IFS-Axxxx Ed. 02/2005

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  • Welcome, my name is _______________________________. I am a (add title) for JennisonDryden Mutual Funds. Today, I’d like to talk to you about one of the most important investment strategies you need to consider —one that is widely used by investment professionals—Asset Allocation. In addition, I want to discuss what’s going on in the marketplace/economy, some time tested strategies used by the professionals that may help you reach your overall long-term financial objectives and an investment program offered by JennisonDryden. (Note to presenter: You may want to go over the format for the meeting-for example request that attendees hold their questions until the end of the presentation, or raise their hands along the way if they have a question etc.)
  • How do we become smart investors? You need to have a strategy that addresses your personal goals and unique needs. Now —let’s talk about your personal investment plan.
  • How important is asset allocation to the overall success of your portfolio? What’s the best way to invest for your financial goals? Professionals who manage pension plans and institutional accounts rely on time-tested strategies of asset allocation and diversification to help select suitable investments in any environment. Asset Allocation is the task of figuring out how much of your portfolio will be invested in different asset classes, such as stocks, bonds, or cash to optimize the risk/reward trade off based on an individual’s specific situation and goals. Diversification is a portfolio strategy designed to reduce exposure to risk by combining a variety of investments, such as stocks and bonds, which are unlikely to move in the same direction. The goal of diversification is reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes move up and down in value at the same time or at the same rate. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions. But before we talk about asset allocation—let’s first discuss alternative ways people invest if they don’t use asset allocation.
  • Let’s talk for a minute about the asset allocation decision. The Brinson, Beebower study was published in 1991, and what Brinson, Beebower did was look at a series of pension plans and tried to understand what determined the spread of returns from one portfolio to another. Why would one return 10% and one return 12% and another one 15%? Why would this happen? What would cause this spread in returns? The overwhelming answer was the simple asset allocation decision that was made. The amount that they had contributed to stocks, bonds and cash was the primary factor in determining the return and risk variation of each portfolio. Market Timing and security selection, the things that everyone had thought were the overwhelming important decisions in the portfolio, contributed to a small degree compared to the importance of the asset allocation decision. So what this means is that we know if we don’t make this decision correctly for the investor’s portfolio, there is a 90% likelihood that they will take on an inappropriate amount of risk in order to achieve their objectives. It is very important that we make that decision correctly. Every other step in the investment process is built to support that decision. So how do you build an accurate asset allocation?
  • (Presentor Note: May want to solicit comments from the audience). The answer is as individual as you. Your personal answer is based on your own individual risk/reward profile.
  • Efficient Frontier-Risk/Return Relationship. Example: If you are an investor looking to take on more risk for a greater reward you would probably be interested in a growth allocation. Conversely, if you are an investor who is less interested in growth by more interested in capital preservation you would probably be interested in a conservation allocation. Allocating, developing, implementing and maintaining a diversified portfolio takes a lot of time and effort…until now.
  • Everyone wants to buy low and sell high, but most investors do the opposite. When stock prices are low investors don’t buy. Stock prices start to increase– investors begin to buy Sales reach their peak when stock prices are highest. Investors continue to buy at market peaks. The peak of the equity market coincided with the highest flows into equity funds. That means more people were buying at the absolute peak than at any other time. This slide also shows minimal flows at market bottoms. Getting caught up and making emotional investment decisions based on the ups and downs of the stock market can only lead one place….poor performance.
  • The best way to develop an effective asset allocation plan is to consult a qualified financial professional. But what happens when you do it alone!
  • Chasing performance and investing on emotion is a recipe for disaster. How are equity fund investors realizing only 27% of the returns offered by the average equity fund? From ’84 through 2003 the average equity fund has beat inflation by 324% which is over 20 times more than the average equity investor. Investors always seem to end up practicing the “Buy High – Sell Low” philosophy. Bond fund investors fared slightly better, but still only realized 34% of the returns offered by the average bond fund. The average bond fund beat inflation by 265%, which is more than 10 times the average bond investor. Today many investors have sought shelter in money market funds, but this strategy isn’t going to help reach long-term financial goals.
  • Stocks produced greater returns over time, but … Stocks produced greater returns than fixed income, but higher returns were associated with more volatility (risk) A well diversified portfolio can offer you higher return potential while reducing the risk associated with investing in a limited number of asset classes. This is critical in terms of real portfolio growth.
  • This is the periodic chart of the major asset classes showing the performance of each since 1995. From the top down, the chart shows leaders in the various asset classes based on company size (large cap, small cap, etc.) and investment type (growth, value, etc.). No one can predict which asset class will be on top in any given year-there’s really no way to know. So what do you do?—Develop a well diversified portfolio to try to maximize returns by investing in assets across all asset classes –and rebalancing periodically.
  • Here’s another way to view this same chart…confusing? Trying to make sense of this to predict what asset class will perform on top next year is next to impossible—there’s a better way to invest. An appropriately asset allocated portfolio –will help by diversifying your portfolios into the asset classes that: You are comfortable investing in and Make most sense given your needs, risk tolerance and time horizon. What can help smooth out this “mess”? An asset allocation program with a good investment manager who provides the tools for effective diversification.
  • How can JennisonDryden help you realize your goals through a well-balanced, disciplined investment plan? Introducing the JennisonDryden Asset Allocation funds. One investment away from a fully diversified portfolio. Allocation strategies designed in consultation with the leading authority on Asset Allocation: Ibbotson Associates Covers key asset classes-stocks bonds, foreign securities Multiple style funds:large-cap growth, large-cap value, small;; caps, mid caps, foreign stocks and fixed income. Managed by three of the industries most talented and experienced asset managers-- Institutional-quality asset management-Jennison Associates, Quantitative Management Associates, and Prudential Fixed Income Day-to day management, portfolio rebalancing by: Quantitative Management Associates Three portfolios to meet many risk profiles.
  • JennisonDryden Asset Allocation Funds feature portfolios that are constructed in consultation with Ibbotson Associates. Founded in 1977, Ibbotson uses leading-edge technology and in-depth economic and investment research in seeking to reduce risk and improve performance for clients. Ibbotson uses the following to build and monitor portfolios for the Funds: Asset Class Modeling: develops allocations for each major asset class consistent with portfolio objectives. Portfolio Design : JennisonDryden mutual funds fulfill style combinations required by each asset class Quarterly Review of Funds Style Consistency : Periodic reviews ensure style exposures are consistent with intended asset class models. Annual Review of Asset Class Modeling : Reviews asset class models to reflect identified long-term trends. .
  • Here’s a little more about Ibbotson Ibbotson is possibly the most recognized and respected name in asset allocation. They have built a firm founded on unbiased, independent research. Ibbotson Associates was founded in 1977 by Roger Ibbotson Ibbotson Associates is well known throughout the investment industry as an experienced and objective provider of asset allocation products.
  • Choose a portfolio that’s right for you There are three portfolios to choose from: JennisonDryden Conservative Allocation Fund JennisonDryden Moderate Allocation Fund JennisonDryden Growth Allocation Fund Each JennisonDryden Asset Allocation Fund invests in a mix of stock and bond mutual funds within the JennisonDryden fund family in proportions intended to reflect a given level of risk tolerance. You and your financial professional select the portfolio that best addresses your needs.
  • The Conservative Allocation fund has an allocation of 60% Fixed Income –bond funds and 40% Equity—stock funds. The fund objective is c urrent income, and a reasonable level of capital appreciation . There is no guarantee that the fund’s objective will be achieved. Appropriate clients for this fund may include investors who are in or near retirement, or are hesitant about putting too much money in the stock market. Other investors who may find these funds useful include investors:        starting a retirement plan        who are still on the sideline        may not have large sums to invest but would benefit from asset allocation        who wish to consolidate mutual fund holdings        IRA contributions An important thing to notice regarding the allocations associated with each fund. When Ibbotson did their asset class modeling, and than filled the model requirements with the underlying JD funds, they did not simply take the fund style as indicated by a Morningstar style box. The Morningstar style box is nine-square grid that classifies securities by size along the vertical axis and by value and growth characteristics along the horizontal axis. Instead, they analyzed the performance of each underlying fund to develop a more accurate style for each fund. For example, in the Conservative Allocation Fund, the broad asset class model called for an 8% allocation to Large Cap Growth. The Jennison LC Growth Fund is not the only fund that fills this appetite. Part of it is filled with the Jennison 20/20 fund and a very small piece is filled with the US Emerging Growth fund. A small piece of the Jennison LC Growth fund is used to help fill the Small/Mid Cap appetite. This process results in a better fit for the model relative to the underlying funds.
  • The Moderate Allocation fund has an allocation of 35% Fixed Income-bond funds and 65% Equity—stock funds The fund objective is capital appreciation with a reasonable level of current income . There is no guarantee that the fund’s objective will be achieved. Appropriate clients for this fund may include investors whose goals may be 10 years or more away, or retirees who need to add more growth potential to a portfolio that’s heavily weighted in fixed income. Other investors who may find these funds useful include investors:          starting a retirement plan         who are still on the sideline          don’t have large sums to invest but would benefit from asset allocation          Clients who wish to consolidate mutual fund holdings          IRA contributions
  • The Moderate Allocation fund has an allocation of 10% Fixed Income-bond funds and 90% Equity-stock funds. The fund objective long term capital appreciation . There is no guarantee that the fund’s objective will be achieved. Appropriate clients for this fund may include for investors with a long time horizon, or who can accept greater risk while seeking higher growth potential. Other investors who may find these funds useful include investors:       Starting a retirement plan       Who are still on the sideline       Don’t have large sums to invest but would benefit from asset allocation Who wish to consolidate mutual fund holdings       IRA contributions
  • JennisonDryden Asset Allocation Funds invest in a mix of stock and bond mutual funds that feature the experience of three successful asset managers, each recognized and respected in the institutional market and by demanding individuals for excellence in their investment strategies. There are risks associated with investing in these funds. You should read the prospectus carefully before you invest in any of these funds. Jennison Associates: the true measure of an investment manager is the ability to deliver long-term competitive performance. Jennison has been meeting that standard since 1969. The Jennison approach combines the experience and judgment of its portfolio managers with a consistent and disciplined investment process built on fundamental research and specialized teamwork. Jennison had over $64.3 billion in assets under management as of 12/31/04. Quantitative Management Associates–QMA : a pioneer in quantitative investment strategies since 1975, QMA uses extensive computer modeling and advanced analytical techniques to structure portfolios and manage risk. QMA combines its teams deep experience and industry-leading investment process for the JennisonDryden Asset Allocation portfolios. QMA had $40.8 billion in assets under management as of 12/31/04. Prudential Fixed Income: -is one of the nation’s largest bond managers, they offer investors a disciplined process, in-depth sector expertise, and one of the most sophisticated research organizations in the industry. These capabilities help identify the best trading opportunities in the bond markets. Prudential Fixed Income had over $151.4 billion in asset under management as of 12/31/04. JDAA funds will invest in funds managed by the JennisonDryden fund family. Prudential Fixed Income is a division of Prudential Investment Management (PIM). Jennison Associates, Quantitative Management Associates and PIM are registered investment advisors and Prudential Financial companies.
  • As of 12/31/2004, JennisonDryden had almost $250 billion in assets under management, and over 63 years of portfolio management experience.
  • Starting with a target allocation in place is not enough. Regular monitoring and adjusting is necessary to maintain this desired allocation. Without rebalancing, a portfolio can drift to completely different allocations than initially intended. This can result in significant swings in the overall portfolio risk/volatility.
  • Let’s say large cap stocks have a great year, and long-term bonds don’t, your portfolios exposure to large caps would increase—which could increase your risk beyond your comfort level To continue the example, if large caps stocks have a poor year , and long term bonds have a great year, your portfolios exposure to large-cap stocks would decrease, which could reduce your growth potential and limit your ability to reach your long-term goals. In the JennisonDryden Asset Allocation Funds, periodic rebalancing by QMA, will correct these imbalances and return your portfolio to its original allocation. (Strategy 2 offers a a significantly higher return than Strategy 1. Although Strategy 1 still appears to have resulted in a fair return, based on previous slides highlighting investor behavior, it is unlikely that an investor would even be disciplined enough to follow this strategy.
  • Once you’ve selected your portfolio, Quantitative Management Associates –QMA-oversees your investment on a day-to-day basis to make sure the portfolio is managed efficiently. Since allocations can drift out of balance due to changes in the market, QMA periodically rebalances the three asset class portfolios to bring them back to their original allocations.
  • One investment resulting in a complete and balanced diversification. Allocation strategies designed in consultation with the leading authority on the subject: Ibbotson Associates Three leading asset managers, Jennison Associates, Quantative Management Associates, and Prudential Fixed Income. One of these funds should be appropriate for most investors, regardless of risk tolerance and time horizon. Automatic rebalancing….PRIMARILY WITH REGULAR CASHFLOWS. This could result in significant tax savings as asset sales for rebalancing purposes will be minimized. A key benefit – Simplicity. Not only is the fund easy to monitor (vs the 10–13 underlying funds), The balanced nature of the funds should result in lower volatility in NAV, especially compared to funds investing in a single asset class. How many of you currently have a diversified portfolio made up of number of different funds Low minimums make it easy for everyone.
  • No matter what the need, the JennisonDryden Asset Allocation Funds have something to help reach your long-term goals.
  • IFS-Axxxx Ed. 02/2005

    1. 1. Invest Like the Professionals… Asset Allocation and Diversification Are Key JennisonDryden is a registered trademark of The Prudential Insurance Company of America. IFS-A103119 Ed. 4/2005
    2. 2. Smart Investing Begins With An Investment Plan <ul><ul><li>One that reflects your unique needs and goals </li></ul></ul><ul><ul><li>The time you have to achieve them </li></ul></ul><ul><ul><li>Your attitude toward risk. </li></ul></ul><ul><ul><li>Step One: Review your current portfolio </li></ul></ul><ul><ul><li>Step Two: Determine your future needs. </li></ul></ul><ul><ul><li>Step Three: Make a plan and stick to your plan. </li></ul></ul>
    3. 3. Invest Like the Professionals <ul><li>Time-tested strategies </li></ul><ul><ul><ul><ul><ul><li>Asset allocation </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Diversification </li></ul></ul></ul></ul></ul>
    4. 4. Asset Allocation Is the Primary Determinant of Total Portfolio Volatility Source: Brinson, Singer, and Beebower (1991)
    5. 5. Which Asset Allocation Model Is Accurate? <ul><li>A. Conservative? </li></ul>B. Moderate? C. Aggressive? Blue – Bonds Purple – Stocks
    6. 6. Answer: They Are All Correct! <ul><li>Your personal answer is based on your </li></ul><ul><li>individual risk/reward profile </li></ul>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. Blue – Bonds Purple – Stocks Standard Deviation (Risk) Expected Return 0.0 30.0 3.0 6.0 9.0 12.0 15.0 18.0 21.0 24.0 27.0 0.0 20.0 3.0 6.0 9.0 12.0 15.0 Stocks Cash Moderate Conservative Growth
    7. 7. Emotional Investing Is a Common Mistake Source: Investment Company Institute and Bloomberg, 12/31/2004. Net equity sales measure the amount of net sales into retail equity mutual funds on an annual basis. The S&P 500 Index is an unmanaged, weighted index of 500 U.S. stocks, providing a broad indicator of price movement. Investors cannot invest directly in the index. Index performance is not representative of the performance of a specific security. Past performance is not indicative of future results. Everyone wants to “buy low and sell high,” but most investors do the opposite
    8. 8. So How Do You Build An Asset Allocation Strategy <ul><ul><ul><li>You need the right mix of stocks and bonds. </li></ul></ul></ul><ul><ul><ul><li>Regular Monitoring and adjusting is necessary to maintain your desired allocation. </li></ul></ul></ul><ul><ul><ul><li>Periodic Rebalancing </li></ul></ul></ul>
    9. 9. Long-Term Gov’t Bond Index Average Bond Fund Investor Average Annual Returns January 1984 – December 2003 Average Stock Fund Investor Inflation S&P 500 Source: Index Performance of the S&P 500 and Lehman Brothers Long-Term Government Bond Indexes between January 1984 and December 2003 was generated using Hysales (Thomson Financial Company. The negative effects of actively trading mutual funds were researched by DALBAR, a Boston-based financial research firm that is independent from JennisonDryden Mutual Funds. Average stock investor and average bond investor performances were used from a DALBAR Study. The Lehman Brothers Long-Term Government Bond Index includes U.S. government, corporate, and mortgage-backed securities with maturities up to 30 years. Past performance is no guarantee of future results. Trying to Time the Market Can Lead to Long-Term Underperformance
    10. 10. A Diversified Long-Term Plan Can Help $110,850 $88,221 $63,843 Hypothetical Growth, Moderate, and Conservative allocation returns are based on the performance of relevant indexes over the graphed time period. All returns assume a $10,000 investment on 1/1/1984. Performance of three hypothetical portfolios does not include any fees, expenses, or taxes. Performance would have been lower if fees, expenses, and taxes were included. Investors cannot invest directly in an index. Past performance is not indicative of future results. Graph does not reflect the performance of JennisonDryden Asset Allocation Funds.
    11. 11. Market leadership Changes from Year to Year Benefits of Asset Allocation 1995 – 2004 Diversified Portfolio 15% Large Value 15% Large Growth 10% Small Value 10% Small Growth 10% International 40% Int.Gov/Credit Source: Ibbotson Associates, Chicago. 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.
    12. 12. Market Leadership Changes Year to Year Disclosure <ul><li>Large Cap Growth and Large Cap Value are represented by S&P/BARRA Growth and S&P/BARRA 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 S&P 500 Index according to price-to-book ratios. The Growth Index contains stocks with higher price-to-book ratios. The Value Index contains stocks with lower price-to-book ratios. The Indexes are market-capitalization weighted, and their constituents are mutually exclusive. </li></ul><ul><li>Small Cap is represented by the Russell 2000 Total Return Index that measures the performance of small-capitalization U.S. stocks. 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. </li></ul><ul><li>Small-Cap Growth and Small-Cap Value are represented by the Russell 2000 Growth and the Russell 2000 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. </li></ul><ul><li>Securities in the Value Index generally have lower price-to-book and price/earnings ratios than those in the Growth Index. The constituent securities are NOT mutually exclusive. </li></ul><ul><li>International is represented by the MSCI EAFE, 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. </li></ul><ul><li>Fixed Income is represented by the Lehman Brothers Aggregate Bond Index. This Index includes U.S. government, corporate, mortgage-backed securities, and asset-backed securities with at least $100 million par amount outstanding and at least one year to final maturity. </li></ul>
    13. 13. Benefits of Diversification Benefits of Asset Allocation 1995– 2004 Diversified Portfolio 15% Large Value 15% Large Growth 10% Small Value 10% Small Growth 10% International 40% Int.Gov/Credit Source: Ibbotson Associates, Chicago. 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.
    14. 14. Introducing JennisonDryden Asset Allocation Funds <ul><li>One step to a diversified long-term investment plan </li></ul><ul><li>Diversified allocation strategies designed in consultation with Ibbotson Associates </li></ul><ul><li>Covers key asset classes </li></ul><ul><li>Multiple style funds </li></ul><ul><li>Leading asset managers </li></ul><ul><li>Day-to day management and portfolio rebalancing by Quantitative Management Associates </li></ul>Ibbotson Associates is not a Prudential Financial company.
    15. 15. Allocation Strategies Designed by Ibbotson Associates <ul><ul><li>Asset class modeling </li></ul></ul><ul><ul><li>Portfolio design </li></ul></ul><ul><ul><li>Quarterly review of fund style consistency </li></ul></ul><ul><ul><li>Annual review of asset class modeling </li></ul></ul>
    16. 16. Source: Ibbotson Associates 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.
    17. 17. Choose a Portfolio That’s 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. Risk Return JennisonDryden Moderate Allocation Fund JennisonDryden Conservative Allocation Fund JennisonDryden Growth Allocation Fund 40% 60% Stocks Bonds 35% 65% 90% 10%
    18. 18. Conservative Allocation Fund 60% bond funds/40% stock funds Allocation percentages reflect estimated target holdings. 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. Stocks Cash Moderate Conservative Growth
    19. 19. Moderate Allocation Fund 65% stock funds/35% bond funds Allocation percentages reflect estimated target holdings. 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. Stocks Cash Moderate Conservative Growth
    20. 20. Growth Allocation Fund 90% stock funds/10% bond funds Allocation percentages reflect estimated target holdings. 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. Stocks Cash Moderate Conservative Growth
    21. 21. Fund Disclosures <ul><li>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 fund’s 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. </li></ul>
    22. 22. Three Leading Asset Managers <ul><li>JennisonDryden Mutual Funds </li></ul><ul><li>JennisonDryden is Prudential Financial’s mutual fund and managed accounts family. We offer a broad spectrum of investments—from core portfolio building blocks to strong sector funds. The managers of our funds are known and respected by major corporations and pension funds throughout the world. When you invest with us, you benefit from the same process, research, risk management, and competitive performance demanded by today’s largest investors. </li></ul><ul><li>Three Successful Asset Managers </li></ul><ul><ul><li>Jennison Associates </li></ul></ul><ul><ul><li>Quantitative Management Associates </li></ul></ul><ul><ul><li>Prudential Fixed Income </li></ul></ul>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.
    23. 23. Investment Teams 1 Prudential 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. 2 Credit analysts only. Year Founded 1969 1975 1875 1 Investment Professionals (Portfolio Managers, traders, analysts) Portfolio Managers Analysts Ph.D.s CFAs Portfolio Manager Experience (average) Analyst Experience (average) Locations Investment Process Funds Managed $64.3 billion 48 14 22 1 17 25 years 12 years New York, Boston Bottom-Up 12 $41 billion 23 12 6 4 22 years 13 years Newark Quantitative Enhanced/Team 5 7 $144 billion 103 34 29 Credit (22 other) 35 16 years 14.5 years 2 Newark, Singapore Team 15 3 Jennison Associates DRYDEN Prudential Fixed Income Quantitative Management Associates JENNISON ASSET MANAGERS AT A GLANCE Assets Under Management (Retail/Institutional as of 12/31/2004
    24. 24. The Need for Rebalancing 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 almost two-thirds equity and one-third fixed income. Asset Mix Drift – 1/1/1984 Through 12/31/2004 Source: Lipper. Equity returns reflect performance of the S&P 500 Index The S&P 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 a n 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.
    25. 25. Why Diversification and Rebalancing Are Important Consider the following two long-term strategies for investing $200,000 over a 20-year period (1984–2004) Source: Prudential Investments, using Wisenberger. For the purpose of this illustration, the following indexes were used: S&P/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 not indicative of future results. Invests $10,000 into top-performing market segment at the end of each year. Strategy 1 Invests $10,000 equally in six different market segments at the end of each year, and rebalances the portfolio each year so it remains equally diversified among the six market segments. Strategy 2
    26. 26. Keeping Your Asset Allocation on Track <ul><li>JennisonDryden Asset Allocation Funds </li></ul><ul><li>Automatic Rebalancing- we do the work for you. </li></ul><ul><li>Quantitative Management Associates periodically rebalances the three asset class portfolios to bring them back to their original allocations </li></ul>
    27. 27. What JennisonDryden Asset Allocation Funds Offer You <ul><li>Immediate and consistent diversification </li></ul><ul><li>Asset management expertise of the JennisonDryden fund family </li></ul><ul><li>Three funds for differing risk profiles </li></ul><ul><li>Automatic portfolio rebalancing </li></ul><ul><li>Simplicity—one investment, one NAV </li></ul><ul><li>Accessibility—investment minimums </li></ul><ul><li>as low as $1,000 </li></ul>
    28. 28. You Have Needs <ul><li>Secure retirement </li></ul><ul><li>College education for children or grandchildren </li></ul><ul><li>New home </li></ul><ul><li>Growing/protecting your nest egg </li></ul><ul><li>We can help </li></ul><ul><li>J ennisonDryden Asset Allocation Funds </li></ul>
    29. 29. How Do You Get Started <ul><li>Fill out an Asset Allocation Questionnaire </li></ul><ul><li>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 </li></ul>
    30. 30. Disclosures <ul><li>For more information about the JennisonDryden Asset Allocation Funds, call your financial professional for a free prospectus. You should consider the Funds’ investment objectives, risks, and charges and expenses carefully before investing. The prospectus will contain this and other information about the investment company. Please read the prospectus carefully before investing. </li></ul><ul><li>Shares of the JennisonDryden Asset Allocation Funds are distributed by Prudential Investment Management Services LLC (PIMS), a Prudential Financial company and member SIPC. JennisonDryden is a registered trademark of The Prudential Insurance Company of America. </li></ul><ul><li>Mutual Funds: </li></ul><ul><li>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. </li></ul>

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