Invest%20Like%20the%20Professionals

1
Invest Like the ProfessionalsAsset Allocation
and Diversification Are Key
JennisonDryden is a registered trademark of The
Prudential Insurance Company of America.
IFS-A103119 Ed. 4/2005
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

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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 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 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 the index.
Index performance is not representative of the
performance of a specific security. Past
performance is not indicative of future results.
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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
Average Annual ReturnsJanuary 1984 December
2003
Average Stock Fund Investor
SP 500
Long-Term Govt Bond Index
Average BondFund Investor
Inflation
Source Index Performance of the SP 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.
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A Diversified Long-Term Plan Can Help
110,850
88,221
63,843
Graph does not reflect the performance of
JennisonDryden Asset Allocation Funds.
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.
11
Market leadership Changes from Year to Year
Benefits of Asset Allocation 1995 2004
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.
Diversified Portfolio 15 Large Value 15 Large
Growth 10 Small Value 10 Small Growth 10
International 40 Int.Gov/Credit
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Market Leadership Changes Year to Year Disclosure

• Large Cap Growth and Large Cap Value are
  represented by SP/BARRA Growth and SP/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 SP 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.
• 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.
• 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.
• 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.
• 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.
• 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.

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Benefits of Diversification Benefits of Asset
Allocation 1995 2004
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.
Diversified Portfolio 15 Large Value 15 Large
Growth 10 Small Value 10 Small Growth 10
International 40 Int.Gov/Credit
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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

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

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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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Choose a Portfolio Thats Right for You
Return
JennisonDryden Growth Allocation Fund
JennisonDryden Moderate Allocation Fund
10
JennisonDryden Conservative Allocation Fund
90
35
Stocks
65
40
60
Bonds
Risk
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 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.
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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.
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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.
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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 Mutual Funds
• JennisonDryden is Prudential Financials mutual
  fund and managed accounts family. We offer a
  broad spectrum of investmentsfrom 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 todays
  largest investors.
• Three Successful Asset Managers
• Jennison Associates
• Quantitative Management Associates
• Prudential Fixed Income

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
ASSET MANAGERS AT A GLANCE
DRYDEN
JENNISON
Prudential Fixed Income
Quantitative Management Associates
Jennison Associates
18751
Year Founded
1975
1969
Assets Under Management (Retail/Institutional as
of 12/31/2004
144 billion
64.3 billion
41 billion
Investment Professionals (Portfolio Managers,
traders, analysts)
48
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103
Portfolio Managers
14
12
34
Analysts
29 Credit (22 other)
22
6
3
Ph.D.s
1
7
CFAs
17
4
35
Portfolio Manager Experience (average)
25 years
22 years
16 years
Analyst Experience (average)
14.5 years2
12 years
13 years
Locations
New York, Boston
Newark
Newark, Singapore
Quantitative Enhanced/Team
Team
Bottom-Up
Investment Process
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Funds Managed
12
5
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.
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The Need for Rebalancing
Asset Mix Drift 1/1/1984 Through 12/31/2004
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.
Source Lipper. 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
(19842004)
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 not indicative 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

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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
• 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

• Fill out 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. 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.
• 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.
• 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.