PGIM Muni
High Income Fund
PROSPECTUS
— October
28, 2022
INVESTMENT
OBJECTIVE
Maximum
amount of income that is eligible for exclusion from federal income
taxes.
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PGIM
MUNI HIGH INCOME FUND | |||
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A:
PRHAX |
C:
PHICX |
Z:
PHIZX |
R6:
PHIQX |
The
Securities and Exchange Commission
(“SEC”)
has not approved or disapproved the
Fund's
shares, nor has the SEC determined
that
this prospectus is complete or accurate.
It is
a criminal offense to state otherwise. Mutual
funds are distributed by Prudential
Investment
Management Services LLC
(“PIMS”),
member SIPC. PGIM Fixed Income
is a
unit of PGIM, Inc. (“PGIM”), a registered
investment
adviser. PIMS and PGIM are
Prudential
Financial companies. © 2022
Prudential
Financial, Inc. and its related
entities.
The Prudential logo and the Rock
symbol
are service marks of Prudential
Financial,
Inc. and its related entities,
registered
in many jurisdictions worldwide. |
 |
To
enroll in e-delivery, go to pgim.com/investments/resource/edelivery
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Class
A |
Class
C |
Class
Z |
Class
R6 |
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Maximum
sales charge (load) imposed on purchases (as a percentage of offering
price) |
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Maximum
deferred sales charge (load) (as a percentage of the lower of the original
purchase price or the net asset value at
redemption) |
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Maximum
sales charge (load) imposed on reinvested dividends and other
distributions |
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Redemption
fee |
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Exchange
fee |
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Maximum
account fee (accounts under $10,000) |
$ |
$ |
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*Investors who purchase $500,000 or
more of Class A shares and sell these shares within 12 months of purchase are
subject to a contingent deferred sales charge (“CDSC”) of
1.00%, although they are not subject to
an initial sales charge. The CDSC is waived for certain retirement and/or
benefit plans.
**Class C shares are
sold with a CDSC of 1.00% on sales made within 12 months of
purchase.
***Direct Transfer
Agent Accounts holding under $10,000 of Class Z shares are subject to the $15
fee.
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Class
A |
Class
C |
Class
Z |
Class
R6 |
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Management
fee |
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Distribution
and service (12b-1) fees |
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Other
expenses |
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Total
annual Fund operating expenses |
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Fee waiver
and/or expense reimbursement |
( |
( |
( |
( |
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Total
annual Fund operating expenses after fee waiver and/or expense
reimbursement(1) |
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(1)
PGIM
Investments LLC (“PGIM Investments”) has contractually agreed, through December
31, 2023, to limit Total Annual Fund Operating Expenses after fee waivers and/or
expense reimbursements to 0.58% of average daily net assets for Class Z shares
and 0.49% of average daily net assets for Class R6 shares. This contractual
waiver excludes interest, brokerage, taxes (such as income and foreign
withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and
expenses, extraordinary expenses, and certain other Fund expenses such as
dividend and interest expense and broker charges on short sales. Where
applicable, PGIM Investments agrees to waive management fees or shared operating
expenses on any share class to the same extent that it waives such expenses on
any other share class. In addition, Total Annual Fund Operating Expenses for
Class R6 shares will not exceed Total Annual Fund Operating Expenses for Class Z
shares. Fees and/or expenses waived and/or reimbursed by PGIM Investments may be
recouped by PGIM Investments within the same fiscal year during which such
waiver and/or reimbursement is made if such recoupment can be realized without
exceeding the expense limit in effect at the time of the recoupment for that
fiscal year. This waiver may not be terminated prior to December 31,
2023 without the prior approval of the
Fund’s Board of Trustees.
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at www.pgim.com/investments
3
|
Share
Class |
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
Z |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
|
Share
Class |
1
Year |
3
Years |
5
Years |
10
Years |
|
Class
A |
$ |
$ |
$ |
$ |
|
Class
C |
$ |
$ |
$ |
$ |
|
Class
Z |
$ |
$ |
$ |
$ |
|
Class
R6 |
$ |
$ |
$ |
$ |
4
PGIM Muni High
Income Fund
Visit our website
at www.pgim.com/investments
5
6
PGIM Muni High
Income Fund
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Visit our website
at www.pgim.com/investments
7
|
Return
Before Taxes |
One
Year |
Five
Years |
Ten
Years |
Since
Inception |
Inception
Date |
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Class A
shares |
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- |
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Class C
shares |
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- |
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Class R6
shares |
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Class
Z Shares % (as of 12-31-21) | |||||
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Return
Before Taxes |
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- |
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Return
After Taxes on Distributions |
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- |
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Return
After Taxes on Distributions and Sale of Fund Shares |
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- |
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Index
% (reflects no deduction for fees, expenses or taxes) (as of
12-31-21) | |||||
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Bloomberg
Municipal Bond Index |
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- |
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Bloomberg
Municipal High Yield Bond Index |
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- |
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Bloomberg
Municipal Bond Index (50%) / Bloomberg Municipal High Yield Bond
Index
(50%) |
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- |
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MANAGEMENT
OF THE FUND
The following
individuals are jointly and primarily responsible for the day-to-day management
of the Fund.
|
Investment
Manager |
Subadviser |
Portfolio
Managers |
Title |
Service
Date |
|
PGIM
Investments LLC |
PGIM Fixed
Income |
Robert
Tipp, CFA |
Managing
Director,
Chief
Investment
Strategist
& Head of
Global
Bonds |
November
2004 |
|
|
|
Jason
Appleson, CFA,
FRM |
Managing
Director &
Head of
PGIM Fixed
Income's
Municipal
Bond
Team |
November
2021 |
|
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Lee
Friedman, CFA |
Principal
& Portfolio
Manager |
March
2014 |
|
|
|
John
Dittemer |
Vice
President &
Portfolio
Manager |
March
2014 |
BUYING
AND SELLING FUND SHARES
|
|
Class
A* |
Class
C* |
Class
Z* |
Class
R6 |
|
Minimum
initial investment |
$1,000 |
$1,000 |
None |
None |
|
Minimum
subsequent investment |
$100 |
$100 |
None |
None |
*
Certain share classes are generally closed to investments by new group
retirement plans. Please see “How
to Buy, Sell and Exchange Fund Shares—Closure of Certain Share Classes to
New Group Retirement Plans” in the Prospectus for more
information.
For Class A and
Class C shares, the minimum initial and subsequent investment for Automatic
Investment Plan purchases is $50. Class R6 shares are generally not available
for purchase by individuals. Class Z shares may be purchased by certain
individuals, subject to certain requirements. Please see “How to Buy, Sell and
Exchange Fund Shares—How to Buy Shares—Qualifying for Class Z Shares,” and
“—Qualifying for Class R6 Shares” in the Prospectus for purchase eligibility
requirements.
8
PGIM Muni High
Income Fund
Your financial
intermediary may impose different investment minimums. You can purchase or
redeem shares on any business day that the Fund is open through the Fund's
transfer agent or through servicing agents, including brokers, dealers and other
financial intermediaries appointed by the distributor to receive purchase and
redemption orders. Current shareholders may also purchase or redeem shares
through the Fund's website or by calling (800) 225-1852.
TAX
INFORMATION
Dividends,
Capital Gains and Taxes. The Fund intends
to distribute income that is exempt from regular federal income tax; however,
Fund distributions may be subject to capital gains tax. A portion of the Fund's
distributions may be subject to federal income tax or to the federal alternative
minimum tax.
PAYMENTS
TO FINANCIAL INTERMEDIaries
If you purchase
Fund shares through a financial intermediary such as a broker-dealer, bank,
retirement recordkeeper or other financial services firm, the Fund or its
affiliates may pay the financial intermediary for the sale of Fund shares and/or
for services to shareholders. This may create a conflict of interest by
influencing the financial intermediary or its representatives to recommend the
Fund over another investment. Ask your financial intermediary or representative
or visit your financial intermediary’s website for more information.
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at www.pgim.com/investments
9
MORE ABOUT THE
FUND'S PRINCIPAL AND NON-PRINCIPAL INVESTMENT STRATEGIES, INVESTMENTS AND
RISKS
INVESTMENT
STRATEGIES AND INVESTMENTS
The investment objective of the
Fund is to provide the maximum amount of income that is eligible for exclusion
from federal income taxes. The Fund invests, under normal circumstances, at
least 80% of its investable assets (net assets plus any borrowing for investment
purposes) in municipal bonds, which are fixed income securities issued by states
and municipalities whose income is free from regular federal income tax. The
Fund's investable assets will be less than its total assets to the extent that
it has borrowed money for non-investment purposes, such as to meet anticipated
redemptions. There can be no assurance that the Fund’s investment objective will
be achieved.
In managing the Fund’s assets, the
subadviser uses a combination of top-down economic analysis and bottom-up
research in conjunction with proprietary quantitative models and risk management
systems. In the top-down economic analysis, the subadviser develops views on
economic, policy and market trends by continually evaluating economic data that
affect the movement of markets and securities prices. This top-down
macroeconomic analysis is integrated into the subadviser’s bottom-up research
which informs security selection. In its bottom-up research, the subadviser
develops an internal rating and outlook on issuers. The rating and outlook are
determined based on a thorough review of the financial health and trends of the
issuer, which include a review of the composition of revenue, profitability,
cash flow margin, and leverage.
The subadviser may
also consider factors such as yield, spread and potential for price appreciation
as well as credit quality, maturity and risk. The subadviser may also utilize
proprietary quantitative tools to support relative value trading and asset
allocation for portfolio management as well as various risk models to support
risk management.
In determining
which securities to buy and sell, the subadviser considers, among other things,
fundamental research, yield, maturity, issue, quality characteristics and
expectations regarding economic and political developments, including movements
in interest rates and demand for municipal bonds. The subadviser may trade
securities based on its outlook on interest rates. The subadviser also seeks to
take advantage of differentials in yields with respect to securities with
similar credit ratings and maturities, but which vary according to the purpose
for which they were issued, as well as securities issued for similar purposes
with similar maturities, but which vary according to ratings.
The Fund may invest
its assets from time to time on a temporary basis in debt securities, the
interest on which is subject to federal, state or local income tax: (1) pending
the investment or reinvestment in municipal securities of the proceeds from the
sale of shares of the Fund or sales of portfolio securities, (2) in order to
avoid the necessity of liquidating portfolio investments to meet redemptions of
shares by investors, or (3) where market conditions due to rising interest rates
or other adverse factors warrant temporary investing. Investments in taxable
securities may include: obligations of the U.S. Government, its agencies or
instrumentalities; and commercial paper rated in the two highest grades by
either Moody’s or S&P (A-1 and A-2, or P-1 and P-2, respectively). The Fund
does not intend to invest more than 5% of its assets in any one category of the
foregoing taxable securities. The Fund may also hold its assets in other cash
equivalents or in cash.
The
Fund’s investment objective is not a fundamental policy, and therefore may be
changed by the Board without shareholder approval.
The
Fund’s policy of investing, under normal circumstances, at least 80% of its
investable assets in municipal bonds is a fundamental policy, which means it may
be changed only by shareholder approval.
Municipal
Bonds
States and
municipalities issue bonds in order to borrow money to finance a project. You
can think of bonds as loans that investors make to the state, local government
or other issuer. The government gets the cash needed to complete the project and
investors earn income on their investment.
10
PGIM Muni High
Income Fund
Municipal bonds pay
interest that generally is eligible for exclusion from federal income taxation.
The Fund, however, may hold certain private activity bonds, which are municipal
bonds, the interest on which is subject to the federal alternative minimum tax
(“AMT”). See “Fund Distributions and Tax Issues—Distributions.” Municipal notes,
like municipal bonds, are fixed income securities issued by states and
municipalities, except that municipal notes mature in one year or
less.
Municipal bonds
include general obligation bonds and revenue bonds. General obligation bonds are
obligations supported by the credit of an issuer that has the power to tax and
are payable from that issuer's general revenues and not from any specific
source. Revenue bonds, on the other hand, are payable from revenues derived from
a particular source or project.
The subadviser
normally invests the Fund's investable assets in municipal bonds that it
believes may provide above average yields. While the Fund may purchase municipal
bonds of any credit quality, the portfolio consists primarily of municipal bonds
rated B or better by Moody's or S&P or bonds with a comparable rating by
another major rating service or unrated bonds judged by the subadviser to be of
comparable quality. Municipal bonds rated Ba1 or BB+ or lower by Moody's or
S&P, respectively, are considered to be speculative with respect to their
capacity to make interest and principal payments and are commonly referred to as
junk bonds. Bonds rated Baa3 and higher by Moody's or BBB- and higher by S&P
are considered investment grade, with a range of adequate to very strong
capacity for meeting their financial obligations, although municipal bonds rated
in the Baa category by Moody's or BBB category by S&P have certain
speculative characteristics and are riskier than higher-rated municipal bonds.
In the event that a security receives different ratings from different
nationally recognized statistical rating organizations (“NRSROs”), the Fund will
treat the security as being rated in the highest rating category received from
an NRSRO.
From time to time, the Fund may own
the majority of an issue of a municipal obligation. Such majority-owned holdings
may present additional market and credit risks.
The municipal bonds in which the
Fund invests generally have maturities in excess of 10 years at the time of
purchase, although the Fund also invests in municipal bonds having maturities
ranging from one year to 10 years. As of August 31, 2022, the Fund's weighted
average maturity was 17.17 years.
Derivative
Strategies
Derivatives are
financial instruments whose value depends upon, or is derived from, the value of
something else, such as one or more underlying investments, indices or
currencies. The Fund may use various derivative strategies to try to improve the
Fund's returns. The subadviser may also use hedging techniques to try to protect
the Fund's assets. A derivative contract will obligate or entitle the Fund to
deliver or receive an asset or cash payment based on the change in value of one
or more investments, indices or currencies. Derivatives may be traded on
organized exchanges, or in individually negotiated transactions with other
parties (these are known as “over-the-counter” derivatives). The Fund may be
limited in its use of derivatives by rules adopted by the SEC governing
derivatives transactions. Although the Fund has the flexibility to make use of
derivatives, it may choose not to for a variety of reasons, even under very
volatile market conditions.
Futures
Contracts and Related Options. The Fund may
purchase and sell financial futures contracts and related options on financial
futures. A futures contract is an agreement to buy or sell a set quantity of an
underlying asset at a future date, or to make or receive a cash payment based on
the value of a securities index, or some other asset, at a stipulated future
date. The terms of futures contracts are standardized. In the case of a
financial futures contract based upon a broad index, there is no delivery of the
securities comprising the underlying index, margin is uniform, a clearing
corporation or an exchange is the counterparty and the Fund makes daily margin
payments based on price movements in the index. An option gives the purchaser
the right to buy or sell securities or currencies, or in the case of an option
on a futures contract, the right to buy or sell a futures contract in exchange
for a premium.
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Swap
Transactions. The Fund may enter
into swap transactions. Swap agreements are two-party contracts entered into
primarily by institutional investors for periods typically ranging from a few
weeks to more than one year. In a standard “swap” transaction, two parties agree
to exchange the returns (or differentials in rates of return) earned or realized
on particular predetermined investments or instruments, which may be adjusted
for an interest factor. There are various types of swaps, including but not
limited to credit default swaps, interest rate swaps, total return swaps and
index swaps.
Swap
Options. The Fund may enter
into swap options. A swap option is a contract that gives a counterparty the
right (but not the obligation) to enter into a new swap agreement or to shorten,
extend, cancel or otherwise modify an existing swap agreement, at some
designated future time on specified terms.
Options on
Securities and Financial Indices. The Fund may purchase and sell put
and call options on securities, and financial indices traded on U.S. or non-U.S.
securities exchanges, on NASDAQ or in the over-the-counter market. An option
gives the purchaser the right to buy or sell securities in exchange for
a premium.
Tax-Advantaged
Hedging. To protect against
price declines in its holdings that have developed large accumulated capital
gains, the Fund may use hedging techniques to help reduce taxes, including the
purchase of put options on securities held, and financial and stock index
futures contracts. Using these techniques rather than selling securities may
reduce exposure to price declines in certain securities without realizing
substantial capital gains under current tax law. The Fund's ability to use these
strategies as a tax management technique for holdings of appreciated securities
is limited—certain hedging transactions must be closed out within 30 days after
the end of the taxable year. The Fund's ability to use different tax-management
strategies may be limited in the future by market volatility, a high volume of
shareholder redemptions or changes in tax law. The subadviser expects that by
using various tax management strategies, the Fund may reduce the extent to which
you incur taxes on Fund distributions of investment income and net realized
gains. Even so, the Fund expects to distribute taxable income or capital gains
from time to time.
Floating
Rate Bonds
The Fund may invest
in floating rate bonds. Floating rate bonds are bonds that have an interest rate
that is set as a specific percentage of a designated rate, such as the rate on
Treasury bonds. The interest rate on floating rate bonds changes when there is a
change in the designated rate.
Variable
Rate Bonds
The Fund may invest
in variable rate bonds, which are bonds that have an interest rate that is
adjusted periodically based on the market rate at a specified time. They
generally allow the Fund to demand full payment of the bond on short notice. At
times the Fund may receive an amount that may be more or less than the amount
paid for the bond.
Inverse
Floaters
The Fund may invest
in inverse floaters. Inverse floaters are debt instruments with a floating or
adjustable interest rate that moves in the opposite direction of the interest
rate on another security or the value of an index.
The Fund receives
interest payments on inverse floaters that bear an inverse relationship to the
interest paid on the floating rate notes. While such inverse floaters expose the
Fund to leverage risk, they do not constitute borrowings for purposes of the
Fund's restrictions on borrowings.
Secondary
Inverse Floaters
The Fund may invest
in secondary inverse floaters, which are municipal asset-backed securities with
a floating or variable interest rate that moves in the opposite direction of the
interest rate on another security or the value of an index.
Zero
Coupon Bonds
The Fund may invest
in zero coupon bonds. Zero coupon bonds do not pay interest during the life of
the security. An investor purchases the security at a price that is less than
the amount the investor will receive when the borrower repays the amount
borrowed (face value).
12
PGIM Muni High
Income Fund
Municipal
Lease Obligations
The Fund may invest in municipal
lease obligations, including Certificates of Participation. Municipal lease
obligations are obligations where the interest and principal are paid out of
lease payments made by the party leasing the equipment or facilities that were
acquired or built with the bonds. Typically, municipal lease obligations are
issued by states or financing authorities to provide money for construction
projects such as schools, offices or stadiums. The entity that leases the
building or facility would be responsible for paying the interest and principal
on the obligation.
Municipal
Asset-Backed Securities
The Fund may invest
in municipal asset-backed securities. A municipal asset-backed security is a
type of pass-through instrument structured as a loan or note that pays interest
that is eligible for exclusion from federal and state income taxation based upon
the income from a collateralized underlying municipal bond or pool of municipal
bonds.
Insured
Municipal Bonds
The Fund may
purchase municipal bonds that are insured to attempt to reduce credit risks.
Although insurance coverage reduces credit risks by providing that the insurer
will make timely payment of interest and/or principal, it does not provide
protection against market fluctuations of insured bonds or fluctuations in the
price of the shares of the Fund. An insured municipal bond fluctuates in value
largely based on factors relating to the insurer's creditworthiness or ability
to satisfy its obligations. The Fund cannot be certain that any insurance
company will make the payments it guarantees.
When-Issued
and Delayed-Delivery Securities
The Fund may
purchase securities, including money market obligations, bonds or other
obligations, on a when-issued, delayed-delivery or forward commitment basis.
When the Fund purchases delayed-delivery securities, the price and interest rate
are fixed at the time of purchase. For both when-issued and delayed-delivery
securities, delivery and payment for the obligations take place at a later time.
The Fund does not earn interest income until the date the obligations are
expected to be delivered.
Credit-Linked
Securities
The Fund may invest
in credit-linked securities. Credit-linked securities are securities whose
payments are derived from the performance of designated reference obligations,
which may be corporate debt securities or a pool of assets such as mortgage
loans. The Fund has the right to receive periodic interest payments from the
issuer of the credit-linked security at an agreed-upon interest rate, and a
return of principal as contractually agreed at the maturity date. The source of
payment for credit-linked securities may be dependent on both the performance of
the reference obligations and the viability of the issuer.
Distressed
and Defaulted Securities
The Fund may invest
in distressed securities, that is, securities of issuers that are financially
troubled and which the subadviser believes are currently valued at less than
their long-term potential. The Fund is also permitted to invest in defaulted
bonds and in bonds having a rating of D or better by Moody's, S&P or another
major rating service, or unrated bonds of comparable quality.
Unrated
Securities and Obtaining Securities Ratings
The Fund may invest
in municipal securities which are not rated if, based upon a credit analysis by
the subadviser, the subadviser believes that the securities are of comparable
quality to other municipal securities that the Fund may purchase. In determining
the suitability for investment in a particular unrated security, the subadviser
will take into consideration asset and debt service coverage, the purpose of the
financing, the history of the issuer, the existence of other rated securities of
the issuer, any credit enhancement by virtue of a letter of credit or other
financial guaranty deemed suitable by the subadviser and other factors as may be
relevant including comparability to other issuers. The Fund may obtain a rating
for unrated securities that the Fund owns if, in the subadviser's judgment,
liquidity or pricing of the security would be improved if the security was
rated. Ratings will be obtained only from an NRSRO. Assets of the Fund may be
used to pay an NRSRO in connection with obtaining such ratings.
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13
After its purchase
by the Fund, an issue of municipal bonds or notes may cease to be rated or its
rating(s) may be reduced. Neither event requires the elimination of that
obligation from the portfolio of the Fund, but each event will be a factor in
determining whether the Fund should continue to hold that issue in its
portfolio.
Investments
in Affiliated Funds
The Fund may invest
its assets in affiliated funds, including exchange-traded funds, that are
registered investment companies under the Investment Company Act of 1940 (the
“1940 Act”). The Fund can invest its free cash balances in affiliated short-term
bond funds and/or money market funds to obtain income on short-term cash
balances while awaiting attractive investment opportunities, to provide
liquidity in preparation for anticipated redemptions or for defensive purposes.
Such an investment could also allow the Fund to obtain the benefits of a more
diversified portfolio available in the affiliated funds than might otherwise be
available through direct investments in those asset classes, and will subject
the Fund to the risks associated with the particular asset class. To the extent
the Fund serves as an underlying investment for other registered funds, the Fund
may be prohibited from investing in certain registered funds and private
funds.
As a shareholder in
the affiliated funds, the Fund will pay its proportional share of the expenses
of the affiliated funds. The affiliated short-term bond funds and certain money
market funds do not pay a management fee to the investment manager, since the
investment manager only receives reimbursement for its expenses. Thus,
shareholders of the Fund are not paying management fees for both the Fund and
the affiliated short-term bond funds and money market funds. The investment
results of the portions of the Fund’s assets invested in the affiliated funds
will be based on the investment results of the affiliated funds.
Temporary
Defensive Investments
In response to
adverse market, economic or political conditions, the Fund may take a temporary
defensive position and invest up to 100% of its assets in money market
instruments, including short-term obligations of, or securities guaranteed by,
the U.S. Government, its agencies or instrumentalities, or in high-quality
obligations of U.S. or non-U.S. banks and corporations, and may hold up to 100%
of its assets in cash or cash equivalents. Although the subadviser has the
ability to take defensive positions, it may choose not to do so for a variety of
reasons, even during volatile market conditions. Investing heavily in these
securities is inconsistent with and limits the Fund's ability to achieve its
investment objective, but may help to preserve the Fund's assets.
Securities
Lending
Consistent with
applicable regulatory requirements, the Fund may lend portfolio securities with
a value up to 33 1∕3% of its total
assets to brokers, dealers and other financial organizations to earn additional
income. Loans of portfolio securities will be collateralized by cash. Cash
collateral will be invested in an affiliated prime money market
fund.
Other
Investments
In addition to the
strategies and securities discussed above, the Fund may use other strategies or
invest in other types of securities as described in the Statement of Additional
Information (“SAI”). The Fund might not use all of the strategies or invest in
all of the types of securities as described in the Prospectus or in the
SAI.
The table below
summarizes the investment limits applicable to the Fund’s principal investment
strategies and certain non-principal investment strategies.
|
Principal
& Certain Non-Principal Strategies: Investment
Limits |
|
◾Municipal
Bonds: At least 80% of investable assets under normal circumstances
◾Higher
Yielding Municipal Bonds: Percentage varies ◾Municipal
lease obligations: Percentage varies ◾Derivatives:
Up to 25% of net assets (subject to the Fund’s operation under the
requirements of Rule 18f-4 under the
Investment
Company Act of 1940) ◾When-Issued
and Delayed-Delivery Securities: Percentage varies ◾Credit-linked
Securities: Up to 15% of investable assets ◾Inverse
Floaters/Secondary Floaters: Percentage varies
|
14
PGIM Muni High
Income Fund
|
Principal
& Certain Non-Principal Strategies: Investment
Limits |
|
◾Municipal
Asset-Backed Securities: Percentage varies ◾Illiquid
Investments: Up to 15% of net assets ◾Distressed
and Defaulted Securities: Up to 10% of assets ◾Variable/Floating
Rate Bonds: Percentage varies |
RISKS
OF INVESTING IN THE FUND
The order of the
below risk factors does not indicate the significance of any particular risk
factor.
Cash
Management and Defensive Investing Risk. The value of the
investments held by the Fund for cash management or defensive investing purposes
can fluctuate. Like other fixed income securities, they are subject to risk,
including market, interest rate and credit risk. If the Fund holds cash
uninvested, it will be subject to the credit risk of the depository institution
holding the cash. If the Fund holds cash uninvested, the Fund will not earn
income on the cash. If a significant amount of the Fund's assets are used for
cash management or defensive investing purposes, it may not achieve its
investment objective.
Credit
Risk. This is the risk
that the issuer, the guarantor or the insurer of a fixed income security, or the
counterparty to a contract, may be unable or unwilling to make timely principal
and interest payments, or to otherwise honor its obligations. Additionally,
fixed income securities could lose value due to a loss of confidence in the
ability of the issuer, guarantor, insurer or counterparty to pay back debt. The
lower the credit quality of a bond, the more sensitive it is to credit
risk.
Credit-Linked
Securities Risk. Credit-linked
securities are subject to the risk that the issuer of the credit-linked security
may default or go bankrupt, as well as the credit risk of the corporate issuer
underlying the credit default swaps. In addition, credit-linked securities are
usually issued in privately negotiated transactions, resulting in limited or no
liquidity. Credit-linked securities are also subject to market risk, interest
rate risk, prepayment risk and extension risk.
Cyber
Security Risk. Failures or
breaches of the electronic systems of the Fund, the Fund's manager, subadviser,
distributor, and other service providers, or the issuers of securities in which
the Fund invests have the ability to cause disruptions and negatively impact the
Fund's business operations, potentially resulting in financial losses to the
Fund and its shareholders. While the Fund has established business continuity
plans and risk management systems seeking to address system breaches or
failures, there are inherent limitations in such plans and systems. Furthermore,
the Fund cannot control the cyber security plans and systems of the Fund's
service providers or issuers of securities in which the Fund
invests.
Debt Obligations
Risk. Debt obligations
are subject to credit risk, market risk and interest rate risk. The Fund's
holdings, share price, yield and total return may also fluctuate in response to
bond market movements. The value of bonds may decline for issuer-related
reasons, including management performance, financial leverage and reduced demand
for the issuer’s goods and services. Certain types of fixed income obligations
also may be subject to “call and
redemption risk,” which is the risk that the issuer
may call a bond held by the Fund for redemption before it matures and the Fund
may not be able to reinvest at the same rate of interest and therefore would
earn less income.
Derivatives
Risk. Derivatives
involve special risks and costs and may result in losses to the Fund. The
successful use of derivatives requires sophisticated management, and, to the
extent that derivatives are used, the Fund will depend on the subadviser's
ability to analyze and manage derivatives transactions. The prices of
derivatives may move in unexpected ways, especially in abnormal market
conditions. Some derivatives are “leveraged” or may create economic leverage for
the Fund and therefore may magnify or otherwise increase investment losses to
the Fund. The Fund's use of derivatives may also increase the amount of taxes
payable by shareholders.
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15
Other risks arise from the
potential inability to terminate or sell derivatives positions. A liquid
secondary market may not always exist for the Fund's derivatives positions. In
fact, many over-the-counter derivative instruments will not have liquidity
beyond the counterparty to the instrument. Over-the-counter derivative
instruments also involve the risk that the other party will not meet its
obligations to the Fund. The use of derivatives also exposes the Fund to
operational issues, such as documentation and settlement issues, systems
failures, inadequate control and human error.
Derivatives may also involve legal risks, such
as insufficient documentation, the lack of capacity or authority of a
counterparty to execute or settle a transaction, and the legality and
enforceability of derivatives contracts. The U.S. Government and foreign
governments have adopted (and may adopt further) regulations governing
derivatives markets, including mandatory clearing of certain derivatives, margin
and reporting requirements, and risk exposure limitations. Regulation of
derivatives may make derivatives more costly, limit their availability or
utility to the Fund, or otherwise adversely affect their performance or disrupt
markets.
Distressed
and Defaulted Securities Risk. Distressed and
defaulted securities are subject to particularly high credit risk, market risk
and illiquidity risk. These securities are at a high risk for default,
especially during economic downturns, and they are subject to greater volatility
than securities of more stable issuers. To the extent that the Fund invests in
bankrupt issuers, the Fund may be subject to litigation risks and
costs.
Economic
and Market Events Risk. Events in the U.S.
and global financial markets, including actions taken by the U.S. Federal
Reserve or foreign central banks to stimulate or stabilize economic growth or
the functioning of the securities markets, may at times result in unusually high
market volatility, which could negatively impact performance. Relatively reduced
liquidity in credit and fixed income markets could adversely affect issuers
worldwide.
Exchange-Traded
Funds (“ETFs”) Risk. Investing in
securities issued by ETFs involves risks similar to those of investing directly
in the securities and other assets held by the ETF. Unlike shares of typical
mutual funds, shares of ETFs are generally traded on an exchange throughout a
trading day and bought and sold based on market values and not at net asset
value. For this reason, shares could trade at either a premium or discount to
net asset value, which may be substantial during periods of market stress. The
trading price of an index-based ETF is expected to (but may not) closely track
the net asset value of the ETF, and the Fund will generally gain or lose value
consistent with the performance of the ETF’s portfolio securities. The Fund will
pay brokerage commissions in connection with the purchase and sale of shares of
ETFs. In addition, the Fund will indirectly bear its pro rata share of the fees
and expenses incurred by an ETF (including ETFs managed by the Manager or the
subadviser(s)) in which it invests, including advisory fees (to the extent not
offset by the Manager through waivers). These expenses are in addition to the
advisory and other expenses that the Fund bears directly in connection with its
own operations. An index-based ETF may not replicate exactly the performance of
the benchmark index it seeks to track for a number of reasons, including
transaction costs incurred by the ETF, the temporary unavailability of certain
index securities in the secondary market or discrepancies between the ETF and
the index with respect to the weighting of securities or the number of
securities held. Investments in ETFs are subject to the risk that the listing
exchange may halt trading of an ETF’s shares, in which case the Fund would be
unable to sell its ETF shares unless and until trading is resumed.
Increase
in Expenses Risk. Your actual cost
of investing in the Fund may be higher than the expenses shown in the expense
table for a variety of reasons. For example, expense ratios may be higher than
those shown if average net assets decrease. Net assets are more likely to
decrease and Fund expense ratios are more likely to increase when markets are
volatile. Active and frequent trading of Fund securities can increase
expenses.
Insured
Municipal Bonds Risk. The Fund may
purchase municipal bonds that are insured to attempt to reduce credit risk.
Although insurance coverage reduces credit risk by providing that the insurer
will make timely payment of interest and/or principal, it does not provide
protection against market fluctuations of insured bonds or fluctuations in the
price of the shares of the Fund. An insured municipal bond fluctuates in value
largely based on factors relating to the insurer's creditworthiness or ability
to satisfy its obligations. The Fund cannot be certain that any insurance
company will make the payments it guarantees.
16
PGIM Muni High
Income Fund
Interest
Rate Risk. The value of your
investment may go down when interest rates rise. A rise in rates tends to have a
greater impact on the prices of longer term or duration debt securities. For
example, a fixed income security with a duration of three years is expected to
decrease in value by approximately 3% if interest rates increase by 1%. This is
referred to as “duration
risk.”
When
interest rates fall, the issuers of debt obligations may prepay principal more
quickly than expected, and the Fund may be required to reinvest the proceeds at
a lower interest rate. This is referred to as “prepayment
risk.”
When interest rates rise, debt obligations may be repaid more slowly than
expected, and the value of the Fund's holdings may fall sharply. This is
referred to as “extension
risk.”
The Fund may lose money if short-term or long-term interest rates rise sharply
or in a manner not anticipated by the subadviser.
Inverse
Floaters and Secondary Inverse Floaters Risk. Inverse floaters
have particularly high market risk and may fluctuate in value more dramatically
than other debt securities when interest rates change. Inverse floaters are also
subject to credit risk, interest rate risk, illiquidity risk and tax risk.
Secondary inverse floaters are subject to the additional risks associated with
municipal asset-backed securities.
Junk
Bonds Risk. High-yield,
high-risk bonds have predominantly speculative characteristics, including
particularly high credit risk. Junk bonds tend to have lower market liquidity
than higher-rated securities. The liquidity of particular issuers or industries
within a particular investment category may shrink or disappear suddenly and
without warning. The non-investment grade bond market can experience sudden and
sharp price swings and become illiquid due to a variety of factors, including
changes in economic forecasts, stock market activity, large sustained sales by
major investors, a high profile default or a change in the market's
psychology.
Large
Shareholder and Large Scale Redemption Risk. Certain individuals, accounts,
funds (including funds affiliated with the Manager) or institutions, including
the Manager and its affiliates, may from time to time own or control a
substantial amount of the Fund’s shares. There is no requirement that these
entities maintain their investment in the Fund.
Certain of these
entities may use predetermined, nondiscretionary mathematical formulas in their
investment process that may result in large-scale asset flows into and out of
the Fund. These shareholders may also pledge or loan Fund shares (to secure
financing or otherwise), which may result in the shares becoming concentrated in
another party. There is a risk that such large shareholders or that the Fund’s
shareholders generally may redeem all or a substantial portion of their
investments in the Fund in a short period of time, which could have a
significant negative impact on the Fund’s NAV, liquidity, and brokerage costs.
Such redemptions may cause the Fund to have to sell securities at inopportune
times or prices. These transactions may adversely affect the Fund’s performance
and increase transaction costs. In addition, large redemption requests may
exceed the cash balance of the Fund and result in credit line borrowing fees
and/or overdraft charges to the Fund until the sales of portfolio securities
necessary to cover the redemption request settle. To the extent a large
shareholder in the Fund is an entity subject to domestic and/or international
regulations governing banking, insurance,
or other financial
institutions, changes in those regulations (e.g., capital requirements) or in
the shareholder’s financial status may cause or require the shareholder to
redeem its investment in the Fund when it otherwise would not choose to redeem
that investment. It is also possible that a significant redemption could result
in an increase in Fund expenses on account of being spread over a smaller asset
base, and therefore make it more difficult for the Fund to implement its
investment strategy. Large redemptions could also result in tax consequences to
shareholders. The Fund’s ability to pursue its investment objective after one or
more large scale redemptions may be impaired and, as a result, the Fund may
invest a larger portion of its assets in cash or cash equivalents.
Liquidity
Risk.
Liquidity risk is the risk that the Fund could not meet requests to redeem
shares issued by the Fund without significant dilution of remaining investors'
interests in the Fund. The Fund may invest in instruments that trade in lower
volumes and are more illiquid than other investments. If the Fund is forced to
sell these investments to pay redemption proceeds or for other reasons, the Fund
may lose money. In addition, when there is no willing buyer and investments
cannot be readily sold at the desired time or price, the Fund may have to accept
a lower price or may not be able to sell the instrument at all. An inability to
sell a portfolio position can adversely affect the Fund's value or prevent the
Fund from being able to take advantage of other investment
opportunities.
Management
Risk. The value of your
investment may decrease if judgments by the subadviser about the attractiveness,
value or market trends affecting a particular security, industry or sector or
about market movements are incorrect.
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17
Market
Disruption and Geopolitical Risks. Market disruption can be caused by
economic, financial or political events and factors, including but not limited
to, international wars or conflicts (including Russia’s military invasion of
Ukraine), geopolitical developments (including trading and tariff arrangements,
sanctions and cybersecurity attacks), instability in regions such as Asia,
Eastern Europe and the Middle East, terrorism, natural disasters and public
health epidemics (including the outbreak of COVID-19 globally).
The extent and duration of such
events and resulting market disruptions cannot be predicted, but could be
substantial and could magnify the impact of other risks to the Fund. These and
other similar events could adversely affect the U.S. and foreign financial
markets and lead to increased market volatility, reduced liquidity in the
securities markets, significant negative impacts on issuers and the markets for
certain securities and commodities and/or government intervention. They may also
cause short- or long-term economic uncertainties in the United States and
worldwide. As a result, whether or not the Fund invests in securities of issuers
located in or with significant exposure to the countries directly affected, the
value and liquidity of the Fund’s investments may be negatively impacted.
Further, due to closures of certain markets and restrictions on trading certain
securities, the value of certain securities held by the Fund could be
significantly impacted, which could lead to such securities being valued at
zero.
COVID-19 and the related
governmental and public responses have had and may continue to have an impact on
the Fund’s investments and net asset value and have led and may continue to lead
to increased market volatility and the potential for illiquidity in certain
classes of securities and sectors of the market. They have also had and may
continue to result in periods of business disruption, business closures,
inability to obtain raw materials, supplies and component parts, and reduced or
disrupted operations for the issuers in which the Fund invests. The occurrence,
reoccurrence and pendency of public health epidemics could adversely affect the
economies and financial markets either in specific countries or
worldwide.
Market
Risk.
Securities markets may be volatile and the market prices of the Fund’s
securities may decline. Securities fluctuate in price based on changes in an
issuer’s financial condition and overall market and economic conditions. If the
market prices of the securities owned by the Fund fall, the value of your
investment in the Fund will decline.
Municipal
Asset-Backed Securities Risk. Municipal asset-backed securities
bear the risk that the underlying municipal bonds will not be paid by issuers or
by credit insurers or guarantors of such instruments. Some municipal
asset-backed securities are unsecured or secured by lower-rated insurers or
guarantors and thus may involve greater risk. Municipal asset-backed securities
are subject to interest rate risk, credit risk and market risk. Municipal
asset-backed securities are particularly susceptible to prepayment and extension
risks, because prepayments on the underlying assets tend to increase when
interest rates fall and decrease when interest rates rise. When market interest
rates increase, refinancings and prepayments slow, which lengthens the effective
duration of these securities. As a result, the negative effect of the interest
rate increase on the market value of municipal asset-backed securities is
usually more pronounced than it is for other types of fixed income securities,
potentially increasing the volatility of the Fund. Conversely, when market interest rates decline,
while the value of municipal asset-backed securities may increase, the rates of
prepayment of the underlying assets tend to increase, which shortens the effective
duration of these securities.
The ability of an issuer of a
municipal asset-backed security to enforce its security interest in the
underlying assets or to otherwise recover from the underlying obligor may be
limited. Certain municipal asset-backed securities present a heightened level of
risk because, in the event of default, the liquidation value of the underlying
assets may be inadequate to pay any unpaid principal or interest.
Municipal Bonds
Risk. Municipal bonds
are subject to credit risk, market risk and interest rate risk. The Fund's
holdings, share price, yield and total return may also fluctuate in response to
municipal bond market movements. Municipal bonds are also subject to the risk
that potential future legislative changes relating to tax or the rights of
municipal bond holders, for example in connection with an insolvency, could
affect the market for and value of municipal bonds, which may adversely affect
the Fund's yield or the value of the Fund's investments in municipal bonds.
Certain municipal bonds with principal and interest payments that are made from
the revenues of a specific project or facility, and not general tax revenues,
may have increased risks. Factors affecting the project or facility, such as
local business or economic conditions, could have a significant effect on the
project's ability to make payments of
18
PGIM Muni High
Income Fund
principal and
interest on these securities. If the Fund invests a substantial amount of its
assets in issuers located in a single region, state or city, there is an
increased risk that environmental, economic, political and social conditions in
those regions will have a significant impact on the Fund's investment
performance. For example, municipal securities of a particular state are
vulnerable to events adversely affecting that state, including economic,
political and regulatory occurrences, court decisions, terrorism, public health
epidemics, social unrest and catastrophic natural disasters, such as hurricanes
or earthquakes. Many municipal bonds are also subject to prepayment risk, which
is the risk that when interest rates fall, issuers may redeem a security by
repaying it early, which may reduce the Fund's income if the proceeds are
reinvested at a lower interest rate. In addition, income from municipal bonds
could be declared taxable because of non-compliant conduct of a bond
issuer.
Municipal
Lease Obligations Risk. Municipal lease
obligations are typically not subject to the statutory and constitutional
requirements of other municipal securities, including voter approval and debt
limits. Because municipal lease obligations generally are backed by revenues
from a particular source or depend on future appropriations by municipalities
and are not obligations of their issuers, they are typically less secure than
most municipal obligations. Many municipal leases contain non-appropriation
clauses under which the municipality may elect annually not to appropriate funds
for future lease payments. Non-appropriation lease obligations are secured only
by the leased property, and disposition of the property in the event of
foreclosure could prove difficult. Municipal lease obligations may not have an
active trading market, which may make it difficult for the Fund to sell them
quickly or at an attractive price.
Puerto Rican
Municipal Securities Risk. Municipal securities of issuers
located in the Commonwealth of Puerto Rico may be affected by political, social,
environmental and economic conditions in Puerto Rico. Puerto Rico has
experienced a significant economic downturn since 2006, and continues to face
fiscal challenges, including persistent government deficits, underfunded public
pension benefit obligations, underfunded government retirement systems, sizable
debt service obligations and a high unemployment rate. Certain issuers of Puerto
Rico municipal bonds have experienced serious financial difficulties in the
past and reoccurrence of these
difficulties may impair the ability of certain Puerto Rico issuers to pay
principal or interest on their obligations. Provisions of Puerto Rican and U.S.
law, including a
federally-appointed oversight board to oversee Puerto Rican financial
operations, which limit the taxing and spending authority of Puerto Rico
governmental entities may impair the ability of Puerto Rico issuers to pay
principal and/or interest on their obligations.
These challenges
and uncertainties have been exacerbated by recent natural disasters that have
struck Puerto Rico, including successive hurricanes in 2017 and a series of
earthquakes in late 2019 and early 2020. These natural disasters have caused
significant damage to Puerto Rico’s infrastructure and may continue to cause
damage. The length of time needed to rebuild Puerto Rico’s infrastructure is
unclear, during which time Puerto Rico is likely to continue to experience an
uncertain economic state. It is unknown what impact these recent natural
disasters—or any future ones—will have on the political, social, environmental
and economic conditions in Puerto Rico.
Reference Rate
Risk. The Fund may be
exposed to financial instruments that are tied to the London Interbank Offered
Rate (“LIBOR”) to determine payment obligations, financing terms, hedging
strategies or investment value.
The United Kingdom's Financial
Conduct Authority announced a phase out of LIBOR such that after June 30, 2023,
the overnight, 1-month, 3-month, 6-month and 12-month U.S. dollar LIBOR settings
will cease to be published or will no longer be representative. All other LIBOR
settings and certain other interbank offered rates, such as the Euro Overnight
Index Average (“EONIA”), ceased to be published or representative after December
31, 2021. The Fund may have investments linked to other interbank offered rates
that may also cease to be published in the future. Various financial industry
groups have been planning for the transition away from LIBOR, but there remain
challenges to converting certain securities and transactions to a new reference
rate (e.g., the Secured Overnight Financing Rate (“SOFR”), which is intended to
replace the U.S. dollar LIBOR).
Neither the effect of the LIBOR
transition process nor its ultimate success can yet be known. The transition
process might lead to increased volatility and illiquidity in markets for
instruments whose terms currently include LIBOR as well as loan facilities used
by the Fund. While some existing LIBOR-based instruments may contemplate a
scenario where
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19
LIBOR is no longer available by
providing for an alternative rate-setting methodology, there may be significant
uncertainty regarding the effectiveness of any such alternative methodologies to
replicate LIBOR. Not all existing LIBOR-based instruments may have alternative
rate-setting provisions and there remains uncertainty regarding the willingness
and ability of issuers to add alternative rate-setting provisions in certain
existing instruments. Global regulators have advised market participants to
cease entering into new contracts using LIBOR as a reference rate, and it is
possible that investments in LIBOR-based instruments could invite regulatory
scrutiny. In addition, a liquid market for newly-issued instruments that use a
reference rate other than LIBOR still may be developing. There may also be
challenges for the Fund to enter into hedging transactions against such
newly-issued instruments until a market for such hedging transactions develops.
All of the aforementioned may adversely affect the Fund's performance or net
asset value.
Securities
Lending Risk. Securities
lending involves the risk that the borrower may fail to return the securities in
a timely manner or at all. As a result, the Fund may lose money and there may be
a delay in recovering the loaned securities. Additionally, losses could result
from the reinvestment of collateral received on loaned securities in investments
that decline in value, default, or do not perform as well as expected. The
affiliated prime money market fund in which cash collateral generally is
invested may impose liquidity fees or temporary gates on redemptions if its
weekly liquid assets fall below a designated threshold. If this were to occur,
the Fund may lose money on its investment of cash collateral in the affiliated
prime money market fund, or the Fund may not be able to redeem its investment of
cash collateral in the affiliated prime money market fund, which might cause the
Fund to liquidate other holdings in order to return the cash collateral to the
borrower upon termination of a securities loan. These events could trigger
adverse tax consequences for the Fund.
Tax
Risk.
Municipal bonds are subject to tax risk. This is the risk that federal income
tax rates may decrease, which could decrease the demand for municipal bonds, or
that a change in the law may limit or eliminate the exemption of interest on
municipal bonds from such taxes. In addition, the income from municipal bonds
could be declared taxable because of non-compliant conduct of an
issuer.
Variable
and Floating Rate Bonds Risk. Variable and
floating rate bonds are subject to credit risk, market risk and interest rate
risk. In addition, the absence of an active market for these securities could
make it difficult for the Fund to dispose of them if the issuer
defaults.
When-Issued
and Delayed-Delivery Transactions Risk. When-issued and
delayed-delivery securities involve the risk that the security the Fund buys
will lose value prior to its delivery. There also is the risk that the security
will not be issued or that the other party to the transaction will not meet its
obligation. If this occurs, the Fund may lose both the investment opportunity
for the assets it set aside to pay for the security and any gain in the
security’s price.
Zero
Coupon Municipal Bonds Risk. Zero coupon
municipal bonds generate “phantom income” for the Fund for tax purposes,
although no income is paid. These bonds are subject to the same risks as
municipal bonds but are typically subject to greater volatility and less
liquidity in adverse markets than other municipal bonds.
Please note that,
in addition to the risks discussed above, there are many other factors that may
impact the Fund’s ability to achieve its investment objective and which could
result in a loss of all or a part of your investment.
More information
about the Fund’s investment strategies and risks appears in the SAI.
20
PGIM Muni High
Income Fund
HOW THE FUND IS
MANAGED
BOARD
OF TRUSTEES
The Fund is overseen by a Board of
“Trustees” (hereafter referred to as “Trustees” or the “Board”). The Board
oversees the actions of the Manager, subadviser and distributor and decides on
general policies. The Board also oversees the Fund's officers, who conduct and
supervise the daily business operations of the Fund.
MANAGER
PGIM
Investments LLC (“PGIM Investments”)
655 Broad Street
Newark, NJ 07102-4410
655 Broad Street
Newark, NJ 07102-4410
Under a management agreement with
the Fund, PGIM Investments manages the Fund's investment operations and
administers its business affairs and is responsible for supervising the Fund's
subadviser. For the period ended August 31, 2022, the Fund paid PGIM Investments
management fees (net of waivers, as applicable) at the effective rate of 0.49%
of the Fund's average daily net assets for all share classes.
PGIM Investments and its
predecessors have served as a manager or administrator to investment companies
since 1987. As of September 30, 2022 PGIM Investments, a wholly-owned subsidiary
of Prudential, served as the investment manager to all of the Prudential U.S.
and offshore open-end investment companies, and as the manager or administrator
to closed-end investment companies, with aggregate assets of approximately
$276.9 billion.
Subject to the
supervision of the Board, PGIM Investments is responsible for conducting the
initial review of prospective subadvisers for the Fund. In evaluating a
prospective subadviser, PGIM Investments considers many factors, including the
firm's experience, investment philosophy and historical performance. Subject to
the Board’s oversight, PGIM Investments is also responsible for monitoring the
performance of the Fund's subadviser and recommending its termination and
replacement when deemed appropriate. PGIM Investments may provide a subadviser
with additional investment guidelines consistent with the Fund's investment
objective and restrictions.
PGIM Investments
and the Fund operate under an exemptive order (the “Order”) from the SEC that
generally permits PGIM Investments to enter into or amend agreements with
unaffiliated subadvisers without obtaining shareholder approval. This authority
is subject to certain conditions, including the requirement that the Board must
approve any new or amended agreements with a subadviser. Shareholders of the
Fund still have the right to terminate these agreements at any time by a vote of
the majority of the outstanding shares of the Fund. The Fund will notify
shareholders of any new subadvisers engaged or material amendments to
subadvisory agreements made pursuant to the Order. Any new subadvisory agreement
or amendment to the Fund’s management agreement or current subadvisory agreement
that directly or indirectly results in an increase in the aggregate management
fee rate payable by the Fund will be submitted to the Fund’s shareholders for
their approval. PGIM Investments does not currently intend to retain
unaffiliated subadvisers.
A discussion of the
basis for the Board's approvals of the management and subadvisory agreements is
available in the Fund's Annual Report to shareholders dated August
31.
SUBADVISER
PGIM, Inc.
(“PGIM”) is an
indirect, wholly-owned subsidiary of Prudential Financial, Inc. (“Prudential”)
that was organized in 1984. Its address is 655 Broad Street, Newark, New Jersey
07102. As of September 30, 2022, PGIM managed approximately $1.2 trillion in
assets.
PGIM Fixed
Income is the primary
public fixed income asset management unit of PGIM, with $759.3 billion in assets
under management as of September 30, 2022 and is the unit of PGIM that provides
investment advisory services to the Fund.*
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21
PGIM Fixed Income
is organized into groups specializing in different sectors of the fixed income
market: U.S. and non-U.S. government bonds, mortgage-backed and asset-backed
securities, U.S. and non-U.S. investment grade corporate bonds, high-yield
bonds, emerging markets bonds, municipal bonds, and money market
securities.
*PGIM Fixed
Income’s assets under management includes the assets under management of PGIM
Limited, an indirect wholly-owned subsidiary of PGIM.
PORTFOLIO
MANAGERS
Robert
Tipp, CFA, Jason Appleson, CFA, FRM, Lee Friedman, CFA, and John
Dittemer are jointly and
primarily responsible for the day-to-day management of the Fund.
Robert
Tipp, CFA, is a Managing
Director, Chief Investment Strategist, and Head of Global Bonds for PGIM Fixed
Income. In addition to co-managing the global multi-sector strategies, Mr. Tipp
is responsible for global rates positioning for Core Plus, Absolute Return, and
other portfolios. Mr. Tipp has worked at the Firm since 1991, where he has held
a variety of senior investment manager and strategist roles. Prior to joining
the Firm, he was a Director in the Portfolio Strategies Group at the First
Boston Corporation, where he developed, marketed, and implemented strategic
portfolio products for money managers. Before that, Mr. Tipp was a Senior Staff
Analyst at the Allstate Research & Planning Center, and managed fixed income
and equity derivative strategies at Wells Fargo Investment Advisors. He received
a BS in Business Administration and an MBA from the University of California,
Berkeley. Mr. Tipp holds the Chartered Financial Analyst (CFA)
designation.
Jason
Appleson, CFA, FRM, is a Managing
Director and Head of PGIM Fixed Income's Municipal Bond Team. Prior to joining
the Firm in 2021, Mr. Appleson served as a lead portfolio manager for PT Asset
Management. In this role, he led portfolio construction, trading, and research
for municipal bond products. Prior to PT Asset Management, Mr. Appleson worked
at the Federal Reserve Bank of New York where he was involved with developing a
systematic approach to stress testing municipal portfolios for the largest
financial institutions. Previously, he worked at AllianceBernstein as a credit
analyst, supporting the firm's $30 billion municipal fund complex. Mr. Appleson
received a BA in finance from Touro College and an MBA with high honors from the
University of Chicago's Booth School of Business. He holds the Chartered
Financial Analyst (CFA) and Financial Risk Manager (FRM)
designations.
Lee
Friedman, CFA, is a Principal and
portfolio manager for PGIM Fixed Income’s U.S. Investment Grade Corporate Bond
Team. Mr. Friedman focuses on taxable municipal bonds. Prior to assuming this
position, Mr. Friedman assisted in managing tax-exempt and taxable municipal
assets for retail funds, institutional clients, and affiliated accounts on the
Municipal Bond Team. Prior to that, he was an Associate for PGIM Fixed Income’s
Credit Research Group where he covered higher education, not-for-profits
(501c3), state and local government obligations, and transportation bonds, and
also supported the senior municipal credit analysts. Previously, Mr. Friedman
held positions in both the Firm’s Asset Liability and Risk Management Group and
PGIM Fixed Income, where he supported the attribution and forecasting processes.
Prior to joining the Firm in 2003, Mr. Friedman was an auditor at The Vanguard
Group. He received a BS in Finance with High Distinction from Pennsylvania State
University. Mr. Friedman holds the Chartered Financial Analyst (CFA)
designation.
John
Dittemer is Vice President
and Portfolio Manager for PGIM Fixed Income’s Municipal Bond Team. Mr. Dittemer
assists in managing tax-exempt and taxable municipal assets for retail funds,
institutional clients, and affiliated accounts. Previously, as a member of the
Portfolio Analysis Group, Mr. Dittemer provided analytical support to Prudential
Fixed Income's municipal bond, money market, and affiliated account teams.
Earlier, he was a team supervisor in money market operations, and a performance
reporting specialist for the affiliated accounts team. Mr. Dittemer received a
BS in Management with a concentration in Finance from Kean University, and an MS
in Management with concentration in Finance from the New Jersey Institute of
Technology.
Additional
information about portfolio manager compensation, other accounts managed, and
portfolio manager ownership of Fund securities may be found in the
SAI.
22
PGIM Muni High
Income Fund
DISTRIBUTOR
Prudential
Investment Management Services LLC (“PIMS” or the “Distributor”) distributes
each class of the Fund's shares under a Distribution Agreement with the Fund.
The Fund has Distribution and Service Plans (the “Plans”) pursuant to Rule 12b-1
under the 1940 Act, applicable to certain of the Fund's shares. Under the Plans
and the Distribution Agreement, the Distributor pays the expenses of
distributing the shares of all share classes of the Fund. The Distributor also
provides certain shareholder support services. Under the Plans, certain classes
of the Fund pay distribution and other fees to the Distributor as compensation
for its services. These fees—known as 12b-1 fees—are set forth in the “Fund Fees
and Expenses” tables.
Because these fees
are paid from the Fund's assets on an ongoing basis, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges.
DISCLOSURE
OF PORTFOLIO HOLDINGS
The Fund's policies
and procedures with respect to the disclosure of the Fund's portfolio securities
are described in the Fund's SAI and on the Fund's website at www.pgim.com/investments.
Visit our website
at www.pgim.com/investments
23
FUND
DISTRIBUTIONS AND TAX ISSUES
DISTRIBUTIONS
The Fund
distributes dividends to shareholders
out of any net investment income. For example, if the Fund owns a City XYZ bond
and the bond pays interest, the Fund will pay out a portion of this interest as
a dividend to its shareholders, assuming the Fund's income is more than its
costs and expenses. These dividends (paid out of tax-exempt interest) generally
will be exempt
from federal income taxes, as long as 50% or
more of the value of the Fund's assets at the end of each quarter is invested in
state, municipal, and other obligations, the interest on which is excluded from
gross income for federal income tax purposes. As mentioned, at least 80% of the
Fund's assets will be invested in such obligations during normal market
conditions. Dividends attributable to the interest on taxable bonds held by the
Fund, market discount on taxable and tax-exempt obligations and short-term
capital gains, however, will be subject to federal, state and local income tax
at ordinary income tax rates. Events occurring after the date of issuance of a
bond or after the Fund's acquisition of a bond may result in a determination
that interest on that bond is includible in gross income for federal income tax
purposes retroactively to its date of issuance. Such a determination may cause a
portion of prior distributions by the Fund to its shareholders to be taxable to
those shareholders in the year of receipt.
Some shareholders
may be subject to federal alternative minimum tax liability (“AMT”). Tax-exempt
interest from certain bonds is treated as an item of tax preference, and may be
attributed to shareholders. These rules could make you liable for the
AMT.
The Fund also
distributes any net realized
capital gains to
shareholders.
For your
convenience, the Fund’s distributions of dividends and net capital gains are
automatically
reinvested in the
Fund without any sales charge. If you ask us to pay the distributions in cash,
we will send you a check if your account is with Prudential Mutual Fund Services
LLC (“PMFS” or the “Transfer Agent”). Otherwise, if your account is with a
broker you will receive a credit to your account. Either way, the distributions
may be subject to income taxes. If your dividend distribution check(s) remains
uncashed for more than six months, your check(s) may be invested in additional
shares of the Fund at the next net asset value (“NAV”) calculated on the day of
the investment. For more information about automatic reinvestment and other
shareholder services, see “Additional Shareholder Services” in the next
section.
The chart below
sets forth the expected frequency of dividend and capital gains distributions to
shareholders. Various factors may impact the frequency of dividend distributions
to shareholders, including but not limited to adverse market conditions or
portfolio holding-specific events.
|
Expected
Distribution Schedule* |
|
|
Net
Investment Income |
Monthly |
|
Short-Term
Capital Gains |
Annually |
|
Long-Term
Capital Gains |
Annually |
*Under certain
circumstances, the Fund may make more than one distribution of short-term and/or
long-term capital gains during a fiscal year.
TAX
ISSUES
Investors who buy
shares of the Fund should be aware of some important tax issues. For example,
the Fund distributes dividends of net investment income and net realized capital
gains, if any, to shareholders. Dividends generally will be exempt from federal
income taxes. However, if the Fund invests in taxable obligations, it will pay
dividends that are not exempt from those income taxes.
Also, if you sell
shares of the Fund for a profit, you may have to pay capital gains taxes on the
amount of your profit, unless you hold your shares in a qualified or
tax-deferred plan or account.
The following
briefly discusses some of the important income tax issues you should be aware
of, but is not meant to be tax advice. For tax advice, please speak with your
tax adviser.
24
PGIM Muni High
Income Fund
Fund
Distributions
Fund distributions
of net capital gains are taxed differently depending on how long the Fund holds
the security. If the Fund holds a security for more than one year before selling
it, any gain is treated as long-term capital gain which
is generally taxed at rates of up to 15% or 20% for non-corporate U.S.
shareholders, depending on whether their incomes exceed certain threshold
amounts, which are adjusted annually for inflation. If the Fund holds the
security for one year or less, any gain is treated as short-term capital gain,
which is taxed at rates applicable to ordinary income, subject to a maximum tax
rate of 37%. Different rates apply to corporate shareholders.
Corporate
shareholders are generally not eligible for the dividends-received deduction in
respect of dividends paid by the Fund. In addition, dividends from the Fund will
not qualify for the preferential rates of U.S. federal income tax applicable to
certain dividends paid to non-corporate shareholders.
A U.S. shareholder
that is an individual, estate or certain type of trust is subject to a 3.8%
Medicare contribution tax on the lesser of (1) the U.S. shareholder’s “net
investment income,” including Fund distributions and net gains from the
disposition of Fund shares, and (2) the excess of the U.S. shareholder’s
modified adjusted gross income for the taxable year over $200,000 (or $250,000
for married couples filing jointly). For this purpose, net investment income
includes interest, dividends, annuities, royalties, capital gain and income from
a passive activity business or a business of trading in financial instruments or
commodities.
Form
1099
For every year the
Fund declares a dividend, you will receive a Form 1099, which reports the amount
of ordinary income distributions and long-term capital gains we distributed to
you during the prior year unless you own shares of the Fund as part of a
qualified or tax-deferred plan or account. If you do own shares of the Fund as
part of a qualified or tax-deferred plan or account, your taxes are deferred, so
you will not receive a Form 1099 annually, but instead you will receive a Form
1099 when you take any distribution from your qualified or tax-deferred plan or
account.
Fund distributions
are generally taxable to you in the calendar year in which they are received,
except when we declare certain dividends and distributions in the fourth
quarter, with a record date in such quarter, and actually pay them in January of
the following year. In such cases, the dividends and distributions are treated
as if they were paid on December 31st of the prior year.
Cost
Basis Reporting
Mutual funds must
report cost basis information to you and the IRS when you sell or exchange
shares acquired on or after January 1, 2012 in your non-retirement accounts. The
cost basis regulations do not affect retirement accounts, money market funds,
and shares acquired before January 1, 2012. The cost basis regulations also
require mutual funds to report whether a gain or loss is short-term (shares held
one year or less) or long-term (shares held more than one year) for all shares
acquired on or after January 1, 2012 that are subsequently sold or exchanged.
The Transfer Agent is not required to report cost basis information on shares
acquired before January 1, 2012. However, in most cases the Transfer Agent will
provide this information to you as a service.
Withholding
Taxes
If federal tax law
requires you to provide the Fund with your taxpayer identification number and
certifications as to your tax status and you fail to do this, or if you are
otherwise subject to backup withholding, we will withhold and pay to the U.S.
Treasury a portion of your distributions and sale proceeds, based on the backup
withholding rate.
Taxation
of Non-U.S. Shareholders
For a discussion
regarding the taxation of non-U.S. shareholders, please see the SAI and contact
your tax adviser.
If
You Purchase on or Before a Record Date
If you buy shares
of the Fund on or before the record date for a distribution (the date that
determines who receives the distribution), we will pay that distribution to you.
As explained above, the distribution may be subject to taxes. You may think
you've done well since you bought shares one day and soon thereafter received a
distribution. That is not so, because when dividends are paid out, the value of
each share of the Fund decreases by the amount of the dividend to
Visit our website
at www.pgim.com/investments
25
reflect the payout,
although this may not be apparent because the value of each share of the Fund
also will be affected by market changes, if any. However, the timing of your
purchase does mean that part of your investment may have come back to you as
taxable income.
Qualified
and Tax-Deferred Retirement Plans
Retirement plans
and accounts allow you to defer paying taxes on investment income and capital
gains. Contributions to these plans may also be tax-deductible, although
distributions from these plans generally are taxable. In the case of Roth IRA
accounts, contributions are not tax-deductible, but distributions from the plan
may be tax-free. Please contact your financial adviser for information on a
variety of PGIM Funds that are suitable for retirement plans offered by
Prudential.
IF
YOU SELL OR EXCHANGE YOUR SHARES
If you sell any
shares of the Fund for a profit, you have realized a capital gain, which is
subject to tax unless the shares are held in a qualified or tax-deferred plan or
account. As mentioned above, the maximum capital gains tax rate is up to 15% or
20% for individuals, depending on whether their incomes exceed certain threshold
amounts, which are adjusted annually for inflation.
If you sell shares
of the Fund at a loss, you may have a capital loss, which you may use to offset
capital gains you have, plus, in the case of non-corporate taxpayers, ordinary
income of up to $3,000. If you sell shares and realize a loss, you will not be
permitted to use the loss to the extent you replace the shares (including
pursuant to the reinvestment of a dividend) within a 61-day period (beginning 30
days before and ending 30 days after the sale of the shares). Under certain
circumstances, if you acquire shares of the Fund and sell or exchange your
shares within 90 days, you may not be allowed to include certain charges
incurred in acquiring the shares for purposes of calculating gain or loss
realized upon the sale or exchange of the shares.
If you exchange
your Fund shares for shares of another class of the Fund, this is generally not
a taxable event and should not result in realization of a capital gain or loss
by you. If you exchange your shares of the Fund for shares of another PGIM Fund,
this is considered a sale for tax purposes. In other words, it's a taxable
event. Therefore, if the shares you exchanged have increased in value since you
purchased them, you have capital gains, which are subject to the taxes described
above. Unless you hold your shares in a qualified or tax-deferred plan or
account, you or your financial adviser should keep track of the dates on which
you buy and sell—or exchange—Fund shares, as well as the amount of any gain or
loss on each transaction. For tax advice, please see your tax
adviser.
Automatic
Conversion of Class C Shares
The conversion of
Class C shares into Class A shares—which happens automatically approximately 8
years after purchase—is not a taxable event for federal income tax purposes. For
more information about the automatic conversion of Class C shares, see
Class
C Shares Automatically Convert to Class A Shares in How
to Buy, Sell and Exchange Fund Shares.
26
PGIM Muni High
Income Fund
HOW TO BUY, SELL
AND EXCHANGE FUND SHARES
HOW
TO BUY SHARES
In order to buy
Fund shares, simply follow the steps described below.
Opening
an Account
Shares may be
purchased through an account with the Transfer Agent, or through an account with
a financial intermediary that has an agreement with the Distributor to sell Fund
shares. In order to open an account with the Transfer Agent contact PMFS at
(800)
225-1852 or write
to:
Prudential
Mutual Fund Services LLC (“PMFS”)
P.O. Box 9658
Providence, RI 02940
P.O. Box 9658
Providence, RI 02940
PMFS will accept
purchases of shares by check or wire. We do not accept cash, money orders,
non-U.S. checks, credit card checks, payable through checks or travelers checks.
To purchase by wire, call the number above to obtain an application. After PMFS
receives your completed application, you will receive an account number. For
additional information, see the back cover page of this Prospectus. Your
purchase order must be in good order to be accepted and processed, which means
that all necessary processing requirements have been satisfied. We have the
right to reject any purchase order (including an exchange into the Fund) or
suspend or modify the Fund's sales of its shares under certain circumstances.
These circumstances include, but are not limited to, failure by you to provide
additional information requested, such as information required to verify the
source of funds used to purchase shares, your identity or the identity of any
underlying beneficial owners of your shares. Furthermore, we are required by law
to close your account if you do not provide the required identifying
information. This would result in the redemption of shares at the then-current
NAV and the proceeds would be remitted to you via check. We will attempt to
verify your identity within a reasonable time frame (e.g., 60 days), which may
change from time to time. For further information, please contact PMFS (for
shares purchased through the Transfer Agent) or your financial professional (for
shares purchased through a financial intermediary).
With certain
limited exceptions, Fund shares are only available to be sold in the United
States, U.S. Virgin Islands, Puerto Rico and Guam.
Choosing
a Share Class
The Fund offers the
following share classes. Certain classes of shares may have additional specific
eligibility or qualification requirements, which are explained
below.
|
Share
Class |
Eligibility |
|
Class
A* |
Retail
investors |
|
Class
C* |
Retail
investors |
|
Class
Z* |
Certain
group retirement plans, institutional investors and certain other
investors |
|
Class
R6 |
Certain
group retirement plans, institutional investors and certain other
investors |
*
The Fund’s Class A, Class C, and Class Z shares are generally closed to
investments by new group retirement plans. Please see “Closure
of Certain Share Classes to New Group Retirement Plans” in this section of the
Prospectus for more information.
Multiple share
classes let you choose a cost structure that meets your needs:
◾
Class A shares purchased in amounts
of less than $500,000 require you to pay a sales charge at the time of purchase,
but the operating expenses of Class A shares are lower than the operating
expenses of Class C shares. Investors who purchase $500,000 or more of Class A
shares and sell these shares within 12 months of purchase are also subject to a
contingent deferred sales charge (“CDSC”) of 1.00%, although they are not
subject to an initial sales charge. The CDSC is waived for certain retirement
and/or benefit plans.
◾
Class C shares do
not require you to pay a sales charge at the time of purchase, but do require
you to pay a CDSC of 1.00% if you sell your shares within 12 months of purchase.
The operating expenses of Class C shares are higher than the operating expenses
of Class A shares.
Visit our website
at www.pgim.com/investments
27
When choosing a
share class, you should consider the following factors:
◾
The amount of your
investment and any previous or planned future investments, which may qualify you
for reduced sales charges for Class A shares under Rights of Accumulation or a
Letter of Intent.
◾
The length of time
you expect to hold the shares and the impact of varying distribution fees. Over
time, these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges. For this reason, Class C shares are
generally appropriate only for investors who plan to hold their shares for no
more than 3 years.
◾
The different sales
charges that apply to each share class—Class A's front-end sales charge (and, in
certain instances, CDSC) vs. Class C's CDSC.
◾
Class C shares
purchased in single amounts greater than $500,000 are generally less
advantageous than purchasing Class A shares. Purchase orders for Class C shares
above this amount generally will not be accepted.
◾
If you purchase
Class Z shares through a broker acting solely as an agent on behalf of its
customers pursuant to an agreement with PIMS, the broker may charge you a
commission in an amount determined and separately disclosed to you by the
broker.
◾
Because Class
Z and Class R6 shares have lower operating expenses than Class A or Class C
shares, as applicable, you should consider whether you are eligible to purchase
such share classes.
See “How to Sell
Your Shares” for a description of the impact of CDSCs.
If your shares are
held through a financial intermediary, you should discuss with your intermediary
which share classes of the Fund are available to you and which share class may
best meet your needs. Certain financial intermediaries through which you may
purchase shares of the Fund may impose their own investment minimums, fees,
policies and procedures for purchasing, exchanging and selling Fund shares,
which are not described in this Prospectus or the SAI, and which will depend on
the policies, procedures and trading platforms of the financial intermediary.
Consult your financial intermediary about share class availability and the
intermediary’s policies, procedures and other information. The
availability of certain sales charge waivers and discounts will depend on
whether you purchase your shares directly from the Fund or through a financial
intermediary. See “Appendix A: Waivers and Discounts Available From Certain
Financial Intermediaries” for additional information. The Fund has
advised financial intermediaries of the share class features and guidelines, per
the Prospectus, and it is their responsibility to monitor and enforce these
guidelines with respect to shareholders purchasing shares through financial
intermediaries.
Share
Class Comparison. Use the following
chart to help you compare the different share classes. The discussion following
this chart will tell you whether you are entitled to a reduction or waiver of
any sales charges.
|
|
Class
A* |
Class
C* |
Class
Z* |
Class
R6 |
|
Minimum
purchase amount |
$1,000 |
$1,000 |
None |
None |
|
Minimum
amount for subsequent purchases |
$100 |
$100 |
None |
None |
|
Maximum
initial sales charge |
3.25%
of the public
offering
price |
None |
None |
None |
|
Contingent
Deferred Sales Charge (CDSC) (as a
percentage
of the lower of the original purchase
price
or the net asset value at redemption) |
1.00%
on sales of
$500,000
or more made
within
12 months of
purchase |
1.00%
on sales made
within
12 months of
purchase |
None |
None |
|
Annual
distribution and service (12b-1) fees (shown
as
a percentage of average daily net assets) |
0.25% |
1.00% |
None |
None |
Notes
to Share Class Comparison Table:
° The minimum
initial and subsequent investment requirements do not apply to
employee savings plan accounts, payroll deduction plan accounts, or when
exchanging all shares of an account to an existing account
with the same registration. The minimum initial and subsequent investment for
AIP accounts is $50 monthly (if your shares are held through
a broker or other financial intermediary, the broker or intermediary is
responsible for determining the minimum initial and subsequent investment
requirements for AIP accounts). In addition, the minimum initial and subsequent
investment requirements do not apply with respect to Class A and Class C shares
when offered at NAV on fee-based programs, mutual fund “wrap” or asset
allocation programs, mutual fund “supermarket” programs, and group retirement
plans.
°
If the value of your Class A, Class C or Class Z account with PMFS is less than
$10,000, the Fund will deduct a $15 annual account maintenance fee from your
account. The $15 annual account
maintenance fee will be assessed during the 4th calendar quarter of each year.
Any applicable CDSC on the shares redeemed to pay the $15 account maintenance
fee will be waived. The $15 account maintenance fee will not be charged on: (i)
accounts during the first six months from inception of the account, (ii)
accounts which are authorized for electronic delivery of account statements,
transaction confirmations, prospectuses and fund shareholder reports, (iii)
omnibus accounts or accounts for which a broker or other financial
28
PGIM Muni High
Income Fund
intermediary
is responsible for recordkeeping, (iv) institutional accounts, (v) group
retirement plans, (vi) AIP accounts or employee savings plan accounts, (vii)
accounts with the same registration
associated with multiple share classes within the Fund, provided that the
aggregate value of share classes with the same registration within the Fund is
$10,000 or more, or (viii) clients with assets of $50,000 or more across the
PGIM family of mutual funds. For more information, see “Purchase, Redemption and
Pricing of Fund Shares—Account Maintenance Fee” in the SAI.
° For more information about the
CDSC and how it is calculated, see “How to Sell Your Shares - Contingent
Deferred Sales Charge (“CDSC”).“
°Investors who
purchase $500,000 or more of Class A shares and sell these shares within 12 months
of purchase are subject to a CDSC of 1.00%, although they are not subject to an
initial sales charge. The CDSC is waived for certain retirement and/or benefit
plans.
°
Distribution and service (12b-1) fees are paid from the Fund's assets on a
continuous basis. Over time, the fees will increase the cost of your investment
and may cost you more than paying other
types of sales charges. The service fee for Class A and Class C shares is 0.25%.
The distribution fee is limited to 0.25% (including the 0.25% service fee) for
Class A shares, and 1.00% (including the 0.25% service fee) for Class C
shares.
*
The Fund’s Class A, Class C and Class Z shares are generally closed to
investments by new group retirement plans. Please see “Closure of
Certain Share Classes to New Group Retirement Plans” in this section of the
Prospectus for more information.
Closure
of Certain Share Classes to New Group Retirement Plans
Effective June 1,
2018 (the “Effective Date”), the Fund’s Class A, Class C, Class R and Class Z
shares, as applicable, were closed to investments by new group retirement plans,
except as discussed below. Existing group retirement plans as of the Effective
Date may keep their investments in their current share class and may continue to
make additional purchases or exchanges in the Fund. As of the Effective Date,
all new group retirement plans wishing to add the Fund as a new addition to the
plan generally will be into one of the available Class R6 shares, Class R4
shares, or Class R2 shares of the Fund, as applicable. A short-term investment
in a PGIM affiliated money market fund shall not be deemed a new group
retirement plan investment for purposes of this policy.
In addition, on the
Effective Date, the Class R shares of any fund were closed to all new investors,
except as discussed below. Due to the closing of the Class R shares to new
investors, effective on the Effective Date new IRA investors may only purchase
Class A, Class C, Class Z or Class R6 shares of the Fund, as applicable, subject
to share class eligibility. Following the Effective Date, no Class R shares may
be purchased or acquired by any new Class R shareholder, except as discussed
below.
|
|
Class
A |
Class
C |
Class
Z |
Class
R |
|
Existing
Investors
(Group Retirement Plans,
IRAs,
and all other investors) |
No
Change |
No
Change |
No
Change |
No
Change |
|
New
Group Retirement Plans |
Closed
to group retirement plans wishing to add the share classes as new
additions to plan menus on June 1, 2018,
subject
to certain exceptions below | |||
|
New
IRAs |
No
Change |
No
Change |
No
Change |
Closed
to all new
investors
on June 1, 2018,
subject
to certain
exceptions
below |
|
All
Other New Investors |
No
Change |
No
Change |
No
Change | |
However, the
following new investors may continue to purchase Class A, Class C, Class R and
Class Z shares of the Fund, as applicable:
◾
Eligible group
retirement plans that are exercising their one-time 90-day repurchase privilege
in the Fund will be permitted to purchase such share classes.
◾
Plan participants
in a group retirement plan that offers Class A, Class C, Class R or Class Z
shares of the Fund, as applicable, as of the Effective Date will be permitted to
purchase such share classes of the Fund, even if the plan participant did not
own shares of that class of the Fund as of the Effective
Date.
◾
Certain new group
retirement plans will be permitted to offer such share classes of the Fund after
the Effective Date, provided that the plan or its financial intermediary or
other agent
has or
is actively negotiating a contractual agreement with the Fund’s distributor or
service provider to offer such share classes of the Fund prior to or on the
Effective Date.
◾
New group
retirement plans that combine with, replace or are otherwise affiliated with a
current plan that invests in such share classes prior to or on the Effective
Date will be permitted to purchase such share classes.
◾
The Fund also
reserves the right to refuse any purchase order that might disrupt management of
the Fund or to otherwise modify the closure policy at any time on a case-by-case
basis.
◾
Shareholders owning
Class C shares may continue to hold their Class C shares until the shares
automatically convert to Class A shares under the conversion schedule, or until
the shareholder redeems their Class C shares.
Reducing
or Waiving Class A's and Class C’s Sales Charges
The following
describes the different ways investors can reduce or avoid paying Class A's
sales charge.
Visit our website
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29
Increase
the Amount of Your Investment. You can reduce
Class A's sales charge by increasing the amount of your investment. The table
below shows how the sales charge decreases as the amount of your investment
increases:
|
Amount
of Purchase |
Sales
Charge as a % of
Offering
Price* |
Sales
Charge as a % of
Amount
Invested* |
Dealer
Reallowance*** |
|
Less
than $100,000 |
3.25% |
3.36% |
3.00% |
|
$100,000
to $249,999 |
3.00% |
3.09% |
2.75% |
|
$250,000
to $499,999 |
2.25% |
2.30% |
2.25% |
|
$500,000
to $4,999,999** |
None |
None |
1.00% |
|
$5,000,000
to $9,999,999** |
None |
None |
0.50% |
|
$10,000,000
and over** |
None |
None |
0.25% |
* Due to rounding
in the calculation of the offering price and the number of shares purchased, the
actual sales charge you pay may be
more or less than the percentages
shown above.
** If you invest $500,000 or more, you can buy only Class A shares, unless you qualify to buy other share classes. If you purchase $500,000 or more of Class A shares and sell these shares within 12 months of purchase, you will be subject to a CDSC of 1.00%, although you will not be subject to an initial sales charge. The CDSC is waived for certain retirement and/or benefit plans.
*** The Dealer Reallowance is the amount that is paid by the Fund’s distributor to the financial intermediary responsible for the sale of the Fund’s shares. For more information, please see “How Financial Intermediaries are Compensated for Selling Fund Shares” in this section of the Prospectus.
** If you invest $500,000 or more, you can buy only Class A shares, unless you qualify to buy other share classes. If you purchase $500,000 or more of Class A shares and sell these shares within 12 months of purchase, you will be subject to a CDSC of 1.00%, although you will not be subject to an initial sales charge. The CDSC is waived for certain retirement and/or benefit plans.
*** The Dealer Reallowance is the amount that is paid by the Fund’s distributor to the financial intermediary responsible for the sale of the Fund’s shares. For more information, please see “How Financial Intermediaries are Compensated for Selling Fund Shares” in this section of the Prospectus.
To satisfy the
purchase amounts above, you can:
◾
Use your
Rights
of Accumulation, which allow you
or an eligible group of related investors to combine the value of a new purchase
of Class A shares of any PGIM Fund with (1) the current value of Class A and
Class C, and any other PGIM Fund share class (when used in retail brokerage or
advisory programs) you or the eligible group of related investors already own,
(2) the value of money market shares (other than Direct Purchase money market
shares) you or an eligible group of related investors have received for shares
of other PGIM Funds in an exchange transaction, and (3) the value of the shares
you or an eligible group of related investors are purchasing;
or
◾
Sign a Letter
of Intent, stating in
writing that you or an eligible group of related investors will purchase a
certain amount of shares in the Fund and other PGIM Funds within 13
months.
◾
Purchases made
prior to the effective date of the Letter of Intent will be applied toward the
satisfaction of the Letter of Intent to determine the level of sales charge that
will be paid pursuant to the Letter of Intent, but will not result in any
reduction in the amount of any previously paid sales charge.
An “eligible group
of related investors” includes any combination of the following:
◾
All accounts held
in your name (alone or with other account holders) and taxpayer identification
number (“TIN”);
◾
Accounts held in
your spouse's name (alone or with other account holders) and TIN (see definition
of spouse below);
◾
Accounts for your
children or your spouse's children, including children for whom you and/or your
spouse are legal guardian(s) (e.g., UGMAs and UTMAs);
◾
Accounts in the
name and TINs of your parents;
◾
Trusts with you,
your spouse, your children, your spouse's children and/or your parents as the
beneficiaries;
◾
With limited
exclusions, accounts with the same address (exclusions include, but are not
limited to, addresses for brokerage firms and other intermediaries and Post
Office boxes); and
◾
Accounts held in
the name of a company controlled by you (a person, entity or group that holds
25% or more of the outstanding voting securities of a company will be deemed to
control the company, and a partnership will be deemed to be controlled by each
of its general partners), including employee benefit plans of the company where
the accounts are held in the plan's TIN.
A “spouse” is
defined in this Prospectus as follows:
◾
The person to whom
you are legally married. We also consider your spouse to include the
following:
◾
An individual of
the same gender with whom you have been joined in a civil union, or legal
contract similar to marriage;
◾
A domestic partner,
who is an individual (including one of the same gender) with whom you have
shared a primary residence for at least six months, in a relationship as a
couple where you, your domestic partner or both provide for the personal or
financial welfare of the other without a fee, to whom you are not related by
blood; or
30
PGIM Muni High
Income Fund
◾
An individual with
whom you have a common law marriage, which is a marriage in a state where such
marriages are recognized between a man and a woman arising from the fact that
the two live together and hold themselves out as being
married.
The value of shares
held by you or an eligible group of related investors will be determined as
follows:
◾
for Class A shares
and any other share class for which a sales charge is paid, the value of
existing shares is determined by the maximum offering price (NAV plus maximum
sales charge); and
◾
for all other share
classes, the value of existing shares is determined by the
NAV.
If your shares are
held directly by the Transfer Agent, and you believe you qualify for a reduction
or waiver of Class A’s or Class C's sales charges, you must notify the Transfer
Agent at the time of the qualifying share purchase in order to receive the
applicable reduction or waiver. If your shares are held through a broker or
other financial intermediary, and you believe you qualify for a reduction or
waiver of Class A’s or Class C's sales charges, you must notify your broker or
intermediary at the time of the qualifying purchase in order to receive the
applicable reduction or waiver. Shares held through a broker or other financial
intermediary will not be systematically aggregated with shares held directly by
the Transfer Agent for purposes of receiving a reduction or waiver of Class A’s
or Class C's sales charges. The reduced or waived sales charge will be granted
subject to confirmation of account holdings.
If your shares are
held directly by the Transfer Agent, you must identify the eligible group of
related investors. Although the Transfer Agent does not require any specific
form of documentation in order to establish your eligibility to receive a waiver
or reduction of Class A’s or Class C's sales charges, you may be required to
provide appropriate documentation if the Transfer Agent is unable to establish
your eligibility.
If your shares are
held through a financial intermediary, the financial intermediary is responsible
for determining the specific documentation, if any, that you may need in order
to establish your eligibility to receive a waiver or reduction of Class A’s or
Class C's sales charges. Your financial intermediary is also responsible for
notifying the Transfer Agent if your share purchase qualifies for a reduction or
waiver of Class A’s or Class C's sales charges.
Purchases
of $500,000 or more. If you purchase
$500,000 or more of Class A shares, you will not be subject to an initial sales
charge, although a CDSC may apply, as previously noted.
Mutual
Fund Programs. The initial sales
charge on Class A shares will be waived for participants in any fee-based
program or trust program sponsored by Prudential or an affiliate that includes
the Fund as an available option. The initial sales charge will also be waived
for clients of financial intermediaries in programs that are sponsored by or
available through financial intermediaries that offer Class A shares without an
initial sales charge, relating to:
◾
Mutual fund “wrap”
or asset allocation programs, where the sponsor places fund trades, links its
clients' accounts to a master account in the sponsor's name and charges its
clients a management, consulting or other fee for its services;
or
◾
Mutual fund
“supermarket” programs, where the sponsor links its clients' accounts to a
master account in the sponsor's name and the sponsor charges a fee for its
services.
Financial
intermediaries sponsoring these mutual fund programs may offer their clients
more than one class of shares in the Fund in connection with different pricing
options for their programs. Investors should consider carefully any separate
transaction and other fees charged by these programs in connection with
investing in each available share class before selecting a share
class.
Group
Retirement Plans.
Class A’s and Class C’s sales charges will be waived for group retirement plans
(including defined contribution plans, defined benefit plans and deferred
compensation plans) available through a retirement plan recordkeeper or third
party administrator. Investors in group retirement plans should contact their
financial intermediary with any questions regarding availability of Class A and
Class C shares at net asset value.
Other
Types of Investors. Certain other
types of investors may purchase Class A shares without paying the initial sales
charge, including:
Visit our website
at www.pgim.com/investments
31
◾
Certain directors
or trustees, officers, current employees (including their spouses, children and
parents) and former employees (including their spouses, children and parents) of
Prudential and its affiliates, the PGIM Funds, and the subadvisers of the PGIM
Funds; former employees must have an existing investment in the
Fund;
◾
Persons who have
retired directly from active service with Prudential or one of its
subsidiaries;
◾
Registered representatives and
employees of broker-dealers (including their spouses, children and parents) that
offer Class A shares; and
◾
Clients of
financial intermediaries, who (i) offer Class A shares through a no-load network
or platform, (ii) charge clients an ongoing fee for advisory, investment,
consulting or similar services, or (iii) offer self-directed brokerage accounts
or other similar types of accounts that may or may not charge transaction fees
to customers.
To qualify for a
waiver of the Class A or Class C sales charges at the time of purchase
(including exchange of share classes within the Fund), you must notify the
Transfer Agent, or the Distributor must be notified by the financial
intermediary facilitating the purchase, that the transaction qualifies for a
waiver of the Class A or Class C sales charges. The waiver will be granted
subject to confirmation of your account holdings.
Additional
Information About Reducing or Waiving Class A’s and Class C's Sales
Charges. The Fund also
makes available free of charge, on the Fund's website, in a clear and prominent
format, information relating to the Fund's Class A and Class C sales charges,
and the different ways that investors can reduce or avoid paying the initial
sales charge. The Fund's website includes hyperlinks that facilitate access to
this information.
You may need to
provide your financial intermediary through which you hold Fund shares with the
information necessary to take full advantage of reduced or waived Class A or
Class C sales charges.
The Distributor may
reallow the Class A sales charge to dealers.
Class
C Shares Automatically Convert to Class A Shares
Class C shares will
be eligible for automatic conversion into Class A shares on a monthly basis
approximately eight years after the original date of purchase. Conversion will
take place based on the relative NAV of the two classes, without the imposition
of any sales load, fee or other charge. All such automatic conversions of Class
C shares will constitute tax-free exchanges for federal income tax purposes. See
the table titled “Annual Fund Operating Expenses”
in the
section of the Fund’s Prospectus titled “Fund Summary – Fund Fees and Expenses”
for the annual fund operating expenses for Class A and Class C
shares.
For shareholders
investing in Class C shares through retirement plans or omnibus accounts, and in
certain other instances, the Fund and its agents may not have transparency into
how long a shareholder has held Class C shares for purposes of determining
whether such Class C shares are eligible for automatic conversion to Class A
shares, and the relevant financial intermediary may not have the ability to
track purchases in order to credit individual shareholders’ holding periods. In
these circumstances, the Fund will not be able to automatically convert Class C
shares to Class A shares as described above. In order to determine eligibility
for conversion in these circumstances, it is the responsibility of the financial
intermediary to notify the Fund that the shareholder is eligible for the
conversion of Class C shares to Class A shares, and the financial intermediary
may be required to maintain and provide the Fund with records that substantiate
the holding period of Class C shares. It is the financial intermediary’s (and
not the Fund’s) responsibility to keep records of transactions made in accounts
it holds and to ensure that the shareholder is credited with the proper holding
period based on such records or those provided to the financial intermediary by
the shareholder. Please consult with your financial intermediary for the
applicability of this conversion feature to your shares.
A financial
intermediary may sponsor and/or control accounts, programs or platforms that
impose a different conversion schedule or different eligibility requirements for
the exchange of Class C shares for Class A shares (see Appendix
A: Waivers and Discounts Available From Certain Financial
Intermediaries of the
Prospectus). Please consult with your financial intermediary if you have any
questions regarding your shares’ conversion from Class C shares to Class A
shares.
32
PGIM Muni High
Income Fund
Qualifying
for Class Z Shares
Institutional
Investors. Various
institutional investors may purchase Class Z shares, including corporations,
banks, governmental entities, municipalities, hospitals, insurance companies and
IRS Section 501 entities, such as foundations and endowments. Institutional
investors are responsible for indicating their eligibility to purchase Class Z
shares at the time of purchase. Certain financial intermediaries may require
that investments by their institutional investor clients in Class Z shares be
placed directly with the Fund's Transfer Agent. Please contact the Transfer
Agent at (800) 225-1852 for further details.
Mutual
Fund Programs. Class Z shares can
be purchased by participants in any fee-based program or trust program sponsored
by Prudential or an affiliate that includes the Fund as an available option.
Class Z shares also can be purchased by investors in certain programs sponsored
by financial intermediaries who offer Class Z shares of the Fund, or whose
programs are available through financial intermediaries that offer Class Z
shares of the Fund, for:
◾
Mutual fund “wrap”
or asset allocation programs where the sponsor places fund trades, links its
clients' accounts to a master account in the sponsor's name and charges its
clients a management, consulting or other fee for its
services;
◾
Mutual fund
“supermarket” programs where the sponsor links its clients' accounts to a master
account in the sponsor's name and the sponsor charges a fee for its services;
or
◾
Fee- or
commission-based retail brokerage programs of certain financial intermediaries
that offer Class Z shares through such programs and that have agreements with
PIMS to offer such shares when acting solely on an agency basis for their
customers for the purchase or sale of such shares. If you transact in Class Z
shares of the Fund through one of these programs, you may be required to pay a
commission and/or other forms of compensation to the broker or financial
intermediary for effecting such transaction. Because the Fund is not a party to
any commission arrangement between you and your broker, any transactions in
Class Z shares will be made by the Fund at net asset value (before imposition of
the commission). Any such fee is paid by you, not by the Fund, and the
imposition of any such fee or commission by your broker or financial
intermediary does not impact the net asset value for such Fund shares. Shares of
the Fund are available in other share classes that have different fees and
expenses.
Financial
intermediaries sponsoring these mutual fund programs may offer their clients
more than one class of shares in the Fund in connection with different pricing
options for their programs. Investors should consider carefully any separate
transaction and other fees charged by these programs in connection with
investing in a share class offered by the program before selecting a share
class.
Other
Types of Investors. Class Z shares
also can be purchased by any of the following:
◾
Certain
participants in the MEDLEY Program (group variable annuity contracts) sponsored
by Prudential for whom Class Z shares of the PGIM Funds are an available
option;
◾
Current and former
Directors/Trustees of mutual funds, closed-end funds and ETFs managed by PGIM
Investments or any other affiliate of Prudential;
◾
Current and former
employees (including their spouses, children and parents) of Prudential and its
affiliates; former employees must have an existing investment in the
Fund;
◾
Prudential
(including any program or account sponsored by Prudential or an affiliate that
includes the Fund as an available option);
◾
PGIM Funds,
including PGIM funds-of-funds;
◾
Qualified state
tuition programs (529 plans); and
◾
Investors working
with fee-based consultants for investment selection and
allocations.
Qualifying
for Class R6 Shares
Group
Retirement Plans.
Group retirement plans (including defined contribution plans, defined benefit
plans and deferred compensation plans) available through a retirement plan
recordkeeper or third party administrator may purchase Class R6 shares.
Investors in group retirement plans should contact their financial intermediary
with any questions regarding availability of Class R6 shares.
Visit our website
at www.pgim.com/investments
33
Institutional
Investors. Various
institutional investors may purchase Class R6 shares, including, but not limited
to, corporations, governmental entities, municipalities, hospitals, insurance
companies and IRS Section 501 entities, such as foundations and endowments and
other institutional investors. Institutional investors are responsible for
indicating their eligibility to purchase Class R6 shares at the time of
purchase.
Other
Types of Investors. Class R6 shares may
also be purchased by Prudential, certain programs or accounts sponsored by
Prudential, and PGIM Funds, including PGIM funds-of-funds.
Class R6 shares may
only be purchased from financial intermediaries who offer such
shares.
Class R6 shares are
offered to eligible investors as described in this Prospectus. Neither the Fund
nor its affiliates shall make or pay fees associated with or similar to
sub-accounting, networking, revenue sharing, or certain administrative fees with
respect to Class R6 shares.
How
Financial Intermediaries are Compensated for Selling Fund Shares
The PGIM Funds are
distributed by Prudential Investment Management Services LLC (the
“Distributor”), a broker-dealer that is licensed to sell securities. The
Distributor generally does not sell shares of the PGIM Funds directly to the
public, but instead markets and sells the PGIM Funds through other
broker-dealers, 401(k) providers, retirement plan administrators, and other
financial intermediaries. Each PGIM Fund is managed by the Manager.
Only persons
licensed with the Financial Industry Regulatory Authority, Inc. (“FINRA”), as a
registered representative (often referred to as a broker or financial adviser)
and associated with a specific financial services firm may sell shares of a
mutual fund to you, or to a retirement plan in which you
participate.
Rule
12b-1 Fees & Sales Charges. The Distributor
has agreements in place with financial intermediaries defining how much each
firm will be paid for the sale of a particular mutual fund from front-end sales
charges, if any, paid by Fund shareholders and from fees paid to the Distributor
by the Fund pursuant to Rule 12b-1 under the 1940 Act (“Rule 12b-1”). These
financial intermediaries then pay their registered representatives who sold you
the Fund some or all of what they received from the Distributor. The registered
representatives may receive a payment when the sale is made and can, in some
cases, continue to receive ongoing payments while you are invested in the Fund.
The Distributor may change at any time, without prior notice, the amount of Rule
12b-1 fees that it pays (when the sale is made and/or any ongoing payments) to
financial intermediaries and registered representatives so that the Distributor
may retain all or a portion of such fees.
“Revenue
Sharing” Payments. In addition to the
compensation received by financial intermediaries as described above, the
Manager or certain of its affiliates (but not the Distributor) may make
additional payments (which are often referred to as “revenue sharing” payments)
to the financial intermediaries from the Manager's or certain affiliates' own
resources, including from the profits derived from management fees or other fees
received from the Fund, without additional direct or indirect cost to the Fund
or its shareholders, provided that no such additional payments to financial
intermediaries are made with respect to the Fund’s Class R6 shares. Revenue
sharing payments are in addition to the front-end sales charges paid by Fund
shareholders or fees paid pursuant to plans adopted in accordance with Rule
12b-1. The Manager or certain of its affiliates may revise the terms of any
existing revenue sharing arrangement, and may enter into additional revenue
sharing arrangements with other financial intermediaries in the
future.
Revenue sharing
arrangements are intended to foster the sale of Fund shares and/or to compensate
financial intermediaries for assisting in marketing or promotional activities in
connection with the sale of Fund shares. In exchange for revenue sharing
payments, the Fund generally expects to receive the opportunity for the Fund to
be sold through the financial intermediaries' sales force or access to
third-party platforms or other marketing programs, including but not limited to
mutual fund “supermarket” platforms or other sales programs. To the extent that
financial intermediaries receiving revenue sharing payments sell more shares of
the Fund, the Manager and Distributor benefit from the increase in Fund assets
as a result of the management and distribution fees they receive from the Fund,
34
PGIM Muni High
Income Fund
respectively.
Increased sales of Fund shares also may benefit shareholders, since an increase
in Fund assets may allow the Fund to expand its investment opportunities, and
increased Fund assets may result in reduced Fund operating
expenses.
From time to time
the Manager or an affiliate of the Fund (and not the Fund itself) may pay
certain administrative fees in order to make the Fund available to shareholders.
Such fees are not included in, and are paid separate and apart from, any revenue
sharing payments.
Revenue sharing
payments, as well as the other types of payments described above, may provide an
incentive for financial intermediaries and their registered representatives to
recommend or sell shares of the Fund to you and in doing so may create conflicts
of interest between the firms' financial interests and their duties to
customers.
If your Fund shares
are purchased through a retirement plan, the Manager or certain of its
affiliates (but not the Distributor) may also make revenue sharing payments to
the plan's recordkeeper or an affiliate, which generally is not a registered
broker-dealer.
It is likely that
financial intermediaries that execute portfolio transactions for the Fund will
include those firms with which the Manager and/or certain of its affiliates have
entered into revenue sharing arrangements. Neither the Manager nor any
subadviser may consider sales of Fund shares as a factor in the selection of
broker-dealers to execute portfolio transactions for the Fund. The Manager and
certain of its affiliates will not use Fund brokerage as any part of revenue
sharing payments to financial intermediaries.
Revenue sharing
payments are usually calculated based on a percentage of Fund sales and/or Fund
assets attributable to a particular financial services firm. Payments may also
be based on other criteria or factors, for example, a fee per each transaction.
Specific payment formulas are negotiated based on a number of factors,
including, but not limited to, reputation in the industry, ability to attract
and retain assets, target markets, customer relationships and scope and quality
of services provided. The Manager and/or certain of its affiliates make such
payments to financial intermediaries in amounts that generally range from 0.02%
up to 0.20% of Fund assets serviced and maintained by the financial
intermediaries or from 0.10% to 0.25% of sales of Fund shares attributable to
the firm. In addition, the Manager and/or certain of its affiliates may pay flat
fees on a one-time or irregular basis for the initial set-up of the Fund on a
financial services intermediary’s systems, participation or attendance at a
financial services firm's meeting, or for other reasons. These amounts are
subject to change. In addition, the costs associated with visiting the financial
intermediaries to make presentations, and/or train and educate the personnel of
the financial intermediaries, may be paid by the Manager and/or certain of its
affiliates, subject to applicable FINRA regulations.
Please contact the
registered representative (or his or her firm) who sold shares of the Fund to
you for details about any payments the financial intermediary may receive from
the Manager and/or certain of its affiliates. You should review your financial
intermediary’s disclosure and/or talk to your financial intermediary to obtain
more information on how this compensation may have influenced your financial
intermediary’s recommendation of the Fund. Additional information regarding
these revenue sharing payments is included in the SAI which is available to you
at no additional charge.
Other
Payments Received by Financial Intermediaries
Administrative,
Sub-Accounting and Networking Fees. In addition to,
rather than in lieu of, the fees that the Fund may pay to financial
intermediaries as described above, and the fees the Fund pays to the Transfer
Agent, the Transfer Agent or its affiliates may enter into additional agreements
on behalf of the Fund with financial intermediaries pursuant to which the Fund
will pay financial intermediaries for certain administrative, sub-accounting and
networking services, provided that no such additional payments to financial
intermediaries are made with respect to the Fund’s Class R6 shares. These
services include maintenance of shareholder accounts by the firms, such as
recordkeeping and other activities that otherwise would be performed by the
Transfer Agent. Sub-accounting services encompass activities that reduce the
burden of recordkeeping to the Fund. Administrative fees are paid to a firm that
undertakes, for example, shareholder communications on behalf of the Fund.
Networking services are services undertaken to support the electronic
transmission of shareholder purchase and redemption orders through the National
Securities Clearing Corporation (“NSCC”).
Visit our website
at www.pgim.com/investments
35
These payments, as
discussed above, are paid out of Fund assets and generally based on either (1) a
percentage of the average daily net assets of Fund shareholders serviced by a
financial intermediary or (2) a fixed dollar amount for each account serviced by
a financial services firm. From time to time, the Manager or certain of its
affiliates (but not the Distributor) also may pay a portion of the fees for the
services to the financial intermediaries at their own expense and out of their
own resources.
In addition, the
Fund reimburses the Distributor for NSCC fees that are invoiced to the
Distributor as the party to the Agreement with NSCC for the administrative
services provided by NSCC to the Fund and its shareholders. These administrative
services provided by NSCC to the Fund and its shareholders include transaction
processing and settlement through Fund/SERV, electronic networking services to
support the transmission of shareholder purchase and redemption orders to and
from financial intermediaries, and related recordkeeping provided by NSCC to the
Fund and its shareholders. These payments are generally based on a transaction
fee rate for certain administrative services plus a fee for other administrative
services.
Anti-Money
Laundering
In accordance with
federal law, the Fund has adopted policies designed to deter money laundering.
Under the policies, the Fund will not knowingly engage in financial transactions
that involve proceeds from unlawful activity or support terrorist activities,
and shall file government reports, including those concerning suspicious
activities, as required by applicable law. The Fund will seek to confirm the
identity of potential shareholders to include both individuals and entities
through documentary and non-documentary methods. Non-documentary methods may
include verification of name, address, date of birth and tax identification
number with selected credit bureaus. The Fund's Anti-Money Laundering Compliance
Officer oversees the Fund's anti-money laundering policies.
Understanding
the Price You'll Pay
The price you pay
for each share of the Fund is based on the share value. The share value of a
mutual fund—known as the net
asset value or NAV—is determined by a
simple calculation: it's the total value of the Fund (assets minus liabilities)
divided by the total number of shares outstanding. For example, if the value of
the investments held by Fund XYZ (minus its liabilities) is $1,000 and there are
100 shares of Fund XYZ owned by shareholders, the value of one share of the
Fund—or the NAV—is $10 ($1,000 divided by 100).
Mutual
Fund Shares
The NAV of mutual
fund shares changes every day because the value of a fund's portfolio changes
constantly. For example, if Fund XYZ holds ACME Corp. bonds in its portfolio and
the price of ACME bonds goes up, while the value of the Fund's other holdings
remains the same and expenses don't change, the NAV of Fund XYZ will
increase.
The Fund's NAV will be determined
every day on which the Fund is open as of the close of regular trading on the
New York Stock Exchange (“NYSE”) (generally, 4:00 p.m. Eastern Time). The Fund's
portfolio securities are valued based upon market quotations or, if market
quotations are not readily available, at fair value as determined in good faith
by the Manager, as the Board's valuation designee. In this capacity, the Manager has adopted pricing
methodologies for determining the fair value of certain types of securities and
other assets held by the Fund that do not have quoted market prices, including
the use of other pricing sources, such as bid prices supplied by a principal
market maker and evaluated prices supplied by pricing vendors that employ
analytic methodologies that take into account the prices of similar securities
and other market factors.
If the Fund determines that a
market quotation for a security is not reliable based on, among other things,
events or market conditions that occur with respect to one or more securities
held by the Fund or the market as a whole, after the quotation is derived or
after the closing of the primary market on which the security is traded, but
before the time that the Fund's NAV is determined, the Fund may use “fair value
pricing,” which is implemented by a valuation committee (“Valuation Committee”)
consisting of representatives of the Manager. The subadviser often provides
36
PGIM Muni High
Income Fund
relevant information for the
Valuation Committee meeting. Non-U.S. securities markets are open for trading on
weekends and other days when the Fund does not price shares. Therefore, the
value of the Fund’s shares may change on days when you will not be able to
purchase or redeem the Fund’s shares.
Investments in
open-end non-exchange-traded mutual funds will be valued at their NAV as
determined as of the close of the NYSE on the date of valuation, which will
reflect the mutual fund’s fair valuation procedures.
Different valuation
methods may result in differing values for the same security. The fair value of
a portfolio security that the Fund uses to determine its NAV may differ from the
security's quoted or published price. If the Fund needs to implement fair value
pricing after the NAV publishing deadline but before shares of the Fund are
processed, the NAV you receive or pay may differ from the published NAV price.
The prospectuses of any other mutual funds in which the Fund invests will
explain each fund’s procedures and policies with respect to the use of fair
value pricing.
Fair value pricing procedures are
designed to result in prices for the Fund's securities and its NAV that are
reasonable in light of the circumstances which make or have made market
quotations unavailable or unreliable, and may have the effect of reducing
arbitrage opportunities available to short-term traders. There is no assurance,
however, that fair value pricing will accurately reflect the market value of a
security or that it will prevent dilution of the Fund's NAV by short-term
traders.
What
Price Will You Pay for Shares of the Fund? For Class A
shares, you'll pay the public offering price, which is the NAV next determined
after we receive your order to purchase, plus an initial sales charge (unless
you're entitled to a waiver). For all other share classes, you will pay the NAV
next determined after we receive your order to purchase (remember, there are no
up-front sales charges for these share classes). Your broker may charge you a
separate or additional fee for purchases of shares. Unless regular trading on
the NYSE closes before 4:00 p.m. Eastern Time, or later than 4:00 p.m. Eastern
Time, your order to purchase must be received by 4:00 p.m. Eastern Time in order
to receive that day's NAV. In the event that regular trading on the NYSE closes
before 4:00 p.m. Eastern Time, you will receive the following day's NAV if your
order to purchase is received after the close of regular trading on the NYSE.
The Fund will not treat an intraday unscheduled disruption in NYSE trading as a
closure of the NYSE and will price its shares as of 4:00 p.m. Eastern Time, if
the particular disruption directly affects only the NYSE. We deem an order
received when it is received by the Transfer Agent at its processing center. If
you submit your order through a broker or other financial intermediary, it may
be deemed received when received by the broker or financial
intermediary.
Each business day,
the Fund's current NAV per share is made available at
www.pgim.com/investments/mutual-funds/prices.
Additional
Shareholder Services
As a Fund
shareholder, you can take advantage of the following services and
privileges:
Automatic
Reinvestment. As we explained in
the “Fund Distributions and Tax Issues” section, the Fund pays out—or
distributes—its net investment income and net capital gains to all shareholders.
For your convenience, we will automatically reinvest your distributions in the
Fund at NAV, without any sales charge. If you want your distributions paid in
cash, you can indicate this preference on your application, or by notifying your
broker or the Transfer Agent in writing (at the address below) at least five
business days before the date we determine who receives dividends. For accounts
held at the Transfer Agent (PMFS), distributions of $10.00 or less on
non-retirement accounts will not be paid out in cash, but will be automatically
reinvested into your account.
Prudential
Mutual Fund Services LLC
P.O. Box 9658
Providence, RI 02940
P.O. Box 9658
Providence, RI 02940
Automatic
Investment Plan (“AIP”). You can make
regular purchases of the Fund by having a fixed amount of money automatically
withdrawn from your bank or brokerage account at specified intervals. The
minimum for subsequent investments through newly-established AIP accounts must
be at least $50 monthly.
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37
Retirement
Plan Services. Prudential offers
a wide variety of retirement plans for individuals and institutions, including
large and small businesses. For information on IRAs, including Roth IRAs or
SEP-IRAs for a one-person business, please contact your financial adviser. If
you are interested in opening a 401(k) or other company-sponsored retirement
plan (SIMPLE IRAs, SEP plans, Keoghs, 403(b)(7) plans, pension and
profit-sharing plans), your financial adviser will help you determine which
retirement plan best meets your needs. Complete instructions about how to
establish and maintain your plan and how to open accounts for you and your
employees will be included in the retirement plan kit you receive in the
mail.
Systematic
Withdrawal Plan. A Systematic
Withdrawal Plan is available that will provide you with monthly, quarterly,
semi-annual or annual redemption checks. The Systematic Withdrawal Plan is not
available to participants in certain retirement plans. Please contact PMFS at
(800) 225-1852 for more details.
Reports
to Shareholders. Every year we will
send you an updated summary prospectus. We will also send or make available to
you pursuant to Rule 30e-3 under the 1940 Act, an annual report and a
semi-annual report, which contain important financial information about the
Fund. To reduce Fund expenses, we may send or make available one annual
shareholder report, one semi-annual shareholder report and one summary
prospectus per household, unless you instruct us or your financial intermediary
otherwise. If each Fund shareholder in your household would like to receive a
copy of the Fund's summary prospectus and shareholder reports, please call us
toll free at (800) 225-1852. We will begin sending additional copies of these
documents within 30 days of receipt of your request.
HOW
TO SELL YOUR SHARES
You can sell your
Fund shares for cash at any time, subject to certain restrictions. For more
information about these restrictions, see “Restrictions on Sales”
below.
When you sell
shares of the Fund—also known as redeeming your shares—the price you will
receive will be the NAV next determined after the Transfer Agent or your
financial intermediary receives your order to sell (less any applicable
CDSC).
Shares
Held by Financial Intermediaries. If your financial
intermediary holds your shares, your financial intermediary must receive your
order to sell no later than the time regular trading on the NYSE closes—which is
usually 4:00 p.m. Eastern Time—to process the sale on that day. In the event
that regular trading on the NYSE closes before 4:00 p.m. Eastern Time, you will
receive the following day's NAV if your order to sell is received after the
close of regular trading on the NYSE.
Shares
Held by the Transfer Agent. If the Transfer
Agent holds your shares, PMFS must receive your order to sell no later than the
time regular trading on the NYSE closes—which is usually 4:00 p.m. Eastern
Time—to process the sale on that day. In the event that regular trading on the
NYSE closes before 4:00 p.m. Eastern Time, you will receive the following day's
NAV if your order to sell is received after the close of regular trading on the
NYSE. You may contact the Transfer Agent at:
Prudential
Mutual Fund Services LLC
P.O. Box 9658
Providence, RI 02940
P.O. Box 9658
Providence, RI 02940
Payment
for Shares You Have Sold
Shares
Held by Financial Intermediaries. Typically, if your
order to sell shares is received in good order, payment will be credited to your
account within 1 to 3 business days after the order is received, but in any
event within seven days. Your broker may charge you a separate or additional fee
for sales of shares.
Shares
Held by the Transfer Agent. Typically, if your
order to sell shares is received in good order, we will send payment on the next
business day, but in any event within seven days, regardless of the method of
payment (e.g., payment by check, wire or electronic transfer
(“ACH”)).
38
PGIM Muni High
Income Fund
Restrictions
on Sales
If you are selling
shares you recently purchased with a check, we may delay sending you the
proceeds until your check clears, which can take up to seven days from the
purchase date.
As a result of
restrictions on withdrawals and transfers imposed by Section 403(b) of the
Internal Revenue Code of 1986, as amended, we may consider a redemption request
to not be in good order until we obtain information from your employer that is
reasonably necessary to ensure that the payment is in compliance with such
restrictions, if applicable. In such an event, the redemption request will not
be in good order and we will not process it until we obtain information from
your employer.
In addition, there
are certain times when you may not be able to sell shares of the Fund or when we
may delay paying you the proceeds from a sale. As permitted by the SEC, the
former may happen only during unusual market conditions or emergencies when the
Fund is unable to determine the value of its assets or sell its holdings. For
more information, see the SAI.
If you hold your
shares directly with the Transfer Agent, you will need to have the signature on
your sell order Medallion signature guaranteed if:
◾
You are selling
more than $100,000 of shares;
◾
You want the
redemption proceeds made payable to someone that is not in the Transfer Agent’s
records;
◾
You want the
redemption proceeds sent to an address that is not in the Transfer Agent’s
records;
◾
You are a business
or a trust; or
◾
You are redeeming
due to the death of the shareholder or on behalf of the
shareholder.
The Medallion
signature guarantee may be obtained from an authorized officer from a bank,
broker, dealer, securities exchange or association, clearing agency, savings
association, or credit union that is participating in one of the recognized
Medallion guarantee programs (STAMP, SEMP, or NYSE MSP), but not from a notary
public. The Medallion signature guarantee must be appropriate for the dollar
amount of the transaction. The Transfer Agent reserves the right to reject sale
transactions where the value of the transaction exceeds the value of the surety
coverage indicated on the Medallion imprint. The Fund may change the signature
guarantee requirements from time to time without prior notice to shareholders.
For more information, see the SAI.
How
the Fund Pays for Shares You Have Sold
Under normal market
conditions, the Fund expects to pay for shares that you have sold primarily by
using cash or cash equivalents in its portfolio or selling portfolio assets to
generate cash. Supplementally, the Fund may also raise cash to pay for sold
shares by short-term borrowing in the form of overdrafts permitted by the Fund’s
custodian bank and/or by short-term borrowing from a group of banks through an
unsecured credit facility, which is intended to provide the Fund with a
temporary additional source of liquidity. In certain circumstances the Fund
reserves the right to pay for sold shares by giving you securities from the
Fund’s portfolio. If you receive securities, you would incur transaction costs
in converting the securities to cash, and you may receive less for the
securities than the price at which they were valued for redemption
purposes.
During stressed
market conditions, it may be impractical or impossible to raise sufficient cash
to pay for sold shares through the primary methods described above. In these
circumstances, the Fund would be more likely to rely more heavily on the credit
facility as a source of liquidity, as described above.
Contingent
Deferred Sales Charge (“CDSC”)
If you sell Class C shares within
12 months of purchase, you will have to pay a CDSC of 1.00%. In addition, if you
purchase $500,000 or more of Class A shares, although you are not subject to an
initial sales charge, you are subject to a CDSC of 1.00% for shares redeemed
within 12 months of purchase. The CDSC is waived for certain retirement and/or
benefit plans. To keep the CDSC as low as possible, we will sell amounts
representing shares in the following order:
◾
Amounts
representing shares you purchased with reinvested dividends and
distributions,
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39
◾
Amounts
representing the increase in NAV above the total amount of payments for shares
made during the past 12 months for Class A shares (in certain cases) and 12
months for Class C shares, and
◾
Amounts
representing the cost of shares held beyond the CDSC period (12 months for Class
A shares (in certain cases) and 12 months for Class C
shares).
Since shares that
fall into any of the categories listed above are not subject to the CDSC,
selling them first helps you to avoid—or at least minimize—the
CDSC.
Having sold the
exempt shares first, if there are any remaining shares that are subject to the
CDSC, we will apply the CDSC to amounts representing the cost of shares held for
the longest period of time within the applicable CDSC period.
The CDSC is
calculated based on the lesser of the original purchase price or the net asset
value at redemption. The rate decreases on the anniversary date of your
purchase.
The holding period
for purposes of determining the applicable CDSC will be calculated from the
anniversary date of the purchase, excluding any time Class C shares were held in
a money market fund.
Waiver
of the CDSC—Class A Shares and Class C Shares
The CDSC will be
waived if the Class A shares and Class C shares are sold:
◾
After a shareholder
is deceased or permanently disabled (or, in the case of a trust account, after
the death or permanent disability of the grantor). This waiver applies to
individual shareholders, as well as shares held in joint tenancy, provided the
shares were purchased before the death or permanent
disability;
◾
To provide for
certain distributions—made without IRS penalty—from a qualified or tax-deferred
retirement plan, benefit plan, IRA or Section 403(b) custodial account;
and
◾
To withdraw excess
contributions from a qualified or tax-deferred retirement plan, IRA or Section
403(b) custodial account.
For more
information, see the SAI.
Involuntary
Redemption of Small Accounts Held by the Transfer Agent
If the value of
your account with PMFS is less than $500 for any reason, we may sell your shares
(without charging any CDSC) and close your account. We would do this to minimize
the Fund's expenses paid by other shareholders. The involuntary sale provisions
do not apply to Automatic Investment Plan (“AIP”) accounts, employee savings
plan accounts, payroll deduction plan accounts, retirement accounts (such as a
401(k) plan, an IRA or other qualified or tax-deferred plan or account), omnibus
accounts, and accounts for which a broker or other financial intermediary is
responsible for recordkeeping. Prior thereto, if you make a sale that reduces
your account value to less than the threshold, we may sell the rest of your
shares (without charging any CDSC) and close your account; this involuntary sale
does not apply to shareholders who own their shares as part of a retirement
account. For more information, see “Purchase, Redemption and Pricing of Fund
Shares—Involuntary Redemption” in the SAI.
Account
Maintenance Fee for Accounts Held by the Transfer Agent
If the value of
your Class A, Class C or Class Z account with PMFS is less than $10,000, with
certain exclusions, a $15 annual account maintenance fee will be deducted from
your account during the 4th calendar quarter of each year. Any applicable CDSC
on the shares redeemed to pay the account maintenance fee will be waived. For
more information, see “Purchase, Redemption and Pricing of Fund Shares—Account
Maintenance Fee” in the SAI.
90-Day
Repurchase Privilege
After you redeem
your shares, you have a 90-day period during which you may reinvest back into
your account any of the redemption proceeds in shares of the same Fund without
paying an initial sales charge. In order to take advantage of this privilege,
you must notify the Transfer Agent or your broker at the time of the repurchase.
This privilege can only be used once in a 12-month period. For more information,
see the SAI.
40
PGIM Muni High
Income Fund
The terms of this
privilege may vary by financial intermediary. For more information, see
“Appendix A: Waivers and Discounts Available From Certain Financial
Intermediaries.”
Retirement
Plans
To sell shares and
receive a distribution from your retirement account, call your broker or the
Transfer Agent for a distribution request form. There are special distribution
and income tax withholding requirements for distributions from retirement plans
and you must submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer or plan trustee, you
must arrange for the distribution request to be signed and sent by the plan
administrator or trustee. For additional information, see the SAI.
HOW
TO EXCHANGE YOUR SHARES
You can generally
exchange your shares of the Fund for shares of the same class in certain other
PGIM Funds—including PGIM Government Money Market Fund—if you satisfy the
minimum investment requirements. For example, you can exchange Class A shares of
the Fund for Class A shares of other funds in the PGIM Funds mutual fund family,
but you can’t exchange Class A shares for a different share class of another
PGIM Fund.
In addition, Class
R6 shares may not be exchanged for Class R6 shares of the Prudential Day One
Funds or the PGIM 60/40 Allocation Fund.
After an exchange,
at redemption, any CDSC will be calculated from the date of the initial
purchase, excluding any time that Class C shares were held in PGIM Government
Money Market Fund. We may change the terms of any exchange privilege after
giving you 60 days' notice.
There is no sales
charge for exchanges. However, if you exchange—and then sell—shares within the
applicable CDSC period, you must still pay the applicable CDSC. At the time of
exchange, CDSC liable shares and free shares move proportionally according to
the percentage of total shares you are exchanging. If you have exchanged Class C
shares into PGIM Government Money Market Fund, the time you hold the Class C
shares in the money market fund will not be counted in calculating the required
holding period for CDSC liability.
For investors in
certain programs sponsored by financial intermediaries that offer shares of the
Fund, or whose programs are available through financial intermediaries that
offer shares of the Fund for mutual fund “wrap” or asset allocation programs or
mutual fund “supermarket” programs, an exchange may be made from Class A to
Class Z shares of the Fund in certain limited circumstances. Contact your
program sponsor or financial intermediary with any questions.
Exchanging
Shares Held by a Financial Intermediary. If you hold shares
through a financial intermediary, you must exchange shares through your
financial intermediary.
Exchanging
Shares Held by the Transfer Agent. If you hold shares
through the Transfer Agent, contact your financial advisor or PMFS at (800)
225-1852 or write to PMFS at:
Prudential
Mutual Fund Services LLC
P.O. Box 9658
Providence, RI 02940
P.O. Box 9658
Providence, RI 02940
If you participate
in any fee-based program where the Fund is an available investment option, you
may arrange with the Transfer Agent or your recordkeeper to exchange your Class
A shares, if any, for Class Z shares when you elect to participate in the
fee-based program. When you no longer participate in the program, you may
arrange with the Transfer Agent or your recordkeeper to exchange all of your
Class Z shares, including shares purchased while you were in the program, for
Class A shares.
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41
Remember, as we
explained in the section entitled “Fund Distributions and Tax Issues—If You Sell
or Exchange Your Shares,” exchanging shares is considered a sale for tax
purposes. Therefore, if the shares you exchange are worth more than the amount
that you paid for them, you may have to pay capital gains tax. For additional
information about exchanging shares, see the SAI.
Frequent
Purchases and Redemptions of Fund Shares
The Fund seeks to
prevent patterns of frequent purchases and redemptions of Fund shares by its
shareholders. Frequent purchases and sales of shares of the Fund may adversely
affect Fund performance and the interests of long-term investors. When a
shareholder engages in frequent or short-term trading, the Fund may have to sell
portfolio securities to have the cash necessary to redeem the shareholder's
shares. This can happen when it is not advantageous to sell any securities, so
the Fund's performance may be hurt. When large dollar amounts are involved,
frequent trading can also make it difficult to use long-term investment
strategies because the Fund cannot predict how much cash it will have to invest.
In addition, if the Fund is forced to liquidate investments due to short-term
trading activity, it may incur increased brokerage and tax costs. Similarly, the
Fund may bear increased administrative costs as a result of the asset level and
investment volatility that accompanies patterns of short-term trading. Moreover,
frequent or short-term trading by certain shareholders may cause dilution in the
value of Fund shares held by other shareholders. Funds that invest in non-U.S.
securities may be particularly susceptible to frequent trading because time zone
differences among international stock markets can allow a shareholder engaging
in frequent trading to exploit fund share prices that may be based on closing
prices of non-U.S. securities established some time before the Fund calculates
its own share price. Funds that invest in certain fixed income securities, such
as high-yield bonds or certain asset-backed securities, may also constitute an
effective vehicle for a shareholder's frequent trading strategy.
The Fund does not
knowingly accommodate or permit frequent trading, and the Board has adopted
policies and procedures designed to discourage or prevent frequent trading
activities by Fund shareholders. In an effort to prevent such practices, the
Fund's Transfer Agent monitors trading activity on a daily basis. The Fund has
implemented a trading policy that limits the number of times a shareholder may
purchase Fund shares or exchange into the Fund and then sell those shares within
a specified period of time (a “round-trip transaction”) as established by the
Fund's Chief Compliance Officer (“CCO”). The CCO is authorized to set and modify
the parameters of the trading policy at any time as required to prevent the
adverse impact of frequent trading on Fund shareholders.
The CCO has defined
frequent trading as one or more round-trip transactions in shares of the Fund
within a 30-day period. If this occurs, the shareholder’s account will be
subject to a 60-day warning period. If a second round-trip occurs before the
conclusion of the 60-day warning period, a trading suspension will be placed on
the account by the Fund’s Transfer Agent that will remain in effect for 90 days.
The trading suspension will relate to purchases and exchange purchases (but not
redemptions) in the Fund in which the frequent trading occurred. Exceptions to
the trading policy will not normally be granted.
Transactions in the
PGIM money market funds, exchange-traded funds and PGIM Short-Term Corporate
Bond Fund are excluded from this trading policy. In addition, transactions by
affiliated PGIM Funds or certain unaffiliated funds, which are structured as
“funds-of-funds,” and invest primarily in other mutual funds within the PGIM
Fund family, are not subject to the limitations of the trading policy and are
not considered frequent or short-term trading.
This trading policy
does not apply to systematic purchases and redemptions (e.g., payroll purchases,
systematic withdrawals and rebalancing transactions or other similar
transactions not initiated by a shareholder or financial professional on
the transaction date). Generally, purchases and redemptions will not be
considered “systematic” unless the transaction is pre-established or scheduled
for a specific date.
The Fund reserves
the right to reject or cancel, without prior notice, all additional purchases or
exchanges into the Fund by a shareholder. Moreover, the Fund may direct a
broker-dealer or other intermediary to block a shareholder account from future
trading in the Fund. The Transfer Agent will monitor daily trading activity
above a certain threshold, which may be changed from time to time, over a
rolling 90-day period. If a purchase into the Fund is rejected or canceled, the
shareholder will receive a return of the purchase amount.
42
PGIM Muni High
Income Fund
If the Fund is offered to qualified
plans on an omnibus basis or if Fund shares may be purchased through other
omnibus arrangements, such as through a financial intermediary such as a
broker-dealer, a bank, an insurance company separate account, an investment
adviser, or an administrator or trustee of a retirement plan (“Intermediaries”)
that holds your shares in an account under its name, Intermediaries maintain the
individual beneficial owner records and submit to the Fund only aggregate orders
combining the transactions of many beneficial owners. The Fund itself generally
cannot monitor trading by particular beneficial owners. The Fund has notified
Intermediaries in writing that it expects the Intermediaries to impose
restrictions on transfers by beneficial owners. Intermediaries may impose
different or stricter restrictions on transfers by beneficial owners.
The Transfer Agent
also reviews aggregate omnibus net flows above a certain threshold. In cases
where the activity is considered unusual, the Intermediary may be contacted by
the Transfer Agent to obtain additional information. The Transfer Agent has the
authority to cancel all or a portion of the trade if the information reveals
that the activity relates to potential offenders. Where appropriate, the
Transfer Agent may request that the Intermediary block a financial adviser or
client from accessing the Fund. If necessary, the Fund may be removed from a
particular Intermediary’s platform.
Shareholders
seeking to engage in frequent trading activities may use a variety of strategies
to avoid detection and, despite the efforts of the Fund to prevent such trading,
there is no guarantee that the Fund, the Transfer Agent or Intermediaries will
be able to identify these shareholders or curtail their trading practices. The
Fund does not have any arrangements intended to permit trading of its shares in
contravention of the policies described above.
Telephone
Redemptions or Exchanges
You may redeem your
shares of the Fund if the proceeds of the redemption do not exceed $250,000 or
exchange your shares in any amount by calling the Fund at (800) 225-1852 and
communicating your instructions in good order to a customer service
representative before 4:00 p.m. Eastern Time. You will receive a redemption or
exchange amount based on that day's NAV. Certain restrictions apply; please see
the section entitled “How to Sell Your Shares—Restrictions on Sales” above for
additional information. In the event that regular trading on the NYSE closes
before 4:00 p.m. Eastern Time, you will receive the following day's NAV if your
order to sell or exchange is received after the close of regular trading on the
NYSE.
The Transfer Agent
will record your telephone instructions and request specific account information
before redeeming or exchanging shares. The Fund will not be liable for losses
due to unauthorized or fraudulent telephone instructions if it follows
instructions that it reasonably believes are made by the shareholder. If the
Fund does not follow reasonable procedures, it may be liable.
In the event of
drastic economic or market changes, you may have difficulty in redeeming or
exchanging your shares by telephone. If this occurs, you should consider
redeeming or exchanging your shares by mail or through your broker.
The telephone
redemption and exchange procedures may be modified or terminated at any time. If
this occurs, you will receive a written notice from the Fund.
Expedited
Redemption Privilege
If you have
selected the Expedited Redemption Privilege, you may have your redemption
proceeds sent directly to your bank account. Expedited redemption requests may
be made by telephone or letter, must be received by the Transfer Agent prior to
4:00 p.m. Eastern Time to receive a redemption amount based on that day's NAV
and are subject to the terms and conditions regarding the redemption of shares.
In the event that regular trading on the NYSE closes before 4:00 p.m. Eastern
Time, you will receive the following day's NAV if your order to sell is received
after the close of regular trading on the NYSE. For more information, see the
SAI. The Expedited Redemption Privilege may be modified or terminated at any
time without notice.
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43
FINANCIAL
HIGHLIGHTS
Introduction
The financial highlights will help
you evaluate the Fund's financial performance for the past five fiscal years or
periods (as applicable). Certain information reflects financial results for a
single fund class share. The total return in each chart represents the rate that
a shareholder would have earned (or lost) on an investment in the Fund, assuming
investment at the start of the period and reinvestment of all dividends and
other distributions. The information is for the periods indicated.
These financial highlights for the
fiscal years ended April 30, 2021 and August 31, 2021 and after were derived
from the financial statements audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, whose report on those financial
statements was unqualified. The information for the fiscal years or periods (as
applicable) prior to the fiscal year ended April 30, 2021 was audited by another
independent registered public accounting firm.
The Fund’s fiscal year end was
changed from April 30 to August 31 following the Fund’s April 30, 2021 fiscal
year end.
A copy of the
Fund's annual report, including the Fund's audited financial statements and
report of independent registered public accounting firm, is available upon
request, at no charge, as described on the back cover of this
Prospectus.
44
PGIM Muni High
Income Fund
|
Class
A Shares | ||||||
|
|
Year
Ended
August
31, 2022 |
Four
months
ended
August
31, 2021 |
Year
Ended April 30, | |||
|
|
2021 |
2020 |
2019 |
2018 | ||
|
Per
Share Operating Performance(a): | ||||||
|
Net
Asset Value, Beginning of Period |
$10.85 |
$10.73 |
$9.58 |
$10.28 |
$10.12 |
$10.12 |
|
Income
(loss) from investment
operations: | ||||||
|
Net
investment income (loss) |
0.31 |
0.11 |
0.34 |
0.38 |
0.39 |
0.39 |
|
Net
realized and unrealized gain (loss) on investment
transactions |
(1.56) |
0.12 |
1.16 |
(0.70) |
0.17 |
0.01 |
|
Total from
investment operations |
(1.25) |
0.23 |
1.50 |
(0.32) |
0.56 |
0.40 |
|
Less
Dividends and Distributions: | ||||||
|
Dividends
from net investment income |
(0.31) |
(0.11) |
(0.35) |
(0.38) |
(0.40) |
(0.40) |
|
Net asset
value, end of period |
$9.29 |
$10.85 |
$10.73 |
$9.58 |
$10.28 |
$10.12 |
|
Total
Return(b): |
(11.70)% |
2.11% |
15.82% |
(3.37)% |
5.67% |
3.99% |
|
| ||||||
|
Ratios/Supplemental
Data: | ||||||
|
Net
assets, end of period (000) |
$376,463 |
$447,158 |
$425,013 |
$342,085 |
$339,940 |
$322,606 |
|
Average
net assets (000) |
$421,850 |
$438,859 |
$390,814 |
$367,591 |
$323,381 |
$337,410 |
|
Ratios
to average net assets(c): | ||||||
|
Expenses
after waivers and/or expense reimbursement |
0.81% |
0.80%(d) |
0.80% |
0.85% |
0.85% |
0.86% |
|
Expenses
before waivers and/or expense reimbursement |
0.84% |
0.83%(d) |
0.82% |
0.85% |
0.85% |
0.86% |
|
Net
investment income (loss) |
3.08% |
2.91%(d) |
3.30% |
3.60% |
3.88% |
3.86% |
|
Portfolio
turnover rate(e)(f) |
58% |
7% |
25% |
53% |
54% |
36% |
|
(a) |
Calculated
based on average shares outstanding during the
period. |
|
(b) |
Total
return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of a share on the first day and a sale on
the last day of each period
reported
and includes reinvestment of dividends and distributions, if any. Total
returns may reflect adjustments to conform to GAAP. Total returns for
periods less than one full
year are
not annualized. |
|
(c) |
Effective
January 1, 2018, class specific expenses include transfer agent fees and
expenses and registration fees, which are charged to their respective
share class. |
|
(d) |
Annualized,
with the exception of certain non-recurring
expenses. |
|
(e) |
The Fund's
portfolio turnover rate is calculated in accordance with regulatory
requirements, without regard to transactions involving short-term
investments, certain derivatives
and
in-kind transactions (if any). If such transactions were included, the
Fund's portfolio turnover rate may be higher. |
|
(f) |
The
portfolio turnover rate includes variable rate demand
notes. |
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45
|
Class
C Shares | ||||||
|
|
Year
Ended
August
31, 2022 |
Four
months
ended
August
31, 2021 |
Year
Ended April 30, | |||
|
|
2021 |
2020 |
2019 |
2018 | ||
|
Per
Share Operating Performance(a): | ||||||
|
Net
Asset Value, Beginning of Period |
$10.85 |
$10.73 |
$9.58 |
$10.28 |
$10.12 |
$10.12 |
|
Income
(loss) from investment
operations: | ||||||
|
Net
investment income (loss) |
0.23 |
0.08 |
0.27 |
0.30 |
0.31 |
0.32 |
|
Net
realized and unrealized gain (loss) on investment
transactions |
(1.56) |
0.12 |
1.15 |
(0.70) |
0.17 |
-(b) |
|
Total from
investment operations |
(1.33) |
0.20 |
1.42 |
(0.40) |
0.48 |
0.32 |
|
Less
Dividends and Distributions: | ||||||
|
Dividends
from net investment income |
(0.23) |
(0.08) |
(0.27) |
(0.30) |
(0.32) |
(0.32) |
|
Net asset
value, end of period |
$9.29 |
$10.85 |
$10.73 |
$9.58 |
$10.28 |
$10.12 |
|
Total
Return(c): |
(12.38)% |
1.84% |
14.94% |
(4.09)% |
4.88% |
3.21% |
|
| ||||||
|
Ratios/Supplemental
Data: | ||||||
|
Net
assets, end of period (000) |
$44,197 |
$64,346 |
$65,412 |
$79,180 |
$95,749 |
$110,077 |
|
Average
net assets (000) |
$55,420 |
$65,052 |
$75,826 |
$94,394 |
$104,786 |
$114,788 |
|
Ratios
to average net assets(d): | ||||||
|
Expenses
after waivers and/or expense reimbursement |
1.58% |
1.58%(e) |
1.57% |
1.60% |
1.60% |
1.62% |
|
Expenses
before waivers and/or expense reimbursement |
1.61% |
1.61%(e) |
1.59% |
1.60% |
1.60% |
1.62% |
|
Net
investment income (loss) |
2.30% |
2.13%(e) |
2.56% |
2.85% |
3.10% |
3.11% |
|
Portfolio
turnover rate(f)(g) |
58% |
7% |
25% |
53% |
54% |
36% |
|
(a) |
Calculated
based on average shares outstanding during the
period. |
|
(b) |
Amount
rounds to zero. |
|
(c) |
Total
return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of a share on the first day and a sale on
the last day of each period
reported
and includes reinvestment of dividends and distributions, if any. Total
returns may reflect adjustments to conform to GAAP. Total returns for
periods less than one full
year are
not annualized. |
|
(d) |
Effective
January 1, 2018, class specific expenses include transfer agent fees and
expenses and registration fees, which are charged to their respective
share class. |
|
(e) |
Annualized,
with the exception of certain non-recurring
expenses. |
|
(f) |
The Fund's
portfolio turnover rate is calculated in accordance with regulatory
requirements, without regard to transactions involving short-term
investments, certain derivatives
and
in-kind transactions (if any). If such transactions were included, the
Fund's portfolio turnover rate may be higher. |
|
(g) |
The
portfolio turnover rate includes variable rate demand
notes. |
46
PGIM Muni High
Income Fund
|
Class
Z Shares | ||||||
|
|
Year
Ended
August
31, 2022 |
Four
months
ended
August
31, 2021 |
Year
Ended April 30, | |||
|
|
2021 |
2020 |
2019 |
2018 | ||
|
Per
Share Operating Performance(a): | ||||||
|
Net
Asset Value, Beginning of Period |
$10.83 |
$10.71 |
$9.57 |
$10.26 |
$10.10 |
$10.11 |
|
Income
(loss) from investment
operations: | ||||||
|
Net
investment income (loss) |
0.33 |
0.11 |
0.37 |
0.40 |
0.41 |
0.42 |
|
Net
realized and unrealized gain (loss) on investment
transactions |
(1.56) |
0.12 |
1.14 |
(0.69) |
0.17 |
-(b) |
|
Total from
investment operations |
(1.23) |
0.23 |
1.51 |
(0.29) |
0.58 |
0.42 |
|
Less
Dividends and Distributions: | ||||||
|
Dividends
from net investment income |
(0.33) |
(0.11) |
(0.37) |
(0.40) |
(0.42) |
(0.43) |
|
Net asset
value, end of period |
$9.27 |
$10.83 |
$10.71 |
$9.57 |
$10.26 |
$10.10 |
|
Total
Return(c): |
(11.52)% |
2.19% |
15.98% |
(3.06)% |
5.90% |
4.15% |
|
| ||||||
|
Ratios/Supplemental
Data: | ||||||
|
Net
assets, end of period (000) |
$332,570 |
$512,347 |
$482,104 |
$337,094 |
$404,188 |
$375,466 |
|
Average
net assets (000) |
$437,004 |
$495,019 |
$411,850 |
$428,468 |
$385,217 |
$370,141 |
|
Ratios
to average net assets(d): | ||||||
|
Expenses
after waivers and/or expense reimbursement |
0.58% |
0.57%(e) |
0.58% |
0.62% |
0.63% |
0.62% |
|
Expenses
before waivers and/or expense reimbursement |
0.61% |
0.60%(e) |
0.61% |
0.62% |
0.63% |
0.62% |
|
Net
investment income (loss) |
3.30% |
3.14%(e) |
3.52% |
3.83% |
4.08% |
4.11% |
|
Portfolio
turnover rate(f)(g) |
58% |
7% |
25% |
53% |
54% |
36% |
|
(a) |
Calculated
based on average shares outstanding during the
period. |
|
(b) |
Amount
rounds to zero. |
|
(c) |
Total
return is calculated assuming a purchase of a share on the first day and a
sale on the last day of each period reported and includes reinvestment of
dividends and
distributions,
if any. Total returns may reflect adjustments to conform to GAAP. Total
returns for periods less than one full year are not
annualized. |
|
(d) |
Effective
January 1, 2018, class specific expenses include transfer agent fees and
expenses and registration fees, which are charged to their respective
share class. |
|
(e) |
Annualized,
with the exception of certain non-recurring
expenses. |
|
(f) |
The Fund's
portfolio turnover rate is calculated in accordance with regulatory
requirements, without regard to transactions involving short-term
investments, certain derivatives
and
in-kind transactions (if any). If such transactions were included, the
Fund's portfolio turnover rate may be higher. |
|
(g) |
The
portfolio turnover rate includes variable rate demand
notes. |
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47
|
Class
R6 Shares | ||||||
|
|
Year
Ended
August
31, 2022 |
Four
months
ended
August
31, 2021 |
Year
Ended April 30, |
June 27,
2017(a)
through
April
30 2018 | ||
|
|
2021 |
2020 |
2019 | |||
|
Per
Share Operating Performance(b): | ||||||
|
Net
Asset Value, Beginning of Period |
$10.84 |
$10.72 |
$9.57 |
$10.27 |
$10.11 |
$10.23 |
|
Income
(loss) from investment
operations: | ||||||
|
Net
investment income (loss) |
0.34 |
0.12 |
0.37 |
0.40 |
0.42 |
0.36 |
|
Net
realized and unrealized gain (loss) on investment
transactions |
(1.56) |
0.12 |
1.16 |
(0.70) |
0.17 |
(0.11) |
|
Total from
investment operations |
(1.22) |
0.24 |
1.53 |
(0.30) |
0.59 |
0.25 |
|
Less
Dividends and Distributions: | ||||||
|
Dividends
from net investment income |
(0.34) |
(0.12) |
(0.38) |
(0.40) |
(0.43) |
(0.37) |
|
Net asset
value, end of period |
$9.28 |
$10.84 |
$10.72 |
$9.57 |
$10.27 |
$10.11 |
|
Total
Return(c): |
(11.43)% |
2.22% |
16.19% |
(3.13)% |
5.94% |
2.50% |
|
| ||||||
|
Ratios/Supplemental
Data: | ||||||
|
Net
assets, end of period (000) |
$51,581 |
$40,009 |
$24,256 |
$9,028 |
$6,998 |
$398 |
|
Average
net assets (000) |
$50,468 |
$34,742 |
$15,737 |
$8,116 |
$4,932 |
$53 |
|
Ratios
to average net assets(d): | ||||||
|
Expenses
after waivers and/or expense reimbursement |
0.49% |
0.48%(e) |
0.49% |
0.59% |
0.60% |
0.59%(f) |
|
Expenses
before waivers and/or expense reimbursement |
0.56% |
0.57%(e) |
0.65% |
0.73% |
0.89% |
25.88%(f) |
|
Net
investment income (loss) |
3.41% |
3.22%(e) |
3.55% |
3.85% |
4.19% |
4.31%(f) |
|
Portfolio
turnover rate(g)(h) |
58% |
7% |
25% |
53% |
54% |
36% |
|
(a) |
Commencement
of offering. |
|
(b) |
Calculated
based on average shares outstanding during the
period. |
|
(c) |
Total
return is calculated assuming a purchase of a share on the first day and a
sale on the last day of each period reported and includes reinvestment of
dividends and
distributions,
if any. Total returns may reflect adjustments to conform to GAAP. Total
returns for periods less than one full year are not
annualized. |
|
(d) |
Effective
January 1, 2018, class specific expenses include transfer agent fees and
expenses and registration fees, which are charged to their respective
share class. |
|
(e) |
Annualized,
with the exception of certain non-recurring
expenses. |
|
(f) |
Annualized. |
|
(g) |
The Fund's
portfolio turnover rate is calculated in accordance with regulatory
requirements, without regard to transactions involving short-term
investments, certain derivatives
and
in-kind transactions (if any). If such transactions were included, the
Fund's portfolio turnover rate may be higher. |
|
(h) |
The
portfolio turnover rate includes variable rate demand
notes. |
48
PGIM Muni High
Income Fund
GLOSSARY
FUND
indices
Bloomberg
Municipal Bond Index. The Bloomberg
Municipal Bond Index is an unmanaged index of long-term investment-grade
municipal bonds. It gives a broad look at how long-term investment-grade
municipal bonds have performed. Index returns do not include the effect of any
sales charges, mutual fund operating expenses or taxes. These returns would be
lower if they included the effect of sales charges, mutual fund operating
expenses or taxes. Source: Bloomberg Index Services Limited.
Bloomberg
Municipal High Yield Bond Index. The Bloomberg
Municipal High Yield Bond Index is an unmanaged index of non-rated or Ba1 or
below-rated municipal bonds. It gives a broad look at how non-investment-grade
municipal bonds have performed. Index returns do not include the effect of any
sales charges, mutual fund operating expenses or taxes. These returns would be
lower if they included the effect of sales charges, mutual fund operating
expenses or taxes. Source: Bloomberg Index Services Limited.
Bloomberg
Municipal Bond Index (50%) / Bloomberg Municipal High Yield Bond Index (50%).
This
is a custom blend of the Bloomberg Municipal Bond Index (50%) and the Bloomberg
Municipal High Yield Bond Index (50%). Index returns do not include the effect
of any sales charges, mutual fund operating expenses or taxes. These returns
would be lower if they included the effect of sales charges, mutual fund
operating expenses or taxes. Source: Bloomberg Index Services
Limited.
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49
APPENDIX A:
WAIVERS AND DISCOUNTS AVAILABLE FROM CERTAIN FINANCIAL
INTERMEDIARIES
The availability of
certain sales charge waivers and discounts will depend on whether you purchase
your shares directly from the Fund or through a financial intermediary.
Intermediaries may have different policies and procedures regarding the
availability of front-end sales load waivers or contingent deferred sales charge
(“CDSC”) waivers (i.e., back-end), which are discussed below. In all instances,
it is the purchaser's responsibility to notify the Fund or the purchaser's
financial intermediary at the time of purchase of any relationship or other
facts qualifying the purchaser for sales charge waivers or discounts.
For
waivers and discounts not available through a particular intermediary,
shareholders will have to purchase Fund shares through the applicable
intermediary to receive these waivers or discounts.
Merrill
Lynch
Shareholders
purchasing Fund shares through a Merrill Lynch platform or account are eligible
only for the following load waivers (front-end sales charge waivers and
contingent deferred, or back-end, sales charge waivers) and discounts, as
applicable, which may differ from those disclosed elsewhere in this Fund's
Prospectus or SAI.
Front-end
Sales Load Waivers on Class A Shares available at Merrill Lynch
◾
Employer-sponsored
retirement, deferred compensation and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan
◾
Shares purchased by
a 529 Plan (does not include 529 Plan units or 529-specific share classes or
equivalents)
◾
Shares purchased
through a Merrill Lynch affiliated investment advisory
program
◾
Shares exchanged
due to the holdings moving from a Merrill Lynch affiliated investment advisory
program to a Merrill Lynch brokerage (non-advisory) account pursuant to Merrill
Lynch’s policies relating to sales load discounts and waivers
◾
Shares purchased by
third party investment advisors on behalf of their advisory clients through
Merrill Lynch’s platform
◾
Shares of funds
purchased through the Merrill Edge Self-Directed platform
◾
Shares purchased
through reinvestment of capital gains distributions and dividend reinvestment
when purchasing shares of the same fund (but not any other fund within the fund
family)
◾
Shares exchanged
from Class C (i.e. level-load) shares of the same fund pursuant to Merrill
Lynch’s policies relating to sales load discounts and waivers
◾
Employees and
registered representatives of Merrill Lynch or its affiliates and their family
members
◾
Directors or
Trustees of the Fund, and employees of the Fund’s investment adviser or any of
its affiliates, as described in this Prospectus
◾
Eligible shares
purchased from the proceeds of redemptions within the same fund family, provided
(1) the repurchase occurs within 90 days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (known as Rights of
Reinstatement). Automated transactions (i.e. systematic purchases and
withdrawals) and purchases made after shares are automatically sold to pay
Merrill Lynch’s account maintenance fees are not eligible for
reinstatement
CDSC
Waivers on Class A and C Shares available at Merrill Lynch
◾
Death or disability
of the shareholder
◾
Shares sold as part
of a systematic withdrawal plan as described in this
Prospectus
◾
Return of excess
contributions from an IRA Account
◾
Shares sold as part
of a required minimum distribution for IRA and retirement accounts pursuant to
the Internal Revenue Code
◾
Shares sold to pay
Merrill Lynch fees but only if the transaction is initiated by Merrill
Lynch
◾
Shares acquired
through a Right of Reinstatement
◾
Shares held in
retirement brokerage accounts, that are exchanged for a lower cost share class
due to transfer to certain fee based accounts or platforms
50
PGIM Muni High
Income Fund
◾
Shares received
through an exchange due to the holdings moving from a Merrill Lynch affiliated
investment advisory program to a Merrill Lynch brokerage (non-advisory) account
pursuant to Merrill Lynch’s policies relating to sales load discounts and
waivers
Front-end
load Discounts Available at Merrill Lynch: Breakpoints, Rights of Accumulation
& Letters of Intent
◾
Breakpoints as
described in this Prospectus
◾
Rights of
Accumulation (“ROA”) which entitle shareholders to breakpoint discounts as
described in the Fund’s Prospectus will be automatically calculated based on the
aggregated holding of fund family assets held by accounts (including 529 program
holdings, where applicable) within the purchaser’s household at Merrill Lynch.
Eligible fund family assets not held at Merrill Lynch may be included in the ROA
calculation only if the shareholder notifies his or her financial advisor about
such assets
◾
Letters of Intent
(“LOI”) which allow for breakpoint discounts based on anticipated purchases
within a fund family, through Merrill Lynch, over a 13-month period of
time
Morgan
Stanley Wealth Management
Shareholders
purchasing Fund shares through a Morgan Stanley Wealth Management transactional
brokerage account are eligible only for the following front-end sales charge
waivers with respect to Class A shares, which may differ from and be more
limited than those disclosed elsewhere in this Fund's Prospectus or
SAI.
Front-End
Sales Charge Waivers on Class A Shares Available at Morgan Stanley Wealth
Management
◾
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans
◾
Morgan Stanley
employee and employee-related accounts according to Morgan Stanley’s account
linking rules
◾
Shares purchased
through reinvestment of dividends and capital gains distributions when
purchasing shares of the same fund
◾
Shares purchased
through a Morgan Stanley self-directed brokerage account
◾
Class C (i.e.,
level-load) shares that are no longer subject to a contingent deferred sales
charge and are converted to Class A shares of the same fund pursuant to Morgan
Stanley Wealth Management’s share class conversion program
◾
Shares purchased
from the proceeds of redemptions within the same fund family, provided (i) the
repurchase occurs within 90 days following the redemption, (ii) the redemption
and purchase occur in the same account, and (iii) redeemed shares were subject
to a front-end or deferred sales charge
Ameriprise
Financial
Class
A Shares Front-End Sales Charge Waivers Available at Ameriprise
Financial
The following
information applies to Class A shares purchases if you have an account with or
otherwise purchase Fund shares through Ameriprise Financial.
Shareholders
purchasing Fund shares through an Ameriprise Financial brokerage account are
eligible for the following front-end sales charge waivers and discounts, which
may differ from those disclosed elsewhere in this Fund's Prospectus or
SAI.
◾
Employer-sponsored
retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b)
plans, profit sharing and money purchase pension plans and defined benefit
plans). For purposes of this provision, employer-sponsored retirement plans do
not include SEP IRAs, Simple IRAs or SAR-SEPs.
◾
Shares purchased
through reinvestment of capital gains distributions and dividend reinvestment
when purchasing shares of the same fund (but not any other fund within the fund
family).
◾
Shares exchanged
from Class C shares of the same fund in the month of or following the 7-year
anniversary of the purchase date. To the extent that this Prospectus elsewhere
provides for a waiver with respect to exchanges of Class C shares or conversion
of Class C shares following a shorter holding period, that waiver will
apply.
Visit our website
at www.pgim.com/investments
51
◾
Employees and
registered representatives of Ameriprise Financial or its affiliates and their
immediate family members.
◾
Shares purchased by
or through qualified accounts (including IRAs, Coverdell Education Savings
Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit
plans) that are held by a covered family member, defined as an Ameriprise
financial advisor and/or the advisor’s spouse, advisor’s lineal ascendant
(mother, father, grandmother, grandfather, great grandmother, great
grandfather), advisor’s lineal descendant (son, step-son, daughter,
step-daughter, grandson, granddaughter, great grandson, great granddaughter) or
any spouse of a covered family member who is a lineal
descendant.
◾
Shares purchased
from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within 90 days following the redemption, (2) the redemption
and purchase occur in the same account, and (3) redeemed shares were subject to
a front-end or deferred sales load (i.e. Rights of
Reinstatement).
Raymond
James & Associates, Inc., Raymond James Financial Services and each entity’s
affiliates (“Raymond James”)
Shareholders
purchasing fund shares through a Raymond James platform or account, or through
an introducing broker-dealer or independent registered investment adviser for
which Raymond James provides trade execution, clearance, and/or custody
services, will be eligible only for the following load waivers (front-end sales
charge waivers and contingent deferred, or back-end, sales charge waivers) and
discounts, which may differ from those disclosed elsewhere in this Fund’s
Prospectus or SAI.
Front-end
sales load waivers on Class A shares available at Raymond James
◾
Shares purchased in
an investment advisory program.
◾
Shares purchased
within the same fund family through a systematic reinvestment of capital gains
and dividend distributions.
◾
Employees and
registered representatives of Raymond James or its affiliates and their family
members as designated by Raymond James.
◾
Shares purchased
from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within 90 days following the redemption, (2) the redemption
and purchase occur in the same account, and (3) redeemed shares were subject to
a front-end or deferred sales load (known as Rights of
Reinstatement).
◾
A shareholder in
the Fund’s Class C shares will have their shares converted at net asset value to
Class A shares (or the appropriate share class) of the Fund if the shares are no
longer subject to a CDSC and the conversion is in line with the policies and
procedures of Raymond James.
CDSC
Waivers on Classes A and C shares available at Raymond James
◾
Death or disability
of the shareholder.
◾
Shares sold as part
of a systematic withdrawal plan as described in the Fund’s
Prospectus.
◾
Return of excess
contributions from an IRA Account.
◾
Shares sold as part
of a required minimum distribution for IRA and retirement accounts due to the
shareholder reaching the qualified age based on applicable IRS regulations as
described in the Fund’s Prospectus.
◾
Shares sold to pay
Raymond James fees but only if the transaction is initiated by Raymond
James.
◾
Shares acquired
through a right of reinstatement.
Front-end
load discounts available at Raymond James: breakpoints, and/or rights of
accumulation, and/or letters of intent
◾
Breakpoints as
described in this Prospectus.
◾
Rights of
accumulation which entitle shareholders to breakpoint discounts will be
automatically calculated based on the aggregated holding of fund family assets
held by accounts within the purchaser’s household at Raymond James. Eligible
fund family assets not held at Raymond James may be included in the calculation
of rights of accumulation only if the shareholder notifies his or her financial
advisor about such assets.
◾
Letters of intent
which allow for breakpoint discounts based on anticipated purchases within a
fund family, over a 13-month time period. Eligible fund family assets not held
at Raymond James may be included in the calculation of letters of intent only if
the shareholder notifies his or her financial advisor about such
assets.
Edward
D. Jones & Co., L.P. (“Edward Jones”)
Policies Regarding Transactions Through Edward Jones
Policies Regarding Transactions Through Edward Jones
52
PGIM Muni High
Income Fund
◾
Clients of Edward
Jones (also referred to as “shareholders”) purchasing fund shares on the Edward
Jones commission and fee-based platforms are eligible only for the following
sales charge discounts (also referred to as “breakpoints”) and waivers, which
can differ from discounts and waivers described elsewhere in this Fund’s
Prospectus or statement of additional information (“SAI”) or through another
broker-dealer. In all instances, it is the shareholder's responsibility to
inform Edward Jones at the time of purchase of any relationship, holdings of the
Fund or other facts qualifying the purchaser for breakpoints, discounts or
waivers. Edward Jones can ask for documentation of such circumstance.
Shareholders should contact Edward Jones if they have questions regarding their
eligibility for these discounts and waivers.
Breakpoints
◾
Breakpoint pricing,
otherwise known as volume pricing, at dollar thresholds as described in this
Fund’s Prospectus.
Rights
of Accumulation (“ROA”)
◾
The applicable
sales charge on a purchase of Class A shares is determined by taking into
account all share classes (except certain money market funds and any assets held
in group retirement plans) of PGIM Funds held by the shareholder or in an
account grouped by Edward Jones with certain other related accounts for the
purpose of providing certain pricing considerations (“pricing groups”). If
grouping assets as a shareholder, this includes all share classes held on the
Edward Jones platform and/or held on another platform. The inclusion of eligible
fund family assets in the ROA calculation is dependent on the shareholder
notifying Edward Jones of such assets at the time of calculation. Money market
funds are included only if such shares were sold with a sales charge at the time
of purchase or acquired in exchange for shares purchased with a sales
charge.
◾
The employer
maintaining a SEP IRA plan and/or SIMPLE IRA plan may elect to establish or
change ROA for the IRA accounts associated with the plan to a plan-level
grouping as opposed to including all share classes at a shareholder or pricing
group level.
◾
ROA is determined
by calculating the higher of cost minus redemptions or market value (current
shares x NAV).
Letter
of Intent (“LOI”)
◾
Through a LOI,
shareholders can receive the sales charge and breakpoint discounts for purchases
shareholders intend to make over a 13-month period from the date Edward Jones
receives the LOI. The LOI is determined by calculating the higher of cost or
market value of qualifying holdings at LOI initiation in combination with the
value that the shareholder intends to buy over a 13-month period to calculate
the front-end sales charge and any breakpoint discounts. Each purchase the
shareholder makes during that 13-month period will receive the sales charge and
breakpoint discount that applies to the total amount. The inclusion of eligible
fund family assets in the LOI calculation is dependent on the shareholder
notifying Edward Jones of such assets at the time of calculation. Purchases made
before the LOI is received by Edward Jones are not adjusted under the LOI and
will not reduce the sales charge previously paid. Sales charges will be adjusted
if LOI is not met.
◾
If the employer
maintaining a SEP IRA plan and/or SIMPLE IRA plan has elected to establish or
change ROA for the IRA accounts associated with the plan to a plan-level
grouping. LOIs will also be at the plan-level and may only be established by the
employer.
Sales
Charge Waivers
Sales charges are
waived for the following shareholders and in the following
situations:
◾
Associates of
Edward Jones and its affiliates and their family members who are in the same
pricing group (as determined by Edward Jones under its policies and procedures)
as the associate. This waiver will continue for the remainder of the associate's
life if the associate retires from Edward Jones in good-standing and remains in
good-standing pursuant to Edward Jones’ policies and
procedures.
◾
Shares purchased in
an Edward Jones fee-based program.
◾
Shares purchased
through reinvestment of capital gains distributions and dividend
reinvestment.
◾
Shares purchased
from the proceeds of redeemed shares of the same fund family so long as the
following conditions are met: (1) the proceeds are from the sale of shares
within 60 days of the purchase, and (2) the sale and purchase are made in the
same share class and the same account or the purchase is made in an individual
retirement account with proceeds from liquidations in a non-retirement
account.
Visit our website
at www.pgim.com/investments
53
◾
Shares exchanged
into Class A shares from another share class so long as the exchange is into the
same fund and was initiated at the discretion of Edward Jones. Edward Jones is
responsible for any remaining CDSC due to the fund company, if applicable. Any
future purchases are subject to the applicable sales charge as disclosed in the
Prospectus.
◾
Exchanges from
Class C shares to Class A shares of the same fund, generally, in the 84th month
following the anniversary of the purchase date or earlier at the discretion of
Edward Jones.
Contingent
Deferred Sales Charge (“CDSC”) Waivers
If the shareholder
purchases shares that are subject to a CDSC and those shares are redeemed before
the CDSC is expired, the shareholder is responsible to pay the CDSC except in
the following conditions:
◾
The death or
disability of the shareholder
◾
Systematic
withdrawals with up to 10% per year of the account value
◾
Return of excess
contributions from an Individual Retirement Account (“IRA”)
◾
Shares sold as part
of a required minimum distribution for IRA and retirement accounts if the
redemption is taken in or after the year the shareholder reaches qualified age
based on applicable IRS regulations
◾
Shares sold to pay
Edward Jones fees or costs in such cases where the transaction is initiated by
Edward Jones
◾
Shares exchanged in
an Edward Jones fee-based program
◾
Shares acquired
through NAV reinstatement
◾
Shares redeemed at
the discretion of Edward Jones for Minimum Balances, as described
below.
Other
Important Information Regarding Transactions Through Edward Jones
Minimum
Purchase Amounts (Class A and Class C shares)
◾
Initial purchase
minimum: $250
◾
Subsequent purchase
minimum: none
Minimum
Balances
◾
Edward Jones has
the right to redeem at its discretion fund holdings with a balance of $250 or
less. The following are examples of accounts that are not included in this
policy:
◾
A fee-based account
held on an Edward Jones platform
◾
A 529 account held
on an Edward Jones platform
◾
An account with an
active systematic investment plan or LOI
Exchanging
Share Classes
◾
Edward Jones has
the authority to exchange at NAV a shareholder's holdings in a fund to Class A
shares or such other share class based on Edward Jones’
policy.
Janney
Montgomery Scott LLC (“Janney”)
Shareholders
purchasing Fund shares through a Janney account are eligible only for the
following load waivers (front-end sales charge waivers and contingent deferred,
or back-end, sales charge waivers) and discounts, which may differ from those
disclosed elsewhere in this Fund's Prospectus or SAI.
Front-end
sales charge waivers on Class A shares available at Janney
◾
Shares purchased
through reinvestment of capital gains distributions and dividend reinvestment
when purchasing shares of the same fund (but not any other fund within the fund
family).
◾
Shares purchased by
employees and registered representatives of Janney or its affiliates and their
family members as designated by Janney.
◾
Shares purchased
from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within ninety (90) days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales load (i.e., right of
reinstatement).
◾
Class C shares that
are no longer subject to a contingent deferred sales charge and are converted to
Class A shares of the same fund pursuant to Janney’s policies and
procedures.
54
PGIM Muni High
Income Fund
Sales
charge waivers on Class A and C shares available at Janney
◾
Shares sold upon
the death or disability of the shareholder.
◾
Shares sold as part
of a systematic withdrawal plan as described in the Fund’s
Prospectus.
◾
Shares purchased in
connection with a return of excess contributions from an IRA
account.
◾
Shares sold as part
of a required minimum distribution for IRA and other retirement accounts due to
the shareholder reaching the qualified age based on applicable IRS regulations
as described in the Fund’s Prospectus.
◾
Shares sold to pay
Janney fees but only if the transaction is initiated by
Janney.
◾
Shares acquired
through a right of reinstatement.
Front-end
load discounts available at Janney: breakpoints, and/or rights of
accumulation
◾
Breakpoints as
described in the Fund’s Prospectus.
◾
Rights of
accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will
be automatically calculated based on the aggregated holding of Fund family
assets held by accounts within the purchaser’s household at Janney. Eligible
fund family assets not held at Janney may be included in the ROA calculation
only if the shareholder notifies his or her financial advisor about such
assets.
Oppenheimer
& Co. Inc. (“OPCO”)
Shareholders
purchasing Fund shares through an OPCO platform or account will only be eligible
for the following sales charge waivers (front-end sales charge waivers and
contingent deferred sales charge (“CDSC”) waivers (i.e., back-end)) and
discounts, which may differ from those disclosed elsewhere in this Prospectus or
the SAI.
Front-End
Sales Charge Waivers on Class A share available at OPCO
◾
Employer-sponsored
retirement, deferred compensation and employee benefit plans (including health
savings accounts) and trusts used to fund those plans, provided that the shares
are not held in a commission-based brokerage account and shares are held for the
benefit of the plan
◾
Shares purchased by
or through a 529 Plan
◾
Shares purchased
through an OPCO affiliated investment advisory program
◾
Shares purchased
through reinvestment of capital gains distributions and dividend reinvestment
when purchasing shares of the same fund (but not any other fund within the PGIM
fund family)
◾
Shares purchased
from the proceeds of redemptions within the same fund family, provided (1) the
repurchase occurs within 90 days following the redemption, (2) the redemption
and purchase occur in the same account, and (3) redeemed shares were subject to
a front-end or deferred sales load (known as Rights of
Reinstatement)
◾
A shareholder in
the Fund’s Class C shares will have their shares converted at net asset value to
Class A shares (or the appropriate share class) of the Fund if the shares are no
longer subject to a CDSC and the conversion is in line with the policies and
procedures of OPCO
◾
Employees and
registered representatives of OPCO or its affiliates and their family
members
◾
Directors or
Trustees of the Fund, and employees of the Fund’s investment adviser or any of
its affiliates, as described in this Prospectus
Contingent
Deferred Sales Charge (“CDSC”) Waivers available at OPCO
◾
The death or
disability of the shareholder
◾
Shares sold as part
of a systematic withdrawal plan as described in this
Prospectus
◾
Return of excess
contributions from an Individual Retirement Account (“IRA”)
◾
Shares sold as part
of a required minimum distribution for IRA and retirement accounts due to the
shareholder reaching the qualified age based on applicable IRS
regulations
◾
Shares sold to pay
OPCO fees but only if the transaction is initiated by OPCO
◾
Shares acquired
through a Right of Reinstatement
Front-end
load discounts available at OPCO: breakpoints and/or rights of
accumulation
◾
Breakpoints as
described in this Prospectus
Visit our website
at www.pgim.com/investments
55
◾
Rights of
accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will
be automatically calculated based on the aggregated holding of Fund family
assets held by accounts within the purchaser’s household at OPCO. Eligible Fund
family assets not held at OPCO may be included in the ROA calculation only if
the shareholder notifies his or her financial advisor about such
assets.
RW
Baird (“Baird”)
Shareholders
purchasing Fund shares through a Baird platform or account will only be eligible
for the following sales charge waivers (front-end sales charge waivers and CDSC
waivers) and discounts, which may differ from those disclosed elsewhere in this
Prospectus or the SAI.
Front-end
sales charge waivers on Class A shares available at Baird
◾
Shares purchased
through reinvestment of capital gains distributions and dividend reinvestment
when purchasing shares of the same fund
◾
Shares purchased by
employees and registered representatives of Baird or its affiliates and their
family members as designated by Baird
◾
Shares purchased
from the proceeds of redemptions from another PGIM Fund, provided (1) the
repurchase occurs within ninety (90) days following the redemption, (2) the
redemption and purchase occur in the same account, and (3) redeemed shares were
subject to a front-end or deferred sales charge (known as Rights of
Reinstatement)
◾
A shareholder in
the Fund's Class C Shares will have their shares converted at net asset value to
Class A shares of the Fund if the shares are no longer subject to CDSC and the
conversion is in line with the policies and procedures of
Baird
◾
Employer-sponsored
retirement plans or charitable accounts in a transactional brokerage account at
Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans,
profit sharing and money purchase pension plans and defined benefit plans. For
purposes of this provision, employer-sponsored retirement plans do not include
SEP IRAs, Simple IRAs or SAR-SEPs
Contingent
Deferred Sales Charge (“CDSC”) waivers on Class A and C shares available at
Baird
◾
Shares sold upon
the death or disability of the shareholder
◾
Shares sold as part
of a systematic withdrawal plan as described in this
Prospectus
◾
Shares purchased in
connection with a return of excess contributions from an IRA
account
◾
Shares sold as part
of a required minimum distribution for IRA and other retirement accounts due to
the shareholder reaching the qualified age based on applicable IRS
regulations
◾
Shares sold to pay
Baird fees but only if the transaction is initiated by Baird
◾
Shares acquired
through a Right of Reinstatement
Front-end
Sales Charge Discounts available at Baird: Breakpoints and/or Rights of
Accumulation
◾
Breakpoints as
described in this Prospectus
◾
Rights of
accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will
be automatically calculated based on the aggregated holding of PGIM Fund assets
held by accounts within the purchaser’s household at Baird. Eligible PGIM Fund
assets not held at Baird may be included in the ROA calculation only if the
shareholder notifies his or her financial advisor about such
assets
◾
Letters of Intent
(“LOI”) which allow for breakpoint discounts based on anticipated purchases of
PGIM Funds through Baird, over a 13-month period of time
STIFEL,
NICOLAUS & COMPANY, INCORPORATED (“STIFEL”)
Shareholders
purchasing Fund shares through a Stifel platform or account, or who own shares
for which Stifel or an affiliate is the broker-dealer of record, are eligible
for the following front-end sales charge waivers with respect to Class A shares,
which may differ from and be more limited than those disclosed elsewhere in this
Fund's Prospectus or SAI. All other waivers in the Fund’s Prospectus or SAI
apply as described.
Front-End
Sales Charge Waivers on Class A Shares
56
PGIM Muni High
Income Fund
◾
Class C (i.e.,
level-load) shares that are no longer subject to a contingent deferred sales
charge and are converted to Class A shares of the same Fund (at net asset value
per share) pursuant to policies and procedures of Stifel.
Visit our website
at www.pgim.com/investments
57
|
FOR
MORE INFORMATION
Please
read this Prospectus before you invest in the Fund and keep it for future
reference.
For
information or shareholder questions contact: | |
|
◾MAIL
Prudential
Mutual Fund Services LLC
PO
Box 9658
Providence,
RI 02940 ◾WEBSITE
www.pgim.com/investments |
◾TELEPHONE
(800)
225-1852
(973)
367-3529
(from
outside the U.S.) |
|
◾E-DELIVERY
To
receive your mutual fund documents on-line, go to
pgim.com/investments/resource/edelivery and enroll.
Instead
of receiving printed documents by mail, you will receive notification via
email when new materials are
available.
You can cancel your enrollment or change your email address at any time by
visiting the website address
above. |
|
The
Annual and Semi-Annual Reports and the SAI contain additional information
about the Fund. Shareholders may
obtain
free copies of the SAI, Annual Report and Semi-Annual Report as well as
other information about the Fund
and
may make other shareholder inquiries through the telephone number, address
and website listed above. | |
|
◾STATEMENT
OF ADDITIONAL INFORMATION (“SAI”)
(incorporated
by reference into this Prospectus) ◾SEMI-ANNUAL
REPORT |
◾ANNUAL
REPORT
(contains
a discussion of the market conditions and
investment
strategies that significantly affected the
Fund's
performance during the last fiscal
year) |
|
You
can also obtain copies of Fund documents, including the SAI, from the SEC
as follows (the SEC charges a fee to
copy
documents): | |
|
◾ELECTRONIC
REQUEST
|
◾VIA
THE INTERNET
on
the EDGAR Database at
www.sec.gov |
|
PGIM
Muni High Income Fund | ||||
|
Share
Class |
A |
C |
Z |
R6 |
|
NASDAQ |
PRHAX |
PHICX |
PHIZX |
PHIQX |
|
CUSIP |
74440M104 |
74440M302 |
74440M401 |
74440M609 |
MF133STAT
The
Fund's Investment Company Act File No. 811-04930