PGIM
Securitized Credit Fund
PROSPECTUS
— November 29, 2023
INVESTMENT
OBJECTIVE
To
seek to maximize total return, through a combination of current income and
capital appreciation
|
PGIM
SECURITIZED CREDIT FUND | |||
|
A:
SCFOX |
C:
SCFVX |
Z:
SCFZX |
R6:
SCFQX |
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. © 2023
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
|
|
Class
A |
Class
C |
Class
Z |
Class
R6 |
|
Maximum
sales charge (load) imposed on purchases (as a percentage of offering
price) |
|
|
|
|
|
Maximum
deferred sales charge (load) (as a percentage of the lower of the original
purchase price or the net asset value at
redemption) |
|
|
|
|
|
Maximum
sales charge (load) imposed on reinvested dividends and other
distributions |
|
|
|
|
|
Redemption
fee |
|
|
|
|
|
Exchange
fee |
|
|
|
|
|
Maximum
account fee (accounts under $10,000) |
$ |
$ |
|
|
*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
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.
|
|
Class
A |
Class
C |
Class
Z |
Class
R6 |
|
Management
fee |
|
|
|
|
|
Distribution
and service (12b-1) fees |
|
|
|
|
|
Other
expenses |
|
|
|
|
|
Acquired
Fund fees and expenses |
|
|
|
|
|
Total
annual Fund operating expenses |
|
|
|
|
|
Fee
waiver and/or expense reimbursement |
( |
( |
( |
( |
|
Total
annual Fund operating expenses after fee waiver and/or expense
reimbursement(1) |
|
|
|
|
(1)
PGIM
Investments LLC (“PGIM Investments”) has contractually agreed, through
January
31, 2025 , to limit Total Annual Fund
Operating Expenses after fee waivers and/or expense reimbursements to 0.90% of
average daily net assets for Class A shares, 1.65% of average daily net assets
for Class C shares, 0.65% of average daily net assets for Class Z shares, and
0.60% 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
for the purpose of preventing the expenses from exceeding a certain expense
ratio limit 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 January 31, 2025 without the prior approval of the Fund’s Board of
Trustees.
Visit our website
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 Securitized
Credit Fund
Visit our website
at www.pgim.com/investments
5
The order of the
below risk factors does not indicate the significance of any particular risk
factor.
6
PGIM Securitized
Credit Fund
Visit our website
at www.pgim.com/investments
7
8
PGIM Securitized
Credit Fund
Visit our website
at www.pgim.com/investments
9
10
PGIM Securitized
Credit Fund
 |
|
|
| ||
|
|
|
|
|
|
|
|
|
|
|
Return
Before Taxes |
One
Year |
Five
Year |
Since
Inception |
Inception
Date |
|
Class
A Shares |
- |
|
|
|
|
Class
C Shares |
- |
|
|
|
|
Class
R6 Shares |
- |
|
|
|
|
Class
Z Shares % (as of 12-31-22) | ||||
|
Return
Before Taxes |
- |
|
|
|
|
Return
After Taxes on Distributions |
- |
|
|
|
|
Return
After Taxes on Distributions and Sale of Fund Shares |
- |
|
|
|
|
Index
% (reflects no deduction for fees, expenses or taxes) (as of
12-31-22) | ||||
|
ICE
BofA US 3-Month Treasury Bill Index |
|
|
|
|
|
Bloomberg
US Aggregate Bond Index |
- |
|
|
|
*
Since
Inception returns for the Index are measured from the closest month-end to the
Predecessor Fund’s inception date, November 16, 2015.
MANAGEMENT
OF THE FUND
The following
individuals are jointly and primarily responsible for the day-to-day management
of the Fund.
|
Investment
Manager |
Subadvisers |
Portfolio
Managers |
Title |
Service
Date |
|
PGIM
Investments LLC |
PGIM
Fixed Income*
PGIM
Limited |
Edwin
Wilches, CFA |
Managing
Director
and
Co-Head of
Securitized
Products
Team |
July
2019
|
Visit our website
at www.pgim.com/investments
11
|
Investment
Manager |
Subadvisers |
Portfolio
Managers |
Title |
Service
Date |
|
|
|
Gabriel
Rivera |
Managing
Director
and
Co-Head of
Securitized
Products
Team |
September
2021 |
|
|
|
Peter
Freitag, CFA |
Principal
and
Securitized
Products
Portfolio
Manager |
July
2019 |
|
|
|
Jung-Chiang
Thomas
Chang,
CFA, FRM** |
Principal
and
Securitized
Products
Portfolio
Manager |
July
2019 |
|
|
|
Brian
Juliano |
Managing
Director
and
Head of U.S.
Leveraged
Loan Team |
July
2019 |
* PGIM Fixed Income is a
business unit of PGIM, Inc.
**Mr. Chang will retire from
the Fund’s portfolio management team effective on or about December 31,
2023.
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.
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's
dividends and distributions are taxable and will be taxed as ordinary income or
capital gains, unless you are investing through a tax-deferred arrangement, such
as a 401(k) plan or an individual retirement account. Such tax-deferred
arrangements may be taxed later upon withdrawal of monies from those
arrangements.
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.
12
PGIM Securitized
Credit Fund
MORE ABOUT THE
FUND'S PRINCIPAL AND NON-PRINCIPAL INVESTMENT STRATEGIES, INVESTMENTS AND
RISKS
INVESTMENT
STRATEGIES AND INVESTMENTS
The Fund's
investment objective is to seek to maximize total return, through a combination
of current income and capital appreciation.
Under normal market
conditions, the Fund invests at least 80% of its investable assets in
securitized credit investments and other similar credit instruments, including
derivative instruments that provide exposure to securitized credit investments
and other similar credit instruments. Securitized credit investments are also
referred to as “structured product securities” or “structured products.” For
purposes of the Fund’s 80% policy, securitized credit investments include
secured loans backed by commercial real estate, residential real estate,
commercial or consumer loans, and securitizations such as agency and non-agency
mortgage-backed securities (“MBS”) (including commercial mortgage-backed
securities (“CMBS”), residential mortgage-backed securities (“RMBS”), and
collateralized mortgage obligations (“CMOs”)), asset-backed securities (“ABS”)
(including collateralized debt obligations (“CDOs”) such as collateralized bond
obligations (“CBOs”) and collateralized loan obligations (“CLOs”)), and other
similar securities and related instruments.
Agency MBS are
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
which include mortgage pass-through securities representing interests in pools
of mortgage loans issued or guaranteed by the Government National Mortgage
Association (“GNMA” or “Ginnie Mae”), the Federal National Mortgage Association
(“FNMA” or “Fannie Mae”), the Student Loan Marketing Association (“SLMA” or
“Sallie Mae”) or the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie
Mac”).
The Fund may also
invest in other fixed income instruments, which include bonds, debt or credit
securities and other similar instruments issued by various U.S. and non-U.S.
public or private sector entities.
The term
“investable assets” refers to the Fund's net assets plus any borrowings for
investment purposes. 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.
The Fund’s
investment objective is not a fundamental policy. The Board of Trustees (the
“Board”) can change investment policies of the Fund that are not fundamental
without shareholder approval. The Fund's policy of investing at least 80% of its
investable assets in the type of investments suggested by the Fund's name is not
a fundamental investment policy and may be changed by the Board on 60 days’
prior written notice to shareholders.
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. In its bottom-up research,
the subadviser develops an internal rating and outlook based on the underlying
collateral of the security, the origination and servicing of the collateral and
the inherent structure of the security. The rating and outlook are determined
based on a thorough review of the financial health and trends of the investment.
The subadviser may also consider investment factors such as a review of the
financial health and trends of the issuer, expected total return, yield, spread
and potential for price appreciation as well as credit quality, maturity and
risk. The Fund may invest in a security based upon the expected total return
rather than the yield of such security.
The subadviser may
also utilize proprietary quantitative tools (i.e., databases, data
visualizations, data reporting, stochastic models, portfolio asset allocation
and risk models) to support relative value trading and asset allocation for
portfolio management as well as various risk models to support risk management.
These proprietary quantitative tools are not used as a substitute for the
discretion of portfolio managers, risk managers or researchers.
Visit our website
at www.pgim.com/investments
13
Although the Fund
may invest in instruments of any duration or maturity, under normal market
conditions the dollar-weighted average effective duration of the Fund, including
futures positions, is expected to range within -2 to +2 years. Effective
duration measures the expected sensitivity of market price of a security to
changes in interest rates, taking into account the effects of structural
complexities (for example, some bonds can be prepaid by the issuer). Generally,
the longer a portfolio’s duration, the more sensitive it will be to changes in
interest rates. For example, if interest rates rise by 1%, a fund with a
two-year effective duration would expect the value of its portfolio to decrease
by 2% and a fund with a ten-year effective duration would expect the value of
its portfolio to decrease by 10%, all other factors being equal. Negative
duration occurs when the price of a debt security moves in the same direction as
changes in interest rates. Although few debt securities have negative duration,
it can be achieved through investments in various derivative
instruments.
The Fund may invest
in investment-grade
and non-investment grade debt securities. Investment-grade
debt securities are debt securities rated BBB or higher or Baa or higher or the
equivalent by a nationally recognized statistical rating organization (“NRSRO”),
such as S&P Global Ratings (“S&P”) or Moody's Investors Service, Inc.
(“Moody's”). A rating is an assessment of the likelihood of the timely payment
of interest and repayment of principal and can be useful when comparing
different debt obligations. These ratings are not a guarantee of quality. The
opinions of the rating agencies do not reflect market risk and they may, at
times, lag behind the current financial condition of a company. In addition to
investing in rated securities, the Fund may invest in unrated securities that
the subadviser determines are of comparable quality to the rated securities that
are permissible investments. In the event that a security receives different
ratings from different NRSROs, the Fund will treat the security as being rated
in the highest rating category received from a NRSRO.
Debt obligations
rated BBB or Baa are considered to have speculative characteristics and are
riskier than higher-rated securities. Obligations rated BB by S&P or Ba by
Moody's or lower are considered to be speculative with respect to their capacity
to pay interest and principal and are commonly referred to as high-yield
debt securities or junk
bonds.
These securities tend to offer higher yields, but also offer greater credit
risks than higher-rated securities. Securities rated Caa by Moody's or CCC by
S&P are speculative and of poor standing and may either be in default or
risk of default on principal or interest payments. An investor can evaluate the
expected likelihood of default by an issuer by looking at its ratings as
compared to another similar issuer. If the rating of a debt security is
downgraded after the Fund purchases it (or if the debt security is no longer
rated), the Fund will not have to sell the security, but the subadviser will
take this into consideration in deciding whether the Fund should continue to
hold the security.
The Fund may invest
in the aggregate up to 35% of its investable assets in non-U.S. fixed income
instruments (including emerging markets) and in fixed income instruments that
are denominated in non-U.S. dollar currencies (including those of emerging
markets). The Fund may invest in foreign debt securities, which include
securities that are issued by foreign governments and corporations. Foreign
government debt securities include securities issued by quasi-governmental
entities, governmental agencies, supranational entities and other governmental
entities denominated in foreign currencies or U.S. dollars. CLOs and other
structured products that are issued in the United States or sponsored by U.S.
companies but organized as Cayman or Bermuda companies are not considered
non-U.S. fixed income instruments for purposes of this 35%
limitation.
The Fund may invest
in debt obligations issued or guaranteed by the U.S. Government and U.S.
Government-related entities. Some (but not all) of the U.S. Government
securities and mortgage-related securities in which the Fund will invest are
backed by the full faith and credit of the U.S. Government, which means that
payment of interest and principal is guaranteed, but yield and market value are
not. These include obligations of the GNMA, the Farmers Home Administration and
the Export-Import Bank. Debt securities issued by other government entities,
like obligations of the FNMA, the SLMA, the FHLMC, the Federal Home Loan Bank,
the Tennessee Valley Authority and the United States Postal Service are not
backed by the full faith and credit of the U.S. Government. However, these
issuers have the right to borrow from the U.S. Treasury to meet their
obligations. In contrast, the debt securities of other issuers, like the Farm
Credit System, depend entirely upon their own resources to repay their debt
obligations.
14
PGIM Securitized
Credit Fund
The Fund may invest
in mortgage-related securities issued or guaranteed by U.S. governmental
entities or private issuers. These securities are usually pass-through
instruments that pay investors a share of all interest and principal payments
from an underlying pool of fixed or adjustable rate mortgages. Mortgage-related
securities issued by the U.S. Government include GNMAs and mortgage-related
securities issued by agencies of the U.S. Government as well as FNMAs and debt
securities issued by FHLMC. The U.S. Government or the issuing agency directly
or indirectly guarantees the payment of interest and principal on these
securities. Private issuer mortgage-backed securities may include loans on
commercial or residential properties and may entail significant credit
risk.
The Fund may invest
in derivative instruments, including futures, options, options on futures,
foreign currency forward contracts and swaps, to try to enhance return or to
reduce (“hedge”) investment risks. The Fund may enter into certain derivative
instruments that may provide leverage, such as engaging in futures, forwards,
swaps, options and short sales (collectively, “effective leverage”).
Asset-backed
securities in which the Fund
invests are issued in the form of debt instruments that may include CDOs, which
may include CBOs and CLOs. CBOs and CLOs are types of asset-backed securities. A
CBO is a trust which is backed by a diversified pool of high risk, below
investment grade fixed income securities. A CLO is a trust typically
collateralized by a pool of loans, which may include, among others, domestic and
foreign senior secured loans, senior unsecured loans, and subordinated corporate
loans, including loans that may be rated below investment grade or equivalent
unrated loans. The Fund’s investments in the most subordinated tranches of CLOs
(i.e., CLO Equity) will be limited to 10% of the Fund’s total
assets.
Asset-backed
securities in which the Fund invests may have underlying assets that include
motor vehicle installment sales or installment loan contracts, leases of various
types of real and personal property and receivables from credit card agreements.
Like mortgages underlying mortgage-backed securities, underlying automobile
sales contracts or credit card receivables are subject to prepayment, which may
reduce the overall return to certificate holders. Certificate holders may also
experience delays in payment on the certificates if the full amounts due on
underlying sales contracts or receivables are not realized by the Fund because
of unanticipated legal or administrative costs of enforcing the contracts or
because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, or other factors.
If the Fund
purchases structured
product securities that are
“subordinated” to other interests in the same pool, the Fund as a holder of
those securities may receive payments only after the pool's obligations to other
investors have been satisfied. An unexpectedly high rate of defaults on the
assets held by an asset pool may limit substantially the securitization trust’s
ability to make payments of principal or interest to the Fund as a holder of
such subordinated securities, reducing the values of those securities or in some
cases rendering them worthless; the risk of such defaults is generally higher in
the case of mortgage pools that include so-called “subprime” mortgages. An
unexpectedly high or low rate of prepayments on a pool's underlying assets may
have a similar effect on subordinated securities. A securitization trust may
issue securities subject to various levels of subordination; the risk of
non-payment affects securities at each level, although the risk is greater in
the case of more highly subordinated securities.
The Fund generally
may not invest more than 7.5% of its total assets in unregistered
or privately issued structured product securities (excluding
structured products offered and sold in the United States in reliance
on Rule 144A or Regulation S under the Securities Act of
1933) that, at the time of purchase, (i) are classified as illiquid and
(ii) for which there is no current market price (“Other Unregistered Structured
Products”). If an identifiable market for the structured product develops after
the Fund’s purchase of the security, the structured product will no longer be
subject to this 7.5% limitation.
The Fund may invest
in floating
or fixed rate loans (secured or
unsecured) arranged through private negotiations between a corporation or other
institution that is the borrower and one or more financial institutions that are
the lenders. Loans are often structured and administered by a financial
institution that acts as agent for the holders of the loan. Loans can be
acquired directly through the agent, by assignment from another holder of the
loan, or as a participation interest in another holder's portion of the loan.
Most floating rate loans are senior in rank (“senior loans”)
Visit our website
at www.pgim.com/investments
15
in the event of
bankruptcy to most other securities of the issuer, such as common stock or
publicly-issued bonds. Floating rate loans may be secured by specific collateral
of the issuer so that holders of the loans will have a priority claim on those
assets in the event of default or bankruptcy of the issuer.
Mortgage
pass-through securities include
collateralized mortgage obligations, multi-class pass-through securities and
stripped mortgage-backed securities. A collateralized
mortgage obligation (“CMO”) is a security
backed by an underlying portfolio of mortgages or mortgage-backed securities
that may be issued or guaranteed by a bank or by U.S. governmental entities. A
multi-class
pass-through security is an interest in
a trust composed of underlying mortgage assets. Payments of principal of and
interest on the mortgage assets and any reinvestment income thereon provide
funds to pay debt service on the CMO or to make scheduled distributions on the
multi-class pass-through security. A stripped
mortgage-backed security (“MBS strip”) may be issued by
U.S. governmental entities or by private institutions. MBS strips take the
pieces of a debt security (principal and interest) and break them apart. The
resulting securities may be sold separately and may perform
differently.
The values of
mortgage-related
securities vary with changes
in market interest rates generally and changes in yields among various kinds of
mortgage-related securities. Such values are particularly sensitive to changes
in prepayments of the underlying mortgages. For example, during periods of
falling interest rates, prepayments tend to accelerate as homeowners and others
refinance their higher rate mortgages; these prepayments reduce the anticipated
duration of the mortgage-related securities. Conversely, during periods of
rising interest rates, prepayments can be expected to decelerate, which has the
effect of extending the anticipated duration at the same time that the value of
the securities declines. MBS strips tend to be even more highly sensitive to
changes in prepayment and interest rates than mortgage-related securities and
CMOs generally.
A corporation that
wishes to raise cash may choose to issue a corporate
debt security whereby the
corporation pays the investor a fixed or variable rate of interest and must
repay the amount borrowed at maturity.
The Fund may invest
in foreign
debt securities, which include
securities that are issued by foreign governments and corporations. Foreign
government debt securities include securities issued by quasi-governmental
entities, governmental agencies, supranational entities and other governmental
entities denominated in foreign currencies or U.S. dollars.
The Fund may engage
in active
trading—that is, frequent
trading of its securities—in order to take advantage of new investment
opportunities or yield differentials. The Fund will be more heavily involved in
active trading during periods of market volatility in order to attempt to
preserve gains or limit losses. There may be tax consequences, such as a
possible increase in short-term capital gains or losses, when the Fund sells a
security without regard to how long it has held the security. In addition,
active trading may result in greater transaction costs, which will reduce the
Fund's return.
Zero
Coupon Bonds, Pay-in-Kind (PIK) and Deferred Payment Securities
The Fund may invest
in zero coupon bonds, pay-in-kind (“PIK”) or deferred payment securities. 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). PIK
securities pay interest in the form of additional securities. Deferred payment
securities pay regular interest after a predetermined date. The Fund records the
amount these securities rise in price each year (phantom income) for accounting
and federal income tax purposes, but does not receive income currently. Because
the Fund is required under federal tax laws to distribute income to its
shareholders, in certain circumstances, the Fund may have to dispose of its
portfolio securities under disadvantageous conditions or borrow to generate
enough cash to distribute phantom income and the value of the paid-in-kind
interest.
Municipal
Bonds and Notes
Municipal bonds and
notes are issued by state and local governments and their agencies, authorities
and other instrumentalities. Municipal bonds and notes may be general obligation
or revenue bonds. General obligation bonds or notes are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenues derived from a particular
facility or class of facilities or from the
16
PGIM Securitized
Credit Fund
proceeds of a
special excise tax or other specific revenue source but not from the general
taxing power. Municipal notes also include tax-exempt or municipal commercial
paper, which may be issued to meet seasonal working capital needs of a
municipality or interim construction financing and may be paid from the general
revenues of the municipality or refinanced with long-term debt. Municipal
commercial paper may be backed by letters of credit, lines of credit, lending
agreements, note repurchase agreements or other credit facility agreements
offered by banks or other institutions.
Convertible
Securities
The Fund may invest
in convertible securities, which include convertible preferred stocks and debt
securities of a corporation that may be converted into underlying shares of
common stock either because they have warrants attached or otherwise permit the
holder to buy common stock of the corporation at a set price. Convertible
securities provide an income stream (usually lower than non-convertible bonds)
and give investors opportunities to participate in the capital appreciation of
the underlying common stock. Convertible securities typically offer greater
potential for appreciation than non-convertible debt securities.
Money
Market Instruments
The Fund may hold
cash and/or invest in money market instruments, including commercial paper of a
U.S. or non-U.S. company, non-U.S. government securities, certificates of
deposit, bankers' acceptances, time deposits of domestic and non-U.S. banks, and
obligations issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. These obligations may be U.S. dollar-denominated or
denominated in a non-U.S. currency. Money market instruments typically have a
maturity of one year or less as measured from the date of purchase.
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.
Repurchase
Agreements
The Fund may enter
into repurchase agreements, where a party agrees to sell a security to the Fund
and then repurchases it at an agreed-upon price at a stated time. This creates a
fixed return for the Fund, and is, in effect, a loan by the Fund.
Reverse
Repurchase Agreements
The Fund may enter
into reverse repurchase agreements, where the Fund sells a security with an
obligation to repurchase it at an agreed-upon price and time. Reverse repurchase
agreements that involve borrowing to take advantage of investment opportunities,
a practice known as leverage, could magnify losses. If the Fund borrows money to
purchase securities and those securities decline in value, then the value of the
Fund's shares will decline faster than if the Fund were not leveraged. In
addition, interest costs and investment fees relating to leverage may exceed
potential investment gains.
Dollar
Rolls
The Fund may enter
into dollar rolls in which the Fund sells securities to be delivered in the
current month and repurchases substantially similar (same type and coupon)
securities to be delivered on a specified future date by the same party. The
Fund is paid the difference between the current sales price and the forward
price for the future purchase as well as the interest earned on the cash
proceeds of the initial sale.
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 instruments, 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
Visit our website
at www.pgim.com/investments
17
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 or listed 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.
Foreign
Currency Forward Contracts. The Fund may enter
into foreign currency forward contracts to protect the value of its assets
against future changes in the level of foreign exchange rates or to enhance
returns. A foreign currency forward contract is an obligation to buy or sell a
given currency on a future date and at a set price or to make or receive a cash
payment based on the value of a given currency at a future date. Delivery of the
underlying currency is expected, the terms are individually negotiated, the
counterparty is not a clearing corporation or an exchange, and payment on the
contract is made upon delivery, rather than daily.
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.
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.
Options. The Fund may
purchase and sell put and call options on debt securities, aggregates of debt
securities, financial indices, and currencies traded on U.S. or foreign
securities exchanges or in the over-the-counter market. An option gives the
purchaser the right to buy or sell securities or such currencies in exchange for
a premium. The Fund will sell only covered options.
Equity
and Equity-Related Securities
From time to time,
the Fund may purchase or hold equity or equity-related securities incidental to
the purchase or ownership of fixed income instruments or in connection with a
reorganization of a borrower. These include common stock, preferred stock or
securities that may be converted into or exchanged for common stock—known as
convertible securities—like rights and warrants.
Short
Sales
The Fund may make
short sales of a security. This means that the Fund may sell a security that it
does not own, which it may do, for example, when the subadviser thinks the value
of the security will decline. The Fund generally borrows the security to deliver
to the buyers in a short sale. The Fund must then replace the borrowed security
by purchasing it at the market price at the time of replacement. The Fund may
make short sales “against the box.” In a short sale against the box, at the time
of sale, the Fund owns or has the right to acquire the identical security at no
additional cost through conversion or exchange of other securities it
owns.
18
PGIM Securitized
Credit Fund
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.
Floating
Rate and Other Loans
The Fund may invest
in fixed and floating rate loans (secured or unsecured) arranged through private
negotiations between a company as the borrower and one or more financial
institutions as lenders. These types of investments can be in the form of loan
participations or assignments.
Loan participations
and assignments are nonconvertible corporate debt instruments of varying
maturities. With participations, the Fund has the right to receive payments of
principal, interest and fees from the lender conditioned upon the lender's
receipt of payment from the borrower. In participations, the Fund generally does
not have direct rights against the borrower on the loan, which means that if the
borrower does not pay back the loan or otherwise comply with the loan agreement,
the Fund will not have the right to make it do so. With assignments, the Fund
has direct rights against the borrower on the loan, but its rights may be more
limited than the original lender's.
Investments
in Affiliated and Unaffiliated Funds
The Fund may invest its assets in
affiliated or unaffiliated funds, including exchange-traded funds. The Fund can
invest its free cash balances in 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
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. The investment results of the portions of the Fund’s
assets invested in the other funds will be based on the investment results of
the other funds. As a shareholder in other funds, the Fund will pay its
proportional share of the expenses of the other funds.
The affiliated
short-term bond funds and certain affiliated 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.
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.
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 investable 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 investable 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.
New
Securities and Other Investment Techniques
New types of
securities and other investment and hedging practices are developed from time to
time. The subadviser expects, consistent with the Fund's investment objective
and policies, to invest in such new types of securities and to engage in such
new types of investment practices if the subadviser believes that these
investments and investment techniques may assist the Fund in achieving its
investment objective. In addition to the strategies and securities
Visit our website
at www.pgim.com/investments
19
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
Strategies: Investment Limits |
|
◾Securitized
credit investments: Under normal market conditions, at least 80% of
investable assets ◾Non-U.S.
fixed income instruments and fixed income instruments denominated in
non-U.S. dollar currencies: Up to 35% of
investable
assets ◾Derivatives:
Up to 25% of total assets in derivatives, based on market value of the
derivatives, for hedging or non-hedging
purposes
(subject to the Fund's operation under the requirements of Rule 18f-4
under the 1940 Act) |
|
Non-Principal
Strategies: Investment Limits |
|
◾Illiquid
investments: Up to 15% of net assets ◾CLO
Equity: Up to 10% of total assets ◾Short
Sales: Up to 25% of net assets (excluding short sales “against
the box”) ◾Money
market instruments: Up to 100% on temporary basis ◾Borrowing:
Up to 33 1∕3%
of total assets ◾Other
Unregistered Structured Products: Up to 7.5% of total
assets |
RISKS
OF INVESTING IN THE FUND
The order of the
below risk factors does not indicate the significance of any particular risk
factor.
Active
Trading Risk. The Fund actively
and frequently trades its portfolio securities. High portfolio turnover results
in higher transaction costs, which can affect the Fund’s performance and have
adverse tax consequences. In addition, high portfolio turnover may also mean
that a proportionately greater amount of distributions to shareholders will be
taxed as ordinary income rather than long-term capital gains compared to
investment companies with lower portfolio turnover.
Convertible
Securities Risk. The market value of
a convertible security performs like that of a regular debt security; that is,
if market interest rates rise, the value of a convertible security usually
falls. In addition, convertible securities are subject to the risk that the
issuer will not be able to pay interest or dividends when due, and their market
value may change based on changes in the issuer's credit rating or the market's
perception of the issuer's creditworthiness. Since it derives a portion of its
value from the common stock into which it may be converted, a convertible
security is also subject to the same types of market and issuer risks that apply
to the underlying common stock.
“Covenant-Lite”
Risk.
Some of the loans or debt obligations in which the Fund may invest or get
exposure to may be “covenant-lite”, which means the loans or obligations contain
fewer financial maintenance covenants than other loans or obligations (in some
cases, none) and do not include terms which allow the lender to monitor the
borrower’s performance and declare a default if certain criteria are breached.
An investment by the Fund in a covenant-lite loan may potentially hinder the
ability to reprice credit risk associated with the issuer and reduce the ability
to restructure a problematic loan and mitigate potential loss. The Fund may also
experience difficulty, expenses or delays in enforcing its rights on its
holdings of covenant-lite loans or obligations. As a result of these risks, the
Fund’s exposure to losses may be increased, which could result in an adverse
impact on the Fund’s net income and NAV.
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.
20
PGIM Securitized
Credit Fund
Credit
Risk/Counterparty Risk. The ability, or
perceived ability, of the issuer or guarantor of a debt security, or the
counterparty (the party on the other side of the transaction) to a derivatives
contract or other financial contract to meet its financial obligations will
affect the value of the security or derivative. Counterparty and credit risk are
especially important in the context of privately negotiated instruments. The
Fund expects to enter into certain privately negotiated agreements where the
counterparty assumes the physical settlement obligations of the Fund under such
transactions. Under this type of arrangement, there is a risk that the relevant
counterparty or intermediary would, due to insolvency or other reasons, be
unable to or fail to assume the physical settlement obligations of the Fund, in
which case the Fund could be required to sell portfolio instruments at
unfavorable times or prices or could have insufficient assets to satisfy its
physical settlement obligations.
Credit ratings are
intended to provide a measure of credit risk. However, credit ratings are only
the opinions of the credit rating agency issuing the ratings and are not
guarantees as to quality. The lower the rating of a debt security held by the
Fund, the greater the degree of credit risk that is perceived to exist by the
credit rating agency with respect to that security. Increasing the amount of
Fund assets allocated to lower-rated securities generally will increase the
credit risk to which the Fund is subject. Not all securities in which the Fund
invests are rated.
The
lower the credit quality of a bond, the more sensitive it is to credit
risk.
Currency
Risk.
The Fund's net asset value could decline as a result of changes in exchange
rates, which could adversely affect the Fund’s investments in currencies, or in
securities that trade in, and receive revenues related to, currencies, or in
derivatives that provide exposure to currencies. Certain foreign countries may
impose restrictions on the ability of issuers of foreign securities to make
payment of principal and interest or dividends to investors located outside the
country, due to blockage of foreign currency exchanges or
otherwise.
Currency
Transactions Risk. The Fund may not
fully benefit from or may lose money on forward currency transactions if changes
in currency exchange rates do not occur as anticipated or do not correspond
accurately to changes in the value of the Fund’s holdings. The value of
investments denominated in foreign currencies increases or decreases as the
rates of exchange between those currencies and the U.S. dollar change. Currency
conversion costs and currency fluctuations could erase investment gains or add
to investment losses.
The Fund’s ability
to use forward foreign currency transactions successfully depends on a number of
factors, including the forward foreign currency transactions being available at
prices that are not too costly, the availability of liquid markets and the
ability of the subadviser to accurately predict the direction of changes in
currency exchange rates. Currency exchange rates may be volatile and may be
affected by, among other factors, the general economics of a country, the
actions of U.S. and foreign governments or central banks, the imposition of
currency controls and speculation. An instrument may be denominated in a
currency that is different from the currency where the issuer is
domiciled.
Currency
transactions are subject to counterparty risk, which is the risk that the other
party in the transaction will not fulfill its
contractual obligation.
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
Visit our website
at www.pgim.com/investments
21
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.
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, the Fund will not earn income on the cash and it will be subject to
the credit risk of the depository institution holding 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.
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.
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.
Dollar
Rolls Risk. Dollar rolls
involve the risk that the market value of the securities that the Fund is
committed to buy may decline below the price of the securities the Fund has
sold. If the buyer of securities under a dollar roll files for bankruptcy or
becomes insolvent, the Fund's right to purchase or repurchase securities under a
dollar roll may be restricted. Successful use of dollar rolls depends on the
ability to correctly predict interest rates and prepayments, depending on the
underlying security. These transactions may involve leverage.
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, or otherwise reduce
inflation, may at times result in unusually high market volatility, which could
negatively impact performance. Governmental efforts to curb inflation often have
negative effects on the level of economic activity. Relatively reduced liquidity
in credit and fixed income markets could adversely affect issuers
worldwide.
Equity
and Equity-Related Securities Risk. Equity and
equity-related securities may be subject to changes in value, and their values
may be more volatile than those of other asset classes. In addition to an
individual security losing value, the value of the equity markets or a sector in
which the Fund invests could go down. Different parts of a market can react
differently to adverse issuer, market, regulatory, political and economic
developments.
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)
22
PGIM Securitized
Credit Fund
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.
Floating
Rate and Other Loans Risk. The Fund's ability
to receive payments of principal and interest and other amounts in connection
with loans (whether through participations, assignments or otherwise) will
depend primarily on the financial condition of the borrower. The failure by the
Fund to receive scheduled interest or principal payments on a loan because of a
default, bankruptcy or any other reason would adversely affect the income of the
Fund and would likely reduce the value of its assets. Even with loans secured by
collateral, there is the risk that the value of the collateral may decline, may
be insufficient to meet the obligations of the borrower, or be difficult to
liquidate. In the event of a default, the Fund may have difficulty collecting on
any collateral and would not have the ability to collect on any collateral for
an uncollateralized loan. Further, the Fund's access to collateral, if any, may
be limited by bankruptcy laws. Due to the nature of the private syndication of
senior loans, including, for example, lack of publicly-available information,
some senior loans are not as easily purchased or sold as publicly-traded
securities. In addition, loan participations generally are subject to
restrictions on transfer, and only limited opportunities may exist to sell loan
participations in secondary markets. As a result, it may be difficult for the
Fund to value loans or sell loans at an acceptable price when it wants to sell
them. Loans trade in an over-the-counter market, and confirmation and
settlement, which are effected through standardized procedures and
documentation, may take significantly longer than seven days to complete.
Extended trade settlement periods may, in unusual market conditions with a high
volume of shareholder redemptions, present a risk to shareholders regarding the
Fund's ability to pay redemption proceeds in a timely manner. In some instances,
loans and loan participations are not rated by independent credit rating
agencies; in such instances, a decision by the Fund to invest in a particular
loan or loan participation could depend exclusively on the subadviser's credit
analysis of the borrower, or in the case of a loan participation, of the
intermediary holding the portion of the loan that the Fund has purchased. To the
extent the Fund invests in loans of non-U.S. issuers, the risks of investing in
non-U.S. issuers are applicable. Loans may not be considered to be “securities”
and as a result may not benefit from the protections of the federal securities
laws, including anti-fraud protections and those with respect to the use of
material non-public information, so that purchasers, such as the Fund, may not
have the benefit of these protections. If the Fund is in possession of material
non-public information about a borrower as a result of its investment in such
borrower’s loan, the Fund may not be able to enter into a transaction with
respect to a publicly-traded security of the borrower when it would otherwise be
advantageous to do so.
Foreign
Securities Risk. Investments in
securities of non-U.S. issuers (including those denominated in U.S. dollars) may
involve more risk than investing in securities of U.S. issuers. Foreign
political, economic and legal systems, especially those in developing and
emerging market countries, may be less stable and more volatile than in the
United States. Foreign legal systems generally have fewer regulatory
requirements than the U.S. legal system, particularly those of emerging markets.
In general, less information is publicly available with respect to non-U.S.
companies than U.S. companies. Non-U.S. companies generally are not subject to
the same accounting, auditing, and financial reporting standards as are U.S.
companies. Additionally, the changing value of foreign currencies and changes in
exchange rates could also affect the value of the assets the Fund holds and the
Fund's performance. Certain foreign countries may impose restrictions on the
ability of issuers of foreign securities to make payment of principal and
interest or dividends to investors located outside the country, due to blockage
of foreign currency exchanges or otherwise. Investments in emerging markets are
subject to greater volatility and price declines.
Visit our website
at www.pgim.com/investments
23
In addition, the
Fund's investments in non-U.S. securities may be subject to the risks of
nationalization or expropriation of assets, imposition of currency exchange
controls or restrictions on the repatriation of non-U.S. currency, confiscatory
taxation and adverse diplomatic developments. Special U.S. tax considerations
may apply.
Forward
Commitments Risk. Forward commitments
are subject to the risk that the counterparty to the forward commitment may fail
to make payment or delivery in a timely manner or at all. Forward commitments
are also subject to the risk that the value of the security to be purchased may
decline prior to the settlement date.
Futures
and Forward Contracts Risk.
The
primary risks associated with the use of futures or forward contracts are (a)
the imperfect correlation between the change in market value of the instruments
held by the Fund and the price of the futures or forward contract; (b) possible
lack of a liquid secondary market for a futures or forward contract and the
resulting inability to close a futures or forward contract when desired; (c)
losses caused by unanticipated market movements, which are potentially
unlimited; (d) the failure to predict correctly the direction of securities or
commodities prices, interest rates, currency exchange rates and other economic
factors; and (e) the possibility that the counterparty to the futures or forward
contract will default in the performance of its obligations. Additionally, not
all forward contracts require a counterparty to post collateral, which may
expose the Fund to greater losses in the event of a default by a
counterparty.
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.
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.
Similarly, a rise in interest rates may also have a greater negative impact on
the value of equity securities whose issuers expect earnings further out in the
future. 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.
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
24
PGIM Securitized
Credit Fund
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.
Leverage
Risk. Certain
transactions in which the Fund may engage may give rise to leverage. The use of
leverage exaggerates the effect of any increase or decrease in the value of the
Fund’s holdings, and makes any change in the Fund’s net asset value greater than
it would be without the use of leverage. This could result in increased
volatility of investment return. The Fund may be required to pledge its assets
or post margin in connection with certain borrowings or derivatives transactions
that involve leverage. There is a possibility that posting or pledging a large
portion of the assets of the Fund could impede portfolio management or the
Fund's ability to meet redemption requests or other current obligations or that
the Fund may be required to dispose of some of its investment at unfavorable
prices or times.
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.
Actively managed funds
are subject to management risk. The subadviser will apply investment techniques
and risk analyses in making investment decisions for the Fund, but the
subadviser's judgments about the attractiveness, value or market trends
affecting a particular security, industry or sector or about market movements
may be incorrect. Additionally, the investments selected for the Fund may
underperform the markets in general, the Fund's benchmark and other funds with
similar investment objectives.
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.
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.
Visit our website
at www.pgim.com/investments
25
Money
Market Instruments Risk. The value of money
market instruments may be affected by changing interest rates and by changes in
the credit ratings of those instruments. If a significant amount of the Fund's
assets are invested in money market instruments, it will be more difficult for
the Fund to achieve its investment objective.
Mortgage-Backed
and Asset-Backed Securities Risk. Mortgage-backed
securities are particularly susceptible to prepayment and extension risks,
because prepayments on the underlying mortgages tend to increase when interest
rates fall and decrease when interest rates rise. Prepayments may also occur on
a scheduled basis or due to foreclosure. When market interest rates increase,
mortgage 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 mortgage-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 mortgage-backed securities may
increase, the rates of prepayment of the underlying mortgages tend to increase,
which shortens the effective duration of these securities. Mortgage-backed
securities are also subject to the risk that underlying borrowers will be unable
to meet their obligations.
At times, some of
the mortgage-backed securities in which the Fund may invest will have higher
than market interest rates and therefore will be purchased at a premium above
their par value. Prepayments may cause losses on securities purchased at a
premium.
The value of
mortgage-backed securities may be affected by changes in credit quality or value
of the mortgage loans or other assets that support the securities. In addition,
for mortgage-backed securities, when market conditions result in an increase in
the default rates on the underlying mortgages and the foreclosure values of the
underlying real estate are below the outstanding amount of the underlying
mortgages, collection of the full amount of accrued interest and principal on
these investments may be doubtful. For mortgage derivatives and structured
securities that have embedded leverage features, small changes in interest or
prepayment rates may cause large and sudden price movements. Mortgage
derivatives can also become illiquid and hard to value in declining
markets.
Asset-backed
securities are structured like mortgage-backed securities and are subject to
many of the same risks, including prepayment risk, extension risk, credit risk
and interest rate risk. The ability of an issuer of asset-backed securities to
enforce its security interest in the underlying assets or to otherwise recover
from the underlying obligor may be limited. Certain 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 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.
26
PGIM Securitized
Credit Fund
Options
Risk.
When the Fund purchases an option, it may lose the premium paid for it if the
price of the underlying security, commodity or other asset decreases or remains
the same (in the case of a call option) or increases or remains the same (in the
case of a put option). If a put or call option purchased by the Fund were
permitted to expire without being sold or exercised, its premium would represent
a loss to the Fund. To the extent that the Fund writes or sells an option, if
the decline or increase in the underlying asset is significantly below or above
the exercise price of the written option, the Fund could experience a
substantial or unlimited loss. Investments in options are considered
speculative.
Preferred
Securities Risk. Preferred stock
can experience sharp declines in value over short or extended periods of time,
regardless of the success or failure of a company’s operations. A redemption by
the issuer may negatively impact the return of the security held by the Fund.
Preferred stockholders’ liquidation rights are subordinate to the company’s debt
holders and creditors. If interest rates rise, the fixed dividend on preferred
stocks may be less attractive and the price of preferred stocks may decline.
Preferred stock usually does not require the issuer to pay dividends and may
permit the issuer to defer dividend payments. Deferred dividend payments could
have adverse tax consequences for the Fund and may cause the preferred security
to lose substantial value. Preferred securities also may have substantially
lower trading volumes and less market depth than many other securities, such as
common stock or U.S. Government securities.
Reference Rate
Risk. The Fund may be
exposed to financial instruments that recently transitioned from using or
continue to use the London Interbank Offered Rate (“LIBOR”) or synthetic version
thereof to determine payment obligations, financing terms, hedging strategies or
investment value.
The United Kingdom's Financial
Conduct Authority (the “FCA”) 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 ceased to be published or are no longer representative. All other
LIBOR settings and certain other interbank offered rates, such as the Euro
Overnight Index Average (“EONIA”), ceased to be published after December 31,
2021. On December 16, 2022, the Federal Reserve Board
adopted regulations implementing the Adjustable Interest Rate Act by identifying
benchmark rates based on the Secured Overnight
Financing Rate that replaced LIBOR in different categories of financial
contracts after June 30, 2023. These regulations apply only to contracts
governed by U.S. law, among other limitations. The FCA will permit the use of
synthetic U.S. dollar LIBOR rates for non-U.S. contracts through September 30,
2024, but any such rates would be considered non-representative of the
underlying market.
Neither the effect of the LIBOR
transition process nor its ultimate success can yet be known. 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. Parties to
contracts, securities or other instruments using LIBOR may disagree on
transition rates or the application of applicable
transition regulation, potentially resulting in
uncertainty of performance and the possibility of litigation. The Fund may have instruments
linked to other interbank offered rates that may also cease to be published in
the future.
Repurchase
Agreements Risk. Repurchase
agreements could involve certain risks in the event of default or insolvency of
the seller, including losses and possible delays or restrictions upon the Fund’s
ability to dispose of the underlying securities. To the extent that, in the
meantime, the value of the securities that the Fund has purchased has decreased,
the Fund could experience a loss.
Reverse
Repurchase Agreements Risk. Reverse repurchase
agreements involve the risk that the other party may fail to return the
securities in a timely manner or at all. The Fund could lose money if it is
unable to recover the securities and the value of the collateral held by the
Fund, including the value of investments made with cash collateral, is less than
the value of the securities. These events could also trigger adverse tax
consequences to the Fund. Reverse repurchase agreements also involve leverage,
which may exaggerate the increase or decrease of the value of the Fund’s assets
during the term of the agreement.
Short
Sales Risk. Short sales
involve costs and risks. The Fund must pay the lender interest on the security
it borrows, and the Fund will lose money to the extent that the price of the
security increases between the time of the short sale and the date when the Fund
replaces the borrowed security. Although the Fund’s gain is limited to the price
at which it
Visit our website
at www.pgim.com/investments
27
sold the securities
short, its potential loss is limited only by the maximum attainable price of the
securities, less the price at which the security was sold and may,
theoretically, be unlimited. The Fund may also make short sales “against the
box.” When selling short against the box, the Fund gives up the opportunity for
capital appreciation in the security.
Structured
Products Risk. Holders of
structured product securities bear risks of the underlying investments, index or
reference obligation. Certain structured products may be thinly traded or have a
limited trading market, and as a result may be characterized as illiquid. The
possible lack of a liquid secondary market for structured securities and the
resulting inability of the Fund to sell a structured security could expose the
Fund to losses and could make structured securities more difficult for the Fund
to value accurately, which may also result in additional costs. Structured
products are also subject to credit risk; the assets backing the structured
product may be insufficient to pay interest or principal. In addition to the
general risks associated with investments in fixed income, structured products
carry additional risks, including, but not limited to: the possibility that
distributions from collateral securities will not be adequate to make interest
or other payments; the quality of the collateral may decline in value or
default; and the possibility that the structured products are subordinate to
other classes. Structured securities are generally privately negotiated debt
obligations where the principal and/or interest or value of the structured
security is determined by reference to the performance of a specific asset,
benchmark asset, market or interest rate (“reference instrument”), and changes
in the reference instrument or security may cause significant price
fluctuations, or could cause the interest rate on the structured security to be
reduced to zero. Holders of structured products indirectly bear risks associated
with the reference instrument, are subject to counterparty risk and typically do
not have direct rights against the reference instrument. Structured products may
also entail structural complexity and documentation risk and there is no
guarantee that the courts or administrators will interpret the priority of
principal and interest payments as expected.
Swaps
Risk.
Swap agreements involve the risk that the party with which the Fund has entered
into the swap will default on its obligation to pay the Fund and the risk that
the Fund will not be able to meet its obligations to pay the other party to the
agreement. Swap agreements may also involve the risk that there is an imperfect
correlation between the return on the Fund's obligation to its counterparty and
the return on the referenced asset.
U.S. Government
and Agency Securities Risk. U.S. Treasury obligations are
backed by the “full faith and credit” of the U.S. Government. Securities issued or guaranteed by
federal agencies or authorities and U.S. Government-sponsored instrumentalities
or enterprises may or may not be backed by the full faith and credit of the U.S.
Government. For example, securities issued by
the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage
Association and the Federal Home Loan Banks are neither insured nor guaranteed
by the U.S. Government. These securities may be supported
by the ability to borrow from the U.S. Treasury or only by the credit of
the issuing agency, authority, instrumentality or enterprise and,
as a result, are subject to greater credit risk than securities issued or
guaranteed by the U.S. Treasury.
Further, the U.S. Government and its agencies,
authorities, instrumentalities and enterprises do not guarantee the market value
of their securities; consequently, the value of such securities will
fluctuate. This may be the case especially
when there is any controversy or ongoing uncertainty regarding the status of
negotiations in the U.S. Congress to increase the statutory debt ceiling. Such
controversy or uncertainty could, among other things, result in the credit
quality rating of the U.S. Government being downgraded and reduced prices of
U.S. Treasury securities. If the U.S. Congress is unable to negotiate an
adjustment to the statutory debt ceiling, there is also the risk that the U.S.
Government may default on payments on certain U.S. Government securities, including those held by the
Fund, which could have a negative impact
on the Fund. An increase in demand for U.S. Government securities
resulting from an increase in demand for government money market funds may lead
to lower yields on such securities.
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 Bond Risk. Zero coupon bonds
may experience greater volatility in market value due to changes in interest
rates. The Fund accrues income on the discount amortization of these
investments, which it is required to distribute each year. The Fund may be
required to sell investments to obtain cash needed for income
distributions.
28
PGIM Securitized
Credit Fund
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.
Visit our website
at www.pgim.com/investments
29
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, subadvisers 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 fiscal year ended September 30, 2023, the Fund paid PGIM
Investments management fees (net of waivers, as applicable) at the effective
rate of 0.60% of the Fund’s average daily net assets.
PGIM Investments and its
predecessors have served as a manager or administrator to investment companies
since 1987. As of September 30, 2023, PGIM Investments, a wholly-owned
subsidiary of Prudential Financial, Inc. (“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 $279.8
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 subadvisers 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 and certain subadvisers that are affiliates of PGIM
Investments 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 September
30.
SUBADVISERS
PGIM, Inc.
(“PGIM”) is an
indirect, wholly-owned subsidiary of Prudential that was organized in 1984. Its
address is 655 Broad Street, Newark, New Jersey 07102. As of September 30, 2023,
PGIM managed approximately $1.22 trillion in assets.
PGIM Fixed
Income is the primary
fixed income asset management unit of PGIM, with $744.2 billion in assets under
management as of September 30, 2023 and is the unit of PGIM that provides fixed
income investment advisory services to the Fund.*
30
PGIM Securitized
Credit Fund
PGIM Fixed Income’s investment
strategies include but are not limited to the following: multi-sector,
investment grade credit, securitized products, leveraged finance, emerging
markets and alternative strategies.
*PGIM Fixed
Income's assets under management includes the assets under management of PGIM
Limited, an indirect wholly-owned subsidiary of PGIM.
PGIM Limited
is an indirect
wholly-owned subsidiary of PGIM. PGIM Limited is located at Grand Buildings, 1-3
Strand, Trafalgar Square, London WC2N 5HR. PGIM Limited provides investment
advisory services with respect to securities in certain foreign markets. As of
September 30, 2023, PGIM Limited managed approximately $51.8 billion in
assets.
PORTFOLIO
MANAGERS
Peter Freitag,
CFA, Jung-Chiang Thomas Chang, CFA, FRM*, Brian Juliano, Edwin Wilches, CFA and
Gabriel Rivera are
jointly and primarily responsible for the day-to-day management of the
Fund.
*Mr. Chang will retire from the
Fund’s portfolio management team effective on or about December 31,
2023.
Peter
Freitag, CFA, is a Principal
and Securitized Products Portfolio Manager on PGIM Fixed Income’s Securitized
Products Team. Since 2001, he has been responsible for non-agency mortgage and
Asset Backed Securities (“ABS”) portfolio management and trading. Mr. Freitag
joined the team in 1995. Prior to joining PGIM Fixed Income in 1994, he was a
management consultant at Oliver, Wyman & Company. Mr. Freitag received a BS
in Engineering with honors from Rensselaer Polytechnic Institute and an MS in
Engineering from Princeton University. He holds the Chartered Financial Analyst
(“CFA”) designation.
Jung-Chiang
Thomas Chang, CFA, FRM, is a Principal
and Securtized Product Portfolio Manager on PGIM Fixed Income’s Securtized
Product Team. Since 2006, he has been responsible for Commercial
Mortgaged-Backed Securities (“CMBS”) portfolios across all mandates including
Core Conservative, Core, Core Plus, Mutual Funds and the Firm’s proprietary
accounts. Mr. Chang joined the team in 2004 following four years in PGIM Fixed
Income’s Actuarial Leadership Development Program. Prior to joining PGIM Fixed
Income in 2000, he was in the actuarial program of Guardian Life. Mr. Chang
earned a BS in Management Science from National Chiao Tung University in Taiwan
and a MS from Purdue University with concentration in Finance and Statistics. He
holds the Chartered Financial Analyst (“CFA”) designation, the Financial Risk
Manager (“FRM”) designation and is a former Fellow of the Society of Actuaries
(“FSA”).
Brian
Juliano is a Managing
Director and Head of the U.S. Leveraged Loan Team for PGIM Fixed Income. He is
also the Co-Head of PGIM Fixed Income’s U.S. CLO business and is a portfolio
manager for the Firm's investments in CLO tranches. Before joining the Bank Loan
Team in 2003, Mr. Juliano was a CDO analyst and member of the CDO Business Team
for the Firm and a manager in financial analysis in the Finance Group, where he
was responsible for the finance function of various investment subsidiaries. Mr.
Juliano joined the Firm in 2000. Previously, he was a consultant at Deloitte
& Touche, where he worked on investment strategy and tax compliance of high
net worth individuals. Mr. Juliano received a BS in Finance and an MBA in
Finance and Accounting from New York University.
Edwin
Wilches, CFA, is a Managing
Director and Co-Head of PGIM Fixed Income’s Securitized Products team. Mr.
Wilches is also a portfolio manager for dedicated CLO Tranche portfolios as well
other dedicated securitized products funds. Mr. Wilches oversees securitized
product security selection across the firm’s multi-sector, investment grade,
high yield, LDI, money market and general account strategies. He plays an active
leadership role in PGIM’s Racial Equity Initiative via participation in multiple
workstreams, and is a member of the Latinx Executive Leadership Team for both
PGIM and PGIM Fixed Income. Mr. Wilches is an active member in multiple trade
associations across the US and European markets seeking to represent our
client’s best interests and to help promote a functioning market structure.
Prior to assuming his current responsibilities, Mr. Wilches was responsible for
managing and trading the Firm's investments in CLO tranches, supporting the
Dryden CLO platform's business development and investor relations efforts, and
analyzing off-the-run alternative fixed income opportunities. Earlier, Mr.
Wilches was a member of
Visit our website
at www.pgim.com/investments
31
PGIM Fixed Income’s
CDO analyst team, Business and Product Development Team and Fixed Income
Operations team. Mr. Wilches joined the Firm in 2003. He received a BA in
Economics from Rutgers University and an MBA from New York University. He holds
the Chartered Financial Analyst (“CFA”) designation.
Gabe
Rivera is a Managing
Director and Co-Head of PGIM Fixed Income’s Securitized Products Team. Mr.
Rivera is a portfolio manager of dedicated securitized products portfolios and
is also responsible for overseeing securitized product security selection across
all of the firm's strategies. Additionally, Mr. Rivera is an active member of
the Latinx Executive Leadership team at PGIM. Prior to joining the Firm in 2016,
Mr. Rivera headed the Commercial Mortgage-Backed Securities (“CMBS”) trading
desk at Barclays Capital where he oversaw trading in all conduit, single asset
single borrower (“SASB”), and synthetics. Mr. Rivera began his career as an
analyst within Blackrock's Mortgage Research Group focusing on the development
and implementation of non-agency mortgage models and analytics. Later at
Blackrock, he transitioned into the portfolio management group where he focused
on non-agency RMBS investing. Mr. Rivera earned a BS in Electrical and Computer
Engineering from Cornell University and a MS from Columbia University in
Operations Research and Industrial Engineering.
Additional
information about portfolio manager compensation, other accounts managed, and
portfolio manager ownership of Fund securities may be found in the
SAI.
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 Investment
Company Act of 1940, as amended (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.
32
PGIM Securitized
Credit Fund
FUND
DISTRIBUTIONS AND TAX ISSUES
DISTRIBUTIONS
The Fund
distributes dividends
to
shareholders out of any net investment income. For example, if the Fund owns
ACME Corp. stock and the stock pays a dividend, the Fund will pay out a portion
of this dividend to its shareholders, assuming the Fund’s income is more than
its costs and expenses. The dividends you receive from the Fund will be subject
to taxation whether or not they are reinvested in the Fund, unless your shares
are held in a qualified or tax-deferred plan or account.
The Fund also
distributes any net realized capital gains to shareholders. Capital gains are
generated when the Fund sells its assets for a profit. For example, if the Fund
bought 100 bonds of ACME Corp. for a total of $1,000 and more than one year
later sold the bonds for a total of $1,500, the Fund has net long-term capital
gains of $500, which it will pass on to shareholders (assuming the Fund's
remaining total gains are greater than any losses it may have).
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, unless your shares
are held in a qualified or tax-deferred plan or account. If your dividend
distribution check remains uncashed for more than six months, your check 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
Fund shares should be aware of some important tax issues. For example, the Fund
distributes dividends of net investment income and realized net capital gains,
if any, to shareholders. Fund distributions and gain from the sale of Fund
shares are subject to federal income taxes, unless you hold your shares in a
401(k) plan, an Individual Retirement Account (“IRA”) or some other qualified or
tax-deferred plan or account. Dividends and distributions from the Fund also may
be subject to state and local income tax in the state where you
live.
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.
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.
Visit our website
at www.pgim.com/investments
33
Dividends from net
investment income paid to a non-corporate U.S. shareholder that are reported as
qualified dividend income will generally be taxable to such shareholder at the
long-term capital gain tax rate. Dividends of net investment income that are not
reported as qualified dividend income will be taxable to shareholders at
ordinary income rates. Also, a portion of the dividends paid to corporate
shareholders of the Fund will be eligible for the dividends received deduction
to the extent the Fund’s income is derived from certain dividends received from
U.S. corporations. Between 2018 and 2025, the Fund may report dividends eligible
for a 20% “qualified business income” deduction for non-corporate U.S.
shareholders to the extent the Fund’s income is derived from ordinary REIT
dividends, reduced by allocable Fund expenses.
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 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.
34
PGIM Securitized
Credit Fund
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.
Visit our website
at www.pgim.com/investments
35
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 534432
Pittsburgh, PA 15253-4432
P.O. Box 534432
Pittsburgh, PA 15253-4432
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.
36
PGIM Securitized
Credit Fund
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 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
Visit our website
at www.pgim.com/investments
37
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 1.00% CDSC, although they are not
subject to an initial sales
charge. The CDSC is waived for certain retirement and/or benefit
plans.
°
These distribution and service (12b-1) fees are paid from the Fund's assets on a
continuous basis. The service fee for Class A and Class C shares is 0.25%. The
distribution fee for Class A shares
is limited to 0.25% (including up to 0.25% as a service fee). Class C shares pay
a distribution fee (in addition to the service fee) of 0.75%.
Closure
of Certain Share Classes to New Group Retirement Plans
The Fund’s Class A,
Class C and Class Z shares, as applicable, are closed to investments by new
group retirement plans, except as discussed below. Existing group retirement
plans may continue to make exchanges in the Fund. All new group retirement plans
wishing to add the Fund as a new addition to the plan generally will be into the
available Class R6 shares of the Fund. 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.
The following new
investors may continue to purchase Class A, Class C, 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, 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.
Increase
the Amount of Your Investment. You can reduce
Class A's sales charge by increasing the amount of your investment. This table
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.
38
PGIM Securitized
Credit Fund
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
◾
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.
Visit our website
at www.pgim.com/investments
39
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. Otherwise, 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:
◾
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.
40
PGIM Securitized
Credit Fund
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.
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. Otherwise, investors in group
retirement plans should contact their financial intermediary with any questions
regarding availability of Class R6 shares.
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.
intermediaries who
offer such shares.
Visit our website
at www.pgim.com/investments
41
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.
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; 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;
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.
42
PGIM Securitized
Credit Fund
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,
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.
Visit our website
at www.pgim.com/investments
43
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”).
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.
44
PGIM Securitized
Credit Fund
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 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.
Visit our website
at www.pgim.com/investments
45
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 534432
Pittsburgh, PA 15253-4432
P.O. Box 534432
Pittsburgh, PA 15253-4432
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.
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.
46
PGIM Securitized
Credit Fund
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 534432
Pittsburgh, PA 15253-4432
P.O. Box 534432
Pittsburgh, PA 15253-4432
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”)).
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.
Visit our website
at www.pgim.com/investments
47
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 1.00% CDSC 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,
◾
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.
48
PGIM Securitized
Credit Fund
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 and/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.
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.
Visit our website
at www.pgim.com/investments
49
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 534432
Pittsburgh, PA 15253-4432
P.O. Box 534432
Pittsburgh, PA 15253-4432
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.
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
50
PGIM Securitized
Credit Fund
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.
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
Visit our website
at www.pgim.com/investments
51
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.
52
PGIM Securitized
Credit Fund
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 September 30, 2020 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 September 30, 2020 was audited by
another independent registered public accounting firm.
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.
|
Class
A Shares | |||||
|
|
Year
Ended September 30, |
July
01, 2019(a)
through
September
30, 2019 | |||
|
|
2023 |
2022 |
2021 |
2020 | |
|
Per
Share Operating Performance(b): | |||||
|
Net
Asset Value, Beginning of Period |
$9.34 |
$9.88 |
$9.45 |
$9.97 |
$10.00 |
|
Income
(loss) from investment operations: | |||||
|
Net
investment income (loss) |
0.56 |
0.30 |
0.26 |
0.30 |
0.08 |
|
Net
realized and unrealized gain (loss) on investment and foreign currency
transactions |
0.22 |
(0.54) |
0.40 |
(0.46) |
(0.03) |
|
Total
from investment operations |
0.78 |
(0.24) |
0.66 |
(0.16) |
0.05 |
|
Less
Dividends and Distributions: | |||||
|
Dividends
from net investment income |
(0.65) |
(0.30) |
(0.23) |
(0.36) |
(0.08) |
|
Tax
return of capital distributions |
- |
- |
- |
(-)(c) |
- |
|
Total
dividends and distributions |
(0.65) |
(0.30) |
(0.23) |
(0.36) |
(0.08) |
|
Net
asset value, end of Period |
$9.47 |
$9.34 |
$9.88 |
$9.45 |
$9.97 |
|
Total
Return(d): |
8.61% |
(2.46)% |
7.10% |
(1.57)% |
0.51% |
|
| |||||
|
Ratios/Supplemental
Data: | |||||
|
Net
assets, end of Period
(000) |
$661 |
$135 |
$39 |
$21 |
$10 |
|
Average
net assets (000) |
$1,122 |
$96 |
$26 |
$16 |
$10 |
|
Ratios
to average net assets(e): | |||||
|
Expenses
after waivers and/or expense reimbursement |
0.90% |
0.90% |
0.90% |
0.90% |
0.90%(f) |
|
Expenses
before waivers and/or expense reimbursement |
1.89% |
10.95% |
26.65% |
94.01% |
813.14%(f) |
|
Net
investment income (loss) |
6.03% |
3.09% |
2.70% |
3.15% |
3.07%(f) |
|
Portfolio
turnover rate(g) |
47% |
37% |
58% |
60% |
14% |
|
(a) |
Commencement
of operations. |
|
(b) |
Calculated
based on average shares outstanding during the
period. |
|
(c) |
Amount
rounds to zero. |
|
(d) |
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. |
|
(e) |
Does
not include expenses of the underlying funds in which the Fund
invests. |
|
(f) |
Annualized,
with the exception of certain non-recurring
expenses. |
|
(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. |
Visit our website
at www.pgim.com/investments
53
|
Class
C Shares | |||||
|
|
Year
Ended September 30, |
July
01, 2019(a)
through
September
30, 2019 | |||
|
|
2023 |
2022 |
2021 |
2020 | |
|
Per
Share Operating Performance(b): | |||||
|
Net
Asset Value, Beginning of Period |
$9.34 |
$9.88 |
$9.44 |
$9.97 |
$10.00 |
|
Income
(loss) from investment operations: | |||||
|
Net
investment income (loss) |
0.49 |
0.23 |
0.19 |
0.24 |
0.06 |
|
Net
realized and unrealized gain (loss) on investment and foreign currency
transactions |
0.21 |
(0.54) |
0.41 |
(0.48) |
(0.03) |
|
Total
from investment operations |
0.70 |
(0.31) |
0.60 |
(0.24) |
0.03 |
|
Less
Dividends and Distributions: | |||||
|
Dividends
from net investment income |
(0.57) |
(0.23) |
(0.16) |
(0.29) |
(0.06) |
|
Tax
return of capital distributions |
- |
- |
- |
(-)(c) |
- |
|
Total
dividends and distributions |
(0.57) |
(0.23) |
(0.16) |
(0.29) |
(0.06) |
|
Net
asset value, end of Period |
$9.47 |
$9.34 |
$9.88 |
$9.44 |
$9.97 |
|
Total
Return(d): |
7.79% |
(3.21)% |
6.41% |
(2.40)% |
0.33% |
|
| |||||
|
Ratios/Supplemental
Data: | |||||
|
Net
assets, end of Period
(000) |
$113 |
$92 |
$10 |
$10 |
$10 |
|
Average
net assets (000) |
$83 |
$60 |
$10 |
$10 |
$10 |
|
Ratios
to average net assets(e): | |||||
|
Expenses
after waivers and/or expense reimbursement |
1.65% |
1.65% |
1.65% |
1.65% |
1.65%(f) |
|
Expenses
before waivers and/or expense reimbursement |
10.01% |
11.95% |
64.82% |
148.80% |
814.62%(f) |
|
Net
investment income (loss) |
5.25% |
2.38% |
1.97% |
2.51% |
2.32%(f) |
|
Portfolio
turnover rate(g) |
47% |
37% |
58% |
60% |
14% |
|
(a) |
Commencement
of operations. |
|
(b) |
Calculated
based on average shares outstanding during the
period. |
|
(c) |
Amount
rounds to zero. |
|
(d) |
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. |
|
(e) |
Does
not include expenses of the underlying funds in which the Fund
invests. |
|
(f) |
Annualized,
with the exception of certain non-recurring
expenses. |
|
(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. |
54
PGIM Securitized
Credit Fund
|
Class
Z Shares | |||||
|
|
Year
Ended September 30, |
July
01, 2019(a)
through
September
30, 2019 | |||
|
|
2023 |
2022 |
2021 |
2020 | |
|
Per
Share Operating Performance(b): | |||||
|
Net
Asset Value, Beginning of Period |
$9.34 |
$9.88 |
$9.45 |
$9.97 |
$10.00 |
|
Income
(loss) from investment operations: | |||||
|
Net
investment income (loss) |
0.60 |
0.31 |
0.29 |
0.33 |
0.08 |
|
Net
realized and unrealized gain (loss) on investment and foreign currency
transactions |
0.20 |
(0.52) |
0.40 |
(0.47) |
(0.02) |
|
Total
from investment operations |
0.80 |
(0.21) |
0.69 |
(0.14) |
0.06 |
|
Less
Dividends and Distributions: | |||||
|
Dividends
from net investment income |
(0.67) |
(0.33) |
(0.26) |
(0.37) |
(0.09) |
|
Tax
return of capital distributions |
- |
- |
- |
(0.01) |
- |
|
Total
dividends and distributions |
(0.67) |
(0.33) |
(0.26) |
(0.38) |
(0.09) |
|
Net
asset value, end of Period |
$9.47 |
$9.34 |
$9.88 |
$9.45 |
$9.97 |
|
Total
Return(c): |
8.87% |
(2.21)% |
7.37% |
(1.32)% |
0.57% |
|
| |||||
|
Ratios/Supplemental
Data: | |||||
|
Net
assets, end of Period
(000) |
$135,574 |
$70,190 |
$32,193 |
$28,137 |
$26,961 |
|
Average
net assets (000) |
$88,825 |
$61,949 |
$29,735 |
$27,164 |
$20,410 |
|
Ratios
to average net assets(d): | |||||
|
Expenses
after waivers and/or expense reimbursement |
0.65% |
0.65% |
0.65% |
0.65% |
0.65%(e) |
|
Expenses
before waivers and/or expense reimbursement |
0.99% |
1.07% |
1.40% |
1.68% |
2.72%(e) |
|
Net
investment income (loss) |
6.37% |
3.20% |
2.97% |
3.50% |
3.32%(e) |
|
Portfolio
turnover rate(f) |
47% |
37% |
58% |
60% |
14% |
|
(a) |
Commencement
of operations. |
|
(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) |
Does
not include expenses of the underlying funds in which the Fund
invests. |
|
(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. |
Visit our website
at www.pgim.com/investments
55
|
Class
R6 Shares | |||||
|
|
Year
Ended September 30, |
July
01, 2019(a)
through
September
30, 2019 | |||
|
|
2023 |
2022 |
2021 |
2020 | |
|
Per
Share Operating Performance(b): | |||||
|
Net
Asset Value, Beginning of Period |
$9.34 |
$9.88 |
$9.45 |
$9.97 |
$10.00 |
|
Income
(loss) from investment operations: | |||||
|
Net
investment income (loss) |
0.64 |
0.32 |
0.29 |
0.34 |
0.08 |
|
Net
realized and unrealized gain (loss) on investment and foreign currency
transactions |
0.16 |
(0.53) |
0.40 |
(0.47) |
(0.02) |
|
Total
from investment operations |
0.80 |
(0.21) |
0.69 |
(0.13) |
0.06 |
|
Less
Dividends and Distributions: | |||||
|
Dividends
from net investment income |
(0.67) |
(0.33) |
(0.26) |
(0.38) |
(0.09) |
|
Tax
return of capital distributions |
- |
- |
- |
(0.01) |
- |
|
Total
dividends and distributions |
(0.67) |
(0.33) |
(0.26) |
(0.39) |
(0.09) |
|
Net
asset value, end of Period |
$9.47 |
$9.34 |
$9.88 |
$9.45 |
$9.97 |
|
Total
Return(c): |
8.91% |
(2.16)% |
7.42% |
(1.28)% |
0.58% |
|
| |||||
|
Ratios/Supplemental
Data: | |||||
|
Net
assets, end of Period
(000) |
$358 |
$10 |
$11 |
$10 |
$10 |
|
Average
net assets (000) |
$80 |
$17 |
$10 |
$10 |
$6,365 |
|
Ratios
to average net assets(d): | |||||
|
Expenses
after waivers and/or expense reimbursement |
0.61%(e) |
0.60% |
0.60% |
0.60% |
0.60%(f) |
|
Expenses
before waivers and/or expense reimbursement |
9.41% |
35.37% |
62.68% |
146.78% |
3.44%(f) |
|
Net
investment income (loss) |
6.68% |
3.31% |
3.02% |
3.56% |
3.33%(f) |
|
Portfolio
turnover rate(g) |
47% |
37% |
58% |
60% |
14% |
|
(a) |
Commencement
of operations. |
|
(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) |
Does
not include expenses of the underlying funds in which the Fund
invests. |
|
(e) |
Includes
certain non-recurring expenses of 0.01% which are being excluded from
the Fund's contractual waiver for the year ended September 30,
2023. |
|
(f) |
Annualized,
with the exception of certain non-recurring
expenses. |
|
(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. |
56
PGIM Securitized
Credit Fund
GLOSSARY
FUND
Indices
Bloomberg US
Aggregate Bond Index.
The Bloomberg US Aggregate Bond Index is unmanaged and represents securities
that are taxable and U.S. dollar denominated. It covers the U.S. investment
grade fixed rate bond market, with index components for government and corporate
securities, mortgage pass-through securities, and asset-backed securities. 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
these expenses.
ICE BofA US
3-Month Treasury Bill Index. The ICE BofA US 3-Month Treasury
Bill Index is an unmanaged index which is comprised of a single issue purchased
at the beginning of the month and held for a full month. At the end of the month
that issue is sold and rolled into a newly selected issue. The issue selected at
each month-end rebalancing is the outstanding Treasury Bill that matures closest
to, but not beyond, three months from the rebalancing date. To qualify for
selection, an issue must have settled on or before the month-end rebalancing
date. The Index cannot be purchased directly by investors, and reflects no
deductions for sales charges, fees, expenses, or taxes.
ICE
BOFA IS LICENSING THE BOFA INDICES “AS IS,” MAKES NO WARRANTIES REGARDING THE
SAME, DOES NOT GUARANTEE THE SUITABILITY, QUALITY, ACCURACY, TIMELINESS, AND/OR
COMPLETENESS OF THE ICE BOFA INDICES OR ANY DATA INCLUDED IN, RELATED TO, OR
DERIVED THEREFROM, ASSUMES NO LIABILITY IN CONNECTION WITH THEIR USE, AND DOES
NOT SPONSOR, ENDORSE, OR RECOMMEND THE FUND, OR ANY OF ITS PRODUCTS OR
SERVICES.
Visit our website
at www.pgim.com/investments
57
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
58
◾
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.
59
◾
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
60
◾
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.
61
◾
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.
62
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
63
◾
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
64
◾
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.
J.P. MORGAN
SECURITIES LLC
Effective September 29, 2023, if
you purchase or hold fund shares through an applicable J.P. Morgan Securities
LLC brokerage account, you will be eligible for the following sales charge
waivers (front-end sales charge waivers and contingent deferred sales charge
(“CDSC”), or back-end sales charge, waivers), share class conversion policy and
discounts, which may differ from those disclosed elsewhere in this fund’s
prospectus or Statement of Additional Information.
Front-end sales
charge waivers on Class A shares available at J.P. Morgan Securities
LLC
◾
Shares exchanged from Class C (i.e.
level-load) shares that are no longer subject to a CDSC and are exchanged into
Class A shares of the same fund pursuant to J.P. Morgan Securities LLC’s share
class exchange policy.
◾
Qualified employer-sponsored
defined contribution and defined benefit retirement plans, nonqualified deferred
compensation plans, other employee benefit plans and trusts used to fund those
plans. For purposes of this provision, such plans do not include SEP IRAs,
SIMPLE IRAs, SAR-SEPs or 501(c)(3) accounts.
◾
Shares of funds purchased through
J.P. Morgan Securities LLC Self-Directed Investing accounts.
◾
Shares purchased through rights of
reinstatement.
◾
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 J.P. Morgan Securities LLC or its affiliates and
their spouse or financial dependent as defined by J.P. Morgan Securities
LLC.
Class C to Class
A share conversion
◾
A shareholder in the fund’s Class C
shares will have their shares converted to Class A shares (or the appropriate
share class) of the same fund if the shares are no longer subject to a CDSC and
the conversion is consistent with J.P. Morgan Securities LLC’s policies and
procedures.
CDSC waivers on
Class A and C shares available at J.P. Morgan Securities LLC
◾
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 retirement accounts pursuant to the Internal
Revenue Code.
◾
Shares acquired through a right of
reinstatement.
Front-end load
discounts available at J.P. Morgan Securities LLC: breakpoints, rights of
accumulation & letters of intent
◾
Breakpoints as described in the
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 within the purchaser’s household at J.P.
Morgan Securities LLC. Eligible fund family assets not held at J.P. Morgan
Securities LLC (including 529 program holdings, where applicable) may be
included in the ROA calculation only if the shareholder notifies their financial
advisor about such assets.
◾
Letters of Intent (“LOI”) which
allow for breakpoint discounts based on anticipated purchases within a fund
family, through J.P. Morgan Securities LLC, over a 13-month period of time (if
applicable).
65
|
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
P.O. Box
534432
Pittsburgh,
PA 15253-4432 ◾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
(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
Securitized Credit Fund | ||||
|
Share
Class |
A |
C |
Z |
R6 |
|
NASDAQ |
SCFOX |
SCFVX |
SCFZX |
SCFQX |
|
CUSIP |
74441F801 |
74441F884 |
74441F876 |
74441F868 |
MF241STAT
The
Fund's Investment Company Act File No. 811-06677