Will the Next 10 Years Resemble the Last 10 Years?WilltheNext10YearsResembletheLast10Years?

Between the global financial crisis in 2008-2009 and the COVID-19 decline in the first quarter of 2020, the U.S. stock market enjoyed the longest bull market in history. Retirement plan participants enjoyed stronger-than-average returns with lower-than-average volatility and drawdowns. However, due to the economic impacts of the COVID-19 virus, many are concerned about how resurgent market volatility may impact the retirement outcomes of plan participants.  As we saw in the first quarter of 2020, when older participants sell out of their TDFs in a declining market, it can have a devastating impact on retirement plans and outcomes.

The time to re-evaluate your target date fund selection is now. Looking at how TDFs have performed during market pullbacks over the last decade may provide insights into how they may perform in a more significant and protracted decline.

* Sources: PGIM, Morningstar as of 12/31/2021. Periods beginning prior to 2013 represent Prudential Day One Target Date 2010 Vintage and its Morningstar Category. Periods beginning between 2014 and 2017 represent performance of Prudential Day One Target Date 2015 Vintage and its Morningstar Category. Periods beginning 2018 and later represent performance of Prudential Day One Target Date 2020 Vintage and its Morningstar Category. These hypothetical investment scenarios are for illustrative purposes only and are not a representation of actual client experience. Calculated by PGIM Investments using data from Morningstar. All rights reserved. Used with permission. An investment cannot be made directly into an index.

The S&P 500 Index is a market-weighted index of 500 of the largest U.S. stocks in a variety of industry sectors. An investment cannot be made directly in an index. Past performance is no guarantee of future results.

In order to provide data from additional drawdown periods (time periods preceding the launch of the Prudential Day One Funds mutual fund vehicle), performance in down market periods is that of Similarly Managed Accounts, as represented by the Prudential Day One Fund CITs, and as described in the Prudential Day One Funds mutual fund prospectus. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted. For the most recent performance of the Day One Funds CITs, please visit the Day One Funds CIT performance page.

Risks—Mutual fund investing involves risk. Some mutual funds have more risk than others. The investment return and principal value will fluctuate, and investors’ shares, when sold, may be worth more or less than the original cost. Fixed income investments are subject to interest rate risk, and their value will decline as interest rates rise. Asset allocation and diversification do not assure a profit or protect against loss in declining markets. There is no guarantee a Fund’s objectives will be achieved. The risks associated with each fund are explained more fully in each fund’s respective prospectus. TIPS may experience greater losses than other fixed income securities with similar durations. Unique risks associated with real estate and commodities may cause these investments to react differently to market conditions than traditional investments. Commodities may be speculative and more volatile than investments in more traditional equity and debt securities.

This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact their financial professional.

The target date is the approximate year in which investors plan to retire. The funds are designed for investors who plan to gradually withdraw assets from the fund over a moderate time period following retirement. Each fund invests in underlying funds that provide exposure to fixed income, equity and non-traditional asset classes. The asset allocation of the target date funds will become more conservative as the target date approaches and for ten years after the target date by lessening the equity exposure and increasing the exposure in fixed income investments.  The principal value of an investment in a target date fund is not guaranteed at any time, including the target date. There is no guarantee that the fund will provide adequate income through retirement.

A target date fund should not be selected solely based on age or retirement date. Before investing, participants should carefully consider the fund’s investment objectives, risks, charges and expenses, as well as their age, anticipated retirement date, risk tolerance, other investments owned, and planned withdrawals.

The stated asset allocation may be subject to change. It is possible to lose money in a target date fund, including losses near and following retirement. These risks may be increased to the extent investors begin to make withdrawals from the fund significantly before the target date. Investments in the funds are not deposits or obligations of any bank and are not insured or guaranteed by any governmental agency or instrumentality. For investors close to or in retirement, the fund’s equity exposure may result in investment volatility that could reduce an investor’s available retirement assets when they are needed. For investors farther from retirement, there is a risk that a fund may invest too much in investments designed to ensure capital conservation and/or current income, which may prevent the investor from meeting his/her retirement goals.

Prudential Day One Funds may be offered as: (i) collective investment trust funds established by Prudential Trust Company, as trustee, a Pennsylvania trust company located in Scranton, PA and a Prudential Financial company, and (ii) registered mutual funds offered through Prudential Investment Management Services LLC (PIMS), Newark, NJ, a Prudential Financial company. Prudential Trust Company is solely responsible for its own contractual obligations and financial condition. Offers of the collective investment trust funds may only be made by sales officers of Prudential Trust Company.

The Day One Funds, as collective investment trusts, are investment vehicles available only to qualified retirement plans, such as 401(k) plans and government plans, and their participants. Unlike mutual funds, The Day One Funds, as collective investment trusts, are exempt from Securities and Exchange Commission registration under both the Securities Act of 1933 and the Investment Company Act of 1940, but are subject to oversight by state banking or insurance regulators, as applicable. Therefore, investors are generally not entitled to the protections of the federal securities laws.

For Mutual Funds: Consider a fund’s investment objectives, risks, charges and expenses carefully before investing. The prospectus and the summary prospectus contain this and other information about the fund. Contact your financial professional or call (877) 275-9786 for a prospectus and the summary prospectus. Read them carefully before investing.

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