PRUDENTIAL INVESTMENTS >> MUTUAL FUNDS STRATEGIES FOR INVESTORS Speaker name Title Date WHAT IS A MUTUAL FUND?

2 “A mutual fund is an investment that pools money from shareholders and invests in a diversified portfolio of securities.” — Investment Company Institute (ICI)

A BRIEF HISTORY 3 Source: Mutual Fund Fact Book, ICI, As of 12/31/ U.S. Mutual fund industry has $15.9 trillion in assets 1940 U.S. Mutual fund industry has $448 million in assets 1936 SEC special study culminates in the Investment Company Act of First fund introduced in Boston

MUTUAL FUND CHARACTERISTICS 4 Source: Investment Company Institute Professional Management Diversification Daily Pricing Liquidity Convenience Investment strategies such as diversification do not assure a profit or protect against a loss in declining markets.

SOME REASONS TO INVEST 5 Source: Investment Company Institute StabilityGrowthIncome There is no guarantee that dividends or distributions will be paid.

FOUR BASIC TYPES OF MUTUAL FUNDS 6 Source: Investment Company Institute Stock Funds (also called equity) Bond Funds (also called fixed income) Hybrid Funds (a combination of stocks and bonds) Money Market Funds

STOCK FUNDS 7 Source: Investment Company Institute Growth Value Equity-Income

STOCK FUNDS (CONT’D) 8 Source: Investment Company Institute International Global Equity Specialty – Gold/ Precious Metals/Energy

BOND FUNDS 9 Source: Investment Company Institute Corporate Bond High-Yield Bond U.S. Government Tax-Free/Munis Global Bond

HYBRID FUNDS 10 Source: Investment Company Institute Asset Allocation Balanced Flexible Portfolio

NUMBER OF MUTUAL FUNDS 11 Source: Mutual Fund Fact Book, ICI, As of 2014

MUTUAL FUND ASSETS 12 Source: Mutual Fund Fact Book, ICI, As of 2014

MUTUAL FUND ASSET ALLOCATION (%) 13 Source: Mutual Fund Fact Book, ICI, As of 2014 Year-End 2014 Stock Funds 52% Money Market Funds 17% Hybrid Funds 9% Bond Funds 22%

MUTUAL FUND ASSET ALLOCATION ($) 14 Source: Mutual Fund Fact Book, ICI, As of 2014 $15.9 Trillion as of Year-End 2014 $1.4 Trillion $8.3 Trillion $2.7 Trillion Hybrid Funds Money Market Funds Stock Funds $1.7 Trillion Bond Funds

U.S. HOUSEHOLD OWNERSHIP OF MUTUAL FUNDS 15 Sources: Investment Company Institute and U.S. Census Bureau. See ICI Research Perspective, “Ownership of Mutual Funds, Shareholder Sentiment, and Use of the Internet, 2014.” 4.6 Million Households

HOW A FUND IS ORGANIZED 16 Source: Investment Company Institute Owned by shareholders Board of Directors – elected by shareholders Management company Investment advisor Custodian Transfer agent Principal underwriter

MUTUAL FUND ACCESSIBILITY 17 Source: Investment Company Institute Directly to the public through: –Brokerage firm –Bank –Insurance company –Financial planning firm

MUTUAL FUNDS AND THE POTENTIAL TO EARN MONEY 18 Source: Investment Company Institute Capital gains, through sales of securities that increased in value Increase overall value of fund securities Dividends

MUTUAL FUND REGULATIONS 19 Source: A Guide to Mutual Funds, Investment Company Institute, 1998 Oversight by the Securities and Exchange Commission (SEC) and FINRA The Investment Company Act of 1940 Securities Act of 1933 Securities Exchange Act of 1934 Investment Advisors Act of 1940

FUND EXPENSES b-1 fees are fees paid by the fund out of fund assets to cover distribution expenses and sometimes shareholder service expenses. Source: Prudential Investments. For illustrative purposes only. Management Fees 12b-1 Fees 1 Other Expenses Total Series Operating Expenses

COMPARING FUNDS’ TOTAL RETURNS 21 A $1,000 Investment Fund XFund Y Annual Expenses1.5% =$153% =$30 Average Return8% =$808% =$80 Net Total Return$65$50 This is a hypothetical illustration and is not meant to represent any specific investment.

SHAREHOLDER SERVICES 22 Financial advisor Online and toll-free telephone 24-hour account information Consolidated account statements Shareholder cost basis (tax) information (non-retirement only) Fund exchanges Automatic investment plan

SHAREHOLDER SERVICES (CONT’D) 23 Check writing (money market) Automatic reinvestment of fund dividends and capital gains Systematic withdrawal plan Investor education (newsletters, websites) Annual/semi-annual reports

CHOOSING THE RIGHT FUND 24 Determine your investment objective –Factors: Financial circumstances Dependent family members Age Income Time horizon Understand your risk tolerance –Usually, the greater the risk, the greater the potential reward (and vice versa)

THE IMPORTANCE OF PROFESSIONAL GUIDANCE 25 A financial professional can help you to: –Develop an investment strategy appropriate to your goals, time horizon, and risk tolerance –Make sure you are diversified and your asset allocation remains targeted to your goals –Monitor your investments and adjust your plan to meet your changing needs

INVESTMENT RISK 26 Mutual fund investing involves risk. Some mutual funds have more risk than others. The investment return and principal value will fluctuate and shares, when sold, may be worth more or less than the original cost. Asset allocation and diversification do not assure a profit or protect against a 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. Fixed income investments are subject to interest rate risk, where their value will decline as interest rates rise.

MORE INFORMATION 27 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 for a prospectus and summary prospectus. Read them carefully before investing. An investment in money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds. There is no assurance the funds will be able to maintain a stable $1.00 NAV per share or that each fund’s objective will be achieved.

THANK YOU 28 Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS) a Prudential Financial company. ©2015 Prudential Financial, Inc., and its related entities. Prudential Investments, Prudential, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc., and its related entities, registered in many jurisdictions worldwide. Mutual Funds: Are not insured by the FDIC or any federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or bank affiliate NS6860 Expires 12/31/2016