The information in this Prospectus/Proxy Statement is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Prospectus/Proxy Statement is not an offer to sell these securities, and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS/PROXY STATEMENT
DATED FEBRUARY 14, 2025
THE PRUDENTIAL SERIES FUND
PROXY STATEMENT
for
PSF NATURAL RESOURCES PORTFOLIO,
A SERIES OF THE PRUDENTIAL SERIES FUND
and
PROSPECTUS
for
PSF PGIM JENNISON BLEND PORTFOLIO,
A SERIES OF THE PRUDENTIAL SERIES FUND
Dated February 14, 2025
655 Broad Street
Newark, New Jersey 07102
Telephone 888-778-2888
Reorganization of the PSF Natural Resources Portfolio
into the PSF PGIM Jennison Blend Portfolio
This Prospectus/Proxy Statement is furnished in connection with a Special Meeting of Shareholders (the "Meeting") of the PSF Natural Resources Portfolio (the "Target Portfolio"), a series of The Prudential Series Fund (the "Trust"). At the Meeting, you will be asked to consider and approve a Plan of Reorganization of the Trust (the "Plan") that provides for the reorganization of the Target Portfolio into the PSF PGIM Jennison Blend Portfolio (the "Acquiring Portfolio," and together with the Target Portfolio, the "Portfolios"), a separate series of the Trust.
As described in more detail below, the Plan provides for the transfer of all of the Target Portfolio's assets to the Acquiring Portfolio in exchange for (i) the Acquiring Portfolio's assumption of all of the Target Portfolio's liabilities and (ii) the Acquiring Portfolio's issuance to the Target Portfolio of shares of beneficial interest in the Acquiring Portfolio (the "Acquiring Portfolio Shares"). The Acquiring Portfolio Shares received by the Target Portfolio will have an aggregate net asset value that is equal to the aggregate net asset value of the Target Portfolio shares that are outstanding immediately prior to the reorganization transaction. As a result of such transaction, the Target Portfolio will be completely liquidated, and contract owners will beneficially own shares of the Acquiring Portfolio having an aggregate value equal to their Target Portfolio shares. A vote in favor of the Plan by shareholders of the Target Portfolio will constitute a vote in favor of the liquidation of the Target Portfolio and the termination of the Target Portfolio as a separate series of the Trust.
The acquisition of all of the assets of the Target Portfolio by the Acquiring Portfolio in exchange for the Acquiring Portfolio's assumption of all of the liabilities of the Target Portfolio, and the issuance of Acquiring Portfolio Shares to the Target Portfolio, which will distribute such shares to its shareholders, is referred to herein as the "Reorganization." If shareholders of the Target Portfolio approve the Plan and the Reorganization is consummated, they will become shareholders of the Acquiring Portfolio and the Target Portfolio will liquidate.
The Meeting will be held at the offices of the Trust, 655 Broad Street, Newark, New Jersey 07102, on March 25, 2025, at 10:30 a.m. Eastern Time. The Board of Trustees of the Trust (the "Board") is soliciting these voting instructions on behalf of the Target Portfolio and has fixed the close of business on January 3, 2025 (the "Record Date"), as the record date for determining shareholders of the Target Portfolio entitled to notice of, and to vote at, the Meeting or any adjournment thereof. Only holders of record of shares of the Target Portfolio at the close of business on the Record Date are entitled to notice of, and to vote at, the Meeting or any adjournment thereof. This Prospectus/Proxy Statement is first being sent to contract owners on or about February [17], 2025.
The investment objectives of the Target Portfolio and the Acquiring Portfolio are the same and are listed below:
| Target Portfolio Name | | Investment Objective |
| PSF Natural Resources Portfolio | | The investment objective of the Portfolio is long-term growth of capital. |
| Acquiring Portfolio Name | | Investment Objective |
| PSF PGIM Jennison Blend Portfolio | | The investment objective of the Portfolio is long-term growth of capital. |
The Target Portfolio and the Acquiring Portfolio serve as underlying mutual funds for variable annuity contracts and variable life insurance policies (each, a "Contract," and collectively, the "Contracts") issued by life insurance companies (each, a "Participating Life Insurance Company," and collectively, the "Participating Insurance Companies"). Each Participating Insurance Company holds assets invested in these Contracts in various separate accounts, each of which is divided into sub-accounts investing exclusively in a mutual fund or in a portfolio of a mutual fund. Therefore, Contract owners who have allocated their account values to applicable sub-accounts are indirectly invested in the Target Portfolio through the Contracts and should consider themselves shareholders of the Target Portfolio for purposes of this Prospectus/Proxy Statement. Each Participating Insurance Company is required to offer Contract owners the opportunity to instruct it, as owner of record of shares held in the Target Portfolio by its separate or general accounts, how it should vote on the Plan at the Meeting and at any adjournments thereof.
This Prospectus/Proxy Statement gives the information about the Reorganization and the issuance of the Acquiring Portfolio Shares that you should know before investing or voting on the Plan. You should read it carefully and retain it for future reference. A copy of this Prospectus/Proxy Statement is available on the internet at www.prudential.com/variableinsuranceportfolios. The following documents containing additional information about the Portfolios have been filed with the Securities and Exchange Commission (the "SEC") and are incorporated by reference into this Prospectus/Proxy Statement:
You may request a free copy of this Prospectus/Proxy Statement, the Statement of Additional Information relating to this Prospectus/Proxy Statement, and the Prospectus and Statement of Additional Information of the Trust with respect to the Portfolios, or other documents relating to the Trust and the Portfolios without charge by calling 1-800-346-3778 or by writing to the Trust at 655 Broad Street, Newark, New Jersey 07102. The SEC maintains a website (www.sec.gov) that contains this Prospectus/Proxy Statement, reports, and other information relating to the Trust and the Portfolios that have been filed with the SEC.
The SEC has not approved or disapproved these securities or passed upon the adequacy of this Prospectus/Proxy Statement. Any representation to the contrary is a criminal offense.
Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not insured by the Federal Deposit Insurance Corporation or any other U.S. government agency. Mutual fund shares involve investment risks, including the possible loss of principal.
PROSPECTUS/PROXY STATEMENT
TABLE OF CONTENTS
| Page | | | |
| 4 | | Summary | |
| 7 | | Information About the Reorganization | |
| 9 | | Comparison of Target Portfolio, Acquiring Portfolio and Combined Portfolio | |
| 17 | | Management of the Target Portfolio, the Acquiring Portfolio, and the Combined Portfolio | |
| 19 | | Voting Information | |
| 19 | | Additional Information About the Target Portfolio and the Acquiring Portfolio | |
| 20 | | Principal Holders of Shares | |
| 22 | | Financial Highlights | |
SUMMARY
This section is only a summary of certain information contained in this Prospectus/Proxy Statement. You should read the more complete information in the rest of this Prospectus/Proxy Statement, including the form of Plan (Exhibit A) and the additional information regarding the Acquiring Portfolio set forth in Exhibit B.
As explained in more detail below, you are being asked to consider and approve the Plan with respect to the Target Portfolio for which you are a beneficial shareholder. Shareholder approval of the Plan and consummation of the Reorganization will have the effect of reorganizing the Target Portfolio into the Acquiring Portfolio, resulting in a single mutual fund.
As further explained in "Management of the Target Portfolio and the Acquiring Portfolio," PGIM Investments (the "Manager") serves as investment manager to the Target Portfolio and the Acquiring Portfolio. The Acquiring Portfolio will be the accounting and performance survivor of the Reorganization, and the combined portfolio resulting from the Reorganization is sometimes referred to herein as the "Combined Portfolio."
The Target Portfolio and the Acquiring Portfolio are managed under a manager-of-managers structure, which means that the Manager has engaged each subadviser listed below to conduct the investment program of the relevant Portfolio, including the purchase, retention, and sale of portfolio securities and other financial instruments. The Target Portfolio and the Acquiring Portfolio have the same distribution and purchase procedures and exchange rights, and redemption procedures.
| Portfolio | | Subadvisers |
| PSF Natural Resources Portfolio | | T. Rowe Price Associates, Inc. ("T. Rowe Price") |
| PSF PGIM Jennison Blend Portfolio | | Jennison Associates LLC ("Jennison") |
| Combined Portfolio | | Jennison |
The Reorganization is not expected to result in taxable gains or losses or capital gains or losses, for U.S. federal income tax purposes, to Contract owners that beneficially own shares of the Target Portfolio immediately prior to the Reorganization.
Comparison of Investment Objectives and Principal Investment Strategies of the Portfolios
The investment objectives of the Target Portfolio and the Acquiring Portfolio are identical. The investment objective of the Target Portfolio and the Acquiring Portfolio is long-term growth of capital. The investment objectives of the Target Portfolio and the Acquiring Portfolio are non-fundamental, meaning that they can be changed by the Board without shareholder approval.
The Portfolios have similar principal investment strategies in that both the Target Portfolio and the Acquiring Portfolio invest primarily in equity securities. In particular, the Target Portfolio normally invests at least 80% of its assets (net assets plus any borrowings made for investment purposes) in equity securities of companies that are associated with natural resources companies, including those companies that are principally engaged in the research, development, manufacturing, extraction, distribution or sale of materials, energy, or goods related to the agriculture, energy, materials, or commodity-related industrials sectors. Although the Acquiring Portfolio does not have a focus on natural resources companies, it invests at least 80% of its assets (net assets plus any borrowings made for investment purposes) in the stock of companies with market capitalizations within the market capitalization range of the Russell 1000® Index. The Acquiring Portfolio may also invest in mid- and small-capitalization companies. The Target Portfolio may also invest up to 10% of its assets in debt securities rated below investment grade whereas the Acquiring Portfolio may invest up to 20% of its assets in debt obligations, convertible and nonconvertible preferred stock and other equity-related securities, 5% of which may be rated below investment grade. Despite these differences, each Portfolio is substantially invested in global equities. As of August 31, 2024, the Target Portfolio and the Acquiring Portfolio each invested approximately 99% of its assets in global equities (with approximately 40% of the Target Portfolio invested in foreign equities and about 10% of the Acquiring Portfolio invested in foreign equities).
As a result of the Reorganization, shareholders of the Target Portfolio will continue to benefit from significant exposure to equity investments as shareholders of the Combined Portfolio. However, such exposure will be more to domestic equities, which tend to be less volatile, than global natural resources companies.
Principal Risks of the Portfolios
The principal risks associated with the Target Portfolio and the Combined Portfolio are substantially similar, but there are differences. Both Portfolios are subject to economic and market events risk, equity securities risk, expense risk, fixed income securities risk, foreign investment risk, high yield risk, market and management risk, small sized company risk and regulatory risk. In addition, the Target Portfolio, but not the Combined Portfolio, is subject to liquidity and valuation risk, natural resources investment risk, emerging markets risk, focus risk, commodity risk, exchange traded funds (ETF) risk, illiquid investment risk, investment company risk, and portfolio turnover risk. The Combined Portfolio, but not the Target Portfolio, is subject to blend style risk, credit risk, interest rate risk, large company risk, mid-sized company risk, market capitalization risk, and prepayment or call risk. Detailed descriptions of the principal risks associated with the Target Portfolio, the Acquiring Portfolio, and the Combined Portfolio are set forth in this Prospectus/Proxy Statement under the caption "Comparison of the Target Portfolio, the Acquiring Portfolio and the Combined Portfolio—Principal Risks of the Portfolios."
There is no guarantee that shares of the Combined Portfolio will not lose value. This means that the value of the Combined Portfolio's investments, and therefore, the value of the Combined Portfolio's shares, may fluctuate.
Comparison of Investment Management Fees and Total Fund Operating Expenses
The current contractual investment management fee rate for the Acquiring Portfolio is identical to the Target Portfolio. The contractual investment management fee rate for the Combined Portfolio is expected to be identical to the Target Portfolio after the Reorganization is completed. Contractual investment management fees are the management fees payable to the Manager and do not reflect any waivers or reimbursements.
Assuming completion of the Reorganization on December 31, 2023, based on assets under management for each of the Portfolios on that date, the pro forma annualized total operating expense ratio (gross and net) of the Combined Portfolio is lower than the annualized total operating expense ratio (gross and net) of the Target Portfolio. This means that the Target Portfolio shareholders will benefit from reduced total expenses as a result of the Reorganization.
The following tables describe the fees and expenses that owners of the Contracts may pay if they invest in the Target Portfolio or the Acquiring Portfolio, as well as the projected fees and expenses of the Combined Portfolio after the Reorganization. The following table does not reflect any Contract charges. Because Contract charges are not included, the total fees and expenses that you will incur will be higher than the fees and expenses set forth below. The Contract charges will not change as a result of the Reorganization. See your Contract prospectus for more information about Contract charges.
Shareholder Fees^
(fees paid directly from your investment)
| | | | Target
Portfolio | | | | Acquiring
Portfolio | | | | Combined Portfolio
(Pro Forma Surviving) | |
| Maximum sales charge (load) imposed on purchases (as a percentage of offering price) | | | NA | * | | | NA | * | | | NA | * |
| Maximum deferred sales charge (load) | | | NA | * | | | NA | * | | | NA | * |
| Maximum sales charge (load) imposed on reinvested dividends | | | NA | * | | | NA | * | | | NA | * |
| Redemption Fee | | | NA | * | | | NA | * | | | NA | * |
| Exchange Fee | | | NA | * | | | NA | * | | | NA | * |
^ Charges and expenses of the Contract will not change as a result of the Reorganization.
* Because shares of both the Target Portfolio and the Acquiring Portfolio are purchased through Contracts, the relevant Contract prospectus should be carefully reviewed for information on the charges and expenses of the Contract. This table does not reflect any such charges; and the expenses shown would be higher if such charges were reflected.
Annual Portfolio Operating Expenses (as of December 31, 2023)
(expenses that are deducted from Portfolio assets)
| | | Target
Portfolio (Class I) | | | Acquiring
Portfolio (Class I) | | | Combined Portfolio
(Pro Forma Surviving) (Class I) | |
| Management Fees | | | 0.45 | % | | | 0.45 | % | | | 0.45 | % |
| Distribution and/or Service Fees (12b-1 Fees) | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % |
| Administration Fees | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % |
| Other Expenses | | | 0.06 | % | | | 0.01 | % | | | 0.01 | % |
| Total Annual Portfolio Operating Expenses | | | 0.51 | % | | | 0.46 | % | | | 0.46 | % |
| Fee Waiver and/or Expense Reimbursement | | | -0.01 | %(1) | | | N/A | | | | -0.01 | %(2) |
| Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement | | | 0.50 | % | | | 0.46 | % | | | 0.45 | % |
(1) The Manager has contractually agreed to waive 0.008% of its management fee through June 30, 2025. This arrangement may not be terminated or modified without the prior approval of the Trust’s Board.
(2) Subject to shareholder approval of the Merger, the Manager will contractually agree to waive 0.012% of its management fee through June 30, 2026. This arrangement may not be terminated or modified without the prior approval of the Trust’s Board.
| | | Target
Portfolio (Class II) | | | Acquiring
Portfolio (Class II) | | | Combined Portfolio
(Pro Forma Surviving) (Class II) | |
| Management Fees | | | 0.45 | % | | | 0.45 | % | | | 0.45 | % |
| Distribution and/or Service Fees (12b-1 Fees) | | | 0.25 | % | | | 0.25 | % | | | 0.25 | % |
| Administration Fees | | | 0.15 | % | | | 0.15 | % | | | 0.15 | % |
| Other Expenses | | | 0.06 | % | | | 0.01 | % | | | 0.01 | % |
| Total Annual Portfolio Operating Expenses | | | 0.91 | % | | | 0.86 | % | | | 0.86 | % |
| Fee Waiver and/or Expense Reimbursement | | | -0.01 | %(1) | | | N/A | | | | -0.01 | %(2) |
| Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement | | | 0.90 | % | | | 0.86 | % | | | 0.85 | % |
(1) The Manager has contractually agreed to waive 0.008% of its management fee through June 30, 2025. This arrangement may not be terminated or modified without the prior approval of the Trust’s Board.
(2) Subject to shareholder approval of the Merger, the Manager will contractually agree to waive 0.012% of its management fee through June 30, 2026. This arrangement may not be terminated or modified without the prior approval of the Trust’s Board.
| | | Target
Portfolio (Class III) | | | Acquiring
Portfolio (Class III) | | | Combined Portfolio
(Pro Forma Surviving) (Class III) | |
| Management Fees | | | 0.45 | % | | | 0.45 | % | | | 0.45 | % |
| Distribution and/or Service Fees (12b-1 Fees) | | | 0.25 | % | | | 0.25 | % | | | 0.25 | % |
| Administration Fees | | | 0.00 | % | | | 0.00 | % | | | 0.00 | % |
| Other Expenses | | | 0.06 | % | | | 0.01 | % | | | 0.01 | % |
| Total Annual Portfolio Operating Expenses | | | 0.76 | % | | | 0.71 | % | | | 0.71 | % |
| Fee Waiver and/or Expense Reimbursement | | | -0.01 | %(1) | | | N/A | | | | -0.01 | %(2) |
| Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement | | | 0.75 | % | | | 0.71 | % | | | 0.70 | % |
(1) The Manager has contractually agreed to waive 0.008% of its management fee through June 30, 2025. This arrangement may not be terminated or modified without the prior approval of the Trust’s Board.
(2) Subject to shareholder approval of the Merger, the Manager will contractually agree to waive 0.012% of its management fee through June 30, 2026. This arrangement may not be terminated or modified without the prior approval of the Trust’s Board.
Expense Examples
The examples assume that you invest $10,000 in each of the Portfolios for the time periods indicated. The examples also assume that your investment has a 5% return each year, that each Portfolio's total operating expenses remain the same, and include the contractual expense cap only for the one-year period for the Target Portfolio, the Acquiring Portfolio and the Combined Portfolio (Pro Forma Surviving), as applicable. These examples do not reflect any charges or expenses for the Contracts. The expenses shown below would be higher if these charges or expenses were included. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
| | | One Year | | | Three Years | | | Five Years | | | Ten Years | |
| Target Portfolio (Class I)(1) | | $ | 51 | | | $ | 163 | | | $ | 284 | | | $ | 640 | |
| Acquiring Portfolio (Class I)(1) | | $ | 47 | | | $ | 148 | | | $ | 258 | | | $ | 579 | |
| Combined Portfolio (Class I) (Pro Forma Surviving)(1) | | $ | 46 | | | $ | 147 | | | $ | 257 | | | $ | 578 | |
(1) Based on total annual operating expense ratios reflected in the table above entitled "Annual Portfolio Operating Expenses (as of December 31, 2023)."
| | | One Year | | | Three Years | | | Five Years | | | Ten Years | |
| Target Portfolio (Class II)(1) | | $ | 92 | | | $ | 289 | | | $ | 503 | | | $ | 1,119 | |
| Acquiring Portfolio (Class II)(1) | | $ | 88 | | | $ | 274 | | | $ | 477 | | | $ | 1,061 | |
| Combined Portfolio (Class II) (Pro Forma Surviving)(1) | | $ | 87 | | | $ | 273 | | | $ | 476 | | | $ | 1,060 | |
(1) Based on total annual operating expense ratios reflected in the table above entitled "Annual Portfolio Operating Expenses (as of December 31, 2023)."
| | | One Year | | | Three Years | | | Five Years | | | | Ten Years | |
| Target Portfolio (Class III)(1) | | $ | 77 | | | $ | 242 | | | $ | 421 | | | $ | 941 | |
| Acquiring Portfolio (Class III)(1) | | $ | 73 | | | $ | 227 | | | $ | 395 | | | $ | 883 | |
| Combined Portfolio (Class III) (Pro Forma Surviving)(1) | | $ | 72 | | | $ | 226 | | | $ | 394 | | | $ | 882 | |
(1) Based on total annual operating expense ratios reflected in the table above entitled "Annual Portfolio Operating Expenses (as of December 31, 2023)."
Portfolio Turnover
The Portfolios pay transaction costs, such as commissions, when each buys and sells securities (or "turns over" its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in annual portfolio operating expenses or in the example, affect a portfolio's performance. During the most recent fiscal year ended December 31, 2023, the Target Portfolio's turnover rate was 94% of the average value of its portfolio, and the Acquiring Portfolio's turnover rate was 77% of the average value of its portfolio.
Reorganization Details and Reasons for the Reorganization
As a result of the Reorganization, you will cease to be a beneficial shareholder of the Target Portfolio and will become a beneficial shareholder of the Acquiring Portfolio. The Acquiring Portfolio Shares received by the Target Portfolio will have an aggregate net asset value that is equal to the aggregate net asset value of the Target Portfolio's shares that are outstanding immediately prior to the Reorganization. As a result of such transaction, the Target Portfolio will be completely liquidated, and shareholders thereof will own shares of the Acquiring Portfolio having an aggregate net asset value equal to the shares of the Target Portfolio held by that shareholder as of the close of regular trading on the New York Stock Exchange on the closing date of the Reorganization.
Both the Target Portfolio and the Acquiring Portfolio serve as underlying mutual funds for the Contracts issued by Participating Insurance Companies. Each Participating Insurance Company holds assets invested in these Contracts in various separate accounts, each of which is divided into sub-accounts investing exclusively in a mutual fund or in a portfolio of a mutual fund. Therefore, Contract owners who have allocated their account values to applicable sub-accounts are indirectly invested in the applicable Portfolio through the Contracts and should consider themselves shareholders of the applicable Portfolio for purposes of this Prospectus/Proxy Statement.
Based on the factors set forth in the "Information About the Reorganization—Board Considerations" section, the Board has determined that the Reorganization is in the best interests of the shareholders of each of the Portfolios and has also concluded that no dilution in value would result to the shareholders of either Portfolio as a result of the Reorganization.
The Board, on behalf of the Target Portfolio and the Acquiring Portfolio, has approved the Plan and unanimously recommends that you vote to approve the Plan.
In deciding whether to vote to approve the Plan, you should consider the information considered by the Board and the information provided in this Prospectus/Proxy Statement.
INFORMATION ABOUT THE REORGANIZATION
This section describes the Reorganization of the Target Portfolio and the Acquiring Portfolio. This section is only a summary of the Plan. You should read the actual form of the Plan attached as Exhibit A.
Board Considerations
On November 19-20, 2024, the Board met to evaluate and consider the proposed Reorganization of the Target Portfolio, a series of the Trust, into the Acquiring Portfolio, also a series of the Trust. In connection with its consideration of whether to approve the Reorganization, the Board was provided with, among other information, presentations by management regarding the proposed Reorganization and information related to the Target Portfolio, the Acquiring Portfolio and the Combined Portfolio. As part of their review process, the Trustees who are not interested persons of the Trust (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")) (the "Independent Trustees") were represented by independent legal counsel. The Independent Trustees were provided with information both in writing and during oral presentations made at that meeting, including, among other matters, historical and projected asset flows, historical performance information, historical fee and expense information, and the projected fee and expense information of the Combined Portfolio following the Reorganization.
The Board, in reaching its decision to approve the Reorganization, considered a number of factors, including, but not limited to, the following:
| ● | The Portfolios have identical investment objectives and similar principal investment strategies and principal risks. The Target Portfolio and the Acquiring Portfolio seek long-term growth of capital. Both the Target Portfolio and the Acquiring Portfolio invest primarily in equity securities; |
| ● | The Combined Portfolio will be larger than the Target Portfolio with an estimated $7.1 billion based on net assets as of August 31, 2024, which will improve overall economies of scale; |
| ● | The Acquiring Portfolio has outperformed the Target Portfolio for the one-, five-, and ten-year periods ended December 31, 2023 and August 31, 2024; |
| ● | Assuming the Reorganization had been in effect for the one-year period ended December 31, 2023, the pro forma total gross and net operating expense ratios for the Combined Portfolio are lower than the total gross and net operating expense ratios, respectively, for the Target Portfolio and the Acquiring Portfolio; |
| ● | The annualized estimated Target Portfolio shareholder savings from the Reorganization will be approximately $255,000, based on portfolio assets for a one-year period, based on current assets as of August 31, 2024; |
| ● | The Portfolios currently have the same investment manager, although the Board noted that the Target Portfolio has a different subadviser than the Acquiring Portfolio; |
| ● | The Target Portfolio and the Acquiring Portfolio each utilize the same custodian, distributor, Fund counsel, and independent public accounting firm, and that those would remain the same immediately after the Reorganization; and |
| ● | The Reorganization is not expected to be a taxable event for U.S. federal income tax purposes for Contract owners. |
For the foregoing reasons, the Board determined that the Reorganization would be in the best interests of the Target Portfolio and Acquiring Portfolio and that the interests of the Target Portfolio's and Acquiring Portfolio's Contract owners and shareholders would not be diluted as a result of the Reorganization. The Board, including a majority of the Independent Trustees, voted to approve the Reorganization and recommends that you vote "FOR" the Reorganization.
Closing of the Reorganization
If shareholders of the Target Portfolio approve the Plan, the Reorganization will take place after various conditions are satisfied by the Trust on behalf of the Target Portfolio and the Acquiring Portfolio. The Trust will determine a specific date for the actual Reorganization to take place, which is presently expected to occur on or about April 14, 2025. This is called the "Closing Date." If the shareholders of the Target Portfolio do not approve the Plan, the Reorganization will not take place, and the Board will consider alternative courses of actions, as described above.
If the shareholders of the Target Portfolio approve the Plan, the Target Portfolio will deliver to the Acquiring Portfolio all of its assets on the Closing Date, the Acquiring Portfolio will assume all of the liabilities of the Target Portfolio on the Closing Date, and the Acquiring Portfolio will issue Acquiring Portfolio Shares to the Target Portfolio. The Acquiring Portfolio Shares received by the Target Portfolio will have an aggregate net asset value that is equal to the aggregate net asset value of the Target Portfolio shares that are outstanding immediately prior to the Reorganization. The Target Portfolio will then distribute the Acquiring Portfolio Shares to its shareholders and liquidate. The Participating Insurance Companies will then make a conforming exchange of units between the applicable sub-accounts in their separate accounts. As a result, shareholders of the Target Portfolio will beneficially own shares of the Acquiring Portfolio that, as of the date of the exchange, have an aggregate value equal to the dollar value of the assets delivered to the Acquiring Portfolio by the Target Portfolio. The stock transfer books of the Target Portfolio will be permanently closed on the Closing Date. Requests to transfer or redeem assets from the Target Portfolio may be submitted at any time before the close of regular trading on the New York Stock Exchange on the Closing Date, and requests that are received in proper form prior to that time will be effected prior to the closing.
To the extent permitted by law, the Trust may amend the Plan without shareholder approval. The Trust may also agree to terminate and abandon the Reorganization at any time before or, to the extent permitted by law, after the approval by shareholders of the Target Portfolio.
Expenses of the Reorganization
All costs incurred in entering into and carrying out the terms and conditions of the Reorganization, other than transaction costs, regardless of whether approved by shareholders, including (without limitation) outside legal counsel and independent registered public accounting firm costs and costs incurred in connection with the printing and mailing of this Prospectus/Proxy Statement and related materials, will be paid by the Manager or its affiliates, not the Target Portfolio or the Acquiring Portfolio. The estimated expenses for this Prospectus/Proxy Statement, including printing and mailing, the shareholder meeting, any proxy solicitation expenses, prospectus updates and proxy solicitation is $207,000.
The Manager expects that approximately 4.2% of the Target Portfolio's holdings (less than 1% of the Combined Portfolio's net assets) will be retained and transferred in kind to the Acquiring Portfolio in connection with the Reorganization. It is anticipated that, in advance of the Reorganization, the remaining 95.8% of the Target Portfolio's holdings will be aligned or sold and the proceeds invested in securities that the Acquiring Portfolio wishes to hold. Prior to the Reorganization, the Manager may use a transition manager to assist in the transition of the Target Portfolio. The Target Portfolio will bear the transaction costs related to the Reorganization, which typically include, but are not limited to, trade commissions, related fees and taxes, and any foreign exchange spread costs, where applicable. The Manager currently estimates such transaction costs, including costs associated with the use of a transition manager, to be approximately $130,000 (0.023% of the Target Portfolio's net assets).
Certain U.S. Federal Income Tax Considerations
For U.S. federal income tax purposes, each Portfolio is treated as a partnership that is not a "publicly traded partnership" as defined in Section 7704 of the Internal Revenue Code of 1986, as amended (the "Code"). If a Portfolio were not to qualify for such treatment, it could be subject to U.S. federal income tax at the Portfolio level, which may reduce the value of an investment therein. As a result of a Portfolio's treatment as a partnership that is not a publicly traded partnership, it is generally not itself subject to U.S. federal income tax. Instead, a Portfolio's income, gains, losses, deductions, credits and other tax items are "passed through" pro rata directly to the Participating Insurance Companies and retain the same character for U.S. federal income tax purposes (without regard as to whether such corresponding amounts are actually distributed from a Portfolio). Distributions may be made to the various separate accounts of the Participating Insurance Companies in the form of additional shares (not in cash).
Each Portfolio intends to comply with the diversification requirements of Section 817(h) of the Code and the U.S. Treasury regulations promulgated thereunder on separate accounts of insurance companies as a condition of maintaining the favorable tax status of the Contracts issued by separate accounts of Participating Insurance Companies. If a Portfolio does not meet such diversification requirements, the Contracts could lose their favorable tax treatment, and thus income and gain allocable to the Contracts could be currently taxable to shareholders of the Portfolio. This could also occur if Contract holders are found to have an impermissible level of control over the investments underlying their Contracts.
Contract owners should consult the applicable prospectus or description of the plan for a discussion and information on the tax consequences of the Contract, policy or plan. In addition, Contract owners may wish to consult with their own tax advisors as to the tax consequences of an investment in one of the Portfolios, including the application of U.S. federal, state, and local and non-U.S. taxes.
The Reorganization may entail various consequences, which are discussed below under the caption "U.S. Federal Income Tax Consequences of the Reorganization."
U.S. Federal Income Tax Consequences of the Reorganization
The following discussion is applicable to the Reorganization. The Reorganization is expected to be treated as a "partnership merger" under Section 708 of the Code and the U.S. Treasury regulations promulgated thereunder. Very generally, pursuant to the partnership merger rules, for U.S. federal income tax purposes, (i) the Combined Portfolio is treated as a continuation of the Portfolio that has the greater net asset value on the Closing Date (the "Continuing Portfolio") and the other Portfolio is treated as terminating (the "Terminating Portfolio"), and (ii) the Terminating Portfolio is treated as contributing all of its assets and liabilities to the Continuing Portfolio in exchange for equity interests of the Continuing Portfolio and immediately thereafter distributing the Continuing Portfolio interests to its shareholders in liquidation of the Terminating Portfolio. Which one of the Portfolios will be treated as the Terminating Portfolio and the Continuing Portfolio for U.S. federal income tax purposes depends on the relative size of each Portfolio at the time of the Reorganization and thus cannot be determined prior to the Reorganization. If the Reorganization had occurred on August 31, 2024, the Target Portfolio would have been treated as the Terminating Portfolio and Acquiring Portfolio would have been treated as the Continuing Portfolio for U.S. federal income tax purposes.
The Reorganization is not expected to be a taxable event for U.S. federal income tax purposes for Contract owners. In addition, assuming the Contracts qualify for U.S. federal tax-deferred treatment applicable to certain variable insurance products, Contract owners generally should not have any reportable gain or loss for U.S. federal income tax purposes even if the Reorganization was a taxable transaction. It is a condition to each Portfolio's obligation to complete its Reorganization that the Portfolios will have received an opinion from Ropes & Gray LLP, counsel to the Portfolios, based upon representations made by the Trust on behalf of the Target Portfolio and the Acquiring Portfolio, existing provisions of the Code, U.S. Treasury regulations promulgated thereunder, current administrative rules, pronouncements and court decisions, and certain assumptions, and subject to certain qualifications, substantially to the effect that:
1. Under Section 723 of the Code, the Continuing Portfolio's tax basis in the assets of the Terminating Portfolio transferred to the Continuing Portfolio in the Reorganization should be the same as the Terminating Portfolio's tax basis in such assets immediately prior to the Reorganization (except and to the extent provided in Section 704(c)(1)(C) of the Code with respect to contributions of "built in loss" property); and
2. Under Section 1223(2) of the Code, the Continuing Portfolio's holding periods in the assets received from the Terminating Portfolio in the Reorganization should include the Terminating Portfolio's holding periods in such assets.
An opinion of counsel is not binding on the U.S. Internal Revenue Service or the courts. Shareholders of the Target Portfolio should consult their tax advisors regarding the tax consequences of the Reorganization to them in light of their individual circumstances.
A Contract owner should consult the prospectus for his or her Contract on the tax consequences of owning the Contract. Contract owners should also consult their tax advisors as to state, local and non-U.S. tax consequences, if any, of the Reorganization, because this discussion only relates to U.S. federal income tax consequences.
Characteristics of Acquiring Portfolio Shares
The Acquiring Portfolio Shares to be distributed to Target Portfolio shareholders will have substantially identical legal characteristics as shares of beneficial interest of the Target Portfolio with respect to such matters as voting rights, accessibility, conversion rights, and transferability.
The Target Portfolio and the Acquiring Portfolio are each organized as a series of the Trust. There are no material differences between the rights of shareholders of the Portfolios.
COMPARISON OF THE TARGET PORTFOLIO, THE ACQUIRING PORTFOLIO, AND THE COMBINED PORTFOLIO
Additional information regarding the Acquiring Portfolio's investments and risks, the management of the Acquiring Portfolio, the purchase and sale of Acquiring Portfolio Shares, annual portfolio operating expenses, certain U.S. federal income tax considerations, and financial intermediary compensation is set forth in Exhibit B to this Prospectus/Proxy Statement.
Analysis of Investment Objectives and Principal Investment Strategies of the Portfolios
The investment objectives of the Target Portfolio and the Acquiring Portfolio are identical. The investment objective of the Target Portfolio and the Acquiring Portfolio is long-term growth of capital. The investment objectives of the Target Portfolio and the Acquiring Portfolio are non-fundamental, meaning that they can be changed by the Board without shareholder approval.
The Portfolios also have similar principal investment strategies in that both the Target Portfolio and the Acquiring Portfolio invest primarily in equity securities. In particular the Target Portfolio normally invests at least 80% of its assets (net assets plus any borrowings made for investment purposes) in equity securities of companies that are associated with natural resources companies, including those companies that are principally engaged in the research, development, manufacturing, extraction, distribution or sale of materials, energy, or goods related to the agriculture, energy, materials, or commodity-related industrials sectors. Although the Acquiring Portfolio does not have a focus on natural resources companies, it invests at least 80% of its assets (net assets plus any borrowings made for investment purposes) in the stock of companies with market capitalizations within the market capitalization range of the Russell 1000® Index. The Acquiring Portfolio may also invest in mid- and small-capitalization companies. The Target Portfolio may also invest up to 10% of its assets in debt securities rated below investment grade whereas the Acquiring Portfolio may invest up to 20% of its assets in debt obligations, convertible and nonconvertible preferred stock and other equity-related securities, 5% of which may be rated below investment grade. Despite these differences, each Portfolio is substantially invested in global equities. As of August 31, 2024, the Target Portfolio and the Acquiring Portfolio each invested approximately 99% of its assets in global equities (with approximately 40% of the Target Portfolio invested in foreign equities and about 10% of the Acquiring Portfolio invested in foreign equities).
As a result of the Reorganization, shareholders of the Target Portfolio will continue to benefit from significant exposure to equity investments as shareholders of the Combined Portfolio. However, such exposure will be more to domestic equities, which tend to be less volatile, than global natural resources companies.
As of the effective date of the Reorganization, the Combined Portfolio will be managed by the Acquiring Portfolio's subadviser (Jennison) according to the investment objective and principal investment strategies of the Acquiring Portfolio. It is not expected that the Acquiring Portfolio will revise any of its investment policies following the Reorganization to reflect those of the Target Portfolio.
| | | Target Portfolio | | Acquiring Portfolio and Combined Portfolio |
| Investment Objective: | | The investment objective of the Target Portfolio is long-term growth of capital. | | The investment objective of the Acquiring Portfolio and the Combined Portfolio is long-term growth of capital. |
| Principal Investment Strategies: | | In pursuing its investment objective, the Target Portfolio normally invests at least 80% of its assets (net assets plus any borrowings made for investment purposes) in equity securities of companies that are associated with natural resources companies, including those companies that are principally engaged in the research, development, manufacturing, extraction, distribution or sale of materials, energy, or goods related to the agriculture, energy, materials, or commodity-related industrials sectors. The Target Portfolio may also invest up to 50% of its total assets in foreign and emerging markets securities, including American Depositary Receipts (ADRs) and securities of companies in developing countries, which offer increasing opportunities for natural resource-related growth. Additionally, the Portfolio may invest in debt securities, including up to 10% of its total assets in debt securities rated below investment grade. The Target Portfolio’s subadviser, T. Rowe Price Associates, Inc. (T. Rowe Price), invests primarily in the common stocks of natural resource companies whose earnings and tangible assets could benefit from accelerating inflation. The Target Portfolio also may invest in other growth companies that T. Rowe Price believes have strong potential for earnings growth but do not own or develop natural resources. The relative percentages invested in natural resource and non-natural resource companies can vary depending on economic and monetary conditions and the Target Portfolio’s subadviser’s outlook for inflation. Natural resource companies in which the Target Portfolio invests typically own, develop, refine, service or transport resources, including energy, metals, forest products, industrials, utilities, chemicals, real estate, and other basic commodities that can be produced and marketed profitably when both labor costs and prices are rising. In pursuing its investment objective, the Target Portfolio has the discretion to deviate from its normal investment criteria and purchase securities that the subadviser believes will provide an opportunity for substantial appreciation. These situations might arise when the subadviser believes a security could increase in value for a variety of reasons, including an extraordinary corporate event, a new product introduction or innovation, a favorable competitive development, or a change in management. The Target Portfolio may also invest in other investment companies, including exchange-traded funds, and illiquid investments. | | In pursuing its investment objective, the Acquiring Portfolio and the Combined Portfolio normally invest at least 80% of its assets (net assets plus any borrowings made for investment purposes) in common stock. The Acquiring Portfolio and the Combined Portfolios primarily invest in the stock of companies with market capitalizations within the market capitalization range of the Russell 1000® Index (measured at the time of purchase). The market capitalization within the range will vary, but as of January 31, 2024, the weighted average market capitalization of companies included in the Russell 1000® Index was approximately $682 billion, and the market capitalization of the largest company included in the Russell 1000® Index was approximately $2.9 trillion. In addition, the Acquiring Portfolio and the Combined Portfolio may invest in mid- and small-capitalization companies. The Acquiring Portfolio's and the Combined Portfolio's subadviser, Jennison Associates LLC, employs a bottom-up fundamental stock research process which sources the investment universe from Jennison’s growth, value, and small/mid cap investment teams. The growth research team seeks companies with unique business models with sustained competitive advantages; catalysts that drive growth rates well above that of the market; superior financial characteristics; and attractive long-term valuations. The value research team seeks companies the team believes are being valued at a discount to their intrinsic value, seeking companies with attractive valuation metrics that are unique to that business, high levels of durability and viability of the business and good business models that are being mispriced. The small/mid cap research process is designed to capitalize on inefficiencies in small-cap asset classes, seeking companies with attractive valuations, strong competitive positions, quality management teams, demonstrated growth in sales and earnings, balance sheet flexibility and strength, and strong earnings growth prospects. The Acquiring Portfolio and the Combined Portfolio may invest up to 30% of its total assets in foreign securities (not including American Depositary Receipts and similar instruments). Up to 20% of the Acquiring Portfolio's and the Combined Portfolio’s investable assets may be invested in short-, intermediate- or long-term debt obligations, convertible and nonconvertible preferred stock and other equity-related securities. Up to 5% of these investable assets may be rated below investment grade. These securities are considered speculative and are sometimes referred to as “junk bonds.” |
| | | Target Portfolio | | Acquiring Portfolio and Combined Portfolio |
| | | | | Jennison employs a systematic portfolio construction process to incorporate its fundamental analysis with a systematic analysis of factors, such as stock price momentum and stock valuation. Incorporating information from both Jennison’s fundamental and systematic analyses, Jennison constructs a diversified portfolio with sector and risk factor exposures managed relative to the Russell 1000® Index, using a technique known generally as portfolio optimization. |
Principal Risks of the Portfolios
The table below compares the principal risks of investing in the Portfolios. A shareholder should refer to the prospectus of the relevant Portfolio for that Portfolio’s full risk profile because the principal risks table below cannot alone be used fully to determine the risk profile of a Portfolio. All investments have risks to some degree, and it is possible that you could lose money by investing in each of the Portfolios. An investment in the Target Portfolio involves similar risks as an investment in the Acquiring Portfolio or the Combined Portfolio, as noted below. An investment in each of the Portfolios is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. While each of the Portfolios makes every effort to achieve its objective, it can't guarantee success. To the extent the Portfolio invests in underlying investment companies or other underlying portfolios, the Portfolio may be exposed to these risks directly through securities and other investments held directly by the Portfolio or indirectly through investments made by underlying portfolios in which the Portfolio invests.
| Principal Risks | | Target
Portfolio | | Acquiring
Portfolio and
Combined
Portfolio |
| Economic and Market Events Risk. Economic and market events risk is the risk that one or more markets in which the Portfolio invests will decline in value, including the possibility that the markets will decline sharply and unpredictably. While a Portfolio's Manager or Subadviser(s) may make efforts to control the risks associated with market changes, and may attempt to identify changes as they occur, market environment changes can be sudden and extreme. Significant shocks to or disruptions of the financial markets or the economy, including those relating to general economic, political, or financial market conditions; significant or unexpected failures, near-failures or credit downgrades of key institutions; investor sentiment and market perceptions; unexpected changes in the prices of key commodities; government actions; geopolitical events or changes; and factors related to a specific issuer, geography, industry or sector, could adversely affect the liquidity and volatility of securities held by the Portfolio. In periods of market volatility and/or declines, the Portfolio may experience high levels of shareholder redemptions, and may have to sell securities at times when it would otherwise not do so, and at unfavorable prices. | | Yes | | Yes |
| Equity Securities Risk. The value of a particular stock or equity-related security held by the Portfolio could fluctuate, perhaps greatly, in response to a number of factors, such as changes in the issuer's financial condition or the value of the equity markets or a sector of those markets. Such events may result in losses to the Portfolio. In addition, due to decreases in liquidity, the Portfolio may be unable to sell its securities holdings within a reasonable time at the price it values the security or at any price. | | Yes | | Yes |
| Expense Risk. The actual cost of investing in the Portfolio may be higher than the expenses shown in the "Annual Portfolio Operating Expenses" table above for a variety of reasons, including, for example, if the Portfolio's average net assets decrease. | | Yes | | Yes |
| Fixed Income Securities Risk. Investment in fixed income securities involves a variety of risks, including that: an issuer or guarantor of a security will be unable or unwilling to pay obligations when due; due to decreases in liquidity, the Portfolio may be unable to sell its securities holdings within a reasonable time at the price it values the security or at any price; and the Portfolio’s investment may decrease in value when interest rates rise. Volatility in interest rates and in fixed income markets may increase the risk that the Portfolio’s investment in fixed income securities will go down in value. In recent years, the Federal Open Market Committee (FOMC) began implementing increases to the federal funds interest rate and there may be further rate increases. To the extent rates increase substantially and/or rapidly, a Portfolio with significant investment in fixed income investments may be subject to significant losses. Changes in interest rates may also affect the liquidity of the Portfolio’s investments in fixed income securities. | | Yes | | Yes |
| Foreign Investment Risk. Foreign markets tend to be more volatile than US markets and are generally not subject to regulatory requirements comparable to those in the US. Foreign securities include investments in securities of foreign issuers denominated in foreign currencies, as well as securities of foreign issuers denominated in US dollars and American Depositary Receipts. Foreign investment risk includes the risk that: changes in currency exchange rates may affect the value of foreign securities held by the Portfolio; foreign markets generally are more volatile than, and generally are not subject to regulatory requirements comparable to, US markets; foreign financial reporting and tax standards usually differ from those in the US; foreign exchanges are often less liquid than US markets; political or social developments may adversely affect the value of foreign securities; foreign holdings may be subject to special taxation and limitations on repatriating investment proceeds; and certain events in foreign markets may adversely affect foreign and domestic issuers, including, among others, military conflict, geopolitical developments, interruptions in the global supply chain, natural disasters, and outbreaks of infectious diseases. | | Yes | | Yes |
| Principal Risks | | Target
Portfolio | | Acquiring
Portfolio and
Combined
Portfolio |
| High Yield Risk. Investments in fixed income instruments rated below investment grade and unrated instruments of similar credit quality (i.e., “high yield securities” or “junk bonds”) may be more sensitive to interest rate, credit, call, and liquidity risks than investments in investment grade securities, and have predominantly speculative characteristics. An economic downturn generally leads to a higher non-payment rate, and a high yield investment may lose significant value before a default occurs. | | Yes | | Yes |
| Large Company Risk. Large-capitalization stocks as a group could fall out of favor with the market, causing the Portfolio to underperform investments that focus on small- or medium-capitalization stocks. Larger, more established companies may be slow to respond to challenges and may grow more slowly than smaller companies. | | No | | Yes |
| Liquidity and Valuation Risk. The Portfolio may hold one or more securities for which there are no or few buyers and sellers or the securities are subject to limitations on transfer. The Portfolio may be unable to sell those portfolio holdings at the desired time or price, and may have difficulty determining the value of such securities for the purpose of determining the Portfolio's net asset value. In such cases, investments owned by the Portfolio may be valued at fair value pursuant to policies and procedures adopted and implemented by the Manager. No assurance can be given that the fair value prices accurately reflect the value of the security. The Portfolio is subject to a liquidity risk management program, which limits the ability of the Portfolio to invest in illiquid investments. | | Yes | | No |
| Market and Management Risk. Markets in which the Portfolio invests may experience volatility and go down in value, and possibly sharply and unpredictably in short periods of time. Investment techniques, risk analyses, and investment strategies, which may include quantitative models or methods, used by a subadviser in making investment decisions for the Portfolio are subject to human error and may not produce the intended or desired results. The value of the Portfolio's investments may be negatively affected by the occurrence of domestic or global events, including war, terrorism, environmental disasters, natural disasters, sanctions, cybersecurity events, supply chain disruptions, political or civil instability, and public health emergencies, among others. Such events may reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and significantly adversely impact the economy. There is no guarantee that the investment objective of the Portfolio will be achieved. | | Yes | | Yes |
| Mid-Sized Company Risk. The shares of mid-sized companies tend to trade less frequently than those of larger, more established companies, which can have an adverse effect on the pricing and volatility of these securities and on the Portfolio's ability to sell the securities. | | No | | Yes |
| Regulatory Risk. The Portfolio is subject to a variety of laws and regulations which govern its operations. The Portfolio is subject to regulation by the Securities and Exchange Commission (the SEC). Similarly, the businesses and other issuers of the securities and other instruments in which the Portfolio invests are also subject to considerable regulation. Changes in laws and regulations may materially impact the Portfolio, a security, business, sector, or market. | | Yes | | Yes |
| Natural Resources Investment Risk. The Portfolio’s investments will expose the Portfolio to the risk of investment in natural resource companies. The market value of securities of natural resource companies may be affected by numerous factors, including changes in commodity prices, events occurring in nature, inflationary pressures, imposition of import controls, international political and economic developments, environmental incidents, resources conservation, the success of exploration projects, and tax and other government regulations. For example, events occurring in nature (such as earthquakes or fires in prime natural resource areas) and political events (such as coups, military confrontations or acts of terrorism) can affect the overall supply of a natural resource and the value of companies involved in such natural resource. Companies in the natural resources industry are at risk for environmental damage claims. Political risks and the other risks to which non-US securities are subject may affect domestic companies if they have significant operations or investments in non-US countries. In addition, rising interest rates and general economic conditions may affect the demand for natural resources. | | Yes | | No |
| Emerging Markets Risk. The risks of non-US investments are greater for investments in or exposed to emerging markets. Emerging market countries typically have economic, political, and social systems that are less developed, and can be expected to be less stable, than those of more developed countries. As a result, there could be less information available about issuers in emerging market countries, which could negatively affect the ability of the manager or a Portfolio’s subadviser(s) to evaluate local companies or their potential impact on a Portfolio’s performance. Characteristics of emerging market economies can include heavy economic dependence on international aid, agriculture or exports (particularly commodities), undeveloped or overburdened infrastructures and legal systems, vulnerability to natural disasters, significant and unpredictable government intervention in markets or the economy, volatile currency exchange rates, currency devaluations, runaway inflation, business practices that depart from norms for developed countries, and generally less liquid markets. For example, the economies of such countries can be subject to currency devaluations and rapid and unpredictable (and in some cases, extremely high) rates of inflation or deflation. Low trading volumes may result in a lack of liquidity, price volatility, and valuation difficulties. Regulatory regimes outside of the US may not require or enforce corporate governance standards comparable to that of the US, which may result in less protections for investors in such issuers and make such issuers more susceptible to actions not in the best interest of the issuer or its investors. Emerging market countries may have policies that restrict investments by foreign investors, or that prevent foreign investors from withdrawing their money at will, which may make it difficult for a Portfolio to invest in such countries or increase the administrative costs of such investments. Countries with emerging markets can be found in regions including, but not limited to, Asia, Latin America, the Middle East, Southern Europe, Eastern Europe, Africa and the region comprising the former Soviet Union. A Portfolio may invest in some emerging markets through trading structures or protocols that subject it to risks such as those associated with decreased liquidity, custody of assets, different settlement and clearance procedures, and asserting legal title under a developing legal and regulatory regime to a greater degree than in developed markets or even in other emerging markets. | | Yes | | No |
| Principal Risks | | Target
Portfolio | | Acquiring
Portfolio and
Combined
Portfolio |
Small Sized Company Risk. Securities of small sized companies tend to be less liquid than those of larger, more established companies, which can have an adverse effect on the price of these securities and on the Portfolio’s ability to sell these securities. The market price of such investments also may rise more in response to buying demand and fall more in response to selling pressure and be more volatile than investments in larger companies. | | Yes | | Yes |
| Focus Risk. The Portfolio focuses or may focus its investments in particular countries, regions, industries, sectors, markets, or types of investments and may accumulate large positions in such areas. As a result, the Portfolio invests in the securities of a small number of issuers and has greater exposure to adverse developments affecting those issuers and a resulting decline in the market price of those issuers’ securities as compared to a portfolio that invests in the securities of a larger number of issuers. | | Yes | | No |
| Commodity Risk. The value of a commodity-linked investment is affected by, among other things, overall market movements, factors affecting a particular industry or commodity, and changes in interest and exchange rates and may be more volatile than traditional equity and debt securities. The value of the commodities underlying commodity-linked instruments may be subject to various economic and non-economic factors, such as drought, floods or other weather conditions, livestock disease, embargoes, competition from substitute products, transportation bottlenecks or shortages, fluctuations in supply and demand, tariffs, war and international economic, political, and regulatory developments. | | Yes | | No |
Exchange-Traded Funds (ETF) Risk. An investment in an ETF generally presents the same primary risks as an investment in a mutual fund that has the same investment objective, strategies, and policies. In addition, the market price of an ETF’s shares may trade above or below its net asset value and there may not be an active trading market for an ETF’s shares. The Portfolio could lose money investing in an ETF if the prices of the securities owned by the ETF go down. | | Yes | | No |
| Illiquid Investments Risk. Illiquid investments risk exists when particular investments made by the Portfolio are difficult to purchase or sell. The Portfolio may make investments that may become less liquid in response to market developments, lack of a trading market, or adverse investor perceptions. If the Portfolio is forced to sell these investments to pay redemption proceeds or for other reasons, the Portfolio may lose money. In addition, when there is no willing buyer and investments cannot be readily sold at the desired time or price, the Portfolio may have to accept a lower price or may not be able to sell the instrument at all. It also may be the case that other market participants may be attempting to liquidate illiquid holdings at the same time as the Portfolio, causing increased supply in the market and contributing to liquidity risk and downward pricing pressure. An inability to sell a portfolio position can adversely affect the Portfolio’s value or prevent the Portfolio from being able to take advantage of other investment opportunities. | | Yes | | No |
| Investment Company Risk. The risks of owning another investment company are generally similar to the risks of investing directly in the securities in which that investment company invests. However, an investment company may not achieve its investment objective or execute its investment strategy effectively, which may adversely affect the Portfolio’s performance. In addition, because closed-end funds and exchange-traded funds trade on a secondary market, their shares may trade at a premium or discount to the actual net asset value of their portfolio securities and their shares may have greater volatility because of the potential lack of liquidity. | | Yes | | No |
| Portfolio Turnover Risk. A subadviser may engage in active trading on behalf of the Portfolio—that is, frequent trading of the Portfolio’s securities—in order to take advantage of new investment opportunities or yield differentials. The Portfolio’s turnover rate may be higher than that of other mutual funds. Portfolio turnover generally involves some expense to the Portfolio, including brokerage commissions or dealer mark-ups and other transaction costs on the sale of securities and reinvestment in other securities. | | Yes | | No |
| Blend Style Risk. A Portfolio’s blend investment style may subject the Portfolio to risks of both value and growth investing. The portion of the Portfolio’s portfolio that makes investments pursuant to a growth strategy may be subject to above-average market price fluctuations as a result of seeking high-quality stocks with good future growth prospects. The portion of the Portfolio’s portfolio that makes investments pursuant to a value strategy may be subject to the risk that the market may not recognize a security’s intrinsic value for long periods of time or that a stock judged to be undervalued may actually be appropriately priced. Issuers of value stocks may have experienced adverse business developments or may be subject to special risks that have caused the stock to be out of favor. If the Portfolio’s assessment of market conditions or a company’s value is inaccurate, the Portfolio could suffer losses or produce poor performance relative to other funds. Historically, growth stocks have performed best during later stages of economic expansion and value stocks have performed best during periods of economic recovery. Therefore, both styles may over time go in and out of favor depending on market conditions. At times when a style is out of favor, that portion of the portfolio may lag the other portion of the portfolio, which may cause the Portfolio to underperform the market in general, its benchmark, and other mutual funds. | | No | | Yes |
| Credit Risk. This is the risk that the issuer, the guarantor, or the insurer of a fixed income security, the counterparty to an investment or derivatives contract, or obligor of an obligation underlying an asset-backed security may be unable or unwilling to make timely principal and interest payments or to otherwise honor its obligations. Litigation, legislation or other political events, business or economic conditions, or the bankruptcy of the issuer could have a significant effect on an issuer’s or obligor’s ability to make payments of principal and/or interest. The lower the credit quality of a bond, the more sensitive it is to credit risk, and the credit quality of an investment can deteriorate rapidly. | | No | | Yes |
| Principal Risks | | Target
Portfolio | | Acquiring
Portfolio and
Combined
Portfolio |
| Interest Rate Risk. The value of your investment may go down when interest rates rise. A rise in interest rates tends to have a greater impact on the prices of longer term or duration securities. When interest rates fall, the issuers of debt obligations may prepay principal more quickly than expected, and the Portfolio 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 Portfolio’s holdings may fall sharply. This is referred to as “extension risk.” The Portfolio currently faces a heightened level of interest rate risk because of recent increases in interest rates in the US and globally. In recent years, the Federal Open Market Committee (FOMC) began implementing increases to the federal funds interest rate and there may be further rate increases. As interest rates rise, the value of fixed income investments typically decreases and there is risk that rates across the financial system also may rise. To the extent rates increase substantially and/or rapidly, a Portfolio with significant investment in fixed income investments may be subject to significant losses. Interest rates may continue to increase, possibly suddenly and significantly, with unpredictable effects on the markets and the Portfolio’s investments. The Portfolio may lose money if short-term or long-term interest rates rise sharply or in a manner not anticipated by the subadviser. | | No | | Yes |
| Market Capitalization Risk. Investing in issuers within the same market capitalization category carries the risk that the category may be out of favor due to current market conditions or investor sentiment. Because the Portfolio may invest a portion of its assets in securities issued by small-cap companies, it is likely to be more volatile than a portfolio that focuses on securities issued by larger companies. Small-sized companies often have less experienced management, narrower product lines, more limited financial resources, and less publicly available information than larger companies. In addition, smaller companies are typically more sensitive to changes in overall economic conditions and their securities may be difficult to trade. | | No | | Yes |
Prepayment or Call Risk. Prepayment or call risk is the risk that issuers will prepay fixed-rate obligations held by the Portfolio when interest rates fall, forcing a Portfolio to reinvest in obligations with lower interest rates than the original obligations. Mortgage-related securities and asset-backed securities are particularly subject to prepayment risk. | | No | | Yes |
Analysis of the Fundamental Investment Policies of the Portfolios:
The Target Portfolio, the Acquiring Portfolio, and the Combined Portfolio have the same fundamental investment policies. Fundamental investment policies may not be changed without a majority vote of shareholders as required by the 1940 Act.
| Target Portfolio, Acquiring Portfolio, and Combined Portfolio |
Under its fundamental investment restrictions, each Portfolio may not: |
1. Buy or sell real estate, except that investments in securities of issuers that invest in real estate and investments in mortgage-backed securities, mortgage participations or other instruments supported or secured by interests in real estate are not subject to this limitation, and except that the Portfolios may exercise rights relating to such securities, including the right to enforce security interests and to hold real estate acquired by reason of such enforcement until that real estate can be liquidated in an orderly manner. None of the Portfolios will buy or sell commodities or commodity contracts, except that a Portfolio may, consistent with its investment style, purchase and sell financial futures contracts and options thereon. For purposes of this restriction, futures contracts on currencies and on securities indices and forward foreign currency exchange contracts are not deemed to be commodities or commodity contracts. |
2. Purchase securities on margin (but a Portfolio may obtain such short-term credits as may be necessary for the clearance of transactions); provided that the deposit or payment by a Portfolio of initial or maintenance margin in connection with otherwise permissible futures or options is not considered the purchase of a security on margin. None of the Portfolios will issue senior securities, borrow money or pledge assets, except as permitted by the 1940 Act and rules thereunder, or by exemptive order, SEC release, no-action letter, or similar relief or interpretations. For purposes of this restriction, the purchase or sale of securities on a when-issued or delayed-delivery basis, reverse repurchase agreements, short sales, derivative and hedging transactions and collateral arrangements with respect thereto, and obligations of the Trust to Trustees pursuant to deferred compensation agreements are not deemed to be a pledge of assets or the issuance of a senior security. |
3. Make loans, except through loans of assets of a Portfolio, repurchase agreements, trade claims, loan participations or similar investments, or as permitted by the 1940 Act and rules thereunder, or by exemptive order, SEC release, no-action letter or similar relief or interpretations. Provided that for purposes of this limitation, the acquisition of bonds, debentures, other debt securities or instruments, or participations or other interests therein and investments in government obligations, commercial paper, certificates of deposit, bankers' acceptances or instruments similar to any of the foregoing will not be considered the making of a loan. |
4. Act as underwriter except to the extent that, in connection with the disposition of portfolio securities, it may be deemed to be an underwriter under certain federal securities laws. |
| 5. Purchase securities of a company in any industry if, as a result of the purchase, a Portfolio's holdings of securities issued by companies in that industry would exceed 25% of the value of the Portfolio, except that this restriction does not apply to purchases of obligations issued or guaranteed by the US Government, its agencies and instrumentalities or issued by domestic banks. For purposes of this restriction, neither finance companies as a group nor utility companies as a group are considered to be a single industry and will be grouped instead according to their services; for example, gas, electric, and telephone utilities will each be considered a separate industry. For purposes of this exception, domestic banks shall include all banks which are organized under the laws of the United States or a state (as defined in the 1940 Act), US branches of foreign banks that are subject to the same regulations as US banks and foreign branches of domestic banks (as permitted by the SEC). For purposes of this limitation, investments in other investment companies shall not be considered an investment in any particular industry. |
Performance of the Target Portfolio
A number of factors, including risk, can affect how the Target Portfolio performs. The information below provides some indication of the risks of investing in the Target Portfolio by showing changes in its performance from year to year, and by showing how its average annual returns over various time periods compare with those of a broad-based securities market index that reflects the performance of the overall market applicable to the Target Portfolio and an additional index that represents the market sectors in which the Target Portfolio primarily invests. Past performance does not mean that the Target Portfolio will achieve similar results in the future.
The annual returns and average annual returns shown in the chart and tables are after deduction of expenses and do not include Contract charges. If Contract charges were included, the returns shown would have been lower than those shown. Consult your Contract prospectus for information about Contract charges.
Note: The PSF Natural Resources Portfolio changed its subadviser and changed its investment policies and strategy effective June 15, 2022. The performance figures prior to June 15, 2022 for the Portfolio reflect the Portfolio’s former investment operations, policies, and strategies prior to this date. Such performance is not representative of the Portfolio’s current investment operations, policies, and strategies that took effect as of this date, and the Portfolio’s performance after this date could be materially different.
Effective May 1, 2024, the Portfolio’s broad-based performance index changed to the S&P 500 Index. The S&P 500 Index is an appropriate broad-based securities market index that represents the overall market applicable to the Portfolio. The Portfolio will retain the Lipper Global Natural Resources Index as its additional benchmark for performance comparison.
BEST QUARTER: 26.29% (4th Quarter of 2020) WORST QUARTER: -34.18% (1st Quarter of 2020)
Average Annual Total Returns (as of December 31, 2023)
| | | 1 YEAR | | | 5 YEARS | | | 10 YEARS | | | SINCE
INCEPTION -
CLASS III
(4/26/21) | |
| Target Portfolio (Class I Shares) | | | 1.98 | % | | | 14.19 | % | | | 1.36 | % | | | N/A | |
| Target Portfolio (Class II Shares) | | | 1.58 | % | | | 13.73 | % | | | 0.96 | % | | | N/A | |
| Target Portfolio (Class III Shares) | | | 1.75 | % | | | N/A | | | | N/A | | | | 12.40 | % |
Broad-Based Securities Market Index: S&P 500 Index
(reflects no deduction for fees, expenses or taxes) | | | 26.29 | % | | | 15.69 | % | | | 12.03 | % | | | 6.74 | %* |
Lipper Global Natural Resources Funds Index
(reflects no deduction for fees, expenses or taxes) | | | 1.19 | % | | | 12.48 | % | | | 2.69 | % | | | 12.87 | %* |
MSCI World Index (GD) (former)
(reflects no deduction for fees, expenses or taxes) | | | 24.42 | % | | | 13.37 | % | | | 9.18 | % | | | 4.99 | %* |
*Since Inception returns for the Indexes are measured from the month-end closest to the inception date.
Average Annual Total Returns (as of August 31, 2024)
| | | 1 YEAR | | | 5 YEARS | | | 10 YEARS | | | SINCE
INCEPTION -
CLASS III
(4/26/21) | |
| Target Portfolio (Class I Shares) | | | 6.77 | % | | | 15.37 | % | | | 0.83 | % | | | N/A | |
| Target Portfolio (Class II Shares) | | | 6.34 | % | | | 14.92 | % | | | 0.42 | % | | | N/A | |
| Target Portfolio (Class III Shares) | | | 6.53 | % | | | N/A | | | | N/A | | | | 12.74 | % |
Broad-Based Securities Market Index: S&P 500 Index
(reflects no deduction for fees, expenses or taxes) | | | 27.14 | % | | | 15.92 | % | | | 12.98 | % | | | 11.15 | %* |
Lipper Global Natural Resources Funds Index
(reflects no deduction for fees, expenses or taxes) | | | 2.73 | % | | | 13.78 | % | | | 2.31 | % | | | 11.98 | %* |
MSCI World Index (GD) (former)
(reflects no deduction for fees, expenses or taxes) | | | 25.00 | % | | | 13.66 | % | | | 10.15 | % | | | 9.01 | %* |
* Since Inception returns for the Indexes are measured from the month-end closest to the inception date.
Performance of the Acquiring Portfolio
A number of factors, including risk, can affect how the Acquiring Portfolio performs. The information below provides some indication of the risks of investing in the Acquiring Portfolio by showing changes in its performance from year to year, and by showing how its average annual returns over various time periods compare with those of a broad-based securities market index that reflects the performance of the overall market applicable to the Acquiring Portfolio and an additional index that represents the market sectors in which the Acquiring Portfolio primarily invests. Past performance does not mean that the Acquiring Portfolio will achieve similar results in the future.
The annual returns and average annual returns shown in the chart and tables are after deduction of expenses and do not include Contract charges. If Contract charges were included, the returns shown would have been lower than those shown. Consult your Contract prospectus for information about Contract charges.
Note: The PSF PGIM Jennison Blend Portfolio changed certain investment strategies, effective December 11, 2023.The performance figures prior to December 11, 2023 for the Portfolio reflect the Portfolio’s former investment operations, policies, and strategies prior to this date. Such performance is not representative of the Portfolio’s current investment operations, policies, and strategies that took effect as of this date, and the Portfolio’s performance after
this date could be materially different.
BEST QUARTER: 26.37% (2nd Quarter of 2020) WORST QUARTER: -19.55% (2nd Quarter of 2022)
Average Annual Total Returns (as of December 31, 2023)
| | | 1 YEAR | | | 5 YEARS | | | 10 YEARS | | | SINCE
INCEPTION -
CLASS III
(4/26/21) | |
| Acquiring Portfolio (Class I Shares) | | | 32.52 | % | | | 14.71 | % | | | 10.52 | % | | | N/A | |
| Acquiring Portfolio (Class II Shares) | | | 31.98 | % | | | 14.25 | % | | | 10.08 | % | | | N/A | |
| Acquiring Portfolio (Class III Shares) | | | 32.19 | % | | | N/A | | | | N/A | | | | 3.69 | % |
Broad-Based Securities Market Index: S&P 500 Index
(reflects no deduction for fees, expenses or taxes) | | | 26.29 | % | | | 15.69 | % | | | 12.03 | % | | | 6.74 | %* |
Russell 1000 Index
(reflects no deduction for fees, expenses or taxes) | | | 26.53 | % | | | 15.52 | % | | | 11.80 | % | | | 5.70 | %* |
*Since Inception returns for the Indexes are measured from the month-end closest to the inception date.
Average Annual Total Returns (as of August 31, 2024)
| | | 1 YEAR | | | 5 YEARS | | | 10 YEARS | | | SINCE
INCEPTION -
CLASS III
(4/26/21) | |
| Acquiring Portfolio (Class I Shares) | | | 29.70 | % | | | 15.47 | % | | | 11.72 | % | | | N/A | |
| Acquiring Portfolio (Class II Shares) | | | 29.18 | % | | | 15.00 | % | | | 11.27 | % | | | N/A | |
| Acquiring Portfolio (Class III Shares) | | | 29.38 | % | | | N/A | | | | N/A | | | | 8.76 | % |
Broad-Based Securities Market Index: S&P 500 Index
(reflects no deduction for fees, expenses or taxes) | | | 27.14 | % | | | 15.92 | % | | | 12.98 | % | | | 11.15 | %* |
Russell 1000 Index
(reflects no deduction for fees, expenses or taxes) | | | 26.60 | % | | | 15.55 | % | | | 12.66 | % | | | 10.04 | %* |
* Since Inception returns for the Indexes are measured from the month-end closest to the inception date.
Capitalizations of the Target Portfolio and the Acquiring Portfolio Before and After the Reorganization
The following table sets forth, as of November 30, 2024: (i) the capitalization of the Target Portfolio, (ii) the capitalization of the Acquiring Portfolio, and (iii) the pro forma capitalization of the Combined Portfolio as adjusted to give effect to the Reorganization.
| Class I | | Target
Portfolio
(unaudited) | | | Acquiring
Portfolio
(unaudited) | | | Adjustments | | | Combined
Portfolio
(Pro Forma
Surviving)
(unaudited) | |
| Net assets | | $ | 525,496,415 | | | $ | 6,834,090,330 | | | | | | | $ | 7,359,586,745 | |
| Total shares outstanding | | | 10,760,328 | | | | 53,996,546 | | | | (6,608,504 | )(a) | | | 58,148,370 | |
| Net asset value per share | | $ | 48.84 | | | $ | 126.57 | | | | | | | $ | 126.57 | |
| | | | | | | | | | | | | | | | | |
| (a) | Reflects the change in shares of the Target Portfolio upon conversion into the Acquiring Portfolio. Shareholders of the Target Portfolio would become shareholders of the Acquiring Portfolio, receiving shares of the Acquiring Portfolio equal to the value of their holdings in the Target Portfolio immediately prior to the Reorganization. |
| Class II | | Target
Portfolio
(unaudited) | | | Acquiring
Portfolio
(unaudited) | | | Adjustments | | | Combined
Portfolio
(Pro Forma
Surviving)
(unaudited) | |
| Net assets | | $ | 16,149,993 | | | $ | 46,345,061 | | | | | | | $ | 62,495,054 | |
| Total shares outstanding | | | 350,230 | | | | 379,981 | | | | (217,820 | )(a) | | | 512,391 | |
| Net asset value per share | | $ | 46.11 | | | $ | 121.97 | | | | | | | $ | 121.97 | |
| | | | | | | | | | | | | | | | | |
(a) Reflects the change in shares of the Target Portfolio upon conversion into the Acquiring Portfolio. Shareholders of the Target Portfolio would become shareholders of the Acquiring Portfolio, receiving shares of the Acquiring Portfolio equal to the value of their holdings in the Target Portfolio immediately prior to the Reorganization.
| Class III | | Target
Portfolio
(unaudited) | | | Acquiring
Portfolio
(unaudited) | | | Adjustments | | | Combined
Portfolio
(Pro Forma
Surviving)
(unaudited) | |
| Net assets | | $ | 23,063,790 | | | $ | 3,699,291 | | | | | | | $ | 26,763,081 | |
| Total shares outstanding | | | 475,963 | | | | 29,493 | | | | (292,085 | )(a) | | | 213,371 | |
| Net asset value per share | | $ | 48.46 | | | $ | 125.43 | | | | | | | $ | 125.43 | |
| | | | | | | | | | | | | | | | | |
(a) Reflects the change in shares of the Target Portfolio upon conversion into the Acquiring Portfolio. Shareholders of the Target Portfolio would become shareholders of the Acquiring Portfolio, receiving shares of the Acquiring Portfolio equal to the value of their holdings in the Target Portfolio immediately prior to the Reorganization.
MANAGEMENT OF THE TARGET PORTFOLIO,
THE ACQUIRING PORTFOLIO AND THE COMBINED PORTFOLIO
This section provides more information about: (i) PGIM Investments, (ii) T. Rowe Price as subadviser to the Target Portfolio, and (iii) Jennison as subadviser to the Acquiring Portfolio and Combined Portfolio.
Investment Management Arrangements
The Target Portfolio and the Acquiring Portfolio are managed by PGIM Investments, 655 Broad Street, Newark, NJ 07102.
As of November 30, 2024, PGIM Investments serves as the investment manager to all of the Prudential U.S. and offshore open-end investment companies, and as administrator to closed-end investment companies, with aggregate assets of approximately $322.1 billion. PGIM Investments is a wholly-owned subsidiary of PIFM Holdco, LLC, which is a wholly-owned subsidiary of PGIM Holding Company, which is a wholly-owned subsidiary of Prudential Financial, Inc. ("Prudential"). PGIM Investments has been in the business of providing advisory services since 1996.
The Investment Management Agreement between the Manager and the Trust on behalf of the Target Portfolio and the Acquiring Portfolio (the "Management Agreement"), provide that the Manager will furnish the Target Portfolio and the Acquiring Portfolio with investment advice and administrative services subject to the oversight of the Board and in conformity with the stated principal investment strategies of the Target Portfolio and the Acquiring Portfolio. The Manager must also provide, or obtain and supervise, the executive, administrative, accounting, custody, transfer agent, and shareholder servicing services to each Portfolio.
The Trust uses a "manager-of-managers" structure. That means that the Manager has engaged the subadvisers to conduct the investment programs of the Target Portfolio and the Acquiring Portfolio, including the purchase, retention and sale of portfolio securities and other financial instruments. The Manager is responsible for monitoring the activities of the subadvisers and reporting on such activities to the Trustees. The Trust has obtained an exemptive order from the SEC that permits the Manager, subject to approval by the Board, to hire or change subadvisers for the Target Portfolio and the Acquiring Portfolio by entering into new subadvisory agreements with affiliated and non-affiliated subadvisers, without obtaining shareholder approval of such changes. This exemptive order (which is similar to exemptive orders granted to other investment companies that are organized in a manner similar to the Trust) is intended to facilitate the efficient supervision and management of the subadvisers by the Manager and the Trustees.
If there is more than one subadviser for a Portfolio, the Manager will normally determine the division of the assets for the Portfolio among the applicable subadvisers. All daily cash inflows (that is, purchases and reinvested distributions) and outflows (that is, redemptions and expense items) will be divided among such subadvisers as the Manager deems appropriate. The Manager may, in its discretion, change the target allocation of assets among subadvisers, transfer assets between subadvisers, or change the allocation of cash inflows or cash outflows among subadvisers for any reason and at any time without notice. As a consequence, the Manager may allocate assets or cash flows from a portfolio segment that has appreciated more to another portfolio segment.
Reallocations of assets among the subadvisers and the Manager may result in additional costs since sales of securities may result in higher portfolio turnover. Also, because the subadvisers and the Manager select portfolio securities independently, it is possible that a security held by a portfolio segment may also be held by another portfolio segment of a Portfolio or that certain subadvisers or the Manager may simultaneously favor the same industry. The Manager will monitor the overall portfolio to ensure that any such overlaps do not create an unintended industry concentration. In addition, if a subadviser buys a security as another subadviser or the Manager sells it, the net position of a Portfolio in the security may be approximately the same as it would have been with a single portfolio and no such sale and purchase, but the applicable Portfolio will have incurred additional costs. The Manager will consider these costs in determining the allocation of assets or cash flows. The Manager will consider the timing of asset and cash flow reallocations based upon the best interests of each Portfolio and its shareholders.
A discussion regarding the basis for the Board's approvals of the Management Agreement and the subadvisory agreements are available in the semi-annual reports (for agreements approved during the six-month period ended June 30) and in the annual reports (for agreements approved during the six-month period ended December 31).
Subadvisers of the Target Portfolio and the Acquiring Portfolio. The Target Portfolio is subadvised by T. Rowe Price. The Acquiring Portfolio is subadvised by Jennison. The SAI provides additional information about the portfolio managers responsible for the day-to-day management of each of the Portfolios, the portfolio manager's compensation, other accounts that each portfolio manager manages, and ownership of portfolio securities by each portfolio manager. If the Reorganization is approved, the Combined Portfolio will be subadvised by Jennison.
Descriptions of the subadvisers and the portfolio managers are set forth below:
Target Portfolio
T. Rowe Price. T. Rowe Price is a wholly-owned subsidiary of T. Rowe Price Group, Inc. T. Rowe Price and its affiliates managed approximately [$XX trillion] in assets as of [November 30, 2024]. T. Rowe Price’s address is 100 East Pratt Street, Baltimore, Maryland 21202.
T. Rowe Price manages the Portfolio through an Investment Advisory Committee. The Committee Chairman has day-to-day responsibility for managing the Portfolio and works with the Committee in developing and executing the Portfolio’s investment program. Shinwoo Kim is the Investment Advisory Committee Chairman for the Portfolio.
Shinwoo Kim is the portfolio manager for the Global Natural Resources Equity Strategy, including the New Era Fund. He is the president and chairman of the fund’s Investment Advisory Committee. In addition, Shinwoo is a member of the Investment Advisory Committees of the US Large-Cap Value Equity and US Large-Cap Equity Income Strategies. He is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Associates, Inc. Shinwoo has been with
T. Rowe Price since 2009, beginning in the US Equity Division as an investment analyst covering energy. Prior to joining the firm, he served as a summer equity research analyst for MFS Investment Management, focusing on the railroad industry. He also was a senior consultant/engineer for AT&T, Inc., and a managed network operation engineer for Sprint Corp. Shinwoo earned a dual B.S., magna cum laude, in electrical engineering and computer engineering from North Carolina State University and an M.B.A. in finance from the University of Pennsylvania, The Wharton School.
Acquiring Portfolio and Combined Portfolio
Jennison. Jennison is organized under the laws of Delaware as single member limited liability company whose sole member is PGIM, Inc., which is a direct, wholly-owned subsidiary of PGIM Holding Company LLC, which is a direct, wholly-owned subsidiary of Prudential Financial, Inc. As of [November 30, 2024], Jennison managed in excess of $[XX billion] in assets for institutional, mutual fund and certain other clients. Jennison's address is 466 Lexington Avenue, New York, New York 10017.
Jason T. McManus, Adam L. Friedman, Brian A. Porpora are jointly and primarily responsible for the day-to-day management of the Portfolio.
Jason T. McManus is a Managing Director, the Head of Custom Solutions, and a custom solutions portfolio manager. He joined Jennison in 1997. Mr. McManus began managing quantitative portfolios and custom solutions for clients in August 2006. From 2003 to 2006, he was part of Jennison’s Applied Research team focusing on quantitative research projects and portfolio analytics. Prior to that, he was a research associate on the International Equity team. Mr. McManus received a BS in economics and computer science from the University at Albany, State University of New York, and an MBA in quantitative finance from New York University’s Stern School of Business.
Adam L. Friedman is a Managing Director, a custom solutions portfolio manager and an investment solutions analyst. He joined Jennison in 2007. Prior to joining the Custom Solutions Group in 2011, he was an investment analyst on the firm’s alternative investments team. Mr. Friedman earned a BS in financial economics from Binghamton University.
Brian A. Porpora is a Managing Director, a custom solutions portfolio manager and an investment solutions analyst. He joined Jennison in 2004. Prior to joining the Custom Solutions Group in 2008, he was an investment analyst on the firm’s alternative investments team. Mr. Porpora earned a BS in applied economics and business management from Cornell University.
The portfolio managers for the Portfolio are supported by other Jennison portfolio managers, research analysts and investment professionals. Team members conduct research, make securities recommendations and support the portfolio managers in all activities. Members of the team may change from time to time.
Additional Information About the Portfolio Managers—Compensation and Conflicts of Interest. For each portfolio manager that will be responsible for the day-to-day portfolio management of the Combined Portfolio if the Reorganization is approved, the SAI corresponding to this Prospectus/Proxy Statement contains an explanation of the structure of, and method(s) used by Jennison to determine portfolio manager compensation, as well as an explanation of any material conflicts of interest that may arise between a portfolio manager's management of the Combined Portfolio's investments and investments in other accounts. The SAI of the Trust also contains this information with respect to each portfolio manager primarily responsible for the day-to-day portfolio management of the Target Portfolio and the Acquiring Portfolio.
Portfolio Managers: Other Accounts—Additional Information About the Portfolio Managers—Other Accounts and Share Ownership. The SAI corresponding to this Prospectus/Proxy Statement provides additional information about the compensation for each portfolio manager that is primarily responsible for the day-to-day management of the Combined Portfolio, other accounts managed by those portfolio managers, and ownership of Trust securities by those portfolio managers. The SAI of the Trust also provides this information with respect to each portfolio manager that is primarily responsible for the day-to-day management of the Target Portfolio and the Acquiring Portfolio.
Contractual and Effective Investment Management Fee Rates for the Portfolios
The contractual investment management fee rates for the Target Portfolio, the Acquiring Portfolio, and the Combined Portfolio are set forth below:
The Target Portfolio
0.45% of average daily net assets
The Acquiring Portfolio
0.45% of average daily net assets
The Combined Portfolio
0.45% of average daily net assets
Assuming completion of the Reorganization and based on the assets under management for each of the Portfolios as of December 31, 2023, the effective management fee rate for the Combined Portfolio would be 0.44%. Additionally, as noted earlier, based on the current assets under management for each of the Portfolios as of December 31, 2023, and assuming completion of the Reorganization on that date, the pro forma annualized total gross and net operating expense ratios for the Combined Portfolio are lower than the annualized total gross and net operating expense ratios of the Target Portfolio, respectively. Contractual investment management fees are the management fees payable to the Manager and do not reflect any waivers or reimbursements. Effective investment management fees are the management fees paid to the Manager, taking into account any applicable waiver or reimbursement.
Management Fees
Set forth below are the total effective annualized management fees paid (as a percentage of average net assets) net of waivers by each Portfolio to the Manager during 2023:
| Portfolio | | Total Effective Annualized Management Fees Paid |
| Target Portfolio | | 0.44% |
| Acquiring Portfolio | | 0.45% |
VOTING INFORMATION
Approval of the Reorganization requires approval by a majority of the outstanding voting securities of the Target Portfolio, as defined by the 1940 Act. For purposes of the 1940 Act, a majority of the Target Portfolio's outstanding voting securities is the lesser of (i) 67% of the Target Portfolio's outstanding voting securities represented at a meeting at which more than 50% of the Target Portfolio's outstanding voting securities are present in person or represented by proxy, or (ii) more than 50% of the Target Portfolio's outstanding voting securities. Each Contract owner will be entitled to give voting instructions equivalent to one vote for each full share, and a fractional vote for each fractional share, of the Target Portfolio beneficially owned at the close of business on the record date. If sufficient votes to approve the Reorganization are not received by the date of the Meeting, the Meeting may be adjourned to permit further solicitations of voting instructions. Pursuant to the Trust's Agreement and Declaration of Trust, the holders of one-third of the outstanding voting shares present in person or by proxy shall constitute a quorum at any meeting of Trust shareholders.
In accordance with requirements of the SEC, each Participating Insurance Company, as record owner of the shares of the Target Portfolio, will vote all shares of the Target Portfolio, including Target Portfolio shares owned by a Participating Insurance Company in its general account or otherwise, for which it does not receive instructions from the Contract owner beneficially owning the shares or for instructions that are not clearly marked, and the Participating Insurance Company will vote those shares (for the proposal, against the proposal, or abstain) in the same proportion as the votes actually cast in accordance with instructions received from Contract owners ("Shadow Voting"). The presence at the Meeting of the Participating Insurance Companies affiliated with the Manager and other portfolios in the Trust will be sufficient to constitute a quorum. Therefore, this Shadow Voting procedure may result in a relatively small number of Contract owners determining the outcome of the vote. No minimum response is required from the Contract owners before Shadow Voting is applied. An abstention is not counted as an affirmative vote of the type necessary to approve the proposal and, therefore, instructions to the applicable Participating Insurance Company to abstain will have the same effect as a vote against the proposal.
How to Vote
| ● | You can vote your shares in any one of four ways: |
| ● | By mail, with the enclosed voting instruction card; |
| ● | Over the Internet; |
| ● | Attending the Meeting to be held at the offices of the Trust, 655 Broad Street, Newark, New Jersey 07102, and submitting your voting instructions; or |
| ● | By phone. |
If you simply sign and date the voting instruction card but give no voting instructions, your shares will be voted by the Participating Insurance Company in favor of the Plan and in accordance with the views of management upon any unexpected matters that come before the Meeting or adjournment thereof.
Revoking Voting Instructions
Contract owners executing and returning voting instructions may revoke such instructions at any time prior to exercise of those instructions by written notice of such revocation to the Secretary of the Trust, by execution of subsequent voting instructions. In addition, you may revoke such instructions by attending the Meeting.
Other Matters
The Board does not intend to bring any matters before the Meeting other than those described in this Prospectus/Proxy Statement. The Board is not aware of any other matters to be brought before the Meeting by others. If any other matter legally comes before the Meeting, it is intended that the Participating Insurance Companies will vote in accordance with their judgment.
Solicitation of Voting Instructions
Voting instructions will be solicited principally by mailing this Prospectus/Proxy Statement and its enclosures, but instructions also may be solicited by telephone, facsimile, through electronic means such as email, or in person by officers or representatives of the Trust or the Participating Insurance Company. Broadridge, Inc. serves as the solicitor and the Participating Insurance Companies will pay such costs for solicitation. If the record owner of a Contract is a custodian, nominee, or fiduciary, the Trust may send proxy materials to the record owner for any beneficial owners that such record owner may represent. The Trust may reimburse custodians, nominees, and fiduciaries for their reasonable expenses incurred in connection with proxy solicitations of such beneficial owners.
ADDITIONAL INFORMATION ABOUT THE TARGET PORTFOLIO
AND THE ACQUIRING PORTFOLIO
Each Portfolio is a separate series of the Trust, which is an open-end management investment company registered with the SEC under the 1940 Act. Each of its series is, in effect, a separate mutual fund.
Additional information about the Acquiring Portfolio is included in Exhibit B to this Prospectus/Proxy Statement. Additional information about the Target Portfolio and the Acquiring Portfolio is included in the prospectus and SAI for the Trust under file number 002-80896, dated May 1, 2024, as supplemented, and the portions of that prospectus and SAI relating to the Target Portfolio and the Acquiring Portfolio are incorporated herein by reference. These documents are available upon request and without charge by calling 1-800-346-3778 or by writing to the Trust at 655 Broad Street, Newark, New Jersey 07102.
The Trust, on behalf of each Portfolio, files proxy materials, reports, and other information with the SEC in accordance with the informational requirements of the Securities Exchange Act of 1934, as amended, and the 1940 Act. The Trust also prepares annual reports, which include the management discussion and analysis with respect to the Portfolio. The annual reports are available both from the SEC and from the Trust. These materials are available on the EDGAR Database on the SEC's Internet site at http://www.sec.gov, and copies of these materials may be obtained, after paying a duplicating fee, by electronic request at the following E-mail address: publicinfo@sec.gov.
PRINCIPAL HOLDERS OF SHARES
As of the Record Date, the Portfolios had shares/votes outstanding as set forth in the table below.
| Target/Acquiring Portfolio | | Shares/Votes
Outstanding | |
| PSF Natural Resources Portfolio - Class I | | | 10,705,583.600 | |
| PSF Natural Resources Portfolio - Class II | | | 347,260.499 | |
| PSF Natural Resources Portfolio - Class III | | | 467,852.138 | |
| PSF PGIM Jennison Blend Portfolio - Class I | | | 54,315,336.537 | |
| PSF PGIM Jennison Blend Portfolio - Class II | | | 375,533.204 | |
| PSF PGIM Jennison Blend Portfolio - Class III | | | 29,731.755 | |
As of the Record Date, all of the shares of the Portfolios are owned as of record by various Participating Insurance Company separate accounts related to the Contracts. As noted above, the Participating Insurance Companies are required to offer Contract owners the opportunity to instruct them as to how to vote Target Portfolio shares. The table below sets forth, as of the Record Date, each shareholder that owns beneficially more than 5% of a Portfolio.
Target/Acquiring
Portfolio | | Beneficial
Owner Name* | | Address | | Shares/
% Ownership |
| PSF Natural Resources Portfolio – Class I | | PRUCO LIFE INSURANCE COMPANY PRU LIFE | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 6,863,797.532 / 64.11% |
| PSF Natural Resources Portfolio – Class I | | PRUCO LIFE INSURANCE COMPANY PLAZ LIFE | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 2,526,400.215 / 23.60% |
| PSF Natural Resources Portfolio – Class I | | PRU ANNUITIES INC PRU ANNUITY | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 825,929.611 / 7.71% |
| PSF Natural Resources Portfolio – Class II | | GE LIFE AND ANNUITY ASSURANCE COMP. | | ATTN VARIABLE ACCOUNTING 6610 W BROAD ST BLDG 3,5TH FLOOR RICHMOND VA 23230-1702 | | 141,227.768 / 40.67% |
| PSF Natural Resources Portfolio – Class II | | TIAA-CREF LIFE SEPARATE ACCOUNT VA-1 OF TIAA-CREF LIFE INSUR. CO | | MAIL CODE E3/N6 8500 ANDREW CARNEGIE BLVD CHARLOTTE NC 28262-8500 | | 66,812.065 / 19.24% |
| PSF Natural Resources Portfolio – Class II | | AXA EQUITABLE LIFE | | SEPARATE ACCOUNT FP C/O BRIAN WALSH 1290 AVENUE OF THE AMERICAS NEW YORK NY 10104-0105 | | 66,158.593 / 19.05% |
| PSF Natural Resources Portfolio – Class II | | TIAA-CREF LIFE SEPARATE ACCOUNT VL1-1 OF TIAA-CREF LIFE INSUR. CO | | 8500 ANDREW CARNEGIE BLVD MAIL CODE E3/N6 CHARLOTTE NC 28262-8500 | | 23,073.191 / 6.64% |
| PSF Natural Resources Portfolio – Class III | | PRUCO LIFE INSURANCE COMPANY PLAZ ANNUITY | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 375,319.201 / 80.22% |
| PSF Natural Resources Portfolio – Class III | | PRUCO LIFE INSURANCE COMPANY PLNJ ANNUITY | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 92,532.937 / 19.78% |
Target/Acquiring
Portfolio | | Beneficial
Owner Name* | | Address | | Shares/
% Ownership |
| PSF PGIM Jennison Blend Portfolio – Class I | | PRUCO LIFE INSURANCE COMPANY PRU LIFE | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 27,087,641.764 / 49.87% |
| PSF PGIM Jennison Blend Portfolio – Class I | | PRUCO LIFE INSURANCE COMPANY PLAZ LIFE | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 15,946,999.019 / 29.36% |
| PSF PGIM Jennison Blend Portfolio – Class I | | PRUCO LIFE INSURANCE COMPANY PLNJ LIFE | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 4,138,411.563 / 7.62% |
| PSF PGIM Jennison Blend Portfolio – Class I | | PRU ANNUITIES INC PRU ANNUITY | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 3,126,407.279 / 5.76% |
| PSF PGIM Jennison Blend Portfolio – Class II | | TIAA-CREF LIFE SEPARATE ACCOUNT VA-1 OF TIAA-CREF LIFE INSUR. CO | | MAIL CODE E3/N6 8500 ANDREW CARNEGIE BLVD CHARLOTTE NC 28262-8500 | | 234,474.725 / 62.44% |
| PSF PGIM Jennison Blend Portfolio – Class II | | AUGUSTAR LIFE INSURANCE CO | | FBO ITS SEPARATE ACCOUNTS PO BOX 237 CINCINNATI OH 452010237 | | 43,370.303 / 11.55% |
| PSF PGIM Jennison Blend Portfolio – Class II | | GE LIFE AND ANNUITY ASSURANCE COMP. | | ATTN VARIABLE ACCOUNTING 6610 W BROAD ST BLDG 3,5TH FLOOR RICHMOND VA 23230-1702 | | 42,650.868 / 11.36% |
| PSF PGIM Jennison Blend Portfolio – Class II | | TIAA-CREF LIFE SEPARATE ACCOUNT VL1-1 OF TIAA-CREF LIFE INSUR. CO | | 8500 ANDREW CARNEGIE BLVD MAIL CODE E3/N6 CHARLOTTE NC 28262-8500 | | 18,875.352 / 5.03% |
| PSF PGIM Jennison Blend Portfolio – Class II | | EMPOWER ANNUITY INSURANCE COMPANY OF AMERICA | | 8515 E ORCHARD RD 7T2 GREENWOOD VILLAGE CO 80111 | | 15,846.898 / 4.22% |
| PSF PGIM Jennison Blend Portfolio – Class III | | PRUCO LIFE INSURANCE COMPANY PLAZ ANNUITY | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 22,488.088 / 75.64% |
| PSF PGIM Jennison Blend Portfolio – Class III | | PRUCO LIFE INSURANCE COMPANY PLNJ ANNUITY | | ATTN SEPARATE ACCOUNTS 7TH FLOOR 213 WASHINGTON ST NEWARK NJ 07102-0000 | | 7,243.667 / 24.36% |
* As defined by the SEC, a security is beneficially owned by a person if that person has or shares voting power or investment power with respect to the security.
As of the Record Date, the Trustees and Officers of the Trust, each as a group, beneficially owned less than 1% of the outstanding voting shares of each Portfolio.
FINANCIAL HIGHLIGHTS
The financial highlights that follow will help you evaluate the financial performance of the Target Portfolio and the Acquiring Portfolio. The total return in each chart represents the rate that a shareholder earned on an investment in the Target Portfolio and the Acquiring Portfolio, assuming reinvestment of all dividends and other distributions. The charts do not reflect any charges under any Contract. Because Contract charges are not included, the actual return that you will receive will be lower than the total return in each chart.
The financial highlights for the Target Portfolio and the Acquiring Portfolio, which the exception of the financial highlights for the period ended December 31, 2019, are derived from the financial statements audited by PricewaterhouseCoopers LLP, the Trust's independent registered public accounting firm for such fiscal year, whose reports thereon were unqualified. The information for the fiscal year ended December 31, 2019 was audited by another independent registered public accounting firm. Figures provided for the six months ended June 30, 2024 are unaudited. Each Portfolio's financial statements are included in the applicable annual reports to shareholders for the periods ending December 31, or the semi-annual period ending June 30, which are available upon request.
| | | PSF Natural Resources Portfolio | |
| | | Six Months Ended | | | | |
| | | June 30, 2024 | | | Year Ended December 31, | |
| Class I | | (unaudited) | | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
| Per Share Operating Performance(a): | | | | | | | | | | | | | | | | | | |
| Net Asset Value, beginning of period | | $ | 42.69 | | | $ | 41.86 | | | $ | 34.30 | | | $ | 27.33 | | | $ | 24.34 | | | $ | 21.99 | |
| Income (Loss) From Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.57 | | | | 1.13 | | | | 1.23 | | | | 0.77 | | | | 0.49 | | | | 0.72 | |
| Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 2.40 | | | | (0.30 | ) | | | 6.33 | | | | 6.20 | | | | 2.50 | | | | 1.63 | |
| Total from investment operations | | | 2.97 | | | | 0.83 | | | | 7.56 | | | | 6.97 | | | | 2.99 | | | | 2.35 | |
| Capital Contributions | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | (b)(c) |
| Net Asset Value, end of period | | $ | 45.66 | | | $ | 42.69 | | | $ | 41.86 | | | $ | 34.30 | | | $ | 27.33 | | | $ | 24.34 | |
| Total Return(d) | | | 6.96 | % | | | 1.98 | % | | | 22.04 | % | | | 25.50 | % | | | 12.28 | % | | | 10.69 | %(e) |
| Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (in millions) | | $ | 503.9 | | | $ | 497.0 | | | $ | 497.9 | | | $ | 419.2 | | | $ | 351.8 | | | $ | 332.2 | |
| Average net assets (in millions) | | $ | 503.9 | | | $ | 482.4 | | | $ | 477.7 | | | $ | 402.7 | | | $ | 284.9 | | | $ | 338.8 | |
| Ratios to average net assets(f): | | | | | | | | | | | | | | | | | | | | | | | | |
| Expenses after waivers and/or expense reimbursement | | | 0.50 | %(g) | | | 0.50 | % | | | 0.49 | % | | | 0.50 | % | | | 0.54 | % | | | 0.53 | % |
| Expenses before waivers and/or expense reimbursement | | | 0.51 | %(g) | | | 0.51 | % | | | 0.50 | % | | | 0.51 | % | | | 0.55 | % | | | 0.54 | % |
| Net investment income (loss) | | | 2.57 | %(g) | | | 2.68 | % | | | 3.14 | % | | | 2.39 | % | | | 2.28 | % | | | 3.04 | % |
| Portfolio turnover rate(h) | | | 10 | % | | | 94 | % | | | 109 | % | | | 79 | % | | | 136 | % | | | 132 | % |
| (a) | Calculated based on average shares outstanding during the period. |
| (b) | Represents payment received by the Portfolio, from Prudential, in connection with excess foreign withholding tax withheld on dividends and interest from certain countries due to the Portfolio’s tax status as a partnership. |
| (c) | Amount rounds to zero. |
| (d) | 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, and does not reflect the effect of insurance contract charges. Total return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
| (e) | Total return for the year includes the impact of the capital contribution, which was not material to the total return. |
| (f) | Does not include expenses of the underlying funds in which the Portfolio invests. |
| (g) | Annualized. |
| (h) | The Portfolio’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 Portfolio’s portfolio turnover rate may be higher. |
| | | PSF Natural Resources Portfolio | |
| | | Six Months Ended
June 30, 2024 | | | Year Ended December 31, | |
| | | | | | | | | | | | | | | | | | | | |
| Class II | | (unaudited) | | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | | 2019 | |
| | | | | | | | | | | | | | | | | | | | |
| Per Share Operating Performance(a): |
| Net Asset Value, beginning of period | | $ | 40.46 | | | $ | 39.83 | | | $ | 32.77 | | | $ | 26.21 | | | $ | 23.44 | | | $ | 21.26 | |
| Income (Loss) From Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.46 | | | | 0.92 | | | | 1.04 | | | | 0.58 | | | | 0.41 | | | | 0.61 | |
| Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 2.27 | | | | (0.29 | ) | | | 6.02 | | | | 5.98 | | | | 2.36 | | | | 1.57 | |
| Total from investment operations | | | 2.73 | | | | 0.63 | | | | 7.06 | | | | 6.56 | | | | 2.77 | | | | 2.18 | |
| Capital Contributions | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | (b)(c) |
| Net Asset Value, end of period | | $ | 43.19 | | | $ | 40.46 | | | $ | 39.83 | | | $ | 32.77 | | | $ | 26.21 | | | $ | 23.44 | |
| Total Return(d) | | | 6.75 | % | | | 1.58 | % | | | 21.54 | % | | | 25.03 | % | | | 11.82 | % | | | 10.25 | %(e) |
| Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (in millions) | | $ | 35.2 | | | $ | 35.0 | | | $ | 34.0 | | | $ | 25.6 | | | $ | 32.5 | | | $ | 49.5 | |
| Average net assets (in millions) | | $ | 35.2 | | | $ | 34.5 | | | $ | 33.5 | | | $ | 27.8 | | | $ | 37.6 | | | $ | 50.1 | |
| Ratios to average net assets(f): | | | | | | | | | | | | | | | | | | | | | | | | |
| Expenses after waivers and/or expense reimbursement | | | 0.90 | %(g) | | | 0.90 | % | | | 0.89 | % | | | 0.90 | % | | | 0.94 | % | | | 0.93 | % |
| Expenses before waivers and/or expense reimbursement | | | 0.91 | %(g) | | | 0.91 | % | | | 0.90 | % | | | 0.91 | % | | | 0.95 | % | | | 0.94 | % |
| Net investment income (loss) | | | 2.17 | %(g) | | | 2.28 | % | | | 2.77 | % | | | 1.89 | % | | | 2.05 | % | | | 2.63 | % |
| Portfolio turnover rate(h) | | | 10 | % | | | 94 | % | | | 109 | % | | | 79 | % | | | 136 | % | | | 132 | % |
| (a) | Calculated based on average shares outstanding during the period. |
| (b) | Represents payment received by the Portfolio, from Prudential, in connection with excess foreign withholding tax withheld on dividends and interest from certain countries due to the Portfolio’s tax status as a partnership. |
| (c) | Amount rounds to zero. |
| (d) | 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, and does not reflect the effect of insurance contract charges. Total return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
| (e) | Total return for the year includes the impact of the capital contribution, which was not material to the total return. |
| (f) | Does not include expenses of the underlying funds in which the Portfolio invests. |
| (g) | Annualized. |
| (h) | The Portfolio’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 Portfolio’s portfolio turnover rate may be higher. |
| | | PSF Natural Resources Portfolio | |
| Class III | | Six Months
Ended
June 30, 2024
(unaudited) | | | Year
Ended
December 31,
2023 | | | Year Ended
December 31,
2022 | | | April 26,
2021(i)
through
December 31,
2021 | |
| | | | | | | | | | | | | |
| Per Share Operating Performance(a): |
| Net Asset Value, beginning of period | | $ | 42.46 | | | $ | 41.73 | | | $ | 34.24 | | | $ | 31.02 | |
| Income (Loss) From Investment Operations: | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.51 | | | | 0.86 | | | | 1.17 | | | | 0.20 | |
| Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 2.38 | | | | (0.13 | ) | | | 6.32 | | | | 3.02 | |
| Total from investment operations | | | 2.89 | | | | 0.73 | | | | 7.49 | | | | 3.22 | |
| Net Asset Value, end of period | | $ | 45.35 | | | $ | 42.46 | | | $ | 41.73 | | | $ | 34.24 | |
| Total Return(d) | | | 6.81 | % | | | 1.75 | % | | | 21.88 | % | | | 10.38 | % |
| Ratios/Supplemental Data: | | | | | | | | | | | | | | | | |
| Net assets, end of period (in millions) | | $ | 23.4 | | | $ | 24.7 | | | $ | 6.1 | | | $ | 1.0 | |
| Average net assets (in millions) | | $ | 24.7 | | | $ | 5.9 | | | $ | 3.7 | | | $ | 0.3 | |
| Ratios to average net assets(f): | | | | | | | | | | | | | | | | |
| Expenses after waivers and/or expense reimbursement | | | 0.75 | %(g) | | | 0.76 | % | | | 0.73 | % | | | 0.72 | %(j) |
| Expenses before waivers and/or expense reimbursement | | | 0.76 | %(g) | | | 0.77 | % | | | 0.74 | % | | | 0.73 | %(j) |
| Net investment income (loss) | | | 2.32 | %(g) | | | 1.99 | % | | | 2.95 | % | | | 0.82 | %(j) |
| Portfolio turnover rate(h) | | | 10 | % | | | 94 | % | | | 109 | % | | | 79 | % |
| (i) | Commencement of offering. |
| (a) | Calculated based on average shares outstanding during the period. |
| (d) | 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, and does not reflect the effect of insurance contract charges. Total return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
| (f) | Does not include expenses of the underlying funds in which the Portfolio invests. |
| (g) | Annualized. |
| (j) | Annualized, with the exception of certain non-recurring expenses. |
| (h) | The Portfolio’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 Portfolio’s portfolio turnover rate may be higher. |
| | | PSF PGIM Jennison Blend Portfolio | |
| | | Six Months Ended
June 30, 2024 | | | Year Ended December 31, | |
| Class I | | (unaudited) | | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
| | | | | | | | | | | | | | | | | | | |
| Per Share Operating Performance(a): |
| Net Asset Value, beginning of period | | $ | 97.36 | | | $ | 73.47 | | | $ | 98.09 | | | $ | 81.50 | | | $ | 63.18 | | | $ | 49.02 | |
| Income (Loss) From Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.39 | | | | 0.77 | | | | 0.76 | | | | 0.40 | | | | 0.53 | | | | 0.66 | |
| Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 17.51 | | | | 23.12 | | | | (25.38 | ) | | | 16.19 | | | | 17.79 | | | | 13.50 | |
| Total from investment operations | | | 17.90 | | | | 23.89 | | | | (24.62 | ) | | | 16.59 | | | | 18.32 | | | | 14.16 | |
| Capital Contributions | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | (c)(d) |
| Net Asset Value, end of period | | $ | 115.26 | | | $ | 97.36 | | | $ | 73.47 | | | $ | 98.09 | | | $ | 81.50 | | | $ | 63.18 | |
| Total Return(e) | | | 18.38 | % | | | 32.52 | % | | | (25.10 | )% | | | 20.36 | % | | | 29.00 | % | | | 28.89 | %(f) |
| Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (in millions) | | $ | 6,430.0 | | | $ | 5,644.6 | | | $ | 4,482.9 | | | $ | 6,379.2 | | | $ | 5,672.4 | | | $ | 4,711.0 | |
| Average net assets (in millions) | | $ | 6,079.8 | | | $ | 5,012.2 | | | $ | 5,044.7 | | | $ | 6,084.1 | | | $ | 4,776.8 | | | $ | 4,406.8 | |
| Ratios to average net assets(g): | | | | | | | | | | | | | | | | | | | | | | | | |
| Expenses after waivers and/or expense reimbursement | | | 0.46 | %(h) | | | 0.46 | % | | | 0.46 | % | | | 0.46 | % | | | 0.47 | % | | | 0.47 | % |
| Expenses before waivers and/or expense reimbursement | | | 0.46 | %(h) | | | 0.46 | % | | | 0.46 | % | | | 0.46 | % | | | 0.47 | % | | | 0.47 | % |
| Net investment income (loss) | | | 0.74 | %(h) | | | 0.90 | % | | | 0.95 | % | | | 0.45 | % | | | 0.80 | % | | | 1.16 | % |
| Portfolio turnover rate(i) | | | 53 | % | | | 77 | % | | | 22 | % | | | 29 | % | | | 62 | % | | | 43 | % |
| (a) | Calculated based on average shares outstanding during the period. |
| (c) | Represents payment received by the Portfolio, from Prudential, in connection with excess foreign withholding tax withheld on dividends and interest from certain countries due to the Portfolio’s tax status as a partnership. |
| (d) | Amount rounds to zero. |
| (e) | 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, and does not reflect the effect of insurance contract charges. Total return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
| (f) | Total return for the year includes the impact of the capital contribution, which was not material to the total return. |
| (g) | Does not include expenses of the underlying funds in which the Portfolio invests. |
| (h) | Annualized. |
| (i) | The Portfolio’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 Portfolio’s portfolio turnover rate may be higher. |
| | | PSF PGIM Jennison Blend Portfolio | |
| | | Six Months Ended
June 30, 2024 | | | Year Ended December 31, | |
| Class II | | (unaudited) | | | 2023 | | | 2022 | | | 2021 | | | 2020 | | | 2019 | |
| | | | | | | | | | | | | | | | | | | |
| Per Share Operating Performance(a): |
| Net Asset Value, beginning of period | | $ | 94.17 | | | $ | 71.35 | | | $ | 95.64 | | | $ | 79.78 | | | $ | 62.09 | | | $ | 48.37 | |
| Income (Loss) From Investment Operations: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.18 | | | | (0.01 | )(b) | | | 0.43 | | | | 0.04 | | | | 0.26 | | | | 0.43 | |
| Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 16.90 | | | | 22.83 | | | | (24.72 | ) | | | 15.82 | | | | 17.43 | | | | 13.29 | |
| Total from investment operations | | | 17.08 | | | | 22.82 | | | | (24.29 | ) | | | 15.86 | | | | 17.69 | | | | 13.72 | |
| Capital Contributions | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | (c)(d) |
| Net Asset Value, end of period | | $ | 111.25 | | | $ | 94.17 | | | $ | 71.35 | | | $ | 95.64 | | | $ | 79.78 | | | $ | 62.09 | |
| Total Return(e) | | | 18.14 | % | | | 31.98 | % | | | (25.40 | )% | | | 19.88 | % | | | 28.49 | % | | | 28.36 | %(f) |
| Ratios/Supplemental Data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Net assets, end of period (in millions) | | $ | 44.0 | | | $ | 39.1 | | | $ | 1.6 | | | $ | 2.3 | | | $ | 2.0 | | | $ | 1.7 | |
| Average net assets (in millions) | | $ | 42.1 | | | $ | 4.1 | | | $ | 1.8 | | | $ | 2.2 | | | $ | 1.7 | | | $ | 1.6 | |
| Ratios to average net assets(g): | | | | | | | | | | | | | | | | | | | | | | | | |
| Expenses after waivers and/or expense reimbursement | | | 0.86 | %(h) | | | 0.85 | % | | | 0.86 | % | | | 0.86 | % | | | 0.87 | % | | | 0.87 | % |
| Expenses before waivers and/or expense reimbursement | | | 0.86 | %(h) | | | 0.85 | % | | | 0.86 | % | | | 0.86 | % | | | 0.87 | % | | | 0.87 | % |
| Net investment income (loss) | | | 0.34 | %(h) | | | (0.01 | )% | | | 0.55 | % | | | 0.04 | % | | | 0.40 | % | | | 0.76 | % |
| Portfolio turnover rate(i) | | | 53 | % | | | 77 | % | | | 22 | % | | | 29 | % | | | 62 | % | | | 43 | % |
| (a) | Calculated based on average shares outstanding during the period. |
| (b) | The per share amount of net investment income (loss) does not directly correlate to the amounts reported in the Statement of Operations due to class specific expenses. |
| (c) | Represents payment received by the Portfolio, from Prudential, in connection with excess foreign withholding tax withheld on dividends and interest from certain countries due to the Portfolio’s tax status as a partnership. |
| (d) | Amount rounds to zero. |
| (e) | 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, and does not reflect the effect of insurance contract charges. Total return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
| (f) | Total return for the year includes the impact of the capital contribution, which was not material to the total return. |
| (g) | Does not include expenses of the underlying funds in which the Portfolio invests. |
| (h) | Annualized. |
| (i) | The Portfolio’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 Portfolio’s portfolio turnover rate may be higher. |
| | | | PSF PGIM Jennison Blend Portfolio |
| Class III | | | Six Months Ended
June 30, 2024
(unaudited) | | | | Year Ended
December 31,
2023 | | | | Year Ended
December 31,
2022 | | | | April 26,
2021(j)
through
December 31,
2021 | |
| | | | | | | | | | | | | | | | | |
| Per Share Operating Performance(a): | | | | | | | | | | | | | | | | |
| Net Asset Value, beginning of period | | $ | 96.71 | | | $ | 73.16 | | | $ | 97.92 | | | $ | 87.74 | |
| Income (Loss) From Investment Operations: | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.26 | | | | 0.52 | | | | 0.58 | | | | 0.12 | |
| Net realized and unrealized gain (loss) on investment and foreign currency transactions | | | 17.37 | | | | 23.03 | | | | (25.34 | ) | | | 10.06 | |
| Total from investment operations | | | 17.63 | | | | 23.55 | | | | (24.76 | ) | | | 10.18 | |
| Net Asset Value, end of period | | $ | 114.34 | | | $ | 96.71 | | | $ | 73.16 | | | $ | 97.92 | |
| Total Return(e) | | | 18.23 | % | | | 32.19 | % | | | (25.29 | )% | | | 11.60 | % |
| Ratios/Supplemental Data: | | | | | | | | | | | | | | | | |
| Net assets, end of period (in millions) | | $ | 3.7 | | | $ | 2.7 | | | $ | 0.9 | | | $ | 0.6 | |
| Average net assets (in millions) | | $ | 3.2 | | | $ | 1.4 | | | $ | 0.8 | | | $ | 0.2 | |
| Ratios to average net assets(g): | | | | | | | | | | | | | | | | |
| Expenses after waivers and/or expense reimbursement | | | 0.71 | %(h) | | | 0.71 | % | | | 0.71 | % | | | 0.70 | %(k) |
| Expenses before waivers and/or expense reimbursement | | | 0.71 | %(h) | | | 0.71 | % | | | 0.71 | % | | | 0.70 | %(k) |
| Net investment income (loss) | | | 0.49 | %(h) | | | 0.61 | % | | | 0.74 | % | | | 0.18 | %(k) |
| Portfolio turnover rate(i) | | | 53 | % | | | 77 | % | | | 22 | % | | | 29 | % |
| (j) | Commencement of offering. |
| (a) | Calculated based on average shares outstanding during the period. |
| (e) | 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, and does not reflect the effect of insurance contract charges. Total return does not reflect expenses associated with the separate account such as administrative fees, account charges and surrender charges which, if reflected, would reduce the total returns for all periods shown. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of fee waivers and/or expense reimbursements, the total return would be lower. Past performance is no guarantee of future results. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
| (g) | Does not include expenses of the underlying funds in which the Portfolio invests. |
| (h) | Annualized. |
| (k) | Annualized, with the exception of certain non-recurring expenses. |
| (i) | The Portfolio’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 Portfolio’s portfolio turnover rate may be higher. |
EXHIBITS TO PROSPECTUS/PROXY STATEMENT
[CODE]
Exhibit A
THE PRUDENTIAL SERIES FUND
FORM OF PLAN OF REORGANIZATION
THIS PLAN OF REORGANIZATION (the “Plan”) of The Prudential Series Fund, a Delaware statutory trust having its principal place of business at 655 Broad Street, Newark, New Jersey 07102 (“PSF”), on behalf of the acquiring portfolio listed in Schedule A to this Plan (the “Acquiring Portfolio”) and the target portfolio listed in Schedule A to this Plan (the “Target Portfolio”), is made as of this day of [_______]. Together, the Target Portfolio and the Acquiring Portfolio are referred to herein as the “Portfolios.”
The reorganization of the Target Portfolio into the Acquiring Portfolio (hereinafter referred to as the “Reorganization”) will consist of: (i) the acquisition by the Acquiring Portfolio of all of the assets of the Target Portfolio and the assumption by the Acquiring Portfolio of all of the liabilities of the Target Portfolio in exchange solely for full and fractional Class I, Class II and Class III shares of the Acquiring Portfolio (“Acquiring Portfolio Shares”); (ii) the distribution of Acquiring Portfolio Shares to the Target Portfolio, which will distribute such shares to its shareholders according to their respective interests in complete liquidation of the Target Portfolio; and (iii) the dissolution of the Target Portfolio as soon as practicable after the closing (as defined in Section 3, hereinafter called the “Closing”), all upon and subject to the terms and conditions of this Plan hereinafter set forth.
The Reorganization is intended to be treated as a “partnership merger” under Section 708 of the Internal Revenue Code of 1986, as amended, (the “Code”) and the U.S. Treasury regulations promulgated thereunder, pursuant to which the combined Portfolio is treated as a continuation of the Portfolio that has the greater net asset value on the Closing Date, as defined below, (the “Continuing Portfolio”) and the other Portfolio is treated as terminating (the “Terminating Portfolio”).
In order to consummate the Plan, the following actions shall be taken by PSF on behalf of the Acquiring Portfolio and the Target Portfolio, as applicable:
1. Sale and Transfer of Assets, Liquidation and Dissolution of Target Portfolio.
(a) Subject to the terms and conditions of this Plan, PSF shall: (i) transfer all of the assets of the Target Portfolio, as set forth in Section 1(b) hereof, to the Acquiring Portfolio; and (ii) cause the Acquiring Portfolio to assume all of the liabilities of the Target Portfolio as set forth in Section 1(b) hereof. Such transactions shall take place at the Closing.
(b) The assets of the Target Portfolio to be acquired by the Acquiring Portfolio (collectively, the “Assets”) shall consist of all property, including, without limitation, all cash, securities, commodities and futures interests, and dividends or interest receivable that are owned by the Target Portfolio, and any deferred or prepaid expenses shown as an asset on the books of the Target Portfolio on the Closing date (as defined in Section 3, hereinafter the “Closing Date”). All liabilities, expenses, costs, charges and reserves of the Target Portfolio, to the extent that they exist at or after the Closing, shall after the Closing attach to the Acquiring Portfolio and may be enforced against the Acquiring Portfolio to the same extent as if the same had been incurred by the Acquiring Portfolio.
(c) Subject to the terms and conditions of this Plan, PSF on behalf of the Acquiring Portfolio shall at the Closing deliver to the Target Portfolio the number of full and fractional Class I, Class II and Class III Acquiring Portfolio Shares, determined by dividing the net asset value per share of each class of the Target Portfolio (“Target Portfolio Shares”) on the Closing Date by the net asset value per share of each class of the Acquiring Portfolio Shares, and multiplying the result thereof by the number of outstanding Target Portfolio Shares of each class as of the close of regular trading on the New York Stock Exchange (the “NYSE”) on the Closing Date. All such values shall be determined in the manner and as of the time set forth in Section 2 hereof.
(d) Immediately following the Closing, the Target Portfolio shall distribute pro rata to its shareholders of record of each class as of the close of business on the Closing Date, the Acquiring Portfolio Shares of the corresponding class received by the Target Portfolio pursuant to this Section 1 and then shall terminate and dissolve. Such liquidation and distribution shall be accomplished by the establishment of accounts on the share records of PSF relating to the Acquiring Portfolio and noting in such accounts the class and amounts of Acquiring Portfolio Shares that former Target Portfolio shareholders are due based on their respective holdings of the Target Portfolio as of the close of business on the Closing Date. Fractional Acquiring Portfolio Shares shall be carried to the third decimal place. The Acquiring Portfolio shall not issue certificates representing the Acquiring Portfolio Shares in connection with such exchange.
2. Valuation.
(a) The value of the Target Portfolio’s Assets to be transferred to the Acquiring Portfolio hereunder shall be computed as of the close of regular trading on the NYSE on the Closing Date (the “Valuation Time”) using the valuation procedures set forth in PSF’s current effective prospectus.
(b) The net asset value of a share of the Acquiring Portfolio shall be determined to the second decimal point as of the Valuation Time using the valuation procedures set forth in PSF’s current effective prospectus.
(c) The net asset value of a share of the Target Portfolio shall be determined to the fourth decimal point as of the Valuation Time using the valuation procedures set forth in PSF’s current effective prospectus.
3. Closing and Closing Date.
The consummation of the transactions contemplated hereby shall take place at the Closing (the “Closing”). The date of the Closing (the “Closing Date”) shall be April 14, 2025, or such other date as determined in writing by PSF’s officers. The Closing shall take place at the principal office of PSF at 5:00 p.m. Eastern Time on the Closing Date. PSF on behalf of the Target Portfolio shall have provided for delivery as of the Closing of the Target Portfolio’s Assets to the account of the Acquiring Portfolio at the Acquiring Portfolio’s custodians. Also, PSF on behalf of the Target Portfolio shall produce at the Closing a list of names and addresses of the shareholders of record of the Target Portfolio Shares and the number of full and fractional shares owned by each such shareholder, all as of the Valuation Time, certified by its transfer agent or by its President to the best of its or his or her knowledge and belief. PSF on behalf of the Acquiring Portfolio shall issue and deliver a confirmation evidencing the Acquiring Portfolio Shares to be credited to the Target Portfolio’s account on the Closing Date to the Secretary of PSF, or shall provide evidence satisfactory to the Target Portfolio that the Acquiring Portfolio Shares have been registered in an account on the books of the Acquiring Portfolio in such manner as PSF on behalf of Target Portfolio may request.
4. Representations and Warranties by PSF on behalf of the Target Portfolio.
PSF makes the following representations and warranties about the Target Portfolio:
(a) The Target Portfolio is a series of PSF, a statutory trust organized under the laws of Delaware and validly existing and in good standing under the laws of that jurisdiction. PSF is duly registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end, management investment company and all of the Target Portfolio Shares sold were sold pursuant to an effective registration statement filed under the Securities Act of 1933, as amended (the “1933 Act”).
(b) PSF on behalf of the Target Portfolio is authorized to issue an unlimited number of the Target Portfolio shares, each outstanding share of which is fully paid, non-assessable, freely transferable and has full voting rights.
(c) The financial statements appearing in PSF’s Annual Report to Shareholders for the fiscal year ended December 31, 2023, audited by PricewaterhouseCoopers LLP, fairly present the financial position of the Target Portfolio as of such date and the results of its operations for the periods indicated in conformity with generally accepted accounting principles applied on a consistent basis. The unaudited financial statements appearing in PSF's Semi-Annual Report to Shareholders for the six-month period ended June 30, 2024 present the financial position of the Target Portfolio as of such date and the results of its operations for the periods indicated in conformity with generally accepted accounting principles applied on a consistent basis.
(d) PSF has the necessary power and authority to conduct the Target Portfolio’s business as such business is now being conducted.
(e) PSF on behalf of the Target Portfolio is not a party to or obligated under any provision of PSF’s Agreement and Declaration of Trust, or any contract or any other commitment or obligation, and is not subject to any order or decree, that would be violated by its execution of or performance under this Plan.
(f) The Target Portfolio does not have any unamortized or unpaid organizational fees or expenses.
(g) The Target Portfolio has elected to be, and is, treated as a partnership for U.S. federal income tax purposes and has not made any election or taken any other action inconsistent with such treatment. The Target Portfolio has satisfied the diversification and look-through requirements of Section 817(h) of the Code, since its inception and will continue to satisfy such requirements at the Closing.
(h) The Target Portfolio, or its agents, (i) holds a valid U.S. Internal Revenue Service ("IRS") Form W-8BEN (or other appropriate series of IRS Form W-8, as the case may be) or IRS Form W-9, for each Target Portfolio shareholder of record, which IRS Form W-8 or Form W-9, as applicable. can be associated with reportable payments made by the Target Portfolio to such shareholder or (ii) has otherwise timely instituted the appropriate nonresident alien or foreign corporation or backup withholding procedures with respect to such shareholder as provided by Sections 1441, 1442, and 3406 of the Code.
(i) At the Closing, the Target Portfolio will have good and marketable title to all of the securities and other assets shown on the statement of assets and liabilities referred to above, free and clear of all liens or encumbrances of any nature whatsoever, except such imperfections of title or encumbrances as do not materially detract from the value or use of the assets subject thereto, or materially adversely affect title thereto.
(j) Except as may be disclosed in PSF’s current effective prospectus, there is no known material suit, judicial action, or legal or administrative proceeding pending or threatened against the Target Portfolio.
(k) There are no known actual or proposed deficiency assessments with respect to any taxes payable by the Target Portfolio.
(l) The execution, delivery, and performance of this Plan have been duly authorized by all necessary actions of PSF’s Board of Trustees, and this Plan constitutes a valid and binding obligation enforceable in accordance with its terms.
5. Representations and Warranties by PSF on behalf of the Acquiring Portfolio.
PSF makes the following representations and warranties about the Acquiring Portfolio:
(a) The Acquiring Portfolio is a series of PSF, a statutory trust organized under the laws of Delaware validly existing and in good standing under the laws of that jurisdiction. PSF is duly registered under the 1940 Act as an open-end, management investment company and all of the Acquiring Portfolio Shares sold have been sold pursuant to an effective registration statement filed under the 1933 Act.
(b) PSF on behalf of the Acquiring Portfolio is authorized to issue an unlimited number of the Acquiring Portfolio Shares, each outstanding share of which is fully paid, non-assessable, freely transferable and has full voting rights.
(c) The financial statements appearing in PSF’s Annual Report to Shareholders for the fiscal year ended December 31, 2023, audited by PricewaterhouseCoopers LLP, fairly present the financial position of the Acquiring Portfolio as of such date and the results of its operations for the periods indicated in conformity with generally accepted accounting principles applied on a consistent basis. The unaudited financial statements appearing in PSF's Semi-Annual Report to Shareholders for the six-month period ended June 30, 2024, present the financial position of the Acquiring Portfolio as of such date and the results of its operations for the periods indicated in conformity with generally accepted accounting principles applied on a consistent basis.
(d) PSF has the necessary power and authority to conduct the Acquiring Portfolio’s business as such business is now being conducted.
(e) PSF on behalf of the Acquiring Portfolio is not a party to or obligated under any provision of PSF’s Agreement and Declaration of Trust, or any contract or any other commitment or obligation, and is not subject to any order or decree, that would be violated by its execution of or performance under this Plan.
(f) The Acquiring Portfolio has elected to be, and is, treated as a partnership for U.S. federal income tax purposes and has not made any election or taken any other action inconsistent with such treatment. The Acquiring Portfolio has satisfied the diversification and look-through requirements of Section 817(h) of the Code since its inception and will continue to satisfy such requirements at the Closing.
(g) The Acquiring Portfolio, or its agents, (i) holds a valid IRS Form W-8BEN (or other appropriate series of IRS Form W-8, as the case may be) or IRS Form W-9 for each Acquiring Portfolio shareholder of record, which IRS Form W-8 or Form W-9, as applicable, can be associated with reportable payments made by the Acquiring Portfolio to such shareholder or (ii) has otherwise timely instituted the appropriate nonresident alien or foreign corporation or backup withholding procedures with respect to such shareholder as provided by Sections 1441, 1442, and 3406 of the Code.
(h) The statement of assets and liabilities to be created by PSF for the Acquiring Portfolio as of the Valuation Time for the purpose of determining the number of Acquiring Portfolio Shares to be issued pursuant to this Plan will accurately reflect the Assets in the case of the Target Portfolio and the net asset value in the case of the Acquiring Portfolio, and outstanding shares, as of such date, in conformity with generally accepted accounting principles applied on a consistent basis.
(i) At the Closing, the Acquiring Portfolio will have good and marketable title to all of the securities and other assets shown on the statement of assets and liabilities referred to above, free and clear of all liens or encumbrances of any nature whatsoever, except such imperfections of title or encumbrances as do not materially detract from the value or use of the assets subject thereto, or materially affect title thereto.
(j) Except as may be disclosed in PSF’s current effective prospectus, there is no known material suit, judicial action, or legal or administrative proceeding pending or threatened against the Acquiring Portfolio.
(k) There are no known actual or proposed deficiency assessments with respect to any taxes payable by the Acquiring Portfolio.
(l) The execution, delivery, and performance of this Plan have been duly authorized by all necessary actions of PSF’s Board of Trustees, and this Plan constitutes a valid and binding obligation enforceable in accordance with its terms.
(m) PSF anticipates that consummation of this Plan will not cause the Acquiring Portfolio to fail to conform to the requirements of Code Section 817(h) at the end of each tax quarter.
6. Intentions of PSF on behalf of the Portfolios.
(a) At the Closing, PSF on behalf of the Target Portfolio, intends to have available a copy of the shareholder ledger accounts, certified by PSF’s transfer agent or its President or a Vice President to the best of its or his or her knowledge and belief, for all the shareholders of record of Target Portfolio Shares as of the Valuation Time who are to become shareholders of the Acquiring Portfolio as a result of the transfer of assets that is the subject of this Plan.
(b) PSF intends to operate each Portfolio’s respective business as presently conducted between the date hereof and the Closing.
(c) PSF intends that the Target Portfolio will not acquire the Acquiring Portfolio Shares for the purpose of making distributions thereof to anyone other than the Target Portfolio’s shareholders.
(d) PSF on behalf of the Target Portfolio intends, if this Plan is consummated, to liquidate and dissolve the Target Portfolio.
(e) PSF intends that, by the Closing, each Portfolio’s U.S. federal and other tax returns and reports required by law to be filed on or before such date shall have been filed, and all U.S. federal and other taxes shown as due on said returns shall have either been paid or adequate liability reserves shall have been provided for the payment of such taxes.
(f) PSF intends to mail to each shareholder of the Target Portfolio entitled to vote at the meeting of its shareholders at which action on this Plan is to be considered, in sufficient time to comply with requirements as to notice thereof, a Combined Proxy Statement and Prospectus that complies in all material respects with the applicable provisions of Section 14(a) of the Securities Exchange Act of 1934, as amended, and Section 20(a) of the 1940 Act, the 1933 Act, and the rules and regulations, respectively, thereunder.
(g) PSF intends to file with the U.S. Securities and Exchange Commission a registration statement on Form N-14 under the 1933 Act relating to the Acquiring Portfolio Shares issuable hereunder (“Registration Statement”), and will use its best efforts to provide that the Registration Statement becomes effective as promptly as practicable. At the time the Registration Statement becomes effective, it will: (i) comply in all material respects with the applicable provisions of the 1940 Act, the 1933 Act, and the rules and regulations promulgated thereunder; and (ii) not contain any untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. At the time the Registration Statement becomes effective, at the time of the shareholders’ meeting of the Target Portfolio, and at the Closing Date, the prospectus and statement of additional information included in the Registration Statement will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
7. Conditions Precedent to be Fulfilled by PSF on behalf of the Portfolios.
The consummation of the Plan with respect to the Acquiring Portfolio and the Target Portfolio shall be subject to the following conditions:
(a) That: (i) all the representations and warranties contained herein concerning the Portfolios shall be true and correct as of the Closing with the same effect as though made as of and at such date; (ii) performance of all obligations required by this Plan to be performed by PSF on behalf of the Portfolios shall occur prior to the Closing; and (iii) PSF shall execute a certificate signed by the President or a Vice President and by the Secretary or equivalent officer to the foregoing effect.
(b) That the form of this Plan shall have been adopted and approved by the appropriate action of the Board of Trustees of PSF on behalf of the Portfolios.
(c) That the U.S. Securities and Exchange Commission shall not have issued an unfavorable management report under Section 25(b) of the 1940 Act or instituted or threatened to institute any proceeding seeking to enjoin consummation of the Plan under Section 25(c) of the 1940 Act. And, further, that no other legal, administrative or other proceeding shall have been instituted or threatened that would materially affect the financial condition of a Portfolio or would prohibit the transactions contemplated hereby.
(d) That there shall be delivered to PSF on behalf of the Portfolios an opinion from Ropes & Gray LLP, in form and substance satisfactory to PSF, substantially to the effect that (i) the Continuing Portfolio’s tax basis in the assets of the Terminating Portfolio treated as transferred to the Continuing Portfolio in the Reorganization should be the same as the Terminating Portfolio’s tax basis in such assets immediately prior to the Reorganization (except to the extent provided in Section 704(c)(1)(C) of the Code with respect to contributions of “built in loss” property), and (ii) the Continuing Portfolio’s holding periods in the assets treated as received from the Terminating Portfolio in the Reorganization should include the Terminating Portfolio’s holding periods in such assets.
In giving the opinion set forth above, counsel may state that it is relying on certificates of the officers of PSF with regard to matters of fact. Such opinion will be based on existing provisions of the Code, U.S. Treasury regulations promulgated thereunder, current administrative rules, pronouncements and court decisions, and will be subject to certain qualifications.
(e) That the Registration Statement with respect to the Acquiring Portfolio Shares to be delivered to the Target Portfolio’s shareholders in accordance with this Plan shall have become effective, and no stop order suspending the effectiveness of the Registration Statement or any amendment or supplement thereto, shall have been issued prior to the Closing Date, or shall be in effect at Closing, and no proceedings for the issuance of such an order shall be pending or threatened on that date.
(f) That the Acquiring Portfolio Shares to be delivered hereunder shall be eligible for sale by the Acquiring Portfolio with each state commission or agency with which such eligibility is required in order to permit the Acquiring Portfolio Shares lawfully to be delivered to each shareholder of the Target Portfolio.
8. Expenses.
(a) PSF represents and warrants that there are no broker or finders’ fees payable by it in connection with the transactions provided for herein.
(b) All costs incurred in entering into and carrying out the terms and conditions of this Plan, including (without limitation) outside legal counsel and independent registered public accounting firm costs and costs incurred in connection with the printing and mailing of the relevant combined prospectus and proxy statement and related materials, shall be paid by the Manager or its affiliates, not the Target Portfolio or the Acquiring Portfolio. Transaction costs, including brokerage commissions, shall be paid by the Portfolio entering into the transaction.
9. Termination; Postponement; Waiver; Order.
(a) Anything contained in this Plan to the contrary notwithstanding, this Plan may be terminated and abandoned at any time (whether before or after approval thereof by the shareholders of a Target Portfolio) prior to the Closing, or the Closing may be postponed by PSF on behalf of a Portfolio by resolution of the Board of Trustees of PSF if circumstances develop that, in the opinion of the Board, make proceeding with the Plan inadvisable.
(b) If the transactions contemplated by this Plan have not been consummated by December 31, 2025, the Plan shall automatically terminate on that date, unless a later date is agreed to by the officers of PSF on behalf of the Portfolios.
(c) In the event of termination of this Plan pursuant to the provisions hereof, the Plan shall become void and have no further effect with respect to the Acquiring Portfolio or Target Portfolio, and neither PSF, the Acquiring Portfolio nor the Target Portfolio, nor the trustees, officers, agents or shareholders shall have any liability in respect of this Plan.
(d) At any time prior to the Closing, any of the terms or conditions of this Plan may be waived by the party who is entitled to the benefit thereof by action taken by PSF’s Board of Trustees if, in the judgment of such Board of Trustees, such action or waiver will not have a material adverse effect on the benefits intended under this Plan to its shareholders, on behalf of whom such action is taken.
(e) If any order or orders of the U.S. Securities and Exchange Commission with respect to this Plan shall be issued prior to the Closing and shall impose any terms or conditions that are determined by action of the Board of Trustees of PSF on behalf of the Portfolios to be acceptable, such terms and conditions shall be binding as if a part of this Plan without further vote or approval of the shareholders of the Target Portfolio, unless such terms and conditions shall result in a change in the method of computing the number of Acquiring Portfolio Shares to be issued the Target Portfolio, in which event, unless such terms and conditions shall have been included in the proxy solicitation material furnished to the shareholders of the Target Portfolio prior to the meeting at which the transactions contemplated by this Plan shall have been approved, this Plan shall not be consummated and shall terminate, unless PSF on behalf of the Target Portfolio shall call a special meeting of shareholders at which such conditions so imposed shall be submitted for approval.
10. Entire Plan and Amendments.
This Plan embodies the entire plan of PSF on behalf of the Portfolios, and there are no agreements, understandings, restrictions, or warranties between the parties other than those set forth or provided for herein. This Plan may be amended only by PSF. Neither this Plan nor any interest herein may be assigned without the prior written consent of PSF on behalf of the Portfolio corresponding to the Portfolio making the assignment.
11. Notices.
Any notice, report, or demand required or permitted by any provision of this Plan shall be in writing and shall be deemed to have been given if delivered or mailed, first class postage prepaid, addressed to PSF at 655 Broad Street, Newark, NJ 07102, Attention: Secretary.
12. Governing Law.
This Plan shall be governed by and carried out in accordance with the laws of Delaware without regard to its conflict of laws principles.
IN WITNESS WHEREOF, each party has executed this Plan by its duly authorized officers, all as of the date and year first written above.
| | | THE PRUDENTIAL SERIES FUND
on behalf of the Acquiring Portfolio listed in Schedule A |
| | | |
| Attest: | | |
| | | |
| | | | |
| Melissa Gonzalez, | | By: | |
| Assistant Secretary | | Title: |
| | | |
| | | THE PRUDENTIAL SERIES FUND
on behalf of the Target Portfolio listed in Schedule A |
| | | |
| Attest: | | |
| | | |
| | | | |
| Melissa Gonzalez, | | By: | |
| Assistant Secretary | | Title: |
Schedule A
| Target Portfolio | | Acquiring Portfolio |
| PSF Natural Resources Portfolio | | PSF PGIM Jennison Blend Portfolio |
Exhibit B
ADDITIONAL INFORMATION ABOUT THE ACQUIRING PORTFOLIO
For purposes of this Exhibit B, references to "the Portfolio" refer to the Acquiring Portfolio.
Purchasing and Redeeming Portfolio Shares
The Portfolio offers Class I shares, Class II shares, and Class III shares. Each class participates in the same investments, but the classes differ in terms of their charges. Class I and Class III shares are sold to separate accounts of Prudential as investment options under certain Contracts. Class I shares may also be sold to separate accounts of insurance companies not affiliated with Prudential Financial. Class II is offered only to separate accounts of non-Prudential insurance companies as an investment option under certain of their Contracts. Please refer to the accompanying Contract prospectus to see which portfolios are available through your Contract.
Investments in the Portfolio are made through certain variable life insurance and variable annuity contracts. Together with this Prospectus/Proxy Statement, you should have received a prospectus for such a Contract. You should refer to that prospectus for further information on investing in the Portfolio. Class I, Class II and Class III shares of the Portfolio are sold without any sales charge at the net asset value of the Portfolio. Class II and Class III shares, however, are subject to an annual distribution or “12b-1” fee of 0.25% of the average daily net assets of the applicable class. The Trust does not provide investment advice. You should contact your financial advisor for advice regarding selection of portfolios and classes.
The Portfolio typically expects to pay redemption proceeds within three days after receipt of a proper notice of the redemption request. Such procedures for providing proper notice of a redemption request are described in further detail in the prospectus for the applicable Contract. However, it may take the Portfolio up to seven days to pay redemption proceeds. There is no redemption charge. We may suspend the right to redeem shares or receive payment when the New York Stock Exchange (NYSE) is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as permitted by the SEC.
Under normal circumstances, the Portfolio typically expects to meet redemption requests by using cash or cash equivalents or proceeds from the sale of portfolio securities (or a combination of these methods). The Portfolio reserves the right to use borrowing arrangements that may be available from time to time. The use of borrowings in order to meet redemption requests is typically expected to be used only during stressed or abnormal market conditions, when an increased portion of the Portfolio’s holdings may be comprised of less liquid investments, or during emergency or temporary circumstances. The Portfolio’s use of redemptions in-kind is discussed below.
Redemption in Kind
The Trust may pay the redemption price to shareholders of record (generally, the Participating Insurance Company separate accounts holding Trust shares) in whole or in part by a distribution in-kind of securities from the relevant investment portfolio of the Trust, in lieu of cash, in conformity with applicable rules of the SEC and procedures adopted by the Board. Securities will be readily marketable and will be valued in the same manner as in a regular redemption.
If shares are redeemed in kind, the recipient will incur transaction costs in converting such assets into cash. These procedures govern the redemption by the shareholder of record, generally a Participating Insurance Company separate account. The procedures do not affect payments by a Participating Insurance Company to a contract owner under a variable contract.
Frequent Purchases or Redemptions of Portfolio Shares
The Trust is part of the group of investment companies advised by PGIM Investments (the PGIM Investment funds) that seeks to prevent patterns of frequent purchases and redemptions of shares by its investors. Frequent purchases and redemptions may adversely affect the investment performance and interests of long-term investors in the Portfolio. When an investor engages in frequent or short-term trading, the PGIM Investment funds may have to sell portfolio securities to have the cash necessary to pay the redemption amounts. This may cause the PGIM Investment funds to sell Portfolio securities at inopportune times, hurting their investment performance. When large dollar amounts are involved, frequent trading can also make it difficult for the PGIM Investment funds to use long-term investment strategies because they cannot predict how much cash they will have to invest. In addition, if a PGIM Investment fund is forced to liquidate investments due to short-term trading activity, it may incur increased transaction and tax costs.
Similarly, the PGIM Investment funds may bear increased administrative costs as a result of the asset level and investment volatility that accompanies patterns of short-term trading. Moreover, frequent or short-term trading by certain investors may cause dilution in the value of PGIM Investment fund shares held by other investors. To the extent the Portfolio invests in foreign securities, the Portfolio may be particularly susceptible to frequent trading, because time zone differences among international stock markets can allow an investor engaging in short-term trading to exploit fund share prices that may be based on closing prices of foreign securities established some time before the fund calculates its own share price. To the extent the Portfolio invests in certain fixed income securities, such as high yield bonds or certain asset-backed securities, the Portfolio may also constitute an effective vehicle for an investor’s frequent trading strategies.
The Boards of Directors/Trustees of the PGIM Investment funds, including the Trust, have adopted policies and procedures designed to discourage or prevent frequent trading by investors. The policies and procedures for the Trust are limited, however, because the Trust does not sell its shares directly to the public. Instead, Portfolio shares are sold only to Participating Insurance Company separate accounts that fund variable annuity contracts and variable life insurance policies. Therefore, Participating Insurance Companies, not the Trust, maintain the individual contract owner account records. Each Participating Insurance Company submits to the Trust's transfer agent daily aggregate orders combining the transactions of many contract owners. Therefore, the Trust and its transfer agent do not monitor trading by individual contract owners.
Under the Trust's policies and procedures, the Trust has notified each Participating Insurance Company that the Trust expects the Participating Insurance Company to impose restrictions on transfers by contract owners. The current Participating Insurance Companies are Prudential and three insurance companies not affiliated with Prudential. The Trust may add additional Participating Insurance Companies in the future. The Trust receives reports on the trading restrictions imposed by Prudential on variable contract owners investing in the Portfolio, and the Trust monitors the aggregate cash flows received from unaffiliated insurance companies. In addition, the Trust has entered shareholder information agreements with Participating Insurance Companies as required by Rule 22c-2 under the 1940 Act. Under these agreements, the Participating Insurance Companies have agreed to: (i) provide certain information regarding contract owners who engage in transactions involving Portfolio shares; and (ii) execute any instructions from the Trust to restrict or prohibit further purchases or exchanges of Portfolio shares by contract owners who have been identified by the Trust as having engaged in transactions in Portfolio shares that violate the Trust's frequent trading policies and procedures. The Trust and its transfer agent each reserve the right, in its sole discretion, to reject all or a portion of a purchase order from a Participating Insurance Company for any reason or no reason. If a purchase order is rejected, the purchase amount will be returned to the Participating Insurance Company.
The Trust also employs fair value pricing procedures to deter frequent trading. Those procedures are described in more detail under “Net Asset Value,” below.
Net Asset Value
Any purchase or sale of Portfolio shares is made at the net asset value, or NAV, of such shares. The price at which a purchase or redemption is made is typically based on the next calculation of the NAV after the order is received in good order. The NAV of the Portfolio is typically determined on each day the NYSE is open for trading as of the close of the exchange's regular trading session (which is generally 4:00 p.m. Eastern Time). The Trust 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. if the particular disruption directly affects only the NYSE. The NYSE is closed on most national holidays and Good Friday. The Trust does not price, and shareholders will not be able to purchase or redeem, the Trust's shares on days when the NYSE is closed but the primary markets for the Trust's foreign securities are open, even though the value of these securities may have changed. Conversely, the Trust will ordinarily price its shares, and shareholders may purchase and redeem shares, on days that the NYSE is open but foreign securities markets are closed. The securities held by the Portfolio are valued based upon market quotations or, if market quotations are not readily available, at fair value as determined in good faith under policies and procedures adopted and implemented by the Manager.
The Trust may use fair value pricing if it determines that a market quotation for a security is not reliable based, among other things, on events or market conditions that occur 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 NAV is determined. This use of fair value pricing commonly occurs with securities that are primarily traded outside of the US, because such securities present time-zone arbitrage opportunities when events or conditions affecting the prices of specific securities or the prices of securities traded in such markets generally occur after the close of the foreign markets but prior to the time that a Portfolio determines its NAV.
With respect to any portion of the Portfolio’s assets that are invested in one or more open-end management investment companies, the Portfolio’s NAV is calculated based upon the NAV of the registered open-end management investment companies in which the Portfolio invests. The prospectuses for these companies explain the circumstances under which those companies will use fair value pricing and the effects of using fair value pricing. The Trust may also use fair value pricing with respect to US traded securities if, for example, trading in a particular security is halted and does not resume before the Portfolio calculates its NAV or the exchange on which a security is traded closes early. In addition, fair value pricing is used for securities where the pricing agent or principal market maker does not provide a valuation or methodology or provides a valuation or methodology that, in the judgment of PGIM Investments (or the Subadviser) does not represent fair value. Different valuation methods may result in differing values for the same security. The fair value of a portfolio security that the Portfolio uses to determine its NAV may differ from the security's published or quoted price. If the Portfolio needs to implement fair value pricing after the NAV publishing deadline but before shares of the Portfolio are processed, the NAV you receive or pay may differ from the published NAV price. For purposes of computing the Trust's NAV, we will value the Trust's futures contracts 15 minutes after the close of regular trading on the NYSE. Except when we fair value securities, we normally value each foreign security held by the Trust as of the close of the security's primary market.
Fair value pricing procedures are designed to result in prices for the Portfolio's securities and its NAV that are reasonable in light of the circumstances that make or have made market quotations unavailable or unreliable, and to reduce arbitrage opportunities available to short-term traders. There is no assurance, however, that fair value pricing will more accurately reflect the market value of a security than the market price of such security on that day or that it will prevent dilution of the Portfolio's NAV by short-term traders.
The NAV for the Portfolio is determined by a simple calculation. It's the total value of the Portfolio (assets minus liabilities) divided by the total number of shares outstanding. Each business day, the Portfolio’s current NAV per share is transmitted electronically to Participating Insurance Companies that use the Portfolio as an underlying investment option for Contracts.
To determine the Portfolio's NAV, its holdings are valued as follows:
Equity Securities for which the primary market is on an exchange (whether domestic or foreign) shall be valued at the last sale price on such exchange or market on the day of valuation or, if there was no sale on such day, at the mean between the last bid and asked prices on such day or at the last bid price on such day in the absence of an asked price. Securities included within the NASDAQ market shall be valued at the NASDAQ official closing price (NOCP) on the day of valuation, or if there was no NOCP issued, at the last sale price on such day. Securities included within the NASDAQ market for which there is no NOCP and no last sale price on the day of valuation shall be valued at the mean between the last bid and asked prices on such day or at the last bid price on such day in the absence of an asked price. Equity securities that are not sold on an exchange or NASDAQ are generally valued by an independent pricing agent or principal market maker.
The Portfolio may own securities that are primarily listed on foreign exchanges that trade on weekends or other days when the Portfolio does not price its shares. Therefore, the value of the Portfolio's assets may change on days when shareholders cannot purchase or redeem Portfolio shares.
Convertible debt securities that are traded in the over-the-counter market, including listed convertible debt securities for which the primary market is believed by PGIM Investments or the Subadviser, as available, to be over-the-counter, shall be valued on the day of valuation at an evaluated bid price provided by an independent pricing agent or, in the absence of a valuation provided by an independent pricing agent, at the bid price provided by a principal market maker or primary market dealer.
Other debt securities—those that are not valued on an amortized cost basis—are valued using an independent pricing service.
Options on stock and stock indexes that are traded on a national securities exchange are valued at the last sale price on such exchange on the day of valuation or, if there was no such sale on such day, at the mean between the most recently quoted bid and asked prices on such exchange.
Futures contracts and options on futures contracts are valued at the last sale price at the close of the commodities exchange or board of trade on which they are traded. If there has been no sale that day, the securities will be valued at the mean between the most recently quoted bid and asked prices on that exchange or board of trade.
Forward currency exchange contracts are valued at the cost of covering or offsetting such contracts calculated on the day of valuation. Securities that are valued in accordance herewith in a currency other than US dollars shall be converted to US dollar equivalents at a rate obtained from a recognized bank, dealer or independent service on the day of valuation.
Over-the-counter (OTC) options are valued at the mean between bid and asked prices provided by a dealer (which may be the counterparty). A subadviser will monitor the market prices of the securities underlying the OTC options with a view to determining the necessity of obtaining additional bid and ask quotations from other dealers to assess the validity of the prices received from the primary pricing dealer.
Short-term debt securities held by the Portfolio, including bonds, notes, debentures and other debt securities, and money market instruments, such as certificates of deposit, commercial paper, bankers' acceptances, and obligations of domestic and foreign banks for which market quotations are readily available, are valued by an independent pricing agent or principal market maker (if available, otherwise a primary market dealer).
Distributor & Distribution Arrangements
Prudential Investment Management Services LLC (PIMS) serves as the distributor for the shares of the Portfolio under a Distribution Agreement with the Trust. PIMS is an affiliate of PGIM Investments. PIMS is registered as a broker-dealer under the Securities Exchange Act of 1934, as amended, and is a member of the Financial Industry Regulatory Authority. PIMS' principal business address is 655 Broad Street, Newark, New Jersey 07102.
The Trust has adopted a Distribution Plan Pursuant to Rule 12b-1 under the 1940 Act for the Class II and Class III shares of the Portfolio (the 12b-1 Plan). Under the 12b-1 plan, Class II and Class III of the Portfolio pay to PIMS a distribution (12b-1) fee at the annual rate of 0.25% of the average daily net assets of the applicable class. This fee pays for distribution services for Class II shares and Class III shares as applicable. Because these fees are paid out of the Portfolio's assets on an ongoing basis, over time these fees will increase the cost of your investment in Class II or Class III shares and may cost you more than paying other types of sales charges. Class II shares are also subject to an administration fee of 0.15% of the average daily net assets of Class II. Class I shares do not have a distribution fee. Class I and Class III shares do not have an administration fee.
U.S. Federal Income Taxes
The Portfolio currently intends to be treated as a partnership for U.S. federal income tax purposes that is not a "publicly traded partnership" as defined in Section 7704 of the Code for U.S. federal income tax purposes. If the Portfolio were not to qualify for such treatment, it could be subject to U.S. federal income tax at the Portfolio level, which generally would reduce the value of an investment in the Portfolio. As a result of the Portfolio's treatment as a partnership that is not a publicly traded partnership, the Portfolio is generally not itself subject to U.S. federal income tax. Instead, the Portfolio's income, gains, losses, deductions, credits and other tax items are "passed through" pro rata directly to the shareholders of the Portfolio, generally the investing portfolios (without regard to whether such corresponding amounts are distributed from the Portfolio) and retain the same character for U.S. federal income tax purposes. Distributions may be made to the various separate accounts of the Participating Insurance Companies in the form of additional shares (not in cash).
The shares of the Portfolio are owned by the investing portfolios, which are owned by separate accounts of Participating Insurance Companies, and may be owned by qualified pension and retirement plans, and certain other eligible persons or plans permitted to hold shares of the investing portfolio pursuant to the applicable U.S. Treasury regulations without impairing the ability of the separate accounts of the Participating Insurance Companies to satisfy the diversification requirements of Section 817(h) of the Code.
The Portfolio intends to comply with the diversification requirements currently imposed by the Code and U.S. Treasury regulations promulgated thereunder on separate accounts of insurance companies as a condition of maintaining the favorable tax status of the Contracts issued by separate accounts of Participating Insurance Companies. If the Portfolio does not meet such diversification requirements, the Contracts could lose their favorable tax treatment and thus income and gain allocable to the Contracts could be taxable currently to shareholders of the Portfolio. This could also occur if Contract holders are found to have an impermissible level of control over the investments underlying their Contracts. Furthermore, if any underlying portfolio fails to comply with the diversification requirements for any taxable year, such failure could cause an insurance company separate account indirectly invested in such an underlying portfolio through the Portfolio to fail to satisfy the separate diversification requirements, with the result that the Contracts supported by that account would no longer be eligible for tax deferral.
Owners of Contracts should consult the applicable prospectus or description of the plan for a discussion and information on the tax consequences of the Contract, policy or plan. In addition, Contract owners may wish to consult with their own tax advisors as to the tax consequences of investing in the Portfolio, including the application of U.S. federal, state and local and non-U.S. taxes.
Monitoring for Possible Conflicts
The Trust sells its shares to fund variable life insurance contracts and variable annuity contracts and is authorized to offer its shares to qualified retirement plans. Because of differences in tax treatment and other considerations, it is possible that the interest of variable life insurance contract owners, variable annuity contract owners and participants in qualified retirement plans could conflict. The Trust will monitor the situation and, in the event that a material conflict does develop, the Trust would determine what action, if any, to take in response.
Disclosure of Portfolio Holdings
A description of the Trust's policies and procedures with respect to the disclosure of the Portfolio's portfolio securities is included in the SAI and on the Trust's website at www.prudential.com/variableinsuranceportfolios.
Payments to Affiliates
PGIM Investments and its affiliates, including a subadviser or PIMS, may compensate affiliates of PGIM Investments, including the insurance companies issuing variable annuity or variable life contracts, by providing reimbursement, defraying the costs of, or paying directly for, among other things, marketing and/or administrative services and/or other services they provide in connection with the variable annuity and/or variable life contracts that offer the Portfolio as an investment option. These services may include, but are not limited to: sponsoring or co-sponsoring various promotional, educational or marketing meetings and seminars attended by distributors, wholesalers, and/or broker dealer firms' registered representatives, and creating marketing materials that discuss the contracts, available options, and the Portfolio.
The amounts paid depend on the nature of the meetings, the number of meetings attended by PGIM Investments, the subadviser, or PIMS, the number of participants and attendees at the meetings, the costs expected to be incurred, and the level of PGIM Investments', the subadviser's or PIMS’ participation. These payments or reimbursements may not be offered by the subadviser or PIMS, and the amounts of such payments may vary between and among PGIM Investments, the subadviser and PIMS depending on their respective participation.
With respect to variable annuity contracts, the amounts paid under these arrangements to Prudential-affiliated insurers are set forth in the prospectuses for the variable annuity contracts that offer the Portfolio as an investment option.
Index Description
Russell 1000 Index. The Russell 1000 Index is an unmanaged index that consists of the 1,000 largest securities in the Russell 3000 Index. These returns do not include the effect of any operating expenses of a mutual fund or taxes payable by investors and would be lower if they included these effects.
S&P 500 Index*. The S&P 500 Index is an unmanaged index of over 500 stocks of large US public companies. It gives a broad look at how stock prices in the United States have performed. These returns do not include the effect of any operating expenses of a mutual fund or taxes payable by investors and would be lower if they included these effects.
* The S&P 500 Index is a product of S&P Dow Jones Indices LLC (SPDJI), and has been licensed for use by PGIM Quantitative Solutions LLC, Prudential Trust Company, The Prudential Insurance Company of America, Prudential Retirement Insurance and Annuity Company, PGIM, Inc., PGIM Limited and/or their affiliates (collectively, Licensee). Standard & Poor’s®, S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Licensee. Licensee’s product(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, S&P Dow Jones Indices). S&P Dow Jones Indices makes no representation or warranty, express or implied, to the owners of the Licensee’s product(s) or any member of the public regarding the advisability of investing in securities generally or in Licensee’s product(s) particularly or the ability of the Index to track general market performance. S&P Dow Jones Indices’ only relationship to Licensee with respect to the Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices or its licensors. The Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Licensee or the Licensee’s product(s). S&P Dow Jones Indices have no obligation to take the needs of Licensee or the owners of Licensee’s product(s) into consideration in determining, composing or calculating the Index. S&P Dow Jones Indices is not responsible for and has not participated in the determination of the prices, and amount of Licensee’s product(s) or the timing of the issuance or sale of Licensee’s product(s) or in the determination or calculation of the equation by which Licensee’s product(s) is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of Licensee’s product(s). There is no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice. Notwithstanding the foregoing, CME Group Inc. and its affiliates may independently issue and/or sponsor financial products unrelated to Licensee’s product(s) currently being issued by Licensee, but which may be similar to and competitive with Licensee’s product(s). In addition, CME Group Inc. and its affiliates may trade financial products which are linked to the performance of the Index.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE LICENSEE’S PRODUCT(S), OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND LICENSEE, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.
