Day One Funds Glidepath

A strategic growth path for smart retirement planning

Each Prudential Day One Fund asset allocation follows a glidepath that becomes more conservative as the Fund’s target date approaches by reducing exposure to equity investments and increasing exposure to fixed income investments.

The glidepath continues to adjust allocations for about 10 years past the target date, when the asset allocation of each Day One Fund will be similar to that of the Day One Income Fund. To make the assumptions behind the design of our glidepath as realistic as possible, we analyzed multiple data sources, including more than 850,000 participants in plans serviced by Prudential.

Asset Class Mix:

Glidepath

Glidepath of years to retirement to equity and non-traditional exposure

Glidepath of years to retirement to equity and non-traditional exposure

Glidepath of years to retirement to equity and non-traditional exposure

97% allocation before 40 years of retirement

97% - Because addressing longevity risk is so important, the glidepath starts with a 97% allocation to domestic and foreign equities, as well as commodities and real estate(non traditional investments) to help provide potential for growth.

20 years before retirement

As the target date approaches, equity exposure decreases.

Retirement Red Zone before 10 years of retirement

Ten years prior to the target date, we incorporate The Retirement Red Zone® concept into our glidepath. At this point, we begin to significantly shift from riskier assets to more conservative ones.

35% allocation after 10 years of retirement

35% - Because the Day One Funds have a “through” retirement glidepath, the exposure to equities continues to decrease to provide additional protection against equity market declines. This allocation stabilizes 10 years after the target date at 26% equities, 9% commodities and real estate, and 65% fixed income.

As shown in the chart above, each Day One Fund’s asset allocation follows a glidepath that becomes more conservative as the applicable target date approaches by reducing exposure to equity investments and increasing exposure to fixed income investments. The glidepath continues to adjust allocations in this manner for approximately 10 years past the target date, at which point the asset allocation of each target-date fund will be similar to that of the Day One Income Fund, which maintains a static asset allocation. The glidepath assumes retirement at approximately age 65 and contributions beginning at approximately age 18.

Each Day One Fund’s underlying asset allocation is reviewed periodically to determine whether the glidepath (or, in the case of the Day One Income Fund, the prescribed asset allocation) and underlying funds in which such fund invests remain suitable to meet the fund’s investment objective. As a result of this review, the glidepath and/or the allocation of the fund’s assets among the underlying funds may be modified.

Glidepath and asset allocations are as of the calendar quarter referenced above. The asset allocation changes over time. PRIAC, together with QMA, may change the Glidepath, asset allocations and Underlying Funds.

Asset allocation does not assure a profit or protect against a loss in declining markets.

Allocations as of January 3, 2017

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