Item 5—Fees and Compensation
Advisory Fees
PMA negotiates advisory fees as well as asset management fees (including sub-advisory fees)
individually with Clients. Fees paid by Clients vary based on numerous factors, such as the size of the
Client Account (including the aggregate size of multiple accounts for the same Client or related Clients),
whether the Client is a founding investor or a strategic partner to PMA or another affiliate of PFI, the
investment strategy, whether the Client is an affiliate or has a relationship with one of our affiliates,
anticipated additional assets, and the required level of service and/or complexity. Since fees are
negotiable, Clients could pay different fees. We are generally compensated for our advisory services
under asset-based fee schedules or performance-based fee schedules. As part of a larger organization,
where PMA provides a discount due to a strategic relationship with a client, PMA could be reimbursed by
an affiliate with respect to strategies for which a strategic partner discount is applied.
Where the investment strategy includes investments in investment funds or structured products, any
asset and performance-based fees and expenses charged at the investment fund or product level,
pursuant to the applicable governing documents, shall be in addition to the advisory and asset
management fees charged by PMA, unless a bundled fee structure is agreed-upon.
Our performance-based compensation arrangements are structured to comply with Rule 205-3 under the
Investment Advisers Act of 1940 and our internal policies with respect to such arrangements. Fees and
other compensation paid by Clients that pay performance-based compensation could be higher than
those paid by Clients who do not, due to the fact that performance-based compensation could increase
based on the performance of a portfolio.
Payment of Fees
Depending on a Client’s preference, we either bill a Client for advisory fees (including sub-advisory fees)
or deduct such fees from the Client’s Account. Asset-based fees are typically payable either monthly or
quarterly in arrears. Performance-based fees, if earned, are payable after the calculation period for such
fees. We do not require or solicit Clients to pay fees in advance. If a Client were to pay fees in advance
and the Client’s contract were to terminate before the end of a billing period, any prepaid fees would be
refunded on a pro-rata basis.
Additional Expenses and Fees
We typically charge our Clients for certain out-of-pocket fees and expenses we incur as more fully
described in our investment management agreement with each Client. Such expenses include, but are
not limited to, transaction costs related to investments for Client Accounts, which includes, without
limitation, the organizational costs and expenses incurred in setting up the Accounts, as well as costs and
expenses incurred in connection with the acquisition, disposition, servicing and management of any
investments included in a Client Account, including, but not limited to, all management fees, performance
based compensation, expenses that a Client Account could be subject to by virtue of investing in
investment funds or other structured products, applicable termination fees in connection with certain
illiquid assets, costs and expenses incurred in connection with transitioning a Client Account and its
assets to management by the PMA, and costs related to preserving or enhancing the value of any
investment, including, without limitation, any cost or expense relating to litigation with respect to any
investment or the restructuring of any investment. Clients are generally responsible for other fees and
expenses related to their accounts, including custodial fees, brokerage fees, and other transaction costs.
We pay all normal operating expenses arising from the day-to-day administrative services we provide.
These expenses primarily consist of salaries for our staff, rent, utilities and other similar ordinary and
recurring expenses.
Revenue Sharing among PGIM Affiliates
As part of a large investment management organization, PMA and its PGIM affiliates have agreed on a
revenue sharing arrangement pursuant to which certain affiliates will make payments to PMA on an
ongoing basis to accommodate the interrelated nature of PGIM’s multi-asset solutions efforts. This
revenue sharing is intended to reimburse PMA for amounts that it foregoes as part of larger multi-asset
mandates with its affiliated advisers who will act as sub-advisers or managers to funds or products that
PMA allocates to under the mandates. Notwithstanding this arrangement, a Client will pay the rates
negotiated with PMA that includes, as applicable, sub-advisory fees and underlying fund or product fees
and expenses, and the internal revenue sharing arrangement will not result in additional fees or expenses
to a client.
Conflicts Related to Valuation and Fees
When Client Accounts hold illiquid or difficult to value investments, our Sub-Advisers face a conflict of
interest when making recommendations regarding the value of such investments since our fees are
generally based on the value of assets under management. As applicable, both we and our Sub-Advisers
could be viewed as having an incentive to value investments at higher valuations. Both PMA and our
Sub-Advisers have valuation policies and procedures that mitigate this conflict effectively and enable our
Sub-Advisers to value Client assets fairly and in a manner that is consistent with the Client’s best
interests. Please see each Sub-Adviser’s Form ADV Part 2A for more detailed information.
Other Amounts Payable by Clients
Advisory and asset management fees (including sub-advisory fees paid to Sub-Advisers) are payable by
Clients to PMA. PMA pays its Sub-Advisers in accordance with rates we negotiate with each Sub-Adviser,
and, depending on such negotiated rates, in certain circumstances, PMA retains a portion of the sub-
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