UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: | 811-08085 | |
Exact name of registrant as specified in charter: | Prudential Investment Portfolios, Inc. 10 | |
Address of principal executive offices: | 655 Broad Street, 17th Floor | |
Newark, New Jersey 07102 | ||
Name and address of agent for service: | Andrew R. French | |
655 Broad Street, 17th Floor | ||
Newark, New Jersey 07102 | ||
Registrant’s telephone number, including area code: | 800-225-1852 | |
Date of fiscal year end: | 10/31/2019 | |
Date of reporting period: | 4/30/2019 |
Item 1 – Reports to Stockholders
PGIM JENNISON EQUITY INCOME FUND
SEMIANNUAL REPORT
APRIL 30, 2019
COMING SOON: PAPERLESS SHAREHOLDER REPORTS
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (pgiminvestments.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-225-1852 or by sending an email request to PGIM Investments at shareholderreports@pgim.com.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary or follow instructions included with this notice to elect to continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 1-800-225-1852 or send an email request to shareholderreports@pgim.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective:Income and capital appreciation |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.
The accompanying financial statements as of April 30, 2019 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates LLC is a registered investment adviser. Both are Prudential Financial companies.© 2019 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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PGIM Jennison Equity Income Fund | 3 |
This Page Intentionally Left Blank
Dear Shareholder:
We hope you find the semiannual report for PGIM Jennison Equity Income Fund informative and useful. The report covers performance for thesix-month period ended April 30, 2019.
Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.
Thank you for choosing our family of funds.
Sincerely,
Stuart S. Parker, President
PGIM Jennison Equity Income Fund
June 14, 2019
PGIM Jennison Equity Income Fund | 5 |
Your Fund’s Performance(unaudited)
Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website atpgiminvestments.comor by calling(800) 225-1852.
Total Returns as of 4/30/19 (without sales charges) | Average Annual Total Returns as of 4/30/19 (with sales charges) | |||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Ten Years (%) | Since Inception (%) | ||||||
Class A | 7.84 | 2.08 | 4.81 | 12.08 | — | |||||
Class B | 7.38 | 2.88 | 5.07 | 11.86 | — | |||||
Class C | 7.46 | 6.38 | 5.22 | 11.87 | — | |||||
Class R | 7.65 | 7.67 | 5.72 | N/A | 8.35 (1/18/11) | |||||
Class Z | 7.93 | 8.34 | 6.28 | 12.99 | — | |||||
Class R6 | 8.03 | 8.40 | 6.39 | N/A | 9.02 (1/18/11) | |||||
Lipper Equity Income Funds Index** | ||||||||||
8.34 | 9.96 | 8.33 | 13.03 | — | ||||||
S&P 500 Index | ||||||||||
9.75 | 13.48 | 11.62 | 15.31 | — | ||||||
Lipper Equity Income Funds Average | ||||||||||
7.38 | 8.48 | 7.70 | 12.59 | — |
Source: PGIM Investments LLC and Lipper Inc.
*Not annualized
**Returns for the Lipper Equity Income Funds Index reflect the expenses of the mutual funds included in the Index.
Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Indexes and the Lipper Average are measured from the closest month-end to the class’ inception date.
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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B* | Class C | Class R | Class Z | Class R6 | |||||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | None | None | ||||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 5.00% (Yr. 1) 4.00% (Yr. 2) 3.00% (Yr. 3) 2.00% (Yr. 4) 1.00% (Yr. 5) 1.00% (Yr. 6) 0.00% (Yr. 7) | 1.00% on sales made within 12 months of purchase | None | None | None | ||||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.30% (0.25% currently) | 1.00% | 1.00% | 0.75% (0.50% currently) | None | None |
*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.
Benchmark Definitions
Lipper Equity Income Funds Index—Funds in the Lipper Equity Income Funds Index seek relatively high current income and growth of income by investing at least 65% of their portfolios in dividend-paying equity securities. These funds’ gross or net yields must be at least 125% of the average gross or net yield of the US diversified equity fund universe. The average annual total return for the Index measured from the month-end closest to the inception date of the Fund’s Class R and Class R6 shares is 10.39%.
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. The average annual total return for the Index measured from the month-end closest to the inception date of the Fund’s Class R and Class R6 shares is 12.90%.
Lipper Equity Income Funds Average—The Lipper Equity Income Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Equity Income Funds universe for the periods noted. Funds in the Lipper Average seek relatively high current income and growth of income through investing 65% or more of their portfolios in dividend-paying equity securities. The average annual total return for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class R and Class R6 shares is 9.82%.
PGIM Jennison Equity Income Fund | 7 |
Your Fund’s Performance(continued)
Investors cannot invest directly in an index or average. The returns for the S&P 500 Index would be lower if it included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average and the Lipper Equity Income Funds Index reflect the deduction of mutual fund operating expenses, but not sales charges or taxes.
Presentation of Fund Holdings
Five Largest Holdings expressed as a percentage of net assets as of 4/30/19 (%) | ||||
Broadcom, Inc.,Semiconductors & Semiconductor Equipment | 3.6 | |||
Williams Cos., Inc. (The),Oil, Gas & Consumable Fuels | 3.0 | |||
Philip Morris International, Inc.,Tobacco | 2.9 | |||
BP PLC,Oil, Gas & Consumable Fuels | 2.9 | |||
AstraZeneca PLC,Pharmaceuticals | 2.9 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/19 (%) | ||||
Semiconductors & Semiconductor Equipment | 11.6 | |||
Oil, Gas & Consumable Fuels | 7.7 | |||
Pharmaceuticals | 7.1 | |||
Banks | 6.4 | |||
Electric Utilities | 6.1 |
Industry weightings reflect only long-term investments and are subject to change.
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As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service(12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2019. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period
PGIM Jennison Equity Income Fund | 9 |
Fees and Expenses(continued)
and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
PGIM Jennison Equity Income Fund | Beginning Account Value November 1, 2018 | Ending Account Value April 30, 2019 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,078.40 | 1.16 | % | $ | 5.98 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.04 | 1.16 | % | $ | 5.81 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,073.80 | 2.02 | % | $ | 10.39 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,014.78 | 2.02 | % | $ | 10.09 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,074.60 | 1.88 | % | $ | 9.67 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.47 | 1.88 | % | $ | 9.39 | ||||||||||
Class R | Actual | $ | 1,000.00 | $ | 1,076.50 | 1.50 | % | $ | 7.72 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.36 | 1.50 | % | $ | 7.50 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,079.30 | 0.89 | % | $ | 4.59 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.38 | 0.89 | % | $ | 4.46 | ||||||||||
Class R6 | Actual | $ | 1,000.00 | $ | 1,080.30 | 0.80 | % | $ | 4.13 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.83 | 0.80 | % | $ | 4.01 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2019, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2019 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
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Schedule of Investments(unaudited)
as of April 30, 2019
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 98.9% | ||||||||
COMMON STOCKS 95.1% | ||||||||
Aerospace & Defense 3.7% | ||||||||
Boeing Co. (The) | 69,673 | $ | 26,314,796 | |||||
Safran SA (France) | 186,175 | 27,201,812 | ||||||
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53,516,608 | ||||||||
Banks 6.4% | ||||||||
Bank of America Corp. | 982,517 | 30,045,370 | ||||||
BB&T Corp. | 443,681 | 22,716,467 | ||||||
JPMorgan Chase & Co. | 205,907 | 23,895,507 | ||||||
SunTrust Banks, Inc. | 231,170 | 15,137,012 | ||||||
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91,794,356 | ||||||||
Beverages 1.8% | ||||||||
Keurig Dr. Pepper, Inc.(a) | 909,733 | 26,445,938 | ||||||
Capital Markets 1.1% | ||||||||
CME Group, Inc. | 36,705 | 6,566,525 | ||||||
Moelis & Co. (Class A Stock) | 212,899 | 8,718,214 | ||||||
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15,284,739 | ||||||||
Chemicals 0.9% | ||||||||
Akzo Nobel NV (Netherlands) | 160,271 | 13,641,975 | ||||||
Commercial Services & Supplies 1.6% | ||||||||
Republic Services, Inc. | 279,892 | 23,180,655 | ||||||
Communications Equipment 4.2% | ||||||||
Cisco Systems, Inc. | 595,164 | 33,299,426 | ||||||
Nokia OYJ (Finland), ADR(a) | 5,293,114 | 27,947,642 | ||||||
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61,247,068 | ||||||||
Consumer Finance 1.1% | ||||||||
American Express Co. | 140,878 | 16,515,128 | ||||||
Diversified Financial Services 0.0% | ||||||||
Gateway Energy & Resource Holdings LLC Private Placement, | 100,000 | 553,488 |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 11 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Diversified Telecommunication Services 2.9% | ||||||||
AT&T, Inc. | 652,634 | $ | 20,205,549 | |||||
Verizon Communications, Inc. | 372,206 | 21,286,461 | ||||||
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41,492,010 | ||||||||
Electric Utilities 5.4% | ||||||||
Duke Energy Corp. | 220,559 | 20,097,336 | ||||||
Edison International | 493,349 | 31,460,866 | ||||||
Exelon Corp. | 511,541 | 26,063,014 | ||||||
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77,621,216 | ||||||||
Electrical Equipment 1.7% | ||||||||
Emerson Electric Co. | 337,262 | 23,942,229 | ||||||
Entertainment 1.6% | ||||||||
Walt Disney Co. (The) | 163,725 | 22,425,401 | ||||||
Equity Real Estate Investment Trusts (REITs) 3.6% | ||||||||
American Tower Corp. | 52,617 | 10,276,100 | ||||||
Boston Properties, Inc. | 158,716 | 21,842,496 | ||||||
Prologis, Inc. | 252,565 | 19,364,159 | ||||||
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51,482,755 | ||||||||
Food & Staples Retailing 1.6% | ||||||||
Walmart, Inc. | 223,325 | 22,966,743 | ||||||
Food Products 1.3% | ||||||||
Mondelez International, Inc. (Class A Stock) | 369,334 | 18,780,634 | ||||||
Health Care Equipment & Supplies 3.7% | ||||||||
Abbott Laboratories | 375,107 | 29,843,513 | ||||||
Zimmer Biomet Holdings, Inc. | 193,937 | 23,885,281 | ||||||
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53,728,794 | ||||||||
Hotels, Restaurants & Leisure 2.5% | ||||||||
McDonald’s Corp. | 181,899 | 35,937,785 | ||||||
Household Products 1.2% | ||||||||
Procter & Gamble Co. (The) | 160,062 | 17,043,402 |
See Notes to Financial Statements.
12 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Industrial Conglomerates 1.0% | ||||||||
Honeywell International, Inc. | 83,711 | $ | 14,534,741 | |||||
Insurance 3.9% | ||||||||
Chubb Ltd. | 240,555 | 34,928,586 | ||||||
MetLife, Inc. | 461,210 | 21,275,617 | ||||||
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56,204,203 | ||||||||
Machinery 1.2% | ||||||||
Caterpillar, Inc. | 120,412 | 16,787,841 | ||||||
Metals & Mining 1.4% | ||||||||
Anglo American PLC (South Africa) | 763,253 | 19,817,411 | ||||||
Mortgage Real Estate Investment Trusts (REITs) 2.0% | ||||||||
MFA Financial, Inc. | 2,712,949 | 20,374,247 | ||||||
Starwood Property Trust, Inc. | 384,212 | 8,856,087 | ||||||
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29,230,334 | ||||||||
Oil, Gas & Consumable Fuels 7.7% | ||||||||
BP PLC (United Kingdom), ADR | 968,170 | 42,338,074 | ||||||
Royal Dutch Shell PLC (Netherlands) (Class A Stock), ADR | 415,855 | 26,419,268 | ||||||
Williams Cos., Inc. (The) | 1,513,840 | 42,887,087 | ||||||
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111,644,429 | ||||||||
Pharmaceuticals 7.1% | ||||||||
AstraZeneca PLC (United Kingdom), ADR(a) | 1,117,618 | 42,089,494 | ||||||
Elanco Animal Health, Inc.* | 483,453 | 15,228,769 | ||||||
Eli Lilly & Co. | 156,378 | 18,302,481 | ||||||
Merck & Co., Inc. | 340,446 | 26,796,505 | ||||||
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102,417,249 | ||||||||
Road & Rail 1.7% | ||||||||
Union Pacific Corp. | 142,386 | 25,208,017 | ||||||
Semiconductors & Semiconductor Equipment 11.6% | ||||||||
Advanced Micro Devices, Inc.*(a) | 948,197 | 26,198,683 | ||||||
Broadcom, Inc. | 161,392 | 51,387,213 | ||||||
Lam Research Corp. | 146,522 | 30,393,058 |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 13 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Semiconductors & Semiconductor Equipment (cont’d.) | ||||||||
Marvell Technology Group Ltd. | 991,435 | $ | 24,805,704 | |||||
QUALCOMM, Inc. | 399,660 | 34,422,716 | ||||||
|
| |||||||
167,207,374 | ||||||||
Software 2.0% | ||||||||
Microsoft Corp. | 220,439 | 28,789,333 | ||||||
Specialty Retail 4.9% | ||||||||
Foot Locker, Inc. | 283,616 | 16,225,671 | ||||||
Lowe’s Cos., Inc. | 177,896 | 20,127,153 | ||||||
Ross Stores, Inc. | 358,519 | 35,012,966 | ||||||
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| |||||||
71,365,790 | ||||||||
Tobacco 3.0% | ||||||||
Philip Morris International, Inc. | 491,969 | 42,584,837 | ||||||
Transportation Infrastructure 1.3% | ||||||||
Atlantia SpA (Italy) | 676,145 | 18,519,836 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 1,371,912,319 | |||||||
|
| |||||||
PREFERRED STOCKS 3.0% | ||||||||
Electric Utilities 0.7% | ||||||||
American Electric Power Co., Inc., CVT, 6.125%* | 201,818 | 10,490,500 | ||||||
Health Care Equipment & Supplies 1.2% | ||||||||
Danaher Corp., Series A, CVT, 4.750%* | 16,853 | 17,754,635 | ||||||
Multi-Utilities 1.1% | ||||||||
Sempra Energy, Series A, CVT, 6.000% | 142,510 | 15,232,894 | ||||||
|
| |||||||
TOTAL PREFERRED STOCKS | 43,478,029 | |||||||
|
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See Notes to Financial Statements.
14 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
CONVERTIBLE BOND 0.8% | ||||||||||||||||
Insurance | ||||||||||||||||
AXA SA (France), | 7.250 | % | 05/15/21 | 10,377 | $ | 11,302,629 | ||||||||||
|
| |||||||||||||||
TOTAL LONG-TERM INVESTMENTS | 1,426,692,977 | |||||||||||||||
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Shares | ||||||||||||||||
SHORT-TERM INVESTMENTS 5.6% | ||||||||||||||||
AFFILIATED MUTUAL FUNDS | ||||||||||||||||
PGIM Core Ultra Short Bond Fund(w) | 14,569,790 | 14,569,790 | ||||||||||||||
PGIM Institutional Money Market Fund | 66,779,629 | 66,799,663 | ||||||||||||||
|
| |||||||||||||||
TOTAL SHORT-TERM INVESTMENTS | 81,369,453 | |||||||||||||||
|
| |||||||||||||||
TOTAL INVESTMENTS 104.5% | 1,508,062,430 | |||||||||||||||
Liabilities in excess of other assets (4.5)% | (65,461,839 | ) | ||||||||||||||
|
| |||||||||||||||
NET ASSETS 100.0% | $ | 1,442,600,591 | ||||||||||||||
|
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Below is a list of the abbreviation(s) used in the semiannual report:
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and, pursuant to the requirements of Rule 144A, may not be resold except to qualified institutional buyers.
ADR—American Depositary Receipt
CVT—Convertible Security
LIBOR—London Interbank Offered Rate
REIT(s)—Real Estate Investment Trust(s)
* | Non-income producing security. |
# | Principal amount is shown in U.S. dollars unless otherwise stated. |
^ | Indicates a Level 3 security. The aggregate value of Level 3 securities is $553,488 and 0.0% of net assets. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $64,858,896; cash collateral of $66,613,304 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
(f) | Indicates a restricted security; the aggregate original cost of such securities is $2,000,000. The aggregate value of $553,488 is 0.0% of net assets. |
(w) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund. |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 15 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Fair Value Measurements:
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—unadjusted quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2019 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Aerospace & Defense | $ | 26,314,796 | $ | 27,201,812 | $ | — | ||||||
Banks | 91,794,356 | — | — | |||||||||
Beverages | 26,445,938 | — | — | |||||||||
Capital Markets | 15,284,739 | — | — | |||||||||
Chemicals | — | 13,641,975 | — | |||||||||
Commercial Services & Supplies | 23,180,655 | — | — | |||||||||
Communications Equipment | 61,247,068 | — | — | |||||||||
Consumer Finance | 16,515,128 | — | — | |||||||||
Diversified Financial Services | — | — | 553,488 | |||||||||
Diversified Telecommunication Services | 41,492,010 | — | — | |||||||||
Electric Utilities | 77,621,216 | — | — | |||||||||
Electrical Equipment | 23,942,229 | — | — | |||||||||
Entertainment | 22,425,401 | — | — | |||||||||
Equity Real Estate Investment Trusts (REITs) | 51,482,755 | — | — | |||||||||
Food & Staples Retailing | 22,966,743 | — | — | |||||||||
Food Products | 18,780,634 | — | — | |||||||||
Health Care Equipment & Supplies | 53,728,794 | — | — | |||||||||
Hotels, Restaurants & Leisure | 35,937,785 | — | — | |||||||||
Household Products | 17,043,402 | — | — | |||||||||
Industrial Conglomerates | 14,534,741 | — | — | |||||||||
Insurance | 56,204,203 | — | — | |||||||||
Machinery | 16,787,841 | — | — | |||||||||
Metals & Mining | — | 19,817,411 | — | |||||||||
Mortgage Real Estate Investment Trusts (REITs) | 29,230,334 | — | — | |||||||||
Oil, Gas & Consumable Fuels | 111,644,429 | — | — | |||||||||
Pharmaceuticals | 102,417,249 | — | — | |||||||||
Road & Rail | 25,208,017 | — | — | |||||||||
Semiconductors & Semiconductor Equipment | 167,207,374 | — | — | |||||||||
Software | 28,789,333 | — | — | |||||||||
Specialty Retail | 71,365,790 | — | — | |||||||||
Tobacco | 42,584,837 | — | — | |||||||||
Transportation Infrastructure | — | 18,519,836 | — | |||||||||
Preferred Stocks | ||||||||||||
Electric Utilities | 10,490,500 | — | — |
See Notes to Financial Statements.
16 |
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities (continued) | ||||||||||||
Preferred Stocks (continued) | ||||||||||||
Health Care Equipment & Supplies | $ | 17,754,635 | $ | — | $ | — | ||||||
Multi-Utilities | 15,232,894 | — | — | |||||||||
Convertible Bond | — | 11,302,629 | — | |||||||||
Affiliated Mutual Funds | 81,369,453 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 1,417,025,279 | $ | 90,483,663 | $ | 553,488 | ||||||
|
|
|
|
|
|
Industry Classification:
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2019 were as follows:
Semiconductors & Semiconductor Equipment | 11.6 | % | ||
Oil, Gas & Consumable Fuels | 7.7 | |||
Pharmaceuticals | 7.1 | |||
Banks | 6.4 | |||
Electric Utilities | 6.1 | |||
Affiliated Mutual Funds (4.6% represents investments purchased with collateral from securities on loan) | 5.6 | |||
Health Care Equipment & Supplies | 4.9 | |||
Specialty Retail | 4.9 | |||
Insurance | 4.7 | |||
Communications Equipment | 4.2 | |||
Aerospace & Defense | 3.7 | |||
Equity Real Estate Investment Trusts (REITs) | 3.6 | |||
Tobacco | 3.0 | |||
Diversified Telecommunication Services | 2.9 | |||
Hotels, Restaurants & Leisure | 2.5 | |||
Mortgage Real Estate Investment Trusts (REITs) | 2.0 | |||
Software | 2.0 | |||
Beverages | 1.8 | |||
Road & Rail | 1.7 | |||
Electrical Equipment | 1.7 | |||
Commercial Services & Supplies | 1.6 | % | ||
Food & Staples Retailing | 1.6 | |||
Entertainment | 1.6 | |||
Metals & Mining | 1.4 | |||
Food Products | 1.3 | |||
Transportation Infrastructure | 1.3 | |||
Household Products | 1.2 | |||
Machinery | 1.2 | |||
Consumer Finance | 1.1 | |||
Capital Markets | 1.1 | |||
Multi-Utilities | 1.1 | |||
Industrial Conglomerates | 1.0 | |||
Chemicals | 0.9 | |||
Diversified Financial Services | 0.0 | * | ||
|
| |||
104.5 | ||||
Liabilities in excess of other assets | (4.5 | ) | ||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Fund entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 17 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Offsetting of financial instrument/transaction assets and liabilities:
Description | Gross Market Value of Recognized Assets/(Liabilities) | Collateral Pledged/(Received)(1) | Net Amount | |||||||||
Securities on Loan | $ | 64,858,896 | $ | (64,858,896 | ) | $ | — | |||||
|
|
(1) | Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
18 |
Statement of Assets & Liabilities(unaudited)
as of April 30, 2019
Assets | ||||
Investments at value, including securities on loan of $64,858,896: | ||||
Unaffiliated investments (cost $1,214,883,865) | $ | 1,426,692,977 | ||
Affiliated investments (cost $81,358,368) | 81,369,453 | |||
Foreign currency, at value (cost $39) | 39 | |||
Receivable for investments sold | 3,718,243 | |||
Receivable for Fund shares sold | 2,153,235 | |||
Dividends and interest receivable | 1,713,860 | |||
Tax reclaim receivable | 1,133,267 | |||
Prepaid expenses and other assets | 29,194 | |||
|
| |||
Total Assets | 1,516,810,268 | |||
|
| |||
Liabilities | ||||
Payable to broker for collateral for securities on loan | 66,613,304 | |||
Payable for Fund shares reacquired | 3,597,215 | |||
Payable for investments purchased | 2,015,679 | |||
Management fee payable | 879,704 | |||
Accrued expenses and other liabilities | 516,731 | |||
Distribution fee payable | 497,629 | |||
Affiliated transfer agent fee payable | 89,392 | |||
Payable to custodian | 23 | |||
|
| |||
Total Liabilities | 74,209,677 | |||
|
| |||
Net Assets | $ | 1,442,600,591 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 103,420 | ||
Paid-in capital in excess of par | 1,145,258,023 | |||
Total distributable earnings (loss) | 297,239,148 | |||
|
| |||
Net assets, April 30, 2019 | $ | 1,442,600,591 | ||
|
|
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 19 |
Statement of Assets & Liabilities(unaudited)
as of April 30, 2019
Class A | ||||
Net asset value and redemption price per share, | $ | 14.41 | ||
Maximum sales charge (5.50% of offering price) | 0.84 | |||
|
| |||
Maximum offering price to public | $ | 15.25 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share, | ||||
($33,638,172 ÷ 2,584,189 shares of common stock issued and outstanding) | $ | 13.02 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | ||||
($396,157,348 ÷ 30,543,616 shares of common stock issued and outstanding) | $ | 12.97 | ||
|
| |||
Class R | ||||
Net asset value, offering price and redemption price per share, | ||||
($27,816,310 ÷ 1,930,367 shares of common stock issued and outstanding) | $ | 14.41 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | ||||
($378,582,543 ÷ 26,287,736 shares of common stock issued and outstanding) | $ | 14.40 | ||
|
| |||
Class R6 | ||||
Net asset value, offering price and redemption price per share, | ||||
($3,819,336 ÷ 264,663 shares of common stock issued and outstanding) | $ | 14.43 | ||
|
|
See Notes to Financial Statements.
20 |
Statement of Operations(unaudited)
Six Months Ended April 30, 2019
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income (net of $181,803 foreign withholding tax) | $ | 23,066,541 | ||
Affiliated dividend income | 345,334 | |||
Interest income | 337,016 | |||
Income from securities lending, net (including affiliated income of $89,867) | 290,938 | |||
|
| |||
Total income | 24,039,829 | |||
|
| |||
Expenses | ||||
Management fee | 5,437,914 | |||
Distribution fee(a) | 3,352,308 | |||
Transfer agent’s fees and expenses (including affiliated expense of $208,797)(a) | 887,673 | |||
Custodian and accounting fees | 71,003 | |||
Shareholders’ reports | 57,095 | |||
Registration fees(a) | 52,649 | |||
Directors’ fees | 20,985 | |||
Audit fee | 13,552 | |||
Legal fees and expenses | 13,250 | |||
Miscellaneous | 20,567 | |||
|
| |||
Total expenses | 9,926,996 | |||
Less: Fee waiver and/or expense reimbursement(a) | (6,879 | ) | ||
Distribution fee waiver(a) | (171,388 | ) | ||
|
| |||
Net expenses | 9,748,729 | |||
|
| |||
Net investment income (loss) | 14,291,100 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions (including affiliated of $(17,154)) | 92,634,686 | |||
Foreign currency transactions | 29,396 | |||
|
| |||
92,664,082 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (including affiliated of $21,315) | (9,553,148 | ) | ||
Foreign currencies | (27,932 | ) | ||
|
| |||
(9,581,080 | ) | |||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 83,083,002 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 97,374,102 | ||
|
|
(a) | Class specific expenses and waivers were as follows: |
Class A | Class B | Class C | Class R | Class Z | Class R6 | |||||||||||||||||||
Distribution fee | 826,693 | 200,471 | 2,224,325 | 100,819 | — | — | ||||||||||||||||||
Transfer agent’s fees and expenses | 372,731 | 42,408 | 226,423 | 22,913 | 222,975 | 223 | ||||||||||||||||||
Registration fees | 10,326 | 7,066 | 8,288 | 7,160 | 12,648 | 7,161 | ||||||||||||||||||
Fee waiver and/or expense reimbursement | — | — | — | — | — | (6,879 | ) | |||||||||||||||||
Distribution fee waiver | (137,782 | ) | — | — | (33,606 | ) | — | — |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 21 |
Statements of Changes in Net Assets(unaudited)
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 14,291,100 | $ | 43,987,565 | ||||
Net realized gain (loss) on investment and foreign currency transactions | 92,664,082 | 230,094,217 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (9,581,080 | ) | (219,131,389 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 97,374,102 | 54,950,393 | ||||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Distributions from distributable earnings | ||||||||
Class A | (89,085,865 | ) | (38,693,618 | ) | ||||
Class B | (7,161,498 | ) | (3,987,585 | ) | ||||
Class C | (80,711,469 | ) | (35,159,248 | ) | ||||
Class R | (4,249,289 | ) | (1,923,875 | ) | ||||
Class Z | (67,920,676 | ) | (31,902,165 | ) | ||||
Class R6 | (623,806 | ) | (222,063 | ) | ||||
|
|
|
| |||||
(249,752,603 | ) | (111,888,554 | ) | |||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 53,898,724 | 60,274,663 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 218,835,801 | 96,882,217 | ||||||
Cost of shares reacquired | (295,284,188 | ) | (511,300,273 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Fund share transactions | (22,549,663 | ) | (354,143,393 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | (174,928,164 | ) | (411,081,554 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 1,617,528,755 | 2,028,610,309 | ||||||
|
|
|
| |||||
End of period | $ | 1,442,600,591 | $ | 1,617,528,755 | ||||
|
|
|
|
See Notes to Financial Statements.
22 |
Notes to Financial Statements(unaudited)
Prudential Investment Portfolios, Inc. 10 (the “Company”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The Company was organized on March 5, 1997, as a Maryland corporation and operates as a series company. The Company consists of two funds: PGIM Jennison Equity Income Fund and PGIM QMA Mid-Cap Value Fund, each of which are diversified funds. These financial statements relate only to the PGIM Jennison Equity Income Fund (the “Fund”).
The investment objective of the Fund is income and capital appreciation.
1. Accounting Policies
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 946 Financial Services—Investment Companies.The following accounting policies conform to U.S. generally accepted accounting principles. The Fund consistently follows such policies in the preparation of its financial statements.
Securities Valuation:The Fund holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Company’s Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or the “Manager”). Pursuant to the Board’s delegation, the Manager has established a Valuation Committee responsible for supervising the fair valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the Fund to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Company’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
PGIM Jennison Equity Income Fund | 23 |
Notes to Financial Statements(unaudited) (continued)
Various inputs determine how the Fund’s investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the Schedule of Investments and referred to herein as the “fair value hierarchy” in accordance with FASB ASC Topic 820—Fair Value Measurements and Disclosures.
Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.
Foreign equities traded on foreign securities exchanges are generally valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements up to the time the Fund is valued. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stock valuation policies discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any
24 |
comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.
Illiquid Securities:Pursuant to Rule 22e-4 under the 1940 Act, the Fund has adopted a Board approved Liquidity Risk Management Program (“LRMP”) that requires, among other things, that the Fund limit its illiquid investments that are assets to no more than 15% of net assets. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, may not reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The Fund may find it difficult to sell illiquid securities at the time considered most advantageous by its subadviser and may incur transaction costs that would not be incurred in the sale of securities that were freely marketable.
Restricted Securities:Securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer are considered restricted as to disposition under federal securities law (“restricted securities”). Such restricted securities are valued pursuant to the valuation procedures noted above. Restricted securities that would otherwise be considered illiquid investments pursuant to the Fund’s LRMP because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. Therefore, these Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act of 1933, may be classified higher than “illiquid” under the LRMP (i.e. “moderately liquid” or “less liquid” investments). However, the liquidity of the Fund’s investments in restricted securities could be impaired if trading does not develop or declines.
Foreign Currency Translation:The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, holding period realized foreign
PGIM Jennison Equity Income Fund | 25 |
Notes to Financial Statements(unaudited) (continued)
currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.
Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Company’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) arise from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates.
Master Netting Arrangements:The Company, on behalf of the Fund, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a Subadviser may have negotiated and entered into on behalf of the Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset amounts payable by the Fund to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Fund’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending:The Fund lends its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the loaned securities. Should the borrower of the securities fail financially, the Fund has the right to repurchase the securities in the open market using the collateral.
The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as
26 |
collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Fund also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Equity and Mortgage Real Estate Investment Trusts (collectively equity REITs):The Fund invests in equity REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from equity REITs during the period is estimated to be dividend income, capital gain or return of capital and recorded accordingly. When material, these estimates are adjusted periodically when the actual source of distributions is disclosed by the equity REITs.
Securities Transactions and Net Investment Income:Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date, or for certain foreign securities, when the Fund becomes aware of such dividends. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day. Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, shareholder servicing fees, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements, as applicable.
Taxes:It is the Fund’s policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.
Tax reform legislation commonly referred to as the Tax Cuts and Jobs Act permits a direct REIT shareholder to claim a 20% “qualified business income” deduction for ordinary REIT dividends. On January 18, 2019, the Internal Revenue Service issued final regulations that expressly permit RICs to pass through this “qualified business income” to their shareholders.
Dividends and Distributions:The Fund expects to pay dividends from net investment income quarterly. Distributions from net realized capital and currency gains, if any, are declared and paid annually. Dividends and distributions to shareholders, which are
PGIM Jennison Equity Income Fund | 27 |
Notes to Financial Statements(unaudited) (continued)
determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified between total distributable earnings (loss) and paid-in capital in excess of par, as appropriate.
Estimates:The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
2. Agreements
The Company, on behalf of the Fund, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Fund. PGIM Investments administers the corporate affairs of the Fund and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by the Fund’s custodian and the Fund’s transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Fund. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Fund, including, but not limited to, the custodian, transfer agent, and accounting agent.
PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Fund. In connection therewith, Jennison is obligated to keep certain books and records of the Fund. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to the Manager is accrued daily and payable monthly at an annual rate of 0.77% of the Fund’s average daily net assets up to and including $500 million, 0.74% on the next $500 million, 0.725% on the next $1.5 billion, 0.70% on the next $5 billion, 0.675% on the next $2.5 billion and 0.65% of the Fund’s average daily net assets in excess of $10 billion. The effective management fee rate before any waivers and/or expense reimbursements was 0.75% for the six months ended April 30, 2019.
28 |
The Manager has contractually agreed, through February 29, 2020, to limit transfer agency, shareholder servicing, sub-transfer agency, and blue sky fees, as applicable, to the extent that such fees cause the total annual operating expenses to exceed 0.80% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales.
Where applicable, the Manager agrees to waive management fees or shared operating expenses on any share class to the same extent that it waives similar expenses on any other share class and, in addition, total annual operating expenses for Class R6 shares will not exceed total annual operating expenses for Class Z shares. Fees and/or expenses waived and/or reimbursed by PGIM Investments may be recouped by PGIM Investments within the same fiscal year during which such wavier and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Company, on behalf of the Fund, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C, Class R, Class Z and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B, Class C and Class R shares, pursuant to the plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z and Class R6 shares of the Fund.
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.30%, 1%, 1% and 0.75% of the average daily net assets of the Class A, Class B, Class C and Class R shares, respectively. PIMS has contractually agreed to limit such fees to 0.25% and 0.50% of the average daily net assets of the Class A and Class R shares, respectively, through February 29, 2020.
For the reporting period ended April 30, 2019, PIMS received $164,567 in front-end sales charges resulting from sales of Class A shares. Additionally, for the reporting period ended April 30, 2019, PIMS received $16,538 and $3,276 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively. From these fees, PIMS paid such sales charges to broker-dealers, who in turn paid commissions to salespersons and incurred other distribution costs.
PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
PGIM Jennison Equity Income Fund | 29 |
Notes to Financial Statements(unaudited) (continued)
3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Company’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Fund may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that subject to certain conditions, permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Pursuant to the Rule 17a-7 procedures and consistent with guidance issued by the SEC, the Company’s Chief Compliance Officer (“CCO”) prepares a quarterly summary of all such transactions for submission to the Board, together with the CCO’s written representation that all such 17a-7 transactions were effected in accordance with the Fund’s Rule 17a-7 procedures. Any 17a-7 transactions for the reporting period are disclosed in the “Portfolio Securities” note, below.
The Fund may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. Through the Fund’s investments in the mentioned underlying funds, PGIM Investments and/or its affiliates are paid fees or reimbursed for providing their services. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the reporting period ended April 30, 2019, were $670,845,600 and $911,306,035, respectively.
A summary of the cost of purchases and proceeds from sales of shares of affiliated investments for the reporting period ended April 30, 2019, is presented as follows:
30 |
Value, Beginning of Period | Cost of Purchases | Proceeds from Sales | Change in Unrealized Gain (Loss) | Realized Gain (Loss) | Value, End of Period | Shares, End of Period | Income | |||||||||||||||||||||||
PGIM Core Ultra Short Bond Fund* | ||||||||||||||||||||||||||||||
$ | 55,291,786 | $ | 237,831,451 | $ | 278,553,447 | $ | — | $ | — | $ | 14,569,790 | 14,569,790 | $ | 345,334 | ||||||||||||||||
PGIM Institutional Money Market Fund* | ||||||||||||||||||||||||||||||
108,930,290 | 521,810,544 | 563,945,332 | 21,315 | (17,154 | ) | 66,799,663 | 66,779,629 | 89,867 | ** | |||||||||||||||||||||
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$ | 164,222,076 | $ | 759,641,995 | $ | 842,498,779 | $ | 21,315 | $ | (17,154 | ) | $ | 81,369,453 | $ | 435,201 | ||||||||||||||||
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* | The Fund did not have any capital gain distributions during the reporting period. |
** | This amount is included in “Income from securities lending, net” on the Statement of Operations. |
For the reporting period ended April 30, 2019, no 17a-7 transactions were entered into by the Fund.
5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of April 30, 2019 were as follows:
Tax Basis | $ | 1,304,979,018 | ||
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| |||
Gross Unrealized Appreciation | 230,602,835 | |||
Gross Unrealized Depreciation | (27,519,423 | ) | ||
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Net Unrealized Appreciation | $ | 203,083,412 | ||
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The book basis may differ from tax basis due to certain tax-related adjustments.
The Manager has analyzed the Fund’s tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Fund’s financial statements for the current reporting period. The Fund’s federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
6. Capital and Ownership
The Fund offers Class A, Class B, Class C, Class R, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B
PGIM Jennison Equity Income Fund | 31 |
Notes to Financial Statements(unaudited) (continued)
shares will automatically convert to Class A shares on a monthly basis approximately seven years after purchase. Class B shares are closed to new purchases. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class C shares will automatically convert to Class A shares on a monthly basis approximately 10 years after purchase. Class R, Class Z and Class R6 shares are not subject to any sales or redemption charge and are available exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund as presented in the table of transactions in shares of common stock.
The authorized capital stock of the Company is 5.5 billion shares, with a par value of $0.001 per share. Of the Company’s authorized capital stock, 2.770 billion authorized shares have been allocated to the Fund and divided into seven classes, designated Class A, Class B, Class C, Class R, Class Z, Class T and Class R6 common stock, each of which consists of 400 million, 20 million, 300 million, 75 million, 1,250 million, 650 million and 75 million authorized shares, respectively. The Fund currently does not have any Class T shares outstanding.
At reporting period end, eight shareholders of record, each holding greater than 5% of the Fund, held 67% of the Fund’s outstanding shares.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 1,331,264 | $ | 18,187,842 | |||||
Shares issued in reinvestment of dividends and distributions | 6,898,429 | 83,063,562 | ||||||
Shares reacquired | (5,779,748 | ) | (79,817,095 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 2,449,945 | 21,434,309 | ||||||
Shares issued upon conversion from other share class(es) | 3,772,214 | 53,529,085 | ||||||
Shares reacquired upon conversion into other share class(es) | (249,257 | ) | (3,624,568 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 5,972,902 | $ | 71,338,826 | |||||
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Year ended October 31, 2018: | ||||||||
Shares sold | 1,391,935 | $ | 23,564,904 | |||||
Shares issued in reinvestment of dividends and distributions | 2,135,094 | 35,824,946 | ||||||
Shares reacquired | (8,004,478 | ) | (135,037,083 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (4,477,449 | ) | (75,647,233 | ) | ||||
Shares issued upon conversion from other share class(es) | 1,507,745 | 25,810,965 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,787,241 | ) | (30,332,570 | ) | ||||
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Net increase (decrease) in shares outstanding | (4,756,945 | ) | $ | (80,168,838 | ) | |||
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32 |
Class B | Shares | Amount | ||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 93,396 | $ | 1,038,560 | |||||
Shares issued in reinvestment of dividends and distributions | 550,275 | 5,984,830 | ||||||
Shares reacquired | (589,293 | ) | (7,380,247 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 54,378 | (356,857 | ) | |||||
Shares reacquired upon conversion into other share class(es) | (693,298 | ) | (9,077,490 | ) | ||||
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Net increase (decrease) in shares outstanding | (638,920 | ) | $ | (9,434,347 | ) | |||
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Year ended October 31, 2018: | ||||||||
Shares sold | 53,945 | $ | 838,977 | |||||
Shares issued in reinvestment of dividends and distributions | 209,850 | 3,242,469 | ||||||
Shares reacquired | (1,252,953 | ) | (19,510,599 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (989,158 | ) | (15,429,153 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (1,263,055 | ) | (20,005,435 | ) | ||||
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Net increase (decrease) in shares outstanding | (2,252,213 | ) | $ | (35,434,588 | ) | |||
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Class C | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 1,250,713 | $ | 14,472,708 | |||||
Shares issued in reinvestment of dividends and distributions | 6,474,780 | 70,188,833 | ||||||
Shares reacquired | (7,187,031 | ) | (88,963,015 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 538,462 | (4,301,474 | ) | |||||
Shares reacquired upon conversion into other share class(es) | (4,028,496 | ) | (51,584,028 | ) | ||||
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Net increase (decrease) in shares outstanding | (3,490,034 | ) | $ | (55,885,502 | ) | |||
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Year ended October 31, 2018: | ||||||||
Shares sold | 880,850 | $ | 13,666,684 | |||||
Shares issued in reinvestment of dividends and distributions | 1,963,882 | 30,299,159 | ||||||
Shares reacquired | (9,089,353 | ) | (140,986,551 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (6,244,621 | ) | (97,020,708 | ) | ||||
Shares issued upon conversion from other share class(es) | 1,386 | 21,965 | ||||||
Shares reacquired upon conversion into other share class(es) | (2,337,504 | ) | (36,380,958 | ) | ||||
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Net increase (decrease) in shares outstanding | (8,580,739 | ) | $ | (133,379,701 | ) | |||
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Class R | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 43,232 | $ | 597,199 | |||||
Shares issued in reinvestment of dividends and distributions | 352,946 | 4,247,569 | ||||||
Shares reacquired | (208,113 | ) | (2,981,547 | ) | ||||
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Net increase (decrease) in shares outstanding | 188,065 | $ | 1,863,221 | |||||
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Year ended October 31, 2018: | ||||||||
Shares sold | 104,615 | $ | 1,767,710 | |||||
Shares issued in reinvestment of dividends and distributions | 114,609 | 1,923,221 | ||||||
Shares reacquired | (682,134 | ) | (11,561,794 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (462,910 | ) | (7,870,863 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (861 | ) | (14,245 | ) | ||||
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Net increase (decrease) in shares outstanding | (463,771 | ) | $ | (7,885,108 | ) | |||
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PGIM Jennison Equity Income Fund | 33 |
Notes to Financial Statements(unaudited) (continued)
Class Z | Shares | Amount | ||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 1,504,558 | $ | 19,261,097 | |||||
Shares issued in reinvestment of dividends and distributions | 4,552,079 | 54,753,346 | ||||||
Shares reacquired | (8,448,859 | ) | (115,147,037 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (2,392,222 | ) | (41,132,594 | ) | ||||
Shares issued upon conversion from other share class(es) | 869,652 | 12,650,330 | ||||||
Shares reacquired upon conversion into other share class(es) | (142,913 | ) | (2,055,090 | ) | ||||
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Net increase (decrease) in shares outstanding | (1,665,483 | ) | $ | (30,537,354 | ) | |||
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Year ended October 31, 2018: | ||||||||
Shares sold | 1,187,630 | $ | 19,983,469 | |||||
Shares issued in reinvestment of dividends and distributions | 1,514,288 | 25,384,558 | ||||||
Shares reacquired | (11,978,925 | ) | (202,379,402 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (9,277,007 | ) | (157,011,375 | ) | ||||
Shares issued upon conversion from other share class(es) | 3,827,286 | 64,837,972 | ||||||
Shares reacquired upon conversion into other share class(es) | (371,625 | ) | (6,243,532 | ) | ||||
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Net increase (decrease) in shares outstanding | (5,821,346 | ) | $ | (98,416,935 | ) | |||
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Class R6 | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 23,988 | $ | 341,318 | |||||
Shares issued in reinvestment of dividends and distributions | 49,577 | 597,661 | ||||||
Shares reacquired | (73,333 | ) | (995,247 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 232 | (56,268 | ) | |||||
Shares issued upon conversion from other share class(es) | 11,895 | 161,761 | ||||||
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Net increase (decrease) in shares outstanding | 12,127 | $ | 105,493 | |||||
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Year ended October 31, 2018: | ||||||||
Shares sold | 26,767 | $ | 452,919 | |||||
Shares issued in reinvestment of dividends and distributions | 12,337 | 207,864 | ||||||
Shares reacquired | (108,238 | ) | (1,824,844 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (69,134 | ) | (1,164,061 | ) | ||||
Shares issued upon conversion from other share class(es) | 137,073 | 2,305,838 | ||||||
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Net increase (decrease) in shares outstanding | 67,939 | $ | 1,141,777 | |||||
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7. Borrowings
The Company, on behalf of the Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 4, 2018 through October 3, 2019. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
34 |
Certain affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.
The Fund did not utilize the SCA during the reporting period ended April 30, 2019.
8. Risks of Investing in the Fund
The Fund’s risks include, but are not limited to, some or all of the risks discussed below:
Equity and Equity-Related Securities Risks:The value of a particular security could go down and you could lose money. In addition to an individual security losing value, the value of the equity markets or a sector in which the Fund invests could go down. The Fund’s holdings can vary significantly from broad market indexes and the performance of the Fund can deviate from the performance of these indexes. Different parts of a market can react differently to adverse issuer, market, regulatory, political and economic developments.
Foreign Securities Risk:The Fund’s investments in securities of foreign issuers or issuers with significant exposure to foreign markets involve additional risk. Foreign countries in which the Fund may invest may have markets that are less liquid, less regulated and more volatile than US markets. The value of the Fund’s investments may decline because of factors affecting the particular issuer as well as foreign markets and issuers generally, such as unfavorable government actions, and political or financial instability.
Market and Credit Risk:Securities markets may be volatile and the market prices of the Fund’s securities may decline. Securities fluctuate in price based on changes in an issuer’s financial condition and overall market and economic conditions. If the market prices of the securities owned by the Fund fall, the value of an investment in the Fund will decline. Additionally, the Fund may also be exposed to credit risk in the event that an issuer or guarantor fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
Risks of Investing in equity REITs:Real estate securities are subject to similar risks as direct investments in real estate and mortgages, and their value will depend on the value of the underlying properties or the underlying loans or interests. The underlying loans may be subject to the risks of default or of payments that occur earlier or later than expected, and such loans may also include so-called “subprime” mortgages. The value of these securities will rise and fall in response to many factors, including economic conditions, the demand for rental property and interest rates. In particular, the value of these securities may decline
PGIM Jennison Equity Income Fund | 35 |
Notes to Financial Statements(unaudited) (continued)
when interest rates rise and will also be affected by the real estate market and by the management of the underlying properties.
In addition, investing in equity REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the equity REITs, while mortgage REITs may be affected by the quality of any credit extended. Equity REITs are dependent upon management skills, may not be diversified geographically or by property/mortgage asset type, and are subject to heavy cash flow dependency, default by borrowers and self-liquidation. Since equity REITs are relatively smaller in size when compared to the broader market, and smaller companies tend to be more volatile than larger companies, they may be more volatile and/or more illiquid than other types of equity securities. Equity REITs are subject to interest rate risks. Equity REITs may incur significant amounts of leverage. The Fund will indirectly bear a portion of the expenses, including management fees, paid by each equity REIT in which it invests, in addition to the expenses of the Fund.
9. Recent Accounting Pronouncements and Reporting Updates
In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-13, which changes certain fair value measurement disclosure requirements. The new ASU, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the Fund’s policy for the timing of transfers between levels. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Manager has evaluated the implications of certain provisions of the ASU and has determined to early adopt aspects related to the removal and modification of certain fair value measurement disclosures under the ASU effective immediately. At this time, the Manager is evaluating the implications of certain other provisions of the ASU related to new disclosure requirements and any impact on the financial statement disclosures has not yet been determined.
36 |
Financial Highlights(unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months 2019 | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.18 | $16.75 | $14.68 | $16.59 | $17.88 | $16.84 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.15 | 0.44 | 0.34 | 0.42 | 0.40 | 0.70 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.60 | (0.01 | ) | 2.11 | (0.66 | ) | (0.65 | ) | 1.77 | |||||||||||||||||||
Total from investment operations | 0.75 | 0.43 | 2.45 | (0.24 | ) | (0.25 | ) | 2.47 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.17 | ) | (0.43 | ) | (0.38 | ) | (0.44 | ) | (0.34 | ) | (0.70 | ) | ||||||||||||||||
Distributions from net realized gains | (2.35 | ) | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | |||||||||||||||||
Total dividends and distributions | (2.52 | ) | (1.00 | ) | (0.38 | ) | (1.67 | ) | (1.04 | ) | (1.43 | ) | ||||||||||||||||
Net asset value, end of period | $14.41 | $16.18 | $16.75 | $14.68 | $16.59 | $17.88 | ||||||||||||||||||||||
Total Return(b): | 7.84% | 2.45% | 16.88% | (1.00)% | (1.53)% | 15.36% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $603 | $580 | $680 | $1,048 | $1,585 | $1,752 | ||||||||||||||||||||||
Average net assets (in millions) | $556 | $648 | $809 | $1,253 | $1,745 | $1,807 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.16% | (e) | 1.15% | 1.14% | 1.16% | 1.13% | 1.13% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.21% | (e) | 1.20% | 1.19% | 1.21% | 1.18% | 1.18% | |||||||||||||||||||||
Net investment income (loss) | 2.10% | (e) | 2.58% | 2.18% | 2.84% | 2.31% | 4.04% | |||||||||||||||||||||
Portfolio turnover rate(f) | 46% | 88% | 75% | 48% | 76% | 57% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 37 |
Financial Highlights(unaudited) (continued)
Class B Shares | ||||||||||||||||||||||||||||
Six Months 2019 | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $14.89 | $15.49 | $13.61 | $15.51 | $16.79 | $15.90 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.09 | 0.27 | 0.21 | 0.28 | 0.25 | 0.53 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.51 | 0.01 | 1.95 | (0.61 | ) | (0.61 | ) | 1.67 | ||||||||||||||||||||
Total from investment operations | 0.60 | 0.28 | 2.16 | (0.33 | ) | (0.36 | ) | 2.20 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.12 | ) | (0.31 | ) | (0.28 | ) | (0.34 | ) | (0.22 | ) | (0.58 | ) | ||||||||||||||||
Distributions from net realized gains | (2.35 | ) | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | |||||||||||||||||
Total dividends and distributions | (2.47 | ) | (0.88 | ) | (0.28 | ) | (1.57 | ) | (0.92 | ) | (1.31 | ) | ||||||||||||||||
Net asset value, end of period | $13.02 | $14.89 | $15.49 | $13.61 | $15.51 | $16.79 | ||||||||||||||||||||||
Total Return(b): | 7.38% | 1.68% | 15.98% | (1.73)% | (2.28)% | 14.52% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $34 | $48 | $85 | $111 | $147 | $174 | ||||||||||||||||||||||
Average net assets (in millions) | $40 | $66 | $100 | $126 | $165 | $172 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.02% | (e) | 1.95% | 1.89% | 1.91% | 1.88% | 1.88% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.02% | (e) | 1.95% | 1.89% | 1.91% | 1.88% | 1.88% | |||||||||||||||||||||
Net investment income (loss) | 1.34% | (e) | 1.70% | 1.45% | 2.04% | 1.56% | 3.25% | |||||||||||||||||||||
Portfolio turnover rate(f) | 46% | 88% | 75% | 48% | 76% | 57% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
38 |
Class C Shares | ||||||||||||||||||||||||||||
Six Months 2019 | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $14.84 | $15.45 | $13.57 | $15.47 | $16.75 | $15.87 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.09 | 0.29 | 0.21 | 0.28 | 0.25 | 0.51 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.52 | - | (b) | 1.95 | (0.61 | ) | (0.61 | ) | 1.68 | |||||||||||||||||||
Total from investment operations | 0.61 | 0.29 | 2.16 | (0.33 | ) | (0.36 | ) | 2.19 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.13 | ) | (0.33 | ) | (0.28 | ) | (0.34 | ) | (0.22 | ) | (0.58 | ) | ||||||||||||||||
Distributions from net realized gains | (2.35 | ) | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | |||||||||||||||||
Total dividends and distributions | (2.48 | ) | (0.90 | ) | (0.28 | ) | (1.57 | ) | (0.92 | ) | (1.31 | ) | ||||||||||||||||
Net asset value, end of period | $12.97 | $14.84 | $15.45 | $13.57 | $15.47 | $16.75 | ||||||||||||||||||||||
Total Return(c): | 7.46% | 1.70% | 16.03% | (1.73)% | (2.29)% | 14.48% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $396 | $505 | $658 | $923 | $1,285 | $1,302 | ||||||||||||||||||||||
Average net assets (in millions) | $449 | $597 | $786 | $1,075 | $1,353 | $1,196 | ||||||||||||||||||||||
Ratios to average net assets(d)(e): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.88% | (f) | 1.87% | 1.89% | 1.91% | 1.88% | 1.88% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.88% | (f) | 1.87% | 1.89% | 1.91% | 1.88% | 1.88% | |||||||||||||||||||||
Net investment income (loss) | 1.46% | (f) | 1.84% | 1.45% | 2.06% | 1.56% | 3.16% | |||||||||||||||||||||
Portfolio turnover rate(g) | 46% | 88% | 75% | 48% | 76% | 57% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Less than $0.005 per share. |
(c) | Total return does not consider the effects of sales loads. 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(e) | Does not include expenses of the underlying funds in which the Fund invests. |
(f) | Annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 39 |
Financial Highlights(unaudited) (continued)
Class R Shares | ||||||||||||||||||||||||||||
Six Months 2019 | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.18 | $16.75 | $14.68 | $16.58 | $17.88 | $16.84 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.13 | 0.38 | 0.31 | 0.37 | 0.36 | 0.59 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.60 | - | (b) | 2.10 | (0.64 | ) | (0.67 | ) | 1.84 | |||||||||||||||||||
Total from investment operations | 0.73 | 0.38 | 2.41 | (0.27 | ) | (0.31 | ) | 2.43 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.15 | ) | (0.38 | ) | (0.34 | ) | (0.40 | ) | (0.29 | ) | (0.66 | ) | ||||||||||||||||
Distributions from net realized gains | (2.35 | ) | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | |||||||||||||||||
Total dividends and distributions | (2.50 | ) | (0.95 | ) | (0.34 | ) | (1.63 | ) | (0.99 | ) | (1.39 | ) | ||||||||||||||||
Net asset value, end of period | $14.41 | $16.18 | $16.75 | $14.68 | $16.58 | $17.88 | ||||||||||||||||||||||
Total Return(c): | 7.65% | 2.12% | 16.59% | (1.19)% | (1.83)% | 15.08% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $28 | $28 | $37 | $40 | $44 | $40 | ||||||||||||||||||||||
Average net assets (in millions) | $27 | $33 | $40 | $42 | $45 | $33 | ||||||||||||||||||||||
Ratios to average net assets(d)(e): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.50% | (f) | 1.48% | 1.39% | 1.41% | 1.38% | 1.38% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.75% | (f) | 1.73% | 1.64% | 1.66% | 1.63% | 1.63% | |||||||||||||||||||||
Net investment income (loss) | 1.80% | (f) | 2.24% | 1.95% | 2.48% | 2.07% | 3.40% | |||||||||||||||||||||
Portfolio turnover rate(g) | 46% | 88% | 75% | 48% | 76% | 57% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Less than $0.005 per share. |
(c) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(e) | Does not include expenses of the underlying funds in which the Fund invests. |
(f) | Annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
40 |
Class Z Shares | ||||||||||||||||||||||||||||
Six Months 2019 | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.18 | $16.74 | $14.67 | $16.58 | $17.88 | $16.84 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.17 | 0.48 | 0.38 | 0.46 | 0.44 | 0.69 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.59 | 0.01 | 2.11 | (0.66 | ) | (0.66 | ) | 1.82 | ||||||||||||||||||||
Total from investment operations | 0.76 | 0.49 | 2.49 | (0.20 | ) | (0.22 | ) | 2.51 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.48 | ) | (0.42 | ) | (0.48 | ) | (0.38 | ) | (0.74 | ) | ||||||||||||||||
Distributions from net realized gains | (2.35 | ) | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | |||||||||||||||||
Total dividends and distributions | (2.54 | ) | (1.05 | ) | (0.42 | ) | (1.71 | ) | (1.08 | ) | (1.47 | ) | ||||||||||||||||
Net asset value, end of period | $14.40 | $16.18 | $16.74 | $14.67 | $16.58 | $17.88 | ||||||||||||||||||||||
Total Return(b): | 7.93% | 2.79% | 17.18% | (0.75)% | (1.33)% | 15.65% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $379 | $452 | $566 | $1,229 | $1,628 | $1,778 | ||||||||||||||||||||||
Average net assets (in millions) | $396 | $507 | $861 | $1,338 | $1,780 | $1,457 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.89% | (e) | 0.88% | 0.90% | 0.91% | 0.88% | 0.88% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.89% | (e) | 0.88% | 0.90% | 0.91% | 0.88% | 0.88% | |||||||||||||||||||||
Net investment income (loss) | 2.40% | (e) | 2.82% | 2.46% | 3.08% | 2.56% | 4.00% | |||||||||||||||||||||
Portfolio turnover rate(f) | 46% | 88% | 75% | �� | 48% | 76% | 57% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 41 |
Financial Highlights(unaudited) (continued)
Class R6 Shares | ||||||||||||||||||||||||||||
Six Months 2019 | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.20 | $16.77 | $14.69 | $16.60 | $17.90 | $16.85 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.18 | 0.52 | 0.42 | 0.51 | 0.47 | 0.74 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.60 | (0.03 | ) | 2.09 | (0.69 | ) | (0.67 | ) | 1.80 | |||||||||||||||||||
Total from investment operations | 0.78 | 0.49 | 2.51 | (0.18 | ) | (0.20 | ) | 2.54 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.20 | ) | (0.49 | ) | (0.43 | ) | (0.50 | ) | (0.40 | ) | (0.76 | ) | ||||||||||||||||
Distributions from net realized gains | (2.35 | ) | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | |||||||||||||||||
Total dividends and distributions | (2.55 | ) | (1.06 | ) | (0.43 | ) | (1.73 | ) | (1.10 | ) | (1.49 | ) | ||||||||||||||||
Net asset value, end of period | $14.43 | $16.20 | $16.77 | $14.69 | $16.60 | $17.90 | ||||||||||||||||||||||
Total Return(b): | 8.03% | 2.81% | 17.32% | (0.62)% | (1.23)% | 15.81% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $4 | $4 | $3 | $8 | $27 | $6 | ||||||||||||||||||||||
Average net assets (in millions) | $4 | $4 | $4 | $20 | $16 | $3 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.80% | (e) | 0.80% | 0.80% | 0.79% | 0.78% | 0.78% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.17% | (e) | 1.19% | 0.80% | 0.79% | 0.78% | 0.78% | |||||||||||||||||||||
Net investment income (loss) | 2.47% | (e) | 3.08% | 2.68% | 3.43% | 2.77% | 4.30% | |||||||||||||||||||||
Portfolio turnover rate(f) | 46% | 88% | 75% | 48% | 76% | 57% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
42 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling(800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding• Kevin J. Bannon• Scott E. Benjamin• Linda W. Bynoe• Barry H. Evans• Keith F. Hartstein• Laurie Simon Hodrick• Michael S. Hyland• Stuart S. Parker• Brian K. Reid • Grace C. Torres |
OFFICERS |
Stuart S. Parker,President•Scott E. Benjamin,Vice President•Christian J. Kelly, Treasurer and Principal Financial and Accounting Officer• Raymond A. O’Hara,Chief Legal Officer • Chad A. Earnst,Chief Compliance Officer • Dino Capasso,Deputy Chief Compliance Officer • Andrew R. French,Secretary• Jonathan D. Shain,Assistant Secretary• Claudia DiGiacomo,Assistant Secretary •Diana N. Huffman,Assistant Secretary • Peter Parrella,Assistant Treasurer• Lana Lomuti,Assistant Treasurer• Linda McMullin,Assistant Treasurer• Kelly A. Coyne,Assistant Treasurer • Charles H. Smith,Anti-Money Laundering Compliance Officer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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SUBADVISER | Jennison Associates LLC | 466 Lexington Avenue New York, NY 10017 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 240 Greenwich Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain the prospectus and summary prospectus by visiting our website atpgiminvestments.com or by calling(800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go topgiminvestments.com/edeliveryand enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time byvisiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM Jennison Equity Income Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Fund’s Form N-PORT filings are available on the Commission’s website at sec.gov. Form N-PORT is filed with the Commission quarterly, and each Fund’s full portfolio holdings as of the first and third fiscal quarter-ends will be made publicly available 60 days after the end of each quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A��DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PGIM JENNISON EQUITY INCOME FUND
SHARE CLASS | A | B | C | R | Z | R6 | ||||||
NASDAQ | SPQAX | JEIBX | AGOCX | PJERX | JDEZX | PJIQX | ||||||
CUSIP | 74441L808 | 74441L881 | 74441L873 | 74441L790 | 74441L832 | 74441L816 |
MF203E2
PGIM QMA MID-CAP VALUE FUND
SEMIANNUAL REPORT
APRIL 30, 2019
COMING SOON: PAPERLESS SHAREHOLDER REPORTS
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semiannual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (pgiminvestments.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-225-1852 or by sending an email request to PGIM Investments at shareholderreports@pgim.com.
You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary or follow instructions included with this notice to elect to continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 1-800-225-1852 or send an email request to shareholderreports@pgim.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Fund.
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective:Long-term growth of capital |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.
The accompanying financial statements as of April 30, 2019 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company, member SIPC. QMA is the primary business name of QMA LLC, a wholly owned subsidiary of PGIM, Inc. (PGIM), a Prudential Financial company.© 2019 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
2 | Visit our website at pgiminvestments.com |
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11 |
PGIM QMA Mid-Cap Value Fund | 3 |
This Page Intentionally Left Blank
Dear Shareholder:
We hope you find the semiannual report for PGIM QMA Mid-Cap Value Fund informative and useful. The report covers performance for thesix-month period ended April 30, 2019.
Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.
Thank you for choosing our family of funds.
Sincerely,
Stuart S. Parker, President
PGIM QMA Mid-Cap Value Fund
June 14, 2019
PGIM QMA Mid-Cap Value Fund | 5 |
Your Fund’s Performance(unaudited)
Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website atpgiminvestments.com or by calling(800) 225-1852.
Total Returns as of 4/30/19 | Average Annual Total Returns as of 4/30/19 (with sales charges) | |||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Ten Years (%) | Since Inception (%) | ||||||
Class A | 3.55 | –8.03 | 4.13 | 12.67 | — | |||||
Class B | 3.09 | –7.75 | 4.36 | 12.47 | — | |||||
Class C | 3.17 | –4.19 | 4.53 | 12.46 | — | |||||
Class R | 3.38 | –2.97 | N/A | N/A | 3.68 (12/22/14) | |||||
Class Z | 3.70 | –2.42 | 5.58 | 13.61 | — | |||||
Class R2 | 3.51 | –2.73 | N/A | N/A | –5.58 (12/28/17) | |||||
Class R4 | 3.68 | –2.46 | N/A | N/A | –5.33 (12/28/17) | |||||
Class R6 | 3.77 | –2.23 | 5.73 | N/A | 9.57 (1/18/11) | |||||
Russell Midcap Value Index | ||||||||||
8.28 | 5.76 | 7.83 | 14.98 | — | ||||||
S&P MidCap 400 Index | ||||||||||
8.91 | 6.99 | 9.49 | 15.13 | — | ||||||
Russell Midcap Index | ||||||||||
11.65 | 10.69 | 9.75 | 15.65 | — | ||||||
Lipper Mid-Cap Value Funds Average | ||||||||||
6.99 | 2.28 | 6.03 | 13.12 | — |
Source: PGIM Investments LLC and Lipper Inc.
*Not annualized
Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Indexes and the Lipper Average are measured from the closest month-end to the class’ inception date.
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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B* | Class C | Class R | Class Z | Class R2 | Class R4 | Class R6 | |||||||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | None | None | None | None | ||||||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 5.00% (Yr. 1) 4.00% (Yr. 2) 3.00% (Yr. 3) 2.00% (Yr. 4) 1.00% (Yr. 5) 1.00% (Yr. 6) 0.00% (Yr. 7) | 1.00% on sales made within 12 months of purchase | None | None | None | None | None | ||||||||
Annual distribution or distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.30% (0.25% currently) | 1.00% | 1.00% | 0.75% currently) | None | 0.25% | None | None | ||||||||
Shareholder service fees | None | None | None | None | None | 0.10% | 0.10% | None |
*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.
Benchmark Definitions
Russell Midcap Value Index—The Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks included in the Index are also members of the Russell 1000 Value Index. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R shares are 7.02%, 2.71% for Class R2 and Class R4 shares, and 10.91% for Class R6 shares.
PGIM QMA Mid-Cap Value Fund | 7 |
Your Fund’s Performance(continued)
S&P MidCap 400 Index—The S&P MidCap 400 Index is an unmanaged index of 400 domestic stocks chosen for market capitalization, liquidity, and industry group representation. It gives a broad look at how US mid-cap stock prices have performed. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R shares is 9.02%, 4.39% for Class R2 and Class R4 shares, and 11.30% for Class R6 shares.
Russell Midcap Index—The Russell Midcap Index is an unmanaged index that measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R shares is 8.91%, 7.42% for Class R2 and Class R4 shares, and 11.73% for Class R6 shares.
Lipper Mid-Cap Value Funds Average—The Lipper Mid-Cap Value Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Mid-Cap Value Funds universe for the periods noted. Funds in the Lipper Average, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Mid-cap value funds typically have a below-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value compared with the companies in the S&P MidCap 400 Index. The average annual total returns for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class R shares is 5.46%, 0.27% for Class R2 and Class R4 shares, and 9.13% for Class R6 shares.
Investors cannot invest directly in an index or average. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Presentation of Fund Holdings
Five Largest Holdings expressed as a percentage of net assets as of 4/30/19 (%) | ||||
PACCAR, Inc.,Machinery | 1.3 | |||
Tyson Foods, Inc. (Class A Stock),FoodProducts | 1.3 | |||
Fifth Third Bancorp,Banks | 1.3 | |||
United Continental Holdings, Inc.,Airlines | 1.3 | |||
PPL Corp.,ElectricUtilities | 1.3 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/19 (%) | ||||
Equity Real Estate Investment Trusts (REITs) | 8.7 | |||
Banks | 8.7 | |||
Oil, Gas & Consumable Fuels | 7.8 | |||
Insurance | 7.5 | |||
Household Durables | 4.8 |
Industry weightings reflect only long-term investments and are subject to change.
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As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2019. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period
PGIM QMA Mid-Cap Value Fund | 9 |
Fees and Expenses(continued)
and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
PGIM QMA Mid-Cap Value Fund | Beginning Account Value November 1, 2018 | Ending Account Value April 30, 2019 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,035.50 | 1.13 | % | $ | 5.70 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.19 | 1.13 | % | $ | 5.66 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,030.90 | 1.95 | % | $ | 9.82 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.12 | 1.95 | % | $ | 9.74 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,031.70 | 1.94 | % | $ | 9.77 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.17 | 1.94 | % | $ | 9.69 | ||||||||||
Class R | Actual | $ | 1,000.00 | $ | 1,033.80 | 1.45 | % | $ | 7.31 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.60 | 1.45 | % | $ | 7.25 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,037.00 | 0.90 | % | $ | 4.55 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.33 | 0.90 | % | $ | 4.51 | ||||||||||
Class R2 | Actual | $ | 1,000.00 | $ | 1,035.10 | 1.23 | % | $ | 6.21 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.70 | 1.23 | % | $ | 6.16 | ||||||||||
Class R4 | Actual | $ | 1,000.00 | $ | 1,036.80 | 0.98 | % | $ | 4.95 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.93 | 0.98 | % | $ | 4.91 | ||||||||||
Class R6 | Actual | $ | 1,000.00 | $ | 1,037.70 | 0.73 | % | $ | 3.69 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,021.17 | 0.73 | % | $ | 3.66 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2019, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2019 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
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Schedule of Investments(unaudited)
as of April 30, 2019
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 99.9% | ||||||||
COMMON STOCKS 99.5% | ||||||||
Airlines 2.5% | ||||||||
Alaska Air Group, Inc. | 30,300 | $ | 1,875,570 | |||||
JetBlue Airways Corp.* | 364,745 | 6,766,020 | ||||||
United Continental Holdings, Inc.* | 104,800 | 9,312,528 | ||||||
|
| |||||||
17,954,118 | ||||||||
Auto Components 3.0% | ||||||||
Adient PLC | 204,272 | 4,718,683 | ||||||
BorgWarner, Inc. | 139,200 | 5,814,384 | ||||||
Goodyear Tire & Rubber Co. (The) | 305,600 | 5,870,576 | ||||||
Lear Corp. | 37,600 | 5,376,800 | ||||||
|
| |||||||
21,780,443 | ||||||||
Banks 8.7% | ||||||||
Associated Banc-Corp. | 30,200 | 685,238 | ||||||
BankUnited, Inc. | 29,400 | 1,075,452 | ||||||
CIT Group, Inc. | 7,600 | 404,852 | ||||||
Citizens Financial Group, Inc. | 233,900 | 8,467,180 | ||||||
Fifth Third Bancorp | 324,433 | 9,350,159 | ||||||
Huntington Bancshares, Inc. | 353,300 | 4,917,936 | ||||||
KeyCorp | 492,900 | 8,650,395 | ||||||
M&T Bank Corp. | 36,100 | 6,139,527 | ||||||
PacWest Bancorp | 87,000 | 3,440,850 | ||||||
People’s United Financial, Inc. | 117,100 | 2,024,659 | ||||||
Popular, Inc. (Puerto Rico) | 31,700 | 1,829,407 | ||||||
Regions Financial Corp. | 531,500 | 8,254,195 | ||||||
Zions Bancorp NA(a) | 146,000 | 7,202,180 | ||||||
|
| |||||||
62,442,030 | ||||||||
Beverages 1.1% | ||||||||
Molson Coors Brewing Co. (Class B Stock) | 118,600 | 7,612,934 | ||||||
Building Products 0.9% | ||||||||
Owens Corning | 125,900 | 6,454,893 | ||||||
Capital Markets 1.1% | ||||||||
Franklin Resources, Inc. | 19,000 | 657,210 | ||||||
Invesco Ltd. | 327,700 | 7,199,569 | ||||||
|
| |||||||
7,856,779 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 11 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Chemicals 2.5% |
| |||||||
Eastman Chemical Co. | 75,200 | $ | 5,931,776 | |||||
Mosaic Co. (The) | 250,200 | 6,532,722 | ||||||
Olin Corp. | 86,000 | 1,865,340 | ||||||
Westlake Chemical Corp. | 51,600 | 3,599,100 | ||||||
|
| |||||||
17,928,938 | ||||||||
Commercial Services & Supplies 0.3% | ||||||||
ADT, Inc.(a) | 286,477 | 1,887,884 | ||||||
Construction & Engineering 0.9% | ||||||||
AECOM*(a) | 198,166 | 6,717,827 | ||||||
Consumer Finance 4.2% | ||||||||
Ally Financial, Inc. | 256,959 | 7,634,252 | ||||||
Discover Financial Services | 33,500 | 2,729,915 | ||||||
Navient Corp. | 266,900 | 3,605,819 | ||||||
OneMain Holdings, Inc. | 66,100 | 2,245,417 | ||||||
Santander Consumer USA Holdings, Inc.(a) | 274,781 | 5,866,574 | ||||||
Synchrony Financial | 243,300 | 8,435,211 | ||||||
|
| |||||||
30,517,188 | ||||||||
Containers & Packaging 2.1% | ||||||||
International Paper Co. | 168,800 | 7,901,528 | ||||||
Westrock Co. | 182,400 | 7,000,512 | ||||||
|
| |||||||
14,902,040 | ||||||||
Diversified Financial Services 1.7% | ||||||||
AXA Equitable Holdings, Inc. | 219,000 | 4,969,110 | ||||||
Voya Financial, Inc. | 127,102 | 6,976,629 | ||||||
|
| |||||||
11,945,739 | ||||||||
Diversified Telecommunication Services 0.9% | ||||||||
CenturyLink, Inc.(a) | 587,300 | 6,706,966 | ||||||
Electric Utilities 3.8% | ||||||||
Avangrid, Inc. | 43,500 | 2,227,635 | ||||||
Edison International | 64,900 | 4,138,673 | ||||||
Entergy Corp. | 75,500 | 7,315,950 | ||||||
Evergy, Inc. | 9,500 | 549,290 | ||||||
FirstEnergy Corp. | 35,200 | 1,479,456 |
See Notes to Financial Statements.
12 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Electric Utilities (cont’d.) |
| |||||||
PPL Corp. | 292,000 | $ | 9,113,320 | |||||
Xcel Energy, Inc. | 46,600 | 2,632,900 | ||||||
|
| |||||||
27,457,224 | ||||||||
Electronic Equipment, Instruments & Components 0.1% | ||||||||
Corning, Inc. | 30,000 | 955,500 | ||||||
Entertainment 1.0% | ||||||||
Viacom, Inc. (Class B Stock) | 236,600 | 6,840,106 | ||||||
Equity Real Estate Investment Trusts (REITs) 8.7% | ||||||||
Apple Hospitality REIT, Inc. | 380,400 | 6,257,580 | ||||||
AvalonBay Communities, Inc. | 2,800 | 562,604 | ||||||
Brixmor Property Group, Inc. | 54,382 | 972,350 | ||||||
Colony Capital, Inc. | 661,000 | 3,397,540 | ||||||
Digital Realty Trust, Inc. | 22,400 | 2,636,704 | ||||||
Hospitality Properties Trust | 208,800 | 5,428,800 | ||||||
Kimco Realty Corp. | 264,061 | 4,592,021 | ||||||
Medical Properties Trust, Inc. | 81,969 | 1,431,178 | ||||||
Park Hotels & Resorts, Inc. | 191,000 | 6,127,280 | ||||||
Senior Housing Properties Trust | 657,800 | 5,282,134 | ||||||
SITE Centers Corp. | 389,050 | 5,151,022 | ||||||
SL Green Realty Corp. | 31,400 | 2,773,876 | ||||||
Spirit Realty Capital, Inc. | 126,980 | 5,137,611 | ||||||
Ventas, Inc. | 29,000 | 1,772,190 | ||||||
VEREIT, Inc. | 817,707 | 6,754,260 | ||||||
VICI Properties, Inc. | 183,200 | 4,176,960 | ||||||
|
| |||||||
62,454,110 | ||||||||
Food & Staples Retailing 0.9% | ||||||||
Kroger Co. (The) | 244,100 | 6,292,898 | ||||||
Food Products 2.0% | ||||||||
Archer-Daniels-Midland Co. | 51,300 | 2,287,980 | ||||||
J.M. Smucker Co. (The) | 24,300 | 2,979,909 | ||||||
Tyson Foods, Inc. (Class A Stock) | 125,500 | 9,413,755 | ||||||
|
| |||||||
14,681,644 | ||||||||
Health Care Equipment & Supplies 0.0% | ||||||||
Zimmer Biomet Holdings, Inc. | 1,100 | 135,476 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 13 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Health Care Providers & Services 2.5% |
| |||||||
Acadia Healthcare Co., Inc.*(a) | 140,600 | $ | 4,502,012 | |||||
Cardinal Health, Inc. | 124,100 | 6,044,911 | ||||||
DaVita, Inc.* | 41,900 | 2,314,556 | ||||||
MEDNAX, Inc.* | 136,600 | 3,820,702 | ||||||
Universal Health Services, Inc. (Class B Stock) | 10,100 | 1,281,387 | ||||||
|
| |||||||
17,963,568 | ||||||||
Hotels, Restaurants & Leisure 2.2% | ||||||||
Norwegian Cruise Line Holdings Ltd.* | 115,800 | 6,529,962 | ||||||
Royal Caribbean Cruises Ltd. | 74,700 | 9,034,218 | ||||||
|
| |||||||
15,564,180 | ||||||||
Household Durables 4.8% | ||||||||
Lennar Corp. (Class A Stock) | 131,963 | 6,866,035 | ||||||
Mohawk Industries, Inc.* | 53,439 | 7,281,064 | ||||||
Newell Brands, Inc. | 397,651 | 5,718,221 | ||||||
PulteGroup, Inc. | 211,247 | 6,645,831 | ||||||
Toll Brothers, Inc. | 163,333 | 6,222,987 | ||||||
Whirlpool Corp. | 12,800 | 1,776,896 | ||||||
|
| |||||||
34,511,034 | ||||||||
Insurance 7.5% | ||||||||
American Financial Group, Inc. | 13,400 | 1,387,302 | ||||||
Athene Holding Ltd.* | 37,000 | 1,670,920 | ||||||
CNA Financial Corp. | 128,728 | 5,963,968 | ||||||
Hartford Financial Services Group, Inc. (The) | 130,600 | 6,831,686 | ||||||
Lincoln National Corp. | 120,781 | 8,058,508 | ||||||
Loews Corp. | 89,836 | 4,607,689 | ||||||
Old Republic International Corp. | 164,900 | 3,687,164 | ||||||
Principal Financial Group, Inc. | 144,500 | 8,259,620 | ||||||
Reinsurance Group of America, Inc. | 48,300 | 7,317,933 | ||||||
Unum Group | 165,500 | 6,110,260 | ||||||
|
| |||||||
53,895,050 | ||||||||
Internet & Direct Marketing Retail 0.7% | ||||||||
Qurate Retail, Inc.*(a) | 288,700 | 4,922,335 | ||||||
IT Services 1.1% | ||||||||
DXC Technology Co. | 120,800 | 7,941,392 |
See Notes to Financial Statements.
14 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Machinery 2.1% |
| |||||||
Colfax Corp.* | 4,400 | $ | 132,748 | |||||
Cummins, Inc. | 26,600 | 4,423,314 | ||||||
PACCAR, Inc. | 136,300 | 9,768,621 | ||||||
Trinity Industries, Inc. | 41,900 | 903,364 | ||||||
|
| |||||||
15,228,047 | ||||||||
Media 2.3% | ||||||||
Discovery, Inc. (Class A Stock)* | 52,400 | 1,619,160 | ||||||
Discovery, Inc. (Class C Stock)* | 75,900 | 2,182,884 | ||||||
DISH Network Corp. (Class A Stock)* | 87,100 | 3,058,952 | ||||||
Liberty Media Corp.-Liberty SiriusXM (Class A Stock)* | 82,800 | 3,307,032 | ||||||
Liberty Media Corp.-Liberty SiriusXM (Class C Stock)* | 98,100 | 3,939,696 | ||||||
News Corp. (Class A Stock) | 216,100 | 2,683,962 | ||||||
|
| |||||||
16,791,686 | ||||||||
Metals & Mining 4.7% | ||||||||
Alcoa Corp.* | 200,000 | 5,336,000 | ||||||
Freeport-McMoRan, Inc. | 672,200 | 8,274,782 | ||||||
Newmont Goldcorp Corp. | 12,200 | 378,932 | ||||||
Nucor Corp. | 104,000 | 5,935,280 | ||||||
Reliance Steel & Aluminum Co. | 73,490 | 6,758,141 | ||||||
Steel Dynamics, Inc. | 97,800 | 3,098,304 | ||||||
United States Steel Corp. | 273,100 | 4,260,360 | ||||||
|
| |||||||
34,041,799 | ||||||||
Mortgage Real Estate Investment Trusts (REITs) 4.4% | ||||||||
AGNC Investment Corp. | 386,800 | 6,881,172 | ||||||
Annaly Capital Management, Inc. | 758,824 | 7,656,534 | ||||||
Chimera Investment Corp. | 176,300 | 3,379,671 | ||||||
MFA Financial, Inc. | 533,600 | 4,007,336 | ||||||
New Residential Investment Corp. | 183,800 | 3,089,678 | ||||||
Starwood Property Trust, Inc. | 157,400 | 3,628,070 | ||||||
Two Harbors Investment Corp. | 244,100 | 3,383,226 | ||||||
|
| |||||||
32,025,687 | ||||||||
Multiline Retail 1.6% | ||||||||
Kohl’s Corp. | 70,400 | 5,005,440 | ||||||
Macy’s, Inc.(a) | 262,100 | 6,169,834 | ||||||
|
| |||||||
11,175,274 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 15 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Multi-Utilities 1.7% |
| |||||||
Consolidated Edison, Inc. | 57,833 | $ | 4,982,891 | |||||
Public Service Enterprise Group, Inc. | 53,100 | 3,167,415 | ||||||
Sempra Energy | 30,000 | 3,838,500 | ||||||
|
| |||||||
11,988,806 | ||||||||
Oil, Gas & Consumable Fuels 7.8% | ||||||||
Antero Resources Corp.*(a) | 299,794 | 2,173,507 | ||||||
Apache Corp.(a) | 40,100 | 1,319,691 | ||||||
Centennial Resource Development, Inc. (Class A Stock)* | 147,800 | 1,556,334 | ||||||
Cimarex Energy Co. | 8,500 | 583,610 | ||||||
CNX Resources Corp.* | 106,800 | 956,928 | ||||||
Concho Resources, Inc. | 54,400 | 6,276,672 | ||||||
Devon Energy Corp. | 109,700 | 3,525,758 | ||||||
Diamondback Energy, Inc. | 21,400 | 2,276,746 | ||||||
EQT Corp.(a) | 284,900 | 5,826,205 | ||||||
HollyFrontier Corp. | 126,100 | 6,018,753 | ||||||
Marathon Oil Corp. | 417,400 | 7,112,496 | ||||||
Murphy Oil Corp. | 9,200 | 250,608 | ||||||
Noble Energy, Inc. | 168,000 | 4,546,080 | ||||||
Parsley Energy, Inc. (Class A Stock)* | 261,900 | 5,227,524 | ||||||
Range Resources Corp. | 328,900 | 2,973,256 | ||||||
Whiting Petroleum Corp.*(a) | 148,200 | 4,059,198 | ||||||
Williams Cos., Inc. (The) | 52,600 | 1,490,158 | ||||||
|
| |||||||
56,173,524 | ||||||||
Paper & Forest Products 0.8% | ||||||||
Domtar Corp. | 123,600 | 6,044,040 | ||||||
Pharmaceuticals 1.0% | ||||||||
Mylan NV* | 278,089 | 7,505,622 | ||||||
Real Estate Management & Development 0.5% | ||||||||
Realogy Holdings Corp.(a) | 257,200 | 3,348,744 | ||||||
Road & Rail 1.6% | ||||||||
Knight-Swift Transportation Holdings, Inc.(a) | 171,700 | 5,726,195 | ||||||
Ryder System, Inc. | 97,441 | 6,138,783 | ||||||
|
| |||||||
11,864,978 | ||||||||
Semiconductors & Semiconductor Equipment 0.1% | ||||||||
Analog Devices, Inc. | 6,700 | 778,808 |
See Notes to Financial Statements.
16 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Specialty Retail 1.3% |
| |||||||
AutoNation, Inc.*(a) | 106,500 | $ | 4,465,545 | |||||
Gap, Inc. (The) | 69,300 | 1,807,344 | ||||||
Penske Automotive Group, Inc. | 63,600 | 2,920,512 | ||||||
|
| |||||||
9,193,401 | ||||||||
Technology Hardware, Storage & Peripherals 2.1% | ||||||||
Western Digital Corp. | 159,600 | 8,158,752 | ||||||
Xerox Corp. | 201,200 | 6,712,032 | ||||||
|
| |||||||
14,870,784 | ||||||||
Textiles, Apparel & Luxury Goods 0.7% | ||||||||
PVH Corp. | 30,000 | 3,869,700 | ||||||
Tapestry, Inc. | 42,200 | 1,361,794 | ||||||
|
| |||||||
5,231,494 | ||||||||
Trading Companies & Distributors 1.5% | ||||||||
Air Lease Corp. | 163,700 | 6,312,272 | ||||||
WESCO International, Inc.* | 77,500 | 4,436,100 | ||||||
|
| |||||||
10,748,372 | ||||||||
Transportation Infrastructure 0.1% | ||||||||
Macquarie Infrastructure Corp. | 12,100 | 490,171 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 715,823,533 | |||||||
|
| |||||||
EXCHANGE-TRADED FUND 0.4% |
| |||||||
iShares Russell Mid-Cap Value ETF | 32,359 | 2,902,602 | ||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 718,726,135 | |||||||
|
| |||||||
SHORT-TERM INVESTMENTS 8.0% |
| |||||||
AFFILIATED MUTUAL FUNDS |
| |||||||
PGIM Core Ultra Short Bond Fund(w) | 813 | 813 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 17 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Description | Shares | Value | ||||||
AFFILIATED MUTUAL FUNDS (Continued) | ||||||||
PGIM Institutional Money Market Fund | 57,724,087 | $ | 57,741,404 | |||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS | 57,742,217 | |||||||
|
| |||||||
TOTAL INVESTMENTS 107.9% | 776,468,352 | |||||||
Liabilities in excess of other assets (7.9)% | (56,540,610 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 719,927,742 | ||||||
|
|
Below is a list of the abbreviation(s) used in the semiannual report:
ETF—Exchange-Traded Fund
LIBOR—London Interbank Offered Rate
REIT(s)—Real Estate Investment Trust(s)
* | Non-income producing security. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $55,583,971; cash collateral of $57,603,884 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
(w) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund. |
Fair Value Measurements:
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—unadjusted quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2019 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Airlines | $ | 17,954,118 | $ | — | $ | — | ||||||
Auto Components | 21,780,443 | — | — | |||||||||
Banks | 62,442,030 | — | — | |||||||||
Beverages | 7,612,934 | — | — | |||||||||
Building Products | 6,454,893 | — | — | |||||||||
Capital Markets | 7,856,779 | — | — |
See Notes to Financial Statements.
18 |
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities (continued) | ||||||||||||
Common Stocks (continued) | ||||||||||||
Chemicals | $ | 17,928,938 | $ | — | $ | — | ||||||
Commercial Services & Supplies | 1,887,884 | — | — | |||||||||
Construction & Engineering | 6,717,827 | — | — | |||||||||
Consumer Finance | 30,517,188 | — | — | |||||||||
Containers & Packaging | 14,902,040 | — | — | |||||||||
Diversified Financial Services | 11,945,739 | — | — | |||||||||
Diversified Telecommunication Services | 6,706,966 | — | — | |||||||||
Electric Utilities | 27,457,224 | — | — | |||||||||
Electronic Equipment, Instruments & Components | 955,500 | — | — | |||||||||
Entertainment | 6,840,106 | — | — | |||||||||
Equity Real Estate Investment Trusts (REITs) | 62,454,110 | — | — | |||||||||
Food & Staples Retailing | 6,292,898 | — | — | |||||||||
Food Products | 14,681,644 | — | — | |||||||||
Health Care Equipment & Supplies | 135,476 | — | — | |||||||||
Health Care Providers & Services | 17,963,568 | — | — | |||||||||
Hotels, Restaurants & Leisure | 15,564,180 | — | — | |||||||||
Household Durables | 34,511,034 | — | — | |||||||||
Insurance | 53,895,050 | — | — | |||||||||
Internet & Direct Marketing Retail | 4,922,335 | — | — | |||||||||
IT Services | 7,941,392 | — | — | |||||||||
Machinery | 15,228,047 | — | — | |||||||||
Media | 16,791,686 | — | — | |||||||||
Metals & Mining | 34,041,799 | — | — | |||||||||
Mortgage Real Estate Investment Trusts (REITs) | 32,025,687 | — | — | |||||||||
Multiline Retail | 11,175,274 | — | — | |||||||||
Multi-Utilities | 11,988,806 | — | — | |||||||||
Oil, Gas & Consumable Fuels | 56,173,524 | — | — | |||||||||
Paper & Forest Products | 6,044,040 | — | — | |||||||||
Pharmaceuticals | 7,505,622 | — | — | |||||||||
Real Estate Management & Development | 3,348,744 | — | — | |||||||||
Road & Rail | 11,864,978 | — | — | |||||||||
Semiconductors & Semiconductor Equipment | 778,808 | — | — | |||||||||
Specialty Retail | 9,193,401 | — | — | |||||||||
Technology Hardware, Storage & Peripherals | 14,870,784 | — | — | |||||||||
Textiles, Apparel & Luxury Goods | 5,231,494 | — | — | |||||||||
Trading Companies & Distributors | 10,748,372 | — | — | |||||||||
Transportation Infrastructure | 490,171 | — | — | |||||||||
Exchange-Traded Fund | 2,902,602 | — | — | |||||||||
Affiliated Mutual Funds | 57,742,217 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 776,468,352 | $ | — | $ | — | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 19 |
Schedule of Investments(unaudited) (continued)
as of April 30, 2019
Industry Classification:
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2019 were as follows:
Equity Real Estate Investment Trusts (REITs) | 8.7 | % | ||
Banks | 8.7 | |||
Affiliated Mutual Funds (8.0% represents investments purchased with collateral from securities on loan) | 8.0 | |||
Oil, Gas & Consumable Fuels | 7.8 | |||
Insurance | 7.5 | |||
Household Durables | 4.8 | |||
Metals & Mining | 4.7 | |||
Mortgage Real Estate Investment Trusts (REITs) | 4.4 | |||
Consumer Finance | 4.2 | |||
Electric Utilities | 3.8 | |||
Auto Components | 3.0 | |||
Health Care Providers & Services | 2.5 | |||
Airlines | 2.5 | |||
Chemicals | 2.5 | |||
Media | 2.3 | |||
Hotels, Restaurants & Leisure | 2.2 | |||
Machinery | 2.1 | |||
Containers & Packaging | 2.1 | |||
Technology Hardware, Storage & Peripherals | 2.1 | |||
Food Products | 2.0 | |||
Multi-Utilities | 1.7 | |||
Diversified Financial Services | 1.7 | |||
Road & Rail | 1.6 | |||
Multiline Retail | 1.6 | |||
Trading Companies & Distributors | 1.5 | |||
Specialty Retail | 1.3 | |||
IT Services | 1.1 | % | ||
Capital Markets | 1.1 | |||
Beverages | 1.1 | |||
Pharmaceuticals | 1.0 | |||
Entertainment | 1.0 | |||
Construction & Engineering | 0.9 | |||
Diversified Telecommunication Services | 0.9 | |||
Building Products | 0.9 | |||
Food & Staples Retailing | 0.9 | |||
Paper & Forest Products | 0.8 | |||
Textiles, Apparel & Luxury Goods | 0.7 | |||
Internet & Direct Marketing Retail | 0.7 | |||
Real Estate Management & Development | 0.5 | |||
Exchange-Traded Fund | 0.4 | |||
Commercial Services & Supplies | 0.3 | |||
Electronic Equipment, Instruments & Components | 0.1 | |||
Semiconductors & Semiconductor Equipment | 0.1 | |||
Transportation Infrastructure | 0.1 | |||
Health Care Equipment & Supplies | 0.0 | * | ||
|
| |||
107.9 | ||||
Liabilities in excess of other assets | (7.9 | ) | ||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Fund entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.
Offsetting of financial instrument/transaction assets and liabilities:
Description | Gross Market Value of Recognized Assets/(Liabilities) | Collateral Pledged/(Received)(1) | Net Amount | |||||||||
Securities on Loan | $ | 55,583,971 | $ | (55,583,971 | ) | $ | — | |||||
|
|
See Notes to Financial Statements.
20 |
(1) | Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 21 |
Statement of Assets & Liabilities(unaudited)
as of April 30, 2019
Assets | ||||
Investments at value, including securities on loan of $55,583,971: | ||||
Unaffiliated investments (cost $718,241,793) | $ | 718,726,135 | ||
Affiliated investments (cost $57,734,232) | 57,742,217 | |||
Receivable for investments sold | 14,307,430 | |||
Receivable for Fund shares sold | 1,394,126 | |||
Dividends and interest receivable | 654,905 | |||
Prepaid expenses | 2,460 | |||
|
| |||
Total Assets | 792,827,273 | |||
|
| |||
Liabilities | ||||
Payable to broker for collateral for securities on loan | 57,603,884 | |||
Payable for investments purchased | 11,048,906 | |||
Payable for Fund shares reacquired | 2,923,932 | |||
Accrued expenses and other liabilities | 450,196 | |||
Management fee payable | 388,480 | |||
Loan payable | 376,000 | |||
Distribution fee payable | 68,918 | |||
Affiliated transfer agent fee payable | 39,215 | |||
|
| |||
Total Liabilities | 72,899,531 | |||
|
| |||
Net Assets | $ | 719,927,742 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 38,617 | ||
Paid-in capital in excess of par | 726,623,093 | |||
Total distributable earnings (loss) | (6,733,968 | ) | ||
|
| |||
Net assets, April 30, 2019 | $ | 719,927,742 | ||
|
|
See Notes to Financial Statements.
22 |
Class A | ||||
Net asset value and redemption price per share, | $ | 18.64 | ||
Maximum sales charge (5.50% of offering price) | 1.08 | |||
|
| |||
Maximum offering price to public | $ | 19.72 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share, | $ | 15.76 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | $ | 15.69 | ||
|
| |||
Class R | ||||
Net asset value, offering price and redemption price per share, | $ | 18.81 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | $ | 18.85 | ||
|
| |||
Class R2 | ||||
Net asset value, offering price and redemption price per share, | $ | 18.78 | ||
|
| |||
Class R4 | ||||
Net asset value, offering price and redemption price per share, | $ | 18.80 | ||
|
| |||
Class R6 | ||||
Net asset value, offering price and redemption price per share, | $ | 18.80 | ||
|
|
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 23 |
Statement of Operations(unaudited)
Six Months Ended April 30, 2019
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income (net of $87 foreign withholding tax) | $ | 10,362,944 | ||
Income from securities lending, net (including affiliated income of $35,704) | 50,274 | |||
Affiliated dividend income | 13,517 | |||
|
| |||
Total income | 10,426,735 | |||
|
| |||
Expenses | ||||
Management fee | 2,696,510 | |||
Distribution fee(a) | 503,967 | |||
Shareholder servicing fees(a) | 282 | |||
Transfer agent’s fees and expenses (including affiliated expense of $110,226)(a) | 516,623 | |||
Registration fees(a) | 63,578 | |||
Custodian and accounting fees | 54,722 | |||
Shareholders’ reports | 31,146 | |||
Directors’ fees | 13,612 | |||
Audit fee | 11,926 | |||
Legal fees and expenses | 11,189 | |||
Miscellaneous | 25,422 | |||
|
| |||
Total expenses | 3,928,977 | |||
Less: Fee waiver and/or expense reimbursement(a) | (285,037 | ) | ||
Distribution fee waiver(a) | (51,218 | ) | ||
|
| |||
Net expenses | 3,592,722 | |||
|
| |||
Net investment income (loss) | 6,834,013 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain (loss) on investment transactions (including affiliated of $(3,115)) | (2,864,663 | ) | ||
Net change in unrealized appreciation (depreciation) on investments (including affiliated of $9,186) | 20,312,691 | |||
|
| |||
Net gain (loss) on investment transactions | 17,448,028 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 24,282,041 | ||
|
|
(a) Class specific expenses and waivers were as follows:
Class A | Class B | Class C | Class R | Class Z | Class R2 | Class R4 | Class R6 | |||||||||||||||||||||||||
Distribution fee | 301,563 | 15,667 | 183,806 | 2,872 | — | 59 | — | — | ||||||||||||||||||||||||
Shareholder servicing fees | — | — | — | — | — | 24 | 258 | — | ||||||||||||||||||||||||
Transfer agent’s fees and expenses | 238,410 | 5,836 | 30,463 | 617 | 237,531 | 82 | 80 | 3,604 | ||||||||||||||||||||||||
Registration fees | 9,308 | 7,352 | 7,526 | 8,094 | 8,804 | 7,438 | 7,439 | 7,617 | ||||||||||||||||||||||||
Fee waiver and/or expense reimbursement | (135,663 | ) | (10,338 | ) | (7,241 | ) | (8,019 | ) | (58,705 | ) | (7,493 | ) | (7,265 | ) | (50,313 | ) | ||||||||||||||||
Distribution fee waiver | (50,261 | ) | — | — | (957 | ) | — | — | — | — |
See Notes to Financial Statements.
24 |
Statements of Changes in Net Assets(unaudited)
Six Months Ended | Year Ended October 31, 2018 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 6,834,013 | $ | 13,862,289 | ||||
Net realized gain (loss) on investment transactions | (2,864,663 | ) | 63,682,339 | |||||
Net change in unrealized appreciation (depreciation) on investments | 20,312,691 | (101,360,207 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 24,282,041 | (23,815,579 | ) | |||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Distributions from distributable earnings | ||||||||
Class A | (20,556,703 | ) | (16,797,692 | ) | ||||
Class B | (357,375 | ) | (346,004 | ) | ||||
Class C | (4,461,337 | ) | (3,688,598 | ) | ||||
Class R | (75,386 | ) | (39,342 | ) | ||||
Class Z | (32,423,748 | ) | (27,750,947 | ) | ||||
Class R2 | (4,643 | ) | — | |||||
Class R4 | (883 | ) | — | |||||
Class R6 | (20,361,882 | ) | (11,572,792 | ) | ||||
|
|
|
| |||||
(78,241,957 | ) | (60,195,375 | ) | |||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 78,137,942 | 234,464,958 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 74,409,134 | 56,283,538 | ||||||
Cost of shares reacquired | (188,852,515 | ) | (320,011,962 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Fund share transactions | (36,305,439 | ) | (29,263,466 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | (90,265,355 | ) | (113,274,420 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 810,193,097 | 923,467,517 | ||||||
|
|
|
| |||||
End of period | $ | 719,927,742 | $ | 810,193,097 | ||||
|
|
|
|
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 25 |
Notes to Financial Statements(unaudited)
Prudential Investment Portfolios, Inc. 10 (the “Company”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The Company was organized on March 5, 1997, as a Maryland corporation and operates as a series company. The Company consists of two funds: PGIM Jennison Equity Income Fund and PGIM QMA Mid-Cap Value Fund, each of which are diversified funds. These financial statements relate only to the PGIM QMA Mid-Cap Value Fund (the “Fund”).
The investment objective of the Fund is capital growth.
1. Accounting Policies
The Fund follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 946 Financial Services—Investment Companies.The following accounting policies conform to U.S. generally accepted accounting principles. The Fund consistently follows such policies in the preparation of its financial statements.
Securities Valuation:The Fund holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Company’s Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or the “Manager”). Pursuant to the Board’s delegation, the Manager has established a Valuation Committee responsible for supervising the fair valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the Fund to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Company’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
26 |
Various inputs determine how the Fund’s investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the Schedule of Investments and referred to herein as the “fair value hierarchy” in accordance with FASB ASC Topic 820—Fair Value Measurements and Disclosures.
Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.
Illiquid Securities:Pursuant to Rule 22e-4 under the 1940 Act, the Fund has adopted a Board approved Liquidity Risk Management Program (“LRMP”) that requires, among other things, that the Fund limit its illiquid investments that are assets to no more than 15% of net assets. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, may not reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. The Fund may find it difficult to sell illiquid securities at the time considered most advantageous by its
PGIM QMA Mid-Cap Value Fund | 27 |
Notes to Financial Statements(unaudited) (continued)
subadviser and may incur transaction costs that would not be incurred in the sale of securities that were freely marketable.
Restricted Securities:Securities acquired in unregistered, private sales from the issuing company or from an affiliate of the issuer are considered restricted as to disposition under federal securities law (“restricted securities”). Such restricted securities are valued pursuant to the valuation procedures noted above. Restricted securities that would otherwise be considered illiquid investments pursuant to the Fund’s LRMP because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. Therefore, these Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act of 1933, may be classified higher than “illiquid” under the LRMP (i.e. “moderately liquid” or “less liquid” investments). However, the liquidity of the Fund’s investments in restricted securities could be impaired if trading does not develop or declines.
Master Netting Arrangements:The Company, on behalf of the Fund, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a Subadviser may have negotiated and entered into on behalf of the Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset amounts payable by the Fund to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Fund’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending:The Fund lends its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the loaned securities. Should the borrower of the
28 |
securities fail financially, the Fund has the right to repurchase the securities in the open market using the collateral.
The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Fund also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Equity and Mortgage Real Estate Investment Trusts (collectively equity REITs):The Fund invests in equity REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from equity REITs during the period is estimated to be dividend income, capital gain or return of capital and recorded accordingly. When material, these estimates are adjusted periodically when the actual source of distributions is disclosed by the equity REITs.
Securities Transactions and Net Investment Income:Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date, or for certain foreign securities, when the Fund becomes aware of such dividends. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day. Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, shareholder servicing fees, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements, as applicable.
Taxes:It is the Fund’s policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.
Tax reform legislation commonly referred to as the Tax Cuts and Jobs Act permits a direct REIT shareholder to claim a 20% “qualified business income” deduction for ordinary REIT
PGIM QMA Mid-Cap Value Fund | 29 |
Notes to Financial Statements(unaudited) (continued)
dividends. On January 18, 2019, the Internal Revenue Service issued final regulations that expressly permit RICs to pass through this “qualified business income” to their shareholders.
Dividends and Distributions:The Fund expects to pay dividends from net investment income and distributions from net realized capital gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified between total distributable earnings (loss) and paid-in capital in excess of par, as appropriate.
Estimates:The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
2. Agreements
The Company, on behalf of the Fund, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Fund. PGIM Investments administers the corporate affairs of the Fund and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by the Fund’s custodian and the Fund’s transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Fund. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Fund, including, but not limited to, the custodian, transfer agent, and accounting agent.
PGIM Investments has entered into a subadvisory agreement with QMA LLC (formerly known as Quantitative Management Associates, LLC) (“QMA”). The subadvisory agreement provides that QMA will furnish investment advisory services in connection with the management of the Fund. In connection therewith, QMA is obligated to keep certain books and records of the Fund. PGIM Investments pays for the services of QMA, the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
30 |
The management fee paid to the Manager is accrued daily and payable monthly at an annual rate of 0.73% of the Fund’s average daily net assets up to $1 billion, 0.71% of the next $2 billion, 0.69% of the next $2 billion, and 0.67% of the average daily net assets in excess of $5 billion. The effective management fee rate before any waivers and/or expense reimbursements was 0.73% for the six months ended April 30, 2019.
The Manager has contractually agreed, through February 29, 2020, to limit total annual operating expenses after fee waivers and/or expense reimbursements to 1.13% of average daily net assets for Class A shares, 1.95% of average daily net assets for Class B shares, 1.95% of average daily net assets for Class C shares, 1.45% of average daily net assets for Class R shares, 0.95% of average daily net assets for Class Z shares, 1.23% of average daily net assets for Class R2 shares, 0.98% of average daily net assets for Class R4 shares and 0.73% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholdings taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales.
Where applicable, the Manager agrees to waive management fees or shared operating expenses an any share class to the same extent that it waives similar expenses on any other share class and, in addition, total annual operating expenses for class R6 shares will not exceed total annual operating expenses for Class Z shares. Fees and/or expenses waived and/or reimbursed by PGIM Investments may be recouped by PGIM Investments within the same fiscal year during which such waiver/reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Company, on behalf of the Fund, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C, Class R, Class Z, Class R2, Class R4 and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B, Class C, Class R and Class R2 shares, pursuant to the plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z, Class R4 and Class R6 shares of the Fund.
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.30%, 1%, 1%, 0.75% and 0.25% of the average daily net assets of the Class A, Class B, Class C, Class R and Class R2 shares, respectively. PIMS has contractually agreed through February 29, 2020 to limit such fees to 0.25% and 0.50% of the average daily net assets of the Class A and Class R shares, respectively.
The Fund has adopted a Shareholder Services Plan with respect to Class R2 and Class R4 shares. Under the terms of the Shareholder Services Plan, Class R2 and Class R4 shares are authorized to pay to Prudential Mutual Fund Services LLC (“PMFS”), its affiliates or
PGIM QMA Mid-Cap Value Fund | 31 |
Notes to Financial Statements(unaudited) (continued)
third-party service providers, as compensation for services rendered to the shareholders of such Class R2 or Class R4 shares, a shareholder service fee at an annual rate of 0.10% of the average daily net assets attributable to Class R2 and Class R4 shares. The shareholder service fee is accrued daily and paid monthly.
For the reporting period ended April 30, 2019, PIMS received $36,648 in front-end sales charges resulting from sales of Class A shares. Additionally, for the reporting period ended April 30, 2019, PIMS received $1,288 and $232 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively. From these fees, PIMS paid such sales charges to broker-dealers, who in turn paid commissions to salespersons and incurred other distribution costs.
PGIM Investments, PIMS and QMA are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Company’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Fund may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that subject to certain conditions, permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Pursuant to the Rule 17a-7 procedures and consistent with guidance issued by the SEC, the Company’s Chief Compliance Officer (“CCO”) prepares a quarterly summary of all such transactions for submission to the Board, together with the CCO’s written representation that all such 17a-7 transactions were effected in accordance with the Fund’s Rule 17a-7 procedures. Any 17a-7 transactions for the reporting period are disclosed in the “Portfolio Securities” note, below.
The Fund may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. Through the Fund’s investments in the mentioned underlying funds, PGIM Investments and/or its affiliates are paid fees or reimbursed for providing their services. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend
32 |
income” and “Income from securities lending, net”, respectively.
4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the reporting period ended April 30, 2019, were $214,959,262 and $320,948,942, respectively.
A summary of the cost of purchases and proceeds from sales of shares of affiliated investments for the reporting period ended April 30, 2019, is presented as follows:
Value, | Cost of Purchases | Proceeds from Sales | Change in Unrealized Gain (Loss) | Realized Gain (Loss) | Value, End of Period | Shares, End of Period | Income | |||||||||||||||||||||||
PGIM Core Ultra Short Bond Fund* | ||||||||||||||||||||||||||||||
$ | 1,065,968 | $ | 49,043,794 | $ | 50,108,949 | $ | — | $ | — | $ | 813 | 813 | $ | 13,517 | ||||||||||||||||
PGIM Institutional Money Market Fund* | ||||||||||||||||||||||||||||||
59,834,012 | 140,691,538 | 142,790,217 | 9,186 | (3,115 | ) | 57,741,404 | 57,724,087 | 35,704 | ** | |||||||||||||||||||||
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| |||||||||||||||||
$ | 60,899,980 | $ | 189,735,332 | $ | 192,899,166 | $ | 9,186 | $ | (3,115 | ) | $ | 57,742,217 | $ | 49,221 | ||||||||||||||||
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* | The Fund did not have any capital gain distributions during the reporting period. |
** | This amount is included in “Income from securities lending, net” on the Statement of Operations. |
For the reporting period ended April 30, 2019, no 17a-7 transactions were entered into by the Fund.
5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized depreciation as of April 30, 2019 were as follows:
Tax Basis | $ | 786,032,183 | ||
|
| |||
Gross Unrealized Appreciation | 68,548,805 | |||
Gross Unrealized Depreciation | (78,112,636 | ) | ||
|
| |||
Net Unrealized Depreciation | $ | (9,563,831 | ) | |
|
|
The book basis may differ from tax basis due to certain tax-related adjustments.
The Manager has analyzed the Fund’s tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Fund’s financial statements for the current reporting period. The Fund’s federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
PGIM QMA Mid-Cap Value Fund | 33 |
Notes to Financial Statements(unaudited) (continued)
6. Capital and Ownership
The Fund offers Class A, Class B, Class C, Class R, Class Z, Class R2, Class R4 and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares on a monthly basis approximately seven years after purchase. Class B shares are closed to new purchases. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class C shares will automatically convert to Class A shares on a monthly basis approximately 10 years after purchase. Class R, Class Z, Class R2, Class R4 and Class R6 shares are not subject to any sales or redemption charge and are available exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund as presented in the table of transactions in shares of common stock.
The authorized capital stock of the Company is 5.5 billion shares, with a par value of $0.001 per share. Of the Company’s authorized capital stock, 800 million authorized shares have been allocated to the Fund and divided into nine classes, designated Class A, Class B, Class C, Class R, Class Z, Class R2, Class R4, Class T and Class R6 common stock, each of which consists of 100 million, 5 million, 30 million, 75 million, 175 million, 75 million, 75 million, 75 million and 190 million authorized shares, respectively. The Fund currently does not have any Class T shares outstanding.
As of April 30, 2019, Prudential, through its affiliated entities, including affiliated funds (if applicable), owned 622 Class R shares, 493 Class R2 shares, 494 Class R4 shares and 577,619 Class R6 shares of the Fund. At reporting period end, three shareholders of record, each holding greater than 5% of the Fund, held 21% of the Fund’s outstanding shares.
34 |
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 853,201 | $ | 15,098,171 | |||||
Shares issued in reinvestment of dividends and distributions | 1,114,756 | 18,282,001 | ||||||
Shares reacquired | (2,302,487 | ) | (41,739,397 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (334,530 | ) | (8,359,225 | ) | ||||
Shares issued upon conversion from other share class(es) | 917,796 | 16,931,818 | ||||||
Shares reacquired upon conversion into other share class(es) | (25,461 | ) | (467,802 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 557,805 | $ | 8,104,791 | |||||
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| |||||
Year ended October 31, 2018: | ||||||||
Shares sold | 1,550,466 | $ | 34,408,657 | |||||
Shares issued in reinvestment of dividends and distributions | 663,954 | 14,792,904 | ||||||
Shares reacquired | (3,071,311 | ) | (68,066,084 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (856,891 | ) | (18,864,523 | ) | ||||
Shares issued upon conversion from other share class(es) | 62,781 | 1,395,218 | ||||||
Shares reacquired upon conversion into other share class(es) | (380,259 | ) | (8,366,084 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (1,174,369 | ) | $ | (25,835,389 | ) | |||
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Class B | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 1,157 | $ | 16,572 | |||||
Shares issued in reinvestment of dividends and distributions | 24,751 | 344,290 | ||||||
Shares reacquired | (38,509 | ) | (597,998 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (12,601 | ) | (237,136 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (20,437 | ) | (319,716 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (33,038 | ) | $ | (556,852 | ) | |||
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Year ended October 31, 2018: | ||||||||
Shares sold | 16,601 | $ | 326,735 | |||||
Shares issued in reinvestment of dividends and distributions | 16,841 | 324,191 | ||||||
Shares reacquired | (71,112 | ) | (1,346,173 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (37,670 | ) | (695,247 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (31,661 | ) | (616,083 | ) | ||||
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Net increase (decrease) in shares outstanding | (69,331 | ) | $ | (1,311,330 | ) | |||
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Class C | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 89,969 | $ | 1,285,519 | |||||
Shares issued in reinvestment of dividends and distributions | 308,195 | 4,265,421 | ||||||
Shares reacquired | (393,078 | ) | (5,849,963 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 5,086 | (299,023 | ) | |||||
Shares reacquired upon conversion into other share class(es) | (1,083,285 | ) | (16,832,589 | ) | ||||
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Net increase (decrease) in shares outstanding | (1,078,199 | ) | $ | (17,131,612 | ) | |||
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Year ended October 31, 2018: | ||||||||
Shares sold | 116,594 | $ | 2,223,483 | |||||
Shares issued in reinvestment of dividends and distributions | 182,413 | 3,495,035 | ||||||
Shares reacquired | (600,932 | ) | (11,412,345 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (301,925 | ) | (5,693,827 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (169,484 | ) | (3,184,495 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (471,409 | ) | $ | (8,878,322 | ) | |||
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PGIM QMA Mid-Cap Value Fund | 35 |
Notes to Financial Statements(unaudited) (continued)
Class R | Shares | Amount | ||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 3,556 | $ | 65,444 | |||||
Shares issued in reinvestment of dividends and distributions | 4,550 | 75,386 | ||||||
Shares reacquired | (7,619 | ) | (140,836 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 487 | $ | (6 | ) | ||||
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| |||||
Year ended October 31, 2018: | ||||||||
Shares sold | 35,853 | $ | 802,404 | |||||
Shares issued in reinvestment of dividends and distributions | 1,751 | 39,341 | ||||||
Shares reacquired | (31,385 | ) | (705,415 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 6,219 | $ | 136,330 | |||||
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Class Z | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 2,108,144 | $ | 38,066,397 | |||||
Shares issued in reinvestment of dividends and distributions | 1,875,368 | 31,074,844 | ||||||
Shares reacquired | (6,247,647 | ) | (114,739,067 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (2,264,135 | ) | (45,597,826 | ) | ||||
Shares issued upon conversion from other share class(es) | 47,036 | 871,836 | ||||||
Shares reacquired upon conversion into other share class(es) | (11,387 | ) | (210,543 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (2,228,486 | ) | $ | (44,936,533 | ) | |||
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Year ended October 31, 2018: | ||||||||
Shares sold | 4,400,794 | $ | 98,167,907 | |||||
Shares issued in reinvestment of dividends and distributions | 1,159,824 | 26,084,430 | ||||||
Shares reacquired | (8,425,650 | ) | (187,815,467 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (2,865,032 | ) | (63,563,130 | ) | ||||
Shares issued upon conversion from other share class(es) | 512,238 | 11,376,184 | ||||||
Shares reacquired upon conversion into other share class(es) | (45,593 | ) | (1,008,202 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (2,398,387 | ) | $ | (53,195,148 | ) | |||
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Class R2 | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 18 | $ | 332 | |||||
Shares issued in reinvestment of dividends and distributions | 281 | 4,643 | ||||||
Shares reacquired | (1 | ) | (22 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 298 | $ | 4,953 | |||||
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| |||||
Period ended October 31, 2018*: | ||||||||
Shares sold | 2,371 | $ | 52,753 | |||||
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Net increase (decrease) in shares outstanding | 2,371 | $ | 52,753 | |||||
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Class R4 | ||||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 55,437 | $ | 901,302 | |||||
Shares issued in reinvestment of dividends and distributions | 53 | 883 | ||||||
Shares reacquired | (12,439 | ) | (212,758 | ) | ||||
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Net increase (decrease) in shares outstanding | 43,051 | $ | 689,427 | |||||
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| |||||
Period ended October 31, 2018*: | ||||||||
Shares sold | 441 | $ | 10,000 | |||||
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| |||||
Net increase (decrease) in shares outstanding | 441 | $ | 10,000 | |||||
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36 |
Class R6 | Shares | Amount | ||||||
Six months ended April 30, 2019: | ||||||||
Shares sold | 1,260,672 | $ | 22,704,205 | |||||
Shares issued in reinvestment of dividends and distributions | 1,232,546 | 20,361,666 | ||||||
Shares reacquired | (1,399,084 | ) | (25,572,474 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 1,094,134 | 17,493,397 | ||||||
Shares issued upon conversion from other share class(es) | 1,446 | 26,996 | ||||||
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| |||||
Net increase (decrease) in shares outstanding | 1,095,580 | $ | 17,520,393 | |||||
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| |||||
Year ended October 31, 2018: | ||||||||
Shares sold | 4,424,882 | $ | 98,473,019 | |||||
Shares issued in reinvestment of dividends and distributions | 514,830 | 11,547,637 | ||||||
Shares reacquired | (2,281,991 | ) | (50,666,478 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 2,657,721 | 59,354,178 | ||||||
Shares issued upon conversion from other share class(es) | 18,365 | 403,462 | ||||||
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| |||||
Net increase (decrease) in shares outstanding | 2,676,086 | $ | 59,757,640 | |||||
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* | Commencement of offering was December 28, 2017. |
7. Borrowings
The Company, on behalf of the Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 4, 2018 through October 3, 2019. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
Certain affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.
The Fund utilized the SCA during the reporting period ended April 30, 2019. The average daily balance for the 49 days that the Fund had loans outstanding during the period was approximately $1,124,020, borrowed at a weighted average interest rate of 3.68%. The maximum loan outstanding amount during the period was $3,412,000. At April 30, 2019, the Fund had an outstanding loan balance of $376,000.
PGIM QMA Mid-Cap Value Fund | 37 |
Notes to Financial Statements(unaudited) (continued)
8. Risks of Investing in the Fund
The Fund’s risks include, but are not limited to, some or all of the risks discussed below:
Equity and Equity-Related Securities Risks:The value of a particular security could go down and you could lose money. In addition to an individual security losing value, the value of the equity markets or a sector in which the Fund invests could go down. The Fund’s holdings can vary significantly from broad market indexes and the performance of the Fund can deviate from the performance of these indexes. Different parts of a market can react differently to adverse issuer, market, regulatory, political and economic developments.
Market and Credit Risk:Securities markets may be volatile and the market prices of the Fund’s securities may decline. Securities fluctuate in price based on changes in an issuer’s financial condition and overall market and economic conditions. If the market prices of the securities owned by the Fund fall, the value of an investment in the Fund will decline. Additionally, the Fund may also be exposed to credit risk in the event that an issuer or guarantor fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
Risks of Investing in equity REITs:Real estate securities are subject to similar risks as direct investments in real estate and mortgages, and their value will depend on the value of the underlying properties or the underlying loans or interests. The underlying loans may be subject to the risks of default or of payments that occur earlier or later than expected, and such loans may also include so-called “subprime” mortgages. The value of these securities will rise and fall in response to many factors, including economic conditions, the demand for rental property and interest rates. In particular, the value of these securities may decline when interest rates rise and will also be affected by the real estate market and by the management of the underlying properties.
In addition, investing in equity REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the equity REITs, while mortgage REITs may be affected by the quality of any credit extended. Equity REITs are dependent upon management skills, may not be diversified geographically or by property/mortgage asset type, and are subject to heavy cash flow dependency, default by borrowers and self-liquidation. Since equity REITs are relatively smaller in size when compared to the broader market, and smaller companies tend to be more volatile than larger companies, they may be more volatile and/or more illiquid than other types of equity securities. Equity REITs are subject to interest rate risks. Equity REITs may incur significant amounts of leverage. The Fund will indirectly bear a portion of the expenses, including management fees, paid by each equity REIT in which it invests, in addition to the expenses of the Fund.
38 |
9. Recent Accounting Pronouncements and Reporting Updates
In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-13, which changes certain fair value measurement disclosure requirements. The new ASU, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the Fund’s policy for the timing of transfers between levels. The amendments are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Manager has evaluated the implications of certain provisions of the ASU and has determined to early adopt aspects related to the removal and modification of certain fair value measurement disclosures under the ASU effective immediately. At this time, the Manager is evaluating the implications of certain other provisions of the ASU related to new disclosure requirements and any impact on the financial statement disclosures has not yet been determined.
PGIM QMA Mid-Cap Value Fund | 39 |
Financial Highlights(unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): |
| |||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $20.17 | $22.24 | $19.48 | $20.29 | $21.57 | $20.51 | ||||||||||||||||||||||
Income (loss) from investment operations: |
| |||||||||||||||||||||||||||
Net investment income (loss) | 0.15 | 0.30 | 0.28 | 0.22 | 0.23 | 0.17 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.30 | (0.95 | ) | 3.11 | 0.34 | (0.23 | ) | 2.92 | ||||||||||||||||||||
Total from investment operations | 0.45 | (0.65 | ) | 3.39 | 0.56 | - | 3.09 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.41 | ) | (0.32 | ) | (0.25 | ) | (0.21 | ) | (0.12 | ) | (0.15 | ) | ||||||||||||||||
Distributions from net realized gains | (1.57 | ) | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | ||||||||||||||||
Total dividends and distributions | (1.98 | ) | (1.42 | ) | (0.63 | ) | (1.37 | ) | (1.28 | ) | (2.03 | ) | ||||||||||||||||
Net asset value, end of period | $18.64 | $20.17 | $22.24 | $19.48 | $20.29 | $21.57 | ||||||||||||||||||||||
Total Return(b): | 3.55% | (3.54)% | 17.56% | 3.38% | 0.15% | 16.54% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $213,206 | $219,477 | $268,067 | $272,964 | $288,607 | $218,957 | ||||||||||||||||||||||
Average net assets (000) | $202,708 | $259,013 | $283,669 | $277,601 | $267,085 | $159,125 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.13% | (e) | 1.18% | 1.21% | 1.20% | 1.21% | 1.22% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.31% | (e) | 1.33% | 1.34% | 1.34% | 1.35% | 1.42% | |||||||||||||||||||||
Net investment income (loss) | 1.63% | (e) | 1.35% | 1.31% | 1.16% | 1.09% | 0.81% | |||||||||||||||||||||
Portfolio turnover rate(f) | 29% | 78% | 112% | 87% | 101% | 87% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Effective August 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
40 |
Class B Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): |
| |||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $17.31 | $19.29 | $16.99 | $17.88 | $19.17 | $18.46 | ||||||||||||||||||||||
Income (loss) from investment operations: |
| |||||||||||||||||||||||||||
Net investment income (loss) | 0.07 | 0.11 | 0.10 | 0.07 | 0.07 | 0.02 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.22 | (0.80 | ) | 2.72 | 0.28 | (0.20 | ) | 2.61 | ||||||||||||||||||||
Total from investment operations | 0.29 | �� | (0.69 | ) | 2.82 | 0.35 | (0.13 | ) | 2.63 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.27 | ) | (0.19 | ) | (0.14 | ) | (0.08 | ) | - | (0.04 | ) | |||||||||||||||||
Distributions from net realized gains | (1.57 | ) | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | ||||||||||||||||
Total dividends and distributions | (1.84 | ) | (1.29 | ) | (0.52 | ) | (1.24 | ) | (1.16 | ) | (1.92 | ) | ||||||||||||||||
Net asset value, end of period | $15.76 | $17.31 | $19.29 | $16.99 | $17.88 | $19.17 | ||||||||||||||||||||||
Total Return(b): | 3.09% | (4.27)% | 16.71% | 2.57% | (0.59)% | 15.66% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $2,764 | $3,608 | $5,357 | $6,063 | $7,202 | $7,959 | ||||||||||||||||||||||
Average net assets (000) | $3,159 | $4,789 | $6,566 | $6,263 | $7,886 | $7,163 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.95% | (e) | 1.95% | 1.96% | 1.95% | 1.96% | 1.97% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.61% | (e) | 2.37% | 2.09% | 2.04% | 2.05% | 2.12% | |||||||||||||||||||||
Net investment income (loss) | 0.95% | (e) | 0.58% | 0.56% | 0.43% | 0.35% | 0.08% | |||||||||||||||||||||
Portfolio turnover rate(f) | 29% | 78% | 112% | 87% | 101% | 87% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Effective August 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 41 |
Financial Highlights(unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||
Six Months Ended | Year Ended October 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): |
| |||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $17.24 | $19.21 | $16.93 | $17.81 | $19.10 | $18.40 | ||||||||||||||||||||||
Income (loss) from investment operations: |
| |||||||||||||||||||||||||||
Net investment income (loss) | 0.09 | 0.11 | 0.10 | 0.07 | 0.06 | 0.02 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.21 | (0.79 | ) | 2.70 | 0.29 | (0.19 | ) | 2.60 | ||||||||||||||||||||
Total from investment operations | 0.30 | (0.68 | ) | 2.80 | 0.36 | (0.13 | ) | 2.62 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.28 | ) | (0.19 | ) | (0.14 | ) | (0.08 | ) | - | (0.04 | ) | |||||||||||||||||
Distributions from net realized gains | (1.57 | ) | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | ||||||||||||||||
Total dividends and distributions | (1.85 | ) | (1.29 | ) | (0.52 | ) | (1.24 | ) | (1.16 | ) | (1.92 | ) | ||||||||||||||||
Net asset value, end of period | $15.69 | $17.24 | $19.21 | $16.93 | $17.81 | $19.10 | ||||||||||||||||||||||
Total Return(b): | 3.17% | (4.22)% | 16.65% | 2.64% | (0.59)% | 15.66% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $21,846 | $42,595 | $56,517 | $55,164 | $62,110 | $50,573 | ||||||||||||||||||||||
Average net assets (000) | $37,066 | $52,438 | $59,943 | $57,300 | $59,460 | $43,599 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.94% | (e) | 1.92% | 1.96% | 1.95% | 1.96% | 1.97% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.98% | (e) | 1.97% | 2.03% | 2.04% | 2.05% | 2.12% | |||||||||||||||||||||
Net investment income (loss) | 1.21% | (e) | 0.60% | 0.55% | 0.42% | 0.34% | 0.08% | |||||||||||||||||||||
Portfolio turnover rate(f) | 29% | 78% | 112% | 87% | 101% | 87% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Effective August 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
42 |
Class R Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | December 22, 2014(a) through October 31, | ||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $20.30 | $22.38 | $19.60 | $20.40 | $20.98 | |||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.13 | 0.24 | 0.22 | 0.18 | 0.12 | |||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.30 | (0.95 | ) | 3.15 | 0.34 | (0.70 | ) | |||||||||||||||||||||
Total from investment operations | 0.43 | (0.71 | ) | 3.37 | 0.52 | (0.58 | ) | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.35 | ) | (0.27 | ) | (0.21 | ) | (0.16 | ) | - | |||||||||||||||||||
Distributions from net realized gains | (1.57 | ) | (1.10 | ) | (0.38 | ) | (1.16 | ) | - | |||||||||||||||||||
Total dividends and distributions | (1.92 | ) | (1.37 | ) | (0.59 | ) | (1.32 | ) | - | |||||||||||||||||||
Net asset value, end of period | $18.81 | $20.30 | $22.38 | $19.60 | $20.40 | |||||||||||||||||||||||
Total Return(c): | 3.38% | (3.76)% | 17.31% | 3.12% | (2.76)% | |||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $748 | $798 | $740 | $89 | $354 | |||||||||||||||||||||||
Average net assets (000) | $772 | $888 | $412 | $293 | $261 | |||||||||||||||||||||||
Ratios to average net assets(d)(e): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.45% | (f) | 1.42% | 1.44% | 1.45% | 1.51% | (f) | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 3.79% | (f) | 3.42% | 4.01% | 1.79% | 1.81% | (f) | |||||||||||||||||||||
Net investment income (loss) | 1.38% | (f) | 1.07% | 0.99% | 0.99% | 0.67% | (f) | |||||||||||||||||||||
Portfolio turnover rate(g) | 29% | 78% | 112% | 87% | 101% |
(a) | Commencement of offering. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Effective August 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(f) | Annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 43 |
Financial Highlights(unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): |
| |||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $20.40 | $22.48 | $19.68 | $20.49 | $21.76 | $20.68 | ||||||||||||||||||||||
Income (loss) from investment operations: |
| |||||||||||||||||||||||||||
Net investment income (loss) | 0.18 | 0.35 | 0.34 | 0.26 | 0.28 | 0.21 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.30 | (0.95 | ) | 3.14 | 0.35 | (0.22 | ) | 2.95 | ||||||||||||||||||||
Total from investment operations | 0.48 | (0.60 | ) | 3.48 | 0.61 | 0.06 | 3.16 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.46 | ) | (0.38 | ) | (0.30 | ) | (0.26 | ) | (0.17 | ) | (0.20 | ) | ||||||||||||||||
Distributions from net realized gains | (1.57 | ) | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | ||||||||||||||||
Total dividends and distributions | (2.03 | ) | (1.48 | ) | (0.68 | ) | (1.42 | ) | (1.33 | ) | (2.08 | ) | ||||||||||||||||
Net asset value, end of period | $18.85 | $20.40 | $22.48 | $19.68 | $20.49 | $21.76 | ||||||||||||||||||||||
Total Return(b): | 3.70% | (3.30)% | 17.84% | 3.64% | 0.45% | 16.80% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $272,944 | $340,962 | $429,566 | $339,119 | $318,977 | $173,716 | ||||||||||||||||||||||
Average net assets (000) | $300,508 | $414,839 | $402,691 | $332,406 | $262,069 | $82,847 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.90% | (e) | 0.93% | 0.95% | 0.95% | 0.96% | 0.97% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.94% | (e) | 0.98% | 1.02% | 1.04% | 1.05% | 1.11% | |||||||||||||||||||||
Net investment income (loss) | 1.96% | (e) | 1.59% | 1.55% | 1.40% | 1.31% | 1.02% | |||||||||||||||||||||
Portfolio turnover rate(f) | 29% | 78% | 112% | 87% | 101% | 87% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Effective August 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
44 |
Class R2 Shares | ||||||||||||
Six Months Ended April 30, 2019 | December 28, 2017(a) through October 31, 2018 | |||||||||||
Per Share Operating Performance(b): | ||||||||||||
Net Asset Value, Beginning of Period | $20.29 | $22.68 | ||||||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) | 0.14 | 0.06 | ||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.31 | (2.45 | ) | |||||||||
Total from investment operations | 0.45 | (2.39 | ) | |||||||||
Less Dividends and Distributions: | ||||||||||||
Dividends from net investment income | (0.39 | ) | - | |||||||||
Distributions from net realized gains | (1.57 | ) | - | |||||||||
Total dividends and distributions | (1.96 | ) | - | |||||||||
Net asset value, end of period | $18.78 | $20.29 | ||||||||||
Total Return(c): | 3.51% | (10.54)% | ||||||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000) | $50 | $48 | ||||||||||
Average net assets (000) | $48 | $15 | ||||||||||
Ratios to average net assets(d): | ||||||||||||
Expenses after waivers and/or expense reimbursement | 1.23% | (e) | 1.26% | (e) | ||||||||
Expenses before waivers and/or expense reimbursement | 32.91% | (e) | 150.41% | (e) | ||||||||
Net investment income (loss) | 1.54% | (e) | 0.31% | (e) | ||||||||
Portfolio turnover rate(f) | 29% | 78% |
(a) | Commencement of offering. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 45 |
Financial Highlights(unaudited) (continued)
Class R4 Shares | ||||||||||||
Six Months Ended April 30, 2019 | December 28, 2017(a) through October 31, 2018 | |||||||||||
Per Share Operating Performance(b): | ||||||||||||
Net Asset Value, Beginning of Period | $20.33 | $22.68 | ||||||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) | 0.09 | 0.21 | ||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.38 | (2.56 | ) | |||||||||
Total from investment operations | 0.47 | (2.35 | ) | |||||||||
Less Dividends and Distributions: | ||||||||||||
Dividends from net investment income | (0.43 | ) | - | |||||||||
Distributions from net realized gains | (1.57 | ) | - | |||||||||
Total dividends and distributions | (2.00 | ) | - | |||||||||
Net asset value, end of period | $18.80 | $20.33 | ||||||||||
Total Return(c): | 3.68% | (10.36)% | ||||||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000) | $818 | $9 | ||||||||||
Average net assets (000) | $521 | $10 | ||||||||||
Ratios to average net assets(d): | ||||||||||||
Expenses after waivers and/or expense reimbursement | 0.98% | (e) | 1.02% | (e) | ||||||||
Expenses before waivers and/or expense reimbursement | 3.79% | (e) | 225.30% | (e) | ||||||||
Net investment income (loss) | 0.97% | (e) | 1.14% | (e) | ||||||||
Portfolio turnover rate(f) | 29% | 78% |
(a) | Commencement of offering. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
46 |
Class R6 Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): |
| |||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $20.38 | $22.45 | $19.65 | $20.47 | $21.75 | $20.69 | ||||||||||||||||||||||
Income (loss) from investment operations: |
| |||||||||||||||||||||||||||
Net investment income (loss) | 0.19 | 0.38 | 0.37 | 0.29 | 0.31 | 0.23 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.29 | (0.94 | ) | 3.14 | 0.35 | (0.23 | ) | 2.94 | ||||||||||||||||||||
Total from investment operations | 0.48 | (0.56 | ) | 3.51 | 0.64 | 0.08 | 3.17 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.49 | ) | (0.41 | ) | (0.33 | ) | (0.30 | ) | (0.20 | ) | (0.23 | ) | ||||||||||||||||
Distributions from net realized gains | (1.57 | ) | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | ||||||||||||||||
Total dividends and distributions | (2.06 | ) | (1.51 | ) | (0.71 | ) | (1.46 | ) | (1.36 | ) | (2.11 | ) | ||||||||||||||||
Net asset value, end of period | $18.80 | $20.38 | $22.45 | $19.65 | $20.47 | $21.75 | ||||||||||||||||||||||
Total Return(b): | 3.77% | (3.12)% | 18.03% | 3.79% | 0.55% | 16.87% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $207,551 | $202,697 | $163,221 | $95,960 | $74,707 | $31,261 | ||||||||||||||||||||||
Average net assets (000) | $200,110 | $200,226 | $125,192 | $82,160 | $43,995 | $23,206 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.73% | (e) | 0.78% | 0.80% | 0.80% | 0.80% | 0.91% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.78% | (e) | 0.83% | 0.87% | 0.89% | 0.89% | 0.97% | |||||||||||||||||||||
Net investment income (loss) | 2.05% | (e) | 1.71% | 1.70% | 1.54% | 1.50% | 1.14% | |||||||||||||||||||||
Portfolio turnover rate(f) | 29% | 78% | 112% | 87% | 101% | 87% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | 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. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Effective August 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(e) | Annualized. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 47 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding• Kevin J. Bannon• Scott E. Benjamin• Linda W. Bynoe• Barry H. Evans• Keith F. Hartstein• Laurie Simon Hodrick• Michael S. Hyland• Stuart S. Parker• Brian K. Reid• Grace C. Torres |
OFFICERS |
Stuart S. Parker,President• Scott E. Benjamin,Vice President• Christian J. Kelly,Treasurer and Principal Financial and Accounting Officer• Raymond A. O’Hara,Chief Legal Officer• Chad A. Earnst,Chief Compliance Officer • Dino Capasso,Deputy Chief Compliance Officer • Andrew R. French,Secretary• Jonathan D. Shain,Assistant Secretary• Claudia DiGiacomo,Assistant Secretary•Diana N. Huffman,Assistant Secretary• Peter Parrella,Assistant Treasurer• Lana Lomuti,Assistant Treasurer• Linda McMullin,Assistant Treasurer• Kelly A. Coyne,Assistant Treasurer• Charles H. Smith,Anti-Money Laundering Compliance Officer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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SUBADVISER | QMA LLC | Gateway Center Two Newark, NJ 07102 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 240 Greenwich Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain the prospectus and summary prospectus by visiting our website atpgiminvestments.com or by calling(800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go topgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time byvisiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM QMA Mid-Cap Value Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on FormN-PORT. The Fund’s FormN-PORT filings are available on the Commission’s website at sec.gov. FormN-PORT is filed with the Commission quarterly, and each Fund’s full portfolio holdings as of the first and third fiscal quarter-ends will be made publicly available 60 days after the end of each quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PGIM QMA MID-CAP VALUE FUND
SHARE CLASS | A | B | C | R | Z | R2 | R4 | R6 | ||||||||
NASDAQ | SPRAX | SVUBX | NCBVX | SDVRX | SPVZX | PMVEX | PMVFX | PMVQX | ||||||||
CUSIP | 74441L105 | 74441L204 | 74441L303 | 74441L782 | 74441L709 | 74441L758 | 74441L741 | 74441L824 |
MF202E2
Item 2 – | Code of Ethics – Not required, as this is not an annual filing. | |
Item 3 – | Audit Committee Financial Expert – Not required, as this is not an annual filing. | |
Item 4 – | Principal Accountant Fees and Services – Not required, as this is not an annual filing. | |
Item 5 – | Audit Committee of Listed Registrants – Not applicable. | |
Item 6 – | Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form. | |
Item 7 – | Disclosure of Proxy Voting Policies and Procedures forClosed-End Management Investment Companies – Not applicable. | |
Item 8 – | Portfolio Managers ofClosed-End Management Investment Companies – Not applicable. | |
Item 9 – | Purchases of Equity Securities byClosed-End Management Investment Company and Affiliated Purchasers – Not applicable.
|
Item 10 – | Submission of Matters to a Vote of Security Holders – Not applicable. | |
Item 11 – | Controls and Procedures |
(a) |
It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
| |
(b) | There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12 – | Exhibits |
(a) | (1) | Code of Ethics – Not required, as this is not an annual filing. | ||||
(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as ExhibitEX-99.CERT. | |||||
(3) | Any written solicitation to purchase securities under Rule23c-1. – Not applicable. | |||||
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as ExhibitEX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | Prudential Investment Portfolios, Inc. 10 | |
By: | /s/ Andrew R. French | |
Andrew R. French | ||
Secretary | ||
Date: | June 17, 2019 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Stuart S. Parker | |
Stuart S. Parker | ||
President and Principal Executive Officer | ||
Date: | June 17, 2019 |
By: | /s/ Christian J. Kelly | |
Christian J. Kelly | ||
Treasurer and Principal Financial and Accounting Officer | ||
Date: | June 17, 2019 |