UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number: | 811-08565 | |
Exact name of registrant as specified in charter: | Prudential Investment Portfolios 12 |
(This Form N-CSR relates solely to the Registrant’s PGIM QMA Long-Short Equity Fund, PGIM Short Duration Muni Fund and PGIM US Real Estate Fund)
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: | 3/31/2022 | |
Date of reporting period: | 9/30/2021 |
Item 1 – Reports to Stockholders
PGIM US REAL ESTATE FUND
SEMIANNUAL REPORT
SEPTEMBER 30, 2021
To enroll in e-delivery, go to pgim.com/investments/resource/edelivery |
Table of Contents | ||||
Letter from the President | 3 | |||
Your Fund’s Performance | 4 | |||
Fees and Expenses | 7 | |||
Holdings and Financial Statements | 9 | |||
Approval of Advisory Agreements |
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 September 30, 2021 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS), member SIPC. PGIM Real Estate is a unit of PGIM, Inc. (PGIM), a registered investment adviser. PIMS and PGIM are Prudential Financial companies. © 2021 Prudential Financial, Inc. and its related entities. PGIM Real Estate, 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 pgim.com/investments
Letter from the President
Dear Shareholder:
We hope you find the semiannual report for PGIM US Real Estate Fund informative and useful. The report covers performance for the six-month period ended September 30, 2021.
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 US Real Estate Fund
November 15, 2021
PGIM US Real Estate Fund 3
Your Fund’s Performance
Performance data quoted represent 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 at pgim.com/investments or by calling (800) 225-1852.
Average Annual Total Returns as of 9/30/21 | ||||||||||
(without sales charges) | (with sales charges) | |||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Ten Years (%) | Since Inception (%) | ||||||
Class A | 15.71 | 31.18 | 8.69 | 11.28 | — | |||||
Class C | 15.33 | 36.87 | 9.10 | 11.08 | — | |||||
Class Z | 15.89 | 39.16 | 10.20 | 12.19 | — | |||||
Class R6 | 15.89 | 39.16 | N/A | N/A | 12.04 (05/25/2017) | |||||
FTSE NAREIT Equity REITs Index | ||||||||||
13.11 | 37.39 | 6.83 | 11.27 | — | ||||||
S&P 500 Index | ||||||||||
9.18 | 30.00 | 16.89 | 16.62 | — |
Average Annual Total Returns as of 9/30/21 Since Inception (%) | ||||
Class R6 | ||||
(05/25/2017) | ||||
FTSE NAREIT Equity REITs Index | 8.52 | |||
S&P 500 Index | 16.44 |
*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 are measured from the closest month-end to the class’ inception date.
Source: PGIM Investments LLC.
4 Visit our website at pgim.com/investments
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 C | Class Z | Class R6 | |||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of the original purchase price or the net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 1.00% on sales made within 12 months of purchase | 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% | None | None |
Benchmark Definitions
FTSE NAREIT Equity REITs Index—The Financial Times Stock Exchange National Association of Real Estate Investment Trusts (FTSE NAREIT) Equity REITs Index is an unmanaged index which measures the performance of all real estate investment trusts (REITs) listed on the New York Stock Exchange, the NASDAQ National Market, and the NYSE MKT LLC (formerly known as NYSE Amex Equities). The Index is designed to reflect the performance of all publicly traded equity REITs as a whole.
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 S&P 500 Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by PGIM, Inc. and/or its affiliates. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC.
PGIM US Real Estate Fund 5
Your Fund’s Performance (continued)
Investors cannot invest directly in an index. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes that may be paid by an investor.
Presentation of Fund Holdings as of 9/30/21
Ten Largest Holdings | Real Estate Sectors | % of Net Assets | ||
Prologis, Inc. | Industrial REITs | 8.3% | ||
Welltower, Inc. | Health Care REITs | 8.1% | ||
Equinix, Inc. | Specialized REITs | 6.0% | ||
Simon Property Group, Inc. | Retail REITs | 5.0% | ||
Essex Property Trust, Inc. | Residential REITs | 4.9% | ||
Camden Property Trust | Residential REITs | 4.8% | ||
Equity Residential | Residential REITs | 4.0% | ||
Digital Realty Trust, Inc. | Specialized REITs | 3.5% | ||
UDR, Inc. | Residential REITs | 3.1% | ||
Life Storage, Inc. | Specialized REITs | 2.9% |
Holdings reflect only long-term investments.
6 Visit our website at pgim.com/investments
Fees and Expenses
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 September 30, 2021. 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 and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information
PGIM US Real Estate Fund 7
Fees and Expenses (continued)
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.
Annualized | ||||||||||
Expense | Expenses Paid | |||||||||
Beginning | Ending | Ratio Based on | During the | |||||||
Account Value | Account Value | the | Six-Month | |||||||
PGIM US Real Estate Fund | April 1,2021 | September 30, 2021 | Six-Month Period | Period* | ||||||
Class A | Actual | $1,000.00 | $1,157.10 | 1.25% | $ 6.76 | |||||
Hypothetical | $1,000.00 | $1,018.80 | 1.25% | $ 6.33 | ||||||
Class C | Actual | $1,000.00 | $1,153.30 | 2.00% | $10.80 | |||||
Hypothetical | $1,000.00 | $1,015.04 | 2.00% | $10.10 | ||||||
Class Z | Actual | $1,000.00 | $1,158.90 | 1.00% | $ 5.41 | |||||
Hypothetical | $1,000.00 | $1,020.05 | 1.00% | $ 5.06 | ||||||
Class R6 | Actual | $1,000.00 | $1,158.90 | 1.00% | $ 5.41 | |||||
Hypothetical | $1,000.00 | $1,020.05 | 1.00% | $ 5.06 |
*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 183 days in the six-month period ended September 30, 2021, and divided by the 366 days in the Fund’s fiscal year ending March 31, 2022 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
8 Visit our website at pgim.com/investments
Schedule of Investments (unaudited)
as of September 30, 2021
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 98.8% | ||||||||
COMMON STOCKS | ||||||||
Diversified REITs 2.8% | ||||||||
Essential Properties Realty Trust, Inc. | 56,550 | $ | 1,578,876 | |||||
Health Care REITs 11.6% | ||||||||
Community Healthcare Trust, Inc. | 11,225 | 507,258 | ||||||
Global Medical REIT, Inc. | 83,517 | 1,227,700 | ||||||
Ventas, Inc. | 4,406 | 243,255 | ||||||
Welltower, Inc. | 55,656 | 4,586,054 | ||||||
|
| |||||||
6,564,267 | ||||||||
Hotel & Resort REITs 3.2% | ||||||||
Host Hotels & Resorts, Inc.* | 46,759 | 763,575 | ||||||
Park Hotels & Resorts, Inc.* | 12,388 | 237,106 | ||||||
Pebblebrook Hotel Trust | 35,679 | 799,566 | ||||||
|
| |||||||
1,800,247 | ||||||||
Industrial REITs 14.4% | ||||||||
Duke Realty Corp. | 28,983 | 1,387,416 | ||||||
First Industrial Realty Trust, Inc. | 10,343 | 538,663 | ||||||
Prologis, Inc. | 37,577 | 4,713,283 | ||||||
Rexford Industrial Realty, Inc. | 27,614 | 1,567,095 | ||||||
|
| |||||||
8,206,457 | ||||||||
Office REITs 5.4% | ||||||||
Boston Properties, Inc. | 11,498 | 1,245,808 | ||||||
Highwoods Properties, Inc. | 25,396 | 1,113,869 | ||||||
JBG SMITH Properties | 10,019 | 296,663 | ||||||
Kilroy Realty Corp. | 6,530 | 432,351 | ||||||
|
| |||||||
3,088,691 | ||||||||
Residential REITs 23.8% | ||||||||
American Campus Communities, Inc. | 23,492 | 1,138,188 | ||||||
American Homes 4 Rent (Class A Stock) | 37,297 | 1,421,762 | ||||||
Camden Property Trust | 18,505 | 2,728,932 | ||||||
Equity Residential | 28,082 | 2,272,396 | ||||||
Essex Property Trust, Inc. | 8,649 | 2,765,431 | ||||||
Invitation Homes, Inc. | 32,079 | 1,229,588 | ||||||
Sun Communities, Inc. | 973 | 180,102 | ||||||
UDR, Inc. | 33,487 | 1,774,141 | ||||||
|
| |||||||
13,510,540 |
See Notes to Financial Statements.
PGIM US Real Estate Fund 9
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Retail REITs 15.4% | ||||||||
Acadia Realty Trust | 61,643 | $ | 1,258,134 | |||||
Federal Realty Investment Trust | 10,681 | 1,260,251 | ||||||
Kimco Realty Corp. | 40,644 | 843,363 | ||||||
National Retail Properties, Inc. | 8,129 | 351,091 | ||||||
NETSTREIT Corp. | 23,324 | 551,613 | ||||||
Phillips Edison & Co., Inc. | 20,360 | 625,256 | ||||||
Simon Property Group, Inc. | 21,963 | 2,854,531 | ||||||
Spirit Realty Capital, Inc. | 22,376 | 1,030,191 | ||||||
|
| |||||||
8,774,430 | ||||||||
Specialized REITs 22.2% | ||||||||
CubeSmart | 19,596 | 949,426 | ||||||
CyrusOne, Inc. | 2,700 | 209,007 | ||||||
Digital Realty Trust, Inc. | 13,700 | 1,978,965 | ||||||
EPR Properties | 18,956 | 936,047 | ||||||
Equinix, Inc. | 4,340 | 3,429,164 | ||||||
Extra Space Storage, Inc. | 6,611 | 1,110,582 | ||||||
Life Storage, Inc. | 14,622 | 1,677,728 | ||||||
MGM Growth Properties LLC (Class A Stock) | 18,600 | 712,380 | ||||||
Public Storage | 4,026 | 1,196,125 | ||||||
VICI Properties, Inc. | 14,751 | 419,076 | ||||||
|
| |||||||
12,618,500 | ||||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 56,142,008 | |||||||
|
| |||||||
SHORT-TERM INVESTMENT 1.1% | ||||||||
AFFILIATED MUTUAL FUND | ||||||||
PGIM Core Ultra Short Bond Fund | 614,421 | 614,421 | ||||||
|
| |||||||
TOTAL INVESTMENTS 99.9% | 56,756,429 | |||||||
Other assets in excess of liabilities 0.1% | 47,318 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 56,803,747 | ||||||
|
|
Below is a list of the abbreviation(s) used in the semiannual report:
LIBOR—London Interbank Offered Rate
REITs—Real Estate Investment Trust
* | Non-income producing security. |
(wb) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund. |
See Notes to Financial Statements.
10
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 September 30, 2021 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Assets | ||||||||||||
Long-Term Investments | ||||||||||||
Common Stocks | ||||||||||||
Diversified REITs | $ | 1,578,876 | $— | $— | ||||||||
Health Care REITs | 6,564,267 | — | — | |||||||||
Hotel & Resort REITs | 1,800,247 | — | — | |||||||||
Industrial REITs | 8,206,457 | — | — | |||||||||
Office REITs | 3,088,691 | — | — | |||||||||
Residential REITs | 13,510,540 | — | — | |||||||||
Retail REITs | 8,774,430 | — | — | |||||||||
Specialized REITs | 12,618,500 | — | — | |||||||||
Short-Term Investment | ||||||||||||
Affiliated Mutual Fund | 614,421 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 56,756,429 | $— | $— | ||||||||
|
|
|
|
|
|
Sector Classification:
The sector classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of September 30, 2021 were as follows:
Residential REITs | 23.8 | % | ||
Specialized REITs | 22.2 | |||
Retail REITs | 15.4 | |||
Industrial REITs | 14.4 | |||
Health Care REITs | 11.6 | |||
Office REITs | 5.4 | |||
Hotel & Resort REITs | 3.2 |
Diversified REITs | 2.8 | % | ||
Affiliated Mutual Fund | 1.1 | |||
|
| |||
99.9 | ||||
Other assets in excess of liabilities | 0.1 | |||
|
| |||
100.0 | % | |||
|
|
See Notes to Financial Statements.
PGIM US Real Estate Fund 11
Statement of Assets and Liabilities (unaudited)
as of September 30, 2021
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $48,488,994) | $ | 56,142,008 | ||
Affiliated investments (cost $614,421) | 614,421 | |||
Receivable for investments sold | 781,172 | |||
Receivable for Fund shares sold | 267,735 | |||
Dividends receivable | 170,735 | |||
Prepaid expenses | 1,397 | |||
|
| |||
Total Assets | 57,977,468 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 1,058,134 | |||
Accrued expenses and other liabilities | 44,359 | |||
Payable for Fund shares purchased | 40,274 | |||
Management fee payable | 26,294 | |||
Distribution fee payable | 2,573 | |||
Affiliated transfer agent fee payable | 1,877 | |||
Trustees’ fees payable | 210 | |||
|
| |||
Total Liabilities | 1,173,721 | |||
|
| |||
Net Assets | $ | 56,803,747 | ||
|
| |||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 3,458 | ||
Paid-in capital in excess of par | 44,099,208 | |||
Total distributable earnings (loss) | 12,701,081 | |||
|
| |||
Net assets, September 30, 2021 | $ | 56,803,747 | ||
|
|
See Notes to Financial Statements.
12
Class A | ||||||||
Net asset value and redemption price per share, ($6,341,087 ÷ 386,213 shares of beneficial interest issued and outstanding) | $ | 16.42 | ||||||
Maximum sales charge (5.50% of offering price) | 0.96 | |||||||
|
| |||||||
Maximum offering price to public | $ | 17.38 | ||||||
|
| |||||||
Class C | ||||||||
Net asset value, offering price and redemption price per share, ($1,528,844 ÷ 95,589 shares of beneficial interest issued and outstanding) | $ | 15.99 | ||||||
|
| |||||||
Class Z | ||||||||
Net asset value, offering price and redemption price per share, ($40,122,326 ÷ 2,440,036 shares of beneficial interest issued and outstanding) | $ | 16.44 | ||||||
|
| |||||||
Class R6 | ||||||||
Net asset value, offering price and redemption price per share, ($8,811,490 ÷ 535,788 shares of beneficial interest issued and outstanding) | $ | 16.45 | ||||||
|
|
See Notes to Financial Statements.
PGIM US Real Estate Fund 13
Statement of Operations (unaudited)
Six Months Ended September 30, 2021
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income | $ | 537,048 | ||
Affiliated dividend income | 318 | |||
|
| |||
Total income | 537,366 | |||
|
| |||
Expenses | ||||
Management fee | 170,650 | |||
Distribution fee(a) | 16,185 | |||
Transfer agent’s fees and expenses (including affiliated expense of $ 5,553)(a) | 26,282 | |||
Custodian and accounting fees | 25,403 | |||
Registration fees(a) | 18,573 | |||
Audit fee | 12,885 | |||
Legal fees and expenses | 8,862 | |||
Shareholders’ reports | 5,494 | |||
Trustees’ fees | 5,029 | |||
Miscellaneous | 9,526 | |||
|
| |||
Total expenses | 298,889 | |||
Less: Fee waiver and/or expense reimbursement(a) | (55,166 | ) | ||
Distribution fee waiver(a) | (1,596 | ) | ||
|
| |||
Net expenses | 242,127 | |||
|
| |||
Net investment income (loss) | 295,239 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain (loss) on investment transactions | 3,520,405 | |||
Net change in unrealized appreciation (depreciation) on investments | 1,662,206 | |||
|
| |||
Net gain (loss) on investment transactions | 5,182,611 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 5,477,850 | ||
|
|
(a) | Class specific expenses and waivers were as follows: |
Class A | Class C | Class Z | Class R6 | |||||||||||||
Distribution fee | 9,574 | 6,611 | — | — | ||||||||||||
Transfer agent’s fees and expenses | 7,162 | 967 | 17,824 | 329 | ||||||||||||
Registration fees | 4,231 | 4,668 | 4,413 | 5,261 | ||||||||||||
Fee waiver and/or expense reimbursement | (13,003) | (5,945) | (29,384 | ) | (6,834) | |||||||||||
Distribution fee waiver | (1,596) | — | — | — |
See Notes to Financial Statements.
14
Statements of Changes in Net Assets (unaudited)
Six Months Ended September 30, 2021 | Year Ended March 31, 2021 | |||||||||
Increase (Decrease) in Net Assets | ||||||||||
Operations | ||||||||||
Net investment income (loss) | $ | 295,239 | $ | 426,762 | ||||||
Net realized gain (loss) on investment transactions | 3,520,405 | 2,471,884 | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 1,662,206 | 6,874,821 | ||||||||
|
|
|
| |||||||
Net increase (decrease) in net assets resulting from operations | 5,477,850 | 9,773,467 | ||||||||
|
|
|
| |||||||
Dividends and Distributions | ||||||||||
Distributions from distributable earnings | ||||||||||
Class A | (17,705 | ) | (84,427 | ) | ||||||
Class B | — | (191 | ) | |||||||
Class C | (689 | ) | (7,323 | ) | ||||||
Class Z | (120,549 | ) | (356,995 | ) | ||||||
Class R6 | (25,351 | ) | (40,691 | ) | ||||||
|
|
|
| |||||||
(164,294 | ) | (489,627 | ) | |||||||
|
|
|
| |||||||
Fund share transactions (Net of share conversions) | ||||||||||
Net proceeds from shares sold | 19,855,624 | 5,589,264 | ||||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 164,266 | 486,613 | ||||||||
Cost of shares purchased | (3,619,956 | ) | (8,427,576 | ) | ||||||
|
|
|
| |||||||
Net increase (decrease) in net assets from Fund share transactions | 16,399,934 | (2,351,699 | ) | |||||||
|
|
|
| |||||||
Total increase (decrease) | 21,713,490 | 6,932,141 | ||||||||
Net Assets: | ||||||||||
Beginning of period | 35,090,257 | 28,158,116 | ||||||||
|
|
|
| |||||||
End of period | $ | 56,803,747 | $ | 35,090,257 | ||||||
|
|
|
|
See Notes to Financial Statements.
PGIM US Real Estate Fund 15
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||||
Six Months Ended September 30, 2021 | ||||||||||||||||||||||||||||||
Year Ended March 31, | ||||||||||||||||||||||||||||||
2021 | 2020 | 2019 | 2018 | 2017 | ||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $14.23 | $10.60 | $13.14 | $11.05 | $12.01 | $13.71 | ||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||
Net investment income (loss) | 0.08 | 0.14 | 0.19 | 0.19 | 0.18 | 0.06 | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.16 | 3.66 | (1.93 | ) | 2.47 | (0.41 | ) | 0.07 | ||||||||||||||||||||||
Total from investment operations | 2.24 | 3.80 | (1.74 | ) | 2.66 | (0.23 | ) | 0.13 | ||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||
Dividends from net investment income | (0.05 | ) | (0.17 | ) | (0.19 | ) | (0.19 | ) | (0.13 | ) | (0.27 | ) | ||||||||||||||||||
Distributions from net realized gains | - | - | (0.61 | ) | (0.38 | ) | (0.60 | ) | (1.56 | ) | ||||||||||||||||||||
Total dividends and distributions | (0.05 | ) | (0.17 | ) | (0.80 | ) | (0.57 | ) | (0.73 | ) | (1.83 | ) | ||||||||||||||||||
Net asset value, end of period | $16.42 | $14.23 | $10.60 | $13.14 | $11.05 | $12.01 | ||||||||||||||||||||||||
Total Return(b): | 15.71 | % | 36.16 | % | (14.51 | )% | 24.76 | % | (2.36 | )% | 1.01 | % | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||
Net assets, end of period (000) | $6,341 | $5,849 | $6,050 | $4,735 | $3,938 | $4,863 | ||||||||||||||||||||||||
Average net assets (000) | $6,365 | $5,881 | $5,832 | $4,230 | $4,492 | $5,555 | ||||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.25 | %(e) | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.34 | % | ||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.71 | %(e) | 1.92 | % | 2.00 | % | 2.36 | % | 2.22 | % | 1.92 | % | ||||||||||||||||||
Net investment income (loss) | 1.01 | %(e) | 1.18 | % | 1.42 | % | 1.63 | % | 1.49 | % | 0.43 | % | ||||||||||||||||||
Portfolio turnover rate(f) | 77 | % | 246 | % | 211 | % | 154 | % | 92 | % | 122 | % |
(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 GAAP. 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 January 1, 2018, 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.
16
Class C Shares | ||||||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||
September 30, | Year Ended March 31, | |||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $13.88 | $10.35 | $12.84 | $10.81 | $11.79 | $13.49 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.03 | 0.05 | 0.09 | 0.10 | 0.08 | (0.05 | ) | |||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.09 | 3.56 | (1.88 | ) | 2.41 | (0.39 | ) | 0.08 | ||||||||||||||||||||
Total from investment operations | 2.12 | 3.61 | (1.79 | ) | 2.51 | (0.31 | ) | 0.03 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.01 | ) | (0.08 | ) | (0.09 | ) | (0.10 | ) | (0.07 | ) | (0.17 | ) | ||||||||||||||||
Distributions from net realized gains | - | - | (0.61 | ) | (0.38 | ) | (0.60 | ) | (1.56 | ) | ||||||||||||||||||
Total dividends and distributions | (0.01 | ) | (0.08 | ) | (0.70 | ) | (0.48 | ) | (0.67 | ) | (1.73 | ) | ||||||||||||||||
Net asset value, end of period | $15.99 | $13.88 | $10.35 | $12.84 | $10.81 | $11.79 | ||||||||||||||||||||||
Total Return(b): | 15.33 | % | 35.04 | % | (15.08 | )% | 23.81 | % | (3.11 | )% | 0.26 | % | ||||||||||||||||
| ||||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $1,529 | $990 | $1,273 | $1,135 | $949 | $1,536 | ||||||||||||||||||||||
Average net assets (000) | $1,319 | $1,031 | $1,360 | $947 | $1,294 | $1,669 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.00 | %(e) | 2.00 | % | 2.00 | % | 2.00 | % | 2.00 | % | 2.08 | % | ||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.90 | %(e) | 3.33 | % | 3.32 | % | 4.17 | % | 3.10 | % | 2.62 | % | ||||||||||||||||
Net investment income (loss) | 0.33 | %(e) | 0.43 | % | 0.65 | % | 0.89 | % | 0.69 | % | (0.39 | )% | ||||||||||||||||
Portfolio turnover rate(f) | 77 | % | 246 | % | 211 | % | 154 | % | 92 | % | 122 | % |
(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 GAAP. 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 January 1, 2018, 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 US Real Estate Fund 17
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||||||||||||||
Ended | ||||||||||||||||||||||||||||||||||||
September 30, | Year Ended March 31, | |||||||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $14.25 | $10.62 | $13.16 | $11.07 | $12.02 | $13.72 | ||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.11 | 0.18 | 0.22 | 0.23 | 0.21 | 0.08 | ||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.14 | 3.65 | (1.93 | ) | 2.46 | (0.40 | ) | 0.09 | ||||||||||||||||||||||||||||
Total from investment operations | 2.25 | 3.83 | (1.71 | ) | 2.69 | (0.19 | ) | 0.17 | ||||||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.20 | ) | (0.22 | ) | (0.22 | ) | (0.16 | ) | (0.31 | ) | ||||||||||||||||||||||||
Distributions from net realized gains | - | - | (0.61 | ) | (0.38 | ) | (0.60 | ) | (1.56 | ) | ||||||||||||||||||||||||||
Total dividends and distributions | (0.06 | ) | (0.20 | ) | (0.83 | ) | (0.60 | ) | (0.76 | ) | (1.87 | ) | ||||||||||||||||||||||||
Net asset value, end of period | $16.44 | $14.25 | $10.62 | $13.16 | $11.07 | $12.02 | ||||||||||||||||||||||||||||||
Total Return(b): | 15.89 | % | 36.44 | % | (14.27 | )% | 25.03 | % | (2.09 | )% | 1.26 | % | ||||||||||||||||||||||||
| ||||||||||||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $40,122 | $24,856 | $19,702 | $20,978 | $15,422 | $16,397 | ||||||||||||||||||||||||||||||
Average net assets (000) | $31,042 | $21,999 | $25,381 | $17,162 | $16,394 | $22,153 | ||||||||||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.00 | %(e) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.13 | % | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.19 | %(e) | 1.42 | % | 1.44 | % | 1.54 | % | 1.80 | % | 1.56 | % | ||||||||||||||||||||||||
Net investment income (loss) | 1.38 | %(e) | 1.44 | % | 1.60 | % | 1.90 | % | 1.76 | % | 0.63 | % | ||||||||||||||||||||||||
Portfolio turnover rate(f) | 77 | % | 246 | % | 211 | % | 154 | % | 92 | % | 122 | % |
(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 GAAP. 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 January 1, 2018, 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.
18
Class R6 Shares
| ||||||||||||||||||||||||||||
Six Months Ended September 30, | May 25, 2017(a) through March 31, | |||||||||||||||||||||||||||
Year Ended March 31, | ||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $14.25 | $10.62 | $13.16 | $11.06 | $12.16 | |||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.11 | 0.18 | 0.28 | 0.22 | 0.20 | |||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.15 | 3.65 | (1.99 | ) | 2.48 | (0.54 | ) | |||||||||||||||||||||
Total from investment operations | 2.26 | 3.83 | (1.71 | ) | 2.70 | (0.34 | ) | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.20 | ) | (0.22 | ) | (0.22 | ) | (0.16 | ) | ||||||||||||||||||
Distributions from net realized gains | - | - | (0.61 | ) | (0.38 | ) | (0.60 | ) | ||||||||||||||||||||
Total dividends and distributions | (0.06 | ) | (0.20 | ) | (0.83 | ) | (0.60 | ) | (0.76 | ) | ||||||||||||||||||
Net asset value, end of period | $16.45 | $14.25 | $10.62 | $13.16 | $11.06 | |||||||||||||||||||||||
Total Return(c): | 15.89 | % | 36.44 | % | (14.27 | )% | 25.14 | % | (3.31 | )% | ||||||||||||||||||
| ||||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $8,811 | $3,396 | $954 | $12 | $10 | |||||||||||||||||||||||
Average net assets (000) | $6,656 | $2,559 | $294 | $11 | $10 | |||||||||||||||||||||||
Ratios to average net assets(d)(e): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.00 | %(f) | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | %(f) | ||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.20 | %(f) | 1.65 | % | 4.99 | % | 135.20 | % | 115.13 | %(f) | ||||||||||||||||||
Net investment income (loss) | 1.38 | %(f) | 1.46 | % | 2.06 | % | 1.88 | % | 1.93 | %(f) | ||||||||||||||||||
Portfolio turnover rate(g) | 77 | % | 246 | % | 211 | % | 154 | % | 92 | % |
(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 GAAP. 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 January 1, 2018, 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 US Real Estate Fund 19
Notes to Financial Statements (unaudited)
1. | Organization |
Prudential Investment Portfolios 12 (the “Trust”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The Trust currently consists of the following seven series: PGIM Global Real Estate Fund, PGIM QMA Long-Short Equity Fund and PGIM Short Duration Muni Fund, each of which are diversified funds for purposes of the 1940 Act and PGIM Jennison International Small-Mid Cap Opportunities Fund, PGIM Jennison NextGeneration Global Opportunities Fund, PGIM Jennison Technology Fund and PGIM US Real Estate Fund, each of which are non-diversified funds for purposes of the 1940 Act, and therefore, may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. These financial statements relate only to the PGIM US Real Estate Fund (the “Fund”).
The investment objective of the Fund is capital appreciation and income.
2. | 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 is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform to U.S. generally accepted accounting principles (“GAAP”). 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 as of the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. As described in further detail below, the Fund’s investments are valued daily based on a number of factors, including the type of investment and whether market quotations are readily available. The Trust’s Board of Trustees (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. 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. A record of the Valuation Committee’s actions is subject to the Board’s review at its first quarterly meeting following the quarter in which such actions take place.
20
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 Fund’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
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 or preferred stocks, exchange-traded funds and derivative instruments, if applicable, 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 funds (other than exchange-traded 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. Altering one or more unobservable inputs may result in a significant change to a Level 3 security’s fair value measurement.
PGIM US Real Estate Fund 21
Notes to Financial Statements (unaudited) (continued)
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.
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 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 investment transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Fund’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 Trust, 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 all or a portion of the
22
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.
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. The remaining maturities of the securities lending transactions are considered overnight and continuous. 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 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, which are reflected in interest income or unaffiliated dividend income based on the nature of the payment on the Statement of Operations. 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 in the Statement of Operations.
Equity and Mortgage Real Estate Investment Trusts (collectively REITs): The Fund invested in REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from 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 REITs.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are
PGIM US Real Estate Fund 23
Notes to Financial Statements (unaudited) (continued)
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. Such class specific expenses and waivers 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. The tax legislation did not expressly permit regulated investment companies (“RICs”) paying dividends attributable to such income to pass through this special treatment to its shareholders. On January 18, 2019, the Internal Revenue Service issued final regulations that permit RICs to pass through “qualified REIT dividends” 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 determined in accordance with federal income tax regulations and which may differ from GAAP, 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.
24
3. | Agreements |
The Trust, on behalf of the Fund, has a management agreement with the Manager. Pursuant to this agreement, the Manager has responsibility for all investment advisory services and supervises the subadvisers’ performance of such services.
The Manager has entered into an amended and restated subadvisory agreement with PGIM, Inc. (which provides subadvisory services to the Fund through its business unit, PGIM Real Estate) and PGIM Real Estate (UK) Limited (formerly PGIM Fund Management Limited), an indirect wholly-owned subsidiary of PGIM, Inc. (each a “subadviser” and collectively the “subadvisers”). The Manager pays for the services of the subadvisers.
The management fee paid to the Manager is accrued daily and payable monthly at an annual rate of 0.75% of the Fund’s average daily net assets up to and including $1 billion, 0.73% on the next $2 billion of average daily net assets, 0.71% on the next $2 billion of average daily net assets, 0.70% on the next $5 billion of average daily net assets and 0.69% on 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 reporting period ended September 30, 2021.
The Manager has contractually agreed, through July 31, 2022, to limit total annual operating expenses after fee waivers and/or expense reimbursements to 1.25% of average daily net assets for Class A shares, 2.00% of average daily net assets for Class C shares, 1.00% of average daily net assets for Class Z shares and 1.00% 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 such expenses on any other share class. 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 the Manager may be recouped by the Manager within the same fiscal year during which such waiver 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 Trust, 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 C, Class Z and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A and Class C shares, pursuant to the plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS.
PGIM US Real Estate Fund 25
Notes to Financial Statements (unaudited) (continued)
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.30%,and 1% of the average daily net assets of the Class A and Class C shares, respectively. PIMS has contractually agreed through July 31, 2022 to limit such fees to 0.25% of the average daily net assets of the Class A shares. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z or Class R6 shares of the Fund.
For the period ended September 30, 2021, PIMS received $11,291 in front-end sales charges resulting from sales of Class A shares. Additionally, for the period ended September 30, 2021, PIMS received $0 and $22 in contingent deferred sales charges imposed upon redemptions by certain Class A 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, PGIM, Inc., PGIM Real Estate (UK) Limited and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
4. | 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 Fund’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 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. PGIM Investments and/or its affiliates are paid fees or reimbursed for providing their services to the Core Fund and the Money Market Fund. In addition to the realized and unrealized gains on investments in the Core Fund and Money Market Fund, earnings from such investments are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
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/trustees, and/or common officers. For the reporting period ended September 30, 2021, no 17a-7 transactions were entered into by the Fund.
26
5. | 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 period ended September 30, 2021, were $51,188,059 and $34,880,405, respectively.
A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the period ended September 30, 2021, is presented as follows:
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 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Investments - Affiliated Mutual Fund: |
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PGIM Core Ultra Short Bond Fund (1)(wb) |
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$201,060 | $ | 19,296,222 | $ | 18,882,861 | $ | — | $ | — | $ | 614,421 | 614,421 | $ | 318 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(1) | The Fund did not have any capital gain distributions during the reporting period. |
(wb) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund. |
6. | Tax Information |
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of September 30, 2021 were as follows:
Tax Basis | $ | 49,518,935 | ||||||||
|
| |||||||||
| Gross Unrealized Appreciation | 7,987,683 | ||||||||
Gross Unrealized Depreciation | (750,189 | ) | ||||||||
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Net Unrealized Appreciation |
| $ | 7,237,494 | |||||||
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The GAAP 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. Since tax authorities can examine previously filed tax returns, the Fund’s U.S. federal and state tax returns for each of the four fiscal years up to the most recent fiscal year ended March 31, 2021 are subject to such review.
7. | Capital and Ownership |
The Fund offers Class A, Class C, 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. Effective June 26, 2020, all of the issued and outstanding
PGIM US Real Estate Fund 27
Notes to Financial Statements (unaudited) (continued)
Class B shares of the Fund converted into Class A shares. 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 eight years (ten years prior to January 22, 2021) after purchase. Class Z and Class R6 shares are not subject to any sales or redemption charges 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 beneficial interest, below.
The Trust has authorized an unlimited number of shares of beneficial interest of the Fund at $0.001 par value per share.
As of September 30, 2021, Prudential, through its affiliated entities, including affiliated funds (if applicable), owned shares of the Fund as follows:
Number of Shares | Percentage of Outstanding Shares | |||
Class Z | 1,531,496 | 62.8% | ||
Class R6 | 997 | 0.2% |
At the reporting period end, the number of shareholders holding greater than 5% of the Fund are as follows:
Affiliated | Unaffiliated | |||||
Number of Shareholders | Percentage of Outstanding Shares | Number of Shareholders | Percentage of Outstanding Shares | |||
1 | 44.3% | 4 | 40.3% |
28
Transactions in shares of beneficial interest were as follows:
Class A | Shares | Amount | ||||||||||
Six months ended September 30, 2021: | ||||||||||||
Shares sold | 44,423 | $ | 735,356 | |||||||||
Shares issued in reinvestment of dividends and distributions | 1,078 | 17,682 | ||||||||||
Shares purchased | (71,925 | ) | (1,162,825 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | (26,424 | ) | (409,787 | ) | ||||||||
Shares issued upon conversion from other share class(es) | 1,536 | 25,456 | ||||||||||
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Net increase (decrease) in shares outstanding | (24,888 | ) | $ | (384,331 | ) | |||||||
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Year ended March 31, 2021: | ||||||||||||
Shares sold | 40,353 | $ | 466,746 | |||||||||
Shares issued in reinvestment of dividends and distributions | 6,796 | 81,445 | ||||||||||
Shares purchased | (225,914 | ) | (2,755,396 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | (178,765 | ) | (2,207,205 | ) | ||||||||
Shares issued upon conversion from other share class(es) | 21,455 | 255,496 | ||||||||||
Shares purchased upon conversion into other share class(es) | (2,237 | ) | (27,985 | ) | ||||||||
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Net increase (decrease) in shares outstanding | (159,547 | ) | $ | (1,979,694 | ) | |||||||
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Class B | ||||||||||||
Period ended June 26, 2020*: | ||||||||||||
Shares sold | 370 | $ | 4,000 | |||||||||
Shares issued in reinvestment of dividends and distributions | 18 | 190 | ||||||||||
Shares purchased | (187 | ) | (2,027 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | 201 | 2,163 | ||||||||||
Shares purchased upon conversion into other share class(es) | (17,515 | ) | (197,930 | ) | ||||||||
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Net increase (decrease) in shares outstanding | (17,314 | ) | $ | (195,767 | ) | |||||||
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Class C | ||||||||||||
Six months ended September 30, 2021: | ||||||||||||
Shares sold | 48,512 | $ | 762,234 | |||||||||
Shares issued in reinvestment of dividends and distributions | 42 | 689 | ||||||||||
Shares purchased | (18,430 | ) | (295,038 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | 30,124 | 467,885 | ||||||||||
Shares purchased upon conversion into other share class(es) | (5,867 | ) | (93,465 | ) | ||||||||
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Net increase (decrease) in shares outstanding | 24,257 | $ | 374,420 | |||||||||
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Year ended March 31, 2021: | ||||||||||||
Shares sold | 14,124 | $ | 179,475 | |||||||||
Shares issued in reinvestment of dividends and distributions | 619 | 7,323 | ||||||||||
Shares purchased | (62,060 | ) | (708,665 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | (47,317 | ) | (521,867 | ) | ||||||||
Shares purchased upon conversion into other share class(es) | (4,425 | ) | (57,566 | ) | ||||||||
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Net increase (decrease) in shares outstanding | (51,742 | ) | $ | (579,433 | ) | |||||||
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PGIM US Real Estate Fund 29
Notes to Financial Statements (unaudited) (continued)
Class Z | Shares | Amount | ||||||||||
Six months ended September 30, 2021: | ||||||||||||
Shares sold | 774,660 | $ | 12,914,312 | |||||||||
Shares issued in reinvestment of dividends and distributions | 7,389 | 120,544 | ||||||||||
Shares purchased | (44,594 | ) | (726,468 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | 737,455 | 12,308,388 | ||||||||||
Shares issued upon conversion from other share class(es) | 4,175 | 68,010 | ||||||||||
Shares purchased upon conversion into other share class(es) | (46,243 | ) | (714,458 | ) | ||||||||
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Net increase (decrease) in shares outstanding | 695,387 | $ | 11,661,940 | |||||||||
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Year ended March 31, 2021: | ||||||||||||
Shares sold | 186,828 | $ | 2,261,393 | |||||||||
Shares issued in reinvestment of dividends and distributions | 29,687 | 356,964 | ||||||||||
Shares purchased | (329,337 | ) | (3,916,194 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | (112,822 | ) | (1,297,837 | ) | ||||||||
Shares issued upon conversion from other share class(es) | 2,234 | 27,985 | ||||||||||
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Net increase (decrease) in shares outstanding | (110,588 | ) | $ | (1,269,852 | ) | |||||||
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Class R6 | ||||||||||||
Six months ended September 30, 2021: | ||||||||||||
Shares sold | 337,582 | $ | 5,443,722 | |||||||||
Shares issued in reinvestment of dividends and distributions | 1,538 | 25,351 | ||||||||||
Shares purchased | (87,889 | ) | (1,435,625 | ) | ||||||||
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Net increase (decrease) in shares outstanding before conversion | 251,231 | 4,033,448 | ||||||||||
Shares issued upon conversion from other share class(es) | 46,243 | 714,457 | ||||||||||
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Net increase (decrease) in shares outstanding | 297,474 | $ | 4,747,905 | |||||||||
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Year ended March 31, 2021: | ||||||||||||
Shares sold | 228,793 | $ | 2,677,650 | |||||||||
Shares issued in reinvestment of dividends and distributions | 3,340 | 40,691 | ||||||||||
Shares purchased | (83,647 | ) | (1,045,294 | ) | ||||||||
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Net increase (decrease) in shares outstanding | 148,486 | $ | 1,673,047 | |||||||||
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* | Effective June 26, 2020, all of the issued and outstanding Class B shares of the Fund converted into Class A shares. |
8. | Borrowings |
The Trust, on behalf of the Fund, along with other affiliated registered investment companies (the “Participating 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 table below provides details of the SCA.
30
SCA | ||
Term of Commitment | 10/2/2020 – 9/30/2021 | |
Total Commitment | $ 1,200,000,000 | |
Annualized Commitment Fee on the Unused Portion of the SCA | 0.15% | |
Annualized Interest Rate on Borrowings | 1.30% plus the higher of (1) the effective federal funds rate, (2) the one-month LIBOR rate or (3) zero percent |
Subsequent to the reporting period end, the SCA has been renewed and effective October 1, 2021 will provide a commitment of $1,200,000,000 through September 29, 2022. The commitment fee paid by the Participating Funds will continue to be .15% of the unused portion of the SCA. The interest on borrowings under the renewed SCA will be paid monthly and at a per annum interest rate of 1.20% plus the higher of (1) the effective federal funds rate, (2) the one-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 Participating Funds in the SCA equitably.
The Fund utilized the SCA during the reporting period ended September 30, 2021. The average daily balance for the 1 day that the Fund had loans outstanding during the period was approximately $144,000, borrowed at a weighted average interest rate of 1.38%. The maximum loan outstanding amount during the period was $144,000. At September 30, 2021, the Fund did not have an outstanding loan amount.
9. | Risks of Investing in the Fund |
The Fund’s risks include, but are not limited to, some or all of the risks discussed below. For further information on the Fund’s risks, please refer to the Fund’s Prospectus and Statement of Additional Information.
Active Trading Risk: The Fund actively and frequently trades its portfolio securities. High portfolio turnover results in higher transaction costs, which can affect the Fund’s performance and have adverse tax consequences. In addition, high portfolio turnover may also mean that a proportionately greater amount of distributions to shareholders will be taxed as ordinary income rather than long-term capital gains compared to investment companies with lower portfolio turnover.
PGIM US Real Estate Fund 31
Notes to Financial Statements (unaudited) (continued)
Concentration Risk: To the extent that the Fund is concentrated in the securities of companies, a particular market, industry, group of industries, sector or asset class, country, region or group of countries, the Fund may be adversely affected by the performance of those securities, may be subject to increased price volatility and may be more susceptible to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class, country, region or group of countries.
Economic and Market Events Risk: Events in the U.S. and global financial markets, including actions taken by the U.S. Federal Reserve or foreign central banks to stimulate or stabilize economic growth or the functioning of the securities markets, may at times result in unusually high market volatility, which could negatively impact performance. Relatively reduced liquidity in credit and fixed income markets could adversely affect issuers worldwide.
Equity and Equity-Related Securities Risk: Equity and equity-related securities may be subject to changes in value, and their values may be more volatile than those of other asset classes. 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. Different parts of a market can react differently to adverse issuer, market, regulatory, political and economic developments.
Increase in Expenses Risk: Your actual cost of investing in the Fund may be higher than the expenses shown in the expense table in the Fund’s prospectus for a variety of reasons. For example, expense ratios may be higher than those shown if average net assets decrease. Net assets are more likely to decrease and Fund expense ratios are more likely to increase when markets are volatile. Active and frequent trading of Fund securities can increase expenses.
Large Shareholder and Large Scale Redemption Risk: Certain individuals, accounts, funds (including funds affiliated with the Manager) or institutions, including the Manager and its affiliates, may from time to time own or control a substantial amount of the Fund’s shares. There is no requirement that these entities maintain their investment in the Fund. There is a risk that such large shareholders or that the Fund’s shareholders generally may redeem all or a substantial portion of their investments in the Fund in a short period of time, which could have a significant negative impact on the Fund’s NAV, liquidity, and brokerage costs. Large redemptions could also result in tax consequences to shareholders and impact the Fund’s ability to implement its investment strategy. The Fund’s ability to pursue its investment objective after one or more large scale redemptions may be impaired and, as a result, the Fund may invest a larger portion of its assets in cash or cash equivalents.
Market Disruption and Geopolitical Risks: International wars or conflicts and geopolitical developments in foreign countries, along with instability in regions such as Asia, Eastern
32
Europe, and the Middle East, possible terrorist attacks in the United States or around the world, public health epidemics such as the outbreak of infectious diseases like the outbreak of COVID-19 globally in 2020 or the 2014–2016 outbreak in West Africa of the Ebola virus, and other similar events could adversely affect the U.S. and foreign financial markets, including increases in market volatility, reduced liquidity in the securities markets and government intervention, and may cause further long-term economic uncertainties in the United States and worldwide generally. The coronavirus pandemic and the related governmental and public responses have had and may continue to have an impact on the Fund’s investments and net asset value and have led and may continue to lead to increased market volatility and the potential for illiquidity in certain classes of securities and sectors of the market. Preventative or protective actions that governments may take in respect of pandemic or epidemic diseases may result in periods of business disruption, business closures, inability to obtain raw materials, supplies and component parts, and reduced or disrupted operations for the issuers in which the Fund invests. Government intervention in markets may impact interest rates, market volatility and security pricing. The occurrence, reoccurrence and pendency of such diseases could adversely affect the economies (including through changes in business activity and increased unemployment) and financial markets either in specific countries or worldwide.
Market 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 your investment in the Fund will decline.
Non-Diversified Investment Company Risk: The Fund is non-diversified for purposes of the Investment Company Act of 1940 (1940 Act). This means that the Fund may invest a greater percentage of its assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund.
Real Estate Investment Trust (REIT) Risk: Investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of any credit extended. 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. REITs may be more volatile and/or more illiquid than other types of equity securities. REITs (especially mortgage REITs) are subject to interest rate risks. REITs may incur significant amounts of leverage. The Fund will indirectly bear a portion of the expenses, including management fees, paid by each REIT in which it invests, in addition to the expenses of the Fund.
REITs must also meet certain requirements under the Internal Revenue Code of 1986, as amended (the Code) to avoid entity level tax and be eligible to pass-through certain tax
PGIM US Real Estate Fund 33
Notes to Financial Statements (unaudited) (continued)
attributes of their income to shareholders. REITs are consequently subject to the risk of failing to meet these requirements for favorable tax treatment and of failing to maintain their exemptions from registration under the Investment Company Act of 1940. REITs are subject to the risks of changes in the Code affecting their tax status.
Because the Fund invests in real estate securities, including REITs, the Fund is subject to the risks of investing in the real estate industry, such as changes in general and local economic conditions, the supply and demand for real estate and changes in zoning and tax laws. Since the Fund concentrates in the real estate industry, its holdings can vary significantly from broad market indices. As a result, the Fund’s performance can deviate from the performance of such indices. Because the Fund invests in stocks, there is the risk that the price of a particular stock owned by the Fund could go down or pay lower-than-expected or no dividends. In addition to an individual stock losing value, the value of the equity markets or of companies comprising the real estate industry could go down.
Real Estate Related Securities Risk: An investment in the Fund will be closely linked to the performance of the real estate markets. Real estate securities are subject to the same 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 prepayments 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.
Selection Risk: Selection risk is the risk that the securities selected by the subadviser will underperform the market, the relevant indices, or other funds with similar investment objectives and investment strategies. Individual REIT prices may drop because of the failure of borrowers to pay their loans, a dividend reduction, a disruption to the real estate investment sales market, changes in federal or state taxation policies affecting REITs, or poor management of a REIT.
Value Style Risk: Since the Fund follows a value investment style, there is the risk that the value style may be out of favor for long periods of time, that the market will not recognize a security’s intrinsic value for a long time or at all, or that a stock judged to be undervalued may actually be appropriately priced or overvalued. Issuers of value stocks may have experienced adverse business developments or may be subject to special risks that have caused the stock to be out of favor. In addition, the Fund’s value investment style may go out
34
of favor with investors, negatively affecting the Fund’s performance. If the Fund’s assessment of market conditions or a company’s value is inaccurate, the Fund could suffer losses or produce poor performance relative to other funds.
10. | Recent Regulatory Developments |
On December 3, 2020, the SEC announced that it voted to adopt a new rule that establishes an updated regulatory framework for fund valuation practices (the “Rule”). The Rule, in part, provides (i) a framework for determining fair value in good faith and (ii) provides for a fund Board’s assignment of its responsibility for the execution of valuation-related activities to a fund’s investment adviser. Further, the SEC is rescinding previously issued guidance on related issues. The Rule took effect on March 8, 2021, with a compliance date of September 8, 2022. Management is currently evaluating the Rule and its impact to the Fund.
PGIM US Real Estate Fund 35
Approval of Advisory Agreements
The Fund’s Board of Trustees
The Board of Trustees (the “Board”) of PGIM US Real Estate Fund (the “Fund”)1 consists of ten individuals, eight of whom are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Trustees”). The Board is responsible for the oversight of the Fund and its operations, and performs the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Trustees have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Trustee. The Board has established four standing committees: the Audit Committee, the Nominating and Governance Committee, and two Investment Committees. Each committee is chaired by, and composed of, Independent Trustees.
Annual Approval of the Fund’s Advisory Agreements
As required under the 1940 Act, the Board determines annually whether to renew the Fund’s management agreement with PGIM Investments LLC (“PGIM Investments”) and the Fund’s subadvisory agreement with PGIM, Inc. (“PGIM”), on behalf of its PGIM Real Estate unit (“PGIM Real Estate”), and PGIM Real Estate (UK) Limited (“PGIM RE (UK)”). In considering the renewal of the agreements, the Board, including all of the Independent Trustees, met on June 7-10, 2021 and approved the renewal of the agreements through July 31, 2022, after concluding that the renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board requested and received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with its consideration. Among other things, the Board considered comparative fee information from PGIM Investments, PGIM and PGIM RE (UK). Also, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups, as is further discussed below.
In approving the agreements, the Board, including the Independent Trustees advised by independent legal counsel, considered the factors it deemed relevant, including the nature, quality and extent of services provided by PGIM Investments and the subadvisers, the performance of the Fund, the profitability of PGIM Investments and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders as the Fund’s assets grow. In their deliberations, the Trustees did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with its deliberations, the Board considered information provided by PGIM Investments throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 7-10, 2021.
1 PGIM US Real Estate Fund is a series of Prudential Investment Portfolios 12.
PGIM US Real Estate Fund
Approval of Advisory Agreements (continued)
The Trustees determined that the overall arrangements between the Fund and PGIM Investments, which serves as the Fund’s investment manager pursuant to a management agreement, and between PGIM Investments and each of PGIM (through its PGIM Real Estate unit), and PGIM RE (UK), which serve as the Fund’s subadvisers pursuant to the terms of a subadvisory agreement with PGIM Investments, are in the best interests of the Fund and its shareholders in light of the services performed, fees charged and such other matters as the Trustees considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the Trustees’ reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature, quality and extent of services provided to the Fund by PGIM Investments, PGIM Real Estate and PGIM RE (UK). The Board noted that PGIM Real Estate and PGIM RE (UK) are affiliated with PGIM Investments. The Board considered the services provided by PGIM Investments, including but not limited to the oversight of the subadvisers for the Fund, as well as the provision of fund recordkeeping, compliance and other services to the Fund, and PGIM Investments’ role as the administrator of the Fund’s liquidity risk management program. With respect to PGIM Investments’ oversight of the subadvisers, the Board noted that PGIM Investments’ Strategic Investment Research Group (“SIRG”), which is a business unit of PGIM Investments, is responsible for monitoring and reporting to PGIM Investments’ senior management on the performance and operations of the subadvisers. The Board also considered that PGIM Investments pays the salaries of all of the officers and interested Trustees of the Fund who are part of Fund management. The Board also considered the investment subadvisory services provided by each of PGIM Real Estate and PGIM RE (UK), including investment research and security selection, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PGIM Investments’ evaluation of the subadvisers, as well as PGIM Investments’ recommendation, based on its review of the subadvisers, to renew the subadvisory agreement.
The Board considered the qualifications, backgrounds and responsibilities of PGIM Investments’ senior management responsible for the oversight of the Fund, PGIM Real Estate and PGIM RE (UK), and also considered the qualifications, backgrounds and responsibilities of PGIM Real Estate’s and PGIM RE (UK)’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PGIM Investments’, PGIM Real Estate’s and PGIM RE (UK)’s organizational structure, senior management, investment operations, and other relevant information pertaining to PGIM Investments, PGIM Real Estate and PGIM RE (UK). The Board also noted that it received favorable compliance reports from
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the Fund’s Chief Compliance Officer (“CCO”) as to PGIM Investments, PGIM Real Estate and PGIM RE (UK).
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PGIM Investments and the subadvisory services provided to the Fund by PGIM Real Estate and PGIM RE (UK), and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PGIM Investments, PGIM Real Estate and PGIM RE (UK) under the management and subadvisory agreements.
Costs of Services and Profits Realized by PGIM Investments
The Board was provided with information on the profitability of PGIM Investments and its affiliates in serving as the Fund’s investment manager. The Board discussed with PGIM Investments the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. However, the Board considered that the cost of services provided by PGIM Investments exceeded the management fees received by PGIM Investments, resulting in an operating loss to PGIM Investments for the year ended December 31, 2020. Taking these factors into account, the Board concluded that the profitability of PGIM Investments and its affiliates in relation to the services rendered was not unreasonable.
Economies of Scale
The Board received and discussed information concerning economies of scale that PGIM Investments may realize as the Fund’s assets grow beyond current levels. The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase. During the course of time, the Board has considered information regarding the launch date of the Fund, the management fees of the Fund compared to those of similarly managed funds and PGIM Investments’ investment in the Fund over time. The Board noted that economies of scale may be shared with the Fund in several ways, including low management fees from inception, additional technological and personnel investments to enhance shareholder services, and maintaining existing expense structures in the face of a rising cost environment. The Board considered PGIM Investments’ assertion that it continually evaluates the management fee schedule of the Fund and the potential to share economies of scale through breakpoints or fee waivers as asset levels increase.
The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board’s understanding that most of PGIM Investments’ costs are not specific to individual funds, but rather are incurred across a variety of products and services.
PGIM US Real Estate Fund
Approval of Advisory Agreements (continued)
Other Benefits to PGIM Investments, PGIM Real Estate and PGIM RE (UK)
The Board considered potential ancillary benefits that might be received by PGIM Investments, PGIM Real Estate, PGIM RE (UK) and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PGIM Investments included transfer agency fees received by the Fund’s transfer agent (which is affiliated with PGIM Investments), and benefits to its reputation as well as other intangible benefits resulting from PGIM Investments’ association with the Fund. The Board concluded that the potential benefits to be derived by PGIM Real Estate and PGIM RE (UK) included their ability to use soft dollar credits, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to its reputation. The Board concluded that the benefits derived by PGIM Investments, PGIM Real Estate and PGIM RE (UK) were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
Performance of the Fund / Fees and Expenses
The Board considered certain additional factors and made related conclusions relating to the historical performance of the Fund for the one-, three-, five- and ten-year periods ended December 31, 2020.
The Board also considered the Fund’s actual management fee, as well as the Fund’s net total expense ratio, for the fiscal year ended March 31, 2020. The Board considered the management fee for the Fund as compared to the management fee charged by PGIM Investments to other funds and the fee charged by other advisers to comparable mutual funds in a Peer Group. The actual management fee represents the fee rate actually paid by Fund shareholders and includes any fee waivers or reimbursements. The net total expense ratio for the Fund represents the actual expense ratio incurred by Fund shareholders.
The mutual funds included in the Peer Universe, which was used to consider performance, and the Peer Group, which was used to consider fees and expenses, were objectively determined by Broadridge, an independent provider of mutual fund data. In certain circumstances, PGIM Investments also may have provided supplemental Peer Universe or Peer Group information for reasons addressed with the Board. The comparisons placed the Fund in various quartiles over various periods, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).
The section below summarizes key factors considered by the Board and the Board’s conclusions regarding the Fund’s performance, fees and overall expenses. The table sets forth net performance comparisons (which reflect the impact on performance of fund expenses, or any subsidies, expense caps or waivers that may be applicable) with the Peer Universe, actual management fees with the Peer Group (which reflect the
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impact of any subsidies or fee waivers), and net total expenses with the Peer Group, each of which were key factors considered by the Board.
Net Performance | 1 Year | 3 Years | 5 Years | 10 Years | ||||
3rd Quartile | 1st Quartile | 1st Quartile | 2nd Quartile | |||||
Actual Management Fees: 1st Quartile | ||||||||
Net Total Expenses: 3rd Quartile |
· | The Board noted that the Fund outperformed its benchmark index over all periods. |
· | The Board and PGIM Investments agreed to retain the existing contractual expense cap, which (exclusive of certain fees and expenses) caps total annual operating expenses at 1.25% for Class A shares, 2.00% for Class C shares, 1.00% for Class Z shares and 1.00% for Class R6 shares through July 31, 2022. |
· | In addition, PGIM Investments will waive management fees or shared operating expenses on any share class to the same extent that it waives such expenses on any other share class, and has agreed that total annual fund operating expenses for Class R6 shares will not exceed total annual fund operating expenses for Class Z shares. |
· | The Board concluded that, in light of the above, it would be in the best interests of the Fund and its shareholders to renew the agreements. |
· | The Board concluded that the management fees (including subadvisory fees) and total expenses were reasonable in light of the services provided. |
* * *
After full consideration of these factors, the Board concluded that the approval of the agreements was in the best interests of the Fund and its shareholders.
PGIM US Real Estate Fund
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street | (800) 225-1852 | pgim.com/investments | ||
Newark, NJ 07102 |
PROXY VOTING
The Board of Trustees 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 or by visiting the Securities and Exchange Commission’s website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.
TRUSTEES
Ellen S. Alberding · Kevin J. Bannon · Scott E. Benjamin · Linda W. Bynoe · Barry H. Evans · Keith F. Hartstein · Laurie Simon Hodrick · 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 · Claudia DiGiacomo, Chief Legal Officer · Dino Capasso, Chief Compliance Officer · Jonathan Corbett, Anti-Money Laundering Compliance Officer · Andrew R. French, Secretary · Melissa Gonzalez, Assistant Secretary · Diana N. Huffman, Assistant Secretary · Kelly A. Coyne, Assistant Secretary · Patrick E. McGuinness, Assistant Secretary · Debra Rubano, Assistant Secretary · Lana Lomuti, Assistant Treasurer · Russ Shupak, Assistant Treasurer · Elyse M. McLaughlin, Assistant Treasurer · Deborah Conway, Assistant Treasurer
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
SUBADVISERS | PGIM Real Estate | 7 Giralda Farms Madison, NJ 07940 | ||
PGIM Real Estate (UK) Limited | Grand Buildings, 1-3 Strand Trafalgar Square London, WC2N 5HR United Kingdom | |||
DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
CUSTODIAN | The Bank of New York Mellon | 240 Greenwich Street New York, NY 10286 | ||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | PricewaterhouseCoopers LLP | 300 Madison Avenue New York, NY 10017 | ||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
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 at PGIM.COM/INVESTMENTS 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 to pgim.com/investments/resource/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 by visiting the website address above.
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, PGIM US Real Estate Fund, PGIM Investments, Attn: Board of Trustees, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Trustee by writing to that Trustee at the same address. Communications are not screened before being delivered to the addressee.
AVAILABILITY OF PORTFOLIO HOLDINGS
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 as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the Commission’s website at sec.gov.
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 US REAL ESTATE FUND | ||||||||||||
SHARE CLASS | A | C | Z | R6 | ||||||||
NASDAQ | PJEAX | PJECX | PJEZX | PJEQX | ||||||||
CUSIP | 744336603 | 744336801 | 744336884 | 744336751 |
MF209E2
PGIM SHORT DURATION MUNI FUND
SEMIANNUAL REPORT
SEPTEMBER 30, 2021
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Holdings and Financial Statements
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Approval of Advisory Agreements
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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 September 30, 2021 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS), member SIPC. Fixed Income is a unit of PGIM, Inc. (PGIM), a registered investment adviser. PIMS and PGIM are Prudential Financial companies. © 2021 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.
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Dear Shareholder:
We hope you find the semiannual report for PGIM Short Duration Muni Fund informative and useful. The report covers performance for the six-month period ended September 30, 2021.
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 Short Duration Muni Fund
November 15, 2021
PGIM Short Duration Muni Fund 3
Performance data quoted represent 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 at pgim.com/investments or by calling (800) 225-1852.
Average Annual Total Returns as of 9/30/21 | ||||||||
(without sales charges) | (with sales charges) | |||||||
Six Months* (%) | One Year (%) | Five Years (%) | Since Inception (%) | |||||
Class A | 0.48 | -0.86 | 1.63 | 2.25 (05/29/2014) | ||||
Class C | 0.02 | -0.37 | 1.32 | 1.78 (05/29/2014) | ||||
Class Z | 0.65 | 1.82 | 2.36 | 2.83 (05/29/2014) | ||||
Class R6 | 0.57 | 1.75 | N/A | 2.84 (05/25/2017) | ||||
Bloomberg 1-8 Year Municipal Index | ||||||||
0.45 | 0.96 | 2.17 | — |
Average Annual Total Returns as of 9/30/21 Since Inception (%) | ||||
Class A, Class C, Class Z | Class R6 | |||
(05/29/2014) | (05/25/2017) | |||
Bloomberg 1-8 Year Municipal Index | 2.10 | 2.31 |
*Not annualized
Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Index are measured from the closest month-end to the class’ inception date.
Source: PGIM Investments LLC and Bloomberg
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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 C | Class Z | Class R6 | |||||
Maximum initial sales charge | 2.25% of the public offering price (3.25% of the public offering price for purchases prior to July 15, 2019). | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of the original purchase price or the net asset value at redemption) | 1.00% on sales of $500,000 or more made within 12 months of purchase (1.00% on sales of $1 million or more made within 12 months of purchase for purchases prior to July 15, 2019). | 1.00% on sales made within 12 months of purchase | None | None | ||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.25% | 1.00% | None | None |
Benchmark Definition
Bloomberg 1-8 Year Municipal Index—The Bloomberg US Municipal Index covers the USD-denominated long-term tax-exempt bond market and has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and pre-refunded bonds. The Bloomberg 1-8 Year Municipal Index contains bonds with maturities between 1 and 8 years.
Investors cannot invest directly in an index. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes that may be paid by an investor.
PGIM Short Duration Muni Fund 5
Your Fund’s Performance (continued)
Distributions and Yields as of 9/30/21 | ||||||||||||||
Total Distributions Paid for | SEC 30-Day Subsidized | Taxable Equivalent 30-Day Subsidized Yield*** at Federal Tax Rates of | SEC 30-Day Unsubsidized | Taxable Equivalent Tax Rates of | ||||||||||
Six Months ($) | Yield* (%) | 37.0% | 40.8% | Yield** (%) | 37.0% | 40.8% | ||||||||
Class A | 0.04 | 0.03 | 0.05 | 0.05 | -0.01 | -0.02 | -0.02 | |||||||
Class C | 0.001 | -0.81 | -1.29 | -1.37 | -0.84 | -1.33 | -1.42 | |||||||
Class Z | 0.06 | 0.33 | 0.52 | 0.56 | 0.21 | 0.33 | 0.35 | |||||||
Class R6 | 0.06 | 0.36 | 0.57 | 0.61 | 0.01 | 0.02 | 0.02 |
*SEC 30-Day Subsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s net expenses (net of any expense waivers or reimbursements). The investor experience is represented by the SEC 30-Day Subsidized Yield.
**SEC 30-Day Unsubsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s gross expenses. The investor experience is represented by the SEC 30-Day Subsidized Yield.
***The taxable equivalent yield is the yield an investor would have to earn on a taxable investment in order to equal the yield provided by a tax-exempt municipal bond. Some investors may be subject to the federal alternative minimum tax (AMT). Taxable equivalent yields reflect federal and applicable state tax rates.
1 Amount rounds to zero.
Credit Quality expressed as a percentage of total investments as of 9/30/21 (%) | ||||
AAA | 5.9 | |||
AA | 39.9 | |||
A | 37.8 | |||
BBB | 12.5 | |||
BB | 0.4 | |||
Not Rated | 1.0 | |||
Cash/Cash Equivalents | 2.5 | |||
Total | 100 |
Source: PGIM Fixed Income
Credit ratings reflect the highest rating assigned by a nationally recognized statistical rating organization (NRSRO) such as Moody’s Investors Service, Inc. (Moody’s), S&P Global Ratings (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, ratings are converted to the comparable S&P/Fitch rating tier nomenclature. These rating agencies are independent and are widely used. The Not Rated category consists of securities that have not been rated by an NRSRO. Credit ratings 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 September 30, 2021. 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 and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information
PGIM Short Duration Muni Fund 7
Fees and Expenses (continued)
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 Short Duration Muni
Fund
| Beginning
Account Value
April 1, 2021
| Ending
Account Value
| Annualized
Expense
Ratio Based on the Six-Month Period
| Expenses Paid
During the
Six-Month
Period*
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Class A | Actual | $1,000.00 | $1,004.80 | 0.62% | $3.12 | |||||
Hypothetical | $1,000.00 | $1,021.96 | 0.62% | $3.14 | ||||||
Class C | Actual | $1,000.00 | $1,000.20 | 1.39% | $6.97 | |||||
Hypothetical | $1,000.00 | $1,018.10 | 1.39% | $7.03 | ||||||
Class Z | Actual | $1,000.00 | $1,006.50 | 0.32% | $1.61 | |||||
Hypothetical | $1,000.00 | $1,023.46 | 0.32% | $1.62 | ||||||
Class R6 | Actual | $1,000.00 | $1,005.70 | 0.29% | $1.46 | |||||
Hypothetical | $1,000.00 | $1,023.61 | 0.29% | $1.47 |
*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 183 days in the six-month period ended September 30, 2021, and divided by the 366 days in the Fund’s fiscal year ending March 31, 2022 (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 September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
LONG-TERM INVESTMENTS 100.9% | ||||||||||||||||
MUNICIPAL BONDS | ||||||||||||||||
Alabama 1.9% | ||||||||||||||||
Alabama Public School and College Authority, | ||||||||||||||||
Revenue, Social Bonds, Series A, Rfdg | 5.000% | 11/01/27 | 1,300 | $ | 1,627,548 | |||||||||||
Black Belt Energy Gas District, | ||||||||||||||||
Revenue, Project No. 4, Series A-1, (Mandatory Put Date 12/01/25) | 4.000 | 12/01/49 | 1,525 | 1,727,032 | ||||||||||||
Revenue, Project No. 5, Series A-1, (Mandatory Put Date 10/01/26) | 4.000 | 10/01/49 | 925 | 1,066,451 | ||||||||||||
Revenue, Project No. 6, Series B, (Mandatory Put Date 12/01/26) | 4.000 | 10/01/52 | 1,000 | 1,149,850 | ||||||||||||
Selma Industrial Development Board, | ||||||||||||||||
Revenue, International Paper Co. Project, Series A, Rfdg, (Mandatory Put Date 06/16/25) | 1.375 | 05/01/34 | 400 | 409,048 | ||||||||||||
Southeast Energy Authority, A Cooperative District, | ||||||||||||||||
Revenue, Project No. 1, Series A, (Mandatory Put Date 10/01/28) | 4.000 | 11/01/51 | 1,000 | 1,183,440 | ||||||||||||
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7,163,369 | ||||||||||||||||
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Alaska 0.8% | ||||||||||||||||
Alaska Industrial Development & Export Authority, | ||||||||||||||||
Revenue, Tanana Chiefs Conference Project, Series A | 5.000 | 10/01/29 | 1,000 | 1,281,750 | ||||||||||||
Northern Tobacco Securitization Corp., | ||||||||||||||||
Revenue, Senior Series A, Class 1, Rfdg | 5.000 | 06/01/28 | 1,350 | 1,698,651 | ||||||||||||
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2,980,401 | ||||||||||||||||
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Arizona 3.1% | ||||||||||||||||
Arizona Health Facilities Authority, | ||||||||||||||||
Revenue, Banner Health, Series B, 3 Month LIBOR + 0.810% | 0.907(c) | 01/01/37 | 2,500 | 2,526,129 | ||||||||||||
Arizona Industrial Development Authority, | ||||||||||||||||
Revenue, Phoenix Children’s Hospital Project, Series A | 5.000 | 02/01/27 | 325 | 394,378 | ||||||||||||
Revenue, Phoenix Children’s Hospital Project, Series A, Rfdg(hh) | 5.000 | 02/01/27 | 1,200 | 1,452,372 | ||||||||||||
Chandler Industrial Development Authority, | ||||||||||||||||
Revenue, Intel Corp. Project, (Mandatory Put Date 08/14/23) | 2.400 | 12/01/35 | 1,340 | 1,389,392 | ||||||||||||
Revenue, Intel Corp., AMT, (Mandatory Put Date 06/03/24) | 5.000 | 06/01/49 | 1,010 | 1,127,402 |
See Notes to Financial Statements.
PGIM Short Duration Muni Fund 9
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Arizona (cont’d.) | ||||||||||||||||
City of Phoenix Civic Improvement Corp., | ||||||||||||||||
Revenue, Senior Lien, AMT, Rfdg | 5.000% | 07/01/32 | 500 | $ | 538,600 | |||||||||||
Industrial Development Authority of the City of Phoenix, | ||||||||||||||||
Revenue, Great Hearts Academies Project | 3.750 | 07/01/24 | 300 | 315,321 | ||||||||||||
Maricopa County Industrial Development Authority, | ||||||||||||||||
Revenue, Reid Traditional Schools Project | 4.000 | 07/01/26 | 500 | 542,885 | ||||||||||||
Maricopa County Special Health Care District, | ||||||||||||||||
Series D, GO | 5.000 | 07/01/28 | 350 | 441,234 | ||||||||||||
Salt River Project Agricultural Improvement & Power District, | ||||||||||||||||
Revenue, Forward Delivery, Series A, Rfdg | 5.000 | 01/01/28 | 375 | 470,824 | ||||||||||||
Salt Verde Finance Corp., | ||||||||||||||||
Revenue, National Gas Utility | 5.250 | 12/01/21 | 815 | 821,023 | ||||||||||||
Revenue, National Gas Utility | 5.250 | 12/01/26 | 1,275 | 1,538,721 | ||||||||||||
|
| |||||||||||||||
11,558,281 | ||||||||||||||||
|
| |||||||||||||||
California 5.6% | ||||||||||||||||
Alameda Corridor Transportation Authority, | ||||||||||||||||
Revenue, Senior Lien, Series A, Rfdg | 5.000 | 10/01/21 | 1,135 | 1,135,147 | ||||||||||||
Bay Area Toll Authority, | ||||||||||||||||
Revenue, San Francisco Bay Area, Series C, Rfdg, (Mandatory Put Date 04/01/26) | 0.500 | 04/01/56 | 650 | 650,393 | ||||||||||||
California Community Choice Financing Authority, | ||||||||||||||||
Revenue, Green Bond, Series B-2, (Mandatory Put Date 08/01/31) | 0.470 | 02/01/52 | 1,000 | 983,624 | ||||||||||||
California Health Facilities Financing Authority, | ||||||||||||||||
Revenue, Providence St. Joseph Health Project, Series C, Rfdg, (Mandatory Put Date 10/01/25) | 5.000 | 10/01/39 | 1,235 | 1,451,854 | ||||||||||||
Revenue, Stanford Health Care, Series A, Rfdg, (Mandatory Put Date 08/15/25) | 3.000 | 08/15/54 | 1,000 | 1,099,460 | ||||||||||||
California Infrastructure & Economic Development Bank, | ||||||||||||||||
Revenue, Brightline West Passenger Rail Project, Series A, (Mandatory Put Date 02/01/22), 144A | 0.200 | 01/01/50 | 1,050 | 1,049,252 | ||||||||||||
Revenue, Sustainability Bond Academy of Sciences, Series B, Rfdg, (Mandatory Put Date 08/01/24) | 0.400 | 08/01/47 | 2,500 | 2,502,642 | ||||||||||||
California Municipal Finance Authority, | ||||||||||||||||
Revenue, American Heritage Foundation, Series A, Rfdg | 4.000 | 06/01/26 | 320 | 345,450 | ||||||||||||
California Pollution Control Financing Authority, | ||||||||||||||||
Revenue, Green Bond Project, AMT, 144A | 7.000 | 07/01/22(d) | 250 | 162,500 |
See Notes to Financial Statements. | ||
10 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
California (cont’d.) | ||||||||||||||||
California Pollution Control Financing Authority, (cont’d.) | ||||||||||||||||
Revenue, Waste Management Inc. Project, Series A, (Mandatory Put Date 05/01/24) | 2.500% | 11/01/38 | 1,000 | $ | 1,049,930 | |||||||||||
California School Finance Authority, | ||||||||||||||||
Revenue, Alliance College Ready Public Schools, Series A, Rfdg, 144A | 4.000 | 07/01/24 | 270 | 293,995 | ||||||||||||
Revenue, Green Dot Public School Project, Series A, 144A | 4.000 | 08/01/25 | 330 | 358,076 | ||||||||||||
Revenue, KIPP Project, Series A, 144A | 3.625 | 07/01/25 | 325 | 346,567 | ||||||||||||
California State Public Works Board, | ||||||||||||||||
Revenue, Forward Delivery, Series A, Rfdg(hh) | 5.000 | 02/01/28 | 1,175 | 1,470,430 | ||||||||||||
Revenue, Various Purpose, Series A, Rfdg(hh) | 5.000 | 08/01/27 | 1,000 | 1,201,230 | ||||||||||||
City of Roseville, | ||||||||||||||||
Westpark Community Facility District No.1, Special Tax, Rfdg | 5.000 | 09/01/22 | 225 | 233,482 | ||||||||||||
Golden State Tobacco Securitization Corp., | ||||||||||||||||
Revenue, Series A-1, Rfdg | 5.000 | 06/01/25 | 245 | 283,732 | ||||||||||||
Revenue, Series A-1, Rfdg | 5.000 | 06/01/26 | 1,000 | 1,181,980 | ||||||||||||
Revenue, Series A-1, Rfdg | 5.000 | 06/01/27 | 1,100 | 1,332,265 | ||||||||||||
Long Beach Bond Finance Authority, | ||||||||||||||||
Revenue, Natural Gas, Series B, 3 Month LIBOR + 1.450% | 1.534(c) | 11/15/27 | 700 | 706,295 | ||||||||||||
San Diego County Water Authority, | ||||||||||||||||
Revenue, Green Bond, Series A, Rfdg | 5.000 | 05/01/28 | 500 | 637,320 | ||||||||||||
State of California, | ||||||||||||||||
GO, Rfdg | 5.000 | 11/01/28 | 1,500 | 1,916,325 | ||||||||||||
GO, Rfdg | 5.000 | 12/01/28 | 400 | 513,412 | ||||||||||||
|
| |||||||||||||||
20,905,361 | ||||||||||||||||
|
| |||||||||||||||
Colorado 2.6% | ||||||||||||||||
City & County of Denver Airport System, | ||||||||||||||||
Revenue, Series A, AMT, Rfdg | 5.000 | 11/15/28 | 250 | 307,235 | ||||||||||||
Revenue, Sub-System, Series A, AMT, Rfdg | 5.000 | 12/01/29 | 485 | 611,095 | ||||||||||||
Colorado Educational & Cultural Facilities Authority, | ||||||||||||||||
Revenue, Lighthouse Building Corp. Stem Project, Rfdg | 4.000 | 11/01/24 | 480 | 498,283 | ||||||||||||
Colorado Health Facilities Authority, | ||||||||||||||||
Revenue, Christian Living Neighborhood, Rfdg | 4.000 | 01/01/22 | 300 | 301,827 | ||||||||||||
Revenue, Commonspirit Health, Series A, Rfdg | 5.000 | 08/01/27 | 1,000 | 1,231,410 | ||||||||||||
Revenue, Commonspirit Health, Series A, Rfdg | 5.000 | 08/01/28 | 200 | 251,620 | ||||||||||||
Revenue, Commonspirit Health, Series A-1, Rfdg | 5.000 | 08/01/25 | 350 | 406,343 |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 11 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Colorado (cont’d.) | ||||||||||||||||
Colorado Health Facilities Authority, (cont’d.) | ||||||||||||||||
Revenue, Commonspirit Health, Series A-2, Rfdg | 5.000% | 08/01/26 | 390 | $ | 467,505 | |||||||||||
Revenue, Commonspirit Health, Series B-2, (Mandatory Put Date 02/01/26) | 5.000 | 08/01/49 | 1,330 | 1,567,392 | ||||||||||||
Revenue, National Jewish Health Initiatives, Rfdg | 5.000 | 01/01/22 | 125 | 126,110 | ||||||||||||
Revenue, National Jewish Health Initiatives, Rfdg | 5.000 | 01/01/24 | 315 | 317,658 | ||||||||||||
Revenue, Valley View Hospital Association Project, | ||||||||||||||||
Rfdg, (Mandatory Put Date 05/15/23) | 2.800 | 05/15/42 | 925 | 949,309 | ||||||||||||
Park Creek Metropolitan District, | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 12/01/23 | 1,100 | 1,199,715 | ||||||||||||
Regional Transportation District, | ||||||||||||||||
Revenue, Denver Transit Partners Eagle P3 Project, Series A, Rfdg | 5.000 | 07/15/27 | 500 | 616,120 | ||||||||||||
Regional Transportation District Sales Tax, | ||||||||||||||||
Revenue, Green Bond Fastracks Project, Series B, Rfdg | 5.000 | 11/01/28 | 575 | 732,642 | ||||||||||||
|
| |||||||||||||||
9,584,264 | ||||||||||||||||
|
| |||||||||||||||
Connecticut 3.2% | ||||||||||||||||
Connecticut State Health & Educational Facilities Authority, | ||||||||||||||||
Revenue, Series 2015-A, Rfdg, (Mandatory Put Date 07/12/24) | 0.375 | 07/01/35 | 1,000 | 999,440 | ||||||||||||
Harbor Point Infrastructure Improvement District, | ||||||||||||||||
Special Assessment, Rfdg, 144A | 5.000 | 04/01/22 | 400 | 407,496 | ||||||||||||
State of Connecticut, | ||||||||||||||||
Revenue, Special Tax Obligation, Series A | 5.000 | 05/01/22 | 250 | 257,080 | ||||||||||||
Revenue, Special Tax Obligation, Series A | 5.000 | 05/01/27 | 750 | 924,135 | ||||||||||||
Revenue, Special Tax Obligation, Series A | 5.000 | 05/01/29 | 1,000 | 1,286,630 | ||||||||||||
Revenue, Transportation Infrastructure, Series A | 5.000 | 01/01/23 | 275 | 291,385 | ||||||||||||
Revenue, Transportation Infrastructure, Series A | 5.000 | 09/01/24 | 900 | 1,021,932 | ||||||||||||
Revenue, Transportation Infrastructure, Series A | 5.000 | 08/01/25 | 1,035 | 1,212,678 | ||||||||||||
Series 2021-A, GO | 4.000 | 01/15/28 | 1,675 | 1,998,727 | ||||||||||||
Series C, GO | 5.000 | 06/15/26 | 1,000 | 1,205,310 | ||||||||||||
Series C, GO, Rfdg | 5.000 | 07/15/24 | 2,000 | 2,262,160 | ||||||||||||
|
| |||||||||||||||
11,866,973 | ||||||||||||||||
|
|
See Notes to Financial Statements. | ||
12 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Delaware 0.4% | ||||||||||||||||
Delaware State Economic Development Authority, | ||||||||||||||||
Revenue, Newark Charter School, Series A, Rfdg | 2.800% | 09/01/26 | 285 | $ | 301,311 | |||||||||||
Delaware Transportation Authority, | ||||||||||||||||
Revenue, Rfdg | 5.000 | 07/01/28 | 850 | 1,078,556 | ||||||||||||
|
| |||||||||||||||
1,379,867 | ||||||||||||||||
|
| |||||||||||||||
District of Columbia 3.3% | ||||||||||||||||
District of Columbia, | ||||||||||||||||
Revenue, Series C, Rfdg | 5.000 | 10/01/27 | 1,625 | 2,031,348 | ||||||||||||
Revenue, Series C, Rfdg | 5.000 | 10/01/28 | 500 | 639,740 | ||||||||||||
District of Columbia Friendship Public Charter School, | ||||||||||||||||
Revenue (Escrowed to Maturity Date 06/01/22)(ee) | 3.550 | 06/01/22 | 170 | 173,760 | ||||||||||||
District of Columbia KIPP Charter School, | ||||||||||||||||
Revenue, Project Series B, Rfdg | 5.000 | 07/01/27 | 145 | 174,837 | ||||||||||||
Revenue, Rfdg (Escrowed to Maturity Date 07/01/23)(ee) | 5.000 | 07/01/23 | 145 | 153,668 | ||||||||||||
Metropolitan Washington Airports Authority, | ||||||||||||||||
Revenue, AMT, Rfdg | 5.000 | 10/01/26 | 2,000 | 2,402,840 | ||||||||||||
Revenue, Series A, AMT, Rfdg | 5.000 | 10/01/26 | 1,050 | 1,261,176 | ||||||||||||
Revenue, Series A, AMT, Rfdg | 5.000 | 10/01/27 | 2,000 | 2,458,060 | ||||||||||||
Revenue, Series A, AMT, Rfdg | 5.000 | 10/01/30 | 1,485 | 1,930,559 | ||||||||||||
Washington Metropolitan Area Transit Authority, | ||||||||||||||||
Revenue, Green Bond, Series A | 5.000 | 07/15/25 | 1,000 | 1,170,140 | ||||||||||||
|
| |||||||||||||||
12,396,128 | ||||||||||||||||
|
| |||||||||||||||
Florida 6.8% | ||||||||||||||||
Central Florida Expressway Authority, | ||||||||||||||||
Revenue, Senior Lien, AGM, Rfdg | 5.000 | 07/01/28 | 2,000 | 2,535,440 | ||||||||||||
City of Tallahassee, | ||||||||||||||||
Revenue, Memorial Healthcare, Inc. Project, Series A | 5.000 | 12/01/23 | 255 | 281,438 | ||||||||||||
Revenue, Memorial Healthcare, Inc. Project, Series A | 5.000 | 12/01/25 | 550 | 649,671 | ||||||||||||
County of Broward Airport System, | ||||||||||||||||
Revenue, Series A, AMT | 5.000 | 10/01/26 | 500 | 583,985 | ||||||||||||
Revenue, Series B, AMT, Rfdg | 5.000 | 10/01/27 | 1,000 | 1,226,900 | ||||||||||||
Revenue, Series B, AMT, Rfdg | 5.000 | 10/01/28 | 1,000 | 1,252,240 | ||||||||||||
County of Lee Airport, | ||||||||||||||||
Revenue, Series A, AMT, Rfdg | 5.000 | 10/01/28 | 1,000 | 1,250,510 | ||||||||||||
County of Miami-Dade Water & Sewer System, | ||||||||||||||||
Revenue, Sub-Series | 5.000 | 10/01/27 | 1,340 | 1,662,578 | ||||||||||||
Greater Orlando Aviation Authority, | ||||||||||||||||
Revenue, Series A, AMT | 5.000 | 10/01/24 | 1,000 | 1,135,390 |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 13 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Florida (cont’d.) | ||||||||||||||||
Hillsborough County Aviation Authority, | ||||||||||||||||
Revenue, Tampa International Airport, Sub-Series A, AMT, Rfdg | 5.000% | 10/01/25 | 1,500 | $ | 1,636,500 | |||||||||||
JEA Electric System, | ||||||||||||||||
Revenue, Sub-Series A, Rfdg | 5.000 | 10/01/28 | 1,000 | 1,265,080 | ||||||||||||
Lakewood Ranch Stewardship District, | ||||||||||||||||
Special Assessment | 4.250 | 05/01/25 | 300 | 312,312 | ||||||||||||
Special Assessment | 4.250 | 05/01/26 | 250 | 262,438 | ||||||||||||
Special Assessment | 4.625 | 05/01/27 | 500 | 538,905 | ||||||||||||
Myrtle Creek Improvement District, | ||||||||||||||||
Special Assessment, Series A, BAM, Rfdg | 4.000 | 05/01/27 | 1,050 | 1,155,504 | ||||||||||||
Orange County Health Facilities Authority, | ||||||||||||||||
Revenue, Orlando Healthcare Obligated Group, Series B, Rfdg | 5.000 | 10/01/25 | 1,940 | 2,275,814 | ||||||||||||
Revenue, Orlando Healthcare Obligated Group, Series B, Rfdg | 5.000 | 10/01/26 | 1,000 | 1,205,890 | ||||||||||||
Revenue, Orlando Healthcare, Inc., Series A, Rfdg | 5.000 | 10/01/23 | 150 | 163,902 | ||||||||||||
Revenue, Orlando Regional Healthcare, NATL, Series | ||||||||||||||||
C, Rfdg (Escrowed to Maturity Date 10/01/21)(ee) | 6.250 | 10/01/21 | 25 | 25,004 | ||||||||||||
Orlando Utilities Commission, | ||||||||||||||||
Revenue, Series B, (Mandatory Put Date 10/01/28) | 1.250 | 10/01/46 | 2,400 | 2,452,248 | ||||||||||||
Palm Beach County Health Facilities Authority, | ||||||||||||||||
Revenue, Sinai Residences, Series A, Rfdg | 6.750 | 06/01/24 | 290 | 306,176 | ||||||||||||
Village Community Development District No. 06, | ||||||||||||||||
Special Assessment, Revenue, Rfdg | 4.000 | 05/01/26 | 230 | 258,511 | ||||||||||||
Village Community Development District No. 07, | ||||||||||||||||
Special Assessment, Revenue, Rfdg | 4.000 | 05/01/24 | 1,455 | 1,584,466 | ||||||||||||
Special Assessment, Revenue, Rfdg | 4.000 | 05/01/25 | 895 | 1,000,377 | ||||||||||||
Special Assessment, Revenue, Rfdg | 4.000 | 05/01/26 | 275 | 306,991 | ||||||||||||
Village Community Development District No. 10, | ||||||||||||||||
Special Assessment, Revenue | 4.500 | 05/01/23 | 210 | 212,529 | ||||||||||||
Village Community Development District No. 12, | ||||||||||||||||
Special Assessment, Revenue, 144A | 3.250 | 05/01/23 | 155 | 157,362 | ||||||||||||
|
| |||||||||||||||
25,698,161 | ||||||||||||||||
Georgia 4.8% | ||||||||||||||||
Burke County Development Authority, | ||||||||||||||||
Revenue, Georgia Power Co. Plant Vogtle Project, (Mandatory Put Date 05/25/23) | 2.250 | 10/01/32 | 250 | 257,632 | ||||||||||||
Revenue, Georgia Power Co. Plant Vogtle Project, Rfdg, (Mandatory Put Date 08/22/24) | 1.700 | 12/01/49 | 1,000 | 1,035,540 |
See Notes to Financial Statements. | ||
14 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Georgia (cont’d.) | ||||||||||||||||
Burke County Development Authority, (cont’d.) | ||||||||||||||||
Revenue, Oglethorpe Power Corp., Series V, Rfdg, (Mandatory Put Date 02/01/25) | 3.250% | 11/01/45 | 500 | $ | 538,765 | |||||||||||
City of Atlanta Department of Aviation, | ||||||||||||||||
Revenue, Series B, AMT | 5.000 | 07/01/24 | 250 | 281,513 | ||||||||||||
Revenue, Series B, AMT, Rfdg | 5.000 | 07/01/28 | 500 | 625,830 | ||||||||||||
Georgia State Road & Tollway Authority, | ||||||||||||||||
Grant Anticipation Revenue Vehicle | 5.000 | 06/01/27 | 1,155 | 1,422,417 | ||||||||||||
Main Street Natural Gas, Inc., | ||||||||||||||||
Revenue, Series B, (Mandatory Put Date 09/01/23), 1 Month LIBOR + 0.750% | 0.805(c) | 04/01/48 | 1,300 | 1,306,994 | ||||||||||||
Revenue, Series B, (Mandatory Put Date 12/01/24) | 4.000 | 08/01/49 | 3,155 | 3,484,130 | ||||||||||||
Revenue, Series C, (Mandatory Put Date 09/01/26) | 4.000 | 03/01/50 | 1,775 | 2,035,375 | ||||||||||||
Revenue, Series C, (Mandatory Put Date 12/01/28) | 4.000 | 05/01/52 | 1,050 | 1,241,341 | ||||||||||||
Revenue, Sub-Series C, (Mandatory Put Date 12/01/23) | 4.000 | 08/01/48 | 2,080 | 2,227,576 | ||||||||||||
Municipal Electric Authority of Georgia, | ||||||||||||||||
Power Revenue, Series HH, Rfdg | 5.000 | 01/01/29 | 1,200 | 1,492,860 | ||||||||||||
Revenue, Combined Cycle Project, Series A, Rfdg | 4.000 | 11/01/24 | 700 | 777,959 | ||||||||||||
Revenue, Project No. 1, Sub-Bonds, Series A, Rfdg | 5.000 | 01/01/26 | 585 | 688,925 | ||||||||||||
Private Colleges & Universities Authority, | ||||||||||||||||
Revenue, Savannah College of Art & Design | 5.000 | 04/01/22 | 715 | 731,230 | ||||||||||||
|
| |||||||||||||||
18,148,087 | ||||||||||||||||
|
| |||||||||||||||
Hawaii 0.3% | ||||||||||||||||
City & County of Honolulu, | ||||||||||||||||
Series A, GO, Rfdg(hh) | 5.000 | 11/01/26 | 1,000 | 1,160,200 | ||||||||||||
|
| |||||||||||||||
Idaho 0.8% | ||||||||||||||||
County of Nez Perce, | ||||||||||||||||
Revenue, Potlatch Corp. Project, Rfdg | 2.750 | 10/01/24 | 1,000 | 1,060,660 | ||||||||||||
Idaho Housing & Finance Association, | ||||||||||||||||
Grant Anticipation Revenue Vehicle, Series A, Rfdg | 5.000 | 07/15/29 | 1,500 | 1,929,540 | ||||||||||||
|
| |||||||||||||||
2,990,200 | ||||||||||||||||
|
| |||||||||||||||
Illinois 10.5% | ||||||||||||||||
Chicago O’Hare International Airport, | ||||||||||||||||
Revenue, Series A, AMT, Rfdg | 5.000 | 01/01/26 | 985 | 1,122,890 | ||||||||||||
Revenue, Series C, AMT, Rfdg | 5.000 | 01/01/23 | 200 | 211,402 |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 15 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Illinois (cont’d.) | ||||||||||||||||
Chicago Transit Authority Capital Grant Receipts, | ||||||||||||||||
Revenue, Section 5307, Rfdg | 5.000% | 06/01/28 | 1,000 | $ | 1,250,240 | |||||||||||
City of Chicago, | ||||||||||||||||
Series 2003 B, GO, Rfdg | 5.000 | 01/01/23 | 370 | 389,543 | ||||||||||||
Series C, GO, Rfdg (Escrowed to Maturity Date 01/01/22)(ee) | 5.000 | 01/01/22 | 675 | 682,634 | ||||||||||||
Series C, GO, Unrefunded, Rfdg | 5.000 | 01/01/22 | 345 | 348,571 | ||||||||||||
City of Chicago Wastewater Transmission, | ||||||||||||||||
Revenue, Second Lien | 5.000 | 01/01/25 | 615 | 621,101 | ||||||||||||
Revenue, Second Lien, Series B, Rfdg | 5.000 | 01/01/23 | 545 | 576,561 | ||||||||||||
Revenue, Second Lien, Series C, Rfdg | 5.000 | 01/01/22 | 990 | 1,001,237 | ||||||||||||
City of Chicago Waterworks, | ||||||||||||||||
Revenue, Second Lien Project | 5.000 | 11/01/25 | 380 | 430,323 | ||||||||||||
Revenue, Second Lien Project, Rfdg | 4.000 | 11/01/21 | 375 | 375,986 | ||||||||||||
Revenue, Second Lien, Rfdg | 4.000 | 11/01/24 | 280 | 290,483 | ||||||||||||
Revenue, Second Lien, Rfdg | 5.000 | 11/01/22 | 915 | 959,066 | ||||||||||||
Revenue, Second Lien, Rfdg | 5.000 | 11/01/27 | 135 | 141,495 | ||||||||||||
City of Springfield Electric, | ||||||||||||||||
Revenue, Senior Lien, Rfdg | 5.000 | 03/01/22 | 300 | 305,841 | ||||||||||||
County of Cook, | ||||||||||||||||
Series A, GO, Rfdg | 5.000 | 11/15/23 | 1,000 | 1,098,420 | ||||||||||||
Series A, GO, Rfdg | 5.000 | 11/15/28 | 450 | 569,174 | ||||||||||||
Illinois Finance Authority, | ||||||||||||||||
Revenue, Advocate Healthcare Project, Series A-1, Rfdg | 4.000 | 11/01/30 | 1,000 | 1,155,380 | ||||||||||||
Revenue, American Water Capital Corp. Project, Rfdg, (Mandatory Put Date 09/01/23) | 0.700 | 05/01/40 | 600 | 601,956 | ||||||||||||
Revenue, Northshore University Health System, Series A, Rfdg | 5.000 | 08/15/24 | 1,000 | 1,130,530 | ||||||||||||
Revenue, OSF Healthcare System, Series B-2, Rfdg, (Mandatory Put Date 11/15/26) | 5.000 | 05/15/50 | 1,000 | 1,188,910 | ||||||||||||
Revenue, University of Chicago, Series A, Rfdg | 5.000 | 10/01/25 | 1,505 | 1,774,440 | ||||||||||||
Illinois State Toll Highway Authority, | ||||||||||||||||
Senior Revenue, Series A, Rfdg | 5.000 | 01/01/28 | 1,480 | 1,847,395 | ||||||||||||
Senior Revenue, Series C, Rfdg | 5.000 | 01/01/28 | 2,225 | 2,777,334 | ||||||||||||
Railsplitter Tobacco Settlement Authority, | ||||||||||||||||
Revenue | 5.000 | 06/01/22 | 950 | 979,688 | ||||||||||||
Revenue | 5.000 | 06/01/24 | 1,845 | 2,070,736 | ||||||||||||
Revenue | �� | 5.000 | 06/01/25 | 545 | 633,197 | |||||||||||
Regional Transportation Authority, | ||||||||||||||||
Revenue, NATL, Series A, Rfdg | 5.500 | 07/01/25 | 760 | 899,506 |
See Notes to Financial Statements. | ||
16 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Illinois (cont’d.) | ||||||||||||||||
Sales Tax Securitization Corp., | ||||||||||||||||
Revenue, Second Lien, Series A, Rfdg | 5.000% | 01/01/27 | 1,000 | $ | 1,210,280 | |||||||||||
State of Illinois, | ||||||||||||||||
GO | 5.000 | 02/01/22 | 200 | 202,940 | ||||||||||||
GO | 5.000 | 05/01/23 | 110 | 117,877 | ||||||||||||
GO, Rfdg | 5.000 | 08/01/24 | 515 | 534,637 | ||||||||||||
Revenue, Build Illinois Bonds, Junior Obligation, | ||||||||||||||||
Series C, Rfdg | 5.000 | 06/15/27 | 2,200 | 2,686,530 | ||||||||||||
Revenue, Junior Obligation, Rfdg | 5.000 | 06/15/24 | 705 | 764,770 | ||||||||||||
Revenue, Junior Series D, BAM, Rfdg | 5.000 | 06/15/25 | 1,325 | 1,525,618 | ||||||||||||
Series A, GO | 4.000 | 01/01/22 | 75 | 75,684 | ||||||||||||
Series A, GO | 4.000 | 01/01/23 | 360 | 362,898 | ||||||||||||
Series A, GO | 5.000 | 04/01/22 | 1,000 | 1,023,070 | ||||||||||||
Series C, GO, Rfdg | 4.000 | 03/01/24 | 1,000 | 1,082,400 | ||||||||||||
Series D, GO | 5.000 | 11/01/23 | 2,260 | 2,470,564 | ||||||||||||
Series D, GO | 5.000 | 11/01/26 | 1,275 | 1,530,115 | ||||||||||||
University of Illinois, | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 04/01/26 | 425 | 490,977 | ||||||||||||
|
| |||||||||||||||
39,512,399 | ||||||||||||||||
|
| |||||||||||||||
Indiana 1.1% | ||||||||||||||||
City of Rockport, | ||||||||||||||||
Revenue, Power Co. Project, Series A, Rfdg | 3.050 | 06/01/25 | 500 | 537,725 | ||||||||||||
City of Whiting Environmental Facilities, | ||||||||||||||||
Revenue, BP Products, AMT, Rfdg, (Mandatory Put Date 06/05/26) | 5.000 | 12/01/44 | 1,000 | 1,191,740 | ||||||||||||
Indiana Finance Authority, | ||||||||||||||||
Revenue, Indiana University Health, Inc., Series A, Rfdg | 5.000 | 12/01/25 | 1,135 | 1,342,853 | ||||||||||||
Revenue, Power & Light Co. Project, Series A, Rfdg | 1.400 | 08/01/29 | 1,000 | 982,060 | ||||||||||||
|
| |||||||||||||||
4,054,378 | ||||||||||||||||
|
| |||||||||||||||
Iowa 0.8% | ||||||||||||||||
Iowa Finance Authority, | ||||||||||||||||
Revenue, Lifespace Communities, Inc. | 2.875 | 05/15/49 | 390 | 390,051 | ||||||||||||
PEFA, Inc., | ||||||||||||||||
Revenue, Gas Project, Series A-1, (Mandatory Put Date 09/01/26) | 5.000 | 09/01/49 | 2,120 | 2,510,864 | ||||||||||||
|
| |||||||||||||||
2,900,915 | ||||||||||||||||
|
|
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 17 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Kentucky 1.1% | ||||||||||||||||
County of Trimble, | ||||||||||||||||
Revenue, Louisville Gas & Electric Project, Series A, AMT, Rfdg, (Mandatory Put Date 09/01/27) | 1.300% | 09/01/44 | 750 | $ | 749,933 | |||||||||||
Kentucky Public Energy Authority, | ||||||||||||||||
Revenue, Series A-1, (Mandatory Put Date 06/01/25) | 4.000 | 12/01/49 | 1,440 | 1,607,544 | ||||||||||||
Revenue, Series B, (Mandatory Put Date 01/01/25) | 4.000 | 01/01/49 | 1,480 | 1,634,778 | ||||||||||||
|
| |||||||||||||||
3,992,255 | ||||||||||||||||
|
| |||||||||||||||
Louisiana 1.1% | ||||||||||||||||
City of New Orleans, | ||||||||||||||||
GO, Rfdg | 5.000 | 12/01/22 | 100 | 105,549 | ||||||||||||
GO, Rfdg | 5.000 | 12/01/23 | 150 | 165,362 | ||||||||||||
City of New Orleans Sewerage Service, | ||||||||||||||||
Revenue | 5.000 | 06/01/23 | 300 | 323,145 | ||||||||||||
Revenue | 5.000 | 06/01/24 | 200 | 224,230 | ||||||||||||
Louisiana Offshore Terminal Authority, | ||||||||||||||||
Revenue, Loop LLC Project, Series C, Rfdg, (Mandatory Put Date 12/01/23) | 1.650 | 09/01/34 | 500 | 514,530 | ||||||||||||
Louisiana Public Facilities Authority, | ||||||||||||||||
Revenue, Ochsner Clinic Foundation Project, Rfdg | 5.000 | 05/15/22 | 265 | 272,645 | ||||||||||||
Revenue, Ochsner Clinic Foundation Project, Series B, Rfdg, (Mandatory Put Date 05/15/25) | 5.000 | 05/15/50 | 1,065 | 1,231,513 | ||||||||||||
Parish of St. John the Baptist, | ||||||||||||||||
Revenue, Marathon Oil Corp. Project, Rfdg, (Mandatory Put Date 07/01/24) | 2.100 | 06/01/37 | 200 | 206,944 | ||||||||||||
State of Louisiana, | ||||||||||||||||
Grant Anticipation Revenue Vehicle | 5.000 | 09/01/23 | 1,000 | 1,090,260 | ||||||||||||
|
| |||||||||||||||
4,134,178 | ||||||||||||||||
|
| |||||||||||||||
Maryland 0.5% | ||||||||||||||||
Maryland Economic Development Corp., | ||||||||||||||||
Revenue, Transportation Project, Series A, Rfdg | 5.000 | 06/01/24 | 350 | 389,571 | ||||||||||||
Maryland State Transportation Authority, | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 07/01/28 | 1,115 | 1,417,444 | ||||||||||||
|
| |||||||||||||||
1,807,015 | ||||||||||||||||
|
|
See Notes to Financial Statements. | ||
18 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Massachusetts 0.6% | ||||||||||||||||
Commonwealth of Massachusetts, | ||||||||||||||||
Consolidated Loans, Series E, GO | 5.000% | 11/01/27 | 1,125 | $ | 1,404,990 | |||||||||||
Massachusetts Port Authority, | ||||||||||||||||
Revenue, Series C, AMT, Rfdg | 5.000 | 07/01/29 | 665 | 848,819 | ||||||||||||
|
| |||||||||||||||
2,253,809 | ||||||||||||||||
|
| |||||||||||||||
Michigan 1.5% | ||||||||||||||||
Michigan Finance Authority, | ||||||||||||||||
Revenue, Local Government Loan Program, NATL, Series D-6, Rfdg | 5.000 | 07/01/25 | 320 | 360,643 | ||||||||||||
Revenue, Local Government Loan Program, Series D-1, Rfdg | 5.000 | 07/01/22 | 400 | 414,048 | ||||||||||||
Revenue, Senior Series A, Class 1, Rfdg | 4.000 | 06/01/23 | 100 | 106,064 | ||||||||||||
Revenue, Senior Series A, Class 1, Rfdg | 5.000 | 06/01/27 | 500 | 612,970 | ||||||||||||
Revenue, Senior Series A, Class 1, Rfdg | 5.000 | 06/01/28 | 500 | 626,060 | ||||||||||||
Revenue, Senior Series A, Class 1, Rfdg | 5.000 | 06/01/29 | 250 | 318,910 | ||||||||||||
Revenue,Trinity Health Credit Group, Series A, Rfdg | 5.000 | 12/01/27 | 1,085 | 1,358,811 | ||||||||||||
Michigan Strategic Fund, | ||||||||||||||||
Revenue, Graphic Packaging International LLC, Green Bond Recycle Project, AMT, (Mandatory Put Date 10/01/26) | 4.000 | 10/01/61 | 1,500 | 1,667,850 | ||||||||||||
|
| |||||||||||||||
5,465,356 | ||||||||||||||||
|
| |||||||||||||||
Mississippi 0.2% | ||||||||||||||||
County of Warren, | ||||||||||||||||
Revenue, International Paper Co. Project, Rfdg, (Mandatory Put Date 09/01/23) | 2.900 | 09/01/32 | 250 | 261,148 | ||||||||||||
Mississippi Business Finance Corp., | ||||||||||||||||
Revenue, Pollution Control, Rfdg | 3.200 | 09/01/28 | 500 | 526,120 | ||||||||||||
|
| |||||||||||||||
787,268 | ||||||||||||||||
|
| |||||||||||||||
Missouri 1.0% | ||||||||||||||||
Health & Educational Facilities Authority of the State of Missouri, | ||||||||||||||||
Revenue, BJC Health System, Series B, Rfdg, (Mandatory Put Date 05/01/26) | 4.000 | 05/01/51 | 1,550 | 1,787,693 | ||||||||||||
Revenue, BJC Health System, Series C, Rfdg, (Mandatory Put Date 05/01/28) | 5.000 | 05/01/52 | 500 | 623,390 |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 19 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Missouri (cont’d.) | ||||||||||||||||
Kansas City Industrial Development Authority, | ||||||||||||||||
Revenue, International Airport Terminal, Series B, AMT | 5.000% | 03/01/29 | 1,000 | $ | 1,257,040 | |||||||||||
|
| |||||||||||||||
3,668,123 | ||||||||||||||||
|
| |||||||||||||||
Nebraska 0.4% | ||||||||||||||||
Central Plains Energy Project, | ||||||||||||||||
Revenue, Project No. 4, (Mandatory Put Date 01/01/24) | 5.000 | 03/01/50 | 1,275 | 1,395,883 | ||||||||||||
|
| |||||||||||||||
Nevada 0.3% | ||||||||||||||||
County of Clark Department of Aviation, | ||||||||||||||||
Revenue, Sub-Series B, AMT, Rfdg | 5.000 | 07/01/27 | 1,000 | 1,220,920 | ||||||||||||
|
| |||||||||||||||
New Jersey 7.4% | ||||||||||||||||
New Jersey Economic Development Authority, | ||||||||||||||||
Revenue, American Water Co. Inc. Project, Series A, Rfdg | 1.000 | 06/01/23 | 1,375 | 1,389,300 | ||||||||||||
Revenue, American Water Co. Inc. Project, Series B, AMT, Rfdg, (Mandatory Put Date 06/01/23) | 1.200 | 11/01/34 | 500 | 506,180 | ||||||||||||
Revenue, American Water Co. Inc. Project, Series E, AMT, Rfdg | 0.850 | 12/01/25 | 600 | 601,212 | ||||||||||||
Revenue, Port Newark Container, AMT, Rfdg | 5.000 | 10/01/21 | 500 | 500,055 | ||||||||||||
Revenue, Series XX, Rfdg | 5.000 | 06/15/22 | 960 | 991,315 | ||||||||||||
Revenue, State Appropriation, Series B, Rfdg | 4.000 | 11/01/25 | 455 | 508,203 | ||||||||||||
Revenue, State Appropriation, Series XX, Rfdg | 5.000 | 06/15/24 | 420 | 471,379 | ||||||||||||
New Jersey Health Care Facilities Financing Authority, | ||||||||||||||||
Revenue, AHS Hospital Corp., Rfdg | 5.000 | 07/01/24 | 400 | 451,080 | ||||||||||||
Revenue, Hackensack Meridian Health, Series A, Rfdg | 5.000 | 07/01/25 | 540 | 629,975 | ||||||||||||
Revenue, RWJ Barnabas Health Obligation Group, Series A, Rfdg | 5.000 | 07/01/27 | 450 | 541,795 | ||||||||||||
Revenue, University Hospital, Series A, AGM, Rfdg | 5.000 | 07/01/23 | 500 | 536,000 | ||||||||||||
New Jersey Transportation Trust Fund Authority, | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/15/27 | 1,175 | 1,437,260 | ||||||||||||
Revenue, Series AA, Rfdg(hh) | 5.000 | 06/15/27 | 800 | 941,224 | ||||||||||||
Revenue, Transportation Program, Series AA | 5.000 | 06/15/22 | 895 | 924,177 | ||||||||||||
Revenue, Transportation System Bond, Rfdg | 5.000 | 12/15/26 | 500 | 604,405 | ||||||||||||
Revenue, Transportation System, Series A, Rfdg | 5.000 | 12/15/23 | 290 | 319,284 | ||||||||||||
Revenue, Transportation System, Series B, AGC, Rfdg | 5.500 | 12/15/21 | 175 | 176,832 |
See Notes to Financial Statements. | ||
20 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
New Jersey (cont’d.) | ||||||||||||||||
New Jersey Turnpike Authority, | ||||||||||||||||
Revenue, Series A | 5.000% | 01/01/27 | 605 | $ | 682,942 | |||||||||||
Revenue, Series D, Rfdg | 5.000 | 01/01/28 | 1,100 | 1,319,054 | ||||||||||||
Revenue, Series D-1, Rfdg, 1 Month LIBOR + 0.700% | 0.760(c) | 01/01/24 | 1,000 | 1,018,565 | ||||||||||||
South Jersey Transportation Authority, | ||||||||||||||||
Revenue, Series A, Rfdg (Escrowed to Maturity Date 11/01/21)(ee) | 5.000 | 11/01/21 | 175 | 175,621 | ||||||||||||
Revenue, Series A, Unrefunded, Rfdg | 5.000 | 11/01/21 | 175 | 175,576 | ||||||||||||
State of New Jersey, | ||||||||||||||||
COVID-19, Emergency Bonds, Series A, GO | 5.000 | 06/01/26 | 5,200 | 6,213,324 | ||||||||||||
Tobacco Settlement Financing Corp., | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/25 | 1,845 | 2,141,584 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/26 | 1,830 | 2,189,632 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/27 | 1,975 | 2,422,456 | ||||||||||||
|
| |||||||||||||||
27,868,430 | ||||||||||||||||
|
| |||||||||||||||
New Mexico 0.4% | ||||||||||||||||
New Mexico Finance Authority, | ||||||||||||||||
Revenue, Sub-Series A | 5.000 | 06/15/28 | 1,250 | 1,583,575 | ||||||||||||
|
| |||||||||||||||
New York 8.4% | ||||||||||||||||
City of New York, | ||||||||||||||||
Fiscal 2008, Series J-5, GO | 5.000 | 08/01/28 | 1,000 | 1,269,410 | ||||||||||||
Fiscal 2015, Sub-Series F-4, GO, (Mandatory Put Date 12/01/25) | 5.000 | 06/01/44 | 2,000 | 2,326,814 | ||||||||||||
Long Island Power Authority, | ||||||||||||||||
Revenue, Notes | 1.000 | 09/01/25 | 2,100 | 2,113,776 | ||||||||||||
Revenue, Series B, Rfdg, (Mandatory Put Date 09/01/26) | 1.500 | 09/01/51 | 2,000 | 2,065,240 | ||||||||||||
Metropolitan Transportation Authority, | ||||||||||||||||
Revenue, Series F, Rfdg | 5.000 | 11/15/24 | 1,125 | 1,280,126 | ||||||||||||
New York City Industrial Development Agency, | ||||||||||||||||
Revenue, Queens Baseball Stadium Project, Series A, AGM, Rfdg | 5.000 | 01/01/28 | 1,000 | 1,242,340 | ||||||||||||
New York City Transitional Finance Authority, | ||||||||||||||||
Revenue, Future Tax Secured, Sub-Bonds, Series D-1, Rfdg | 5.000 | 11/01/28 | 1,210 | 1,541,419 | ||||||||||||
Revenue, Series A-1, Rfdg | 5.000 | 11/01/27 | 2,000 | 2,494,300 | ||||||||||||
New York City Water & Sewer System, | ||||||||||||||||
Revenue | 5.000 | 06/15/28 | 750 | 915,848 | ||||||||||||
Revenue, Second General Resolution, Series DD, Rfdg | 5.000 | 06/15/26 | 1,185 | 1,431,302 |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 21 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
New York (cont’d.) | ||||||||||||||||
New York City Water & Sewer System, (cont’d.) | ||||||||||||||||
Revenue, Second General Resolution, Series DD, Rfdg | 5.000% | 06/15/29 | 300 | $ | 388,758 | |||||||||||
New York State Dormitory Authority, | ||||||||||||||||
Revenue, Memorial Sloan Kettering Cancer Center, Series 1, Rfdg | 5.000 | 07/01/24 | 230 | 261,036 | ||||||||||||
Revenue, New York University Hospitals Center, Rfdg | 5.000 | 07/01/24 | 845 | 951,808 | ||||||||||||
Revenue, New York University Hospitals Center, Rfdg | 5.000 | 07/01/24 | 895 | 1,008,128 | ||||||||||||
Revenue, St John’s University, Series A, Rfdg | 5.000 | 07/01/26 | 400 | 475,428 | ||||||||||||
New York State Environmental Facilities Corp., | ||||||||||||||||
Revenue, New York City Municipal Water Financing Authority Project, Sub-Series A, Rfdg | 5.000 | 06/15/31 | 1,265 | 1,562,515 | ||||||||||||
New York State Thruway Authority, | ||||||||||||||||
Revenue, Series A-1, Group 1, Rfdg | 5.000 | 03/15/31 | 3,000 | 3,996,960 | ||||||||||||
New York Transportation Development Corp., | ||||||||||||||||
Revenue, JFK International Air Terminal Project, Series A, AMT, Rfdg | 5.000 | 12/01/25 | 200 | 233,502 | ||||||||||||
Port Authority of New York & New Jersey, | ||||||||||||||||
Revenue, Series 223, AMT, Rfdg | 5.000 | 07/15/27 | 1,000 | 1,228,480 | ||||||||||||
Revenue, Series 226, AMT, Rfdg | 5.000 | 10/15/27 | 650 | 802,809 | ||||||||||||
Triborough Bridge & Tunnel Authority, | ||||||||||||||||
Revenue, Senior Lien, Sub-Series B-2, Rfdg, (Mandatory Put Date 05/15/26) | 5.000 | 05/15/50 | 1,000 | 1,200,800 | ||||||||||||
Revenue, Series A-2, Rfdg, (Mandatory Put Date 05/15/26) | 2.000 | 05/15/45 | 1,000 | 1,064,440 | ||||||||||||
Revenue, Sub-Series A, Bond Anticipation Notes | 5.000 | 11/01/25 | 1,000 | 1,183,020 | ||||||||||||
TSASC, Inc., | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/24 | 290 | 324,606 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/25 | 100 | 115,860 | ||||||||||||
|
| |||||||||||||||
31,478,725 | ||||||||||||||||
|
| |||||||||||||||
North Carolina 1.4% | ||||||||||||||||
Charlotte-Mecklenburg Hospital Authority, | ||||||||||||||||
Revenue, Atriumn Health, Series B, (Mandatory Put Date 12/02/24) | 5.000 | 01/15/50 | 1,000 | 1,143,520 | ||||||||||||
North Carolina Medical Care Commission, | ||||||||||||||||
Revenue, Caromont Health, Series B, (Mandatory Put Date 02/01/26) | 5.000 | 02/01/51 | 450 | 536,121 | ||||||||||||
Revenue, Duke University Health System, Series A, Rfdg | 5.000 | 06/01/27 | 545 | 671,173 | ||||||||||||
Revenue, Duke University Health System, Series A, Rfdg | 5.000 | 06/01/28 | 990 | 1,247,915 |
See Notes to Financial Statements. | ||
22 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
North Carolina (cont’d.) | ||||||||||||||||
North Carolina Turnpike Authority, | ||||||||||||||||
Revenue, Bond Anticipation Notes | 5.000% | 02/01/24 | 1,560 | $ | 1,719,541 | |||||||||||
|
| |||||||||||||||
5,318,270 | ||||||||||||||||
|
| |||||||||||||||
North Dakota 0.1% | ||||||||||||||||
Cass County Joint Water Resource District, | ||||||||||||||||
Series A, GO | 0.480 | 05/01/24 | 555 | 548,867 | ||||||||||||
|
| |||||||||||||||
Ohio 2.6% | ||||||||||||||||
Akron Bath Copley Joint Township Hospital District, | ||||||||||||||||
Revenue, Summa Health Obligation Group, Rfdg | 5.000 | 11/15/27 | 185 | 227,180 | ||||||||||||
Buckeye Tobacco Settlement Financing Authority, | ||||||||||||||||
Revenue, Senior Series A-2, Class 1, Rfdg | 5.000 | 06/01/28 | 1,455 | 1,817,862 | ||||||||||||
County of Allen Hospital Facilities, | ||||||||||||||||
Revenue, Bon Secours Mercy Health, Inc., Series A, Rfdg | 5.000 | 08/01/27 | 1,185 | 1,459,991 | ||||||||||||
County of Cuyahoga, | ||||||||||||||||
Revenue, MetroHealth System, Rfdg | 4.000 | 02/15/29 | 1,200 | 1,399,212 | ||||||||||||
Revenue, MetroHealth System, Rfdg | 5.000 | 02/15/25 | 695 | 801,676 | ||||||||||||
Lancaster Port Authority, | ||||||||||||||||
Revenue, Natural Gas, Series A, Rfdg, (Mandatory Put Date 02/01/25) | 5.000 | 08/01/49 | 300 | 342,489 | ||||||||||||
Ohio Air Quality Development Authority, | ||||||||||||||||
Revenue, American Electric Power Co. Project, Series A, (Mandatory Put Date 10/01/29) | 2.400 | 12/01/38 | 500 | 518,220 | ||||||||||||
Revenue, Ohio Valley Electric Corp. Project, Series B, (Mandatory Put Date 11/01/24) | 1.375 | 02/01/26 | 750 | 749,670 | ||||||||||||
Ohio Water Development Authority, | ||||||||||||||||
Revenue | 5.000 | 12/01/28 | 700 | 896,665 | ||||||||||||
State of Ohio, | ||||||||||||||||
Revenue, Cleveland Clinic Health System Obligation Group, Series B, Rfdg(hh) | 5.000 | 01/01/28 | 1,100 | 1,369,148 | ||||||||||||
|
| |||||||||||||||
9,582,113 | ||||||||||||||||
|
| |||||||||||||||
Oklahoma 1.1% | ||||||||||||||||
Oklahoma Development Finance Authority, | ||||||||||||||||
Revenue, Gilcrease Expressway West, AMT | 1.625 | 07/06/23 | 500 | 503,695 | ||||||||||||
Revenue, University of Oklahoma Medicine Project, Series B | 5.000 | 08/15/25 | 800 | 923,592 |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 23 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Oklahoma (cont’d.) | ||||||||||||||||
Oklahoma Development Finance Authority, (cont’d.) | ||||||||||||||||
Revenue, University of Oklahoma Medicine Project, Series B | 5.000% | 08/15/29 | 1,100 | $ | 1,345,443 | |||||||||||
Oklahoma Turnpike Authority, | ||||||||||||||||
Revenue, Second Senior Series A, Class 1, Rfdg | 5.000 | 01/01/29 | 1,000 | 1,283,970 | ||||||||||||
|
| |||||||||||||||
4,056,700 | ||||||||||||||||
|
| |||||||||||||||
Pennsylvania 5.7% | ||||||||||||||||
Allegheny County Airport Authority, | ||||||||||||||||
Revenue, Series A, AMT | 5.000 | 01/01/26 | 1,600 | 1,887,152 | ||||||||||||
Chester County Industrial Development Authority, | ||||||||||||||||
Revenue, Renaissance Academy Charter School, Rfdg | 3.750 | 10/01/24 | 270 | 285,836 | ||||||||||||
Revenue, Renaissance Academy Charter School, Rfdg | 5.000 | 10/01/34 | 355 | 394,398 | ||||||||||||
City of Philadelphia Airport, | ||||||||||||||||
Revenue, Private Activity, AMT, Rfdg | 5.000 | 07/01/27 | 1,125 | 1,373,029 | ||||||||||||
Commonwealth Financing Authority, | ||||||||||||||||
Revenue, Tobacco Master Settlement Payment | 5.000 | 06/01/24 | 1,315 | 1,474,207 | ||||||||||||
Revenue, Tobacco Master Settlement Payment | 5.000 | 06/01/25 | 1,080 | 1,254,290 | ||||||||||||
Commonwealth of Pennsylvania, | ||||||||||||||||
First Series, GO, Rfdg | 5.000 | 08/15/25 | 1,235 | 1,449,668 | ||||||||||||
Series A, Certificate of Participation, Rfdg | 5.000 | 07/01/26 | 500 | 599,835 | ||||||||||||
Delaware River Joint Toll Bridge Commission, | ||||||||||||||||
Revenue, Bridge System, Series B, Rfdg | 5.000 | 07/01/28 | 305 | 386,545 | ||||||||||||
Delaware Valley Regional Finance Authority, | ||||||||||||||||
Revenue, Series A, AMBAC | 5.500 | 08/01/28 | 500 | 648,125 | ||||||||||||
East Hempfield Township Industrial Development Authority, | ||||||||||||||||
Revenue, Willow Valley Community, Rfdg | 5.000 | 12/01/23 | 500 | 550,555 | ||||||||||||
Geisinger Authority, | ||||||||||||||||
Revenue, Geisinger Health System Obligation Group, | ||||||||||||||||
Series B, Rfdg, (Mandatory Put Date 02/15/27) | 5.000 | 04/01/43 | 945 | 1,135,455 | ||||||||||||
Pennsylvania Higher Educational Facilities Authority, | ||||||||||||||||
Revenue, University of Pennsylvania Health System | 5.000 | 08/15/28 | 1,000 | 1,271,550 | ||||||||||||
Revenue, University of Pennsylvania Health System, Rfdg | 5.000 | 08/15/26 | 940 | 1,102,169 | ||||||||||||
Pennsylvania Turnpike Commission, | ||||||||||||||||
Revenue, Rfdg | 5.000 | 12/01/29 | 1,455 | 1,858,108 | ||||||||||||
Revenue, Series A-2, Rfdg | 5.000 | 12/01/26 | 1,515 | 1,847,436 | ||||||||||||
Philadelphia Authority for Industrial Development, | ||||||||||||||||
Revenue, The Children’s Hospital of Philadelphia Project, | ||||||||||||||||
Series A, Rfdg | 5.000 | 07/01/28 | 575 | 727,864 |
See Notes to Financial Statements. | ||
24 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Pennsylvania (cont’d.) | ||||||||||||||||
Philadelphia Gas Works Co., | ||||||||||||||||
Revenue, Rfdg | 5.000% | 08/01/25 | 420 | $ | 491,828 | |||||||||||
Revenue, Sixteenth Series A, AGM | 5.000 | 08/01/27 | 1,450 | 1,767,651 | ||||||||||||
University of Pittsburgh of the Commonwealth System of Higher Education, | ||||||||||||||||
Revenue, Rfdg | 4.000 | 04/15/26 | 750 | 858,600 | ||||||||||||
|
| |||||||||||||||
21,364,301 | ||||||||||||||||
|
| |||||||||||||||
Puerto Rico 0.1% | ||||||||||||||||
Puerto Rico Sales Tax Financing Corp., | �� | |||||||||||||||
Revenue, Series A-1, CABS | (1.322)(s) | 07/01/24 | 245 | 234,115 | ||||||||||||
|
| |||||||||||||||
Rhode Island 1.0% | ||||||||||||||||
Tobacco Settlement Financing Corp., | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/22 | 540 | 557,301 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/23 | 790 | 850,964 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/24 | 1,940 | 2,175,555 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 06/01/28 | 240 | 272,381 | ||||||||||||
|
| |||||||||||||||
3,856,201 | ||||||||||||||||
|
| |||||||||||||||
South Carolina 1.0% | ||||||||||||||||
County of Richland, | ||||||||||||||||
Revenue, International Paper Co. Project, Series A, Rfdg | 3.875 | 04/01/23 | 1,115 | 1,168,710 | ||||||||||||
South Carolina Public Service Authority, | ||||||||||||||||
Revenue, Santee Cooper, Series A, Rfdg | 5.000 | 12/01/24 | 280 | 282,128 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 12/01/26 | 625 | 758,281 | ||||||||||||
Revenue, Series C, Rfdg | 5.000 | 12/01/24 | 610 | 702,738 | ||||||||||||
Revenue, Series C, Rfdg | 5.000 | 12/01/29 | 630 | 722,629 | ||||||||||||
|
| |||||||||||||||
3,634,486 | ||||||||||||||||
|
| |||||||||||||||
Tennessee 0.8% | ||||||||||||||||
Memphis-Shelby County Airport Authority, | ||||||||||||||||
Revenue, Series A, AMT | 5.000 | 07/01/25 | 500 | 581,520 | ||||||||||||
Tennergy Corp., | ||||||||||||||||
Revenue, Series A, (Mandatory Put Date 09/01/28) | 4.000 | 12/01/51 | 2,000 | 2,362,360 | ||||||||||||
|
| |||||||||||||||
2,943,880 | ||||||||||||||||
|
|
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 25 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Texas 11.1% | ||||||||||||||||
Bexar County Health Facilities Development Corp., | ||||||||||||||||
Revenue, Army Retirement Residence Foundation, Rfdg | 5.000% | 07/15/24 | 500 | $ | 549,905 | |||||||||||
Board of Regents of the University of Texas System, | ||||||||||||||||
Revenue, Series C, Rfdg | 5.000 | 08/15/28 | 1,165 | 1,478,478 | ||||||||||||
Central Texas Regional Mobility Authority, | ||||||||||||||||
Revenue, Senior Lien, Series A, Rfdg | 5.000 | 01/01/23 | 610 | 645,447 | ||||||||||||
Revenue, Series C | 5.000 | 01/01/27 | 500 | 588,895 | ||||||||||||
Revenue, Sub-Series F, Bond Anticipation Notes | 5.000 | 01/01/25 | 625 | 701,894 | ||||||||||||
City of Houston, | ||||||||||||||||
Series A, GO, Rfdg | 5.000 | 03/01/28 | 1,130 | 1,416,670 | ||||||||||||
City of Houston Airport System, | ||||||||||||||||
Revenue, Sub-Lien, Series A, AMT, Rfdg, | ||||||||||||||||
(Pre-refunded Date 07/01/22)(ee) | 5.000 | 07/01/32 | 1,000 | 1,035,120 | ||||||||||||
Revenue, Sub-Series A, AMT, Rfdg | 5.000 | 07/01/25 | 1,000 | 1,164,210 | ||||||||||||
Clear Creek Independent School District, | ||||||||||||||||
Permanent School Fund Program, GO, (Mandatory Put Date 08/15/24) | 0.280 | 02/15/38 | 1,000 | 998,410 | ||||||||||||
Clifton Higher Education Finance Corp., | ||||||||||||||||
Revenue, Idea Public Schools | 3.750 | 08/15/22 | 90 | 92,571 | ||||||||||||
Revenue, Idea Public Schools, Series B | 4.000 | 08/15/23 | 610 | 649,790 | ||||||||||||
Revenue, Idea Public Schools, Series B | 5.000 | 08/15/25 | 210 | 243,737 | ||||||||||||
Dallas Fort Worth International Airport, | ||||||||||||||||
Revenue, Series A, Rfdg | 5.000 | 11/01/25 | 1,030 | 1,212,537 | ||||||||||||
Decatur Hospital Authority, | ||||||||||||||||
Revenue, Wise Regional Health Systems, Series A, Rfdg | 5.000 | 09/01/22 | 150 | 156,353 | ||||||||||||
Revenue, Wise Regional Health Systems, Series A, Rfdg | 5.000 | 09/01/23 | 150 | 163,208 | ||||||||||||
Gulf Coast Authority, | ||||||||||||||||
Revenue, ExxonMobil Project, FRDD | 0.060(cc) | 06/01/30 | 4,600 | 4,600,000 | ||||||||||||
Revenue, ExxonMobil Project, FRDD | 0.100(cc) | 09/01/25 | 10,500 | 10,500,000 | ||||||||||||
Revenue, ExxonMobil Project, FRDD | 0.100(cc) | 12/01/25 | 1,240 | 1,240,000 | ||||||||||||
Revenue, ExxonMobil Project, Series B, FRDD | 0.060(cc) | 06/01/25 | 230 | 230,000 | ||||||||||||
Harris County Cultural Education Facilities Finance Corp., | ||||||||||||||||
Revenue, Baylor College of Medicine Medical Facility, Series A, Rfdg, (Mandatory Put Date 07/01/24) | 0.710 | 11/15/46 | 1,000 | 1,001,200 | ||||||||||||
Harris County Toll Road Authority, | ||||||||||||||||
Revenue, First Lien, Rfdg | 5.000 | 08/15/28 | 1,375 | 1,749,261 | ||||||||||||
Houston Higher Education Finance Corp., | ||||||||||||||||
Revenue, Cosmos Foundation, Series A | 4.000 | 02/15/22 | 15 | 15,175 |
See Notes to Financial Statements. | ||
26 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Texas (cont’d.) | ||||||||||||||||
Kerrville Health Facilities Development Corp., | ||||||||||||||||
Revenue, Peterson Regional Medical Center Project, Rfdg | 5.000% | 08/15/22 | 485 | $ | 504,647 | |||||||||||
Lower Colorado River Authority, | ||||||||||||||||
Revenue, LCRA Transmission Services Corp. Project, Rfdg | 5.000 | 05/15/27 | 500 | 613,095 | ||||||||||||
Lower Neches Valley Authority Industrial Development Corp., | ||||||||||||||||
Revenue, ExxonMobil Project, Series B, Rfdg, FRDD | 0.060(cc) | 11/01/29 | 850 | 850,000 | ||||||||||||
New Caney Independent School District, | ||||||||||||||||
Permanent School Fund Program, School Building, | ||||||||||||||||
GO, (Mandatory Put Date 08/15/24) | 1.250 | 02/15/50 | 650 | 666,744 | ||||||||||||
North Texas Tollway Authority, | ||||||||||||||||
Revenue, First Tier, Series A, Rfdg | 5.000 | 01/01/27 | 390 | 460,496 | ||||||||||||
Revenue, First Tier, Series B, Rfdg | 5.000 | 01/01/25 | 725 | 830,640 | ||||||||||||
Revenue, Second Tier, Series B, Rfdg | 5.000 | 01/01/26 | 690 | 730,358 | ||||||||||||
Revenue, Second Tier, Series B, Rfdg | 5.000 | 01/01/27 | 1,550 | 1,886,985 | ||||||||||||
Revenue, Second Tier, Series B, Rfdg | 5.000 | 01/01/28 | 340 | 401,686 | ||||||||||||
Revenue, Series A, Rfdg | 5.000 | 01/01/26 | 2,050 | 2,261,171 | ||||||||||||
Tarrant County Cultural Education Facilities Finance Corp., | ||||||||||||||||
Revenue, Texas Health Resources System, Series A, Rfdg | 5.000 | 02/15/26 | 365 | 433,930 | ||||||||||||
Revenue, Trinity Terrace Project, Series A-1, Rfdg | 5.000 | 10/01/29 | 630 | 708,164 | ||||||||||||
Texas Municipal Gas Acquisition & Supply Corp. I, | ||||||||||||||||
Revenue, Senior Lien, Series D | 6.250 | 12/15/26 | 830 | 966,286 | ||||||||||||
|
| |||||||||||||||
41,747,063 | ||||||||||||||||
|
| |||||||||||||||
Utah 2.3% | ||||||||||||||||
County of Utah, | ||||||||||||||||
Revenue, IHC Health Services, Inc., Series B, | ||||||||||||||||
(Mandatory Put Date 08/01/26) | 5.000 | 05/15/60 | 3,315 | 3,994,907 | ||||||||||||
Salt Lake City Airport, | ||||||||||||||||
Revenue, Series A, AMT | 5.000 | 07/01/22 | 360 | 372,470 | ||||||||||||
Revenue, Series A, AMT | 5.000 | 07/01/23 | 535 | 578,479 | ||||||||||||
Revenue, Series A, AMT | 5.000 | 07/01/26 | 1,160 | 1,388,242 | ||||||||||||
Revenue, Series A, AMT | 5.000 | 07/01/28 | 375 | 458,617 | ||||||||||||
Revenue, Series A, AMT | 5.000 | 07/01/28 | 500 | 625,310 | ||||||||||||
Revenue, Series A, AMT | 5.000 | 07/01/28 | 1,000 | 1,254,360 | ||||||||||||
|
| |||||||||||||||
8,672,385 | ||||||||||||||||
|
|
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 27 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
Virginia 1.0% | ||||||||||||||||
Hampton Roads Transportation Accountability Commission, | ||||||||||||||||
Revenue, Senior Lien, Series A, Bond Anticipation Notes | 5.000% | 07/01/26 | 2,025 | $ | 2,440,307 | |||||||||||
Virginia Small Business Financing Authority, | ||||||||||||||||
Revenue, 95 Express Lanes LLC Project, AMT | 5.000 | 01/01/44 | 1,000 | 1,010,180 | ||||||||||||
Revenue, Elizabeth River Crossings Project, Senior Lien | 4.250 | 07/01/22 | 225 | 231,948 | ||||||||||||
Wise County Industrial Development Authority, | ||||||||||||||||
Revenue, Virginia Electric & Power Co., Series A, | ||||||||||||||||
(Mandatory Put Date 05/31/24) | 1.200 | 11/01/40 | 250 | 255,195 | ||||||||||||
|
| |||||||||||||||
3,937,630 | ||||||||||||||||
|
| |||||||||||||||
Washington 2.6% | ||||||||||||||||
City of Seattle Municipal Light & Power, | ||||||||||||||||
Revenue, Series B, Rfdg, (Mandatory Put Date 11/01/26) | 0.300 | 05/01/45 | 500 | 504,818 | ||||||||||||
County of King, | ||||||||||||||||
Series A, GO | 5.000 | 01/01/28 | 1,000 | 1,252,600 | ||||||||||||
Energy Northwest, | ||||||||||||||||
Revenue, Project No. 1, Series A, Rfdg | 5.000 | 07/01/26 | 1,300 | 1,569,529 | ||||||||||||
Port of Seattle, | ||||||||||||||||
Revenue, Intermediate Lein Private Activity, Series C, AMT, Rfdg | 5.000 | 08/01/28 | 1,500 | 1,867,140 | ||||||||||||
Revenue, Intermediate Lien, AMT | 5.000 | 04/01/29 | 1,000 | 1,260,580 | ||||||||||||
University of Washington, | ||||||||||||||||
Revenue, Forward Delivery, Series C, Rfdg | 5.000 | 04/01/26 | 1,500 | 1,796,415 | ||||||||||||
Washington Health Care Facilities Authority, | ||||||||||||||||
Revenue, Overlake Hospital Medical Center, Series B, Rfdg | 5.000 | 07/01/28 | 375 | 466,466 | ||||||||||||
Revenue, Providence Health & Services, Series A, Rfdg | 5.000 | 10/01/21 | 905 | 905,118 | ||||||||||||
|
| |||||||||||||||
9,622,666 | ||||||||||||||||
|
| |||||||||||||||
West Virginia 0.9% | ||||||||||||||||
County of Harrison, | ||||||||||||||||
Revenue, Monongahela Power Co., Series A, AMT, | 3.000 | 10/15/37 | 500 | 500,365 | ||||||||||||
West Virginia Economic Development Authority, | ||||||||||||||||
Revenue, Appalachian Power Co. Amos Project, | ||||||||||||||||
Series A, Rfdg, (Mandatory Put Date 04/01/24) | 2.550 | 03/01/40 | 1,000 | 1,049,960 |
See Notes to Financial Statements. | ||
28 |
Description | Interest Rate | Maturity Date | Principal (000)# | Value | ||||||||||||
MUNICIPAL BONDS (Continued) | ||||||||||||||||
West Virginia (cont’d.) | ||||||||||||||||
West Virginia Economic Development Authority, (cont’d.) | ||||||||||||||||
Revenue, Appalachian Power Co., Series A, Rfdg, | 0.625% | 12/01/38 | 1,500 | $ | 1,489,890 | |||||||||||
Revenue, Wheeling Power Co. Mitchell Plant Project, | ||||||||||||||||
Series A, AMT, Rfdg, (Mandatory Put Date 04/01/22) | 3.000 | 06/01/37 | 500 | 505,605 | ||||||||||||
|
| |||||||||||||||
3,545,820 | ||||||||||||||||
|
| |||||||||||||||
Wisconsin 0.3% | ||||||||||||||||
Public Finance Authority, | ||||||||||||||||
Revenue, Bancroft Neurohealth Project, Series A, 144A | 5.000 | 06/01/23 | 500 | 530,580 | ||||||||||||
Revenue, Trips Obligation Group, Senior Series E, Rfdg | 5.000 | 07/01/23 | 355 | 366,662 | ||||||||||||
Wisconsin Health & Educational Facilities Authority, | ||||||||||||||||
Revenue, Children’s Hospital of Wisconsin, Rfdg | 5.000 | 08/15/27 | 335 | 415,266 | ||||||||||||
|
| |||||||||||||||
1,312,508 | ||||||||||||||||
|
| |||||||||||||||
TOTAL INVESTMENTS 100.9% (cost $372,403,252) | 378,331,526 | |||||||||||||||
Liabilities in excess of other assets(z) (0.9)% | (3,358,412 | ) | ||||||||||||||
|
| |||||||||||||||
NET ASSETS 100.0% | $ | 374,973,114 | ||||||||||||||
|
|
Below is a list of the abbreviation(s) used in the semiannual report:
USD—US Dollar
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.
AGC—Assured Guaranty Corp.
AGM—Assured Guaranty Municipal Corp.
AMBAC—American Municipal Bond Assurance Corp.
AMT—Alternative Minimum Tax
BAM—Build America Mutual
CABS—Capital Appreciation Bonds
FRDD—Floating Rate Daily Demand Note
GO—General Obligation
IDB—Industrial Development Bond
LIBOR—London Interbank Offered Rate
NATL—National Public Finance Guarantee Corp.
OTC—Over-the-counter
PCR—Pollution Control Revenue
Rfdg—Refunding
# | Principal amount is shown in U.S. dollars unless otherwise stated. |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 29 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
(c) | Variable rate instrument. The interest rate shown reflects the rate in effect at September 30, 2021. |
(cc) | Variable rate instrument. The rate shown is based on the latest available information as of September 30, 2021. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description. |
(d) | Represents issuer in default on interest payments and/or principal repayment. Non-income producing security. Such securities may be post-maturity. |
(ee) | All or partial escrowed to maturity and pre-refunded issues are secured by escrowed cash, a guaranteed investment contract and /or U.S. guaranteed obligations. |
(hh) | When-issued security. |
(s) | Represents zero coupon bond or principal only security. Rate represents yield to maturity at purchase date. |
(z) | Includes net unrealized appreciation/(depreciation) and/or market value of the below holdings which are excluded from the Schedule of Investments: |
Futures contracts outstanding at September 30, 2021:
Number of Contracts |
| Type | Expiration Date | Current Notional Amount | Value / Unrealized Appreciation (Depreciation) | |||||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||||||
Short Position: |
| |||||||||||||||||||||||
12 | 10 Year U.S. Treasury Notes | Dec. 2021 | $1,579,313 | $ | 20,101 | |||||||||||||||||||
|
|
Summary of Collateral for Centrally Cleared/Exchange-traded Derivatives:
Cash and securities segregated as collateral, including pending settlement for closed positions, to cover requirements for centrally cleared/exchange-traded derivatives are listed by broker as follows:
Broker | Cash and/or Foreign Currency | Securities Market Value | ||||||||
Citigroup Global Markets, Inc. | $171,000 | $— | ||||||||
|
|
|
|
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 September 30, 2021 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Assets | ||||||||||||
Long-Term Investments | ||||||||||||
Municipal Bonds | ||||||||||||
Alabama | $ | — | $ 7,163,369 | $— |
See Notes to Financial Statements. | ||
30 |
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities (continued) | ||||||||||||
Assets (continued) | ||||||||||||
Long-Term Investments (continued) | ||||||||||||
Municipal Bonds (continued) | ||||||||||||
Alaska | $ | — | $ | 2,980,401 | $— | |||||||
Arizona | — | 11,558,281 | — | |||||||||
California | — | 20,905,361 | — | |||||||||
Colorado | — | 9,584,264 | — | |||||||||
Connecticut | — | 11,866,973 | — | |||||||||
Delaware | — | 1,379,867 | — | |||||||||
District of Columbia | — | 12,396,128 | — | |||||||||
Florida | — | 25,698,161 | — | |||||||||
Georgia | — | 18,148,087 | — | |||||||||
Hawaii | — | 1,160,200 | — | |||||||||
Idaho | — | 2,990,200 | — | |||||||||
Illinois | — | 39,512,399 | — | |||||||||
Indiana | — | 4,054,378 | — | |||||||||
Iowa | — | 2,900,915 | — | |||||||||
Kentucky | — | 3,992,255 | — | |||||||||
Louisiana | — | 4,134,178 | — | |||||||||
Maryland | — | 1,807,015 | — | |||||||||
Massachusetts | — | 2,253,809 | — | |||||||||
Michigan | — | 5,465,356 | — | |||||||||
Mississippi | — | 787,268 | — | |||||||||
Missouri | — | 3,668,123 | — | |||||||||
Nebraska | — | 1,395,883 | — | |||||||||
Nevada | — | 1,220,920 | — | |||||||||
New Jersey | — | 27,868,430 | — | |||||||||
New Mexico | — | 1,583,575 | — | |||||||||
New York | — | 31,478,725 | — | |||||||||
North Carolina | — | 5,318,270 | — | |||||||||
North Dakota | — | 548,867 | — | |||||||||
Ohio | — | 9,582,113 | — | |||||||||
Oklahoma | — | 4,056,700 | — | |||||||||
Pennsylvania | — | 21,364,301 | — | |||||||||
Puerto Rico | — | 234,115 | — | |||||||||
Rhode Island | — | 3,856,201 | — | |||||||||
South Carolina | — | 3,634,486 | — | |||||||||
Tennessee | — | 2,943,880 | — | |||||||||
Texas | — | 41,747,063 | — | |||||||||
Utah | — | 8,672,385 | — | |||||||||
Virginia | — | 3,937,630 | — | |||||||||
Washington | — | 9,622,666 | — | |||||||||
West Virginia | — | 3,545,820 | — | |||||||||
Wisconsin | — | 1,312,508 | — | |||||||||
|
|
|
| |||||||||
Total | $ | — | $ | 378,331,526 | $— | |||||||
|
|
|
|
|
|
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 31 |
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Level 1 | Level 2 | Level 3 | ||||||||||
Other Financial Instruments* | ||||||||||||
Assets | ||||||||||||
Futures Contracts | $20,101 | $ | — | $— | ||||||||
|
|
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and centrally cleared swap contracts, which are recorded at the unrealized appreciation (depreciation) on the instrument, and OTC swap contracts which are recorded at fair value. |
Sector Classification:
The sector classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of September 30, 2021 were as follows:
Transportation | 22.1 | % | ||
Healthcare | 15.6 | |||
Special Tax/Assessment District | 11.1 | |||
Corporate Backed IDB & PCR | 10.8 | |||
General Obligation | 9.6 | |||
Pre-pay Gas | 7.8 | |||
Tobacco | 6.8 | |||
Power | 5.5 | |||
Education | 4.8 |
Water & Sewer | 3.5 | % | ||
Lease Backed Certificate of Participation | 2.7 | |||
Solid Waste/Resource Recovery | 0.3 | |||
Pre-Refunded | 0.3 | |||
|
| |||
100.9 | ||||
Liabilities in excess of other assets | (0.9 | ) | ||
|
| |||
100.0 | % | |||
|
|
Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:
The Fund invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is interest rate contracts risk. See the Notes to Financial Statements for additional detail regarding these derivative instruments and their risks. The effect of such derivative instruments on the Fund’s financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
Fair values of derivative instruments as of September 30, 2021 as presented in the Statement of Assets and Liabilities:
Asset Derivatives | Liability Derivatives | |||||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||||
Interest rate contracts | Due from/to broker-variation margin futures | $ | 20,101 | * | — | $— | ||||
|
|
|
* | Includes cumulative appreciation (depreciation) as reported in the schedule of open futures and centrally cleared swap contracts. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
See Notes to Financial Statements. | ||
32 |
The effects of derivative instruments on the Statement of Operations for the six months ended September 30, 2021 are as follows:
Amount of Realized Gain (Loss) on Derivatives Recognized in Income | ||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Futures | |||||
Interest rate contracts | $ | (37,933) | ||||
|
|
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging instruments, carried at fair value | Futures | |||
Interest rate contracts | $15,435 | |||
|
For the six months ended September 30, 2021, the Fund’s average volume of derivative activities is as follows:
Futures Contracts— Short Positions(1) |
$1,843,625 |
(1) | Notional Amount in USD. |
Average volume is based on average quarter end balances as noted for the six months ended September 30, 2021.
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 33 |
Statement of Assets and Liabilities (unaudited)
as of September 30, 2021
Assets | ||||
Unaffiliated investments (cost $372,403,252) | $ | 378,331,526 | ||
Cash | 539,545 | |||
Interest receivable | 3,880,237 | |||
Receivable for Fund shares sold | 2,846,349 | |||
Deposit with broker for centrally cleared/exchange-traded derivatives | 171,000 | |||
Prepaid expenses | 2,513 | |||
|
| |||
Total Assets | 385,771,170 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 8,382,294 | |||
Payable for Fund shares purchased | 2,198,742 | |||
Accrued expenses and other liabilities | 71,346 | |||
Management fee payable | 59,332 | |||
Dividends payable | 47,688 | |||
Distribution fee payable | 35,427 | |||
Due to broker—variation margin futures | 1,688 | |||
Affiliated transfer agent fee payable | 1,034 | |||
Trustees’ fees payable | 505 | |||
|
| |||
Total Liabilities | 10,798,056 | |||
|
| |||
Net Assets | $ | 374,973,114 | ||
|
| |||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 35,826 | ||
Paid-in capital in excess of par | 372,021,569 | |||
Total distributable earnings (loss) | 2,915,719 | |||
|
| |||
Net assets, September 30, 2021 | $ | 374,973,114 | ||
|
|
See Notes to Financial Statements. | ||
34 |
Class A | |||||
Net asset value and redemption price per share, ($122,553,559 ÷ 11,706,248 shares of beneficial interest issued and outstanding) | $ | 10.47 | |||
Maximum sales charge (2.25% of offering price) | 0.24 | ||||
|
| ||||
Maximum offering price to public | $ | 10.71 | |||
|
| ||||
Class C | |||||
Net asset value, offering price and redemption price per share, ($12,187,260 ÷ 1,165,018 shares of beneficial interest issued and outstanding) | $ | 10.46 | |||
|
| ||||
Class Z | |||||
Net asset value, offering price and redemption price per share, ($237,151,386 ÷ 22,660,091 shares of beneficial interest issued and outstanding) | $ | 10.47 | |||
|
| ||||
Class R6 | |||||
Net asset value, offering price and redemption price per share, ($3,080,909 ÷ 294,449 shares of beneficial interest issued and outstanding) | $ | 10.46 | |||
|
|
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 35 |
Statement of Operations (unaudited)
Six Months Ended September 30, 2021
Net Investment Income (Loss) | ||||
Interest income | $ | 2,310,128 | ||
|
| |||
Expenses | ||||
Management fee | 473,914 | |||
Distribution fee(a) | 204,527 | |||
Transfer agent’s fees and expenses (including affiliated expense of $ 2,942)(a) | 114,344 | |||
Registration fees(a) | 38,988 | |||
Custodian and accounting fees | 29,354 | |||
Audit fee | 21,484 | |||
Legal fees and expenses | 10,033 | |||
Shareholders’ reports | 8,066 | |||
Trustees’ fees | 6,505 | |||
Miscellaneous | 11,646 | |||
|
| |||
Total expenses | 918,861 | |||
Less: Fee waiver and/or expense reimbursement(a) | (159,687 | ) | ||
Custodian fee credit | (135 | ) | ||
|
| |||
Net expenses | 759,039 | |||
|
| |||
Net investment income (loss) | 1,551,089 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 59,355 | |||
Futures transactions | (37,933 | ) | ||
|
| |||
21,422 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (409,215 | ) | ||
Futures | 15,435 | |||
|
| |||
(393,780 | ) | |||
|
| |||
Net gain (loss) on investment transactions | (372,358 | ) | ||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 1,178,731 | ||
|
|
(a) | Class specific expenses and waivers were as follows: |
Class A | Class C | Class Z | Class R6 | |||||||||||||
Distribution fee | 141,385 | 63,142 | — | — | ||||||||||||
Transfer agent’s fees and expenses | 22,006 | 3,781 | 88,502 | 55 | ||||||||||||
Registration fees | 16,575 | 6,529 | 11,190 | 4,694 | ||||||||||||
Fee waiver and/or expense reimbursement | (24,377 | ) | (7,554 | ) | (122,670 | ) | (5,086 | ) |
See Notes to Financial Statements. | ||
36 |
Statements of Changes in Net Assets (unaudited)
Six Months Ended September 30, 2021 | Year Ended March 31, 2021 | ||||||||||||||
Increase (Decrease) in Net Assets | |||||||||||||||
Operations | |||||||||||||||
Net investment income (loss) | $ | 1,551,089 | $ | 3,092,167 | |||||||||||
Net realized gain (loss) on investment transactions | 21,422 | (1,660,974 | ) | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | (393,780 | ) | 6,614,161 | ||||||||||||
|
|
|
| ||||||||||||
Net increase (decrease) in net assets resulting from operations | 1,178,731 | 8,045,354 | |||||||||||||
|
|
|
| ||||||||||||
Dividends and Distributions | |||||||||||||||
Distributions from distributable earnings | |||||||||||||||
Class A | (433,077 | ) | (815,430 | ) | |||||||||||
Class C | (2,200 | ) | (122,120 | ) | |||||||||||
Class Z | (1,085,035 | ) | (2,137,761 | ) | |||||||||||
Class R6 | (8,199 | ) | (16,074 | ) | |||||||||||
|
|
|
| ||||||||||||
(1,528,511 | ) | (3,091,385 | ) | ||||||||||||
|
|
|
| ||||||||||||
Fund share transactions (Net of share conversions) | |||||||||||||||
Net proceeds from shares sold | 151,927,602 | 192,362,576 | |||||||||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 1,258,244 | 2,451,448 | |||||||||||||
Cost of shares purchased | (64,380,923 | ) | (74,564,249 | ) | |||||||||||
|
|
|
| ||||||||||||
Net increase (decrease) in net assets from Fund share transactions | 88,804,923 | 120,249,775 | |||||||||||||
|
|
|
| ||||||||||||
Total increase (decrease) | 88,455,143 | 125,203,744 | |||||||||||||
Net Assets: | |||||||||||||||
Beginning of period | 286,517,971 | 161,314,227 | |||||||||||||
|
|
|
| ||||||||||||
End of period | $ | 374,973,114 | $ | 286,517,971 | |||||||||||
|
|
|
|
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 37 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $10.46 | $10.12 | $10.25 | $10.10 | $10.03 | $10.26 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.04 | 0.15 | 0.21 | 0.22 | 0.22 | 0.21 | ||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.01 | (b) | 0.35 | (0.13 | ) | 0.15 | 0.06 | (0.23 | ) | |||||||||||||||||||||||
Total from investment operations | 0.05 | 0.50 | 0.08 | 0.37 | 0.28 | (0.02 | ) | |||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.04 | ) | (0.16 | ) | (0.21 | ) | (0.22 | ) | (0.21 | ) | (0.21 | ) | ||||||||||||||||||||
Net asset value, end of period | $10.47 | $10.46 | $10.12 | $10.25 | $10.10 | $10.03 | ||||||||||||||||||||||||||
Total Return(c): | 0.48 | % | 4.99 | % | 0.72 | % | 3.69 | % | 2.78 | % | (0.23 | )% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $122,554 | $98,413 | $37,864 | $33,779 | $40,222 | $40,966 | ||||||||||||||||||||||||||
Average net assets (000) | $112,799 | $56,478 | $38,599 | $31,640 | $38,892 | $58,677 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.62 | %(e) | 0.63 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.66 | %(e) | 0.74 | % | 1.03 | % | 1.04 | % | 1.07 | % | 1.06 | % | ||||||||||||||||||||
Net investment income (loss) | 0.80 | %(e) | 1.43 | % | 1.99 | % | 2.21 | % | 2.14 | % | 2.07 | % | ||||||||||||||||||||
Portfolio turnover rate(f)(g) | 27 | % | 64 | % | 83 | % | 90 | % | 71 | % | 70 | % |
(a) | Calculated based on average shares outstanding during the period. |
(b) | The per share amount of realized and unrealized gain (loss) on investments does not directly correlate to the amounts reported in the Statement of Operations due to the timing of portfolio share transactions in relation to fluctuating market values. |
(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 GAAP. Total returns for periods less than one full year are not annualized. |
(d) | Effective January 1, 2018, 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. |
(g) | The portfolio turnover rate includes variable rate demand notes. |
See Notes to Financial Statements. | ||
38 |
Class C Shares | ||||||||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $10.46 | $10.11 | $10.24 | $10.09 | $10.02 | $10.25 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | - | (b) | 0.08 | 0.13 | 0.15 | 0.14 | 0.14 | |||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | - | (b) | 0.35 | (0.13 | ) | 0.14 | 0.06 | (0.24 | ) | |||||||||||||||||||||||
Total from investment operations | -(b) | 0.43 | - | 0.29 | 0.20 | (0.10 | ) | |||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | - | (b) | (0.08 | ) | (0.13 | ) | (0.14 | ) | (0.13 | ) | (0.13 | ) | ||||||||||||||||||||
Net asset value, end of period | $10.46 | $10.46 | $10.11 | $10.24 | $10.09 | $10.02 | ||||||||||||||||||||||||||
Total Return(c): | 0.02 | % | 4.25 | % | (0.03 | )% | 2.93 | % | 2.01 | % | (0.98 | )% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $12,187 | $13,047 | $17,580 | $18,002 | $20,309 | $21,240 | ||||||||||||||||||||||||||
Average net assets (000) | $12,594 | $15,371 | $18,047 | $18,317 | $21,456 | $22,803 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.39 | %(e) | 1.43 | % | 1.60 | % | 1.60 | % | 1.60 | % | 1.60 | % | ||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.51 | %(e) | 1.54 | % | 1.80 | % | 1.84 | % | 1.85 | % | 1.81 | % | ||||||||||||||||||||
Net investment income (loss) | 0.04 | %(e) | 0.80 | % | 1.27 | % | 1.46 | % | 1.39 | % | 1.33 | % | ||||||||||||||||||||
Portfolio turnover rate(f)(g) | 27 | % | 64 | % | 83 | % | 90 | % | 71 | % | 70 | % |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Amount rounds to zero. |
(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 GAAP. Total returns for periods less than one full year are not annualized. |
(d) | Effective January 1, 2018, 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. |
(g) | The portfolio turnover rate includes variable rate demand notes. |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 39 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $10.46 | $10.12 | $10.25 | $10.10 | $10.02 | $10.26 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.06 | 0.19 | 0.24 | 0.25 | 0.24 | 0.24 | ||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.01 | (b) | 0.34 | (0.14 | ) | 0.14 | 0.07 | (0.25 | ) | |||||||||||||||||||||||
Total from investment operations | 0.07 | 0.53 | 0.10 | 0.39 | 0.31 | (0.01 | ) | |||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.19 | ) | (0.23 | ) | (0.24 | ) | (0.23 | ) | (0.23 | ) | ||||||||||||||||||||
Net asset value, end of period | $10.47 | $10.46 | $10.12 | $10.25 | $10.10 | $10.02 | ||||||||||||||||||||||||||
Total Return(c): | 0.65 | % | 5.30 | % | 0.97 | % | 3.95 | % | 3.13 | % | (0.08 | )% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $237,151 | $174,371 | $104,867 | $97,709 | $80,839 | $57,368 | ||||||||||||||||||||||||||
Average net assets (000) | $198,995 | $119,138 | $110,231 | $93,569 | $74,855 | $67,197 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.32 | %(e) | 0.32 | % | 0.60 | % | 0.60 | % | 0.60 | % | 0.60 | % | ||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.44 | %(e) | 0.52 | % | 0.79 | % | 0.83 | % | 0.82 | % | 0.81 | % | ||||||||||||||||||||
Net investment income (loss) | 1.09 | %(e) | 1.80 | % | 2.26 | % | 2.46 | % | 2.40 | % | 2.33 | % | ||||||||||||||||||||
Portfolio turnover rate(f)(g) | 27 | % | 64 | % | 83 | % | 90 | % | 71 | % | 70 | % |
(a) | Calculated based on average shares outstanding during the period. |
(b) | The per share amount of realized and unrealized gain (loss) on investments does not directly correlate to the amounts reported in the Statement of Operations due to the timing of portfolio share transactions in relation to fluctuating market values. |
(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 GAAP. Total returns for periods less than one full year are not annualized. |
(d) | Effective January 1, 2018, 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. |
(g) | The portfolio turnover rate includes variable rate demand notes. |
See Notes to Financial Statements. | ||
40 |
Class R6 Shares | ||||||||||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | May 25, 2017(a) through March 31, | ||||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $10.46 | $10.11 | $10.24 | $10.10 | $10.14 | |||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.06 | 0.20 | 0.24 | 0.25 | 0.21 | |||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | - | (c) | 0.35 | (0.14 | ) | 0.13 | (0.05 | ) | ||||||||||||||||||||||||||
Total from investment operations | 0.06 | 0.55 | 0.10 | 0.38 | 0.16 | |||||||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.06 | ) | (0.20 | ) | (0.23 | ) | (0.24 | ) | (0.20 | ) | ||||||||||||||||||||||||
Net asset value, end of period | $10.46 | $10.46 | $10.11 | $10.24 | $10.10 | |||||||||||||||||||||||||||||
Total Return(d): | 0.57 | % | 5.44 | % | 0.97 | % | 3.85 | % | 1.58 | % | ||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $3,081 | $688 | $1,003 | $2,300 | $10 | |||||||||||||||||||||||||||||
Average net assets (000) | $1,556 | $820 | $1,689 | $1,291 | $10 | |||||||||||||||||||||||||||||
Ratios to average net assets(e): | ||||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.29 | %(f) | 0.29 | % | 0.60 | % | 0.60 | % | 0.60 | %(f) | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.94 | %(f) | 1.78 | % | 1.42 | % | 1.90 | % | 141.66 | %(f) | ||||||||||||||||||||||||
Net investment income (loss) | 1.06 | %(f) | 1.97 | % | 2.32 | % | 2.48 | % | 2.42 | %(f) | ||||||||||||||||||||||||
Portfolio turnover rate(g)(h) | 27 | % | 64 | % | 83 | % | 90 | % | 71 | % |
(a) | Commencement of offering. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Amount rounds to zero. |
(d) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
(e) | Effective January 1, 2018, 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. |
(h) | The portfolio turnover rate includes variable rate demand notes. |
See Notes to Financial Statements. | ||
PGIM Short Duration Muni Fund 41 |
Notes to Financial Statements (unaudited)
1. | Organization |
Prudential Investment Portfolios 12 (the “Trust”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The Trust currently consists of the following seven series: PGIM Global Real Estate Fund, PGIM QMA Long-Short Equity Fund and PGIM Short Duration Muni Fund, each of which are diversified funds for purposes of the 1940 Act and PGIM Jennison International Small-Mid Cap Opportunities Fund, PGIM Jennison NextGeneration Global Opportunities Fund, PGIM Jennison Technology Fund and PGIM US Real Estate Fund, each of which are non-diversified funds for purposes of the 1940 Act, and therefore, may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. These financial statements relate only to the PGIM Short Duration Muni Fund (the “Fund”).
The investment objective of the Fund is to seek a high level of current income exempt from federal income taxes.
2. | 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 is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform to U.S. generally accepted accounting principles (“GAAP”). 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 as of the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. As described in further detail below, the Fund’s investments are valued daily based on a number of factors, including the type of investment and whether market quotations are readily available. The Trust’s Board of Trustees (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. 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. A
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record of the Valuation Committee’s actions is subject to the Board’s review at its first quarterly meeting following the quarter in which such actions take place.
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 Fund’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
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 or preferred stocks, exchange-traded funds and derivative instruments, if applicable, 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.
Fixed income securities traded in the OTC market are generally classified as Level 2 in the fair value hierarchy. Such fixed income securities are typically valued using the market approach which generally involves obtaining data from an approved independent third-party vendor source. The Fund utilizes the market approach as the primary method to value securities when market prices of identical or comparable instruments are available. The third-party vendors’ valuation techniques used to derive the evaluated bid price are based on evaluating observable inputs, including but not limited to, yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations and reported trades. Certain Level 3 securities are also valued using the market approach when obtaining a single broker quote or when utilizing transaction prices for identical securities that have been used in excess of five business days. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.
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. Altering one or more unobservable inputs may result in a significant change to a Level 3 security’s fair value measurement.
PGIM Short Duration Muni Fund 43 |
Notes to Financial Statements (unaudited) (continued)
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.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain (loss). When the contract expires or is closed, the gain (loss) is realized and is presented in the Statement of Operations as net realized gain (loss) on futures transactions.
The Fund invested in financial futures contracts in order to hedge its existing portfolio securities, or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. Since futures contracts are exchange-traded, there is minimal counterparty credit risk to the Fund since the exchanges’ clearinghouse acts as counterparty to all exchange-traded futures and guarantees the futures contracts against default.
Delayed-Delivery Transactions: The Fund purchased or sold securities on a when-issued or delayed-delivery and forward commitment basis. These transactions involve a commitment by the Fund to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed-delivery purchases are outstanding, the Fund will set aside and maintain an amount of liquid assets sufficient to meet the purchase price in a segregated account until the settlement date. When purchasing a security on a delayed-delivery basis, the Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. The Fund may dispose
44 |
of or renegotiate a delayed-delivery transaction subsequent to establishment, and may sell when-issued securities before they are delivered, which may result in a realized gain (loss). When selling a security on a delayed-delivery basis, the Fund forfeits its eligibility to realize future gains (losses) with respect to the security.
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. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. 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. Such class specific expenses and waivers 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.
Custody Fee Credits: The Fund has an arrangement with its custodian bank, whereby uninvested monies earn credits which reduce the fees charged by the custodian. Such custody fee credits, if any, are presented as a reduction of gross expenses in the accompanying Statement of Operations.
Dividends and Distributions: The Fund expects to declare dividends of its net investment income daily and pay such dividends monthly. Distributions of net realized capital and currency gains, if any, are declared and paid at least annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from GAAP, 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.
PGIM Short Duration Muni Fund 45 |
Notes to Financial Statements (unaudited) (continued)
3. | Agreements |
The Trust, on behalf of the Fund, has a management agreement with the Manager. Pursuant to this agreement, the Manager has responsibility for all investment advisory services and supervises the subadviser’s performance of such services.
The Manager has entered into a subadvisory agreement with PGIM, Inc. (the “subadviser”), which provides subadvisory services to the Fund through its PGIM Fixed Income unit. The Manager pays for the services of PGIM, Inc.
The management fee paid to the Manager is accrued daily and payable monthly at an annual rate of 0.29% of the Fund’s average daily net assets up to and including $5 billion and 0.28% of the Fund’s average daily net assets in excess of $5 billion. The effective management fee rate before any waivers and/or expense reimbursements was 0.29% for the reporting period ended September 30, 2021.
The Manager has contractually agreed, through July 31, 2022, to limit total annual operating expenses after fee waivers and/or expense reimbursements to 0.85% of average daily net assets for Class A shares, 1.60% of average daily net assets for Class C shares, 0.32% of average daily net assets for Class Z shares and 0.29% 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 such expenses on any other share class. 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 the Manager may be recouped by the Manager within the same fiscal year during which such waiver 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.
In order to support Class C’s income yield, the Manager has voluntarily undertaken to waive/subsidize fees and/or expenses of Class C, respectively, such that the 1-day income yield (excluding capital gain (loss)) does not fall below 0.00%. The waivers/subsidies are voluntary and may be modified or terminated at any time. Pursuant to this undertaking, during the period ended September 30, 2021, the Manager has waived/subsidized $4,832 of Class C’s fees and/or expenses.
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The Trust, 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 C, Class Z and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A and Class C shares, pursuant to the plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS.
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.25%,and 1% of the average daily net assets of the Class A and Class C shares, respectively. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z or Class R6 shares of the Fund.
For the reporting period ended September 30, 2021, PIMS received $58,019 in front-end sales charges resulting from sales of Class A shares. Additionally, for the reporting period ended September 30, 2021, PIMS received $25,475 and $948 in contingent deferred sales charges imposed upon redemptions by certain Class A 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, PGIM, Inc. and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
4. | 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 Fund’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/trustees, and/or common officers.
For the reporting period ended September 30, 2021, the Fund’s purchase and sales transactions under Rule 17a-7 and realized gain (loss) as a result of 17a-7 sales transactions were as follows:
Purchases | Sales | Realized Gain (Loss) | ||||
$23,545,109 | $ | 25,250,211 | $— |
PGIM Short Duration Muni Fund 47 |
Notes to Financial Statements (unaudited) (continued)
5. | 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 September 30, 2021, were $188,510,857 and $87,198,435, respectively.
6. | Tax Information |
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of September 30, 2021 were as follows:
Tax Basis | $ | 372,333,350 | ||
|
| |||
Gross Unrealized Appreciation | 6,917,640 | |||
Gross Unrealized Depreciation | (899,363 | ) | ||
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| |||
Net Unrealized Appreciation | $ | 6,018,277 | ||
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The GAAP basis may differ from tax basis due to certain tax-related adjustments.
The Fund elected to treat late year losses of approximately $7,000 as having been incurred in the following fiscal year (March 31, 2022).
As of March 31, 2021, the Fund had a capital loss carryforward of approximately $3,348,000 which can be carried forward for an unlimited period. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.
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. Since tax authorities can examine previously filed tax returns, the Fund’s U.S. federal and state tax returns for each of the four fiscal years up to the most recent fiscal year ended March 31, 2021 are subject to such review.
7. | Capital and Ownership |
The Fund offers Class A, Class C, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 2.25%. Investors who purchase $500,000 or more of Class A shares and sell those shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1.00% on sales although these purchases are not subject to a front-end 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 C shares are sold with a CDSC
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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 eight years (ten years prior to January 22, 2021) after purchase. Class Z and Class R6 shares are not subject to any sales or redemption charges 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 beneficial interest, below.
The Trust has authorized an unlimited number of shares of beneficial interest of the Fund at $0.001 par value per share.
As of September 30, 2021, Prudential, through its affiliated entities, including affiliated funds (if applicable), owned shares of the Fund as follows:
Number of Shares | Percentage of Outstanding Shares | |||
Class R6 | 1,080 | 0.4% |
At the reporting period end, the number of shareholders holding greater than 5% of the Fund are as follows:
Affiliated | Unaffiliated | |||||
Number of Shareholders | Percentage of Outstanding Shares | Number of Shareholders | Percentage of Outstanding Shares | |||
— | —% | 8 | 87.5% |
Transactions in shares of beneficial interest were as follows:
Class A | Shares | Amount | ||||||
Six months ended September 30, 2021: | ||||||||
Shares sold | 3,884,722 | $ | 40,860,240 | |||||
Shares issued in reinvestment of dividends and distributions | 33,263 | 349,606 | ||||||
Shares purchased | (1,479,913 | ) | (15,564,153 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 2,438,072 | 25,645,693 | ||||||
Shares issued upon conversion from other share class(es) | 71,898 | 756,241 | ||||||
Shares purchased upon conversion into other share class(es) | (209,623 | ) | (2,201,448 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 2,300,347 | $ | 24,200,486 | |||||
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| |||||
Year ended March 31, 2021: | ||||||||
Shares sold | 6,548,554 | $ | 68,450,018 | |||||
Shares issued in reinvestment of dividends and distributions | 62,903 | 653,167 | ||||||
Shares purchased | (1,618,179 | ) | (16,743,825 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 4,993,278 | 52,359,360 | ||||||
Shares issued upon conversion from other share class(es) | 888,818 | 9,283,942 | ||||||
Shares purchased upon conversion into other share class(es) | (217,312 | ) | (2,278,979 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 5,664,784 | $ | 59,364,323 | |||||
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PGIM Short Duration Muni Fund 49 |
Notes to Financial Statements (unaudited) (continued)
Class C | Shares | Amount | ||||||
Six months ended September 30, 2021: | ||||||||
Shares sold | 122,152 | $ | 1,285,124 | |||||
Shares issued in reinvestment of dividends and distributions | 139 | 1,458 | ||||||
Shares purchased | (158,847 | ) | (1,669,583 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (36,556 | ) | (383,001 | ) | ||||
Shares purchased upon conversion into other share class(es) | (46,149 | ) | (485,139 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (82,705 | ) | $ | (868,140 | ) | |||
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| |||||
Year ended March 31, 2021: | ||||||||
Shares sold | 395,621 | $ | 4,065,314 | |||||
Shares issued in reinvestment of dividends and distributions | 6,506 | 67,146 | ||||||
Shares purchased | (235,175 | ) | (2,411,171 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 166,952 | 1,721,289 | ||||||
Shares purchased upon conversion into other share class(es) | (657,766 | ) | (6,857,138 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (490,814 | ) | $ | (5,135,849 | ) | |||
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Class Z | ||||||||
Six months ended September 30, 2021: | ||||||||
Shares sold | 10,148,012 | $ | 106,792,771 | |||||
Shares issued in reinvestment of dividends and distributions | 85,566 | 899,017 | ||||||
Shares purchased | (4,426,452 | ) | (46,553,067 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 5,807,126 | 61,138,721 | ||||||
Shares issued upon conversion from other share class(es) | 219,304 | 2,302,713 | ||||||
Shares purchased upon conversion into other share class(es) | (35,414 | ) | (372,367 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 5,991,016 | $ | 63,069,067 | |||||
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| |||||
Year ended March 31, 2021: | ||||||||
Shares sold | 11,474,763 | $ | 119,847,244 | |||||
Shares issued in reinvestment of dividends and distributions | 165,363 | 1,715,061 | ||||||
Shares purchased | (5,321,625 | ) | (55,045,625 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 6,318,501 | 66,516,680 | ||||||
Shares issued upon conversion from other share class(es) | 261,970 | 2,744,556 | ||||||
Shares purchased upon conversion into other share class(es) | (276,281 | ) | (2,892,381 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 6,304,190 | $ | 66,368,855 | |||||
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Class R6 | ||||||||
Six months ended September 30, 2021: | ||||||||
Shares sold | 284,301 | $ | 2,989,467 | |||||
Shares issued in reinvestment of dividends and distributions | 777 | 8,163 | ||||||
Shares purchased | (56,370 | ) | (594,120 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 228,708 | $ | 2,403,510 | |||||
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| |||||
Year ended March 31, 2021: | ||||||||
Shares issued in reinvestment of dividends and distributions | 1,555 | $ | 16,074 | |||||
Shares purchased | (34,938 | ) | (363,628 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (33,383 | ) | $ | (347,554 | ) | |||
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8. | Borrowings |
The Trust, on behalf of the Fund, along with other affiliated registered investment companies (the “Participating 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 table below provides details of the SCA.
SCA | ||||||
Term of Commitment | 10/2/2020 – 9/30/2021 | |||||
Total Commitment | $ 1,200,000,000 | |||||
Annualized Commitment Fee on the Unused Portion of the SCA | 0.15% | |||||
Annualized Interest Rate on Borrowings | 1.30% plus the higher of (1) the effective federal funds rate, (2) the one-month LIBOR rate or (3) zero percent |
Subsequent to the reporting period end, the SCA has been renewed and effective October 1, 2021 will provide a commitment of $1,200,000,000 through September 29, 2022. The commitment fee paid by the Participating Funds will continue to be .15% of the unused portion of the SCA. The interest on borrowings under the renewed SCA will be paid monthly and at a per annum interest rate of 1.20% plus the higher of (1) the effective federal funds rate, (2) the one-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 Participating Funds in the SCA equitably.
The Fund did not utilize the SCA during the reporting period ended September 30, 2021.
9. | Risks of Investing in the Fund |
The Fund’s risks include, but are not limited to, some or all of the risks discussed below. For further information on the Fund’s risks, please refer to the Fund’s Prospectus and Statement of Additional Information.
Bond Obligations Risk: As with credit risk, market risk and interest rate risk, the Fund’s holdings, share price, yield and total return may fluctuate in response to bond market movements. The value of bonds may decline for issuer-related reasons, including management performance, financial leverage and reduced demand for the issuer’s goods and services. Certain types of fixed income obligations also may be subject to “call and
PGIM Short Duration Muni Fund 51 |
Notes to Financial Statements (unaudited) (continued)
redemption risk,” which is the risk that the issuer may call a bond held by the Fund for redemption before it matures and the Fund may lose income.
Credit Risk: This is the risk that the issuer, the guarantor or the insurer of a fixed income security, or the counterparty to a contract, may be unable or unwilling to make timely principal and interest payments, or to otherwise honor its obligations. Additionally, fixed income securities could lose value due to a loss of confidence in the ability of the issuer, guarantor, insurer or counterparty to pay back debt. The longer the maturity and the lower the credit quality of a bond, the more sensitive it is to credit risk.
Economic and Market Events Risk: Events in the U.S. and global financial markets, including actions taken by the U.S. Federal Reserve or foreign central banks to stimulate or stabilize economic growth or the functioning of the securities markets, may at times result in unusually high market volatility, which could negatively impact performance. Relatively reduced liquidity in credit and fixed income markets could adversely affect issuers worldwide.
Increase in Expenses Risk: Your actual cost of investing in the Fund may be higher than the expenses shown in the expense table in the Fund’s prospectus for a variety of reasons. For example, expense ratios may be higher than those shown if average net assets decrease. Net assets are more likely to decrease and Fund expense ratios are more likely to increase when markets are volatile. Active and frequent trading of Fund securities can increase expenses.
Interest Rate Risk: The value of your investment may go down when interest rates rise. A rise in rates tends to have a greater impact on the prices of longer term or duration debt securities. For example, a fixed income security with a duration of three years is expected to decrease in value by approximately 3% if interest rates increase by 1%. This is referred to as “duration risk.” When interest rates fall, the issuers of debt obligations may prepay principal more quickly than expected, and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as “prepayment risk.” When interest rates rise, debt obligations may be repaid more slowly than expected, and the value of the Fund’s holdings may fall sharply. This is referred to as “extension risk.” The Fund may lose money if short-term or long-term interest rates rise sharply or in a manner not anticipated by the subadviser.
Junk Bonds Risk: High-yield, high-risk bonds have predominantly speculative characteristics, including particularly high credit risk. Junk bonds tend to have lower market liquidity than higher-rated securities. The liquidity of particular issuers or industries within a particular investment category may shrink or disappear suddenly and without warning. The non-investment grade bond market can experience sudden and sharp price swings and
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become illiquid due to a variety of factors, including changes in economic forecasts, stock market activity, large sustained sales by major investors, a high profile default or a change in the market’s psychology.
Large Shareholder and Large Scale Redemption Risk: Certain individuals, accounts, funds (including funds affiliated with the Manager) or institutions, including the Manager and its affiliates, may from time to time own or control a substantial amount of the Fund’s shares. There is no requirement that these entities maintain their investment in the Fund. There is a risk that such large shareholders or that the Fund’s shareholders generally may redeem all or a substantial portion of their investments in the Fund in a short period of time, which could have a significant negative impact on the Fund’s NAV, liquidity, and brokerage costs. Large redemptions could also result in tax consequences to shareholders and impact the Fund’s ability to implement its investment strategy. The Fund’s ability to pursue its investment objective after one or more large scale redemptions may be impaired and, as a result, the Fund may invest a larger portion of its assets in cash or cash equivalents.
LIBOR Risk: Many financial instruments use or may use a floating rate based on the London Interbank Offered Rate, or “LIBOR,” which is the offered rate for short-term Eurodollar deposits between major international banks. Over the course of the last several years, global regulators have indicated an intent to phase out the use of LIBOR and similar interbank offering rates (IBOR). There still remains uncertainty regarding the nature of any replacement rates for LIBOR and the other IBORs as well as around fallback approaches for instruments extending beyond the any phase-out of these reference rates. The lack of consensus around replacement rates and the uncertainty of the phase out of LIBOR and other IBORs may result in increased volatility in corporate or governmental debt, bank loans, derivatives and other instruments invested in by the Fund as well as loan facilities used by the Fund. The potential effect of a transition away from LIBOR on the Fund or the financial instruments in which the Fund invests cannot yet be determined. The elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates could have an adverse impact on the market for, or value of, any securities or payments linked to those reference rates, which may adversely affect the Fund’s performance and/or net asset value. Certain proposed replacement rates to LIBOR, such as the Secured Overnight Financing Rate (“SOFR”), are materially different from LIBOR, and changes in the applicable spread for instruments previously linked to LIBOR will need to be made in order for instruments to pay similar rates. Uncertainty and risk also remain regarding the willingness and ability of issuers and lenders to include revised provisions in new and existing contracts or instruments. Consequently, the transition away from LIBOR to other reference rates may lead to reduced coupons on debt held by the Fund, higher rates required to be paid by the Fund on bank lines of credit due to increases in spreads, increased volatility and illiquidity in markets that are tied to LIBOR, fluctuations in values of LIBOR-related investments or investments in issuers that utilize LIBOR, increased difficulty in borrowing or refinancing and diminished effectiveness of hedging strategies, adversely affecting the Fund’s performance. Furthermore, the risks associated with the expected discontinuation of LIBOR and transition may be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a
PGIM Short Duration Muni Fund 53 |
Notes to Financial Statements (unaudited) (continued)
timely manner. Because the usefulness of LIBOR and the other IBORs as benchmarks could deteriorate during the transition period, these effects could begin to be experienced by the end of 2021 and beyond until the anticipated discontinuance date in 2023 for the majority of the LIBOR rates.
Liquidity Risk: Liquidity risk is the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors’ interests in the Fund. The Fund may invest in instruments that trade in lower volumes and are more illiquid than other investments. If the Fund is forced to sell these investments to pay redemption proceeds or for other reasons, the Fund may lose money. In addition, when there is no willing buyer and investments cannot be readily sold at the desired time or price, the Fund may have to accept a lower price or may not be able to sell the instrument at all. An inability to sell a portfolio position can adversely affect the Fund’s value or prevent the Fund from being able to take advantage of other investment opportunities.
Management Risk: The value of your investment may decrease if judgments by the subadviser about the attractiveness, value or market trends affecting a particular security, industry or sector or about market movements are incorrect.
Market Disruption and Geopolitical Risks: International wars or conflicts and geopolitical developments in foreign countries, along with instability in regions such as Asia, Eastern Europe, and the Middle East, possible terrorist attacks in the United States or around the world, public health epidemics such as the outbreak of infectious diseases like the outbreak of COVID-19 globally in 2020 or the 2014–2016 outbreak in West Africa of the Ebola virus, and other similar events could adversely affect the U.S. and foreign financial markets, including increases in market volatility, reduced liquidity in the securities markets and government intervention, and may cause further long-term economic uncertainties in the United States and worldwide generally. The coronavirus pandemic and the related governmental and public responses have had and may continue to have an impact on the Fund’s investments and net asset value and have led and may continue to lead to increased market volatility and the potential for illiquidity in certain classes of securities and sectors of the market. Preventative or protective actions that governments may take in respect of pandemic or epidemic diseases may result in periods of business disruption, business closures, inability to obtain raw materials, supplies and component parts, and reduced or disrupted operations for the issuers in which the Fund invests. Government intervention in markets may impact interest rates, market volatility and security pricing. The occurrence, reoccurrence and pendency of such diseases could adversely affect the economies (including through changes in business activity and increased unemployment) and financial markets either in specific countries or worldwide.
54 |
Market 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 your investment in the Fund will decline.
Municipal Bonds Risk: Municipal bonds are subject to credit risk, market risk and interest rate risk. The Fund’s holdings, share price, yield and total return may also fluctuate in response to municipal bond market movements. Municipal bonds are also subject to the risk that potential future legislative changes could affect the market for and value of municipal bonds, which may adversely affect the Fund’s yield or the value of the Fund’s investments in municipal bonds. Certain municipal bonds with principal and interest payments that are made from the revenues of a specific project or facility, and not general tax revenues, may have increased risks. Factors affecting the project or facility, such as local business or economic conditions, could have a significant effect on the project’s ability to make payments of principal and interest on these securities. If the Fund invests a substantial amount of its assets in issuers located in a single region, state or city, there is an increased risk that environmental, economic, political and social conditions in those regions will have a significant impact on the Fund’s investment performance. For example, municipal securities of a particular state are vulnerable to events adversely affecting that state, including economic, political and regulatory occurrences, court decisions, terrorism, public health epidemics, social unrest and catastrophic natural disasters, such as hurricanes or earthquakes. Many municipal bonds are also subject to prepayment risk, which is the risk that when interest rates fall, issuers may redeem a security by repaying it early, which may reduce the Fund’s income if the proceeds are reinvested at a lower interest rate. In addition, income from municipal bonds could be declared taxable because of non-compliant conduct of a bond issuer.
Tax Risk: Municipal bonds are subject to tax risk. This is the risk that federal income tax rates may decrease, which could decrease the demand for municipal bonds, or that a change in the law may limit or eliminate the exemption of interest on municipal bonds from such taxes. In addition, the income from municipal bonds could be declared taxable because of non-compliant conduct of an issuer.
10. | Recent Accounting Pronouncement and Regulatory Developments |
In March 2020, the FASB issued Accounting Standard Update (“ASU”) No. 2020-04, which provides optional guidance for applying GAAP to contract modifications, hedging relationships and other transactions affected by the reference rate reform if certain criteria are met. ASU 2020-04 is elective and is effective on March 12, 2020 through December 31, 2022. At this time, management is evaluating the implications of certain provisions of the ASU and any impact on the financial statement disclosures has not yet been determined.
On December 3, 2020, the SEC announced that it voted to adopt a new rule that establishes an updated regulatory framework for fund valuation practices (the “Rule”). The Rule, in part, provides (i) a framework for determining fair value in good faith and (ii) provides for a
PGIM Short Duration Muni Fund 55 |
Notes to Financial Statements (unaudited) (continued)
fund Board’s assignment of its responsibility for the execution of valuation-related activities to a fund’s investment adviser. Further, the SEC is rescinding previously issued guidance on related issues. The Rule took effect on March 8, 2021, with a compliance date of September 8, 2022. Management is currently evaluating the Rule and its impact to the Fund.
56 |
Approval of Advisory Agreements
The Fund’s Board of Trustees
The Board of Trustees (the “Board”) of PGIM Short Duration Muni Fund (the “Fund”)1 consists of ten individuals, eight of whom are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Trustees”). The Board is responsible for the oversight of the Fund and its operations, and performs the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Trustees have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Trustee. The Board has established four standing committees: the Audit Committee, the Nominating and Governance Committee, and two Investment Committees. Each committee is chaired by, and composed of, Independent Trustees.
Annual Approval of the Fund’s Advisory Agreements
As required under the 1940 Act, the Board determines annually whether to renew the Fund’s management agreement with PGIM Investments LLC (“PGIM Investments”) and the Fund’s subadvisory agreement with PGIM, Inc. (“PGIM”) on behalf of its PGIM Fixed Income unit (“PGIM Fixed Income”). In considering the renewal of the agreements, the Board, including all of the Independent Trustees, met on June 7-10, 2021 and approved the renewal of the agreements through July 31, 2022, after concluding that the renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board requested and received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with its consideration. Among other things, the Board considered comparative fee information from PGIM Investments and PGIM. Also, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups, as is further discussed below.
In approving the agreements, the Board, including the Independent Trustees advised by independent legal counsel, considered the factors it deemed relevant, including the nature, quality and extent of services provided by PGIM Investments and the subadviser, the performance of the Fund, the profitability of PGIM Investments and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders as the Fund’s assets grow. In their deliberations, the Trustees did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with its deliberations, the Board considered information provided by PGIM Investments throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 7-10, 2021.
The Trustees determined that the overall arrangements between the Fund and PGIM Investments, which serves as the Fund’s investment manager pursuant to a
1 | PGIM Short Duration Muni Fund is a series of Prudential Investment Portfolios 12. |
PGIM Short Duration Muni Fund |
Approval of Advisory Agreements (continued)
management agreement, and between PGIM Investments and PGIM, which, through its PGIM Fixed Income unit, serves as the Fund’s subadviser pursuant to the terms of a subadvisory agreement with PGIM Investments, are in the best interests of the Fund and its shareholders in light of the services performed, fees charged and such other matters as the Trustees considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the Trustees’ reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature, quality and extent of services provided to the Fund by PGIM Investments and PGIM Fixed Income. The Board noted that PGIM Fixed Income is affiliated with PGIM Investments. The Board considered the services provided by PGIM Investments, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of fund recordkeeping, compliance and other services to the Fund, and PGIM Investments’ role as administrator of the Fund’s liquidity risk management program. With respect to PGIM Investments’ oversight of the subadviser, the Board noted that PGIM Investments’ Strategic Investment Research Group (“SIRG”), which is a business unit of PGIM Investments, is responsible for monitoring and reporting to PGIM Investments’ senior management on the performance and operations of the subadviser. The Board also considered that PGIM Investments pays the salaries of all of the officers and interested Trustees of the Fund who are part of Fund management. The Board also considered the investment subadvisory services provided by PGIM Fixed Income, including investment research and security selection, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PGIM Investments’ evaluation of the subadviser, as well as PGIM Investments’ recommendation, based on its review of the subadviser, to renew the subadvisory agreement.
The Board considered the qualifications, backgrounds and responsibilities of PGIM Investments’ senior management responsible for the oversight of the Fund and PGIM Fixed Income, and also considered the qualifications, backgrounds and responsibilities of PGIM Fixed Income’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PGIM Investments’ and PGIM Fixed Income’s organizational structure, senior management, investment operations, and other relevant information pertaining to both PGIM Investments and PGIM Fixed Income. The Board also noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer (“CCO”) as to both PGIM Investments and PGIM Fixed Income.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PGIM Investments and the subadvisory services provided to the Fund by PGIM Fixed Income, and that there was a reasonable
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basis on which to conclude that the Fund benefits from the services provided by PGIM Investments and PGIM Fixed Income under the management and subadvisory agreements.
Costs of Services and Profits Realized by PGIM Investments
The Board was provided with information on the profitability of PGIM Investments and its affiliates in serving as the Fund’s investment manager. The Board discussed with PGIM Investments the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. However, the Board considered that the cost of services provided by PGIM Investments during the year ended December 31, 2020 exceeded the management fees received by PGIM Investments, resulting in an operating loss to PGIM Investments. Taking these factors into account, the Board concluded that the profitability of PGIM Investments and its affiliates in relation to the services rendered was not unreasonable.
Economies of Scale
The Board received and discussed information concerning economies of scale that PGIM Investments may realize as the Fund’s assets grow beyond current levels. The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase. During the course of time, the Board has considered information regarding the launch date of the Fund, the management fees of the Fund compared to those of similarly managed funds and PGIM Investments’ investment in the Fund over time. The Board noted that economies of scale may be shared with the Fund in several ways, including low management fees from inception, additional technological and personnel investments to enhance shareholder services, and maintaining existing expense structures in the face of a rising cost environment. The Board considered PGIM Investments’ assertion that it continually evaluates the management fee schedule of the Fund and the potential to share economies of scale through breakpoints or fee waivers as asset levels increase.
The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board’s understanding that most of PGIM Investments’ costs are not specific to individual funds, but rather are incurred across a variety of products and services.
Other Benefits to PGIM Investments and PGIM Fixed Income
The Board considered potential ancillary benefits that might be received by PGIM Investments, PGIM Fixed Income and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PGIM Investments included transfer agency fees received by the Fund’s transfer agent (which
PGIM Short Duration Muni Fund |
Approval of Advisory Agreements (continued)
is affiliated with PGIM Investments), as well as benefits to its reputation or other intangible benefits resulting from PGIM Investments’ association with the Fund. The Board concluded that the potential benefits to be derived by PGIM Fixed Income included the ability to use soft dollar credits, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to its reputation. The Board concluded that the benefits derived by PGIM Investments and PGIM Fixed Income were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
Performance of the Fund / Fees and Expenses
The Board considered certain additional factors and made related conclusions relating to the historical performance of the Fund for the one-, three- and five-year periods ended December 31, 2020. The Board considered that the Fund commenced operations on May 29, 2014 and that longer-term performance was not yet available.
The Board also considered the Fund’s actual management fee, as well as the Fund’s net total expense ratio, for the fiscal year ended March 31, 2020. The Board considered the management fee for the Fund as compared to the management fee charged by PGIM Investments to other funds and the fee charged by other advisers to comparable mutual funds in a Peer Group. The actual management fee represents the fee rate actually paid by Fund shareholders and includes any fee waivers or reimbursements. The net total expense ratio for the Fund represents the actual expense ratio incurred by Fund shareholders.
The mutual funds included in the Peer Universe, which was used to consider performance, and the mutual funds included in the Peer Group, which was used to consider fees and expenses, were objectively determined by Broadridge, an independent provider of mutual fund data. In certain circumstances, PGIM Investments also provided supplemental Peer Universe or Peer Group information for reasons addressed with the Board. The comparisons placed the Fund in various quartiles over various periods, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).
The section below summarizes key factors considered by the Board and the Board’s conclusions regarding the Fund’s performance, fees and overall expenses. The table sets forth net performance comparisons (which reflect the impact on performance of fund expenses, or any subsidies, expense caps or waivers that may be applicable) with the Peer Universe, actual management fees with the Peer Group (which reflect the impact of any subsidies or fee waivers), and net total expenses with the Peer Group, each of which were key factors considered by the Board.
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Net Performance | 1 Year | 3 Years | 5 Years | 10 Years | ||||
4th Quartile | 1st Quartile | 1st Quartile | N/A | |||||
Actual Management Fees: 2nd Quartile | ||||||||
Net Total Expenses: 4th Quartile |
· | The Board noted that the Fund outperformed its benchmark index over the five-year period, equaled its benchmark index over the three-year period, and underperformed its benchmark index over the one-year period. |
· | The Board also noted that the Fund outperformed its benchmark index on a gross basis over the three- and five-year periods and over the last quarter of 2020. |
· | The Board considered certain strategy enhancements made to the Fund as of April 2020, including updates to the Fund’s name, performance benchmark and peer group category as well as reductions in management and subadvisory fees. The Board noted that PGIM Investments expects relative returns to improve following such strategy enhancements and agreed to continue to monitor the performance of the Fund. |
· | The Board and PGIM Investments agreed to retain the Fund’s existing contractual expense cap that (exclusive of certain fees and expenses) caps the Fund’s annual operating expenses at 0.85% for Class A shares, 1.60% for Class C shares, 0.32% for Class Z shares, and 0.29% for Class R6 shares through July 31, 2022. |
· | In addition, PGIM Investments will waive management fees or shared operating expenses on any share class to the same extent that it waives such expenses on any other share class, and has agreed that total annual fund operating expenses for Class R6 shares will not exceed total annual fund operating expenses for Class Z shares. |
· | The Board concluded that, in light of the above, it would be in the best interests of the Fund and its shareholders to renew the agreements. |
· | The Board concluded that the management fees (including subadvisory fees) and total expenses were reasonable in light of the services provided. |
* * *
After full consideration of these factors, the Board concluded that approval of the agreements was in the best interests of the Fund and its shareholders.
PGIM Short Duration Muni Fund |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street | (800) 225-1852 | pgim.com/investments | ||
Newark, NJ 07102 |
PROXY VOTING
The Board of Trustees 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 or by visiting the Securities and Exchange Commission’s website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.
TRUSTEES
Ellen S. Alberding · Kevin J. Bannon · Scott E. Benjamin · Linda W. Bynoe · Barry H. Evans · Keith F. Hartstein · Laurie Simon Hodrick · 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 · Claudia DiGiacomo, Chief Legal Officer · Dino Capasso, Chief Compliance Officer · Jonathan Corbett, Anti-Money Laundering Compliance Officer · Andrew R. French, Secretary · Melissa Gonzalez, Assistant Secretary · Diana N. Huffman, Assistant Secretary · Kelly A. Coyne, Assistant Secretary · Patrick E. McGuinness, Assistant Secretary · Debra Rubano, Assistant Secretary · Lana Lomuti, Assistant Treasurer · Russ Shupak, Assistant Treasurer · Elyse M. McLaughlin, Assistant Treasurer · Deborah Conway, Assistant Treasurer
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
SUBADVISER | PGIM Fixed Income | 655 Broad Street Newark, NJ 07102 | ||
DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
CUSTODIAN | The Bank of New York Mellon | 240 Greenwich Street New York, NY 10286 | ||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | PricewaterhouseCoopers LLP | 300 Madison Avenue New York, NY 10017 | ||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
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 at pgim.com/investments 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 to pgim.com/investments/resource/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 by visiting the website address above.
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, PGIM Short Duration Muni Fund, PGIM Investments, Attn: Board of Trustees, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Trustee by writing to that Trustee at the same address. Communications are not screened before being delivered to the addressee.
AVAILABILITY OF PORTFOLIO HOLDINGS
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 as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the Commission’s website at sec.gov.
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 SHORT DURATION MUNI FUND
SHARE CLASS | A | C | Z | R6 | ||||
NASDAQ | PDSAX | PDSCX | PDSZX | PDSQX | ||||
CUSIP | 744336835 | 744336827 | 744336819 | 744336744 |
MF222E2
PGIM QMA LONG-SHORT EQUITY FUND
SEMIANNUAL REPORT
SEPTEMBER 30, 2021
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Holdings and Financial Statements
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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 September 30, 2021 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 and member SIPC. PGIM Quantitative Solutions is the primary business name of PGIM Quantitative Solutions LLC (formerly known as QMA LLC), a wholly owned subsidiary of PGIM, Inc. (PGIM), a registered investment adviser and Prudential Financial company. © 2021 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.
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Dear Shareholder:
We hope you find the semiannual report for PGIM QMA Long-Short Equity Fund informative and useful. The report covers performance for the six-month period ended September 30, 2021.
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 Long-Short Equity Fund
November 15, 2021
PGIM QMA Long-Short Equity Fund 3
Performance data quoted represent 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 at pgim.com/investments or by calling (800) 225-1852.
(without sales charges) | Average Annual Total Returns as of 9/30/21 (with sales charges) | |||||||||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Since Inception (%) | |||||||||||||
Class A | 6.60 | 2.60 | -0.96 | 1.26 (05/29/2014) | ||||||||||||
Class C | 6.20 | 6.86 | -0.56 | 1.29 (05/29/2014) | ||||||||||||
Class Z | 6.71 | 8.88 | 0.42 | 2.30 (05/29/2014) | ||||||||||||
Class R6 | 6.71 | 8.88 | N/A | -0.93 (05/25/2017) | ||||||||||||
S&P 500 Index | ||||||||||||||||
9.18 | 30.00 | 16.89 | — | |||||||||||||
Customized Blend Index |
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4.59 | 14.37 | 9.06 | — | |||||||||||||
Average Annual Total Returns as of 9/30/21 Since Inception (%) |
Class A, Class C, Class Z (05/29/2014) | Class R6 (05/25/2017) | |||||||||||||||||||
S&P 500 Index | 13.82 | 16.44 | ||||||||||||||||||
Customized Blend Index | 7.39 | 8.94 |
*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 are measured from the closest month-end to the class’ inception date.
Source: PGIM Investments LLC.
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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 C | Class Z | Class R6 | |||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of the original purchase price or the net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 1.00% on sales made within 12 months of purchase | 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% | None | None |
Benchmark Definitions
Customized Blend Index*—The Customized Blend Index (the Index) is a model portfolio consisting of the S&P 500 Index (50%), which is unmanaged and provides a broad indicator of stock price movements, and the FTSE 3-Month Treasury Bill Index (50%), which is unmanaged and represents monthly return equivalents of yield averages of the last three-month Treasury bill issues.
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 S&P 500 Index (“Index”) is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by PGIM, Inc. and/or its affiliates. Copyright © 2021 S&P Dow Jones Indices LLC, a division of S&P Global, Inc., and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. For more information on any of S&P Dow Jones Indices LLC’s indices please visit www.spdji.com. S&P® is a registered trademark of S&P Global and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC.
Investors cannot invest directly in an index. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes that may be paid by an investor.
PGIM QMA Long-Short Equity Fund 5
Your Fund’s Performance (continued)
Presentation of Fund Holdings as of 9/30/21
Ten Largest Holdings Long | Line of Business | % of Net Assets | ||||
Microsoft Corp. | Software | 3.5 | % | |||
Facebook, Inc. (Class A Stock) | Interactive Media & Services | 2.4 | % | |||
Alphabet, Inc. (Class A Stock) | Interactive Media & Services | 2.0 | % | |||
Johnson & Johnson | Pharmaceuticals | 2.0 | % | |||
Apple, Inc. | Technology Hardware, Storage & Peripherals | 1.8 | % | |||
Verizon Communications, Inc. | Diversified Telecommunication Services | 1.8 | % | |||
Westlake Chemical Corp. | Chemicals | 1.6 | % | |||
Bristol-Myers Squibb Co. | Pharmaceuticals | 1.5 | % | |||
Sanderson Farms, Inc. | Food Products | 1.5 | % | |||
Applied Materials, Inc. | Semiconductors & Semiconductor Equipment | 1.5 | % | |||
Ten Largest Holdings Short | Line of Business | % of Net Assets | ||||
MongoDB, Inc. | IT Services | (0.5 | )% | |||
WD-40 Co. | Household Products | (0.5 | )% | |||
Goosehead Insurance, Inc. (Class A Stock) | Insurance | (0.5 | )% | |||
Chart Industries, Inc. | Machinery | (0.5 | )% | |||
WillScot Mobile Mini Holdings Corp. | Construction & Engineering | (0.5 | )% | |||
Infinera Corp. | Communications Equipment | (0.5 | )% | |||
Sunrun, Inc. | Electrical Equipment | (0.5 | )% | |||
Repay Holdings Corp. | IT Services | (0.5 | )% | |||
Bally’s Corp. | Hotels, Restaurants & Leisure | (0.5 | )% | |||
Cree, Inc. | Semiconductors & Semiconductor Equipment | (0.5 | )% |
Holdings reflect only long-term investments.
6 Visit our website at pgim.com/investments
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 September 30, 2021. 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 and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information
PGIM QMA Long-Short Equity Fund 7
Fees and Expenses (continued)
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 Long-Short Equity Fund | Beginning Account Value April 1, 2021 | Ending Account Value September 30, 2021 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||
Class A | Actual | $1,000.00 | $1,066.00 | 1.50% | $ 7.77 | |||||
Hypothetical | $1,000.00 | $1,017.55 | 1.50% | $ 7.59 | ||||||
Class C | Actual | $1,000.00 | $1,062.00 | 2.25% | $11.63 | |||||
Hypothetical | $1,000.00 | $1,013.79 | 2.25% | $11.36 | ||||||
Class Z | Actual | $1,000.00 | $1,067.10 | 1.25% | $ 6.48 | |||||
Hypothetical | $1,000.00 | $1,018.80 | 1.25% | $ 6.33 | ||||||
Class R6 | Actual | $1,000.00 | $1,067.10 | 1.25% | $ 6.48 | |||||
Hypothetical | $1,000.00 | $1,018.80 | 1.25% | $ 6.33 |
*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 183 days in the six-month period ended September 30, 2021, and divided by the 366 days in the Fund’s fiscal year ending March 31, 2022 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
8 Visit our website at pgim.com/investments
Schedule of Investments (unaudited)
as of September 30, 2021
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 96.7% | ||||||||
COMMON STOCKS | ||||||||
Aerospace & Defense 2.3% | ||||||||
Curtiss-Wright Corp. | 700 | $ | 88,326 | |||||
General Dynamics Corp. | 2,100 | 411,663 | ||||||
Vectrus, Inc.* | 2,100 | 105,588 | ||||||
|
| |||||||
605,577 | ||||||||
Auto Components 1.5% | ||||||||
Dana, Inc. | 8,500 | 189,040 | ||||||
Goodyear Tire & Rubber Co. (The)* | 10,500 | 185,850 | ||||||
Modine Manufacturing Co.* | 3,700 | 41,921 | ||||||
|
| |||||||
416,811 | ||||||||
Banks 0.4% | ||||||||
CNB Financial Corp. | 2,300 | 55,982 | ||||||
South Plains Financial, Inc. | 1,700 | 41,446 | ||||||
|
| |||||||
97,428 | ||||||||
Beverages 0.3% | ||||||||
Coca-Cola Co. (The) | 1,500 | 78,705 | ||||||
Biotechnology 2.1% | ||||||||
Gilead Sciences, Inc. | 2,500 | 174,625 | ||||||
Regeneron Pharmaceuticals, Inc.* | 500 | 302,590 | ||||||
United Therapeutics Corp.* | 500 | 92,290 | ||||||
|
| |||||||
569,505 | ||||||||
Building Products 0.4% | ||||||||
Carlisle Cos., Inc. | 300 | 59,637 | �� | |||||
JELD-WEN Holding, Inc.* | 2,200 | 55,066 | ||||||
|
| |||||||
114,703 | ||||||||
Capital Markets 2.4% | ||||||||
Piper Sandler Cos. | 2,800 | 387,688 | ||||||
Raymond James Financial, Inc. | 750 | 69,210 | ||||||
Stifel Financial Corp. | 600 | 40,776 | ||||||
StoneX Group, Inc.* | 2,200 | 144,980 | ||||||
|
| |||||||
642,654 |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 9
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Chemicals 3.0% | ||||||||
Cabot Corp. | 6,200 | $ | 310,744 | |||||
Mosaic Co. (The) | 1,900 | 67,868 | ||||||
Westlake Chemical Corp. | 4,600 | 419,244 | ||||||
|
| |||||||
797,856 | ||||||||
Commercial Services & Supplies 0.2% | ||||||||
Clean Harbors, Inc.* | 400 | 41,548 | ||||||
Construction & Engineering 1.5% | ||||||||
EMCOR Group, Inc. | 3,400 | 392,292 | ||||||
Consumer Finance 2.4% | ||||||||
Capital One Financial Corp. | 2,300 | 372,531 | ||||||
OneMain Holdings, Inc. | 4,900 | 271,117 | ||||||
|
| |||||||
643,648 | ||||||||
Distributors 1.3% | ||||||||
LKQ Corp.* | 7,000 | 352,240 | ||||||
Diversified Telecommunication Services 1.8% | ||||||||
Verizon Communications, Inc. | 9,000 | 486,090 | ||||||
Electrical Equipment 2.8% | ||||||||
Acuity Brands, Inc. | 2,200 | 381,414 | ||||||
Atkore, Inc.* | 4,200 | 365,064 | ||||||
|
| |||||||
746,478 | ||||||||
Electronic Equipment, Instruments & Components 2.4% | ||||||||
ePlus, Inc.* | 1,300 | 133,393 | ||||||
ScanSource, Inc.* | 5,000 | 173,950 | ||||||
SYNNEX Corp. | 3,200 | 333,120 | ||||||
|
| |||||||
640,463 | ||||||||
Entertainment 1.1% | ||||||||
World Wrestling Entertainment, Inc. (Class A Stock) | 5,400 | 303,804 | ||||||
Equity Real Estate Investment Trusts (REITs) 0.9% | ||||||||
Piedmont Office Realty Trust, Inc. (Class A Stock) | 12,500 | 217,875 |
See Notes to Financial Statements.
10
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Equity Real Estate Investment Trusts (REITs) (cont’d.) | ||||||||
PotlatchDeltic Corp. | 400 | $ | 20,632 | |||||
Service Properties Trust | 1,100 | 12,331 | ||||||
|
| |||||||
250,838 | ||||||||
Food Products 2.6% | ||||||||
Sanderson Farms, Inc. | 2,200 | 414,040 | ||||||
Tyson Foods, Inc. (Class A Stock) | 3,600 | 284,184 | ||||||
|
| |||||||
698,224 | ||||||||
Health Care Equipment & Supplies 5.7% | ||||||||
Boston Scientific Corp.* | 8,700 | 377,493 | ||||||
DENTSPLY SIRONA, Inc. | 6,200 | 359,910 | ||||||
Envista Holdings Corp.* | 4,700 | 196,507 | ||||||
Integer Holdings Corp.* | 2,500 | 223,350 | ||||||
Stryker Corp. | 1,400 | 369,208 | ||||||
|
| |||||||
1,526,468 | ||||||||
Health Care Providers & Services 2.8% | ||||||||
Anthem, Inc. | 1,100 | 410,080 | ||||||
Cigna Corp. | 400 | 80,064 | ||||||
Select Medical Holdings Corp. | 6,900 | 249,573 | ||||||
|
| |||||||
739,717 | ||||||||
Hotels, Restaurants & Leisure 2.2% | ||||||||
Century Casinos, Inc.* | 10,200 | 137,394 | ||||||
Del Taco Restaurants, Inc. | 9,300 | 81,189 | ||||||
RCI Hospitality Holdings, Inc. | 700 | 47,957 | ||||||
Red Rock Resorts, Inc. (Class A Stock)* | 6,400 | 327,808 | ||||||
|
| |||||||
594,348 | ||||||||
Independent Power & Renewable Electricity Producers 0.1% | ||||||||
AES Corp. (The) | 1,000 | 22,830 | ||||||
Insurance 0.6% | ||||||||
MetLife, Inc. | 700 | 43,211 | ||||||
Reinsurance Group of America, Inc. | 1,100 | 122,386 | ||||||
|
| |||||||
165,597 |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 11
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Interactive Media & Services 4.4% | ||||||||
Alphabet, Inc. (Class A Stock)*(u) | 200 | $ | 534,704 | |||||
Facebook, Inc. (Class A Stock)*(u) | 1,900 | 644,841 | ||||||
|
| |||||||
1,179,545 | ||||||||
Internet & Direct Marketing Retail 2.1% | ||||||||
Amazon.com, Inc.* | 100 | 328,504 | ||||||
Duluth Holdings, Inc. (Class B Stock)* | 13,100 | 178,553 | ||||||
Liquidity Services, Inc.* | 2,300 | 49,703 | ||||||
|
| |||||||
556,760 | ||||||||
IT Services 4.1% | ||||||||
Cognizant Technology Solutions Corp. (Class A Stock) | 5,500 | 408,155 | ||||||
Evo Payments, Inc. (Class A Stock)* | 8,600 | 203,648 | ||||||
Hackett Group, Inc. (The) | 20,300 | 398,286 | ||||||
Visa, Inc. (Class A Stock) | 400 | 89,100 | ||||||
|
| |||||||
1,099,189 | ||||||||
Leisure Products 1.6% | ||||||||
Brunswick Corp. | 4,100 | 390,607 | ||||||
MasterCraft Boat Holdings, Inc.* | 1,900 | 47,652 | ||||||
|
| |||||||
438,259 | ||||||||
Life Sciences Tools & Services 3.8% | ||||||||
IQVIA Holdings, Inc.* | 1,700 | 407,218 | ||||||
Mettler-Toledo International, Inc.* | 200 | 275,472 | ||||||
Thermo Fisher Scientific, Inc. | 600 | 342,798 | ||||||
|
| |||||||
1,025,488 | ||||||||
Machinery 4.6% | ||||||||
AGCO Corp. | 3,000 | 367,590 | ||||||
Cummins, Inc. | 1,600 | 359,296 | ||||||
Hillenbrand, Inc. | 4,200 | 179,130 | ||||||
Oshkosh Corp. | 3,100 | 317,347 | ||||||
|
| |||||||
1,223,363 | ||||||||
Metals & Mining 1.8% | ||||||||
Freeport-McMoRan, Inc. | 2,700 | 87,831 | ||||||
Reliance Steel & Aluminum Co. | 2,700 | 384,534 | ||||||
|
| |||||||
472,365 |
See Notes to Financial Statements.
12
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Mortgage Real Estate Investment Trusts (REITs) 0.1% | ||||||||
Granite Point Mortgage Trust, Inc. | 2,000 | $ | 26,340 | |||||
Multi-Utilities 0.7% | ||||||||
MDU Resources Group, Inc. | 6,500 | 192,855 | ||||||
Oil, Gas & Consumable Fuels 2.9% | ||||||||
APA Corp. | 18,000 | 385,740 | ||||||
Exxon Mobil Corp. | 6,600 | 388,212 | ||||||
|
| |||||||
773,952 | ||||||||
Personal Products 1.6% | ||||||||
Medifast, Inc. | 1,600 | 308,224 | ||||||
Nu Skin Enterprises, Inc. (Class A Stock) | 3,300 | 133,551 | ||||||
|
| |||||||
441,775 | ||||||||
Pharmaceuticals 3.5% | ||||||||
Bristol-Myers Squibb Co. | 7,000 | 414,190 | ||||||
Johnson & Johnson(u) | 3,300 | 532,950 | ||||||
|
| |||||||
947,140 | ||||||||
Professional Services 1.2% | ||||||||
ManpowerGroup, Inc. | 3,000 | 324,840 | ||||||
Semiconductors & Semiconductor Equipment 6.1% | ||||||||
Applied Materials, Inc. | 3,200 | 411,936 | ||||||
Broadcom, Inc. | 200 | 96,986 | ||||||
Cirrus Logic, Inc.* | 1,300 | 107,055 | ||||||
Intel Corp. | 2,500 | 133,200 | ||||||
Kulicke & Soffa Industries, Inc. (Singapore) | 2,200 | 128,216 | ||||||
MKS Instruments, Inc. | 2,600 | 392,366 | ||||||
QUALCOMM, Inc. | 2,900 | 374,042 | ||||||
|
| |||||||
1,643,801 | ||||||||
Software 8.8% | ||||||||
Agilysys, Inc.* | 2,700 | 141,372 | ||||||
CDK Global, Inc. | 7,200 | 306,360 | ||||||
Dolby Laboratories, Inc. (Class A Stock) | 3,000 | 264,000 | ||||||
Manhattan Associates, Inc.* | 2,500 | 382,575 |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 13
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Software (cont’d.) | ||||||||
Microsoft Corp.(u) | 3,300 | $ | 930,336 | |||||
SS&C Technologies Holdings, Inc. | 4,800 | 333,120 | ||||||
|
| |||||||
2,357,763 | ||||||||
Specialty Retail 2.8% | ||||||||
AutoNation, Inc.* | 3,300 | 401,808 | ||||||
Foot Locker, Inc. | 6,400 | 292,224 | ||||||
Zumiez, Inc.* | 1,700 | 67,592 | ||||||
|
| |||||||
761,624 | ||||||||
Technology Hardware, Storage & Peripherals 2.9% | ||||||||
Apple, Inc.(u) | 3,500 | 495,250 | ||||||
Western Digital Corp.* | 5,000 | 282,200 | ||||||
|
| |||||||
777,450 | ||||||||
Textiles, Apparel & Luxury Goods 1.2% | ||||||||
Capri Holdings Ltd.* | 4,600 | 222,686 | ||||||
Tapestry, Inc. | 3,000 | 111,060 | ||||||
|
| |||||||
333,746 | ||||||||
Tobacco 0.2% | ||||||||
Vector Group Ltd. | 4,300 | 54,825 | ||||||
Trading Companies & Distributors 1.5% | ||||||||
Veritiv Corp.* | 4,400 | 394,064 | ||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 25,952,968 | |||||||
|
| |||||||
SHORT-TERM INVESTMENTS 3.8% | ||||||||
AFFILIATED MUTUAL FUND 3.1% | ||||||||
PGIM Core Ultra Short Bond Fund | 818,393 | 818,393 | ||||||
|
|
See Notes to Financial Statements.
14
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. TREASURY OBLIGATION(k)(n) 0.7% | ||||||||||||||||
U.S. Treasury Bills | 0.035% | 12/09/21 | 200 | $ | 199,989 | |||||||||||
|
| |||||||||||||||
TOTAL SHORT-TERM INVESTMENTS | 1,018,382 | |||||||||||||||
|
| |||||||||||||||
TOTAL INVESTMENTS, BEFORE SECURITIES SOLD SHORT | 26,971,350 | |||||||||||||||
|
| |||||||||||||||
Shares | ||||||||||||||||
SECURITIES SOLD SHORT (48.7)% | ||||||||||||||||
COMMON STOCKS | ||||||||||||||||
Aerospace & Defense (0.9)% | ||||||||||||||||
AeroVironment, Inc.* | 900 | (77,688 | ) | |||||||||||||
Astronics Corp.* | 900 | (12,654 | ) | |||||||||||||
Kratos Defense & Security Solutions, Inc.* | 3,900 | (87,009 | ) | |||||||||||||
Maxar Technologies, Inc. | 2,600 | (73,632 | ) | |||||||||||||
|
| |||||||||||||||
(250,983 | ) | |||||||||||||||
Auto Components (0.4)% | ||||||||||||||||
QuantumScape Corp.* | 4,400 | (107,976 | ) | |||||||||||||
Automobiles (0.2)% | ||||||||||||||||
Fisker, Inc.* | 4,400 | (64,460 | ) | |||||||||||||
Banks (0.3)% | ||||||||||||||||
Independent Bank Corp. | 1,100 | (83,765 | ) | |||||||||||||
Beverages (0.5)% | ||||||||||||||||
Celsius Holdings, Inc.* | 1,400 | (126,126 | ) | |||||||||||||
Biotechnology (2.5)% | ||||||||||||||||
Albireo Pharma, Inc.* | 700 | (21,840 | ) | |||||||||||||
Avid Bioservices, Inc.* | 1,600 | (34,512 | ) | |||||||||||||
ChemoCentryx, Inc.* | 2,500 | (42,750 | ) | |||||||||||||
Cytokinetics, Inc.* | 2,800 | (100,072 | ) | |||||||||||||
Generation Bio Co.* | 2,100 | (52,647 | ) | |||||||||||||
Global Blood Therapeutics, Inc.* | 3,700 | (94,276 | ) | |||||||||||||
Heron Therapeutics, Inc.* | 3,500 | (37,415 | ) | |||||||||||||
ImmunoGen, Inc.* | 7,200 | (40,824 | ) | |||||||||||||
IVERIC bio, Inc.* | 3,500 | (56,840 | ) |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 15
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Biotechnology (cont’d.) | ||||||||
Radius Health, Inc.* | 1,200 | $ | (14,892 | ) | ||||
Sarepta Therapeutics, Inc.* | 800 | (73,984 | ) | |||||
Twist Bioscience Corp.* | 900 | (96,273 | ) | |||||
|
| |||||||
(666,325 | ) | |||||||
Building Products (0.9)% | ||||||||
CSW Industrials, Inc. | 1,000 | (127,700 | ) | |||||
PGT Innovations, Inc.* | 1,600 | (30,560 | ) | |||||
Trex Co., Inc.* | 900 | (91,737 | ) | |||||
|
| |||||||
(249,997 | ) | |||||||
Capital Markets (0.3)% | ||||||||
MarketAxess Holdings, Inc. | 200 | (84,138 | ) | |||||
Chemicals (1.0)% | ||||||||
Danimer Scientific, Inc.* | 2,500 | (40,850 | ) | |||||
Livent Corp.* | 5,400 | (124,794 | ) | |||||
Quaker Chemical Corp. | 400 | (95,088 | ) | |||||
|
| |||||||
(260,732 | ) | |||||||
Commercial Services & Supplies (0.8)% | ||||||||
Montrose Environmental Group, Inc.* | 1,700 | (104,958 | ) | |||||
Viad Corp.* | 2,700 | (122,607 | ) | |||||
|
| |||||||
(227,565 | ) | |||||||
Communications Equipment (0.9)% | ||||||||
Infinera Corp.* | 16,000 | (133,120 | ) | |||||
Viasat, Inc.* | 1,800 | (99,126 | ) | |||||
|
| |||||||
(232,246 | ) | |||||||
Construction & Engineering (1.0)% | ||||||||
Ameresco, Inc. (Class A Stock)* | 1,100 | (64,273 | ) | |||||
Construction Partners, Inc. (Class A Stock)* | 1,200 | (40,044 | ) | |||||
Great Lakes Dredge & Dock Corp.* | 1,800 | (27,162 | ) | |||||
WillScot Mobile Mini Holdings Corp.* | 4,200 | (133,224 | ) | |||||
|
| |||||||
(264,703 | ) | |||||||
Consumer Finance (0.3)% | ||||||||
LendingTree, Inc.* | 500 | (69,915 | ) |
See Notes to Financial Statements.
16
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Containers & Packaging (0.1)% | ||||||||
Ranpak Holdings Corp.* | 1,000 | $ | (26,820 | ) | ||||
Diversified Consumer Services (1.2)% | ||||||||
2U, Inc.* | 2,400 | (80,568 | ) | |||||
Bright Horizons Family Solutions, Inc.* | 600 | (83,652 | ) | |||||
Coursera, Inc.* | 2,400 | (75,960 | ) | |||||
OneSpaWorld Holdings Ltd. (Bahamas)* | 9,000 | (89,730 | ) | |||||
|
| |||||||
(329,910 | ) | |||||||
Electrical Equipment (2.1)% | ||||||||
Bloom Energy Corp. (Class A Stock)* | 6,400 | (119,808 | ) | |||||
FTC Solar, Inc.* | 2,800 | (21,812 | ) | |||||
FuelCell Energy, Inc.* | 15,600 | (104,364 | ) | |||||
Plug Power, Inc.* | 3,500 | (89,390 | ) | |||||
Shoals Technologies Group, Inc. (Class A Stock)* | 3,200 | (89,216 | ) | |||||
Sunrun, Inc.* | 3,000 | (132,000 | ) | |||||
|
| |||||||
(556,590 | ) | |||||||
Electronic Equipment, Instruments & Components (0.5)% | ||||||||
Luna Innovations, Inc.* | 1,900 | (18,050 | ) | |||||
PAR Technology Corp.* | 2,000 | (123,020 | ) | |||||
|
| |||||||
(141,070 | ) | |||||||
Energy Equipment & Services (0.2)% | ||||||||
Dril-Quip, Inc.* | 2,300 | (57,914 | ) | |||||
Equity Real Estate Investment Trusts (REITs) (1.1)% |
| |||||||
Americold Realty Trust | 1,900 | (55,195 | ) | |||||
Independence Realty Trust, Inc. | 6,100 | (124,135 | ) | |||||
Innovative Industrial Properties, Inc. | 500 | (115,585 | ) | |||||
|
| |||||||
(294,915 | ) | |||||||
Food & Staples Retailing (0.3)% | ||||||||
Grocery Outlet Holding Corp.* | 3,300 | (71,181 | ) | |||||
Food Products (1.2)% | ||||||||
Beyond Meat, Inc.* | 1,100 | (115,786 | ) | |||||
Cal-Maine Foods, Inc. | 1,500 | (54,240 | ) |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 17
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Food Products (cont’d.) | ||||||||
Freshpet, Inc.* | 700 | $ | (99,883 | ) | ||||
Utz Brands, Inc. | 2,600 | (44,538 | ) | |||||
|
| |||||||
(314,447 | ) | |||||||
Health Care Equipment & Supplies (1.9)% | ||||||||
Acutus Medical, Inc.* | 1,900 | (16,796 | ) | |||||
Axonics, Inc.* | 1,800 | (117,162 | ) | |||||
Cerus Corp.* | 5,800 | (35,322 | ) | |||||
CryoPort, Inc.* | 1,900 | (126,369 | ) | |||||
Dexcom, Inc.* | 200 | (109,372 | ) | |||||
Novocure Ltd.* | 800 | (92,936 | ) | |||||
Silk Road Medical, Inc.* | 200 | (11,006 | ) | |||||
|
| |||||||
(508,963 | ) | |||||||
Health Care Providers & Services (3.5)% | ||||||||
1Life Healthcare, Inc.* | 5,100 | (103,275 | ) | |||||
Accolade, Inc.* | 2,900 | (122,293 | ) | |||||
AdaptHealth Corp.* | 5,100 | (118,779 | ) | |||||
Castle Biosciences, Inc.* | 700 | (46,550 | ) | |||||
HealthEquity, Inc.* | 1,900 | (123,044 | ) | |||||
Oak Street Health, Inc.* | 2,700 | (114,831 | ) | |||||
Progyny, Inc.* | 2,000 | (112,000 | ) | |||||
R1 RCM, Inc.* | 4,400 | (96,844 | ) | |||||
Signify Health, Inc. (Class A Stock)* | 5,200 | (92,924 | ) | |||||
|
| |||||||
(930,540 | ) | |||||||
Health Care Technology (1.0)% | ||||||||
Health Catalyst, Inc.* | 2,500 | (125,025 | ) | |||||
Simulations Plus, Inc. | 700 | (27,650 | ) | |||||
Teladoc Health, Inc.* | 900 | (114,129 | ) | |||||
|
| |||||||
(266,804 | ) | |||||||
Hotels, Restaurants & Leisure (1.2)% | ||||||||
Bally’s Corp.* | 2,600 | (130,364 | ) | |||||
DraftKings, Inc. (Class A Stock)* | 1,700 | (81,872 | ) | |||||
Rush Street Interactive, Inc.* | 2,100 | (40,341 | ) | |||||
Shake Shack, Inc. (Class A Stock)* | 1,000 | (78,460 | ) | |||||
|
| |||||||
(331,037 | ) |
See Notes to Financial Statements.
18
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Household Durables (0.9)% | ||||||||
Helen of Troy Ltd.* | 500 | $ | (112,340 | ) | ||||
Lovesac Co. (The)* | 500 | (33,045 | ) | |||||
Purple Innovation, Inc.* | 3,900 | (81,978 | ) | |||||
Vuzix Corp.* | 2,300 | (24,058 | ) | |||||
|
| |||||||
(251,421 | ) | |||||||
Household Products (0.8)% | ||||||||
Church & Dwight Co., Inc. | 800 | (66,056 | ) | |||||
WD-40 Co. | 600 | (138,888 | ) | |||||
|
| |||||||
(204,944 | ) | |||||||
Independent Power & Renewable Electricity Producers (0.5)% | ||||||||
Sunnova Energy International, Inc.* | 3,800 | (125,172 | ) | |||||
Insurance (1.7)% | ||||||||
BRP Group, Inc. (Class A Stock)* | 2,800 | (93,212 | ) | |||||
Goosehead Insurance, Inc. (Class A Stock) | 900 | (137,061 | ) | |||||
HCI Group, Inc. | 300 | (33,231 | ) | |||||
Palomar Holdings, Inc.* | 200 | (16,166 | ) | |||||
Selectquote, Inc.* | 6,900 | (89,217 | ) | |||||
Trupanion, Inc.* | 1,000 | (77,670 | ) | |||||
|
| |||||||
(446,557 | ) | |||||||
Interactive Media & Services (0.8)% | ||||||||
fuboTV, Inc.* | 3,400 | (81,464 | ) | |||||
MediaAlpha, Inc. (Class A Stock)* | 1,400 | (26,152 | ) | |||||
TripAdvisor, Inc.* | 3,500 | (118,475 | ) | |||||
|
| |||||||
(226,091 | ) | |||||||
Internet & Direct Marketing Retail (1.2)% | ||||||||
CarParts.com, Inc.* | 4,800 | (74,928 | ) | |||||
Etsy, Inc.* | 500 | (103,980 | ) | |||||
Porch Group, Inc.* | 2,600 | (45,968 | ) | |||||
RealReal, Inc. (The)* | 8,400 | (110,712 | ) | |||||
|
| |||||||
(335,588 | ) | |||||||
IT Services (3.6)% | ||||||||
BigCommerce Holdings, Inc. (Class 1 Stock)* | 1,600 | (81,024 | ) | |||||
Cloudflare, Inc. (Class A Stock)* | 1,100 | (123,915 | ) | |||||
Fastly, Inc. (Class A Stock)* | 2,700 | (109,188 | ) |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 19
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
IT Services (cont’d.) | ||||||||
LiveRamp Holdings, Inc.* | 300 | $ | (14,169 | ) | ||||
MongoDB, Inc.* | 300 | (141,453 | ) | |||||
Okta, Inc.* | 500 | (118,670 | ) | |||||
Repay Holdings Corp.* | 5,700 | (131,271 | ) | |||||
Snowflake, Inc. (Class A Stock)* | 200 | (60,486 | ) | |||||
Switch, Inc. (Class A Stock) | 3,800 | (96,482 | ) | |||||
Wix.com Ltd. (Israel)* | 400 | (78,388 | ) | |||||
|
| |||||||
(955,046 | ) | |||||||
Leisure Products (0.4)% | ||||||||
Peloton Interactive, Inc. (Class A Stock)* | 1,300 | (113,165 | ) | |||||
Life Sciences Tools & Services (1.3)% | ||||||||
Adaptive Biotechnologies Corp.* | 2,900 | (98,571 | ) | |||||
Berkeley Lights, Inc.* | 3,400 | (66,504 | ) | |||||
ChromaDex Corp.* | 3,900 | (24,453 | ) | |||||
Inotiv, Inc.* | 500 | (14,620 | ) | |||||
NanoString Technologies, Inc.* | 2,300 | (110,423 | ) | |||||
Seer, Inc.* | 900 | (31,077 | ) | |||||
|
| |||||||
(345,648 | ) | |||||||
Machinery (2.0)% | ||||||||
Chart Industries, Inc.* | 700 | (133,777 | ) | |||||
Energy Recovery, Inc.* | 2,000 | (38,060 | ) | |||||
Hydrofarm Holdings Group, Inc.* | 1,500 | (56,775 | ) | |||||
Proto Labs, Inc.* | 1,500 | (99,900 | ) | |||||
RBC Bearings, Inc.* | 400 | (84,880 | ) | |||||
Trinity Industries, Inc. | 4,600 | (124,982 | ) | |||||
|
| |||||||
(538,374 | ) | |||||||
Media (0.8)% | ||||||||
Cardlytics, Inc.* | 1,400 | (117,516 | ) | |||||
Magnite, Inc.* | 3,500 | (98,000 | ) | |||||
|
| |||||||
(215,516 | ) | |||||||
Metals & Mining (0.4)% | ||||||||
Novagold Resources, Inc. (Canada)* | 16,000 | (110,080 | ) | |||||
Personal Products (0.1)% | ||||||||
Honest Co., Inc. (The)* | 3,100 | (32,178 | ) |
See Notes to Financial Statements.
20
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Pharmaceuticals (0.6)% | ||||||||
Marinus Pharmaceuticals, Inc.* | 1,400 | $ | (15,932 | ) | ||||
Reata Pharmaceuticals, Inc. (Class A Stock)* | 1,200 | (120,732 | ) | |||||
Theravance Biopharma, Inc.* | 4,400 | (32,560 | ) | |||||
|
| |||||||
(169,224 | ) | |||||||
Professional Services (0.8)% | ||||||||
Clarivate PLC* | 3,900 | (85,410 | ) | |||||
Upwork, Inc.* | 2,700 | (121,581 | ) | |||||
Willdan Group, Inc.* | 400 | (14,236 | ) | |||||
|
| |||||||
(221,227 | ) | |||||||
Real Estate Management & Development (0.6)% | ||||||||
Fathom Holdings, Inc.* | 900 | (24,030 | ) | |||||
Redfin Corp.* | 2,500 | (125,250 | ) | |||||
|
| |||||||
(149,280 | ) | |||||||
Semiconductors & Semiconductor Equipment (1.7)% | ||||||||
Cree, Inc.* | 1,600 | (129,168 | ) | |||||
Enphase Energy, Inc.* | 700 | (104,979 | ) | |||||
First Solar, Inc.* | 900 | (85,914 | ) | |||||
Kopin Corp.* | 3,300 | (16,929 | ) | |||||
NeoPhotonics Corp.* | 3,100 | (27,001 | ) | |||||
Silicon Laboratories, Inc.* | 600 | (84,096 | ) | |||||
|
| |||||||
(448,087 | ) | |||||||
Software (5.2)% | ||||||||
Appian Corp.* | 1,300 | (120,263 | ) | |||||
Bill.com Holdings, Inc.* | 300 | (80,085 | ) | |||||
Coupa Software, Inc.* | 500 | (109,590 | ) | |||||
Digimarc Corp.* | 2,100 | (72,324 | ) | |||||
Digital Turbine, Inc.* | 900 | (61,875 | ) | |||||
DoubleVerify Holdings, Inc.* | 1,900 | (64,904 | ) | |||||
E2open Parent Holdings, Inc.* | 6,600 | (74,580 | ) | |||||
Everbridge, Inc.* | 400 | (60,416 | ) | |||||
Jamf Holding Corp.* | 3,000 | (115,560 | ) | |||||
LivePerson, Inc.* | 1,500 | (88,425 | ) | |||||
MicroStrategy, Inc. (Class A Stock)* | 100 | (57,840 | ) | |||||
nCino, Inc.* | 1,400 | (99,442 | ) | |||||
Palantir Technologies, Inc. (Class A Stock)* | 2,500 | (60,100 | ) | |||||
Rapid7, Inc.* | 800 | (90,416 | ) | |||||
Rekor Systems, Inc.* | 1,200 | (13,788 | ) |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 21
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Software (cont’d.) | ||||||||
Smartsheet, Inc. (Class A Stock)* | 1,700 | $ | (116,994 | ) | ||||
Zscaler, Inc.* | 400 | (104,888 | ) | |||||
|
| |||||||
(1,391,490 | ) | |||||||
Specialty Retail (1.0)% | ||||||||
GrowGeneration Corp.* | 2,400 | (59,208 | ) | |||||
Leslie’s, Inc.* | 5,400 | (110,916 | ) | |||||
Vroom, Inc.* | 4,100 | (90,487 | ) | |||||
|
| |||||||
(260,611 | ) | |||||||
Thrifts & Mortgage Finance (0.0)% | ||||||||
Capitol Federal Financial, Inc. | 900 | (10,341 | ) | |||||
|
| |||||||
TOTAL SECURITIES SOLD SHORT | (13,069,162 | ) | ||||||
|
| |||||||
TOTAL INVESTMENTS, NET OF SECURITIES SOLD SHORT 51.8% | 13,902,188 | |||||||
Other assets in excess of liabilities(z) 48.2% | 12,927,475 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 26,829,663 | ||||||
|
|
Below is a list of the abbreviation(s) used in the semiannual report:
USD—US Dollar
LIBOR—London Interbank Offered Rate
OTC—Over-the-counter
REITs—Real Estate Investment Trust
S&P—Standard & Poor’s
* | Non-income producing security. |
# | Principal amount is shown in U.S. dollars unless otherwise stated. |
(k) | Represents security, or a portion thereof, segregated as collateral for centrally cleared/exchange-traded derivatives. |
(n) | Rate shown reflects yield to maturity at purchased date. |
(u) | Represents security, or a portion thereof, segregated as collateral for short sales. |
(wb) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund. |
(z) | Includes net unrealized appreciation/(depreciation) and/or market value of the below holdings which are excluded from the Schedule of Investments: |
See Notes to Financial Statements.
22
Futures contracts outstanding at September 30, 2021:
Number of | Type | Expiration Date | Current | Value / | |||||||||||||||
Long Position: | |||||||||||||||||||
4 | S&P 500 E-Mini Index | Dec. 2021 | $859,550 | $(30,204 | ) | ||||||||||||||
|
|
Summary of Collateral for Centrally Cleared/Exchange-traded Derivatives:
Cash and securities segregated as collateral, including pending settlement for closed positions, to cover requirements for centrally cleared/exchange-traded derivatives are listed by broker as follows:
Broker | Cash and/or Foreign Currency | Securities Market Value | ||||||||
Goldman Sachs & Co. LLC | $ | — | $ | 199,989 | ||||||
|
|
|
|
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 September 30, 2021 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Assets | ||||||||||||
Long-Term Investments | ||||||||||||
Common Stocks | ||||||||||||
Aerospace & Defense | $ | 605,577 | $ | — | $— | |||||||
Auto Components | 416,811 | — | — | |||||||||
Banks | 97,428 | — | — | |||||||||
Beverages | 78,705 | — | — | |||||||||
Biotechnology | 569,505 | — | — | |||||||||
Building Products | 114,703 | — | — | |||||||||
Capital Markets | 642,654 | — | — | |||||||||
Chemicals | 797,856 | — | — | |||||||||
Commercial Services & Supplies | 41,548 | — | — | |||||||||
Construction & Engineering | 392,292 | — | — | |||||||||
Consumer Finance | 643,648 | — | — | |||||||||
Distributors | 352,240 | — | — | |||||||||
Diversified Telecommunication Services | 486,090 | — | — | |||||||||
Electrical Equipment | 746,478 | — | — |
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 23
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Investments in Securities (continued) | ||||||||||||||||||||
Assets (continued) | ||||||||||||||||||||
Long-Term Investments (continued) | ||||||||||||||||||||
Common Stocks (continued) | ||||||||||||||||||||
Electronic Equipment, Instruments & Components | $ | 640,463 | $ | — | $ | — | ||||||||||||||
Entertainment | 303,804 | — | — | |||||||||||||||||
Equity Real Estate Investment Trusts (REITs) | 250,838 | — | — | |||||||||||||||||
Food Products | 698,224 | — | — | |||||||||||||||||
Health Care Equipment & Supplies | 1,526,468 | — | — | |||||||||||||||||
Health Care Providers & Services | 739,717 | — | — | |||||||||||||||||
Hotels, Restaurants & Leisure | 594,348 | — | — | |||||||||||||||||
Independent Power & Renewable Electricity Producers | 22,830 | — | — | |||||||||||||||||
Insurance | 165,597 | — | — | |||||||||||||||||
Interactive Media & Services | 1,179,545 | — | — | |||||||||||||||||
Internet & Direct Marketing Retail | 556,760 | — | — | |||||||||||||||||
IT Services | 1,099,189 | — | — | |||||||||||||||||
Leisure Products | 438,259 | — | — | |||||||||||||||||
Life Sciences Tools & Services | 1,025,488 | — | — | |||||||||||||||||
Machinery | 1,223,363 | — | — | |||||||||||||||||
Metals & Mining | 472,365 | — | — | |||||||||||||||||
Mortgage Real Estate Investment Trusts (REITs) | 26,340 | — | — | |||||||||||||||||
Multi-Utilities | 192,855 | — | — | |||||||||||||||||
Oil, Gas & Consumable Fuels | 773,952 | — | — | |||||||||||||||||
Personal Products | 441,775 | — | — | |||||||||||||||||
Pharmaceuticals | 947,140 | — | — | |||||||||||||||||
Professional Services | 324,840 | — | — | |||||||||||||||||
Semiconductors & Semiconductor Equipment | 1,643,801 | — | — | |||||||||||||||||
Software | 2,357,763 | — | — | |||||||||||||||||
Specialty Retail | 761,624 | — | — | |||||||||||||||||
Technology Hardware, Storage & Peripherals | 777,450 | — | — | |||||||||||||||||
Textiles, Apparel & Luxury Goods | 333,746 | — | — | |||||||||||||||||
Tobacco | 54,825 | — | — | |||||||||||||||||
Trading Companies & Distributors | 394,064 | — | — | |||||||||||||||||
Short-Term Investments | ||||||||||||||||||||
Affiliated Mutual Fund | 818,393 | — | — | |||||||||||||||||
U.S. Treasury Obligation | — | 199,989 | — | |||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||
Total | $ | 26,771,361 | $ | 199,989 |
| $— |
| |||||||||||||
|
|
|
|
|
| |||||||||||||||
Liabilities | ||||||||||||||||||||
Common Stocks - Short | ||||||||||||||||||||
Aerospace & Defense | $ | (250,983 | ) | $ | — | $ | — | |||||||||||||
Auto Components | (107,976 | ) | — | — | ||||||||||||||||
Automobiles | (64,460 | ) | — | — | ||||||||||||||||
Banks | (83,765 | ) | — | — | ||||||||||||||||
Beverages | (126,126 | ) | — | — | ||||||||||||||||
Biotechnology | (666,325 | ) | — | — | ||||||||||||||||
Building Products | (249,997 | ) | — | — | ||||||||||||||||
Capital Markets | (84,138 | ) | — | — |
See Notes to Financial Statements.
24
Level 1 | Level 2 | Level 3 | ||||||||||||||||||
Investments in Securities (continued) | ||||||||||||||||||||
Liabilities (continued) | ||||||||||||||||||||
Common Stocks - Short (continued) | ||||||||||||||||||||
Chemicals | $ | (260,732 | ) | $ | — | $ | — | |||||||||||||
Commercial Services & Supplies | (227,565 | ) | — | — | ||||||||||||||||
Communications Equipment | (232,246 | ) | — | — | ||||||||||||||||
Construction & Engineering | (264,703 | ) | — | — | ||||||||||||||||
Consumer Finance | (69,915 | ) | — | — | ||||||||||||||||
Containers & Packaging | (26,820 | ) | — | — | ||||||||||||||||
Diversified Consumer Services | (329,910 | ) | — | — | ||||||||||||||||
Electrical Equipment | (556,590 | ) | — | — | ||||||||||||||||
Electronic Equipment, Instruments & Components | (141,070 | ) | — | — | ||||||||||||||||
Energy Equipment & Services | (57,914 | ) | — | — | ||||||||||||||||
Equity Real Estate Investment Trusts (REITs) | (294,915 | ) | — | — | ||||||||||||||||
Food & Staples Retailing | (71,181 | ) | — | — | ||||||||||||||||
Food Products | (314,447 | ) | — | — | ||||||||||||||||
Health Care Equipment & Supplies | (508,963 | ) | — | — | ||||||||||||||||
Health Care Providers & Services | (930,540 | ) | — | — | ||||||||||||||||
Health Care Technology | (266,804 | ) | — | — | ||||||||||||||||
Hotels, Restaurants & Leisure | (331,037 | ) | — | — | ||||||||||||||||
Household Durables | (251,421 | ) | — | — | ||||||||||||||||
Household Products | (204,944 | ) | — | — | ||||||||||||||||
Independent Power & Renewable Electricity Producers | (125,172 | ) | — | — | ||||||||||||||||
Insurance | (446,557 | ) | — | — | ||||||||||||||||
Interactive Media & Services | (226,091 | ) | — | — | ||||||||||||||||
Internet & Direct Marketing Retail | (335,588 | ) | — | — | ||||||||||||||||
IT Services | (955,046 | ) | — | — | ||||||||||||||||
Leisure Products | (113,165 | ) | — | — | ||||||||||||||||
Life Sciences Tools & Services | (345,648 | ) | — | — | ||||||||||||||||
Machinery | (538,374 | ) | — | — | ||||||||||||||||
Media | (215,516 | ) | — | — | ||||||||||||||||
Metals & Mining | (110,080 | ) | — | — | ||||||||||||||||
Personal Products | (32,178 | ) | — | — | ||||||||||||||||
Pharmaceuticals | (169,224 | ) | — | — | ||||||||||||||||
Professional Services | (221,227 | ) | — | — | ||||||||||||||||
Real Estate Management & Development | (149,280 | ) | — | — | ||||||||||||||||
Semiconductors & Semiconductor Equipment | (448,087 | ) | — | — | ||||||||||||||||
Software | (1,391,490 | ) | — | — | ||||||||||||||||
Specialty Retail | (260,611 | ) | — | — | ||||||||||||||||
Thrifts & Mortgage Finance | (10,341 | ) | — | — | ||||||||||||||||
|
|
|
|
|
|
| ||||||||||||||
Total | $ | (13,069,162 | ) | $ | — | $ | — | |||||||||||||
|
|
|
|
|
| |||||||||||||||
Other Financial Instruments* | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Futures Contracts | $ | (30,204 | ) | $ | — | $ | — | |||||||||||||
|
|
|
|
|
|
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 25
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and centrally cleared swap contracts, which are recorded at the unrealized appreciation (depreciation) on the instrument, and OTC swap contracts which are recorded at fair value. |
Industry Classification:
The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of September 30, 2021 were as follows:
Software | 8.8 | % | ||
Semiconductors & Semiconductor Equipment | 6.1 | |||
Health Care Equipment & Supplies | 5.7 | |||
Machinery | 4.6 | |||
Interactive Media & Services | 4.4 | |||
IT Services | 4.1 | |||
Life Sciences Tools & Services | 3.8 | |||
Pharmaceuticals | 3.5 | |||
Affiliated Mutual Fund | 3.1 | |||
Chemicals | 3.0 | |||
Technology Hardware, Storage & Peripherals | 2.9 | |||
Oil, Gas & Consumable Fuels | 2.9 | |||
Specialty Retail | 2.8 | |||
Electrical Equipment | 2.8 | |||
Health Care Providers & Services | 2.8 | |||
Food Products | 2.6 | |||
Consumer Finance | 2.4 | |||
Capital Markets | 2.4 | |||
Electronic Equipment, Instruments & Components | 2.4 | |||
Aerospace & Defense | 2.3 | |||
Hotels, Restaurants & Leisure | 2.2 | |||
Biotechnology | 2.1 | |||
Internet & Direct Marketing Retail | 2.1 | |||
Diversified Telecommunication Services | 1.8 | |||
Metals & Mining | 1.8 | |||
Personal Products | 1.6 | |||
Leisure Products | 1.6 | |||
Auto Components | 1.5 | |||
Trading Companies & Distributors | 1.5 | |||
Construction & Engineering | 1.5 | |||
Distributors | 1.3 | |||
Textiles, Apparel & Luxury Goods | 1.2 | |||
Professional Services | 1.2 | |||
Entertainment | 1.1 | |||
Equity Real Estate Investment Trusts (REITs) | 0.9 | |||
U.S. Treasury Obligations | 0.7 | |||
Multi-Utilities | 0.7 | |||
Insurance | 0.6 | |||
Building Products | 0.4 | |||
Banks | 0.4 | |||
Beverages | 0.3 | |||
Tobacco | 0.2 | |||
Commercial Services & Supplies | 0.2 | |||
Mortgage Real Estate Investment Trusts (REITs) | 0.1 | |||
Independent Power & Renewable Electricity Producers | 0.1 | |||
Securities Sold Short | ||||
Thrifts & Mortgage Finance | (0.0 | )* |
Containers & Packaging | (0.1 | )% | ||
Personal Products | (0.1 | ) | ||
Energy Equipment & Services | (0.2 | ) | ||
Automobiles | (0.2 | ) | ||
Consumer Finance | (0.3 | ) | ||
Food & Staples Retailing | (0.3 | ) | ||
Banks | (0.3 | ) | ||
Capital Markets | (0.3 | ) | ||
Auto Components | (0.4 | ) | ||
Metals & Mining | (0.4 | ) | ||
Leisure Products | (0.4 | ) | ||
Independent Power & Renewable Electricity Producers | (0.5 | ) | ||
Beverages | (0.5 | ) | ||
Electronic Equipment, Instruments & Components | (0.5 | ) | ||
Real Estate Management & Development | (0.6 | ) | ||
Pharmaceuticals | (0.6 | ) | ||
Household Products | (0.8 | ) | ||
Media | (0.8 | ) | ||
Professional Services | (0.8 | ) | ||
Interactive Media & Services | (0.8 | ) | ||
Commercial Services & Supplies | (0.8 | ) | ||
Communications Equipment | (0.9 | ) | ||
Building Products | (0.9 | ) | ||
Aerospace & Defense | (0.9 | ) | ||
Household Durables | (0.9 | ) | ||
Specialty Retail | (1.0 | ) | ||
Chemicals | (1.0 | ) | ||
Construction & Engineering | (1.0 | ) | ||
Health Care Technology | (1.0 | ) | ||
Equity Real Estate Investment Trusts (REITs) | (1.1 | ) | ||
Food Products | (1.2 | ) | ||
Diversified Consumer Services | (1.2 | ) | ||
Hotels, Restaurants & Leisure | (1.2 | ) | ||
Internet & Direct Marketing Retail | (1.2 | ) | ||
Life Sciences Tools & Services | (1.3 | ) | ||
Insurance | (1.7 | ) | ||
Semiconductors & Semiconductor Equipment | (1.7 | ) | ||
Health Care Equipment & Supplies | (1.9 | ) | ||
Machinery | (2.0 | ) | ||
Electrical Equipment | (2.1 | ) | ||
Biotechnology | (2.5 | ) | ||
Health Care Providers & Services | (3.5 | ) | ||
IT Services | (3.6 | ) | ||
Software | (5.2 | ) | ||
|
|
See Notes to Financial Statements.
26
Industry Classification (continued):
51.8 | % | |||
Other assets in excess of liabilities | 48.2 | |||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:
The Fund invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is equity contracts risk. See the Notes to Financial Statements for additional detail regarding these derivative instruments and their risks. The effect of such derivative instruments on the Fund’s financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
Fair values of derivative instruments as of September 30, 2021 as presented in the Statement of Assets and Liabilities:
Asset Derivatives | Liability Derivatives | |||||||||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||||||||
Equity contracts | — | $— | Due from/to broker-variation margin futures | $ | 30,204 | * | ||||||||
|
|
|
* | Includes cumulative appreciation (depreciation) as reported in the schedule of open futures and centrally cleared swap contracts. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
The effects of derivative instruments on the Statement of Operations for the six months ended September 30, 2021 are as follows:
Amount of Realized Gain (Loss) on Derivatives Recognized in Income |
Derivatives not accounted for as hedging instruments, carried at fair value | Futures | |||||||
Equity contracts | $ | 167,905 | ||||||
|
|
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income |
Derivatives not accounted for as hedging instruments, carried at fair value | Futures | |||||||
Equity contracts | $ | (45,718 | ) | |||||
|
|
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 27
Schedule of Investments (unaudited) (continued)
as of September 30, 2021
For the six months ended September 30, 2021, the Fund’s average volume of derivative activities is as follows:
Futures |
Contracts— |
Long |
Positions(1) |
$1,239,010 |
(1) | Notional Amount in USD. |
Average volume is based on average quarter end balances as noted for the six months ended September 30, 2021.
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 | Counterparty | Gross Market Value of Recognized Assets/(Liabilities) | Collateral Pledged/(Received)(1) | Net Amount | ||||||||||||||||||||||||||
Securities Sold Short | Barclays Capital Group | $ | (13,069,162 | ) | $ | 13,069,162 | $ | — | ||||||||||||||||||||||
|
|
|
|
|
|
(1) | Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
28
Statement of Assets and Liabilities (unaudited)
as of September 30, 2021
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $23,661,522) | $ | 26,152,957 | ||
Affiliated investments (cost $818,393) | 818,393 | |||
Deposit with broker for securities sold short | 13,043,685 | |||
Receivable for Fund shares sold | 71,244 | |||
Dividends and interest receivable | 13,760 | |||
Prepaid expenses | 1,412 | |||
|
| |||
Total Assets | 40,101,451 | |||
|
| |||
Liabilities | ||||
Securities sold short, at value (proceeds received $13,569,974) | 13,069,162 | |||
Payable for Fund shares purchased | 93,078 | |||
Accrued expenses and other liabilities | 74,640 | |||
Due to broker—variation margin futures | 10,400 | |||
Management fee payable | 8,705 | |||
Dividends and interest payable on securities sold short | 7,549 | |||
Distribution fee payable | 6,343 | |||
Affiliated transfer agent fee payable | 1,256 | |||
Trustees’ fees payable | 655 | |||
|
| |||
Total Liabilities | 13,271,788 | |||
|
| |||
Net Assets | $ | 26,829,663 | ||
|
| |||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 2,639 | ||
Paid-in capital in excess of par | 59,526,712 | |||
Total distributable earnings (loss) | (32,699,688 | ) | ||
|
| |||
Net assets, September 30, 2021 | $ | 26,829,663 | ||
|
|
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 29
Statement of Assets and Liabilities (unaudited)
as of September 30, 2021
Class A | ||||||||
Net asset value and redemption price per share, ($6,906,832 ÷ 678,157 shares of beneficial interest issued and outstanding) | $ | 10.18 | ||||||
Maximum sales charge (5.50% of offering price) | 0.59 | |||||||
|
| |||||||
Maximum offering price to public | $ | 10.77 | ||||||
|
| |||||||
Class C | ||||||||
Net asset value, offering price and redemption price per share, ($5,742,461 ÷ 588,459 shares of beneficial interest issued and outstanding) | $ | 9.76 | ||||||
|
| |||||||
Class Z | ||||||||
Net asset value, offering price and redemption price per share, ($13,203,898 ÷ 1,277,965 shares of beneficial interest issued and outstanding) | $ | 10.33 | ||||||
|
| |||||||
Class R6 | ||||||||
Net asset value, offering price and redemption price per share, ($976,472 ÷ 94,533 shares of beneficial interest issued and outstanding) | $ | 10.33 | ||||||
|
|
See Notes to Financial Statements.
30
Statement of Operations (unaudited)
Six Months Ended September 30, 2021
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income | $ | 255,725 | ||
Interest income | 6,611 | |||
Affiliated dividend income | 986 | |||
|
| |||
Total income | 263,322 | |||
|
| |||
Expenses | ||||
Management fee | 237,363 | |||
Distribution fee(a) | 43,642 | |||
Broker fees and expenses on short sales | 35,013 | |||
Transfer agent’s fees and expenses (including affiliated expense of $3,811)(a) | 29,384 | |||
Custodian and accounting fees | 26,030 | |||
Registration fees(a) | 21,079 | |||
Dividend expense on short sales | 20,386 | |||
Audit fee | 16,352 | |||
Legal fees and expenses | 9,546 | |||
Shareholders’ reports | 9,233 | |||
Trustees’ fees | 5,475 | |||
Miscellaneous | 13,189 | |||
|
| |||
Total expenses | 466,692 | |||
Less: Fee waiver and/or expense reimbursement(a) | (109,648 | ) | ||
Distribution fee waiver(a) | (1,913 | ) | ||
|
| |||
Net expenses | 355,131 | |||
|
| |||
Net investment income (loss) | (91,809 | ) | ||
|
| |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 10,983,234 | |||
Futures transactions | 167,905 | |||
Short sales transactions | (4,552,844 | ) | ||
|
| |||
6,598,295 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (8,034,314 | ) | ||
Futures | (45,718 | ) | ||
Short sales | 5,056,823 | |||
|
| |||
(3,023,209 | ) | |||
|
| |||
Net gain (loss) on investment transactions | 3,575,086 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 3,483,277 | ||
|
|
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 31
Statement of Operations (unaudited)
Six Months Ended September 30, 2021
(a) | Class specific expenses and waivers were as follows: |
Class A | Class C | Class Z | Class R6 | |||||||||||||
Distribution fee | 11,480 | 32,162 | — | — | ||||||||||||
Transfer agent’s fees and expenses | 6,964 | 5,200 | 16,905 | 315 | ||||||||||||
Registration fees | 4,888 | 4,402 | 6,541 | 5,248 | ||||||||||||
Fee waiver and/or expense reimbursement | (23,643 | ) | (19,515 | ) | (55,509 | ) | (10,981 | ) | ||||||||
Distribution fee waiver | (1,913 | ) | — | — | — |
See Notes to Financial Statements.
32
Statements of Changes in Net Assets (unaudited)
Six Months Ended September 30, 2021 | Year Ended March 31, 2021 | ||||||||||||||
Increase (Decrease) in Net Assets | |||||||||||||||
Operations | |||||||||||||||
Net investment income (loss) | $ | (91,809 | ) | $ | (459,775 | ) | |||||||||
Net realized gain (loss) on investment transactions | 6,598,295 | (21,237,810 | ) | ||||||||||||
Net change in unrealized appreciation (depreciation) on investments | (3,023,209 | ) | 24,150,113 | ||||||||||||
|
|
|
| ||||||||||||
Net increase (decrease) in net assets resulting from operations | 3,483,277 | 2,452,528 | |||||||||||||
|
|
|
| ||||||||||||
Dividends and Distributions | |||||||||||||||
Distributions from distributable earnings | |||||||||||||||
Class A | — | (337,294 | ) | ||||||||||||
Class C | — | (206,940 | ) | ||||||||||||
Class Z | — | (1,398,939 | ) | ||||||||||||
Class R6 | — | (525,228 | ) | ||||||||||||
|
|
|
| ||||||||||||
— | (2,468,401 | ) | |||||||||||||
|
|
|
| ||||||||||||
Tax return of capital distributions | |||||||||||||||
Class A | — | (911 | ) | ||||||||||||
Class C | — | (559 | ) | ||||||||||||
Class Z | — | (3,780 | ) | ||||||||||||
Class R6 | — | (1,420 | ) | ||||||||||||
|
|
|
| ||||||||||||
— | (6,670 | ) | |||||||||||||
|
|
|
| ||||||||||||
Fund share transactions (Net of share conversions) | |||||||||||||||
Net proceeds from shares sold | 1,649,994 | 24,833,560 | |||||||||||||
Net asset value of shares issued in reinvestment of dividends and distributions | — | 2,198,444 | |||||||||||||
Cost of shares purchased | (38,112,427 | ) | (163,024,932 | ) | |||||||||||
|
|
|
| ||||||||||||
Net increase (decrease) in net assets from Fund share transactions | (36,462,433 | ) | (135,992,928 | ) | |||||||||||
|
|
|
| ||||||||||||
Total increase (decrease) | (32,979,156 | ) | (136,015,471 | ) | |||||||||||
Net Assets: | |||||||||||||||
Beginning of period | 59,808,819 | 195,824,290 | |||||||||||||
|
|
|
| ||||||||||||
End of period | $ | 26,829,663 | $ | 59,808,819 | |||||||||||
|
|
|
|
See Notes to Financial Statements.
PGIM QMA Long-Short Equity Fund 33
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.55 | $9.76 | $12.35 | $12.56 | $11.86 | $11.35 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.03 | ) | (0.05 | ) | 0.06 | 0.06 | (0.04 | ) | (0.07 | ) | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.66 | 0.12 | (1.98 | ) | (0.06 | ) | 0.74 | 0.77 | ||||||||||||||||||||||||
Total from investment operations | 0.63 | 0.07 | (1.92 | ) | - | 0.70 | 0.70 | |||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | - | (0.28 | ) | (0.11 | ) | - | - | - | ||||||||||||||||||||||||
Tax return of capital distributions | - | - | (b) | - | - | - | - | |||||||||||||||||||||||||
Distributions from net realized gains | - | - | (0.56 | ) | (0.21 | ) | - | (0.19 | ) | |||||||||||||||||||||||
Total dividends and distributions | - | (0.28 | ) | (0.67 | ) | (0.21 | ) | - | (0.19 | ) | ||||||||||||||||||||||
Net asset value, end of period | $10.18 | $9.55 | $9.76 | $12.35 | $12.56 | $11.86 | ||||||||||||||||||||||||||
Total Return(c): | 6.60 | % | 0.81 | % | (16.43 | )% | 0.06 | % | 5.90 | % | 6.17 | % | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $6,907 | $10,534 | $17,149 | $42,954 | $51,585 | $33,579 | ||||||||||||||||||||||||||
Average net assets (000) | $7,632 | $13,477 | $29,067 | $49,694 | $39,444 | $69,722 | ||||||||||||||||||||||||||
Ratios to average net assets(d)(e): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement(f) | 1.77 | %(g) | 1.84 | % | 2.07 | % | 2.15 | % | 2.44 | % | 2.30 | % | ||||||||||||||||||||
Expenses before waivers and/or expense reimbursement(f) | 2.44 | %(g) | 2.14 | % | 2.22 | % | 2.28 | % | 2.59 | % | 2.44 | % | ||||||||||||||||||||
Net investment income (loss) | (0.54 | )%(g) | (0.50 | )% | 0.49 | % | 0.46 | % | (0.35 | )% | (0.59 | )% | ||||||||||||||||||||
Portfolio turnover rate(h) | 86 | % | 206 | % | 142 | % | 160 | % | 83 | % | 83 | % |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Amount rounds to zero. |
(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 GAAP. 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 January 1, 2018, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(f) | The expense ratio includes dividend expense and broker fees and expenses on short sales of 0.27%, 0.34%, 0.56%, 0.65%, 0.94% and 0.72%, for the six months ended September 30, 2021, the years ended March 31, 2021, March 31, 2020, March 31, 2019, March 31, 2018 and March 31, 2017, respectively. |
(g) | Annualized. |
(h) | 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.
34
Class C Shares | ||||||||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.19 | $9.38 | $11.90 | $12.20 | $11.61 | $11.20 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.06 | ) | (0.12 | ) | (0.03 | ) | (0.03 | ) | (0.14 | ) | (0.15 | ) | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.63 | 0.13 | (1.91 | ) | (0.06 | ) | 0.73 | 0.75 | ||||||||||||||||||||||||
Total from investment operations | 0.57 | 0.01 | (1.94 | ) | (0.09 | ) | 0.59 | 0.60 | ||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | - | (0.20 | ) | (0.02 | ) | - | - | - | ||||||||||||||||||||||||
Tax return of capital distributions | - | - | (b) | - | - | - | - | |||||||||||||||||||||||||
Distributions from net realized gains | - | - | (0.56 | ) | (0.21 | ) | - | (0.19 | ) | |||||||||||||||||||||||
Total dividends and distributions | - | (0.20 | ) | (0.58 | ) | (0.21 | ) | - | (0.19 | ) | ||||||||||||||||||||||
Net asset value, end of period | $9.76 | $9.19 | $9.38 | $11.90 | $12.20 | $11.61 | ||||||||||||||||||||||||||
Total Return(c): | 6.20 | % | 0.05 | % | (17.01 | )% | (0.68 | )% | 5.08 | % | 5.35 | % | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $5,742 | $6,874 | $16,069 | $36,168 | $36,903 | $32,783 | ||||||||||||||||||||||||||
Average net assets (000) | $6,415 | $11,484 | $26,594 | $37,987 | $34,263 | $29,401 | ||||||||||||||||||||||||||
Ratios to average net assets(d)(e): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement(f) | 2.52 | %(g) | 2.59 | % | 2.82 | % | 2.91 | % | 3.21 | % | 3.08 | % | ||||||||||||||||||||
Expenses before waivers and/or expense reimbursement(f) | 3.13 | %(g) | 2.84 | % | 2.94 | % | 3.00 | % | 3.31 | % | 3.19 | % | ||||||||||||||||||||
Net investment income (loss) | (1.28 | )%(g) | (1.25 | )% | (0.26 | )% | (0.26 | )% | (1.12 | )% | (1.31 | )% | ||||||||||||||||||||
Portfolio turnover rate(h) | 86 | % | 206 | % | 142 | % | 160 | % | 83 | % | 83 | % |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Amount rounds to zero. |
(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 GAAP. 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 January 1, 2018, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(f) | The expense ratio includes dividend expense and broker fees and expenses on short sales of 0.27%, 0.34%, 0.57%, 0.65%, 0.96% and 0.77%, for the six months ended September 30, 2021, the years ended March 31, 2021, March 31, 2020, March 31, 2019, March 31, 2018 and March 31, 2017, respectively. |
(g) | Annualized. |
(h) | 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 Long-Short Equity Fund 35
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | 2017 | |||||||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.68 | $9.89 | $12.51 | $12.69 | $11.95 | $11.41 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (0.01 | ) | (0.03 | ) | 0.09 | 0.09 | (0.01 | ) | (0.04 | ) | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.66 | 0.13 | (2.01 | ) | (0.06 | ) | 0.75 | 0.77 | ||||||||||||||||||||||||
Total from investment operations | 0.65 | 0.10 | (1.92 | ) | 0.03 | 0.74 | 0.73 | |||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | - | (0.31 | ) | (0.14 | ) | - | - | - | ||||||||||||||||||||||||
Tax return of capital distributions | - | - | (b) | - | - | - | - | |||||||||||||||||||||||||
Distributions from net realized gains | - | - | (0.56 | ) | (0.21 | ) | - | (0.19 | ) | |||||||||||||||||||||||
Total dividends and distributions | - | (0.31 | ) | (0.70 | ) | (0.21 | ) | - | (0.19 | ) | ||||||||||||||||||||||
Net asset value, end of period | $10.33 | $9.68 | $9.89 | $12.51 | $12.69 | $11.95 | ||||||||||||||||||||||||||
Total Return(c): | 6.71 | % | 1.10 | % | (16.25 | )% | 0.30 | % | 6.19 | % | 6.40 | % | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $13,204 | $29,829 | $123,443 | $342,001 | $395,409 | $274,663 | ||||||||||||||||||||||||||
Average net assets (000) | $22,053 | $67,087 | $253,412 | $391,781 | $312,993 | $199,471 | ||||||||||||||||||||||||||
Ratios to average net assets(d)(e): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement(f) | 1.52 | %(g) | 1.59 | % | 1.82 | % | 1.91 | % | 2.19 | % | 2.08 | % | ||||||||||||||||||||
Expenses before waivers and/or expense reimbursement(f) | 2.02 | %(g) | 1.75 | % | 1.88 | % | 1.96 | % | 2.27 | % | 2.19 | % | ||||||||||||||||||||
Net investment income (loss) | (0.25 | )%(g) | (0.28 | )% | 0.75 | % | 0.73 | % | (0.11 | )% | (0.31 | )% | ||||||||||||||||||||
Portfolio turnover rate(h) | 86 | % | 206 | % | 142 | % | 160 | % | 83 | % | 83 | % |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Amount rounds to zero. |
(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 GAAP. 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 January 1, 2018, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(f) | The expense ratio includes dividend expense and broker fees and expenses on short sales of 0.27%, 0.34%, 0.57%, 0.65%, 0.94% and 0.78%, for the six months ended September 30, 2021, the years ended March 31, 2021, March 31, 2020, March 31, 2019, March 31, 2018 and March 31, 2017, respectively. |
(g) | Annualized. |
(h) | 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.
36
Class R6 Shares | ||||||||||||||||||||||||||||||||
Six Months | ||||||||||||||||||||||||||||||||
Ended | Year Ended March 31, | May 25, 2017(a) | ||||||||||||||||||||||||||||||
September 30, | through March 31, | |||||||||||||||||||||||||||||||
2021 | 2021 | 2020 | 2019 | 2018 | ||||||||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.68 | $9.89 | $12.51 | $12.68 | $11.98 | |||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | - | (c) | (0.03 | ) | 0.08 | 0.12 | (0.01 | ) | ||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 0.65 | 0.13 | (2.00 | ) | (0.08 | ) | 0.71 | |||||||||||||||||||||||||
Total from investment operations | 0.65 | 0.10 | (1.92 | ) | 0.04 | 0.70 | ||||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | - | (0.31 | ) | (0.14 | ) | - | - | |||||||||||||||||||||||||
Tax return of capital distributions | - | - | (c) | - | - | - | ||||||||||||||||||||||||||
Distributions from net realized gains | - | - | (0.56 | ) | (0.21 | ) | - | |||||||||||||||||||||||||
Total dividends and distributions | - | (0.31 | ) | (0.70 | ) | (0.21 | ) | - | ||||||||||||||||||||||||
Net asset value, end of period | $10.33 | $9.68 | $9.89 | $12.51 | $12.68 | |||||||||||||||||||||||||||
Total Return(d): | 6.71 | % | 1.10 | % | (16.25 | )% | 0.38 | % | 5.84 | % | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $976 | $12,572 | $39,163 | $74,941 | $16,090 | |||||||||||||||||||||||||||
Average net assets (000) | $5,068 | $19,895 | $44,915 | $30,635 | $15,834 | |||||||||||||||||||||||||||
Ratios to average net assets(e)(f): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement(g) | 1.50 | %(h) | 1.58 | % | 1.82 | % | 1.91 | % | 2.24 | %(h) | ||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement(g) | 1.93 | %(h) | 1.69 | % | 1.83 | % | 1.94 | % | 2.30 | %(h) | ||||||||||||||||||||||
Net investment income (loss) | (0.07 | )%(h) | (0.30 | )% | 0.67 | % | 0.92 | % | (0.05 | )%(h) | ||||||||||||||||||||||
Portfolio turnover rate(i) | 86 | % | 206 | % | 142 | % | 160 | % | 83 | % |
(a) | Commencement of offering. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Amount rounds to zero. |
(d) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to GAAP. Total returns for periods less than one full year are not annualized. |
(e) | Does not include expenses of the underlying funds in which the Fund invests. |
(f) | Effective January 1, 2018, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(g) | The expense ratio includes dividend expense and broker fees and expenses on short sales of 0.25%, 0.33%, 0.57%, 0.65% and 0.99%, for the six months ended September 30, 2021, the years ended March 31, 2021, March 31, 2020, March 31, 2019 and the period ended March 31, 2018, respectively. |
(h) | Annualized. |
(i) | 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 Long-Short Equity Fund 37
Notes to Financial Statements (unaudited)
1. | Organization |
Prudential Investment Portfolios 12 (the “Trust”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The Trust currently consists of the following seven series: PGIM Global Real Estate Fund, PGIM QMA Long-Short Equity Fund and PGIM Short Duration Muni Fund, each of which are diversified funds for purposes of the 1940 Act and PGIM Jennison International Small-Mid Cap Opportunities Fund, PGIM Jennison NextGeneration Global Opportunities Fund, PGIM Jennison Technology Fund and PGIM US Real Estate Fund, each of which are non-diversified funds for purposes of the 1940 Act, and therefore, may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. These financial statements relate only to the PGIM QMA Long-Short Equity Fund (the “Fund”).
The investment objective of the Fund is to seek long-term capital appreciation.
2. | 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 is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements. The policies conform to U.S. generally accepted accounting principles (“GAAP”). 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 as of the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. As described in further detail below, the Fund’s investments are valued daily based on a number of factors, including the type of investment and whether market quotations are readily available. The Trust’s Board of Trustees (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. 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. A record of the Valuation Committee’s actions is subject to the Board’s review at its first quarterly meeting following the quarter in which such actions take place.
38
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 Fund’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
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 or preferred stocks, exchange-traded funds and derivative instruments, if applicable, 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 funds (other than exchange-traded 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. Altering one or more unobservable inputs may result in a significant change to a Level 3 security’s fair value measurement.
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.
PGIM QMA Long-Short Equity Fund 39
Notes to Financial Statements (unaudited) (continued)
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain (loss). When the contract expires or is closed, the gain (loss) is realized and is presented in the Statement of Operations as net realized gain (loss) on futures transactions.
The Fund invested in financial futures contracts in order to hedge its existing portfolio securities, or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. Since futures contracts are exchange-traded, there is minimal counterparty credit risk to the Fund since the exchanges’ clearinghouse acts as counterparty to all exchange-traded futures and guarantees the futures contracts against default.
Short Sales: The Fund sold a security it does not own in anticipation of a decline in the market value of that security (short sale). When the Fund makes a short sale, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale as collateral for its obligation to deliver the security upon conclusion of the transaction. The Fund may have to pay a fee to borrow the particular security and may be obligated to return any interest or dividends received on such borrowed securities. Dividends declared on open short positions are recorded on the ex-date and the interest payable is accrued daily on fixed income securities sold short, both of which are recorded as an expense. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in magnitude, will be recognized upon the termination of a short sale if the market price at termination is less than or greater than, respectively, the proceeds originally received.
Short sales and financial futures contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities, if applicable. Such risks may be mitigated by engaging in master netting arrangements.
Master Netting Arrangements: The Trust, 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 all or a portion of the Fund. A master netting arrangement between the Fund and the counterparty permits the
40
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.
Equity and Mortgage Real Estate Investment Trusts (collectively REITs): The Fund invested in REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from 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 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. Such class specific expenses and waivers 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.
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 GAAP, 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.
PGIM QMA Long-Short Equity Fund 41
Notes to Financial Statements (unaudited) (continued)
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.
3. | Agreements |
The Trust, on behalf of the Fund, has a management agreement with the Manager. Pursuant to this agreement, the Manager has responsibility for all investment advisory services and supervises the subadviser’s performance of such services.
The Manager has entered into a subadvisory agreement with PGIM Quantitative Solutions LLC (“PGIM Quantitative Solutions” or the “subadviser”) (formally known as QMA LLC). The Manager pays for the services of PGIM Quantitative Solutions.
The management fee paid to the Manager is accrued daily and payable monthly at an annual rate of 1.15% average daily net assets up to and including $5 billion and 1.13% on average daily net assets in excess of $5 billion. The effective management fee rate before any waivers and/or expense reimbursements was 1.15% for the reporting period ended September 30, 2021.
The Manager has contractually agreed, through July 31, 2022, to limit total annual operating expenses after fee waivers and/or expense reimbursements to 1.50% of average daily net assets for Class A shares, 2.25% of average daily net assets for Class C shares, 1.25% of average daily net assets for Class Z shares and 1.25% 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 such expenses on any other share class. 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 the Manager may be recouped by the Manager within the same fiscal year during which such waiver 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 Trust, 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 C, Class Z and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and
42
servicing the Fund’s Class A and Class C shares, pursuant to the plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS.
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.30%,and 1% of the average daily net assets of the Class A and Class C shares, respectively. PIMS has contractually agreed through July 31, 2022 to limit such fees to 0.25% of the average daily net assets of the Class A shares. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z or Class R6 shares of the Fund.
For the reporting period ended September 30, 2021, PIMS received $896 in front-end sales charges resulting from sales of Class A shares. Additionally, for the reporting period ended September 30, 2021, PIMS did not receive any contingent deferred sales charges imposed upon redemptions by certain Class A 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 PGIM Quantitative Solutions are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
4. | 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 Fund’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 invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. PGIM Investments and/or its affiliates are paid fees or reimbursed for providing their services to the Core Fund. In addition to the realized and unrealized gains on investments in the Core Fund, earnings from such investments are disclosed on the Statement of Operations as “Affiliated dividend income”.
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/trustees, and/or common officers. For the reporting period ended September 30, 2021, no 17a-7 transactions were entered into by the Fund.
PGIM QMA Long-Short Equity Fund 43
Notes to Financial Statements (unaudited) (continued)
5. | 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 September 30, 2021, were $54,212,092 and $73,225,741, respectively.
A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the reporting period ended September 30, 2021, is presented as follows:
Value, Period | Cost of Purchases | Proceeds | Change in Gain (Loss) | Realized Gain (Loss) | Value, End of Period | Shares, of Period | Income | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-Term Investments - Affiliated Mutual Fund: |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PGIM Core Ultra Short Bond Fund (1)(wb) |
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$99,373 |
| $ | 25,840,486 | $ | 25,121,466 | $ | — | $ | — | $ | 818,393 | 818,393 | $ | 986 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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(1) | The Fund did not have any capital gain distributions during the reporting period. |
(wb) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund. |
6. | Tax Information |
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of September 30, 2021 were as follows:
Tax Basis | $ | 11,326,354 | ||||
|
| |||||
Gross Unrealized Appreciation | 5,672,449 | |||||
Gross Unrealized Depreciation | (3,126,819 | ) | ||||
|
| |||||
Net Unrealized Appreciation | $ | 2,545,630 | ||||
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The GAAP basis may differ from tax basis due to certain tax-related adjustments.
For federal income tax purposes, the Fund had a capital loss carryforward as of September 30, 2021 of approximately $41,668,000 which can be carried forward for an unlimited period. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.
The Fund elected to treat late year losses of approximately $34,000 as having been incurred in the following fiscal year March 31, 2022.
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. Since tax
44
authorities can examine previously filed tax returns, the Fund’s U.S. federal and state tax returns for each of the four fiscal years up to the most recent fiscal year ended March 31, 2021 are subject to such review.
7. | Capital and Ownership |
The Fund offers Class A, Class C, 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 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 eight years (ten years prior to January 22, 2021) after purchase. Class Z and Class R6 shares are not subject to any sales or redemption charges 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 beneficial interest, below.
The Trust has authorized an unlimited number of shares of beneficial interest of the Fund at $0.001 par value per share.
At the reporting period end, the number of shareholders holding greater than 5% of the Fund are as follows:
Affiliated | Unaffiliated | |||||
Number of Shareholders | Percentage of Outstanding Shares | Number of Shareholders | Percentage of Outstanding Shares | |||
— | —% | 6 | 83.1% |
PGIM QMA Long-Short Equity Fund 45
Notes to Financial Statements (unaudited) (continued)
Transactions in shares of beneficial interest were as follows:
Class A | Shares | Amount | ||||||||||||||
Six months ended September 30, 2021: | ||||||||||||||||
Shares sold | 11,049 | $ | 110,824 | |||||||||||||
Shares purchased | (452,434 | ) | (4,456,942 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding before conversion | (441,385 | ) | (4,346,118 | ) | ||||||||||||
Shares issued upon conversion from other share class(es) | 20,334 | 201,263 | ||||||||||||||
Shares purchased upon conversion into other share class(es) | (3,443 | ) | (34,709 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding | (424,494 | ) | $ | (4,179,564 | ) | |||||||||||
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Year ended March 31, 2021: | ||||||||||||||||
Shares sold | 36,058 | $ | 344,320 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 37,251 | 334,039 | ||||||||||||||
Shares purchased | (755,427 | ) | (7,432,129 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding before conversion | (682,118 | ) | (6,753,770 | ) | ||||||||||||
Shares issued upon conversion from other share class(es) | 91,309 | 871,828 | ||||||||||||||
Shares purchased upon conversion into other share class(es) | (63,788 | ) | (632,301 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding | (654,597 | ) | $ | (6,514,243 | ) | |||||||||||
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Class C | ||||||||||||||||
Six months ended September 30, 2021: | ||||||||||||||||
Shares sold | 1,289 | $ | 12,492 | |||||||||||||
Shares purchased | (147,556 | ) | (1,419,643 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding before conversion | (146,267 | ) | (1,407,151 | ) | ||||||||||||
Shares purchased upon conversion into other share class(es) | (13,452 | ) | (128,850 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding | (159,719 | ) | $ | (1,536,001 | ) | |||||||||||
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Year ended March 31, 2021: | ||||||||||||||||
Shares sold | 11,237 | $ | 100,026 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 23,898 | 206,635 | ||||||||||||||
Shares purchased | (916,606 | ) | (8,488,899 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding before conversion | (881,471 | ) | (8,182,238 | ) | ||||||||||||
Shares purchased upon conversion into other share class(es) | (82,878 | ) | (743,107 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding | (964,349 | ) | $ | (8,925,345 | ) | |||||||||||
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46
Class Z | Shares | Amount | ||||||||||||||
Six months ended September 30, 2021: | ||||||||||||||||
Shares sold | 148,419 | $ | 1,508,623 | |||||||||||||
Shares purchased | (1,948,483 | ) | (19,886,778 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding before conversion | (1,800,064 | ) | (18,378,155 | ) | ||||||||||||
Shares issued upon conversion from other share class(es) | 5,768 | 59,057 | ||||||||||||||
Shares purchased upon conversion into other share class(es) | (9,690 | ) | (96,761 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding | (1,803,986 | ) | $ | (18,415,859 | ) | |||||||||||
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Year ended March 31, 2021: | ||||||||||||||||
Shares sold | 1,159,855 | $ | 11,406,055 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 148,498 | 1,348,022 | ||||||||||||||
Shares purchased | (10,765,269 | ) | (106,691,409 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding before conversion | (9,456,916 | ) | (93,937,332 | ) | ||||||||||||
Shares issued upon conversion from other share class(es) | 108,052 | 1,071,574 | ||||||||||||||
Shares purchased upon conversion into other share class(es) | (51,282 | ) | (514,627 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding | (9,400,146 | ) | $ | (93,380,385 | ) | |||||||||||
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Class R6 | ||||||||||||||||
Six months ended September 30, 2021: | ||||||||||||||||
Shares sold | 1,835 | $ | 18,055 | |||||||||||||
Shares purchased | (1,206,479 | ) | (12,349,064 | ) | ||||||||||||
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Net increase (decrease) in shares outstanding | (1,204,644 | ) | $ | (12,331,009 | ) | |||||||||||
|
|
|
| |||||||||||||
Year ended March 31, 2021: | ||||||||||||||||
Shares sold | 1,295,475 | $ | 12,983,159 | |||||||||||||
Shares issued in reinvestment of dividends and distributions | 34,126 | 309,748 | ||||||||||||||
Shares purchased | (3,986,383 | ) | (40,412,495 | ) | ||||||||||||
|
|
|
| |||||||||||||
Net increase (decrease) in shares outstanding before conversion | (2,656,782 | ) | (27,119,588 | ) | ||||||||||||
Shares purchased upon conversion into other share class(es) | (5,331 | ) | (53,367 | ) | ||||||||||||
|
|
|
| |||||||||||||
Net increase (decrease) in shares outstanding | (2,662,113 | ) | $ | (27,172,955 | ) | |||||||||||
|
|
|
|
8. | Borrowings |
The Trust, on behalf of the Fund, along with other affiliated registered investment companies (the “Participating 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 table below provides details of the SCA.
SCA | ||
Term of Commitment | 10/2/2020 – 9/30/2021 | |
Total Commitment | $1,200,000,000 | |
Annualized Commitment Fee on the Unused Portion of the SCA | 0.15% | |
Annualized Interest Rate on Borrowings | 1.30% plus the higher of (1) the effective federal funds rate, (2) the one-month LIBOR rate or (3) zero percent |
Subsequent to the reporting period end, the SCA has been renewed and effective October 1, 2021 will provide a commitment of $1,200,000,000 through September 29, 2022. The commitment fee paid by the Participating Funds will continue to be .15% of the unused portion of the SCA. The interest on borrowings under the renewed SCA will be paid monthly
PGIM QMA Long-Short Equity Fund 47
Notes to Financial Statements (unaudited) (continued)
and at a per annum interest rate of 1.20% plus the higher of (1) the effective federal funds rate, (2) the one-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 Participating Funds in the SCA equitably.
The Fund did not utilize the SCA during the reporting period ended September 30, 2021.
9. | Risks of Investing in the Fund |
The Fund’s risks include, but are not limited to, some or all of the risks discussed below. For further information on the Fund’s risks, please refer to the Fund’s Prospectus and Statement of Additional Information.
Active Trading Risk: The Fund actively and frequently trades its portfolio securities. High portfolio turnover results in higher transaction costs, which can affect the Fund’s performance and have adverse tax consequences. In addition, high portfolio turnover may also mean that a proportionately greater amount of distributions to shareholders will be taxed as ordinary income rather than long-term capital gains compared to investment companies with lower portfolio turnover.
Economic and Market Events Risk: Events in the U.S. and global financial markets, including actions taken by the U.S. Federal Reserve or foreign central banks to stimulate or stabilize economic growth or the functioning of the securities markets, may at times result in unusually high market volatility, which could negatively impact performance. Relatively reduced liquidity in credit and fixed income markets could adversely affect issuers worldwide.
Equity and Equity-Related Securities Risk: Equity and equity-related securities may be subject to changes in value, and their values may be more volatile than those of other asset classes. 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. Different parts of a market can react differently to adverse issuer, market, regulatory, political and economic developments.
48
Increase in Expenses Risk: Your actual cost of investing in the Fund may be higher than the expenses shown in the expense table in the Fund’s prospectus for a variety of reasons. For example, expense ratios may be higher than those shown if average net assets decrease. Net assets are more likely to decrease and Fund expense ratios are more likely to increase when markets are volatile. Active and frequent trading of Fund securities can increase expenses.
Large Capitalization Company Risk: Companies with large market capitalizations go in and out of favor based on market and economic conditions. Larger companies tend to be less volatile than companies with smaller market capitalizations. In exchange for this potentially lower risk, the Fund’s value may not rise or fall as much as the value of funds that emphasize companies with smaller market capitalizations.
Large Shareholder and Large Scale Redemption Risk: Certain individuals, accounts, funds (including funds affiliated with the Manager) or institutions, including the Manager and its affiliates, may from time to time own or control a substantial amount of the Fund’s shares. There is no requirement that these entities maintain their investment in the Fund. There is a risk that such large shareholders or that the Fund’s shareholders generally may redeem all or a substantial portion of their investments in the Fund in a short period of time, which could have a significant negative impact on the Fund’s NAV, liquidity, and brokerage costs. Large redemptions could also result in tax consequences to shareholders and impact the Fund’s ability to implement its investment strategy. The Fund’s ability to pursue its investment objective after one or more large scale redemptions may be impaired and, as a result, the Fund may invest a larger portion of its assets in cash or cash equivalents.
Leverage Risk: Certain transactions in which the Fund may engage may give rise to leverage. The use of leverage exaggerates the effect of any increase or decrease in the value of the Fund’s holdings, and makes any change in the Fund’s net asset value (NAV) greater than it would be without the use of leverage. This could result in increased volatility of investment return. There is a possibility that segregation involving a large percentage of the assets of the Fund could impede portfolio management or the Fund’s ability to meet redemption requests or other current obligations or that the Fund may be required to dispose of some of its investments at unfavorable prices or times.
Management Risk: Actively managed mutual funds are subject to management risk. The subadviser will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that these techniques will produce the desired results. Additionally, the investments selected by the subadviser may underperform the markets in general, the Fund’s benchmark and other mutual funds with similar investment objectives.
Market Disruption and Geopolitical Risks: International wars or conflicts and geopolitical developments in foreign countries, along with instability in regions such as Asia, Eastern Europe, and the Middle East, possible terrorist attacks in the United States or around the world, public health epidemics such as the outbreak of infectious diseases like the outbreak
PGIM QMA Long-Short Equity Fund 49
Notes to Financial Statements (unaudited) (continued)
of COVID-19 globally in 2020 or the 2014–2016 outbreak in West Africa of the Ebola virus, and other similar events could adversely affect the U.S. and foreign financial markets, including increases in market volatility, reduced liquidity in the securities markets and government intervention, and may cause further long-term economic uncertainties in the United States and worldwide generally. The coronavirus pandemic and the related governmental and public responses have had and may continue to have an impact on the Fund’s investments and net asset value and have led and may continue to lead to increased market volatility and the potential for illiquidity in certain classes of securities and sectors of the market. Preventative or protective actions that governments may take in respect of pandemic or epidemic diseases may result in periods of business disruption, business closures, inability to obtain raw materials, supplies and component parts, and reduced or disrupted operations for the issuers in which the Fund invests. Government intervention in markets may impact interest rates, market volatility and security pricing. The occurrence, reoccurrence and pendency of such diseases could adversely affect the economies (including through changes in business activity and increased unemployment) and financial markets either in specific countries or worldwide.
Market 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 your investment in the Fund will decline.
Model Design Risk: The subadviser uses certain quantitative models to help guide its investment decisions. The design of the underlying models may be flawed or incomplete. The investment models the subadviser uses are based on historical and theoretical underpinnings that it believes are sound. There can be no guarantee, however, that these underpinnings will correlate with security price behavior in the manner assumed by the subadviser’s models. Additionally, the quantitative techniques that underlie the subadviser’s portfolio construction processes may fail to fully anticipate important risks.
Model Implementation Risk: While the subadviser strives to mitigate the likelihood of material implementation errors, it is impossible to completely eliminate the risk of error in the implementation of the computer models that guide the subadviser’s quantitative investment processes. Additionally, it may be difficult to implement model recommendations in volatile and rapidly changing market conditions.
Short Sales Risk: The Fund will have substantial short positions and must borrow those securities to make delivery to the buyer. The Fund may not be able to borrow a security that it needs to deliver or it may not be able to close out a short position at an acceptable price and may have to sell related long positions before it had intended to do so. If a security sold
50
short increases in price, the Fund may have to cover its short position at a higher price than the short sale price, resulting in a loss.
When borrowing a security for delivery to a buyer, the Fund also may be required to pay a premium and other transaction costs, which would increase the cost of the security sold short. The Fund must normally repay to the lender an amount equal to any dividends or interest that accrues while the loan is outstanding. The amount of any gain will be decreased, and the amount of any loss increased, by the amount of the premium, dividends, interest or expenses the Fund may be required to pay in connection with the short sale. Short sales result in dividend and interest expenses due in part to paying the value of dividends to the securities’ lenders. A portion of these costs are expected to be offset by market value gains on the short position in relation to the value of dividends paid. These offsets are treated as capital gain in the Fund’s financial statements and, therefore, are not reflected in the fee table. The actual amount of offset may vary due to other market activity.
Also, the lender of a security may terminate the loan at a time when the Fund is unable to borrow the same security for delivery. In that case, the Fund would need to purchase a replacement security at the then current market price or “buy in” by paying the lender an amount equal to the cost of purchasing the security.
Because the Fund’s loss on a short sale arises from increases in the value of the security sold short, such loss is theoretically unlimited. In certain cases, purchasing a security to cover a short position can itself cause the price of the security to rise further, thereby exacerbating the loss. Conversely, gains on short sales, after transaction and related costs, are generally the difference between the price at which the Fund sold the borrowed security and the price it paid to purchase the security for delivery to the buyer. By contrast, the Fund’s loss on a long position arises from decreases in the value of the security and is limited by the fact that a security’s value cannot drop below zero. The Fund is also required to segregate other assets on its books to cover its obligation to return the security to the lender, which means that those other assets may not be available to meet the Fund’s needs for immediate cash or other liquidity.
Selling securities short is a form of leverage. The Fund must maintain collateral at least equal to the current market value of the security sold short. The use of leverage may exaggerate the effect of any increase or decrease in the value of the Fund’s holdings, and make any change in the Fund’s net asset value (NAV) greater than it would be without the use of leverage. This could result in increased volatility of investment returns. The Fund is required to segregate cash or other liquid assets with its custodian to “cover” the Fund’s short positions and other transactions that create leverage. Securities that are segregated or otherwise posted as collateral cannot be sold while the position they are covering or collateralizing is outstanding, unless they are replaced with similar securities. This may limit the Fund’s investment flexibility, as well as its ability to meet redemption requests or other current obligations. Leverage may also increase interest expense, which may lower the Fund’s returns.
PGIM QMA Long-Short Equity Fund 51
Notes to Financial Statements (unaudited) (continued)
Small and Medium Sized Companies Risk: Small and medium sized companies usually offer a smaller range of products and services than larger companies. Smaller companies may also have limited financial resources and may lack management depth. As a result, their prices may fluctuate more than the stocks of larger, more established companies. Historically, small and medium sized companies have sometimes gone through extended periods when they did not perform as well as larger companies. Small and medium sized companies generally are more illiquid than larger companies, which may make such investments more difficult to sell at the time and price that the Fund would like.
Value Style Risk: Since the Fund may invest significantly in value stocks or use a value investment style, there is the risk that value stocks or the value style may be out of favor for a period of time, that the market will not recognize a security’s intrinsic value for a long time or at all or that a stock judged to be undervalued may actually be appropriately priced or overvalued. Issuers of value stocks may have experienced adverse business developments or may be subject to special risks that have caused the stock to be out of favor. In addition, the Fund’s value investment style may go out of favor with investors, negatively affecting the Fund’s performance.
10. | Recent Regulatory Developments |
On December 3, 2020, the SEC announced that it voted to adopt a new rule that establishes an updated regulatory framework for fund valuation practices (the “Rule”). The Rule, in part, provides (i) a framework for determining fair value in good faith and (ii) provides for a fund Board’s assignment of its responsibility for the execution of valuation-related activities to a fund’s investment adviser. Further, the SEC is rescinding previously issued guidance on related issues. The Rule took effect on March 8, 2021, with a compliance date of September 8, 2022. Management is currently evaluating the Rule and its impact to the Fund.
11. | Subsequent Event |
On September 15, 2021 the Board of Trustees approved a proposal to liquidate all of the outstanding shares of the PGIM QMA Long-Short Equity Fund. The liquidation is expected to be completed on or about November 23, 2021.
52
Approval of Advisory Agreements
The Fund’s Board of Trustees
The Board of Trustees (the “Board”) of PGIM QMA Long-Short Equity Fund (the “Fund”)1 consists of ten individuals, eight of whom are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Trustees”). The Board is responsible for the oversight of the Fund and its operations, and performs the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Trustees have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Trustee. The Board has established four standing committees: the Audit Committee, the Nominating and Governance Committee, and two Investment Committees. Each committee is chaired by, and composed of, Independent Trustees.
Annual Approval of the Fund’s Advisory Agreements
As required under the 1940 Act, the Board determines annually whether to renew the Fund’s management agreement with PGIM Investments LLC (“PGIM Investments”) and the Fund’s subadvisory agreement with QMA LLC (“QMA”). In considering the renewal of the agreements, the Board, including all of the Independent Trustees, met on June 7-10, 2021 and approved the renewal of the agreements through July 31, 2022, after concluding that the renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board requested and received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with its consideration. Among other things, the Board considered comparative fee information from PGIM Investments and QMA. Also, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups, as is further discussed below.
In approving the agreements, the Board, including the Independent Trustees advised by independent legal counsel, considered the factors it deemed relevant, including the nature, quality and extent of services provided by PGIM Investments and the subadviser, the performance of the Fund, the profitability of PGIM Investments and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders as the Fund’s assets grow. In their deliberations, the Trustees did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with its deliberations, the Board considered information provided by PGIM Investments throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 7-10, 2021.
The Trustees determined that the overall arrangements between the Fund and PGIM Investments, which serves as the Fund’s investment manager pursuant to a
1 | PGIM QMA Long-Short Equity Fund is a series of Prudential Investment Portfolios 12. |
PGIM QMA Long-Short Equity Fund
Approval of Advisory Agreements (continued)
management agreement, and between PGIM Investments and QMA, which serves as the Fund’s subadviser pursuant to the terms of a subadvisory agreement with PGIM Investments, are in the best interests of the Fund and its shareholders in light of the services performed, fees charged and such other matters as the Trustees considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the Trustees’ reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature, quality and extent of services provided to the Fund by PGIM Investments and QMA. The Board noted that QMA is affiliated with PGIM Investments. The Board considered the services provided by PGIM Investments, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of fund recordkeeping, compliance and other services to the Fund, and PGIM Investments’ role as administrator for the Fund’s liquidity risk management program. With respect to PGIM Investments’ oversight of the subadviser, the Board noted that PGIM Investments’ Strategic Investment Research Group (“SIRG”), which is a business unit of PGIM Investments, is responsible for monitoring and reporting to PGIM Investments’ senior management on the performance and operations of the subadviser. The Board also considered that PGIM Investments pays the salaries of all of the officers and interested Trustees of the Fund who are part of Fund management. The Board also considered the investment subadvisory services provided by QMA, including investment research and security selection, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PGIM Investments’ evaluation of the subadviser, as well as PGIM Investments’ recommendation, based on its review of the subadviser, to renew the subadvisory agreement.
The Board considered the qualifications, backgrounds and responsibilities of PGIM Investments’ senior management responsible for the oversight of the Fund and QMA, and also considered the qualifications, backgrounds and responsibilities of QMA’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PGIM Investments’ and QMA’s organizational structure, senior management, investment operations, and other relevant information pertaining to both PGIM Investments and QMA. The Board also noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer (“CCO”) as to both PGIM Investments and QMA.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PGIM Investments and the subadvisory services provided to the Fund by QMA, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PGIM Investments and QMA under the management and subadvisory agreements.
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Costs of Services and Profits Realized by PGIM Investments
The Board was provided with information on the profitability of PGIM Investments and its affiliates in serving as the Fund’s investment manager. The Board discussed with PGIM Investments the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. Taking these factors into account, the Board concluded that the profitability of PGIM Investments and its affiliates in relation to the services rendered was not unreasonable.
Economies of Scale
The Board received and discussed information concerning economies of scale that PGIM Investments may realize as the Fund’s assets grow beyond current levels. The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of reducing the fee rate as assets increase. During the course of time, the Board has considered information regarding the launch date of the Fund, the management fees of the Fund compared to those of similarly managed funds and PGIM Investments’ investment in the Fund over time. The Board noted that economies of scale can be shared with the Fund in other ways, including low management fees from inception, additional technological and personnel investments to enhance shareholder services, and maintaining existing expense structures in the face of a rising cost environment. The Board also considered PGIM Investments’ assertion that it continually evaluates the management fee schedule of the Fund and the potential to share economies of scale through breakpoints or fee waivers as asset levels increase.
The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board’s understanding that most of PGIM Investments’ costs are not specific to individual funds, but rather are incurred across a variety of products and services.
Other Benefits to PGIM Investments and QMA
The Board considered potential ancillary benefits that might be received by PGIM Investments, QMA and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PGIM Investments included transfer agency fees received by the Fund’s transfer agent (which is affiliated with PGIM Investments), and benefits to its reputation as well as other intangible benefits resulting from PGIM Investments’ association with the Fund. The Board concluded that the potential benefits to be derived by QMA included its ability to use soft dollar credits, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to its reputation. The Board concluded that the benefits derived
PGIM QMA Long-Short Equity Fund
Approval of Advisory Agreements (continued)
by PGIM Investments and QMA were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
Performance of the Fund / Fees and Expenses
The Board considered certain additional factors and made related conclusions relating to the historical performance of the Fund for the one-, three- and five-year periods ended December 31, 2020. The Board considered that the Fund commenced operations on May 29, 2014 and that longer-term performance was not yet available.
The Board also considered the Fund’s actual management fee, as well as the Fund’s net total expense ratio, for the fiscal year ended March 31, 2020. The Board considered the management fee for the Fund as compared to the management fee charged by PGIM Investments to other funds and the fee charged by other advisers to comparable mutual funds in a Peer Group. The actual management fee represents the fee rate actually paid by Fund shareholders and includes any fee waivers or reimbursements. The net total expense ratio for the Fund represents the actual expense ratio incurred by Fund shareholders.
The mutual funds included in the Peer Universe, which was used to consider performance, and the Peer Group, which was used to consider expenses and fees, were objectively determined by Broadridge, an independent provider of mutual fund data. In certain circumstances, PGIM Investments also provided supplemental Peer Universe or Peer Group information for reasons addressed with the Board. The comparisons placed the Fund in various quartiles over various periods, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).
The section below summarizes key factors considered by the Board and the Board’s conclusions regarding the Fund’s performance, fees and overall expenses. The table sets forth net performance comparisons (which reflect the impact on performance of fund expenses, or any subsidies, expense caps or waivers that may be applicable) with the Peer Universe, actual management fees with the Peer Group (which reflect the impact of any subsidies or fee waivers), and net total expenses with the Peer Group, each of which were key factors considered by the Board.
Net Performance | 1 Year | 3 Years | 5 Years | 10 Years | ||||
4th Quartile | 4th Quartile | 4th Quartile | N/A | |||||
Actual Management Fees: 1st Quartile | ||||||||
Net Total Expenses: 1st Quartile |
· | The Board noted that the Fund underperformed its benchmark index over all periods. |
· | The Board considered PGIM Investments’ assertion that the subadviser has made enhancements to the Fund’s risk management constraints. The Board further |
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considered that these enhancements appear to be having a positive impact on performance give that the Fund outperformed its benchmark index and ranked in the first quartile of its peer group for the first quarter of 2021. |
· | The Board concluded to closely monitor the performance of the Fund and consider strategic alternatives to address the Fund’s underperformance, as appropriate. |
· | The Board and PGIM Investments agreed to retain the Fund’s existing contractual expense cap, which (exclusive of certain fees and expenses) caps total annual operating expenses at 1.50% for Class A shares, 2.25% for Class C shares, 1.25% for Class Z shares, and 1.25% for Class R6 shares through July 31, 2022. |
· | In addition, PGIM Investments will waive management fees or shared operating expenses on any share class to the same extent that it waives such expenses on any other share class, and has agreed that total annual fund operating expenses for Class R6 shares will not exceed total annual fund operating expenses for Class Z shares. |
· | The Board concluded that, in light of the above, it would be in the best interests of the Fund and its shareholders to renew the agreements. |
· | The Board concluded that the management fees (including subadvisory fees) and total expenses were reasonable in light of the services provided. |
* * *
After full consideration of these factors, the Board concluded that the approval of the agreements was in the best interests of the Fund and its shareholders.
PGIM QMA Long-Short Equity Fund
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street | (800) 225-1852 | pgim.com/investments | ||
Newark, NJ 07102 |
PROXY VOTING The Board of Trustees 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 or by visiting the Securities and Exchange Commission’s website at sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website. |
TRUSTEES Ellen S. Alberding · Kevin J. Bannon · Scott E. Benjamin · Linda W. Bynoe · Barry H. Evans · Keith F. Hartstein · Laurie Simon Hodrick · 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 · Claudia DiGiacomo, Chief Legal Officer · Dino Capasso, Chief Compliance Officer · Jonathan Corbett, Anti-Money Laundering Compliance Officer · Andrew R. French, Secretary · Melissa Gonzalez, Assistant Secretary · Diana N. Huffman, Assistant Secretary · Kelly A. Coyne, Assistant Secretary · Patrick E. McGuinness, Assistant Secretary · Debra Rubano, Assistant Secretary · Lana Lomuti, Assistant Treasurer · Russ Shupak, Assistant Treasurer · Elyse M. McLaughlin, Assistant Treasurer · Deborah Conway, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street | ||
Newark, NJ 07102 | ||||
SUBADVISER | PGIM Quantitative Solutions LLC | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
DISTRIBUTOR | Prudential Investment | 655 Broad Street | ||
Management Services LLC | Newark, NJ 07102 | |||
CUSTODIAN | The Bank of New York | 240 Greenwich Street | ||
Mellon | New York, NY 10286 | |||
TRANSFER AGENT | Prudential Mutual Fund | PO Box 9658 | ||
Services LLC | Providence, RI 02940 | |||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | PricewaterhouseCoopers LLP | 300 Madison Avenue New York, NY 10017 | ||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
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 at pgim.com/investments 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 to pgim.com/investments/resource/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 by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, PGIM QMA Long-Short Equity Fund, PGIM Investments, Attn: Board of Trustees, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Trustee by writing to that Trustee at the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO HOLDINGS 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 as an exhibit to its reports on Form N-PORT. The Fund’s Form N-PORT filings are available on the Commission’s website at sec.gov. |
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 LONG-SHORT EQUITY FUND
SHARE CLASS | A | C | Z | R6 | ||||
NASDAQ | PLHAX | PLHCX | PLHZX | PLHQX | ||||
CUSIP | 744336868 | 744336850 | 744336843 | 744336736 |
MF221E2
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 for Closed-End Management Investment Companies – Not applicable. |
Item 8 – Portfolio Managers of Closed-End Management Investment Companies – Not applicable.
Item 9 – | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable. |
Item 10 – Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.
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 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 – Controls and Procedures - Disclosure of Securities Lending Activities for Closed-End
Management Investment Companies – Not applicable.
Item 13 – Exhibits
(a) (1) | Code of Ethics – Not required, as this is not an annual filing. |
(2) |
(3) | Any written solicitation to purchase securities under Rule 23c-1. – Not applicable. |
(b) |
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 12 | |
By: | /s/ Andrew R. French | |
Andrew R. French | ||
Secretary | ||
Date: | November 16, 2021 |
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: | November 16, 2021 | |
By: | /s/ Christian J. Kelly | |
Christian J. Kelly | ||
Treasurer and Principal Financial and Accounting Officer | ||
Date: | November 16, 2021 |