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: | 811-03981 | |
Exact name of registrant as specified in charter: | Prudential World Fund, Inc | |
Address of principal executive offices: | 655 Broad Street, 17th Floor Newark, New Jersey 07102 | |
Name and address of agent for service: | Deborah A. Docs 655 Broad Street, 17th Floor Newark, New Jersey 07102 | |
Registrant’s telephone number, including area code: | 800-225-1852 | |
Date of fiscal year end: | 10/31/2017 | |
Date of reporting period: | 4/30/2017 |
Item 1 – Reports to Stockholders
PRUDENTIAL QMA INTERNATIONAL EQUITY FUND
SEMIANNUAL REPORT
APRIL 30, 2017
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: Long-term growth of capital |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2017 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. QMA is the primary business name of Quantitative Management Associates LLC, a wholly owned subsidiary of PGIM, Inc. (PGIM), a Prudential Financial company. © 2017 Prudential Financial, Inc. and its related entities. The Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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Letter from the President
Dear Shareholder:
We hope you find the semiannual report for the Prudential QMA International Equity Fund informative and useful. The report covers performance for the six-month period ended April 30, 2017. We are proud to announce that Prudential Investments became PGIM® Investments, effective April 3, 2017. Why PGIM? This new name was chosen to further align with the global investment management businesses of Prudential Financial, which rebranded from Prudential Investment Management in January 2016. This new name allows for one brand and reflects our ability and commitment to delivering investment solutions to clients around the globe. Please keep in mind that only the Fund adviser’s name was changed: the name of your Fund and the management and operation did not change.
Since market conditions change over time, 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 adviser 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. We’re part of PGIM, the 9th-largest 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
Prudential QMA International Equity Fund
June 15, 2017
Prudential QMA International Equity Fund | 3 |
Your Fund’s Performance (unaudited)
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 www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 4/30/17 | Average Annual Total Returns as of 4/30/17 (with sales charges) | |||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Ten Years (%) | Since Inception (%) | ||||||
Class A | 10.37 | 7.45 | 4.53 | –1.28 | — | |||||
Class B | 9.91 | 7.82 | 4.82 | –1.41 | — | |||||
Class C | 10.09 | 12.01 | 4.99 | –1.41 | — | |||||
Class Q | 11.87** | N/A | N/A | N/A | N/A (12/28/16) | |||||
Class Z | 10.60 | 14.09 | 6.06 | –0.43 | — | |||||
MSCI All Country World Ex-US Index | 10.37 | 12.59 | 5.13 | 1.12 | — | |||||
Lipper International Multi-Cap Core Funds Average | 10.89 | 12.05 | 6.44 | 1.04 | — |
*Not annualized
**Since inception
Source: PGIM Investments LLC and Lipper Inc.
Inception returns are provided for any share class with less than 10 fiscal years of returns.
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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. The Since Inception returns for the index and the Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Class A | Class B* | Class C | Class Q | Class Z | ||||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | None | |||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1% on sales of $1 million or more made within 12 months of purchase | 5% (Yr.1) 4% (Yr.2) 3% (Yr.3) 2% (Yr.4) 1% (Yr.5) 1% (Yr.6) 0% (Yr.7) | 1% 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) | .30% | 1% | 1% | None | None |
*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.
Benchmark Definitions
MSCI All Country World Ex-US Index—The Morgan Stanley Capital International All Country World ex-US Index (MSCI ACWI ex-US Index) is an unmanaged free float-adjusted market-capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the US.
Lipper International Multi-Cap Core Funds Average—The Lipper International Multi-Cap Core Funds Average (Lipper Average) is based on the average return of all funds in the Lipper International Multi-Cap Core Funds category for the periods noted. Funds in the Lipper Average are funds that, by portfolio practice, invest in a variety of market-capitalization ranges without concentrating 75% of their equity assets in any one market-capitalization range over an extended period of time. International multi-cap core funds typically have above-average characteristics compared to the MSCI EAFE Index.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Prudential QMA International Equity Fund | 5 |
Your Fund’s Performance (continued)
Five Largest Holdings expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Samsung Electronics Co. Ltd., Technology Hardware, Storage & Peripherals | 1.7 | |||
Roche Holding AG, Pharmaceuticals | 1.6 | |||
British American Tobacco PLC, Tobacco | 1.3 | |||
Siemens AG, Industrial Conglomerates | 1.2 | |||
Bayer AG, Pharmaceuticals | 1.2 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Banks | 15.2 | |||
Pharmaceuticals | 7.5 | |||
Oil, Gas & Consumable Fuels | 6.2 | |||
Insurance | 5.2 | |||
Automobiles | 4.1 |
Industry weightings reflect only long-term investments and are subject to change.
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Fees and Expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2017. 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 Investments funds, including the Fund, that you own. You should consider the additional fees that were charged to your
Prudential QMA International Equity Fund | 7 |
Fees and Expenses (continued)
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 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.
Prudential QMA International Equity Fund | Beginning Account Value November 1, 2016 | Ending Account April 30, 2017 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,103.70 | 1.68 | % | $ | 8.76 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.46 | 1.68 | % | $ | 8.40 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,099.10 | 2.38 | % | $ | 12.39 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,012.99 | 2.38 | % | $ | 11.88 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,100.90 | 2.38 | % | $ | 12.40 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,012.99 | 2.38 | % | $ | 11.88 | ||||||||||
Class Q | Actual** | $ | 1,000.00 | $ | 1,118.70 | 1.05 | % | $ | 3.75 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.59 | 1.05 | % | $ | 5.26 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,106.00 | 1.38 | % | $ | 7.21 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.95 | 1.38 | % | $ | 6.90 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2017, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2017 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
**“Actual” expenses are calculated using the 123 day period ended April 30, 2017 due to the Fund’s inception date of December 28, 2016.
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Schedule of Investments (unaudited)
as of April 30, 2017
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 99.4% | ||||||||
COMMON STOCKS 96.3% | ||||||||
Australia 4.2% | ||||||||
Aristocrat Leisure Ltd. | 112,687 | $ | 1,656,012 | |||||
CIMIC Group Ltd. | �� | 31,261 | 866,331 | |||||
Commonwealth Bank of Australia | 43,564 | 2,845,336 | ||||||
Computershare Ltd. | 9,419 | 103,836 | ||||||
CSR Ltd. | 263,849 | 967,507 | ||||||
Fortescue Metals Group Ltd. | 349,581 | 1,385,618 | ||||||
QBE Insurance Group Ltd. | 52,743 | 506,743 | ||||||
South32 Ltd. | 71,902 | 149,002 | ||||||
Westpac Banking Corp. | 95,428 | 2,501,624 | ||||||
|
| |||||||
10,982,009 | ||||||||
Austria 0.9% | ||||||||
Lenzing AG | 5,282 | 984,726 | ||||||
voestalpine AG | 34,859 | 1,453,251 | ||||||
|
| |||||||
2,437,977 | ||||||||
Belgium 0.1% | ||||||||
KBC Group NV | 3,357 | 242,600 | ||||||
Brazil 1.1% | ||||||||
Cia de Saneamento Basico do Estado de Sao Paulo | 142,600 | 1,308,269 | ||||||
EDP—Energias do Brasil SA | 168,700 | 716,990 | ||||||
Magazine Luiza Sa | 7,700 | 536,687 | ||||||
Petroleo Brasileiro SA* | 40,600 | 183,299 | ||||||
Qualicorp SA | 15,100 | 107,040 | ||||||
Vale SA | 18,200 | 156,194 | ||||||
|
| |||||||
3,008,479 | ||||||||
Canada 5.5% | ||||||||
Bank of Montreal | 31,600 | 2,237,615 | ||||||
Bank of Nova Scotia (The) | 31,400 | 1,745,454 | ||||||
Canadian Imperial Bank of Commerce | 20,100 | 1,623,402 | ||||||
Canadian National Railway Co. | 9,500 | 686,689 | ||||||
Celestica, Inc.* | 58,300 | 830,691 | ||||||
Cogeco Communications, Inc. | 16,000 | 915,542 | ||||||
Constellation Software, Inc. | 1,100 | 503,105 | ||||||
Genworth MI Canada, Inc. | 26,800 | 665,558 | ||||||
Restaurant Brands International, Inc. | 4,700 | 263,810 | ||||||
Royal Bank of Canada | 6,800 | 465,621 |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 9 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Canada (cont’d.) | ||||||||
Toronto-Dominion Bank (The) | 56,300 | $ | 2,649,096 | |||||
TransCanada Corp. | 38,600 | 1,792,219 | ||||||
|
| |||||||
14,378,802 | ||||||||
Chile 0.8% | ||||||||
AES Gener SA | 501,650 | 190,571 | ||||||
Cencosud SA | 450,626 | 1,283,606 | ||||||
Engie Energia Chile SA | 238,250 | 436,229 | ||||||
Inversiones La Construccion SA | 11,723 | 161,755 | ||||||
|
| |||||||
2,072,161 | ||||||||
China 6.4% | ||||||||
Agricultural Bank of China Ltd. (Class H Stock) | 3,109,000 | 1,433,218 | ||||||
Alibaba Group Holding Ltd., ADR* | 2,300 | 265,650 | ||||||
Bank of Communications Co. Ltd. (Class H Stock) | 973,000 | 748,159 | ||||||
BOC Hong Kong Holdings Ltd. | 103,500 | 425,337 | ||||||
Changyou.com Ltd., ADR* | 29,500 | 963,175 | ||||||
China CITIC Bank Corp. Ltd. (Class H Stock) | 1,972,000 | 1,248,317 | ||||||
China Construction Bank Corp. (Class H Stock) | 1,839,000 | 1,492,650 | ||||||
China Minsheng Banking Corp. Ltd. (Class H Stock) | 1,208,000 | 1,188,503 | ||||||
China Telecom Corp. Ltd. (Class H Stock) | 210,000 | 102,435 | ||||||
China Vanke Co. Ltd. (Class H Stock) | 522,100 | 1,323,003 | ||||||
CIFI Holdings Group Co. Ltd. | 1,442,000 | 520,604 | ||||||
Citic Ltd. | 137,000 | 198,651 | ||||||
Geely Automobile Holdings Ltd. | 85,000 | 114,525 | ||||||
Guangzhou Automobile Group Co. Ltd. (Class H Stock) | 186,000 | 289,063 | ||||||
Guangzhou R&F Properties Co. Ltd. (Class H Stock) | 231,600 | 389,821 | ||||||
JD.com, Inc., ADR* | 25,300 | 887,271 | ||||||
KWG Property Holding Ltd. | 1,180,500 | 891,762 | ||||||
Ping An Insurance Group Co. of China Ltd. (Class H Stock) | 245,500 | 1,380,263 | ||||||
Powerlong Real Estate Holdings Ltd. | 674,000 | 317,063 | ||||||
Shanghai Pharmaceuticals Holding Co. Ltd. (Class H Stock) | 50,500 | 133,570 | ||||||
Sihuan Pharmaceutical Holdings Group Ltd. | 752,000 | 334,190 | ||||||
Sinopec Shanghai Petrochemical Co. Ltd. (Class H Stock) | 2,500,000 | 1,396,964 | ||||||
Tencent Holdings Ltd. | 28,800 | 902,400 | ||||||
|
| |||||||
16,946,594 | ||||||||
Colombia 0.2% | ||||||||
Almacenes Exito SA | 85,676 | 443,815 |
See Notes to Financial Statements.
10 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Denmark 2.0% | ||||||||
Danske Bank A/S | 19,039 | $ | 692,230 | |||||
ISS A/S | 33,464 | 1,388,094 | ||||||
Novo Nordisk A/S (Class B Stock) | 25,422 | 989,853 | ||||||
Vestas Wind Systems A/S | 24,085 | 2,072,432 | ||||||
|
| |||||||
5,142,609 | ||||||||
Finland 1.1% | ||||||||
Neste OYJ | 2,394 | 97,554 | ||||||
Orion OYJ (Class B Stock) | 8,365 | 479,395 | ||||||
Sampo OYJ (Class A Stock) | 6,122 | 292,984 | ||||||
UPM-Kymmene OYJ | 75,214 | 1,981,642 | ||||||
|
| |||||||
2,851,575 | ||||||||
France 6.1% | ||||||||
Atos SE | 1,308 | 171,329 | ||||||
AXA SA | 92,459 | 2,466,822 | ||||||
BNP Paribas SA | 9,112 | 643,100 | ||||||
Credit Agricole SA | 121,381 | 1,805,404 | ||||||
Hermes International | 3,249 | 1,553,250 | ||||||
JCDecaux SA | 2,878 | 101,592 | ||||||
LVMH Moet Hennessy Louis Vuitton SE | 3,941 | 972,911 | ||||||
Natixis SA | 198,898 | 1,384,171 | ||||||
Orange SA | 29,103 | 450,438 | ||||||
Peugeot SA* | 49,623 | 1,040,378 | ||||||
Sanofi | 31,563 | 2,982,512 | ||||||
SCOR SE | 2,610 | 103,244 | ||||||
Societe Generale SA | 10,361 | 568,122 | ||||||
Total SA | 34,911 | 1,792,096 | ||||||
|
| |||||||
16,035,369 | ||||||||
Germany 4.9% | ||||||||
adidas AG | 2,580 | 517,261 | ||||||
Allianz SE | 15,597 | 2,969,324 | ||||||
BASF SE | 4,023 | 391,917 | ||||||
Bayer AG | 24,610 | 3,045,076 | ||||||
Deutsche Lufthansa AG | 95,053 | 1,639,879 | ||||||
Hannover Rueck SE | 8,906 | 1,068,402 | ||||||
Siemens AG | 21,942 | 3,147,428 | ||||||
|
| |||||||
12,779,287 |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Greece 0.6% |
| |||||||
JUMBO SA | 47,359 | $ | 747,192 | |||||
Motor Oil Hellas Corinth Refineries SA | 47,436 | 804,834 | ||||||
|
| |||||||
1,552,026 | ||||||||
Hong Kong 3.1% |
| |||||||
ASM Pacific Technology Ltd. | 7,300 | 108,634 | ||||||
CK Hutchison Holdings Ltd. | 70,000 | 874,110 | ||||||
Galaxy Entertainment Group Ltd. | 31,402 | 174,452 | ||||||
Henderson Land Development Co. Ltd. | 213,000 | 1,348,388 | ||||||
Kingboard Chemical Holdings Ltd. | 67,000 | 241,304 | ||||||
Kingboard Laminates Holdings Ltd. | 459,000 | 553,208 | ||||||
Sun Hung Kai Properties Ltd. | 106,000 | 1,588,411 | ||||||
WH Group Ltd. | 1,739,500 | 1,551,901 | ||||||
Wheelock & Co. Ltd. | 217,000 | 1,690,303 | ||||||
|
| |||||||
8,130,711 | ||||||||
Hungary 0.1% |
| |||||||
Magyar Telekom Telecommunications PLC | 199,105 | 332,959 | ||||||
India 2.0% |
| |||||||
Bharat Petroleum Corp. Ltd. | 31,122 | 347,985 | ||||||
Hindustan Petroleum Corp. Ltd. | 157,575 | 1,313,447 | ||||||
Oil & Natural Gas Corp. Ltd. | 475,810 | 1,378,691 | ||||||
Power Finance Corp. Ltd. | 720,476 | 1,790,195 | ||||||
Reliance Infrastructure Ltd., GDR | 5,869 | 159,637 | ||||||
Whirlpool of India Ltd.* | 11,190 | 210,325 | ||||||
|
| |||||||
5,200,280 | ||||||||
Indonesia 0.3% |
| |||||||
Gudang Garam Tbk PT | 143,900 | 715,694 | ||||||
Japfa Comfeed Indones Tbk PT | 1,127,900 | 123,900 | ||||||
|
| |||||||
839,594 | ||||||||
Israel 0.6% |
| |||||||
Check Point Software Technologies Ltd.* | 16,200 | 1,684,962 | ||||||
Italy 1.6% |
| |||||||
ACEA SpA | 7,116 | 102,391 | ||||||
Atlantia SpA | 17,877 | 453,346 | ||||||
Enel SpA | 110,951 | 527,482 | ||||||
Ferrari Nv | 1,660 | 124,876 | ||||||
Intesa Sanpaolo SpA-RSP | 274,305 | 751,072 |
See Notes to Financial Statements.
12 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Italy (cont’d.) |
| |||||||
Maire Tecnimont SpA | 128,052 | $ | 508,771 | |||||
Recordati SpA | 9,584 | 355,186 | ||||||
Telecom Italia SpA* | 1,683,588 | 1,494,343 | ||||||
|
| |||||||
4,317,467 | ||||||||
Japan 17.0% |
| |||||||
Aisin Seiki Co. Ltd. | 2,700 | 132,238 | ||||||
Astellas Pharma, Inc. | 123,100 | 1,623,334 | ||||||
Daiichi Sankyo Co. Ltd. | 60,100 | 1,335,653 | ||||||
DIC Corp. | 6,300 | 224,259 | ||||||
Fujitsu Ltd. | 236,000 | 1,473,188 | ||||||
Hitachi Ltd. | 286,000 | 1,579,969 | ||||||
Honda Motor Co. Ltd. | 37,300 | 1,085,641 | ||||||
Hoya Corp. | 5,200 | 248,523 | ||||||
ITOCHU Corp. | 125,100 | 1,770,163 | ||||||
Japan Tobacco, Inc. | 55,900 | 1,860,116 | ||||||
Kajima Corp. | 201,000 | 1,364,834 | ||||||
Kansai Electric Power Co., Inc. (The) | 12,200 | 164,873 | ||||||
KDDI Corp. | 25,600 | 678,760 | ||||||
Keyence Corp. | 600 | 241,208 | ||||||
Koito Manufacturing Co. Ltd. | 14,800 | 764,761 | ||||||
Konami Holdings Corp. | 11,400 | 474,551 | ||||||
Marubeni Corp. | 22,400 | 138,068 | ||||||
Medipal Holdings Corp. | 18,800 | 311,478 | ||||||
Mitsubishi Chemical Holdings Corp. | 187,500 | 1,467,598 | ||||||
Mitsubishi Corp. | 60,100 | 1,296,964 | ||||||
Mitsubishi Motors Corp. | 223,100 | 1,428,854 | ||||||
Mitsui & Co. Ltd. | 70,200 | 991,266 | ||||||
Mixi, Inc. | 2,400 | 133,138 | ||||||
MS&AD Insurance Group Holdings, Inc. | 19,700 | 642,300 | ||||||
Nidec Corp. | 3,300 | 302,788 | ||||||
Nippon Telegraph & Telephone Corp. | 47,484 | 2,034,958 | ||||||
Nissan Motor Co. Ltd. | 171,300 | 1,631,731 | ||||||
NTT DOCOMO, Inc. | 5,100 | 123,405 | ||||||
Obayashi Corp. | 143,100 | 1,389,342 | ||||||
ORIX Corp. | 125,400 | 1,916,455 | ||||||
Screen Holdings Co. Ltd. | 12,900 | 937,009 | ||||||
Sharp Corp.*(a) | 366,000 | 1,327,314 | ||||||
Shin-Etsu Chemical Co. Ltd. | 5,600 | 486,739 | ||||||
SoftBank Group Corp. | 28,300 | 2,146,632 | ||||||
Sony Corp. | 21,000 | 720,601 | ||||||
Sumitomo Corp. | 114,800 | 1,534,111 |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 13 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Japan (cont’d.) |
| |||||||
Sumitomo Mitsui Financial Group, Inc. | 15,900 | $ | 590,377 | |||||
Suzuki Motor Corp. | 42,600 | 1,780,807 | ||||||
Taisei Corp. | 187,000 | 1,425,949 | ||||||
Tokio Marine Holdings, Inc. | 37,300 | 1,572,701 | ||||||
Tokyo Electron Ltd. | 2,100 | 254,927 | ||||||
Tokyo Steel Manufacturing Co. Ltd. | 55,000 | 409,811 | ||||||
Tosoh Corp. | 99,000 | 930,461 | ||||||
Toyota Boshoku Corp. | 37,300 | 789,257 | ||||||
Toyota Motor Corp. | 16,033 | 867,719 | ||||||
|
| |||||||
44,604,831 | ||||||||
Luxembourg 0.1% |
| |||||||
ArcelorMittal* | 24,767 | 194,628 | ||||||
Malaysia 0.1% |
| |||||||
Malaysian Pacific Industries Bhd | 69,300 | 191,162 | ||||||
Tenaga Nasional Bhd | 46,800 | 150,258 | ||||||
|
| |||||||
341,420 | ||||||||
Mexico 0.6% |
| |||||||
Grupo Financiero Interacciones SA de CV | 141,100 | 659,807 | ||||||
Macquarie Mexico Real Estate Management SA de CV* | 760,000 | 832,457 | ||||||
|
| |||||||
1,492,264 | ||||||||
Netherlands 3.0% |
| |||||||
BE Semiconductor Industries NV | 5,899 | 308,393 | ||||||
ING Groep NV | 163,321 | 2,662,059 | ||||||
Randstad Holding NV | 24,875 | 1,482,999 | ||||||
Royal Dutch Shell PLC (Class A Stock) | 63,388 | 1,646,092 | ||||||
Royal Dutch Shell PLC (Class B Stock) | 61,779 | 1,643,756 | ||||||
Wolters Kluwer NV | 2,543 | 107,910 | ||||||
|
| |||||||
7,851,209 | ||||||||
New Zealand 0.2% | ||||||||
Air New Zealand Ltd. | 205,995 | 360,478 | ||||||
Auckland International Airport Ltd. | 22,308 | 105,709 | ||||||
|
| |||||||
466,187 | ||||||||
Norway 0.9% | ||||||||
Aker BP ASA | 11,729 | 198,585 | ||||||
Austevoll Seafood ASA | 98,572 | 792,832 | ||||||
Marine Harvest ASA* | 84,245 | 1,401,678 | ||||||
|
| |||||||
2,393,095 |
See Notes to Financial Statements.
14 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Poland 0.3% | ||||||||
Ciech SA | 6,702 | $ | 134,043 | |||||
Enea SA* | 128,697 | 395,295 | ||||||
Polski Koncern Naftowy Orlen SA | 6,998 | 209,140 | ||||||
|
| |||||||
738,478 | ||||||||
Portugal 0.6% | ||||||||
EDP—Energias de Portugal SA | 168,845 | 557,227 | ||||||
Sonae SGPS SA* | 927,766 | 951,919 | ||||||
|
| |||||||
1,509,146 | ||||||||
Qatar 0.1% | ||||||||
Ooredoo QSC | 9,490 | 270,423 | ||||||
Russia 0.9% | ||||||||
Gazprom PAO, ADR | 110,142 | 523,174 | ||||||
Lukoil PJSC, ADR | 10,372 | 515,125 | ||||||
Rosneft OAO, GDR, RegS | 58,411 | 323,305 | ||||||
Sberbank of Russia PJSC, ADR | 58,038 | 690,072 | ||||||
Severstal PJSC, GDR | 18,676 | 255,488 | ||||||
|
| |||||||
2,307,164 | ||||||||
South Africa 1.3% | ||||||||
Bid Corp. Ltd. | 4,842 | 102,578 | ||||||
KAP Industrial Holdings Ltd. | 1,134,491 | 794,820 | ||||||
Sappi Ltd. | 202,857 | 1,506,501 | ||||||
Shoprite Holdings Ltd. | 7,490 | 117,504 | ||||||
Steinhoff International Holdings NV | 40,764 | 207,370 | ||||||
Telkom SA SOC Ltd. | 87,549 | 489,969 | ||||||
Wilson Bayly Holmes-Ovcon Ltd. | 21,488 | 229,810 | ||||||
|
| |||||||
3,448,552 | ||||||||
South Korea 4.3% | ||||||||
Korea Petrochemical Ind Co. Ltd. | 521 | 108,164 | ||||||
KT Corp. | 53,617 | 1,517,027 | ||||||
LG Electronics, Inc. | 1,595 | 96,822 | ||||||
LG Uplus Corp. | 103,041 | 1,309,286 | ||||||
Lotte Chemical Corp. | 5,180 | 1,555,011 | ||||||
Meritz Securities Co. Ltd. | 79,686 | 288,952 | ||||||
Samsung Electronics Co. Ltd. | 2,246 | 4,403,124 | ||||||
Shinhan Financial Group Co. Ltd. | 2,941 | 122,791 | ||||||
SK Hynix, Inc. | 37,650 | 1,783,609 | ||||||
SK Telecom Co. Ltd. | 518 | 109,342 | ||||||
|
| |||||||
11,294,128 |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 15 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) |
| |||||||
Spain 1.4% | ||||||||
Amadeus IT Group SA | 30,116 | $ | 1,625,340 | |||||
Endesa SA | 47,364 | 1,115,573 | ||||||
Gamesa Corp. Tecnologica SA | 4,830 | 104,167 | ||||||
Repsol SA | 28,725 | 453,377 | ||||||
Telefonica SA | 33,273 | 367,998 | ||||||
|
| |||||||
3,666,455 | ||||||||
Sweden 2.6% |
| |||||||
Atlas Copco AB (Class A Stock) | 23,646 | 883,298 | ||||||
Boliden AB | 27,230 | 777,915 | ||||||
ICA Gruppen AB | 39,361 | 1,343,241 | ||||||
Investor AB (Class B Stock) | 30,505 | 1,393,815 | ||||||
Skanska AB (Class B Stock) | 16,988 | 406,041 | ||||||
Svenska Cellulosa AB SCA (Class B Stock) | 7,019 | 232,380 | ||||||
Swedbank AB (Class A Stock) | 12,566 | 297,815 | ||||||
Volvo AB (Class B Stock) | 93,941 | 1,534,138 | ||||||
|
| |||||||
6,868,643 | ||||||||
Switzerland 5.3% |
| |||||||
Adecco Group AG | 6,713 | 498,788 | ||||||
Cie Financiere Richemont SA | 1,248 | 104,281 | ||||||
Flughafen Zuerich AG | 4,197 | 924,925 | ||||||
Glencore PLC* | 174,005 | 683,866 | ||||||
Logitech International SA | 29,013 | 969,650 | ||||||
Nestle SA | 25,097 | 1,932,984 | ||||||
Novartis AG | 31,143 | 2,397,546 | ||||||
Partners Group Holding AG | 586 | 354,241 | ||||||
Roche Holding AG | 16,465 | 4,308,306 | ||||||
Swatch Group AG (The) | 21,683 | 1,682,143 | ||||||
Swiss Life Holding AG* | 381 | 123,992 | ||||||
|
| |||||||
13,980,722 | ||||||||
Taiwan 2.6% |
| |||||||
AU Optronics Corp. | 254,000 | 105,564 | ||||||
Chailease Holding Co. Ltd. | 45,000 | 114,647 | ||||||
Formosa Chemicals & Fibre Corp. | 422,000 | 1,297,644 | ||||||
Formosa Petrochemical Corp. | 474,000 | 1,656,832 | ||||||
Gourmet Master Co. Ltd. | 350 | 3,515 | ||||||
Hon Hai Precision Industry Co. Ltd. | 363,000 | 1,188,158 | ||||||
Innolux Corp. | 389,000 | 181,562 | ||||||
Lite-On Technology Corp. | 348,242 | 607,458 |
See Notes to Financial Statements.
16 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) |
| |||||||
Taiwan (cont’d.) |
| |||||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 128,000 | $ | 824,563 | |||||
Tripod Technology Corp. | 321,000 | 907,177 | ||||||
|
| |||||||
6,887,120 | ||||||||
Thailand 1.5% |
| |||||||
Charoen Pokphand Foods PCL | 1,137,300 | 878,385 | ||||||
GFPT PCL | 1,133,300 | 598,092 | ||||||
Glow Energy PCL | 199,094 | 471,734 | ||||||
Kiatnakin Bank PCL | 448,900 | 884,776 | ||||||
SPCG PCL | 303,000 | 182,112 | ||||||
Tisco Financial Group PCL | 409,000 | 901,181 | ||||||
|
| |||||||
3,916,280 | ||||||||
Turkey 1.2% |
| |||||||
Aygaz A/S | 126,174 | 503,353 | ||||||
Eregli Demir VE Celik Fabrikalari TAS | 403,889 | 739,846 | ||||||
Tekfen Holding A/S | 109,020 | 280,990 | ||||||
Trakya Cam Sanayii A/S | 326,918 | 316,595 | ||||||
Turkiye Garanti Bankasi A/S | 388,995 | 1,050,074 | ||||||
Turkiye Is Bankasi (Class C Stock) | 203,521 | 401,656 | ||||||
|
| |||||||
3,292,514 | ||||||||
United Kingdom 10.7% | ||||||||
Anglo American PLC* | 19,033 | 272,505 | ||||||
AstraZeneca PLC | 3,019 | 180,807 | ||||||
Aviva PLC | 55,831 | 379,675 | ||||||
BP PLC | 490,546 | 2,808,193 | ||||||
British American Tobacco PLC | 51,029 | 3,447,698 | ||||||
Britvic PLC | 84,628 | 728,123 | ||||||
Coca-Cola European Partners PLC | 2,942 | 111,328 | ||||||
Diageo PLC | 59,123 | 1,720,908 | ||||||
Fiat Chrysler Automobiles NV* | 12,218 | 138,778 | ||||||
GKN PLC | 298,691 | 1,388,098 | ||||||
GlaxoSmithKline PLC | 78,587 | 1,581,792 | ||||||
HSBC Holdings PLC | 112,799 | 930,179 | ||||||
Inchcape PLC | 82,336 | 910,845 | ||||||
J. Sainsbury PLC | 286,613 | 1,021,909 | ||||||
JD Sports Fashion PLC | 159,102 | 917,449 | ||||||
Legal & General Group PLC | 491,722 | 1,567,159 | ||||||
Lloyds Banking Group PLC | 1,739,053 | 1,562,589 | ||||||
Moneysupermarket.com Group PLC | 117,017 | 524,211 | ||||||
Persimmon PLC | 4,188 | 126,365 |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 17 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) |
| |||||||
United Kingdom (cont’d.) | ||||||||
Prudential PLC | 25,242 | $ | 560,219 | |||||
Redrow PLC | 18,479 | 138,044 | ||||||
RELX PLC | 73,246 | 1,485,046 | ||||||
Taylor Wimpey PLC | 568,643 | 1,472,953 | ||||||
UBM PLC | 36,071 | 331,759 | ||||||
Unilever NV, CVA | 39,141 | 2,050,422 | ||||||
Unilever PLC | 31,965 | 1,644,549 | ||||||
|
| |||||||
28,001,603 | ||||||||
United States 0.0% | ||||||||
Lululemon Athletica, Inc.* | 48 | 2,496 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 252,906,634 | |||||||
|
| |||||||
EXCHANGE TRADED FUNDS 1.0% | ||||||||
United States | ||||||||
iShares MSCI EAFE Index Fund(a) | 33,520 | 2,138,576 | ||||||
iShares MSCI Emerging Markets Index Fund(a) | 12,464 | 499,308 | ||||||
|
| |||||||
TOTAL EXCHANGE TRADED FUNDS | 2,637,884 | |||||||
|
| |||||||
PREFERRED STOCKS 2.1% | ||||||||
Brazil 1.1% | ||||||||
Banco ABC Brasil SA (PRFC) | 129,000 | 720,177 | ||||||
Cia de Saneamento do Parana (PRFC) | 113,400 | 364,418 | ||||||
Itau Unibanco Holding SA (PRFC) | 152,800 | 1,889,029 | ||||||
|
| |||||||
2,973,624 | ||||||||
Germany 0.8% | ||||||||
Volkswagen AG (PRFC) | 13,649 | 2,166,737 | ||||||
South Korea 0.2% | ||||||||
Samsung Electronics Co. Ltd. (PRFC) | 230 | 354,183 | ||||||
|
| |||||||
TOTAL PREFERRED STOCKS | 5,494,544 | |||||||
|
|
See Notes to Financial Statements.
18 |
Description | Units | Value | ||||||
RIGHTS* 0.0% | ||||||||
Hong Kong | ||||||||
Bank of Communications Co. Ltd., expiring 05/25/17^ | 1,946 | $ | — | |||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 261,039,062 | |||||||
|
| |||||||
Shares | ||||||||
SHORT-TERM INVESTMENTS 4.0% | ||||||||
AFFILIATED MUTUAL FUNDS | ||||||||
Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund(w) | 7,570,397 | 7,570,397 | ||||||
Prudential Investment Portfolios 2 - Prudential Institutional Money Market Fund | 2,968,920 | 2,969,514 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS | 10,539,911 | |||||||
|
| |||||||
TOTAL INVESTMENTS 103.4% | 271,578,973 | |||||||
Liabilities in excess of other assets (3.4)% | (8,867,204 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 262,711,769 | ||||||
|
|
The following abbreviations are used in the semiannual report:
ADR—American Depositary Receipt
CVA—Certificate Van Aandelen (Bearer)
EAFE—Europe, Australasia and Far East
GDR—Global Depositary Receipt
LIBOR—London Interbank Offered Rate
MSCI—Morgan Stanley Capital International
OTC—Over-the-counter
PRFC—Preference Shares
REIT—Real Estate Investment Trust
RSP—Risparimo (Savings Shares)
* | Non-income producing security. |
^ | Indicates a Level 3 security. The aggregate value of Level 3 securities is $0 and 0.0% of net assets. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $2,950,149; cash collateral of $2,967,240 (included with liabilities) was received with which the Series purchased highly liquid short-term investments. |
(b) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
(w) | PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund and Prudential Institutional Money Market Fund. |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 19 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Fair Value Measurements:
Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.
Level 1—unadjusted quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2017 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Australia | $ | — | $ | 10,982,009 | $ | — | ||||||
Austria | — | 2,437,977 | — | |||||||||
Belgium | — | 242,600 | — | |||||||||
Brazil | 3,008,479 | — | — | |||||||||
Canada | 14,378,802 | — | — | |||||||||
Chile | 2,072,161 | — | — | |||||||||
China | 2,116,096 | 14,830,498 | — | |||||||||
Colombia | 443,815 | — | — | |||||||||
Denmark | — | 5,142,609 | — | |||||||||
Finland | — | 2,851,575 | — | |||||||||
France | — | 16,035,369 | — | |||||||||
Germany | — | 12,779,287 | — | |||||||||
Greece | — | 1,552,026 | �� | — | ||||||||
Hong Kong | — | 8,130,711 | — | |||||||||
Hungary | — | 332,959 | — | |||||||||
India | 159,637 | 5,040,643 | — | |||||||||
Indonesia | — | 839,594 | — | |||||||||
Israel | 1,684,962 | — | — | |||||||||
Italy | — | 4,317,467 | — | |||||||||
Japan | — | 44,604,831 | — | |||||||||
Luxembourg | — | 194,628 | — | |||||||||
Malaysia | — | 341,420 | — | |||||||||
Mexico | 1,492,264 | — | — | |||||||||
Netherlands | — | 7,851,209 | — | |||||||||
New Zealand | — | 466,187 | — | |||||||||
Norway | — | 2,393,095 | — | |||||||||
Poland | — | 738,478 | — |
See Notes to Financial Statements.
20 |
Level 1 | Level 2 | Level 3 | ||||||||||
Common Stocks (continued) | ||||||||||||
Portugal | $ | — | $ | 1,509,146 | $ | — | ||||||
Qatar | 270,423 | — | — | |||||||||
Russia | 2,307,164 | — | — | |||||||||
South Africa | — | 3,448,552 | — | |||||||||
South Korea | — | 11,294,128 | — | |||||||||
Spain | — | 3,666,455 | — | |||||||||
Sweden | — | 6,868,643 | — | |||||||||
Switzerland | — | 13,980,722 | — | |||||||||
Taiwan | — | 6,887,120 | — | |||||||||
Thailand | — | 3,916,280 | — | |||||||||
Turkey | — | 3,292,514 | — | |||||||||
United Kingdom | — | 28,001,603 | — | |||||||||
United States | 2,496 | — | — | |||||||||
Exchange Traded Funds | ||||||||||||
United States | 2,637,884 | — | — | |||||||||
Preferred Stocks | ||||||||||||
Brazil | 2,973,624 | — | — | |||||||||
Germany | — | 2,166,737 | — | |||||||||
South Korea | — | 354,183 | — | |||||||||
Rights | ||||||||||||
Hong Kong | — | — | — | |||||||||
Affiliated Mutual Funds | 10,539,911 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 44,087,718 | $ | 227,491,255 | $ | — | ||||||
|
|
|
|
|
|
During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.
Industry Classification:
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2017 were as follows:
Banks | 15.3 | % | ||
Pharmaceuticals | 7.5 | |||
Oil, Gas & Consumable Fuels | 6.2 | |||
Insurance | 5.2 | |||
Automobiles | 4.1 | |||
Affiliated Mutual Funds (including 1.1% of collateral for securities on loan) | 4.0 | |||
Chemicals | 3.4 | |||
Diversified Telecommunication Services | 3.2 | |||
Real Estate Management & Development | 3.1 | |||
Food Products | 2.8 | |||
Metals & Mining | 2.5 | |||
Construction & Engineering | 2.5 | |||
Technology Hardware, Storage & Peripherals | 2.4 | % | ||
Tobacco | 2.3 | |||
Trading Companies & Distributors | 2.2 | |||
Diversified Financial Services | 2.0 | |||
Food & Staples Retailing | 2.0 | |||
Industrial Conglomerates | 1.9 | |||
Electronic Equipment, Instruments & Components | 1.9 | |||
Textiles, Apparel & Luxury Goods | 1.8 | |||
Semiconductors & Semiconductor Equipment | 1.7 | |||
Household Durables | 1.6 | |||
Electric Utilities | 1.6 | |||
Personal Products | 1.4 |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 21 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Industry Classification (cont’d.)
Software | 1.4 | % | ||
Professional Services | 1.4 | |||
Paper & Forest Products | 1.3 | |||
IT Services | 1.3 | |||
Auto Components | 1.2 | |||
Wireless Telecommunication Services | 1.2 | |||
Exchange Traded Funds | 1.0 | |||
Beverages | 1.0 | |||
Electrical Equipment | 0.9 | |||
Machinery | 0.9 | |||
Hotels, Restaurants & Leisure | 0.8 | |||
Airlines | 0.8 | |||
Internet Software & Services | 0.7 | |||
Water Utilities | 0.6 | |||
Specialty Retail | 0.6 | |||
Transportation Infrastructure | 0.6 | |||
Commercial Services & Supplies | 0.5 | |||
Oil, Gas and Consumable Fuels | 0.5 | |||
Media | 0.5 | |||
Construction Materials | 0.4 | |||
Distributors | 0.3 | |||
Internet & Direct Marketing Retail | 0.3 | % | ||
Independent Power & Renewable Electricity Producers | 0.3 | |||
Equity Real Estate Investment Trusts (REITs) | 0.3 | |||
Electronic Equipment, Instrument & Components | 0.3 | |||
Road & Rail | 0.3 | |||
Thrifts & Mortgage Finance | 0.3 | |||
Capital Markets | 0.2 | |||
Health Care Providers & Services | 0.2 | |||
Multiline Retail | 0.2 | |||
Gas Utilities | 0.2 | |||
Building Products | 0.1 | |||
Health Care Equipment & Supplies | 0.1 | |||
Household Products | 0.1 | |||
Multi-Utilities | 0.0 | * | ||
|
| |||
103.4 | ||||
Liabilities in excess of other assets | (3.4 | ) | ||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:
The Series invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is equity contracts risk. The effect of such derivative instruments on the Series’ 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 April 30, 2017 as presented in the Statement of Assets and Liabilities:
Asset Derivatives | Liability Derivatives | |||||||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Balance | Fair Value | Balance | Fair Value | ||||||||
Equity contracts | Unaffiliated investments | $ | — | — | $ | — | ||||||
|
|
|
|
See Notes to Financial Statements.
22 |
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2017 are as follows:
For the six months ended April 30, 2017, the Series did not have any net realized gain (loss) on derivatives recognized in income.
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging | Rights(1) | |||
Equity contracts | $ | — | ||
|
|
(1) | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Series 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 instruments/transactions assets and liabilities:
Description | Gross Amounts of Recognized Assets(1) | Collateral Pledged(2) | Net Amount | |||||||||
Securities on Loan | $ | 2,950,149 | $ | (2,950,149 | ) | $ | — | |||||
|
|
(1) | Amount represents market value. |
(2) | Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 23 |
Statement of Assets & Liabilities (unaudited)
as of April 30, 2017
Assets | ||||
Investments at value, including securities on loan of $2,950,149: | ||||
Unaffiliated investments (cost $224,873,807) | $ | 261,039,062 | ||
Affiliated investments (cost $10,539,893) | 10,539,911 | |||
Foreign currency, at value (cost $713,735) | 713,597 | |||
Receivable for investments sold | 7,710,903 | |||
Dividends receivable | 1,003,234 | |||
Tax reclaim receivable | 944,776 | |||
Receivable for Series shares sold | 365,688 | |||
Prepaid expenses | 859 | |||
|
| |||
Total Assets | 282,318,030 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 15,296,029 | |||
Payable to broker for collateral for securities on loan | 2,967,240 | |||
Payable for Series shares reacquired | 701,839 | |||
Accrued expenses | 327,123 | |||
Management fee payable | 180,855 | |||
Affiliated transfer agent fee payable | 71,766 | |||
Distribution fee payable | 61,330 | |||
Loan interest payable | 79 | |||
|
| |||
Total Liabilities | 19,606,261 | |||
|
| |||
Net Assets | $ | 262,711,769 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 375,001 | ||
Paid-in capital in excess of par | 430,833,120 | |||
|
| |||
431,208,121 | ||||
Undistributed net investment income | 69,533 | |||
Accumulated net realized loss on investment and foreign currency transactions | (204,661,295 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 36,095,410 | |||
|
| |||
Net assets, April 30, 2017 | $ | 262,711,769 | ||
|
|
See Notes to Financial Statements.
24 |
Class A | ||||
Net asset value and redemption price per share | $ | 7.01 | ||
Maximum sales charge (5.50% of offering price) | 0.41 | |||
|
| |||
Maximum offering price to public | $ | 7.42 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share | $ | 6.73 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | $ | 6.73 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share | $ | 7.07 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | $ | 7.07 | ||
|
|
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 25 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2017
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $415,109) | $ | 3,584,873 | ||
Income from securities lending, net (including affiliated income of $1,478) | 19,069 | |||
Affiliated dividend income | 1,959 | |||
|
| |||
Total income | 3,605,901 | |||
|
| |||
Expenses | ||||
Management fee | 1,069,838 | |||
Distribution fee—Class A | 274,101 | |||
Distribution fee—Class B | 14,095 | |||
Distribution fee—Class C | 76,232 | |||
Transfer agent’s fees and expenses (including affiliated expense of $99,400) | 365,000 | |||
Custodian and accounting fees | 144,000 | |||
Registration fees | 34,000 | |||
Shareholders’ reports | 27,000 | |||
Audit fee | 15,000 | |||
Legal fees and expenses | 9,000 | |||
Directors’ fees | 7,000 | |||
Loan interest expense | 1,728 | |||
Miscellaneous | 31,251 | |||
|
| |||
Total expenses | 2,068,245 | |||
|
| |||
Net investment income (loss) | 1,537,656 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions (including affiliated of $184) | 13,858,238 | |||
Foreign currency transactions | (116,021 | ) | ||
|
| |||
13,742,217 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (including affiliated of $(671)) | 10,172,637 | |||
Foreign currencies | 2,704 | |||
|
| |||
10,175,341 | ||||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 23,917,558 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 25,455,214 | ||
|
|
See Notes to Financial Statements.
26 |
Statement of Changes in Net Assets (unaudited)
Six Months Ended April 30, 2017 | Year Ended October 31, 2016 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 1,537,656 | $ | 4,419,582 | ||||
Net realized gain (loss) on investment and foreign currency transactions | 13,742,217 | (19,290,268 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 10,175,341 | 11,275,285 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 25,455,214 | (3,595,401 | ) | |||||
|
|
|
| |||||
Dividends from net investment income | ||||||||
Class A | (3,575,263 | ) | (3,287,114 | ) | ||||
Class B | (42,092 | ) | (41,536 | ) | ||||
Class C | (214,555 | ) | (170,911 | ) | ||||
Class Z | (1,161,844 | ) | (1,031,700 | ) | ||||
|
|
|
| |||||
(4,993,754 | ) | (4,531,261 | ) | |||||
|
|
|
| |||||
Series share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 6,840,690 | 10,632,582 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 4,913,253 | 4,447,393 | ||||||
Cost of shares reacquired | (23,270,346 | ) | (42,209,977 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Series share transactions | (11,516,403 | ) | (27,130,002 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | 8,945,057 | (35,256,664 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 253,766,712 | 289,023,376 | ||||||
|
|
|
| |||||
End of period(a) | $ | 262,711,769 | $ | 253,766,712 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 69,533 | $ | 3,525,631 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 27 |
Notes to Financial Statements (unaudited)
Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”) as a diversified, open-end management investment company. The Fund consists of six series: Prudential QMA International Equity Fund (the “Series”, formerly Prudential International Equity Fund), Prudential Jennison Global Infrastructure Fund, Prudential Jennison Global Opportunities Fund, Prudential Jennison International Opportunities Fund, Prudential Jennison Emerging Markets Equity Fund and Prudential Emerging Markets Debt Local Currency Fund. These financial statements relate to the Prudential QMA International Equity Fund. The financial statements of the other series are not presented herein. The Series’ investment objective is to seek long-term growth of capital.
Note 1. Accounting Policies
The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services-Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Series holds securities and other assets that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”) (formerly known as Prudential Investments LLC). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Schedule of Investments.
Common and preferred stocks, exchange-traded funds, and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security
28 |
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.
Common and preferred stocks traded on foreign securities exchanges are 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. 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 stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser 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 mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities
Prudential QMA International Equity Fund | 29 |
Notes to Financial Statements (unaudited) (continued)
are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
Foreign Currency Translation: The books and records of the Series 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 daily 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 Series are presented at the foreign exchange rates and market values at the close of the period, the Series 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 Series 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.
Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period-end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currency transactions.
30 |
Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. companies as a result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.
Warrants and Rights: The Series may hold warrants and rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Warrants and rights entitle the holder to buy a proportionate amount of common stock, or such other security that the issuer may specify, at a specific price and time through the expiration dates. Such warrants and rights are held as long positions by the Series until exercised, sold or expired. Warrants and rights are valued at fair value in accordance with the Board approved fair valuation procedures.
Securities Lending: The Series may lend 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. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Prudential QMA International Equity Fund | 31 |
Notes to Financial Statements (unaudited) (continued)
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. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an 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 distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class), 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.
Dividends and Distributions: The Series expects to pay dividends from net investment income and distributions from net realized capital gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.
Taxes: It is each Series’ 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 are recorded, net of reclaimable amounts, at the time the related income is earned.
Estimates: The preparation of the 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 these estimates.
Note 2. Agreements
The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadvisers’ performance of such services. PGIM Investments has entered into a subadvisory agreement with Quantitative Management Associates LLC (“QMA”). The subadvisory agreement provides that QMA will furnish investment advisory services in connection with the management of the Series. In connection therewith, QMA is
32 |
obligated to keep certain books and records of the Series. PGIM Investments pays for the services of the subadviser, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of .85% of the average daily net assets of the Series up to and including $300 million, .75% of the average daily net assets in excess of $300 million up to and including $1.5 billion and .70% of the Series’ average daily net assets over $1.5 billion. The effective management fee was .85% for the six months ended April 30, 2017.
The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C, Class Q and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class B and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Class Z shares of the Series.
Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at the annual rate of up to .30%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively.
PIMS has advised the Series that it has received $33,741 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2017. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 2017 it received $3, $996 and $194 in contingent deferred sales charges imposed upon redemptions by certain Class A, Class B and Class C shareholders, respectively.
PGIM Investments, QMA and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. The transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Series 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 permits purchase and sale transactions among affiliated investment companies, or
Prudential QMA International Equity Fund | 33 |
Notes to Financial Statements (unaudited) (continued)
between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common trustees, and/or common officers. Such transactions are subject to ratification by the Board.
The Series may invest its overnight sweep cash in the Prudential Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the Prudential 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. Earnings from the Core Fund and the Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
Note 4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Treasury securities) for the six months ended April 30, 2017, were $154,771,716 and $170,571,031, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2017 were as follows:
Tax Basis | $ | 238,502,849 | ||
|
| |||
Appreciation | 35,342,021 | |||
Depreciation | (2,265,897 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 33,076,124 | ||
|
|
The book basis may differ from tax basis due to certain tax-related adjustments.
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Series offers Class A, Class B, Class C, Class Q and Class Z shares. Class A shares are sold with a front-end sales charge of up to 5.50%. All investors who purchase Class A shares
34 |
in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%. The Class A CDSC is waived for purchases by certain retirement and/or benefit plans. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. Class B Shares are closed to new purchases. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Q and Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.
The Fund is authorized to issue 4.2 billion shares of common stock at $.001 par value per share. There are 700 million shares authorized for the Series, designated Class A, Class B, Class C, Class Z, Class Q and Class T, each of which consists of 100 million, 5 million, 100 million, 180 million, 180 million and 135 million authorized shares, respectively. The Series currently does not have any Class T shares outstanding.
As of April 30, 2017, Prudential owned 1,582 Class Q shares of the Series. At reporting period end, four shareholders of record held 41% of the Series’ outstanding shares.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 312,046 | $ | 2,059,718 | |||||
Shares issued in reinvestment of dividends and distributions | 558,922 | 3,504,441 | ||||||
Shares reacquired | (2,125,265 | ) | (13,952,219 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (1,254,297 | ) | (8,388,060 | ) | ||||
Shares issued upon conversion from other share class(es) | 116,066 | 776,654 | ||||||
Shares reacquired upon conversion into other share class(es) | (147,483 | ) | (976,492 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,285,714 | ) | $ | (8,587,898 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 762,631 | $ | 4,732,434 | |||||
Shares issued in reinvestment of dividends and distributions | 512,660 | 3,219,500 | ||||||
Shares reacquired | (4,507,217 | ) | (28,182,837 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (3,231,926 | ) | (20,230,903 | ) | ||||
Shares issued upon conversion from other share class(es) | 149,564 | 935,639 | ||||||
Shares reacquired upon conversion into other share class(es) | (142,045 | ) | (892,788 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (3,224,407 | ) | $ | (20,188,052 | ) | |||
|
|
|
|
Prudential QMA International Equity Fund | 35 |
Notes to Financial Statements (unaudited) (continued)
Class B | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 4,308 | $ | 27,866 | |||||
Shares issued in reinvestment of dividends and distributions | 6,760 | 40,832 | ||||||
Shares reacquired | (35,856 | ) | (225,215 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (24,788 | ) | (156,517 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (65,447 | ) | (412,062 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (90,235 | ) | $ | (568,579 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 10,670 | $ | 65,248 | |||||
Shares issued in reinvestment of dividends and distributions | 6,686 | 40,453 | ||||||
Shares reacquired | (121,431 | ) | (728,578 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (104,075 | ) | (622,877 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (149,541 | ) | (896,634 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (253,616 | ) | $ | (1,519,511 | ) | |||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 50,823 | $ | 319,048 | |||||
Shares issued in reinvestment of dividends and distributions | 34,905 | 210,474 | ||||||
Shares reacquired | (301,274 | ) | (1,885,537 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (215,546 | ) | (1,356,015 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (63,644 | ) | (416,901 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (279,190 | ) | $ | (1,772,916 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 200,289 | $ | 1,218,445 | |||||
Shares issued in reinvestment of dividends and distributions | 27,456 | 166,109 | ||||||
Shares reacquired | (522,460 | ) | (3,111,379 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (294,715 | ) | (1,726,825 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (4,615 | ) | (27,813 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (299,330 | ) | $ | (1,754,638 | ) | |||
|
|
|
| |||||
Class Q | ||||||||
Period * ended April 30, 2017: | ||||||||
Shares sold | 128,433 | $ | 886,939 | |||||
Shares reacquired | (473,588 | ) | (3,206,562 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (345,155 | ) | (2,319,623 | ) | ||||
Shares issued upon conversion from other share class(es) | 5,686,644 | 35,939,720 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 5,341,489 | $ | 33,620,097 | |||||
|
|
|
|
36 |
Class Z | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 555,736 | $ | 3,547,119 | |||||
Shares issued in reinvestment of dividends and distributions | 183,440 | 1,157,506 | ||||||
Shares reacquired | (610,467 | ) | (4,000,813 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 128,709 | 703,812 | ||||||
Shares issued upon conversion from other share class(es) | 154,162 | 1,027,286 | ||||||
Shares reacquired upon conversion into other share class(es) | (5,686,425 | ) | (35,938,205 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (5,403,554 | ) | $ | (34,207,107 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 751,142 | $ | 4,616,455 | |||||
Shares issued in reinvestment of dividends and distributions | 161,859 | 1,021,331 | ||||||
Shares reacquired | (1,614,319 | ) | (10,187,183 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (701,318 | ) | (4,549,397 | ) | ||||
Shares issued upon conversion from other shares class(es) | 144,090 | 912,035 | ||||||
Shares reacquired upon conversion into other share class(es) | (4,675 | ) | (30,439 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (561,903 | ) | $ | (3,667,801 | ) | |||
|
|
|
|
* | Commencement of operations was December 28, 2016. |
Note 7. Borrowings
The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 6, 2016 through October 5, 2017. The Funds pay an annualized commitment fee of .15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
The Series utilized the SCA during the six months ended April 30, 2017. The average daily balance for the 89 days that the Series had loans outstanding during the period was $365,281, borrowed at a weighted average interest rate of 1.91%. The maximum loan balance outstanding during the period was $1,922,000. At April 30, 2017, the Series did not have an outstanding loan balance.
Note 8. Recent Accounting Pronouncements and Reporting Updates
On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new rules and forms and amended existing rules and forms which are intended to modernize and enhance the reporting and disclosure of information by registered investment companies and to improve the quality of information that funds provide to investors, including modifications to Regulation S-X which would require standardized, enhanced
Prudential QMA International Equity Fund | 37 |
Notes to Financial Statements (unaudited) (continued)
disclosure about derivatives in investment company financial statements. The new rules also enhance disclosure regarding fund liquidity and redemption practices. The compliance dates of the modifications to Regulation S-X are August 1, 2017 and other amendments and rules are generally June 1, 2018 and December 1, 2018. Management is currently evaluating the impacts to the financial statement disclosures, if any.
Note 9. Other
At the Fund’s Board meeting in March, 2017, the Board of Directors approved a change in the methodology of allocating certain expenses, like Transfer Agent fees (including sub-transfer agent and networking fees) and Blue Sky fees. The impact to the net assets of the Series and individual share classes is not ascertainable at the present time. PGIM Investments expects to implement the changes by December 31, 2017.
38 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.48 | $6.65 | $7.36 | $7.37 | $6.02 | $5.72 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .04 | .11 | .11 | .15 | .12 | .12 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .62 | (.17 | ) | (.65 | ) | (.02 | ) | 1.36 | .29 | |||||||||||||||||||
Total from investment operations | .66 | (.06 | ) | (.54 | ) | .13 | 1.48 | .41 | ||||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.13 | ) | (.11 | ) | (.17 | ) | (.14 | ) | (.13 | ) | (.11 | ) | ||||||||||||||||
Net asset value, end of period | $7.01 | $6.48 | $6.65 | $7.36 | $7.37 | $6.02 | ||||||||||||||||||||||
Total Return(b): | 10.37% | (.93)% | (7.37)% | 1.84% | 25.06% | 7.40% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $191,322 | $185,120 | $211,314 | $218,909 | $234,668 | $209,568 | ||||||||||||||||||||||
Average net assets (000) | $184,244 | $189,980 | $229,598 | $232,049 | $221,300 | $204,088 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.68% | (d) | 1.66% | 1.62% | 1.59% | 1.59% | 1.67% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.68% | (d) | 1.66% | 1.62% | 1.59% | 1.59% | 1.67% | |||||||||||||||||||||
Net investment income (loss) | 1.18% | (d) | 1.69% | 1.39% | 2.02% | 1.83% | 2.18% | |||||||||||||||||||||
Portfolio turnover rate | 61% | (e) | 114% | 111% | 134% | 114% | 83% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying portfolios in which the Series invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 39 |
Financial Highlights (unaudited) (continued)
Class B Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.21 | $6.37 | $7.05 | $7.07 | $5.78 | $5.50 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .01 | .06 | .05 | .10 | .07 | .08 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .60 | (.16 | ) | (.61 | ) | (.03 | ) | 1.32 | .27 | |||||||||||||||||||
Total from investment operations | .61 | (.10 | ) | (.56 | ) | .07 | 1.39 | .35 | ||||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.09 | ) | (.06 | ) | (.12 | ) | (.09 | ) | (.10 | ) | (.07 | ) | ||||||||||||||||
Net asset value, end of period | $6.73 | $6.21 | $6.37 | $7.05 | $7.07 | $5.78 | ||||||||||||||||||||||
Total Return(b): | 9.91% | (1.55)% | (7.96)% | 1.10% | 24.26% | 6.50% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $2,734 | $3,080 | $4,774 | $5,006 | $6,066 | $5,439 | ||||||||||||||||||||||
Average net assets (000) | $2,842 | $3,710 | $5,313 | $5,868 | $5,690 | $5,823 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.38% | (d) | 2.36% | 2.32% | 2.29% | 2.29% | 2.37% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.38% | (d) | 2.36% | 2.32% | 2.29% | 2.29% | 2.37% | |||||||||||||||||||||
Net investment income (loss) | .41% | (d) | .96% | .68% | 1.35% | 1.13% | 1.48% | |||||||||||||||||||||
Portfolio turnover rate | 61% | (e) | 114% | 111% | 134% | 114% | 83% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying portfolios in which the Series invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
40 |
Class C Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.20 | $6.37 | $7.05 | $7.07 | $5.78 | $5.50 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .01 | .06 | .06 | .10 | .07 | .08 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .61 | (.17 | ) | (.62 | ) | (.03 | ) | 1.32 | .27 | |||||||||||||||||||
Total from investment operations | .62 | (.11 | ) | (.56 | ) | .07 | 1.39 | .35 | ||||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.09 | ) | (.06 | ) | (.12 | ) | (.09 | ) | (.10 | ) | (.07 | ) | ||||||||||||||||
Net asset value, end of period | $6.73 | $6.20 | $6.37 | $7.05 | $7.07 | $5.78 | ||||||||||||||||||||||
Total Return(b): | 10.09% | (1.71)% | (7.96)% | 1.10% | 24.27% | 6.51% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $15,361 | $15,892 | $18,209 | $18,146 | $19,472 | $17,658 | ||||||||||||||||||||||
Average net assets (000) | $15,373 | $16,416 | $20,086 | $19,402 | $18,341 | $19,019 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.38% | (d) | 2.36% | 2.32% | 2.29% | 2.29% | 2.37% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.38% | (d) | 2.36% | 2.32% | 2.29% | 2.29% | 2.37% | |||||||||||||||||||||
Net investment income (loss) | .46% | (d) | .98% | .71% | 1.32% | 1.13% | 1.49% | |||||||||||||||||||||
Portfolio turnover rate | 61% | (e) | 114% | 111% | 134% | 114% | 83% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying portfolios in which the Series invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 41 |
Financial Highlights (unaudited) (continued)
Class Q Shares | ||||
December 28, 2016(a) through April 30, 2017 | ||||
Per Share Operating Performance(b): | ||||
Net Asset Value, Beginning of Period | $6.32 | |||
Income (loss) from investment operations: | ||||
Net investment income (loss) | .05 | |||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .70 | |||
Total from investment operations | .75 | |||
Net asset value, end of period | $7.07 | |||
Total Return(c): | 11.87% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $37,773 | |||
Average net assets (000) | $36,929 | |||
Ratios to average net assets: | ||||
Expense after waivers and/or expense reimbursement | 1.05% | (e) | ||
Expense before waivers and/or expense reimbursement | 1.05% | (e) | ||
Net investment income (loss) | 2.15% | (e) | ||
Portfolio turnover rate | 61% | (f) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying portfolios in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
42 |
Class Z Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $6.54 | $6.70 | $7.42 | $7.43 | $6.07 | $5.77 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .04 | .13 | .13 | .16 | .15 | .14 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .64 | (.16 | ) | (.66 | ) | (.01 | ) | 1.36 | .29 | |||||||||||||||||||
Total from investment operations | .68 | (.03 | ) | (.53 | ) | .15 | 1.51 | .43 | ||||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.15 | ) | (.13 | ) | (.19 | ) | (.16 | ) | (.15 | ) | (.13 | ) | ||||||||||||||||
Net asset value, end of period | $7.07 | $6.54 | $6.70 | $7.42 | $7.43 | $6.07 | ||||||||||||||||||||||
Total Return(b): | 10.60% | (.44)% | (7.15)% | 2.12% | 25.36% | 7.69% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $15,521 | $49,675 | $54,726 | $48,064 | $71,753 | $50,531 | ||||||||||||||||||||||
Average net assets (000) | $26,457 | $50,923 | $55,405 | $53,881 | $60,981 | $45,946 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.38% | (d) | 1.36% | 1.32% | 1.29% | 1.29% | 1.37% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.38% | (d) | 1.36% | 1.32% | 1.29% | 1.29% | 1.37% | |||||||||||||||||||||
Net investment income (loss) | 1.11% | (d) | 1.99% | 1.69% | 2.07% | 2.17% | 2.46% | |||||||||||||||||||||
Portfolio turnover rate | 61% | (e) | 114% | 111% | 134% | 114% | 83% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying portfolios in which the Series invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
Prudential QMA International Equity Fund | 43 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s investment 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 www.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. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Quantitative Management Associates LLC | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential QMA International Equity Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
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 |
PRUDENTIAL QMA INTERNATIONAL EQUITY FUND
SHARE CLASS | A | B | C | Q | Z | |||||
NASDAQ | PJRAX | PJRBX | PJRCX | PJRQX | PJIZX | |||||
CUSIP | 743969859 | 743969867 | 743969875 | 743969578 | 743969883 |
MF190E2
PRUDENTIAL EMERGING MARKETS DEBT
LOCAL CURRENCY FUND
SEMIANNUAL REPORT
APRIL 30, 2017
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: Total return, through a combination of current income and capital appreciation |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2017 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 Fixed Income is a unit of PGIM, Inc. (PGIM), a registered investment adviser. PIMS and PGIM are Prudential Financial companies. © 2017 Prudential Financial, Inc. and its related entities. The Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
2 | Visit our website at pgiminvestments.com |
Letter from the President
Dear Shareholder:
We hope you find the semiannual report for the Prudential Emerging Markets Debt Local Currency Fund informative and useful. The report covers performance for the six-month period ended April 30, 2017. We are proud to announce that Prudential Investments became PGIM® Investments, effective April 3, 2017. Why PGIM? This new name was chosen to further align with the global investment management businesses of Prudential Financial, which rebranded from Prudential Investment Management in January 2016. This new name allows for one brand and reflects our ability and commitment to delivering investment solutions to clients around the globe. Please keep in mind that only the Fund adviser’s name was changed: the name of your Fund and the management and operation did not change.
Since market conditions change over time, 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 adviser 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. We’re part of PGIM, the 9th-largest 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
Prudential Emerging Markets Debt Local Currency Fund
June 15, 2017
Prudential Emerging Markets Debt Local Currency Fund | 3 |
Your Fund’s Performance (unaudited)
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 www.prudentialfunds.com or by calling (800) 225-1852.
Total Returns as of 4/30/17 (without sales charges) | Average Annual Total Returns as of 4/30/17 (with sales charges) | |||||||
Six Months* (%) | One Year (%) | Five Years (%) | Since Inception (%) | |||||
Class A | 2.61 | –0.95 | –2.56 | –1.93 (3/30/11) | ||||
Class C | 2.36 | 2.38 | –2.28 | –1.74 (3/30/11) | ||||
Class Q | 3.06 | 4.36 | –1.23 | –0.76 (3/30/11) | ||||
Class Z | 3.01 | 4.23 | –1.32 | –0.81 (3/30/11) | ||||
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index | 2.04 | 4.03 | –1.58 | –0.59 | ||||
Lipper Emerging Markets Local Currency Debt Funds Average | 2.30 | 4.39 | –1.59 | –0.78 |
*Not annualized
Source: PGIM Investments LLC and Lipper Inc.
Inception returns are provided for any share class with less than 10 fiscal years of returns.
4 | Visit our website at pgiminvestments.com |
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 Q | Class Z | |||||
Maximum initial sales charge | 4.50% of the public offering price | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1% on sales of $1 million or more made within 12 months of purchase | 1% on sales made within 12 months of purchase | None | None | ||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | .25% | 1% | None | None |
Benchmark Definitions
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index—The JP Morgan Government Bond Index-Emerging Markets Global Diversified Index, an unmanaged index, is a comprehensive emerging markets debt benchmark that tracks local currency bonds issued by emerging market governments.
Lipper Emerging Markets Local Currency Debt Funds Average—The Lipper Emerging Markets Local Currency Debt Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Emerging Markets Local Currency Debt Funds universe for the periods noted. Funds in the Lipper Average seek either current income or total return by investing at least 65% of total assets in debt issues denominated in the currency of their market of issuance. “Emerging market” is defined by a country’s GNP per capita or other economic measures.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Prudential Emerging Markets Debt Local Currency Fund | 5 |
Your Fund’s Performance (continued)
Distributions and Yields as of 4/30/17 | ||||||
Total Distributions Paid for Six Months ($) | SEC 30-Day Subsidized Yield* (%) | SEC 30-Day Unsubsidized Yield** (%) | ||||
Class A | 0.17 | 5.29 | 4.21 | |||
Class C | 0.15 | 4.80 | 3.69 | |||
Class Q | 0.18 | 5.87 | 4.81 | |||
Class Z | 0.18 | 5.74 | 4.64 |
*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).
**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.
Credit Quality expressed as a percentage of total investments as of 4/30/17 (%) | ||||
AAA | 1.0 | |||
AA | 1.5 | |||
A | 29.8 | |||
BBB | 50.4 | |||
BB | 12.8 | |||
B | 2.0 | |||
C | 0.1 | |||
Not Rated | –0.1 | |||
Cash/Cash Equivalents | 2.6 | |||
Total Investments | 100.0 |
Source: PGIM Fixed Income
Credit ratings reflect the highest rating assigned by a nationally recognized statistical rating organization (NRSRO) such as Moody’s Investor 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 a NRSRO. Credit ratings are subject to change. Values may not sum to 100.0% due to rounding.
6 | Visit our website at pgiminvestments.com |
Fees and Expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2017. 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 Investments 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
Prudential Emerging Markets Debt Local Currency Fund | 7 |
Fees and Expenses (continued)
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 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.
Prudential Emerging Markets Debt Local Currency Fund | Beginning Account Value November 1, 2016 | Ending Account April 30, 2017 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,026.10 | 1.13 | % | $ | 5.68 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.19 | 1.13 | % | $ | 5.66 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,023.60 | 1.88 | % | $ | 9.43 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.47 | 1.88 | % | $ | 9.39 | ||||||||||
Class Q | Actual | $ | 1,000.00 | $ | 1,030.60 | 0.88 | % | $ | 4.43 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.43 | 0.88 | % | $ | 4.41 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,030.10 | 0.88 | % | $ | 4.43 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.43 | 0.88 | % | $ | 4.41 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2017, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2017 (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 pgiminvestments.com |
Schedule of Investments (unaudited)
as of April 30, 2017
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
LONG-TERM INVESTMENTS 96.4% |
| |||||||||||||||
FOREIGN BONDS 96.3% |
| |||||||||||||||
Argentina 1.5% |
| |||||||||||||||
Argentine Bonos del Tesoro, | ||||||||||||||||
Bonds | 16.000 | % | 10/17/23 | ARS | 3,305 | $ | 230,328 | |||||||||
Bonds | 22.750 | 03/05/18 | ARS | 2,228 | 147,222 | |||||||||||
Unsec’d. Notes | 18.200 | 10/03/21 | ARS | 1,130 | 79,994 | |||||||||||
|
| |||||||||||||||
457,544 | ||||||||||||||||
Brazil 12.5% |
| |||||||||||||||
Brazil Loan Trust I, Gov’t. Gtd. Notes, RegS | 5.477 | 07/24/23 | 122 | 124,179 | ||||||||||||
Brazil Notas do Tesouro Nacionalie, | ||||||||||||||||
Notes, Ser. NTNF | 10.000 | 01/01/19 | BRL | 454 | 144,404 | |||||||||||
Notes, Ser. NTNF | 10.000 | 01/01/21 | BRL | 2,729 | 860,282 | |||||||||||
Notes, Ser. NTNF | 10.000 | 01/01/23 | BRL | 3,765 | 1,177,172 | |||||||||||
Notes, Ser. NTNF | 10.000 | 01/01/25 | BRL | 1,541 | 478,469 | |||||||||||
Notes, Ser. NTNF | 10.000 | 01/01/27 | BRL | 2,520 | 778,352 | |||||||||||
Brazilian Government International Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | 8.500 | 01/05/24 | BRL | 54 | 16,332 | |||||||||||
Sr. Unsec’d. Notes | 8.875 | 10/14/19 | 75 | 87,113 | ||||||||||||
Petrobras Global Finance BV, Gtd. Notes | 8.375 | 05/23/21 | 175 | 198,188 | ||||||||||||
|
| |||||||||||||||
3,864,491 | ||||||||||||||||
Colombia 4.5% |
| |||||||||||||||
Colombian TES, Bonds, Ser. B | 6.000 | 04/28/28 | COP | 4,214,500 | 1,379,729 | |||||||||||
Czech Republic 0.5% |
| |||||||||||||||
Czech Republic Government Bond, Bond | 0.000 | (ss) | 02/10/20 | CZK | 3,890 | 157,346 | ||||||||||
Hungary 4.7% |
| |||||||||||||||
Hungary Government Bond, | ||||||||||||||||
Bonds, Ser. 20/A | 7.500 | 11/12/20 | HUF | 72,240 | 307,362 | |||||||||||
Bonds, Ser. 20/B | 3.500 | 06/24/20 | HUF | 40,650 | 153,260 | |||||||||||
Bonds, Ser. 21/B | 2.500 | 10/27/21 | HUF | 43,240 | 156,513 | |||||||||||
Bonds, Ser. 23/A | 6.000 | 11/24/23 | HUF | 70,510 | 296,004 | |||||||||||
Bonds, Ser. 31/A | 3.250 | 10/22/31 | HUF | 34,370 | 112,620 | |||||||||||
Hungary Government International Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | 6.250 | 01/29/20 | 120 | 131,567 | ||||||||||||
Sr. Unsec’d. Notes | 6.375 | 03/29/21 | 260 | 293,800 | ||||||||||||
|
| |||||||||||||||
1,451,126 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 9 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
FOREIGN BONDS (Continued) |
| |||||||||||||||
Indonesia 11.7% |
| |||||||||||||||
Indonesia Treasury Bond, | ||||||||||||||||
Sr. Unsec’d. Notes, Ser. FR53 | 8.250 | % | 07/15/21 | IDR | 8,966,000 | $ | 707,984 | |||||||||
Sr. Unsec’d. Notes, Ser. FR56 | 8.375 | 09/15/26 | IDR | 3,580,000 | 291,954 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR58 | 8.250 | 06/15/32 | IDR | 1,700,000 | 133,972 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR59 | 7.000 | 05/15/27 | IDR | 3,600,000 | 269,277 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR61 | 7.000 | 05/15/22 | IDR | 2,300,000 | 174,627 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR63 | 5.625 | 05/15/23 | IDR | 3,100,000 | 216,302 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR65 | 6.625 | 05/15/33 | IDR | 5,700,000 | 385,677 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR67 | 8.750 | 02/15/44 | IDR | 600,000 | 48,984 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR68 | 8.375 | 03/15/34 | IDR | 10,000,000 | 796,009 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR70 | 8.375 | 03/15/24 | IDR | 2,300,000 | 185,136 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR71 | 9.000 | 03/15/29 | IDR | 2,920,000 | 245,464 | |||||||||||
Sr. Unsec’d. Notes, Ser. FR72 | 8.250 | 05/15/36 | IDR | 1,950,000 | 153,978 | |||||||||||
|
| |||||||||||||||
3,609,364 | ||||||||||||||||
Kazakhstan 0.4% |
| |||||||||||||||
KazMunayGas National Co. JSC, Sr. Unsec’d. Notes, EMTN, RegS | 9.125 | 07/02/18 | 125 | 134,275 | ||||||||||||
Malaysia 4.8% |
| |||||||||||||||
Malaysia Government Bond, | ||||||||||||||||
Sr. Unsec’d. Notes, Ser. 0216 | 4.736 | 03/15/46 | MYR | 500 | 113,763 | |||||||||||
Sr. Unsec’d. Notes, Ser. 0311 | 4.392 | 04/15/26 | MYR | 660 | 154,368 | |||||||||||
Sr. Unsec’d. Notes, Ser. 0313 | 3.480 | 03/15/23 | MYR | 4,250 | 957,381 | |||||||||||
Sr. Unsec’d. Notes, Ser. 0316 | 3.900 | 11/30/26 | MYR | 1,110 | 252,375 | |||||||||||
|
| |||||||||||||||
1,477,887 | ||||||||||||||||
Mexico 8.1% |
| |||||||||||||||
America Movil SAB de CV, Sr. Unsec’d. Notes | 6.450 | 12/05/22 | MXN | 7,500 | 369,609 | |||||||||||
Mexican Bonos, | ||||||||||||||||
Bonds, Ser. M-30 | 10.000 | 11/20/36 | MXN | 9,465 | 625,347 | |||||||||||
Sr. Unsec’d. Notes, Ser. M | 7.750 | 11/13/42 | MXN | 15,870 | 856,210 | |||||||||||
Petroleos Mexicanos, | ||||||||||||||||
Gtd. Notes, MTN | 6.875 | 08/04/26 | 400 | 447,000 | ||||||||||||
Gtd. Notes, 144A | 7.650 | 11/24/21 | MXN | 4,120 | 207,081 | |||||||||||
|
| |||||||||||||||
2,505,247 |
See Notes to Financial Statements.
10 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
FOREIGN BONDS (Continued) |
| |||||||||||||||
Peru 4.8% |
| |||||||||||||||
Peru Government Bond, Bonds | 6.950 | % | 08/12/31 | PEN | 190 | $ | 63,260 | |||||||||
Peruvian Government International Bond, | ||||||||||||||||
Sr, Unsec’d. Notes, 144A | 6.350 | 08/12/28 | PEN | 520 | 165,919 | |||||||||||
Sr. Unsec’d. Notes, RegS | 5.200 | 09/12/23 | PEN | 1,893 | 589,003 | |||||||||||
Sr. Unsec’d. Notes, RegS | 6.950 | 08/12/31 | PEN | 1,690 | 562,682 | |||||||||||
Sr. Unsec’d Notes, RegS | 8.200 | 08/12/26 | PEN | 295 | 107,725 | |||||||||||
|
| |||||||||||||||
1,488,589 | ||||||||||||||||
Philippines 0.7% |
| |||||||||||||||
Philippine Government International Bond, Sr. Unsec’d. Notes | 4.950 | 01/15/21 | PHP | 11,000 | 225,658 | |||||||||||
Poland 8.4% |
| |||||||||||||||
Republic of Poland Government Bond, | ||||||||||||||||
Bonds, Ser. 0422 | 2.250 | 04/25/22 | PLN | 4,550 | 1,139,025 | |||||||||||
Bonds, Ser. 0721 | 1.750 | 07/25/21 | PLN | 1,945 | 482,489 | |||||||||||
Bonds, Ser. 0725 | 3.250 | 07/25/25 | PLN | 1,765 | 455,455 | |||||||||||
Bonds, Ser. 0726 | 2.500 | 07/25/26 | PLN | 1,990 | 479,956 | |||||||||||
Bonds, Ser. 1023 | 4.000 | 10/25/23 | PLN | 125 | 33,976 | |||||||||||
|
| |||||||||||||||
2,590,901 | ||||||||||||||||
Romania 3.6% |
| |||||||||||||||
Romania Government Bond, | ||||||||||||||||
Bonds, Ser. 3YR | 2.500 | 04/29/19 | RON | 1,560 | 380,365 | |||||||||||
Bonds, Ser. 4YR | 3.250 | 01/17/18 | RON | 1,130 | 275,768 | |||||||||||
Bonds, Ser. 5YR | 3.250 | 03/22/21 | RON | 1,180 | 290,281 | |||||||||||
Bonds, Ser. 10YR | 5.850 | 04/26/23 | RON | 650 | 178,151 | |||||||||||
|
| |||||||||||||||
1,124,565 | ||||||||||||||||
Russia 5.5% |
| |||||||||||||||
Russian Federal Bond - OFZ, | ||||||||||||||||
Bonds, Ser. 6218 | 8.500 | 09/17/31 | RUB | 43,905 | 821,359 | |||||||||||
Bonds, Ser. 6219 | 7.750 | 09/16/26 | RUB | 37,200 | 660,310 | |||||||||||
Vnesheconombank Via VEB Finance PLC, Sr. Unsec’d. Notes, RegS | 4.224 | 11/21/18 | 200 | 204,750 | ||||||||||||
|
| |||||||||||||||
1,686,419 | ||||||||||||||||
Singapore 1.0% |
| |||||||||||||||
Singapore Government Bond, Sr. Unsec’d. Notes | 0.500 | 04/01/18 | SGD | 430 | 306,261 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
FOREIGN BONDS (Continued) |
| |||||||||||||||
South Africa 10.5% |
| |||||||||||||||
Eskom Holdings SOC Ltd., Govt. Gtd. Notes, Ser. ES23, MTN | 10.000 | % | 01/25/23 | ZAR | 7,500 | $ | 584,253 | |||||||||
Republic of South Africa Government Bond, | ||||||||||||||||
Bonds, Ser. 2023 | 7.750 | 02/28/23 | ZAR | 5,870 | 432,000 | |||||||||||
Bonds, Ser. 2032 | 8.250 | 03/31/32 | ZAR | 11,500 | 788,940 | |||||||||||
Bonds, Ser. 2040 | 9.000 | 01/31/40 | ZAR | 7,635 | 537,503 | |||||||||||
Bonds, Ser. 2044 | 8.750 | 01/31/44 | ZAR | 9,200 | 628,702 | |||||||||||
Bonds, Ser. R186 | 10.500 | 12/21/26 | ZAR | 1,800 | 150,338 | |||||||||||
Bonds, Ser. R213 | 7.000 | 02/28/31 | ZAR | 1,905 | 118,765 | |||||||||||
|
| |||||||||||||||
3,240,501 | ||||||||||||||||
South Korea 1.0% |
| |||||||||||||||
Korea Treasury Bond, Sr. Unsec’d. Notes, Ser. 1906 | 1.500 | 06/10/19 | KRW | 350,000 | 306,790 | |||||||||||
Thailand 4.8% |
| |||||||||||||||
Thailand Government Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | 3.400 | 06/17/36 | THB | 2,200 | 64,184 | |||||||||||
Sr. Unsec’d. Notes | 3.625 | 06/16/23 | THB | 2,900 | 89,734 | |||||||||||
Sr. Unsec’d. Notes | 3.775 | 06/25/32 | THB | 600 | 18,357 | |||||||||||
Sr. Unsec’d. Notes | 3.850 | 12/12/25 | THB | 6,600 | 208,415 | |||||||||||
Sr. Unsec’d. Notes | 3.875 | 06/13/19 | THB | 5,000 | 151,372 | |||||||||||
Sr. Unsec’d. Notes | 4.875 | 06/22/29 | THB | 24,265 | 834,733 | |||||||||||
Sr. Unsec’d. Notes | 5.125 | 03/13/18 | THB | 3,500 | 104,315 | |||||||||||
|
| |||||||||||||||
1,471,110 | ||||||||||||||||
Turkey 6.8% |
| |||||||||||||||
Turkey Government Bond, | ||||||||||||||||
Bonds | 7.100 | 03/08/23 | TRY | 2,313 | 557,951 | |||||||||||
Bonds | 7.400 | 02/05/20 | TRY | 3,335 | 864,277 | |||||||||||
Bonds | 8.000 | 03/12/25 | TRY | 1,890 | 470,378 | |||||||||||
Bonds | 8.800 | 09/27/23 | TRY | 128 | 33,550 | |||||||||||
Bonds | 9.200 | 09/22/21 | TRY | 595 | 159,305 | |||||||||||
|
| |||||||||||||||
2,085,461 | ||||||||||||||||
Ukraine 0.5% |
| |||||||||||||||
Ukraine Government International Bond, Sr. Unsec’d. Notes, RegS | 7.750 | 09/01/19 | 150 | 153,006 | ||||||||||||
|
| |||||||||||||||
TOTAL FOREIGN BONDS | 29,716,270 | |||||||||||||||
|
|
See Notes to Financial Statements.
12 |
Description | Shares | Value | ||||||||||
COMMON STOCK 0.1% | ||||||||||||
Colombia |
| |||||||||||
Pacific Exploration & Production Corp. (Colombia)* | 697 | $ | 20,541 | |||||||||
|
| |||||||||||
TOTAL LONG-TERM INVESTMENTS | 29,736,811 | |||||||||||
|
| |||||||||||
SHORT-TERM INVESTMENTS 0.3% |
| |||||||||||
AFFILIATED MUTUAL FUND 0.0% |
| |||||||||||
Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund(w) | 6,376 | 6,376 | ||||||||||
|
| |||||||||||
Counterparty | Notional Amount (000)# | |||||||||||
OPTIONS PURCHASED* 0.3% | ||||||||||||
Call Options | ||||||||||||
Currency Option Euro vs Brazilian Real, expiring 04/04/18, Strike Price 3.40 | Citigroup Global Markets | EUR | 300 | 37,109 | ||||||||
Currency Option Euro vs South African Rand, expiring 04/04/18, Strike Price 15.00 | Goldman Sachs & Co. | EUR | 200 | 17,791 | ||||||||
Currency Option United States Dollar vs Mexican Peso, expiring 03/23/18, Strike Price 19.25 | Citigroup Global Markets | 600 | 38,652 | |||||||||
|
| |||||||||||
TOTAL OPTIONS PURCHASED | 93,552 | |||||||||||
|
| |||||||||||
TOTAL SHORT-TERM INVESTMENTS | 99,928 | |||||||||||
|
| |||||||||||
TOTAL INVESTMENTS, BEFORE OPTIONS WRITTEN 96.7% |
| 29,836,739 | ||||||||||
|
| |||||||||||
OPTIONS WRITTEN* (0.2)% | ||||||||||||
Put Options | ||||||||||||
Currency Option Euro vs Brazilian Real, expiring 04/04/18, Strike Price 3.20 | Citigroup Global Markets | EUR | 300 | (2,317 | ) | |||||||
Currency Option Euro vs South African Rand, expiring 04/04/18, Strike Price 14.00 | Goldman Sachs & Co. | EUR | 200 | (3,411 | ) | |||||||
Currency Option United States Dollar vs Mexican Peso, expiring 03/23/18, Strike Price 17.75 | Citigroup Global Markets | 600 | (6,695 | ) | ||||||||
|
| |||||||||||
(12,423 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 13 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Counterparty | Notional Amount (000)# | Value | |||||||||
OPTIONS WRITTEN* (Continued) | ||||||||||||
Call Options | ||||||||||||
Currency Option Euro vs Brazilian Real, expiring 04/04/18, Strike Price 3.80 | Citigroup Global Markets | EUR | 300 | $ | (17,584 | ) | ||||||
Currency Option Euro vs South African Rand, expiring 04/04/18, Strike Price 17.00 | Goldman Sachs & Co. | EUR | 200 | (7,475 | ) | |||||||
Currency Option United States Dollar vs Mexican Peso, expiring 03/23/18, Strike Price 21.25 | Citigroup Global Markets | 600 | (16,892 | ) | ||||||||
|
| |||||||||||
(41,951 | ) | |||||||||||
|
| |||||||||||
TOTAL OPTIONS WRITTEN | (54,374 | ) | ||||||||||
|
| |||||||||||
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN 96.5% | 29,782,365 | |||||||||||
Other assets in excess of liabilities(z) 3.5% | 1,077,085 | |||||||||||
|
| |||||||||||
NET ASSETS 100.0% | $ | 30,859,450 | ||||||||||
|
|
The following abbreviations are used in the semiannual report:
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
EMTN—Euro Medium Term Note
LIBOR—London Interbank Offered Rate
MTN—Medium Term Note
OTC—Over-the-counter
RegS—Regulation S. Security was purchased pursuant to Regulation S and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
ARS—Argentine Peso
AUD—Australian Dollar
BRL—Brazilian Real
CAD—Canadian Dollar
CLP—Chilean Peso
CNH—Chinese Renminbi
COP—Colombian Peso
CZK—Czech Koruna
EUR—Euro
HUF—Hungarian Forint
IDR—Indonesian Rupiah
ILS—Israeli Shekel
INR—Indian Rupee
JPY—Japanese Yen
KRW—South Korean Won
See Notes to Financial Statements.
14 |
MXN—Mexican Peso
MYR—Malaysian Ringgit
PEN—Peruvian Nuevo Sol
PHP—Philippine Peso
PLN—Polish Zloty
RON—Romanian Leu
RUB—Russian Ruble
SGD—Singapore Dollar
THB—Thai Baht
TRY—Turkish Lira
TWD—New Taiwanese Dollar
ZAR—South African Rand
* | Non-income producing security. |
# | Principal or notional amount is shown in U.S. dollars unless otherwise stated. |
(ss) | Represents zero coupon bond. |
(w) | PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund. |
(z) | Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end: |
Forward foreign currency exchange contracts outstanding at April 30, 2017:
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts: |
| |||||||||||||||||
Argentine Peso, | ||||||||||||||||||
Expiring 05/02/2017 | Citigroup Global Markets | ARS | 1,715 | $ | 107,695 | $ | 111,368 | $ | 3,673 | |||||||||
Expiring 05/08/2017 | BNP Paribas | ARS | 1,242 | 76,350 | 80,359 | 4,009 | ||||||||||||
Expiring 05/15/2017 | Citigroup Global Markets | ARS | 1,230 | 75,850 | 79,252 | 3,402 | ||||||||||||
Expiring 07/06/2017 | BNP Paribas | ARS | 250 | 15,550 | 15,691 | 141 | ||||||||||||
Expiring 07/06/2017 | Citigroup Global Markets | ARS | 2,080 | 130,251 | 130,739 | 488 | ||||||||||||
Expiring 08/02/2017 | Goldman Sachs & Co. | ARS | 1,715 | 106,096 | 106,311 | 215 | ||||||||||||
Brazilian Real, | ||||||||||||||||||
Expiring 05/03/2017 | Barclays Capital Group | BRL | 1,907 | 607,829 | 600,231 | (7,598 | ) | |||||||||||
Expiring 05/03/2017 | Goldman Sachs & Co. | BRL | 211 | 66,060 | 66,423 | 363 | ||||||||||||
Expiring 05/03/2017 | Goldman Sachs & Co. | BRL | 1,907 | 604,188 | 600,231 | (3,957 | ) | |||||||||||
Expiring 06/02/2017 | Citigroup Global Markets | BRL | 1,619 | 505,438 | 505,472 | 34 | ||||||||||||
Expiring 06/02/2017 | Goldman Sachs & Co. | BRL | 80 | 24,726 | 24,876 | 150 | ||||||||||||
Expiring 06/02/2017 | Goldman Sachs & Co. | BRL | 1,619 | 504,965 | 505,472 | 507 | ||||||||||||
Chilean Peso, | ||||||||||||||||||
Expiring 07/12/2017 | Goldman Sachs & Co. | CLP | 49,637 | 74,179 | 74,113 | (66 | ) | |||||||||||
Expiring 07/12/2017 | Goldman Sachs & Co. | CLP | 156,762 | 235,928 | 234,063 | (1,865 | ) | |||||||||||
Colombian Peso, | ||||||||||||||||||
Expiring 07/12/2017 | Bank of America | COP | 137,126 | 46,000 | 46,101 | 101 | ||||||||||||
Expiring 07/12/2017 | Citigroup Global Markets | COP | 90,297 | 31,062 | 30,357 | (705 | ) | |||||||||||
Expiring 07/12/2017 | Citigroup Global Markets | COP | 126,082 | 44,000 | 42,388 | (1,612 | ) | |||||||||||
Expiring 07/12/2017 | Goldman Sachs & Co. | COP | 82,951 | 28,311 | 27,888 | (423 | ) | |||||||||||
Expiring 07/12/2017 | UBS AG | COP | 1,571,313 | 542,112 | 528,266 | (13,846 | ) | |||||||||||
Expiring 07/12/2017 | UBS AG | COP | 1,571,313 | 544,933 | 528,266 | (16,667 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 15 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Forward foreign currency exchange contracts outstanding at April 30, 2017 (continued):
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts (cont’d.): |
| |||||||||||||||||
Czech Koruna, | ||||||||||||||||||
Expiring 07/12/2017 | Citigroup Global Markets | CZK | 8,185 | $ | 333,806 | $ | 333,773 | $ | (33 | ) | ||||||||
Expiring 07/12/2017 | Goldman Sachs & Co. | CZK | 3,400 | 136,818 | 138,649 | 1,831 | ||||||||||||
Expiring 07/12/2017 | UBS AG | CZK | 3,400 | 136,935 | 138,650 | 1,715 | ||||||||||||
Euro, | ||||||||||||||||||
Expiring 07/27/2017 | Goldman Sachs & Co. | EUR | 355 | 388,001 | 388,485 | 484 | ||||||||||||
Expiring 07/27/2017 | JPMorgan Chase | EUR | 10 | 10,684 | 10,703 | 19 | ||||||||||||
Hungarian Forint, | ||||||||||||||||||
Expiring 07/21/2017 | Citigroup Global Markets | HUF | 263,600 | 905,812 | 919,458 | 13,646 | ||||||||||||
Indian Rupee, | ||||||||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | INR | 2,420 | 36,000 | 37,407 | 1,407 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | INR | 4,609 | 70,000 | 71,233 | 1,233 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | INR | 10,156 | 154,520 | 156,955 | 2,435 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | INR | 33,087 | 491,523 | 511,346 | 19,823 | ||||||||||||
Expiring 06/08/2017 | JPMorgan Chase | INR | 1,339 | 19,906 | 20,691 | 785 | ||||||||||||
Expiring 06/08/2017 | UBS AG | INR | 1,982 | 30,000 | 30,633 | 633 | ||||||||||||
Expiring 06/08/2017 | UBS AG | INR | 3,550 | 54,000 | 54,868 | 868 | ||||||||||||
Expiring 06/08/2017 | UBS AG | INR | 5,442 | 83,991 | 84,101 | 110 | ||||||||||||
Expiring 06/08/2017 | UBS AG | INR | 17,108 | 254,086 | 264,404 | 10,318 | ||||||||||||
Expiring 06/08/2017 | UBS AG | INR | 17,108 | 254,087 | 264,405 | 10,318 | ||||||||||||
Indonesian Rupiah, | ||||||||||||||||||
Expiring 06/16/2017 | BNP Paribas | IDR | 3,613,785 | 271,000 | 269,624 | (1,376 | ) | |||||||||||
Expiring 06/16/2017 | JPMorgan Chase | IDR | 4,202,262 | 314,000 | 313,531 | (469 | ) | |||||||||||
Israeli Shekel, | ||||||||||||||||||
Expiring 07/21/2017 | Citigroup Global Markets | ILS | 69 | 18,700 | 18,978 | 278 | ||||||||||||
Expiring 07/21/2017 | Citigroup Global Markets | ILS | 89 | 24,406 | 24,712 | 306 | ||||||||||||
Malaysian Ringgit, | ||||||||||||||||||
Expiring 05/08/2017 | Barclays Capital Group | MYR | 3,506 | 788,561 | 807,212 | 18,651 | ||||||||||||
Expiring 07/03/2017 | Citigroup Global Markets | MYR | 69 | 15,610 | 15,949 | 339 | ||||||||||||
Expiring 07/03/2017 | Citigroup Global Markets | MYR | 616 | 138,666 | 141,451 | 2,785 | ||||||||||||
Expiring 07/03/2017 | JPMorgan Chase | MYR | 152 | 34,210 | 35,031 | 821 | ||||||||||||
Expiring 07/17/2017 | JPMorgan Chase | MYR | 1,577 | 358,350 | 362,022 | 3,672 | ||||||||||||
Mexican Peso, | ||||||||||||||||||
Expiring 06/08/2017 | Bank of America | MXN | 2,026 | 101,927 | 106,892 | 4,965 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | MXN | 457 | 23,000 | 24,108 | 1,108 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | MXN | 601 | 31,000 | 31,718 | 718 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | MXN | 616 | 32,000 | 32,484 | 484 | ||||||||||||
Expiring 06/08/2017 | Goldman Sachs & Co. | MXN | 39,886 | 2,019,750 | 2,104,165 | 84,415 | ||||||||||||
Expiring 06/08/2017 | JPMorgan Chase | MXN | 602 | 30,380 | 31,760 | 1,380 | ||||||||||||
Expiring 06/08/2017 | JPMorgan Chase | MXN | 864 | 45,408 | 45,556 | 148 |
See Notes to Financial Statements.
16 |
Forward foreign currency exchange contracts outstanding at April 30, 2017 (continued):
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts (cont’d.): |
| |||||||||||||||||
Mexican Peso, (cont’d.) | ||||||||||||||||||
Expiring 06/08/2017 | Morgan Stanley | MXN | 1,158 | $ | 61,097 | $ | 61,092 | $ | (5 | ) | ||||||||
Expiring 06/08/2017 | UBS AG | MXN | 155 | 8,000 | 8,169 | 169 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 356 | 17,982 | 18,755 | 773 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 356 | 18,000 | 18,774 | 774 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 397 | 20,000 | 20,957 | 957 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 437 | 22,000 | 23,067 | 1,067 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 1,492 | 75,127 | 78,710 | 3,583 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 1,534 | 80,361 | 80,930 | 569 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 1,535 | 75,955 | 80,996 | 5,041 | ||||||||||||
Expiring 03/27/2018 | Citigroup Global Markets | MXN | 4,973 | 250,000 | 250,890 | 890 | ||||||||||||
New Taiwanese Dollar, | ||||||||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 250 | 8,205 | 8,288 | 83 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 1,853 | 60,000 | 61,516 | 1,516 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 3,154 | 104,000 | 104,715 | 715 | ||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 3,474 | 114,000 | 115,333 | 1,333 | ||||||||||||
Expiring 06/08/2017 | JPMorgan Chase | TWD | 203 | 6,763 | 6,744 | (19 | ) | |||||||||||
Expiring 06/08/2017 | UBS AG | TWD | 401 | 13,000 | 13,299 | 299 | ||||||||||||
Expiring 06/08/2017 | UBS AG | TWD | 2,060 | 68,000 | 68,377 | 377 | ||||||||||||
Expiring 06/08/2017 | UBS AG | TWD | 4,710 | 156,756 | 156,351 | (405 | ) | |||||||||||
Peruvian Nuevo Sol, | ||||||||||||||||||
Expiring 07/26/2017 | UBS AG | PEN | 509 | 155,822 | 155,572 | (250 | ) | |||||||||||
Philippine Peso, | ||||||||||||||||||
Expiring 07/12/2017 | Citigroup Global Markets | PHP | 897 | 18,000 | 17,876 | (124 | ) | |||||||||||
Expiring 07/12/2017 | UBS AG | PHP | 8,447 | 169,800 | 168,417 | (1,383 | ) | |||||||||||
Polish Zloty, | ||||||||||||||||||
Expiring 07/21/2017 | Citigroup Global Markets | PLN | 707 | 181,983 | 182,240 | 257 | ||||||||||||
Expiring 07/21/2017 | Citigroup Global Markets | PLN | 856 | 220,748 | 220,458 | (290 | ) | |||||||||||
Expiring 07/21/2017 | UBS AG | PLN | 1,053 | 266,412 | 271,323 | 4,911 | ||||||||||||
Romanian Leu, | ||||||||||||||||||
Expiring 07/21/2017 | JPMorgan Chase | RON | 992 | 234,733 | 238,519 | 3,786 | ||||||||||||
Russian Ruble, | ||||||||||||||||||
Expiring 07/07/2017 | Bank of America | RUB | 24,219 | 420,511 | 418,876 | (1,635 | ) | |||||||||||
Expiring 07/07/2017 | Barclays Capital Group | RUB | 3,219 | 55,970 | 55,681 | (289 | ) | |||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | RUB | 1,553 | 27,000 | 26,861 | (139 | ) | |||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | RUB | 2,655 | 46,021 | 45,919 | (102 | ) | |||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | RUB | 4,761 | 83,991 | 82,351 | (1,640 | ) | |||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | RUB | 5,000 | 86,542 | 86,484 | (58 | ) | |||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | RUB | 14,261 | 249,160 | 246,653 | (2,507 | ) | |||||||||||
Expiring 07/07/2017 | Goldman Sachs & Co. | RUB | 24,219 | 420,175 | 418,876 | (1,299 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 17 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Forward foreign currency exchange contracts outstanding at April 30, 2017 (continued):
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts (cont’d.): |
| |||||||||||||||||
Singapore Dollar, | ||||||||||||||||||
Expiring 06/16/2017 | Citigroup Global Markets | SGD | 67 | $ | 48,000 | $ | 48,027 | $ | 27 | |||||||||
Expiring 06/16/2017 | Citigroup Global Markets | SGD | 419 | 300,700 | 300,360 | (340 | ) | |||||||||||
Expiring 06/16/2017 | JPMorgan Chase | SGD | 94 | 67,539 | 67,357 | (182 | ) | |||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 13 | 9,000 | 9,003 | 3 | ||||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 21 | 15,000 | 15,046 | 46 | ||||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 433 | 308,472 | 309,852 | 1,380 | ||||||||||||
South African Rand, | ||||||||||||||||||
Expiring 07/07/2017 | Goldman Sachs & Co. | ZAR | 1,082 | 77,670 | 80,006 | 2,336 | ||||||||||||
Expiring 07/07/2017 | UBS AG | ZAR | 579 | 43,000 | 42,801 | (199 | ) | |||||||||||
South Korean Won, | ||||||||||||||||||
Expiring 06/21/2017 | JPMorgan Chase | KRW | 6,303 | 5,562 | 5,543 | (19 | ) | |||||||||||
Thai Baht, | ||||||||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 419 | 12,000 | 12,100 | 100 | ||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 546 | 15,550 | 15,770 | 220 | ||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 1,297 | 37,748 | 37,478 | (270 | ) | |||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 1,411 | 40,000 | 40,774 | 774 | ||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 1,708 | 48,330 | 49,362 | 1,032 | ||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 3,676 | 107,000 | 106,248 | (752 | ) | |||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 6,339 | 180,638 | 183,254 | 2,616 | ||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 28,181 | 804,267 | 814,633 | 10,366 | ||||||||||||
Expiring 05/17/2017 | Goldman Sachs & Co. | THB | 1,554 | 45,242 | 44,927 | (315 | ) | |||||||||||
Expiring 05/17/2017 | UBS AG | THB | 1,734 | 50,000 | 50,119 | 119 | ||||||||||||
Turkish Lira, | ||||||||||||||||||
Expiring 05/08/2017 | Bank of America | TRY | 283 | 76,200 | 79,393 | 3,193 | ||||||||||||
Expiring 05/08/2017 | Bank of America | TRY | 418 | 111,000 | 117,436 | 6,436 | ||||||||||||
Expiring 05/08/2017 | Bank of America | TRY | 647 | 176,854 | 181,700 | 4,846 | ||||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 41 | 10,748 | 11,463 | 715 | ||||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 73 | 19,235 | 20,436 | 1,201 | ||||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 258 | 68,964 | 72,433 | 3,469 | ||||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 724 | 195,219 | 203,379 | 8,160 | ||||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 831 | 222,312 | 233,459 | 11,147 | ||||||||||||
Expiring 05/08/2017 | Goldman Sachs & Co. | TRY | 2,778 | 735,943 | 780,277 | 44,334 | ||||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 36 | 9,884 | 10,250 | 366 | ||||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 53 | 14,000 | 14,807 | 807 | ||||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 106 | 29,000 | 29,846 | 846 | ||||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 174 | 47,186 | 48,743 | 1,557 | ||||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 282 | 75,927 | 79,171 | 3,244 | ||||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 444 | 121,156 | 124,786 | 3,630 | ||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 19,904,120 | $ | 20,182,129 | $ | 278,009 | |||||||||||||
|
|
|
|
|
|
See Notes to Financial Statements.
18 |
Forward foreign currency exchange contracts outstanding at April 30, 2017 (continued):
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts: |
| |||||||||||||||||
Argentine Peso, | ||||||||||||||||||
Expiring 05/02/2017 | Goldman Sachs & Co. | ARS | 1,715 | $ | 111,332 | $ | 111,368 | $ | (36 | ) | ||||||||
Australian Dollar, | ||||||||||||||||||
Expiring 07/12/2017 | UBS AG | AUD | 1 | 992 | 992 | — | ||||||||||||
Brazilian Real, | ||||||||||||||||||
Expiring 05/03/2017 | Citigroup Global Markets | BRL | 1,619 | 509,479 | 509,534 | (55 | ) | |||||||||||
Expiring 05/03/2017 | Citigroup Global Markets | BRL | 55 | 17,316 | 17,249 | 67 | ||||||||||||
Expiring 05/03/2017 | Goldman Sachs & Co. | BRL | 1,619 | 508,999 | 509,535 | (536 | ) | |||||||||||
Expiring 05/03/2017 | Goldman Sachs & Co. | BRL | 732 | 233,786 | 230,566 | 3,220 | ||||||||||||
Expiring 06/02/2017 | Bank of America | BRL | 1,552 | 485,450 | 484,588 | 862 | ||||||||||||
Expiring 06/02/2017 | Barclays Capital Group | BRL | 119 | 36,711 | 37,053 | (342 | ) | |||||||||||
Canadian Dollar, | ||||||||||||||||||
Expiring 07/12/2017 | UBS AG | CAD | 1 | 702 | 686 | 16 | ||||||||||||
Chilean Peso, | ||||||||||||||||||
Expiring 07/12/2017 | Citigroup Global Markets | CLP | 50,989 | 77,257 | 76,133 | 1,124 | ||||||||||||
Expiring 07/12/2017 | UBS AG | CLP | 202,815 | 308,816 | 302,824 | 5,992 | ||||||||||||
Chinese Renminbi, | ||||||||||||||||||
Expiring 07/26/2017 | Citigroup Global Markets | CNH | 1,393 | 201,064 | 200,800 | 264 | ||||||||||||
Expiring 07/26/2017 | UBS AG | CNH | 1,089 | 156,757 | 156,933 | (176 | ) | |||||||||||
Expiring 07/26/2017 | UBS AG | CNH | 1,079 | 155,822 | 155,593 | 229 | ||||||||||||
Expiring 07/26/2017 | UBS AG | CNH | 1,070 | 154,464 | 154,295 | 169 | ||||||||||||
Colombian Peso, | ||||||||||||||||||
Expiring 07/12/2017 | Barclays Capital Group | COP | 68,710 | 23,170 | 23,100 | 70 | ||||||||||||
Expiring 07/12/2017 | Citigroup Global Markets | COP | 28,481 | 9,811 | 9,575 | 236 | ||||||||||||
Expiring 07/12/2017 | Goldman Sachs & Co. | COP | 405,210 | 139,300 | 136,229 | 3,071 | ||||||||||||
Euro, | ||||||||||||||||||
Expiring 07/27/2017 | Citigroup Global Markets | EUR | 1,395 | 1,531,882 | 1,526,266 | 5,616 | ||||||||||||
Expiring 07/27/2017 | Citigroup Global Markets | EUR | 283 | 309,207 | 310,064 | (857 | ) | |||||||||||
Expiring 07/27/2017 | Goldman Sachs & Co. | EUR | 158 | 169,903 | 172,928 | (3,025 | ) | |||||||||||
Hungarian Forint, | ||||||||||||||||||
Expiring 07/21/2017 | JPMorgan Chase | HUF | 4,577 | 15,964 | 15,965 | (1 | ) | |||||||||||
Expiring 07/21/2017 | UBS AG | HUF | 16,835 | 58,725 | 58,722 | 3 | ||||||||||||
Expiring 07/21/2017 | UBS AG | HUF | 14,888 | 51,000 | 51,931 | (931 | ) | |||||||||||
Indian Rupee, | ||||||||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | INR | 1,253 | 19,000 | 19,359 | (359 | ) | |||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | INR | 496 | 7,624 | 7,670 | (46 | ) | |||||||||||
Expiring 06/08/2017 | JPMorgan Chase | INR | 660 | 10,248 | 10,200 | 48 | ||||||||||||
Expiring 06/08/2017 | UBS AG | INR | 18,079 | 277,480 | 279,408 | (1,928 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 19 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Forward foreign currency exchange contracts outstanding at April 30, 2017 (continued):
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts (cont’d.): |
| |||||||||||||||||
Indonesian Rupiah, | ||||||||||||||||||
Expiring 06/16/2017 | Citigroup Global Markets | IDR | 4,356,971 | $ | 323,578 | $ | 325,074 | $ | (1,496 | ) | ||||||||
Expiring 06/16/2017 | Citigroup Global Markets | IDR | 261,915 | 19,607 | 19,541 | 66 | ||||||||||||
Expiring 06/16/2017 | Citigroup Global Markets | IDR | 222,096 | 16,618 | 16,570 | 48 | ||||||||||||
Expiring 06/16/2017 | JPMorgan Chase | IDR | 438,036 | 32,785 | 32,682 | 103 | ||||||||||||
Expiring 06/16/2017 | UBS AG | IDR | 817,400 | 61,000 | 60,986 | 14 | ||||||||||||
Expiring 08/21/2017 | JPMorgan Chase | IDR | 2,088,331 | 146,395 | 154,614 | (8,219 | ) | |||||||||||
Japanese Yen, | ||||||||||||||||||
Expiring 07/27/2017 | Citigroup Global Markets | JPY | 20,404 | 184,655 | 183,722 | 933 | ||||||||||||
Expiring 07/27/2017 | UBS AG | JPY | 17,177 | 154,539 | 154,662 | (123 | ) | |||||||||||
Expiring 07/27/2017 | UBS AG | JPY | 12,198 | 110,225 | 109,828 | 397 | ||||||||||||
Expiring 07/27/2017 | UBS AG | JPY | 12,178 | 110,224 | 109,647 | 577 | ||||||||||||
Malaysian Ringgit, | ||||||||||||||||||
Expiring 05/08/2017 | Bank of America | MYR | 489 | 110,100 | 112,691 | (2,591 | ) | |||||||||||
Expiring 05/08/2017 | Barclays Capital Group | MYR | 805 | 180,190 | 185,394 | (5,204 | ) | |||||||||||
Expiring 05/08/2017 | Barclays Capital Group | MYR | 682 | 153,150 | 157,107 | (3,957 | ) | |||||||||||
Expiring 07/03/2017 | Bank of America | MYR | 273 | 62,700 | 62,670 | 30 | ||||||||||||
Expiring 07/03/2017 | Bank of America | MYR | 96 | 22,047 | 22,037 | 10 | ||||||||||||
Expiring 07/03/2017 | Barclays Capital Group | MYR | 75 | 16,925 | 17,294 | (369 | ) | |||||||||||
Expiring 07/03/2017 | UBS AG | MYR | 264 | 61,000 | 60,677 | 323 | ||||||||||||
Mexican Peso, | ||||||||||||||||||
Expiring 06/08/2017 | Bank of America | MXN | 705 | 36,507 | 37,202 | (695 | ) | |||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | MXN | 4,728 | 249,160 | 249,399 | (239 | ) | |||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | MXN | 245 | 12,161 | 12,930 | (769 | ) | |||||||||||
Expiring 06/08/2017 | JPMorgan Chase | MXN | 2,177 | 107,037 | 114,832 | (7,795 | ) | |||||||||||
Expiring 06/08/2017 | JPMorgan Chase | MXN | 864 | 45,947 | 45,564 | 383 | ||||||||||||
Expiring 06/08/2017 | JPMorgan Chase | MXN | 384 | 20,310 | 20,238 | 72 | ||||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 3,771 | 198,180 | 198,914 | (734 | ) | |||||||||||
Expiring 06/08/2017 | UBS AG | MXN | 324 | 17,124 | 17,082 | 42 | ||||||||||||
New Taiwanese Dollar, | ||||||||||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 21,308 | 693,171 | 707,372 | (14,201 | ) | |||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 3,675 | 121,000 | 121,993 | (993 | ) | |||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 1,960 | 65,000 | 65,080 | (80 | ) | |||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 1,426 | 47,000 | 47,331 | (331 | ) | |||||||||||
Expiring 06/08/2017 | Citigroup Global Markets | TWD | 852 | 28,000 | 28,285 | (285 | ) | |||||||||||
Expiring 06/08/2017 | JPMorgan Chase | TWD | 109 | 3,526 | 3,606 | (80 | ) | |||||||||||
Expiring 06/08/2017 | UBS AG | TWD | 5,205 | 168,972 | 172,798 | (3,826 | ) | |||||||||||
Expiring 06/08/2017 | UBS AG | TWD | 1,449 | 48,000 | 48,090 | (90 | ) | |||||||||||
Expiring 06/08/2017 | UBS AG | TWD | 1,034 | 34,000 | 34,313 | (313 | ) |
See Notes to Financial Statements.
20 |
Forward foreign currency exchange contracts outstanding at April 30, 2017 (continued):
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts (cont’d.): |
| |||||||||||||||||
Peruvian Nuevo Sol, | ||||||||||||||||||
Expiring 07/27/2017 | BNP Paribas | PEN | 357 | $ | 109,010 | $ | 109,107 | $ | (97 | ) | ||||||||
Expiring 07/27/2017 | Citigroup Global Markets | PEN | 1,951 | 595,856 | 595,932 | (76 | ) | |||||||||||
Philippine Peso, | ||||||||||||||||||
Expiring 07/12/2017 | Bank of America | PHP | 22,560 | 446,555 | 449,799 | (3,244 | ) | |||||||||||
Polish Zloty, | ||||||||||||||||||
Expiring 07/21/2017 | BNP Paribas | PLN | 110 | 28,251 | 28,322 | (71 | ) | |||||||||||
Expiring 07/21/2017 | UBS AG | PLN | 384 | 98,905 | 98,961 | (56 | ) | |||||||||||
Romanian Leu, | ||||||||||||||||||
Expiring 07/21/2017 | Barclays Capital Group | RON | 36 | 8,529 | 8,536 | (7 | ) | |||||||||||
Expiring 07/21/2017 | JPMorgan Chase | RON | 1,559 | 369,371 | 374,911 | (5,540 | ) | |||||||||||
Expiring 07/21/2017 | JPMorgan Chase | RON | 299 | 72,022 | 71,880 | 142 | ||||||||||||
Expiring 07/21/2017 | UBS AG | RON | 103 | 24,726 | 24,728 | (2 | ) | |||||||||||
Russian Ruble, | ||||||||||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | RUB | 1,779 | 31,000 | 30,760 | 240 | ||||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | RUB | 556 | 9,557 | 9,611 | (54 | ) | |||||||||||
Expiring 07/07/2017 | Goldman Sachs & Co. | RUB | 6,968 | 119,375 | 120,513 | (1,138 | ) | |||||||||||
Expiring 07/07/2017 | Goldman Sachs & Co. | RUB | 389 | 6,697 | 6,722 | (25 | ) | |||||||||||
Expiring 07/07/2017 | JPMorgan Chase | RUB | 1,232 | 21,230 | 21,303 | (73 | ) | |||||||||||
Expiring 07/07/2017 | UBS AG | RUB | 6,981 | 119,375 | 120,736 | (1,361 | ) | |||||||||||
Singapore Dollar, | ||||||||||||||||||
Expiring 06/16/2017 | Citigroup Global Markets | SGD | 987 | 698,068 | 706,624 | (8,556 | ) | |||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 435 | 309,840 | 311,676 | (1,836 | ) | |||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 432 | 309,206 | 309,580 | (374 | ) | |||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 220 | 157,463 | 157,210 | 253 | ||||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 219 | 157,464 | 157,058 | 406 | ||||||||||||
Expiring 06/16/2017 | UBS AG | SGD | 54 | 38,000 | 38,442 | (442 | ) | |||||||||||
South African Rand, | ||||||||||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | ZAR | 2,427 | 184,375 | 179,460 | 4,915 | ||||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | ZAR | 2,068 | 155,269 | 152,953 | 2,316 | ||||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | ZAR | 2,050 | 155,925 | 151,597 | 4,328 | ||||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | ZAR | 294 | 21,047 | 21,711 | (664 | ) | |||||||||||
Expiring 07/07/2017 | Citigroup Global Markets | ZAR | 199 | 14,389 | 14,715 | (326 | ) | |||||||||||
Expiring 07/07/2017 | JPMorgan Chase | ZAR | 345 | 25,612 | 25,539 | 73 | ||||||||||||
Expiring 07/07/2017 | UBS AG | ZAR | 1,171 | 86,542 | 86,618 | (76 | ) | |||||||||||
Expiring 07/07/2017 | UBS AG | ZAR | 214 | 15,729 | 15,855 | (126 | ) | |||||||||||
Expiring 07/07/2017 | UBS AG | ZAR | 191 | 13,800 | 14,157 | (357 | ) | |||||||||||
South Korean Won, | ||||||||||||||||||
Expiring 06/21/2017 | Barclays Capital Group | KRW | 81,224 | 71,000 | 71,422 | (422 | ) | |||||||||||
Expiring 06/21/2017 | Citigroup Global Markets | KRW | 734,166 | 640,818 | 645,566 | (4,748 | ) | |||||||||||
Expiring 06/21/2017 | UBS AG | KRW | 193,929 | 169,800 | 170,525 | (725 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 21 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Forward foreign currency exchange contracts outstanding at April 30, 2017 (continued):
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
OTC forward foreign currency exchange contracts (cont’d.): |
| |||||||||||||||||
Thai Baht, | ||||||||||||||||||
Expiring 05/17/2017 | Bank of America | THB | 5,302 | $ | 153,223 | $ | 153,249 | $ | (26 | ) | ||||||||
Expiring 05/17/2017 | Bank of America | THB | 2,163 | 62,512 | 62,519 | (7 | ) | |||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 3,525 | 100,921 | 101,901 | (980 | ) | |||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 1,712 | 49,453 | 49,487 | (34 | ) | |||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 806 | 23,359 | 23,304 | 55 | ||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 338 | 9,796 | 9,765 | 31 | ||||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 271 | 7,738 | 7,840 | (102 | ) | |||||||||||
Expiring 05/17/2017 | Citigroup Global Markets | THB | 201 | 5,821 | 5,800 | 21 | ||||||||||||
Expiring 05/17/2017 | JPMorgan Chase | THB | 201 | 5,716 | 5,798 | (82 | ) | |||||||||||
Turkish Lira, | ||||||||||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 1,995 | 533,410 | 560,450 | (27,040 | ) | |||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 1,096 | 290,367 | 307,732 | (17,365 | ) | |||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 125 | 33,641 | 35,004 | (1,363 | ) | |||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 80 | 20,876 | 22,452 | (1,576 | ) | |||||||||||
Expiring 05/08/2017 | Citigroup Global Markets | TRY | 24 | 6,439 | 6,736 | (297 | ) | |||||||||||
Expiring 05/08/2017 | JPMorgan Chase | TRY | 906 | 252,207 | 254,504 | (2,297 | ) | |||||||||||
Expiring 05/08/2017 | JPMorgan Chase | TRY | 93 | 24,880 | 26,177 | (1,297 | ) | |||||||||||
Expiring 05/08/2017 | JPMorgan Chase | TRY | 90 | 24,972 | 25,247 | (275 | ) | |||||||||||
Expiring 05/08/2017 | JPMorgan Chase | TRY | 42 | 11,269 | 11,676 | (407 | ) | |||||||||||
Expiring 05/08/2017 | JPMorgan Chase | TRY | 31 | 8,273 | 8,731 | (458 | ) | |||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 286 | 75,928 | 80,291 | (4,363 | ) | |||||||||||
Expiring 05/08/2017 | UBS AG | TRY | 44 | 12,000 | 12,456 | (456 | ) | |||||||||||
Expiring 07/07/2017 | UBS AG | TRY | 414 | 114,360 | 114,308 | 52 | ||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 16,355,061 | $ | 16,467,747 | (112,686 | ) | |||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 165,323 | |||||||||||||||||
|
|
Cross currency exchange contracts outstanding at April 30, 2017:
Settlement | Type | Notional Amount (000) | In Exchange For (000) | Unrealized Appreciation (Depreciation) | Counterparty | |||||||||||||||||
OTC cross currency exchange contracts: |
| |||||||||||||||||||||
05/08/2017 | Buy | TRY | 194 | EUR | 47 | $ | 2,863 | Citigroup Global Markets | ||||||||||||||
07/12/2017 | Buy | CZK | 3,856 | EUR | 146 | (1,993 | ) | Citigroup Global Markets | ||||||||||||||
07/12/2017 | Buy | EUR | 357 | CZK | 9,630 | (2,350 | ) | Citigroup Global Markets | ||||||||||||||
07/12/2017 | Buy | EUR | 107 | CZK | 2,885 | (897 | ) | Citigroup Global Markets | ||||||||||||||
07/12/2017 | Buy | EUR | 76 | CZK | 2,048 | (592 | ) | Citigroup Global Markets | ||||||||||||||
04/06/2018 | Buy | ZAR | 1,369 | EUR | 86 | 1,358 | Goldman Sachs & Co. | |||||||||||||||
04/06/2018 | Buy | BRL | 450 | EUR | 124 | (4,785 | ) | Citigroup Global Markets | ||||||||||||||
|
| |||||||||||||||||||||
$ | (6,396 | ) | ||||||||||||||||||||
|
|
See Notes to Financial Statements.
22 |
Interest rate swap agreements outstanding at April 30, 2017:
Notional | Termination Date | Fixed Rate | Floating Rate | Fair Value | Upfront Premiums Paid (Received) | Unrealized Appreciation (Depreciation) | Counterparty | |||||||||||||||||||
OTC swap agreements: | ||||||||||||||||||||||||||
MYR | 1,650 | 05/20/21 | 3.770% | 3 Month Malaysia Bumiputra Rate(2) | $ | (235 | ) | $ | — | $ | (235 | ) | JPMorgan Chase | |||||||||||||
THB | 9,000 | 02/28/26 | 2.300% | 6 Month Thailand Fixing Rate(2) | (3,831 | ) | — | (3,831 | ) | JPMorgan Chase | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
$ | (4,066 | ) | $ | — | $ | (4,066 | ) | |||||||||||||||||||
|
|
|
|
|
|
Notional | Termination Date | Fixed Rate | Floating Rate | Value at Trade Date | Value at April 30, 2017 | Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
Centrally cleared swap agreements: | ||||||||||||||||||||||||||
MXN | 4,500 | 02/16/21 | 5.400% | | 28 Day Mexican Interbank Rate(2) | | $ | 9 | $ | (14,911 | ) | $ | (14,920 | ) | ||||||||||||
MXN | 3,300 | 02/21/22 | 6.620% | | 28 Day Mexican Interbank Rate(2) | | 133 | (4,687 | ) | (4,820 | ) | |||||||||||||||
MXN | 20,650 | 06/04/25 | 6.470% | | 28 Day Mexican Interbank Rate(2) | | 330 | (65,126 | ) | (65,456 | ) | |||||||||||||||
MXN | 3,400 | 01/05/26 | 6.260% | | 28 Day Mexican Interbank Rate(1) | | 10 | 14,141 | 14,131 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
$ | 482 | $ | (70,583 | ) | $ | (71,065 | ) | |||||||||||||||||||
|
|
|
|
|
|
Cash of $170,000 has been segregated with Citigroup Global Markets to cover requirements for open centrally cleared interest rate swap contracts at April 30, 2017.
(1) | The Series pays the fixed rate and receives the floating rate. |
(2) | The Series pays the floating rate and receives the fixed rate. |
Fair Value Measurements:
Various inputs are used in determining the value of the Series’ 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.
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 23 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
The following is a summary of the inputs used as of April 30, 2017 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Foreign Bonds | ||||||||||||
Argentina | $ | — | $ | 457,544 | $ | — | ||||||
Brazil | — | 3,864,491 | — | |||||||||
Colombia | — | 1,379,729 | — | |||||||||
Czech Republic | — | 157,346 | — | |||||||||
Hungary | — | 1,451,126 | — | |||||||||
Indonesia | — | 3,609,364 | — | |||||||||
Kazakhstan | — | 134,275 | — | |||||||||
Malaysia | — | 1,477,887 | — | |||||||||
Mexico | — | 2,505,247 | — | |||||||||
Peru | — | 1,488,589 | — | |||||||||
Philippines | — | 225,658 | — | |||||||||
Poland | — | 2,590,901 | — | |||||||||
Romania | — | 1,124,565 | — | |||||||||
Russia | — | 1,686,419 | — | |||||||||
Singapore | — | 306,261 | — | |||||||||
South Africa | — | 3,240,501 | — | |||||||||
South Korea | — | 306,790 | — | |||||||||
Thailand | — | 1,471,110 | — | |||||||||
Turkey | — | 2,085,461 | — | |||||||||
Ukraine | — | 153,006 | — | |||||||||
Common Stock | ||||||||||||
Colombia | 20,541 | — | — | |||||||||
Affiliated Mutual Fund | 6,376 | — | — | |||||||||
Options Purchased | — | 93,552 | — | |||||||||
Options Written | — | (54,374 | ) | — | ||||||||
Other Financial Instruments* | ||||||||||||
OTC Forward Foreign Currency Exchange Contracts | — | 165,323 | — | |||||||||
OTC Cross Currency Exchange Contracts | — | (6,396 | ) | — | ||||||||
OTC Interest Rate Swap Agreements | — | (4,066 | ) | — | ||||||||
Centrally Cleared Interest Rate Swap Agreements | — | (71,065 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 26,917 | $ | 29,839,244 | $ | — | ||||||
|
|
|
|
|
|
* | 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. |
During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.
See Notes to Financial Statements.
24 |
Industry Classification:
The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2017 were as follows:
Foreign Government Obligations | 86.9 | % | ||
Non-Corporate Foreign Agencies | 6.1 | |||
Sovereign Bonds | 2.1 | |||
Foreign Corporations | 1.2 | |||
Options Purchased | 0.3 | |||
Oil, Gas & Consumable Fuels | 0.1 | |||
Affiliated Mutual Fund | 0.0 | *% | ||
|
| |||
96.7 | ||||
Options Written | (0.2 | ) | ||
Other assets in excess of liabilities | 3.5 | |||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:
The Series invested in derivative instruments during the reporting period. The primary types of risk associated with these derivative instruments are foreign exchange contracts risk and interest rate contracts risk. The effect of such derivative instruments on the Series’ 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 April 30, 2017 as presented in the Statement of Assets and Liabilities:
Derivatives not accounted | Asset Derivatives | Liability Derivatives | ||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | |||||||||
Foreign exchange contracts | Unrealized appreciation on OTC forward foreign currency exchange contracts | 375,665 | Unrealized depreciation on OTC forward foreign currency exchange contracts | 210,342 | ||||||||
Foreign exchange contracts | Unrealized appreciation on OTC cross currency exchange contracts | 4,221 | Unrealized depreciation on OTC cross currency exchange contracts | 10,617 | ||||||||
Foreign exchange contracts | Unaffiliated Investments | 93,552 | Options Written outstanding, at value | 54,374 | ||||||||
Interest rate contracts | Due from/to broker—variation margin swaps | 14,131 | * | Due from/to broker—variation margin swaps | 85,196 | * | ||||||
Interest rate contracts | — | — | Unrealized depreciation on OTC swap agreements | 4,066 | ||||||||
|
|
|
| |||||||||
Total | $ | 487,569 | $ | 364,595 | ||||||||
|
|
|
|
* | 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 Asset and Liabilities. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 25 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2017 are as follows:
Amount of Realized Gain (Loss) on Derivatives Recognized in Income | ||||||||||||
Derivatives not accounted | Forward and Cross Currency Contracts(1) | Swaps | Total | |||||||||
Foreign exchange contracts | $ | (37,328 | ) | $ | — | $ | (37,328 | ) | ||||
Interest rate contracts | — | 3,176 | 3,176 | |||||||||
|
|
|
|
|
| |||||||
$ | (37,328 | ) | $ | 3,176 | $ | (34,152 | ) | |||||
|
|
|
|
|
|
(1) | Included in net realized gain (loss) on foreign currency transactions in the Statement of Operations. |
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||
Derivatives not accounted | Options Purchased(2) | Options Written | Forward and Cross Currency Contracts(3) | Swaps | Total | |||||||||||||||
Foreign exchange contracts | $ | 1,760 | $ | 2,167 | $ | 339,663 | $ | — | $ | 343,590 | ||||||||||
Interest rate contracts | — | — | — | (85,263 | ) | (85,263 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 1,760 | $ | 2,167 | $ | 339,663 | $ | (85,263 | ) | $ | 258,327 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(2) | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
(3) | Included in net change in unrealized appreciation (depreciation) on foreign currencies in the Statement of Operations. |
For the six months ended April 30, 2017, the average volume of derivative activities are as follows:
Options | Options Written(4) | Forward Foreign Currency Exchange Contracts— Purchased(3) | Forward Foreign Currency Exchange Contracts— Sold(3) | Cross Currency Exchange Contracts(2) | Interest Rate Swap Agreements(4) | |||||||||||||||||
$ | 30,597 | $ | 763,100 | $ | 19,880,392 | $ | 15,603,354 | $ | 899,068 | $ | 2,277,186 |
(1) | Cost. |
(2) | Value at Trade Date. |
(3) | Value at Settlement Date. |
(4) | Notional Amount in USD. |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Series invested in OTC derivatives 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
See Notes to Financial Statements.
26 |
and related netting arrangements for OTC derivatives and other financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.
Offsetting of OTC derivative assets and liabilities:
Counterparty | Gross Amounts of Recognized Assets(1) | Gross Amounts Available for Offset | Collateral Received(3) | Net Amount | ||||||||||||
Bank of America | $ | 20,443 | $ | (8,198 | ) | $ | — | $ | 12,245 | |||||||
Barclays Capital Group | 18,721 | (18,188 | ) | — | 533 | |||||||||||
BNP Paribas | 4,150 | (1,544 | ) | — | 2,606 | |||||||||||
Citigroup Global Markets | 195,664 | (145,569 | ) | — | 50,095 | |||||||||||
Goldman Sachs & Co. | 160,075 | (23,571 | ) | — | 136,504 | |||||||||||
JPMorgan Chase | 11,432 | (11,432 | ) | — | — | |||||||||||
Morgan Stanley | — | — | — | — | ||||||||||||
UBS AG | 62,953 | (51,045 | ) | — | 11,908 | |||||||||||
|
| |||||||||||||||
$ | 473,438 | |||||||||||||||
|
| |||||||||||||||
Counterparty | Gross Amounts of Recognized Liabilities(2) | Gross Amounts Available for Offset | Collateral Pledged(3) | Net Amount | ||||||||||||
Bank of America | $ | (8,198 | ) | $ | 8,198 | $ | — | $ | — | |||||||
Barclays Capital Group | (18,188 | ) | 18,188 | — | — | |||||||||||
BNP Paribas | (1,544 | ) | 1,544 | — | — | |||||||||||
Citigroup Global Markets | (145,569 | ) | 145,569 | — | — | |||||||||||
Goldman Sachs & Co. | (23,571 | ) | 23,571 | — | — | |||||||||||
JPMorgan Chase | (31,279 | ) | 11,432 | — | (19,847 | ) | ||||||||||
Morgan Stanley | (5 | ) | — | — | (5 | ) | ||||||||||
UBS AG | (51,045 | ) | 51,045 | — | — | |||||||||||
|
| |||||||||||||||
$ | (279,399 | ) | ||||||||||||||
|
|
(1) | Includes unrealized appreciation on swaps and forwards, premiums paid on swap agreements and market value of purchased options. |
(2) | Includes unrealized depreciation on swaps and forwards, premiums received on swap agreements and market value of written options. |
(3) | Collateral amount disclosed by the Series is limited to the Series’ OTC derivative exposure by counterparty. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 27 |
Statement of Assets & Liabilities (unaudited)
as of April 30, 2017
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $30,397,414) | $ | 29,830,363 | ||
Affiliated investments (cost $6,376) | 6,376 | |||
Foreign currency, at value (cost $504,517) | 504,664 | |||
Deposit with broker for centrally cleared swaps | 170,000 | |||
Receivable for investments sold | 1,550,450 | |||
Dividends and interest receivable | 492,371 | |||
Unrealized appreciation on OTC forward foreign currency exchange contracts | 375,665 | |||
Tax reclaim receivable | 34,800 | |||
Due from Manager | 7,726 | |||
Receivable for Series shares sold | 5,725 | |||
Unrealized appreciation on OTC cross currency exchange contracts | 4,221 | |||
Due from broker—variation margin swaps | 2,137 | |||
Prepaid expenses | 275 | |||
|
| |||
Total Assets | 32,984,773 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 1,664,685 | |||
Unrealized depreciation on OTC forward foreign currency exchange contracts | 210,342 | |||
Accrued expenses and other liabilities | 97,684 | |||
Options written outstanding, at value (premiums received $56,541) | 54,374 | |||
Payable for Series shares reacquired | 42,601 | |||
Foreign capital gains tax liability | 37,279 | |||
Unrealized depreciation on OTC cross currency exchange contracts | 10,617 | |||
Unrealized depreciation on OTC swap agreements | 4,066 | |||
Dividends payable | 1,793 | |||
Distribution fee payable | 1,188 | |||
Affiliated transfer agent fee payable | 694 | |||
|
| |||
Total Liabilities | 2,125,323 | |||
|
| |||
Net Assets | $ | 30,859,450 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 47,490 | ||
Paid-in capital in excess of par | 36,368,484 | |||
|
| |||
36,415,974 | ||||
Distributions in excess of net investment income | (931,156 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (4,078,612 | ) | ||
Net unrealized depreciation on investments and foreign currencies | (546,756 | ) | ||
|
| |||
Net assets, April 30, 2017 | $ | 30,859,450 | ||
|
|
See Notes to Financial Statements.
28 |
Class A | ||||
Net asset value and redemption price per share | $ | 6.43 | ||
Maximum sales charge (4.50% of offering price) | 0.30 | |||
|
| |||
Maximum offering price to public | $ | 6.73 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | ||||
($590,576 ÷ 91,014 shares of common stock issued and outstanding) | $ | 6.49 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share | ||||
($954 ÷ 146.681 shares of common stock issued and outstanding) | $ | 6.50 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | ||||
($27,023,697 ÷ 4,153,436 shares of common stock issued and outstanding) | $ | 6.51 | ||
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 29 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2017
Net Investment Income (Loss) | ||||
Income | ||||
Interest income (net of foreign withholding taxes of $39,760) | $ | 902,738 | ||
Affiliated dividend income | 4,328 | |||
|
| |||
Total income | 907,066 | |||
|
| |||
Expenses | ||||
Management fee | 119,423 | |||
Distribution fee—Class A | 4,210 | |||
Distribution fee—Class C | 3,023 | |||
Custodian and accounting fees | 84,000 | |||
Audit fee | 31,000 | |||
Registration fees | 29,000 | |||
Shareholders’ reports | 14,000 | |||
Legal fees and expenses | 9,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $1,800) | 7,000 | |||
Directors’ fees | 5,000 | |||
Miscellaneous | 6,776 | |||
|
| |||
Total expenses | 312,432 | |||
Less: Expense reimbursement | (173,832 | ) | ||
|
| |||
Net expenses | 138,600 | |||
|
| |||
Net investment income (loss) | 768,466 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (1,109,343 | ) | ||
Swap agreement transactions | 3,176 | |||
Foreign currency transactions | (60,906 | ) | ||
|
| |||
(1,167,073 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (net change in foreign capital gain taxes $35,582) | 982,147 | |||
Options written | 2,167 | |||
Swap agreements | (85,263 | ) | ||
Foreign currencies | 289,684 | |||
|
| |||
1,188,735 | ||||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 21,662 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 790,128 | ||
|
|
See Notes to Financial Statements.
30 |
Statement of Changes in Net Assets (unaudited)
Six Months April 30, 2017 | Year Ended | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 768,466 | $ | 1,598,078 | ||||
Net realized gain (loss) on investment and foreign currency transactions | (1,167,073 | ) | (5,151,186 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 1,188,735 | 6,265,870 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 790,128 | 2,712,762 | ||||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Dividends from net investment income* | ||||||||
Class A | (93,129 | ) | (264 | ) | ||||
Class C | (14,333 | ) | (49 | ) | ||||
Class Q | (26 | ) | — | ** | ||||
Class Z | (738,649 | ) | (2,125 | ) | ||||
|
|
|
| |||||
(846,137 | ) | (2,438 | ) | |||||
|
|
|
| |||||
Tax return of capital distributions | ||||||||
Class A | — | (193,151 | ) | |||||
Class C | — | (36,091 | ) | |||||
Class Q | — | (53 | ) | |||||
Class Z | — | (1,553,499 | ) | |||||
|
|
|
| |||||
— | (1,782,794 | ) | ||||||
|
|
|
| |||||
Series share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 1,310,260 | 4,264,777 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 831,575 | 1,752,892 | ||||||
Cost of shares reacquired | (3,466,256 | ) | (3,435,696 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Series share transactions | (1,324,421 | ) | 2,581,973 | |||||
|
|
|
| |||||
Total increase (decrease) | (1,380,430 | ) | 3,509,503 | |||||
Net Assets: | ||||||||
Beginning of period | 32,239,880 | 28,730,377 | ||||||
|
|
|
| |||||
End of period | $ | 30,859,450 | $ | 32,239,880 | ||||
|
|
|
|
* | Dividends from net investment income may include other items that are ordinary income for tax purposes. |
** | Less than $1. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 31 |
Notes to Financial Statements (unaudited)
Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”) as an open-end management investment company and currently consists of six series: Prudential QMA International Equity Fund, Prudential Jennison Global Infrastructure Fund, Prudential Jennison International Opportunities Fund, Prudential Emerging Markets Debt Local Currency Fund, Prudential Jennison Emerging Markets Equity Fund and Prudential Jennison Global Opportunities Fund. These financial statements relate to Prudential Emerging Markets Debt Local Currency Fund (the “Series”). The financial statements of the other series are not presented herein. The Series is non-diversified.
The investment objective of the Series is total return, through a combination of current income and capital appreciation.
Note 1. Accounting Policies
The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services-Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follow such policies in the preparation of their financial statements.
Securities Valuation: The Series holds securities and other assets that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”) (formerly known as Prudential Investments LLC). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Schedule of Investments.
32 |
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
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 Series 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 is 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 recent transaction prices for identical or comparable securities. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques.
OTC derivative instruments are generally classified as Level 2 in the fair value hierarchy. Such derivative instruments are typically valued using the market approach and/or income approach which generally involves obtaining data from an approved independent third-party vendor source. The Series utilizes the market approach when quoted prices in broker-dealer markets are available but also include consideration of alternative valuation approaches, including the income approach. In the absence of reliable market quotations, the income approach is typically utilized for purposes of valuing OTC derivatives such as interest rate swaps based on a discounted cash flow analysis whereby the value of the instrument is equal to the present value of its future cash inflows or outflows. Such analysis includes projecting future cash flows and determining the discount rate (including the present value factors that affect the discount rate) used to discount the future cash flows. In addition, the third-party vendors’ valuation techniques used to derive the evaluated OTC derivative price is based on evaluating observable inputs, including but not limited to, underlying asset prices, indices, spreads, interest rates and exchange rates. Certain OTC derivatives may be classified as Level 3 when valued using the market approach by obtaining a single broker quote or when utilizing significant unobservable inputs in the income approach. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.
Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are generally valued at the daily settlement price determined by the respective exchange. These securities are classified as Level 2 in the fair value hierarchy, as the daily settlement price is not public.
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
Prudential Emerging Markets Debt Local Currency Fund | 33 |
Notes to Financial Statements (unaudited) (continued)
unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser 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 mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
Foreign Currency Translation: The books and records of the Series 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 Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of
34 |
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 Series 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. Notwithstanding the above, the Series does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain (loss) upon the sale or maturity of foreign currency denominated debt obligations; such amounts are included in net realized gains (losses) on foreign currency transactions.
Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currency transactions.
Concentration of Risk: The ability of debt securities issuers (other than those issued or guaranteed by the U.S. Government) held by the Series to meet its obligations may be affected by the economic or political developments in a specific industry, region or country. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability, or the level of governmental supervision and regulation of foreign securities markets.
Forward Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The Series enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or specific receivables and payables denominated in a foreign currency. The contracts are valued daily at current exchange rates and any unrealized gain (loss) is included in net unrealized appreciation (depreciation) on foreign currencies. Gain (loss) is realized on the settlement date of the contract equal to the difference between the settlement value of the original and negotiated forward contracts. This gain (loss), if any, is included in net realized gain (loss) on foreign currency transactions. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. Forward currency contracts involve risks from currency exchange rate and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Series’ maximum risk of loss from counterparty credit risk is the net value of the cash flows to be received from the counterparty at the end of the contract’s life.
Prudential Emerging Markets Debt Local Currency Fund | 35 |
Notes to Financial Statements (unaudited) (continued)
Cross Currency Exchange Contracts: A cross currency contract is a forward contract where a specified amount of one foreign currency will be exchanged for a specified amount of another foreign currency.
Options: The Series may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates or foreign currency exchange rates, with respect to securities which the Series currently owns or intends to purchase. The Series may also use options to gain additional market exposure. The Series’ principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Series purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Series writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Series realizes a gain (loss) to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Series has realized a gain (loss). The difference between the premium and the amount received or paid at the closing of a purchase or sale transaction is also treated as a realized gain (loss). Gain (loss) on purchased options is included in net realized gain (loss) on investment transactions. Gain (loss) on written options is presented separately as net realized gain (loss) on options written transactions.
The Series, as writer of an option, may have no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Series bears the market risk of an unfavorable change in the price of the security underlying the written option. OTC options also involve the risk of the potential inability of the counterparties to meet the terms of their contracts. With exchange-traded options contracts, there is minimal counterparty credit risk to the Series since the exchanges’ clearinghouse acts as counterparty to all exchange-traded options and guarantees the options contracts against default.
Swap Agreements: The Series entered into interest rate swap agreements. A swap agreement is an agreement to exchange the return generated by one instrument for the return generated by another instrument. Swap agreements are negotiated in the OTC market and may be executed either directly with counterparty (“OTC-traded”) or through a central clearing facility, such as a registered commodities exchange. Swap agreements are valued daily at current market value and any change in value is included in the net unrealized appreciation (depreciation) on investments. Centrally cleared swaps pay or receive an amount known as “variation margin”, based on daily changes in the valuation of the swap contract. Payments received or paid by the Series are recorded as realized gains (losses) upon termination or maturity of the swap. Risk of loss may exceed amounts
36 |
recognized on the Statement of Assets and Liabilities. Swap agreements outstanding at period end, if any, are listed on the Schedule of Investments.
Interest Rate Swaps: Interest rate swaps represent an agreement between counterparties to exchange cash flows based on the difference between two interest rates, applied to a notional principal amount for a specified period. The Series is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. The Series used interest rate swaps to maintain its ability to generate steady cash flow by receiving a stream of fixed-rate payments and to increase exposure to prevailing market rates by receiving floating rate payments. The Series’ maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life.
Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
The Fund, on behalf of the Series, is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the Series is held in a segregated account by the Series’ custodian and with respect to those amounts which can be sold or re-pledged, is presented in the Schedule of Investments. Collateral pledged by the Series is segregated by the Series’ custodian and identified in the Schedule of Investments. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the Series and the applicable counterparty. Collateral requirements are determined based on the Series’ net position with each counterparty. Termination events applicable to the Series may occur upon a decline in the Series’ net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign
Prudential Emerging Markets Debt Local Currency Fund | 37 |
Notes to Financial Statements (unaudited) (continued)
exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the Series’ counterparties to elect early termination could impact the Series’ future derivative activity.
In addition to each instrument’s primary underlying risk exposure (e.g. interest rate, credit, equity or foreign exchange, etc.), swap agreements involve, to varying degrees, elements of credit, market and documentation risk. Such risks involve the possibility that no liquid market for these agreements will exist, the counterparty to the agreement may default on its obligation to perform or disagree on the contractual terms of the agreement, and changes in net interest rates will be unfavorable. In connection with these agreements, securities in the portfolio may be identified or received as collateral from the counterparty in accordance with the terms of the respective swap agreements to provide or receive assets of value and to serve as recourse in the event of default or bankruptcy/insolvency of either party. Such OTC derivative agreements include conditions which, when materialized, give the counterparty the right to cause an early termination of the transactions under those agreements. Any election by the counterparty for early termination of the contract(s) may impact the amounts reported on financial statements.
As of April 30, 2017, the Series has not met conditions under such agreements which give the counterparty the right to call for an early termination.
Forward currency contracts, written options and swaps involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Such risks may be mitigated by engaging in master netting arrangements.
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. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an 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 distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) 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.
38 |
Dividends and Distributions: The Series expects to pay dividends of net investment income monthly and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.
Taxes: It is each Series’ 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.
Estimates: The preparation of the 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.
Note 2. Agreements
The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PGIM Investments has entered into a subadvisory agreement with PGIM, Inc., which provides subadvisory services to the Series through its PGIM Fixed Income unit. The subadvisory agreement provides that PGIM, Inc. will furnish investment advisory services in connection with the management of the Series. In connection therewith, PGIM, Inc. is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of PGIM, Inc., the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of .80% on average daily net assets up to and including $1 billion; .78% on the next $2 billion of average daily net assets; .76% on the next $2 billion of average daily net assets; .75% on the next $5 billion of average daily net assets; and .74% on average daily net assets exceeding $10 billion. The effective management fee rate before any waivers and/or expense reimbursement was .80% for the six months ended April 30, 2017. For the six months ended April 30, 2017, the expense reimbursement exceeded the effective management fee.
PGIM Investments has contractually agreed through February 28, 2018 to limit the net annual operating expenses (exclusive of distribution and service (12b-1) fees, taxes (such as income and foreign withholdings taxes, stamp duty and deferred tax expenses), interest, underlying funds, brokerage, extraordinary and certain other expenses such as dividend, broker charges and interest expense on short sales) of each class of shares of the Series to .88% of the Series’
Prudential Emerging Markets Debt Local Currency Fund | 39 |
Notes to Financial Statements (unaudited) (continued)
average daily net assets. Expenses waived/reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver/reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) who acts as the distributor of the Class A, Class C, Class Q and Class Z shares. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Z shares of the Series.
Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .25% and 1% of the average daily net assets of the Class A and C shares, respectively.
PIMS has advised the Series that it has received $8,069 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2017. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 2017 it has received $309 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.
PGIM Investments, PGIM, Inc. and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ 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 Series 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 permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board.
40 |
The Series may invest its overnight sweep cash in the Prudential 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. Earnings from the Core Fund are disclosed on the Statement of Operations as “Affiliated dividend income”.
Note 4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities, (excluding short-term investments and U.S. Treasury securities), for the six months ended April 30, 2017, were $24,325,087 and $23,815,892, respectively.
Transactions in options written during the six months ended April 30, 2017, were as follows:
Notional Amount (000) | Premium | |||||||
Balance at beginning of period | — | $ | — | |||||
Written options | 2,200,000 | 56,541 | ||||||
Expired options | — | — | ||||||
Closed options | — | — | ||||||
|
|
|
| |||||
Balance at end of period | 2,200,000 | $ | 56,541 | |||||
|
|
|
|
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized depreciation as of April 30, 2017 were as follows:
Tax Basis | $ | 31,471,897 | ||
|
| |||
Appreciation | 63,874 | |||
Depreciation | (1,699,032 | ) | ||
|
| |||
Net Unrealized Depreciation | $ | (1,635,158 | ) | |
|
|
The book basis may differ from tax basis due to certain tax-related adjustments.
For federal income tax purposes, the Series had a capital loss carryforward as of October 31, 2016 of approximately $2,737,000 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.
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Prudential Emerging Markets Debt Local Currency Fund | 41 |
Notes to Financial Statements (unaudited) (continued)
Note 6. Capital
The Series offers Class A, Class C, Class Q and Class Z shares. Class A shares are sold with a front-end sales charge of up to 4.50%. Investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%. The Class A CDSC is waived for purchases by certain retirement and/or benefit plans. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class Q and Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock. For the six months ended April 30, 2017, no such exchanges were made.
There are 550 million shares of common stock at $.01 par value per share, authorized and divided into five classes, designated Class A, Class C, Class Q, Class Z and Class T common stock, each of which consists of 10 million, 50 million, 50 million, 250 million and 190 million authorized shares, respectively. The Series currently does not have any Class T shares outstanding.
As of April 30, 2017, Prudential, through its affiliates, owned 147 Class Q shares and 3,455,875 Class Z shares of the Series. At reporting period end, two shareholders of record held 84% of the Series’ outstanding shares on behalf of multiple beneficial owners.
42 |
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 156,750 | $ | 969,323 | |||||
Shares issued in reinvestment of dividends and distributions | 13,680 | 84,486 | ||||||
Shares reacquired | (249,718 | ) | (1,533,026 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (79,288 | ) | (479,217 | ) | ||||
Shares issued upon conversion from other share class(es) | 32,903 | 196,502 | ||||||
Shares reacquired upon conversion into other share class(es) | (68,967 | ) | (432,887 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (115,352 | ) | $ | (715,602 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 264,798 | $ | 1,692,459 | |||||
Shares issued in reinvestment of dividends and distributions | 26,404 | 166,092 | ||||||
Shares reacquired | (160,699 | ) | (999,854 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 130,503 | 858,697 | ||||||
Shares reacquired upon conversion into other share class(es) | (24,656 | ) | (157,311 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 105,847 | $ | 701,386 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 9,801 | $ | 63,140 | |||||
Shares issued in reinvestment of dividends and distributions | 2,194 | 13,643 | ||||||
Shares reacquired | (42,301 | ) | (259,478 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (30,306 | ) | $ | (182,695 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 28,487 | $ | 180,763 | |||||
Shares issued in reinvestment of dividends and distributions | 5,373 | 33,925 | ||||||
Shares reacquired | (24,063 | ) | (148,044 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 9,797 | $ | 66,644 | |||||
|
|
|
| |||||
Class Q | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares issued in reinvestment of dividends and distributions | 4 | $ | 26 | |||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 4 | $ | 26 | |||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares issued in reinvestment of dividends and distributions | 8 | $ | 53 | |||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 8 | $ | 53 | |||||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 45,622 | $ | 277,797 | |||||
Shares issued in reinvestment of dividends and distributions | 117,356 | 733,420 | ||||||
Shares reacquired | (267,575 | ) | (1,673,752 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (104,597 | ) | (662,535 | ) | ||||
Shares issued upon conversion from other share class(es) | 68,274 | 432,887 | ||||||
Shares reacquired upon conversion into other share class(es) | (32,480 | ) | (196,502 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (68,803 | ) | $ | (426,150 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 373,514 | $ | 2,391,555 | |||||
Shares issued in reinvestment of dividends and distributions | 244,902 | 1,552,822 | ||||||
Shares reacquired | (357,213 | ) | (2,287,798 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 261,203 | 1,656,579 | ||||||
Shares issued upon conversion from other share class(es) | 24,432 | 157,311 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 285,635 | $ | 1,813,890 | |||||
|
|
|
|
Prudential Emerging Markets Debt Local Currency Fund | 43 |
Notes to Financial Statements (unaudited) (continued)
Note 7. Borrowings
The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 6, 2016 through October 5, 2017. The Funds pay an annualized commitment fee of .15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under each SCA is paid is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
The Series did not utilize the SCA during the six months ended April 30, 2017.
Note 8. Recent Accounting Pronouncements and Reporting Updates
On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new rules and forms and amended existing rules and forms which are intended to modernize and enhance the reporting and disclosure of information by registered investment companies and to improve the quality of information that funds provide to investors, including modifications to Regulation S-X which would require standardized, enhanced disclosure about derivatives in investment company financial statements. The new rules also enhance disclosure regarding fund liquidity and redemption practices. The compliance dates of the modifications to Regulation S-X are August 1, 2017 and other amendments and rules are generally June 1, 2018 and December 1, 2018. Management is currently evaluating the impacts to the financial statement disclosures, if any.
Note 9. Other
At the Fund’s Board meeting in March, 2017, the Board of Directors approved a change in the methodology of allocating certain expenses, like Transfer Agent fees (including sub-transfer agent and networking fees) and Blue Sky fees. The impact to the net assets of the Series and individual share classes is not ascertainable at the present time. PGIM Investments expects to implement the changes by December 31, 2017.
44 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $6.44 | $6.24 | $7.92 | $8.67 | $9.61 | $9.36 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .15 | .33 | .37 | .49 | .47 | .42 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .01 | .23 | (1.64 | ) | (.71 | ) | (.76 | ) | .35 | |||||||||||||||||||
Total from investment operations | .16 | .56 | (1.27 | ) | (.22 | ) | (.29 | ) | .77 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income(f) | (.17 | ) | - | (e) | (.06 | ) | (.07 | ) | (.30 | ) | (.52 | ) | ||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.05 | ) | - | |||||||||||||||||||||
Tax return of capital distributions | - | (.36 | ) | (.35 | ) | (.46 | ) | (.30 | ) | - | ||||||||||||||||||
Total dividends and distributions | (.17 | ) | (.36 | ) | (.41 | ) | (.53 | ) | (.65 | ) | (.52 | ) | ||||||||||||||||
Net asset value, end of period | $6.43 | $6.44 | $6.24 | $7.92 | $8.67 | $9.61 | ||||||||||||||||||||||
Total Return(b): | 2.61% | 9.29% | (16.41)% | (2.47)% | (3.23)% | 8.53% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $3,244 | $3,990 | $3,208 | $5,991 | $10,862 | $5,985 | ||||||||||||||||||||||
Average net assets (000) | $3,396 | $3,343 | $4,341 | $6,701 | $12,797 | $2,721 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | 1.13% | (g) | 1.28% | 1.30% | (d) | 1.30% | 1.30% | 1.30% | ||||||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 2.31% | (g) | 2.33% | 2.39% | (d) | 2.13% | 1.78% | 2.09% | ||||||||||||||||||||
Net investment income (loss) | 5.01% | (g) | 5.20% | 5.32% | (d) | 5.99% | 5.07% | 4.73% | ||||||||||||||||||||
Portfolio turnover rate | 84% | (h) | 196% | 101% | 110% | 102% | 70% |
(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 return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying fund in which the Series invests. |
(d) | Effective March 9, 2015, the contractual distribution and service (12b-1) fees were reduced from .30% to .25% of the average daily net assets and the .05% contractual 12b-1 fee waiver was terminated. |
(e) | Less than $.005. |
(f) | Dividends from net investment income may include other items that are ordinary income for tax purposes. |
(g) | Annualized. |
(h) | Not annualized. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 45 |
Financial Highlights (unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $6.49 | $6.28 | $7.97 | $8.72 | $9.65 | $9.41 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .13 | .28 | .32 | .43 | .40 | .37 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .02 | .25 | (1.65 | ) | (.71 | ) | (.75 | ) | .32 | |||||||||||||||||||
Total from investment operations | .15 | .53 | (1.33 | ) | (.28 | ) | (.35 | ) | .69 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income(e) | (.15 | ) | - | (d) | (.01 | ) | (.01 | ) | (.23 | ) | (.45 | ) | ||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.05 | ) | - | |||||||||||||||||||||
Tax return of capital distributions | - | (.32 | ) | (.35 | ) | (.46 | ) | (.30 | ) | - | ||||||||||||||||||
Total dividends and distributions | (.15 | ) | (.32 | ) | (.36 | ) | (.47 | ) | (.58 | ) | (.45 | ) | ||||||||||||||||
Net asset value, end of period | $6.49 | $6.49 | $6.28 | $7.97 | $8.72 | $9.65 | ||||||||||||||||||||||
Total Return(b): | 2.36% | 8.61% | (17.00)% | (3.21)% | (3.85)% | 7.55% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $591 | $787 | $701 | $927 | $1,469 | $1,025 | ||||||||||||||||||||||
Average net assets (000) | $610 | $721 | $789 | $1,207 | $1,585 | $786 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | 1.88% | (f) | 2.03% | 2.05% | 2.05% | 2.05% | 2.05% | |||||||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 3.06% | (f) | 3.07% | 3.11% | 2.82% | 2.47% | 2.78% | |||||||||||||||||||||
Net investment income (loss) | 4.23% | (f) | 4.40% | 4.52% | 5.17% | 4.26% | 3.89% | |||||||||||||||||||||
Portfolio turnover rate | 84% | (g) | 196% | 101% | 110% | 102% | 70% |
(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 return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying fund in which the Series invests. |
(d) | Less than $.005. |
(e) | Dividends from net investment income may include other items that are ordinary income for tax purposes. |
(f) | Annualized. |
(g) | Not annualized. |
See Notes to Financial Statements.
46 |
Class Q Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $6.50 | $6.30 | $7.98 | $8.71 | $9.66 | $9.37 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .16 | .35 | .39 | .51 | .58 | .47 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .02 | .23 | (1.63 | ) | (.69 | ) | (.86 | ) | .37 | |||||||||||||||||||
Total from investment operations | .18 | .58 | (1.24 | ) | (.18 | ) | (.28 | ) | .84 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income(e) | (.18 | ) | - | (d) | (.09 | ) | (.09 | ) | (.32 | ) | (.55 | ) | ||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.05 | ) | - | |||||||||||||||||||||
Tax return of capital distributions | - | (.38 | ) | (.35 | ) | (.46 | ) | (.30 | ) | - | ||||||||||||||||||
Total dividends and distributions | (.18 | ) | (.38 | ) | (.44 | ) | (.55 | ) | (.67 | ) | (.55 | ) | ||||||||||||||||
Net asset value, end of period | $6.50 | $6.50 | $6.30 | $7.98 | $8.71 | $9.66 | ||||||||||||||||||||||
Total Return(b): | 2.91% | 9.55% | (15.94)% | (1.97)% | (3.06)% | 9.31% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $1 | $1 | $1 | $1 | $1 | $1 | ||||||||||||||||||||||
Average net assets (000) | $1 | $1 | $1 | $1 | $1 | $1 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | .88% | (f) | 1.03% | 1.05% | 1.05% | 1.05% | 1.05% | |||||||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 2.02% | (f) | 2.06% | 2.01% | 1.69% | 1.39% | 1.71% | |||||||||||||||||||||
Net investment income (loss) | 5.29% | (f) | 5.47% | 5.60% | 6.17% | 6.22% | 5.06% | |||||||||||||||||||||
Portfolio turnover rate | 84% | (g) | 196% | 101% | 110% | 102% | 70% |
(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 return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying fund in which the Series invests. |
(d) | Less than $.005. |
(e) | Dividends from net investment income may include other items that are ordinary income for tax purposes. |
(f) | Annualized. |
(g) | Not annualized. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 47 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $6.50 | $6.31 | $7.98 | $8.72 | $9.66 | $9.37 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .16 | .34 | .38 | .51 | .49 | .47 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .03 | .23 | (1.62 | ) | (.70 | ) | (.76 | ) | .36 | |||||||||||||||||||
Total from investment operations | .19 | .57 | (1.24 | ) | (.19 | ) | (.27 | ) | .83 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income(e) | (.18 | ) | - | (d) | (.08 | ) | (.09 | ) | (.32 | ) | (.54 | ) | ||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.05 | ) | - | |||||||||||||||||||||
Tax return of capital distributions | - | (.38 | ) | (.35 | ) | (.46 | ) | (.30 | ) | - | ||||||||||||||||||
Total dividends and distributions | (.18 | ) | (.38 | ) | (.43 | ) | (.55 | ) | (.67 | ) | (.54 | ) | ||||||||||||||||
Net asset value, end of period | $6.51 | $6.50 | $6.31 | $7.98 | $8.72 | $9.66 | ||||||||||||||||||||||
Total Return(b): | 3.01% | 9.31% | (15.90)% | (2.12)% | (2.98)% | 9.21% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $27,024 | $27,462 | $24,821 | $28,578 | $31,330 | $33,559 | ||||||||||||||||||||||
Average net assets (000) | $26,098 | $25,994 | $25,969 | $30,288 | $35,341 | $30,441 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | .88% | (f) | 1.03% | 1.05% | 1.05% | 1.05% | 1.05% | |||||||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 2.04% | (f) | 2.06% | 2.11% | 1.82% | 1.49% | 1.81% | |||||||||||||||||||||
Net investment income (loss) | 5.19% | (f) | 5.36% | 5.50% | 6.14% | 5.25% | 4.96% | |||||||||||||||||||||
Portfolio turnover rate | 84% | (g) | 196% | 101% | 110% | 102% | 70% |
(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 return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying fund in which the Series invests. |
(d) | Less than $.005. |
(e) | Dividends from net investment income may include other items that are ordinary income for tax purposes. |
(f) | Annualized. |
(g) | Not annualized. |
See Notes to Financial Statements.
48 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s investment 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 www.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. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | PGIM Fixed Income | 655 Broad Street Newark, NJ 07102 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
|
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 a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential Emerging Markets Debt Local Currency Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
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 |
PRUDENTIAL EMERGING MARKETS DEBT LOCAL CURRENCY FUND
SHARE CLASS | A | C | Q | Z | ||||
NASDAQ | EMDAX | EMDCX | EMDQX | EMDZX | ||||
CUSIP | 743969750 | 743969743 | 743969735 | 743969727 |
MF212E2
PRUDENTIAL JENNISON EMERGING MARKETS EQUITY FUND
SEMIANNUAL REPORT
APRIL 30, 2017
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: Long-term growth of capital |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2017 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates LLC is a registered investment adviser. Both are Prudential Financial companies. © 2017 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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Letter from the President
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison Emerging Markets Equity Fund informative and useful. The report covers performance for the six-month period ended April 30, 2017. We are proud to announce that Prudential Investments became PGIM® Investments, effective April 3, 2017. Why PGIM? This new name was chosen to further align with the global investment management businesses of Prudential Financial, which rebranded from Prudential Investment Management in January 2016. This new name allows for one brand and reflects our ability and commitment to delivering investment solutions to clients around the globe. Please keep in mind that only the Fund adviser’s name was changed: the name of your Fund and the management and operation did not change.
Since market conditions change over time, 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 adviser 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. We’re part of PGIM, the 9th-largest 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
Prudential Jennison Emerging Markets Equity Fund
June 15, 2017
Prudential Jennison Emerging Markets Equity Fund | 3 |
Your Fund’s Performance (unaudited)
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 www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 4/30/17 | Average Annual Total Returns as of 4/30/17 (with sales charges) | |||||
Six Months* (%) | One Year (%) | Since Inception (%) | ||||
Class A | 4.82 | 8.21 | –2.92 (9/16/14) | |||
Class C | 4.35 | 12.61 | –1.54 (9/16/14) | |||
Class Q | 4.90 | 14.80 | –0.56 (9/16/14) | |||
Class Z | 4.90 | 14.80 | –0.57 (9/16/14) | |||
MSCI Emerging Markets Index | 8.88 | 19.13 | 1.11 | |||
Lipper Emerging Markets Funds Average | 8.63 | 17.53 | 0.39 |
*Not annualized
Source: PGIM Investments LLC and Lipper Inc.
Inception returns are provided for any share class with less than 10 fiscal years of returns.
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 Q | Class Z | |||||
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 original purchase price or net asset value at redemption) | 1% on sales of $1 million or more made within 12 months of purchase | 1% 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) | .30% (.25% currently) | 1% | None | None |
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Benchmark Definitions
MSCI Emerging Markets Index—The MSCI Emerging Markets Index is an unmanaged free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 23 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates.
Lipper Emerging Markets Funds Average—The Lipper Emerging Markets Funds Average (Lipper Average) includes funds that seek long-term capital appreciation by investing at least 65% of total assets in emerging market equity securities, where “emerging market” is defined by a country’s GNP per capita or other economic measures.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the Index and Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Five Largest Holdings expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Tencent Holdings Ltd., Internet Software & Services | 7.3 | |||
MercadoLibre, Inc., Internet Software & Services | 6.7 | |||
Alibaba Group Holding Ltd., Internet Software & Services | 5.1 | |||
MakeMyTrip Ltd., Internet & Direct Marketing Retail | 4.4 | |||
Ctrip.com International Ltd., Internet & Direct Marketing Retail | | 4.3 | |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Internet Software & Services | 21.8 | |||
Internet & Direct Marketing Retail | 11.7 | |||
Banks | 8.8 | |||
Automobiles | 5.7 | |||
Health Care Providers & Services | 5.6 |
Industry weightings reflect only long-term investments and are subject to change.
Prudential Jennison Emerging Markets Equity Fund | 5 |
Fees and Expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2017. 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 Investments 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
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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 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.
Prudential Jennison Emerging Markets Equity Fund | Beginning Account Value November 1, 2016 | Ending Account April 30, 2017 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,048.20 | 1.45 | % | $ | 7.36 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.60 | 1.45 | % | $ | 7.25 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,043.50 | 2.20 | % | $ | 11.15 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.88 | 2.20 | % | $ | 10.99 | ||||||||||
Class Q | Actual | $ | 1,000.00 | $ | 1,049.00 | 1.20 | % | $ | 6.10 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.84 | 1.20 | % | $ | 6.01 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,049.00 | 1.20 | % | $ | 6.10 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.84 | 1.20 | % | $ | 6.01 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2017, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2017 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
Prudential Jennison Emerging Markets Equity Fund | 7 |
Schedule of Investments (unaudited)
as of April 30, 2017
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 93.7% | ||||||||
COMMON STOCKS 89.4% | ||||||||
Argentina 6.7% | ||||||||
MercadoLibre, Inc. | 3,654 | $ | 836,437 | |||||
Brazil 6.5% | ||||||||
BM&FBovespa SA - Bolsa de Valores Mercadorias e Futuros | 38,368 | 228,826 | ||||||
Lojas Renner SA | 27,327 | 253,981 | ||||||
Raia Drogasil SA | 15,398 | 326,050 | ||||||
|
| |||||||
808,857 | ||||||||
Chile 3.1% | ||||||||
Sociedad Quimica y Minera de Chile SA, ADR | 11,008 | 391,334 | ||||||
China 24.2% | ||||||||
Alibaba Group Holding Ltd., ADR*(a) | 5,561 | 642,295 | ||||||
Baidu, Inc., ADR* | 1,894 | 341,356 | ||||||
China Biologic Products, Inc.* | 1,743 | 205,674 | ||||||
Ctrip.com International Ltd., ADR* | 10,698 | 540,356 | ||||||
JD.com, Inc., ADR* | 10,994 | 385,560 | ||||||
Tencent Holdings Ltd. | 29,332 | 919,069 | ||||||
|
| |||||||
3,034,310 | ||||||||
Hong Kong 1.2% | ||||||||
Sands China Ltd. | 33,539 | 151,903 | ||||||
India 18.9% | ||||||||
Ashok Leyland Ltd. | 166,555 | 221,036 | ||||||
Asian Paints Ltd. | 12,586 | 219,377 | ||||||
Biocon Ltd.* | 16,535 | 283,246 | ||||||
Eicher Motors Ltd.* | 590 | 238,796 | ||||||
Godrej Consumer Products Ltd. | 10,065 | 272,457 | ||||||
HDFC Bank Ltd., ADR | 3,037 | 241,776 | ||||||
MakeMyTrip Ltd.* | 14,218 | 545,971 | ||||||
Maruti Suzuki India Ltd. | 3,441 | 348,763 | ||||||
|
| |||||||
2,371,422 | ||||||||
Indonesia 9.6% | ||||||||
Astra International Tbk PT | 542,085 | 363,301 | ||||||
Bank Rakyat Indonesia Persero Tbk PT | 273,374 | 264,052 | ||||||
Matahari Department Store Tbk PT | 197,075 | 215,346 | ||||||
Mitra Adiperkasa Tbk PT* | 467,654 | 221,683 | ||||||
Mitra Keluarga Karyasehat Tbk PT | 703,505 | 133,960 | ||||||
|
| |||||||
1,198,342 |
See Notes to Financial Statements.
Prudential Jennison Emerging Markets Equity Fund | 9 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Malaysia 1.4% | ||||||||
IHH Healthcare Bhd | 124,306 | $ | 176,871 | |||||
Mexico 2.9% | ||||||||
Arca Continental SAB de CV* | 49,817 | 366,325 | ||||||
Peru 1.3% | ||||||||
Credicorp Ltd. | 1,026 | 157,655 | ||||||
Philippines 1.6% | ||||||||
Universal Robina Corp. | 58,924 | 202,774 | ||||||
Russia 3.4% | ||||||||
Sberbank of Russia PJSC, ADR | 16,976 | 201,845 | ||||||
X5 Retail Group NV, RegS, GDR* | 6,542 | 228,925 | ||||||
|
| |||||||
430,770 | ||||||||
Taiwan 4.9% | ||||||||
Cathay Financial Holding Co. Ltd. | 172,000 | 275,650 | ||||||
Largan Precision Co. Ltd. | 2,000 | 332,139 | ||||||
|
| |||||||
607,789 | ||||||||
Thailand 3.7% | ||||||||
Bangkok Dusit Medical Services PCL | 285,370 | 167,369 | ||||||
CP ALL PCL | 166,554 | 293,720 | ||||||
|
| |||||||
461,089 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS |
| 11,195,878 | ||||||
|
| |||||||
PREFERRED STOCKS 4.3% | ||||||||
Brazil | ||||||||
Itau Unibanco Holding SA (PRFC) | 19,350 | 239,220 | ||||||
Petroleo Brasileiro SA (PRFC)* | 66,986 | 293,138 | ||||||
|
| |||||||
TOTAL PREFERRED STOCKS |
| 532,358 | ||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS |
| 11,728,236 | ||||||
|
|
See Notes to Financial Statements.
10 |
Description | Shares | Value | ||||||
SHORT-TERM INVESTMENTS 11.3% | ||||||||
AFFILIATED MUTUAL FUNDS | ||||||||
Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund(b) | 766,757 | $ | 766,757 | |||||
Prudential Investment Portfolios 2 - Prudential Institutional Money Market Fund (cost $648,348; includes $647,900 cash collateral for securities on loan)(b)(c) | 648,219 | 648,348 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS |
| 1,415,105 | ||||||
|
| |||||||
TOTAL INVESTMENTS 105.0% |
| 13,143,341 | ||||||
Liabilities in excess of other assets (5.0)% |
| (624,447 | ) | |||||
|
| |||||||
NET ASSETS 100.0% |
| $ | 12,518,894 | |||||
|
|
The following abbreviations are used in the semiannual report:
ADR—American Depositary Receipt
GDR—Global Depositary Receipt
PRFC—Preference Shares
LIBOR—London Interbank Offered Rate
RegS—Regulation S. Security was purchased pursuant to Regulation S and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
* | Non-income producing security. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $635,250; cash collateral of $647,900 (included in liabilities) was received with which the Series purchased highly liquid short-term investments. |
(b) | PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund and Prudential Institutional Money Market Fund. |
(c) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
Fair Value Measurements:
Various inputs are used in determining the value of the Series’ 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.
See Notes to Financial Statements.
Prudential Jennison Emerging Markets Equity Fund | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
The following is a summary of the inputs used as of April 30, 2017 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Argentina | $ | 836,437 | $ | — | $ | — | ||||||
Brazil | 808,857 | — | — | |||||||||
Chile | 391,334 | — | — | |||||||||
China | 2,115,241 | 919,069 | — | |||||||||
Hong Kong | — | 151,903 | — | |||||||||
India | 1,070,993 | 1,300,429 | — | |||||||||
Indonesia | — | 1,198,342 | — | |||||||||
Malaysia | — | 176,871 | — | |||||||||
Mexico | 366,325 | — | — | |||||||||
Peru | 157,655 | — | — | |||||||||
Philippines | — | 202,774 | — | |||||||||
Russia | 430,770 | — | — | |||||||||
Taiwan | — | 607,789 | — | |||||||||
Thailand | 461,089 | — | — | |||||||||
Preferred Stocks | ||||||||||||
Brazil | 532,358 | — | — | |||||||||
Affiliated Mutual Funds | 1,415,105 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 8,586,164 | $ | 4,557,177 | $ | — | ||||||
|
|
|
|
|
|
During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.
Industry Classification:
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2017 were as follows:
Internet Software & Services | 21.8 | % | ||
Internet & Direct Marketing Retail | 11.7 | |||
Affiliated Mutual Funds (including 5.2% of collateral for securities on loan) | 11.3 | |||
Banks | 8.8 | |||
Automobiles | 5.7 | |||
Health Care Providers & Services | 5.6 | |||
Multiline Retail | 5.6 | |||
Food & Staples Retailing | 5.0 | |||
Chemicals | 4.8 | |||
Biotechnology | 4.0 | |||
Machinery | 3.7 | |||
Beverages | 2.9 | |||
Electronic Equipment, Instruments & Components | 2.7 | % | ||
Oil, Gas & Consumable Fuels | 2.4 | |||
Insurance | 2.2 | |||
Personal Products | 2.2 | |||
Capital Markets | 1.8 | |||
Food Products | 1.6 | |||
Hotels, Restaurants & Leisure | 1.2 | |||
|
| |||
105.0 | ||||
Liabilities in excess of other assets | (5.0 | ) | ||
|
| |||
100.0 | % | |||
|
|
See Notes to Financial Statements.
12 |
Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:
The Series invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is equity contracts risk. The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
The Series did not hold any derivative instruments as of April 30, 2017, accordingly, no derivative positions were presented in the Statement of Assets and Liabilities.
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2017 are as follows:
Amount of Realized Gain (Loss) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging instruments, carried at fair value | Warrants(1) | |||
Equity contracts | $ | 7,617 | ||
|
|
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging instruments, carried at fair value | Warrants(2) | |||
Equity contracts | $ | (6,239 | ) | |
|
|
(1) | Included in net realized gain (loss) on investments transactions in the Statement of Operations. |
(2) | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Fund entered into financial 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 transactions, where the legal right to set-off exists, is presented in the summary below.
Offsetting of financial instruments/transactions assets and liabilities:
Description | Gross amounts of recognized assets(1) | Collateral Pledged(2) | Net Amount | |||||||||
Securities on Loan | $ | 635,250 | $ | (635,250 | ) | $ | — | |||||
|
|
(1) | Amount represents market value. |
(2) | Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
Prudential Jennison Emerging Markets Equity Fund | 13 |
Statement of Assets & Liabilities (unaudited)
as of April 30, 2017
Assets | ||||
Investments at value, including securities on loan of $635,250: | ||||
Unaffiliated investments (cost $9,445,588) | $ | 11,728,236 | ||
Affiliated investments (cost $1,415,105) | 1,415,105 | |||
Receivable for Series shares sold | 100,120 | |||
Dividends and interest receivable | 12,429 | |||
Receivable from advisor | 6,047 | |||
Prepaid expenses | 275 | |||
|
| |||
Total assets | 13,262,212 | |||
|
| |||
Liabilities | ||||
Payable to broker for collateral for securities on loan | 647,900 | |||
Accrued expenses | 52,632 | |||
Payable for Series shares reacquired | 29,327 | |||
Foreign capital gains tax liability | 11,954 | |||
Distribution fee payable | 864 | |||
Affiliated transfer agent fee payable | 641 | |||
|
| |||
Total liabilities | 743,318 | |||
|
| |||
Net Assets | $ | 12,518,894 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 12,743 | ||
Paid-in capital in excess of par | 12,478,893 | |||
|
| |||
12,491,636 | ||||
Accumulated net investment loss | (44,413 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (2,199,089 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 2,270,760 | |||
|
| |||
Net assets, April 30, 2017 | $ | 12,518,894 | ||
|
|
See Notes to Financial Statements.
14 |
Class A | ||||
Net asset value and redemption price per share, | $ | 9.79 | ||
Maximum sales charge (5.50% of offering price) | 0.57 | |||
|
| |||
Maximum offering price to public | $ | 10.36 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | ||||
($769,350 ÷ 80,136 shares of common stock issued and outstanding) | $ | 9.60 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share, | $ | 9.85 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | $ | 9.85 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison Emerging Markets Equity Fund | 15 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2017
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $5,929) | $ | 40,469 | ||
Income from securities lending, net (including affiliated income of $569) | 1,801 | |||
Affiliated dividend income | 1,664 | |||
|
| |||
Total income | 43,934 | |||
|
| |||
Expenses | ||||
Management fee | 57,056 | |||
Distribution fee—Class A | 1,374 | |||
Distribution fee—Class C | 3,505 | |||
Custodian and accounting fees | 31,000 | |||
Registration fees | 29,000 | |||
Audit fee | 15,000 | |||
Shareholders’ reports | 11,000 | |||
Legal fees and expenses | 8,000 | |||
Directors’ fees | 5,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $1,500) | 2,000 | |||
Miscellaneous | 7,077 | |||
|
| |||
Total expenses | 170,012 | |||
Less: Management fee waiver and/or expense reimbursement | (99,925 | ) | ||
Less: Distribution fee waiver-Class A | (229 | ) | ||
|
| |||
Net expenses | 69,858 | |||
|
| |||
Net investment income (loss) | (25,924 | ) | ||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions (including affiliated of $156) | (72,893 | ) | ||
Foreign currency transactions | (961 | ) | ||
|
| |||
(73,854 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (including affiliated of ($153)) (net of change in foreign capital gains taxes $(11,954)) | 671,383 | |||
Foreign currencies | (49 | ) | ||
|
| |||
671,334 | ||||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 597,480 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 571,556 | ||
|
|
See Notes to Financial Statements.
16 |
Statement of Changes in Net Assets (unaudited)
Six Months Ended April 30, 2017 | Year Ended | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | (25,924 | ) | $ | (36,576 | ) | ||
Net realized gain (loss) on investment and foreign currency transactions | (73,854 | ) | (1,054,244 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 671,334 | 1,752,198 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 571,556 | 661,378 | ||||||
|
|
|
| |||||
Series share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 1,228,379 | 1,120,407 | ||||||
Cost of shares reacquired | (471,153 | ) | (464,853 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Series share transactions | 757,226 | 655,554 | ||||||
|
|
|
| |||||
Total increase (decrease) | 1,328,782 | 1,316,932 | ||||||
Net Assets: | ||||||||
Beginning of period | 11,190,112 | 9,873,180 | ||||||
|
|
|
| |||||
End of period | $ | 12,518,894 | $ | 11,190,112 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Jennison Emerging Markets Equity Fund | 17 |
Notes to Financial Statements (unaudited)
Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”) as an open-end management investment company and currently consists of six series: Prudential Jennison Emerging Markets Equity Fund, (the “Series”), Prudential Jennison Global Infrastructure Fund, Prudential QMA International Equity Fund, Prudential Emerging Markets Debt Local Currency Fund, Prudential Jennison Global Opportunities Fund and Prudential Jennison International Opportunities Fund. These financial statements relate to Prudential Jennison Emerging Markets Equity Fund. The financial statements of the other series are not presented herein.
The investment objective of the Series is to seek long-term growth of capital.
Note 1. Accounting Policies
The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of their financial statements.
Securities Valuation: The Series holds securities and other assets that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”) (formerly known as Prudential Investments LLC). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.
Common and preferred stocks, exchange-traded funds, and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security
18 |
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.
Common and preferred stocks traded on foreign securities exchanges are 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. 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 stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser 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 mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those
Prudential Jennison Emerging Markets Equity Fund | 19 |
Notes to Financial Statements (unaudited) (continued)
that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
Foreign Currency Translation: The books and records of the Series 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 Series are presented at the foreign exchange rates and market values at the close of the period, the Series 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 Series 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. Notwithstanding the above, the Series does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain (loss) upon the sale or maturity of foreign currency denominated debt obligations: such amounts are included in net realized gain (loss) on foreign currency transactions.
Additionally net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the holding of foreign currencies, forward currency contracts disposition of foreign currencies, currency gains (losses) realized between the trade date and settlement date on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than
20 |
investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.
Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending: The Fund may lend 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. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the loaned securities. Should the
borrower of the securities fail financially, the Fund has the right to repurchase the securities in the open market using the collateral. The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Fund also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the
collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability or the level of the governmental supervision and regulation of foreign securities markets.
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. Interest income, including amortization of premium and accretion of discount on debt
Prudential Jennison Emerging Markets Equity Fund | 21 |
Notes to Financial Statements (unaudited) (continued)
securities, as required, is recorded on an accrual basis. Expenses are recorded on the accrual basis, which may require the use of certain estimates by management that may differ from actual.
Net investment income or loss, (other than distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) 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.
Warrants and Rights: The Series may hold warrants and rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Warrants and rights entitle the holder to buy a proportionate amount of common stock at a specific price and time through the expiration dates. Such warrants and rights are held as long positions by the Series until exercised, sold or expired. Warrants and rights are valued at fair value in accordance with the Board’s approved fair valuation procedures.
Dividends and Distributions: The Series expects to pay dividends of net investment income and distributions of net realized capital gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid in capital in excess of par, as appropriate.
Taxes: It is the Series’ 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 income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends are recorded, net of reclaimable amounts, at the time the related income is earned.
Estimates: The preparation of the 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.
Note 2. Agreements
The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The
22 |
subadvisory agreement provides that Jennison furnishes investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of 1.05% of the Series’ average daily net assets up to $5 billion and 1.025% of the Series’ average daily net assets in excess of $5 billion. For the six months ended April 30, 2017, the effective management fee rate before any waivers and/or expense reimbursement was 1.05% and the waivers and/or expense reimbursements exceeded the effective management fee rate.
PGIM Investments has contractually agreed through February 28, 2018 to limit the net annual operating expenses (exclusive of distribution and service (12b-1) fees, taxes (such as income and foreign withholdings taxes, stamp duty and deferred tax expenses), interest, underlying funds, brokerage, extraordinary and certain other expenses such as dividend, broker charges and interest expense on short sales) of each class of shares of the Fund to 1.20% of the Fund’s average daily net assets. Expenses waived/reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver/reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C, Class Q and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q shares and Class Z shares of the Series.
Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30% and 1% of the average daily net assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fee to .25% of the average daily net assets of the Class A shares through February 28, 2018.
PIMS has advised the Series that it received $8,348 in front-end sales charges resulting from sales of Class A shares, during the six months ended April 30, 2017. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 2017, it has received $12 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.
PGIM Investments PGIM, Inc., PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Prudential Jennison Emerging Markets Equity Fund | 23 |
Notes to Financial Statements (unaudited) (continued)
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, whollyowned subsidiary of Prudential, serves as the Series’ transfer agent. The Transfer agent’s fees and expenses in the Statement of Operations also include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Series 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 permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board.
The Series may invest its overnight sweep cash in the Prudential Core Ultra Short Bond Fund (the “Core Fund”) and its securities lending cash collateral in the Prudential 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. For the period ended April 30, 2017, PGIM, Inc., was compensated $301 by PGIM Investments for managing the Fund’s securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and the Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
Note 4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of investment securities, (excluding short-term investments and U.S. Treasury securities), for the six months ended April 30, 2017 were $4,738,656 and $4,377,849, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2017 were as follows:
Tax Basis | $ | 10,860,693 | ||
|
| |||
Appreciation | 2,417,177 | |||
Depreciation | (134,529 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 2,282,648 | ||
|
|
24 |
For federal income tax purposes, the Series had a capital loss carryforward as of October 31, 2016 of approximately $2,125,000 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 Series elected to treat certain late-year ordinary losses of approximately $18,000 as having been incurred in the following fiscal year (October 31, 2017).
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Series offers Class A, Class C, Class Q and Class Z shares. Class A shares are subject to a maximum front-end sales charge of up to 5.50%. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. The Class A CDSC is waived for purchases by certain retirement or benefit plans. Class C shares are sold with a CDSC of 1% during the first 12 months from the date of purchase. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock. There are 865 million authorized shares of $.01 par value common stock, divided into four classes, designated Class A, Class C, Class Q, Class Z and Class T common stock, each of which consists of 25 million, 65 million, 250 million, 300 million and 225 million authorized shares, respectively. The Series currently does not have any Class T shares outstanding.
As of April 30, 2017, Prudential, through its affiliates, owned 1,000 shares of Class A, 1,000 shares of Class C, 1,001,515 shares of Class Q and 1,000 shares of Class Z. At reporting period end, two shareholders of record held 85% of the Fund’s outstanding shares on behalf of multiple beneficial owners.
Prudential Jennison Emerging Markets Equity Fund | 25 |
Notes to Financial Statements (unaudited) (continued)
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 75,209 | $ | 694,725 | |||||
Shares reacquired | (26,166 | ) | (229,968 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 49,043 | $ | 464,757 | |||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 73,952 | $ | 650,175 | |||||
Shares reacquired | (13,892 | ) | (121,759 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 60,060 | $ | 528,416 | |||||
Shares reacquired upon conversion into other share class(es) | (2,403 | ) | (21,648 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 57,657 | $ | 506,768 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 9,420 | $ | 87,751 | |||||
Shares reacquired | (9,023 | ) | (84,289 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 397 | $ | 3,462 | |||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 18,264 | $ | 163,648 | |||||
Shares reacquired | (14,302 | ) | (127,007 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 3,962 | $ | 36,641 | |||||
|
|
|
| |||||
Class Q | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | — | $ | — | |||||
Shares reacquired | — | — | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | — | — | ||||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | — | $ | — | |||||
Shares reacquired | — | — | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | — | $ | — | |||||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 48,142 | $ | 445,903 | |||||
Shares reacquired | (17,039 | ) | (156,896 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 31,103 | $ | 289,007 | |||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 34,206 | $ | 306,584 | |||||
Shares reacquired | (23,906 | ) | (216,087 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 10,300 | $ | 90,497 | |||||
Shares issued upon conversion from other share class(es) | 2,400 | 21,648 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 12,700 | $ | 112,145 | |||||
|
|
|
|
26 |
Note 7. Borrowings
The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 6, 2016 through October 5, 2017. The Funds pay an annualized commitment fee of .15% of the unused portion of the SCA. For the SCA, the Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under each SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
The Fund did not utilize the SCA during the six months ended April 30, 2017.
Note 8. Recent Accounting Pronouncements and Reporting Updates
On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new rules and forms and amended existing rules and forms which are intended to modernize and enhance the reporting and disclosure of information by registered investment companies and to improve the quality of information that funds provide to investors, including modifications to Regulation S-X which would require standardized, enhanced disclosure about derivatives in investment company financial statements. The new rules also enhance disclosure regarding fund liquidity and redemption practices. The compliance dates of the modifications to Regulation S-X are August 1, 2017 and other amendments and rules are generally June 1, 2018 and December 1, 2018. Management is currently evaluating the impacts to the financial statement disclosures, if any.
Note 9. Other
At the Fund’s Board meeting in March, 2017, the Board of Directors approved a change in the methodology of allocating certain expenses, like Transfer Agent Fees (including sub-transfer agent and networking fees) and Blue Sky fees. The impact to the net assets of the Series and individual share classes is not ascertainable at the present time. PGIM Investments expects to implement the changes by December 31, 2017.
Prudential Jennison Emerging Markets Equity Fund | 27 |
Financial Highlights
Class A Shares | ||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | September 16, 2014(b) through October 31, | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||
Per Share Operating Performance(c): | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.34 | $8.81 | $10.09 | $10.00 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (.03 | ) | (.04 | ) | (.04 | ) | (.01 | ) | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | .48 | .57 | (1.24 | ) | .10 | |||||||||||||||||||
Total from investment operations | .45 | .53 | (1.28 | ) | .09 | |||||||||||||||||||
Net asset value, end of period | $9.79 | $9.34 | $8.81 | $10.09 | ||||||||||||||||||||
Total Return(a) | 4.82% | 6.02% | (12.69)% | .90% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets, end of period (000) | $1,390 | $869 | $311 | $18 | ||||||||||||||||||||
Average net assets (000) | $924 | $528 | $208 | $15 | ||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||
Expenses after waiver and/or expense reimbursement | 1.45%(e) | 1.45% | 1.54% | 1.55% | (e) | |||||||||||||||||||
Expenses before waiver and/or expense reimbursement | 3.54%(e) | 3.87% | 3.40% | �� | 14.06% | (e) | ||||||||||||||||||
Net investment loss | (.63%)(e) | (.49)% | (.48)% | (.93)% | (e) | |||||||||||||||||||
Portfolio turnover rate | 41%(f) | 44% | 67% | 15% | (f) |
(a) | Total return does not consider the effect of sales load. 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 return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Commencement of operations |
(c) | Calculated based on average shares outstanding during the period. |
(d) | Does not include expenses of the underlying portfolios in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
28 |
Class C Shares | ||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | September 16, 2014(b) through October 31, | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||
Per Share Operating Performance(c): | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.20 | $8.74 | $10.08 | $10.00 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (.06 | ) | (.11 | ) | (.13 | ) | (.02 | ) | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | .46 | .57 | (1.21 | ) | .10 | |||||||||||||||||||
Total from investment operations | .40 | .46 | (1.34 | ) | .08 | |||||||||||||||||||
Net asset value, end of period | $9.60 | $9.20 | $8.74 | $10.08 | ||||||||||||||||||||
Total Return(a) | 4.35% | 5.26% | (13.29)% | .80% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets, end of period (000) | $769 | $734 | $662 | $501 | ||||||||||||||||||||
Average net assets (000) | $707 | $672 | $699 | $296 | ||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||
Expenses after waiver and/or expense reimbursement | 2.20%(e) | 2.20% | 2.29% | 2.30% | (e) | |||||||||||||||||||
Expenses before waiver and/or expense reimbursement | 4.25%(e) | 4.62% | 4.12% | 15.19% | (e) | |||||||||||||||||||
Net investment loss | (1.39%)(e) | (1.29)% | (1.36)% | (1.79)% | (e) | |||||||||||||||||||
Portfolio turnover rate | 41%(f) | 44% | 67% | 15% | (f) |
(a) | Total return does not consider the effect of sales load. 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 return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Commencement of operations |
(c) | Calculated based on average shares outstanding during the period. |
(d) | Does not include expenses of the underlying portfolio in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
Prudential Jennison Emerging Markets Equity Fund | 29 |
Financial Highlights (continued)
Class Q Shares | ||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | September 16, 2014(b) through October 31, | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||
Per Share Operating Performance(c): | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.39 | $8.83 | $10.09 | $10.00 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (.02 | ) | (.03 | ) | (.04 | ) | (.01 | ) | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | .48 | .59 | (1.21 | ) | .10 | |||||||||||||||||||
Total from investment operations | .46 | .56 | (1.25 | ) | .09 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||
Dividends from net investment income | - | - | (.01 | ) | - | |||||||||||||||||||
Net asset value, end of period | $9.85 | $9.39 | $8.83 | $10.09 | ||||||||||||||||||||
Total Return(a) | 4.90% | 6.34% | (12.44)% | .90% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets, end of period (000) | $9,861 | $9,404 | $8,840 | $10,101 | ||||||||||||||||||||
Average net assets (000) | $9,078 | $8,722 | $9,518 | $9,785 | ||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||
Expenses after waiver and/or expense reimbursement | 1.20%(e) | 1.20% | 1.29% | 1.30% | (e) | |||||||||||||||||||
Expenses before waiver and/or expense reimbursement | 3.00%(e) | 3.13% | 2.91% | 13.37% | (e) | |||||||||||||||||||
Net investment loss | (.39%)(e) | (.29)% | (.40)% | (.68)% | (e) | |||||||||||||||||||
Portfolio turnover rate | 41%(f) | 44% | 67% | 15% | (f) |
(a) | 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 investment return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Commencement of operations |
(c) | Calculated based on average shares outstanding during the period. |
(d) | Does not include expenses of the underlying portfolios in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
30 |
Class Z Shares | ||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | September 16, 2014(b) through October 31, | ||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||
Per Share Operating Performance(c): | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.39 | $8.82 | $10.09 | $10.00 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (.02 | ) | (.03 | ) | (.04 | ) | (.01 | ) | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | .48 | .60 | (1.23 | ) | .10 | |||||||||||||||||||
Total from investment operations | .46 | .57 | (1.27 | ) | .09 | |||||||||||||||||||
Net asset value, end of period | $9.85 | $9.39 | $8.82 | $10.09 | ||||||||||||||||||||
Total Return(a) | 4.90% | 6.46% | (12.59)% | .90% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets, end of period (000) | $498 | $183 | $60 | $10 | ||||||||||||||||||||
Average net assets (000) | $249 | $102 | $17 | $10 | ||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||
Expenses after waiver and/or expense reimbursement | 1.20%(e) | 1.20% | 1.29% | 1.30% | (e) | |||||||||||||||||||
Expenses before waiver and/or expense reimbursement | 3.26%(e) | 3.55% | 3.48% | 13.51% | (e) | |||||||||||||||||||
Net investment loss | (.40%)(e) | (.31)% | (.44)% | (.67)% | (e) | |||||||||||||||||||
Portfolio turnover rate | 41%(f) | 44% | 67% | 15% | (f) |
(a) | 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 investment return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Commencement of operations |
(c) | Calculated based on average shares outstanding during the period. |
(d) | Does not include expenses of the underlying portfolios in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
Prudential Jennison Emerging Markets Equity Fund | 31 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Trustees of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most 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 • Keith F. Hartstein • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Chad A. Earnst, Chief Compliance Officer • Deborah A. Docs, Secretary • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Jennison Associates LLC | 466 Lexington Avenue New York, NY 10017 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time 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, Prudential Jennison Emerging Markets Equity Fund, PGIM Investments, Attn: Board of Trustees, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
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 |
PRUDENTIAL JENNISON EMERGING MARKETS EQUITY FUND
SHARE CLASS | A | C | Q | Z | ||||
NASDAQ | PDEAX | PDECX | PDEQX | PDEZX | ||||
CUSIP | 743969644 | 743969636 | 743969628 | 743969610 |
MF225E2
PRUDENTIAL JENNISON GLOBAL OPPORTUNITIES FUND
SEMIANNUAL REPORT
APRIL 30, 2017
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: To seek long-term growth of capital |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2017 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. © 2017 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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Letter from the President
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison Global Opportunities Fund informative and useful. The report covers performance for the six-month period ended April 30, 2017. We are proud to announce that Prudential Investments became PGIM® Investments, effective April 3, 2017. Why PGIM? This new name was chosen to further align with the global investment management businesses of Prudential Financial, which rebranded from Prudential Investment Management in January 2016. This new name allows for one brand and reflects our ability and commitment to delivering investment solutions to clients around the globe. Please keep in mind that only the Fund adviser’s name was changed: the name of your Fund and the management and operation did not change.
Since market conditions change over time, 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 adviser 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. We’re part of PGIM, the 9th-largest 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
Prudential Jennison Global Opportunities Fund
June 15, 2017
Prudential Jennison Global Opportunities Fund | 3 |
Your Fund’s Performance (unaudited)
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 www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 4/30/17 (without sales charges) | Average Annual Total Returns as of 4/30/17 (with sales charges) | |||||||
Six Months* (%) | One Year (%) | Five Years (%) | Since Inception (%) | |||||
Class A | 15.79 | 15.76 | 10.36 | 10.34 (3/14/12) | ||||
Class C | 15.40 | 20.56 | 10.79 | 10.72 (3/14/12) | ||||
Class Q | 16.05 | 22.94 | N/A | 10.20 (12/22/14) | ||||
Class Z | 15.94 | 22.75 | 11.89 | 11.83 (3/14/12) | ||||
MSCI ACWI ND Index | 11.76 | 15.14 | 8.96 | — | ||||
Lipper Global Multi-Cap Growth Funds Average | 12.10 | 15.24 | 9.12 | — |
*Not annualized
Source: PGIM Investments LLC and Lipper Inc.
Inception returns are provided for any share class with less than 10 fiscal years of returns.
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 Q | Class Z | |||||
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 original purchase price or net asset value at redemption) | 1% on sales of $1 million or more made within 12 months of purchase | 1% 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) | .30% (.25% currently) | 1% | None | None |
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Benchmark Definitions
MSCI ACWI ND Index—The Morgan Stanley Capital International All Country World Net Dividend Index (MSCI ACWI ND Index) is an unmanaged free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI ND Index consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes. The developed market country indexes included are: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States. The emerging market country indexes included are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates. The ND version of the MSCI ACWI Index reflects the impact of the maximum withholding taxes on reinvested dividends. The average annual total return for the Index measured from the month-end closest to the inception date through 4/30/17 is 8.56% for Class A, Class C, and Class Z shares and 5.91% for Class Q shares.
Lipper Global Multi-Cap Growth Funds Average—The Lipper Global Multi-Cap Growth Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Global Multi-Cap Growth Funds universe for the periods noted. Funds in the Lipper Average are funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Global multi-cap growth funds typically have above-average characteristics compared to the MSCI World Index. The average annual total return for the Lipper Average measured from the month-end closest to the inception date through 4/30/17 is 8.88% for Class A, Class C, and Class Z shares and 5.81% for Class Q shares.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Five Largest Holdings expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Tencent Holdings Ltd., Internet Software & Services | 6.2 | |||
Amazon.com, Inc., Internet & Direct Marketing Retail | 5.5 | |||
adidas AG, Textiles, Apparel & Luxury Goods | 5.3 | |||
Alibaba Group Holding Ltd., Internet Software & Services | 5.2 | |||
Facebook, Inc., Internet Software & Services | 4.1 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Internet Software & Services | 23.7 | |||
Textiles, Apparel & Luxury Goods | 13.1 | |||
Internet & Direct Marketing Retail | 10.2 | |||
Semiconductors & Semiconductor Equipment | 5.4 | |||
Specialty Retail | 5.0 |
Industry weightings reflect only long-term investments and are subject to change.
Prudential Jennison Global Opportunities Fund | 5 |
Fees and Expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2017. 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 Investments funds, including the Fund, that you own. You should consider the additional fees that were charged to your
6 | Visit our website at pgiminvestments.com |
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 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.
Prudential Jennison Global Opportunities Fund | Beginning Account Value November 1, 2016 | Ending Account Value April 30, 2017 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,157.90 | 1.21 | % | $ | 6.47 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.79 | 1.21 | % | $ | 6.06 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,154.00 | 1.96 | % | $ | 10.47 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.08 | 1.96 | % | $ | 9.79 | ||||||||||
Class Q | Actual | $ | 1,000.00 | $ | 1,160.50 | 0.84 | % | $ | 4.50 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.63 | 0.84 | % | $ | 4.21 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,159.40 | 0.96 | % | $ | 5.14 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.03 | 0.96 | % | $ | 4.81 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2017, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2017 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
Prudential Jennison Global Opportunities Fund | 7 |
Schedule of Investments (unaudited)
as of April 30, 2017
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 98.7% | ||||||||
COMMON STOCKS 97.5% | ||||||||
Argentina 3.5% | ||||||||
MercadoLibre, Inc. | 44,768 | $ | 10,247,843 | |||||
Brazil 2.1% | ||||||||
Raia Drogasil SA | 288,987 | 6,119,253 | ||||||
China 13.1% | ||||||||
Alibaba Group Holding Ltd., ADR*(a) | 131,120 | 15,144,360 | ||||||
Baidu, Inc., ADR* | 28,661 | 5,165,572 | ||||||
Tencent Holdings Ltd. | 576,787 | 18,072,663 | ||||||
|
| |||||||
38,382,595 | ||||||||
France 5.9% | ||||||||
Kering | 31,629 | 9,803,677 | ||||||
LVMH Moet Hennessy Louis Vuitton SE | 30,710 | 7,581,351 | ||||||
|
| |||||||
17,385,028 | ||||||||
Germany 5.3% | ||||||||
adidas AG | 76,992 | 15,436,038 | ||||||
India 2.1% | ||||||||
HDFC Bank Ltd., ADR | 75,689 | 6,025,601 | ||||||
Japan 2.1% | ||||||||
Keyence Corp. | 15,465 | 6,217,147 | ||||||
Netherlands 2.2% | ||||||||
ASML Holding NV | 49,441 | 6,537,554 | ||||||
Spain 3.6% | ||||||||
Industria de Diseno Textil SA(a) | 279,301 | 10,703,156 | ||||||
Thailand 2.2% | ||||||||
CP ALL PCL | 3,659,452 | 6,455,220 | ||||||
United Kingdom 5.6% | ||||||||
Ashtead Group PLC | 289,948 | 6,116,738 | ||||||
ASOS PLC* | 55,742 | 4,201,238 | ||||||
St. James’s Place PLC | 417,301 | 6,202,505 | ||||||
|
| |||||||
16,520,481 |
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 9 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
United States 49.8% | ||||||||
Activision Blizzard, Inc. | 68,589 | $ | 3,583,775 | |||||
Albemarle Corp. | 69,359 | 7,553,889 | ||||||
Alphabet, Inc. (Class A Stock)* | 10,121 | 9,357,067 | ||||||
Amazon.com, Inc.* | 17,471 | 16,160,500 | ||||||
Apple, Inc. | 42,123 | 6,050,969 | ||||||
BioMarin Pharmaceutical, Inc.* | 60,437 | 5,792,282 | ||||||
Broadcom Ltd. | 41,967 | 9,266,733 | ||||||
Celgene Corp.* | 19,165 | 2,377,418 | ||||||
Charter Communications, Inc. (Class A Stock)* | 25,858 | 8,925,147 | ||||||
Facebook, Inc. (Class A Stock)* | 80,275 | 12,061,319 | ||||||
Goldman Sachs Group, Inc. (The) | 32,516 | 7,277,081 | ||||||
Halliburton Co. | 118,273 | 5,426,365 | ||||||
Illumina, Inc.* | 32,736 | 6,051,577 | ||||||
Mastercard, Inc. (Class A Stock) | 92,316 | 10,738,197 | ||||||
Netflix, Inc.* | 62,215 | 9,469,123 | ||||||
NIKE, Inc. (Class B Stock) | 102,018 | 5,652,817 | ||||||
Parker-Hannifin Corp. | 42,362 | 6,811,810 | ||||||
Tesla, Inc.*(a) | 26,215 | 8,233,345 | ||||||
Ulta Beauty, Inc.* | 14,670 | 4,128,725 | ||||||
Vertex Pharmaceuticals, Inc.* | 12,165 | 1,439,120 | ||||||
|
| |||||||
146,357,259 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS | 286,387,175 | |||||||
|
| |||||||
PREFERRED STOCK 1.2% | ||||||||
Brazil | ||||||||
Itau Unibanco Holding SA (PRFC) | 293,636 | 3,630,150 | ||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 290,017,325 | |||||||
|
| |||||||
SHORT-TERM INVESTMENTS 10.5% |
| |||||||
AFFILIATED MUTUAL FUNDS |
| |||||||
Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund(b) | 4,089,300 | 4,089,300 | ||||||
Prudential Investment Portfolios 2 - Prudential Institutional Money Market Fund | 26,776,553 | 26,781,909 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS | 30,871,209 | |||||||
|
| |||||||
TOTAL INVESTMENTS 109.2% | 320,888,534 | |||||||
Liabilities in excess of other assets (9.2)% | (27,123,213 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 293,765,321 | ||||||
|
|
See Notes to Financial Statements.
10 |
The following abbreviations are used in the semiannual report:
ADR—American Depositary Receipt
LIBOR—London Interbank Offered Rate
* | Non-income producing security. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $26,329,018; cash collateral of $26,761,790 (included in liabilities) was received with which the Series purchased highly liquid short-term investments. |
(b) | PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund and Prudential Institutional Money Market Fund. |
(c) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
Fair Value Measurements:
Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.
Level 1—unadjusted quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2017 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Argentina | $ | 10,247,843 | $ | — | $ | — | ||||||
Brazil | 6,119,253 | — | — | |||||||||
China | 20,309,932 | 18,072,663 | — | |||||||||
France | — | 17,385,028 | — | |||||||||
Germany | — | 15,436,038 | — | |||||||||
India | 6,025,601 | — | — | |||||||||
Japan | — | 6,217,147 | — | |||||||||
Netherlands | — | 6,537,554 | — | |||||||||
Spain | — | 10,703,156 | — | |||||||||
Thailand | — | 6,455,220 | — | |||||||||
United Kingdom | — | 16,520,481 | — | |||||||||
United States | 146,357,259 | — | — | |||||||||
Preferred Stock | ||||||||||||
Brazil | 3,630,150 | — | — | |||||||||
Affiliated Mutual Funds | 30,871,209 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 223,561,247 | $ | 97,327,287 | $ | — | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.
Industry Classification:
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2017 were as follows:
Internet Software & Services | 23.7 | % | ||
Textiles, Apparel & Luxury Goods | 13.1 | |||
Affiliated Mutual Funds (including 9.1% of collateral for securities on loan) | 10.5 | |||
Internet & Direct Marketing Retail | 10.2 | |||
Semiconductors & Semiconductor Equipment | 5.4 | |||
Specialty Retail | 5.0 | |||
Food & Staples Retailing | 4.3 | |||
IT Services | 3.7 | |||
Banks | 3.3 | |||
Biotechnology | 3.3 | |||
Media | 3.0 | |||
Automobiles | 2.8 | |||
Chemicals | 2.6 | |||
Capital Markets | 2.5 | % | ||
Machinery | 2.3 | |||
Electronic Equipment, Instruments | 2.1 | |||
Insurance | 2.1 | |||
Trading Companies & Distributors | 2.1 | |||
Life Sciences Tools & Services | 2.1 | |||
Technology Hardware, Storage & Peripherals | 2.1 | |||
Energy Equipment & Services | 1.8 | |||
Software | 1.2 | |||
|
| |||
109.2 | ||||
Liabilities in excess of other assets | (9.2 | ) | ||
|
| |||
100.0 | % | |||
|
|
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Series entered into financial 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 transactions, where the legal right to set-off exists, is presented in the summary below.
Offsetting of financial instruments/transactions assets and liabilities:
Description | Gross Amounts of Recognized Assets(1) | Collateral Pledged(2) | Net Amount | |||||
Securities on Loan | $26,329,018 | $ | (26,329,018 | ) | $ — | |||
|
(1) | Amount represents market value. |
(2) | Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
12 |
This Page Intentionally Left Blank
Statement of Assets & Liabilities (unaudited)
as of April 30, 2017
Assets |
| |||
Investments at value, including securities on loan of $26,329,018: |
| |||
Unaffiliated investments (cost $219,192,147) | $ | 290,017,325 | ||
Affiliated investments (cost $30,869,816) | 30,871,209 | |||
Receivable for investments sold | 6,225,693 | |||
Receivable for Series shares sold | 928,068 | |||
Dividends receivable | 428,353 | |||
Tax reclaim receivable | 56,599 | |||
Prepaid expenses | 926 | |||
|
| |||
Total Assets | 328,528,173 | |||
|
| |||
Liabilities |
| |||
Payable to broker for collateral for securities on loan | 26,761,790 | |||
Payable for Series shares reacquired | 5,535,251 | |||
Payable for investments purchased | 2,089,092 | |||
Management fee payable | 166,195 | |||
Accrued expenses and other liabilities | 149,907 | |||
Distribution fee payable | 52,048 | |||
Affiliated transfer agent fee payable | 8,569 | |||
|
| |||
Total Liabilities | 34,762,852 | |||
|
| |||
Net Assets | $ | 293,765,321 | ||
|
| |||
Net assets were comprised of: |
| |||
Common stock, at par | $ | 167,381 | ||
Paid-in capital in excess of par | 249,068,233 | |||
|
| |||
249,235,614 | ||||
Accumulated net investment loss | (1,257,757 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (25,041,359 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 70,828,823 | |||
|
| |||
Net assets, April 30, 2017 | $ | 293,765,321 | ||
|
|
See Notes to Financial Statements.
14 |
Class A |
| |||
Net asset value and redemption price per share | $ | 17.53 | ||
Maximum sales charge (5.50% of offering price) | 1.02 | |||
|
| |||
Maximum offering price to public | $ | 18.55 | ||
|
| |||
Class C |
| |||
Net asset value, offering price and redemption price per share | ||||
($51,762,010 ÷ 3,069,586 shares of common stock issued and outstanding) | $ | 16.86 | ||
|
| |||
Class Q |
| |||
Net asset value, offering price and redemption price per share |
| |||
($10,359,021 ÷ 582,170 shares of common stock issued and outstanding) | $ | 17.79 | ||
|
| |||
Class Z |
| |||
Net asset value, offering price and redemption price per share |
| |||
($176,414,981 ÷ 9,936,592 shares of common stock issued and outstanding) | $ | 17.75 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 15 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2017
Net Investment Income (Loss) |
| |||
Income |
| |||
Unaffiliated dividend income (net of foreign withholding taxes of $53,380) | $ | 999,382 | ||
Income from securities lending, net (including affiliated income of $11,417) | 41,093 | |||
Affiliated dividend income | 15,812 | |||
|
| |||
Total income | 1,056,287 | |||
|
| |||
Expenses |
| |||
Management fee | 1,089,779 | |||
Distribution fee—Class A | 105,475 | |||
Distribution fee—Class C | 235,258 | |||
Transfer agent’s fees and expenses (including affiliated expense of $25,100) | 150,000 | |||
Custodian and accounting fees | 76,000 | |||
Registration fees | 43,000 | |||
Shareholders’ reports | 20,000 | |||
Audit fee | 13,000 | |||
Legal fees and expenses | 10,000 | |||
Directors’ fees | 7,000 | |||
Loan interest expense | 1,183 | |||
Miscellaneous | 15,647 | |||
|
| |||
Total expenses | 1,766,342 | |||
Less: Expense reimbursement | (164,811 | ) | ||
Distribution fee waiver—Class A | (17,582 | ) | ||
|
| |||
Net expenses | 1,583,949 | |||
|
| |||
Net investment income (loss) | (527,662 | ) | ||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions |
| |||
Net realized gain (loss) on: |
| |||
Investment transactions (including affiliated of $429) | 4,651,913 | |||
Foreign currency transactions | (12,808 | ) | ||
|
| |||
4,639,105 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: |
| |||
Investments (including affiliated of $1,393) | 35,896,403 | |||
Foreign currencies | 3,827 | |||
|
| |||
35,900,230 | ||||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 40,539,335 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 40,011,673 | ||
|
|
See Notes to Financial Statements.
16 |
Statement of Changes in Net Assets (unaudited)
Six Months Ended April 30, 2017 | Year Ended October 31, 2016 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations |
| |||||||
Net investment income (loss) | $ | (527,662 | ) | $ | (939,509 | ) | ||
Net realized gain (loss) on investment and foreign currency transactions | 4,639,105 | (26,490,892 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 35,900,230 | 12,316,327 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 40,011,673 | (15,114,074 | ) | |||||
|
|
|
| |||||
Series share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 65,405,245 | 270,276,394 | ||||||
Cost of shares reacquired | (76,351,120 | ) | (196,305,393 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Series share transactions | (10,945,875 | ) | 73,971,001 | |||||
|
|
|
| |||||
Total increase (decrease) | 29,065,798 | 58,856,927 | ||||||
Net Assets: |
| |||||||
Beginning of period | 264,699,523 | 205,842,596 | ||||||
|
|
|
| |||||
End of period | $ | 293,765,321 | $ | 264,699,523 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 17 |
Notes to Financial Statements (unaudited)
Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”) as an open-end management investment company, and currently consists of six investment portfolios: Prudential Jennison Global Opportunities Fund (the “Series”), Prudential Jennison Global Infrastructure Fund, Prudential QMA International Equity Fund, Prudential Jennison International Opportunities Fund, Prudential Jennison Emerging Markets Equity Fund and Prudential Emerging Markets Debt Local Currency Fund. These financial statements relate to Prudential Jennison Global Opportunities Fund. The financial statements of the other series are not presented herein. The Series commenced investment operations on March 14, 2012. The Series is diversified and its investment objective is to seek long-term growth of capital.
Note 1. Accounting Policies
The Fund follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Series holds securities and other assets that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”) (formerly known as Prudential Investments LLC). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Schedule of Investments.
Common and preferred stocks, exchange-traded funds, and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security
18 |
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.
Common and preferred stocks traded on foreign securities exchanges are 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. 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 stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser 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 mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities
Prudential Jennison Global Opportunities Fund | 19 |
Notes to Financial Statements (unaudited) (continued)
are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
Foreign Currency Translation: The books and records of the Series 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 Series are presented at the foreign exchange rates and market values at the close of the period, the Series 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 Series 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.
Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period-end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.
20 |
Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability or the level of governmental supervision and regulation of foreign securities markets.
Master Netting Arrangements: The Series may be subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending: The Series may lend 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. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series 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 collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
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. 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.
Prudential Jennison Global Opportunities Fund | 21 |
Notes to Financial Statements (unaudited) (continued)
Net investment income or loss (other than distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) 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.
Dividends and Distributions: The Series expects to pay dividends from net investment income and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.
Taxes: It is the Series’ 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.
Estimates: The preparation of the 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.
Note 2. Agreements
The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison furnishes investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of .825% of the Series’ average daily net assets up to $1 billion and .80% of
22 |
such assets in excess of $1 billion. The effective management fee rate before any waivers and/or expense reimbursements was .825% for the six months ended April 30, 2017. The effective management fee rate, net of waivers and/or expense reimbursement, was .700%.
PGIM Investments has contractually agreed through February 28, 2018 to limit the net annual operating expenses (exclusive of distribution and service (12b-1) fees, transfer agency expenses (including sub-transfer agency and networking fees), taxes (such as income and foreign withholdings taxes, stamp duty and deferred tax expenses), interest, underlying funds, brokerage, extraordinary and certain other expenses, such as dividend, broker charges and interest expense on short sales) of each class of shares of the Series to .84% of the Series’ average daily net assets. Expenses waived/reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver/reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C, Class Q and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Class Z shares of the Series.
Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30% and 1% of the average daily net assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares through February 28, 2018.
PIMS has advised the Series that it has received $86,900 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2017. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 2017 it has received $6,336 in contingent deferred sales charges imposed upon redemption by certain Class C shareholders.
PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses on the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
Prudential Jennison Global Opportunities Fund | 23 |
Notes to Financial Statements (unaudited) (continued)
The Series 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 permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board.
The Series may invest its overnight sweep cash in the Prudential Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the Prudential 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. For the period ended April 30, 2017, PGIM, Inc., an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, was compensated $7,934 for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
Note 4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Treasury securities) for the six months ended April 30, 2017 were $123,364,873 and $135,500,996, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2017 were as follows:
Tax Basis | $ | 252,264,243 | ||
|
| |||
Appreciation | 70,151,578 | |||
Depreciation | (1,527,287 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 68,624,291 | ||
|
|
The book basis may differ from tax basis due to certain tax-related adjustments.
For federal income tax purposes, the Series had a capital loss carryforward as of October 31, 2016 of approximately $27,478,000 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.
24 |
The Series elected to treat certain late-year ordinary income losses of approximately $723,000 as having been incurred in the following fiscal year (October 31, 2017).
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Series offers Class A, Class C, Class Q and Class Z shares. Class A shares are subject to a maximum front-end sales charge of 5.50%. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%. The Class A CDSC is waived for purchases by certain retirement or benefits plans. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. Class Q and Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.
There are 725 million shares of common stock, at $.01 par value per share, authorized and divided into 5 classes, designated Class A, Class C, Class Q, Class T and Class Z common stock, each of which consists of 25 million, 65 million, 200 million, 235 million and 200 million shares, respectively. The Series currently does not have any Class T shares outstanding.
As of April 30, 2017, Prudential through its affiliates, owned 707 Class Q shares of the Series. At reporting period end, five shareholders of record held 59% of the Series’ outstanding shares.
Prudential Jennison Global Opportunities Fund | 25 |
Notes to Financial Statements (unaudited) (continued)
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 486,888 | $ | 7,675,603 | |||||
Shares reacquired | (1,424,817 | ) | (22,305,363 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (937,929 | ) | (14,629,760 | ) | ||||
Shares issued upon conversion from other share class(es) | 19,004 | 305,057 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,848,670 | ) | (29,216,237 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (2,767,595 | ) | $ | (43,540,940 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 4,917,603 | $ | 74,099,622 | |||||
Shares reacquired | (3,588,967 | ) | (52,198,226 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 1,328,636 | 21,901,396 | ||||||
Shares issued upon conversion from other share class(es) | 72,822 | 1,078,878 | ||||||
Shares reacquired upon conversion into other share class(es) | (221,310 | ) | (3,302,153 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,180,148 | $ | 19,678,121 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 387,776 | $ | 5,980,104 | |||||
Shares reacquired | (830,737 | ) | (12,209,172 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (442,961 | ) | (6,229,068 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (62,760 | ) | (935,482 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (505,721 | ) | $ | (7,164,550 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 2,729,452 | $ | 40,204,884 | |||||
Shares reacquired | (1,010,034 | ) | (14,223,430 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 1,719,418 | 25,981,454 | ||||||
Shares reacquired upon conversion into other share class(es) | (50,695 | ) | (759,086 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,668,723 | $ | 25,222,368 | |||||
|
|
|
| |||||
Class Q | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 19,441 | $ | 325,075 | |||||
Shares reacquired | (2,503 | ) | (42,233 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 16,938 | 282,842 | ||||||
Shares issued upon conversion from other share class(es) | 1,321 | 22,025 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 18,259 | $ | 304,867 | |||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 563,204 | $ | 9,000,000 | |||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 563,204 | $ | 9,000,000 | |||||
|
|
|
|
26 |
Class Z | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 3,296,078 | $ | 51,424,463 | |||||
Shares reacquired | (2,687,384 | ) | (41,794,352 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 608,694 | 9,630,111 | ||||||
Shares issued upon conversion from other share class(es) | 1,884,924 | 30,122,361 | ||||||
Shares reacquired upon conversion into other share class(es) | (18,319 | ) | (297,724 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 2,475,299 | $ | 39,454,748 | |||||
|
|
|
| |||||
Year ended October 31, 2016: |
| |||||||
Shares sold | 9,732,772 | $ | 146,971,888 | |||||
Shares reacquired | (8,986,305 | ) | (129,883,737 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 746,467 | 17,088,151 | ||||||
Shares issued upon conversion from other shares class(es) | 247,411 | 3,745,581 | ||||||
Shares reacquired upon conversion into other share class(es) | (51,894 | ) | (763,220 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 941,984 | $ | 20,070,512 | |||||
|
|
|
|
Note 7. Borrowings
The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 6, 2016 through October 5, 2017. The Funds pay an annualized commitment fee of .15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
The Series utilized the SCA during the six months ended April 30, 2017. The average daily balance for the 19 days the Series had loans outstanding during the period was $1,124,053 borrowed at a weighted average interest rate of 1.99%. The maximum loan balance outstanding during the period was $3,835,000. At April 30, 2017, the Series did not have an outstanding loan balance.
Note 8. Recent Accounting Pronouncements and Reporting Updates
On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new rules and forms and amended existing rules and forms which are intended to modernize and enhance the reporting and disclosure of information by registered investment companies and to improve the quality of information that funds provide to investors, including modifications to Regulation S-X which would require standardized, enhanced disclosure about derivatives in investment company financial statements. The new rules also enhance disclosure regarding fund liquidity and redemption practices. The compliance
Prudential Jennison Global Opportunities Fund | 27 |
Notes to Financial Statements (unaudited) (continued)
dates of the modifications to Regulation S-X are August 1, 2017 and other amendments and rules are generally June 1, 2018 and December 1, 2018. Management is currently evaluating the impacts to the financial statement disclosures, if any.
Note 9. Other
At the Fund’s Board meeting in March, 2017, the Board of Directors approved a change in the methodology of allocating certain expenses, like Transfer Agent fees (including sub-transfer agent and networking fees) and Blue Sky fees. The impact to the net assets of the Series and individual share classes is not ascertainable at the present time. PGIM Investments expects to implement the changes by December 31, 2017.
28 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 14, 2012(a) through October 31, | ||||||||||||||||||||||||||||||
2017(b) | 2016(b) | 2015(b) | 2014(b) | 2013(b) | 2012 | |||||||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.14 | $15.63 | $14.08 | $12.94 | $9.86 | $10.00 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (.04) | (.05) | (.09) | (.11) | (.06) | (.02) | ||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.43 | (.44) | 1.64 | 1.25 | 3.14 | (.12) | ||||||||||||||||||||||||||
Total from investment operations | 2.39 | (.49) | 1.55 | 1.14 | 3.08 | (.14) | ||||||||||||||||||||||||||
Net asset value, end of period | $17.53 | $15.14 | $15.63 | $14.08 | $12.94 | $9.86 | ||||||||||||||||||||||||||
Total Return(c): | 15.79% | (3.13)% | 11.01% | 8.81% | 31.24% | (1.40)% | ||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $55,229 | $89,579 | $74,049 | $21,150 | $10,035 | $3,898 | ||||||||||||||||||||||||||
Average net assets (000) | $70,911 | $100,220 | $36,635 | $19,352 | $4,982 | $2,967 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.21% | (e) | 1.20% | 1.38% | 1.60% | 1.60% | 1.60% | (e) | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.38% | (e) | 1.36% | 1.56% | 1.71% | 2.19% | 3.10% | (e) | ||||||||||||||||||||||||
Net investment income (loss) | (.49)% | (e) | (.31)% | (.63)% | (.78)% | (.54)% | (.30)% | (e) | ||||||||||||||||||||||||
Portfolio turnover rate | 47% | (f) | 88% | 58% | 68% | 70% | 48% | (f) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized. |
(d) | Does not include expenses of the underlying fund in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 29 |
Financial Highlights (unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 14, 2012(a) through October 31, | ||||||||||||||||||||||||||||||
2017(b) | 2016(b) | 2015(b) | 2014(b) | 2013(b) | 2012 | |||||||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $14.61 | $15.20 | $13.79 | $12.77 | $9.81 | $10.00 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (.09 | ) | (.15 | ) | (.20 | ) | (.21 | ) | (.14 | ) | (.06 | ) | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.34 | (.44 | ) | 1.61 | 1.23 | 3.10 | (.13 | ) | ||||||||||||||||||||||||
Total from investment operations | 2.25 | (.59 | ) | 1.41 | 1.02 | 2.96 | (.19 | ) | ||||||||||||||||||||||||
Net asset value, end of period | $16.86 | $14.61 | $15.20 | $13.79 | $12.77 | $9.81 | ||||||||||||||||||||||||||
Total Return(c): | 15.40% | (3.88)% | 10.22% | 7.99% | 30.17% | (1.90)% | ||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $51,762 | $52,246 | $28,982 | $5,723 | $1,659 | $593 | ||||||||||||||||||||||||||
Average net assets (000) | $47,447 | $50,113 | $11,330 | $4,361 | $950 | $300 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.96% | (e) | 1.95% | 2.12% | 2.35% | 2.35% | 2.35% | (e) | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.08% | (e) | 2.06% | 2.27% | 2.41% | 2.89% | 3.85% | (e) | ||||||||||||||||||||||||
Net investment income (loss) | (1.17)% | (e) | (1.07)% | (1.37)% | (1.54)% | (1.26)% | (.97)% | (e) | ||||||||||||||||||||||||
Portfolio turnover rate | 47% | (f) | 88% | 58% | 68% | 70% | 48% | (f) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized. |
(d) | Does not include expenses of the underlying fund in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
30 |
Class Q Shares | ||||||||||||||||||||
Six Months Ended April 30, 2017 | Year Ended | December 22, 2015 | ||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.33 | $15.78 | $14.15 | |||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||
Net investment income (loss) | - | (g) | .01 | (.03 | ) | |||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.46 | (.46 | ) | 1.66 | ||||||||||||||||
Total from investment operations | 2.46 | (.45 | ) | 1.63 | ||||||||||||||||
Net asset value, end of period | $17.79 | $15.33 | $15.78 | |||||||||||||||||
Total Return(c): | 16.05% | (2.85)% | 11.52% | |||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000) | $10,359 | $8,647 | $11 | |||||||||||||||||
Average net assets (000) | $9,032 | $7,736 | $11 | |||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | .84% | (e) | .84% | 1.09% | (e) | |||||||||||||||
Expenses before waivers and/or expense reimbursement | .96% | (e) | .95% | 1.18% | (e) | |||||||||||||||
Net investment income (loss) | (.03)% | (e) | .05% | (.27)% | (e) | |||||||||||||||
Portfolio turnover rate | 47% | (f) | 88% | 58% | (f) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
(d) | Does not include expenses of the underlying portfolio in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
(g) | Less than $0.005 per share. |
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 31 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 14, 2012(a) through October 31, | ||||||||||||||||||||||||||||||
2017(b) | 2016(b) | 2015(b) | 2014(b) | 2013(b) | 2012 | |||||||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.31 | $15.77 | $14.17 | $12.99 | $9.87 | $10.00 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (.01 | ) | (.01 | ) | (.06 | ) | (.08 | ) | (.03 | ) | - | (e) | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 2.45 | (.45 | ) | 1.66 | 1.26 | 3.15 | (.13 | ) | ||||||||||||||||||||||||
Total from investment operations | 2.44 | (.46 | ) | 1.60 | 1.18 | 3.12 | (.13 | ) | ||||||||||||||||||||||||
Net asset value, end of period | $17.75 | $15.31 | $15.77 | $14.17 | $12.99 | $9.87 | ||||||||||||||||||||||||||
Total Return(c): | 15.94% | (2.92)% | 11.29% | 9.08% | 31.61% | (1.30)% | ||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $176,415 | $114,228 | $102,800 | $33,504 | $25,219 | $15,002 | ||||||||||||||||||||||||||
Average net assets (000) | $139,019 | $131,042 | $48,494 | $30,965 | $18,340 | $14,655 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | .96% | (f) | .95% | 1.15% | 1.35% | 1.35% | 1.35% | (f) | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.08% | (f) | 1.06% | 1.28% | 1.42% | 1.89% | 2.72% | (f) | ||||||||||||||||||||||||
Net investment income (loss) | (.11)% | (f) | (.07)% | (.41)% | (.56)% | (.25)% | (.03)% | (f) | ||||||||||||||||||||||||
Portfolio turnover rate | 47% | (g) | 88% | 58% | 68% | 70% | 48% | (g) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized. |
(d) | Does not include expenses of the underlying fund in which the Series invests. |
(e) | Less than $.005 per share. |
(f) | Annualized. |
(g) | Not annualized. |
See Notes to Financial Statements.
32 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s investment 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 www.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. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
| ||||
INVESTMENT SUBADVISER | Jennison Associates LLC | 466 Lexington Avenue New York, NY 10017 | ||
| ||||
DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
| ||||
CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
| ||||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
| ||||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
| ||||
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 a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential Jennison Global Opportunities Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
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 |
PRUDENTIAL JENNISON GLOBAL OPPORTUNITIES FUND
SHARE CLASS | A | C | Q | Z | ||||
NASDAQ | PRJAX | PRJCX | PRJQX | PRJZX | ||||
CUSIP | 743969719 | 743969693 | 743969594 | 743969685 |
MF214E2
PRUDENTIAL JENNISON INTERNATIONAL OPPORTUNITIES FUND
SEMIANNUAL REPORT
APRIL 30, 2017
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: To seek long-term growth of capital |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2017 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. © 2017 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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Letter from the President
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison International Opportunities Fund informative and useful. The report covers performance for the six-month period ended April 30, 2017. We are proud to announce that Prudential Investments became PGIM® Investments, effective April 3, 2017. Why PGIM? This new name was chosen to further align with the global investment management businesses of Prudential Financial, which rebranded from Prudential Investment Management in January 2016. This new name allows for one brand and reflects our ability and commitment to delivering investment solutions to clients around the globe. Please keep in mind that only the Fund adviser’s name was changed: the name of your Fund and the management and operation did not change.
Since market conditions change over time, 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 adviser 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. We’re part of PGIM, the 9th-largest 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
Prudential Jennison International Opportunities Fund
June 15, 2017
Prudential Jennison International Opportunities Fund | 3 |
Your Fund’s Performance (unaudited)
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 www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 4/30/17 (without sales charges) | Average Annual Total Returns as of 4/30/17 (with sales charges) | |||||
Six Month* (%) | One Year (%) | Since Inception (%) | ||||
Class A | 13.59 | 7.96 | 6.80 (6/5/12) | |||
Class C | 13.21 | 12.40 | 7.25 (6/5/12) | |||
Class Q | 13.79 | 14.62 | 5.37 (12/23/15) | |||
Class Z | 13.63 | 14.45 | 8.30 (6/5/12) | |||
MSCI ACWI ex-US Index | 10.37 | 12.59 | — | |||
Lipper International Multi-Cap Growth Funds Average | 10.32 | 11.53 | — |
*Not annualized
Source: PGIM Investments LLC and Lipper Inc.
Inception returns are provided for any share class with less than 10 fiscal years of returns.
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 Q | Class Z | |||||
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 original purchase price or net asset value at redemption) | 1% on sales of $1 million or more made within 12 months of purchase | 1% 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) | .30% (.25% currently) | 1% | None | None |
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Benchmark Definitions
MSCI All Country World Index ex-US Index—The Morgan Stanley Capital International All Country World Index ex-US Index (MSCI ACWI ex-US Index) is an unmanaged free float-adjusted market capitalization weighted index that is designed to provide a broad measure of stock performance throughout the world, with the exception of US-based companies. The average annual total returns for the MSCI ACWI ex-US Index measured from the month-end closest to the inception date through 4/30/17 are 7.84% for Class A, Class C, and Class Z shares and 11.14% for Class Q shares.
Lipper International Multi-Cap Growth Funds Average—The Lipper International Multi-Cap Growth Funds Average (Lipper Average) is based on the average return of all funds in the Lipper International Multi-Cap Growth Funds universe for the periods noted. Funds in the Lipper Average, by portfolio practice, invest in a variety of market-capitalization ranges without concentrating 75% of their equity assets in any one market-capitalization range over an extended period of time. International multi-cap growth funds typically have above-average characteristics compared to the MSCI EAFE Index. The average annual total return for the Lipper Average measured from the month-end closest to the inception date through 4/30/17 is 8.52% for Class A, Class C, and Class Z shares and 8.21% for Class Q shares.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Five Largest Holdings expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Tencent Holdings Ltd., Internet Software & Services | 6.7 | |||
Alibaba Group Holding Ltd., Internet Software & Services | 5.7 | |||
adidas AG, Textiles, Apparel & Luxury Goods | 5.6 | |||
Industria de Diseno Textil SA, Specialty Retail | 5.4 | |||
MercadoLibre, Inc., Internet Software & Services | 4.0 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Internet Software & Services | 18.4 | |||
Textiles, Apparel & Luxury Goods | 13.6 | |||
Semiconductors & Semiconductor Equipment | 8.5 | |||
Banks | 6.8 | |||
Specialty Retail | 5.5 |
Industry weightings reflect only long-term investments and are subject to change.
Prudential Jennison International Opportunities Fund | 5 |
Fees and Expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2017. 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 Investments 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
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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 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.
Prudential Jennison International Opportunities Fund | Beginning Account Value November 1, 2016 | Ending Account April 30, 2017 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,135.90 | 1.15 | % | $ | 6.09 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.09 | 1.15 | % | $ | 5.76 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,132.10 | 1.90 | % | $ | 10.04 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.37 | 1.90 | % | $ | 9.49 | ||||||||||
Class Q | Actual | $ | 1,000.00 | $ | 1,137.90 | 0.84 | % | $ | 4.45 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.63 | 0.84 | % | $ | 4.21 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,136.30 | 0.90 | % | $ | 4.77 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.33 | 0.90 | % | $ | 4.51 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2017, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2017 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
Prudential Jennison International Opportunities Fund | 7 |
Schedule of Investments (unaudited)
as of April 30, 2017
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 98.9% | ||||||||
COMMON STOCKS 93.3% | ||||||||
Argentina 4.0% | ||||||||
MercadoLibre, Inc. | 8,875 | $ | 2,031,576 | |||||
Brazil 2.1% | ||||||||
Raia Drogasil SA | 49,494 | 1,048,027 | ||||||
China 14.3% | ||||||||
Alibaba Group Holding Ltd., ADR*(a) | 24,910 | 2,877,105 | ||||||
Baidu, Inc., ADR* | 5,568 | 1,003,521 | ||||||
Tencent Holdings Ltd. | 107,250 | 3,360,500 | ||||||
|
| |||||||
7,241,126 | ||||||||
France 11.3% | ||||||||
Dassault Systemes SE | 11,924 | 1,063,870 | ||||||
Kering | 5,328 | 1,651,459 | ||||||
LVMH Moet Hennessy Louis Vuitton SE | 6,137 | 1,515,036 | ||||||
Valeo SA | 20,552 | 1,478,925 | ||||||
|
| |||||||
5,709,290 | ||||||||
Germany 10.9% | ||||||||
adidas AG | 13,993 | 2,805,440 | ||||||
Fresenius SE & Co. KGaA | 18,609 | 1,509,756 | ||||||
Infineon Technologies AG | 56,880 | 1,175,686 | ||||||
|
| |||||||
5,490,882 | ||||||||
Hong Kong 1.9% | ||||||||
Techtronic Industries Co. Ltd. | 225,240 | 966,362 | ||||||
India 2.7% | ||||||||
HDFC Bank Ltd., ADR | 16,941 | 1,348,673 | ||||||
Italy 3.6% | ||||||||
Brembo SpA | 11,937 | 937,852 | ||||||
Brunello Cucinelli SpA | 28,442 | 745,288 | ||||||
Brunello Cucinelli SpA, 144A(g) | 5,417 | 141,946 | ||||||
|
| |||||||
1,825,086 | ||||||||
Japan 4.4% | ||||||||
Keyence Corp. | 3,784 | 1,521,221 | ||||||
Shionogi & Co. Ltd. | 13,388 | 689,453 | ||||||
|
| |||||||
2,210,674 |
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 9 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Netherlands 2.8% | ||||||||
ASML Holding NV | 10,793 | $ | 1,427,152 | |||||
Spain 5.5% | ||||||||
Industria de Diseno Textil SA | 71,731 | 2,748,820 | ||||||
Sweden 4.0% | ||||||||
Atlas Copco AB (Class A Stock) | 42,587 | 1,590,841 | ||||||
Hexagon AB (Class B Stock) | 9,364 | 407,529 | ||||||
|
| |||||||
1,998,370 | ||||||||
Switzerland 3.1% | ||||||||
Givaudan SA | 286 | 551,040 | ||||||
Straumann Holding AG | 1,941 | 1,024,568 | ||||||
|
| |||||||
1,575,608 | ||||||||
Thailand 2.1% | ||||||||
CP ALL PCL | 588,963 | 1,038,922 | ||||||
United Kingdom 10.9% | ||||||||
Ashtead Group PLC | 52,917 | 1,116,336 | ||||||
ASOS PLC* | 9,478 | 714,351 | ||||||
Compass Group PLC | 38,183 | 770,947 | ||||||
St. James’s Place PLC | 83,583 | 1,242,326 | ||||||
Unilever NV, CVA | 14,326 | 750,475 | ||||||
Worldpay Group PLC | 238,588 | 926,574 | ||||||
|
| |||||||
5,521,009 | ||||||||
United States 9.7% | ||||||||
Albemarle Corp. | 12,655 | 1,378,256 | ||||||
Broadcom Ltd. | 7,567 | 1,670,869 | ||||||
JPMorgan Chase & Co. | 16,645 | 1,448,115 | ||||||
Shire PLC | 6,860 | 404,458 | ||||||
|
| |||||||
4,901,698 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS | 47,083,275 | |||||||
|
| |||||||
PARTICIPATORY NOTE† 2.3% | ||||||||
India | ||||||||
Goldman Sachs Maruti Suzuki India, expiring 07/26/17, Private Placement, 144A(g) | 11,627 | 1,178,457 | ||||||
|
|
See Notes to Financial Statements.
10 |
Description | Shares | Value | ||||||
PREFERRED STOCKS 3.3% | ||||||||
Brazil 1.3% | ||||||||
Itau Unibanco Holding SA (PRFC) | 52,705 | $ | 651,579 | |||||
Germany 2.0% | ||||||||
Sartorius AG (PRFC) | 10,931 | 1,000,756 | ||||||
|
| |||||||
TOTAL PREFERRED STOCKS | 1,652,335 | |||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 49,914,067 | |||||||
|
| |||||||
SHORT-TERM INVESTMENTS 7.9% | ||||||||
AFFILIATED MUTUAL FUNDS | ||||||||
Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund(w) | 1,072,496 | 1,072,496 | ||||||
Prudential Investment Portfolios 2 - Prudential Institutional Money Market Fund | 2,934,719 | 2,935,306 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS | 4,007,802 | |||||||
|
| |||||||
TOTAL INVESTMENTS 106.8% | 53,921,869 | |||||||
Liabilities in excess of other assets (6.8)% | (3,432,275 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 50,489,594 | ||||||
|
|
The following abbreviations are used in the semiannual report:
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
ADR—American Depositary Receipt
CVA—Certificate Van Aandelen (Bearer)
LIBOR—London Interbank Offered Rate
PRFC—Preference Shares
* | Non-income producing security. |
† | Participatory note represented 2.3% of net assets, of which the Series attributed 2.3% to Goldman Sachs & Co., as counterparty to the security. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $2,875,950; cash collateral of $2,933,220 (included in liabilities) was received with which the Series purchased highly liquid short-term investments. |
(b) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
(g) | Indicates a security that has been deemed illiquid; the aggregate value of $1,320,403 is approximately 2.6% of net assets. |
(w) | PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund and Prudential Institutional Money Market Fund. |
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Fair Value Measurements:
Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.
Level 1—unadjusted quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2017 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Argentina | $ | 2,031,576 | $ | — | $ | — | ||||||
Brazil | 1,048,027 | — | — | |||||||||
China | 3,880,626 | 3,360,500 | — | |||||||||
France | — | 5,709,290 | — | |||||||||
Germany | — | 5,490,882 | — | |||||||||
Hong Kong | — | 966,362 | — | |||||||||
India | 1,348,673 | — | — | |||||||||
Italy | — | 1,825,086 | — | |||||||||
Japan | — | 2,210,674 | — | |||||||||
Netherlands | — | 1,427,152 | — | |||||||||
Spain | — | 2,748,820 | — | |||||||||
Sweden | — | 1,998,370 | — | |||||||||
Switzerland | — | 1,575,608 | — | |||||||||
Thailand | — | 1,038,922 | — | |||||||||
United Kingdom | — | 5,521,009 | — | |||||||||
United States | 4,497,240 | 404,458 | — | |||||||||
Participatory Note | ||||||||||||
India | — | 1,178,457 | — | |||||||||
Preferred Stocks | ||||||||||||
Brazil | 651,579 | — | — | |||||||||
Germany | — | 1,000,756 | — | |||||||||
Affiliated Mutual Funds | 4,007,802 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 17,465,523 | $ | 36,456,346 | $ | — | ||||||
|
|
|
|
|
|
During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.
See Notes to Financial Statements.
12 |
Industry Classification:
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2017 were as follows:
Internet Software & Services | 18.4 | % | ||
Textiles, Apparel & Luxury Goods | 13.6 | |||
Semiconductors & Semiconductor Equipment | 8.5 | |||
Affiliated Mutual Funds (including 5.8% of collateral for securities on loan) | 7.9 | |||
Banks | 6.8 | |||
Specialty Retail | 5.5 | |||
Auto Components | 4.8 | |||
Food & Staples Retailing | 4.1 | |||
Health Care Equipment & Supplies | 4.0 | |||
Chemicals | 3.8 | |||
Electronic Equipment, Instruments & Components | 3.8 | |||
Machinery | 3.2 | |||
Health Care Providers & Services | 3.0 | |||
Insurance | 2.5 | % | ||
Automobiles | 2.3 | |||
Trading Companies & Distributors | 2.2 | |||
Software | 2.1 | |||
Household Durables | 1.9 | |||
IT Services | 1.8 | |||
Hotels, Restaurants & Leisure | 1.5 | |||
Personal Products | 1.5 | |||
Internet & Direct Marketing Retail | 1.4 | |||
Pharmaceuticals | 1.4 | |||
Biotechnology | 0.8 | |||
|
| |||
106.8 | ||||
Liabilities in excess of other assets | (6.8 | ) | ||
|
| |||
100.0 | % | |||
|
|
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Series 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 instruments/transactions assets and liabilities:
Description | Gross amounts of recognized assets(1) | Collateral Pledged(2) | Net Amount | |||||||||
Securities on Loan | $ | 2,875,950 | $ | (2,875,950 | ) | $ | — | |||||
|
|
(1) | Amount represents market value. |
(2) | Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 13 |
Statement of Assets & Liabilities (unaudited)
as of April 30, 2017
Assets | ||||
Investments at value, including securities on loan of $2,875,950: |
| |||
Unaffiliated investments (cost $37,961,345) | $ | 49,914,067 | ||
Affiliated investments (cost $4,007,802) | 4,007,802 | |||
Receivable for investments sold | 272,409 | |||
Dividends receivable | 98,423 | |||
Receivable for Series shares sold | 96,552 | |||
Tax reclaim receivable | 66,325 | |||
Prepaid expenses | 304 | |||
|
| |||
Total Assets | 54,455,882 | |||
|
| |||
Liabilities | ||||
Payable to broker for collateral for securities on loan | 2,933,220 | |||
Payable for investments purchased | 511,703 | |||
Payable for Series shares reacquired | 447,372 | |||
Accrued expenses and other liabilities | 57,000 | |||
Management fee payable | 14,936 | |||
Distribution fee payable | 1,250 | |||
Affiliated transfer agent fee payable | 787 | |||
Loan interest payable | 20 | |||
|
| |||
Total Liabilities | 3,966,288 | |||
|
| |||
Net Assets | $ | 50,489,594 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 35,676 | ||
Paid-in capital in excess of par | 43,449,466 | |||
|
| |||
43,485,142 | ||||
Undistributed net investment income | 23,125 | |||
Accumulated net realized loss on investment and foreign currency transactions | (4,968,418 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 11,949,745 | |||
|
| |||
Net assets, April 30, 2017 | $ | 50,489,594 | ||
|
|
See Notes to Financial Statements.
14 |
Class A | ||||
Net asset value and redemption price per share | $ | 14.04 | ||
Maximum sales charge (5.50% of offering price) | 0.82 | |||
|
| |||
Maximum offering price to public | $ | 14.86 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | ||||
($968,735 ÷ 71,575 shares of common stock issued and outstanding) | $ | 13.53 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share | ||||
($25,221,308 ÷ 1,779,511 shares of common stock issued and outstanding) | $ | 14.17 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | ||||
($21,490,698 ÷ 1,516,362 shares of common stock issued and outstanding) | $ | 14.17 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 15 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2017
Net Investment Income (Loss) |
| |||
Income |
| |||
Unaffiliated dividend income (net of foreign withholding taxes of $20,459) | $ | 228,657 | ||
Affiliated dividend income | 4,544 | |||
Income from securities lending, net (including affiliated income of $1,111) | 1,676 | |||
|
| |||
Total income | 234,877 | |||
|
| |||
Expenses |
| |||
Management fee | 189,052 | |||
Distribution fee—Class A | 3,836 | |||
Distribution fee—Class C | 3,878 | |||
Custodian and accounting fees | 46,000 | |||
Registration fees | 30,000 | |||
Audit fee | 13,000 | |||
Shareholders’ reports | 12,000 | |||
Legal fees and expenses | 9,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $2,000) | 7,000 | |||
Directors’ fees | 5,000 | |||
Loan interest expense | 60 | |||
Miscellaneous | 13,109 | |||
|
| |||
Total expenses | 331,935 | |||
Less: Expense reimbursement | (124,681 | ) | ||
Distribution fee waiver—Class A | (639 | ) | ||
|
| |||
Net expenses | 206,615 | |||
|
| |||
Net investment income (loss) | 28,262 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions |
| |||
Net realized gain (loss) on: |
| |||
Investment transactions (including affiliated of $344) | (106,117 | ) | ||
Foreign currency transactions | (8,870 | ) | ||
|
| |||
(114,987 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: |
| |||
Investments (including affiliated of $(299)) | 6,370,531 | |||
Foreign currencies | 944 | |||
|
| |||
6,371,475 | ||||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 6,256,488 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 6,284,750 | ||
|
|
See Notes to Financial Statements.
16 |
Statement of Changes in Net Assets (unaudited)
Six Months Ended April 30, 2017 | Year Ended October 31, 2016 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 28,262 | $ | 179,456 | ||||
Net realized gain (loss) on investment and foreign currency transactions | (114,987 | ) | (2,754,574 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 6,371,475 | 26,264 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 6,284,750 | (2,548,854 | ) | |||||
|
|
|
| |||||
Dividends from net investment income | ||||||||
Class Q | (71,620 | ) | — | |||||
Class Z | (41,518 | ) | — | |||||
|
|
|
| |||||
(113,138 | ) | — | ||||||
|
|
|
| |||||
Series share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 4,166,296 | 6,080,927 | ||||||
Net asset value of shares issued in reinvestment of dividends | 113,138 | — | ||||||
Cost of shares reacquired | (5,397,608 | ) | (9,583,417 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Series share transactions | (1,118,174 | ) | (3,502,490 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | 5,053,438 | (6,051,344 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 45,436,156 | 51,487,500 | ||||||
|
|
|
| |||||
End of period(a) | $ | 50,489,594 | $ | 45,436,156 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 23,125 | $ | 108,001 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 17 |
Notes to Financial Statements (unaudited)
Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of six investment portfolios: Prudential Jennison International Opportunities Fund (the “Series”), Prudential Jennison Global Infrastructure Fund, Prudential QMA International Equity Fund, Prudential Jennison Global Opportunities Fund, Prudential Emerging Markets Debt Local Currency Fund and Prudential Jennison Emerging Markets Equity Fund. These financial statements relate to the Prudential Jennison International Opportunities Fund. The financial statements of the other series are not presented herein. The Series commenced investment operations on June 5, 2012.
The investment objective of the Series is to seek long-term growth of capital.
Note 1. Accounting Policies
The Fund follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Series holds securities and other assets that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”) (formerly known as Prudential Investments LLC). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Schedule of Investments.
Common and preferred stocks, exchange-traded funds and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the last
18 |
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.
Common and preferred stocks traded on foreign securities exchanges are 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. 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 stocks discussed above.
Participatory notes (“P-notes”) are generally valued based upon the value of a related underlying security that trades actively in the market and are classified as Level 2 in the fair value hierarchy.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser 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 mutual funds to calculate their net asset values.
Prudential Jennison International Opportunities Fund | 19 |
Notes to Financial Statements (unaudited) (continued)
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
Warrants and Rights: The Series may hold warrants and rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Warrants and rights entitle the holder to buy a proportionate amount of common stock, or such other security that the issuer may specify, at a specific price and time through the expiration dates. Such warrants and rights are held as long positions by the Series until exercised, sold or expired. Warrants and rights are valued at fair value in accordance with the Board approved fair valuation procedures.
Foreign Currency Translation: The books and records of the Series 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 Series are presented at the foreign exchange rates and market values at the close of the period, the Series 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 Series 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
20 |
foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.
Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currency transactions.
P-notes: The Series may gain exposure to securities in certain foreign markets through investments in P-notes. The Series may purchase P-notes due to restrictions applicable to foreign investors when investing directly in a foreign market. P-notes are generally issued by banks or broker-dealers and are designed to offer a return linked to a particular underlying security. P-notes involve transaction costs, which may be higher than those applicable to the equity securities. An investment in a P-note may involve risks, including counterparty risk, beyond those normally associated with a direct investment in the underlying security. The Series must rely on the creditworthiness of the counterparty and would have no rights against the issuer of the underlying security. Furthermore, the P-note’s performance may differ from that of the underlying security. The holder of the P-note is entitled to receive from the bank or broker-dealer, an amount equal to dividends paid by the issuer of the underlying security; however, the holder is not entitled to the same rights (e.g., dividends, voting rights) as an owner of the underlying security. There is also no assurance that there will be a secondary trading market for a P-note or that the trading price of a P-note will equal the value of the underlying security.
Master Netting Arrangements: The Fund, on behalf of the Series, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities
Prudential Jennison International Opportunities Fund | 21 |
Notes to Financial Statements (unaudited) (continued)
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. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability or the level of governmental supervision and regulation of foreign securities markets.
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. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an 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 distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) 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.
Dividends and Distributions: The Series expects to pay dividends from net investment income and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting
22 |
principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.
Taxes: It is the Series’ 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.
Estimates: The preparation of the 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.
Note 2. Agreements
The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison furnishes investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of .825% of the Series’ average daily net assets up to $1 billion and .80% of such assets in excess of $1 billion. The effective management fee rate before any waivers and/or expense reimbursements was .825% for the six months ended April 30, 2017. The effective management fee rate, net of waivers and/or expense reimbursements was .281%.
PGIM Investments has contractually agreed through February 28, 2018 to limit the net annual operating expenses (exclusive of distribution and service (12b-1) fees, transfer agency expenses (including sub-transfer agency and networking fees), taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), interest, underlying funds, brokerage, extraordinary and certain other expenses such as dividend, broker charges and interest expense on short sales) of each class of shares of the Series to .84% of the Series’ average daily net assets. Expenses waived/reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver/reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
Prudential Jennison International Opportunities Fund | 23 |
Notes to Financial Statements (unaudited) (continued)
The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C, Class Q and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Class Z shares of the Series.
Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30% and 1% of the average daily net assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares through February 28, 2018.
PIMS has advised the Series that it has received $3,717 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2017. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 2017 it has received $26 in contingent deferred sales charges imposed upon redemption by certain Class C shareholders.
PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ 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 Series 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 permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board.
24 |
The Series may invest its overnight sweep cash in the Prudential Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the Prudential 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. For the period ended April 30, 2017, PGIM, Inc., an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, was compensated $759 by PGIM Investments for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
Note 4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Treasury securities) for the six months ended April 30, 2017 were $19,201,635 and $19,341,775, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2017 were as follows:
Tax Basis | $ | 41,990,744 | ||
|
| |||
Appreciation | 12,012,193 | |||
Depreciation | (81,068 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 11,931,125 | ||
|
|
The book basis may differ from tax basis due to certain tax-related adjustments.
For federal income tax purposes, the Series had a capital loss carryforward as of October 31, 2016 of approximately $4,832,000 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.
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Series offers Class A, Class C, Class Q and Class Z shares. Class A shares are subject to a maximum front-end sales charge of 5.50%. Investors who purchase Class A shares in
Prudential Jennison International Opportunities Fund | 25 |
Notes to Financial Statements (unaudited) (continued)
an amount of $1 million or more and sell these shares within 12 months of purchase are not subject to an initial sales charge but are subject to a contingent deferred sales charge (“CDSC”) of 1%. The Class A CDSC is waived for purchases by certain retirement or benefits plans. The CDSC for Class C shares is 1% for shares redeemed within 12 months of purchase. Class Q and Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of capital stock.
There are 850 million shares of common stock, $.01 par value per share, authorized and divided into five classes, designated Class A, Class C, Class Q, Class T and Class Z common stock, each of which consists of 40 million, 125 million, 250 million, 235 million and 200 million authorized shares, respectively. The Series currently does not have any Class T shares outstanding.
As of April 30, 2017, Prudential, through its affiliates, owned 1,041 of Class C, 757 of Class Q and 1,043,512 of Class Z shares of the Series, respectively. At reporting period end, five shareholders of record held 93% of the Series’ outstanding shares.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 37,479 | $ | 481,109 | |||||
Shares reacquired | (42,289 | ) | (506,576 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (4,810 | ) | (25,467 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (31,100 | ) | (386,576 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (35,910 | ) | $ | (412,043 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 70,653 | $ | 882,511 | |||||
Shares reacquired | (143,364 | ) | (1,778,347 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (72,711 | ) | (895,836 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (9,512 | ) | (120,888 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (82,223 | ) | $ | (1,016,724 | ) | |||
|
|
|
|
26 |
Class C | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 15,078 | $ | 188,517 | |||||
Shares reacquired | (8,595 | ) | (101,731 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 6,483 | $ | 86,786 | |||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 20,106 | $ | 248,644 | |||||
Shares reacquired | (50,156 | ) | (613,645 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (30,050 | ) | $ | (365,001 | ) | |||
|
|
|
| |||||
Class Q | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 206,509 | $ | 2,470,000 | |||||
Shares issued in reinvestment of dividends and distributions | 6,044 | 71,620 | ||||||
Shares reacquired | (278,615 | ) | (3,635,000 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (66,062 | ) | $ | (1,093,380 | ) | |||
|
|
|
| |||||
Period ended October 31, 2016*: | ||||||||
Shares sold | 269,177 | $ | 3,275,000 | |||||
Shares reacquired | (340,747 | ) | (4,355,000 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (71,570 | ) | (1,080,000 | ) | ||||
Shares issued upon conversion from other share class(es) | 1,917,143 | 25,402,138 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,845,573 | $ | 24,322,138 | |||||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 81,521 | $ | 1,026,670 | |||||
Shares issued in reinvestment of dividends and distributions | 3,504 | 41,518 | ||||||
Shares reacquired | (93,253 | ) | (1,154,301 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (8,228 | ) | (86,113 | ) | ||||
Shares issued upon conversion from other share class(es) | 30,803 | 386,576 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 22,575 | $ | 300,463 | |||||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 133,459 | $ | 1,674,772 | |||||
Shares reacquired | (224,120 | ) | (2,836,425 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (90,661 | ) | (1,161,653 | ) | ||||
Shares issued upon conversion from other shares class(es) | 9,411 | 120,888 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,917,143 | ) | (25,402,138 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,998,393 | ) | $ | (26,442,903 | ) | |||
|
|
|
|
* | Commencement of operations was December 23, 2015. |
Note 7. Borrowings
The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 6, 2016 through October 5, 2017. The Funds pay an annualized
Prudential Jennison International Opportunities Fund | 27 |
Notes to Financial Statements (unaudited) (continued)
commitment fee of .15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
The Series utilized the SCA during the six months ended April 30, 2017. The average daily balance for the 5 days that the Series had loans outstanding during the period was $194,000, borrowed at a weighted average interest rate of 2.23%. The maximum loan balance outstanding during the period was $194,000. At April 30, 2017, the Series did not have an outstanding loan balance.
Note 8. Recent Accounting Pronouncements and Reporting Updates
On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new rules and forms and amended existing rules and forms which are intended to modernize and enhance the reporting and disclosure of information by registered investment companies and to improve the quality of information that funds provide to investors, including modifications to Regulation S-X which would require standardized, enhanced disclosure about derivatives in investment company financial statements. The new rules also enhance disclosure regarding fund liquidity and redemption practices. The compliance dates of the modifications to Regulation S-X are August 1, 2017 and other amendments and rules are generally June 1, 2018 and December 1, 2018. Management is currently evaluating the impacts to the financial statement disclosures, if any.
Note 9. Other
At the Fund’s Board meeting in March, 2017, the Board of Directors approved a change in the methodology of allocating certain expenses, like Transfer Agent fees (including sub-transfer agent and networking fees) and Blue Sky fees. The impact to the net assets of the Series and individual share classes is not ascertainable at the present time. PGIM Investments expects to implement the changes by December 31, 2017.
28 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||||||
Six Months Ended | Year Ended October 31, | June 5, | ||||||||||||||||||||||||||||||
2017(b) | 2016(b) | 2015(b) | 2014(b) | 2013(b) | 2012 | |||||||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $12.36 | $13.09 | $13.06 | $13.51 | $11.30 | $10.00 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (.01 | ) | .02 | (.05 | ) | (.06 | ) | (.01 | ) | (.01 | ) | |||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 1.69 | (.75 | ) | .08 | .09 | 2.27 | 1.31 | |||||||||||||||||||||||||
Total from investment operations | 1.68 | (.73 | ) | .03 | .03 | 2.26 | 1.30 | |||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | - | - | - | - | (.05 | ) | - | |||||||||||||||||||||||||
Distributions from net realized gains | - | - | - | (.48 | ) | - | - | |||||||||||||||||||||||||
Total dividends and distributions | - | - | - | (.48 | ) | (.05 | ) | - | ||||||||||||||||||||||||
Net asset value, end of period | $14.04 | $12.36 | $13.09 | $13.06 | $13.51 | $11.30 | ||||||||||||||||||||||||||
Total Return(c): | 13.59% | (5.58)% | .23% | .20% | 20.04% | 13.00% | ||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $2,809 | $2,918 | $4,167 | $1,833 | $889 | $94 | ||||||||||||||||||||||||||
Average net assets (000) | $2,579 | $3,575 | $3,179 | $1,467 | $356 | $32 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.15% | (e) | 1.15% | 1.55% | 1.60% | 1.60% | 1.60% | (e) | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.74% | (e) | 1.74% | 1.67% | 1.90% | 3.16% | 4.42% | (e) | ||||||||||||||||||||||||
Net investment income (loss) | (.17)% | (e) | .15% | (.39)% | (.48)% | (.08)% | (.61)% | (e) | ||||||||||||||||||||||||
Portfolio turnover rate | 42% | (f) | 65% | 75% | 61% | 86% | 28% | (f) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 29 |
Financial Highlights (unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | June 5, 2012(a) through October 31, | ||||||||||||||||||||||||||||||
2017(b) | 2016(b) | 2015(b) | 2014(b) | 2013(b) | 2012 | |||||||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $11.96 | $12.77 | $12.82 | $13.37 | $11.27 | $10.00 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | (.05 | ) | (.08 | ) | (.15 | ) | (.16 | ) | (.14 | ) | (.05 | ) | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 1.62 | (.73 | ) | .10 | .09 | 2.29 | 1.32 | |||||||||||||||||||||||||
Total from investment operations | 1.57 | (.81 | ) | (.05 | ) | (.07 | ) | 2.15 | 1.27 | |||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | - | - | - | - | (.05 | ) | - | |||||||||||||||||||||||||
Distributions from net realized gains | - | - | - | (.48 | ) | - | - | |||||||||||||||||||||||||
Total dividends and distributions | - | - | - | (.48 | ) | (.05 | ) | - | ||||||||||||||||||||||||
Net asset value, end of period | $13.53 | $11.96 | $12.77 | $12.82 | $13.37 | $11.27 | ||||||||||||||||||||||||||
Total Return(c): | 13.13% | (6.34)% | (.39)% | (.57)% | 19.11% | 12.70% | ||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $969 | $779 | $1,215 | $465 | $181 | $11 | ||||||||||||||||||||||||||
Average net assets (000) | $782 | $895 | $903 | $362 | $38 | $11 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.90% | (e) | 1.90% | 2.30% | 2.35% | 2.35% | 2.35% | (e) | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.44% | (e) | 2.44% | 2.37% | 2.60% | 4.09% | 5.29% | (e) | ||||||||||||||||||||||||
Net investment income (loss) | (.85)% | (e) | (.67)% | (1.15)% | (1.21)% | (1.12)% | (1.16)% | (e) | ||||||||||||||||||||||||
Portfolio turnover rate | 42% | (f) | 65% | 75% | 61% | 86% | 28% | (f) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
30 |
Class Q Shares | ||||||||||||
Six Months Ended April 30, 2017 | December 23, 2015(a) through October 31, 2016 | |||||||||||
Per Share Operating Performance(b): | ||||||||||||
Net Asset Value, Beginning of Period | $12.50 | $13.25 | ||||||||||
Income (loss) from investment operations: | ||||||||||||
Net investment income (loss) | .01 | .06 | ||||||||||
Net realized and unrealized gain (loss) on investment transactions | 1.70 | (.81 | ) | |||||||||
Total from investment operations | 1.71 | (.75 | ) | |||||||||
Less Dividends: | ||||||||||||
Dividends from net investment income | (.04 | ) | - | |||||||||
Net asset value, end of period | $14.17 | $12.50 | ||||||||||
Total Return(c): | 13.71% | (5.66)% | ||||||||||
Ratios/Supplemental Data: | ||||||||||||
Net assets, end of period (000) | $25,221 | $23,073 | ||||||||||
Average net assets (000) | $24,086 | $23,677 | ||||||||||
Ratios to average net assets(d): | ||||||||||||
Expenses after waivers and/or expense reimbursement | .84% | (e) | .84% | (e) | ||||||||
Expenses before waivers and/or expense reimbursement | 1.39% | (e) | 1.43% | (e) | ||||||||
Net investment income (loss) | .17% | (e) | .60% | (e) | ||||||||
Portfolio turnover rate | 42% | (f) | 65% |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 31 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | June 5, | ||||||||||||||||||||||||||||||
2017(b) | 2016(b) | 2015(b) | 2014(b) | 2013(b) | 2012 | |||||||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $12.50 | $13.20 | $13.13 | $13.55 | $11.32 | $10.00 | ||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||
Net investment income (loss) | .01 | .03 | (.03 | ) | (.02 | ) | .02 | (.01 | ) | |||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | 1.69 | (.73 | ) | .10 | .08 | 2.26 | 1.33 | |||||||||||||||||||||||||
Total from investment operations | 1.70 | (.70 | ) | .07 | .06 | 2.28 | 1.32 | |||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||
Dividends from net investment income | (.03 | ) | - | - | - | (.05 | ) | - | ||||||||||||||||||||||||
Distributions from net realized gains | - | - | - | (.48 | ) | - | - | |||||||||||||||||||||||||
Total dividends and distributions | (.03 | ) | - | - | (.48 | ) | (.05 | ) | - | |||||||||||||||||||||||
Net asset value, end of period | $14.17 | $12.50 | $13.20 | $13.13 | $13.55 | $11.32 | ||||||||||||||||||||||||||
Total Return(c): | 13.63% | (5.30)% | .53% | .42% | 20.24% | 13.20% | ||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $21,491 | $18,667 | $46,105 | $46,996 | $16,487 | $11,962 | ||||||||||||||||||||||||||
Average net assets (000) | $18,762 | $23,274 | $47,187 | $38,835 | $13,938 | $11,061 | ||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | .90% | (e) | .90% | 1.31% | 1.35% | 1.35% | 1.35% | (e) | ||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.44% | (e) | 1.41% | 1.40% | 1.54% | 2.73% | 4.28% | (e) | ||||||||||||||||||||||||
Net investment income (loss) | .14% | (e) | .25% | (.19)% | (.13)% | .13% | (.17)% | (e) | ||||||||||||||||||||||||
Portfolio turnover rate | 42% | (f) | 65% | 75% | 61% | 86% | 28% | (f) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
32 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s investment 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 www.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. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Jennison Associates LLC | 466 Lexington Avenue New York, NY 10017 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
| ||||
CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential Jennison International Opportunities Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
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 |
PRUDENTIAL JENNISON INTERNATIONAL OPPORTUNITIES FUND
SHARE CLASS | A | C | Q | Z | ||||
NASDAQ | PWJAX | PWJCX | PWJQX | PWJZX | ||||
CUSIP | 743969677 | 743969669 | 743969586 | 743969651 |
MF215E2
PRUDENTIAL JENNISON GLOBAL INFRASTRUCTURE FUND
SEMIANNUAL REPORT
APRIL 30, 2017
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: Total return |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2017 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates LLC is a registered investment adviser. Both are Prudential Financial companies. © 2017 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
2 | Visit our website at pgiminvestments.com |
Letter from the President
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison Global Infrastructure Fund informative and useful. The report covers performance for the six-month period ended April 30, 2017. We are proud to announce that Prudential Investments became PGIM® Investments, effective April 3, 2017. Why PGIM? This new name was chosen to further align with the global investment management businesses of Prudential Financial, which rebranded from Prudential Investment Management in January 2016. This new name allows for one brand and reflects our ability and commitment to delivering investment solutions to clients around the globe. Please keep in mind that only the Fund adviser’s name was changed: the name of your Fund and the management and operation did not change.
Since market conditions change over time, 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 adviser 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. We’re part of PGIM, the 9th-largest 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
Prudential Jennison Global Infrastructure Fund
June 15, 2017
Prudential Jennison Global Infrastructure Fund | 3 |
Your Fund’s Performance (unaudited)
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 www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 4/30/17 (without sales charges) | Average Annual Total Returns as of 4/30/17 (with sales charges) | |||||
Six Months* (%) | One Year (%) | Since Inception (%) | ||||
Class A | 7.69 | 3.61 | 5.73 (9/25/13) | |||
Class C | 7.38 | 7.91 | 6.61 (9/25/13) | |||
Class Q | 9.22** | N/A | N/A (12/28/16) | |||
Class Z | 7.80 | 9.96 | 7.65 (9/25/13) | |||
S&P Global Infrastructure Index | 7.93 | 10.02 | — | |||
S&P 500 Index | 13.31 | 17.90 | — | |||
Lipper Global Infrastructure Funds Average | 7.78 | 10.06 | — |
*Not annualized
**Since inception
Source: PGIM Investments LLC and Lipper Inc.
Inception returns are provided for any share class with less than 10 fiscal years of returns.
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 Q | Class Z | |||||
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 original purchase price or net asset value at redemption) | 1% on sales of $1 million or more made within 12 months of purchase | 1% 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) | .30% (.25% currently) | 1% | None | None |
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Benchmark Definitions
S&P Global Infrastructure Index—The S&P Global Infrastructure Index is an unmanaged index that consists of 75 companies from around the world that represent the listed infrastructure universe. To create diversified exposure across the global listed infrastructure market, the Index has balanced weights across three distinct infrastructure clusters: Utilities, Transportation, and Energy. The average annual total return for the S&P Global Infrastructure Index measured from the month-end closest to the inception date through 4/30/17 is 6.52% for Class A, Class C, and Class Z shares. Class Q shares have been in existence for less than one year and have no average annual total return performance information available.
S&P 500 Index—The Standard & Poor’s 500 Composite Stock Price Index (S&P 500 Index) is an unmanaged index of over 500 stocks of large US public companies. It gives a broad look at how stock prices in the United States have performed. The average annual total return for the S&P 500 Index measured from the month-end closest to the inception date through 4/30/17 is 12.55% for Class A, Class C, and Class Z shares. Class Q shares have been in existence for less than one year and have no average annual total return performance information available.
Lipper Global Infrastructure Funds Average—The Lipper Global Infrastructure Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Global Infrastructure Funds universe for the periods noted. Funds in the Lipper Average invest primarily in equity securities of domestic and foreign companies engaged in an infrastructure industry, including but not limited to transportation, communication, and waste management. The average annual total return for the Lipper Average measured from the month-end closest to the inception date through 4/30/17 is 6.80% for Class A, Class C, and Class Z shares. Class Q shares have been in existence for less than one year and have no average annual total return performance information available.
Investors cannot invest directly in an index or average. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the Indexes and the Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Five Largest Holdings expressed as a percentage of net assets as of 4/30/17 (%) | ||||
PG&E Corp., Electric Utilities | 3.6 | |||
Eiffage SA, Construction & Engineering | 3.5 | |||
Vinci SA, Construction & Engineering | 3.4 | |||
Williams Cos., Inc. (The), Oil, Gas & Consumable Fuels | 3.4 | |||
Transurban Group, Transportation Infrastructure | 3.4 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/17 (%) | ||||
Oil, Gas & Consumable Fuels | 23.1 | |||
Transportation Infrastructure | 19.7 | |||
Electric Utilities | 19.0 | |||
Construction & Engineering | 9.7 | |||
Road & Rail | 7.5 |
Industry weightings reflect only long-term investments and are subject to change.
Prudential Jennison Global Infrastructure Fund | 5 |
Fees and Expenses (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2017. 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 Investments 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
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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 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.
Prudential Jennison Global Infrastructure Fund | Beginning Account Value November 1, 2016 | Ending Account Value April 30, 2017 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,076.90 | 1.50 | % | $ | 7.72 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.36 | 1.50 | % | $ | 7.50 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,073.80 | 2.25 | % | $ | 11.57 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.64 | 2.25 | % | $ | 11.23 | ||||||||||
Class Q | Actual** | $ | 1,000.00 | $ | 1,092.20 | 1.25 | % | $ | 4.41 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.60 | 1.25 | % | $ | 6.26 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,078.00 | 1.25 | % | $ | 6.44 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.60 | 1.25 | % | $ | 6.26 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2017, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2017 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
**“Actual” expenses are calculated using the 123 day period ended April 30, 2017 due to the Fund’s inception date of December 28, 2016.
Prudential Jennison Global Infrastructure Fund | 7 |
Schedule of Investments (unaudited)
as of April 30, 2017
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 97.8% | ||||||||
COMMON STOCKS 96.0% | ||||||||
Australia 4.4% | ||||||||
Sydney Airport | 118,891 | $ | 614,058 | |||||
Transurban Group | 226,211 | 2,066,641 | ||||||
|
| |||||||
2,680,699 | ||||||||
Brazil 4.1% | ||||||||
Alupar Investimento SA, UTS | 28,344 | 167,703 | ||||||
Alupar Investimento SA, UTS, 144A(g) | 65,311 | 386,428 | ||||||
CCR SA | 185,475 | 1,030,790 | ||||||
EcoRodovias Infraestrutura e Logistica SA | 320,036 | 947,792 | ||||||
|
| |||||||
2,532,713 | ||||||||
Canada 7.6% | ||||||||
Enbridge, Inc. (TSX) | 21,716 | 900,107 | ||||||
Fortis, Inc. | 18,623 | 606,010 | ||||||
Pembina Pipeline Corp. | 39,565 | 1,261,332 | ||||||
TransCanada Corp. (TSX) | 32,693 | 1,517,954 | ||||||
Westshore Terminals Investment Corp. | 22,486 | 393,202 | ||||||
|
| |||||||
4,678,605 | ||||||||
China 1.0% | ||||||||
Huaneng Renewables Corp. Ltd. (Class H Stock) | 1,764,321 | 615,875 | ||||||
France 9.3% | ||||||||
Aeroports de Paris | 11,065 | 1,476,023 | ||||||
Eiffage SA | 25,574 | 2,166,246 | ||||||
Vinci SA | 24,606 | 2,097,382 | ||||||
|
| |||||||
5,739,651 | ||||||||
Germany 1.0% | ||||||||
Fraport AG Frankfurt Airport Services Worldwide | 8,085 | 636,076 | ||||||
India 2.3% | ||||||||
NTPC Ltd. | 221,522 | 566,338 | ||||||
Power Grid Corp. of India Ltd. | 255,335 | 824,980 | ||||||
|
| |||||||
1,391,318 | ||||||||
Italy 4.9% | ||||||||
Atlantia SpA | 57,327 | 1,453,766 | ||||||
Enel SpA | 195,633 | 930,077 | ||||||
Italgas SpA* | 140,341 | 634,468 | ||||||
|
| |||||||
3,018,311 |
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 9 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Mexico 2.5% | ||||||||
Grupo Aeroportuario del Sureste SAB de CV (Class B Stock) | 30,492 | $ | 577,794 | |||||
Infraestructura Energetica Nova SAB de CV, 144A(g) | 17,329 | 80,794 | ||||||
Infraestructura Energetica Nova SAB de CV | 193,501 | 902,170 | ||||||
|
| |||||||
1,560,758 | ||||||||
Philippines 0.5% | ||||||||
International Container Terminal Services, Inc. | 166,236 | 295,940 | ||||||
Spain 5.7% | ||||||||
Aena SA, 144A | 6,923 | 1,220,613 | ||||||
Ferrovial SA | 80,867 | 1,720,252 | ||||||
Iberdrola SA | 82,191 | 590,852 | ||||||
|
| |||||||
3,531,717 | ||||||||
Switzerland 2.3% | ||||||||
Flughafen Zuerich AG | 6,293 | 1,386,836 | ||||||
United States 50.4% | ||||||||
American Electric Power Co., Inc. | 16,259 | 1,102,848 | ||||||
American Tower Corp., REIT | 9,851 | 1,240,635 | ||||||
American Water Works Co., Inc. | 9,404 | 750,063 | ||||||
Atmos Energy Corp. | 9,122 | 739,064 | ||||||
Cheniere Energy Partners LP Holdings LLC | 33,525 | 860,922 | ||||||
Cheniere Energy, Inc.* | 23,152 | 1,049,943 | ||||||
CSX Corp. | 38,408 | 1,952,663 | ||||||
Edison International | 17,460 | 1,396,276 | ||||||
Equinix, Inc., REIT | 1,499 | 626,132 | ||||||
Exelon Corp. | 26,445 | 915,790 | ||||||
FedEx Corp. | 4,954 | 939,774 | ||||||
Genesee & Wyoming, Inc. (Class A Stock)* | 15,946 | 1,080,501 | ||||||
Great Plains Energy, Inc. | 20,888 | 618,076 | ||||||
Kinder Morgan, Inc. | 78,633 | 1,622,199 | ||||||
NextEra Energy, Inc. | 14,122 | 1,886,134 | ||||||
Noble Midstream Partners LP, MLP | 18,765 | 940,502 | ||||||
PG&E Corp. | 33,551 | 2,249,595 | ||||||
Plains All American Pipeline LP, MLP | 40,583 | 1,187,053 | ||||||
SBA Communications Corp., REIT* | 9,794 | 1,238,843 | ||||||
Sempra Energy | 7,952 | 898,735 | ||||||
Sunoco Logistics Partners LP, MLP | 65,283 | 1,562,875 | ||||||
Targa Resources Corp. | 23,683 | 1,305,643 | ||||||
Union Pacific Corp. | 13,745 | 1,538,890 | ||||||
Waste Management, Inc. | 17,550 | 1,277,289 | ||||||
Williams Cos., Inc. (The) | 67,667 | 2,072,640 | ||||||
|
| |||||||
31,053,085 | ||||||||
|
| |||||||
TOTAL COMMON STOCKS | 59,121,584 | |||||||
|
|
See Notes to Financial Statements.
10 |
Description | Shares | Value | ||||||
PREFERRED STOCKS 1.8% | ||||||||
Brazil | ||||||||
Cia de Saneamento do Parana (PRFC), 144A(g) | 225,828 | $ | 725,712 | |||||
Cia de Saneamento do Parana (PRFC) | 111,609 | 358,662 | ||||||
|
| |||||||
TOTAL PREFERRED STOCKS | 1,084,374 | |||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 60,205,958 | |||||||
|
| |||||||
SHORT-TERM INVESTMENTS 1.3% | ||||||||
AFFILIATED MUTUAL FUNDS | ||||||||
Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund(w) | 823,854 | 823,854 | ||||||
Prudential Investment Portfolios 2 - Prudential Institutional Money Market Fund(w) | 194 | 194 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS | 824,048 | |||||||
|
| |||||||
TOTAL INVESTMENTS 99.1% | 61,030,006 | |||||||
Other assets in excess of liabilities 0.9% | 534,013 | |||||||
|
| |||||||
NET ASSETS 100.0% | $ | 61,564,019 | ||||||
|
|
The following abbreviations are used in the semiannual report:
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
LIBOR—London Interbank Offered Rate
MLP—Master Limited Partnership
PRFC—Preference Shares
REIT—Real Estate Investment Trust
TSX—Toronto Stock Exchange
UTS—Unit Trust Security
* | Non-income producing security. |
(g) | Indicates a security that has been deemed illiquid; the aggregate value of $1,192,934 is approximately 1.9% of net assets. |
(w) | PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Ultra Short Bond Fund and Prudential Institutional Money Market Fund. |
Fair Value Measurements:
Various inputs are used in determining the value of the Series’ 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.
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2017
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2017 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Australia | $ | — | $ | 2,680,699 | $ | — | ||||||
Brazil | 2,146,285 | 386,428 | — | |||||||||
Canada | 4,678,605 | — | — | |||||||||
China | — | 615,875 | — | |||||||||
France | — | 5,739,651 | — | |||||||||
Germany | — | 636,076 | — | |||||||||
India | — | 1,391,318 | — | |||||||||
Italy | — | 3,018,311 | — | |||||||||
Mexico | 1,479,964 | 80,794 | — | |||||||||
Philippines | — | 295,940 | — | |||||||||
Spain | — | 3,531,717 | — | |||||||||
Switzerland | — | 1,386,836 | — | |||||||||
United States | 31,053,085 | — | — | |||||||||
Preferred Stocks | ||||||||||||
Brazil | 358,662 | 725,712 | — | |||||||||
Affiliated Mutual Funds | 824,048 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 40,540,649 | $ | 20,489,357 | $ | — | ||||||
|
|
|
|
|
|
During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.
Industry Classification:
The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2017 were as follows:
Oil, Gas & Consumable Fuels | 23.1 | % | ||
Transportation Infrastructure | 19.7 | |||
Electric Utilities | 19.0 | |||
Construction & Engineering | 9.7 | |||
Road & Rail | 7.5 | |||
Equity Real Estate Investment Trusts (REITs) | 5.0 | |||
Gas Utilities | 3.8 | |||
Water Utilities | 3.0 | |||
Commercial Services & Supplies | 2.1 | |||
Independent Power & Renewable Electricity Producers | 1.9 | % | ||
Air Freight & Logistics | 1.5 | |||
Multi-Utilities | 1.5 | |||
Affiliated Mutual Funds | 1.3 | |||
|
| |||
99.1 | ||||
Other assets in excess of liabilities | 0.9 | |||
|
| |||
100.0 | % | |||
|
|
See Notes to Financial Statements.
12 |
Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:
The Series invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is equity contracts risk. The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
The Series did not hold any derivative instruments as of April 30, 2017, accordingly, no derivative positions were presented in the Statement of Assets and Liabilities.
The effects of derivative instruments on the Statement of Operations for the period ended April 30, 2017 are as follows:
For the six months ended April 30, 2017, the Series did not have any realized gain (loss) on derivatives recognized in income.
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging | Rights(1) | |||
Equity contracts | $ | 1,081 | ||
|
|
(1) | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 13 |
Statement of Assets & Liabilities (unaudited)
as of April 30, 2017
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $51,506,353) | $ | 60,205,958 | ||
Affiliated investments (cost $824,048) | 824,048 | |||
Cash | 5,124 | |||
Receivable for investments sold | 1,493,258 | |||
Dividends and interest receivable | 168,180 | |||
Receivable for Series shares sold | 92,121 | |||
Tax reclaim receivable | 25,037 | |||
Prepaid expenses | 342 | |||
|
| |||
Total assets | 62,814,068 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 1,051,766 | |||
Payable for Series shares reacquired | 66,086 | |||
Accrued expenses | 65,634 | |||
Management fee payable | 39,442 | |||
Foreign capital gains tax liability | 17,581 | |||
Distribution fee payable | 7,134 | |||
Affiliated transfer agent fee payable | 2,406 | |||
|
| |||
Total liabilities | 1,250,049 | |||
|
| |||
Net Assets | $ | 61,564,019 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 27,003 | ||
Paid-in capital in excess of par | 61,269,471 | |||
|
| |||
61,296,474 | ||||
Distributions in excess of net investment income | (141,362 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (8,271,428 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 8,680,335 | |||
|
| |||
Net assets, April 30, 2017 | $ | 61,564,019 | ||
|
|
See Notes to Financial Statements.
14 |
Class A | ||||
Net asset value and redemption price per share, | $ | 12.40 | ||
Maximum sales charge (5.50% of offering price) | 0.72 | |||
|
| |||
Maximum offering price to public | $ | 13.12 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | ||||
($6,109,132 ÷ 495,218 shares of common stock issued and outstanding) | $ | 12.34 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share, | ||||
($16,545,777 ÷ 1,333,882 shares of common stock issued and outstanding) | $ | 12.40 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | ||||
($28,103,886 ÷ 2,265,703 shares of common stock issued and outstanding) | $ | 12.40 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 15 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2017
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $53,472) | $ | 759,873 | ||
Affiliated dividend income | 6,743 | |||
Income from securities lending, net (including affiliated income of $233) | 725 | |||
|
| |||
Total income | 767,341 | |||
|
| |||
Expenses | ||||
Management fee | 289,322 | |||
Distribution fee—Class A | 16,939 | |||
Distribution fee—Class C | 29,712 | |||
Custodian and accounting fees | 41,000 | |||
Registration fees | 29,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $6,500) | 24,000 | |||
Shareholders’ reports | 15,000 | |||
Audit fee | 13,000 | |||
Legal fees and expenses | 9,000 | |||
Directors’ fees | 5,000 | |||
Loan interest expense | 302 | |||
Miscellaneous | 10,412 | |||
|
| |||
Total expenses | 482,687 | |||
Less: Management fee waiver and/or expense reimbursement | (74,082 | ) | ||
Distribution fee waiver—Class A | (2,823 | ) | ||
|
| |||
Net expenses | 405,782 | |||
|
| |||
Net investment income (loss) | 361,559 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions (including affiliated of $(40)) | 279,939 | |||
Foreign currency transactions | 2,445 | |||
|
| |||
282,384 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (Net of change in foreign capital gains taxes $(17,581)) | 3,697,615 | |||
Foreign currencies | (3,668 | ) | ||
|
| |||
3,693,947 | ||||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 3,976,331 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 4,337,890 | ||
|
|
See Notes to Financial Statements.
16 |
Statement of Changes in Net Assets (unaudited)
Six Months Ended | Year Ended | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 361,559 | $ | 501,509 | ||||
Net realized gain (loss) on investment and foreign currency transactions | 282,384 | (3,627,807 | ) | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 3,693,947 | 3,466,087 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 4,337,890 | 339,789 | ||||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Dividends from net investment income | ||||||||
Class A | (94,273 | ) | (115,375 | ) | ||||
Class C | (29,605 | ) | (20,095 | ) | ||||
Class Q | (53,023 | ) | — | |||||
Class Z | (326,020 | ) | (340,326 | ) | ||||
|
|
|
| |||||
(502,921 | ) | (475,796 | ) | |||||
|
|
|
| |||||
Tax return of capital distributions | ||||||||
Class A | — | (132,272 | ) | |||||
Class C | — | (23,038 | ) | |||||
Class Q | — | — | ||||||
Class Z | — | (390,170 | ) | |||||
|
|
|
| |||||
— | (545,480 | ) | ||||||
|
|
|
| |||||
Series share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 11,665,534 | 17,321,482 | ||||||
Net asset value of shares issued in reinvestment of dividends, distributions and tax return of capital | 482,494 | 979,002 | ||||||
Cost of shares reacquired | (13,245,358 | ) | (35,225,219 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Series share transactions | (1,097,330 | ) | (16,924,735 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | 2,737,639 | (17,606,222 | ) | |||||
Net Assets: | ||||||||
Beginning of period | 58,826,380 | 76,432,602 | ||||||
|
|
|
| |||||
End of period | $ | 61,564,019 | $ | 58,826,380 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 17 |
Notes to Financial Statements (unaudited)
Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”) as an open-end management investment company and currently consists of six series: Prudential Jennison Global Infrastructure Fund (the “Series”), Prudential QMA International Equity Fund, Prudential Jennison Emerging Markets Equity Fund, Prudential Jennison Global Opportunities Fund, Prudential Jennison International Opportunities Fund and Prudential Emerging Markets Debt Local Currency Fund. These financial statements relate to the Prudential Jennison Global Infrastructure Fund. The financial statements of the other series are not presented herein.
The investment objective of the Series is to achieve total return.
Note 1. Accounting Policies
The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services-Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Series holds securities and other assets that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”) (formerly known as Prudential Investments). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Schedule of Investments.
Common and preferred stocks, exchange-traded funds and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the last
18 |
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.
Common and preferred stocks traded on foreign securities exchanges are 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. 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 stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser 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 mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted
Prudential Jennison Global Infrastructure Fund | 19 |
Notes to Financial Statements (unaudited) (continued)
securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
Foreign Currency Translation: The books and records of the Series 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 daily 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 Series are presented at the foreign exchange rates and market values at the close of the period, the Series 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 Series 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.
Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than
20 |
investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.
Rights: The Series may hold rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Rights entitle the holder to buy a proportionate amount of common stock, or such other security that the issuer may specify, at a specific price and time through the expiration dates. Such rights are held as long positions until exercised, sold or expired. Rights are valued at fair value in accordance with the Board of Directors’ approved fair valuation procedures.
Master Limited Partnerships (MLPs): The Series invests in MLPs. Distributions received from the Series’ investments in MLPs generally are comprised of income and return of capital. The Series records investment income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on historical information available from each MLP and other industry sources. These estimates may subsequently be revised based on information received from MLPs after their respective tax reporting periods have concluded.
Real Estate Investment Trust (REITs): The Series invests 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. These estimates are adjusted periodically when the actual source of distributions is disclosed by the REITs.
Master Netting Arrangements: The Series may be subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending: The Series may lend 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. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the
Prudential Jennison Global Infrastructure Fund | 21 |
Notes to Financial Statements (unaudited) (continued)
borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. companies as a result of, among other factors, the possibility of political and economic instability or the level of governmental supervision and regulation of foreign securities markets.
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. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an accrual basis. Expenses are recorded on the accrual basis, which may require the use of certain estimates by management that may differ from actual.
Net investment income or loss (other than distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) 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.
Dividends and Distributions: The Series expects to pay dividends from net investment income quarterly and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.
Taxes: It is the Series’ 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
22 |
investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends are recorded, net of reclaimable amounts, at the time the related income is earned.
Estimates: The preparation of the 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.
Note 2. Agreements
The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the subadvisers’ performance of such services. PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of 1.00% of the Series’ average daily net assets of the Series. The effective management fee rate, net of waivers and/or expense reimbursement was .74% for the six months ended April 30, 2017.
PGIM Investments has contractually agreed through February 28, 2018 to limit the net annual operating expenses (exclusive of distribution and service (12b-1) fees, taxes (such as income and foreign withholdings taxes, stamp duty and deferred tax expenses), interest, underlying funds, brokerage, extraordinary and certain other expenses such as dividend, broker charges and interest expense on short sales) of each class of shares of the Series to 1.25% of the Series’ average daily net assets. Expenses waived/reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver/reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services (“PIMS”) who acts as the distributor of Class A, Class C, Class Q and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Class Z shares of the Series.
Prudential Jennison Global Infrastructure Fund | 23 |
Notes to Financial Statements (unaudited) (continued)
Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at the annual rate of .30% and 1% of the average daily net assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares through February 28, 2018.
PIMS has advised the Series that it has received $23,921 in front-end sales charges resulting from sales of Class A shares, during the six months ended April 30, 2017. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 2017, it received $1,905 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.
PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect wholly-owned subsidiary of Prudential, serves as the Series’ 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 Series 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 permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board.
The Series may invest its overnight sweep cash in the Prudential Core Ultra Short Bond Fund, (the “Core Fund”), and its securities lending cash collateral in the Prudential Institutional Money Market Fund, (the “Money Market Fund”), each a series of the Prudential Investment Portfolios 2, registered under the 1940 Act, and managed by PGIM Investments. For the period ended April 30, 2017, PGIM, Inc., an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, was compensated $141 for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and the Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
24 |
Note 4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities, (excluding short-term investments and U.S. Treasury securities, for the six months ended April 30, 2017, were $27,266,209 and $28,329,729, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2017 were as follows:
Tax Basis | $ | 53,094,306 | ||
|
| |||
Appreciation | 8,108,632 | |||
Depreciation | (172,932 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 7,935,700 | ||
|
|
The book basis may differ from tax basis due to certain tax-related adjustments.
For federal income tax purposes, the Series had a capital loss carryforward as of October 31, 2016 of approximately $7,790,000 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.
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Series offers Class A, Class C, Class Q and Class Z shares. Class A shares are sold with a front-end sales charge of up to 5.50%. All investors who purchase Class A shares in the amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%. The CDSC is waived for purchase by certain retirement or benefit plans. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. Class Q and Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.
Prudential Jennison Global Infrastructure Fund | 25 |
Notes to Financial Statements (unaudited) (continued)
There are 510 million shares of common stock authorized, $.001 par value per share, divided into five classes, designated Class A, Class C, Class Q, Class T and Class Z shares, each of which consists of 20 million, 100 million, 125 million, 115 million and 150 million shares, respectively. The Fund currently does not have any Class T shares outstanding.
As of April 30, 2017, Prudential, through its affiliates, owned 881 shares of Class Q and 525,719 shares of Class Z. At reporting period end, six shareholders of record held 82% of the Fund’s outstanding shares.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 169,521 | $ | 1,980,690 | |||||
Shares issued in reinvestment of dividends and distributions | 7,430 | 85,981 | ||||||
Shares reacquired | (109,453 | ) | (1,274,866 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 67,498 | 791,805 | ||||||
Shares issued upon conversion from other share class(es) | 6,694 | 81,534 | ||||||
Shares reacquired upon conversion into other share class(es) | (260,560 | ) | (3,114,862 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (186,368 | ) | $ | (2,241,523 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 168,191 | $ | 1,888,675 | |||||
Shares issued in reinvestment of dividends and distributions | 18,936 | 214,780 | ||||||
Shares reacquired† | (843,748 | ) | (9,350,430 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (656,621 | ) | (7,246,975 | ) | ||||
Shares issued upon conversion from other share class(es) | 2,208 | 26,057 | ||||||
Shares reacquired upon conversion into other share class(es) | (235,790 | ) | (2,823,216 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (890,203 | ) | $ | (10,044,134 | ) | |||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 96,145 | $ | 1,104,756 | |||||
Shares issued in reinvestment of dividends and distributions | 2,277 | 25,783 | ||||||
Shares reacquired | (82,997 | ) | (969,664 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 15,425 | 160,875 | ||||||
Shares reacquired upon conversion into other share class(es) | (16,918 | ) | (203,509 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,493 | ) | $ | (42,634 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 101,212 | $ | 1,168,296 | |||||
Shares issued in reinvestment of dividends and distributions | 3,649 | 40,323 | ||||||
Shares reacquired† | (197,310 | ) | (2,185,953 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (92,449 | ) | (977,334 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (3,951 | ) | (46,048 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (96,400 | ) | $ | (1,023,382 | ) | |||
|
|
|
|
26 |
Class Q | Shares | Amount | ||||||
Period ended April 30, 2017*: | ||||||||
Shares sold | 201,115 | $ | 2,463,396 | |||||
Shares issued in reinvestment of dividends and distributions | 4,321 | 53,023 | ||||||
Shares reacquired | (313,201 | ) | (3,760,300 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (107,765 | ) | (1,243,881 | ) | ||||
Shares issued upon conversion from other share class(es) | 1,441,647 | 16,420,354 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,333,882 | $ | 15,176,473 | |||||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2017: | ||||||||
Shares sold | 527,884 | $ | 6,116,692 | |||||
Shares issued in reinvestment of dividends and distributions | 27,534 | 317,707 | ||||||
Shares reacquired | (634,051 | ) | (7,240,528 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (78,633 | ) | (806,129 | ) | ||||
Shares issued upon conversion from other share class(es) | 272,127 | 3,254,287 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,443,104 | ) | (16,437,804 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,249,610 | ) | $ | (13,989,646 | ) | |||
|
|
|
| |||||
Year ended October 31, 2016: | ||||||||
Shares sold | 1,234,281 | $ | 14,264,511 | |||||
Shares issued in reinvestment of dividends and distributions | 63,614 | 723,899 | ||||||
Shares reacquired† | (2,142,501 | ) | (23,688,836 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (844,606 | ) | (8,700,426 | ) | ||||
Shares issued upon conversion from other share class(es) | 238,917 | 2,860,137 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,431 | ) | (16,930 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (607,120 | ) | $ | (5,857,219 | ) | |||
|
|
|
|
† | Includes affiliated redemptions of 1,019 shares with a value of $11,243 for Class A shares, 1,008 shares with a value of $11,065 for Class C shares and 1,024 shares with a value of $11,296 for Class Z shares. |
* | Commencement of operations was December 28, 2016. |
Note 7. Borrowings
The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Series”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 6, 2016 through October 5, 2017. The Funds pay an annualized commitment fee of .15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
The Fund utilized the SCA during the six months ended April 30, 2017. The average daily balance for the 5 days that the Series had loans outstanding during the period was $1,071,000, borrowed at an average weighted interest rate of 2.03%. The maximum loan balance outstanding during the period was $1,071,000. At April 30, 2017, the Series did not have an outstanding loan balance.
Prudential Jennison Global Infrastructure Fund | 27 |
Notes to Financial Statements (unaudited) (continued)
Note 8. Recent Accounting Pronouncements and Reporting Updates
On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new rules and forms and amended existing rules and forms which are intended to modernize and enhance the reporting and disclosure of information by registered investment companies and to improve the quality of information that funds provide to investors, including modifications to Regulation S-X which would require standardized, enhanced disclosure about derivatives in investment company financial statements. The new rules also enhance disclosure regarding fund liquidity and redemption practices. The compliance dates of the modifications to Regulation S-X are August 1, 2017 and other amendments and rules are generally June 1, 2018 and December 1, 2018. Management is currently evaluating the impacts to the financial statement disclosures, if any.
Note 9. Other
At the Fund’s Board meeting in March, 2017, the Board of Directors approved a change in the methodology of allocating certain expenses, like Transfer Agency (including sub-transfer agency and networking) and Blue Sky fees. The impact to the net assets of the Fund and individual share classes is not ascertainable at the present time. PGIM Investments expects to implement the changes by December 31, 2017.
28 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months | Year Ended October 31, | September 25, 2013(b) through October 31, | ||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||
Per Share Operating Performance(c): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $11.61 | $11.48 | $12.62 | $10.42 | $10.00 | |||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | .07 | .09 | .06 | .09 | - | (g) | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .82 | .21 | (1.12 | ) | 2.26 | .42 | ||||||||||||||||||||||
Total from investment operations | .89 | .30 | (1.06 | ) | 2.35 | .42 | ||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.10 | ) | (.08 | ) | (.05 | ) | (.14 | ) | - | |||||||||||||||||||
Tax return of capital distributions | - | (.09 | ) | (.03 | ) | - | - | |||||||||||||||||||||
Distributions from net realized gains | - | - | - | (.01 | ) | - | ||||||||||||||||||||||
Total dividends and distributions | (.10 | ) | (.17 | ) | (.08 | ) | (.15 | ) | - | |||||||||||||||||||
Net Asset Value, end of period | $12.40 | $11.61 | $11.48 | $12.62 | $10.42 | |||||||||||||||||||||||
Total Return(a): | 7.69% | 2.62% | (8.46)% | 22.67% | 4.20% | |||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $10,805 | $12,277 | $22,353 | $15,521 | $21 | |||||||||||||||||||||||
Average net assets (000) | $11,386 | $16,694 | $22,695 | $4,906 | $17 | |||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.50% | (e) | 1.50% | 1.50% | 1.50% | 1.50% | (e) | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.83% | (e) | 1.79% | 1.78% | 1.95% | 25.87% | (e) | |||||||||||||||||||||
Net investment income (loss) | 1.17% | (e) | .76% | .52% | .73% | .28% | (e) | |||||||||||||||||||||
Portfolio turnover rate | 47% | (f) | 82% | 94% | 49% | 10% | (f) |
(a) | Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Commencement of operations. |
(c) | Calculated based on the average shares outstanding during the period. |
(d) | Does not include expenses of the underlying portfolio in which the Series invests. |
(e) | Annualized. |
(f) | Not Annualized. |
(g) | Less than $.005. |
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 29 |
Financial Highlights (unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | September 25, 2013(b) through October 31, | ||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||||
Per Share Operating Performance(c): | ||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $11.55 | $11.42 | $12.58 | $10.41 | $10.00 | |||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||
Net investment income (loss) | .02 | - | (g) | (.03 | ) | .01 | .01 | |||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .83 | .21 | (1.13 | ) | 2.25 | .40 | ||||||||||||||||||||||||||||||
Total from investment operations | .85 | .21 | (1.16 | ) | 2.26 | .41 | ||||||||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (.06 | ) | (.04 | ) | - | (g) | (.08 | ) | - | |||||||||||||||||||||||||||
Tax return of capital distributions | - | (.04 | ) | - | (g) | - | - | |||||||||||||||||||||||||||||
Distributions from net realized gains | - | - | - | (.01 | ) | - | ||||||||||||||||||||||||||||||
Total dividends and distributions | (.06 | ) | (.08 | ) | - | (.09 | ) | - | ||||||||||||||||||||||||||||
Net Asset Value, end of period | $12.34 | $11.55 | $11.42 | $12.58 | $10.41 | |||||||||||||||||||||||||||||||
Total Return(a): | 7.38% | 1.88% | (9.21)% | 21.76% | 4.10% | |||||||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $6,109 | $5,738 | $6,775 | $3,835 | $40 | |||||||||||||||||||||||||||||||
Average net assets (000) | $5,992 | $5,783 | $6,353 | $1,104 | $17 | |||||||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.25% | (e) | 2.25% | 2.25% | 2.25% | 2.25% | (e) | |||||||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.53% | (e) | 2.49% | 2.48% | 2.70% | 38.05% | (e) | |||||||||||||||||||||||||||||
Net investment income (loss) | .37% | (e) | (.02)% | (.22)% | .12% | .52% | (e) | |||||||||||||||||||||||||||||
Portfolio turnover rate | 47% | (f) | 82% | 94% | 49% | 10% | (f) |
(a) | Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Commencement of operations. |
(c) | Calculated based on the average shares outstanding during the period. |
(d) | Does not include expenses of the underlying portfolio in which the Series invests. |
(e) | Annualized. |
(f) | Not Annualized. |
(g) | Less than $.005. |
See Notes to Financial Statements.
30 |
Class Q Shares | ||||
December 28, 2016(a) through April 30, 2017 | ||||
Per Share Operating Performance(b): | ||||
Net Asset Value, Beginning of Period | $11.39 | |||
Income (loss) from investment operations: | ||||
Net investment income (loss) | .03 | |||
Net realized and unrealized gain (loss) on investments | 1.02 | |||
Total from investment operations | 1.05 | |||
Less Dividends and Distributions: | ||||
Dividends from net investment income | (.04 | ) | ||
Net asset value, end of period | $12.40 | |||
Total Return(c): | 9.22% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $16,546 | |||
Average net assets (000) | $15,465 | |||
Ratios to average net assets(d): | ||||
Expense after waivers and/or expense reimbursement | 1.25% | (e) | ||
Expense before waivers and/or expense reimbursement | 1.42% | (e) | ||
Net investment income (loss) | .65% | (e) | ||
Portfolio turnover rate | 47% | (f) |
(a) | Commencement of operations. |
(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 investment return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying portfolio in which the Series invests. |
(e) | Annualized. |
(f) | Not annualized. |
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 31 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | September 25, 2013(b) through October 31, | ||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||||
Per Share Operating Performance(c): | ||||||||||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $11.61 | $11.47 | $12.62 | $10.42 | $10.00 | |||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||
Net investment income (loss) | .10 | .11 | .09 | .22 | .01 | |||||||||||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .80 | .23 | (1.13 | ) | 2.15 | .41 | ||||||||||||||||||||||||||||||
Total from investment operations | .90 | .34 | (1.04 | ) | 2.37 | .42 | ||||||||||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (.11 | ) | (.09 | ) | (.08 | ) | (.16 | ) | - | |||||||||||||||||||||||||||
Tax return of capital distributions | - | (.11 | ) | (.03 | ) | - | - | |||||||||||||||||||||||||||||
Distributions from net realized gains | - | - | - | (.01 | ) | - | ||||||||||||||||||||||||||||||
Total dividends and distributions | (.11 | ) | (.20 | ) | (.11 | ) | (.17 | ) | - | |||||||||||||||||||||||||||
Net Asset Value, end of period | $12.40 | $11.61 | $11.47 | $12.62 | $10.42 | |||||||||||||||||||||||||||||||
Total Return(a): | 7.80% | 2.96% | (8.28)% | 22.91% | 4.20% | |||||||||||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||||||||||
Net assets, end of period (000) | $28,104 | $40,811 | $47,305 | $31,788 | $5,247 | |||||||||||||||||||||||||||||||
Average net assets (000) | $30,457 | $40,236 | $42,210 | $20,117 | $5,113 | |||||||||||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.25% | (e) | 1.25% | 1.25% | 1.25% | 1.25% | (e) | |||||||||||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.53% | (e) | 1.49% | 1.48% | 2.08% | 22.65% | (e) | |||||||||||||||||||||||||||||
Net investment income (loss) | 1.66% | (e) | .94% | .75% | 1.79% | .56% | (e) | |||||||||||||||||||||||||||||
Portfolio turnover rate | 47% | (f) | 82% | 94% | 49% | 10% | (f) |
(a) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Commencement of operations. |
(c) | Calculated based on the average shares outstanding during the period. |
(d) | Does not include expenses of the underlying portfolio in which the Series invests. |
(e) | Annualized. |
(f) | Not Annualized. |
See Notes to Financial Statements.
32 |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s investment 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 www.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. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Jennison Associates LLC | 466 Lexington Avenue New York, NY 10017 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential Jennison Global Infrastructure Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
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 |
PRUDENTIAL JENNISON GLOBAL INFRASTRUCTURE FUND
SHARE CLASS | A | C | Q | Z | ||||
NASDAQ | PGJAX | PGJCX | PGJQX | PGJZX | ||||
CUSIP | 743969792 | 743969784 | 743969560 | 743969776 |
MF217E2
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 required, as this is not an annual filing. | |
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 – Not applicable. | |
Item 11 – | Controls and Procedures |
(a) | It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. | |||
(b) | There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12 – Exhibits
(a) | (1) | Code of Ethics – Not required, as this is not an annual filing. | ||||
(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT. | |||||
(3) | Any written solicitation to purchase securities under Rule 23c-1. – Not applicable. | |||||
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | Prudential World Fund, Inc. | |
By: | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary | ||
Date: | June 19, 2017 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Stuart S. Parker | |
Stuart S. Parker | ||
President and Principal Executive Officer | ||
Date: | June 19, 2017 | |
By: | /s/ M. Sadiq Peshimam | |
M. Sadiq Peshimam | ||
Treasurer and Principal Financial and Accounting Officer | ||
Date: | June 19, 2017 |