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: | 811-08085 | |
Exact name of registrant as specified in charter: | Prudential Investment Portfolios, Inc. 10 | |
Address of principal executive offices: | 655 Broad Street, 17th Floor | |
Newark, New Jersey 07102 | ||
Name and address of agent for service: | 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: | 10/31/2018 | |
Date of reporting period: | 4/30/2018 |
Item 1 – Reports to Stockholders
PGIM JENNISON EQUITY INCOME FUND
(Formerly known as Prudential Jennison Equity Income Fund)
SEMIANNUAL REPORT
APRIL 30, 2018
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: Income and capital appreciation |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.
The accompanying financial statements as of April 30, 2018 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. © 2018 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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PGIM Jennison Equity Income Fund | 3 |
This Page Intentionally Left Blank
Dear Shareholder:
We hope you find the semiannual report for PGIM Jennison Equity Income Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.
We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*
Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.
Thank you for choosing our family of funds.
Sincerely,
Stuart S. Parker, President
PGIM Jennison Equity Income Fund
June 15, 2018
*The Prudential Day One Funds did not change their names.
PGIM Jennison Equity Income Fund | 5 |
Your Fund’s Performance (unaudited)
Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 4/30/18 (without sales charges) | Average Annual Total Returns as of 4/30/18 (with sales charges) | |||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Ten Years (%) | Since Inception (%) | ||||||
Class A | 2.27 | 3.61 | 6.63 | 7.19 | — | |||||
Class B | 1.87 | 3.78 | 6.88 | 6.99 | — | |||||
Class C | 1.91 | 7.84 | 7.05 | 7.00 | — | |||||
Class R | 2.11 | 9.34 | 7.58 | N/A | 8.45 (1/18/11) | |||||
Class Z | 2.41 | 9.92 | 8.11 | N/A | 8.98 (8/22/08) | |||||
Class R6** | 2.46 | 10.01 | 8.24 | N/A | 9.10 (1/18/11) | |||||
Lipper Equity Income Funds Index*** | ||||||||||
1.82 | 8.93 | 9.73 | 7.21 | — | ||||||
S&P 500 Index | ||||||||||
3.82 | 13.26 | 12.95 | 9.01 | — | ||||||
Lipper Equity Income Funds Average | ||||||||||
2.15 | 8.57 | 9.15 | 7.32 | — |
Source: PGIM Investments LLC and Lipper Inc.
*Not annualized
**Formerly known as Class Q shares.
***Returns for the Lipper Equity Income Funds Index reflect the expenses of the mutual funds included in the Index.
Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Indexes and the Lipper Average are measured from the closest month-end to the class’ inception date.
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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B* | Class C | Class R | Class Z | Class R6** | |||||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | None | None | ||||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 5.00% (Yr. 1) 4.00% (Yr. 2) 3.00% (Yr. 3) 2.00% (Yr. 4) 1.00% (Yr. 5) 1.00% (Yr. 6) 0.00% (Yr. 7) | 1.00% on sales made within 12 months of purchase | None | None | None | ||||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.30% (0.25% currently) | 1.00% | 1.00% | 0.75% (0.50% currently) | None | None |
*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.
**Formerly known as Class Q shares.
Benchmark Definitions
Lipper Equity Income Funds Index—Funds in the Lipper Equity Income Funds Index seek relatively high current income and growth of income by investing at least 65% of their portfolios in dividend-paying equity securities. These funds’ gross or net yields must be at least 125% of the average gross or net yield of the US diversified equity fund universe. The average annual total return for the Index measured from the month-end closest to the inception date of the Fund’s Class R and Class R6 shares is 10.45% and 8.38% for Class Z shares.
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 Index measured from the month-end closest to the inception date of the Fund’s Class R and Class R6 shares is 12.82% and 10.12% for Class Z shares.
PGIM Jennison Equity Income Fund | 7 |
Your Fund’s Performance (continued)
Lipper Equity Income Funds Average—The Lipper Equity Income Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Equity Income Funds universe for the periods noted. Funds in the Lipper Average seek relatively high current income and growth of income through investing 65% or more of their portfolios in dividend-paying equity securities. The average annual total return for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class R and Class R6 shares is 9.93% and 8.27% for Class Z shares.
Investors cannot invest directly in an index or average. The returns for the S&P 500 Index would be lower if it included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average and the Lipper Equity Income Funds Index reflect the deduction of mutual fund operating expenses, but not sales charges or taxes.
Presentation of Fund Holdings
Five Largest Holdings expressed as a percentage of net assets as of 4/30/18 (%) | ||||
JPMorgan Chase & Co., Banks | 3.7 | |||
Bank of America Corp., Banks | 3.7 | |||
BB&T Corp., Banks | 3.2 | |||
Dr. Pepper Snapple Group, Inc., Beverages | 2.9 | |||
PNC Financial Services Group, Inc. (The), Banks | 2.9 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/18 (%) | ||||
Banks | 16.9 | |||
Oil, Gas & Consumable Fuels | 8.7 | |||
Pharmaceuticals | 6.4 | |||
Aerospace & Defense | 5.8 | |||
Hotels, Restaurants & Leisure | 5.8 |
Industry weightings reflect only long-term investments and are subject to change.
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As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period
PGIM Jennison Equity Income Fund | 9 |
Fees and Expenses (continued)
and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
PGIM Jennison Equity Income Fund | Beginning Account Value November 1, 2017 | Ending Account Value April 30, 2018 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,022.70 | 1.18 | % | $ | 5.92 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.94 | 1.18 | % | $ | 5.91 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,018.70 | 1.99 | % | $ | 9.96 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,014.93 | 1.99 | % | $ | 9.94 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,019.10 | 1.90 | % | $ | 9.51 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.37 | 1.90 | % | $ | 9.49 | ||||||||||
Class R | Actual | $ | 1,000.00 | $ | 1,021.10 | 1.51 | % | $ | 7.57 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.31 | 1.51 | % | $ | 7.55 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,024.10 | 0.92 | % | $ | 4.62 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.23 | 0.92 | % | $ | 4.61 | ||||||||||
Class R6** | Actual | $ | 1,000.00 | $ | 1,024.60 | 0.80 | % | $ | 4.02 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.83 | 0.80 | % | $ | 4.01 |
* Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund's fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.
**Formerly known as Class Q shares.
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Schedule of Investments (unaudited)
as of April 30, 2018
Description | Shares | Value | ||||||||||
LONG-TERM INVESTMENTS 98.4% | ||||||||||||
COMMON STOCKS 93.2% | ||||||||||||
Aerospace & Defense 5.8% | ||||||||||||
Boeing Co. (The) | 85,296 | $ | 28,451,334 | |||||||||
General Dynamics Corp. | 109,106 | 21,964,129 | ||||||||||
Lockheed Martin Corp. | 105,724 | 33,920,488 | ||||||||||
Safran SA (France) | 166,815 | 19,565,731 | ||||||||||
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103,901,682 | ||||||||||||
Air Freight & Logistics 1.2% | ||||||||||||
FedEx Corp. | 84,211 | 20,816,959 | ||||||||||
Banks 15.3% | ||||||||||||
Bank of America Corp. | 2,198,038 | 65,765,297 | ||||||||||
BB&T Corp. | 1,077,005 | 56,865,864 | ||||||||||
JPMorgan Chase & Co. | 616,055 | 67,014,463 | ||||||||||
PNC Financial Services Group, Inc. (The) | 355,732 | 51,798,137 | ||||||||||
SunTrust Banks, Inc. | 500,599 | 33,440,013 | ||||||||||
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274,883,774 | ||||||||||||
Beverages 4.7% | ||||||||||||
Coca-Cola Co. (The) | 334,171 | 14,439,529 | ||||||||||
Diageo PLC (United Kingdom), ADR | 115,965 | 16,462,391 | ||||||||||
Dr. Pepper Snapple Group, Inc. | 440,370 | 52,826,785 | ||||||||||
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83,728,705 | ||||||||||||
Biotechnology 1.2% | ||||||||||||
AbbVie, Inc. | 223,363 | 21,565,698 | ||||||||||
Capital Markets 3.2% | ||||||||||||
Goldman Sachs Group, Inc. (The) | 98,386 | 23,448,335 | ||||||||||
Moelis & Co. (Class A Stock) | 621,227 | 33,422,013 | ||||||||||
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56,870,348 | ||||||||||||
Chemicals 3.2% | ||||||||||||
Air Products & Chemicals, Inc. | 135,219 | 21,944,691 | ||||||||||
Akzo Nobel NV (Netherlands) | 162,772 | 14,740,342 | ||||||||||
DowDuPont, Inc. | 338,591 | 21,412,495 | ||||||||||
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58,097,528 | ||||||||||||
Communications Equipment 2.1% | ||||||||||||
Cisco Systems, Inc. | 866,012 | 38,355,671 |
See Notes to Financial Statements.
PGIM Jennison Equity Income | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
Description | Shares | Value | ||||||||||||||
COMMON STOCKS (Continued) | ||||||||||||||||
Diversified Financial Services 0.0% | ||||||||||||||||
Gateway Energy & Resource Holdings LLC, Private Placement, | 100,000 | $ | 631,888 | |||||||||||||
Electric Utilities 1.3% | ||||||||||||||||
Exelon Corp. | 592,046 | 23,492,385 | ||||||||||||||
Electrical Equipment 1.6% | ||||||||||||||||
Emerson Electric Co. | 428,157 | 28,433,906 | ||||||||||||||
Equity Real Estate Investment Trusts (REITs) 0.7% | ||||||||||||||||
American Tower Corp. | 98,185 | 13,388,507 | ||||||||||||||
Food & Staples Retailing 1.5% | ||||||||||||||||
Walmart, Inc. | 315,657 | 27,923,018 | ||||||||||||||
Food Products 1.7% | ||||||||||||||||
Conagra Brands, Inc. | 823,728 | 30,535,597 | ||||||||||||||
Health Care Equipment & Supplies 2.5% | ||||||||||||||||
Abbott Laboratories | 313,092 | 18,200,038 | ||||||||||||||
Koninklijke Philips NV (Netherlands), ADR | 297,754 | 12,571,174 | ||||||||||||||
Zimmer Biomet Holdings, Inc. | 130,661 | 15,048,227 | ||||||||||||||
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45,819,439 | ||||||||||||||||
Health Care Providers & Services 0.5% | ||||||||||||||||
UnitedHealth Group, Inc. | 38,447 | 9,088,871 | ||||||||||||||
Hotels, Restaurants & Leisure 5.8% | ||||||||||||||||
Carnival Corp. | 191,367 | 12,067,603 | ||||||||||||||
International Game Technology PLC | 1,225,486 | 34,644,489 | ||||||||||||||
McDonald’s Corp. | 112,671 | 18,865,632 | ||||||||||||||
MGM Resorts International | 539,398 | 16,947,885 | ||||||||||||||
Starbucks Corp. | 368,994 | 21,242,985 | ||||||||||||||
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103,768,594 | ||||||||||||||||
Independent Power & Renewable Electricity Producers 1.1% | ||||||||||||||||
NRG Energy, Inc. | 645,054 | 19,996,674 | ||||||||||||||
Industrial Conglomerates 1.3% | ||||||||||||||||
Honeywell International, Inc. | 160,573 | 23,231,702 | ||||||||||||||
Insurance 1.2% | ||||||||||||||||
MetLife, Inc. | 473,518 | 22,572,603 |
See Notes to Financial Statements.
12 |
Description | Shares | Value | ||||||||||||||
COMMON STOCKS (Continued) | ||||||||||||||||
IT Services 3.7% | ||||||||||||||||
DXC Technology Co. | 467,107 | $ | 48,140,047 | |||||||||||||
Mastercard, Inc. (Class A Stock) | 102,539 | 18,279,628 | ||||||||||||||
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66,419,675 | ||||||||||||||||
Life Sciences Tools & Services 1.6% | ||||||||||||||||
Thermo Fisher Scientific, Inc. | 137,531 | 28,929,646 | ||||||||||||||
Machinery 1.4% | ||||||||||||||||
Caterpillar, Inc. | 175,566 | 25,344,708 | ||||||||||||||
Media 2.7% | ||||||||||||||||
Time Warner, Inc. | 227,481 | 21,565,199 | ||||||||||||||
Twenty-First Century Fox, Inc. (Class A Stock) | 718,381 | 26,264,009 | ||||||||||||||
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47,829,208 | ||||||||||||||||
Metals & Mining 1.4% | ||||||||||||||||
Rio Tinto PLC (United Kingdom), ADR(a) | 464,911 | 25,546,859 | ||||||||||||||
Mortgage Real Estate Investment Trusts (REITs) 1.3% | ||||||||||||||||
MFA Financial, Inc. | 2,050,197 | 15,417,481 | ||||||||||||||
Starwood Property Trust, Inc. | 346,851 | 7,269,997 | ||||||||||||||
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22,687,478 | ||||||||||||||||
Multi-Utilities 0.3% | ||||||||||||||||
Public Service Enterprise Group, Inc. | 105,658 | 5,510,065 | ||||||||||||||
Oil, Gas & Consumable Fuels 8.7% | ||||||||||||||||
Anadarko Petroleum Corp. | 305,076 | 20,537,717 | ||||||||||||||
BP PLC (United Kingdom), ADR | 987,175 | 44,018,133 | ||||||||||||||
Cheniere Energy Partners LP Holdings LLC | 1,700,653 | 47,448,219 | ||||||||||||||
Royal Dutch Shell PLC (Netherlands) (Class A Stock), ADR | 638,477 | 44,629,542 | ||||||||||||||
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156,633,611 | ||||||||||||||||
Pharmaceuticals 6.4% | ||||||||||||||||
Allergan PLC | 103,471 | 15,898,319 | ||||||||||||||
AstraZeneca PLC (United Kingdom), ADR | 501,715 | 17,825,934 | ||||||||||||||
Bristol-Myers Squibb Co. | 777,972 | 40,555,681 | ||||||||||||||
Eli Lilly & Co. | 228,088 | 18,491,094 | ||||||||||||||
Pfizer, Inc. | 614,331 | 22,490,658 | ||||||||||||||
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115,261,686 |
See Notes to Financial Statements.
PGIM Jennison Equity Income | 13 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
Description | Interest Rate | Maturity Date | Shares | Value | ||||||||||||
COMMON STOCKS (Continued) | ||||||||||||||||
Road & Rail 0.6% | ||||||||||||||||
CSX Corp. | 178,027 | $ | 10,573,024 | |||||||||||||
Semiconductors & Semiconductor Equipment 3.0% | ||||||||||||||||
Intel Corp. | 702,749 | 36,275,903 | ||||||||||||||
Texas Instruments, Inc. | 177,165 | 17,969,846 | ||||||||||||||
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54,245,749 | ||||||||||||||||
Software 2.7% | ||||||||||||||||
Microsoft Corp. | 512,757 | 47,953,035 | ||||||||||||||
Specialty Retail 1.6% | ||||||||||||||||
Home Depot, Inc. (The) | 158,179 | 29,231,479 | ||||||||||||||
Textiles, Apparel & Luxury Goods 1.9% | ||||||||||||||||
NIKE, Inc. (Class B Stock) | 135,460 | 9,264,109 | ||||||||||||||
Tapestry, Inc. | 451,132 | 24,257,368 | ||||||||||||||
|
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33,521,477 | ||||||||||||||||
|
| |||||||||||||||
TOTAL COMMON STOCKS | 1,676,791,249 | |||||||||||||||
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PREFERRED STOCKS 3.6% | ||||||||||||||||
Electronic Equipment, Instruments & Components 0.9% |
| |||||||||||||||
Belden, Inc., Series B, CVT, 6.750%(a) | 191,035 | 16,583,748 | ||||||||||||||
Internet Software & Services 1.8% | ||||||||||||||||
Mandatory Exchangeable Trust (China), CVT, 5.750%, 144A |
| 163,259 | 32,925,308 | |||||||||||||
Multi-Utilities 0.9% | ||||||||||||||||
Sempra Energy, Series A, CVT, 6.000% | 146,278 | 15,041,767 | ||||||||||||||
|
| |||||||||||||||
TOTAL PREFERRED STOCKS | 64,550,823 | |||||||||||||||
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Principal Amount (000)# | ||||||||||||||||
CONVERTIBLE BOND 1.6% | ||||||||||||||||
Banks | ||||||||||||||||
Goldman Sachs DXC Technology Co., Sr. Unsec’d. | 1.655 | % | 5/10/18 | 27,505 | 28,336,510 | |||||||||||
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TOTAL LONG-TERM INVESTMENTS | 1,769,678,582 | |||||||||||||||
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See Notes to Financial Statements.
14 |
Description | Shares | Value | ||||||||||||||
SHORT-TERM INVESTMENTS 1.3% | ||||||||||||||||
AFFILIATED MUTUAL FUNDS | ||||||||||||||||
Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund(w) | 23,935,420 | $ | 23,935,420 | |||||||||||||
Prudential Investment Portfolios 2 - PGIM Institutional Money Market | 161,871 | 161,871 | ||||||||||||||
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TOTAL SHORT-TERM INVESTMENTS | 24,097,291 | |||||||||||||||
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TOTAL INVESTMENTS 99.7% | 1,793,775,873 | |||||||||||||||
Other assets in excess of liabilities 0.3% | 4,755,967 | |||||||||||||||
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NET ASSETS 100.0% | $ | 1,798,531,840 | ||||||||||||||
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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
CVT—Convertible Security
LIBOR—London Interbank Offered Rate
REITs—Real Estate Investment Trusts
* | Non-income producing security. |
# | Principal amount is shown in U.S. dollars unless otherwise stated. |
^ | Indicates a Level 3 security. The aggregate value of Level 3 securities is $28,968,398 and 1.6% 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 $143,705; cash collateral of $152,002 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
(f) | Indicates a restricted security; the aggregate cost of the restricted security is $2,000,000. The aggregate value, $631,888, is approximately 0.0% of net assets. |
(w) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund. |
Fair Value Measurements:
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—unadjusted quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
See Notes to Financial Statements.
PGIM Jennison Equity Income | 15 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Aerospace & Defense | $ | 84,335,951 | $ | 19,565,731 | $ | — | ||||||
Air Freight & Logistics | 20,816,959 | — | — | |||||||||
Banks | 274,883,774 | — | — | |||||||||
Beverages | 83,728,705 | — | — | |||||||||
Biotechnology | 21,565,698 | — | — | |||||||||
Capital Markets | 56,870,348 | — | — | |||||||||
Chemicals | 43,357,186 | 14,740,342 | — | |||||||||
Communications Equipment | 38,355,671 | — | — | |||||||||
Diversified Financial Services | — | — | 631,888 | |||||||||
Electric Utilities | 23,492,385 | — | — | |||||||||
Electrical Equipment | 28,433,906 | — | — | |||||||||
Equity Real Estate Investment Trusts (REITs) | 13,388,507 | — | — | |||||||||
Food & Staples Retailing | 27,923,018 | — | — | |||||||||
Food Products | 30,535,597 | — | — | |||||||||
Health Care Equipment & Supplies | 45,819,439 | — | — | |||||||||
Health Care Providers & Services | 9,088,871 | — | — | |||||||||
Hotels, Restaurants & Leisure | 103,768,594 | — | — | |||||||||
Independent Power & Renewable Electricity Producers | 19,996,674 | — | — | |||||||||
Industrial Conglomerates | 23,231,702 | — | — | |||||||||
Insurance | 22,572,603 | — | — | |||||||||
IT Services | 66,419,675 | — | — | |||||||||
Life Sciences Tools & Services | 28,929,646 | — | — | |||||||||
Machinery | 25,344,708 | — | — | |||||||||
Media | 47,829,208 | — | — | |||||||||
Metals & Mining | 25,546,859 | — | — | |||||||||
Mortgage Real Estate Investment Trusts (REITs) | 22,687,478 | — | — | |||||||||
Multi-Utilities | 5,510,065 | — | — | |||||||||
Oil, Gas & Consumable Fuels | 156,633,611 | — | — | |||||||||
Pharmaceuticals | 115,261,686 | — | — | |||||||||
Road & Rail | 10,573,024 | — | — | |||||||||
Semiconductors & Semiconductor Equipment | 54,245,749 | — | — | |||||||||
Software | 47,953,035 | — | — | |||||||||
Specialty Retail | 29,231,479 | — | — | |||||||||
Textiles, Apparel & Luxury Goods | 33,521,477 | — | — | |||||||||
Preferred Stocks | ||||||||||||
Electronic Equipment, Instruments & Components | 16,583,748 | — | — | |||||||||
Internet Software & Services | 32,925,308 | — | — | |||||||||
Multi-Utilities | 15,041,767 | — | — | |||||||||
Convertible Bond | — | — | 28,336,510 | |||||||||
Affiliated Mutual Funds | 24,097,291 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 1,730,501,402 | $ | 34,306,073 | $ | 28,968,398 | ||||||
|
|
|
|
|
|
During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.
See Notes to Financial Statements.
16 |
The following is a reconciliation of assets in which unobservable inputs (Level 3) were used in determining fair value:
Common Stocks | Convertible Bond | |||||||
Balance as of 10/31/17 | $ | 707,901 | $ | 31,629,373 | ||||
Realized gain (loss) | — | 5,315,787 | ||||||
Change in unrealized appreciation (depreciation) | (76,013 | ) | (1,761,626 | ) | ||||
Purchases/Exchanges/Issuances | — | 25,047,701 | ||||||
Sales/Paydowns | — | (31,894,725 | ) | |||||
Accrued discounts/premiums | — | �� | — | |||||
Transfers out of Level 3 | — | — | ||||||
|
|
|
| |||||
Balance as of 4/30/18 | $ | 631,888 | $ | 28,336,510 | ||||
|
|
|
| |||||
Change in unrealized appreciation (depreciation) relating to securities still held at reporting period end | $ | (76,013 | ) | $ | 3,288,809 | |||
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and exchange-traded swap contracts, which are recorded at the unrealized appreciation (depreciation) on the instrument, and OTC swap contracts which are recorded at fair value. |
Level 3 securities as presented in the table above are being fair valued using pricing methodologies approved by Board, which contain unobservable inputs as follows:
Level 3 Securities | Fair Value as of April 30, 2018 | Valuation | Unobservable Inputs | |||||
Common Stocks | $ | 631,888 | Mark-to-market (Index) | Discretionary adjustment rate | ||||
Convertible Bond | 28,336,510 | Market approach | Single broker indicative quote | |||||
|
| |||||||
$ | 28,968,398 | |||||||
|
|
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, 2018 were as follows:
Banks | 16.9 | % | ||
Oil, Gas & Consumable Fuels | 8.7 | |||
Pharmaceuticals | 6.4 | |||
Aerospace & Defense | 5.8 | |||
Hotels, Restaurants & Leisure | 5.8 | |||
Beverages | 4.7 | |||
IT Services | 3.7 | |||
Chemicals | 3.2 | |||
Capital Markets | 3.2 | % | ||
Semiconductors & Semiconductor Equipment | 3.0 | |||
Software | 2.7 | |||
Media | 2.7 | |||
Health Care Equipment & Supplies | 2.5 | |||
Communications Equipment | 2.1 | |||
Textiles, Apparel & Luxury Goods | 1.9 | |||
Internet Software & Services | 1.8 |
See Notes to Financial Statements.
PGIM Jennison Equity Income | 17 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
Industry (cont’d.) | ||||
Food Products | 1.7 | % | ||
Specialty Retail | 1.6 | |||
Life Sciences Tools & Services | 1.6 | |||
Electrical Equipment | 1.6 | |||
Food & Staples Retailing | 1.5 | |||
Metals & Mining | 1.4 | |||
Machinery | 1.4 | |||
Affiliated Mutual Funds (including 0.0% of collateral for securities on loan) | 1.3 | |||
Electric Utilities | 1.3 | |||
Industrial Conglomerates | 1.3 | |||
Mortgage Real Estate Investment Trusts (REITs) | 1.3 | |||
Insurance | 1.2 | |||
Biotechnology | 1.2 | |||
Air Freight & Logistics | 1.2 | |||
Multi-Utilities | 1.2 | % | ||
Independent Power & Renewable Electricity Producers | 1.1 | |||
Electronic Equipment, Instruments & Components | 0.9 | |||
Equity Real Estate Investment Trusts (REITs) | 0.7 | |||
Road & Rail | 0.6 | |||
Health Care Providers & Services | 0.5 | |||
Diversified Financial Services | 0.0 | * | ||
|
| |||
99.7 | ||||
Other assets in excess of liabilities | 0.3 | |||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Fund entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.
Offsetting of financial instrument/transaction assets and liabilities:
Description | Gross Market Value of Recognized Assets/(Liabilities) | Collateral Pledged/(Received)(1) | Net Amount | |||||||||
Securities on Loan | $ | 143,705 | $ | (143,705 | ) | $ | — | |||||
|
|
(1) | Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
18 |
This Page Intentionally Left Blank
Statement of Assets & Liabilities (unaudited)
as of April 30, 2018
Assets | ||||
Investments at value, including securities on loan of $143,705: | ||||
Unaffiliated investments (cost $1,408,254,723) | $ | 1,769,678,582 | ||
Affiliated investments (cost $24,097,273) | 24,097,291 | |||
Receivable for investments sold | 20,877,531 | |||
Dividends and interest receivable | 2,090,473 | |||
Receivable for Fund shares sold | 1,618,811 | |||
Tax reclaim receivable | 1,394,986 | |||
Prepaid expenses | 6,869 | |||
|
| |||
Total assets | 1,819,764,543 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 14,516,882 | |||
Payable for Fund shares reacquired | 4,040,378 | |||
Management fee payable | 1,164,118 | |||
Distribution fee payable | 683,578 | |||
Accrued expenses and other liabilities | 606,647 | |||
Payable to broker for collateral for securities on loan | 152,002 | |||
Affiliated transfer agent fee payable | 69,098 | |||
|
| |||
Total liabilities | 21,232,703 | |||
|
| |||
Net Assets | $ | 1,798,531,840 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 112,989 | ||
Paid-in capital in excess of par | 1,327,612,085 | |||
|
| |||
1,327,725,074 | ||||
Undistributed net investment income | 1,754,114 | |||
Accumulated net realized gain on investment and foreign currency transactions | 107,636,006 | |||
Net unrealized appreciation on investments and foreign currencies | 361,416,646 | |||
|
| |||
Net assets, April 30, 2018 | $ | 1,798,531,840 | ||
|
|
See Notes to Financial Statements.
20 |
Class A | ||||
Net asset value and redemption price per share, | $ | 16.42 | ||
Maximum sales charge (5.50% of offering price) | 0.96 | |||
|
| |||
Maximum offering price to public | $ | 17.38 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share, | $ | 15.13 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | $ | 15.09 | ||
|
| |||
Class R | ||||
Net asset value, offering price and redemption price per share, | $ | 16.42 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | $ | 16.41 | ||
|
| |||
Class R6 | ||||
Net asset value, offering price and redemption price per share, | $ | 16.44 | ||
|
|
See Notes to Financial Statements.
PGIM Jennison Equity Income | 21 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2018
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $405,120) | $ | 26,722,464 | ||
Interest income | 212,290 | |||
Affiliated dividend income | 143,800 | |||
Income from securities lending, net (including affiliated income of $2,105) | 22,247 | |||
|
| |||
Total income | 27,100,801 | |||
|
| |||
Expenses | ||||
Management fee | 7,511,698 | |||
Distribution fee(a) | 4,654,551 | |||
Transfer agent’s fees and expenses (including affiliated expense of $158,647)(a) | 1,093,960 | |||
Custodian and accounting fees | 84,738 | |||
Registration fees(a) | 67,294 | |||
Shareholders’ reports | 59,041 | |||
Directors’ fees | 23,856 | |||
Legal fees and expenses | 15,286 | |||
Audit fee | 13,418 | |||
Miscellaneous | 30,987 | |||
|
| |||
Total expenses | 13,554,829 | |||
Less: Fee waiver and/or expense reimbursement(a) | (8,289 | ) | ||
Distribution fee waiver(a) | (209,741 | ) | ||
|
| |||
Net expenses | 13,336,799 | |||
|
| |||
Net investment income (loss) | 13,764,002 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions (including affiliated of $(5,834)) | 112,926,289 | |||
Foreign currency transactions | (99,297 | ) | ||
|
| |||
112,826,992 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (including affiliated of $(21)) | (79,160,289 | ) | ||
Foreign currencies | 85,326 | |||
|
| |||
(79,074,963 | ) | |||
|
| |||
Net gain (loss) on investment and foreign currency transactions | 33,752,029 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 47,516,031 | ||
|
|
(a) | Class specific expenses and waivers were as follows: |
Class A | Class B | Class C | Class R | Class Z | Class R6 | |||||||||||||||||||
Distribution fee | 996,741 | 376,811 | 3,150,146 | 130,853 | — | — | ||||||||||||||||||
Transfer agent’s fees and expenses | 408,195 | 63,217 | 292,704 | 28,527 | 301,107 | 210 | ||||||||||||||||||
Registration fees | 15,584 | 7,418 | 10,171 | 7,610 | 18,432 | 8,079 | ||||||||||||||||||
Fee waiver and/or expense reimbursement | — | — | — | — | — | (8,289 | ) | |||||||||||||||||
Distribution fee waiver | (166,123 | ) | — | — | (43,618 | ) | — | — |
See Notes to Financial Statements.
22 |
Statements of Changes in Net Assets (unaudited)
Six Months Ended April 30, 2018 | Year Ended October 31, 2017 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 13,764,002 | $ | 52,544,936 | ||||
Net realized gain (loss) on investment and foreign currency transactions | 112,826,992 | 213,115,670 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (79,074,963 | ) | 151,974,206 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 47,516,031 | 417,634,812 | ||||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Dividends from net investment income | ||||||||
Class A | (5,769,097 | ) | (19,379,438 | ) | ||||
Class B | (411,661 | ) | (1,803,533 | ) | ||||
Class C | (3,734,327 | ) | (14,362,936 | ) | ||||
Class R | (249,215 | ) | (841,494 | ) | ||||
Class Z | (5,224,364 | ) | (22,404,546 | ) | ||||
Class R6 | (34,789 | ) | (121,274 | ) | ||||
|
|
|
| |||||
(15,423,453 | ) | (58,913,221 | ) | |||||
|
|
|
| |||||
Distributions from net realized gains | ||||||||
Class A | (22,507,577 | ) | — | |||||
Class B | (2,817,681 | ) | — | |||||
Class C | (23,261,213 | ) | — | |||||
Class R | (1,208,024 | ) | — | |||||
Class Z | (17,940,078 | ) | — | |||||
Class R6 | (107,043 | ) | — | |||||
|
|
|
| |||||
(67,841,616 | ) | — | ||||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 36,895,859 | 156,201,792 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 72,008,544 | 49,868,593 | ||||||
Cost of shares reacquired | (303,233,834 | ) | (1,895,076,368 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from share transactions | (194,329,431 | ) | (1,689,005,983 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | (230,078,469 | ) | (1,330,284,392 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 2,028,610,309 | 3,358,894,701 | ||||||
|
|
|
| |||||
End of period(a) | $ | 1,798,531,840 | $ | 2,028,610,309 | ||||
|
|
|
| |||||
(a) Includes undistributed/(distributions in excess of) net investment income of: | $ | 1,754,114 | $ | 3,413,565 | ||||
|
|
|
|
See Notes to Financial Statements.
PGIM Jennison Equity Income | 23 |
Notes to Financial Statements (unaudited)
Prudential Investment Portfolios, Inc. 10 (the “Company”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The Company was organized on March 5, 1997, as a Maryland Corporation and operates as a series company. The Company consists of two funds: PGIM Jennison Equity Income Fund and PGIM QMA Mid-Cap Value Fund, each of which are diversified funds. These financial statements relate only to the PGIM Jennison Equity Income Fund (the “Fund”). Effective June 11, 2018, the Funds’ names were changed by replacing “Prudential” with “PGIM” in each Fund’s name and Class Q shares were renamed Class R6 shares.
The investment objective of the Fund is income and capital appreciation.
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 Fund consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Fund holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The 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”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the Fund to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Fund’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
24 |
Various inputs determine how the Fund’s investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the Schedule of Investments.
Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.
Foreign equities traded on foreign securities exchanges are generally valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stock valuation policies discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.
PGIM Jennison Equity Income | 25 |
Notes to Financial Statements (unaudited) (continued)
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Fund 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 Fund has valued the investment. Therefore, the Fund may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur transaction costs that would not be incurred in the sale of securities that were freely marketable. 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 Fund’s Subadviser under the guidelines adopted by the Board of the Fund. However, the liquidity of the Fund’s investments in Rule 144A securities could be impaired if trading does not develop or declines.
Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.
Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes
26 |
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 currencies.
Master Netting Arrangements: The Company, on behalf of the Fund, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset amounts payable by the Fund to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Fund’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending: The Fund 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. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the loaned securities. Should the borrower of the securities fail financially, the Fund has the right to repurchase the securities in the open market using the collateral.
The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as 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 or economic instability or the level of governmental supervision and regulation of foreign securities markets.
PGIM Jennison Equity Income | 27 |
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. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.
Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.
Equity and Mortgage Real Estate Investment Trusts (REITs): The Fund invests in equity REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from equity REITs during the period is estimated to be dividend income, capital gain or return of capital and recorded accordingly. When material, these estimates are adjusted periodically when the actual source of distributions is disclosed by the equity REITs.
Taxes: It is the Fund’s policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.
Dividends and Distributions: The Fund expects to pay dividends from net investment income 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.
Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
28 |
2. Agreements
The Company, on behalf of the Fund, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Fund. PGIM Investments administers the corporate affairs of the Fund and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Fund’s custodian (the Custodian), and the Fund’s transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Fund. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Fund, including, but not limited to, the custodian, transfer agent, and accounting agent.
PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Fund. In connection therewith, Jennison is obligated to keep certain books and records of the Fund. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable month at an annual rate of 0.825% of the average daily net assets of the Fund up to and including $500 million, 0.775% on the next $500 million, 0.75% on the next $1.5 billion, 0.70% on the next $5 billion, 0.675% on the next $2.5 billion and 0.65% of the Fund’s average daily net assets in excess of $10 billion. The effective management fee rate, before any waivers and/or expense reimbursements, was 0.78% for the six months ended April 30, 2018.
PGIM Investments has contractually agreed, through February 29, 2020, to limit transfer agency, shareholder servicing, sub-transfer agency, and blue sky fees, as applicable, to the extent that such fees cause the Total Annual Fund Operating Expenses to exceed 0.80% of average daily net assets for Class R6 shares. This contractual expense limitation excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. Fees and/or expenses waived and/or reimbursed by PGIM Investments may be recouped by PGIM Investments within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The effective management fee rate, net of waivers and/or expense reimbursements, was 0.78% for the six months ended April 30, 2018.
PGIM Jennison Equity Income | 29 |
Notes to Financial Statements (unaudited) (continued)
The Company, on behalf of the Fund, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C, Class R, Class Z and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B, Class C and Class R shares pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z and Class R6 shares of the Fund.
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.30%, 1%, 1% and 0.75%, of the average daily net assets of the Class A, Class B, Class C and Class R shares, respectively. PIMS has contractually agreed to limit such fees to 0.25% and 0.50% of the average daily net assets of the Class A and Class R shares, respectively, through February 28, 2019.
PIMS has advised the Fund that it has received $221,765 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended April 30, 2018, it received $38,951, and $4,182 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively.
PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Fund may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that 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. For the reporting period ended April 30, 2018 no such transactions were entered into by the Fund.
30 |
The Fund may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30, 2018, PGIM, Inc. was compensated $8,487 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 Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018 were $760,806,860 and $1,024,692,564, respectively.
A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:
Affiliated | Value, Beginning of Period | Cost of Purchases | Proceeds from Sales | Change in Unrealized Gain (Loss) | Realized Gain (Loss) | Value, End of Period | Shares, End of Period | Dividend Income | ||||||||||||||||||||||||
PGIM Core Ultra Short Bond Fund | $ | 5,977,165 | $ | 943,825,862 | $ | 925,867,607 | $ | — | $ | — | $ | 23,935,420 | 23,935,420 | $ | 143,800 | |||||||||||||||||
PGIM Institutional Money Market Fund | 21,712,580 | 140,241,688 | 161,786,542 | (21 | ) | (5,834 | ) | 161,871 | 161,871 | 2,105 | ||||||||||||||||||||||
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$ | 27,689,745 | $ | 1,084,067,550 | $ | 1,087,654,149 | $ | (21 | ) | $ | (5,834 | ) | $ | 24,097,291 | $ | 145,905 | |||||||||||||||||
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* | The Funds did not have any capital gain distributions during the reporting period. |
5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of April 30, 2018 were as follows:
Tax Basis | $ | 1,437,453,799 | ||
|
| |||
Gross Unrealized Appreciation | 383,382,681 | |||
Gross Unrealized Depreciation | (27,060,607 | ) | ||
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Net Unrealized Appreciation | $ | 356,322,074 | ||
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The book basis may differ from tax basis due to certain tax-related adjustments.
During the fiscal year ended October 31, 2017, the Fund utilized approximately $142,091,000 of its capital loss carryforward to offset capital gains.
PGIM Jennison Equity Income | 31 |
Notes to Financial Statements (unaudited) (continued)
Management has analyzed the Fund’s tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Fund’s financial statements for the current reporting period. The Fund’s federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
6. Capital and Ownership
The Fund offers Class A, Class B, Class C, Class R, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class B shares are sold with a CDSC which declines from 5% to zero depending upon the period of time the shares are held. Class B shares will automatically convert to Class A shares approximately seven years after purchase. Class B shares are closed to new purchases. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class R, Class Z and Class R6 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 Fund to one or more other share classes of the Fund as presented in the table of transactions in shares of common stock.
The authorized capital stock of the Company is 5.5 billion shares, with a par value of $0.001 per share. Of the Company’s authorized capital stock, 2.770 billion authorized shares have been allocated to the Fund and divided into seven classes, designated Class A, Class B, Class C, Class R, Class Z, Class T and Class R6 common stock, each of which consists of 400 million, 20 million, 300 million, 75 million, 1,250 million, 650 million and 75 million authorized shares, respectively.
The Fund currently does not have any Class T shares outstanding.
At reporting period end, eight shareholders of record held 73% of the Fund’s outstanding shares on behalf of multiple beneficial owners.
32 |
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 871,625 | $ | 14,749,928 | |||||
Shares issued in reinvestment of dividends and distributions | 1,579,966 | 26,219,158 | ||||||
Shares reacquired | (4,772,241 | ) | (80,423,493 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (2,320,650 | ) | (39,454,407 | ) | ||||
Shares issued upon conversion from other share class(es) | 748,213 | 12,853,118 | ||||||
Shares reacquired upon conversion into other share class(es) | (620,790 | ) | (10,538,579 | ) | ||||
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Net increase (decrease) in shares outstanding | (2,193,227 | ) | $ | (37,139,868 | ) | |||
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Year ended October 31, 2017: | ||||||||
Shares sold | 2,609,211 | $ | 40,491,177 | |||||
Shares issued in reinvestment of dividends and distributions | 1,109,269 | 17,456,780 | ||||||
Shares reacquired | (21,330,088 | ) | (332,581,496 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (17,611,608 | ) | (274,633,539 | ) | ||||
Shares issued upon conversion from other share class(es) | 859,274 | 13,626,451 | ||||||
Shares reacquired upon conversion into other share class(es) | (14,039,855 | ) | (218,923,813 | ) | ||||
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Net increase (decrease) in shares outstanding | (30,792,189 | ) | $ | (479,930,901 | ) | |||
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Class B | ||||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 32,297 | $ | 497,691 | |||||
Shares issued in reinvestment of dividends and distributions | 170,261 | 2,609,611 | ||||||
Shares reacquired | (796,813 | ) | (12,423,893 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (594,255 | ) | (9,316,591 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (680,522 | ) | (10,806,665 | ) | ||||
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Net increase (decrease) in shares outstanding | (1,274,777 | ) | $ | (20,123,256 | ) | |||
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Year ended October 31, 2017: | ||||||||
Shares sold | 104,937 | $ | 1,519,662 | |||||
Shares issued in reinvestment of dividends and distributions | 93,236 | 1,365,362 | ||||||
Shares reacquired | (2,325,197 | ) | (33,983,697 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (2,127,024 | ) | (31,098,673 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (526,889 | ) | (7,738,780 | ) | ||||
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Net increase (decrease) in shares outstanding | (2,653,913 | ) | $ | (38,837,453 | ) | |||
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Class C | ||||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 561,392 | $ | 8,693,873 | |||||
Shares issued in reinvestment of dividends and distributions | 1,519,549 | 23,221,947 | ||||||
Shares reacquired | (4,961,910 | ) | (77,015,457 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (2,880,969 | ) | (45,099,637 | ) | ||||
Shares issued upon conversion from other share class(es) | 1,386 | 21,965 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,174,255 | ) | (18,293,699 | ) | ||||
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Net increase (decrease) in shares outstanding | (4,053,838 | ) | $ | (63,371,371 | ) | |||
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Year ended October 31, 2017: | ||||||||
Shares sold | 1,164,967 | $ | 16,744,026 | |||||
Shares issued in reinvestment of dividends and distributions | 818,973 | 11,940,476 | ||||||
Shares reacquired | (22,398,025 | ) | (324,557,860 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (20,414,085 | ) | (295,873,358 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (5,009,805 | ) | (72,754,069 | ) | ||||
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Net increase (decrease) in shares outstanding | (25,423,890 | ) | $ | (368,627,427 | ) | |||
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PGIM Jennison Equity Income | 33 |
Notes to Financial Statements (unaudited) (continued)
Class R | Shares | Amount | ||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 67,525 | $ | 1,141,224 | |||||
Shares issued in reinvestment of dividends and distributions | 87,687 | 1,456,764 | ||||||
Shares reacquired | (427,057 | ) | (7,227,897 | ) | ||||
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Net increase (decrease) in shares outstanding | (271,845 | ) | $ | (4,629,909 | ) | |||
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Year ended October 31, 2017: | ||||||||
Shares sold | 263,332 | $ | 4,123,870 | |||||
Shares issued in reinvestment of dividends and distributions | 53,220 | 841,235 | ||||||
Shares reacquired | (853,039 | ) | (13,479,022 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (536,487 | ) | $ | (8,513,917 | ) | |||
Shares reacquired upon conversion into other share class(es) | (681 | ) | (10,786 | ) | ||||
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Net increase (decrease) in shares outstanding | (537,168 | ) | $ | (8,524,703 | ) | |||
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Class Z | ||||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 691,941 | $ | 11,614,262 | |||||
Shares issued in reinvestment of dividends and distributions | 1,108,017 | 18,369,116 | ||||||
Shares reacquired | (7,420,480 | ) | (125,395,300 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (5,620,522 | ) | (95,411,922 | ) | ||||
Shares issued upon conversion from other share class(es) | 1,629,122 | 27,594,111 | ||||||
Shares reacquired upon conversion into other share class(es) | (100,914 | ) | (1,697,906 | ) | ||||
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Net increase (decrease) in shares outstanding | (4,092,314 | ) | $ | (69,515,717 | ) | |||
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Year ended October 31, 2017: | ||||||||
Shares sold | 6,017,080 | $ | 92,026,614 | |||||
Shares issued in reinvestment of dividends and distributions | 1,162,565 | 18,165,242 | ||||||
Shares reacquired | (75,394,537 | ) | (1,182,837,487 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (68,214,892 | ) | (1,072,645,631 | ) | ||||
Shares issued upon conversion from other share class(es) | 18,408,360 | 287,529,506 | ||||||
Shares reacquired upon conversion into other share class(es) | (142,248 | ) | (2,240,211 | ) | ||||
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Net increase (decrease) in shares outstanding | (49,948,780 | ) | $ | (787,356,336 | ) | |||
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Class R6 | ||||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 11,790 | $ | 198,881 | |||||
Shares issued in reinvestment of dividends and distributions | 7,956 | 131,948 | ||||||
Shares reacquired | (44,541 | ) | (747,794 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (24,795 | ) | (416,965 | ) | ||||
Shares issued upon conversion from other share class(es) | 51,575 | 867,655 | ||||||
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Net increase (decrease) in shares outstanding | 26,780 | $ | 450,690 | |||||
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Year ended October 31, 2017: | ||||||||
Shares sold | 81,981 | $ | 1,296,443 | |||||
Shares issued in reinvestment of dividends and distributions | 6,322 | 99,498 | ||||||
Shares reacquired | (492,877 | ) | (7,636,806 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (404,574 | ) | (6,240,865 | ) | ||||
Shares issued upon conversion from other share class(es) | 33,258 | 533,116 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,342 | ) | (21,414 | ) | ||||
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Net increase (decrease) in shares outstanding | (372,658 | ) | $ | (5,729,163 | ) | |||
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34 |
7. Borrowings
The Company, on behalf of the Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCAs 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.
Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.
The Fund utilized the SCA during the reporting period ended April 30, 2018. The average daily balance for the 1 day that the Fund had loans outstanding during the period was $944,000, borrowed at a weighted average interest rate of 2.52%. The maximum loan balance outstanding during the period was $944,000. At April 30, 2018, the Fund did not have an outstanding loan balance.
PGIM Jennison Equity Income | 35 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.75 | $14.68 | $16.59 | $17.88 | $16.84 | $13.90 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.14 | 0.34 | 0.42 | 0.40 | 0.70 | 0.40 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.25 | 2.11 | (0.66 | ) | (0.65 | ) | 1.77 | 3.01 | ||||||||||||||||||||
Total from investment operations | 0.39 | 2.45 | (0.24 | ) | (0.25 | ) | 2.47 | 3.41 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.15 | ) | (0.38 | ) | (0.44 | ) | (0.34 | ) | (0.70 | ) | (0.47 | ) | ||||||||||||||||
Distributions from net realized gains on investments | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | - | ||||||||||||||||||
Total dividends and distributions | (0.72 | ) | (0.38 | ) | (1.67 | ) | (1.04 | ) | (1.43 | ) | (0.47 | ) | ||||||||||||||||
Net asset value, end of period | $16.42 | $16.75 | $14.68 | $16.59 | $17.88 | $16.84 | ||||||||||||||||||||||
Total Return(a) | 2.27% | 16.88% | (1.00)% | (1.53)% | 15.36% | 25.14% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $630.7 | $680.0 | $1,048.0 | $1,584.9 | $1,751.8 | $1,738.3 | ||||||||||||||||||||||
Average net assets (in millions) | $670.0 | $808.6 | $1,253.2 | $1,745.2 | $1,807.3 | $1,458.7 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.18% | (e) | 1.14% | 1.16% | 1.13% | 1.13% | 1.16% | |||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.23% | (e) | 1.19% | 1.21% | 1.18% | 1.18% | 1.21% | |||||||||||||||||||||
Net investment income (loss) | 1.61% | (e) | 2.18% | 2.84% | 2.31% | 4.04% | 2.63% | |||||||||||||||||||||
Portfolio turnover rate(g) | 40% | (f) | 75% | 48% | 76% | 57% | 91% |
(a) | Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of shares 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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Not annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
36 |
Class B Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.49 | $13.61 | $15.51 | $16.79 | $15.90 | $13.15 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.07 | 0.21 | 0.28 | 0.25 | 0.53 | 0.25 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.23 | 1.95 | (0.61 | ) | (0.61 | ) | 1.67 | 2.87 | ||||||||||||||||||||
Total from investment operations | 0.30 | 2.16 | (0.33 | ) | (0.36 | ) | 2.20 | 3.12 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.09 | ) | (0.28 | ) | (0.34 | ) | (0.22 | ) | (0.58 | ) | (0.37 | ) | ||||||||||||||||
Distributions from net realized gains on investments | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | - | ||||||||||||||||||
Total dividends and distributions | (0.66 | ) | (0.28 | ) | (1.57 | ) | (0.92 | ) | (1.31 | ) | (0.37 | ) | ||||||||||||||||
Net asset value, end of period | $15.13 | $15.49 | $13.61 | $15.51 | $16.79 | $15.90 | ||||||||||||||||||||||
Total Return(a) | 1.87% | 15.98% | (1.73)% | (2.28)% | 14.52% | 24.16% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $63.6 | $84.8 | $110.6 | $146.6 | $173.7 | $159.3 | ||||||||||||||||||||||
Average net assets (in millions) | $76.0 | $100.0 | $125.7 | $164.6 | $171.9 | $119.3 | ||||||||||||||||||||||
Ratios to average net assets(c): | �� | |||||||||||||||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.99% | (e) | 1.89% | 1.91% | 1.88% | 1.88% | 1.91% | |||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.99% | (e) | 1.89% | 1.91% | 1.88% | 1.88% | 1.91% | |||||||||||||||||||||
Net investment income (loss) | 0.85% | (e) | 1.45% | 2.04% | 1.56% | 3.25% | 1.81% | |||||||||||||||||||||
Portfolio turnover rate(g) | 40% | (f) | 75% | 48% | 76% | 57% | 91% |
(a) | Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of shares 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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Not annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 37 |
Financial Highlights (unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $15.45 | $13.57 | $15.47 | $16.75 | $15.87 | $13.12 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.07 | 0.21 | 0.28 | 0.25 | 0.51 | 0.27 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.23 | 1.95 | (0.61 | ) | (0.61 | ) | 1.68 | 2.85 | ||||||||||||||||||||
Total from investment operations | 0.30 | 2.16 | (0.33 | ) | (0.36 | ) | 2.19 | 3.12 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.09 | ) | (0.28 | ) | (0.34 | ) | (0.22 | ) | (0.58 | ) | (0.37 | ) | ||||||||||||||||
Distributions from net realized gains on investments | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | - | ||||||||||||||||||
Total dividends and distributions | (0.66 | ) | (0.28 | ) | (1.57 | ) | (0.92 | ) | (1.31 | ) | (0.37 | ) | ||||||||||||||||
Net asset value, end of period | $15.09 | $15.45 | $13.57 | $15.47 | $16.75 | $15.87 | ||||||||||||||||||||||
Total Return(a) | 1.91% | 16.03% | (1.73)% | (2.29)% | 14.48% | 24.22% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $581.8 | $658.3 | $923.4 | $1,285.1 | $1,302.2 | $1,066.6 | ||||||||||||||||||||||
Average net assets (in millions) | $635.3 | $786.3 | $1,075.0 | $1,353.4 | $1,195.7 | $851.3 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.90% | (e) | 1.89% | 1.91% | 1.88% | 1.88% | 1.91% | |||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.90% | (e) | 1.89% | 1.91% | 1.88% | 1.88% | 1.91% | |||||||||||||||||||||
Net investment income (loss) | 0.90% | (e) | 1.45% | 2.06% | 1.56% | 3.16% | 1.87% | |||||||||||||||||||||
Portfolio turnover rate(g) | 40% | (f) | 75% | 48% | 76% | 57% | 91% |
(a) | Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of shares 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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Not annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
38 |
Class R Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.75 | $14.68 | $16.58 | $17.88 | $16.84 | $13.89 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.11 | 0.31 | 0.37 | 0.36 | 0.59 | 0.34 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.25 | 2.10 | (0.64 | ) | (0.67 | ) | 1.84 | 3.05 | ||||||||||||||||||||
Total from investment operations | 0.36 | 2.41 | (0.27 | ) | (0.31 | ) | 2.43 | 3.39 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.12 | ) | (0.34 | ) | (0.40 | ) | (0.29 | ) | (0.66 | ) | (0.44 | ) | ||||||||||||||||
Distributions from net realized gains on investments | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | - | ||||||||||||||||||
Total dividends and distributions | (0.69 | ) | (0.34 | ) | (1.63 | ) | (0.99 | ) | (1.39 | ) | (0.44 | ) | ||||||||||||||||
Net assets, end of period | $16.42 | $16.75 | $14.68 | $16.58 | $17.88 | $16.84 | ||||||||||||||||||||||
Total Return(a) | 2.11% | 16.59% | (1.19)% | (1.83)% | 15.08% | 24.86% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $31.8 | $36.9 | $40.3 | $44.4 | $40.3 | $22.4 | ||||||||||||||||||||||
Average net assets (in millions) | $35.2 | $39.5 | $41.9 | $44.6 | $32.5 | $14.7 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 1.51% | (e) | 1.39% | 1.41% | 1.38% | 1.38% | 1.41% | |||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.76% | (e) | 1.64% | 1.66% | 1.63% | 1.63% | 1.66% | |||||||||||||||||||||
Net investment income (loss) | 1.30% | (e) | 1.95% | 2.48% | 2.07% | 3.40% | 2.25% | |||||||||||||||||||||
Portfolio turnover rate(g) | 40% | (f) | 75% | 48% | 76% | 57% | 91% |
(a) | Total return is calculated assuming a purchase of shares 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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Not annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 39 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.74 | $14.67 | $16.58 | $17.88 | $16.84 | $13.89 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.16 | 0.38 | 0.46 | 0.44 | 0.69 | 0.43 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.25 | 2.11 | (0.66 | ) | (0.66 | ) | 1.82 | 3.03 | ||||||||||||||||||||
Total from investment operations | 0.41 | 2.49 | (0.20 | ) | (0.22 | ) | 2.51 | 3.46 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.17 | ) | (0.42 | ) | (0.48 | ) | (0.38 | ) | (0.74 | ) | (0.51 | ) | ||||||||||||||||
Distributions from net realized gains on investments | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | - | ||||||||||||||||||
Total dividends and distributions | (0.74 | ) | (0.42 | ) | (1.71 | ) | (1.08 | ) | (1.47 | ) | (0.51 | ) | ||||||||||||||||
Net asset value, end of period | $16.41 | $16.74 | $14.67 | $16.58 | $17.88 | $16.84 | ||||||||||||||||||||||
Total Return(a) | 2.41% | 17.18% | (0.75)% | (1.33)% | 15.65% | 25.47% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $487.2 | $565.5 | $1,228.5 | $1,628.4 | $1,777.7 | $1,254.1 | ||||||||||||||||||||||
Average net assets (in millions) | $533.3 | $861.4 | $1,337.5 | $1,779.5 | $1,457.1 | $1,023.2 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.92% | (e) | 0.90% | 0.91% | 0.88% | 0.88% | 0.91% | |||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 0.92% | (e) | 0.90% | 0.91% | 0.88% | 0.88% | 0.91% | |||||||||||||||||||||
Net investment income (loss) | 1.88% | (e) | 2.46% | 3.08% | 2.56% | 4.00% | 2.87% | |||||||||||||||||||||
Portfolio turnover rate(g) | 40% | (f) | 75% | 48% | 76% | 57% | 91% |
(a) | Total return is calculated assuming a purchase of shares 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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Not annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
40 |
Class R6 Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $16.77 | $14.69 | $16.60 | $17.90 | $16.85 | $13.90 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.17 | 0.42 | 0.51 | 0.47 | 0.74 | 0.46 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.25 | 2.09 | (0.69 | ) | (0.67 | ) | 1.80 | 3.01 | ||||||||||||||||||||
Total from investment operations | 0.42 | 2.51 | (0.18 | ) | (0.20 | ) | 2.54 | 3.47 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.18 | ) | (0.43 | ) | (0.50 | ) | (0.40 | ) | (0.76 | ) | (0.52 | ) | ||||||||||||||||
Distributions from net realized gains on investments | (0.57 | ) | - | (1.23 | ) | (0.70 | ) | (0.73 | ) | - | ||||||||||||||||||
Total dividends and distributions | (0.75 | ) | (0.43 | ) | (1.73 | ) | (1.10 | ) | (1.49 | ) | (0.52 | ) | ||||||||||||||||
Net asset value, end of period | $16.44 | $16.77 | $14.69 | $16.60 | $17.90 | $16.85 | ||||||||||||||||||||||
Total Return(a) | 2.46% | 17.32% | (0.62)% | (1.23)% | 15.81% | 25.64% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (in millions) | $3.5 | $3.1 | $8.2 | $27.3 | $5.6 | $2.7 | ||||||||||||||||||||||
Average net assets (in millions) | $3.3 | $4.3 | $20.2 | $16.0 | $2.8 | $2.3 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after fee waivers and/or expense reimbursement | 0.80% | (e) | 0.80% | 0.79% | 0.78% | 0.78% | 0.81% | |||||||||||||||||||||
Expenses before fee waivers and/or expense reimbursement | 1.31% | (e) | 0.80% | 0.79% | 0.78% | 0.78% | 0.81% | |||||||||||||||||||||
Net investment income (loss) | 1.96% | (e) | 2.68% | 3.43% | 2.77% | 4.30% | 3.00% | |||||||||||||||||||||
Portfolio turnover rate(g) | 40% | (f) | 75% | 48% | 76% | 57% | 91% |
(a) | Total return is calculated assuming a purchase of shares 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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Not annualized. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
See Notes to Financial Statements.
PGIM Jennison Equity Income Fund | 41 |
∎ 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. 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 • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • 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 • Dino Capasso, Vice President and Deputy 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, PGIM Jennison Equity Income Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-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 |
PGIM JENNISON EQUITY INCOME FUND
SHARE CLASS | A | B | C | R | Z | R6* | ||||||
NASDAQ | SPQAX | JEIBX | AGOCX | PJERX | JDEZX | PJIQX | ||||||
CUSIP | 74441L808 | 74441L881 | 74441L873 | 74441L790 | 74441L832 | 74441L816 |
*Formerly known as Class Q shares.
MF203E2
PGIM QMA MID-CAP VALUE FUND
(Formerly known as Prudential QMA Mid-Cap Value Fund)
SEMIANNUAL REPORT
APRIL 30, 2018
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: Capital growth |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.
The accompanying financial statements as of April 30, 2018 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. © 2018 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
2 | Visit our website at pgiminvestments.com |
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PGIM QMA Mid-Cap Value Fund | 3 |
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Dear Shareholder:
We hope you find the semiannual report for PGIM QMA Mid-Cap Value Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.
We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*
Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.
Thank you for choosing our family of funds.
Sincerely,
Stuart S. Parker, President
PGIM QMA Mid-Cap Value Fund
June 15, 2018
*The Prudential Day One Funds did not change their names.
PGIM QMA Mid-Cap Value Fund | 5 |
Your Fund’s Performance (unaudited)
Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 4/30/18 (without sales charges) | Average Annual Total Returns as of 4/30/18 (with sales charges) | |||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Ten Years (%) | Since Inception (%) | ||||||
Class A | 2.63 | –1.14 | 9.05 | 8.48 | — | |||||
Class B | 2.26 | –1.05 | 9.33 | 8.31 | — | |||||
Class C | 2.22 | 2.82 | 9.46 | 8.29 | — | |||||
Class R | 2.55 | 4.41 | N/A | N/A | 5.74 (12/22/14) | |||||
Class Z | 2.77 | 4.91 | 10.56 | 9.38 | — | |||||
Class R2 | –4.81** | N/A | N/A | N/A | N/A (12/28/17) | |||||
Class R4 | –4.72** | N/A | N/A | N/A | N/A (12/28/17) | |||||
Class R6*** | 2.83 | 5.03 | 10.71 | N/A | 11.30 (1/18/11) | |||||
Russell Midcap Value Index | ||||||||||
2.55 | 6.83 | 10.97 | 9.22 | — | ||||||
S&P MidCap 400 Index | ||||||||||
2.83 | 9.77 | 11.77 | 10.05 | — | ||||||
Russell Midcap Index | ||||||||||
3.69 | 11.17 | 11.77 | 9.48 | — | ||||||
Lipper Mid-Cap Value Funds Average | ||||||||||
2.74 | 7.36 | 9.96 | 8.40 | — |
Source: PGIM Investments LLC and Lipper Inc.
*Not annualized
**Since inception.
***Formerly known as Class Q shares.
Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Indexes and the Lipper Average are measured from the closest month-end to the class’ inception date.
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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B* | Class C | Class R | Class Z | Class R2 | Class R4 | Class R6** | |||||||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | None | None | None | None | ||||||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 5.00% (Yr. 1) 4.00% (Yr. 2) 3.00% (Yr. 3) 2.00% (Yr. 4) 1.00% (Yr. 5) 1.00% (Yr. 6) 0.00% (Yr. 7) | 1.00% on sales made within 12 months of purchase | None | None | None | None | None | ||||||||
Annual distribution or distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.30% (0.25% currently) | 1.00% | 1.00% | 0.75% currently) | None | 0.25% | None | None | ||||||||
Shareholder services fees | None | None | None | None | None | 0.10% | 0.10% | None |
*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.
**Formerly known as Class Q shares.
Benchmark Definitions
Russell Midcap Value Index—The Russell Midcap Value Index is an unmanaged index that measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks included in the Index are also members of the Russell 1000 Value Index. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R shares is 7.41% and 11.64% for Class R6 shares.
PGIM QMA Mid-Cap Value Fund | 7 |
Your Fund’s Performance (continued)
Standard & Poor’s MidCap 400 Index—The Standard & Poor’s MidCap 400 Index (S&P MidCap 400 Index) is an unmanaged index of 400 domestic stocks chosen for market capitalization, liquidity, and industry group representation. It gives a broad look at how US mid-cap stock prices have performed. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R shares is 9.64% and 11.91% for Class R6 shares.
Russell Midcap Index—The Russell Midcap Index is an unmanaged index that measures the performance of the 800 smallest companies in the Russell 1000 Index, which represent approximately 25% of the total market capitalization of the Russell 1000 Index. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R shares is 8.38% and 11.88% for Class R6 shares.
Lipper Mid-Cap Value Funds Average—The Lipper Mid-Cap Value Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Mid-Cap Value Funds universe for the periods noted. Funds in the Lipper Average, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Mid-cap value funds typically have a below-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value compared with the companies in the S&P MidCap 400 Index. The average annual total returns for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class R shares is 6.64% and 10.35% for Class R6 shares.
Investors cannot invest directly in an index or average. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Presentation of Fund Holdings
Five Largest Holdings expressed as a percentage of net assets as of 4/30/18 (%) | ||||
SunTrust Banks, Inc., Banks | 1.6 | |||
Public Service Enterprise Group, Inc., Multi-Utilities | 1.6 | |||
Fifth Third Bancorp, Banks | 1.5 | |||
Marathon Petroleum Corp., Oil, Gas & Consumable Fuels | 1.4 | |||
Regions Financial Corp., Banks | 1.4 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/18 (%) | ||||
Banks | 10.3 | |||
Insurance | 8.9 | |||
Equity Real Estate Investment Trusts (REITs) | 8.7 | |||
Oil, Gas & Consumable Fuels | 5.0 | |||
Consumer Finance | 5.0 |
Industry weightings reflect only long-term investments and are subject to change.
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As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period
PGIM QMA Mid-Cap Value Fund | 9 |
Fees and Expenses (continued)
and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
PGIM QMA Mid-Cap Value Fund | Beginning Account Value November 1, 2017 | Ending Account Value April 30, 2018 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,026.30 | 1.20 | % | $ | 6.03 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.84 | 1.20 | % | $ | 6.01 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,022.60 | 1.95 | % | $ | 9.78 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.12 | 1.95 | % | $ | 9.74 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,022.20 | 1.94 | % | $ | 9.73 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.17 | 1.94 | % | $ | 9.69 | ||||||||||
Class R | Actual | $ | 1,000.00 | $ | 1,025.50 | 1.39 | % | $ | 6.98 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.90 | 1.39 | % | $ | 6.95 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,027.70 | 0.92 | % | $ | 4.63 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.23 | 0.92 | % | $ | 4.61 | ||||||||||
Class R2 | Actual** | $ | 1,000.00 | $ | 951.90 | 1.30 | % | $ | 4.28 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.35 | 1.30 | % | $ | 6.51 | ||||||||||
Class R4 | Actual** | $ | 1,000.00 | $ | 952.80 | 1.05 | % | $ | 3.45 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.59 | 1.05 | % | $ | 5.26 | ||||||||||
Class R6*** | Actual | $ | 1,000.00 | $ | 1,028.30 | 0.80 | % | $ | 4.02 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.83 | 0.80 | % | $ | 4.01 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2018 (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 days in the period ended April 30, 2018 due to the class’ inception date of December 28, 2017.
***Formerly known as Class Q shares.
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Schedule of Investments (unaudited)
as of April 30, 2018
Description | Shares | Value | ||||||
LONG-TERM INVESTMENTS 100.5% | ||||||||
COMMON STOCKS | ||||||||
Airlines 3.3% | ||||||||
Alaska Air Group, Inc. | 30,300 | $ | 1,967,379 | |||||
American Airlines Group, Inc. | 79,600 | 3,417,228 | ||||||
Copa Holdings SA (Panama) (Class A Stock) | 26,600 | 3,116,722 | ||||||
JetBlue Airways Corp.* | 432,800 | 8,305,432 | ||||||
Spirit Airlines, Inc.* | 63,700 | 2,275,364 | ||||||
United Continental Holdings, Inc.* | 161,900 | 10,934,726 | ||||||
|
| |||||||
30,016,851 | ||||||||
Auto Components 2.8% | ||||||||
Adient PLC | 51,300 | 3,144,177 | ||||||
BorgWarner, Inc. | 185,700 | 9,088,158 | ||||||
Goodyear Tire & Rubber Co. (The) | 221,900 | 5,571,909 | ||||||
Lear Corp. | 43,400 | 8,114,498 | ||||||
|
| |||||||
25,918,742 | ||||||||
Banks 10.3% | ||||||||
Associated Banc-Corp. | 78,700 | 2,081,615 | ||||||
BankUnited, Inc. | 67,300 | 2,665,753 | ||||||
CIT Group, Inc. | 83,000 | 4,394,850 | ||||||
Citizens Financial Group, Inc. | 289,400 | 12,007,206 | ||||||
East West Bancorp, Inc. | 110,700 | 7,374,834 | ||||||
Fifth Third Bancorp | 405,600 | 13,453,752 | ||||||
First Hawaiian, Inc. | 16,100 | 443,555 | ||||||
First Horizon National Corp. | 17,100 | 312,930 | ||||||
Huntington Bancshares, Inc. | 353,300 | 5,267,703 | ||||||
KeyCorp | 510,200 | 10,163,184 | ||||||
PacWest Bancorp | 131,200 | 6,722,688 | ||||||
People’s United Financial, Inc. | 10,000 | 182,900 | ||||||
Popular, Inc. | 44,100 | 2,041,389 | ||||||
Regions Financial Corp. | 690,400 | 12,910,480 | ||||||
SunTrust Banks, Inc. | 226,700 | 15,143,560 | ||||||
|
| |||||||
95,166,399 | ||||||||
Beverages 1.1% | ||||||||
Molson Coors Brewing Co. (Class B Stock) | 138,900 | 9,895,236 | ||||||
Biotechnology 0.4% | ||||||||
United Therapeutics Corp.* | 37,100 | 4,085,081 | ||||||
Building Products 0.0% | ||||||||
Owens Corning | 6,000 | 392,940 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 11 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Capital Markets 2.1% | ||||||||
Affiliated Managers Group, Inc. | 37,000 | $ | 6,099,820 | |||||
Ameriprise Financial, Inc. | 43,300 | 6,071,093 | ||||||
Invesco Ltd. | 80,200 | 2,323,394 | ||||||
Lazard Ltd. (Class A Stock) MLP | 42,700 | 2,323,734 | ||||||
Legg Mason, Inc. | 59,800 | 2,374,060 | ||||||
|
| |||||||
19,192,101 | ||||||||
Chemicals 2.0% | ||||||||
Eastman Chemical Co. | 104,500 | 10,667,360 | ||||||
Huntsman Corp. | 263,000 | 7,829,510 | ||||||
|
| |||||||
18,496,870 | ||||||||
Communications Equipment 0.9% | ||||||||
Juniper Networks, Inc. | 342,900 | 8,431,911 | ||||||
Construction & Engineering 0.9% | ||||||||
AECOM* | 238,766 | 8,223,101 | ||||||
Consumer Finance 5.0% | ||||||||
Ally Financial, Inc. | 301,400 | 7,866,540 | ||||||
Discover Financial Services | 170,500 | 12,148,125 | ||||||
Navient Corp. | 396,900 | 5,262,894 | ||||||
OneMain Holdings, Inc.* | 54,200 | 1,672,070 | ||||||
Santander Consumer USA Holdings, Inc. | 372,300 | 6,868,935 | ||||||
Synchrony Financial | 369,800 | 12,266,266 | ||||||
|
| |||||||
46,084,830 | ||||||||
Containers & Packaging 1.2% | ||||||||
Berry Global Group, Inc.* | 61,700 | 3,393,500 | ||||||
International Paper Co. | 61,100 | 3,150,316 | ||||||
Owens-Illinois, Inc.* | 210,701 | 4,283,551 | ||||||
|
| |||||||
10,827,367 | ||||||||
Diversified Financial Services 0.7% | ||||||||
Leucadia National Corp. | 267,200 | 6,423,488 | ||||||
Diversified Telecommunication Services 1.3% | ||||||||
CenturyLink, Inc. | 634,200 | 11,783,436 | ||||||
Electric Utilities 4.3% | ||||||||
Edison International | 177,300 | 11,616,696 | ||||||
Entergy Corp. | 132,700 | 10,826,993 |
See Notes to Financial Statements.
12 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Electric Utilities (cont’d.) | ||||||||
FirstEnergy Corp. | 175,800 | $ | 6,047,520 | |||||
Great Plains Energy, Inc. | 28,200 | 922,986 | ||||||
OGE Energy Corp. | 52,700 | 1,732,249 | ||||||
Pinnacle West Capital Corp. | 1,300 | 104,650 | ||||||
PPL Corp. | 274,700 | 7,993,770 | ||||||
|
| |||||||
39,244,864 | ||||||||
Electrical Equipment 0.8% | ||||||||
Regal Beloit Corp. | 101,600 | 7,233,920 | ||||||
Electronic Equipment, Instruments & Components 0.1% | ||||||||
Jabil, Inc. | 22,500 | 598,500 | ||||||
Equity Real Estate Investment Trusts (REITs) 8.7% | ||||||||
Apple Hospitality REIT, Inc. | 388,300 | 6,985,517 | ||||||
Brixmor Property Group, Inc. | 524,435 | 7,808,837 | ||||||
CoreCivic, Inc. | 143,300 | 2,888,928 | ||||||
DDR Corp. | 946,500 | 6,862,125 | ||||||
Hospitality Properties Trust | 286,600 | 7,130,608 | ||||||
Kimco Realty Corp. | 407,700 | 5,915,727 | ||||||
Medical Properties Trust, Inc. | 387,369 | 4,950,576 | ||||||
Omega Healthcare Investors, Inc. | 170,300 | 4,424,394 | ||||||
Outfront Media, Inc. | 88,979 | 1,668,356 | ||||||
Park Hotels & Resorts, Inc. | 140,300 | 4,037,834 | ||||||
Piedmont Office Realty Trust, Inc. (Class A Stock) | 71,100 | 1,274,112 | ||||||
Prologis, Inc. | 4,300 | 279,113 | ||||||
Senior Housing Properties Trust | 430,700 | 6,705,999 | ||||||
Spirit Realty Capital, Inc. | 1,021,900 | 8,226,295 | ||||||
Uniti Group, Inc. | 226,700 | 4,085,134 | ||||||
VEREIT, Inc. | 963,400 | 6,551,120 | ||||||
|
| |||||||
79,794,675 | ||||||||
Food Products 2.3% | ||||||||
Campbell Soup Co. | 36,400 | 1,484,392 | ||||||
J.M. Smucker Co. (The) | 75,400 | 8,601,632 | ||||||
Pilgrim’s Pride Corp.* | 48,100 | 1,038,960 | ||||||
TreeHouse Foods, Inc.* | 29,700 | 1,143,450 | ||||||
Tyson Foods, Inc. (Class A Stock) | 127,400 | 8,930,740 | ||||||
|
| |||||||
21,199,174 | ||||||||
Gas Utilities 0.5% | ||||||||
National Fuel Gas Co. | 93,252 | 4,788,490 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 13 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Health Care Equipment & Supplies 0.1% | ||||||||
Zimmer Biomet Holdings, Inc. | 5,600 | $ | 644,952 | |||||
Health Care Providers & Services 3.2% | ||||||||
Acadia Healthcare Co., Inc.* | 27,000 | 960,660 | ||||||
Cardinal Health, Inc. | 151,800 | 9,741,006 | ||||||
DaVita, Inc.* | 104,100 | 6,536,439 | ||||||
LifePoint Health, Inc.* | 84,800 | 4,061,920 | ||||||
Universal Health Services, Inc. (Class B Stock) | 71,000 | 8,108,200 | ||||||
|
| |||||||
29,408,225 | ||||||||
Hotels, Restaurants & Leisure 2.8% | ||||||||
Extended Stay America, Inc. | 270,096 | 5,288,480 | ||||||
Norwegian Cruise Line Holdings Ltd.* | 170,400 | 9,111,288 | ||||||
Royal Caribbean Cruises Ltd. | 100,700 | 10,894,733 | ||||||
|
| |||||||
25,294,501 | ||||||||
Household Durables 3.1% | ||||||||
Lennar Corp. (Class A Stock) | 45,700 | 2,417,073 | ||||||
Lennar Corp. (Class B Stock) | 10,500 | 448,245 | ||||||
Newell Brands, Inc. | 381,800 | 10,549,134 | ||||||
PulteGroup, Inc. | 77,700 | 2,358,972 | ||||||
Toll Brothers, Inc. | 186,933 | 7,881,095 | ||||||
Whirlpool Corp. | 31,300 | 4,849,935 | ||||||
|
| |||||||
28,504,454 | ||||||||
Independent Power & Renewable Electricity Producers 1.0% | ||||||||
AES Corp. | 714,000 | 8,739,360 | ||||||
Insurance 8.9% | ||||||||
American Financial Group, Inc. | 82,500 | 9,340,650 | ||||||
Assured Guaranty Ltd. | 35,800 | 1,299,182 | ||||||
CNA Financial Corp. | 143,075 | 7,219,564 | ||||||
First American Financial Corp. | 92,000 | 4,702,120 | ||||||
FNF Group | 131,700 | 4,850,511 | ||||||
Hartford Financial Services Group, Inc. (The) | 86,700 | 4,667,928 | ||||||
Lincoln National Corp. | 149,700 | 10,574,808 | ||||||
Loews Corp. | 186,636 | 9,790,925 | ||||||
Principal Financial Group, Inc. | 175,200 | 10,375,344 | ||||||
Reinsurance Group of America, Inc. | 61,600 | 9,203,040 | ||||||
Unum Group | 196,900 | 9,526,022 | ||||||
|
| |||||||
81,550,094 |
See Notes to Financial Statements.
14 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Internet & Direct Marketing Retail 0.7% | ||||||||
Liberty Expedia Holdings, Inc. (Class A Stock)* | 83,100 | $ | 3,390,480 | |||||
Qurate Retail Group, Inc. QVC Group (Class A Stock) | 141,800 | 3,319,538 | ||||||
|
| |||||||
6,710,018 | ||||||||
Machinery 2.1% | ||||||||
Cummins, Inc. | 54,700 | 8,744,342 | ||||||
PACCAR, Inc. | 151,300 | 9,633,271 | ||||||
Trinity Industries, Inc. | 22,400 | 713,888 | ||||||
|
| |||||||
19,091,501 | ||||||||
Media 2.8% | ||||||||
Discovery, Inc. (Class A Stock)*(a) | 214,600 | 5,075,290 | ||||||
Discovery, Inc. (Class C Stock)* | 201,100 | 4,468,442 | ||||||
Interpublic Group of Cos., Inc. (The) | 23,800 | 561,442 | ||||||
Liberty SiriusXM Group (Class A Stock)* | 39,100 | 1,633,207 | ||||||
Liberty SiriusXM Group, (Class C Stock)* | 60,400 | 2,516,264 | ||||||
TEGNA, Inc. | 389,600 | 4,118,072 | ||||||
Viacom, Inc. (Class A Stock)(a) | 10,184 | 362,041 | ||||||
Viacom, Inc. (Class B Stock) | 245,000 | 7,389,200 | ||||||
|
| |||||||
26,123,958 | ||||||||
Metals & Mining 2.9% | ||||||||
Alcoa Corp.* | 137,700 | 7,050,240 | ||||||
Freeport-McMoRan, Inc. | 670,100 | 10,192,221 | ||||||
Tahoe Resources, Inc.* | 613,700 | 3,086,911 | ||||||
United States Steel Corp. | 199,800 | 6,759,234 | ||||||
|
| |||||||
27,088,606 | ||||||||
Mortgage Real Estate Investment Trusts (REITs) 4.0% | ||||||||
AGNC Investment Corp. | 408,500 | 7,728,820 | ||||||
Annaly Capital Management, Inc. | 942,700 | 9,775,799 | ||||||
Chimera Investment Corp. | 342,800 | 5,995,572 | ||||||
MFA Financial, Inc. | 564,000 | 4,241,280 | ||||||
New Residential Investment Corp. | 167,300 | 2,924,404 | ||||||
Starwood Property Trust, Inc. | 95,000 | 1,991,200 | ||||||
Two Harbors Investment Corp. | 292,300 | 4,460,498 | ||||||
|
| |||||||
37,117,573 | ||||||||
Multi-Utilities 1.6% | ||||||||
Public Service Enterprise Group, Inc. | 277,100 | 14,450,765 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 15 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Multiline Retail 1.6% | ||||||||
Kohl’s Corp. | 100,200 | $ | 6,224,424 | |||||
Macy’s, Inc. | 206,300 | 6,409,741 | ||||||
Nordstrom, Inc. | 47,600 | 2,406,656 | ||||||
|
| |||||||
15,040,821 | ||||||||
Oil, Gas & Consumable Fuels 5.0% | ||||||||
Andeavor | 14,500 | 2,005,640 | ||||||
Concho Resources, Inc.* | 5,000 | 786,050 | ||||||
Devon Energy Corp. | 250,400 | 9,097,032 | ||||||
Gulfport Energy Corp.* | 451,000 | 4,194,300 | ||||||
Laredo Petroleum, Inc.* | 466,300 | 5,129,300 | ||||||
Marathon Petroleum Corp. | 174,400 | 13,064,304 | ||||||
Newfield Exploration Co.* | 170,400 | 5,077,920 | ||||||
Range Resources Corp. | 128,600 | 1,781,110 | ||||||
Southwestern Energy Co.* | 1,153,600 | 4,729,760 | ||||||
World Fuel Services Corp. | 20,500 | 440,135 | ||||||
|
| |||||||
46,305,551 | ||||||||
Paper & Forest Products 0.7% | ||||||||
Domtar Corp. | 146,000 | 6,409,400 | ||||||
Personal Products 0.1% | ||||||||
Edgewell Personal Care Co.* | 16,700 | 735,635 | ||||||
Pharmaceuticals 0.4% | ||||||||
Mallinckrodt PLC*(a) | 44,400 | 577,200 | ||||||
Mylan NV* | 89,489 | 3,468,594 | ||||||
|
| |||||||
4,045,794 | ||||||||
Real Estate Management & Development 1.3% | ||||||||
CBRE Group, Inc. (Class A Stock)* | 205,500 | 9,311,205 | ||||||
Jones Lang LaSalle, Inc. | 6,400 | 1,084,864 | ||||||
Realogy Holdings Corp. | 58,400 | 1,448,904 | ||||||
|
| |||||||
11,844,973 | ||||||||
Road & Rail 0.8% | ||||||||
AMERCO | 3,400 | 1,147,568 | ||||||
Ryder System, Inc. | 98,241 | 6,624,391 | ||||||
|
| |||||||
7,771,959 |
See Notes to Financial Statements.
16 |
Description | Shares | Value | ||||||
COMMON STOCKS (Continued) | ||||||||
Specialty Retail 4.5% | ||||||||
AutoNation, Inc.*(a) | 77,500 | $ | 3,579,725 | |||||
Bed Bath & Beyond, Inc. | 211,200 | 3,687,552 | ||||||
Best Buy Co., Inc. | 95,900 | 7,339,227 | ||||||
Dick’s Sporting Goods, Inc. | 116,300 | 3,848,367 | ||||||
Foot Locker, Inc. | 106,400 | 4,583,712 | ||||||
GameStop Corp. (Class A Stock)(a) | 29,300 | 399,945 | ||||||
Gap, Inc. (The) | 170,400 | 4,982,496 | ||||||
Murphy USA, Inc.* | 10,400 | 650,728 | ||||||
Penske Automotive Group, Inc. | 88,200 | 3,977,820 | ||||||
Sally Beauty Holdings, Inc.*(a) | 85,800 | 1,483,482 | ||||||
Signet Jewelers Ltd. | 104,900 | 4,078,512 | ||||||
Williams-Sonoma, Inc. | 50,500 | 2,413,900 | ||||||
|
| |||||||
41,025,466 | ||||||||
Technology Hardware, Storage & Peripherals 1.2% | ||||||||
Western Digital Corp. | 139,900 | 11,022,721 | ||||||
Textiles, Apparel & Luxury Goods 1.9% | ||||||||
Michael Kors Holdings Ltd.* | 126,000 | 8,620,920 | ||||||
Ralph Lauren Corp. | 82,200 | 9,029,670 | ||||||
|
| |||||||
17,650,590 | ||||||||
Trading Companies & Distributors 1.1% | ||||||||
Air Lease Corp. | 135,200 | 5,636,488 | ||||||
United Rentals, Inc.* | 30,901 | 4,635,150 | ||||||
|
| |||||||
10,271,638 | ||||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 924,646,531 | |||||||
|
| |||||||
SHORT-TERM INVESTMENTS 1.3% | ||||||||
AFFILIATED MUTUAL FUNDS | ||||||||
Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund(w) | 3,494,450 | 3,494,450 | ||||||
Prudential Investment Portfolios 2 - PGIM Institutional Money Market Fund | 8,511,795 | 8,511,795 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS | 12,006,245 | |||||||
|
| |||||||
TOTAL INVESTMENTS 101.8% | 936,652,776 | |||||||
Liabilities in excess of other assets (1.8)% | (16,316,403 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 920,336,373 | ||||||
|
|
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 17 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
The following abbreviations are used in the semiannual report:
LIBOR—London Interbank Offered Rate
MLP—Master Limited Partnership
REIT(s)—Real Estate Investment Trust(s)
* | Non-income producing security. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $8,197,262; cash collateral of $8,492,296 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
(w) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund. |
Fair Value Measurements:
Various inputs are used in determining the value of the Fund’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—unadjusted quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Airlines | $ | 30,016,851 | $ | — | $ | — | ||||||
Auto Components | 25,918,742 | — | — | |||||||||
Banks | 95,166,399 | — | — | |||||||||
Beverages | 9,895,236 | — | — | |||||||||
Biotechnology | 4,085,081 | — | — | |||||||||
Building Products | 392,940 | — | — | |||||||||
Capital Markets | 19,192,101 | — | — | |||||||||
Chemicals | 18,496,870 | — | — | |||||||||
Communications Equipment | 8,431,911 | — | — | |||||||||
Construction & Engineering | 8,223,101 | — | — | |||||||||
Consumer Finance | 46,084,830 | — | — | |||||||||
Containers & Packaging | 10,827,367 | — | — | |||||||||
Diversified Financial Services | 6,423,488 | — | — | |||||||||
Diversified Telecommunication Services | 11,783,436 | — | — | |||||||||
Electric Utilities | 39,244,864 | — | — | |||||||||
Electrical Equipment | 7,233,920 | — | — |
See Notes to Financial Statements.
18 |
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities (continued) | ||||||||||||
Common Stocks (continued) | ||||||||||||
Electronic Equipment, Instruments & Components | $ | 598,500 | $ | — | $ | — | ||||||
Equity Real Estate Investment Trusts (REITs) | 79,794,675 | — | — | |||||||||
Food Products | 21,199,174 | — | — | |||||||||
Gas Utilities | 4,788,490 | — | — | |||||||||
Health Care Equipment & Supplies | 644,952 | — | — | |||||||||
Health Care Providers & Services | 29,408,225 | — | — | |||||||||
Hotels, Restaurants & Leisure | 25,294,501 | — | — | |||||||||
Household Durables | 28,504,454 | — | — | |||||||||
Independent Power & Renewable Electricity Producers | 8,739,360 | — | — | |||||||||
Insurance | 81,550,094 | — | — | |||||||||
Internet & Direct Marketing Retail | 6,710,018 | — | — | |||||||||
Machinery | 19,091,501 | — | — | |||||||||
Media | 26,123,958 | — | — | |||||||||
Metals & Mining | 27,088,606 | — | — | |||||||||
Mortgage Real Estate Investment Trusts (REITs) | 37,117,573 | — | — | |||||||||
Multi-Utilities | 14,450,765 | — | — | |||||||||
Multiline Retail | 15,040,821 | — | — | |||||||||
Oil, Gas & Consumable Fuels | 46,305,551 | — | — | |||||||||
Paper & Forest Products | 6,409,400 | — | — | |||||||||
Personal Products | 735,635 | — | — | |||||||||
Pharmaceuticals | 4,045,794 | — | — | |||||||||
Real Estate Management & Development | 11,844,973 | — | — | |||||||||
Road & Rail | 7,771,959 | — | — | |||||||||
Specialty Retail | 41,025,466 | — | — | |||||||||
Technology Hardware, Storage & Peripherals | 11,022,721 | — | — | |||||||||
Textiles, Apparel & Luxury Goods | 17,650,590 | — | — | |||||||||
Trading Companies & Distributors | 10,271,638 | — | — | |||||||||
Affiliated Mutual Funds | 12,006,245 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 936,652,776 | $ | — | $ | — | ||||||
|
|
|
|
|
|
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, 2018 were as follows:
Banks | 10.3 | % | ||
Insurance | 8.9 | |||
Equity Real Estate Investment Trusts (REITs) | 8.7 | |||
Oil, Gas & Consumable Fuels | 5.0 | |||
Consumer Finance | 5.0 | |||
Specialty Retail | 4.5 | % | ||
Electric Utilities | 4.3 | |||
Mortgage Real Estate Investment Trusts (REITs) | 4.0 | |||
Airlines | 3.3 | |||
Health Care Providers & Services | 3.2 |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 19 |
Schedule of Investments (unaudited) (continued)
as of April 30, 2018
Industry (cont’d.) | ||||
Household Durables | 3.1 | % | ||
Metals & Mining | 2.9 | |||
Media | 2.8 | |||
Auto Components | 2.8 | |||
Hotels, Restaurants & Leisure | 2.8 | |||
Food Products | 2.3 | |||
Capital Markets | 2.1 | |||
Machinery | 2.1 | |||
Chemicals | 2.0 | |||
Textiles, Apparel & Luxury Goods | 1.9 | |||
Multiline Retail | 1.6 | |||
Multi-Utilities | 1.6 | |||
Affiliated Mutual Funds (including 0.9% of collateral for securities on loan) | 1.3 | |||
Real Estate Management & Development | 1.3 | |||
Diversified Telecommunication Services | 1.3 | |||
Technology Hardware, Storage & Peripherals | 1.2 | |||
Containers & Packaging | 1.2 | |||
Trading Companies & Distributors | 1.1 | |||
Beverages | 1.1 | |||
Independent Power & Renewable Electricity Producers | 1.0 | % | ||
Communications Equipment | 0.9 | |||
Construction & Engineering | 0.9 | |||
Road & Rail | 0.8 | |||
Electrical Equipment | 0.8 | |||
Internet & Direct Marketing Retail | 0.7 | |||
Diversified Financial Services | 0.7 | |||
Paper & Forest Products | 0.7 | |||
Gas Utilities | 0.5 | |||
Biotechnology | 0.4 | |||
Pharmaceuticals | 0.4 | |||
Personal Products | 0.1 | |||
Health Care Equipment & Supplies | 0.1 | |||
Electronic Equipment, Instruments & Components | 0.1 | |||
Building Products | 0.0 | * | ||
|
| |||
101.8 | ||||
Liabilities in excess of other assets | (1.8 | ) | ||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Fund entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.
Offsetting of financial instrument/transaction assets and liabilities:
Description | Gross Market Value of Recognized Assets/(Liabilities) | Collateral Pledged/(Received)(1) | Net Amount | |||||||||
Securities on Loan | $ | 8,197,262 | $ | (8,197,262 | ) | $ | — | |||||
|
|
(1) | Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
20 |
This Page Intentionally Left Blank
Statement of Assets & Liabilities (unaudited)
as of April 30, 2018
Assets | ||||
Investments at value, including securities on loan of $8,197,262: | ||||
Unaffiliated investments (cost $862,278,815) | $ | 924,646,531 | ||
Affiliated investments (cost $12,005,316) | 12,006,245 | |||
Receivable for Fund shares sold | 1,267,758 | |||
Dividends and interest receivable | 936,946 | |||
Receivable for investments sold | 1,982 | |||
Prepaid expenses | 2,708 | |||
|
| |||
Total assets | 938,862,170 | |||
|
| |||
Liabilities | ||||
Payable for Fund shares reacquired | 9,072,897 | |||
Payable to broker for collateral for securities on loan | 8,492,296 | |||
Management fee payable | 564,359 | |||
Accrued expenses and other liabilities | 252,636 | |||
Distribution fee payable | 100,544 | |||
Affiliated transfer agent fee payable | 43,057 | |||
Shareholder servicing fee payable | 8 | |||
|
| |||
Total liabilities | 18,525,797 | |||
|
| |||
Net Assets | $ | 920,336,373 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 43,055 | ||
Paid-in capital in excess of par | 823,195,650 | |||
|
| |||
823,238,705 | ||||
Undistributed net investment income | 1,184,126 | |||
Accumulated net realized gain on investment transactions | 33,544,897 | |||
Net unrealized appreciation on investments | 62,368,645 | |||
|
| |||
Net assets, April 30, 2018 | $ | 920,336,373 | ||
|
|
See Notes to Financial Statements.
22 |
Class A | ||||
Net asset value and redemption price per share, | $ | 21.45 | ||
Maximum sales charge (5.50% of offering price) | 1.25 | |||
|
| |||
Maximum offering price to public | $ | 22.70 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share, | $ | 18.48 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | $ | 18.40 | ||
|
| |||
Class R | ||||
Net asset value, offering price and redemption price per share, | $ | 21.62 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | $ | 21.68 | ||
|
| |||
Class R2 | ||||
Net asset value, offering price and redemption price per share, | $ | 21.59 | ||
|
| |||
Class R4 | ||||
Net asset value, offering price and redemption price per share, | $ | 21.61 | ||
|
| |||
Class R6 | ||||
Net asset value, offering price and redemption price per share, | $ | 21.63 | ||
|
|
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 23 |
Statement of Operations (unaudited)
Six Months Ended April 30, 2018
Net Investment Income (Loss) | ||||
Income | ||||
Unaffiliated dividend income | $ | 11,282,224 | ||
Income from securities lending, net (including affiliated income of $6,069) | 42,165 | |||
Affiliated dividend income | 31,301 | |||
|
| |||
Total income | 11,355,690 | |||
|
| |||
Expenses | ||||
Management fee | 3,914,603 | |||
Distribution fee(a) | 707,154 | |||
Shareholder servicing fee(a) | 8 | |||
Transfer agent’s fees and expenses (including affiliated expense of $116,895)(a) | 583,740 | |||
Registration fees(a) | 59,126 | |||
Custodian and accounting fees | 52,600 | |||
Shareholders’ reports | 28,816 | |||
Legal fees and expenses | 12,458 | |||
Directors’ fees | 12,336 | |||
Audit fee | 11,808 | |||
Miscellaneous | 15,954 | |||
|
| |||
Total expenses | 5,398,603 | |||
Less: Fee waiver and/or expense reimbursement(a) | (382,105 | ) | ||
Distribution fee waiver(a) | (67,652 | ) | ||
|
| |||
Net expenses | 4,948,846 | |||
|
| |||
Net investment income (loss) | 6,406,844 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain (loss) on investment transactions (including affiliated of $(3,287)) | 38,820,495 | |||
Net change in unrealized appreciation (depreciation) on investments (including affiliated of $(165)) | (19,171,198 | ) | ||
|
| |||
Net gain (loss) on investment transactions | 19,649,297 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 26,056,141 | ||
|
|
(a) | Class specific expenses and waivers were as follows: |
Class A | Class B | Class C | Class R | Class Z | Class R2 | Class R4 | Class R6 | |||||||||||||||||||||||||
Distribution fee | 399,527 | 26,133 | 278,294 | 3,192 | — | 8 | — | — | ||||||||||||||||||||||||
Shareholder servicing fee | — | — | — | — | — | 4 | 4 | — | ||||||||||||||||||||||||
Transfer agent’s fees and expenses | 267,767 | 7,114 | 35,734 | 237 | 269,601 | 39 | 39 | 3,209 | ||||||||||||||||||||||||
Registration fees | 12,747 | 5,976 | 6,367 | 6,628 | 7,280 | 6,411 | 6,411 | 7,306 | ||||||||||||||||||||||||
Fee waiver and/or expense reimbursement | (150,787 | ) | (10,540 | ) | (19,055 | ) | (6,700 | ) | (120,814 | ) | (6,446 | ) | (6,446 | ) | (61,317 | ) | ||||||||||||||||
Distribution fee waiver | (66,588 | ) | — | — | (1,064 | ) | — | — | — | — |
See Notes to Financial Statements.
24 |
Statements of Changes in Net Assets (unaudited)
Six Months Ended April 30, 2018 | Year Ended October 31, 2017 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 6,406,844 | $ | 12,461,669 | ||||
Net realized gain (loss) on investment transactions | 38,820,495 | 43,520,843 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (19,171,198 | ) | 78,815,689 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 26,056,141 | 134,798,201 | ||||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Dividends from net investment income | ||||||||
Class A | (3,739,008 | ) | (3,537,716 | ) | ||||
Class B | (49,494 | ) | (49,664 | ) | ||||
Class C | (531,194 | ) | (453,120 | ) | ||||
Class R | (7,721 | ) | (978 | ) | ||||
Class Z | (7,012,993 | ) | (5,075,587 | ) | ||||
Class R6 | (3,115,740 | ) | (1,534,170 | ) | ||||
|
|
|
| |||||
(14,456,150 | ) | (10,651,235 | ) | |||||
|
|
|
| |||||
Distributions from net realized gains | ||||||||
Class A | (13,058,685 | ) | (5,277,818 | ) | ||||
Class B | (296,511 | ) | (133,950 | ) | ||||
Class C | (3,157,404 | ) | (1,222,132 | ) | ||||
Class R | (31,620 | ) | (1,778 | ) | ||||
Class Z | (20,737,953 | ) | (6,393,200 | ) | ||||
Class R6 | (8,457,052 | ) | (1,757,938 | ) | ||||
|
|
|
| |||||
(45,739,225 | ) | (14,786,816 | ) | |||||
|
|
|
| |||||
Fund share transactions | ||||||||
Net proceeds from shares sold | 143,168,189 | 316,571,892 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 56,283,538 | 24,063,415 | ||||||
Cost of shares reacquired | (168,443,637 | ) | (295,887,309 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from fund share transactions | 31,008,090 | 44,747,998 | ||||||
|
|
|
| |||||
Total increase (decrease) | (3,131,144 | ) | 154,108,148 | |||||
Net Assets: | ||||||||
Beginning of period | 923,467,517 | 769,359,369 | ||||||
|
|
|
| |||||
End of period(a) | $ | 920,336,373 | $ | 923,467,517 | ||||
|
|
|
| |||||
(a) Includes undistributed/(distributions in excess of) net investment income of: | $ | 1,184,126 | $ | 9,233,432 | ||||
|
|
|
|
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 25 |
Notes to Financial Statements (unaudited)
Prudential Investment Portfolios, Inc. 10 (the “Company”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The Company was organized on March 5, 1997, as a Maryland Corporation and operates as a series company. The Company consists of two funds: PGIM Jennison Equity Income Fund and PGIM QMA Mid-Cap Value Fund, each of which are diversified funds. These financial statements relate only to the Prudential QMA Mid-Cap Value Fund (the “Fund”). Effective June 11, 2018, the Funds’ names were changed by replacing “Prudential” with “PGIM” in each Fund’s name and Class Q shares were renamed Class R6 shares.
The investment objective of the Fund is capital growth.
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 Fund consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Fund holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The 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”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the Fund to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Fund’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
26 |
Various inputs determine how the Fund’s investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the Schedule of Investments.
Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Fund 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 Fund has valued the investment. Therefore, the Fund may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be
PGIM QMA Mid-Cap Value Fund | 27 |
Notes to Financial Statements (unaudited) (continued)
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 Fund’s Subadviser under the guidelines adopted by the Board of the Fund. However, the liquidity of the Fund’s investments in Rule 144A securities could be impaired if trading does not develop or declines.
Master Netting Arrangements: The Company, on behalf of the Fund, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset amounts payable by the Fund to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Fund’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
Securities Lending: The Fund 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. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the loaned securities. Should the borrower of the securities fail financially, the Fund has the right to repurchase the securities in the open market using the collateral.
The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as 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
28 |
term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Equity and Mortgage Real Estate Investment Trusts (REITs): The Fund invests in equity REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from equity REITs during the period is estimated to be dividend income, capital gain or return of capital and recorded accordingly. When material, these estimates are adjusted periodically when the actual source of distributions is disclosed by the equity REITs.
Concentration of Risk for REITs: Real estate securities are subject to similar risks as direct investments in real estate and mortgages, and their value will depend on the value of the underlying properties or the underlying loans or interests. The underlying loans may be subject to the risks of default or of prepayments that occur earlier or later than expected, and such loans may also include so-called “subprime” mortgages. The value of these securities will rise and fall in response to many factors, including economic conditions, the demand for rental property and interest rates. In particular, the value of these securities may decline when interest rates rise and will also be affected by the real estate market and by the management of the underlying properties.
In addition, investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are dependent upon management skills, may not be diversified geographically or by property/mortgage asset type, and are subject to heavy cash flow dependency, default by borrowers and self-liquidation. REITs may be more volatile and/or more illiquid than other types of equity securities. REITs (especially mortgage REITs) are subject to interest rate risks. REITs may incur significant amounts of leverage. The Fund will indirectly bear a portion of the expenses, including management fees, paid by each REIT in which it invests, in addition to the expenses of the Fund.
Master Limited Partnerships (MLPs): The Fund invests in MLPs. Distributions received from the Fund’s investment in MLPs generally are comprised of income and return of capital. The Fund 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.
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. Expenses are recorded on an accrual basis, which may require the use of certain
PGIM QMA Mid-Cap Value Fund | 29 |
Notes to Financial Statements (unaudited) (continued)
estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.
Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, shareholder servicing fee, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.
Taxes: It is the Fund’s policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.
Dividends and Distributions: The Fund expects to pay dividends from net investment income and distributions from net realized capital gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from 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.
Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
2. Agreements
The Company, on behalf of the Fund, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Fund. PGIM Investments administers the corporate affairs of the Fund and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by the Fund’s custodian and the Fund’s transfer agent. PGIM Investments is also responsible for the staffing and
30 |
management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Fund. The groups of legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Fund, including, but not limited to, the custodian, transfer agent, and accounting agent.
PGIM Investments has entered into a subadvisory agreement with Quantitative Management Associates, LLC (“QMA”). The subadvisory agreement provides that QMA will furnish investment advisory services in connection with the management of the Fund. In connection therewith, QMA is obligated to keep certain books and records of the Fund. PGIM Investments pays for the services of QMA, the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of 0.825% of the Fund’s average daily net assets up to $1 billion and 0.80% of the average daily net assets in excess of $1 billion. The effective management fee rate before any waivers and/or expense reimbursements, was 0.825% for the six months ended April 30, 2018.
PGIM Investments has contractually agreed, through February 29, 2020, to limit Total Annual Fund Operating Expenses after fee waivers and/or expense reimbursements to 1.20% of average daily net assets for Class A shares, 1.95% of average daily net assets for Class B shares, 1.95% of average daily net assets for Class C shares, 1.45% of average daily net assets for Class R shares, 0.95% of average daily net assets for Class Z shares, 1.30% of average daily net assets for Class R2 shares, 1.05% of average daily net assets for Class R4 shares, and 0.80% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. In addition, PGIM Investments had 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 Fund to .80% of the Fund’s average daily net assets. To the extent shared expenses which are exclusive of class specific expenses are waived and/or reimbursed for any specific share class the Manager has voluntarily agreed to waive and/or reimburse shared expenses equally for all share classes. Fees and/or expenses waived and/or reimbursed by PGIM Investments may be recouped by PGIM Investments within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The effective management fee rate, net of waivers and/or expense reimbursements, was 0.748% for the six months ended April 30, 2018.
PGIM QMA Mid-Cap Value Fund | 31 |
Notes to Financial Statements (unaudited) (continued)
The Company, on behalf of the Fund, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of the Class A, Class B, Class C, Class R, Class Z, Class R2, Class R4 and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B, Class C, Class R and Class R2 shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z, Class R4, and Class R6 shares of the Fund.
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.30%, 1%, 1%, 0.75% and 0.25%, of the average daily net assets of the Class A, Class B, Class C, Class R and Class R2 shares, respectively. PIMS has contractually agreed through February 28, 2019 to limit such fees to 0.25% and 0.50% of the average daily net assets of the Class A and Class R shares, respectively.
The Fund has adopted a Shareholder Services Plan with respect to Class R2 and Class R4 shares. Under the terms of the Shareholder Services Plan, Class R2 and Class R4 shares are authorized to pay to Prudential Mutual Fund Services LLC (“PMFS”), its affiliates or third-party service providers, as compensation for services rendered to the shareholders of such Class R2 or Class R4 shares, a shareholder service fee at an annual rate of 0.10% of the average daily net assets attributable to Class R2 and Class R4 shares. The shareholder service fee is accrued daily and paid monthly.
PIMS has advised the Fund that it received $67,563 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended April 30, 2018, it received $2,915 and $1,027 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively.
PGIM Investments, PIMS and QMA are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
32 |
The Fund may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that 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. For the reporting period ended April 30, 2018 no such transactions were entered into by the Fund.
The Fund may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30, 2018, PGIM, Inc. was compensated $7,818 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 Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018, were $338,340,101 and $351,821,503, respectively.
A summary of cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:
Affiliated Mutual Funds* | Value, Beginning of Period | Cost of Purchases | Proceeds from Sales | Change in Unrealized Gain (Loss) | Realized Gain (Loss) | Value, End of Period | Shares, End of Period | Dividend Income | ||||||||||||||||||||||||
PGIM Core Ultra Short Bond Fund | $ | 4,243,639 | $ | 73,165,778 | $ | 73,914,967 | $ | — | $ | — | $ | 3,494,450 | 3,494,450 | $ | 31,301 | |||||||||||||||||
PGIM Institutional Money Market Fund | 37,960,058 | 94,439,160 | 123,883,971 | (165 | ) | (3,287 | ) | 8,511,795 | 8,511,795 | 6,069 | ||||||||||||||||||||||
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| |||||||||||||||||||
$ | 42,203,697 | $ | 167,604,938 | $ | 197,798,938 | $ | (165 | ) | $ | (3,287 | ) | $ | 12,006,245 | $ | 37,370 | |||||||||||||||||
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* | The Fund did not have any capital gain distributions during the reporting period. |
5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of April 30, 2018 were as follows:
Tax Basis | $ | 879,512,540 | ||
|
| |||
Gross Unrealized Appreciation | 111,592,784 | |||
Gross Unrealized Depreciation | (54,452,548 | ) | ||
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| |||
Net Unrealized Appreciation | $ | 57,140,236 | ||
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PGIM QMA Mid-Cap Value Fund | 33 |
Notes to Financial Statements (unaudited) (continued)
The book basis may differ from tax basis due to certain tax-related adjustments.
Management has analyzed the Fund’s tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Fund’s financial statements for the current reporting period. The Fund’s federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
6. Capital and Ownership
The Fund offers Class A, Class B, Class C, Class R, Class Z, Class R2, Class R4 and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class B shares are sold with a CDSC which declines from 5% to zero depending upon the period of time the shares are held. Class B shares will automatically convert to Class A shares approximately seven years after purchase. Class B shares are closed to new purchases. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class R, Class Z and Class R6 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 Fund to one or more other share classes of the Fund as presented in the table of transactions in shares of common stock.
The authorized capital stock of the Company is 5.5 billion shares, with a par value of $0.001 per share. Of the Company’s authorized capital stock, 800 million authorized shares have been allocated to the Fund and divided into nine classes, designated Class A, Class B, Class C, Class R, Class Z, Class R2, Class R4, Class T and Class R6 common stock, each of which consists of 100 million, 5 million, 30 million, 75 million, 175 million, 75 million, 75 million, 75 million and 190 million authorized shares, respectively.
The Fund currently does not have any Class T shares outstanding.
As of April 30, 2018, Prudential, through its affiliate entities, including affiliated funds (if applicable), owned 558 Class R shares, 441 Class R2 shares, 441 Class R4 shares and 480,115 Class R6 shares of the Fund. At reporting period end, 4 shareholders of record held 29% of the Fund’s outstanding shares on behalf of multiple beneficial owners.
34 |
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 978,897 | $ | 21,928,155 | |||||
Shares issued in reinvestment of dividends and distributions | 663,955 | 14,792,904 | ||||||
Shares reacquired | (1,763,911 | ) | (39,478,234 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (121,059 | ) | (2,757,175 | ) | ||||
Shares issued upon conversion from other share class(es) | 27,358 | 615,101 | ||||||
Shares reacquired upon conversion into other share class(es) | (114,446 | ) | (2,551,131 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (208,147 | ) | $ | (4,693,205 | ) | |||
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Year ended October 31, 2017: | ||||||||
Shares sold | 2,699,895 | $ | 58,412,501 | |||||
Shares issued in reinvestment of dividends and distributions | 362,805 | 7,749,518 | ||||||
Shares reacquired | (3,683,686 | ) | (79,686,902 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (620,986 | ) | (13,524,883 | ) | ||||
Shares issued upon conversion from other share class(es) | 132,694 | 2,877,139 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,470,100 | ) | (32,156,267 | ) | ||||
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Net increase (decrease) in shares outstanding | (1,958,392 | ) | $ | (42,804,011 | ) | |||
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Class B | ||||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 14,686 | $ | 290,872 | |||||
Shares issued in reinvestment of dividends and distributions | 16,842 | 324,191 | ||||||
Shares reacquired | (38,025 | ) | (726,466 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (6,497 | ) | (111,403 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (18,594 | ) | (366,606 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (25,091 | ) | $ | (478,009 | ) | |||
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| |||||
Year ended October 31, 2017: | ||||||||
Shares sold | 73,367 | $ | 1,384,120 | |||||
Shares issued in reinvestment of dividends and distributions | 8,765 | 163,466 | ||||||
Shares reacquired | (123,589 | ) | (2,331,642 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (41,457 | ) | (784,056 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (37,561 | ) | (713,160 | ) | ||||
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Net increase (decrease) in shares outstanding | (79,018 | ) | $ | (1,497,216 | ) | |||
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Class C | ||||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 81,031 | $ | 1,556,224 | |||||
Shares issued in reinvestment of dividends and distributions | 182,413 | 3,495,035 | ||||||
Shares reacquired | (336,578 | ) | (6,474,484 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (73,134 | ) | (1,423,225 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (73,552 | ) | (1,396,836 | ) | ||||
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Net increase (decrease) in shares outstanding | (146,686 | ) | $ | (2,820,061 | ) | |||
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Year ended October 31, 2017: | ||||||||
Shares sold | 599,122 | $ | 11,285,262 | |||||
Shares issued in reinvestment of dividends and distributions | 83,944 | 1,558,834 | ||||||
Shares reacquired | (692,314 | ) | (12,964,291 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (9,248 | ) | (120,195 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (307,691 | ) | (5,746,546 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (316,939 | ) | $ | (5,866,741 | ) | |||
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PGIM QMA Mid-Cap Value Fund | 35 |
Notes to Financial Statements (unaudited) (continued)
Class R | Shares | Amount | ||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 27,595 | $ | 620,751 | |||||
Shares issued in reinvestment of dividends and distributions | 1,751 | 39,341 | ||||||
Shares reacquired | (17,170 | ) | (390,270 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | 12,176 | $ | 269,822 | |||||
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| |||||
Year ended October 31, 2017: | ||||||||
Shares sold | 29,402 | $ | 636,648 | |||||
Shares issued in reinvestment of dividends and distributions | 128 | 2,756 | ||||||
Shares reacquired | (978 | ) | (21,227 | ) | ||||
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Net increase (decrease) in shares outstanding | 28,552 | $ | 618,177 | |||||
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Class Z | ||||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 2,888,154 | $ | 64,849,967 | |||||
Shares issued in reinvestment of dividends and distributions | 1,159,823 | 26,084,430 | ||||||
Shares reacquired | (4,367,265 | ) | (98,226,019 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (319,288 | ) | (7,291,622 | ) | ||||
Shares issued upon conversion from other share class(es) | 172,307 | 3,868,375 | ||||||
Shares reacquired upon conversion into other share class(es) | (21,238 | ) | (467,408 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (168,219 | ) | $ | (3,890,655 | ) | |||
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| |||||
Year ended October 31, 2017: | ||||||||
Shares sold | 6,905,027 | $ | 151,377,039 | |||||
Shares issued in reinvestment of dividends and distributions | 525,132 | 11,311,347 | ||||||
Shares reacquired | (7,168,269 | ) | (156,501,857 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 261,890 | 6,186,529 | ||||||
Shares issued upon conversion from other share class(es) | 1,628,609 | 35,884,210 | ||||||
Shares reacquired upon conversion into other share class(es) | (14,960 | ) | (328,124 | ) | ||||
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Net increase (decrease) in shares outstanding | 1,875,539 | $ | 41,742,615 | |||||
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Class R2 | ||||||||
Period ended April 30, 2018*: | ||||||||
Shares sold | 441 | $ | 10,000 | |||||
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Net increase (decrease) in shares outstanding | 441 | $ | 10,000 | |||||
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Class R4 | ||||||||
Period ended April 30, 2018*: | ||||||||
Shares sold | 441 | $ | 10,000 | |||||
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| |||||
Net increase (decrease) in shares outstanding | 441 | $ | 10,000 | |||||
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36 |
Class R6 | Shares | Amount | ||||||
Six months ended April 30, 2018: | ||||||||
Shares sold | 2,406,688 | $ | 53,902,220 | |||||
Shares issued in reinvestment of dividends and distributions | 514,830 | 11,547,637 | ||||||
Shares reacquired | (1,033,193 | ) | (23,148,164 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 1,888,325 | 42,301,693 | ||||||
Shares issued upon conversion from other share class(es) | 13,691 | 298,505 | ||||||
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| |||||
Net increase (decrease) in shares outstanding | 1,902,016 | $ | 42,600,198 | |||||
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| |||||
Year ended October 31, 2017: | ||||||||
Shares sold | 4,269,492 | $ | 93,476,322 | |||||
Shares issued in reinvestment of dividends and distributions | 152,513 | 3,277,494 | ||||||
Shares reacquired | (2,043,665 | ) | (44,381,390 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 2,378,340 | 52,372,426 | ||||||
Shares issued upon conversion from other share class(es) | 8,402 | 182,748 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 2,386,742 | $ | 52,555,174 | |||||
|
|
|
|
* | Commencement of offering was December 29, 2017. |
7. Borrowings
The Company, on behalf of the Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.
The Fund utilized the SCA during the reporting period ended April 30, 2018. The average daily balance for the 8 days that the Fund had loans outstanding during the period was $1,712,000, borrowed at a weighted average interest rate of 2.86%. The maximum loan balance outstanding during the period was $4,081,000. At April 30, 2018, the Fund did not have an outstanding loan balance.
PGIM QMA Mid-Cap Value Fund | 37 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $22.24 | $19.48 | $20.29 | $21.57 | $20.51 | $15.25 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.13 | 0.28 | 0.22 | 0.23 | 0.17 | 0.23 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.50 | 3.11 | 0.34 | (0.23 | ) | 2.92 | 5.24 | |||||||||||||||||||||
Total from investment operations | 0.63 | 3.39 | 0.56 | - | 3.09 | 5.47 | ||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.32 | ) | (0.25 | ) | (0.21 | ) | (0.12 | ) | (0.15 | ) | (0.21 | ) | ||||||||||||||||
Distributions from net realized gains | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | - | |||||||||||||||||
Total dividends and distributions | (1.42 | ) | (0.63 | ) | (1.37 | ) | (1.28 | ) | (2.03 | ) | (0.21 | ) | ||||||||||||||||
Net asset value, end of period | $21.45 | $22.24 | $19.48 | $20.29 | $21.57 | $20.51 | ||||||||||||||||||||||
Total Return(a): | 2.59% | 17.56% | 3.38% | 0.15% | 16.54% | 36.32% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $254,175 | $268,067 | $272,964 | $288,607 | $218,957 | $120,387 | ||||||||||||||||||||||
Average net assets (000) | $268,559 | $283,669 | $277,601 | $267,085 | $159,125 | $94,162 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.20% | (d) | 1.21% | 1.20% | 1.21% | 1.22% | 1.40% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.36% | (d) | 1.34% | 1.34% | 1.35% | 1.42% | 1.52% | |||||||||||||||||||||
Net investment income (loss) | 1.21% | (d) | 1.31% | 1.16% | 1.09% | 0.81% | 1.27% | |||||||||||||||||||||
Portfolio turnover rate | 36% | (e) | 112% | 87% | 101% | 87% | 83% |
(a) | Total return does not consider the effects 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 returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
38 |
Class B Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $19.29 | $16.99 | $17.88 | $19.17 | $18.46 | $13.76 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.05 | 0.10 | 0.07 | 0.07 | 0.02 | 0.08 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.42 | 2.72 | 0.28 | (0.20 | ) | 2.61 | 4.74 | |||||||||||||||||||||
Total from investment operations | 0.47 | 2.82 | 0.35 | (0.13 | ) | 2.63 | 4.82 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.18 | ) | (0.14 | ) | (0.08 | ) | - | (0.04 | ) | (0.12 | ) | |||||||||||||||||
Distributions from net realized gains | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | - | |||||||||||||||||
Total dividends and distributions | (1.28 | ) | (0.52 | ) | (1.24 | ) | (1.16 | ) | (1.92 | ) | (0.12 | ) | ||||||||||||||||
Net asset value, end of period | $18.48 | $19.29 | $16.99 | $17.88 | $19.17 | $18.46 | ||||||||||||||||||||||
Total Return(a): | 2.20% | 16.71% | 2.57% | (0.59)% | 15.66% | 35.28% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $4,670 | $5,357 | $6,063 | $7,202 | $7,959 | $5,409 | ||||||||||||||||||||||
Average net assets (000) | $5,270 | $6,566 | $6,263 | $7,886 | $7,163 | $3,331 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.95% | (d) | 1.96% | 1.95% | 1.96% | 1.97% | 2.15% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.35% | (d) | 2.09% | 2.04% | 2.05% | 2.12% | 2.28% | |||||||||||||||||||||
Net investment income (loss) | 0.48% | (d) | 0.56% | 0.43% | 0.35% | 0.08% | 0.48% | |||||||||||||||||||||
Portfolio turnover rate | 36% | (e) | 112% | 87% | 101% | 87% | 83% |
(a) | Total return does not consider the effects 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 returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 39 |
Financial Highlights (unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $19.21 | $16.93 | $17.81 | $19.10 | $18.40 | $13.72 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.05 | 0.10 | 0.07 | 0.06 | 0.02 | 0.08 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.43 | 2.70 | 0.29 | (0.19 | ) | 2.60 | 4.72 | |||||||||||||||||||||
Total from investment operations | 0.48 | 2.80 | 0.36 | (0.13 | ) | 2.62 | 4.80 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.14 | ) | (0.08 | ) | - | (0.04 | ) | (0.12 | ) | |||||||||||||||||
Distributions from net realized gains | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | - | |||||||||||||||||
Total dividends and distributions | (1.29 | ) | (0.52 | ) | (1.24 | ) | (1.16 | ) | (1.92 | ) | (0.12 | ) | ||||||||||||||||
Net asset value, end of period | $18.40 | $19.21 | $16.93 | $17.81 | $19.10 | $18.40 | ||||||||||||||||||||||
Total Return(a): | 2.22% | 16.65% | 2.64% | (0.59)% | 15.66% | 35.24% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $51,448 | $56,517 | $55,164 | $62,110 | $50,573 | $37,532 | ||||||||||||||||||||||
Average net assets (000) | $56,120 | $59,943 | $57,300 | $59,460 | $43,599 | $30,636 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.94% | (d) | 1.96% | 1.95% | 1.96% | 1.97% | 2.15% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.00% | (d) | 2.03% | 2.04% | 2.05% | 2.12% | 2.27% | |||||||||||||||||||||
Net investment income (loss) | 0.48% | (d) | 0.55% | 0.42% | 0.34% | 0.08% | 0.53% | |||||||||||||||||||||
Portfolio turnover rate | 36% | (e) | 112% | 87% | 101% | 87% | 83% |
(a) | Total return does not consider the effects 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 returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
40 |
Class R Shares | ||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | December 22, 2014(f) through October 31, | ||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | |||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $22.38 | $19.60 | $20.40 | $20.98 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.10 | 0.22 | 0.18 | 0.12 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.51 | 3.15 | 0.34 | (0.70 | ) | |||||||||||||||||||
Total from investment operations | 0.61 | 3.37 | 0.52 | (0.58 | ) | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.27 | ) | (0.21 | ) | (0.16 | ) | - | |||||||||||||||||
Distributions from net realized gains | (1.10 | ) | (0.38 | ) | (1.16 | ) | - | |||||||||||||||||
Total dividends and distributions | (1.37 | ) | (0.59 | ) | (1.32 | ) | - | |||||||||||||||||
Net asset value, end of period | $21.62 | $22.38 | $19.60 | $20.40 | ||||||||||||||||||||
Total Return(a): | 2.50% | 17.31% | 3.12% | (2.76)% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets, end of period (000) | | $979 | | $740 | $89 | $354 | ||||||||||||||||||
Average net assets (000) | $858 | $412 | $293 | $261 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | | 1.39% | (d) | 1.44% | 1.45% | 1.51% | (d) | |||||||||||||||||
Expenses before waivers and/or expense reimbursement | 3.22% | (d) | 4.01% | 1.79% | 1.81% | (d) | ||||||||||||||||||
Net investment income (loss) | 0.90% | (d) | 0.99% | 0.99% | 0.67% | (d) | ||||||||||||||||||
Portfolio turnover rate | 36% | (e) | 112% | 87% | 101% | (e) |
(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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
(f) | Commencement of operations. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 41 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $22.48 | $19.68 | $20.49 | $21.76 | $20.68 | $15.38 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.16 | 0.34 | 0.26 | 0.28 | 0.21 | 0.25 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.52 | 3.14 | 0.35 | (0.22 | ) | 2.95 | 5.30 | |||||||||||||||||||||
Total from investment operations | 0.68 | 3.48 | 0.61 | 0.06 | 3.16 | 5.55 | ||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.38 | ) | (0.30 | ) | (0.26 | ) | (0.17 | ) | (0.20 | ) | (0.25 | ) | ||||||||||||||||
Distributions from net realized gains | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | - | |||||||||||||||||
Total dividends and distributions | (1.48 | ) | (0.68 | ) | (1.42 | ) | (1.33 | ) | (2.08 | ) | (0.25 | ) | ||||||||||||||||
Net asset value, end of period | $21.68 | $22.48 | $19.68 | $20.49 | $21.76 | $20.68 | ||||||||||||||||||||||
Total Return(a): | 2.77% | 17.84% | 3.64% | 0.45% | 16.80% | 36.60% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $410,655 | $429,566 | $339,119 | $318,977 | $173,716 | $27,007 | ||||||||||||||||||||||
Average net assets (000) | $437,838 | $402,691 | $332,406 | $262,069 | $82,847 | $12,271 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.92% | (d) | 0.95% | 0.95% | 0.96% | 0.97% | 1.10% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.98% | (d) | 1.02% | 1.04% | 1.05% | 1.11% | 1.26% | |||||||||||||||||||||
Net investment income (loss) | 1.48% | (d) | 1.55% | 1.40% | 1.31% | 1.02% | 1.36% | |||||||||||||||||||||
Portfolio turnover rate | 36% | (e) | 112% | 87% | 101% | 87% | 83% |
(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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
42 |
Class R2 Shares | ||||
December 28, 2017(f) through April 30, 2018 | ||||
Per Share Operating Performance(b): | ||||
Net Asset Value, Beginning of Period | $22.68 | |||
Income (loss) from investment operations: | ||||
Net investment income (loss) | 0.01 | |||
Net realized and unrealized gain (loss) on investments and foreign currency transactions | (1.10 | ) | ||
Total from investment operations | (1.09 | ) | ||
Net asset value, end of period | $21.59 | |||
Total Return(a): | (4.81)% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $10 | |||
Average net assets (000) | $10 | |||
Ratios to average net assets(c): | ||||
Expenses after waivers and/or expense reimbursement | 1.30% | (d) | ||
Expenses before waivers and/or expense reimbursement | 196.05% | (d) | ||
Net investment income (loss) | 0.19% | (d) | ||
Portfolio turnover rate | 36% | (e) |
(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) | Calculated based upon average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
(f) | Commencement of operations. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 43 |
Financial Highlights (unaudited) (continued)
Class R4 Shares | ||||
December 28, 2017(f) through April 30, 2018 | ||||
Per Share Operating Performance(b): | ||||
Net Asset Value, Beginning of Period | $22.68 | |||
Income (loss) from investment operations: | ||||
Net investment income (loss) | 0.03 | |||
Net realized and unrealized gain (loss) on investments and foreign currency transactions | (1.10 | ) | ||
Total from investment operations | (1.07 | ) | ||
Net asset value, end of period | $21.61 | |||
Total Return(a): | (4.72)% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $10 | |||
Average net assets (000) | $10 | |||
Ratios to average net assets(c): | ||||
Expenses after waivers and/or expense reimbursement | 1.05% | (d) | ||
Expenses before waivers and/or expense reimbursement | 195.74% | (d) | ||
Net investment income (loss) | 0.44% | (d) | ||
Portfolio turnover rate | 36% | (e) |
(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) | Calculated based upon average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
(f) | Commencement of operations. |
See Notes to Financial Statements.
44 |
Class R6 Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $22.45 | $19.65 | $20.47 | $21.75 | $20.69 | $15.39 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.17 | 0.37 | 0.29 | 0.31 | 0.23 | 0.31 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.52 | 3.14 | 0.35 | (0.23 | ) | 2.94 | 5.28 | |||||||||||||||||||||
Total from investment operations | 0.69 | 3.51 | 0.64 | 0.08 | 3.17 | 5.59 | ||||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.41 | ) | (0.33 | ) | (0.30 | ) | (0.20 | ) | (0.23 | ) | (0.29 | ) | ||||||||||||||||
Distributions from net realized gains | (1.10 | ) | (0.38 | ) | (1.16 | ) | (1.16 | ) | (1.88 | ) | - | |||||||||||||||||
Total dividends and distributions | (1.51 | ) | (0.71 | ) | (1.46 | ) | (1.36 | ) | (2.11 | ) | (0.29 | ) | ||||||||||||||||
Net asset value, end of period | $21.63 | $22.45 | $19.65 | $20.47 | $21.75 | $20.69 | ||||||||||||||||||||||
Total Return(a): | 2.83% | 18.03% | 3.79% | 0.55% | 16.87% | 36.91% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $198,391 | $163,221 | $95,960 | $74,707 | $31,261 | $20,759 | ||||||||||||||||||||||
Average net assets (000) | $188,200 | $125,192 | $82,160 | $43,995 | $23,206 | $7,480 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.80% | (d) | 0.80% | 0.80% | 0.80% | 0.91% | 0.96% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.87% | (d) | 0.87% | 0.89% | 0.89% | 0.97% | 1.10% | |||||||||||||||||||||
Net investment income (loss) | 1.54% | (d) | 1.70% | 1.54% | 1.50% | 1.14% | 1.67% | |||||||||||||||||||||
Portfolio turnover rate | 36% | (e) | 112% | 87% | 101% | 87% | 83% |
(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) | Calculated based on average shares outstanding during the period. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Not annualized. |
See Notes to Financial Statements.
PGIM QMA Mid-Cap Value Fund | 45 |
∎ 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. 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 • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • 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 • Dino Capasso, Vice President and Deputy 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 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, PGIM QMA Mid-Cap Value Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on 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 |
PGIM QMA MID-CAP VALUE FUND
SHARE CLASS | A | B | C | R | Z | R2 | R4 | R6* | ||||||||
NASDAQ | SPRAX | SVUBX | NCBVX | SDVRX | SPVZX | PMVEX | PMVFX | PMVQX | ||||||||
CUSIP | 74441L105 | 74441L204 | 74441L303 | 74441L782 | 74441L709 | 74441L758 | 74441L741 | 74441L824 |
*Formerly known as Class Q shares.
MF202E2
Item 2 – | Code of Ethics – Not required, as this is not an annual filing. | |
Item 3 – | Audit Committee Financial Expert – Not required, as this is not an annual filing. | |
Item 4 – | Principal Accountant Fees and Services – Not required, as this is not an annual filing. | |
Item 5 – | Audit Committee of Listed Registrants – Not applicable. | |
Item 6 – | Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form. | |
Item 7 – | Disclosure of Proxy Voting Policies and Procedures 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.
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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.
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(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 Investment Portfolios, Inc. 10 | |
By: | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary | ||
Date: | June 18, 2018 |
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 18, 2018 | |
By: | /s/ M. Sadiq Peshimam | |
M. Sadiq Peshimam | ||
Treasurer and Principal Financial and Accounting Officer | ||
Date: | June 18, 2018 |