UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: | 811-08565 | |
Exact name of registrant as specified in charter: | Prudential Investment Portfolios 12 | |
Address of principal executive offices: | Gateway Center 3, | |
100 Mulberry Street, | ||
Newark, New Jersey 07102 | ||
Name and address of agent for service: | Deborah A. Docs | |
Gateway Center 3, | ||
100 Mulberry Street, | ||
Newark, New Jersey 07102 | ||
Registrant’s telephone number, including area code: | 800-225-1852 | |
Date of fiscal year end: | 3/31/2012 | |
Date of reporting period: | 9/30/2011 |
Item 1 – | Reports to Stockholders |
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL GLOBAL REAL ESTATE FUND
SEMIANNUAL REPORT · SEPTEMBER 30, 2011
Fund Type
Sector stock
Objective
Capital appreciation and income
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of September 30, 2011, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Prudential Investments, Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
![]() |
November 15, 2011
Dear Shareholder:
On the following pages, you’ll find your Fund’s semiannual report, including a table showing fund performance over the first half of the fiscal year and for longer periods. The report also contains a listing of the Fund’s holdings at period-end. Semiannual reports are interim statements furnished between the Fund’s annual reports, which include an analysis of Fund performance over the fiscal year in addition to other data.
Mutual fund prices and returns will rise or fall over time, and asset managers tend to have periods when they perform better or worse than their long-term average. The best measures of a mutual fund’s quality are its return compared to that of similar investments and the variability of its return over the long term. We recommend that you review your portfolio regularly with your financial professional.
Thank you for choosing the Prudential Investments® family of mutual funds.
Sincerely,
Judy A. Rice, President
Prudential Global Real Estate Fund
Prudential Global Real Estate Fund | 1 |
Your Fund’s Performance (Unaudited)
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.prudentialfunds.com or by calling (800) 225-1852. The maximum initial sales charge is 5.50% (Class A shares). Gross operating expenses: Class A, 1.22%; Class B, 1.92%; Class C, 1.92%; Class R, 1.67%; Class Z, 0.92%. Net operating expenses: Class A, 1.22%; Class B, 1.92%; Class C, 1.92%; Class R, 1.42%; Class Z, 0.92%, after contractual reduction through 7/31/2012 for Class R.
Cumulative Total Returns (Without Sales Charges) as of 9/30/11 | ||||||||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception | ||||||||||||||
Class A | –15.04 | % | –8.05 | % | –17.81 | % | 169.95 | % | — | |||||||||
Class B | –15.33 | –8.68 | –20.66 | 150.86 | — | |||||||||||||
Class C | –15.29 | –8.68 | –20.66 | 150.87 | — | |||||||||||||
Class R | –15.13 | –8.21 | N/A | N/A | –15.26% (6/16/08) | |||||||||||||
Class Z | –14.92 | –7.79 | –16.65 | 177.12 | — | |||||||||||||
S&P Developed BMI Property Net Index | –14.37 | –6.03 | –21.29 | 119.80 | — | |||||||||||||
S&P 500 Index | –13.79 | 1.13 | –5.75 | 32.00 | — | |||||||||||||
Lipper Average | –16.35 | –9.19 | –24.94 | 116.97 | — | |||||||||||||
Average Annual Total Returns (With Sales Charges) as of 9/30/11 | ||||||||||||||||||
One Year | Five Years | Ten Years | Since Inception | |||||||||||||||
Class A | –13.11 | % | –4.93 | % | 9.82 | % | — | |||||||||||
Class B | –13.12 | –4.67 | 9.63 | — | ||||||||||||||
Class C | –9.57 | –4.52 | 9.63 | — | ||||||||||||||
Class R | –8.21 | N/A | N/A | –4.91% (6/16/08) | ||||||||||||||
Class Z | –7.79 | –3.58 | 10.73 | — | ||||||||||||||
S&P Developed BMI Property Net Index | –6.03 | –4.68 | 8.19 | — | ||||||||||||||
S&P 500 Index | 1.13 | –1.18 | 2.82 | — | ||||||||||||||
Lipper Average | –9.19 | –5.63 | 7.95 | — |
Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund’s total returns do not reflect the deduction of income taxes or an individual’s investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares.
2 | Visit our website at www.prudentialfunds.com |
Source: Prudential Investments LLC and Lipper Inc. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.
Inception returns are provided for any share class with less than 10 calendar years of returns.
The average annual total returns take into account applicable sales charges. Class A, Class B, Class C and Class R shares are subject to an annual distribution and service (12b-1) fee of up to 0.30%, 1.00%, 1.00%, and 0.75% respectively. Under certain limited circumstances, an exchange may be made from Class A shares to Class Z shares of the Fund. All investors who purchase Class A shares in the amount of $1 million or more and sell these shares within 12 months of purchase are not subject to a front-end sales charge but are subject to a contingent deferred sales charge (CDSC) of 1%. Class B shares are not subject to a front-end sales charge but are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1%, respectively, for the first six years after purchase and a 12b-1 fee of 1% annually. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class C shares are not subject to a front-end sales charge, but are subject to a CDSC of 1% for Class C shares sold within 12 months from the date of purchase and an annual 12b-1 fee of 1%. Class R shares are not subject to a sales charge but are subject to a 12b-1 fee of up to 0.75% annually. Class Z shares are not subject to a sales charge or a 12b-1 fee. 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.
Benchmark Definitions
S&P Developed BMI Property Net Index
The S&P Developed BMl Property Net Index is an unmanaged broad market index of more than 400 companies from 21 countries. Its inception date is 12/29/2000, later than the inception of the Fund. S&P Developed BMI Property Net Index Closest Month-End to Inception cumulative total return is –22.43% for Class R. S&P Developed BMI Property Net Index Closest Month-End to Inception average annual total return is –7.34% for Class R.
S&P 500 Index
The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. public companies. It gives a broad look at how U.S. stock prices have performed. S&P 500 Index Closest Month-End to Inception cumulative total return is –12.95% for Class R. S&P 500 Index Closest Month-End to Inception average annual total return is –4.07% for Class R.
Lipper Global Real Estate Funds Average
The Lipper Global Real Estate Funds Average (Lipper Average) is based on the average return for all funds in the Lipper Global Real Estate Funds category for the periods noted. Funds in the Lipper Average invest at least 25% but less than 75% of their equity portfolio in shares of companies engaged in the real estate industry that are strictly outside of the U.S. or whose securities are principally traded outside of the U.S. Lipper Average Closest Month-End to Inception cumulative total return is –23.21% for Class R. Lipper Average Closest Month-End to Inception average annual total return is –7.66% for Class R.
Investors cannot invest directly in an index. The securities in the S&P Developed BMl Property Net Index and S&P 500 Index may be very different from those in the Fund. Their returns do not include the effect of the sales charges and operating expenses of a mutual fund and would be lower if they did. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the S&P Developed BMl Property Net Index, S&P 500 Index, and the Lipper Average are measured from the closest month-end to inception date, and not from the Fund’s actual inception date.
Prudential Global Real Estate Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Holdings expressed as a percentage of net assets as of 9/30/11 |
| |||
Simon Property Group, Inc., Retail REIT’s | 5.1 | % | ||
Mitsubishi Estate Co. Ltd., Diversified Real Estate Activities | 2.8 | |||
Sun Hung Kai Properties Ltd., Diversified Real Estate Activities | 2.7 | |||
Ventas, Inc., REIT, Retail REIT’s | 2.6 | |||
Westfield Group, Retail REIT’s | 2.6 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 9/30/11 |
| |||
Retail REIT’s | 19.4 | % | ||
Diversified Real Estate Activities | 16.0 | |||
Specialized REIT’s | 13.2 | |||
Residential REIT’s | 11.9 | |||
Diversified REIT’s | 11.8 |
Industry weightings reflect only long-term investments and are subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on April 1, 2011, at the beginning of the period, and held through the six-month period ended September 30, 2011. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
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 Prudential Investments funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
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
Prudential Global Real Estate Fund | 5 |
Fees and Expenses (continued)
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Prudential Global Real Estate Fund | Beginning Account Value April 1, 2011 | Ending Account Value September 30, 2011 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 849.60 | 1.22 | % | $ | 5.64 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.90 | 1.22 | % | $ | 6.16 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 846.70 | 1.92 | % | $ | 8.86 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.40 | 1.92 | % | $ | 9.67 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 847.10 | 1.92 | % | $ | 8.87 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.40 | 1.92 | % | $ | 9.67 | ||||||||||
Class R | Actual | $ | 1,000.00 | $ | 848.70 | 1.42 | % | $ | 6.56 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.90 | 1.42 | % | $ | 7.16 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 850.80 | 0.92 | % | $ | 4.26 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.40 | 0.92 | % | $ | 4.65 |
* Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 183 days in the six-month period ended September 30, 2011, and divided by the 366 days in the Fund’s fiscal year ending March 31, 2012 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
6 | Visit our website at www.prudentialfunds.com |
Portfolio of Investments
as of September 30, 2011 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 98.2% |
| |||||
COMMON STOCKS |
| |||||
Australia 8.4% |
| |||||
2,360,000 | CFS Retail Property Trust, REIT | $ | 3,960,252 | |||
810,000 | Charter Hall Office, REIT | 2,606,897 | ||||
605,323 | Charter Hall Retail, REIT | 1,818,925 | ||||
3,551,333 | Commonwealth Property Office Fund, REIT | 3,055,900 | ||||
6,851,426 | Dexus Property Group, REIT | 5,400,399 | ||||
1,294,000 | FKP Property Group | 552,038 | ||||
9,483,800 | Goodman Group, REIT | 5,196,083 | ||||
2,583,520 | GPT Group, REIT | 7,770,555 | ||||
5,431,820 | Investa Office Fund, REIT | 3,166,880 | ||||
670,256 | Mirvac Group, REIT | 736,883 | ||||
2,862,525 | Stockland, REIT | 7,967,766 | ||||
2,500,279 | Westfield Group, REIT | 18,541,292 | ||||
|
| |||||
60,773,870 | ||||||
Belgium 0.3% |
| |||||
17,627 | Cofinimmo, REIT | 2,075,470 | ||||
Brazil 1.4% |
| |||||
224,256 | BR Malls Participacoes SA | 2,247,033 | ||||
193,600 | Cyrela Brazil Realty SA Empreendimentos e Participacoes | 1,199,543 | ||||
288,502 | Gafisa SA | 817,825 | ||||
169,961 | Multiplan Empreendimentos Imobiliarios SA | 3,145,668 | ||||
963,196 | PDG Realty SA Empreendimentos e Participacoes | 3,104,357 | ||||
|
| |||||
10,514,426 | ||||||
Canada 1.4% |
| |||||
3,700 | Boardwalk Real Estate Investment Trust, REIT | 170,117 | ||||
181,116 | Brookfield Properties Corp. | 2,504,410 | ||||
54,305 | Canadian Apartment Properties, REIT | 1,093,459 | ||||
316,958 | Chartwell Seniors Housing Real Estate Investment Trust, REIT | 2,283,646 | ||||
155,335 | RioCan Real Estate Investment Trust, REIT | 3,854,099 | ||||
|
| |||||
9,905,731 | ||||||
Finland 0.6% |
| |||||
531,563 | Citycon Oyj | 1,817,949 | ||||
664,073 | Sponda Oyj | 2,494,047 | ||||
|
| |||||
4,311,996 |
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 7 |
Portfolio of Investments
as of September 30, 2011 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
France 3.2% |
| |||||
8,811 | Fonciere des Regions, REIT | $ | 614,625 | |||
21,927 | ICADE, REIT | 1,713,173 | ||||
209,109 | Klepierre, REIT | 5,861,591 | ||||
84,880 | Unibail-Rodamco SE, REIT | 15,145,674 | ||||
|
| |||||
23,335,063 | ||||||
Hong Kong 10.1% |
| |||||
6,062,000 | Champion, REIT | 2,315,797 | ||||
1,325,776 | Cheung Kong Holdings Ltd. | 14,372,243 | ||||
1,537,000 | China Overseas Land & Investment Ltd. | 2,195,262 | ||||
3,189,469 | Hang Lung Properties Ltd. | 9,489,710 | ||||
1,630,794 | Henderson Land Development Co. Ltd. | 7,321,605 | ||||
1,829,000 | Hongkong Land Holdings Ltd. | 8,193,920 | ||||
711,999 | Hysan Development Co. Ltd. | 2,157,082 | ||||
845,219 | Link (The), REIT | 2,670,388 | ||||
2,958,000 | Sino Land Co. Ltd. | 3,906,355 | ||||
1,722,935 | Sun Hung Kai Properties Ltd. | 19,765,531 | ||||
98,000 | Wharf Holdings Ltd. (The) | 483,500 | ||||
|
| |||||
72,871,393 | ||||||
Italy 0.2% |
| |||||
3,437,884 | Beni Stabili SpA, REIT | 1,810,074 | ||||
Japan 12.4% |
| |||||
357,900 | Aeon Mall Co. Ltd. | 8,175,163 | ||||
138,900 | Daito Trust Construction Co. Ltd. | 12,734,232 | ||||
746,000 | Daiwa House Industry Co. Ltd. | 9,552,033 | ||||
166 | Japan Logistics Fund, Inc., REIT | 1,450,481 | ||||
1,246,780 | Mitsubishi Estate Co. Ltd. | 20,223,541 | ||||
1,037,339 | Mitsui Fudosan Co. Ltd. | 16,387,045 | ||||
243 | Nippon Accommodations Fund, Inc., REIT | 1,721,094 | ||||
707 | Nippon Building Fund, Inc., REIT | 7,319,080 | ||||
209,100 | Nomura Real Estate Holdings, Inc. | 3,163,509 | ||||
772 | NTT Urban Development Corp. | 560,999 | ||||
450,952 | Sumitomo Realty & Development Co. Ltd. | 8,668,672 | ||||
|
| |||||
89,955,849 | ||||||
Netherlands 1.9% |
| |||||
45,428 | Corio NV, REIT | 2,093,172 | ||||
126,208 | Eurocommercial Properties NV, REIT | 4,857,861 |
See Notes to Financial Statements.
8 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Netherlands (cont’d.) |
| |||||
42,232 | Vastned Retail NV, REIT | $ | 2,003,582 | |||
66,983 | Wereldhave NV, REIT | 4,710,707 | ||||
|
| |||||
13,665,322 | ||||||
Norway 0.2% |
| |||||
994,997 | Norwegian Property ASA | 1,325,319 | ||||
Singapore 4.9% |
| |||||
2,237,000 | Ascendas Real Estate Investment Trust, REIT | 3,449,530 | ||||
3,287,000 | Cache Logistics Trust, REIT | 2,401,903 | ||||
1,098,000 | CapitaCommercial Trust, REIT | 838,745 | ||||
1,683,000 | CapitaLand Ltd. | 3,140,155 | ||||
1,991,673 | CapitaMall Trust, REIT | 2,762,005 | ||||
2,456,000 | CDL Hospitality Trusts, REIT | 2,821,103 | ||||
735,058 | City Developments Ltd. | 5,329,448 | ||||
995,000 | Fortune Real Estate Investment Trust, REIT | 431,611 | ||||
1,016,000 | Global Logistic Properties Ltd.(a) | 1,274,093 | ||||
3,061,600 | Keppel Land Ltd. | 5,980,076 | ||||
3,561,000 | Mapletree Commercial Trust, REIT | 2,204,332 | ||||
1,873,800 | Mapletree Industrial Trust, REIT | 1,541,709 | ||||
638,000 | Mapletree Logistics Trust, REIT | 413,240 | ||||
3,162,000 | Suntec Real Estate Investment Trust, REIT | 2,764,916 | ||||
|
| |||||
35,352,866 | ||||||
Sweden 0.9% |
| |||||
380,644 | Hufvudstaden AB (Class A Stock) | 3,675,233 | ||||
444,042 | Klovern AB | 1,615,717 | ||||
190,010 | Kungsleden AB | 1,290,942 | ||||
|
| |||||
6,581,892 | ||||||
Switzerland 0.8% |
| |||||
61,780 | PSP Swiss Property AG | 5,544,459 | ||||
United Kingdom 4.8% |
| |||||
531,695 | Atrium European Real Estate Ltd. | 2,531,063 | ||||
706,657 | British Land Co. PLC, REIT | 5,205,159 | ||||
788,850 | Great Portland Estates PLC, REIT | 4,156,708 | ||||
878,722 | Hammerson PLC, REIT | 5,144,475 | ||||
1,028,433 | Land Securities Group PLC, REIT | 10,221,200 | ||||
1,505,056 | Segro PLC, REIT | 5,134,183 |
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 9 |
Portfolio of Investments
as of September 30, 2011 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
United Kingdom (cont’d.) |
| |||||
276,250 | Shaftesbury PLC, REIT | $ | 1,995,709 | |||
|
| |||||
34,388,497 | ||||||
United States 46.7% |
| |||||
49,800 | Alexandria Real Estate Equities, Inc., REIT | 3,057,222 | ||||
70,778 | American Assets Trust, Inc., REIT | 1,270,465 | ||||
236,206 | American Campus Communities, Inc., REIT | 8,789,225 | ||||
302,397 | Associated Estates Realty Corp., REIT | 4,675,058 | ||||
125,490 | AvalonBay Communities, Inc., REIT | 14,312,134 | ||||
82,000 | Boston Properties, Inc., REIT | 7,306,200 | ||||
421,154 | Brandywine Realty Trust, REIT | 3,373,444 | ||||
164,888 | BRE Properties, Inc., REIT | 6,981,358 | ||||
238,333 | Camden Property Trust, REIT | 13,170,282 | ||||
182,000 | CBRE Group, Inc. (Class A Stock)(a) | 2,449,720 | ||||
796,905 | Cogdell Spencer, Inc., REIT | 3,004,332 | ||||
553,610 | Colonial Properties Trust, REIT | 10,053,558 | ||||
741,582 | Cousins Properties, Inc., REIT | 4,338,255 | ||||
1,261,020 | CubeSmart, REIT | 10,756,501 | ||||
915,079 | DDR Corp., REIT | 9,974,361 | ||||
167,050 | DiamondRock Hospitality Co., REIT | 1,167,679 | ||||
246,042 | Douglas Emmett, Inc., REIT | 4,207,318 | ||||
237,716 | Education Realty Trust, Inc., REIT | 2,041,980 | ||||
271,116 | Equity Residential, REIT | 14,062,787 | ||||
70,362 | Essex Property Trust, Inc., REIT | 8,446,254 | ||||
156,950 | Extra Space Storage, Inc., REIT | 2,923,978 | ||||
464,522 | FelCor Lodging Trust, Inc., REIT(a) | 1,082,336 | ||||
241,127 | First Potomac Realty Trust, REIT | 3,006,854 | ||||
38,517 | General Growth Properties, Inc., REIT | 466,056 | ||||
357,833 | Glimcher Realty Trust, REIT | 2,533,458 | ||||
56,816 | HCP, Inc., REIT | 1,991,969 | ||||
93,263 | Health Care REIT, Inc., REIT | 4,364,708 | ||||
125,543 | Healthcare Realty Trust, Inc., REIT | 2,115,400 | ||||
1,129,813 | Host Hotels & Resorts, Inc., REIT | 12,360,154 | ||||
105,218 | Hudson Pacific Properties, Inc., REIT | 1,223,685 | ||||
59,300 | Hyatt Hotels Corp. (Class A Stock)(a) | 1,860,241 | ||||
284,574 | Kilroy Realty Corp., REIT | 8,907,166 | ||||
260,303 | Liberty Property Trust, REIT | 7,577,420 | ||||
111,692 | LTC Properties, Inc., REIT | 2,828,041 | ||||
270,660 | Macerich Co. (The), REIT | 11,538,236 | ||||
378,921 | Mack-Cali Realty Corp., REIT | �� | 10,136,137 |
See Notes to Financial Statements.
10 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
United States (cont’d.) |
| |||||
33,047 | Medical Properties Trust, Inc., REIT | $ | 295,771 | |||
123,011 | Pebblebrook Hotel Trust, REIT | 1,925,122 | ||||
321,277 | Post Properties, Inc., REIT | 11,161,163 | ||||
445,548 | ProLogis, Inc., REIT | 10,804,539 | ||||
166,282 | Public Storage, REIT | 18,515,501 | ||||
335,499 | Simon Property Group, Inc., REIT | 36,898,180 | ||||
49,104 | SL Green Realty Corp., REIT | 2,855,398 | ||||
109,361 | Sovran Self Storage, Inc., REIT | 4,064,948 | ||||
865,529 | Strategic Hotels & Resorts, Inc., REIT(a) | 3,730,430 | ||||
326,482 | Sunrise Senior Living, Inc.(a) | 1,511,612 | ||||
132,164 | Tanger Factory Outlet Centers, REIT | 3,437,586 | ||||
33,371 | Taubman Centers, Inc., REIT | 1,678,895 | ||||
382,826 | Ventas, Inc., REIT | 18,911,604 | ||||
176,292 | Vornado Realty Trust, REIT | 13,154,909 | ||||
|
| |||||
337,299,630 | ||||||
|
| |||||
Total long-term investments | 709,711,857 | |||||
|
| |||||
SHORT-TERM INVESTMENT 2.5% |
| |||||
Affiliated Money Market Mutual Fund |
| |||||
18,221,042 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 18,221,042 | ||||
|
| |||||
Total Investments 100.7% | 727,932,899 | |||||
Liabilities in excess of other assets (0.7%) | (5,351,675 | ) | ||||
|
| |||||
Net Assets 100% | $ | 722,581,224 | ||||
|
|
The following abbreviation is used in the Portfolio descriptions:
REIT—Real Estate Investment Trust
(a) | Non-income producing security. |
(b) | Prudential Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 11 |
Portfolio of Investments
as of September 30, 2011 (Unaudited) continued
Various inputs are used in determining the value of the Portfolio’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices generally for stocks, exchange traded funds, options and futures traded in active markets for identical securities, and mutual funds which trade at daily net asset value.
Level 2—other significant observable inputs (including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, foreign currency exchange rates, and amortized cost) generally for debt securities, swaps, forward foreign currency contracts and for foreign stocks priced using vendor modeling tools.
Level 3—significant unobservable inputs for securities valued in accordance with Board approved on fair valuation procedures.
The following is a summary of the inputs used as of September 30, 2011 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks: | ||||||||||||
Australia | $ | — | $ | 60,773,870 | $ | — | ||||||
Belgium | — | 2,075,470 | — | |||||||||
Brazil | 10,514,426 | — | — | |||||||||
Canada | 9,905,731 | — | — | |||||||||
Finland | — | 4,311,996 | — | |||||||||
France | — | 23,335,063 | — | |||||||||
Hong Kong | 8,193,920 | 64,677,473 | — | |||||||||
Italy | — | 1,810,074 | — | |||||||||
Japan | — | 89,955,849 | — | |||||||||
Netherlands | 4,857,861 | 8,807,461 | — | |||||||||
Norway | — | 1,325,319 | — | |||||||||
Singapore | — | 35,352,866 | — | |||||||||
Sweden | — | 6,581,892 | — | |||||||||
Switzerland | — | 5,544,459 | — | |||||||||
United Kingdom | — | 34,388,497 | — | |||||||||
United States | 337,299,630 | — | — | |||||||||
Affiliated Money Market Mutual Fund | 18,221,042 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 388,992,610 | $ | 338,940,289 | $ | — | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
12 | Visit our website at www.prudentialfunds.com |
Fair Value of Level 2 investments at 03/31/11 was $0. $292,718,479 was transferred into Level 2 from Level 1 at 9/30/11 as a result of using third-party vendor modeling tools due to significant market movements between the time at which the Portfolio valued its securities and the earlier closing of foreign markets.
It is the Portfolio’s policy to recognize transfers in and transfers out at the fair value as of the beginning of period.
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of September 30, 2011 were as follows:
Retail REIT’s | 19.4 | % | ||
Diversified Real Estate Activities | 16.0 | |||
Specialized REIT’s | 13.2 | |||
Residential REIT’s | 11.9 | |||
Diversified REIT’s | 11.8 | |||
Office REIT’s | 9.2 | |||
Real Estate Operating Companies | 6.8 | |||
Industrial REIT’s | 4.6 | |||
Real Estate Development | 3.8 | |||
Affiliated Money Market Mutual Fund | 2.5 | % | ||
Homebuilding | 0.7 | |||
Real Estate Services | 0.3 | |||
Hotels, Resorts & Cruise Lines | 0.3 | |||
Healthcare Facilities | 0.2 | |||
|
| |||
100.7 | ||||
Liabilities in excess of other assets | (0.7 | ) | ||
|
| |||
100.0 | % | |||
|
|
The Portfolio invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is foreign exchange risk.
The effect of such derivative instruments on the Portfolio’s financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
The Portfolio did not hold any derivative instruments as of September 30, 2011, accordingly, no derivative positions were presented in the Statements of Assets and Liabilities.
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 13 |
Portfolio of Investments
as of September 30, 2011 (Unaudited) continued
The effects of derivative instruments on the Statement of Operations for the six months ended September 30, 2011 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging instruments, carried at fair value | Forward Currency Contracts | |||
Foreign exchange contracts | $ | 60,043 | ||
|
|
For the six months ended September 30, 2011, the Portfolio did not have any unrealized appreciation or (depreciation) on derivatives recognized in income.
See Notes to Financial Statements.
14 | Visit our website at www.prudentialfunds.com |
Financial Statements
(Unaudited)
SEPTEMBER 30, 2011 | SEMIANNUAL REPORT |
Prudential Global Real Estate Fund
Statement of Assets and Liabilities
September 30, 2011 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated Investments (cost $749,842,006) | $ | 709,711,857 | ||
Affiliated Investments (cost $18,221,042) | 18,221,042 | |||
Cash | 42,486 | |||
Foreign currency, at value (cost $24,245) | 24,245 | |||
Receivable for Fund shares sold | 3,468,099 | |||
Dividends receivable | 2,355,495 | |||
Receivable for investments sold | 102,517 | |||
Tax reclaim receivable | 66,423 | |||
Prepaid expenses | 14,532 | |||
|
| |||
Total assets | 734,006,696 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 7,787,705 | |||
Payable for Fund shares reacquired | 2,970,094 | |||
Management fee payable | 473,923 | |||
Distribution fee payable | 142,616 | |||
Accrued expenses | 34,698 | |||
Affiliated transfer agent fee payable | 16,436 | |||
|
| |||
Total liabilities | 11,425,472 | |||
|
| |||
Net Assets | $ | 722,581,224 | ||
|
| |||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 44,261 | ||
Paid-in capital in excess of par | 927,651,148 | |||
|
| |||
927,695,409 | ||||
Distributions in excess of net investment income | (9,849,418 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (155,112,459 | ) | ||
Net unrealized depreciation on investments and foreign currencies | (40,152,308 | ) | ||
|
| |||
Net assets, September 30, 2011 | $ | 722,581,224 | ||
|
|
See Notes to Financial Statements.
16 | Visit our website at www.prudentialfunds.com |
Class A: | ||||
Net asset value and redemption price per share | $ | 16.31 | ||
Maximum sales charge (5.5% of offering price) | .95 | |||
|
| |||
Maximum offering price to public | $ | 17.26 | ||
|
| |||
Class B: | ||||
Net asset value, offering price and redemption price per share | $ | 16.19 | ||
|
| |||
Class C: | ||||
Net asset value, offering price and redemption price per share | $ | 16.19 | ||
|
| |||
Class R: | ||||
Net asset value, offering price and redemption price per share | $ | 16.30 | ||
|
| |||
Class Z: | ||||
Net asset value, offering price and redemption price per share | $ | 16.36 | ||
|
|
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 17 |
Statement of Operations
Six Months Ended September 30, 2011 (Unaudited)
Investment Income | ||||
Unaffiliated dividend income (net of $605,739 foreign withholding tax) | $ | 11,977,368 | ||
Affiliated dividend income | 32,141 | |||
|
| |||
Total income | 12,009,509 | |||
|
| |||
Expenses | ||||
Management fee | 2,908,574 | |||
Distribution fee—Class A | 452,237 | |||
Distribution fee—Class B | 71,036 | |||
Distribution fee—Class C | 389,623 | |||
Distribution fee—Class R | 9,813 | |||
Transfer agent’s fees and expenses (including affiliated expenses of $81,000) | 359,000 | |||
Custodian’s fees and expenses | 105,000 | |||
Registration fees | 71,000 | |||
Reports to shareholders | 51,000 | |||
Audit fee | 13,000 | |||
Legal fees and expenses | 13,000 | |||
Trustees’ fees | 12,000 | |||
Commitment fee on syndicated credit agreement | 2,000 | |||
Miscellaneous | 17,598 | |||
|
| |||
Total expenses | 4,474,881 | |||
|
| |||
Net investment income | 7,534,628 | |||
|
| |||
Net Realized And Unrealized Gain (Loss) On Investments And Foreign Currencies | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 5,176,158 | |||
Foreign currency transactions | (189,651 | ) | ||
|
| |||
4,986,507 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (141,153,237 | ) | ||
Foreign currencies | 9,751 | |||
|
| |||
(141,143,486 | ) | |||
|
| |||
Net gain on investments and foreign currencies | (136,156,979 | ) | ||
|
| |||
Net Decrease In Net Assets Resulting From Operations | $ | (128,622,351 | ) | |
|
|
See Notes to Financial Statements.
18 | Visit our website at www.prudentialfunds.com |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended September 30, 2011 | Year Ended March 31, 2011 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 7,534,628 | $ | 8,718,641 | ||||
Net realized gain on investment and foreign currency transactions | 4,986,507 | 4,238,812 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (141,143,486 | ) | 65,449,259 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | (128,622,351 | ) | 78,406,712 | |||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (3,580,225 | ) | (6,028,465 | ) | ||||
Class B | (119,165 | ) | (254,037 | ) | ||||
Class C | (686,671 | ) | (946,017 | ) | ||||
Class R | (46,511 | ) | (60,408 | ) | ||||
Class Z | (5,266,564 | ) | (6,623,176 | ) | ||||
|
|
|
| |||||
(9,699,136 | ) | (13,912,103 | ) | |||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) (Note 6): | ||||||||
Net proceeds from shares sold | 281,391,634 | 388,696,144 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 7,280,073 | 10,702,328 | ||||||
Cost of shares reacquired | (120,268,802 | ) | (137,408,216 | ) | ||||
|
|
|
| |||||
Net increase in net assets from Fund share transactions | 168,402,905 | 259,990,256 | ||||||
|
|
|
| |||||
Total increase in net assets | 30,081,418 | 324,484,865 | ||||||
Net Assets | ||||||||
Beginning of period | 692,499,806 | 368,014,941 | ||||||
|
|
|
| |||||
End of period | $ | 722,581,224 | $ | 692,499,806 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 19 |
Notes to Financial Statements
(Unaudited)
Prudential Investment Portfolios 12 (the “Trust”) is registered under the Investment Company Act of 1940, as amended, (“1940 Act”) as a non-diversified, open end, management investment company presently consisting of two portfolios: Prudential Global Real Estate Fund (the “Fund”) and Prudential US Real Estate Fund. These financial statements relate only to Prudential Global Real Estate Fund. The financial statements of the other portfolio are not presented herein. The Trust was established as a Delaware business trust on October 24, 1997. The investment objective of the Fund is capital appreciation and income. It seeks to achieve this objective by investing primarily in equity securities of real estate companies.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of its financial statements.
Securities Valuation: Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and asked prices, or at the last bid price on such day in the absence of an asked price. Securities traded via NASDAQ are valued at the NASDAQ official closing price (“NOCP”) on the day of valuation, or if there was no NOCP, at the last sale price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”), in consultation with the subadviser, to be over-the-counter, are valued at market value using prices provided by an independent pricing agent or principal market maker. Options on securities and indices traded on an exchange are valued at the last sale price as of the close of trading on the applicable exchange or, if there was no sale, at the mean between the most recently quoted bid and asked prices on such exchange. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Prices may be obtained from independent pricing services which use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics.
20 | Visit our website at www.prudentialfunds.com |
Securities for which reliable market quotations are not readily available, or whose values have been affected by events occurring after the close of the security’s foreign market and before the Fund’s normal pricing time, are valued at fair value in accordance with the Board of Trustees’ approved fair valuation procedures. When determining the fair valuation 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 issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Investments in open end, non-exchange traded mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.
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 daily rates of exchange;
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the fiscal period, the Fund does not 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 portfolio securities held at the end of the fiscal 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 portfolio securities sold during the fiscal period. Accordingly, realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.
Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from holdings of foreign currencies, currency gains or losses realized between the trade and settlement dates on security transactions, and the
Prudential Global Real Estate Fund | 21 |
Notes to Financial Statements
(Unaudited) continued
difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains or 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. 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.
Foreign Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate between two parties. The Series enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or specific receivables and payables denominated in a foreign currency. The contracts are valued daily at current exchange rates and any unrealized gain or loss is included in net unrealized appreciation or depreciation on foreign currencies. Gain or loss is realized on the settlement date of the contract equal to the difference between the settlement value of the original and negotiated forward contracts. This gain or loss, if any, is included in net realized gain (loss) on foreign currency transactions. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. Forward currency contracts involve risks from currency exchange rate and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Series’ maximum risk of loss from counterparty credit risk is the net value of the cash flows to be received from the counterparty at the end of the contract’s life. This risk may be mitigated by having a master netting arrangement between the Series and the counterparty which may permit the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable.
Securities Transactions and Net Investment Income: Security transactions are recorded on the trade date. Realized and unrealized gains or losses from investments and currency transactions on sales of portfolio securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest
22 | Visit our website at www.prudentialfunds.com |
income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on the accrual basis. The Fund invests in real estate investment trusts (“REITs”), which report information on the source of their distributions annually. A portion of distributions received from REITs during the period is estimated to be capital gain and a portion is estimated to be return of capital and is recorded as a reduction of their cost. These estimates are adjusted when the actual source of distributions is disclosed by the REITs.
Net investment income or loss (other than distribution fees which are charged directly to the respective class) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions: The Fund expects to pay dividends of net investment income and distributions of net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income; accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.
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 are recorded, net of reclaimable amounts, at the time the related income is earned.
Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadviser’s performance of such services. PI has entered into a subadvisory agreement with
Prudential Global Real Estate Fund | 23 |
Notes to Financial Statements
(Unaudited) continued
Prudential Real Estate Investors (“PREI”), which is a business unit of Prudential Investment Management (“PIM”). The subadvisory agreement provides that each subadviser furnishes investment advisory services in connection with the management of the Fund. In connection therewith, each subadviser is obligated to keep certain books and records of the Fund. PI pays for the services of the subadvisers, 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 PI is computed daily and payable monthly at an annual rate of 0.75% of the Fund’s average daily net assets. The effective management fee rate was 0.75% for the six months ended September 30, 2011.
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 and Class Z 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 “Class A, B, C and R 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 shares of the Fund.
Pursuant to the Class A, B, C and R 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, B, C and R shares, respectively. For the six months ended September 30, 2011, PIMS has contractually agreed to limit such fees to 0.50% of the average daily net assets of the Class R shares.
PIMS has advised the Fund that it has received $351,677 in front-end sales charges resulting from sales of Class A during the six months ended September 30, 2011. 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 it has received $12,220 and $7,503 in contingent deferred sales charges imposed upon certain redemptions by Class B and Class C shareholders, respectively, during the six months ended September 30, 2011.
PI and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
24 | Visit our website at www.prudentialfunds.com |
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. The transfer agent fees and expenses in the Statement of Operations also include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Fund invests in the Prudential Core Taxable Money Market Fund (the “Core Fund”), a portfolio of Prudential Investment Portfolios 2. The Core Fund is a money market mutual fund registered under the 1940 Act, as amended, and managed by PI. Earnings from the Core Fund are disclosed on the Consolidated Statement of Operations as affiliated dividend income.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, other than short-term investments, for the six months ended September 30, 2011, were $268,850,366 and $69,069,461, respectively.
Note 5. Distributions and Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of September 30, 2011 were as follows:
Tax Basis of | Appreciation | Depreciation | Net | |||
$804,696,316 | $20,812,283 | $(97,575,700) | $(76,763,417) |
The difference between book basis and tax basis are primarily attributable to deferred losses on wash sales and investments in passive foreign investment companies.
For federal income tax purposes, the Fund had a capital loss carryforward as of March 31, 2011 of approximately $139,079,000 of which $3,918,000 expires in 2016, $48,041,000 expires in 2017, $82,582,000 expires in 2018 and 4,538,000 expires in 2019. Accordingly, no capital gains distribution is expected to be paid to shareholders until net gains have been realized in excess of such carryforward. Under the recently enacted Regulated Investment Company Modernization Act of 2010, the Fund is permitted to carryforward capital losses incurred in taxable years beginning after December 22, 2010 (“post-enactment losses”) for an unlimited period. However, any post-enactment losses are required to be utilized before the utilization of losses
Prudential Global Real Estate Fund | 25 |
Notes to Financial Statements
(Unaudited) continued
incurred prior to the effective date of the Act. As a result of this ordering rule, capital loss carryforwards related to the taxable years beginning prior to the effective date of the Act may have an increased likelihood to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
The Fund elects to treat post-October foreign currency losses of approximately $119,000 as having been incurred in the following year (March 31, 2012).
Management has analyzed the Fund’s tax positions taken on federal income tax returns for all open tax years and has concluded that no provision for income tax would be required in the Fund’s financial statements for the current reporting period. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Fund offers Class A, Class B, Class C, Class R and Class Z shares. Class A shares are sold with a front-end sales charge of up to 5.5%. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class C shares are sold with a CDSC of 1% during the first 12 months. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class R and Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
The Fund has authorized an unlimited number of shares of beneficial interest, $.001 par value per share, divided into five classes, designated Class A, Class B, Class C, Class R and Class Z.
26 | Visit our website at www.prudentialfunds.com |
Transactions in shares of beneficial interest were as follows:
Class A | Shares | Amount | ||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 4,831,851 | $ | 94,208,535 | |||||
Shares issued in reinvestment of dividends | 166,459 | 3,115,963 | ||||||
Shares reacquired | (2,343,434 | ) | (44,781,673 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 2,654,876 | 52,542,825 | ||||||
Shares issued upon conversion from Class B and Class Z | 71,572 | 1,314,456 | ||||||
Shares reacquired upon conversion into Class Z | (1,326,308 | ) | (25,837,597 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,400,140 | $ | 28,019,684 | |||||
|
|
|
| |||||
Year ended March 31, 2011: | ||||||||
Shares sold | 7,107,852 | $ | 131,644,912 | |||||
Shares issued in reinvestment of dividends | 287,132 | 5,285,184 | ||||||
Shares reacquired | (4,019,399 | ) | (72,286,181 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 3,375,585 | 64,643,915 | ||||||
Shares issued upon conversion from Class B | 62,167 | 1,146,400 | ||||||
Shares reacquired upon conversion into Class Z | (19,261 | ) | (361,102 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 3,418,491 | $ | 65,429,213 | |||||
|
|
|
| |||||
Class B | ||||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 66,012 | $ | 1,287,453 | |||||
Shares issued in reinvestment of dividends | 5,530 | 102,953 | ||||||
Shares reacquired | (69,253 | ) | (1,317,156 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 2,289 | 73,250 | ||||||
Shares issued upon conversion into Class A | (36,001 | ) | (666,635 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (33,712 | ) | $ | (593,385 | ) | |||
|
|
|
| |||||
Year ended March 31, 2011: | ||||||||
Shares sold | 161,233 | $ | 2,943,719 | |||||
Shares issued in reinvestment of dividends | 12,087 | 220,305 | ||||||
Shares reacquired | (103,020 | ) | (1,808,496 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 70,300 | 1,355,528 | ||||||
Shares issued upon conversion into Class A | (62,787 | ) | (1,146,400 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 7,513 | $ | 209,128 | |||||
|
|
|
|
Prudential Global Real Estate Fund | 27 |
Notes to Financial Statements
(Unaudited) continued
Class C | Shares | Amount | ||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 1,081,593 | $ | 20,936,454 | |||||
Shares issued in reinvestment of dividends | 28,337 | 526,515 | ||||||
Shares reacquired | (276,972 | ) | (5,200,391 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 832,958 | 16,262,578 | ||||||
Shares reacquired upon conversion into Class Z | (25,719 | ) | (478,597 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 807,239 | $ | 15,783,981 | |||||
|
|
|
| |||||
Year ended March 31, 2011: | ||||||||
Shares sold | 1,703,835 | $ | 31,640,444 | |||||
Shares issued in reinvestment of dividends | 39,776 | 725,094 | ||||||
Shares reacquired | (545,618 | ) | (9,761,660 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 1,197,993 | 22,603,878 | ||||||
Shares reacquired upon conversion into Class Z | (17,548 | ) | (325,510 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,180,445 | $ | 22,278,368 | |||||
|
|
|
| |||||
Class R | ||||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 148,236 | $ | 2,853,385 | |||||
Shares issued in reinvestment of dividends | 1,806 | 33,719 | ||||||
Shares reacquired | (74,223 | ) | (1,390,380 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 75,819 | $ | 1,496,724 | |||||
|
|
|
| |||||
Year ended March 31, 2011: | ||||||||
Shares sold | 144,009 | $ | 2,596,766 | |||||
Shares issued in reinvestment of dividends | 2,010 | 36,944 | ||||||
Shares reacquired | (40,029 | ) | (726,679 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 105,990 | $ | 1,907,031 | |||||
|
|
|
|
28 | Visit our website at www.prudentialfunds.com |
Class Z | Shares | Amount | ||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 8,476,301 | $ | 162,105,807 | |||||
Shares issued in reinvestment of dividends | 187,149 | 3,500,923 | ||||||
Shares reacquired | (3,576,873 | ) | (67,579,202 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 5,086,577 | 98,027,528 | ||||||
Shares issued upon conversion from Class A and Class C | 1,346,900 | 26,316,194 | ||||||
Shares reacquired upon conversion into Class A | (35,751 | ) | (647,821 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 6,397,726 | $ | 123,695,901 | |||||
|
|
|
| |||||
Year ended March 31, 2011: | ||||||||
Shares sold | 11,661,095 | $ | 217,870,303 | |||||
Shares issued in reinvestment of dividends | 239,972 | 4,434,801 | ||||||
Shares reacquired | (2,902,451 | ) | (52,825,200 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 8,998,616 | 169,479,904 | ||||||
Shares issued upon conversion from Class A and Class C | 36,387 | 686,612 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 9,035,003 | $ | 170,166,516 | |||||
|
|
|
|
Note 7. Borrowings
The Fund, along with other affiliated registered investment companies (the “Companies”), are 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 $750 million for the period December 17, 2010 through December 16, 2011. The Companies pay a commitment fee of .10% of the unused portion of the SCA. Interest on any borrowings under the SCA is paid at contracted market rates. The commitment fee for the unused amount is accrued daily and paid quarterly. The Fund did not utilize the line of credit during the six months ended September 30, 2011.
Note 8. New Accounting Pronouncements
In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-03 “Reconsideration of Effective control for Repurchase Agreements.” The objective of ASU No. 2011-03 is to improve the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. Under previous guidance, whether or not to account for a transaction as a sale was based on, in part, if the entity maintained effective control over the transferred financial assets. ASU No. 2011-03 removes the transferor’s ability criterion from the effective control assessment. This guidance is effective prospectively for interim and annual reporting periods beginning on or after December 15, 2011. At this time,
Prudential Global Real Estate Fund | 29 |
Notes to Financial Statements
(Unaudited) continued
management is evaluating the implications of ASU No. 2011-03 and its impact on the financial statements has not been determined.
In May 2011, the FASB issued ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU No. 2011-04 will require reporting entities to disclose quantitative information about the unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU No. 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU No. 2011-04 and its impact on the financial statements has not been determined.
30 | Visit our website at www.prudentialfunds.com |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||
2011(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $19.43 | $16.83 | $9.53 | $21.33 | $31.19 | $24.96 | ||||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||||
Net investment income | .18 | .35 | .30 | .41 | .38 | .38 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (3.07 | ) | 2.75 | 7.64 | (11.99 | ) | (5.12 | ) | 6.30 | |||||||||||||||||
Total from investment operations | (2.89 | ) | 3.10 | 7.94 | (11.58 | ) | (4.74 | ) | 6.68 | |||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.23 | ) | (.50 | ) | (.64 | ) | (.22 | ) | (.63 | ) | (.44 | ) | ||||||||||||||
Distributions from net realized gains on investments | - | - | - | - | (4.49 | ) | (.01 | ) | ||||||||||||||||||
Total dividends and distributions | (.23 | ) | (.50 | ) | (.64 | ) | (.22 | ) | (5.12 | ) | (.45 | ) | ||||||||||||||
Net asset value, end of period | $16.31 | $19.43 | $16.83 | $9.53 | $21.33 | $31.19 | ||||||||||||||||||||
Total Return(a) | (15.04)% | 18.57% | 83.79% | (54.38)% | (17.79)% | 27.09% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $259,085 | $281,427 | $186,200 | $91,991 | $204,098 | $264,980 | ||||||||||||||||||||
Average net assets (000) | $301,492 | $214,086 | $148,247 | $163,953 | $233,525 | $176,407 | ||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees(c) | 1.22% | (e) | 1.30% | 1.37% | 1.35% | 1.31% | 1.22% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | .92% | (e) | 1.00% | 1.07% | 1.07% | 1.06% | .97% | |||||||||||||||||||
Net investment income | 1.92% | (e) | 1.92% | 2.03% | 2.58% | 1.55% | 1.58% | |||||||||||||||||||
For Class A, B, C, R and Z shares: | ||||||||||||||||||||||||||
Portfolio turnover | 9% | (f) | 29% | 53% | 67% | 78% | 121% |
(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. Total returns for periods of less than one full year are not annualized. Total investment returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Based on average shares outstanding during the period.
(c) Prior to July 31, 2008, the Distributor of the Fund had contractually agreed to limit its distribution and service (12b-1) fees to .25% of the average daily net assets for the Class A shares.
(d) Does not include expenses of the underlying funds in which the Fund invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 31 |
Financial Highlights
(Unaudited) continued
Class B Shares | ||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||
2011(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $19.29 | $16.70 | $9.47 | $21.18 | $31.02 | $24.84 | ||||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||||
Net investment income | .12 | .24 | .20 | .30 | .21 | .18 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (3.06 | ) | 2.70 | 7.58 | (11.87 | ) | (5.11 | ) | 6.25 | |||||||||||||||||
Total from investment operations | (2.94 | ) | 2.94 | 7.78 | (11.57 | ) | (4.90 | ) | 6.43 | |||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.16 | ) | (.35 | ) | (.55 | ) | (.14 | ) | (.45 | ) | (.24 | ) | ||||||||||||||
Distributions from net realized gains on investments | - | - | - | - | (4.49 | ) | (.01 | ) | ||||||||||||||||||
Total dividends and distributions | (.16 | ) | (.35 | ) | (.55 | ) | (.14 | ) | (4.94 | ) | (.25 | ) | ||||||||||||||
Net asset value, end of period | $16.19 | $19.29 | $16.70 | $9.47 | $21.18 | $31.02 | ||||||||||||||||||||
Total Return(a) | (15.33)% | 17.74% | 82.55% | (54.68)% | (18.42)% | 26.12% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $11,583 | $14,451 | $12,382 | $7,612 | $21,706 | $32,867 | ||||||||||||||||||||
Average net assets (000) | $14,207 | $13,028 | $11,178 | $15,393 | $28,993 | $25,925 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 1.92% | (d) | 2.00% | 2.07% | 2.07% | 2.06% | 1.97% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | .92% | (d) | 1.00% | 1.07% | 1.07% | 1.06% | .97% | |||||||||||||||||||
Net investment income | 1.27% | (d) | 1.33% | 1.37% | 1.87% | .85% | 1.66% |
(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. Total returns for periods of less than one full year are not annualized. Total investment returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Based on average shares outstanding during the period.
(c) Does not include the expenses of the underlying fund in which the Fund invests.
(d) Annualized.
See Notes to Financial Statements.
32 | Visit our website at www.prudentialfunds.com |
Class C Shares | ||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||
2011(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $19.29 | $16.69 | $9.47 | $21.18 | $31.02 | $24.84 | ||||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||||
Net investment income | .11 | .20 | .20 | .30 | .19 | .16 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (3.05 | ) | 2.75 | 7.57 | (11.87 | ) | (5.09 | ) | 6.27 | |||||||||||||||||
Total from investment operations | (2.94 | ) | 2.95 | 7.77 | (11.57 | ) | (4.90 | ) | 6.43 | |||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.16 | ) | (.35 | ) | (.55 | ) | (.14 | ) | (.45 | ) | (.24 | ) | ||||||||||||||
Distributions from net realized gains on investments | - | - | - | - | (4.49 | ) | (.01 | ) | ||||||||||||||||||
Total dividends and distributions | (.16 | ) | (.35 | ) | (.55 | ) | (.14 | ) | (4.94 | ) | (.25 | ) | ||||||||||||||
Net asset value, end of period | $16.19 | $19.29 | $16.69 | $9.47 | $21.18 | $31.02 | ||||||||||||||||||||
Total Return(a) | (15.29)% | 17.81% | 82.44% | (54.68)% | (18.42)% | 26.12% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $70,728 | $68,703 | $39,758 | $21,122 | $51,856 | $49,921 | ||||||||||||||||||||
Average net assets (000) | $77,925 | $47,954 | $32,986 | $41,377 | $54,791 | $32,840 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 1.92% | (d) | 2.00% | 2.07% | 2.07% | 2.06% | 1.97% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | .92% | (d) | 1.00% | 1.07% | 1.07% | 1.06% | .97% | |||||||||||||||||||
Net investment income | 1.20% | (d) | 1.14% | 1.33% | 1.87% | .79% | 1.58% |
(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. Total returns for periods of less than one full year are not annualized. Total investment returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Based on average shares outstanding during the period.
(c) Does not include the expenses of the underlying fund in which the Fund invests.
(d) Annualized.
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 33 |
Financial Highlights
(Unaudited) continued
Class R Shares | ||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | June 16, 2008(d) through March 31, | ||||||||||||||||||
2011(b) | 2011(b) | 2010(b) | 2009(b) | |||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||
Net Asset Value, Beginning Of Period | $19.42 | $16.81 | $9.63 | $21.14 | ||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||
Net investment income | .16 | .30 | .23 | .14 | ||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (3.07 | ) | 2.76 | 7.56 | (11.43 | ) | ||||||||||||||
Total from investment operations | (2.91 | ) | 3.06 | 7.79 | (11.29 | ) | ||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||
Dividends from net investment income | (.21 | ) | (.45 | ) | (.61 | ) | (.22 | ) | ||||||||||||
Distributions from net realized gains on investments | - | - | - | - | ||||||||||||||||
Total dividends and distributions | (.21 | ) | (.45 | ) | (.61 | ) | (.22 | ) | ||||||||||||
Net asset value, end of period | $16.30 | $19.42 | $16.81 | $9.63 | ||||||||||||||||
Total Return(a) | (15.13)% | 18.37% | 81.34% | (53.49)% | ||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000) | $3,781 | $3,032 | $843 | $101 | ||||||||||||||||
Average net assets (000) | $3,925 | $1,823 | $296 | $34 | ||||||||||||||||
Ratios to average net assets(f): | ||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees(e) | 1.42% | (c) | 1.50% | 1.57% | 1.57% | (c) | ||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | .92% | (c) | 1.00% | 1.07% | 1.07% | (c) | ||||||||||||||
Net investment income | 1.63% | (c) | 1.64% | 1.47% | 1.63% | (c) |
(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. Total returns for periods of less than one full year are not annualized. Total investment returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Based on average shares outstanding during the period.
(c) Annualized.
(d) Commencement of operations.
(e) The Distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .50% of the average daily net assets for the Class R shares.
(f) Does not include the expenses of the underlying fund in which the Fund invests.
See Notes to Financial Statements.
34 | Visit our website at www.prudentialfunds.com |
Class Z Shares | ||||||||||||||||||||||||||
Six Months Ended September 30, | Year Ended March 31, | |||||||||||||||||||||||||
2011(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $19.50 | $16.89 | $9.56 | $21.38 | $31.26 | $25.01 | ||||||||||||||||||||
Income (loss) from investment operations | ||||||||||||||||||||||||||
Net investment income | .21 | .37 | .34 | .44 | .39 | .47 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (3.10 | ) | 2.80 | 7.67 | (12.01 | ) | (5.09 | ) | 6.29 | |||||||||||||||||
Total from investment operations | (2.89 | ) | 3.17 | 8.01 | (11.57 | ) | (4.70 | ) | 6.76 | |||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.25 | ) | (.56 | ) | (.68 | ) | (.25 | ) | (.69 | ) | (.50 | ) | ||||||||||||||
Distributions from net realized gains on investments | - | - | - | - | (4.49 | ) | (.01 | ) | ||||||||||||||||||
Total dividends and distributions | (.25 | ) | (.56 | ) | (.68 | ) | (.25 | ) | (5.18 | ) | (.51 | ) | ||||||||||||||
Net asset value, end of period | $16.36 | $19.50 | $16.89 | $9.56 | $21.38 | $31.26 | ||||||||||||||||||||
Total Return(a) | (14.92)% | 18.97% | 84.30% | (54.22)% | (17.60)% | 27.38% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $377,403 | $324,886 | $128,831 | $52,390 | $95,273 | $42,601 | ||||||||||||||||||||
Average net assets (000) | $377,749 | $191,320 | $89,126 | $87,029 | $70,158 | $33,458 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | .92% | (d) | 1.00% | 1.07% | 1.07% | 1.06% | .97% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | .92% | (d) | 1.00% | 1.07% | 1.07% | 1.06% | .97% | |||||||||||||||||||
Net investment income | 2.14% | (d) | 2.01% | 2.29% | 2.81% | 1.65% | 1.68% |
(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. Total returns for periods of less than one full year are not annualized. Total investment returns may reflect adjustments to conform to generally accepted accounting principles.
(b) Based on average shares outstanding during the period.
(c) Does not include the expenses of the underlying fund in which the Fund invests.
(d) Annualized.
See Notes to Financial Statements.
Prudential Global Real Estate Fund | 35 |
Approval of Advisory Agreements (Unaudited)
The Fund’s Board of Trustees
The Board of Trustees (the “Board”) of Prudential Global Real Estate Fund (the “Fund”) consists of 10 individuals, eight of whom are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Trustees”). The Board is responsible for the oversight of the Fund and its operations, and performs the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Trustees have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Trustee. The Board has established three standing committees: the Audit Committee, the Nominating and Governance Committee, and the Investment Committee. Each committee is chaired by, and composed of, Independent Trustees.
Annual Approval of the Fund’s Advisory Agreements
As required under the 1940 Act, the Board determines annually whether to renew the Fund’s management agreement with Prudential Investments LLC (“PI”) and the Fund’s subadvisory agreement with Prudential Investment Management, Inc. (“PIM”), which provides subadvisory services to the Fund through its Prudential Real Estate Investors unit (“PREI”). In considering the renewal of the agreements, the Board, including all of the Independent Trustees, met on June 6-8, 2011 and approved the renewal of the agreements through July 31, 2012, after concluding that the renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board requested and received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with its consideration. Among other things, the Board considered comparative fee information from PI and PIM. Also, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups. The mutual funds included in each Peer Universe or Peer Group were objectively determined by Lipper Inc. (“Lipper”), an independent provider of mutual fund data. The comparisons placed the Fund in various quartiles over the one-, three-, five-, and 10-year periods ending December 31, 2010, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).
In approving the agreements, the Board, including the Independent Trustees advised by independent legal counsel, considered the factors it deemed relevant, including the nature, quality and extent of services provided by PI and the subadviser, the performance of the Fund, the profitability of PI and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders the Fund’s assets grow. In their deliberations, the Trustees did not
Prudential Global Real Estate Fund
Approval of Advisory Agreements (continued)
identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with its deliberations, the Board considered information provided by PI throughout the year at regular Board meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 6-8, 2011.
The Trustees determined that the overall arrangements between the Fund and PI, which serves as the Fund’s investment manager pursuant to a management agreement, and between PI and PIM, pursuant to the terms of a subadvisory agreement with PI, are in the interest of the Fund and its shareholders in light of the services performed, fees charged and such other matters as the Trustees considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the Trustees’ reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature, quality and extent of services provided to the Fund by PI and PREI. The Board considered the services provided by PI, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of fund recordkeeping, compliance, and other services to the Fund. With respect to PI’s oversight of the subadviser, the Board noted that PI’s Strategic Investment Research Group (“SIRG”), which is a business unit of PI, is responsible for monitoring and reporting to PI’s senior management on the performance and operations of the subadviser. The Board also considered that PI pays the salaries of all of the officers and non-independent Trustees of the Fund. The Board also considered the investment subadvisory services provided by PREI, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PI’s evaluation of the subadviser, as well as PI’s recommendation, based on its review of the subadviser, to renew the subadvisory agreement.
The Board reviewed the qualifications, backgrounds and responsibilities of PI’s senior management responsible for the oversight of the Fund and PREI, and also reviewed the qualifications, backgrounds and responsibilities of PREI’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PI’s, PIM’s and PREI’s organizational structure, senior management, investment operations, and other relevant information pertaining to PI, PIM and PREI. The Board also noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer (“CCO”) as to PI, PIM and PREI. The Board noted that PREI and PIM are affiliated with PI.
Visit our website at www.prudentialfunds.com
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PI and the subadvisory services provided to the Fund by PIM through PREI, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PI and PIM through PREI under the management and subadvisory agreements.
Performance of the Fund
The Board received and considered information about the Fund’s historical performance. The Board considered that the Fund’s gross performance in relation to its Peer Universe (the Lipper Retail and Institutional Global Real Estate Funds Performance Universe) was in the first quartile over the five- and 10-year periods, and in the second quartile over the one- and three-year periods. The Board also noted that the Fund outperformed its benchmark index over all periods. The Board concluded that, in light of the Fund’s competitive performance, it would be in the interest of the Fund and its shareholders for the Fund to renew the agreements.
Fees and Expenses
The Board considered that the Fund’s actual management fee (which reflects any subsidies, waivers or expense caps) ranked in the Expense Group’s second quartile, and that the Fund’s total expenses ranked in the Expense Group’s first quartile. The Board concluded that the management fees (including subadvisory fees) and total expenses were reasonable in light of the services provided.
Costs of Services and Profits Realized by PI
The Board was provided with information on the profitability of PI and its affiliates in serving as the Fund’s investment manager. The Board discussed with PI the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. The Board did not separately consider the profitability of the subadviser, an affiliate of PI, as its profitability was reflected in the profitability report for PI. Taking these factors into account, the Board concluded that the profitability of PI and its affiliates in relation to the services rendered was not unreasonable.
Economies of Scale
The Board noted that the management fee schedule for the Fund does not contain breakpoints that would reduce the fee rate on assets above specified levels. The Board
Prudential Global Real Estate Fund
Approval of Advisory Agreements (continued)
received and discussed information concerning whether PI realizes economies of scale as the Fund’s assets grow beyond current levels. In light of the Fund’s current size, performance and expense structure, the Board concluded that the absence of breakpoints in the Fund’s fee schedule is acceptable at this time.
Other Benefits to PI and PIM
The Board considered potential ancillary benefits that might be received by PI and PIM and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PI included fees received by affiliates of PI for serving as the Fund’s securities lending agent, transfer agency fees received by the Fund’s transfer agent (which is affiliated with PI), and benefits to the reputation as well as other intangible benefits resulting from PI’s association with the Fund. The Board concluded that the potential benefits to be derived by PIM included its ability to use soft dollar credits, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to the reputation. The Board concluded that the benefits derived by PI and PIM were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
After full consideration of these factors, the Board concluded that the approval of the agreements was in the interest of the Fund and its shareholders.
Visit our website at www.prudentialfunds.com
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.prudentialfunds.com |
PROXY VOTING |
The Board of Trustees of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website. |
TRUSTEES |
Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Judy A. Rice, President • Scott E. Benjamin, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Timothy J. Knierim, Chief Compliance Officer • Valerie M. Simpson, Deputy Chief Compliance Officer • Theresa C. Thompson, Deputy Chief Compliance Officer • Richard W. Kinville, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Andrew R. French, Assistant Secretary • M. Sadiq Peshimam, Assistant Treasurer • Peter Parrella, Assistant Treasurer |
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street | ||
| ||||
INVESTMENT SUBADVISER | Prudential Real Estate Investors | 8 Campus Drive Parsippany, NJ 07054 | ||
| ||||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
| ||||
CUSTODIAN | The Bank of New York Mellon | One Wall Street New York, NY 10286 | ||
| ||||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
| ||||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
| ||||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.prudentialfunds.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.prudentialfunds.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Prudential Global Real Estate Fund, Prudential Investments, Attn: Board of Trustees, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Trustee by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each fiscal quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PRUDENTIAL GLOBAL REAL ESTATE FUND
SHARE CLASS | A | B | C | R | Z | |||||
NASDAQ | PURAX | PURBX | PURCX | PURRX | PURZX | |||||
CUSIP | 744336108 | 744336207 | 744336306 | 744336405 | 744336504 |
MF182E2 0213447-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL US REAL ESTATE FUND
SEMIANNUAL REPORT · SEPTEMBER 30, 2011
Fund Type
Sector stock
Objective
Capital appreciation and income
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of September 30, 2011, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Prudential Investments, Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
![]() |
November 15, 2011
Dear Shareholder:
On the following pages, you’ll find your Fund’s semiannual report, including a table showing fund performance over the first half of the fiscal year and for longer periods. The report also contains a listing of the Fund’s holdings at period-end. Semiannual reports are interim statements furnished between the Fund’s annual reports, which include an analysis of Fund performance over the fiscal year in addition to other data.
Mutual fund prices and returns will rise or fall over time, and asset managers tend to have periods when they perform better or worse than their long-term average. The best measures of a mutual fund’s quality are its return compared to that of similar investments and the variability of its return over the long term. We recommend that you review your portfolio regularly with your financial professional.
Thank you for choosing the Prudential Investments® family of mutual funds.
Sincerely,
Judy A. Rice, President
Prudential US Real Estate Fund
Prudential US Real Estate Fund | 1 |
Your Fund’s Performance (Unaudited)
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.prudentialfunds.com or by calling (800) 225-1852. The maximum initial sales charge is 5.50% (Class A shares). Gross operating expenses: Class A, 2.63%; Class B, 3.33%; Class C, 3.33%; Class Z, 2.33%. Net operating expenses: Class A, 1.60%; Class B, 2.35%; Class C, 2.35%; Class Z, 1.35%, after contractual reduction through 12/31/2012.
Cumulative Total Returns (Without Sales Charges) as of 9/30/11 |
| |||||
Six Months | Since Inception | |||||
Class A | –13.32% | –6.44 | % | |||
Class B | –13.46 | –6.80 | ||||
Class C | –13.65 | –7.00 | ||||
Class Z | –13.21 | –6.27 | ||||
FTSE NAREIT Equity REITs Index | –11.62 | –6.01 | ||||
Lipper Average | –11.63 | –6.09 | ||||
Average Annual Total Returns (With Sales Charges) as of 9/30/11 |
| |||||
Since Inception | ||||||
Class A | N/A | |||||
Class B | N/A | |||||
Class C | N/A | |||||
Class Z | N/A | |||||
FTSE NAREIT Equity REITs Index | N/A | |||||
Lipper Average | N/A |
Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund’s total returns do not reflect the deduction of income taxes or an individual’s investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares.
Source: Prudential Investments LLC and Lipper Inc. Performance figures may reflect fee waivers and/or expense reimbursements. In the absence of such fee waivers and/or expense reimbursements, total returns would be lower.
Inception date: 12/21/10
2 | Visit our website at www.prudentialfunds.com |
The average annual total returns take into account applicable sales charges. Class A, Class B, and Class C shares are subject to an annual distribution and service (12b-1) fee of up to 0.30%, 1.00%, and 1.00%, respectively. Under certain limited circumstances, an exchange may be made from Class A shares to Class Z shares of the fund. All investors who purchase Class A shares in the amount of $1 million or more and sell these shares within 12 months of purchase are not subject to a front-end sales charge but are subject to a contingent deferred sales charge (CDSC) of 1%. Class B shares are not subject to a front-end sales charge but are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1%, respectively, for the first six years after purchase and a 12b-1 fee of 1% annually. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class C shares are not subject to a front-end sales charge but are subject to a CDSC of 1% for Class C shares sold within 12 months from the date of purchase and an annual 12b-1 fee of 1%. Class Z shares are not subject to a sales charge or a 12b-1 fee. 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.
Benchmark Definitions
FTSE NAREIT Equity REITs Index
The Financial Times Stock Exchange National Association of Real Estate Investment Trusts (FTSE NAREIT) Equity REITs Index is an unmanaged index which measures the performance of all real estate investment trusts listed on the New York Stock Exchange, the NASDAQ National Market, and the NYSE Amex Equities.
Lipper Equity Real Estate Funds Average
Funds in the Lipper Equity Real Estate Funds Average (Lipper Average) invest their portfolio primarily in shares of domestic companies engaged in the real estate industry.
Investors cannot invest directly in an index. The securities in the Index may be very different from those in the Fund. Their returns do not include the effect of the sales charges and operating expenses of a mutual fund and would be lower if they did. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the FTSE NAREIT Equity REITs Index and the Lipper Average are measured from the closest month-end to inception date, and not from the Fund’s actual inception date.
Five Largest Holdings expressed as a percentage of net assets as of 9/30/11 |
| |||
Simon Property Group, Inc., Retail REIT’s | 12.2 | % | ||
Ventas, Inc., Specialized REIT’s | 5.7 | |||
Public Storage, Inc., Specialized REIT’s | 5.6 | |||
Vornado Realty Trust, Diversified REIT’s | 5.0 | |||
AvalonBay Communities, Inc., Residential REIT’s | 4.1 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 9/30/11 |
| |||
Specialized REIT’s | 25.7 | % | ||
Residential REIT’s | 23.1 | |||
Retail REIT’s | 20.6 | |||
Diversified REIT’s | 13.0 | |||
Office REIT’s | 11.6 |
Industry weightings reflect only long-term investments and are subject to change.
Prudential US Real Estate Fund | 3 |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on April 1, 2011, at the beginning of the period, and held through the six-month period ended September 30, 2011. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
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 Prudential Investments funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
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
4 | Visit our website at www.prudentialfunds.com |
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Prudential US Real Estate Fund | Beginning Account Value April 1, 2011 | Ending Account Value September 30, 2011 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 866.80 | 1.60 | % | $ | 7.47 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.00 | 1.60 | % | $ | 8.07 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 865.40 | 2.35 | % | $ | 10.96 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.25 | 2.35 | % | $ | 11.83 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 863.50 | 2.35 | % | $ | 10.95 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.25 | 2.35 | % | $ | 11.83 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 867.90 | 1.35 | % | $ | 6.30 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.25 | 1.35 | % | $ | 6.81 |
* Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 183 days in the six-month period ended September 30, 2011, and divided by the 366 days in the Fund’s fiscal year ending March 31, 2012 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
Prudential US Real Estate Fund | 5 |
Portfolio of Investments
as of September 30, 2011 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 100.1% | ||||||
COMMON STOCKS | ||||||
Diversified REIT’s 13.0% | ||||||
4,793 | American Assets Trust, Inc. | $ | 86,034 | |||
21,199 | Colonial Properties Trust | 384,974 | ||||
45,738 | Cousins Properties, Inc. | 267,567 | ||||
10,550 | Liberty Property Trust | 307,111 | ||||
8,800 | Vornado Realty Trust | 656,656 | ||||
|
| |||||
1,702,342 | ||||||
Healthcare Facilities 0.4% | ||||||
11,561 | Sunrise Senior Living, Inc.(a) | 53,528 | ||||
Hotels, Resorts & Cruise Lines 0.5% | ||||||
2,300 | Hyatt Hotels Corp. (Class A Stock)(a) | 72,151 | ||||
Industrial REIT’s 4.5% | ||||||
7,372 | First Potomac Realty Trust | 91,929 | ||||
20,377 | ProLogis, Inc. | 494,142 | ||||
|
| |||||
586,071 | ||||||
Office REIT’s 11.6% | ||||||
2,400 | Alexandria Real Estate Equities, Inc. | 147,336 | ||||
3,300 | Boston Properties, Inc. | 294,030 | ||||
16,612 | Brandywine Realty Trust | 133,062 | ||||
6,369 | Douglas Emmett, Inc. | 108,910 | ||||
7,501 | Hudson Pacific Properties, Inc. | 87,237 | ||||
9,861 | Kilroy Realty Corp. | 308,649 | ||||
12,500 | Mack-Cali Realty Corp. | 334,375 | ||||
1,893 | SL Green Realty Corp. | 110,078 | ||||
|
| |||||
1,523,677 | ||||||
Real Estate Services 0.7% | ||||||
6,500 | CBRE Group, Inc.(a) | 87,490 | ||||
Residential REIT’s 23.1% | ||||||
8,600 | American Campus Communities, Inc. | 320,006 | ||||
8,300 | Associated Estates Realty Corp. | 128,318 | ||||
4,676 | AvalonBay Communities, Inc. | 533,298 | ||||
6,490 | BRE Properties, Inc. | 274,787 | ||||
9,098 | Camden Property Trust | 502,755 |
See Notes to Financial Statements.
Prudential US Real Estate Fund | 7 |
Portfolio of Investments
as of September 30, 2011 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Residential REIT’s (cont’d.) | ||||||
12,180 | Education Realty Trust, Inc. | $ | 104,626 | |||
7,587 | Equity Residential | 393,538 | ||||
2,986 | Essex Property Trust, Inc. | 358,439 | ||||
11,800 | Post Properties, Inc. | 409,932 | ||||
|
| |||||
3,025,699 | ||||||
Retail REIT’s 20.6% | ||||||
32,767 | DDR Corp. | 357,160 | ||||
14,500 | Glimcher Realty Trust | 102,660 | ||||
11,900 | Macerich Co. (The) | 507,297 | ||||
14,600 | Simon Property Group, Inc. | 1,605,708 | ||||
4,470 | Tanger Factory Outlet Centers | 116,265 | ||||
200 | Taubman Centers, Inc. | 10,062 | ||||
|
| |||||
2,699,152 | ||||||
Specialized REIT’s 25.7% | ||||||
31,611 | Cogdell Spencer, Inc. | 119,174 | ||||
50,300 | CubeSmart | 429,059 | ||||
7,082 | DiamondRock Hospitality Co. | 49,503 | ||||
25,011 | FelCor Lodging Trust, Inc.(a) | 58,276 | ||||
3,900 | Health Care REIT, Inc. | 182,520 | ||||
4,479 | Healthcare Realty Trust, Inc. | 75,471 | ||||
42,076 | Host Hotels & Resorts, Inc. | 460,311 | ||||
4,826 | LTC Properties, Inc. | 122,194 | ||||
1,572 | Medical Properties Trust, Inc. | 14,069 | ||||
4,349 | Pebblebrook Hotel Trust | 68,062 | ||||
6,560 | Public Storage, Inc. | 730,456 | ||||
4,700 | Sovran Self Storage, Inc. | 174,699 | ||||
33,470 | Strategic Hotels & Resorts, Inc.(a) | 144,256 | ||||
15,150 | Ventas, Inc. | 748,410 | ||||
|
| |||||
3,376,460 | ||||||
|
| |||||
Total long-term investments | 13,126,570 | |||||
|
|
See Notes to Financial Statements.
8 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
SHORT-TERM INVESTMENT 1.7% | ||||||
AFFILIATED MONEY MARKET MUTUAL FUND | ||||||
221,399 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund (cost $221,399)(b) | $ | 221,399 | |||
|
| |||||
Total Investments 101.8% | 13,347,969 | |||||
Liabilities in excess of other assets (1.8)% | (231,871 | ) | ||||
|
| |||||
Net Assets 100% | $ | 13,116,098 | ||||
|
|
The following abbreviation is used in the Portfolio descriptions:
REIT—Real Estate Investment Trust
(a) | Non-income producing security. |
(b) | Prudential Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund |
Various inputs are used in determining the value of the Portfolio's investments. These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices generally for stocks, exchange traded funds, options and futures traded in active markets for identical securities, and mutual funds which trade at daily net asset value.
Level 2—other significant observable inputs (including, but not limited to, quoted prices for similar securities, interest rates, prepayment speeds, foreign currency exchange rates, and amortized cost) generally for debt securities, swaps, forward foreign currency contracts and for foreign stocks priced using vendor modeling tools.
Level 3—significant unobservable inputs for securities valued in accordance with Board approved on fair valuation procedures.
The following is a summary of the inputs used as of September 30, 2011 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | $ | 13,126,570 | $ | — | $ | — | ||||||
Affiliated Money Market Mutual Fund | 221,399 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 13,347,969 | $ | — | $ | — | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
Prudential US Real Estate Fund | 9 |
Portfolio of Investments
as of September 30, 2011 (Unaudited) continued
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of September 30, 2011 were as follows:
Specialized REIT’s | 25.7 | % | ||
Residential REIT’s | 23.1 | |||
Retail REIT’s | 20.6 | |||
Diversified REIT’s | 13.0 | |||
Office REIT’s | 11.6 | |||
Industrial REIT’s | 4.5 | |||
Affiliated Money Market Mutual Fund | 1.7 | |||
Real Estate Services | 0.7 | |||
Hotels, Resorts & Cruise Lines | 0.5 | |||
Healthcare Facilities | 0.4 | |||
|
| |||
101.8 | ||||
Liabilities in excess of other assets | (1.8 | ) | ||
|
| |||
100.0 | % | |||
|
|
See Notes to Financial Statements.
10 | Visit our website at www.prudentialfunds.com |
Financial Statements
(Unaudited)
SEPTEMBER 30, 2011 | SEMIANNUAL REPORT |
Prudential US Real Estate Fund
Statement of Assets and Liabilities
as of September 30, 2011 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $14,283,434) | $ | 13,126,570 | ||
Affiliated investments (cost $221,399) | 221,399 | |||
Dividends receivable | 35,481 | |||
Receivable for investments sold | 10,310 | |||
Prepaid expenses | 496 | |||
|
| |||
Total assets | 13,394,256 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 176,146 | |||
Accrued expenses | 80,197 | |||
Payable for Fund shares reacquired | 10,903 | |||
Management fee payable | 10,528 | |||
Distribution fee payable | 248 | |||
Affiliated transfer agent fee payable | 136 | |||
|
| |||
Total liabilities | 278,158 | |||
|
| |||
Net Assets | $ | 13,116,098 | ||
|
| |||
Net assets were comprised of: | ||||
Shares of beneficial interest, at par | $ | 1,405 | ||
Paid-in capital in excess of par | 14,161,185 | |||
|
| |||
14,162,590 | ||||
Undistributed net investment income | 32,082 | |||
Accumulated net realized gain on investment and foreign currency transactions | 78,290 | |||
Net unrealized depreciation on investments | (1,156,864 | ) | ||
|
| |||
Net assets, September 30, 2011 | $ | 13,116,098 | ||
|
|
See Notes to Financial Statements.
12 | Visit our website at www.prudentialfunds.com |
Class A: | ||||
Net asset value and redemption price per share | $ | 9.34 | ||
Maximum sales charge (5.5% of offering price) | 0.54 | |||
|
| |||
Maximum offering price to public | $ | 9.88 | ||
|
| |||
Class B: | ||||
Net asset value, offering price and redemption price per share | $ | 9.32 | ||
|
| |||
Class C: | ||||
Net asset value, offering price and redemption price per share | $ | 9.30 | ||
|
| |||
Class Z: | ||||
Net asset value, offering price and redemption price per share | $ | 9.34 | ||
|
|
See Notes to Financial Statements.
Prudential US Real Estate Fund | 13 |
Statement of Operations
Six Months Ended September 30, 2011 (Unaudited)
Investment Income | ||||
Unaffiliated dividend income | $ | 145,751 | ||
Affiliated dividend income | 489 | |||
|
| |||
Total income | 146,240 | |||
|
| |||
Expenses | ||||
Management fee | 69,132 | |||
Distribution fee—Class A | 479 | |||
Distribution fee—Class B | 397 | |||
Distribution fee—Class C | 277 | |||
Registration fees | 36,000 | |||
Custodian’s fees and expenses | 24,000 | |||
Audit fee | 13,000 | |||
Legal fees and expenses | 13,000 | |||
Reports to shareholders | 10,000 | |||
Trustees’ fees | 5,000 | |||
Transfer agent’s fees and expenses (including affiliated expenses of $300) | 3,000 | |||
Commitment fee on syndicated credit agreement | 1,000 | |||
Loan interest expense (Note 7) | 74 | |||
Miscellaneous | 4,733 | |||
|
| |||
Total expenses | 180,092 | |||
Less: advisory fee waivers and expense reimbursements | (75,166 | ) | ||
|
| |||
Net expenses | 104,926 | |||
|
| |||
Net investment income | 41,314 | |||
|
| |||
Net Realized And Unrealized Gain (loss) On Investments And Foreign Currencies | ||||
Net realized gain on: | ||||
Investment transactions | 50,960 | |||
Foreign currency transactions | 126 | |||
|
| |||
51,086 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on investments | (2,049,546 | ) | ||
|
| |||
Net loss on investments and foreign currencies | (1,998,460 | ) | ||
|
| |||
Net Decrease In Net Assets Resulting From Operations | $ | (1,957,146 | ) | |
|
|
See Notes to Financial Statements.
14 | Visit our website at www.prudentialfunds.com |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended September 30, 2011 | December 21, 2010* through March 31, 2011 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 41,314 | $ | 27,772 | ||||
Net realized gain on investment and foreign currency transactions | 51,086 | 27,204 | ||||||
Net change in unrealized appreciation (depreciation) on investments | (2,049,546 | ) | 892,682 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | (1,957,146 | ) | 947,658 | |||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (652 | ) | (75 | ) | ||||
Class Z | (38,845 | ) | (12,299 | ) | ||||
|
|
|
| |||||
(39,497 | ) | (12,374 | ) | |||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) (Note 6): | ||||||||
Net proceeds from shares sold | 3,327,652 | 13,746,757 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 39,464 | 12,361 | ||||||
Cost of shares reacquired | (2,945,843 | ) | (2,934 | ) | ||||
|
|
|
| |||||
Net increase in net assets from fund share transactions | 421,273 | 13,756,184 | ||||||
|
|
|
| |||||
Total increase (decrease) in net assets | (1,575,370 | ) | 14,691,468 | |||||
Net Assets | ||||||||
Beginning of period | 14,691,468 | — | ||||||
|
|
|
| |||||
End of period(a) | $ | 13,116,098 | $ | 14,691,468 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of | $ | 32,082 | $ | 30,265 | ||||
|
|
|
|
* | Commencement of operations. |
See Notes to Financial Statements.
Prudential US Real Estate Fund | 15 |
Notes to Financial Statements
(Unaudited)
Prudential Investment Portfolios 12 (the “Trust”) is registered under the Investment Company Act of 1940, as amended, (“1940 Act”) as a non-diversified, open end, management investment company presently consisting of two portfolios: Prudential Global Real Estate Fund and Prudential US Real Estate Fund (the “Fund”). These financial statements relate only to Prudential US Real Estate Fund. The Fund commenced investment operations on December 21, 2010. The financial statements of the other portfolio are not presented herein. The Trust was established as a Delaware business trust on October 24, 1997. The investment objective of the Fund is capital appreciation and income. It seeks to achieve this objective by investing primarily in equity securities of real estate companies operating in the United States.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements.
Securities Valuation: Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange on the day of valuation or, if there was no sale on such day, at the mean between the last reported bid and asked prices, or at the last bid price on such day in the absence of an asked price. Securities traded via NASDAQ are valued at the NASDAQ official closing price (“NOCP”) on the day of valuation, or if there was no NOCP, at the last sale price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC (“PI” or “Manager”) in consultation with the subadviser, to be over-the-counter, are valued at market value using prices provided by an independent pricing agent or principal market maker. Futures contracts and options thereon traded on a commodities exchange or board of trade are valued at the last sale price at the close of trading on such exchange or board of trade or, if there was no sale on the applicable commodities exchange or board of trade on such day, at the mean between the most recently quoted prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Prices may be obtained from independent pricing services which use information provided by market makers or estimates of market values obtained from yield data relating to investments or securities with similar characteristics.
Securities for which reliable market quotations are not readily available, or whose values have been affected by events occurring after the close of the security’s foreign
16 | Visit our website at www.prudentialfunds.com |
market and before the Fund’s normal pricing time, are valued at fair value in accordance with the Board of Trustees’ approved fair valuation procedures. 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 investments; the size of the holding and the capitalization of issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Investments in open end, non exchange-traded mutual funds are valued at their net asset value as of the close of the New York Stock Exchange on the date of valuation.
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 daily rates of exchange.
(ii) purchases and sales of investment securities, income and expenses-at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the fiscal period, the Fund does not 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 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 portfolio securities sold during the period. Accordingly, realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.
Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from the holdings of foreign currencies, currency gains or losses realized between the trade date and settlement date on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains or losses from valuing foreign currency denominated assets and liabilities (other than investments) at
Prudential US Real Estate Fund | 17 |
Notes to Financial Statements
(Unaudited) continued
year-end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability and the level of governmental supervision and regulation of foreign securities markets.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses on sales of securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income, including amortization of premium and accretion of discount on debt securities as required, is recorded on the accrual basis. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. The Fund invests in real estate investment trusts (“REITs”), which report information on the source of their distributions annually. A portion of distributions received from REITs during the period is estimated to be capital gain and a portion is estimated to be return of capital and is recorded as a reduction of their cost. These estimates are adjusted when the actual source of distributions is disclosed by the REITs.
Net investment income or loss (other than distribution fees, which are charged directly to respective class) and unrealized and realized gains or losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions: The Fund expects to pay dividends of net investment income quarterly and distributions of 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-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par as appropriate.
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
18 | Visit our website at www.prudentialfunds.com |
its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends are recorded net of reclaimable amounts, at the time the related income is earned.
Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI manages the investment operations of the Fund, administers the Fund’s affairs and supervises the subadviser’s performance of all investment advisory services. PI has entered into a subadvisory agreement with Prudential Real Estate Investors (“PREI”), which is a business unit of Prudential Investment Management (“PIM”). The subadvisory agreement provides that the subadviser furnish investment advisory services in connection with the management of the Fund. In connection therewith, the subadviser is obligated to keep certain books and records of the Fund. Pursuant to the advisory agreement, PI pays the cost of compensation of officers of the Fund, occupancy and certain clerical and accounting costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly at an annual rate of .90% of the average daily net assets of the Fund.
Through the six months ended September 30, 2011, PI has contractually agreed to limit net annual Fund operating expenses (exclusive of distribution and service (12b-1) fees, interest, dividend and interest expense on short sales, brokerage, taxes, extraordinary and certain other expenses) of each class of shares to 1.35% of the Fund’s average daily net assets.
The Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of the Class A, B, C, and Z shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, B, C, and Z 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 for Class Z shares of the Fund.
Prudential US Real Estate Fund | 19 |
Notes to Financial Statements
(Unaudited) continued
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to .30%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively. Through the six months ended September 30, 2011, PIMS contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares.
PIMS has advised the Fund that it has received $1,502 in front-end sales charges resulting from sales of Class A during the six months ended September 30, 2011. 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 September 30, 2011, it has received $0, $0 and $0 in contingent deferred sales charges imposed upon certain redemptions by Class A, Class B, and Class C shareholders, respectively.
PI, PIMS, and PIM are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Fund invests in the Prudential Core Taxable Money Market Fund (the “Core Fund”), a portfolio of Prudential Investment Portfolios 2. The Core Fund is a money market mutual fund registered under the 1940 Act, as amended, and managed by PI. Earnings from the Core Fund are disclosed on the Statement of Operations as affiliated dividend income.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments, for the six months ended September 30, 2011, aggregated $5,294,305 and $4,082,718, respectively.
20 | Visit our website at www.prudentialfunds.com |
Note 5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized depreciation as of September 30, 2011 were as follows:
Tax Basis of | Appreciation | Depreciation | Net | |||
$14,504,833 | $318,584 | $(1,475,448) | $(1,156,864) |
Federal income tax basis is substantially the same as for financial reporting purposes.
Management has analyzed the Fund’s tax positions taken on federal 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 and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
Note 6. Capital
The Fund offers Class A, Class B, Class C, and Class Z shares. Class A shares are subject to 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 not subject to an initial sales charge but are subject to a contingent deferred sales charge (CDSC) of 1%, including investors who purchase their shares through broker-dealers affiliated with Prudential. Class B shares are subject to a CDSC of 5%, which decreases by 1% annually to 1% in the fifth and sixth years and 0% in the seventh year. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. The CDSC for Class C shares is 1% for shares redeemed within 12 months of purchase. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
The Trust has authorized an unlimited number of shares of beneficial interest at $.001 par value per share.
Prudential US Real Estate Fund | 21 |
Notes to Financial Statements
(Unaudited) continued
As of September 30, 2011, Prudential owned 100 of Class A shares, 100 Class B shares, 100 Class C shares and 1,003,608 Class Z shares of the Fund.
Class A | Shares | Amount | ||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 35,943 | $ | 401,720 | |||||
Shares issued in reinvestment of dividends and distributions | 57 | 619 | ||||||
Shares reacquired | (23,442 | ) | (252,862 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 12,558 | $ | 149,477 | |||||
|
|
|
| |||||
Period December 21, 2010* through March 31, 2011: | ||||||||
Shares sold | 24,593 | $ | 263,403 | |||||
Shares issued in reinvestment of dividends and distributions | 6 | 63 | ||||||
Shares reacquired | (279 | ) | (2,934 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 24,320 | $ | 260,532 | |||||
|
|
|
| |||||
Class B | ||||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 11,142 | $ | 120,097 | |||||
Shares issued in reinvestment of dividends and distributions | — | — | ||||||
Shares reacquired | (1,025 | ) | (11,287 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 10,117 | $ | 108,810 | |||||
|
|
|
| |||||
Period December 21, 2010* through March 31, 2011: | ||||||||
Shares sold | 3,792 | $ | 39,619 | |||||
Shares issued in reinvestment of dividends and distributions | — | — | ||||||
Shares reacquired | — | — | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 3,792 | $ | 39,619 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 7,486 | $ | 83,055 | |||||
Shares issued in reinvestment of dividends and distributions | — | — | ||||||
Shares reacquired | (1,646 | ) | (15,664 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 5,840 | $ | 67,391 | |||||
|
|
|
| |||||
Period December 21, 2010* through March 31, 2011: | ||||||||
Shares sold | 2,680 | $ | 28,235 | |||||
Shares issued in reinvestment of dividends and distributions | — | — | ||||||
Shares reacquired | — | — | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 2,680 | $ | 28,235 | |||||
|
|
|
|
22 | Visit our website at www.prudentialfunds.com |
Class Z | Shares | Amount | ||||||
Six months ended September 30, 2011: | ||||||||
Shares sold | 256,262 | $ | 2,722,780 | |||||
Shares issued in reinvestment of dividends and distributions | 3,599 | 38,845 | ||||||
Shares reacquired | (245,636 | ) | (2,666,030 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 14,225 | $ | 95,595 | |||||
|
|
|
| |||||
Period December 21, 2010* through March 31, 2011: | ||||||||
Shares sold | 1,330,084 | $ | 13,415,500 | |||||
Shares issued in reinvestment of dividends and distributions | 1,200 | 12,298 | ||||||
Shares reacquired | — | — | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,331,284 | $ | 13,427,798 | |||||
|
|
|
|
* | Commencement of operations. |
Note 7. Borrowings
The Fund, along with other affiliated registered investment companies (the “Companies”), are 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 $750 million for the period December 17, 2010 through December 16, 2011. The Companies pay a commitment fee of .10% of the unused portion of the SCA. Interest on any borrowings under the SCA is paid at contracted market rates. The commitment fee for the unused amount is accrued daily and paid quarterly.
The Fund utilized the SCA during the six months ended September 30, 2011. The Fund had an outstanding balance of $364,000 for five days at an average interest rate of 1.45%.
Note 8. New Accounting Pronouncements
In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-03 “Reconsideration of Effective control for Repurchase Agreements.” The objective of ASU No. 2011-03 is to improve the accounting for repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. Under previous guidance, whether or not to account for a transaction as a sale was based on, in part, if the entity maintained effective control over the transferred financial assets. ASU No. 2011-03 removes the transferor’s ability criterion from the effective control assessment. This guidance is effective prospectively for interim and annual reporting periods beginning on or after December 15, 2011. At this time, management is evaluating the implications of ASU No. 2011-03 and its impact on the financial statements has not been determined.
Prudential US Real Estate Fund | 23 |
Notes to Financial Statements
(Unaudited) continued
In May 2011, the FASB issued ASU No. 2011-04 “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” ASU No. 2011-04 includes common requirements for measurement of and disclosure about fair value between U.S. GAAP and IFRS. ASU No. 2011-04 will require reporting entities to disclose quantitative information about the unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy. In addition, ASU No. 2011-04 will require reporting entities to make disclosures about amounts and reasons for all transfers in and out of Level 1 and Level 2 fair value measurements. The new and revised disclosures are effective for interim and annual reporting periods beginning after December 15, 2011. At this time, management is evaluating the implications of ASU No. 2011-04 and its impact on the financial statements has not been determined.
24 | Visit our website at www.prudentialfunds.com |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||
Six Months Ended September 30, 2011(b) | December 21, 2010(e) through March 31, 2011(b) | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning of Period | $10.79 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income (loss) | .01 | (.02 | ) | |||||||
Net realized and unrealized gain (loss) on investments | (1.44 | ) | .81 | |||||||
Total from investment operations | (1.43 | ) | .79 | |||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.02 | ) | - | (i) | ||||||
Total dividends and distributions | (.02 | ) | - | (i) | ||||||
Net Asset Value, end of period | $9.34 | $10.79 | ||||||||
Total Return(a): | (13.32 | )% | 7.94% | |||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $344 | $262 | ||||||||
Average net assets (000) | $383 | $104 | ||||||||
Ratios to average net assets(d): | ||||||||||
Expenses, including distribution and service (12b-1) fees(c) | 1.60% | (f)(h) | 1.60% | (f)(h) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.35% | (f)(h) | 1.35% | (f)(h) | ||||||
Net investment income (loss) | .26% | (f)(h) | (.66)% | (f)(h) | ||||||
For Class A, B, C and Z shares: | ||||||||||
Portfolio turnover rate | 27% | (g) | 4% | (g) |
(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. 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) Calculations are based on the average daily number of shares outstanding.
(c) The distributor of the Fund has contractually agreed to limit its distribution and service (12b-1) fees to .25% of the average daily net assets of the Class A shares.
(d) Does not include expenses of the underlying portfolio in which the Fund invests.
(e) Commencement of operations.
(f) Annualized.
(g) Not annualized.
(h) Net of advisory fee waiver and expense reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios both including and excluding distribution and service (12b-1) fees and the net investment loss ratio would have been 2.58%, 2.33%, (.72)%, respectively, for the six months ended September 30, 2011 and 7.01%, 6.76% and (6.07)%, respectively for the period ended March 31, 2011.
(i) Less than $0.005.
See Notes to Financial Statements.
Prudential US Real Estate Fund | 25 |
Financial Highlights
(Unaudited) continued
Class B Shares | ||||||||||
Six Months Ended September 30, 2011(b) | December 21, 2010(d) through March 31, 2011(b) | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning of Period | $10.77 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment loss | (.07 | ) | (.06 | ) | ||||||
Net realized and unrealized gain (loss) on investments | (1.38 | ) | .83 | |||||||
Total from investment operations | (1.45 | ) | .77 | |||||||
Net Asset Value, end of period | $9.32 | $10.77 | ||||||||
Total Return(a): | (13.46 | )% | 7.70% | |||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $130 | $41 | ||||||||
Average net assets (000) | $79 | $10 | ||||||||
Ratios to average net assets(c): | ||||||||||
Expenses, including distribution and service (12b-1) fees | 2.35% | (e)(f) | 2.35% | (e)(f) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.35% | (e)(f) | 1.35% | (e)(f) | ||||||
Net investment loss | (1.31)% | (e)(f) | (2.13)% | (e)(f) |
(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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) Calculations are based on the average daily number of shares outstanding.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Commencement of operations.
(e) Annualized.
(f) Net of advisory fee waiver and expense reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios both including and excluding distribution and service (12b-1) fees and the net investment loss ratio would have been 3.33%, 2.33%, (2.29)%, respectively, for the six months ended September 30, 2011 and 7.76%, 6.76% and (7.54)%, respectively for the period ended March 31, 2011.
See Notes to Financial Statements.
26 | Visit our website at www.prudentialfunds.com |
Class C Shares | ||||||||||
Six Months Ended September 30, 2011(b) | December 21, 2010(d) through March 31, 2011(b) | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning of Period | $10.77 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment loss | (.06 | ) | (.05 | ) | ||||||
Net realized and unrealized gain (loss) on investments | (1.41 | ) | .82 | |||||||
Total from investment operations | (1.47 | ) | .77 | |||||||
Net Asset Value, end of period | $9.30 | $10.77 | ||||||||
Total Return(a): | (13.65 | )% | 7.70% | |||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $79 | $29 | ||||||||
Average net assets (000) | $55 | $7 | ||||||||
Ratios to average net assets(c): | ||||||||||
Expenses, including distribution and service (12b-1) fees | 2.35% | (e)(f) | 2.35% | (e)(f) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.35% | (e)(f) | 1.35% | (e)(f) | ||||||
Net investment loss | (1.07)% | (e)(f) | (1.83)% | (e)(f) |
(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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) Calculations are based on the average daily number of shares outstanding.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Commencement of operations.
(e) Annualized.
(f) Net of advisory fee waiver and expense reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios both including and excluding distribution and service (12b-1) fees and the net investment loss ratio would have been 3.33%, 2.33%, (2.05)%, respectively, for the six months ended September 30, 2011 and 7.76%, 6.76% and (7.24)%, respectively for the period ended March 31, 2011.
See Notes to Financial Statements.
Prudential US Real Estate Fund | 27 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||||||||
Six Months Ended September 30, 2011(b) | December 21, 2010(d) through March 31, 2011(b) | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning of Period | $10.79 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .03 | .02 | ||||||||
Net realized and unrealized gain (loss) on investments | (1.45 | ) | .78 | |||||||
Total from investment operations | (1.42 | ) | .80 | |||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.03 | ) | (.01 | ) | ||||||
Total dividends and distributions | (.03 | ) | (.01 | ) | ||||||
Net Asset Value, end of period | $9.34 | $10.79 | ||||||||
Total Return(a): | (13.21 | )% | 8.00% | |||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $12,563 | $14,359 | ||||||||
Average net assets (000) | $14,844 | $13,065 | ||||||||
Ratios to average net assets(c): | ||||||||||
Expenses, including distribution and service (12b-1) fees | 1.35% | (e)(f) | 1.35% | (e)(f) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.35% | (e)(f) | 1.35% | (e)(f) | ||||||
Net investment income | .56% | (e)(f) | .78% | (e)(f) |
(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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) Calculations are based on the average daily number of shares outstanding.
(c) Does not include expenses of the underlying portfolio in which the Fund invests.
(d) Commencement of operations.
(e) Annualized.
(f) Net of advisory fee waiver and expense reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios both including and excluding distribution and service (12b-1) fees and the net investment loss ratio would have been 2.33%, 2.33%, (.42)%, respectively, for the six months ended September 30, 2011 and 6.76%, 6.76% and (4.63)%, respectively for the period ended March 31, 2011.
See Notes to Financial Statements.
28 | Visit our website at www.prudentialfunds.com |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.prudentialfunds.com |
PROXY VOTING |
The Board of Trustees of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website. |
TRUSTEES |
Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Richard A. Redeker • Judy A. Rice • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Judy A. Rice, President • Scott E. Benjamin, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Kathryn L. Quirk, Chief Legal Officer • Deborah A. Docs, Secretary • Timothy J. Knierim, Chief Compliance Officer • Valerie M. Simpson, Deputy Chief Compliance Officer • Theresa C. Thompson, Deputy Chief Compliance Officer • Richard W. Kinville, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • John P. Schwartz, Assistant Secretary • Andrew R. French, Assistant Secretary • M. Sadiq Peshimam, Assistant Treasurer • Peter Parrella, Assistant Treasurer |
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street | ||
| ||||
INVESTMENT SUBADVISER | Prudential Real Estate Investors | 8 Campus Drive Parsippany, NJ 07054 | ||
| ||||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
| ||||
CUSTODIAN | The Bank of New York Mellon | One Wall Street New York, NY 10286 | ||
| ||||
TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
| ||||
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
| ||||
FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.prudentialfunds.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.prudentialfunds.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH TRUSTEES |
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, Prudential US Real Estate Fund, Prudential Investments, Attn: Board of Trustees, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Trustee by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each fiscal quarter. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PRUDENTIAL US REAL ESTATE FUND
SHARE CLASS | A | B | C | Z | ||||
NASDAQ | PJEAX | PJEBX | PJECX | PJEZX | ||||
CUSIP | 744336603 | 744336702 | 744336801 | 744336884 |
MF209E2 0213446-00001-00
Item 2 – | Code of Ethics – Not required, as this is not an annual filing. | |||||
Item 3 – | Audit Committee Financial Expert – Not required, as this is not an annual filing. | |||||
Item 4 – | Principal Accountant Fees and Services – Not required, as this is not an annual filing. | |||||
Item 5 – | Audit Committee of Listed Registrants – Not applicable. | |||||
Item 6 – | Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form. | |||||
Item 7 – | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable. | |||||
Item 8 – | Portfolio Managers of Closed-End Management Investment Companies – Not applicable. | |||||
Item 9 – | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable. | |||||
Item 10 – | Submission of Matters to a Vote of Security Holders – Not applicable. | |||||
Item 11 – | Controls and Procedures | |||||
(a) | It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. | |||||
(b) | There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting. | |||||
Item 12 – | Exhibits | |||||
(a) | (1) | Code of Ethics – Not required, as this is not an annual filing. | ||||
(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT. | |||||
(3) | Any written solicitation to purchase securities under Rule 23c-1. – Not applicable. | |||||
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | Prudential Investment Portfolios 12 | |||
By: | /s/ Deborah A. Docs | |||
Deborah A. Docs | ||||
Secretary | ||||
Date: | November 21, 2011 |
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/ Judy A. Rice | |||
Judy A. Rice | ||||
President and Principal Executive Officer | ||||
Date: | November 21, 2011 | |||
By: | /s/ Grace C. Torres | |||
Grace C. Torres | ||||
Treasurer and Principal Financial Officer | ||||
Date: | November 21, 2011 |