UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: | 811-03981 | |
Exact name of registrant as specified in charter: | Prudential World Fund, Inc. | |
Address of principal executive offices: | 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: | 10/31/2012 | |
Date of reporting period: | 4/30/2012 |
Item 1 | – Reports to Stockholders |
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL INTERNATIONAL EQUITY FUND
SEMIANNUAL REPORT · APRIL 30, 2012
Fund Type
International Stock
Objective
Long-term growth of capital
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2012, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Prudential Investments, Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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June 15, 2012
Dear Shareholder:
After an extraordinary career at Prudential, Judy Rice retired at the end of 2011 as President of Prudential Investments and President and Director of the Prudential International Equity Fund (the Fund). While she will remain as Chairman of Prudential Investments until the end of 2012, I was named to succeed her as President of Prudential Investments and President and Director of the Fund effective January 1, 2012. I previously served as Executive Vice President of Retail Mutual Fund Distribution for Prudential Investments for the past six years.
Since this is my first letter to shareholders, I would like to recognize Judy for the significant contributions she made in building the Prudential Investments fund family and her unflagging commitment to helping investors like you meet the challenges of a rapidly changing investment environment. My goal is to build on Judy’s accomplishments, with a particular focus on delivering the solutions you need to address your financial goals.
I hope you find the semiannual report for the Fund informative. We recognize that ongoing market volatility may make it a difficult time to be an investor. We continue to believe a prudent response to uncertainty is to maintain a diversified portfolio, including stock and bond mutual funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial professional can help you create a diversified investment plan that reflects your personal investor profile and risk tolerance. Keep in mind that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets. We encourage you to call your financial professional before making any investment decision.
Prudential Investments provides a wide range of mutual funds to choose from that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of Prudential Financial’s affiliated asset managers. Thank you for choosing the Prudential Investments family of mutual funds.
Sincerely,
Stuart S. Parker, President
Prudential International Equity Fund
Prudential International Equity 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. Class A and Class L shares have a maximum initial sales charge of 5.50% and 5.75%, respectively. Gross operating expenses: Class A, 1.70%; Class B, 2.40%; Class C, 2.40%; Class F, 2.15%; Class L, 1.90%; Class X, 2.40%; Class Z, 1.40%. Net operating expenses: Class A, 1.70%; Class B, 2.40%; Class C, 2.40%; Class F, 2.15%; Class L, 1.90%; Class X, 2.40%; Class Z, 1.40%.
Cumulative Total Returns (Without Sales Charges) as of 4/30/12 |
| |||||||||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception | ||||||||||||||||
Class A | 4.90 | % | –12.28 | % | –29.53 | % | 48.98 | % | — | |||||||||||
Class B | 4.48 | –12.80 | –31.98 | 38.56 | — | |||||||||||||||
Class C | 4.48 | –12.80 | –31.97 | 38.58 | — | |||||||||||||||
Class F | 4.76 | –12.57 | –31.05 | N/A | –25.17% (12/18/06) | |||||||||||||||
Class L | 4.66 | –12.33 | –30.27 | N/A | –24.80 (3/19/07) | |||||||||||||||
Class X | 4.48 | –12.80 | –31.98 | N/A | –26.78 (3/19/07) | |||||||||||||||
Class Z | 5.03 | –11.92 | –28.62 | 52.41 | — | |||||||||||||||
MSCI EAFE® ND Index | 2.44 | –12.82 | –21.48 | 69.51 | — | |||||||||||||||
Lipper International Large-Cap Core Funds Average | 3.92 | –12.69 | –20.39 | 58.95 | — | |||||||||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/12 |
| |||||||||||||||||||
One Year | Five Years | Ten Years | Since Inception | |||||||||||||||||
Class A | –11.04 | % | –6.86 | % | 3.38 | % | — | |||||||||||||
Class B | –11.09 | –6.64 | 3.20 | — | ||||||||||||||||
Class C | –7.40 | –6.47 | 3.20 | — | ||||||||||||||||
Class F | –10.84 | –6.39 | N/A | –5.28% (12/18/06) | ||||||||||||||||
Class L | –11.47 | –7.11 | N/A | –6.39 (3/19/07) | ||||||||||||||||
Class X | –12.01 | –6.98 | N/A | –6.11 (3/19/07) | ||||||||||||||||
Class Z | –5.52 | –5.57 | 4.21 | — | ||||||||||||||||
MSCI EAFE® ND Index | –5.77 | –3.51 | 5.65 | — | ||||||||||||||||
Lipper International Large-Cap Core Funds Average | –5.98 | –3.53 | 4.88 | — |
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 and Class L shares are subject to a maximum front-end sales charge of 5.50% and 5.75%, respectively, and a 12b-1 fee of 0.30% and 0.50%, respectively, annually. All investors who purchase Class A and Class L shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%. The Class A CDSC is waived for purchases by certain retirement or benefit plans. Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund. Class B and Class F shares are subject to a declining CDSC of 5%, 4%, 3%, 2%, 1%, and 1%, respectively, for the first six years after purchase and 12b-1 fees of 1% and 0.75%, respectively, annually. Approximately seven years after purchase, Class B and Class F will automatically convert to Class A shares on a quarterly basis. Class C shares are not subject to a front-end sales charge, but charge a CDSC of 1% for shares sold within 12 months from the date of purchase and an annual 12b-1 fee of 1%. Class X shares purchased are not subject to a front-end sales charge, but charge a CDSC of 6% and a 12b-1 fee of 1%. The CDSC for Class X shares declines by 1% annually to 4% in the third and fourth year after purchase, 3% in the fifth year after purchase, 2% in the sixth and seventh year after purchase, 1% in the eighth year after purchase and 0% in the ninth and tenth year after purchase. Class X shares convert to Class A shares on a monthly basis approximately 10 years after purchase. Class L and Class X shares are not offered to new purchases and are available only through exchanges from the same share class of certain other Prudential Investments mutual funds. The returns in the tables reflect the share class expense structure in effect at the close of the fiscal period. 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
Morgan Stanley Capital International Europe, Australasia, and Far East ND Index
The Morgan Stanley Capital International Europe, Australasia, and Far East Net Dividend (MSCI EAFE ND) Index is an unmanaged, weighted index of performance that reflects stock price movements of developed-country markets in Europe, Australasia, and the Far East. The ND version of the MSCI EAFE Index reflects the impact of the maximum withholding taxes on reinvested dividends. MSCI EAFE ND Index Closest Month-End to Inception cumulative total returns as of 4/30/12 are –14.65% for Class F and –17.99% for Class L and Class X. MSCI EAFE ND Index Closest Month-End to Inception average annual total returns as of 3/31/12 are –2.61% for Class F and –3.51% for Class L and Class X.
Lipper International Large-Cap Core Funds Average
The Lipper International Large-Cap Core Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper International Large-Cap Core Funds category. Funds in the Lipper Average invest at least 75% of their equity assets in companies strictly outside of the United States with market capitalizations (on a three-year weighted basis) greater than the 250th largest company in the S&P Developed ex-U.S. Broad Market Index (BMI). Large-Cap Core funds typically have an average price-to-cash-flow ratio, price-to-book ratio, and three-year sales-per-share-growth value compared with the S&P Developed ex-U.S. BMI. Lipper Average Closest Month-End to Inception cumulative total returns as of 4/30/12 are –14.68% for Class F and –17.52% for Class L and Class X. Lipper Average Closest Month-End to Inception average annual total returns as of 3/31/12 are –2.73% for Class F and –3.53% for Class L and Class X.
Prudential International Equity Fund | 3 |
Your Fund’s Performance (continued)
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Five Largest Holdings in Long-Term Portfolio expressed as a percentage of net assets as of 4/30/12 | ||||
Roche Holding AG, Pharmaceuticals | 1.6 | % | ||
BP PLC, Oil, Gas & Consumable Fuels | 1.5 | |||
Total SA, Oil, Gas & Consumable Fuels | 1.5 | |||
Royal Dutch Shell PLC (Class A Stock), Oil, Gas & Consumable Fuels | 1.4 | |||
Sanofi, Pharmaceuticals | 1.3 |
Holdings are subject to change.
Five Largest Industries in Long-Term Portfolio expressed as a percentage of net assets as of 4/30/12 |
| |||
Commercial Banks | 12.6 | % | ||
Oil, Gas & Consumable Fuels | 8.2 | |||
Pharmaceuticals | 7.9 | |||
Metals & Mining | 6.1 | |||
Insurance | 4.7 |
Industry weightings 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 November 1, 2011, at the beginning of the period, and held through the six-month period ended April 30, 2012. 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 expenses, which is not the Fund’s actual return. The hypothetical account values and
Prudential International Equity Fund | 5 |
Fees and Expenses (continued)
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 International Equity Fund | Beginning Account Value November 1, 2011 | Ending Account April 30, 2012 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,049.00 | 1.70 | % | $ | 8.66 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.41 | 1.70 | % | $ | 8.52 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,044.80 | 2.40 | % | $ | 12.20 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,012.93 | 2.40 | % | $ | 12.01 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,044.80 | 2.40 | % | $ | 12.20 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,012.93 | 2.40 | % | $ | 12.01 | ||||||||||
Class F | Actual | $ | 1,000.00 | $ | 1,047.60 | 2.15 | % | $ | 10.95 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,014.17 | 2.15 | % | $ | 10.77 | ||||||||||
Class L | Actual | $ | 1,000.00 | $ | 1,046.60 | 1.90 | % | $ | 9.67 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.42 | 1.90 | % | $ | 9.52 | ||||||||||
Class X | Actual | $ | 1,000.00 | $ | 1,044.80 | 2.40 | % | $ | 12.20 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,012.93 | 2.40 | % | $ | 12.01 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,050.30 | 1.40 | % | $ | 7.14 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.90 | 1.40 | % | $ | 7.02 |
* 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 182 days in the six-month period ended April 30, 2012, and divided by the 366 days in the Fund’s fiscal year ending October 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 April 30, 2012 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 99.1% | ||||||
COMMON STOCKS 96.7% | ||||||
Australia 7.3% | ||||||
91,181 | Asciano Ltd. | $ | 449,378 | |||
108,529 | Australia & New Zealand Banking Group Ltd. | 2,703,783 | ||||
100,051 | BHP Billiton Ltd. | 3,706,017 | ||||
18,709 | Campbell Brothers Ltd. | 1,336,691 | ||||
278,808 | CFS Retail Property Trust | 559,220 | ||||
44,659 | Commonwealth Bank of Australia | 2,418,289 | ||||
1,310 | CSL Ltd. | 50,039 | ||||
317,611 | Fortescue Metals Group Ltd. | 1,866,470 | ||||
19,598 | Goodman Group | 73,512 | ||||
348,796 | GPT Group | 1,188,408 | ||||
143,075 | Insurance Australia Group Ltd. | 527,732 | ||||
82,867 | Metcash Ltd. | 341,919 | ||||
68,708 | National Australia Bank Ltd. | 1,806,221 | ||||
29,953 | Ramsay Health Care Ltd. | 625,126 | ||||
15,731 | Rio Tinto Ltd. | 1,087,536 | ||||
164,327 | SP AusNet | 189,199 | ||||
65,199 | Tabcorp Holdings Ltd. | 194,971 | ||||
59,412 | Toll Holdings Ltd. | 362,759 | ||||
7,597 | Wesfarmers Ltd. | 239,687 | ||||
54,591 | Westpac Banking Corp. | 1,292,906 | ||||
16,944 | Woolworths Ltd. | 457,965 | ||||
|
| |||||
21,477,828 | ||||||
Austria 0.3% | ||||||
124,862 | Immofinanz Immobilien Anlagen | 438,982 | ||||
3,085 | Raiffeisen Bank International AG(a) | 102,437 | ||||
6,978 | Voestalpine AG | 225,885 | ||||
|
| |||||
767,304 | ||||||
Belgium 0.5% | ||||||
17,435 | Anheuser-Busch InBev NV | 1,256,633 | ||||
1,939 | Delhaize Group SA | 94,388 | ||||
|
| |||||
1,351,021 | ||||||
Brazil 1.4% | ||||||
31,397 | Centrais Eletricas Brasileiras SA (Class B Stock), ADR | 375,194 | ||||
11,200 | Cetip SA - Mercados Organizados | 172,158 | ||||
26,771 | Cia de Bebidas das Americas, ADR | 1,123,847 |
See Notes to Financial Statements.
Prudential International Equity Fund | 7 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Brazil (cont’d.) | ||||||
9,055 | Cia de Saneamento Basico do Estado de Sao Paulo, ADR | $ | 716,794 | |||
35,531 | Vale SA (Class B Stock), ADR | 788,788 | ||||
42,912 | Vale SA (Preference) (Class B Stock), ADR | 928,187 | ||||
|
| |||||
4,104,968 | ||||||
Chile |
| |||||
2,200 | Cia Cervecerias Unidas SA, ADR | 157,564 | ||||
China 0.6% |
| |||||
1,454,000 | China Minsheng Banking Corp. Ltd. (Class H Stock) | 1,508,600 | ||||
91,000 | China Petroleum & Chemical Corp. (Class H Stock) | 98,053 | ||||
42,200 | Development Co. Ltd. (Class H Stock) | 62,985 | ||||
|
| |||||
1,669,638 | ||||||
Colombia 0.1% |
| |||||
3,600 | Ecopetrol SA, ADR | 232,920 | ||||
Denmark 1.4% |
| |||||
13 | AP Moller - Maersk A/S (Class A Stock) | 96,872 | ||||
55 | AP Moller - Maersk A/S (Class B Stock) | 430,198 | ||||
6,971 | Coloplast A/S (Class B Stock) | 1,289,961 | ||||
13,896 | DSV A/S | 316,481 | ||||
13,838 | Novo Nordisk A/S (Class B Stock) | 2,041,156 | ||||
|
| |||||
4,174,668 | ||||||
Finland 1.4% |
| |||||
25,277 | Kesko OYJ (Class B Stock) | 675,204 | ||||
1,159 | Kone OYJ (Class B Stock) | 71,722 | ||||
39,507 | Metso OYJ | 1,694,368 | ||||
35,487 | Orion OYJ (Class B Stock)(a) | 723,870 | ||||
4,195 | Pohjola Bank PLC (Class A Stock) | 45,145 | ||||
133,964 | Stora ENSO OYJ (Class R Stock) | 913,238 | ||||
|
| |||||
4,123,547 | ||||||
France 7.7% |
| |||||
12,987 | Arkema SA | 1,150,240 | ||||
80,880 | AXA SA* | 1,145,548 | ||||
27,322 | BNP Paribas | 1,097,640 | ||||
1,464 | Casino Guichard Perrachon SA* | 143,772 | ||||
6,471 | Christian Dior SA | 975,198 |
See Notes to Financial Statements.
8 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
France (cont’d.) | ||||||
17,691 | Compagnie Generale des Etablissements Michelin | $ | 1,321,217 | |||
8,214 | Dassault Systemes SA | 797,197 | ||||
41,896 | Eiffage SA | 1,424,151 | ||||
22,776 | European Aeronautic Defence and Space Co. NV | 899,180 | ||||
3,953 | Fonciere DES Regions | 306,367 | ||||
27,756 | France Telecom SA | 379,713 | ||||
10,100 | ICADE*(a) | 852,028 | ||||
8,577 | Publicis Groupe | 442,326 | ||||
50,437 | Sanofi | 3,849,572 | ||||
27,193 | Schneider Electric SA* | 1,670,541 | ||||
4,616 | Technip SA | 521,993 | ||||
91,979 | Total SA | 4,391,606 | ||||
2,402 | Unibail-Rodamco SE | 448,948 | ||||
43,471 | Vivendi SA | 803,580 | ||||
|
| |||||
22,620,817 | ||||||
Germany 6.2% |
| |||||
41,361 | BASF SE | 3,404,867 | ||||
14,382 | Bayer AG | 1,012,981 | ||||
10,233 | Bayerische Motoren Werke AG | 972,694 | ||||
13,163 | Continental AG | 1,275,772 | ||||
39,299 | Deutsche Bank AG | 1,709,896 | ||||
37,546 | Deutsche Post AG | 700,763 | ||||
27,954 | Hannover Rueckversicherung AG | 1,689,725 | ||||
4,597 | Henkel AG & Co. KGaA | 281,372 | ||||
17,332 | Infineon Technologies AG | 172,549 | ||||
16,882 | Lanxess AG | 1,344,151 | ||||
402 | Linde AG | 68,804 | ||||
29,038 | RWE AG | 1,248,258 | ||||
43,941 | SAP AG | 2,913,463 | ||||
15,588 | Siemens AG | 1,443,746 | ||||
|
| |||||
18,239,041 | ||||||
Hong Kong 3.2% |
| |||||
243,000 | BOC Hong Kong Holdings Ltd. | 753,243 | ||||
43,200 | Cheung Kong Holdings Ltd. | 574,615 | ||||
91,000 | Cheung Kong Infrastructure Holdings Ltd. | 540,113 | ||||
283,000 | China Citic Bank Corp. Ltd. (Class H Stock) | 180,189 | ||||
205,000 | China Overseas Land & Investment Ltd. | 444,420 | ||||
831,000 | Franshion Properties China Ltd. | 229,207 |
See Notes to Financial Statements.
Prudential International Equity Fund | 9 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Hong Kong (cont’d.) | ||||||
296,000 | Galaxy Entertainment Group Ltd.* | $ | 925,161 | |||
374,750 | Great Wall Motor Co. Ltd. (Class H Stock)* | 809,524 | ||||
268,800 | Guangzhou R&F Properties Co. Ltd. (Class H Stock) | 358,924 | ||||
168,000 | Hong Kong & China Gas Co. Ltd. | 429,601 | ||||
39,500 | Kerry Properties Ltd. | 180,479 | ||||
328,500 | Lifestyle International Holdings Ltd. | 770,585 | ||||
229,500 | Link REIT (The) | 955,430 | ||||
221,600 | Sands China Ltd. | 871,131 | ||||
86,000 | Sino Land Co. Ltd. | 148,531 | ||||
91,000 | SJM Holdings Ltd. | 199,860 | ||||
75,000 | Sun Hung Kai Properties Ltd. | 904,797 | ||||
55,000 | Wynn Macau Ltd. | 176,513 | ||||
|
| |||||
9,452,323 | ||||||
India 0.5% |
| |||||
52,558 | Tata Motors Ltd., ADR(a) | 1,563,600 | ||||
Indonesia 0.2% |
| |||||
668,000 | PT Bank Rakyat Indonesia Persero Tbk | 483,347 | ||||
Israel 0.2% | ||||||
17,224 | Israel Chemicals Ltd. | 197,597 | ||||
5,304 | Mizrahi Tefahot Bank Ltd.* | 47,901 | ||||
7,254 | Teva Pharmaceutical Industries Ltd. | 328,331 | ||||
3,400 | Teva Pharmaceutical Industries Ltd., ADR | 155,516 | ||||
|
| |||||
729,345 | ||||||
Italy 2.7% | ||||||
684,113 | ENEL SpA | 2,245,784 | ||||
93,086 | ENI SpA | 2,066,360 | ||||
20,903 | Fiat Industrial SpA | 237,125 | ||||
146,543 | Fiat SpA* | 707,634 | ||||
285,233 | Intesa Sanpaolo SpA | 431,553 | ||||
75,161 | Intesa Sanpaolo SpA-RSP | 100,386 | ||||
984,228 | Telecom Italia SpA* | 1,118,471 | ||||
839,145 | Telecom Italia SpA-RSP* | 788,649 | ||||
58,878 | Terna Rete Elettrica Nazionale SpA | 219,002 | ||||
|
| |||||
7,914,964 |
See Notes to Financial Statements.
10 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Japan 18.8% | ||||||
96,700 | AEON Co. Ltd. | $ | 1,264,464 | |||
249,000 | All Nippon Airways Co. Ltd.(a) | 729,785 | ||||
190,000 | Aozora Bank Ltd. | 490,230 | ||||
250,200 | Asahi Kasei Corp. | 1,554,349 | ||||
11,500 | Benesse Holdings, Inc. | 570,391 | ||||
11,000 | Canon, Inc. | 505,636 | ||||
210 | Central Japan Railway Co. | 1,746,493 | ||||
8,100 | Daito Trust Construction Co. Ltd. | 731,475 | ||||
28,000 | Daiwa House Industry Co. Ltd. | 362,625 | ||||
13,000 | Denso Corp. | 424,812 | ||||
24,900 | East Japan Railway Co. | 1,553,131 | ||||
13,400 | Fanuc Corp. | 2,280,887 | ||||
100 | Fujitsu Ltd. | 488 | ||||
65,400 | Gree, Inc.(a) | 1,761,966 | ||||
9,130 | Hakuhodo DY Holdings, Inc. | 572,912 | ||||
140,000 | Hino Motors Ltd. | 999,499 | ||||
78,100 | Hitachi Ltd. | 500,842 | ||||
9,000 | Hitachi Metals Ltd. | 112,951 | ||||
7,500 | Ibiden Co. Ltd. | 154,904 | ||||
6,700 | Idemitsu Kosan Co. Ltd. | 619,314 | ||||
73,000 | Isuzu Motors Ltd. | 419,677 | ||||
73,400 | Itochu Corp. | 832,921 | ||||
6,400 | Itochu Techno-Solutions Corp. | 292,184 | ||||
313,650 | JX Holdings, Inc. | 1,779,602 | ||||
22,500 | Kamigumi Co. Ltd. | 181,206 | ||||
385 | KDDI Corp. | 2,531,626 | ||||
10,200 | Konami Corp. | 297,670 | ||||
42,000 | Kuraray Co. Ltd. | 601,804 | ||||
2,500 | Kyocera Corp. | 246,117 | ||||
111,722 | Marubeni Corp. | 780,823 | ||||
3,100 | McDonald’s Holdings Co. Japan Ltd. | 88,061 | ||||
24,300 | Mitsubishi Corp. | 530,497 | ||||
709,100 | Mitsubishi UFJ Financial Group, Inc. | 3,437,146 | ||||
47,400 | Mitsui & Co. Ltd. | 744,484 | ||||
700 | Murata Manufacturing Co. Ltd. | 40,287 | ||||
96,900 | Namco Bandai Holdings, Inc. | 1,393,302 | ||||
50,900 | Nikon Corp. | 1,525,597 | ||||
59,500 | Nippon Telegraph & Telephone Corp. | 2,701,497 | ||||
166,600 | Nissan Motor Co. Ltd. | 1,744,459 | ||||
53,900 | Nomura Research Institute Ltd. | 1,245,560 |
See Notes to Financial Statements.
Prudential International Equity Fund | 11 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Japan (cont’d.) | ||||||
1,600 | Oriental Land Co. Ltd. | $ | 177,555 | |||
2,990 | ORIX Corp. | 287,615 | ||||
13,100 | Otsuka Corp. | 1,055,023 | ||||
9,700 | Otsuka Holdings Co. Ltd. | 292,798 | ||||
343,400 | Resona Holdings, Inc. | 1,466,676 | ||||
40,000 | Sekisui House Ltd. | 373,246 | ||||
29,800 | Seven & I Holdings Co. Ltd. | 904,376 | ||||
6,500 | Shimamura Co. Ltd. | 738,414 | ||||
47,400 | SoftBank Corp. | 1,422,475 | ||||
15,300 | Sony Corp. | 252,189 | ||||
98,600 | Sumitomo Corp. | 1,407,866 | ||||
51,000 | Sumitomo Metal Mining Co. Ltd. | 674,549 | ||||
80,900 | Sumitomo Mitsui Financial Group, Inc. | 2,618,307 | ||||
190,000 | Sumitomo Mitsui Trust Holdings, Inc. | 561,623 | ||||
49,700 | Suzuki Motor Corp. | 1,180,873 | ||||
98,000 | Tokyu Land Corp. | 476,253 | ||||
9,500 | Toyoda Gosei Co., Ltd. | 195,616 | ||||
31,434 | Toyota Motor Corp. | 1,301,220 | ||||
76,800 | Toyota Tsusho Corp. | 1,532,345 | ||||
|
| |||||
55,270,693 | ||||||
Netherlands 5.0% | ||||||
55,556 | ASML Holding NV | 2,826,851 | ||||
14,320 | Heineken Holding NV | 663,058 | ||||
154,767 | Koninklijke Ahold NV | 1,963,012 | ||||
8,867 | Koninklijke Boskalis Westminster NV | 323,478 | ||||
115,996 | Royal Dutch Shell PLC (Class A Stock) | 4,128,327 | ||||
101,736 | Royal Dutch Shell PLC (Class B Stock) | 3,709,142 | ||||
26,980 | Unilever NV - CVA | 923,904 | ||||
|
| |||||
14,537,772 | ||||||
New Zealand 0.5% | ||||||
656,458 | Telecom Corp. of New Zealand, Ltd. | 1,411,830 | ||||
Norway 1.4% | ||||||
27,817 | DNB ASA | 299,899 | ||||
23,971 | Seadrill Ltd. | 927,769 | ||||
37,267 | Statoil ASA | 995,011 | ||||
36,168 | Yara International ASA | 1,773,973 | ||||
|
| |||||
3,996,652 |
See Notes to Financial Statements.
12 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Philippines | ||||||
221,300 | Alliance Global Group, Inc. | $ | 64,786 | |||
Portugal 0.2% | ||||||
188,163 | EDP - Energias de Portugal SA | 537,993 | ||||
Russia 0.6% | ||||||
915 | NovaTek OAO, GDR | 116,297 | ||||
11,645 | Sberbank of Russia, ADR | 150,337 | ||||
118,410 | Sberbank of Russia, ADR | 1,533,409 | ||||
3,628 | Sistema JSFC, GDR | 68,932 | ||||
|
| |||||
1,868,975 | ||||||
Singapore 2.2% | ||||||
205,000 | Ascendas Real Estate Investment Trust | 344,566 | ||||
403,000 | ComfortDelGro Corp. Ltd. | 498,254 | ||||
70,000 | DBS Group Holdings Ltd. | 789,656 | ||||
1,240,000 | Golden Agri-Resources Ltd. | 736,485 | ||||
29,000 | Jardine Cycle & Carriage Ltd. | 1,105,398 | ||||
93,000 | Keppel Corp. Ltd. | 830,424 | ||||
21,400 | SembCorp Industries Ltd. | 87,329 | ||||
133,300 | UOL Group Ltd. | 486,882 | ||||
1,634,000 | Yangzijiang Shipbuilding Holdings Ltd. | 1,558,077 | ||||
|
| |||||
6,437,071 | ||||||
South Africa 0.8% | ||||||
166,919 | FirstRand Ltd. | 542,629 | ||||
22,049 | Imperial Holdings Ltd. | 478,855 | ||||
800 | Kumba Iron Ore Ltd., ADR | 56,632 | ||||
10,039 | Sasol Ltd., ADR | 476,150 | ||||
20,324 | Tiger Brands Ltd. | 745,154 | ||||
|
| |||||
2,299,420 | ||||||
South Korea 1.7% | ||||||
2,266 | Hyundai Motor Co., GDR | 75,458 | ||||
7,337 | Hyundai Motor Co. | 1,743,156 | ||||
4,324 | Kia Motors Corp. | 319,099 | ||||
163,250 | Korea Exchange Bank | 1,240,852 | ||||
10,258 | KT&G Corp. | 704,365 | ||||
1,630 | Samsung Electronics Co. Ltd., GDR | 1,002,411 | ||||
2,300 | SK Telecom Co. Ltd., ADR | 31,096 | ||||
|
| |||||
5,116,437 |
See Notes to Financial Statements.
Prudential International Equity Fund | 13 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Spain 2.9% | ||||||
147,116 | Banco Bilbao Vizcaya Argentaria SA | $ | 994,327 | |||
169,386 | Banco Santander SA | 1,058,298 | ||||
61,217 | Enagas | 1,075,710 | ||||
40,506 | Ferrovial SA | 451,032 | ||||
56,256 | Gas Natural SDG SA | 783,381 | ||||
182,082 | Iberdrola SA | 847,672 | ||||
29,084 | Mapfre SA(a) | 84,042 | ||||
33,252 | Red Electrica Corp. SA | 1,447,672 | ||||
22,908 | Repsol YPF SA | 438,171 | ||||
101,428 | Telefonica SA | 1,478,202 | ||||
|
| |||||
8,658,507 | ||||||
Sweden 3.0% |
| |||||
29,893 | Assa Abloy AB (Class B Stock) | 871,266 | ||||
12,678 | Atlas Copco AB (Class A Stock) | 301,799 | ||||
3,231 | Getinge AB (Class B Stock) | 86,720 | ||||
27,099 | Hexagon AB (Class B Stock) | 550,342 | ||||
5,625 | Holmen AB (Class B Stock) | 149,385 | ||||
14,264 | Investor AB (Class B Stock) | 284,376 | ||||
286,115 | Skandinaviska Enskilda Banken (Class A Stock) | 1,930,903 | ||||
14,404 | SKF AB (Class B Stock) | 341,814 | ||||
15,307 | Svenska Handelsbanken AB (Class A Stock) | 496,015 | ||||
138,296 | Swedbank AB (Class A Stock) | 2,290,084 | ||||
102,251 | Volvo AB (Class B Stock) | 1,417,850 | ||||
|
| |||||
8,720,554 | ||||||
Switzerland 7.1% |
| |||||
1,340 | Adecco SA* | 65,254 | ||||
12,724 | Aryzta AG | 640,651 | ||||
28,420 | Cie Financiere Richemont SA | 1,756,582 | ||||
62,842 | Nestle SA | 3,849,518 | ||||
65,901 | Novartis AG | 3,633,939 | ||||
25,619 | Roche Holding AG | 4,679,811 | ||||
1,682 | Swiss Life Holding AG | 172,064 | ||||
37,500 | Swiss Re AG | 2,350,851 | ||||
912 | Syngenta AG | 320,228 | ||||
9,056 | Transocean Ltd. | 451,977 | ||||
63,269 | UBS AG* | 789,773 | ||||
8,430 | Zurich Financial Services AG | 2,061,874 | ||||
|
| |||||
20,772,522 |
See Notes to Financial Statements.
14 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Taiwan 0.9% |
| |||||
44,000 | Asustek Computer, Inc. | $ | 444,391 | |||
14,000 | Hon Hai Precision Industry Co. Ltd. | 44,289 | ||||
322,000 | Radiant Opto-Electronics Corp. | 1,355,975 | ||||
27,362 | Taiwan Semiconductor Manufacturing Co. Ltd., ADR(a) | 426,300 | ||||
479,000 | TECO Electric And Machinery Co. Ltd. | 350,946 | ||||
|
| |||||
2,621,901 | ||||||
Thailand 0.1% |
| |||||
9,800 | PTT PCL | 111,545 | ||||
58,300 | Siam Commercial Bank PCL | 285,338 | ||||
|
| |||||
396,883 | ||||||
United Kingdom 17.7% |
| |||||
14,577 | Admiral Group PLC | 286,487 | ||||
28,651 | Anglo American PLC | 1,101,067 | ||||
78,640 | AstraZeneca PLC | 3,445,238 | ||||
207,113 | Aviva PLC | 1,035,599 | ||||
41,643 | Babcock International Group PLC | 561,611 | ||||
335,125 | BAE Systems PLC | 1,605,519 | ||||
194,885 | Balfour Beatty PLC | 825,489 | ||||
512,983 | Barclays PLC | 1,816,978 | ||||
7,903 | BG Group PLC | 186,038 | ||||
98,601 | BHP Billiton PLC | 3,159,591 | ||||
623,016 | BP PLC | 4,499,369 | ||||
69,337 | British American Tobacco | 3,554,734 | ||||
380,331 | BT Group PLC (Class A Stock) | 1,301,142 | ||||
117,688 | Diageo PLC | 2,962,350 | ||||
142,909 | GlaxoSmithKline PLC | 3,304,965 | ||||
227,091 | HSBC Holdings PLC | 2,045,802 | ||||
43,908 | Imperial Tobacco Group PLC | 1,755,807 | ||||
1,188,437 | ITV PLC | 1,614,336 | ||||
1,076,697 | Legal & General Group PLC | 2,054,912 | ||||
73,871 | National Grid PLC | 797,837 | ||||
432,176 | Old Mutual PLC | 1,036,639 | ||||
9,646 | Petrofac Ltd. | 271,606 | ||||
53,187 | Prudential PLC | 651,264 | ||||
26,140 | Reckitt Benckiser Group PLC | 1,521,701 | ||||
37,078 | Rexam PLC | 258,748 | ||||
49,597 | Rio Tinto PLC | 2,762,857 | ||||
5,950 | SSE PLC | 127,559 |
See Notes to Financial Statements.
Prudential International Equity Fund | 15 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
United Kingdom (cont’d.) |
| |||||
25,143 | Standard Chartered PLC | $ | 614,518 | |||
116,692 | Standard Life PLC | 423,453 | ||||
52,385 | Tate & Lyle PLC | 587,034 | ||||
23,107 | Tesco PLC | 119,008 | ||||
23,457 | TUI Travel PLC | 72,711 | ||||
53,199 | Unilever PLC | 1,815,663 | ||||
538,778 | Vodafone Group PLC | 1,490,825 | ||||
1,249 | Weir Group PLC (The) | 34,560 | ||||
318,745 | WM Morrison Supermarkets PLC | 1,451,521 | ||||
18,646 | WPP PLC | 252,222 | ||||
29,252 | Xstrata PLC | 558,996 | ||||
|
| |||||
51,965,756 | ||||||
United States 0.1% |
| |||||
2,031 | Millicom International Cellular SA | 215,752 | ||||
1,111 | Southern Copper Corp.(a) | 36,530 | ||||
|
| |||||
252,282 | ||||||
|
| |||||
Total common stocks | 283,992,929 | |||||
|
| |||||
EXCHANGE TRADED FUND 1.1% |
| |||||
United States |
| |||||
57,400 | iShares MSCI EAFE Index Fund(a) | 3,085,250 | ||||
|
| |||||
PREFERRED STOCKS 1.3% |
| |||||
Brazil 0.3% |
| |||||
45,700 | Vale SA | 988,970 | ||||
Germany 0.8% |
| |||||
11,909 | Henkel AG & Co. KGaA | 885,931 | ||||
1,076 | RWE AG | 42,544 | ||||
7,124 | Volkswagen AG | 1,349,435 | ||||
|
| |||||
2,277,910 |
See Notes to Financial Statements.
16 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
PREFERRED STOCKS (Continued) |
| |||||
South Korea 0.2% |
| |||||
733 | Hyundai Motor Co. - 1st Offering | $ | 48,515 | |||
8,343 | Hyundai Motor Co. - 2nd Offering | 589,113 | ||||
|
| |||||
637,628 | ||||||
|
| |||||
Total preferred stocks | 3,904,508 | |||||
|
| |||||
Total long-term investments | 290,982,687 | |||||
|
| |||||
Principal Amount (000) | ||||||
SHORT-TERM INVESTMENTS 2.5% |
| |||||
United State Government Security |
| |||||
$ 200 | U.S. Treasury Bill 0.025%, 6/28/12 | 199,976 | ||||
|
| |||||
Shares | ||||||
Affiliated Money Market Mutual Fund 2.5% |
| |||||
7,215,519 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 7,215,519 | ||||
|
| |||||
Total short-term investments | 7,415,495 | |||||
|
| |||||
Total Investments 101.6% | 298,398,182 | |||||
Liabilities in excess of other assets(f) (1.6%) | (4,714,755 | ) | ||||
|
| |||||
Net Assets 100.0% | $ | 293,683,427 | ||||
|
|
The following abbreviations are used in the portfolio descriptions:
ADR—American Depositary Receipt
CVA—Certificate Van Aandelen (Bearer)
GDR—Global Depositary Receipt
REIT—Real Estate Investment Trust
RSP—Risparmio Shares (Savings Shares)
* | Non-income producing security. |
See Notes to Financial Statements.
Prudential International Equity Fund | 17 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $6,765,991; cash collateral of $7,213,452 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Represents security, or a portion thereof, segregated as collateral for futures contracts. |
(c) | Rate quoted represents yield-to-maturity as of purchase date. |
(d) | Prudential Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
(e) | Represents security, or a portion thereof, purchased with cash collateral received for securities on loan. |
(f) | Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end: |
Open futures contracts outstanding at April 30, 2012:
Number of Contracts | Type | Expiration Date | Value at April 30, 2012 | Value at Trade Date | Unrealized Depreciation | |||||||||||||||
Long Positions: | ||||||||||||||||||||
7 | FTSE 100 Index | Jun. 2012 | $ | 649,242 | $ | 655,032 | $ | (5,790 | ) | |||||||||||
6 | TOPIX Index | Jun. 2012 | 603,081 | 612,890 | (9,809 | ) | ||||||||||||||
|
| |||||||||||||||||||
$ | (15,599 | ) | ||||||||||||||||||
|
|
Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices generally for securities actively traded on a regulated securities exchange and for open-end 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 fair valuation procedures.
See Notes to Financial Statements.
18 | Visit our website at www.prudentialfunds.com |
The following is a summary of the inputs used as of April 30, 2012 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Australia | $ | 21,477,828 | $ | — | $ | — | ||||||
Austria | 767,304 | — | — | |||||||||
Belgium | 1,351,021 | — | — | |||||||||
Brazil | 4,104,968 | — | — | |||||||||
Chile | 157,564 | — | — | |||||||||
China | 1,669,638 | — | — | |||||||||
Colombia | 232,920 | — | — | |||||||||
Denmark | 4,174,668 | — | — | |||||||||
Finland | 4,123,547 | — | — | |||||||||
France | 22,620,817 | — | — | |||||||||
Germany | 18,239,041 | — | — | |||||||||
Hong Kong | 9,452,323 | — | — | |||||||||
India | 1,563,600 | — | — | |||||||||
Indonesia | 483,347 | — | — | |||||||||
Israel | 729,345 | — | — | |||||||||
Italy | 7,914,964 | — | — | |||||||||
Japan | 55,270,693 | — | — | |||||||||
Netherlands | 14,537,772 | — | — | |||||||||
New Zealand | 1,411,830 | — | — | |||||||||
Norway | 3,996,652 | — | — | |||||||||
Philippines | 64,786 | — | — | |||||||||
Portugal | 537,993 | — | — | |||||||||
Russia | 1,868,975 | — | — | |||||||||
Singapore | 6,437,071 | — | — | |||||||||
South Africa | 2,299,420 | — | — | |||||||||
South Korea | 5,116,437 | — | — | |||||||||
Spain | 8,658,507 | — | — | |||||||||
Sweden | 8,720,554 | — | — | |||||||||
Switzerland | 20,772,522 | — | — | |||||||||
Taiwan | 2,621,901 | — | — | |||||||||
Thailand | 396,883 | — | — | |||||||||
United Kingdom | 51,965,756 | — | — | |||||||||
United States | 252,282 | — | — | |||||||||
Exchange Traded Fund | ||||||||||||
United States | 3,085,250 | — | — | |||||||||
Preferred Stocks | ||||||||||||
Brazil | 988,970 | — | — |
See Notes to Financial Statements.
Prudential International Equity Fund | 19 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Level 1 | Level 2 | Level 3 | ||||||||||
Preferred Stocks (continued) | ||||||||||||
Germany | $ | 2,277,910 | $ | — | $ | — | ||||||
South Korea | 637,628 | — | — | |||||||||
United States Government Security | — | 199,976 | — | |||||||||
Affiliated Money Market Mutual Fund | 7,215,519 | — | — | |||||||||
|
|
|
|
|
| |||||||
298,198,206 | 199,976 | — | ||||||||||
Other Financial Instruments* | ||||||||||||
Futures Contracts | (15,599 | ) | — | — | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 298,182,607 | $ | 199,976 | $ | — | ||||||
|
|
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swap contracts, which are recorded at the unrealized appreciation/depreciation on the instrument. |
Fair value of Level 2 investments at October 31, 2011 was $282,953,266. $212,484,557 was transferred into Level 1 from Level 2 at April 30, 2012 as a result of no longer using third-party vendor modeling tools to reflect any significant market movements between the time at which the Series valued its securities and the earlier closing of foreign markets.
It is the Series’ policy to recognize transfers in and transfers out at the fair value as of the beginning of period.
The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2012 were as follows:
Commercial Banks | 12.6 | % | ||
Oil, Gas & Consumable Fuels | 8.2 | |||
Pharmaceuticals | 7.9 | |||
Metals & Mining | 6.1 | |||
Insurance | 4.7 | |||
Automobiles | 4.2 | |||
Chemicals | 3.6 | |||
Diversified Telecommunication Services | 3.4 | |||
Food Products | 3.0 | |||
Machinery | 3.0 | |||
Food & Staples Retailing | 2.6 | |||
Affiliated Money Market Mutual Fund (including 2.5% of collateral received for securities on loan) | 2.5 | |||
Electric Utilities | 2.3 | |||
Tobacco | 2.1 | |||
Trading Companies & Distributors | 2.1 | % | ||
Beverages | 2.0 | |||
Semiconductors & Semiconductor Equipment | 2.0 | |||
Wireless Telecommunication Services | 2.0 | |||
Real Estate Management & Development | 1.8 | |||
Road & Rail | 1.5 | |||
Software | 1.4 | |||
Real Estate Investment Trusts (REITs) | 1.2 | |||
Exchange Traded Fund | 1.1 | |||
Auto Components | 1.0 | |||
Capital Markets | 1.0 | |||
Construction & Engineering | 1.0 | |||
Hotels, Restaurants & Leisure | 1.0 | |||
Leisure Equipment & Products | 1.0 | |||
Media | 1.0 | |||
Aerospace & Defense | 0.9 |
See Notes to Financial Statements.
20 | Visit our website at www.prudentialfunds.com |
Household Products | 0.9 | % | ||
IT Services | 0.9 | |||
Textiles, Apparel & Luxury Goods | 0.9 | |||
Energy Equipment & Services | 0.8 | |||
Gas Utilities | 0.8 | |||
Industrial Conglomerates | 0.8 | |||
Electrical Equipment | 0.7 | |||
Multi-Utilities | 0.7 | |||
Distributors | 0.6 | |||
Electronic Equipment, Instruments & Components | 0.6 | |||
Healthcare Equipment & Supplies | 0.6 | |||
Internet Software & Services | 0.6 | |||
Professional Services | 0.5 | |||
Diversified Financial Services | 0.4 | |||
Real Estate Investment Trusts | 0.4 | |||
Air Freight & Logistics | 0.3 | |||
Building Products | 0.3 | |||
Multiline Retail | 0.3 | % | ||
Paper & Forest Products | 0.3 | |||
Airlines | 0.2 | |||
Commercial Services & Supplies | 0.2 | |||
Computers & Peripherals | 0.2 | |||
Diversified Consumer Services | 0.2 | |||
Household Durables | 0.2 | |||
Marine | 0.2 | |||
Office Electronics | 0.2 | |||
Specialty Retail | 0.2 | |||
Water Utilities | 0.2 | |||
Containers & Packaging | 0.1 | |||
Transportation Infrastructure | 0.1 | |||
|
| |||
101.6 | ||||
Liabilities in excess of other assets | (1.6 | ) | ||
|
| |||
100.0 | % | |||
|
|
The Series invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is equity risk. The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
Fair values of derivative instruments as of April 30, 2012 as presented in the Statement of Assets and Liabilities:
Derivatives not designated | Asset Derivatives | Liability Derivatives | ||||||||||
Balance | Fair Value | Balance | Fair Value | |||||||||
Equity contracts | — | $ | — | Due to broker—variation margin | $ | 15,599 | * | |||||
|
|
|
|
* | Includes cumulative appreciation/depreciation on futures contracts as reported in Portfolio of Investments. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
See Notes to Financial Statements.
Prudential International Equity Fund | 21 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2012 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||
Derivatives not designated as hedging | Futures | Rights | Total | |||||||||
Equity contracts | $ | 223,667 | $ | 127,740 | $ | 351,407 | ||||||
|
|
|
|
|
|
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||
Derivatives not designated as hedging | Futures | Total | ||||||
Equity contracts | $ | (288,645 | ) | $ | (288,645 | ) | ||
|
|
|
|
For the six months ended April 30, 2012, the average value at trade date for futures contracts was $1,597,655.
See Notes to Financial Statements.
22 | Visit our website at www.prudentialfunds.com |
Financial Statements
(Unaudited)
APRIL 30, 2012 | SEMIANNUAL REPORT |
Prudential International Equity Fund
Statement of Assets and Liabilities
as of April 30, 2012 (Unaudited)
Assets | ||||
Investments at value, including securities on loan of $6,765,991: | ||||
Unaffiliated Investments (cost $264,686,543) | $ | 291,182,663 | ||
Affiliated Investments (cost $7,215,519) | 7,215,519 | |||
Foreign currency, at value (cost $520,451) | 521,632 | |||
Receivable for investments sold | 14,635,436 | |||
Dividends and interest receivable | 1,784,794 | |||
Foreign tax reclaim receivable | 735,194 | |||
Receivable for Series shares sold | 324,467 | |||
Prepaid expenses | 1,880 | |||
|
| |||
Total assets | 316,401,585 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 13,690,362 | |||
Payable to broker for collateral for securities on loan (Note 3) | 7,213,452 | |||
Loan payable | 587,000 | |||
Payable for Series shares reacquired | 430,314 | |||
Accrued expenses | 427,491 | |||
Management fee payable | 203,778 | |||
Affiliated transfer agent fee payable | 82,868 | |||
Distribution fee payable | 77,563 | |||
Due to broker—variation margin | 5,330 | |||
|
| |||
Total liabilities | 22,718,158 | |||
|
| |||
Net Assets | $ | 293,683,427 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 499,381 | ||
Paid-in capital in excess of par | 516,900,199 | |||
|
| |||
517,399,580 | ||||
Undistributed net investment income | 1,720,417 | |||
Accumulated net realized loss on investment and foreign currency transactions | (251,994,333 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 26,557,763 | |||
|
| |||
Net assets, April 30, 2012 | $ | 293,683,427 | ||
|
|
See Notes to Financial Statements.
24 | Visit our website at www.prudentialfunds.com |
Class A | ||||
Net asset value and redemption price per share | $ | 5.90 | ||
Maximum sales charge (5.50% of offering price) | 0.34 | |||
|
| |||
Maximum offering price to public | $ | 6.24 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share | $ | 5.68 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | $ | 5.68 | ||
|
| |||
Class F | ||||
Net asset value, offering price and redemption price per share | $ | 5.68 | ||
|
| |||
Class L | ||||
Net asset value and redemption price per share | $ | 5.90 | ||
Maximum sales charge (5.75% of offering price) | 0.36 | |||
|
| |||
Maximum offering price to public | $ | 6.26 | ||
|
| |||
Class X | ||||
Net asset value, offering price and redemption price per share | $ | 5.68 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | �� | $ | 5.93 | |
|
|
See Notes to Financial Statements.
Prudential International Equity Fund | 25 |
Statement of Operations
Six Months Ended April 30, 2012 (Unaudited)
Net Investment Income | ||||
Income | ||||
Unaffiliated dividends (net of foreign withholding taxes of $51,673) | $ | 5,787,216 | ||
Affiliated income from securities loaned, net | 24,161 | |||
Affiliated dividend income | 269 | |||
Unaffiliated interest income | 83 | |||
|
| |||
Total income | 5,811,729 | |||
|
| |||
Expenses | ||||
Management fee | 1,230,895 | |||
Distribution fee—Class A | 310,536 | |||
Distribution fee—Class B | 30,892 | |||
Distribution fee—Class C | 100,899 | |||
Distribution fee—Class F | 4,800 | |||
Distribution fee—Class L | 20,650 | |||
Distribution fee—Class M | 1,560 | |||
Distribution fee—Class X | 6,597 | |||
Transfer agent’s fees and expenses (including affiliated expense of $111,700) (Note 3) | 481,000 | |||
Custodian’s fees and expenses | 137,000 | |||
Registration fees | 52,000 | |||
Reports to shareholders | 48,000 | |||
Legal fees and expenses | 16,000 | |||
Audit fee | 15,000 | |||
Directors’ fees | 9,000 | |||
Insurance | 4,000 | |||
Loan interest expense (Note 7) | 1,996 | |||
Miscellaneous | 28,139 | |||
|
| |||
Total expenses | 2,498,964 | |||
|
| |||
Net investment income | 3,312,765 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment, Futures And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (1,182,835 | ) | ||
Foreign currency transactions | (98,677 | ) | ||
Financial futures transactions | 223,667 | |||
|
| |||
(1,057,845 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 12,324,738 | |||
Foreign currencies | 17,070 | |||
Financial futures contracts | (288,645 | ) | ||
|
| |||
12,053,163 | ||||
|
| |||
Net gain on investment and foreign currency transactions | 10,995,318 | |||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 14,308,083 | ||
|
|
See Notes to Financial Statements.
26 | Visit our website at www.prudentialfunds.com |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended April 30, 2012 | Year Ended October 31, 2011 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 3,312,765 | $ | 5,027,387 | ||||
Net realized gain (loss) on investment and foreign currency transactions | (1,057,845 | ) | 17,074,787 | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 12,053,163 | (40,027,313 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 14,308,083 | (17,925,139 | ) | |||||
|
|
|
| |||||
Dividends from net investment income (Note 1) | ||||||||
Class A | (4,099,544 | ) | (4,571,474 | ) | ||||
Class B | (85,513 | ) | (110,787 | ) | ||||
Class C | (268,526 | ) | (320,075 | ) | ||||
Class F | (23,756 | ) | (47,027 | ) | ||||
Class L | (145,518 | ) | (171,721 | ) | ||||
Class M | (8,376 | ) | (33,226 | ) | ||||
Class X | (19,252 | ) | (35,242 | ) | ||||
Class Z | (1,011,006 | ) | (949,745 | ) | ||||
|
|
|
| |||||
(5,661,491 | ) | (6,239,297 | ) | |||||
|
|
|
| |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 6,449,669 | 19,235,595 | ||||||
Net asset value of shares issued in reinvestment of dividends | 5,514,065 | 6,069,976 | ||||||
Cost of shares reacquired | (26,668,149 | ) | (64,297,912 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from Series share transactions | (14,704,415 | ) | (38,992,341 | ) | ||||
|
|
|
| |||||
Capital Contributions (Note 6) | ||||||||
Proceeds from regulatory settlement | — | 1,399,459 | ||||||
|
|
|
| |||||
Total decrease | (6,057,823 | ) | (61,757,318 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 299,741,250 | 361,498,568 | ||||||
|
|
|
| |||||
End of period(a) | $ | 293,683,427 | $ | 299,741,250 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 1,720,417 | $ | 4,069,143 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential International Equity Fund | 27 |
Notes to Financial Statements
(Unaudited)
Prudential World Fund, Inc. (the “Fund”) is an open-end management investment company, registered under the Investment Company Act of 1940, as amended, (“1940 Act”) and currently consists of five series: Prudential International Equity Fund (the “Series”), Prudential International Value Fund, Prudential Jennison Global Opportunities Fund, Prudential Jennison International Opportunities Fund and Prudential Emerging Markets Debt Local Currency Fund. These financial statements relate to the Prudential International Equity Fund. The financial statements of the other series are not presented herein. The Series commenced investment operations in March 2000. The investment objective of the Series is to achieve long-term growth of capital.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund and the Series 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 subadvisors, 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 bid and asked 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
28 | Visit our website at www.prudentialfunds.com |
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 market and before the Series’ normal pricing time, are valued at fair value in accordance with the Board of Directors’ 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 advisor 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.
Short-term debt securities of sufficient credit quality, which mature in 60 days or less, are valued at amortized cost, which approximates market value. The amortized cost method includes valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term debt securities, which mature in more than 60 days, are valued at fair value.
Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral, at least equal to the market value of the securities loaned. Collateral pledged by each borrower is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities using the collateral in the open market. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The Series also continues to receive interest and dividends or amounts equivalent thereto, on the securities loaned and recognizes any unrealized gain or loss in the market price of the securities loaned that may occur during the term of the loan.
Prudential International Equity Fund | 29 |
Notes to Financial Statements
(Unaudited) continued
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities-at the current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses-at the rate of exchange prevailing on the respective dates of such transactions.
The Series 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 long term securities held at the end of the fiscal year. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of portfolio securities sold during the fiscal year. 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 difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains or losses from valuing foreign currency denominated assets and liabilities (other than investments) at fiscal year 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.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions on sales of portfolio securities are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date and interest income, including amortization and accretion of discount on debt securities, as required, is recorded on
30 | Visit our website at www.prudentialfunds.com |
the accrual basis. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. Net investment income or loss (other than distribution fees which are charged directly to the respective class), and unrealized and realized gains or losses are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Series is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Series each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain or loss. When the contract expires or is closed, the gain or loss is realized and is presented in the Statement of Operations as net realized gain or loss on financial futures transactions. The Series invested in financial futures contracts in order to hedge its existing portfolio securities, or securities the Series intends to purchase, against fluctuations in value caused by changes in prevailing interest rates, value of equities or foreign currency exchange rates. Should interest rates move unexpectedly, the Series may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.
Financial futures contracts involve elements of both risk in excess of the amounts reflected on the Statement of Assets and Liabilities.
With exchange-traded futures, there is a minimal counterparty credit risk to the Series since the exchanges’ clearinghouse acts as counterparty to all exchange traded futures and guarantees the futures contracts against default.
Dividends and Distributions: The Series 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.
Taxes: For federal income tax purposes, each Series in the Fund is treated as a separate taxpaying entity. It is each Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment
Prudential International Equity Fund | 31 |
Notes to Financial Statements
(Unaudited) continued
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 for the Series with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI entered into a subadvisory agreement with Quantitative Management Associates LLC (“QMA”). The subadvisory agreement provides that QMA furnishes investment advisory services in connection with the management of the Series. In connection therewith, QMA is obligated to keep certain books and records of the Series. PI pays for the services of QMA, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly, at an annual rate of .85% of the average daily net assets of the Series up to and including $300 million, .75% of the average daily net assets in excess of $300 million up to and including $1.5 billion and .70% of the Series’ average daily net assets over $1.5 billion. The effective management fee was .85% for the six months ended April 30, 2012.
The Series has distribution agreements with Prudential Investment Management Services LLC (“PIMS”) and Prudential Annuities Distributors, Inc. (“PAD”). PIMS and PAD are both affiliates of PI and indirect, wholly-owned subsidiaries of Prudential. PIMS serves as the distributor of the Series’ Class A, Class B, Class C, Class F, and Class Z shares. PIMS, together with PAD, serves as co-distributor of the Fund’s Class L, Class M, and Class X shares.
The Series has adopted a separate Distribution and Service plan (each a “Plan” and collectively the “Plans”) for the Class A, Class B, Class C, Class F, Class L, Class M,
32 | Visit our website at www.prudentialfunds.com |
and Class X shares of the Series in accordance with Rule 12b-1 of the 1940 Act, as amended. No distribution or service fees are paid to PIMS as distributor for the Series’ Class Z shares. Under the Plans, the Fund compensates PIMS and PAD a distribution and service fee at the annual rate of .30%, 1.00%, 1.00%, .75%, .50%, 1.00%, and 1.00% of the average daily net assets of the Class A, B, C, F, L, M, and X shares, respectively.
PIMS has advised the Series that they received $28,600 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2012. 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 Series that for the six months ended April 30, 2012 it received $43, $6,051, $169, $492 and $43 in contingent deferred sales charges imposed upon redemptions by certain Class A, Class B, Class C, Class F and Class X shareholders, respectively.
PI, QMA and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
Prudential Investment Management, Inc. (“PIM”), an indirect, wholly-owned subsidiary of Prudential, is the Series’ security lending agent. For the six months ended April 30, 2012, PIM has been compensated approximately $7,200 for these services.
The Series invests in the Prudential Core Taxable Money Market Fund (the “Core Fund”), a series of the Prudential Investment Portfolios 2, registered under the 1940 Act, 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, other than short-term investments, for the six months ended April 30, 2012 aggregated $125,127,000 and $142,799,100 respectively.
Prudential International Equity Fund | 33 |
Notes to Financial Statements
(Unaudited) continued
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2012 were as follows:
Tax Basis | Appreciation | Depreciation | Net Unrealized | |||
$279,826,452 | $32,630,085 | $(14,058,355) | $18,571,730 |
The difference between book basis and tax basis were primarily attributable to deferred losses on wash sales and investments in passive foreign investment companies as of the most recent fiscal year end.
For federal income tax purposes, the Series has a capital loss carryforward as of October 31, 2011 of approximately $243,483,000 of which $51,069,000 expires in 2016, $184,077,000 expires in 2017, and $8,337,000 expires in 2018. The Fund utilized approximately $15,462,000 of its capital loss carryforward to offset net taxable gains realized in the year ended October 31, 2011. Accordingly, no capital gains distributions are 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 Act”), the Series 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 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.
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ 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.
34 | Visit our website at www.prudentialfunds.com |
Note 6. Capital
The Series offers Class A, B, C, F, L, M, X and Z shares. Class A and L shares are sold with a front-end sales charge of up to 5.50% and 5.75%, respectively. All investors who purchase Class A and L shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%. The Class A CDSC is waived for purchases by certain retirement and/or benefit plans. Class B and F shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B and F shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. Class M shares automatically convert to Class A shares approximately eight years after purchase. As of April 13, 2012, the last conversion of Class M shares to Class A shares was completed. There are no Class M shares outstanding and Class M shares are no longer being offered for sale. Class X shares are sold with a CDSC which declines from 6% to zero depending on the period of time the shares are held. Class X shares will automatically convert to Class A shares on a quarterly basis approximately ten years after purchase. A special exchange privilege is also available for shareholders who qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.
During the fiscal years ended October 31, 2011 and October 31, 2010, the Series received $1,399,459 and $4,717,145, respectively, related to settlements of regulatory proceedings involving allegations of improper trading in Series shares. The amounts relating to a former affiliate for the years ended October 31, 2011 and October 31, 2010 were $1,123,251 and $4,493,246, respectively. The per share effect of these amounts is disclosed in the financial highlights.
There are 1 billion authorized shares of common stock at $.01 par value per share, designated Class A, Class B, Class C, Class F, Class L, Class M, Class X, Class New X and Class Z, each of which consists of 225 million, 150 million, 150 million, 50 million, 50 million, 50 million, 50 million, 50 million and 225 million authorized shares, respectively.
Prudential International Equity Fund | 35 |
Notes to Financial Statements
(Unaudited) continued
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 511,518 | $ | 2,926,403 | |||||
Shares issued in reinvestment of dividends | 728,075 | 3,975,267 | ||||||
Shares reacquired | (3,325,893 | ) | (18,795,870 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (2,086,300 | ) | (11,894,200 | ) | ||||
Shares issued upon conversion from Class B, F, M, X and Z | 405,630 | 2,298,971 | ||||||
Shares reacquired upon conversion into Class Z | (9,771 | ) | (53,790 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,690,441 | ) | $ | (9,649,019 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 1,157,745 | $ | 7,274,534 | |||||
Shares issued in reinvestment of dividends | 728,171 | 4,427,283 | ||||||
Shares reacquired | (7,310,868 | ) | (45,368,737 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (5,424,952 | ) | (33,666,920 | ) | ||||
Shares issued upon conversion from Class B, F, M and X | 883,630 | 5,477,217 | ||||||
Shares reacquired upon conversion into Class Z | (186,656 | ) | (1,187,796 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (4,727,978 | ) | $ | (29,377,499 | ) | |||
|
|
|
| |||||
Class B | ||||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 59,216 | $ | 326,988 | |||||
Shares issued in reinvestment of dividends | 15,550 | 82,106 | ||||||
Shares reacquired | (102,766 | ) | (564,980 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (28,000 | ) | (155,886 | ) | ||||
Shares reacquired upon conversion into Class A | (132,594 | ) | (729,089 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (160,594 | ) | $ | (884,975 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 134,342 | $ | 803,818 | |||||
Shares issued in reinvestment of dividends | 18,311 | 107,666 | ||||||
Shares reacquired | (240,348 | ) | (1,441,980 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (87,695 | ) | (530,496 | ) | ||||
Shares reacquired upon conversion into Class A | (233,493 | ) | (1,372,829 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (321,188 | ) | $ | (1,903,325 | ) | |||
|
|
|
|
36 | Visit our website at www.prudentialfunds.com |
Class C | Shares | Amount | ||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 46,209 | $ | 253,047 | |||||
Shares issued in reinvestment of dividends | 48,720 | 256,753 | ||||||
Shares reacquired | (523,991 | ) | (2,897,820 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (429,062 | ) | $ | (2,388,020 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 285,739 | $ | 1,702,762 | |||||
Shares issued in reinvestment of dividends | 52,345 | 307,788 | ||||||
Shares reacquired | (948,643 | ) | (5,685,795 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (610,559 | ) | (3,675,245 | ) | ||||
Shares reacquired upon conversion into Class Z | (151 | ) | (831 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (610,710 | ) | $ | (3,676,076 | ) | |||
|
|
|
| |||||
Class F | ||||||||
Six months ended April 30, 2012: | ||||||||
Shares issued in reinvestment of dividends | 4,166 | $ | 21,955 | |||||
Shares reacquired | (21,937 | ) | (118,981 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (17,771 | ) | (97,026 | ) | ||||
Shares reacquired upon conversion into Class A | (78,187 | ) | (429,012 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (95,958 | ) | $ | (526,038 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 122 | $ | 841 | |||||
Shares issued in reinvestment of dividends | 7,787 | 45,709 | ||||||
Shares reacquired | (86,360 | ) | (524,163 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (78,451 | ) | (477,613 | ) | ||||
Shares reacquired upon conversion into Class A | (200,736 | ) | (1,188,873 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (279,187 | ) | $ | (1,666,486 | ) | |||
|
|
|
| |||||
Class L | ||||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 2,717 | $ | 16,693 | |||||
Shares issued in reinvestment of dividends | 25,883 | 141,578 | ||||||
Shares reacquired | (132,558 | ) | (755,014 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (103,958 | ) | $ | (596,743 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 6,430 | $ | 41,363 | |||||
Shares issued in reinvestment of dividends | 27,508 | 167,799 | ||||||
Shares reacquired | (292,840 | ) | (1,835,606 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (258,902 | ) | $ | (1,626,444 | ) | |||
|
|
|
|
Prudential International Equity Fund | 37 |
Notes to Financial Statements
(Unaudited) continued
Class M | Shares | Amount | ||||||
Period ended April 13, 2012*: | ||||||||
Shares sold | 68 | $ | 390 | |||||
Shares issued in reinvestment of dividends | 1,251 | 6,604 | ||||||
Shares reacquired | (6,526 | ) | (33,728 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (5,207 | ) | (26,734 | ) | ||||
Shares reacquired upon conversion into Class A | (129,902 | ) | (704,453 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (135,109 | ) | $ | (731,187 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 2,102 | $ | 12,843 | |||||
Shares issued in reinvestment of dividends | 5,162 | 30,351 | ||||||
Shares reacquired | (70,593 | ) | (427,774 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (63,329 | ) | (384,580 | ) | ||||
Shares reacquired upon conversion into Class A | (304,398 | ) | (1,842,076 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (367,727 | ) | $ | (2,226,656 | ) | |||
|
|
|
| |||||
Class X | ||||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 622 | $ | 3,893 | |||||
Shares issued in reinvestment of dividends | 3,618 | 19,104 | ||||||
Shares reacquired | (22,196 | ) | (121,412 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (17,956 | ) | (98,415 | ) | ||||
Shares reacquired upon conversion into Class A | (77,237 | ) | (423,356 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (95,193 | ) | $ | (521,771 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 3,680 | $ | 22,212 | |||||
Shares issued in reinvestment of dividends | 5,872 | 34,525 | ||||||
Shares reacquired | (63,117 | ) | (377,288 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (53,565 | ) | (320,551 | ) | ||||
Shares reacquired upon conversion into Class A | (177,542 | ) | (1,073,439 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (231,107 | ) | $ | (1,393,990 | ) | |||
|
|
|
|
38 | Visit our website at www.prudentialfunds.com |
Class Z | Shares | Amount | ||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 515,710 | $ | 2,922,144 | |||||
Shares issued in reinvestment of dividends | 184,098 | 1,010,698 | ||||||
Shares reacquired | (582,008 | ) | (3,380,233 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 117,800 | 552,609 | ||||||
Shares issued upon conversion from Class A | 9,713 | 53,790 | ||||||
Shares reacquired upon conversion into Class A | (2,366 | ) | (13,061 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 125,147 | $ | 593,338 | |||||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 1,525,305 | $ | 9,377,222 | |||||
Shares issued in reinvestment of dividends | 155,042 | 948,855 | ||||||
Shares reacquired | (1,350,436 | ) | (8,636,569 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 329,911 | 1,689,508 | ||||||
Shares issued upon conversion from Class A and C | 185,345 | 1,188,627 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 515,256 | $ | 2,878,135 | |||||
|
|
|
|
* | As of April 13, 2012, the last conversion of Class M shares to Class A shares was completed. There are no Class M shares outstanding and Class M shares are no longer being offered for sale. |
Note 7. Borrowing
The Series, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period December 16, 2011 through December 14, 2012. The Funds pay an annualized commitment fee of 0.08% of the unused portion of the SCA. Prior to December 16, 2011, the Funds had another Syndicated Credit Agreement of a $750 million commitment with an annualized commitment fee of 0.10% of the unused portion. 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 Series utilized the SCA during the six months ended April 30, 2012. The average daily balance for the 108 days that the Series had loans outstanding during the period was approximately $436,000, borrowed at a weighted average interest rate of 1.50%. At April 30, 2012, the Series has an outstanding loan amount of $587,000.
Note 8. Ownership
As of April 30, 2012, approximately 27% of the Series was owned by two institutional shareholders for the beneficial interest of their underlying account holders.
Prudential International Equity Fund | 39 |
Notes to Financial Statements
(Unaudited) continued
Note 9. 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.
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.
40 | Visit our website at www.prudentialfunds.com |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2012(a) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.72 | $6.17 | $5.77 | $4.80 | $10.49 | $8.54 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .07 | .09 | .08 | .08 | .16 | .16 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .22 | (.46 | ) | .36 | 1.06 | (5.37 | ) | 1.92 | ||||||||||||||||||
Total from investment operations | .29 | (.37 | ) | .44 | 1.14 | (5.21 | ) | 2.08 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.11 | ) | (.11 | ) | (.10 | ) | (.17 | ) | (.14 | ) | (.13 | ) | ||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||
Total dividends and distributions | (.11 | ) | (.11 | ) | (.10 | ) | (.17 | ) | (.48 | ) | (.13 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | .03 | .06 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $5.90 | $5.72 | $6.17 | $5.77 | $4.80 | $10.49 | ||||||||||||||||||||
Total Return(b): | 4.90% | (5.61)% | 8.78% | 24.65% | (51.87)% | 24.68% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $211,044 | $214,610 | $260,555 | $275,993 | $246,234 | $557,878 | ||||||||||||||||||||
Average net assets (000) | $208,161 | $247,859 | $257,553 | $240,744 | $438,831 | $438,194 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees(e) | 1.70% | (d) | 1.64% | 1.57% | 1.54% | 1.43% | 1.34% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | |||||||||||||||||||
Net investment income | 2.32% | (d) | 1.51% | 1.35% | 1.75% | 1.94% | 1.60% | |||||||||||||||||||
Portfolio turnover rate | 43% | (f) | 70% | 96% | 76% | 74% | 114% |
(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) The distributor of the series had contractually agreed to limit its distribution and service (12b-1) fees to .25 of the average daily net assets of the Class A shares through February 28, 2008.
(f) Not Annualized.
See Notes to Financial Statements.
Prudential International Equity Fund | 41 |
Financial Highlights
(Unaudited) continued
Class B Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2012(a) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | $8.22 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .04 | .05 | .04 | .05 | .09 | .06 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .21 | (.45 | ) | .35 | 1.02 | (5.16 | ) | 1.88 | ||||||||||||||||||
Total from investment operations | .25 | (.40 | ) | .39 | 1.07 | (5.07 | ) | 1.94 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.07 | ) | (.07 | ) | ||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||
Total dividends and distributions | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.41 | ) | (.07 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | .03 | .06 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $5.68 | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | ||||||||||||||||||||
Total Return(b): | 4.48% | (6.27)% | 8.11% | 23.82% | (52.22)% | 23.73% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $6,030 | $6,720 | $9,160 | $9,976 | $11,205 | $32,905 | ||||||||||||||||||||
Average net assets (000) | $6,212 | $8,320 | $9,246 | $9,229 | $22,786 | $39,205 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 2.40% | (d) | 2.34% | 2.27% | 2.24% | 2.15% | 2.09% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | |||||||||||||||||||
Net investment income | 1.57% | (d) | .83% | .66% | 1.06% | 1.17% | .67% | |||||||||||||||||||
Portfolio turnover rate | 43% | (e) | 70% | 96% | 76% | 74% | 114% |
(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) Not Annualized.
See Notes to Financial Statements.
42 | Visit our website at www.prudentialfunds.com |
Class C Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2012(a) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | $8.22 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .04 | .05 | .04 | .05 | .09 | .10 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .21 | (.45 | ) | .35 | 1.02 | (5.16 | ) | 1.84 | ||||||||||||||||||
Total from investment operations | .25 | (.40 | ) | .39 | 1.07 | (5.07 | ) | 1.94 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.07 | ) | (.07 | ) | ||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||
Total dividends and distributions | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.41 | ) | (.07 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | .03 | .06 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $5.68 | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | ||||||||||||||||||||
Total Return(b): | 4.48% | (6.27)% | 8.11% | 23.83% | (52.22)% | 23.73% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $19,582 | $21,310 | $26,625 | $29,326 | $28,858 | $75,010 | ||||||||||||||||||||
Average net assets (000) | $20,291 | $25,128 | $26,974 | $26,677 | $55,111 | $53,765 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 2.40% | (d) | 2.34% | 2.27% | 2.24% | 2.15% | 2.09% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | |||||||||||||||||||
Net investment income | 1.59% | (d) | .81% | .66% | 1.06% | 1.19% | 1.03% | |||||||||||||||||||
Portfolio turnover rate | 43% | (e) | 70% | 96% | 76% | 74% | 114% |
(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) Not annualized.
See Notes to Financial Statements.
Prudential International Equity Fund | 43 |
Financial Highlights
(Unaudited) continued
Class F Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | December 18, 2006(e) through October 31, | ||||||||||||||||||||||||||
2012(a) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.50 | $5.94 | $5.56 | $4.62 | $10.11 | $8.56 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | .05 | .06 | .05 | .06 | .11 | .09 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .22 | (.44 | ) | .35 | 1.01 | (5.17 | ) | 1.46 | ||||||||||||||||||||
Total from investment operations | .27 | (.38 | ) | .40 | 1.07 | (5.06 | ) | 1.54 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.09 | ) | (.09 | ) | (.08 | ) | (.13 | ) | (.09 | ) | - | |||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||||
Total dividends and distributions | (.09 | ) | (.09 | ) | (.08 | ) | (.13 | ) | (.43 | ) | - | |||||||||||||||||
Capital Contributions (Note 6) | - | .03 | .06 | - | - | - | ||||||||||||||||||||||
Net asset value, end of period | $5.68 | $5.50 | $5.94 | $5.56 | $4.62 | $10.11 | ||||||||||||||||||||||
Total Return(b): | 4.76% | (6.05)% | 8.35% | 24.04% | (52.10)% | 18.11% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $1,077 | $1,572 | $3,355 | $5,226 | $8,171 | $28,728 | ||||||||||||||||||||||
Average net assets (000) | $1,287 | $2,442 | $4,064 | $5,769 | $18,310 | $33,219 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 2.15% | (d) | 2.09% | 2.02% | 1.99% | 1.90% | 1.84% | (d) | ||||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | (d) | ||||||||||||||||||||
Net investment income | 1.69% | (d) | 1.07% | .95% | 1.35% | 1.37% | 1.13% | (d) | ||||||||||||||||||||
Portfolio turnover rate | 43% | (f) | 70% | 96% | 76% | 74% | 114% | (f) |
(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) Commencement of offering.
(f) Not annualized.
See Notes to Financial Statements.
44 | Visit our website at www.prudentialfunds.com |
Class L Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 19, 2007(e) through October 31, | ||||||||||||||||||||||||||
2012(a) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.73 | $6.17 | $5.77 | $4.79 | $10.48 | $8.92 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | .06 | .08 | .07 | .07 | .14 | .11 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .21 | (.45 | ) | .36 | 1.06 | (5.38 | ) | 1.45 | ||||||||||||||||||||
Total from investment operations | .27 | (.37 | ) | .43 | 1.13 | (5.24 | ) | 1.56 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.10 | ) | (.10 | ) | (.09 | ) | (.15 | ) | (.11 | ) | - | |||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||||
Total dividends and distributions | (.10 | ) | (.10 | ) | (.09 | ) | (.15 | ) | (.45 | ) | - | |||||||||||||||||
Capital Contributions (Note 6) | - | .03 | .06 | - | - | - | ||||||||||||||||||||||
Net asset value, end of period | $5.90 | $5.73 | $6.17 | $5.77 | $4.79 | $10.48 | ||||||||||||||||||||||
Total Return(b): | 4.66% | (5.62)% | 8.59% | 24.49% | (52.07)% | 17.49% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $8,300 | $8,644 | $10,919 | $12,342 | $12,621 | $34,433 | ||||||||||||||||||||||
Average net assets (000) | $8,305 | $10,189 | $11,216 | $11,250 | $24,942 | $35,182 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 1.90% | (d) | 1.84% | 1.77% | 1.74% | 1.65% | 1.59% | (d) | ||||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | (d) | ||||||||||||||||||||
Net investment income | 2.11% | (d) | 1.31% | 1.16% | 1.56% | 1.68% | 1.82% | (d) | ||||||||||||||||||||
Portfolio turnover rate | 43% | (f) | 70% | 96% | 76% | 74% | 114% | (f) |
(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) Commencement of offering.
(f) Not annualized.
See Notes to Financial Statements.
Prudential International Equity Fund | 45 |
Financial Highlights
(Unaudited) continued
Class M Shares | ||||||||||||||||||||||||||||
Period Ended April 13, | Year Ended October 31, | March 19, 2007(e) through October 31, | ||||||||||||||||||||||||||
2012(a)(g) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | $8.63 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | .01 | .05 | .04 | .05 | .07 | .08 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .09 | (.45 | ) | .35 | 1.02 | (5.14 | ) | 1.38 | ||||||||||||||||||||
Total from investment operations | .10 | (.40 | ) | .39 | 1.07 | (5.07 | ) | 1.46 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.07 | ) | - | |||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||||
Total dividends and distributions | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.41 | ) | - | |||||||||||||||||
Capital Contributions (Note 6) | - | 0.03 | 0.06 | - | - | - | ||||||||||||||||||||||
Net asset value, end of period | $5.53 | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | ||||||||||||||||||||||
Total Return(b): | 1.90% | (6.27)% | 8.11% | 23.82% | (52.22)% | 16.92% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $29 | $743 | $2,985 | $6,622 | $11,467 | $68,244 | ||||||||||||||||||||||
Average net assets (000) | $342 | $1,768 | $4,441 | $7,957 | $34,319 | $76,639 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 2.40% | (d) | 2.34% | 2.27% | 2.24% | 2.15% | 2.09% | (d) | ||||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | (d) | ||||||||||||||||||||
Net investment income | .26% | (d) | .76% | .68% | 1.09% | .92% | 1.41% | (d) | ||||||||||||||||||||
Portfolio turnover rate | 43% | (f)(h) | 70% | 96% | 76% | 74% | 114% | (f) |
(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) Commencement of offering.
(f) Not annualized.
(g) As of April 13, 2012, the last conversion of Class M shares to Class A shares was completed. There are no Class M shares outstanding and Class M shares are no longer being offered for sale.
(h) Calculated as of April 30, 2012.
See Notes to Financial Statements.
46 | Visit our website at www.prudentialfunds.com |
Class X Shares | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 19, 2007(e) through October 31, | ||||||||||||||||||||||||||
2012(a) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | $8.63 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | .04 | .05 | .04 | .05 | .09 | .08 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .21 | (.45 | ) | .35 | 1.02 | (5.16 | ) | 1.38 | ||||||||||||||||||||
Total from investment operations | .25 | (.40 | ) | .39 | 1.07 | (5.07 | ) | 1.46 | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.07 | ) | - | |||||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||||
Total dividends and distributions | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | (.41 | ) | - | |||||||||||||||||
Capital Contributions (Note 6) | - | .03 | .06 | - | - | - | ||||||||||||||||||||||
Net asset value, end of period | $5.68 | $5.50 | $5.94 | $5.56 | $4.61 | $10.09 | ||||||||||||||||||||||
Total Return(b): | 4.48% | (6.27)% | 8.11% | 23.82% | (52.22)% | 16.92% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $1,081 | $1,569 | $3,067 | $5,957 | $8,597 | $25,428 | ||||||||||||||||||||||
Average net assets (000) | $1,327 | $2,351 | $4,020 | $6,611 | $17,864 | $25,351 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 2.40% | (d) | 2.34% | 2.27% | 2.24% | 2.15% | 2.09% | (d) | ||||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | (d) | ||||||||||||||||||||
Net investment income | 1.41% | (d) | .80% | .66% | 1.10% | 1.18% | 1.30% | (d) | ||||||||||||||||||||
Portfolio turnover rate | 43% | (f) | 70% | 96% | 76% | 74% | 114% | (f) |
(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) Commencement of offering.
(f) Not annualized.
See Notes to Financial Statements.
Prudential International Equity Fund | 47 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2012(a) | 2011(a) | 2010(a) | 2009(a) | 2008(a) | 2007(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.77 | $6.22 | $5.82 | $4.85 | $10.60 | $8.62 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .08 | .11 | .13 | .10 | .18 | .16 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .21 | (.46 | ) | .33 | 1.06 | (5.43 | ) | 1.97 | ||||||||||||||||||
Total from investment operations | .29 | (.35 | ) | .46 | 1.16 | (5.25 | ) | 2.13 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.13 | ) | (.13 | ) | (.12 | ) | (.19 | ) | (.16 | ) | (.15 | ) | ||||||||||||||
Distributions from net realized gains | - | - | - | - | (.34 | ) | - | |||||||||||||||||||
Total dividends and distributions | (.13 | ) | (.13 | ) | (.12 | ) | (.19 | ) | (.50 | ) | (.15 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | .03 | .06 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $5.93 | $5.77 | $6.22 | $5.82 | $4.85 | $10.60 | ||||||||||||||||||||
Total Return(b): | 5.03% | (5.30)% | 8.98% | 24.95% | (51.77)% | 25.05% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $46,569 | $44,573 | $44,833 | $229,771 | $169,874 | $353,771 | ||||||||||||||||||||
Average net assets (000) | $45,316 | $46,529 | $149,685 | $184,038 | $285,097 | $301,553 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.40% | (d) | 1.34% | 1.27% | 1.24% | 1.15% | 1.09% | |||||||||||||||||||
Net investment income | 2.64% | (d) | 1.77% | 2.12% | 2.05% | 2.22% | 1.73% | |||||||||||||||||||
Portfolio turnover rate | 43% | (e) | 70% | 96% | 76% | 74% | 114% |
(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total investment returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Annualized.
(e) Not annualized.
See Notes to Financial Statements.
48 | 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 Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website. |
DIRECTORS |
Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Judy A. Rice, Vice President • Scott E. Benjamin, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, 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 • Amanda S. Ryan, 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 Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Quantitative Management Associates LLC | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street | ||
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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 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.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 DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential International Equity Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
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 INTERNATIONAL EQUITY FUND
SHARE CLASS | A | B | C | F | L | X | Z | |||||||
NASDAQ | PJRAX | PJRBX | PJRCX | N/A | DEILX | DEIQX | PJIZX | |||||||
CUSIP | 743969859 | 743969867 | 743969875 | 743969842 | 743969834 | 743969818 | 743969883 |
MF190E2 0226467-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL INTERNATIONAL VALUE FUND
SEMIANNUAL REPORT · APRIL 30, 2012
Fund Type
International Stock
Objective
Long-Term growth of capital
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2012, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Prudential Investments, Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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June 15, 2012
Dear Shareholder:
After an extraordinary career at Prudential, Judy Rice retired at the end of 2011 as President of Prudential Investments and President and Director of the Prudential International Value Fund (the Fund). While she will remain as Chairman of Prudential Investments until the end of 2012, I was named to succeed her as President of Prudential Investments and President and Director of the Fund effective January 1, 2012. I previously served as Executive Vice President of Retail Mutual Fund Distribution for Prudential Investments for the past six years.
Since this is my first letter to shareholders, I would like to recognize Judy for the significant contributions she made in building the Prudential Investments fund family and her unflagging commitment to helping investors like you meet the challenges of a rapidly changing investment environment. My goal is to build on Judy’s accomplishments, with a particular focus on delivering the solutions you need to address your financial goals.
I hope you find the semiannual report for the Fund informative. We recognize that ongoing market volatility may make it a difficult time to be an investor. We continue to believe a prudent response to uncertainty is to maintain a diversified portfolio, including stock and bond mutual funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial professional can help you create a diversified investment plan that reflects your personal investor profile and risk tolerance. Keep in mind that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets. We encourage you to call your financial professional before making any investment decision.
Prudential Investments provides a wide range of mutual funds to choose from that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of Prudential Financial’s affiliated asset managers. Thank you for choosing the Prudential Investments family of mutual funds.
Sincerely,
Stuart S. Parker, President
Prudential International Value Fund
Prudential International Value 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, 1.98%; Class B, 2.68%; Class C, 2.68%; Class Z, 1.68%. Net operating expenses: Class A, 1.93%; Class B, 2.68%; Class C, 2.68%; Class Z, 1.68%, after contractual reduction for Class A shares through 2/28/2013.
Cumulative Total Returns (Without Sales Charges) as of 4/30/12 |
| |||||||||||||||
Six Months | One Year | Five Years | Ten Years | |||||||||||||
Class A | 3.20 | % | –14.61 | % | –20.28 | % | 51.08 | % | ||||||||
Class B | 2.78 | –15.27 | –23.24 | 40.03 | ||||||||||||
Class C | 2.78 | –15.25 | –23.24 | 40.06 | ||||||||||||
Class Z | 3.30 | –14.38 | –19.22 | 54.79 | ||||||||||||
MSCI EAFE® ND Index | 2.44 | –12.82 | –21.48 | 69.51 | ||||||||||||
Lipper International Large-Cap Core Funds Average | 3.92 | –12.69 | –20.39 | 58.95 | ||||||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/12 |
| |||||||||||||||
One Year | Five Years | Ten Years | ||||||||||||||
Class A | –13.10 | % | –4.39 | % | 3.92 | % | ||||||||||
Class B | –13.28 | –4.19 | 3.72 | |||||||||||||
Class C | –9.60 | –4.02 | 3.73 | |||||||||||||
Class Z | –7.84 | –3.05 | 4.77 | |||||||||||||
MSCI EAFE® ND Index | –5.77 | –3.51 | 5.65 | |||||||||||||
Lipper International Large-Cap Core Funds Average | –5.98 | –3.53 | 4.88 |
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.
The average annual total returns take into account applicable sales charges. Class A shares are subject to a maximum front-end sales charge of 5.50%, and a 12b-1 fee of 0.30% annually. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%. The Class A CDSC is waived for purchases by certain retirement or benefit plans. Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund. Class B shares 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 purchased are not subject to a front-end sales charge, but are
2 | Visit our website at www.prudentialfunds.com |
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 12b-1 fees. The returns in the tables reflect the share class expense structure in effect at the close of the fiscal period. 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
Morgan Stanley Capital International Europe, Australasia, and Far East ND Index
The Morgan Stanley Capital International Europe, Australasia, and Far East Index (MSCI EAFE® ND Index) is an unmanaged, weighted index of performance that reflects stock price movements of developed-country markets in Europe, Australasia, and the Far East. The Net Dividend (ND) version of the MSCI EAFE Index reflects the impact of the maximum withholding taxes on reinvested dividends.
Lipper International Large-Cap Core Funds Average
The Lipper International Large-Cap Core Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper International Large-Cap Core Funds category. Funds in the Lipper Average invest at least 75% of their equity assets in companies strictly outside of the U.S. with market capitalizations (on a three-year weighted basis) above Lipper’s international large-cap floor. International large-cap core funds typically have average characteristics compared to the large-cap-specific subset of the MSCI EAFE Index.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.
Five Largest Holdings expressed as a percentage of net assets as of 4/30/12 | ||||
Royal Dutch Shell PLC (Class B stock), Oil, Gas & Consumable Fuels | 1.8 | % | ||
Novartis AG, Pharmaceuticals | 1.7 | |||
Vodafone Group PLC, Telecommunications | 1.5 | |||
Novo Nordisk A/S (Class B Stock), Pharmaceuticals | 1.4 | |||
Allianz SE, Insurance | 1.4 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/12 | ||||
Banks | 11.0 | % | ||
Oil, Gas & Consumable Fuels | 10.2 | |||
Pharmaceuticals | 9.6 | |||
Insurance | 7.1 | |||
Telecommunications | 6.7 |
Industry weightings reflect only long-term investments and are subject to change.
Prudential International Value 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 November 1, 2011, at the beginning of the period, and held through the six-month period ended April 30, 2012. 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 International Value Fund | Beginning Account Value November 1, 2011 | Ending Account Value April 30, 2012 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,032.00 | 1.93 | % | $ | 9.75 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.27 | 1.93 | % | $ | 9.67 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,027.80 | 2.68 | % | $ | 13.51 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,011.54 | 2.68 | % | $ | 13.40 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,027.80 | 2.68 | % | $ | 13.51 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,011.54 | 2.68 | % | $ | 13.40 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,033.00 | 1.68 | % | $ | 8.49 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.51 | 1.68 | % | $ | 8.42 |
* 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 182 days in the six-month period ended April 30, 2012, and divided by the 366 days in the Fund’s fiscal year ending October 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 International Value Fund | 5 |
Portfolio of Investments
as of April 30, 2012 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 97.2% |
| |||||
COMMON STOCKS 96.0% |
| |||||
Australia 4.2% |
| |||||
33,100 | Bendigo and Adelaide Bank Ltd. | $ | 259,698 | |||
17,452 | BHP Billiton Ltd. | 646,444 | ||||
61,388 | BlueScope Steel Ltd.* | 25,265 | ||||
12,700 | Caltex Australia Ltd. | 182,215 | ||||
82,600 | Challenger Ltd. | 342,539 | ||||
71,625 | Downer EDI Ltd.* | 269,413 | ||||
253,200 | Emeco Holdings Ltd. | 274,374 | ||||
171,558 | Goodman Fielder Ltd. | 117,084 | ||||
77,000 | Metcash Ltd. | 317,711 | ||||
24,000 | National Australia Bank Ltd. | 630,921 | ||||
176,200 | OneSteel Ltd. | 239,587 | ||||
88,300 | Pacific Brands Ltd. | 56,583 | ||||
6,200 | Rio Tinto Ltd. | 428,627 | ||||
78,100 | Telstra Corp. Ltd. | 288,072 | ||||
|
| |||||
4,078,533 | ||||||
Austria 0.6% |
| |||||
10,700 | OMV AG | 362,233 | ||||
5,700 | Voestalpine AG | 184,515 | ||||
|
| |||||
546,748 | ||||||
Belgium 0.4% |
| |||||
32,700 | AGFA-Gevaert NV* | 71,420 | ||||
7,300 | Delhaize Group SA | 355,357 | ||||
4,935 | Dexia NV/SA* | 1,241 | ||||
|
| |||||
428,018 | ||||||
Brazil 1.3% |
| |||||
52,410 | BM&FBOVESPA SA | 292,824 | ||||
14,217 | Embraer SA, ADR | 492,477 | ||||
22,900 | Natura Cosmeticos SA | 517,432 | ||||
|
| |||||
1,302,733 | ||||||
Canada 2.9% |
| |||||
11,370 | Canadian National Railway Co. | 970,280 | ||||
18,700 | Canadian Natural Resources Ltd. | 649,677 | ||||
13,711 | Cenovus Energy, Inc. | 497,585 | ||||
16,460 | Potash Corp. of Saskatchewan, Inc. | 699,221 | ||||
|
| |||||
2,816,763 |
See Notes to Financial Statements.
Prudential International Value Fund | 7 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Cayman Islands 0.8% |
| |||||
1,792 | Baidu, Inc., ADR* | $ | 237,799 | |||
16,805 | Tencent Holdings Ltd. | 528,063 | ||||
|
| |||||
765,862 | ||||||
China 2.0% |
| |||||
143,404 | China Life Insurance Co. Ltd. (Class H Stock) | 388,146 | ||||
281,529 | China Merchants Bank Co. Ltd. (Class H Stock) | 611,053 | ||||
830,300 | Industrial & Commercial Bank of China Ltd. (Class H Stock) | 554,343 | ||||
146,024 | Sinopharm Group Co. Ltd. (Class H Stock) | 383,003 | ||||
|
| |||||
1,936,545 | ||||||
Denmark 1.8% |
| |||||
7,700 | Danske Bank A/S* | 125,018 | ||||
13,600 | H. Lundbeck A/S | 272,232 | ||||
9,425 | Novo Nordisk A/S (Class B Stock) | 1,390,222 | ||||
|
| |||||
1,787,472 | ||||||
Finland 0.3% |
| |||||
13,700 | Tieto Oyj | 241,372 | ||||
France 8.4% |
| |||||
6,771 | Air Liquide SA | 870,910 | ||||
20,000 | AXA SA | 283,271 | ||||
8,100 | BNP Paribas | 325,411 | ||||
6,502 | Cie Generale des Etablissements Michelin (Class B Stock) | 485,589 | ||||
2,700 | Ciments Francais SA | 172,981 | ||||
37,707 | Credit Agricole SA | 193,811 | ||||
9,900 | France Telecom SA | 135,436 | ||||
6,885 | LVMH Moet Hennessy Louis Vuitton SA | 1,140,574 | ||||
13,784 | Publicis Groupe SA | 710,858 | ||||
3,900 | Rallye SA | 130,170 | ||||
4,600 | Renault SA | 209,005 | ||||
13,760 | Sanofi | 1,050,223 | ||||
12,000 | SCOR SE | 317,290 | ||||
5,863 | Societe Generale | 138,608 | ||||
5,900 | Thales SA | 204,422 | ||||
16,400 | Total SA | 783,030 | ||||
5,100 | Valeo SA | 250,457 | ||||
4,800 | Vallourec SA | 288,651 | ||||
26,900 | Vivendi SA | 497,258 | ||||
|
| |||||
8,187,955 |
See Notes to Financial Statements.
8 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Germany 9.6% |
| |||||
14,090 | Adidas AG | $ | 1,175,006 | |||
12,400 | Allianz SE | 1,381,717 | ||||
3,300 | Aurubis AG | 183,137 | ||||
6,200 | BASF SE | 510,388 | ||||
3,100 | Bayer AG | 218,345 | ||||
7,500 | Daimler AG | 414,631 | ||||
8,700 | Deutsche Bank AG | 378,536 | ||||
12,200 | E.ON AG | 276,392 | ||||
12,348 | Fresenius Medical Care AG & Co. KGaA | 876,583 | ||||
4,300 | Hannover Rueckversicherung AG | 259,920 | ||||
2,200 | Merck KGaA | 241,707 | ||||
2,700 | Muenchener Rueckversicherungs-Gesellschaft AG | 391,887 | ||||
5,100 | Rheinmetall AG | 286,405 | ||||
7,300 | RWE AG | 313,806 | ||||
16,018 | SAP AG | 1,062,057 | ||||
8,900 | Siemens AG | 824,310 | ||||
7,800 | ThyssenKrupp AG | 184,815 | ||||
2,500 | Volkswagen AG | 426,727 | ||||
|
| |||||
9,406,369 | ||||||
Hong Kong 2.7% |
| |||||
103,000 | Cathay Pacific Airways Ltd. | 174,706 | ||||
458,717 | CNOOC Ltd. | 977,899 | ||||
388,800 | First Pacific Co. Ltd. | 422,443 | ||||
44,548 | Hong Kong Exchanges and Clearing Ltd. | 712,547 | ||||
58,100 | Kingboard Chemical Holdings Ltd. | 162,873 | ||||
68,200 | Yue Yuen Industrial Holdings Ltd. | 228,545 | ||||
|
| |||||
2,679,013 | ||||||
Ireland 0.7% |
| |||||
20,600 | Allied Irish Banks PLC* | 2,045 | ||||
12,400 | Covidien PLC | 684,852 | ||||
15,600 | Irish Life & Permanent Group Holdings PLC* | 764 | ||||
|
| |||||
687,661 | ||||||
Israel 2.6% |
| |||||
62,300 | Bank Hapoalim BM | 231,675 | ||||
11,063 | Check Point Software Technologies Ltd.* | 643,092 | ||||
6,200 | Elbit Systems Ltd. | 226,443 | ||||
9,100 | Teva Pharmaceutical Industries Ltd. | 411,884 |
See Notes to Financial Statements.
Prudential International Value Fund | 9 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Israel (cont’d.) |
| |||||
22,014 | Teva Pharmaceutical Industries Ltd., ADR | $ | 1,006,920 | |||
|
| |||||
2,520,014 | ||||||
Italy 1.6% |
| |||||
14,400 | Banco Popolare Scarl | 21,387 | ||||
124,700 | Enel SpA | 409,361 | ||||
35,100 | ENI SpA | 779,164 | ||||
15,200 | Finmeccanica SpA | 65,310 | ||||
5,500 | Fondiaria-SAI SpA* | 6,756 | ||||
251,900 | Telecom Italia SpA | 286,257 | ||||
|
| |||||
1,568,235 | ||||||
Japan 16.2% |
| |||||
8,373 | Alpine Electronics, Inc. | 110,640 | ||||
11,400 | Aoyama Trading Co. Ltd. | 236,167 | ||||
15,366 | Canon, Inc. | 706,328 | ||||
22,500 | COMSYS Holdings Corp. | 227,705 | ||||
294 | Dai-ichi Life Insurance Co. Ltd. (The) | 372,655 | ||||
3,509 | Fanuc Corp. | 597,286 | ||||
73,900 | Fukuoka Financial Group, Inc. | 309,151 | ||||
8,700 | Fuyo General Lease Co. Ltd. | 283,970 | ||||
21,600 | Heiwa Corp. | 450,180 | ||||
12,800 | Hitachi Capital Corp. | 213,066 | ||||
3,400 | Itochu Techno-Solutions Corp. | 155,223 | ||||
57,894 | JX Holdings, Inc. | 328,482 | ||||
203 | KDDI Corp. | 1,334,857 | ||||
9,400 | Keihin Corp. | 161,769 | ||||
29,045 | Komatsu Ltd. | 842,174 | ||||
50,100 | Kurabo Industries Ltd. | 93,498 | ||||
20,400 | Kyorin Holdings, Inc. | 392,976 | ||||
25,600 | Kyowa Exeo Corp. | 233,748 | ||||
76,000 | Marubeni Corp. | 531,162 | ||||
3,900 | Miraca Holdings, Inc. | 154,114 | ||||
5,900 | Mitsubishi Corp. | 128,804 | ||||
174,700 | Mitsubishi UFJ Financial Group, Inc. | 846,805 | ||||
25,800 | Mitsui & Co. Ltd. | 405,225 | ||||
248,700 | Mizuho Financial Group, Inc. | 395,602 | ||||
1,100 | Nichirei Corp. | 5,015 | ||||
14,700 | Nippon Electric Glass Co. Ltd. | 120,045 | ||||
22,800 | Nippon Shokubai Co. Ltd. | 257,014 |
See Notes to Financial Statements.
10 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Japan (cont’d.) |
| |||||
12,300 | Nippon Telegraph & Telephone Corp. | $ | 558,461 | |||
78,700 | Nishi-Nippon City Bank Ltd. (The) | 207,987 | ||||
22,000 | Nissan Shatai Co. Ltd. | 232,841 | ||||
300 | NTT DoCoMo, Inc. | 511,774 | ||||
6,600 | Otsuka Holdings Co. Ltd. | 199,223 | ||||
3,400 | Sankyo Co. Ltd. | 164,379 | ||||
49,800 | Sankyu, Inc. | 198,352 | ||||
29,400 | Seino Holdings Co. Ltd. | 204,371 | ||||
13,500 | Shimachu Co. Ltd. | 304,359 | ||||
25,400 | Shizuoka Gas Co. Ltd. | 184,201 | ||||
38,600 | Sumitomo Corp. | 551,152 | ||||
17,900 | Sumitomo Mitsui Financial Group, Inc. | 579,329 | ||||
14,006 | Sumitomo Mitsui Trust Holdings, Inc. | 41,401 | ||||
52,600 | Toagosei Co. Ltd. | 228,610 | ||||
16,700 | Toppan Forms Co. Ltd. | 150,392 | ||||
24,171 | Toyota Motor Corp. | 1,000,566 | ||||
18,300 | Toyota Tsusho Corp. | 365,129 | ||||
36,900 | Yokohama Rubber Co. Ltd. (The) | 272,221 | ||||
|
| |||||
15,848,409 | ||||||
Mexico 0.6% |
| |||||
214,556 | Wal-Mart de Mexico SAB de CV (Class V Stock) | 613,561 | ||||
Netherlands 3.3% |
| |||||
18,800 | Aegon NV* | 86,825 | ||||
44,700 | ING Groep NV, CVA* | 315,195 | ||||
40,800 | Koninklijke Ahold NV | 517,493 | ||||
8,300 | Koninklijke DSM NV | 475,888 | ||||
21,300 | Koninklijke KPN NV | 191,189 | ||||
8,366 | Koninklijke Philips Electronics NV | 166,111 | ||||
2,000 | Nutreco NV | 145,342 | ||||
13,649 | Schlumberger Ltd. | 1,011,937 | ||||
11,700 | Yandex NV (Class A Stock)* | 277,524 | ||||
|
| |||||
3,187,504 | ||||||
New Zealand 0.2% |
| |||||
279,800 | Air New Zealand Ltd.(a) | 203,637 | ||||
Norway 0.7% |
| |||||
15,500 | Cermaq ASA* | 211,661 |
See Notes to Financial Statements.
Prudential International Value Fund | 11 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Norway (cont’d.) |
| |||||
20,700 | DnB NOR ASA | $ | 223,170 | |||
9,700 | Statoil ASA | 258,985 | ||||
|
| |||||
693,816 | ||||||
Singapore 0.4% |
| |||||
578,400 | Golden Agri-Resources Ltd. | 343,534 | ||||
South Korea 0.9% |
| |||||
3,530 | Hyundai Motor Co. | 838,673 | ||||
Spain 1.3% |
| |||||
28,659 | Banco Bilbao Vizcaya Argentaria SA | 193,700 | ||||
19,900 | Banco Espanol de Credito SA | 74,889 | ||||
73,500 | Banco Santander SA | 459,217 | ||||
20,300 | Repsol YPF SA | 388,286 | ||||
12,200 | Telefonica SA | 177,802 | ||||
|
| |||||
1,293,894 | ||||||
Sweden 2.0% |
| |||||
31,600 | Boliden AB | 505,878 | ||||
9,500 | Electrolux AB (Class B Stock) | 212,154 | ||||
25,116 | Hennes & Mauritz AB (Class B Stock) | 862,822 | ||||
5,500 | NCC AB (Class B Stock) | 108,097 | ||||
700 | Svenska Cellulosa AB (Class B Stock) | 11,091 | ||||
8,500 | Svenska Handelsbanken AB (Class A Stock) | 275,438 | ||||
|
| |||||
1,975,480 | ||||||
Switzerland 7.7% |
| |||||
4,500 | Baloise Holding AG | 348,289 | ||||
14,084 | Clariant AG* | 179,066 | ||||
24,900 | Credit Suisse Group AG* | 595,581 | ||||
500 | Georg Fischer AG* | 221,589 | ||||
12,166 | Julius Baer Group Ltd.* | 465,784 | ||||
18,200 | Nestle SA | 1,114,879 | ||||
29,767 | Novartis AG | 1,641,424 | ||||
4,400 | Roche Holding AG | 803,746 | ||||
770 | Swatch Group AG (The) | 355,117 | ||||
2,100 | Swiss Life Holding AG* | 214,824 | ||||
6,400 | Swiss Re Ltd.* | 401,212 | ||||
1,320 | Syngenta AG | 463,487 |
See Notes to Financial Statements.
12 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Switzerland (cont’d.) |
| |||||
1,400 | Verwaltungs-und Privat-Bank AG | $ | 119,385 | |||
2,500 | Zurich Financial Services AG* | 611,469 | ||||
|
| |||||
7,535,852 | ||||||
Taiwan 0.2% |
| |||||
10,238 | HTC Corp. | 155,278 | ||||
United Kingdom 22.1% |
| |||||
50,858 | ARM Holdings PLC | 432,497 | ||||
20,700 | AstraZeneca PLC | 906,872 | ||||
60,800 | Aviva PLC | 304,010 | ||||
100,100 | BAE Systems PLC | 479,560 | ||||
85,481 | Barclays PLC | 302,772 | ||||
75,157 | Beazley PLC | 172,835 | ||||
15,600 | Berendsen PLC | 130,384 | ||||
40,544 | BG Group PLC | 954,414 | ||||
116,400 | BP PLC | 840,631 | ||||
22,696 | British American Tobacco PLC | 1,163,567 | ||||
207,400 | BT Group PLC | 709,532 | ||||
285,700 | Cable & Wireless Communications PLC | 152,962 | ||||
20,109 | Carnival PLC | 653,678 | ||||
38,100 | Cookson Group PLC | 448,595 | ||||
29,400 | Dairy Crest Group PLC | 143,617 | ||||
38,000 | Drax Group PLC | 334,870 | ||||
20,900 | GlaxoSmithKline PLC | 483,341 | ||||
98,900 | Home Retail Group PLC | 171,098 | ||||
97,464 | HSBC Holdings PLC | 888,132 | ||||
55,000 | Intermediate Capital Group PLC | 229,219 | ||||
115,700 | J. Sainsbury PLC | 578,143 | ||||
165,503 | Kingfisher PLC | 780,269 | ||||
234,900 | Legal & General Group PLC | 448,314 | ||||
123,600 | Logica PLC | 156,260 | ||||
24,800 | Marks & Spencer Group PLC | 143,685 | ||||
48,900 | Marston’s PLC | 77,416 | ||||
35,300 | Mondi PLC | 327,404 | ||||
4,200 | Next PLC | 199,646 | ||||
142,800 | Old Mutual PLC | 342,527 | ||||
29,034 | Pearson PLC | 546,584 | ||||
19,573 | Reckitt Benckiser Group PLC | 1,139,413 | ||||
29,290 | Rolls-Royce Holdings PLC* | 391,449 | ||||
46,900 | Royal Dutch Shell PLC (Class B Stock) | 1,709,904 |
See Notes to Financial Statements.
Prudential International Value Fund | 13 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
United Kingdom (cont’d.) |
| |||||
100,287 | RSA Insurance Group PLC | $ | 170,894 | |||
14,457 | SABMiller PLC | 607,322 | ||||
44,457 | Standard Chartered PLC | 1,086,570 | ||||
167,579 | Tesco PLC | 863,079 | ||||
56,900 | Thomas Cook Group PLC | 20,777 | ||||
50,700 | Tullett Prebon PLC | 282,636 | ||||
515,770 | Vodafone Group PLC | 1,427,161 | ||||
84,500 | WM Morrison Supermarkets PLC | 384,801 | ||||
|
| |||||
21,586,840 | ||||||
United States 0.5% |
| |||||
6,900 | Yum! Brands, Inc. | 501,837 | ||||
|
| |||||
Total common stocks | 93,731,608 | |||||
|
| |||||
PREFERRED STOCKS 1.2% |
| |||||
Brazil 0.3% |
| |||||
23,400 | Itau Unibanco Holding SA, ADR 2.79% (PRFC) | 367,146 | ||||
Germany 0.9% |
| |||||
4,552 | Volkswagen AG, 1.81% (PRFC) | 862,244 | ||||
United Kingdom |
| |||||
3,104,740 | Rolls-Royce Holdings PLC (PRFC C)*(a) | 5,039 | ||||
|
| |||||
Total preferred stocks | 1,234,429 | |||||
|
| |||||
Total long-term investments | 94,966,037 | |||||
|
| |||||
SHORT-TERM INVESTMENT 1.7% |
| |||||
Affiliated Money Market Mutual Fund |
| |||||
1,652,682 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 1,652,682 | ||||
|
| |||||
Total Investments 98.9% | 96,618,719 | |||||
Other assets in excess of liabilities(c) 1.1% | 1,049,111 | |||||
|
| |||||
Net Assets 100% | $ | 97,667,830 | ||||
|
|
See Notes to Financial Statements.
14 | Visit our website at www.prudentialfunds.com |
The following abbreviations are used in the Portfolio descriptions:
ADR—American Depositary Receipt
CVA—Certificate Van Aandelen (Bearer)
PRFC—Preference Shares
EUR—Euro
* | Non-income producing security. |
(a) | Indicates a security or securities that have been deemed illiquid. |
(b) | Prudential Investments LLC, the manager of the Portfolio, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
(c) | Includes net unrealized appreciation on the following derivative contracts held at reporting period end: |
Forward foreign currency exchange contracts outstanding at April 30, 2012:
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Receivable | Current Value | Unrealized Appreciation | |||||||||||||
Euro, | ||||||||||||||||||
Expiring 05/09/12 | Bank of New York Mellon | EUR | 1,787 | $ | 2,452,948 | $ | 2,365,001 | $ | 87,947 | |||||||||
|
|
|
|
|
|
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 securities actively traded on a regulated securities exchange and for open-end 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 fair valuation procedures.
See Notes to Financial Statements.
Prudential International Value Fund | 15 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
The following is a summary of the inputs used as of April 30, 2012 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks: | ||||||||||||
Australia | $ | 4,078,533 | $ | — | $ | — | ||||||
Austria | 546,748 | — | — | |||||||||
Belgium | 428,018 | — | — | |||||||||
Brazil | 1,302,733 | — | — | |||||||||
Canada | 2,816,763 | — | — | |||||||||
Cayman Islands | 765,862 | — | — | |||||||||
China | 1,936,545 | — | — | |||||||||
Denmark | 1,787,472 | — | — | |||||||||
Finland | 241,372 | — | — | |||||||||
France | 8,187,955 | — | — | |||||||||
Germany | 9,406,369 | — | — | |||||||||
Hong Kong | 2,679,013 | — | — | |||||||||
Ireland | 687,661 | — | — | |||||||||
Israel | 2,520,014 | — | — | |||||||||
Italy | 1,568,235 | — | — | |||||||||
Japan | 15,848,409 | — | — | |||||||||
Mexico | 613,561 | — | — | |||||||||
Netherlands | 3,187,504 | — | — | |||||||||
New Zealand | 203,637 | — | — | |||||||||
Norway | 693,816 | — | — | |||||||||
Singapore | 343,534 | — | — | |||||||||
South Korea | 838,673 | — | — | |||||||||
Spain | 1,293,894 | — | — | |||||||||
Sweden | 1,975,480 | — | — | |||||||||
Switzerland | 7,535,852 | — | — | |||||||||
Taiwan | 155,278 | — | — | |||||||||
United Kingdom | 21,586,840 | — | — | |||||||||
United States | 501,837 | — | — | |||||||||
Preferred Stocks: | ||||||||||||
Brazil | 367,146 | — | — | |||||||||
Germany | 862,244 | — | — | |||||||||
United Kingdom | — | — | 5,039 | |||||||||
Affiliated Money Market Mutual Fund | 1,652,682 | — | — | |||||||||
Other Financial Instruments* | ||||||||||||
Foreign Forward Currency Exchange Contracts | — | 87,947 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 96,613,680 | $ | 87,947 | $ | 5,039 | ||||||
|
|
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swap contracts, which are recorded at the unrealized appreciation/depreciation on the instrument. |
See Notes to Financial Statements.
16 | Visit our website at www.prudentialfunds.com |
Fair Value of Level 2 investments at 10/31/11 was $87,692,258. $85,530,685 was transferred into Level 1 from Level 2 at 04/30/12 as a result of no longer 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 the period.
The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2012 were as follows:
Banks | 11.0 | % | ||
Oil, Gas & Consumable Fuels | 10.2 | |||
Pharmaceuticals | 9.6 | |||
Insurance | 7.1 | |||
Telecommunications | 6.7 | |||
Food & Beverage | 5.4 | |||
Chemicals | 4.2 | |||
Automobile Manufacturers | 4.0 | |||
Retail & Merchandising | 3.8 | |||
Metals & Mining | 2.7 | |||
Diversified Financial Services | 2.3 | |||
Distribution/Wholesale | 2.0 | |||
Holding Companies—Diversified | 1.9 | |||
Machinery & Equipment | 1.8 | |||
Computer Services & Software | 1.8 | |||
Affiliated Money Market Mutual Fund | 1.7 | |||
Apparel | 1.5 | |||
Aerospace/Defense | 1.5 | |||
Automotive Parts | 1.5 | |||
Transportation | 1.4 | |||
Miscellaneous Manufacturing | 1.4 | |||
Entertainment & Leisure | 1.4 | |||
Consumer Products & Services | 1.3 | |||
Agriculture | 1.2 | |||
Utilities | 1.0 | |||
Healthcare Providers & Services | 0.9 | % | ||
Engineering & Construction | 0.8 | |||
Internet | 0.8 | |||
Advertising | 0.7 | |||
Office Equipment | 0.7 | |||
Healthcare Products | 0.7 | |||
Software | 0.7 | |||
Commercial Services | 0.6 | |||
Media & Entertainment | 0.6 | |||
Cosmetics/Personal Care | 0.5 | |||
Retail | 0.5 | |||
Semiconductors | 0.4 | |||
Aerospace & Defense | 0.4 | |||
Airlines | 0.4 | |||
Food | 0.4 | |||
Forest & Paper Products | 0.3 | |||
Home Furnishings | 0.3 | |||
Electronic Components & Equipment | 0.3 | |||
Internet Software & Services | 0.3 | |||
Building Materials | 0.2 | |||
|
| |||
98.9 | ||||
Other assets in excess of liabilities | 1.1 | |||
|
| |||
100.0 | % | |||
|
|
The Series invested in various derivative instruments during the reporting period. The primary types of risk associated with these derivative instruments were equity risk and foreign exchange risk.
The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
See Notes to Financial Statements.
Prudential International Value Fund | 17 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Fair values of derivative instruments as of April 30, 2012 as presented in the Statement of Assets and Liabilities:
Derivatives not accounted for | Asset Derivatives | Liability Derivatives | ||||||||||
Balance | Fair Value | Balance | Fair Value | |||||||||
Foreign exchange contracts | Unrealized appreciation on foreign currency forward contracts | $ | 87,947 | — | $ | — | ||||||
|
|
|
|
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2012 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||
Derivatives not accounted for as hedging | Rights | Forward Currency Contracts | Total | |||||||||
Foreign exchange contracts | $ | — | $ | 156,270 | $ | 156,270 | ||||||
Equity contracts | 43,770 | — | 43,770 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 43,770 | $ | 156,270 | $ | 200,040 | ||||||
|
|
|
|
|
|
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||
Derivatives not accounted for as hedging | Forward Currency Contracts | Total | ||||||
Foreign exchange contracts | $ | (4,149 | ) | $ | (4,149 | ) | ||
|
|
|
|
For the six months ended April 30, 2012, the Series’ average value at settlement date receivable for forward foreign currency exchange sale contracts was $2,771,109.
See Notes to Financial Statements.
18 | Visit our website at www.prudentialfunds.com |
Financial Statements
(Unaudited)
APRIL 30, 2012 | SEMIANNUAL REPORT |
Prudential International Value Fund
Statement of Assets and Liabilities
as of April 30, 2012 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated Investments (cost $87,292,476) | $ | 94,966,037 | ||
Affiliated Investments (cost $1,652,682) | 1,652,682 | |||
Cash | 25,314 | |||
Foreign currency, at value (cost $300,018) | 302,636 | |||
Dividends and interest receivable | 582,053 | |||
Receivable for investments sold | 464,435 | |||
Tax reclaim receivable | 250,998 | |||
Unrealized appreciation on foreign currency forward contracts | 87,947 | |||
Receivable for Series shares sold | 66,182 | |||
Prepaid expenses | 631 | |||
|
| |||
Total assets | 98,398,915 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 336,037 | |||
Accrued expenses | 210,830 | |||
Advisory fee payable | 79,689 | |||
Payable for Series shares reacquired | 73,052 | |||
Affiliated transfer agent fee payable | 18,442 | |||
Distribution fee payable | 13,035 | |||
|
| |||
Total liabilities | 731,085 | |||
|
| |||
Net Assets | $ | 97,667,830 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par value | $ | 51,194 | ||
Paid-in capital in excess of par | 115,319,849 | |||
|
| |||
115,371,043 | ||||
Undistributed net investment income | 605,645 | |||
Accumulated net realized loss on investment and foreign currency transactions | (26,093,551 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 7,784,693 | |||
|
| |||
Net assets, April 30, 2012 | $ | 97,667,830 | ||
|
|
See Notes to Financial Statements.
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Class A: | ||||
Net asset value and redemption price per share | $ | 19.08 | ||
Maximum sales charge (5.5% of offering price) | 1.11 | |||
|
| |||
Maximum offering price to public | $ | 20.19 | ||
|
| |||
Class B: | ||||
Net asset value, offering price and redemption price per share | $ | 18.26 | ||
|
| |||
Class C: | ||||
Net asset value, offering price and redemption price per share | $ | 18.29 | ||
|
| |||
Class Z: | ||||
Net asset value, offering price and redemption price per share | $ | 19.18 | ||
|
|
See Notes to Financial Statements.
Prudential International Value Fund | 21 |
Statement of Operations
Six Months Ended April 30, 2012 (Unaudited)
Net Investment Income | ||||
Investment Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $120,243) | $ | 1,588,317 | ||
Affiliated dividend income | 2,155 | |||
Unaffiliated interest income | 563 | |||
|
| |||
Total income | 1,591,035 | |||
|
| |||
Expenses | ||||
Advisory fee | 480,987 | |||
Distribution fee—Class A | 45,186 | |||
Distribution fee—Class B | 8,996 | |||
Distribution fee—Class C | 27,187 | |||
Transfer agent’s fee and expenses (including affiliated expense of $47,000) (Note 3) | 117,000 | |||
Custodian’s fees and expenses | 102,000 | |||
Registration fees | 26,000 | |||
Reports to shareholders | 20,000 | |||
Legal fees and expenses | 18,000 | |||
Audit fees | 15,000 | |||
Directors’ fees | 7,000 | |||
Insurance fees | 1,000 | |||
Miscellaneous | 22,334 | |||
|
| |||
Total expenses | 890,690 | |||
|
| |||
Net investment income | 700,345 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (52,105 | ) | ||
Foreign currency transactions | 137,767 | |||
|
| |||
85,662 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 2,294,597 | |||
Foreign currencies | (7,645 | ) | ||
|
| |||
2,286,952 | ||||
|
| |||
Net gain on investments and foreign currencies | 2,372,614 | |||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 3,072,959 | ||
|
|
See Notes to Financial Statements.
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Statement of Changes in Net Assets
(Unaudited)
For Six Months Ended April 30, 2012 | Year Ended October 31, 2011 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 700,345 | $ | 1,691,196 | ||||
Net realized gain on investment and foreign currency transactions | 85,662 | 10,774,092 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 2,286,952 | (12,788,702 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 3,072,959 | (323,414 | ) | |||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (610,527 | ) | (376,129 | ) | ||||
Class B | (17,304 | ) | (5,738 | ) | ||||
Class C | (53,269 | ) | (12,666 | ) | ||||
Class Z | (978,760 | ) | (1,693,194 | ) | ||||
|
|
|
| |||||
(1,659,860 | ) | (2,087,727 | ) | |||||
|
|
|
| |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 5,824,758 | 27,552,858 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 1,623,730 | 2,073,598 | ||||||
Cost of shares reacquired | (10,058,908 | ) | (142,888,872 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from Series share transactions | (2,610,420 | ) | (113,262,416 | ) | ||||
|
|
|
| |||||
Total decrease | (1,197,321 | ) | (115,673,557 | ) | ||||
Net Assets | ||||||||
Beginning of period | 98,865,151 | 214,538,708 | ||||||
|
|
|
| |||||
End of period(a) | $ | 97,667,830 | $ | 98,865,151 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 605,645 | $ | 1,565,160 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential International Value Fund | 23 |
Notes to Financial Statements
(Unaudited)
Prudential World Fund, Inc. (the “Fund”), is registered under the Investment Company Act of 1940, as amended, (“1940 Act”) as an open-end diversified management investment company and currently consists of five series: Prudential International Value Fund (the “Series”), Prudential International Equity Fund, Prudential Emerging Markets Debt Local Currency Fund, Prudential Jennison Global Opportunities Fund and Prudential Jennison International Opportunities Fund. These financial statements relate to Prudential International Value Fund. The financial statements of the other series are not presented herein. The investment objective of the Series is to achieve long-term growth of capital.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund and the Series 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 ask 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 subadvisor(s), 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 bid and asked prices on such exchange or board of trade or at the last bid price in the absence of an asked price. Securities for which 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 Funds’ normal pricing time, are valued at fair value in accordance with the Board of
24 | Visit our website at www.prudentialfunds.com |
Directors’ 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 advisor 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 value at their net asset value as of the close of the New York Stock Exchange on the date of the valuation.
Short-term securities of sufficient credit quality, which mature in 60 days or less, are valued at amortized cost, which approximates market value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term securities which mature in more than 60 days are valued at fair value.
Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged to each borrower is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the lender securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities using the collateral in the open market. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The Series also continues to receive interest and dividends or amounts equivalent thereto, on the securities loaned and recognizes any unrealized gain or loss in the market price of the securities loaned that may occur during the term of the loan.
Prudential International Value Fund | 25 |
Notes to Financial Statements
(Unaudited) continued
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange.
(ii) Purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the fiscal period, the Series 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 long-term securities held at the end of the fiscal period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the 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 the holding 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 Series’ 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 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 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
26 | Visit our website at www.prudentialfunds.com |
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 forward 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 elements of both market 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. Such credit risk may be mitigated by a master netting agreement 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 are no assurances that such mitigating factors are easily enforceable.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized and unrealized 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 an accrual basis. Expenses are recorded on the accrual basis. Net investment income or loss, (other than distribution fees which are charged directly to the 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 Series expects to pay dividends of net investment income and distributions of net realized capital gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-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: For federal income tax purposes, each series in the Fund is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the requirements
Prudential International Value Fund | 27 |
Notes to Financial Statements
(Unaudited) continued
of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends are recorded, net of reclaimable amounts, at the time the related income is earned.
Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
Note 2. Agreements
The Fund has a management agreement for the Series with Prudential Investments LLC (“PI”). Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI has entered into subadvisory agreements with LSV Asset Management (“LSV”) and Thornburg Investment Management (“Thornburg”) for the Series.
The subadvisory agreements provide that LSV and Thornburg furnish investment advisory services in connection with the management of the Series. In connection therewith, LSV and Thornburg are obligated to keep certain books and records of the Series. PI pays for the services of the subadvisors, the compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly at an annual rate of 1% of the average daily net assets up to $300 million, .95% of the next $700 million of average daily net assets and .90% of average daily net assets in excess of $1 billion of the Series. The effective management fee rate as of April 30, 2012 was 1.00%.
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 and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class B and Class C shares pursuant to plans of distribution (the “Class A, B and C Plans”), regardless of expenses actually incurred by
28 | Visit our website at www.prudentialfunds.com |
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 Series.
Pursuant to the Class A, B and C Plans, the Series 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. For the six months ended April 30, 2012, PIMS contractually agreed to limit such fee to 0.25% of the average daily net assets of the Class A shares.
PIMS has advised the Series that it received $10,984 in front-end sales charges resulting from sales of Class A shares, during the six months ended April 30, 2012. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS advised the Series that for the six months ended April 30, 2012, it received $2, $1,365 and $423 in contingent deferred sales charges imposed upon certain redemptions by Class A, Class B and Class C shareholders, respectively.
PI and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly owned subsidiary of Prudential, serves as the Series’ 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 Series invests in the Prudential Core Taxable Money Market Fund (the “Core Fund”), a portfolio of Prudential Investment Portfolios 2 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 investment securities, other than short-term investments, for the six months ended April 30, 2012 were $6,691,628 and $9,610,728, respectively.
Prudential International Value Fund | 29 |
Notes to Financial Statements
(Unaudited) continued
Note 5. Distributions and Tax Information
The federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2012 was as follows:
Tax Basis | Appreciation | Depreciation | Net | |||
$89,660,363 | $18,918,757 | $(11,960,401) | $6,958,356 |
The difference between book basis and tax basis was primarily attributable to deferred losses on wash sales and mark-to-market of open passive foreign investment companies.
For federal income tax purposes, the Series had a capital loss carryforward as of October 31, 2011 of approximately $25,464,000 of which $24,487,000 expires in 2017, and $977,000 expires in 2018. The Series utilized capital loss carryforward to offset net taxable capital gains realized in the fiscal year ended October 31, 2011 of approximately $3,208,000. Accordingly, no capital gain distributions are 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 Act”), the Series 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 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.
Management has analyzed the Series‘ 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 Series’ financial statements for the current reporting period. The Series’ federal and state income and federal excise tax returns for tax years for which the applicable statuses of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
30 | Visit our website at www.prudentialfunds.com |
Note 6. Capital
The Series offers Class A, Class B, Class C and Class Z shares. Class A shares are sold with a front-end sales charge of up to 5.50%. All investors who purchase Class A shares in 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. Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock. Class B shares are sold with a CDSC which declines from 5% to zero depending upon the period of time the shares are held. Class C shares are sold with a CDSC of 1% during the first 12 months from the date of purchase. Class B shares will 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 qualify to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
There are 250 million authorized shares of $.01 par value common stock, divided into four classes, designated Class A, Class B, Class C and Class Z common stock each of which consists of 75 million, 50 million, 50 million and 75 million authorized shares, respectively.
For the year ended October 31, 2010, the Series received $329,878 related to an affiliate’s settlement of regulatory proceedings involving allegations of improper trading. The per share effect of this amount is disclosed in the financial highlights.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six Months ended April 30, 2012: | ||||||||
Shares sold | 41,474 | $ | 772,080 | |||||
Shares issued in reinvestment of dividends and distributions | 32,651 | 585,428 | ||||||
Shares reacquired | (272,401 | ) | (4,992,803 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (198,276 | ) | (3,635,295 | ) | ||||
Shares issued upon conversion from Class B | 10,800 | 199,277 | ||||||
Shares reacquired upon conversion into Class Z | (6,033 | ) | (107,215 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (193,509 | ) | $ | (3,543,233 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 174,148 | $ | 3,564,449 | |||||
Shares issued in reinvestment of dividends and distributions | 18,196 | 363,555 | ||||||
Shares reacquired | (405,920 | ) | (8,369,754 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (213,576 | ) | (4,441,750 | ) | ||||
Shares issued upon conversion from Class B | 33,177 | 671,705 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (180,399 | ) | $ | (3,770,045 | ) | |||
|
|
|
|
Prudential International Value Fund | 31 |
Notes to Financial Statements
(Unaudited) continued
Class B | Shares | Amount | ||||||
Six Months ended April 30, 2012: | ||||||||
Shares sold | 4,971 | $ | 87,993 | |||||
Shares issued in reinvestment of dividends and distributions | 928 | 15,993 | ||||||
Shares reacquired | (11,965 | ) | (213,193 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (6,066 | ) | (109,207 | ) | ||||
Shares reacquired upon conversion into Class A | (11,103 | ) | (199,277 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (17,169 | ) | $ | (308,484 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 11,306 | $ | 223,306 | |||||
Shares issued in reinvestment of dividends and distributions | 281 | 5,390 | ||||||
Shares reacquired | (26,475 | ) | (519,188 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (14,888 | ) | (290,492 | ) | ||||
Shares reacquired upon conversion into Class A | (34,655 | ) | (671,705 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (49,543 | ) | $ | (962,197 | ) | |||
|
|
|
| |||||
Class C | ||||||||
Six Months ended April 30, 2012: | ||||||||
Shares sold | 13,487 | $ | 237,382 | |||||
Shares issued in reinvestment of dividends and distributions | 3,028 | 52,206 | ||||||
Shares reacquired | (59,277 | ) | (1,031,226 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (42,762 | ) | $ | (741,638 | ) | |||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 33,601 | $ | 667,489 | |||||
Shares issued in reinvestment of dividends and distributions | 649 | 12,462 | ||||||
Shares reacquired | (55,107 | ) | (1,085,844 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (20,857 | ) | $ | (405,893 | ) | |||
|
|
|
| |||||
Class Z | ||||||||
Six Months ended April 30, 2012: | ||||||||
Shares sold | 257,102 | $ | 4,727,303 | |||||
Shares issued in reinvestment of dividends and distributions | 53,865 | 970,103 | ||||||
Shares reacquired | (203,471 | ) | (3,821,686 | ) | ||||
|
|
|
| |||||
107,496 | 1,875,720 | |||||||
Shares reacquired upon conversion into Class A | 6,006 | 107,215 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 113,502 | $ | 1,982,935 | |||||
|
|
|
| |||||
Year ended October 31, 2011: | ||||||||
Shares sold | 1,145,232 | $ | 23,097,614 | |||||
Shares issued in reinvestment of dividends and distributions | 84,356 | 1,692,191 | ||||||
Shares reacquired | (6,266,505 | ) | (132,914,086 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (5,036,917 | ) | $ | (108,124,281 | ) | |||
|
|
|
|
32 | Visit our website at www.prudentialfunds.com |
Note 7. Borrowings
The Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period December 16, 2011 through December 14, 2012. The Funds pay an annualized commitment fee of .08% of the unused portion of the SCA. Prior to December 16, 2011, the Funds had another Syndicated Credit Agreement of a $750 million commitment with an annualized commitment fee of .10% of the unused portion. 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 Series did not utilize the SCA during the six months ended April 30, 2012.
Note 8. In-Kind Redemption
During the year ended October 31, 2011, the Series settled the redemption of certain fund shares by delivery of certain portfolio securities in lieu of cash. The value of such securities was $112,688,510. The Series realized a gain of $8,016,394 related to the in-kind redemption transactions, which amount is included in the Statement of Changes under “Net realized gain on investment and foreign currency transactions”. Such gain is excluded from calculation of the Series’ taxable gain for federal income tax purposes.
Note 9. 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 International Value Fund | 33 |
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.
34 | Visit our website at www.prudentialfunds.com |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2012(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $18.80 | $20.29 | $18.45 | $15.28 | $34.10 | $27.12 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .12 | .32 | .22 | .20 | .44 | .51 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .46 | (1.64 | ) | 1.71 | 3.59 | (14.93 | ) | 7.85 | ||||||||||||||||||
Total from investment operations | .58 | (1.32 | ) | 1.93 | 3.79 | (14.49 | ) | 8.36 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.30 | ) | (.17 | ) | (.12 | ) | (.62 | ) | (.38 | ) | (.03 | ) | ||||||||||||||
Distributions from net realized gains | - | - | - | - | (3.95 | ) | (1.35 | ) | ||||||||||||||||||
Total dividends and distributions | (.30 | ) | (.17 | ) | (.12 | ) | (.62 | ) | (4.33 | ) | (1.38 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | - | .03 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $19.08 | $18.80 | $20.29 | $18.45 | $15.28 | $34.10 | ||||||||||||||||||||
Total Return(a): | 3.20% | (6.56)% | 10.68% | 26.03% | (48.33)% | 32.15% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $35,739 | $38,858 | $45,598 | $45,945 | $40,580 | $91,221 | ||||||||||||||||||||
Average net assets (000) | $36,348 | $44,169 | $44,626 | $39,582 | $71,618 | $84,344 | ||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees(c) | 1.93% | (e) | 1.78% | 1.66% | 1.65% | 1.56% | 1.57% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.68% | (e) | 1.53% | 1.41% | 1.40% | 1.31% | 1.32% | |||||||||||||||||||
Net investment income | 1.34% | (e) | 1.56% | 1.17% | 1.30% | 1.79% | 1.74% | |||||||||||||||||||
Portfolio turnover rate | 7% | (f) | 25% | 40% | 40% | 27% | 44% |
(a) Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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 1% of the average daily assets of the Class A shares.
(d) Does not include expenses of the underlying portfolio in which the Series invests.
(e) Annualized.
(f) Not Annualized.
See Notes to Financial Statements.
Prudential International Value Fund | 35 |
Financial Highlights
(Unaudited) continued
Class B Shares | ||||||||||||||||||||||||||
Six Months Ended | Year Ended October 31, | |||||||||||||||||||||||||
2012(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $17.93 | $19.37 | $17.64 | $14.58 | $32.73 | $26.24 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .05 | .16 | .08 | .08 | .24 | .24 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .44 | (1.56 | ) | 1.63 | 3.45 | (14.29 | ) | 7.60 | ||||||||||||||||||
Total from investment operations | .49 | (1.40 | ) | 1.71 | 3.53 | (14.05 | ) | 7.84 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.16 | ) | (.04 | ) | (.01 | ) | (.47 | ) | (.15 | ) | - | |||||||||||||||
Distributions from net realized gains | - | - | - | - | (3.95 | ) | (1.35 | ) | ||||||||||||||||||
Total dividends and distributions | (.16 | ) | (.04 | ) | (.01 | ) | (.47 | ) | (4.10 | ) | (1.35 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | - | .03 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $18.26 | $17.93 | $19.37 | $17.64 | $14.58 | $32.73 | ||||||||||||||||||||
Total Return(a): | 2.78% | (7.26)% | 9.86% | 25.11% | (48.74)% | 31.17% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $1,698 | $1,975 | $3,093 | $3,839 | $5,143 | $16,279 | ||||||||||||||||||||
Average net assets (000) | $1,809 | $2,651 | $3,314 | $3,985 | $10,730 | $16,627 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 2.68% | (d) | 2.52% | 2.41% | 2.40% | 2.31% | 2.32% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.68% | (d) | 1.52% | 1.41% | 1.40% | 1.31% | 1.32% | |||||||||||||||||||
Net investment income | .53% | (d) | .81% | .43% | .58% | 1.01% | .84% | |||||||||||||||||||
Portfolio turnover rate | 7% | (e) | 25% | 40% | 40% | 27% | 44% |
(a) Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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 Series invests.
(d) Annualized.
(e) Not Annualized.
See Notes to Financial Statements.
36 | Visit our website at www.prudentialfunds.com |
Class C Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2012(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $17.96 | $19.40 | $17.66 | $14.60 | $32.77 | $26.27 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .05 | .16 | .07 | .08 | .24 | .27 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .44 | (1.56 | ) | 1.65 | 3.45 | (14.31 | ) | 7.58 | ||||||||||||||||||
Total from investment operations | .49 | (1.40 | ) | 1.72 | 3.53 | (14.07 | ) | 7.85 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.16 | ) | (.04 | ) | (.01 | ) | (.47 | ) | (.15 | ) | - | |||||||||||||||
Distributions from net realized gains | - | - | - | - | (3.95 | ) | (1.35 | ) | ||||||||||||||||||
Total dividends and distributions | (.16 | ) | (.04 | ) | (.01 | ) | (.47 | ) | (4.10 | ) | (1.35 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | - | .03 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $18.29 | $17.96 | $19.40 | $17.66 | $14.60 | $32.77 | ||||||||||||||||||||
Total Return(a): | 2.78% | (7.25)% | 9.91% | 25.08% | (48.74)% | 31.17% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $5,275 | $5,947 | $6,828 | $7,507 | $7,355 | $17,938 | ||||||||||||||||||||
Average net assets (000) | $5,467 | $6,690 | $6,760 | $6,807 | $13,571 | $16,297 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 2.68% | (d) | 2.53% | 2.41% | 2.40% | 2.31% | 2.32% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.68% | (d) | 1.53% | 1.41% | 1.40% | 1.31% | 1.32% | |||||||||||||||||||
Net investment income | .56% | (d) | .81% | .42% | .58% | 1.04% | .94% | |||||||||||||||||||
Portfolio turnover rate | 7% | (e) | 25% | 40% | 40% | 27% | 44% |
(a) Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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 Series invests.
(d) Annualized.
(e) Not Annualized.
See Notes to Financial Statements.
Prudential International Value Fund | 37 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2012(b) | 2011(b) | 2010(b) | 2009(b) | 2008(b) | 2007(b) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $18.93 | $20.42 | $18.55 | $15.37 | $34.30 | $27.26 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .15 | .24 | .26 | .24 | .50 | .60 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .45 | (1.51 | ) | 1.74 | 3.62 | (15.02 | ) | 7.89 | ||||||||||||||||||
Total from investment operations | .60 | (1.27 | ) | 2.00 | 3.86 | (14.52 | ) | 8.49 | ||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.35 | ) | (.22 | ) | (.16 | ) | (.68 | ) | (.46 | ) | (.10 | ) | ||||||||||||||
Distributions from net realized gains | - | - | - | - | (3.95 | ) | (1.35 | ) | ||||||||||||||||||
Total dividends and distributions | (.35 | ) | (.22 | ) | (.16 | ) | (.68 | ) | (4.41 | ) | (1.45 | ) | ||||||||||||||
Capital Contributions (Note 6) | - | - | .03 | - | - | - | ||||||||||||||||||||
Net asset value, end of period | $19.18 | $18.93 | $20.42 | $18.55 | $15.37 | $34.30 | ||||||||||||||||||||
Total Return(a): | 3.30% | (6.30)% | 11.01% | 26.41% | (48.23)% | 32.50% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $54,957 | $52,086 | $159,020 | $136,238 | $115,710 | $234,828 | ||||||||||||||||||||
Average net assets (000) | $53,102 | $79,550 | $139,023 | $115,310 | $186,380 | $206,798 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses, including distribution and service (12b-1) fees | 1.68% | (d) | 1.47% | 1.41% | 1.40% | 1.31% | 1.32% | |||||||||||||||||||
Expenses, excluding distribution and service (12b-1) fees | 1.68% | (d) | 1.47% | 1.41% | 1.40% | 1.31% | 1.32% | |||||||||||||||||||
Net investment income | 1.66% | (d) | 1.16% | 1.41% | 1.58% | 2.06% | 2.02% | |||||||||||||||||||
Portfolio turnover rate | 7% | (e) | 25% | 40% | 40% | 27% | 44% |
(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 Series invests.
(d) Annualized.
(e) Not Annualized.
See Notes to Financial Statements.
38 | 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 Directors of the Fund has delegated to the Fund’s investment subadvisers 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. |
DIRECTORS |
Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Judy A. Rice, Vice President • Scott E. Benjamin, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, 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 • Amanda S. Ryan, 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 Newark, NJ 07102 | ||
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INVESTMENT SUBADVISERS | LSV Asset Management | 155 North Wacker Drive 46th Floor Chicago, IL 60606 | ||
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Thornburg Investment Management, Inc. | 2300 North Ridgetop Road Santa Fe, NM 87506 | |||
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DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | One Wall Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 |
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 DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential International Value Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
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 INTERNATIONAL VALUE FUND
SHARE CLASS | A | B | C | Z | ||||
NASDAQ | PISAX | PISBX | PCISX | PISZX | ||||
CUSIP | 743969503 | 743969602 | 743969701 | 743969800 |
MF115E2 0226469-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL EMERGING MARKETS DEBT LOCAL CURRENCY FUND
SEMIANNUAL REPORT · APRIL 30, 2012
Fund Type
Emerging Market Bond
Objective
Total return, through a combination of current income and capital appreciation
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2012, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Prudential Investments, Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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June 15, 2012
Dear Shareholder:
After an extraordinary career at Prudential, Judy Rice retired at the end of 2011 as President of Prudential Investments and President and Director of the Prudential Emerging Markets Debt Local Currency Fund (the Fund). While she will remain as Chairman of Prudential Investments until the end of 2012, I was named to succeed her as President of Prudential Investments and President and Director of the Fund effective January 1, 2012. I previously served as Executive Vice President of Retail Mutual Fund Distribution for Prudential Investments for the past six years.
Since this is my first letter to shareholders, I would like to recognize Judy for the significant contributions she made in building the Prudential Investments fund family and her unflagging commitment to helping investors like you meet the challenges of a rapidly changing investment environment. My goal is to build on Judy’s accomplishments, with a particular focus on delivering the solutions you need to address your financial goals.
I hope you find the semiannual report for the Fund informative. We recognize that ongoing market volatility may make it a difficult time to be an investor. We continue to believe a prudent response to uncertainty is to maintain a diversified portfolio, including stock and bond mutual funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial professional can help you create a diversified investment plan that reflects your personal investor profile and risk tolerance. Keep in mind that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets. We encourage you to call your financial professional before making any investment decision.
Prudential Investments provides a wide range of mutual funds to choose from that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of Prudential Financial’s affiliated asset managers. Thank you for choosing the Prudential Investments family of mutual funds.
Sincerely,
Stuart S. Parker, President
Prudential Emerging Markets Debt Local Currency Fund
Prudential Emerging Markets Debt Local Currency 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. Class A shares have a maximum initial sales charge of 4.50%. Gross operating expenses: Class A, 2.23%; Class C, 2.93%; Class Q, 1.88%; Class Z, 1.93%. Net operating expenses: Class A, 1.30%; Class C, 2.05%; Class Q, 1.05%; Class Z, 1.05%, after contractual reduction through 2/28/2013.
Cumulative Total Returns (Without Sales Charges) as of 4/30/12 | ||||||||||
Six Months | One Year | Since Inception | ||||||||
Class A | 4.40 | % | –1.90 | % | 1.12% | |||||
Class C | 3.64 | –2.21 | 0.82 | |||||||
Class Q | 4.87 | –1.54 | 1.58 | |||||||
Class Z | 4.94 | –1.47 | 1.65 | |||||||
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index | 4.05 | –0.28 | 4.43 | |||||||
Lipper Emerging Markets Debt Funds Average | 5.49 | 4.87 | 7.59 | |||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/12 | ||||||||||
One Year | Since Inception | |||||||||
Class A | –4.33 | % | –4.30% | |||||||
Class C | –1.01 | –0.06 | ||||||||
Class Q | 0.61 | 0.60 | ||||||||
Class Z | 0.68 | 0.68 | ||||||||
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index | 3.44 | 3.44 | ||||||||
Lipper Emerging Markets Debt Funds Average | 6.63 | 6.63 |
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: 3/30/11
The average annual total returns take into account applicable sales charges. Class A shares are subject to a maximum front-end sales charge of 4.50% and a 12b-1 fee of up to 0.30% annually. 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%. Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund. Class C shares
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are not subject to a front-end sales charge, but charge a CDSC of 1% for shares sold within 12 months from the date of purchase and an annual 12b-1 fee of 1%. Class Q and Class Z shares are not subject to a CDSC or 12b-1 fee. The returns in the tables reflect the share class expense structure in effect at the close of the fiscal period. 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
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index
The JP Morgan GBI-EM Global Diversified Index (GBI-EM Global Diversified), an unmanaged index, is a comprehensive emerging markets debt benchmark that tracks local currency bonds issued by emerging market governments.
Lipper Emerging Markets Debt Funds Average
Funds in the Lipper Emerging Markets Debt Funds Average seek either current income or total return by investing at least 65% of total assets in emerging market debt securities, where “emerging market” is defined by a country’s GNP per capita or other economic measure.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Distributions and Yields as of 4/30/12 |
| |||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | |||||||
Class A | $ | 0.26 | 4.81 | % | ||||
Class C | 0.23 | 4.27 | ||||||
Class Q | 0.28 | 5.34 | ||||||
Class Z | 0.27 | 5.24 |
Five Largest Issues expressed as a percentage of net assets as of 4/30/12 | ||||
Hungary Government Bond, Bonds, Ser. 17/13, 6.75%, 02/24/17 | 5.2 | % | ||
Brazil Notas Do Tesouro Nacional, Notes, Ser. NTN-F, 10.000%, 01/01/21 | 4.8 | |||
Poland Government Bond, Bonds, Ser. 1019, 5.500%, 10/25/19 | 3.2 | |||
Eskom Holdings Ltd., Notes, MTN, 10.000%, 01/25/23 | 3.0 | |||
Poland Government Bond, Bonds, Ser. 0415, 5.500%, 04/25/15 | 2.9 |
Issues reflect only long-term investments and are subject to change.
Prudential Emerging Markets Debt Local Currency Fund | 3 |
Your Fund’s Performance (continued)
Credit Quality* expressed as a percentage of net assets as of 4/30/12 |
| |||
A | 17.0 | % | ||
Baa | 51.8 | |||
Ba | 14.8 | |||
B | 2.5 | |||
Not Rated** | 14.8 | |||
Total Investments | 100.9 | |||
Liabilities in excess of other assets | –0.9 | |||
Net Assets | 100.0 | % | ||
|
|
*Source: Moody’s rating, defaulting to S&P when not rated by Moody’s.
** Approximately 10.1% of Not Rated is invested in affiliated money market mutual funds.
Credit Quality is subject to change.
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Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on November 1, 2011, at the beginning of the period, and held through the six-month period ended April 30, 2012. 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 Emerging Markets Debt Local Currency 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 Emerging Markets Debt Local Currency Fund | Beginning Account Value November 1, 2011 | Ending Account April 30, 2012 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,044.00 | 1.30 | % | $ | 6.61 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.35 | 1.30 | % | $ | 6.52 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,036.40 | 2.05 | % | $ | 10.38 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,014.67 | 2.05 | % | $ | 10.27 | ||||||||||
Class Q | Actual | $ | 1,000.00 | $ | 1,048.70 | 1.05 | % | $ | 5.35 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.64 | 1.05 | % | $ | 5.27 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,049.40 | 1.05 | % | $ | 5.35 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.64 | 1.05 | % | $ | 5.27 |
* 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 182 days in the six-month period ended April 30, 2012, and divided by the 366 days in the Fund’s fiscal year ending October 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.
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Portfolio of Investments
as of April 30, 2012 (Unaudited)
Description | Moody’s Ratings† | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | |||||||||||
LONG-TERM INVESTMENTS 90.8% |
| |||||||||||||||
FOREIGN BONDS | ||||||||||||||||
Argentina 0.7% | ||||||||||||||||
Argentina Boden Bonds, | ||||||||||||||||
Sr. Unsec’d. Notes(a) | B3 | 0.785% | 08/03/12 | $ | 250 | $ | 247,000 | |||||||||
Brazil 11.8% | ||||||||||||||||
Banco Votorantim Ltd., | ||||||||||||||||
Sr. Unsec’d. Notes, MTN, RegS | Baa1 | 10.625 | 04/10/14 | BRL | 415 | 224,248 | ||||||||||
Brazil Notas Do Tesouro Nacional, Notes | ||||||||||||||||
Ser. NTN-B - Inflation Linked | Baa2 | 6.000 | 08/15/14 | BRL | 52 | 61,585 | ||||||||||
Ser. NTN-B - Inflation Linked | Baa2 | 6.000 | 05/15/15 | BRL | 185 | 221,054 | ||||||||||
Ser. NTN-F | Baa2 | 10.000 | 01/01/13 | BRL | 421 | 223,008 | ||||||||||
Ser. NTN-F | Baa2 | 10.000 | 01/01/14 | BRL | 840 | 448,360 | ||||||||||
Ser. NTN-F | Baa3 | 10.000 | 01/01/15 | BRL | 775 | 412,140 | ||||||||||
Ser. NTN-F | Baa2 | 10.000 | 01/01/17 | BRL | 1,492 | 781,329 | ||||||||||
Ser. NTN-F | Baa2 | 10.000 | 01/01/21 | BRL | 3,373 | 1,712,365 | ||||||||||
Itau Unibanco Holding SA, | ||||||||||||||||
Sr. Unsec’d. Notes, RegS | Baa1 | 10.500 | 11/23/15 | BRL | 300 | 173,911 | ||||||||||
|
| |||||||||||||||
4,258,000 | ||||||||||||||||
Colombia 3.6% | ||||||||||||||||
Colombia Government International Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | Baa3 | 7.750 | 04/14/21 | COP | 947,000 | 659,646 | ||||||||||
Sr. Unsec’d. Notes | Baa3 | 9.850 | 06/28/27 | COP | 180,000 | 148,657 | ||||||||||
Sr. Unsec’d. Notes | Baa3 | 12.000 | 10/22/15 | COP | 700,000 | 496,293 | ||||||||||
|
| |||||||||||||||
1,304,596 | ||||||||||||||||
Hungary 7.8% | ||||||||||||||||
Hungary Government Bond, Bonds, | ||||||||||||||||
Ser. 15/A | Ba1 | 8.000 | 02/12/15 | HUF | 65,690 | 303,133 | ||||||||||
Ser. 16/C | Ba1 | 5.500 | 02/12/16 | HUF | 75,080 | 319,118 | ||||||||||
Ser. 17/B | Ba1 | 6.750 | 02/24/17 | HUF | 428,270 | 1,877,742 | ||||||||||
Ser. 19/A | Ba1 | 6.500 | 06/24/19 | HUF | 73,650 | 309,726 | ||||||||||
|
| |||||||||||||||
2,809,719 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 7 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Description | Moody’s Ratings† | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | |||||||||||
FOREIGN BONDS (Continued) |
| |||||||||||||||
Indonesia 9.6% | ||||||||||||||||
Indonesia Treasury Bond, | ||||||||||||||||
Ser. FR36 | Baa3 | 11.500% | 09/15/19 | IDR | 2,200,000 | $ | 320,135 | |||||||||
Ser. FR51 | Baa3 | 11.250 | 05/15/14 | IDR | 2,950,000 | 362,424 | ||||||||||
Ser. FR53 | Baa3 | 8.250 | 07/15/21 | IDR | 4,970,000 | 628,444 | ||||||||||
Ser. FR54 | Baa3 | 9.500 | 07/15/31 | IDR | 4,000,000 | 560,776 | ||||||||||
Ser. FR55 | Baa3 | 7.375 | 09/15/16 | IDR | 3,000,000 | 354,323 | ||||||||||
Ser. FR56 | Baa3 | 8.375 | 09/15/26 | IDR | 1,000,000 | 127,384 | ||||||||||
Ser. FR58 | Baa3 | 8.250 | 06/15/32 | IDR | 3,000,000 | 378,105 | ||||||||||
Ser. FR61 | Baa3 | 7.000 | 05/15/22 | IDR | 6,100,000 | 717,058 | ||||||||||
|
| |||||||||||||||
3,448,649 | ||||||||||||||||
Ireland 1.0% | ||||||||||||||||
RZD Capital Ltd., | ||||||||||||||||
Sr. Unsec’d. Notes, RegS | Baa1 | 8.300 | 04/02/19 | RUB | 10,100 | 343,470 | ||||||||||
Malaysia 3.3% | ||||||||||||||||
Malaysia Government Bond, | ||||||||||||||||
Ser. 0111 | A3 | 4.160 | 07/15/21 | MYR | 1,740 | 602,918 | ||||||||||
Ser. 0311 | A3 | 4.392 | 04/15/26 | MYR | 440 | 154,023 | ||||||||||
Sr. Unsec’d. Notes, Ser. 1/06 | A3 | 4.262 | 09/15/16 | MYR | 1,200 | 412,255 | ||||||||||
|
| |||||||||||||||
1,169,196 | ||||||||||||||||
Mexico 7.8% | ||||||||||||||||
Mexican Bonos, Bonds | ||||||||||||||||
Ser. M | Baa1 | 6.500 | 06/10/21 | MXN | 3,500 | 275,340 | ||||||||||
Ser. M 20 | Baa1 | 7.750 | 05/29/31 | MXN | 1,600 | 130,429 | ||||||||||
Ser. M 20 | Baa1 | 8.500 | 05/31/29 | MXN | 1,400 | 124,088 | ||||||||||
Ser. M 30 | Baa1 | 8.500 | 11/18/38 | MXN | 10,655 | 920,813 | ||||||||||
Petroleos Mexicanos, | ||||||||||||||||
Gtd. Notes, 144A | Baa1 | 7.650 | 11/24/21 | MXN | 620 | 48,668 | ||||||||||
Gtd. Notes | Baa1 | 9.100 | 01/27/20 | MXN | 9,650 | 829,728 | ||||||||||
Notes | Baa1 | 5.190 | 05/12/14 | MXN | 6,000 | 464,074 | ||||||||||
|
| |||||||||||||||
2,793,140 | ||||||||||||||||
Peru 4.6% | ||||||||||||||||
Peruvian Government International Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | Baa3 | 6.950 | 08/12/31 | PEN | 190 | 79,991 |
See Notes to Financial Statements.
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Description | Moody’s Ratings† | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | |||||||||||
FOREIGN BONDS (Continued) |
| |||||||||||||||
Peru (cont’d.) | ||||||||||||||||
Sr. Unsec’d. Notes, 144A | Baa3 | 7.840% | 08/12/20 | PEN | 650 | $ | 290,545 | |||||||||
Sr. Unsec’d. Notes, RegS | Baa3 | 6.950 | 08/12/31 | PEN | 345 | 145,247 | ||||||||||
Sr. Unsec’d. Notes, RegS | Baa3 | 7.840 | 08/12/20 | PEN | 1,075 | 480,517 | ||||||||||
Sr. Unsec’d. Notes, RegS | Baa3 | 8.200 | 08/12/26 | PEN | 880 | 419,469 | ||||||||||
Sr. Unsec’d. Notes, RegS | Baa3 | 9.910 | 05/05/15 | PEN | 550 | 242,008 | ||||||||||
|
| |||||||||||||||
1,657,777 | ||||||||||||||||
Philippines 1.2% | ||||||||||||||||
Philippine Government International Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | Ba2 | 4.950 | 01/15/21 | PHP | 8,000 | 195,287 | ||||||||||
Sr. Unsec’d. Notes | Ba2 | 6.250 | 01/14/36 | PHP | 10,000 | 247,661 | ||||||||||
|
| |||||||||||||||
442,948 | ||||||||||||||||
Poland 6.8% | ||||||||||||||||
Poland Government Bond, Bonds | ||||||||||||||||
Ser. 0415 | A2 | 5.500 | 04/25/15 | PLN | 3,195 | 1,034,502 | ||||||||||
Ser. 1019 | A2 | 5.500 | 10/25/19 | PLN | 3,565 | 1,150,007 | ||||||||||
Ser. 1020 | A2 | 5.250 | 10/25/20 | PLN | 840 | 265,003 | ||||||||||
|
| |||||||||||||||
2,449,512 | ||||||||||||||||
Romania 0.4% | ||||||||||||||||
Romanian Government International Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | Baa3 | 5.000 | 03/18/15 | EUR | 115 | 155,650 | ||||||||||
Russia 6.9% | ||||||||||||||||
Home Credit & Finance Bank Via Eurasia Capital SA, | ||||||||||||||||
Sr. Sec’d. Notes | Ba3 | 7.000 | 03/18/14 | $ | 250 | 258,705 | ||||||||||
Russian Agricultural Bank OJSC Via RSHB Capital SA, | ||||||||||||||||
Sr. Unsec’d. Notes | Baa1 | 7.500 | 03/25/13 | RUB | 10,100 | 345,274 | ||||||||||
Sr. Unsec’d. Notes, MTN | Baa1 | 8.700 | 03/17/16 | RUB | 18,000 | 628,970 | ||||||||||
Russian Foreign Bond-Eurobond, | ||||||||||||||||
Sr. Unsec’d. Notes, RegS | Baa1 | 7.850 | 03/10/18 | RUB | 20,000 | 709,917 | ||||||||||
Sr. Unsec’d. Notes, 144A | Baa1 | 7.850 | 03/10/18 | RUB | 10,000 | 354,958 | ||||||||||
Vimpelcom Holdings BV, Gtd. Notes, 144A(a) | Ba3 | 4.471 | 06/29/14 | $ | 200 | 200,117 | ||||||||||
|
| |||||||||||||||
2,497,941 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 9 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Description | Moody’s Ratings† | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | |||||||||||
FOREIGN BONDS (Continued) |
| |||||||||||||||
Singapore 0.5% | ||||||||||||||||
Berau Capital Resources Pte Ltd., Gtd. Notes, RegS | B1 | 12.500% | 07/08/15 | $ | 145 | $ | 162,037 | |||||||||
South Africa 9.9% | ||||||||||||||||
Eskom Holdings Ltd., Notes, MTN | Baa2 | 10.000 | 01/25/23 | ZAR | 7,500 | 1,073,113 | ||||||||||
South Africa Government Bond, Bonds | ||||||||||||||||
Ser. R157 | A3 | 13.500 | 09/15/15 | ZAR | 258 | 40,105 | ||||||||||
Ser. R186 | A3 | 10.500 | 12/21/26 | ZAR | 4,973 | 764,501 | ||||||||||
Ser. R204 | A3 | 8.000 | 12/21/28 | ZAR | 2,775 | 369,948 | ||||||||||
Ser. R208 | A3 | 6.750 | 03/31/21 | ZAR | 3,860 | 467,718 | ||||||||||
Ser. R209 | A3 | 6.250 | 03/31/36 | ZAR | 565 | 54,302 | ||||||||||
Sr. Unsec’d. Notes, Ser. R207 | A3 | 7.250 | 01/15/20 | ZAR | 6,390 | 807,325 | ||||||||||
|
| |||||||||||||||
3,577,012 | ||||||||||||||||
Thailand 4.4% | ||||||||||||||||
Thailand Government Bond, | ||||||||||||||||
Sr. Unsec’d. Notes | Baa1 | 3.625 | 06/16/23 | THB | 4,177 | 131,949 | ||||||||||
Sr. Unsec’d. Notes | Baa1 | 3.650 | 12/17/21 | THB | 16,800 | 541,277 | ||||||||||
Sr. Unsec’d. Notes | Baa1 | 3.850 | 12/12/25 | THB | 2,000 | 63,831 | ||||||||||
Sr. Unsec’d. Notes | Baa1 | 3.875 | 06/13/19 | THB | 20,000 | 658,520 | ||||||||||
Sr. Unsec’d. Notes | Baa1 | 5.670 | 03/13/28 | THB | 5,000 | 193,313 | ||||||||||
|
| |||||||||||||||
1,588,890 | ||||||||||||||||
Turkey 4.0% | ||||||||||||||||
Turkey Government Bond, | ||||||||||||||||
Bonds | Ba2 | 8.000 | 10/09/13 | TRY | 380 | 212,475 | ||||||||||
Bonds | Ba2 | 9.000 | 01/27/16 | TRY | 1,080 | 612,487 | ||||||||||
Bonds | Ba2 | 10.500 | 01/15/20 | TRY | 775 | 473,715 | ||||||||||
Bonds | Ba2 | 11.000 | 08/06/14 | TRY | 225 | 132,598 | ||||||||||
|
| |||||||||||||||
1,431,275 | ||||||||||||||||
Ukraine 1.3% | ||||||||||||||||
NAK Naftogaz Ukraine, | NR | 9.500 | 09/30/14 | $ | 230 | 225,170 | ||||||||||
Ukraine Government International Bond, Sr. Unsec’d. Notes, 144A | B+(b) | 6.250 | 06/17/16 | 275 | 253,000 | |||||||||||
|
| |||||||||||||||
478,170 |
See Notes to Financial Statements.
10 | Visit our website at www.prudentialfunds.com |
Description | Moody’s Ratings† | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | |||||||||||
FOREIGN BONDS (Continued) |
| |||||||||||||||
United Arab Emirates 1.2% | ||||||||||||||||
Dubai DOF Sukuk Ltd., | NR | 6.396% | 11/03/14 | $ | 155 | $ | 163,719 | |||||||||
Emirate of Dubai Government International Bonds, | NR | 6.700 | 10/05/15 | 250 | 268,450 | |||||||||||
|
| |||||||||||||||
432,169 | ||||||||||||||||
Uruguay 0.5% | ||||||||||||||||
Uruguay Government International Bond, Sr. Unsec’d. Notes | Ba1 | 5.000 | 09/14/18 | UYU | 2,997 | 175,443 | ||||||||||
Venezuela 3.5% | ||||||||||||||||
Petroleos de Venezuela SA, | B+(b) | 8.500 | 11/02/17 | $ | 240 | 214,200 | ||||||||||
Sr. Unsec’d. Notes | B1 | 8.000 | 11/17/13 | 40 | 40,152 | |||||||||||
Sr. Unsec’d. Notes, Ser. 2014 | NR | 4.900 | 10/28/14 | 1,100 | 1,003,750 | |||||||||||
|
| |||||||||||||||
1,258,102 | ||||||||||||||||
|
| |||||||||||||||
Total long-term investments | 32,680,696 | |||||||||||||||
|
| |||||||||||||||
Shares | ||||||||||||||||
SHORT-TERM INVESTMENT 10.1% | ||||||||||||||||
Affiliated Money Market Mutual Fund |
| |||||||||||||||
Prudential Investment | 3,647,285 | 3,647,285 | ||||||||||||||
|
| |||||||||||||||
Total Investments 100.9% | 36,327,981 | |||||||||||||||
Liabilities in excess of other assets(d) (0.9)% | (339,435 | ) | ||||||||||||||
|
| |||||||||||||||
Net Assets 100.0% | $ | 35,988,546 | ||||||||||||||
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 11 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
The following abbreviations are used in the portfolio descriptions:
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
RegS—Regulation S. Security was purchased pursuant to Regulation S and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
BRL—Brazilian Real
CLP—Chilean Peso
CNY—Chinese Yuan Renminbi
COP—Colombian Peso
EUR—Euro
HUF—Hungarian Forint
IDR—Indonesian Rupiah
INR—Indian Rupee
KRW—South Korean Won
MTN—Medium Term Note
MXN—Mexican Peso
MYR—Malaysian Ringgit
NR—Not Rated by Moody’s or Standard & Poor’s
PEN—Peruvian Nuevo Sol
PHP—Philippine Peso
PLN—Polish Zloty
RUB—Russian Ruble
SGD—Singapore Dollar
THB—Thailand Baht
TRY—Turkish Lira
UYU—Uruguayan Peso
ZAR—South African Rand
† | The ratings reflected are as of April 30, 2012. Ratings of certain bonds may have changed subsequent to that date. |
# | Principal amount is shown in U.S. dollars unless otherwise stated. |
(a) | Variable rate instrument. The interest rate shown reflects the rate in effect at April 30, 2012. |
(b) | Standard & Poor’s Rating. |
(c) | Prudential Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolio 2 - Prudential Core Taxable Money Market Fund. |
(d) | Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end: |
See Notes to Financial Statements.
12 | Visit our website at www.prudentialfunds.com |
Forward foreign currency exchange contracts outstanding at April 30, 2012:
Foreign Currency | Counterparty | Notional Amount | Payable at Settlement Date | Value at April 30, 2012 | Unrealized Appreciation/ (Depreciation) | |||||||||||||
Purchased: | ||||||||||||||||||
Brazilian Real | ||||||||||||||||||
Expiring 05/10/12 | Citibank NA | BRL | 187,802 | $ | 101,900 | $ | 98,306 | $ | (3,594 | ) | ||||||||
Expiring 07/17/12 | Citibank NA | BRL | 727,569 | 390,159 | 376,006 | (14,153 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | BRL | 405,210 | 217,166 | 209,411 | (7,755 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | BRL | 250,493 | 135,000 | 129,454 | (5,546 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | BRL | 26,256 | 13,800 | 13,569 | (231 | ) | |||||||||||
Chilean Peso | ||||||||||||||||||
Expiring 07/09/12 | Citibank NA | CLP | 130,419,800 | 266,000 | 266,551 | 551 | ||||||||||||
Expiring 07/09/12 | Citibank NA | CLP | 110,308,167 | 224,981 | 225,447 | 466 | ||||||||||||
Expiring 07/09/12 | Citibank NA | CLP | 22,561,990 | 46,300 | 46,112 | (188 | ) | |||||||||||
Expiring 07/09/12 | Citibank NA | CLP | 21,889,680 | 44,600 | 44,738 | 138 | ||||||||||||
Expiring 07/09/12 | Citibank NA | CLP | 21,733,800 | 44,500 | 44,420 | (80 | ) | |||||||||||
Chinese Yuan Renminbi | ||||||||||||||||||
Expiring 01/04/13 | Citibank NA | CNY | 1,794,240 | 283,280 | 283,278 | (2 | ) | |||||||||||
Expiring 03/20/13 | Goldman Sachs Group LP | CNY | 2,527,000 | 400,000 | 398,719 | (1,281 | ) | |||||||||||
Expiring 03/21/13 | Barclays Capital, Inc. | CNY | 1,674,005 | 265,000 | 264,128 | (872 | ) | |||||||||||
Colombian Peso | ||||||||||||||||||
Expiring 05/07/12 | Citibank NA | COP | 366,857,120 | 204,400 | 207,949 | 3,549 | ||||||||||||
Expiring 05/07/12 | Citibank NA | COP | 116,407,200 | 65,600 | 65,984 | 384 | ||||||||||||
Expiring 05/07/12 | Citibank NA | COP | 80,393,600 | 44,800 | 45,570 | 770 | ||||||||||||
Expiring 05/07/12 | Citibank NA | COP | 79,515,000 | 45,000 | 45,072 | 72 | ||||||||||||
Expiring 05/07/12 | Citibank NA | COP | 53,580,000 | 30,000 | 30,371 | 371 | ||||||||||||
Expiring 05/16/12 | Citibank NA | COP | 395,876,250 | 223,596 | 224,105 | 509 | ||||||||||||
Expiring 05/16/12 | Citibank NA | COP | 189,525,000 | 105,000 | 107,290 | 2,290 | ||||||||||||
Expiring 05/16/12 | Citibank NA | COP | 158,259,420 | 89,100 | 89,590 | 490 | ||||||||||||
Expiring 05/16/12 | Citibank NA | COP | 88,500,000 | 50,000 | 50,100 | 100 | ||||||||||||
Euro | ||||||||||||||||||
Expiring 05/25/12 | Barclays Capital, Inc. | EUR | 70,000 | 92,230 | 92,668 | 438 | ||||||||||||
Expiring 05/25/12 | Barclays Capital, Inc. | EUR | 70,000 | 92,741 | 92,668 | (73 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 268,305 | 353,985 | 355,190 | 1,205 | ||||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 130,000 | 172,638 | 172,098 | (540 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 65,000 | 86,702 | 86,049 | (653 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 45,000 | 59,035 | 59,572 | 537 | ||||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 40,000 | 53,017 | 52,953 | (64 | ) | |||||||||||
Hungarian Forint | ||||||||||||||||||
Expiring 05/24/12 | Citibank NA | HUF | 15,542,002 | 70,000 | 71,462 | 1,462 | ||||||||||||
Expiring 07/17/12 | Barclays Capital, Inc. | HUF | 9,758,043 | 42,378 | 44,535 | 2,157 | ||||||||||||
Expiring 07/17/12 | Citibank NA | HUF | 11,566,123 | 52,500 | 52,787 | 287 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 13 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Foreign Currency | Counterparty | Notional Amount | Payable at Settlement Date | Value at April 30, 2012 | Unrealized Appreciation/ (Depreciation) | |||||||||||||
Purchased (cont’d.): | ||||||||||||||||||
Indian Rupee | ||||||||||||||||||
Expiring 07/10/12 | Citibank NA | INR | 16,913,135 | $ | 320,871 | $ | 316,004 | $ | (4,867 | ) | ||||||||
Expiring 07/10/12 | Citibank NA | INR | 2,681,024 | 51,400 | 50,092 | (1,308 | ) | |||||||||||
Expiring 07/10/12 | Citibank NA | INR | 731,124 | 13,800 | 13,660 | (140 | ) | |||||||||||
Expiring 07/30/12 | Citibank NA | INR | 700,025 | 13,003 | 13,027 | 24 | ||||||||||||
Indonesian Rupiah | ||||||||||||||||||
Expiring 07/17/12 | Citibank NA | IDR | 2,990,663,095 | 323,210 | 322,794 | (416 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | IDR | 1,458,720,000 | 157,393 | 157,445 | 52 | ||||||||||||
Malaysian Ringgit | ||||||||||||||||||
Expiring 05/08/12 | Citibank NA | MYR | 4,980,624 | 1,623,570 | 1,644,901 | 21,331 | ||||||||||||
Expiring 05/08/12 | Citibank NA | MYR | 413,304 | 136,000 | 136,498 | 498 | ||||||||||||
Expiring 05/08/12 | Citibank NA | MYR | 355,500 | 116,500 | 117,407 | 907 | ||||||||||||
Expiring 05/08/12 | Citibank NA | MYR | 176,464 | 57,700 | 58,279 | 579 | ||||||||||||
Expiring 05/08/12 | Morgan Stanley & Co., Inc. | MYR | 932,687 | 306,100 | 308,029 | 1,929 | ||||||||||||
Expiring 05/08/12 | Morgan Stanley & Co., Inc. | MYR | 216,677 | 71,100 | 71,560 | 460 | ||||||||||||
Expiring 05/08/12 | Morgan Stanley & Co., Inc. | MYR | 201,096 | 66,500 | 66,414 | (86 | ) | |||||||||||
Expiring 06/04/12 | Citibank NA | MYR | 651,988 | 215,000 | 214,879 | (121 | ) | |||||||||||
Expiring 07/06/12 | Citibank NA | MYR | 1,232,010 | 405,600 | 405,185 | (415 | ) | |||||||||||
Expiring 07/06/12 | Citibank NA | MYR | 479,342 | 154,437 | 157,647 | 3,210 | ||||||||||||
Expiring 07/06/12 | Citibank NA | MYR | 163,244 | 53,200 | 53,688 | 488 | ||||||||||||
Expiring 07/06/12 | Citibank NA | MYR | 158,209 | 51,400 | 52,032 | 632 | ||||||||||||
Expiring 07/06/12 | Citibank NA | MYR | 157,911 | 51,400 | 51,934 | 534 | ||||||||||||
Mexican Peso | ||||||||||||||||||
Expiring 05/08/12 | Citibank NA | MXN | 2,621,328 | 204,400 | 201,075 | (3,325 | ) | |||||||||||
Expiring 05/22/12 | Barclays Capital, Inc. | MXN | 1,839,530 | 140,000 | 140,903 | 903 | ||||||||||||
Expiring 05/22/12 | Barclays Capital, Inc. | MXN | 1,353,713 | 105,000 | 103,691 | (1,309 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 6,976,989 | 547,916 | 534,418 | (13,498 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 3,421,440 | 259,200 | 262,073 | 2,873 | ||||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 1,437,135 | 110,000 | 110,081 | 81 | ||||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 1,435,518 | 110,000 | 109,957 | (43 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 900,981 | 70,000 | 69,013 | (987 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 449,655 | 35,000 | 34,442 | (558 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 382,925 | 30,000 | 29,331 | (669 | ) | |||||||||||
Expiring 05/22/12 | Goldman Sachs Group LP | MXN | 438,466 | 34,300 | 33,585 | (715 | ) | |||||||||||
Expiring 05/22/12 | JPMorgan Chase Bank | MXN | 656,804 | 50,900 | 50,310 | (590 | ) |
See Notes to Financial Statements.
14 | Visit our website at www.prudentialfunds.com |
Foreign Currency | Counterparty | Notional Amount | Payable at Settlement Date | Value at April 30, 2012 | Unrealized Appreciation/ (Depreciation) | |||||||||||||
Purchased (cont’d.): | ||||||||||||||||||
Expiring 07/17/12 | Barclays Capital, Inc. | MXN | 529,644 | $ | 39,887 | $ | 40,366 | $ | 479 | |||||||||
Expiring 07/17/12 | Citibank NA | MXN | 720,030 | 55,000 | 54,877 | (123 | ) | |||||||||||
Expiring 11/21/12 | Citibank NA | MXN | 13,802,746 | 1,032,908 | 1,039,936 | 7,028 | ||||||||||||
Peruvian Nuevo Sol | ||||||||||||||||||
Expiring 07/10/12 | Citibank NA | PEN | 140,847 | 53,200 | 53,297 | 97 | ||||||||||||
Philippine Peso | ||||||||||||||||||
Expiring 07/18/12 | Citibank NA | PHP | 26,098,517 | 607,861 | 614,400 | 6,539 | ||||||||||||
Expiring 07/18/12 | Citibank NA | PHP | 1,493,450 | 34,784 | 35,158 | 374 | ||||||||||||
Polish Zloty | ||||||||||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 1,508,455 | 474,633 | 477,091 | 2,458 | ||||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 1,126,340 | 355,000 | 356,237 | 1,237 | ||||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 882,734 | 280,083 | 279,189 | (894 | ) | |||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 389,486 | 125,000 | 123,186 | (1,814 | ) | |||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 210,419 | 65,699 | 66,551 | 852 | ||||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 140,580 | 44,440 | 44,462 | 22 | ||||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 84,252 | 26,332 | 26,647 | 315 | ||||||||||||
Expiring 05/24/12 | Goldman Sachs Group LP | PLN | 192,290 | 61,039 | 60,817 | (222 | ) | |||||||||||
Expiring 05/24/12 | UBS AG | PLN | 189,585 | 59,252 | 59,962 | 710 | ||||||||||||
Expiring 07/17/12 | Citibank NA | PLN | 169,855 | 53,400 | 53,387 | (13 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | PLN | 134,645 | 41,632 | 42,321 | 689 | ||||||||||||
Russian Ruble | ||||||||||||||||||
Expiring 06/06/12 | Citibank NA | RUB | 2,523,008 | 85,700 | 85,358 | (342 | ) | |||||||||||
Expiring 06/06/12 | Citibank NA | RUB | 2,271,499 | 75,800 | 76,849 | 1,049 | ||||||||||||
Expiring 06/06/12 | Goldman Sachs Group LP | RUB | 23,871,218 | 812,444 | 807,605 | (4,839 | ) | |||||||||||
Expiring 07/13/12 | Citibank NA | RUB | 7,705,038 | 256,972 | 259,344 | 2,372 | ||||||||||||
Expiring 07/17/12 | Citibank NA | RUB | 8,124,325 | 271,100 | 273,299 | 2,199 | ||||||||||||
Expiring 07/17/12 | Citibank NA | RUB | 2,718,596 | 91,600 | 91,452 | (148 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | RUB | 410,895 | 13,800 | 13,822 | 22 | ||||||||||||
Singapore Dollar | ||||||||||||||||||
Expiring 05/23/12 | Barclays Capital, Inc. | SGD | 162,928 | 130,000 | 131,662 | 1,662 | ||||||||||||
Expiring 05/23/12 | Citibank NA | SGD | 207,461 | 165,000 | 167,648 | 2,648 | ||||||||||||
Expiring 05/23/12 | Citibank NA | SGD | 135,991 | 108,340 | 109,894 | 1,554 | ||||||||||||
Expiring 05/23/12 | Citibank NA | SGD | 131,467 | 105,000 | 106,238 | 1,238 | ||||||||||||
Expiring 05/23/12 | Citibank NA | SGD | 12,289 | 9,770 | 9,930 | 160 | ||||||||||||
Expiring 07/17/12 | Citibank NA | SGD | 64,195 | 51,500 | 51,887 | 387 | ||||||||||||
Expiring 07/17/12 | Citibank NA | SGD | 51,869 | 41,592 | 41,924 | 332 | ||||||||||||
South African Rand | ||||||||||||||||||
Expiring 05/30/12 | Citibank NA | ZAR | 420,646 | 55,000 | 53,861 | (1,139 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 15 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Foreign Currency | Counterparty | Notional Amount | Payable at Settlement Date | Value at April 30, 2012 | Unrealized Appreciation/ (Depreciation) | |||||||||||||
Purchased (cont’d.): | ||||||||||||||||||
Expiring 05/31/12 | Citibank NA | ZAR | 1,986,297 | $ | 255,840 | $ | 254,298 | $ | (1,542 | ) | ||||||||
Expiring 05/31/12 | Citibank NA | ZAR | 264,845 | 33,900 | 33,907 | 7 | ||||||||||||
Expiring 05/31/12 | Citibank NA | ZAR | 51,744 | 6,615 | 6,625 | 10 | ||||||||||||
Expiring 05/31/12 | Morgan Stanley & Co., Inc. | ZAR | 266,054 | 34,300 | 34,062 | (238 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | ZAR | 304,810 | 37,839 | 38,761 | 922 | ||||||||||||
South Korean Won | ||||||||||||||||||
Expiring 05/02/12 | Citibank NA | KRW | 241,091,940 | 211,800 | 213,332 | 1,532 | ||||||||||||
Expiring 05/02/12 | Citibank NA | KRW | 179,001,975 | 158,500 | 158,391 | (109 | ) | |||||||||||
Expiring 05/14/12 | Citibank NA | KRW | 248,759,120 | 219,200 | 219,894 | 694 | ||||||||||||
Expiring 07/06/12 | Citibank NA | KRW | 125,229,105 | 110,300 | 110,304 | 4 | ||||||||||||
Expiring 07/06/12 | Citibank NA | KRW | 62,269,240 | 54,800 | 54,848 | 48 | ||||||||||||
Expiring 07/13/12 | Citibank NA | KRW | 120,120,000 | 105,000 | 105,754 | 754 | ||||||||||||
Expiring 07/13/12 | Citibank NA | KRW | 39,444,991 | 34,249 | 34,727 | 478 | ||||||||||||
Expiring 07/13/12 | UBS AG | KRW | 244,594,750 | 215,000 | 215,341 | 341 | ||||||||||||
Expiring 08/02/12 | Citibank NA | KRW | 179,001,975 | 155,986 | 157,387 | 1,401 | ||||||||||||
Thai Baht | ||||||||||||||||||
Expiring 05/08/12 | Citibank NA | THB | 929,820 | 30,000 | 30,221 | 221 | ||||||||||||
Expiring 05/31/12 | Morgan Stanley & Co., Inc. | THB | 3,816,009 | 123,400 | 123,823 | 423 | ||||||||||||
Expiring 05/31/12 | Morgan Stanley & Co., Inc. | THB | 1,808,194 | 58,500 | 58,673 | 173 | ||||||||||||
Expiring 05/31/12 | UBS AG | THB | 44,695,699 | 1,464,712 | 1,450,297 | (14,415 | ) | |||||||||||
Expiring 07/03/12 | Citibank NA | THB | 8,876,289 | 286,600 | 287,459 | 859 | ||||||||||||
Expiring 07/03/12 | Citibank NA | THB | 8,045,873 | 260,300 | 260,566 | 266 | ||||||||||||
Expiring 07/03/12 | Citibank NA | THB | 1,587,746 | 51,400 | 51,419 | 19 | ||||||||||||
Expiring 07/18/12 | Citibank NA | THB | 1,162,416 | 37,431 | 37,610 | 179 | ||||||||||||
Turkish Lira | ||||||||||||||||||
Expiring 05/31/12 | Bank of New York (The) | TRY | 3,258,994 | 1,799,420 | 1,842,074 | 42,654 | ||||||||||||
Expiring 05/31/12 | Barclays Capital, Inc. | TRY | 121,626 | 67,200 | 68,746 | 1,546 | ||||||||||||
Expiring 05/31/12 | Citibank NA | TRY | 629,020 | 350,000 | 355,540 | 5,540 | ||||||||||||
Expiring 05/31/12 | Citibank NA | TRY | 573,592 | 317,286 | 324,210 | 6,924 | ||||||||||||
Expiring 05/31/12 | Citibank NA | TRY | 398,768 | 225,000 | 225,394 | 394 | ||||||||||||
Expiring 05/31/12 | Goldman Sachs Group LP | TRY | 141,794 | 78,800 | 80,146 | 1,346 | ||||||||||||
Expiring 07/16/12 | Citibank NA | TRY | 648,341 | 353,375 | 363,058 | 9,683 | ||||||||||||
Expiring 07/16/12 | Citibank NA | TRY | 94,376 | 51,600 | 52,849 | 1,249 | ||||||||||||
Expiring 07/16/12 | Citibank NA | TRY | 25,194 | 13,800 | 14,108 | 308 | ||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 23,136,229 | $ | 23,208,987 | $ | 72,758 | |||||||||||||
|
|
|
|
|
|
See Notes to Financial Statements.
16 | Visit our website at www.prudentialfunds.com |
Foreign Currency | Counterparty | Notional Amount | Payable at Settlement Date | Value at April 30, 2012 | Unrealized Appreciation/ (Depreciation) | |||||||||||||
Sold | ||||||||||||||||||
Brazilian Real | ||||||||||||||||||
Expiring 05/10/12 | Citibank NA | BRL | 278,088 | $ | 158,500 | $ | 145,567 | $ | 12,933 | |||||||||
Expiring 07/17/12 | Citibank NA | BRL | 1,952,792 | 1,045,784 | 1,009,197 | 36,587 | ||||||||||||
Expiring 07/17/12 | Citibank NA | BRL | 473,340 | �� | 245,000 | 244,621 | 379 | |||||||||||
Expiring 07/17/12 | Citibank NA | BRL | 32,198 | 17,200 | 16,640 | 560 | ||||||||||||
Chilean Peso | ||||||||||||||||||
Expiring 07/09/12 | Citibank NA | CLP | 132,360,950 | 269,300 | 270,519 | (1,219 | ) | |||||||||||
Expiring 07/09/12 | Citibank NA | CLP | 21,927,585 | 44,700 | 44,815 | (115 | ) | |||||||||||
Chinese Yuan Renminbi | ||||||||||||||||||
Expiring 01/04/13 | Morgan Stanley & Co., Inc. | CNY | 1,794,240 | 280,000 | 283,278 | (3,278 | ) | |||||||||||
Colombian Peso | ||||||||||||||||||
Expiring 05/07/12 | Citibank NA | COP | 85,134,250 | 47,500 | 48,257 | (757 | ) | |||||||||||
Expiring 05/07/12 | Citibank NA | COP | 30,702,000 | 17,200 | 17,403 | (203 | ) | |||||||||||
Expiring 05/07/12 | Morgan Stanley & Co., Inc. | COP | 107,520,000 | 60,000 | 60,947 | (947 | ) | |||||||||||
Expiring 05/16/12 | Citibank NA | COP | 187,351,500 | 105,000 | 106,059 | (1,059 | ) | |||||||||||
Euro | ||||||||||||||||||
Expiring 05/24/12 | Citibank NA | EUR | 50,000 | 65,698 | 66,191 | (493 | ) | |||||||||||
Expiring 05/24/12 | Citibank NA | EUR | 20,000 | 26,332 | 26,476 | (144 | ) | |||||||||||
Expiring 05/24/12 | UBS AG | EUR | 45,000 | 59,252 | 59,572 | (320 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 430,000 | 572,069 | 569,246 | 2,823 | ||||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 130,000 | 172,650 | 172,098 | 552 | ||||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 55,000 | 71,846 | 72,811 | (965 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 50,000 | 66,084 | 66,191 | (107 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 50,000 | 66,048 | 66,191 | (143 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 45,000 | 59,182 | 59,572 | (390 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 45,000 | 59,449 | 59,572 | (123 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 35,000 | 45,664 | 46,334 | (670 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 35,000 | 45,719 | 46,334 | (615 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 35,000 | 45,760 | 46,334 | (574 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 30,000 | 39,921 | 39,715 | 206 | ||||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 30,000 | 39,202 | 39,715 | (513 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 30,000 | 39,384 | 39,715 | (331 | ) | |||||||||||
Expiring 05/25/12 | Citibank NA | EUR | 15,000 | 19,844 | 19,858 | (14 | ) | |||||||||||
Expiring 05/25/12 | Morgan Stanley & Co., Inc. | EUR | 76,630 | 101,700 | 101,445 | 255 | ||||||||||||
Hungarian Forint | ||||||||||||||||||
Expiring 05/24/12 | Barclays Capital, Inc. | HUF | 32,704,672 | 150,602 | 150,375 | 227 | ||||||||||||
Expiring 05/24/12 | Citibank NA | HUF | 116,277,625 | 525,606 | 534,642 | (9,036 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 17 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Foreign Currency | Counterparty | Notional Amount | Payable at Settlement Date | Value at April 30, 2012 | Unrealized Appreciation/ (Depreciation) | |||||||||||||
Sold (cont’d.) | ||||||||||||||||||
Indian Rupee | ||||||||||||||||||
Expiring 07/10/12 | Citibank NA | INR | 2,992,275 | $ | 55,800 | $ | 55,908 | $ | (108 | ) | ||||||||
Expiring 07/10/12 | Citibank NA | INR | 2,671,928 | 50,800 | 49,922 | 878 | ||||||||||||
Expiring 07/10/12 | Citibank NA | INR | 902,742 | 17,200 | 16,867 | 333 | ||||||||||||
Indonesian Rupiah | ||||||||||||||||||
Expiring 05/10/12 | Citibank NA | IDR | 5,224,078,200 | 568,700 | 567,800 | 900 | ||||||||||||
Malaysian Ringgit | ||||||||||||||||||
Expiring 05/08/12 | Morgan Stanley & Co., Inc. | MYR | 262,126 | 86,200 | 86,570 | (370 | ) | |||||||||||
Expiring 07/06/12 | Citibank NA | MYR | 324,718 | 104,900 | 106,794 | (1,894 | ) | |||||||||||
Mexican Peso | ||||||||||||||||||
Expiring 05/08/12 | Citibank NA | MXN | 2,621,328 | 203,114 | 201,074 | 2,040 | ||||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 13,802,746 | 1,049,718 | 1,057,253 | (7,535 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 1,837,039 | 140,000 | 140,712 | (712 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 1,395,251 | 108,700 | 106,872 | 1,828 | ||||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 1,222,505 | 95,000 | 93,641 | 1,359 | ||||||||||||
Expiring 05/22/12 | Citibank NA | MXN | 461,263 | 35,000 | 35,331 | (331 | ) | |||||||||||
Peruvian Nuevo Sol | ||||||||||||||||||
Expiring 07/10/12 | Citibank NA | PEN | 2,052,034 | 766,972 | 776,503 | (9,531 | ) | |||||||||||
Expiring 07/10/12 | Citibank NA | PEN | 274,383 | 102,900 | 103,828 | (928 | ) | |||||||||||
Philippine Peso | ||||||||||||||||||
Expiring 05/22/12 | Citibank NA | PHP | 5,140,443 | 119,506 | 121,542 | (2,036 | ) | |||||||||||
Expiring 05/22/12 | Citibank NA | PHP | 1,069,250 | 25,000 | 25,282 | (282 | ) | |||||||||||
Expiring 05/22/12 | Morgan Stanley & Co., Inc. | PHP | 28,257,900 | 660,000 | 668,136 | (8,136 | ) | |||||||||||
Polish Zloty | ||||||||||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 614,430 | 194,515 | 194,331 | 184 | ||||||||||||
Expiring 05/24/12 | Citibank NA | PLN | 159,484 | 50,900 | 50,441 | 459 | ||||||||||||
Russian Ruble | ||||||||||||||||||
Expiring 06/06/12 | Citibank NA | RUB | 6,650,550 | 225,000 | 225,000 | — | ||||||||||||
Expiring 06/06/12 | Citibank NA | RUB | 3,665,996 | 124,250 | 124,027 | 223 | ||||||||||||
Expiring 07/17/12 | Citibank NA | RUB | 10,404,450 | 350,000 | 350,001 | (1 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | RUB | 9,517,573 | 316,472 | 320,167 | (3,695 | ) | |||||||||||
Expiring 07/17/12 | Citibank NA | RUB | 8,008,728 | 266,000 | 269,410 | (3,410 | ) | |||||||||||
Singapore Dollar | ||||||||||||||||||
Expiring 05/23/12 | Citibank NA | SGD | 137,739 | 110,000 | 111,307 | (1,307 | ) | |||||||||||
Expiring 05/23/12 | Citibank NA | SGD | 130,799 | 105,000 | 105,698 | (698 | ) | |||||||||||
Expiring 05/23/12 | Citibank NA | SGD | 112,316 | 90,000 | 90,763 | (763 | ) | |||||||||||
South African Rand | ||||||||||||||||||
Expiring 05/31/12 | Citibank NA | ZAR | 1,369,947 | 177,161 | 175,389 | 1,772 | ||||||||||||
Expiring 05/31/12 | UBS AG | ZAR | 1,279,385 | 164,053 | 163,795 | 258 |
See Notes to Financial Statements.
18 | Visit our website at www.prudentialfunds.com |
Foreign Currency | Counterparty | Notional Amount | Payable at Settlement Date | Value at April 30, 2012 | Unrealized Appreciation/ (Depreciation) | |||||||||||||
Sold (cont’d.) | ||||||||||||||||||
South Korean Won | ||||||||||||||||||
Expiring 05/02/12 | Citibank NA | KRW | 241,091,940 | $ | 214,657 | $ | 213,332 | $ | 1,325 | |||||||||
Expiring 05/02/12 | Citibank NA | KRW | 179,001,975 | 156,882 | 158,391 | (1,509 | ) | |||||||||||
Expiring 05/14/12 | Morgan Stanley & Co., Inc. | KRW | 248,600,000 | 220,000 | 219,754 | 246 | ||||||||||||
Expiring 07/06/12 | Citibank NA | KRW | 64,231,695 | 56,100 | 56,576 | (476 | ) | |||||||||||
Expiring 07/13/12 | Citibank NA | KRW | 58,967,040 | 51,200 | 51,915 | (715 | ) | |||||||||||
Thai Baht | ||||||||||||||||||
Expiring 05/31/12 | Citibank NA | THB | 11,754,754 | 381,017 | 381,421 | (404 | ) | |||||||||||
Expiring 05/31/12 | Citibank NA | THB | 5,048,537 | 164,100 | 163,816 | 284 | ||||||||||||
Expiring 05/31/12 | Citibank NA | THB | 4,201,688 | 135,900 | 136,337 | (437 | ) | |||||||||||
Expiring 07/03/12 | Citibank NA | THB | 8,799,750 | 284,800 | 284,980 | (180 | ) | |||||||||||
Expiring 07/03/12 | Citibank NA | THB | 7,471,992 | 242,000 | 241,981 | 19 | ||||||||||||
Expiring 07/03/12 | Citibank NA | THB | 1,745,013 | 56,100 | 56,512 | (412 | ) | |||||||||||
Turkish Lira | ||||||||||||||||||
Expiring 05/31/12 | Barclays Capital, Inc. | TRY | 406,099 | 229,862 | 229,538 | 324 | ||||||||||||
Expiring 05/31/12 | Barclays Capital, Inc. | TRY | 17,680 | 9,680 | 9,993 | (313 | ) | |||||||||||
Expiring 07/16/12 | Citibank NA | TRY | 31,540 | 17,200 | 17,662 | (462 | ) | |||||||||||
|
|
|
|
|
| |||||||||||||
$ | 13,144,555 | $ | 13,146,262 | (1,707 | ) | |||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 71,051 | |||||||||||||||||
|
|
Interest rate swap agreements outstanding as of April 30, 2012:
Notional | Termination Date | Fixed Rate | Floating | Fair Value | Upfront Premiums Paid/ (Received) | Unrealized Appreciation (Depreciation) | Counterparty | |||||||||||||||||||
MXN | 8,000 | 02/21/22 | 6.620% | 28 Day Mexican Interbank Rate(1) | $ | 11,912 | $ | — | $ | 11,912 | Barclays Bank PLC | |||||||||||||||
MXN | 3,000 | 02/28/22 | 6.440% | 28 Day Mexican Interbank Rate(1) | 998 | — | 998 | Barclays Bank PLC | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
$ | 12,910 | $ | — | $ | 12,910 | |||||||||||||||||||||
|
|
|
|
|
|
(1) | Fund pays the floating rate and receives the fixed rate. |
# | Notional amount is shown in U.S. dollars unless otherwise stated. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 19 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices generally for securities actively traded on a regulated securities exchange and for open-end mutual funds which are traded 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 fair valuation procedures.
The following is a summary of the inputs used as of April 30, 2012 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Foreign Bonds: | ||||||||||||
Argentina | $ | — | $ | 247,000 | $ | — | ||||||
Brazil | — | 4,258,000 | — | |||||||||
Colombia | — | 1,304,596 | — | |||||||||
Hungary | — | 2,809,719 | — | |||||||||
Indonesia | — | 3,448,649 | — | |||||||||
Ireland | — | 343,470 | — | |||||||||
Malaysia | — | 1,169,196 | — | |||||||||
Mexico | — | 1,450,670 | 1,342,470 | |||||||||
Peru | — | 1,657,777 | — | |||||||||
Philippines | — | 442,948 | — | |||||||||
Poland | — | 2,449,512 | — | |||||||||
Romania | — | 155,650 | — | |||||||||
Russia | — | 2,497,941 | — | |||||||||
Singapore | — | 162,037 | — | |||||||||
South Africa | — | 3,577,012 | — | |||||||||
Thailand | — | 1,588,890 | — | |||||||||
Turkey | — | 1,431,275 | — | |||||||||
Ukraine | — | 478,170 | — | |||||||||
United Arab Emirates | — | 432,169 | — | |||||||||
Uruguay | — | 175,443 | — |
See Notes to Financial Statements.
20 | Visit our website at www.prudentialfunds.com |
Level 1 | Level 2 | Level 3 | ||||||||||
Foreign Bonds (continued): | ||||||||||||
Venezuela | $ | — | $ | 1,258,102 | $ | — | ||||||
Affiliated Money Market Mutual Fund | 3,647,285 | — | — | |||||||||
Other Financial Instruments* | ||||||||||||
Forward Foreign Currency Exchange Contracts | — | 71,051 | — | |||||||||
Interest Rate Swap Agreements | — | 12,910 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 3,647,285 | $ | 31,422,187 | $ | 1,342,470 | ||||||
|
|
|
|
|
|
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
Foreign Bonds | ||||
Balance as of 10/31/11 | $ | 1,275,437 | ||
Realized gain (loss) | — | |||
Change in unrealized appreciation (depreciation)** | 21,459 | |||
Purchases | 45,574 | |||
Sales | — | |||
Accrued discount/premium | — | |||
Transfers into Level 3 | — | |||
Transfers out of Level 3 | — | |||
|
| |||
Balance as of 04/30/12 | $ | 1,342,470 | ||
|
|
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swap contracts, which are recorded at the unrealized appreciation/depreciation on the instrument. |
** | Of which, $21,459 was included in Net Assets relating to securities held at the reporting period end. |
The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2012 was as follows:
Foreign Government Obligations | 70.5 | % | ||
Foreign Agencies | 15.2 | |||
Foreign Corporations | 5.1 | |||
Affiliated Money Market Mutual Fund | 10.1 | |||
|
| |||
100.9 | ||||
Liabilities in excess of other assets | (0.9 | ) | ||
|
| |||
Net Assets | 100.0 | % | ||
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 21 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Prudential Emerging Markets Debt Local Currency Fund (the “Series”) invested in derivative instruments during the reporting period. The primary types of risk associated with these derivative instruments is foreign exchange risk and interest rate risk. The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
Fair values of derivative instruments as of April 30, 2012 as presented in the Statement of Assets and Liabilities:
Derivatives not designated | Asset Derivatives | Liability Derivatives | ||||||||||
Balance | Fair Value | Balance | Fair Value | |||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency contracts | $ | 229,629 | Unrealized depreciation on forward foreign currency contracts | $ | 158,578 | ||||||
Interest rate contracts | Unrealized appreciation on swap agreements | 12,910 | — | — | ||||||||
|
|
|
| |||||||||
$ | 242,539 | $ | 158,578 | |||||||||
|
|
|
|
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2012 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||
Derivatives not designated as hedging | Forward Contracts | Futures | Swaps | Total | ||||||||||||
Foreign exchange contracts | $ | 80,192 | $ | — | $ | — | $ | 80,192 | ||||||||
Interest rate contracts | — | (19,889 | ) | 1,201 | (18,688 | ) | ||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 80,192 | $ | (19,889 | ) | $ | 1,201 | $ | 61,504 | |||||||
|
|
|
|
|
|
|
|
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||
Derivatives not designated as hedging | Forward Contracts | Swaps | Total | |||||||||
Interest rate contracts | $ | — | $ | 12,910 | $ | 12,910 | ||||||
Foreign exchange contracts | 139,118 | — | 139,118 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 139,118 | $ | 12,910 | $ | 152,028 | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
22 | Visit our website at www.prudentialfunds.com |
As of April 30, 2012, the Series’ volume of derivative activities is as follows:
Forward Currency Contracts—Purchased (Value at Settlement Date Payable) | Forward Currency Contracts—Sold (Value at Settlement Date Receivable) | Interest Rate Swaps (Notional amount in USD (000) | ||||||||
$ | 19,413,849 | $ | 11,565,093 | $ | 846 |
In addition, interest rate futures contracts were bought and sold/closed with an aggregate value at trade date of $1,314,398 and $1,294,509, respectively.
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 23 |
Statement of Assets and Liabilities
as of April 30, 2012 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated Investments (cost $33,096,291) | $ | 32,680,696 | ||
Affiliated Investments (cost $3,647,285) | 3,647,285 | |||
Foreign currency, at value (cost $173,846) | 176,225 | |||
Cash | 27,695 | |||
Dividends and interest receivable | 620,034 | |||
Unrealized appreciation on forward foreign currency contracts | 229,629 | |||
Receivable for investments sold | 196,187 | |||
Receivable for Series shares sold | 75,235 | |||
Unrealized appreciation on swap agreements | 12,910 | |||
Prepaid expenses | 195 | |||
|
| |||
Total assets | 37,666,091 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 1,339,443 | |||
Accrued expenses | 164,252 | |||
Unrealized depreciation on forward foreign currency contracts | 158,578 | |||
Payable for Series shares reacquired | 9,573 | |||
Dividends payable | 2,464 | |||
Management fee payable | 1,644 | |||
Distribution fee payable | 1,232 | |||
Affiliated transfer agent fee payable | 359 | |||
|
| |||
Total liabilities | 1,677,545 | |||
|
| |||
Net Assets | $ | 35,988,546 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 37,706 | ||
Paid-in capital in excess of par | 36,714,402 | |||
|
| |||
36,752,108 | ||||
Distributions in excess of net investment income | (127,940 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (249,254 | ) | ||
Net unrealized depreciation on investments and foreign currencies (net of capital gain tax) | (386,368 | ) | ||
|
| |||
Net assets, April 30, 2012 | $ | 35,988,546 | ||
|
|
See Notes to Financial Statements.
24 | Visit our website at www.prudentialfunds.com |
Class A | ||||
Net asset value and redemption price per share | $ | 9.50 | ||
Maximum sales charge (4.50% of offering price) | 0.45 | |||
|
| |||
Maximum offering price to public | $ | 9.95 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share ($911,502 ÷ 95,765 shares of common stock issued and outstanding) | $ | 9.52 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share | $ | 9.54 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | $ | 9.55 | ||
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 25 |
Statement of Operations
Six Months Ended April 30, 2012 (Unaudited)
Net Investment Income | ||||
Income | ||||
Unaffiliated interest income (net of foreign withholding taxes of $55,803) | $ | 971,968 | ||
Affiliated dividend income | 1,593 | |||
|
| |||
Total income | 973,561 | |||
|
| |||
Expenses | ||||
Management fee | 122,758 | |||
Distribution fee—Class A | 2,571 | |||
Distribution fee—Class C | 3,038 | |||
Custodian’s fees and expenses | 72,000 | |||
Registration fees | 34,000 | |||
Audit fee | 29,000 | |||
Reports to shareholders | 12,000 | |||
Legal fees and expenses | 8,000 | |||
Directors’ fees | 6,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $1,155) (Note 3) | 3,000 | |||
Miscellaneous | 9,583 | |||
|
| |||
Total expenses | 301,950 | |||
Expense reimbursement (Note 2) | (135,313 | ) | ||
|
| |||
Net expenses | 166,637 | |||
|
| |||
Net investment income | 806,924 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (275,858 | ) | ||
Foreign currency transactions | 63,050 | |||
Financial futures transactions | (19,889 | ) | ||
Swap agreement transactions | 1,201 | |||
|
| |||
(231,496 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (net of capital gains tax) | 766,539 | |||
Foreign currencies | 146,509 | |||
Swap agreements | 12,910 | |||
|
| |||
925,958 | ||||
|
| |||
Net gain on investment and foreign currency transactions | 694,462 | |||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 1,501,386 | ||
|
|
See Notes to Financial Statements.
26 | Visit our website at www.prudentialfunds.com |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended April 30, 2012 | March 30, 2011* through October 31, 2011 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 806,924 | $ | 810,330 | ||||
Net realized loss on investment and foreign currency transactions | (231,496 | ) | (537,861 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 925,958 | (1,312,326 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 1,501,386 | (1,039,857 | ) | |||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (58,555 | ) | (19,533 | ) | ||||
Class C | (14,290 | ) | (2,172 | ) | ||||
Class Q | (29 | ) | (12 | ) | ||||
Class Z | (825,712 | ) | (314,913 | ) | ||||
|
|
|
| |||||
(898,586 | ) | (336,630 | ) | |||||
|
|
|
| |||||
Tax return of capital | ||||||||
Class A | — | (33,363 | ) | |||||
Class C | — | (3,710 | ) | |||||
Class Q | — | (21 | ) | |||||
Class Z | — | (537,863 | ) | |||||
|
|
|
| |||||
— | (574,957 | ) | ||||||
|
|
|
| |||||
Series share transactions (Note 6) | ||||||||
Net proceeds from shares sold | 6,622,800 | 32,459,449 | ||||||
Net asset value of shares issued in reinvestment of dividends and tax return of capital | 864,776 | 894,161 | ||||||
Cost of shares reacquired | (1,652,317 | ) | (1,851,679 | ) | ||||
|
|
|
| |||||
Net increase in net assets from Series share transactions | 5,835,259 | 31,501,931 | ||||||
|
|
|
| |||||
Total increase | 6,438,059 | 29,550,487 | ||||||
Net Assets: | ||||||||
Beginning of period | 29,550,487 | — | ||||||
|
|
|
| |||||
End of period | $ | 35,988,546 | $ | 29,550,487 | ||||
|
|
|
|
* | Commencement of operations. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 27 |
Notes to Financial Statements
(Unaudited)
Prudential World Fund, Inc. (the “Fund”) is an open-end management investment company, registered under the Investment Company Act of 1940, as amended, (“1940 Act”) and currently consists of five series: Prudential International Equity Fund, Prudential International Value Fund, Prudential Jennison Global Opportunities Fund, Prudential Jennison International Opportunities Fund, and Prudential Emerging Markets Debt Local Currency Fund (the “Series”). These financial statements relate to the Prudential Emerging Markets Debt Local Currency Fund. The financial statements of the other series are not presented herein. The Series commenced investment operations on March 30, 2011. The investment objective of the Series is to seek total return, through a combination of current income and capital appreciation. The Series is non-diversified.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund and the Series in the preparation of its financial statements.
Security Valuation: Securities listed on a securities exchange (other than options on securities and indices) are valued at the last sale price on such exchange or market on the day of valuation or, if there was no sale on such a 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 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 subadvisor, to be over-the-counter, are valued at market value using prices provided by an independent pricing agent or principal market maker. 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 market and before the Series’ normal pricing time, are valued at fair value in accordance with Board of Directors’ 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/
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offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment advisor 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 the valuation.
Short-term debt securities of sufficient credit quality which mature in sixty days or less, are valued at amortized cost, which approximates fair value. The amortized cost method involves valuing a security at its cost on the date of purchase and thereafter assuming a constant amortization to maturity of the difference between the principal amount due at maturity and cost. Short-term debt securities, which mature in more than sixty days, are valued at fair value.
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities-at the current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses-at the rate of exchange prevailing on the respective dates of such transactions.
The Series 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 long term securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of 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 holdings of foreign currencies, currency gains or losses realized between the trade and settlement dates on security transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid.
Net unrealized currency gains 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.
Prudential Emerging Markets Debt Local Currency Fund | 29 |
Notes to Financial Statements
(Unaudited) continued
Forward Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate between two parties. The Series entered 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. Such credit risk may be mitigated by entering into 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 are no assurances that such mitigating factors are easily enforceable.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Series is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Series each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain (loss). When the contract expires or is closed, the gain (loss) is realized and is presented in the Statement of Operations as net realized gain (loss) on financial futures transactions. Financial futures contracts involve elements of risk in excess of the amounts reflected on the Statement of Assets and Liabilities.
The Series invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Series intends to purchase, against fluctuations in value caused by changes in prevailing interest rates, value of equities or foreign currency exchange rates. Should interest rates move unexpectedly, the Series may not achieve
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the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets.
Swap Agreements: The Series entered into interest rate swap agreements. A swap agreement is an agreement to exchange the return generated by one instrument for the return generated by another instrument. Swap agreements are negotiated in the over-the-counter market and may be executed either directly with counterparty (“OTC Traded”) or through a central clearing facility, such as a registered commodities exchange (“Exchange Traded”). The swap agreements are valued daily at current market value and any change in value is included in the net unrealized appreciation or depreciation on investments. Payments received or paid by the Series are recorded as realized gains or losses upon termination or maturity of the swap. Risk of loss may exceed amounts recognized on the statements of assets and liabilities. Swap agreements outstanding at period end, if any, are listed on the Portfolio of Investments.
Interest Rate Swaps: Interest rate swaps represent an agreement between counterparties to exchange cash flows based on the difference between two interest rates, applied to a notional principal amount for a specified period. The Series is subject to interest rate risk exposure in the normal course of pursuing its investment objectives. The Series used interest rate swaps to maintain its ability to generate steady cash flow by receiving a stream of fixed rate payments and to increase exposure to prevailing market rates by receiving floating rate payments using interest rate swap contracts. The Series’ maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from the counterparty over the contract’s remaining life. Such credit risk may be mitigated by entering into 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 are no assurances that such mitigating factors are easily enforceable.
In addition to each instrument’s primary underlying risk exposure (e.g. interest rate), swap agreements involve, to varying degrees, elements of credit, market risk and documentation risk. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreement may default on its obligation to perform or disagree as to the meaning of the contractual terms in the agreement, that there will be unfavorable changes in net interest rates. In connection with these agreements, securities in the portfolio may be identified as collateral or received as collateral from the counterparty in accordance with the terms of the respective swap agreements to provide or receive assets of value and serve as recourse in the event of default or bankruptcy/insolvency of either party.
Prudential Emerging Markets Debt Local Currency Fund | 31 |
Notes to Financial Statements
(Unaudited) continued
Such over-the-counter derivative agreements include conditions which when materialized, give the counterparty the right to cause an early termination of the transactions under those agreements. Any election by the counterparty for early termination of the contract(s) may impact the amounts reported on financial statements.
As of April 30, 2012, the Series has not met conditions under such agreements that give the counterparty the right to call for an early termination.
Concentration of Risk: The ability of issuers of debt securities (other than those issued or guaranteed by the U.S. Government), held by the Series, to meet their obligations may be affected by the economic or political developments in a specific industry, region or country. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability, or the level of governmental supervision and regulation of foreign securities markets.
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 is recorded on the accrual basis. The Series amortizes premiums and accretes discounts on debt securities as adjustments to interest income. Expenses are recorded on the accrual basis. Net investment income or loss (other than distribution fees which are charged directly to the respective class) and unrealized and realized gains or losses are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.
Dividends and Distributions: The Series declares dividends of net investment income daily and payment is made monthly. Distributions of net realized capital and currency gains, if any, are made annually. Dividends and distributions are recorded on the ex-dividend date. Dividends and distributions are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. Permanent book/tax differences relating to income and gains are reclassified amongst distribution in excess of net investment income, accumulated net realized gain or loss and paid-in-capital in excess of par, as appropriate.
Taxes: For federal income tax purposes, each series in the Fund is treated as a separate taxpaying entity. It is each series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment
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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 interest 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 Series has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM will furnish investment advisory services in connection with the management of the Series. In connection therewith, PIM is obligated to keep certain books and records of the Series. PI pays for the services of PIM, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly at an annual rate of .80% of the average daily net assets of the Series.
PI has contractually agreed through February 28, 2013 to limit net annual Series operating expenses (excluding distribution and service (12b-1) fees, extraordinary and certain other expenses such as taxes, interest and brokerage commissions) to each class of shares to 1.05% of the Series’ average daily net assets.
The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) who acts as the distributor of the Class A, Class C, Class Q and Class Z shares. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C, pursuant to plans of distribution (the “Class A and C Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Z shares of the Series.
Pursuant to the Class A and C Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30% and 1% of the average daily net assets of the Class A and C shares, respectively. PIMS has contractually agreed through February 28, 2013, to limit such expenses to .25% of the average daily net assets of the Class A shares.
Prudential Emerging Markets Debt Local Currency Fund | 33 |
Notes to Financial Statements
(Unaudited) continued
PIMS has advised the Series that it received $10,882 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2012. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended April 30, 2012, there were no contingent deferred sales charges imposed.
PI, PIM and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ 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 Series invests in the Prudential Core Taxable Money Market Fund (the “Core Fund”), a Series of the Prudential Investment Portfolios 2 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 investment securities, other than short-term investments, for the six months ended April 30, 2012 aggregated $14,453,283 and $8,409,635, respectively.
Note 5. Distributions and Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized depreciation as of April 30, 2012 were as follows:
Tax Basis | Appreciation | Depreciation | Net | |||
$36,897,581 | $710,051 | $(1,279,651) | $(569,600) |
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The difference between book basis and tax basis is primarily attributable to the difference in the treatment of amortization of premiums.
Management has analyzed the Series’ 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 Series’ financial statements for the current reporting period. The Series’ 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 Series offers Class A, Class C, Class Q and Class Z shares. Class A shares are sold with a front-end sales charge of up to 4.50%. All Investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1%. The Class A CDSC is waived for purchases by certain retirement and/or benefit plans. Class C shares are sold with a contingent deferred sales charge of 1% on shares redeemed within the first 12 months after purchase. Under certain limited circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock below. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class Q and Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
As of April 30, 2012, Prudential Financial, Inc. through its affiliates owned 106 Class A shares, 106 Class C shares, 106 Class Q shares and 2,660,994 Class Z shares of the Series.
There are 250 million shares of common stock at $0.01 par value per share, designated Class A, Class C, Class Q and Class Z common stock, each of which consists of 75 million, 50 million, 50 million and 75 million authorized shares, respectively.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 152,987 | $ | 1,430,536 | |||||
Shares issued in reinvestment of dividends and distributions | 5,199 | 48,239 | ||||||
Shares reacquired | (144,157 | ) | (1,339,074 | ) | ||||
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Net increase (decrease) in shares outstanding | 14,029 | $ | 139,701 | |||||
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Prudential Emerging Markets Debt Local Currency Fund | 35 |
Notes to Financial Statements
(Unaudited) continued
Class A | Shares | Amount | ||||||
Period ended October 31, 2011*: | ||||||||
Shares sold | 415,348 | $ | 4,173,929 | |||||
Shares issued in reinvestment of dividends and tax return of capital | 4,853 | 46,027 | ||||||
Shares reacquired | (140,426 | ) | (1,355,681 | ) | ||||
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Net increase (decrease) in shares outstanding | 279,775 | $ | 2,864,275 | |||||
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Class C | ||||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 53,465 | $ | 503,086 | |||||
Shares issued in reinvestment of dividends and distributions | 1,459 | 13,716 | ||||||
Shares reacquired | (1,389 | ) | (13,209 | ) | ||||
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Net increase (decrease) in shares outstanding | 53,535 | $ | 503,593 | |||||
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Period ended October 31, 2011*: | ||||||||
Shares sold | 50,542 | $ | 505,520 | |||||
Shares issued in reinvestment of dividends and tax return of capital | 571 | 5,479 | ||||||
Shares reacquired | (8,883 | ) | (82,126 | ) | ||||
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Net increase (decrease) in shares outstanding | 42,230 | $ | 428,873 | |||||
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Class Q | ||||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | — | $ | — | |||||
Shares issued in reinvestment of dividends and distributions | 3.1 | 29 | ||||||
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Net increase (decrease) in shares outstanding | 3.1 | $ | 29 | |||||
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Period ended October 31, 2011*: | ||||||||
Shares sold | 100.0 | $ | 1,000 | |||||
Shares issued in reinvestment of dividends and tax return of capital | 3.4 | 33 | ||||||
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Net increase (decrease) in shares outstanding | 103.4 | $ | 1,033 | |||||
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Class Z | ||||||||
Six months ended April 30, 2012: | ||||||||
Shares sold | 496,711 | $ | 4,689,178 | |||||
Shares issued in reinvestment of dividends and distributions | 85,966 | 802,792 | ||||||
Shares reacquired | (32,303 | ) | (300,034 | ) | ||||
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Net increase (decrease) in shares outstanding | 550,374 | $ | 5,191,936 | |||||
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Period ended October 31, 2011*: | ||||||||
Shares sold | 2,790,861 | $ | 27,779,000 | |||||
Shares issued in reinvestment of dividends and tax return of capital | 85,813 | 842,622 | ||||||
Shares reacquired | (46,075 | ) | (413,872 | ) | ||||
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Net increase (decrease) in shares outstanding | 2,830,599 | $ | 28,207,750 | |||||
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* | Commencement of operations on March 30, 2011. |
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Note 7. Borrowing
The Series, along with other affiliated registered investment companies (the “Funds”), is a party to a syndicated credit agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period December 16, 2011 through December 14, 2012. The Funds pay an annualized commitment fee of 0.08% of the unused portion of the SCA. Prior to December 16, 2011, the Funds had another Syndicated Credit Agreement of a $750 million commitment with an annualized commitment fee of 0.10% of the unused portion. 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 Series did not utilize the SCA during the six months ended April 30, 2012.
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.
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.
Prudential Emerging Markets Debt Local Currency Fund | 37 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||
Six Months Ended April 30, 2012 | March 30, 2011(a) through October 31, 2011 | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning Of Period | $9.36 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .24 | .32 | ||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .16 | (.62 | ) | |||||||
Total from investment operations | .40 | (.30 | ) | |||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.26 | ) | (.13 | ) | ||||||
Tax return of capital | - | (.21 | ) | |||||||
Total dividends and distributions | (.26 | ) | (.34 | ) | ||||||
Net asset value, end of period | $9.50 | $9.36 | ||||||||
Total Return(b): | 4.40% | (3.14)% | ||||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $2,792 | $2,620 | ||||||||
Average net assets (000) | $2,068 | $1,634 | ||||||||
Ratios to average net assets(c)(d): | ||||||||||
Expenses, including distribution and service (12b-1) fees(e) | 1.30% | (f) | 1.30% | (f) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.05% | (f) | 1.05% | (f) | ||||||
Net investment income | 5.11% | (f) | 4.85% | (f) | ||||||
Portfolio turnover rate | 29% | (g) | 60% | (g) |
(a) Commencement of operations.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of the reporting period, and includes reinvestment of dividends and distributions. Total return may reflect adjustments to conform to generally accepted accounting principles. Total return for a period less than a full year is not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Net of expense waiver/reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios including and excluding distribution and services (12b-1) fees and net investment income ratio would be 2.18%, 1.93% and 4.22%, 2.76%, 2.51% and 3.39%, respectively, for the six months ended April 30, 2012 and the period ended October 31, 2011.
(e) The distributor of the Series 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.
(f) Annualized
(g) Not annualized.
See Notes to Financial Statements.
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Class C Shares | ||||||||||
Six Months Ended April 30, 2012 | March 30, 2011(a) through October 31, 2011 | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning Of Period | $9.41 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .26 | .31 | ||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .08 | (.57 | ) | |||||||
Total from investment operations | .34 | (.26 | ) | |||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.23 | ) | (.12 | ) | ||||||
Tax return of capital | - | (.21 | ) | |||||||
Total dividends and distributions | (.23 | ) | (.33 | ) | ||||||
Net asset value, end of period | $9 .52 | $9.41 | ||||||||
Total Return(b): | 3.64% | (2.72)% | ||||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $912 | $398 | ||||||||
Average net assets (000) | $611 | $211 | ||||||||
Ratios to average net assets(c)(d): | ||||||||||
Expenses, including distribution and service (12b-1) fees | 2.05% | (e) | 2.05% | (e) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.05% | (e) | 1.05% | (e) | ||||||
Net investment income | 4.15% | (e) | 4.09% | (e) | ||||||
Portfolio turnover rate | 29% | (f) | 60% | (f) |
(a) Commencement of operations.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of the reporting period, and includes reinvestment of dividends and distributions. Total return may reflect adjustments to conform to generally accepted accounting principles. Total return for a period less than a full year is not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Net of expense waiver/reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios including and excluding distribution and services (12b-1) fees and net investment income ratio would be 2.93%, 1.93% and 3.27%, 3.52%, 2.52% and 2.62%, respectively, for the six months ended April 30, 2012 and the period ended October 31, 2011.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 39 |
Financial Highlights
(Unaudited) continued
Class Q Shares | ||||||||||
Six Months Ended April 30, 2012 | March 30, 2011(a) through October 31, 2011 | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning Of Period | $9.37 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .25 | .29 | ||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .20 | (.59 | ) | |||||||
Total from investment operations | .45 | (.30 | ) | |||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.28 | ) | (.12 | ) | ||||||
Tax return of capital | - | (.21 | ) | |||||||
Total dividends and distributions | (.28 | ) | (.33 | ) | ||||||
Net asset value, end of period | $9.54 | $9.37 | ||||||||
Total Return(b): | 4.87% | (3.14)% | ||||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $1 | $1 | ||||||||
Average net assets (000) | $1 | $1 | ||||||||
Ratios to average net assets(c)(d): | ||||||||||
Expenses, including distribution and service (12b-1) fees | 1.05% | (e) | 1.05% | (e) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.05% | (e) | 1.05% | (e) | ||||||
Net investment income | 5.37% | (e) | 4.98% | (e) | ||||||
Portfolio turnover rate | 29% | (f) | 60% | (f) |
(a) Commencement of operations.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of the reporting period, and includes reinvestment of dividends and distributions. Total return may reflect adjustments to conform to generally accepted accounting principles. Total return for a period less than a full year is not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Net of expense waiver/reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios including and excluding distribution and services (12b-1) fees and net investment income ratio would be 1.88%, 1.88% and 4.48%, 2.67%, 2.67% and 3.36%, respectively, for the six months ended April 30, 2012 and the period ended October 31, 2011.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
40 | Visit our website at www.prudentialfunds.com |
Class Z Shares | ||||||||||
Six Months Ended April 30, 2012 | March 30, 2011(a) through October 31, 2011 | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning Of Period | $9.37 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .25 | .29 | ||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .20 | (.59 | ) | |||||||
Total from investment operations | .45 | (.30 | ) | |||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.27 | ) | (.12 | ) | ||||||
Tax return of capital | - | (.21 | ) | |||||||
Total dividends and distributions | (.27 | ) | (.33 | ) | ||||||
Net asset value, end of period | $9.55 | $9.37 | ||||||||
Total Return(b): | 4.94% | (3.14)% | ||||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $32,284 | $26,532 | ||||||||
Average net assets (000) | $28,179 | $25,697 | ||||||||
Ratios to average net assets(c)(d): | ||||||||||
Expenses, including distribution and service (12b-1) fees | 1.05% | (e) | 1.05% | (e) | ||||||
Expenses, excluding distribution and service (12b-1) fees | 1.05% | (e) | 1.05% | (e) | ||||||
Net investment income | 5.29% | (e) | 4.99% | (e) | ||||||
Portfolio turnover rate | 29% | (f) | 60% | (f) |
(a) Commencement of operations.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of the reporting period, and includes reinvestment of dividends and distributions. Total return may reflect adjustments to conform to generally accepted accounting principles. Total return for a period less than a full year is not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Net of expense waiver/reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios including and excluding distribution and services (12b-1) fees and net investment income ratio would be 1.93%, 1.93% and 4.41%, 2.72%, 2.72% and 3.32%, respectively, for the six months ended April 30, 2012 and the period ended October 31, 2011.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 41 |
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 Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website. |
DIRECTORS |
Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Judy A. Rice, Vice President • Scott E. Benjamin, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, 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 • Amanda S. Ryan, 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 Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
| ||||
DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street | ||
| ||||
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 DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential Emerging Markets Debt Local Currency Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PRUDENTIAL EMERGING MARKETS DEBT LOCAL CURRENCY FUND
SHARE CLASS | A | C | Q | Z | ||||
NASDAQ | EMDAX | EMDCX | EMDQX | EMDZX | ||||
CUSIP | 743969750 | 743969743 | 743969735 | 743969727 |
MF212E2 0226470-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL JENNISON GLOBAL OPPORTUNITIES FUND
SEMIANNUAL REPORT · APRIL 30, 2012
Fund Type
Global Stock
Objective
To seek long-term growth of capital
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2012, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Prudential Investments, Prudential, the Prudential logo, the Rock symbol, and Bring Your Challenges are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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June 15, 2012
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison Global Opportunities Fund informative and useful. Because of ongoing market volatility, we understand that this is a difficult time to be an investor. While it is impossible to predict what the future holds, we continue to believe a prudent response to uncertainty is to maintain a diversified portfolio, including stock and bond mutual funds consistent with your tolerance for risk, time horizon, and financial goals.
A diversified asset allocation offers two potential advantages: It limits your exposure to any particular asset class; plus it provides a better opportunity to invest some of your assets in the right place at the right time. Your financial professional can help you create a diversified investment plan that may include mutual funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. Keep in mind that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® provides a wide range of mutual funds to choose from that can help you make progress toward your financial goals. Our funds offer the experience, resources, and professional discipline of Prudential Financial’s affiliated asset managers. Most of Prudential Investments’ equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors. Prudential Investment Management, Inc. (PIM) advises the Prudential Investments fixed income and money market funds through its Prudential Fixed Income unit. Jennison Associates, QMA, and PIM are registered investment advisers and Prudential Financial companies. Prudential Real Estate Investors is a unit of PIM. Thank you for choosing the Prudential Investments family of mutual funds.
Sincerely,
Stuart S. Parker, President
Prudential Jennison Global Opportunities Fund
Prudential Jennison Global Opportunities 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. Class A shares have a maximum initial sales charge of 5.50%. Gross operating expenses: Class A, 2.73%; Class C, 3.43%; Class Z, 2.43%. Net operating expenses: Class A, 1.60%; Class C, 2.35%; Class Z, 1.35%, after contractual reduction through 3/31/2013.
Cumulative Total Returns (Without Sales Charges) as of 4/30/12 | ||||||||
Since Inception | ||||||||
Class A | 1.20% | |||||||
Class C | 1.00 | |||||||
Class Z | 1.20 | |||||||
MSCI AC World ND Index | –0.49 | |||||||
Lipper Global Multi-Cap Core Funds Average | –0.80 | |||||||
Lipper Global Multi-Cap Growth Funds Average | 0.28 | |||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/12 | ||||||||
Since Inception | ||||||||
Class A | N/A | |||||||
Class C | N/A | |||||||
Class Z | N/A | |||||||
MSCI AC World ND Index | N/A | |||||||
Lipper Global Multi-Cap Core Funds Average | N/A | |||||||
Lipper Global Multi-Cap Growth Funds Average | N/A |
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.
The performance data featured represents past performance for a period of less than one year. While past performance is never an indication of future results, short periods of performance may be particularly unrepresentative of long-term performance for certain types of funds.
Inception date: 3/14/12
The average annual total returns take into account applicable sales charges. Class A shares are subject to a maximum front-end sales charge of 5.50% and a 12b-1 fee of up to 0.30% annually. 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
2 | Visit our website at www.prudentialfunds.com |
subject to a contingent deferred sales charge (CDSC) of 1%. Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund. Class C shares are not subject to a front-end sales charge, but charge a CDSC of 1% for 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 CDSC or 12b-1 fee. The returns in the tables reflect the share class expense structure in effect at the close of the fiscal period. 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
MSCI AC World ND Index
MSCI All Country World Index is an unmanaged free-float-adjusted, market capitalization-weighted index designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI comprises 24 developed market indexes and 21 emerging market country indexes. The developed market country indexes include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States. The emerging market country indexes include Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.
Note: The Fund has been classified by Lipper as Lipper Global Multi-Cap Core Funds but we reclassified it to Lipper Global Multi-Cap Growth Funds. Below are both definitions for reference.
Lipper Global Multi-Cap Core Funds Average
Lipper Global Multi-Cap Core Funds Average are Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Global multi-cap core funds typically have average characteristics compared to the MSCI World Index.
Lipper Global Multi-Cap Growth Funds Average
Lipper Global Multi-Cap Growth Funds Average are Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Global multi-cap growth funds typically have above-average characteristics compared to the MSCI World Index.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Averages reflect the deduction of operating expenses, but not sales charges or taxes.
Five Largest Holdings expressed as a percentage of net assets as of 4/30/12 | ||||
Apple, Inc., United States | 8.5 | % | ||
priceline.com, Inc., United States | 4.3 | |||
Michael Kors Holdings Ltd., United States | 3.1 | |||
VMware, Inc. (Class A Stock), United States | 3.1 | |||
Novo Nordisk A/S (Class B Stock), Denmark | 3.0 |
Prudential Jennison Global Opportunities Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Industries expressed as a percentage of net assets as of 4/30/12 | ||||
Textiles, Apparel & Luxury Goods | 12.1 | % | ||
Software | 9.1 | |||
Computers & Peripherals | 8.5 | |||
Specialty Retail | 7.7 | |||
Internet Software & Services | 6.5 |
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Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on November 1, 2011, at the beginning of the period, and held through the six-month period ended April 30, 2012. 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 Jennison Global Opportunities 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 Jennison Global Opportunities Fund | Beginning Account Value November 1, 2011 | Ending Account April 30, 2012 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual** | $ | 1,000.00 | $ | 1,012.00 | 1.60 | % | $ | 2.11 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.91 | 1.60 | % | $ | 8.02 | ||||||||||
Class C | Actual** | $ | 1,000.00 | $ | 1,010.00 | 2.35 | % | $ | 3.10 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.18 | 2.35 | % | $ | 11.76 | ||||||||||
Class Z | Actual** | $ | 1,000.00 | $ | 1,012.00 | 1.35 | % | $ | 1.78 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.15 | 1.35 | % | $ | 6.77 |
* 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 182 days in the six-month period ended April 30, 2012, and divided by the 366 days in the Fund’s fiscal year ending October 31, 2012 (to reflect the six-month period) with the exception of the “Actual” information which reflects the 48 day period ended April 30, 2012 due to its inception date of March 14, 2012. Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
** Commenced operations on March 14, 2012.
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Portfolio of Investments
as of April 30, 2012 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 98.7% | ||||||
COMMON STOCKS | ||||||
Bermuda 1.5% | ||||||
7,800 | BTG Pactual Participations Ltd., 144A* | $ | 126,034 | |||
7,736 | BTG Pactual Participations Ltd.* | 125,000 | ||||
|
| |||||
251,034 | ||||||
Brazil 6.2% | ||||||
14,175 | Arezzo Industria e Comercio SA | 219,227 | ||||
9,219 | Cia Hering | 228,909 | ||||
57,008 | OdontoPrev SA | 301,167 | ||||
30,045 | Raia Drogasil SA | 321,233 | ||||
|
| |||||
1,070,536 | ||||||
China 4.3% | ||||||
2,652 | Baidu, Inc., ADR* | 351,920 | ||||
12,638 | Tencent Holdings Ltd. | 397,124 | ||||
|
| |||||
749,044 | ||||||
Denmark 3.0% | ||||||
3,564 | Novo Nordisk A/S (Class B Stock) | 525,703 | ||||
France 1.8% | ||||||
2,818 | Remy Cointreau SA | 314,044 | ||||
Germany 3.8% | ||||||
4,074 | Adidas AG | 339,743 | ||||
4,796 | SAP AG | 317,994 | ||||
|
| |||||
657,737 | ||||||
Ireland 2.3% | ||||||
12,179 | Shire PLC | 397,283 | ||||
Italy 0.9% | ||||||
22,586 | Prada SpA* | 153,414 | ||||
Japan 1.4% | ||||||
1,422 | FANUC Corp. | 242,046 | ||||
Macau 1.8% | ||||||
78,087 | Sands China Ltd. | 306,968 |
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 7 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
South Africa 1.5% | ||||||
19,581 | Mr Price Group Ltd. | $ | 264,998 | |||
South Korea 3.1% | ||||||
800 | NCSoft Corp. | 207,411 | ||||
261 | Samsung Electronics Co. Ltd. | 321,017 | ||||
|
| |||||
528,428 | ||||||
Spain 1.8% | ||||||
3,552 | Inditex SA | 319,485 | ||||
Thailand 1.7% | ||||||
121,856 | CP ALL PCL* | 302,163 | ||||
United Kingdom 8.2% | ||||||
9,947 | Aggreko PLC | 363,379 | ||||
29,585 | ARM Holdings PLC | 251,591 | ||||
19,668 | BG Group PLC | 462,989 | ||||
14,436 | Burberry Group PLC | 347,909 | ||||
|
| |||||
1,425,868 | ||||||
United States 55.4% | ||||||
5,509 | Alexion Pharmaceuticals, Inc.* | 497,573 | ||||
8,215 | American Express Co. | 494,625 | ||||
2,844 | Anadarko Petroleum Corp. | 208,209 | ||||
2,522 | Apple, Inc.* | 1,473,453 | ||||
4,922 | Cognizant Technology Solutions Corp. (Class A Stock)* | 360,881 | ||||
2,025 | Credicorp Ltd. | 265,093 | ||||
2,025 | Dril-Quip, Inc.* | 136,465 | ||||
4,835 | Estee Lauder Cos., Inc. (The) | 315,967 | ||||
8,433 | FMC Technologies, Inc.* | 396,351 | ||||
2,053 | Fossil, Inc.* | 268,266 | ||||
6,634 | Home Depot, Inc. (The) | 343,575 | ||||
3,403 | LinkedIn Corp. (Class A Stock)* | 369,055 | ||||
3,105 | Lululemon Athletica, Inc.* | 230,205 | ||||
1,105 | MasterCard, Inc. (Class A Stock) | 499,758 | ||||
11,896 | Michael Kors Holdings Ltd.* | 543,290 | ||||
3,147 | Monsanto Co. | 239,739 | ||||
5,285 | National Oilwell Varco, Inc. | 400,391 | ||||
1,798 | Precision Castparts Corp. | 317,113 | ||||
968 | priceline.com, Inc.* | 736,474 |
See Notes to Financial Statements.
8 | Visit our website at www.prudentialfunds.com |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
United States (cont’d) | ||||||
4,723 | Red Hat, Inc.* | $ | 281,538 | |||
1,462 | Salesforce.com, Inc.* | 227,677 | ||||
2,972 | Starbucks Corp. | 170,534 | ||||
3,036 | Tesla Motors, Inc.* | 100,583 | ||||
4,231 | TJX Cos., Inc. | 176,475 | ||||
4,820 | VMware, Inc. (Class A Stock)* | 538,490 | ||||
|
| |||||
9,591,780 | ||||||
|
| |||||
Total long-term investments | 17,100,531 | |||||
|
| |||||
SHORT-TERM INVESTMENT 3.6% | ||||||
Affiliated Money Market Mutual Fund | ||||||
624,790 | Prudential Investment Portfolios 2 - Prudential Core Taxable | 624,790 | ||||
|
| |||||
Total Investments 102.3% | 17,725,321 | |||||
Liabilities in excess of other assets (2.3%) | (394,774 | ) | ||||
|
| |||||
Net Assets 100.0% | $ | 17,330,547 | ||||
|
|
The following abbreviations are used in the Portfolio descriptions:
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
ADR—American Depositary Receipt
* | Non-income producing security. |
(a) | Prudential Investments LLC, the manager of the Series, 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 Fund’s investments. These inputs are summarized in the three broad levels listed below.
Level 1—quoted prices generally in active markets for identical securities.
Level 2—other significant observable inputs including, but not limited to quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates, and amortized cost.
Level 3—significant unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
Prudential Jennison Global Opportunities Fund | 9 |
Portfolio of Investments
as of April 30, 2012 (Unaudited) continued
The following is a summary of the inputs used as of April 30, 2012 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks: | ||||||||||||
Bermuda | $ | 251,034 | $ | — | $ | — | ||||||
Brazil | 1,070,536 | — | — | |||||||||
China | 749,044 | — | — | |||||||||
Denmark | 525,703 | — | — | |||||||||
France | 314,044 | — | — | |||||||||
Germany | 657,737 | — | — | |||||||||
Ireland | 397,283 | — | — | |||||||||
Italy | 153,414 | — | — | |||||||||
Japan | 242,046 | — | — | |||||||||
Macau | 306,968 | — | — | |||||||||
South Africa | 264,998 | — | — | |||||||||
South Korea | 528,428 | — | — | |||||||||
Spain | 319,485 | — | — | |||||||||
Thailand | 302,163 | — | — | |||||||||
United Kingdom | 1,425,868 | — | — | |||||||||
United States | 9,591,780 | — | — | |||||||||
Affiliated Money Market Mutual Fund | 624,790 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 17,725,321 | $ | — | $ | — | ||||||
|
|
|
|
|
|
The industry classification of portfolio holdings and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2012 were as follows:
Textiles, Apparel & Luxury Goods | 12.1 | % | ||
Software | 9.1 | |||
Computers & Peripherals | 8.5 | |||
Specialty Retail | 7.7 | |||
Internet Software & Services | 6.5 | |||
Energy Equipment & Services | 5.4 | |||
Pharmaceuticals | 5.3 | |||
IT Services | 5.0 | |||
Internet & Catalog Retail | 4.2 | |||
Oil, Gas & Consumable Fuels | 3.9 | |||
Affiliated Money Market Mutual Fund | 3.6 | |||
Food & Staples Retailing | 3.6 | |||
Semiconductors & Semiconductor Equipment | 3.3 | |||
Biotechnology | 2.9 | |||
Consumer Finance | 2.9 | |||
Hotels, Restaurants & Leisure | 2.8 | % | ||
Commercial Services & Supplies | 2.1 | |||
Aerospace & Defense | 1.8 | |||
Beverages | 1.8 | |||
Personal Products | 1.8 | |||
Healthcare Providers & Services | 1.7 | |||
Commercial Banks | 1.5 | |||
Capital Markets | 1.4 | |||
Chemicals | 1.4 | |||
Machinery | 1.4 | |||
Automobiles | 0.6 | |||
|
| |||
102.3 | ||||
Liabilities in excess of other assets | (2.3 | ) | ||
|
| |||
100.0 | % | |||
|
|
See Notes to Financial Statements.
10 | Visit our website at www.prudentialfunds.com |
Financial Statements
(Unaudited)
APRIL 30, 2012 | SEMIANNUAL REPORT |
Prudential Jennison Global Opportunities Fund
Statement of Assets and Liabilities
as of April 30, 2012 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $16,817,046) | $ | 17,100,531 | ||
Affiliated investments (cost $624,790) | 624,790 | |||
Receivable for investments sold | 543,242 | |||
Prepaid expenses | 44,270 | |||
Dividends receivable | 16,205 | |||
Due from Manager | 2,585 | |||
Receivable for Series shares sold | 992 | |||
Foreign tax reclaim receivable | 955 | |||
|
| |||
Total assets | 18,333,570 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 986,644 | |||
Accrued expenses | 15,875 | |||
Distribution fee payable | 446 | |||
Affiliated transfer agent fee payable | 58 | |||
|
| |||
Total liabilities | 1,003,023 | |||
|
| |||
Net Assets | $ | 17,330,547 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 17,122 | ||
Paid-in capital in excess of par | 17,116,701 | |||
|
| |||
17,133,823 | ||||
Accumulated net investment loss | (1,677 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (86,843 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 285,244 | |||
|
| |||
Net assets, April 30, 2012 | $ | 17,330,547 | ||
|
|
See Notes to Financial Statements.
12 | Visit our website at www.prudentialfunds.com |
Class A | ||||
Net asset value and redemption price per share | $ | 10.12 | ||
Maximum sales charge (5.50% of offering price) | 0.59 | |||
|
| |||
Maximum offering price to public | $ | 10.71 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | $ | 10.10 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | $ | 10.12 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 13 |
Statement of Operations
For the Period March 14, 2012* through April 30, 2012 (Unaudited)
Net Investment Loss | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $1,331) | $ | 27,775 | ||
Affiliated dividend income | 618 | |||
|
| |||
Total income | 28,393 | |||
|
| |||
Expenses | ||||
Management fee | 19,563 | |||
Distribution fee—Class A | 406 | |||
Distribution fee—Class C | 262 | |||
Custodian’s fees and expenses | 10,000 | |||
Registration fees | 9,000 | |||
Legal fees and expenses | 5,000 | |||
Audit fee | 3,000 | |||
Reports to shareholders | 2,000 | |||
Directors’ fees | 1,000 | |||
Miscellaneous | 3,414 | |||
|
| |||
Total expenses | 53,645 | |||
|
| |||
Expense reimbursement (Note 2) | (23,575 | ) | ||
|
| |||
Net expenses | 30,070 | |||
|
| |||
Net investment loss | (1,677 | ) | ||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized loss on: | ||||
Investment transactions | (60,397 | ) | ||
Foreign currency transactions | (26,446 | ) | ||
|
| |||
(86,843 | ) | |||
|
| |||
Net change in unrealized appreciation on: | ||||
Investments | 283,485 | |||
Foreign currencies | 1,759 | |||
|
| |||
285,244 | ||||
|
| |||
Net gain on investment and foreign currency transactions | 198,401 | |||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 196,724 | ||
|
|
* | Commencement of Series. |
See Notes to Financial Statements.
14 | Visit our website at www.prudentialfunds.com |
Statement of Changes in Net Assets
(Unaudited)
March 14, 2012* April 30, 2012 | ||||
Increase (Decrease) In Net Assets | ||||
Operations | ||||
Net investment loss | $ | (1,677 | ) | |
Net realized loss on investment and foreign currency transactions | (86,843 | ) | ||
Net change in unrealized appreciation on investments and foreign currencies | 285,244 | |||
|
| |||
Net increase in net assets resulting from operations | 196,724 | |||
|
| |||
Series share transactions (Note 6) | ||||
Net proceeds from shares sold | 17,133,823 | |||
|
| |||
Net increase in net assets from Series share transactions | 17,133,823 | |||
|
| |||
Total increase | 17,330,547 | |||
Net Assets: | ||||
Beginning of period | — | |||
|
| |||
End of period | $ | 17,330,547 | ||
|
|
* | Commencement of Series. |
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 15 |
Notes to Financial Statements
(Unaudited)
Prudential World Fund, Inc. (the “Fund”) is an open-end management investment company, registered under the Investment Company Act of 1940, as amended, (“1940 Act”) and currently consists of five series: Prudential Jennison Global Opportunities Fund (the “Series”), Prudential International Equity Fund, Prudential International Value Fund, Prudential Jennison International Opportunities Fund and Prudential Emerging Markets Debt Local Currency Fund. These financial statements relate to the Prudential Jennison Global Opportunities Fund. The financial statements of the other series are not presented herein. The Series commenced investment operations on March 14, 2012. The investment objective of the Series is to achieve long-term growth of capital.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund and the Series in the preparation of its financial statements.
The Series holds portfolio securities and other assets that are fair valued at the close of each day the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors has delegated fair valuation responsibilities to the Manager through the adoption of Valuation Procedures for valuation of the Series’ securities. Under the current Valuation Procedures, a Valuation Committee is established and responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures allow the Series to utilize independent pricing vendor services, quotations from market makers and other valuation methods in events when market quotations are not readily available. A record of Valuation Committee’s actions is subject to review, approval and ratification by the Board at its next regularly scheduled quarterly meeting.
The valuation methodologies and significant inputs used in determining the fair value of securities and other assets classified as Level 1, Level 2 and Level 3 of the hierarchy are as follows:
Common stock, exchange-traded funds and financial derivative instruments (including futures contracts and certain options contracts on securities), that are traded on a national securities exchange are valued at the last sale price as of the
16 | Visit our website at www.prudentialfunds.com |
close of trading on the applicable exchange. Securities traded via Nasdaq are valued at the official Nasdaq official closing price. To the extent these securities are valued at the last sale price or Nasdaq official closing price, they are classified as Level 1 of the fair value hierarchy.
In the event there is no sale or official closing price on such day, these securities are valued at the mean between the last reported bid and asked prices, or at the last bid price in absence of an asked price. These securities are classified as Level 2 of the fair value hierarchy as these inputs are considered as significant other observable inputs to the valuation.
For common stocks traded on foreign securities exchanges, certain valuation adjustments will be applied when events occur after the close of the security’s foreign market and before the Series’ normal pricing time. These securities are valued using pricing vendor services that provide adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such adjustment factors are classified as Level 2 of the fair value hierarchy.
Investments in open end, non exchange-traded mutual funds are valued at their net asset value as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 as these securities have the ability to be purchased or sold at their net asset value on the date of valuation.
Short-term investments of sufficient credit quality which mature in 60 days or less are valued at amortized cost which approximates fair market value. These securities are categorized as level 2 of the fair value hierarchy.
Over the counter derivatives are usually valued using pricing vendor services, which derive the valuation based on underlying asset prices, indices, spreads, and other inputs. These instruments are categorized as level 2 of the fair value hierarchy.
Securities and other assets that cannot be priced using the methods described above are valued with pricing methodologies approved by the Valuation Committee. Where there are unobservable inputs used when determining such valuation, the securities will be classified as Level 3 of the fair value hierarchy.
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities-at the current rates of exchange;
Prudential Jennison Global Opportunities Fund | 17 |
Notes to Financial Statements
(Unaudited) continued
(ii) purchases and sales of investment securities, income and expenses-at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the fiscal period, the Series 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 long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, 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 holding of foreign currencies, currency gains or losses realized between the trade date and settlement dates on security transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains 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 and economic instability and the level of governmental supervision and regulation of foreign securities markets.
Forward Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate 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
18 | Visit our website at www.prudentialfunds.com |
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. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions on sales of portfolio 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 Series’ expenses are allocated to the respective portfolios on the basis of relative net assets except for expenses that are charged directly at the portfolio or class level.
Net investment income or loss (other than distribution fees which are charged directly to the respective class), and unrealized and realized gains or losses are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.
Dividends and Distributions: The Series expects to pay dividends 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 and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date.
Taxes: For federal income tax purposes, each Series in the Fund is treated as a separate taxpaying entity. It is each Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required.
Prudential Jennison Global Opportunities Fund | 19 |
Notes to Financial Statements
(Unaudited) continued
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 for the Series with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison furnishes investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PI pays for the services of Jennison, the compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.
The management fee paid to PI is computed daily and payable monthly at an annual rate of .90% of the Series’ average daily net assets.
PI has contractually agreed through March 31, 2013 to limit net annual Series operating expenses (excluding distribution and service (12b-1) fees, extraordinary and certain other expenses such as taxes, interest and brokerage commissions) to each class of shares to 1.35% of the Series’ average daily net assets.
The Series has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C and Class Z shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares, pursuant to plans of distribution (the “Class A and C 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 Series.
Pursuant to the Class A and C Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to .30% and 1% of the average daily net
20 | Visit our website at www.prudentialfunds.com |
assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares through March 31, 2013.
PIMS has advised the Series that for the period ended April 30, 2012, there were no front-end sales charges received.
PIMS has advised the Series that for the period ended April 30, 2012, there were no contingent deferred sales charges imposed.
PI, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses on the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
The Series invests in the Prudential Core Taxable Money Market Fund (the “Core Fund”), a portfolio of the Prudential Investment Portfolios 2, 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, other than short-term investments, for the period ended April 30, 2012 were $18,523,367 and $1,645,925, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2012 were as follows:
Tax Basis | Appreciation | Depreciation | Net | |||
$17,441,836 | $613,646 | $(330,161) | $283,485 |
Prudential Jennison Global Opportunities Fund | 21 |
Notes to Financial Statements
(Unaudited) continued
The cost of securities for federal income tax purposes is substantially the same as for financial reporting purposes.
Note 6. Capital
The Series offers Class A, Class C and Class Z shares. Class A shares are subject to a maximum front-end sales charge of 5.50%. Investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are not subject to an initial sales charge but are subject to a contingent deferred sales charge (CDSC) of 1%. The Class A CDSC is waived for purchases by certain retirement or benefits plans. The CDSC for Class C shares is 1% for shares redeemed within 12 months of purchase. Class Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of capital stock.
At April 30, 2012, Prudential Financial, Inc. through its affiliates owned 1,000 Class A shares, 1,000 Class C shares and 1,501,000 Class Z shares of the Series.
There are 900 million shares of common stock, $.01 par value per share, divided into three classes, designated Class A, Class C and Class Z common stock, each of which consists of 300,000,000 authorized shares.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Period ended April 30, 2012:* | ||||||||
Shares sold | 196,359 | $ | 1,986,849 | |||||
|
|
|
| |||||
Net increase in shares outstanding | 196,359 | $ | 1,986,849 | |||||
|
|
|
| |||||
Class C | ||||||||
Period ended April 30, 2012:* | ||||||||
Shares sold | 14,834 | $ | 136,974 | |||||
|
|
|
| |||||
Net increase in shares outstanding | 14,834 | $ | 136,974 | |||||
|
|
|
|
22 | Visit our website at www.prudentialfunds.com |
Class Z | Shares | Amount | ||||||
Period ended April 30, 2012:* | ||||||||
Shares sold | 1,501,000 | $ | 15,010,000 | |||||
|
|
|
| |||||
Net increase in shares outstanding | 1,501,000 | $ | 15,010,000 | |||||
|
|
|
|
* | Commenced operations on March 14, 2012. |
Note 7. Borrowings
The Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period December 16, 2011 through December 14, 2012. The Funds pay an annualized commitment fee of 0.08% of the unused portion of the SCA. Prior to December 16, 2011, the Funds had another Syndicated Credit Agreement of a $750 million commitment with an annualized commitment fee of 0.10% of the unused portion. 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 Series did not utilize the SCA during the period ended April 30, 2012.
Prudential Jennison Global Opportunities Fund | 23 |
Financial Highlights
(Unaudited)
Class A Shares | ||||
March 14, 2012(a) April 30, 2012 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $10.00 | |||
Income (loss) from investment operations: | ||||
Net investment loss | — | (e) | ||
Net realized and unrealized gain on investment and foreign currency transactions | .12 | |||
Total from investment operations | .12 | |||
Net asset value, end of period | $10.12 | |||
Total Return(b): | 1.20% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $1,988 | |||
Average net assets (000) | $1,239 | |||
Ratios to average net assets(c)(d): | ||||
Expenses, including distribution and service (12b-1) fees | 1.60% | (f)(g) | ||
Expenses, excluding distribution and service (12b-1) fees | 1.35% | (f)(g) | ||
Net investment loss | (.32)% | (f)(g) | ||
Portfolio turnover rate | 10% | (h) |
(a) Commencement of Series.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) 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.
(e) Less than $.005 per share.
(f) Net of expense waiver/reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios including and excluding distribution and services (12b-1) fees and net investment income ratio would be 2.68%, 2.43% and (1.40)%, respectively, for the period ended April 30, 2012.
(g) Annualized
(h) Not annualized.
See Notes to Financial Statements.
24 | Visit our website at www.prudentialfunds.com |
Class C Shares | ||||
March 14, 2012(a) April 30, 2012 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $10.00 | |||
Income (loss) from investment operations: | ||||
Net investment loss | — | (e) | ||
Net realized and unrealized gain on investment and foreign currency transactions | .10 | |||
Total from investment operations | .10 | |||
Net asset value, end of period | $10.10 | |||
Total Return(b): | 1.00% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $150 | |||
Average net assets (000) | $200 | |||
Ratios to average net assets(c): | ||||
Expenses, including distribution and service (12b-1) fees | 2.35% | (d)(f) | ||
Expenses, excluding distribution and service (12b-1) fees | 1.35% | (d)(f) | ||
Net investment loss | (.06)% | (d)(f) | ||
Portfolio turnover rate | 10% | (g) |
(a) Commencement of Series.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(c) | Does not include expenses of the underlying portfolios in which the Series invests. |
(d) Net of expense waiver/reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios including and excluding distribution and services (12b-1) fees and net investment loss ratio would be 3.43%, 2.43% and (1.14)%, respectively, for the period ended April 30, 2012.
(e) Less than $.005 per share.
(f) Annualized.
(g) Not annualized.
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 25 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||
March 14, 2012(a) April 30, 2012 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $10.00 | |||
Income (loss) from investment operations: | ||||
Net investment loss | — | (e) | ||
Net realized and unrealized gain on investment and foreign currency transactions | .12 | |||
Total from investment operations | .12 | |||
Net asset value, end of period | $10.12 | |||
Total Return(b): | 1.20% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $15,193 | |||
Average net assets (000) | $15,135 | |||
Ratios to average net assets(c): | ||||
Expenses, including distribution and service (12b-1) fees | 1.35% | (d)(f) | ||
Expenses, excluding distribution and service (12b-1) fees | 1.35% | (d)(f) | ||
Net investment loss | (.06)% | (d)(f) | ||
Portfolio turnover rate | 10% | (g) |
(a) Commencement of Series.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) Net of expense waiver/reimbursement. If the investment manager had not waived/reimbursed expenses, the expense ratios including and excluding distribution and services (12b-1) fees and net investment loss ratio would be 2.43%, 2.43% and (1.14)%, respectively, for the period ended April 30, 2012.
(e) Less than $.005 per share.
(f) Annualized.
(g) Not annualized.
See Notes to Financial Statements.
26 | Visit our website at www.prudentialfunds.com |
Approval of Advisory Agreements
Initial Approval of the Fund’s Advisory Agreements
As required by the Investment Company Act of 1940, as amended (the “1940 Act”), the Board considered the proposed management agreement with Prudential Investments LLC (the “Manager”) and the proposed subadvisory agreement with Jennison Associates LLC (the “Subadviser”), with respect to the Prudential Jennison Global Opportunities Fund (the “Fund”) prior to the Fund’s commencement of operations. The Board of Directors (the “Board”) of Prudential World Fund, Inc., including all of the Independent Directors, met on November 29-December 1, 2011 and approved the agreements for an initial two year period, after concluding that approval of the agreements was in the best interests of the Fund.
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.
In approving the agreements, the Board, including the Independent Directors advised by independent legal counsel, considered the factors it deemed relevant, including the nature, quality and extent of services to be provided to the Fund by the Manager and the Subadviser; any relevant comparable performance and the Subadviser’s qualifications and track record in serving other affiliated mutual funds; the fees proposed to be paid by the Fund to the Manager and by the Manager to the Subadvisers under the agreements; and the potential for economies of scale that may be shared with the Fund and its shareholders. In connection with its deliberations, the Board considered information provided by the Manager and the Subadviser at or in advance of the meetings on November 29-December 1, 2011. The Board also considered information provided by the Manager with respect to other funds managed by the Manager and the Subadviser, which information had been provided throughout the year at regular Board meetings. In their deliberations, the Directors did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund.
The Directors determined that the overall arrangements between the Fund and the Manager, which will serve as the Fund’s investment manager pursuant to a management agreement, and between the Manager and the Subadviser, which will serve as the Fund’s Subadviser pursuant to the terms of a subadvisory agreement, are appropriate in light of the services to be performed and the fees to be charged under the agreements and such other matters as the Directors considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the Directors’ reaching their determinations to approve the agreements are separately discussed below.
Prudential Jennison Global Opportunities Fund
Approval of Advisory Agreements (continued)
Nature, quality and extent of services
With respect to the Manager, the Board noted that it had received and considered information about the Manager at the June 6-8, 2011 meetings in connection with the renewal of the management agreements between the Manager and the other Prudential Retail Funds, as well as at other regular meetings throughout the year, regarding the nature, quality and extent of services provided by the Manager. The Board considered the services to be provided by the Manager, including but not limited to the oversight of the Subadviser, as well as the provision of fund recordkeeping, compliance and other services to the Fund. With respect to the Manager’s oversight of the Subadviser, the Board noted that the Manager’s Strategic Investment Research Group, which is a business unit of the Manager, is responsible for monitoring and reporting to the Manager’s senior management on the performance and operations of the Subadviser. The Board also noted that the Manager pays the salaries of all the officers and non-independent Directors of the Fund. The Board reviewed the qualifications, backgrounds and responsibilities of the Manager’s senior management responsible for the oversight of the Fund and the Subadviser, and was also provided with information pertaining to the Manager’s organizational structure, senior management, investment operations and other relevant information. The Board further noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer as to the Manager. The Board noted that it had concluded that it was satisfied with the nature, quality and extent of the services provided by the Manager to the other Prudential Retail Funds and determined that it was reasonable to conclude that the nature, quality and extent of services to be provided by the Manager under the management agreement for the Fund would be similar in nature to those provided under the other management agreements.
With respect to the Subadviser, the Board noted that it had received and considered information about the Subadviser at the June 6-8, 2011 meetings in connection with the renewal of the subadvisory agreements between the Manager and the Subadviser with respect to other Prudential Retail Funds, as well as at other regular meetings throughout the year, regarding the nature, quality and extent of services provided by the Subadviser. The Board considered, among other things, the qualifications, background and experience of the Subadviser’s portfolio managers who will be responsible for the day-to-day management of the Fund’s portfolio, as well as information on the Subadviser’s organizational structure, senior management, investment operations and other relevant information. The Board further noted that it received favorable compliance reports from the Fund’s Chief Compliance Officer as to the Subadviser. The Board noted that it was satisfied with the nature, quality and extent of services provided by the Subadviser with respect to the other Prudential Retail Funds served by the Subadviser and determined that it was reasonable to conclude that the nature, quality and extent of services to be provided by the
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Subadviser under the subadvisory agreement for the Fund would be similar in nature to those provided under the other subadvisory agreements. The Board noted that the Subadviser is affiliated with the Manager.
Performance
Because the Fund had not yet commenced operations and the actual asset base of the Fund has not yet been determined, no investment performance for the Fund existed for Board review. Nevertheless, as noted above, the Board did consider the background and professional experience of the proposed portfolio management team for the Fund. The Manager will provide information relating to performance to the Board in connection with future annual reviews of the management agreement and subadvisory agreement.
Fee Rates
The Board considered the proposed management fees of 0.90% of the Fund’s average daily net assets to be paid by the Fund to the Manager and the proposed subadvisory fees of 0.45% of the Fund’s first $500 million of average daily net assets and 0.40% of average daily net assets in excess of $500 million to be paid by the Manager to the Subadviser.
The Board considered information provided by the Manager comparing the Fund’s proposed management fee rate and total expenses for Class A shares to the Lipper 15(c) Peer Group. The Board noted that the Fund’s net management fee was in the third quartile of the Lipper Peer Group (first quartile being the lowest fee). The Board further noted that the anticipated net total expenses for Class A shares (including expenses related to short sales) were in the third quartile of the Lipper Peer Group (first quartile being the lowest expenses).
The Board noted that the Fund’s contractual management fee of 0.90% was 0.02% from the Peer Group median of 0.88% and that the Fund’s actual management fee would be 0.00%, due to waivers and reimbursements required to support the net total expense limitation, given that the Fund’s initial assets will be low. The Board concluded that the proposed management fee and total expenses were reasonable in light of the services to be provided.
Profitability
Because the Fund had not yet commenced operations and the actual asset base of the Funds has not yet been determined, the Board noted that there was no historical profitability information with respect to the Fund to be reviewed. The Board noted that it would review profitability information in connection with the annual renewal of the advisory and subadvisory agreements.
Prudential Jennison Global Opportunities Fund
Approval of Advisory Agreements (continued)
Economies of Scale
Because the Fund had not yet commenced operations and the actual asset base of the Funds has not yet been determined, the Board noted that there was no historical information regarding economies of scale with respect to the Fund to be reviewed. The Board noted that it would review such information in connection with the annual renewal of the advisory and subadvisory agreements.
Other Benefits to the Manager and the Subadviser
The Board considered potential “fall-out” or ancillary benefits anticipated to be received by the Manager and the Subadviser. The Board concluded that any potential benefits to be derived by the Manager were similar to benefits derived by the Manager in connection with its management of the other Prudential Retail Funds, which are reviewed on an annual basis. The Board also concluded that any potential benefits to be derived by the Subadviser were consistent with those generally derived by subadvisers to the Prudential Retail Funds, and that those benefits are reviewed on an annual basis. The Board concluded that any potential benefits derived by the Manager and the Subadviser 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 interests of the Fund.
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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 Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852 or by visiting the Securities and Exchange Commission’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Commission’s website. |
DIRECTORS |
Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Judy A. Rice, Vice President • Scott E. Benjamin, Vice President • Grace C. Torres, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, 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 • Amanda S. Ryan, 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 Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Jennison Associates LLC | 466 Lexington Avenue New York, NY 10017 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street | ||
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CUSTODIAN | The Bank of New York Mellon | One Wall Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 |
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.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 DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, Prudential Jennison Global Opportunities Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling (202) 551-8090. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PRUDENTIAL JENNISON GLOBAL OPPORTUNITIES FUND
SHARE CLASS | A | C | Z | |||
NASDAQ | PRJAX | PRJCX | PRJZX | |||
CUSIP | 743969719 | 743969693 | 743969685 |
MF214E2 0226472-00001-00
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 World Fund, Inc. | |
By: | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary | ||
Date: | June 21, 2012 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Stuart S. Parker | |
Stuart S. Parker | ||
President and Principal Executive Officer | ||
Date: | June 21, 2012 | |
By: | /s/ Grace C. Torres | |
Grace C. Torres | ||
Treasurer and Principal Financial Officer | ||
Date: | June 21, 2012 |