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: | 10/31/2014 | |
Date of reporting period: | 4/30/2014 |
Item 1 – Reports to Stockholders
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL INTERNATIONAL EQUITY FUND
SEMIANNUAL REPORT · APRIL 30, 2014
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, 2014, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company. Quantitative Management Associates, LLC (QMA) is a wholly owned subsidiary of Prudential Investment Management, Inc. (PIM). QMA and PIM are registered investment advisers and Prudential Financial companies. © 2014 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, Prudential, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
June 16, 2014
Dear Shareholder:
We hope you find the semiannual report for the Prudential International Equity Fund informative and useful. The report covers performance for the six-month period that ended April 30, 2014.
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 of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks. We offer the expertise of Prudential Financial’s affiliated asset managers* that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential International Equity Fund
*Most of Prudential Investments’ equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors. Prudential Investments’ fixed income and money market funds are advised by Prudential Investment Management, Inc. (PIM) 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.
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.
Cumulative Total Returns (Without Sales Charges) as of 4/30/14 |
| |||||||||||||||
Six Months | One Year | Five Years | Ten Years | |||||||||||||
Class A | 4.47 | % | 11.75 | % | 88.07 | % | 75.34 | % | ||||||||
Class B | 4.11 | 11.02 | 81.81 | 62.95 | ||||||||||||
Class C | 4.11 | 11.02 | 81.82 | 62.97 | ||||||||||||
Class Z | 4.60 | 12.14 | 90.16 | 79.39 | ||||||||||||
MSCI All Country World Ex-U.S. ND Index | 2.91 | 9.76 | 83.42 | 108.21 | ||||||||||||
MSCI EAFE ND Index* | 4.44 | 13.35 | 89.01 | 95.36 | ||||||||||||
Lipper International Multi-Cap Core Funds Average | 3.57 | 12.04 | 89.98 | 92.42 | ||||||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/14 |
| |||||||||||||||
One Year | Five Years | Ten Years | ||||||||||||||
Class A | 9.74 | % | 14.55 | % | 4.76 | % | ||||||||||
Class B | 10.53 | 14.96 | 4.60 | |||||||||||||
Class C | 14.53 | 15.08 | 4.60 | |||||||||||||
Class Z | 16.51 | 16.15 | 5.62 | |||||||||||||
MSCI All Country World Ex-U.S. ND Index | 12.36 | 15.52 | 7.12 | |||||||||||||
MSCI EAFE ND Index* | 17.54 | 16.02 | 6.53 | |||||||||||||
Lipper International Multi-Cap Core Funds Average | 15.70 | 15.84 | 6.27 |
*The Fund no longer utilizes the MSCI EAFE ND Index, and instead utilizes the MSCI ACWI Ex-U.S. Index for performance comparisons, because the Fund’s investment Manager believes that the MSCI ACWI Ex-U.S. Index provides a more appropriate basis for Fund performance comparisons, due to the fact that the Fund’s investment policies recently changed to permit increased exposure to emerging markets securities, and the MSCI ACWI Ex-U.S. Index includes emerging markets securities while the MSCI EAFE ND Index does not include emerging markets securities.
2 | Visit our website at www.prudentialfunds.com |
Source: Prudential Investments LLC and Lipper Inc.
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B | Class C | Class Z | |||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or sale proceeds) | 1% on sales of $1 million or more made within 12 months of purchase | 5%(Yr.1) 4%(Yr.2) 3%(Yr.3) 2%(Yr.4) 1%(Yr.5) 1%(Yr.6) 0%(Yr.7) | 1% on sales made within 12 months of purchase | None | ||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | .30% | 1% | 1% | None |
Benchmark Definitions
MSCI All Country World Ex-U.S. ND Index
The MSCI All Country World Ex-U.S. ND Index is an unmanaged and a free-float-adjusted market-capitalization- weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the U.S.
Morgan Stanley Capital International Europe, Australasia, and Far East Net Dividend 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.
Lipper International Multi-Cap Core Funds Average
The Lipper International Multi-Cap Core Funds Average (Lipper Average) represents returns based on an average return of all funds in the Lipper International Multi-Cap Core Funds category: 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.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Prudential International Equity Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Holdings in Long-Term Portfolio expressed as a percentage of net assets as of 4/30/14 | ||||
Novartis AG, Pharmaceuticals | 1.8 | % | ||
Total SA, Oil, Gas & Consumable Fuels | 1.5 | |||
BP PLC, Oil, Gas & Consumable Fuels | 1.5 | |||
Roche Holding AG, Pharmaceuticals | 1.4 | |||
Commonwealth Bank of Australia, Banks | 1.3 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries in Long-Term Portfolio expressed as a percentage of net assets as of 4/30/14 | ||||
Banks | 15.9 | % | ||
Oil, Gas & Consumable Fuels | 9.5 | |||
Pharmaceuticals | 6.8 | |||
Insurance | 5.8 | |||
Metals & Mining | 5.1 |
Industry weightings reflect only long-term investments and are subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on November 1, 2013, at the beginning of the period, and held through the six-month period ended April 30, 2014. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of Prudential Investments funds, including the Fund, that you own. You should consider
Prudential International Equity Fund | 5 |
Fees and Expenses (continued)
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.
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, 2013 | Ending Account April 30, 2014 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,044.70 | 1.58 | % | $ | 8.01 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.96 | 1.58 | % | $ | 7.90 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,041.10 | 2.28 | % | $ | 11.54 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.49 | 2.28 | % | $ | 11.38 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,041.10 | 2.28 | % | $ | 11.54 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.49 | 2.28 | % | $ | 11.38 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,046.00 | 1.28 | % | $ | 6.49 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.45 | 1.28 | % | $ | 6.41 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2014, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2014 (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 |
The Fund’s annualized expense ratios for the period ended April 30, 2014, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||||||
A | 1.58 | % | 1.58 | % | ||||
B | 2.28 | 2.28 | ||||||
C | 2.28 | 2.28 | ||||||
Z | 1.28 | 1.28 |
Net operating expenses shown above reflect any fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
Prudential International Equity Fund | 7 |
Portfolio of Investments
as of April 30, 2014 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 99.5% | ||||||
COMMON STOCKS 97.5% | ||||||
Australia 6.0% | ||||||
106,220 | Australia & New Zealand Banking Group Ltd. | $ | 3,415,786 | |||
51,931 | BHP Billiton Ltd. | 1,828,828 | ||||
54,995 | Commonwealth Bank of Australia | 4,045,469 | ||||
3,736 | CSL Ltd. | 238,171 | ||||
84,051 | Dexus Property Group | 88,919 | ||||
27,120 | Federation Centres Ltd. | 62,953 | ||||
415,036 | Fortescue Metals Group Ltd. | 1,963,087 | ||||
323,843 | Insurance Australia Group Ltd. | 1,730,858 | ||||
3,868 | Leighton Holdings Ltd.(a) | 68,781 | ||||
897,270 | Mount Gibson Iron Ltd. | 612,768 | ||||
2,367 | Ramsay Health Care Ltd. | 98,902 | ||||
1,950 | REA Group Ltd. | 85,044 | ||||
114,563 | Westpac Banking Corp. | 3,752,443 | ||||
5,581 | Woodside Petroleum Ltd. | 212,139 | ||||
7,641 | Woolworths Ltd. | 265,539 | ||||
|
| |||||
18,469,687 | ||||||
Austria 0.5% | ||||||
30,021 | OMV AG | 1,403,613 | ||||
1,873 | Voestalpine AG | 85,557 | ||||
|
| |||||
1,489,170 | ||||||
Brazil 1.2% | ||||||
190,500 | AMBEV SA | 1,388,328 | ||||
51,100 | Banco do Brasil SA | 538,329 | ||||
6,300 | Cia de Saneamento Basico do Estado de Sao Paulo | 59,758 | ||||
62,500 | Light SA | 496,132 | ||||
169,700 | Petroleo Brasileiro SA | 1,184,228 | ||||
6,370 | WEG SA | 76,563 | ||||
|
| |||||
3,743,338 | ||||||
Canada 7.2% | ||||||
6,900 | Alimentation Couche Tard, Inc. (Class B Stock) | 194,463 | ||||
19,300 | Bank of Nova Scotia | 1,172,739 | ||||
2,400 | Boardwalk Real Estate Investment Trust | 135,279 | ||||
23,700 | Canadian Imperial Bank of Commerce | 2,113,009 | ||||
41,700 | Canadian Natural Resources Ltd. | 1,699,121 | ||||
12,800 | Canadian Tire Corp. Ltd. (Class A Stock) | 1,257,169 |
See Notes to Financial Statements.
Prudential International Equity Fund | 9 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Canada (cont’d.) | ||||||
30,600 | Genworth MI Canada, Inc.(a) | $ | 1,073,464 | |||
4,800 | Imperial Oil Ltd. | 234,383 | ||||
53,000 | Jean Coutu Group PJC, Inc. (The) (Class A Stock) | 1,068,172 | ||||
2,732 | Loblaw Cos. Ltd. | 118,772 | ||||
24,400 | Magna International, Inc. | 2,390,468 | ||||
1,700 | Methanex Corp. | 105,299 | ||||
5,400 | National Bank of Canada | 224,119 | ||||
2,400 | Peyto Exploration & Development Corp. | 88,485 | ||||
46,300 | Royal Bank of Canada | 3,090,046 | ||||
11,700 | Saputo, Inc. | 625,644 | ||||
6,300 | Shaw Communications, Inc. (Class B Stock) | 152,607 | ||||
73,800 | Suncor Energy, Inc. | 2,846,826 | ||||
54,800 | Toronto-Dominion Bank (The) | 2,636,380 | ||||
1,600 | Vermilion Energy, Inc. | 106,462 | ||||
318,600 | Western Forest Products, Inc. | 636,590 | ||||
|
| |||||
21,969,497 | ||||||
Chile 0.1% | ||||||
6,513 | Banco de Credito e Inversiones | 360,131 | ||||
China 4.3% | ||||||
359,000 | Agricultural Bank of China Ltd. (Class H Stock) | 151,060 | ||||
66,500 | Anhui Conch Cement Co. Ltd. (Class H Stock) | 248,294 | ||||
117,200 | Anhui Gujing Distillery Co. Ltd. (Class B Stock) | 248,838 | ||||
4,862,000 | Bank of China Ltd. (Class H Stock) | 2,142,190 | ||||
681,000 | Bank of Communications Co. Ltd. (Class H Stock) | 424,186 | ||||
858,000 | Beijing Capital Land Ltd. (Class H Stock) | 288,842 | ||||
60,500 | BOC Hong Kong Holdings Ltd. | 177,517 | ||||
2,648,000 | China CITIC Bank Corp. Ltd. (Class H Stock) | 1,581,809 | ||||
1,190,000 | China Construction Bank Corp. (Class H Stock) | 823,925 | ||||
5,060,000 | China Lumena New Materials Corp. | 818,881 | ||||
425,000 | China Merchants Bank Co. Ltd. (Class H Stock) | 761,507 | ||||
2,492,000 | China Power International Development Ltd. | 897,275 | ||||
132,000 | China Railway Group Ltd. (Class H Stock) | 59,121 | ||||
28,000 | China Resources Power Holdings Co. Ltd. | 70,374 | ||||
1,254,000 | China Unicom Hong Kong Ltd. | 1,922,427 | ||||
257,000 | CNOOC Ltd. (Class H Stock) | 424,782 | ||||
58,000 | Huaneng Power International, Inc. (Class H Stock) | 56,775 | ||||
2,136,000 | Industrial & Commercial Bank of China Ltd. (Class H Stock) | 1,276,299 | ||||
2,038,000 | Kaisa Group Holdings Ltd. | 648,390 |
See Notes to Financial Statements.
10 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
China (cont’d.) | ||||||
616,000 | Shenzhen Expressway Co. Ltd. (Class H Stock) | $ | 281,067 | |||
|
| |||||
13,303,559 | ||||||
Czech Republic 0.5% | ||||||
53,531 | CEZ A/S | 1,610,998 | ||||
Denmark 1.8% | ||||||
50 | A.P. Moeller - Maersk A/S (Class A Stock) | 113,594 | ||||
761 | A.P. Moeller - Maersk A/S (Class B Stock) | 1,816,704 | ||||
20,321 | Coloplast A/S (Class B Stock) | 1,706,822 | ||||
32,589 | Novo Nordisk A/S (Class B Stock) | 1,479,085 | ||||
6,146 | Schouw & Co. | 343,070 | ||||
|
| |||||
5,459,275 | ||||||
Egypt 0.4% | ||||||
1,073,303 | Centamin PLC* | 1,173,370 | ||||
Finland 0.9% | ||||||
14,664 | Kesko OYJ (Class B Stock) | 600,236 | ||||
41,047 | Sampo OYJ (Class A Stock) | 2,040,017 | ||||
|
| |||||
2,640,253 | ||||||
France 6.5% | ||||||
2,618 | Accor SA | 128,176 | ||||
3,908 | Alten SA | 199,666 | ||||
4,171 | Boiron SA | 351,711 | ||||
3,179 | Cap Gemini SA | 224,608 | ||||
33,761 | Carrefour SA | 1,316,038 | ||||
11,400 | Casino Guichard Perrachon SA* | 1,452,623 | ||||
16,449 | Credit Agricole SA* | 259,539 | ||||
38,030 | Electricite de France SA | 1,460,385 | ||||
23,770 | GDF Suez | 599,085 | ||||
3,190 | Groupe Fnac* | 152,684 | ||||
25,759 | JCDecaux SA | 1,057,408 | ||||
14,849 | Natixis | 105,408 | ||||
15,410 | Nexity SA | 691,254 | ||||
9,013 | Rallye SA | 458,430 | ||||
4,639 | Sanofi | 500,639 | ||||
11,711 | Societe Generale SA | 729,328 | ||||
4,741 | Sopra Group SA(a) | 545,779 |
See Notes to Financial Statements.
Prudential International Equity Fund | 11 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
France (cont’d.) | ||||||
63,644 | Technicolor SA* | $ | 475,845 | |||
1,511 | Thales SA | 96,213 | ||||
66,335 | Total SA | 4,745,877 | ||||
16,590 | Valeo SA | 2,278,289 | ||||
28,267 | Vinci SA | 2,134,336 | ||||
|
| |||||
19,963,321 | ||||||
Germany 7.6% | ||||||
7,028 | Allianz SE | 1,223,080 | ||||
29,034 | BASF SE* | 3,368,106 | ||||
10,328 | Bayer AG | 1,436,021 | ||||
5,473 | Bayerische Motoren Werke AG | 687,982 | ||||
38,462 | Daimler AG | 3,580,774 | ||||
60,355 | Deutsche Lufthansa AG | 1,515,682 | ||||
55,386 | Deutsche Post AG | 2,089,876 | ||||
12,043 | Duerr AG* | 952,910 | ||||
2,031 | Fresenius SE & Co. KGaA | 309,022 | ||||
20,761 | Hannover Rueck SE | 1,934,548 | ||||
14,872 | Henkel AG & Co. KGaA | 1,529,112 | ||||
50,035 | K+S AG(a) | 1,753,230 | ||||
1,158 | Merck KGaA* | 195,752 | ||||
9,851 | Muenchener Rueckversicherungs AG* | 2,277,144 | ||||
693 | RTL Group SA | 77,166 | ||||
1,996 | Siemens AG | 263,313 | ||||
|
| |||||
23,193,718 | ||||||
Greece 0.4% | ||||||
81,166 | Hellenic Telecommunications Organization SA* | 1,296,685 | ||||
Hong Kong 2.8% | ||||||
101,400 | Bank of East Asia Ltd. | 418,871 | ||||
23,000 | Cheung Kong Holdings Ltd. | 392,779 | ||||
11,000 | Cheung Kong Infrastructure Holdings Ltd. | 71,886 | ||||
84,000 | China Resources Cement Holdings Ltd. | 58,478 | ||||
203,000 | Galaxy Entertainment Group Ltd.* | 1,602,518 | ||||
11,500 | Hang Seng Bank Ltd. | 187,749 | ||||
1,294,000 | Huabao International Holdings Ltd. | 612,913 | ||||
135,000 | Hutchison Whampoa Ltd. | 1,852,133 | ||||
15,000 | Hysan Development Co. Ltd. | 64,333 | ||||
389,000 | Link REIT (The) | 1,936,728 |
See Notes to Financial Statements.
12 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Hong Kong (cont’d.) | ||||||
36,000 | NWS Holdings Ltd. | $ | 61,739 | |||
38,400 | Sands China Ltd. | 281,924 | ||||
479,500 | Shimao Property Holdings Ltd. | 950,806 | ||||
33,000 | SJM Holdings Ltd. | 91,804 | ||||
164,000 | TCC International Holdings Ltd. | 80,433 | ||||
|
| |||||
8,665,094 | ||||||
India 1.0% | ||||||
56,500 | Tata Motors Ltd., ADR(a) | 2,114,230 | ||||
86,000 | Wipro Ltd., ADR(a) | 1,028,560 | ||||
|
| |||||
3,142,790 | ||||||
Indonesia 0.2% | ||||||
153,000 | PT Bank Mandiri (Persero) Tbk | 130,726 | ||||
138,000 | PT Bank Negara Indonesia (Persero) Tbk | 57,676 | ||||
186,100 | PT Bank Rakyat Indonesia (Persero) Tbk | 159,815 | ||||
104,000 | PT Indofood Sukses Makmur Tbk | 63,620 | ||||
32,500 | PT United Tractors Tbk | 61,104 | ||||
|
| |||||
472,941 | ||||||
Ireland 0.5% | ||||||
242,291 | Greencore Group PLC | 1,070,135 | ||||
9,860 | Shire PLC | 563,910 | ||||
|
| |||||
1,634,045 | ||||||
Israel 1.2% | ||||||
19,521 | Cellcom Israel Ltd. | 247,490 | ||||
3,139 | Delek Group Ltd. | 1,272,207 | ||||
45,052 | Teva Pharmaceutical Industries Ltd. | 2,208,448 | ||||
|
| |||||
3,728,145 | ||||||
Italy 1.5% | ||||||
33,128 | Azimut Holding SpA | 1,034,181 | ||||
41,062 | Eni SpA | 1,063,477 | ||||
13,913 | Fiat SpA* | 167,968 | ||||
33,349 | Snam SpA | 200,592 | ||||
511,844 | Telecom Italia SpA | 508,759 | ||||
409,449 | UnipolSai SpA* | 1,506,591 | ||||
|
| |||||
4,481,568 |
See Notes to Financial Statements.
Prudential International Equity Fund | 13 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Japan 14.3% | ||||||
2,200 | Aoyama Trading Co. Ltd. | $ | 54,593 | |||
21,000 | Asahi Kasei Corp. | 142,775 | ||||
52,000 | Bridgestone Corp. | 1,861,886 | ||||
7,000 | Daicel Corp. | 58,624 | ||||
28,700 | Daikin Industries Ltd. | 1,660,127 | ||||
32,000 | Daiwa Securities Group, Inc. | 239,950 | ||||
3,100 | Dentsu, Inc. | 127,139 | ||||
3,100 | FANUC Corp. | 559,351 | ||||
14,000 | Fuji Electric Co. Ltd. | 63,536 | ||||
82,000 | Fuji Heavy Industries Ltd. | 2,156,164 | ||||
29,900 | FUJIFILM Holdings Corp. | 772,379 | ||||
278,000 | Fujitsu Ltd. | 1,634,704 | ||||
4,200 | Hino Motors Ltd. | 55,331 | ||||
500 | Hirose Electric Co. Ltd. | 70,577 | ||||
81,000 | Hitachi Ltd. | 577,444 | ||||
4,000 | Japan Exchange Group, Inc. | 79,144 | ||||
46,300 | Japan Tobacco, Inc. | 1,521,815 | ||||
3,000 | JGC Corp. | 97,144 | ||||
36,700 | KDDI Corp. | 1,957,273 | ||||
700 | Keyence Corp. | 270,033 | ||||
4,500 | LIXIL Group Corp. | 119,250 | ||||
46,000 | Marubeni Corp. | 307,391 | ||||
109,400 | Medipal Holdings Corp. | 1,538,761 | ||||
111,000 | Mitsubishi Corp. | 1,987,712 | ||||
31,000 | Mitsubishi Electric Corp. | 352,992 | ||||
540,100 | Mitsubishi UFJ Financial Group, Inc. | 2,873,061 | ||||
129,500 | Mitsui & Co. Ltd. | 1,836,618 | ||||
1,190,300 | Mizuho Financial Group, Inc. | 2,331,331 | ||||
3,300 | Murata Manufacturing Co. Ltd. | 275,101 | ||||
2,800 | Namco Bandai Holdings, Inc. | 60,494 | ||||
10,800 | Nidec Corp. | 610,583 | ||||
88,000 | Nippon Flour Mills Co. Ltd. | 490,985 | ||||
4,000 | Nippon Paint Co. Ltd. | 61,885 | ||||
216,000 | Nippon Steel & Sumitomo Metal Corp. | 566,706 | ||||
44,000 | Nippon Telegraph & Telephone Corp. | 2,441,682 | ||||
27,000 | Nippon Yusen K.K. | 73,184 | ||||
2,700 | Nitto Denko Corp. | 116,900 | ||||
14,800 | NKSJ Holdings, Inc. | 369,243 | ||||
8,000 | NSK Ltd. | 84,102 | ||||
14,000 | Oji Holdings Corp. | 58,821 |
See Notes to Financial Statements.
14 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Japan (cont’d.) | ||||||
3,600 | Omron Corp. | $ | 127,492 | |||
65,900 | Otsuka Holdings Co. Ltd. | 1,898,434 | ||||
180,600 | Panasonic Corp. | 1,968,552 | ||||
32,800 | Resona Holdings, Inc. | 167,707 | ||||
1,600 | Rohm Co. Ltd. | 76,515 | ||||
56,300 | Seiko Epson Corp. | 1,536,428 | ||||
142,000 | Sekisui Chemical Co. Ltd. | 1,439,057 | ||||
5,000 | Shionogi & Co. Ltd. | 87,642 | ||||
9,700 | Showa Shell Sekiyu K.K. | 98,401 | ||||
18,500 | Sumitomo Corp. | 240,139 | ||||
9,000 | Sumitomo Metal Mining Co. Ltd. | 135,941 | ||||
63,100 | Sumitomo Mitsui Financial Group, Inc. | 2,494,363 | ||||
5,900 | Suzuki Motor Corp. | 152,220 | ||||
6,100 | Takata Corp. | 143,728 | ||||
130,000 | TOTO Ltd. | 1,838,897 | ||||
18,134 | Toyota Motor Corp. | 979,747 | ||||
|
| |||||
43,902,054 | ||||||
Luxembourg | ||||||
1,180 | Millicom International Cellular SA, SDR | 116,956 | ||||
Macau 0.3% | ||||||
15,600 | MGM China Holdings Ltd. | 54,509 | ||||
218,800 | Wynn Macau Ltd. | 865,917 | ||||
|
| |||||
920,426 | ||||||
Malaysia 0.2% | ||||||
84,100 | Kossan Rubber Industries | 105,615 | ||||
72,200 | Malayan Banking Bhd | 219,163 | ||||
27,500 | MISC Bhd* | 54,943 | ||||
329,400 | Sunway Bhd | 313,437 | ||||
|
| |||||
693,158 | ||||||
Mexico 0.3% | ||||||
975,100 | America Movil SAB de CV (Class L Stock) | 983,094 | ||||
Netherlands 2.0% | ||||||
141,218 | Aegon NV | 1,294,461 | ||||
15,244 | Koninklijke Ahold NV | 294,695 | ||||
39,954 | Royal Dutch Shell PLC (Class A Stock) | 1,579,542 |
See Notes to Financial Statements.
Prudential International Equity Fund | 15 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Netherlands (cont’d.) | ||||||
43,225 | Royal Dutch Shell PLC (Class B Stock) | $ | 1,835,367 | |||
29,178 | Unilever NV, CVA | 1,251,184 | ||||
|
| |||||
6,255,249 | ||||||
New Zealand 0.6% | ||||||
424,002 | Air New Zealand Ltd. | 768,319 | ||||
301,428 | Auckland International Airport Ltd. | 1,032,367 | ||||
|
| |||||
1,800,686 | ||||||
Norway 1.4% | ||||||
18,428 | Austevoll Seafood ASA | 119,370 | ||||
113,082 | DNB ASA | 2,004,439 | ||||
3,313 | Gjensidige Forsikring ASA | 61,085 | ||||
8,953 | Leroy Seafood Group ASA | 317,098 | ||||
87,190 | Marine Harvest ASA | 1,069,386 | ||||
18,541 | Statoil ASA | 565,230 | ||||
2,979 | Yara International ASA | 140,822 | ||||
|
| |||||
4,277,430 | ||||||
Philippines 0.2% | ||||||
91,300 | Alliance Global Group, Inc. | 63,943 | ||||
501,700 | First Gen Corp. | 213,880 | ||||
281,100 | Manila Water Co., Inc. | 168,262 | ||||
|
| |||||
446,085 | ||||||
Poland 0.3% | ||||||
2,348 | Bank Pekao SA | 150,696 | ||||
2,269 | KGHM Polska Miedz SA | 82,156 | ||||
4,865 | Powszechny Zaklad Ubezpieczen SA | 690,105 | ||||
|
| |||||
922,957 | ||||||
Portugal 0.8% | ||||||
474,875 | EDP-Energias de Portugal SA | 2,306,779 | ||||
Russia 1.0% | ||||||
97,208 | Gazprom OAO, ADR | 701,064 | ||||
32,896 | Lukoil OAO, ADR | 1,738,554 | ||||
4,186 | Magnit OJSC, GDR, RegS | 196,951 | ||||
1,634 | NOVATEK OAO, GDR, RegS | 168,792 |
See Notes to Financial Statements.
16 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Russia (cont’d.) | ||||||
46,643 | Sberbank of Russia, ADR* | $ | 390,962 | |||
|
| |||||
3,196,323 | ||||||
Singapore 0.7% | ||||||
57,000 | CapitaCommercial Trust | 72,945 | ||||
255,000 | Mapletree Industrial Trust | 293,434 | ||||
7,000 | United Overseas Bank Ltd. | 121,836 | ||||
639,000 | Wilmar International Ltd. | 1,736,684 | ||||
|
| |||||
2,224,899 | ||||||
South Africa 2.6% | ||||||
4,002 | Assore Ltd. | 154,899 | ||||
82,208 | AVI Ltd. | 453,599 | ||||
271,265 | Capital Property Fund | 273,503 | ||||
430,012 | FirstRand Ltd. | 1,582,182 | ||||
23,145 | Kumba Iron Ore Ltd., ADR | 824,304 | ||||
5,338 | Liberty Holdings Ltd. | 64,030 | ||||
50,357 | Resilient Property Income Fund Ltd. | 275,848 | ||||
43,181 | Sasol Ltd. | 2,420,050 | ||||
416,169 | Sibanye Gold Ltd. | 1,074,978 | ||||
225,072 | Telkom SA SOC Ltd.* | 805,334 | ||||
|
| |||||
7,928,727 | ||||||
South Korea 2.3% | ||||||
16,163 | Chongkundang Holdings Corp. | 780,443 | ||||
20,930 | Cosmax BTI, Inc. | 856,718 | ||||
877 | Coway Co. Ltd. | 69,320 | ||||
4,126 | Dongsuh Co., Inc. | 63,253 | ||||
1,109 | Hanil Cement Co. Ltd. | 128,055 | ||||
20,137 | Hyundai Hysco Co. Ltd. | 1,071,939 | ||||
1,181 | Hyundai Steel Co. | 77,384 | ||||
1,955 | KT&G Corp. | 156,657 | ||||
11,400 | LF Corp. | 296,395 | ||||
2,223 | LG Electronics, Inc. | 148,065 | ||||
212 | POSCO | 62,631 | ||||
749 | Samsung Electronics Co. Ltd. | 976,667 | ||||
2,680 | SeAH Steel Corp. | 319,364 | ||||
50,050 | SK Hynix, Inc.* | 1,951,624 | ||||
308 | SK Telecom Co. Ltd. | 63,773 | ||||
|
| |||||
7,022,288 |
See Notes to Financial Statements.
Prudential International Equity Fund | 17 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Spain 1.6% | ||||||
6,244 | Abertis Infraestructuras SA | $ | 140,549 | |||
43,527 | ACS Actividades de Construccion y Servicios SA | 1,868,367 | ||||
22,755 | Amadeus IT Holding SA (Class A Stock) | 946,391 | ||||
20,005 | Banco Santander SA | 198,963 | ||||
1,939 | Red Electrica Corp. SA | 159,611 | ||||
88,689 | Telefonica SA | 1,488,387 | ||||
|
| |||||
4,802,268 | ||||||
Sweden 1.9% | ||||||
5,075 | Alfa Laval AB | 135,215 | ||||
6,412 | Atlas Copco AB (Class B Stock) | 174,889 | ||||
8,715 | Axfood AB | 463,347 | ||||
61,231 | Investor AB (Class B Stock)* | 2,371,834 | ||||
171,861 | Skandinaviska Enskilda Banken AB (Class A Stock) | 2,373,903 | ||||
14,919 | Swedbank AB (Class A Stock) | 399,261 | ||||
|
| |||||
5,918,449 | ||||||
Switzerland 5.5% | ||||||
1,834 | Actelion Ltd.* | 180,564 | ||||
657 | Autoneum Holding AG | 139,383 | ||||
996 | Bucher Industries AG | 324,423 | ||||
186 | EMS-Chemie Holding AG | 72,577 | ||||
5,321 | Geberit AG | 1,777,162 | ||||
33,008 | Nestle SA | 2,551,000 | ||||
61,916 | Novartis AG | 5,382,517 | ||||
14,373 | Roche Holding AG | 4,216,266 | ||||
24,119 | Swiss Re AG | 2,108,991 | ||||
384 | Swisscom AG | 233,618 | ||||
|
| |||||
16,986,501 | ||||||
Taiwan 3.5% | ||||||
108,000 | Advanced Semiconductor Engineering, Inc. | 125,762 | ||||
76,500 | Asia Cement China Holdings Corp. | 55,619 | ||||
12,000 | Asustek Computer, Inc. | 124,068 | ||||
272,000 | Catcher Technology Co. Ltd. | 2,296,651 | ||||
43,184 | Cathay Financial Holding Co. Ltd. | 61,062 | ||||
1,196,000 | Chimei Materials Technology Corp. | 1,392,960 | ||||
110,210 | CTBC Financial Holding Co. Ltd. | 65,572 | ||||
635,000 | Everlight Electronics Co. Ltd. | 1,488,047 | ||||
48,000 | Fubon Financial Holding Co. Ltd. | 62,125 |
See Notes to Financial Statements.
18 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Taiwan (cont’d.) | ||||||
140,000 | Grape King Bio Ltd. | $ | 627,762 | |||
94,000 | Hey Song Corp. | 98,742 | ||||
812,000 | Hon Hai Precision Industry Co. Ltd. | 2,332,033 | ||||
611,000 | King Yuan Electronics Co. Ltd. | 466,584 | ||||
2,000 | Largan Precision Co. Ltd. | 125,218 | ||||
49,000 | MediaTek, Inc. | 767,830 | ||||
79,891 | Mega Financial Holding Co. Ltd. | 61,163 | ||||
31,000 | Merry Electronics Co. Ltd. | 168,553 | ||||
179,000 | Namchow Chemical Industrial Co. Ltd. | 345,157 | ||||
|
| |||||
10,664,908 | ||||||
Thailand 0.9% | ||||||
10,100 | Airports of Thailand PCL | 60,997 | ||||
2,366,800 | GFPT PCL | 1,031,269 | ||||
25,600 | PTT Exploration & Production PCL | 126,356 | ||||
703,800 | PTT Global Chemical PCL | 1,343,005 | ||||
368,400 | Thai Vegetable Oil PCL | 272,088 | ||||
|
| |||||
2,833,715 | ||||||
Turkey | ||||||
14,929 | Enka Insaat ve Sanayi A/S | 45,381 | ||||
10,705 | KOC Holding A/S | 47,971 | ||||
3,540 | Koza Altin Isletmeleri A/S | 35,498 | ||||
|
| |||||
128,850 | ||||||
United Kingdom 12.4% | ||||||
66,770 | Ashtead Group PLC | 989,272 | ||||
99,765 | BHP Billiton PLC | 3,238,792 | ||||
559,688 | BP PLC | 4,725,486 | ||||
20,344 | British American Tobacco PLC | 1,174,758 | ||||
436,747 | BT Group PLC | 2,726,443 | ||||
590,698 | Cable & Wireless Communications PLC | 527,505 | ||||
93,959 | Capita PLC | 1,722,959 | ||||
35,768 | Diageo PLC | 1,095,919 | ||||
74,087 | easyJet PLC | 2,049,951 | ||||
397,144 | Ferrexpo PLC | 979,581 | ||||
51,641 | GlaxoSmithKline PLC | 1,426,862 | ||||
20,996 | Hammerson PLC, REIT | 202,633 | ||||
300,617 | Home Retail Group PLC | 1,038,720 | ||||
307,386 | HSBC Holdings PLC | 3,140,737 |
See Notes to Financial Statements.
Prudential International Equity Fund | 19 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
United Kingdom (cont’d.) | ||||||
17,020 | International Consolidated Airlines Group SA* | $ | 116,468 | |||
683,609 | ITV PLC | 2,102,840 | ||||
322,768 | J. Sainsbury PLC | 1,830,990 | ||||
99,216 | Legal & General Group PLC | 355,166 | ||||
60,597 | National Grid PLC | 861,277 | ||||
2,581 | Next PLC | 284,739 | ||||
109,331 | Prudential PLC | 2,513,411 | ||||
10,487 | Reckitt Benckiser Group PLC | 846,569 | ||||
20,940 | Rio Tinto PLC | 1,138,454 | ||||
26,515 | Schroders PLC | 1,146,661 | ||||
8,247 | TUI Travel PLC | 59,652 | ||||
20,954 | Unilever PLC | 937,332 | ||||
230,088 | Vodafone Group PLC | 873,550 | ||||
|
| |||||
38,106,727 | ||||||
United States 0.1% | ||||||
3,700 | Catamaran Corp.* | 140,566 | ||||
5,771 | Transocean Ltd. | 246,531 | ||||
|
| |||||
387,097 | ||||||
|
| |||||
TOTAL COMMON STOCKS | 299,623,211 | |||||
|
| |||||
EXCHANGE TRADED FUNDS 0.9% |
| |||||
United States | ||||||
32,500 | iShares MSCI EAFE Index Fund(a) | 2,220,400 | ||||
15,100 | iShares MSCI Emerging Markets Index Fund | 624,083 | ||||
|
| |||||
TOTAL EXCHANGE TRADED FUNDS | 2,844,483 | |||||
|
| |||||
PREFERRED STOCKS 1.1% | ||||||
Brazil 1.0% |
| |||||
18,100 | Banco ABC Brasil SA (PRFC) | 105,934 | ||||
33,600 | Banco Bradesco SA (PRFC) | 498,782 | ||||
30,600 | Braskem SA (PRFC) | 208,460 | ||||
145,500 | Cia Paranaense de Energia (PRFC) | 2,082,906 | ||||
28,000 | Petroleo Brasileiro SA (PRFC) | 206,570 | ||||
|
| |||||
3,102,652 |
See Notes to Financial Statements.
20 |
Shares | Description | Value (Note 1) | ||||
PREFERRED STOCKS (Continued) | ||||||
Germany | ||||||
967 | Bayerische Motoren Werke AG (PRFC) | $ | 95,322 | |||
South Korea 0.1% | ||||||
131 | Samsung Electronics Co. Ltd. (PRFC) | 131,731 | ||||
|
| |||||
TOTAL PREFERRED STOCKS | 3,329,705 | |||||
|
| |||||
Units | ||||||
RIGHTS* | ||||||
Brazil | ||||||
266 | AMBEV SA, expiring 05/29/14 | 30 | ||||
South Africa | ||||||
3,301 | Resilient Property Income Fund Ltd., expiring 05/29/14 | 1,522 | ||||
|
| |||||
TOTAL RIGHTS | 1,552 | |||||
|
| |||||
TOTAL LONG-TERM INVESTMENTS | 305,798,951 | |||||
|
| |||||
SHORT-TERM INVESTMENT 2.7% | ||||||
AFFILIATED MONEY MARKET MUTUAL FUND | ||||||
8,351,091 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 8,351,091 | ||||
|
| |||||
TOTAL INVESTMENTS 102.2% | 314,150,042 | |||||
Liabilities in excess of other assets (2.2)% | (6,794,787 | ) | ||||
|
| |||||
NET ASSETS 100.0% | $ | 307,355,255 | ||||
|
|
See Notes to Financial Statements.
Prudential International Equity Fund | 21 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
The following abbreviations are used in the portfolio descriptions:
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.
ADR—American Depositary Receipt
CVA—Certificate Van Aandelen (Bearer)
EAFE—Europe, Australasia and Far East
GDR—Global Depositary Receipt
MSCI—Morgan Stanley Capital International
PRFC—Preference Shares
REIT—Real Estate Investment Trust
SDR—Swedish Depositary Receipt
* | Non-income producing security. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $6,801,516; cash collateral of $6,934,657 (included with liabilities) was received with which the Series purchased highly liquid short-term investments. Securities on loan are subject to contractual netting arrangements. |
(b) | Prudential Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
(c) | Represents security, or a portion thereof, purchased with cash collateral received for securities on loan. |
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 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.
See Notes to Financial Statements.
22 |
The following is a summary of the inputs used as of April 30, 2014 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Australia | $ | — | $ | 18,469,687 | $ | — | ||||||
Austria | — | 1,489,170 | — | |||||||||
Brazil | 3,743,338 | — | — | |||||||||
Canada | 21,969,497 | — | — | |||||||||
Chile | 360,131 | — | — | |||||||||
China | 288,842 | 12,195,836 | 818,881 | |||||||||
Czech Republic | — | 1,610,998 | — | |||||||||
Denmark | — | 5,459,275 | — | |||||||||
Egypt | 1,173,370 | — | — | |||||||||
Finland | — | 2,640,253 | — | |||||||||
France | 504,395 | 19,458,926 | — | |||||||||
Germany | — | 23,193,718 | — | |||||||||
Greece | — | 1,296,685 | — | |||||||||
Hong Kong | — | 8,665,094 | — | |||||||||
India | 3,142,790 | — | — | |||||||||
Indonesia | — | 472,941 | — | |||||||||
Ireland | — | 1,634,045 | — | |||||||||
Israel | — | 3,728,145 | — | |||||||||
Italy | — | 4,481,568 | — | |||||||||
Japan | — | 43,902,054 | — | |||||||||
Luxembourg | — | 116,956 | — | |||||||||
Macau | — | 920,426 | — | |||||||||
Malaysia | — | 693,158 | — | |||||||||
Mexico | 983,094 | — | — | |||||||||
Netherlands | — | 6,255,249 | — | |||||||||
New Zealand | — | 1,800,686 | — | |||||||||
Norway | 61,085 | 4,216,345 | — | |||||||||
Philippines | — | 446,085 | — | |||||||||
Poland | — | 922,957 | — | |||||||||
Portugal | — | 2,306,779 | — | |||||||||
Russia | 3,196,323 | — | — | |||||||||
Singapore | — | 2,224,899 | — | |||||||||
South Africa | — | 7,928,727 | — | |||||||||
South Korea | 156,657 | 6,865,631 | — | |||||||||
Spain | — | 4,802,268 | — | |||||||||
Sweden | 463,347 | 5,455,102 | — | |||||||||
Switzerland | — | 16,986,501 | — |
See Notes to Financial Statements.
Prudential International Equity Fund | 23 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Level 1 | Level 2 | Level 3 | ||||||||||
Common Stocks (continued) | ||||||||||||
Taiwan | $ | — | $ | 10,664,908 | $ | — | ||||||
Thailand | 1,343,005 | 1,490,710 | — | |||||||||
Turkey | — | 128,850 | — | |||||||||
United Kingdom | — | 38,106,727 | — | |||||||||
United States | 140,566 | 246,531 | — | |||||||||
Exchange Traded Funds | ||||||||||||
United States | 2,844,483 | — | — | |||||||||
Preferred Stocks | ||||||||||||
Brazil | 3,102,652 | — | — | |||||||||
Germany | — | 95,322 | — | |||||||||
South Korea | — | 131,731 | — | |||||||||
Rights | ||||||||||||
Brazil | 30 | — | — | |||||||||
South Africa | 1,522 | — | — | |||||||||
Affiliated Money Market Mutual Fund | 8,351,091 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 51,826,218 | $ | 261,504,943 | $ | 818,881 | ||||||
|
|
|
|
|
|
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2014 was as follows:
Banks | 15.9 | % | ||
Oil, Gas & Consumable Fuels | 9.5 | |||
Pharmaceuticals | 6.8 | |||
Insurance | 5.8 | |||
Metals & Mining | 5.1 | |||
Food Products | 4.0 | |||
Diversified Telecommunication Services | 4.0 | |||
Automobiles | 3.3 | |||
Chemicals | 2.8 | |||
Electric Utilities | 2.8 | |||
Affiliated Money Market Mutual Fund (including 2.3% of collateral for securities on loan) | 2.7 | |||
Food & Staples Retailing | 2.7 | |||
Auto Components | 2.2 | |||
Electronic Equipment, Instruments & Components | 2.2 | |||
Semiconductors & Semiconductor Equipment | 2.0 | |||
Trading Companies & Distributors | 1.8 | |||
Building Products | 1.7 | |||
IT Services | 1.5 | |||
Airlines | 1.5 | |||
Household Durables | 1.4 | |||
Media | 1.4 | |||
Wireless Telecommunication Services | 1.3 | % | ||
Construction & Engineering | 1.3 | |||
Diversified Financial Services | 1.3 | |||
Technology Hardware, Storage & Peripherals | 1.3 | |||
Real Estate Investment Trusts (REITs) | 1.1 | |||
Tobacco | 1.0 | |||
Hotels, Restaurants & Leisure | 0.9 | |||
Exchange Traded Funds | 0.9 | |||
Beverages | 0.8 | |||
Real Estate Management & Development | 0.8 | |||
Capital Markets | 0.8 | |||
Household Products | 0.8 | |||
Industrial Conglomerates | 0.7 | |||
Air Freight & Logistics | 0.7 | |||
Machinery | 0.7 | |||
Health Care Providers & Services | 0.6 | |||
Marine | 0.6 | |||
Health Care Equipment & Supplies | 0.6 | |||
Professional Services | 0.6 | |||
Multiline Retail | 0.5 | |||
Personal Products | 0.5 | |||
Multi-Utilities | 0.5 | |||
Transportation Infrastructure | 0.4 |
See Notes to Financial Statements.
24 |
Independent Power & Renewable Electricity Producers | 0.4 | % | ||
Thrifts & Mortgage Finance | 0.4 | |||
Internet & Catalog Retail | 0.3 | |||
Electrical Equipment | 0.3 | |||
Biotechnology | 0.2 | |||
Paper & Forest Products | 0.2 | |||
Construction Materials | 0.1 | |||
Textiles, Apparel & Luxury Goods | 0.1 | |||
Energy Equipment & Services | 0.1 | % | ||
Water Utilities | 0.1 | |||
Specialty Retail | 0.1 | |||
Gas Utilities | 0.1 | |||
|
| |||
102.2 | ||||
Liabilities in excess of other assets | (2.2 | ) | ||
|
| |||
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, 2014 as presented in the Statement of Assets and Liabilities:
Derivatives not designated as hedging | Asset Derivatives | Liability Derivatives | ||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | |||||||||
Equity contracts | Unaffiliated investments | $ | 1,552 | — | $ | — |
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2014 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||
Derivatives not accounted for as hedging | Futures | Rights* | Total | |||||||||
Equity contracts | $ | 38,288 | $ | 454 | $ | 38,742 | ||||||
|
|
|
|
|
|
* | Included in net realized gain (loss) on investment transactions in the Statement of Operations. |
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||
Derivatives not accounted for as hedging | Futures | Rights** | Total | |||||||||
Equity contracts | $ | (40,773 | ) | $ | 762 | $ | (40,011 | ) | ||||
|
|
|
|
|
|
** | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
For the six months ended April 30, 2014, the average value at trade date for futures long positions was $864,612.
See Notes to Financial Statements.
Prudential International Equity Fund | 25 |
Statement of Assets & Liabilities
as of April 30, 2014 (Unaudited)
Assets | ||||
Investments at value, including securities on loan of $6,801,516: | ||||
Unaffiliated Investments (cost $257,293,898) | $ | 305,798,951 | ||
Affiliated Investments (cost $8,351,091) | 8,351,091 | |||
Cash | 392,588 | |||
Foreign currency, at value (cost $612,937) | 615,012 | |||
Dividends receivable | 1,217,737 | |||
Receivable for investments sold | 1,214,032 | |||
Tax reclaim receivable | 840,057 | |||
Receivable for Series shares sold | 95,751 | |||
Prepaid expenses | 1,159 | |||
|
| |||
Total assets | 318,526,378 | |||
|
| |||
Liabilities | ||||
Payable to broker for collateral for securities on loan (Note 3) | 6,934,657 | |||
Payable for investments purchased | 3,020,375 | |||
Payable for Series shares reacquired | 586,616 | |||
Accrued expenses | 272,165 | |||
Management fee payable | 213,502 | |||
Distribution fee payable | 78,341 | |||
Affiliated transfer agent fee payable | 65,467 | |||
|
| |||
Total liabilities | 11,171,123 | |||
|
| |||
Net Assets | $ | 307,355,255 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 408,051 | ||
Paid-in capital in excess of par | 456,338,497 | |||
|
| |||
456,746,548 | ||||
Undistributed net investment income | 1,475,327 | |||
Accumulated net realized loss on investment and foreign currency transactions | (199,400,508 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 48,533,888 | |||
|
| |||
Net assets, April 30, 2014 | $ | 307,355,255 | ||
|
|
See Notes to Financial Statements.
26 |
Class A | ||||
Net asset value and redemption price per share | ||||
($234,298,479 ÷ 31,034,565 shares of common stock issued and outstanding) | $ | 7.55 | ||
Maximum sales charge (5.50% of offering price) | 0.44 | |||
|
| |||
Maximum offering price to public | $ | 7.99 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share | ||||
($6,029,642 ÷ 830,623 shares of common stock issued and outstanding) | $ | 7.26 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | ||||
($19,521,894 ÷ 2,690,269 shares of common stock issued and outstanding) | $ | 7.26 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | ||||
($47,505,240 ÷ 6,249,630 shares of common stock issued and outstanding) | $ | 7.60 | ||
|
|
See Notes to Financial Statements.
Prudential International Equity Fund | 27 |
Statement of Operations
Six Months Ended April 30, 2014 (Unaudited)
Net Investment Income | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $431,502) | $ | 5,568,426 | ||
Affiliated income from securities loaned, net | 6,766 | |||
Interest income | 3,778 | |||
Affiliated dividend income | 729 | |||
|
| |||
Total income | 5,579,699 | |||
|
| |||
Expenses | ||||
Management fee | 1,327,048 | |||
Distribution fee—Class A | 344,068 | |||
Distribution fee—Class B | 30,131 | |||
Distribution fee—Class C | 96,042 | |||
Distribution fee—Class F | 201 | |||
Distribution fee—Class X | 462 | |||
Transfer agent’s fees and expenses (including affiliated expense of $61,400) | 397,000 | |||
Custodian’s fees and expenses | 136,000 | |||
Shareholders’ reports | 41,000 | |||
Registration fees | 37,000 | |||
Audit fee | 17,000 | |||
Legal fees and expenses | 11,000 | |||
Directors’ fees | 9,000 | |||
Loan interest expense | 3,300 | |||
Insurance expenses | 2,000 | |||
Miscellaneous | 35,561 | |||
|
| |||
Total expenses | 2,486,813 | |||
|
| |||
Net investment income | 3,092,886 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | 26,614,792 | |||
Futures transactions | 38,288 | |||
Foreign currency transactions | (13,900 | ) | ||
|
| |||
26,639,180 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (16,781,753 | ) | ||
Futures | (40,773 | ) | ||
Foreign currencies | (26,352 | ) | ||
|
| |||
(16,848,878 | ) | |||
|
| |||
Net gain on investment and foreign currency transactions | 9,790,302 | |||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 12,883,188 | ||
|
|
See Notes to Financial Statements.
28 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended April 30, 2014 | Year Ended October 31, 2013 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 3,092,886 | $ | 5,659,124 | ||||
Net realized gain on investment and foreign currency transactions | 26,639,180 | 32,547,864 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (16,848,878 | ) | 30,209,826 | |||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 12,883,188 | 68,416,814 | ||||||
|
|
|
| |||||
Dividends from net investment income (Note 1) | ||||||||
Class A | (4,392,794 | ) | (4,559,841 | ) | ||||
Class B | (82,095 | ) | (87,134 | ) | ||||
Class C | (258,429 | ) | (283,431 | ) | ||||
Class F | (2,101 | ) | (10,934 | ) | ||||
Class X | (2,191 | ) | (9,832 | ) | ||||
Class Z | (1,570,284 | ) | (1,229,773 | ) | ||||
|
|
|
| |||||
(6,307,894 | ) | (6,180,945 | ) | |||||
|
|
|
| |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 9,972,968 | 24,830,694 | ||||||
Net asset value of shares issued in reinvestment of dividends | 6,176,619 | 6,043,937 | ||||||
Cost of shares reacquired | (47,679,753 | ) | (45,385,832 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from Series share transactions | (31,530,166 | ) | (14,511,201 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | (24,954,872 | ) | 47,724,668 | |||||
Net Assets: | ||||||||
Beginning of period | 332,310,127 | 284,585,459 | ||||||
|
|
|
| |||||
End of period(a) | $ | 307,355,255 | $ | 332,310,127 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 1,475,327 | $ | 4,690,335 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential International Equity Fund | 29 |
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 six series: Prudential International Equity Fund (the “Series”), Prudential Jennison Global Infrastructure Fund, 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 investment objective of the Series is to seek long-term growth of capital.
Note 1. Accounting Policies
The following accounting policies conform to U.S. generally accepted accounting principles. The Fund and the Series consistently follow such policies in the preparation of their financial statements.
Security Valuation: The Series holds 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 (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.
Common stocks, exchange-traded funds, and derivative instruments that are traded on a national securities exchange are valued at the last sale price as of the close of
30 |
trading on the applicable exchange. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy except for exchange-traded and cleared swaps which are classified as Level 2 in the fair value hierarchy, as the prices marked at the official settle are not public.
In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and asked prices, or at the last bid price in the absence of an asked price. These securities are classified as Level 2 in the fair value hierarchy, as the inputs are observable and considered to be significant to the valuation.
Common stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Securities not valued using such model prices are valued in accordance with exchange-traded common stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after evaluating observable inputs including, but not limited to yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations, and reported trades. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Prudential International Equity Fund | 31 |
Notes to Financial Statements
(Unaudited) continued
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that significant unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not 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, these realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.
32 |
Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from sales and maturities of short-term securities and forward currency contracts, disposition 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.
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.
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 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. With exchange-traded futures contracts, there is minimal counterparty credit risk to the Series since the exchanges’ clearing house acts as counterparty to all exchange-traded futures and guarantees the futures contracts against default.
Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. The right to set-off exists when all the conditions are met such that
Prudential International Equity Fund | 33 |
Notes to Financial Statements
(Unaudited) continued
each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there were no instances where the right of set-off existed and management has not elected to offset.
Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in a highly liquid short-term money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities, and any interest on the investment of 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.
Warrants and Rights: The Series may hold warrants and rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Warrants and rights entitle the holder to buy a proportionate amount of common stock, or such other security that the issuer may specify, at a specific price and time through the expiration dates. The Series holds such warrants and rights as long positions until exercised, sold or expired. Warrants and rights are valued at fair value in accordance with the Board of Directors’ approved fair valuation procedures.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual.
34 |
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 from net investment income and distributions from net realized capital gains, if any, at least 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, the Series is treated as a separate taxpaying entity. It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to 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
Prudential International Equity Fund | 35 |
Notes to Financial Statements
(Unaudited) continued
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, 2014.
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 Series’ 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 and Class X shares of the Series in accordance with Rule 12b-1 of the 1940 Act. No distribution or service fees are paid to PIMS as distributor for the Series’ Class Z shares. Under the Plans, the Series compensates PIMS and PAD a distribution and service fee at the annual rate of .30%, 1%, 1%, .75% and 1% of the average daily net assets of the Class A, B, C, F and X shares, respectively.
PIMS has advised the Series that they received $54,916 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2014. 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, 2014 it received $1,248, $4,396, $194, and $49 in contingent deferred sales charges imposed upon redemptions by certain Class A, Class B, Class C and Class F shareholders, respectively.
PI, QMA, PAD 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.
36 |
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, 2014, PIM has been compensated approximately $2,300 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, 2014 aggregated $250,255,108 and $285,176,121, 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, 2014 were as follows:
Tax Basis | $ | 269,598,889 | ||
|
| |||
Appreciation | 48,658,125 | |||
Depreciation | (4,106,972 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 44,551,153 | ||
|
|
The book basis may differ from tax basis due to certain tax-related adjustments.
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), the Series are permitted to carryforward capital losses incurred in the fiscal year ended October 31, 2012 and October 31, 2013 (“post-enactment losses”) for an unlimited period. 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 taxable years ending before October 31, 2012 (“pre-enactment losses”) may have an increased likelihood to expire unused. The Series utilized approximately $30,641,000 of its capital loss carryforward to offset net taxable gains realized in the fiscal year ended October 31, 2013. No capital gains
Prudential International Equity Fund | 37 |
Notes to Financial Statements
(Unaudited) continued
distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses. As of October 31, 2013, the pre and post-enactment losses were approximately:
Post-Enactment Losses: | $ | 0 | ||
|
| |||
Pre-Enactment Losses: | ||||
Expiring 2016 | $ | 30,926,000 | ||
Expiring 2017 | 184,077,000 | |||
Expiring 2018 | 8,337,000 | |||
|
| |||
$ | 223,340,000 | |||
|
|
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, B, C, and 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%. The Class A CDSC is waived for purchases by certain retirement and/or benefit plans. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. The last conversion of Class F and Class X shares to Class A shares was completed as of March 14, 2014 and April 11, 2014, respectively. There are no Class F and Class X shares outstanding and Class F and Class X shares are no longer being offered for sale. 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.
38 |
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.
There are 1 billion authorized shares of common stock at $.01 par value per share, designated Class A, Class B, Class C, Class F, Class M, Class X, Class New X and Class Z, each of which consists of 275 million, 150 million, 150 million, 50 million, 50 million, 50 million, 50 million and 225 million authorized shares, respectively.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 626,204 | $ | 4,593,961 | |||||
Shares issued in reinvestment of dividends and distributions | 606,075 | 4,278,811 | ||||||
Shares reacquired | (2,111,802 | ) | (15,478,946 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (879,523 | ) | (6,606,174 | ) | ||||
Shares issued upon conversion from Class B, Class F and Class X | 117,357 | 842,700 | ||||||
Shares reacquired upon conversion into Class Z | (31,779 | ) | (234,289 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (793,945 | ) | $ | (5,997,763 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 1,007,911 | $ | 6,687,880 | |||||
Shares issued in reinvestment of dividends and distributions | 709,948 | 4,437,173 | ||||||
Shares reacquired | (4,910,399 | ) | (32,339,317 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (3,192,540 | ) | (21,214,264 | ) | ||||
Shares issued upon conversion from Class B, Class F, Class X and Class Z | 294,902 | 1,955,257 | ||||||
Shares reacquired upon conversion into Class Z | (78,700 | ) | (530,920 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (2,976,338 | ) | $ | (19,789,927 | ) | |||
|
|
|
| |||||
Class B | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 100,498 | $ | 711,992 | |||||
Shares issued in reinvestment of dividends and distributions | 11,788 | 80,161 | ||||||
Shares reacquired | (60,627 | ) | (429,724 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 51,659 | 362,429 | ||||||
Shares reacquired upon conversion into Class A | (78,696 | ) | (542,386 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (27,037 | ) | $ | (179,957 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 140,384 | $ | 904,991 | |||||
Shares issued in reinvestment of dividends and distributions | 14,301 | 86,379 | ||||||
Shares reacquired | (105,231 | ) | (665,748 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 49,454 | 325,622 | ||||||
Shares reacquired upon conversion into Class A | (132,182 | ) | (844,219 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (82,728 | ) | $ | (518,597 | ) | |||
|
|
|
|
Prudential International Equity Fund | 39 |
Notes to Financial Statements
(Unaudited) continued
Class C | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 153,508 | $ | 1,062,817 | |||||
Shares issued in reinvestment of dividends and distributions | 36,950 | 251,259 | ||||||
Shares reacquired | (246,442 | ) | (1,728,502 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (55,984 | ) | (414,426 | ) | ||||
Shares reacquired upon conversion into Class Z | (7,866 | ) | (56,267 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (63,850 | ) | $ | (470,693 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 194,985 | $ | 1,261,519 | |||||
Shares issued in reinvestment of dividends and distributions | 45,635 | 275,180 | ||||||
Shares reacquired | (537,568 | ) | (3,387,583 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (296,948 | ) | (1,850,884 | ) | ||||
Shares reacquired upon conversion into Class Z | (2,569 | ) | (17,777 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (299,517 | ) | $ | (1,868,661 | ) | |||
|
|
|
| |||||
Class F | ||||||||
Period ended March 14, 2014*: | ||||||||
Shares issued in reinvestment of dividends and distributions | 86 | $ | 583 | |||||
Shares reacquired | (5,211 | ) | (37,196 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (5,125 | ) | (36,613 | ) | ||||
Shares reacquired upon conversion into Class A | (14,245 | ) | (97,276 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (19,370 | ) | $ | (133,889 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 16 | $ | 107 | |||||
Shares issued in reinvestment of dividends and distributions | 1,732 | 10,446 | ||||||
Shares reacquired | (10,025 | ) | (62,519 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (8,277 | ) | (51,966 | ) | ||||
Shares reacquired upon conversion into Class A | (90,014 | ) | (575,098 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (98,291 | ) | $ | (627,064 | ) | |||
|
|
|
|
40 |
Class X | Shares | Amount | ||||||
Period ended April 11, 2014**: | ||||||||
Shares sold | 14 | $ | 99 | |||||
Shares issued in reinvestment of dividends and distributions | 311 | 2,117 | ||||||
Shares reacquired | (1,493 | ) | (10,397 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (1,168 | ) | (8,181 | ) | ||||
Shares reacquired upon conversion into Class A | (29,057 | ) | (203,038 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (30,225 | ) | $ | (211,219 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 1,547 | $ | 9,653 | |||||
Shares issued in reinvestment of dividends and distributions | 1,618 | 9,773 | ||||||
Shares reacquired | (11,055 | ) | (70,470 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (7,890 | ) | (51,044 | ) | ||||
Shares reacquired upon conversion into Class A | (84,144 | ) | (533,747 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (92,034 | ) | $ | (584,791 | ) | |||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 493,416 | $ | 3,604,099 | |||||
Shares issued in reinvestment of dividends and distributions | 220,237 | 1,563,688 | ||||||
Shares reacquired | (4,155,650 | ) | (29,994,988 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (3,441,997 | ) | (24,827,201 | ) | ||||
Shares issued upon conversion from Class A and Class C | 39,083 | 290,556 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (3,402,914 | ) | $ | (24,536,645 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 2,363,610 | $ | 15,966,544 | |||||
Shares issued in reinvestment of dividends and distributions | 194,751 | 1,224,986 | ||||||
Shares reacquired | (1,312,558 | ) | (8,860,195 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 1,245,803 | 8,331,335 | ||||||
Shares issued upon conversion from Class A and Class C | 80,644 | 548,697 | ||||||
Shares reacquired upon conversion into Class A | (341 | ) | (2,193 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,326,106 | $ | 8,877,839 | |||||
|
|
|
|
* | As of March 14, 2014, the last conversion of Class F shares to Class A shares was completed. There are no Class F shares outstanding and Class F shares are no longer being offered for sale. |
** | As of April 11, 2014, the last conversion of Class X shares to Class A shares was completed. There are no Class X shares outstanding and Class X shares are no longer being offered for sale. |
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
Prudential International Equity Fund | 41 |
Notes to Financial Statements
(Unaudited) continued
capital share redemptions. The SCA provides for a commitment of $900 million for the period November 5, 2013 through November 4, 2014. The Funds pay an annualized commitment fee of 0.08% on the unused portion of the SCA. Prior to November 5, 2013, the Funds had another SCA with substantially similar terms. 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, 2014. The average daily balance for the 67 days that the Series had loans outstanding during the period was approximately $1,265,821, borrowed at a weighted average interest rate of 1.41%. At April 30, 2014, the Series did not have an outstanding loan amount.
Note 8. Ownership
As of April 30, 2014, approximately 26% of the Series was owned by two institutional shareholders for the beneficial interest of their underlying account holders.
42 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $7.37 | $6.02 | $5.72 | $6.17 | $5.77 | $4.80 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .07 | .12 | .12 | .09 | .08 | .08 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .25 | 1.36 | .29 | (.46 | ) | .36 | 1.06 | |||||||||||||||||||
Total from investment operations | .32 | 1.48 | .41 | (.37 | ) | .44 | 1.14 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.14 | ) | (.13 | ) | (.11 | ) | (.11 | ) | (.10 | ) | (.17 | ) | ||||||||||||||
Capital Contributions(d): | - | - | - | .03 | .06 | - | ||||||||||||||||||||
Net asset value, end of period | $7.55 | $7.37 | $6.02 | $5.72 | $6.17 | $5.77 | ||||||||||||||||||||
Total Return(b): | 4.47% | 25.06% | 7.40% | (5.61)% | 8.78% | 24.65% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $234,298 | $234,668 | $209,568 | $214,610 | $260,555 | $275,993 | ||||||||||||||||||||
Average net assets (000) | $231,280 | $221,300 | $204,088 | $247,859 | $257,553 | $240,744 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.58% | (e) | 1.59% | 1.67% | 1.64% | 1.57% | 1.54% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.58% | (e) | 1.59% | 1.67% | 1.64% | 1.57% | 1.54% | |||||||||||||||||||
Net investment income | 2.05% | (e) | 1.83% | 2.18% | 1.51% | 1.35% | 1.75% | |||||||||||||||||||
Portfolio turnover rate | 79% | (f) | 114% | 83% | 70% | 96% | 76% |
(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 a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal years ended October 31, 2011 and October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of settlement.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential International Equity Fund | 43 |
Financial Highlights
(Unaudited) continued
Class B Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $7.07 | $5.78 | $5.50 | $5.94 | $5.56 | $4.61 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .05 | .07 | .08 | .05 | .04 | .05 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .23 | 1.32 | .27 | (.45 | ) | .35 | 1.02 | |||||||||||||||||||
Total from investment operations | .28 | 1.39 | .35 | (.40 | ) | .39 | 1.07 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.09 | ) | (.10 | ) | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | ||||||||||||||
Capital Contributions(d): | - | - | - | .03 | .06 | - | ||||||||||||||||||||
Net asset value, end of period | $7.26 | $7.07 | $5.78 | $5.50 | $5.94 | $5.56 | ||||||||||||||||||||
Total Return(b): | 4.11% | 24.26% | 6.50% | (6.27)% | 8.11% | 23.82% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $6,030 | $6,066 | $5,439 | $6,720 | $9,160 | $9,976 | ||||||||||||||||||||
Average net assets (000) | $6,076 | $5,690 | $5,823 | $8,320 | $9,246 | $9,229 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.28% | (e) | 2.29% | 2.37% | 2.34% | 2.27% | 2.24% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.28% | (e) | 2.29% | 2.37% | 2.34% | 2.27% | 2.24% | |||||||||||||||||||
Net investment income | 1.34% | (e) | 1.13% | 1.48% | .83% | .66% | 1.06% | |||||||||||||||||||
Portfolio turnover rate | 79% | (f) | 114% | 83% | 70% | 96% | 76% |
(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 a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal years ended October 31, 2011 and October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of settlement.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
44 |
Class C Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $7.07 | $5.78 | $5.50 | $5.94 | $5.56 | $4.61 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .05 | .07 | .08 | .05 | .04 | .05 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .23 | 1.32 | .27 | (.45 | ) | .35 | 1.02 | |||||||||||||||||||
Total from investment operations | .28 | 1.39 | .35 | (.40 | ) | .39 | 1.07 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.09 | ) | (.10 | ) | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | ||||||||||||||
Capital Contributions(d): | - | - | - | .03 | .06 | - | ||||||||||||||||||||
Net asset value, end of period | $7.26 | $7.07 | $5.78 | $5.50 | $5.94 | $5.56 | ||||||||||||||||||||
Total Return(b): | 4.11% | 24.27% | 6.51% | (6.27)% | 8.11% | 23.83% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $19,522 | $19,472 | $17,658 | $21,310 | $26,625 | $29,326 | ||||||||||||||||||||
Average net assets (000) | $19,368 | $18,341 | $19,019 | $25,128 | $26,974 | $26,677 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.28% | (e) | 2.29% | 2.37% | 2.34% | 2.27% | 2.24% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.28% | (e) | 2.29% | 2.37% | 2.34% | 2.27% | 2.24% | |||||||||||||||||||
Net investment income | 1.36% | (e) | 1.13% | 1.49% | .81% | .66% | 1.06% | |||||||||||||||||||
Portfolio turnover rate | 79% | (f) | 114% | 83% | 70% | 96% | 76% |
(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 a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal years ended October 31, 2011 and October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of settlement.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential International Equity Fund | 45 |
Financial Highlights
(Unaudited) continued
Class F Shares | ||||||||||||||||||||||||||
Period Ended March 14, | Year Ended October 31, | |||||||||||||||||||||||||
2014(h) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $7.08 | $5.79 | $5.50 | $5.94 | $5.56 | $4.62 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .01 | .09 | .09 | .06 | .05 | .06 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.05 | ) | 1.31 | .29 | (.44 | ) | .35 | 1.01 | ||||||||||||||||||
Total from investment operations | (.04 | ) | 1.40 | .38 | (.38 | ) | .40 | 1.07 | ||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.11 | ) | (.11 | ) | (.09 | ) | (.09 | ) | (.08 | ) | (.13 | ) | ||||||||||||||
Capital Contributions(d): | - | - | - | .03 | .06 | - | ||||||||||||||||||||
Net asset value, end of period | $6.93 | $7.08 | $5.79 | $5.50 | $5.94 | $5.56 | ||||||||||||||||||||
Total Return(b): | (.51)% | 24.51% | 6.98% | (6.05)% | 8.35% | 24.04% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $5 | $137 | $681 | $1,572 | $3,355 | $5,226 | ||||||||||||||||||||
Average net assets (000) | $71 | $423 | $1,044 | $2,442 | $4,064 | $5,769 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.03% | (e) | 2.04% | 2.12% | 2.09% | 2.02% | 1.99% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.03% | (e) | 2.04% | 2.12% | 2.09% | 2.02% | 1.99% | |||||||||||||||||||
Net investment income | .27% | (e) | 1.36% | 1.74% | 1.07% | .95% | 1.35% | |||||||||||||||||||
Portfolio turnover rate | 79% | (f)(g) | 114% | 83% | 70% | 96% | 76% |
(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 a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal years ended October 31, 2011 and October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of settlement.
(e) Annualized.
(f) Not annualized.
(g) Calculated as of April 30, 2014.
(h) As of March 14, 2014, the last conversion of Class F shares to Class A shares was completed. There are no Class F shares outstanding and Class F shares are no longer being offered for sale.
See Notes to Financial Statements.
46 |
Class X Shares | ||||||||||||||||||||||||||
Period Ended April 11, | Year Ended October 31, | |||||||||||||||||||||||||
2014(h) | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $7.07 | $5.79 | $5.50 | $5.94 | $5.56 | $4.61 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income (loss) | - | (i) | .07 | .08 | .05 | .04 | .05 | |||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .15 | 1.31 | .28 | (.45 | ) | .35 | 1.02 | |||||||||||||||||||
Total from investment operations | .15 | 1.38 | .36 | (.40 | ) | .39 | 1.07 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.09 | ) | (.10 | ) | (.07 | ) | (.07 | ) | (.07 | ) | (.12 | ) | ||||||||||||||
Capital Contributions(d): | - | - | - | .03 | .06 | - | ||||||||||||||||||||
Net asset value, end of period | $7.13 | $7.07 | $5.79 | $5.50 | $5.94 | $5.56 | ||||||||||||||||||||
Total Return(b): | 2.25% | 24.05% | 6.69% | (6.27)% | 8.11% | 23.82% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $11 | $214 | $707 | $1,569 | $3,067 | $5,957 | ||||||||||||||||||||
Average net assets (000) | $102 | $449 | $1,077 | $2,351 | $4,020 | $6,611 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.28% | (e) | 2.29% | 2.37% | 2.34% | 2.27% | 2.24% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.28% | (e) | 2.29% | 2.37% | 2.34% | 2.27% | 2.24% | |||||||||||||||||||
Net investment income (loss) | (.04)% | (e) | 1.05% | 1.45% | .80% | .66% | 1.10% | |||||||||||||||||||
Portfolio turnover rate | 79% | (f)(g) | 114% | 83% | 70% | 96% | 76% |
(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 a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal years ended October 31, 2011 and October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of settlement.
(e) Annualized.
(f) Not annualized.
(g) Calculated as of April 30, 2014.
(h) As of April 11, 2014, the last conversion of Class X shares to Class A shares was completed. There are no Class X shares outstanding and Class X shares are no longer being offered for sale.
(i) Less than $.005 per share.
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, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $7.43 | $6.07 | $5.77 | $6.22 | $5.82 | $4.85 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .07 | .15 | .14 | .11 | .13 | .10 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .26 | 1.36 | .29 | (.46 | ) | .33 | 1.06 | |||||||||||||||||||
Total from investment operations | .33 | 1.51 | .43 | (.35 | ) | .46 | 1.16 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.16 | ) | (.15 | ) | (.13 | ) | (.13 | ) | (.12 | ) | (.19 | ) | ||||||||||||||
Capital Contributions(d): | - | - | - | .03 | .06 | - | ||||||||||||||||||||
Net asset value, end of period | $7.60 | $7.43 | $6.07 | $5.77 | $6.22 | $5.82 | ||||||||||||||||||||
Total Return(b): | 4.60% | 25.36% | 7.69% | (5.30)% | 8.98% | 24.95% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $47,505 | $71,753 | $50,531 | $44,573 | $44,833 | $229,771 | ||||||||||||||||||||
Average net assets (000) | $59,941 | $60,981 | $45,946 | $46,529 | $149,685 | $184,038 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.28% | (e) | 1.29% | 1.37% | 1.34% | 1.27% | 1.24% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.28% | (e) | 1.29% | 1.37% | 1.34% | 1.27% | 1.24% | |||||||||||||||||||
Net investment income | 1.91% | (e) | 2.17% | 2.46% | 1.77% | 2.12% | 2.05% | |||||||||||||||||||
Portfolio turnover rate | 79% | (f) | 114% | 83% | 70% | 96% | 76% |
(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 a full year are not annualized.
(c) Does not include expenses of the underlying portfolios in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal years ended October 31, 2011 and October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of settlement.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
48 |
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 Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer and Chief Compliance Officer • Deborah A. Docs, Secretary • 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 • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, 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 | ||
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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 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 | Z | ||||
NASDAQ | PJRAX | PJRBX | PJRCX | PJIZX | ||||
CUSIP | 743969859 | 743969867 | 743969875 | 743969883 |
MF190E2 0263049-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL INTERNATIONAL VALUE FUND
SEMIANNUAL REPORT · APRIL 30, 2014
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, 2014, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company and member SIPC. © 2014 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, 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.
June 16, 2014
Dear Shareholder:
We hope you find the semiannual report for the Prudential International Value Fund informative and useful. The report covers performance for the six-month period that ended April 30, 2014.
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 of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks. We offer the expertise of Prudential Financial’s affiliated asset managers* that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential International Value Fund
*Most of Prudential Investments’ equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors. Prudential Investments’ fixed income and money market funds are advised by Prudential Investment Management, Inc. (PIM) 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.
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.
Cumulative Total Returns (Without Sales Charges) as of 4/30/14 |
| |||||||||||||||
Six Months | One Year | Five Years | Ten Years | |||||||||||||
Class A | 2.50 | % | 10.46 | % | 76.66 | % | 85.63 | % | ||||||||
Class B | 2.13 | 9.63 | 70.15 | 72.04 | ||||||||||||
Class C | 2.13 | 9.61 | 70.19 | 72.09 | ||||||||||||
Class Z | 2.64 | 10.70 | 79.00 | 90.28 | ||||||||||||
MSCI EAFE ND Index | 4.44 | 13.35 | 89.01 | 95.36 | ||||||||||||
Lipper International Multi-Cap Core Funds Average | 3.57 | 12.04 | 89.98 | 92.42 | ||||||||||||
Lipper Customized Blend Funds Average | 3.67 | 12.05 | 88.22 | 93.38 | ||||||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/14 |
| |||||||||||||||
One Year | Five Years | Ten Years | ||||||||||||||
Class A | 7.40 | % | 13.23 | % | 5.46 | % | ||||||||||
Class B | 7.77 | 13.54 | 5.25 | |||||||||||||
Class C | 11.79 | 13.67 | 5.25 | |||||||||||||
Class Z | 13.89 | 14.82 | 6.32 | |||||||||||||
MSCI EAFE ND Index | 17.54 | 16.02 | 6.53 | |||||||||||||
Lipper International Multi-Cap Core Funds Average | 15.70 | 15.84 | 6.27 | |||||||||||||
Lipper Customized Blend Funds Average | 15.64 | 15.64 | 6.32 |
Source: Prudential Investments LLC and Lipper Inc.
2 | Visit our website at www.prudentialfunds.com |
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B | Class C | Class Z | |||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or sale proceeds) | 1% on sales of $1 million or more made within 12 months of purchase | 5% (Yr. 1) 4% (Yr. 2) 3% (Yr. 3) 2% (Yr. 4) 1% (Yr. 5/6) 0% (Yr. 7) | 1% on sales made within 12 months of purchase | None | ||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | .30% (.25% currently) | 1% | 1% | None |
Benchmark Definitions
Morgan Stanley Capital International Europe, Australasia, and Far East Net Dividend 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 Multi-Cap Core Funds Average
The Lipper International Multi-Cap Core Funds Average includes Funds that, by portfolio practice, invest in a variety of market-capitalization ranges without concentrating 75% of their equity assets in any one market-capitalization range over an extended period of time. International multi-cap core funds typically have average characteristics compared to the MSCI EAFE Index.
Lipper Customized Blend Funds Average
The Lipper Customized Blend Funds Average is a 50/50 blend of the Lipper International Multi-Cap Core Funds and Lipper International Large-Cap Core Funds Averages.
Note: Although Lipper classifies the Prudential International Value Fund in the Lipper International Multi-Cap Core Funds Performance Universe, the Lipper Customized Blend Funds Performance Universe is utilized because the Fund’s investment manager believes that the funds included in this custom blend universe provide a more appropriate basis for Portfolio performance comparisons.
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 Averages reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.
Prudential International Value Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Holdings expressed as a percentage of net assets as of 4/30/14 | ||||
Novartis AG, Pharmaceuticals | 1.8 | % | ||
Total SA, Oil, Gas & Consumable Fuels | 1.8 | |||
Royal Dutch Shell PLC (Class B Stock), Oil, Gas & Consumable Fuels | 1.6 | |||
Roche Holding AG, Pharmaceuticals | 1.3 | |||
Nestle SA, Food Products | 1.2 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/14 | ||||
Banks | 10.8 | % | ||
Pharmaceuticals | 8.2 | |||
Insurance | 7.0 | |||
Oil, Gas & Consumable Fuels | 6.8 | |||
Capital Markets | 3.4 |
Industry weightings reflect only long-term investments and are subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on November 1, 2013, at the beginning of the period, and held through the six-month period ended April 30, 2014. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of Prudential Investments funds, including the Fund, that you own. You should consider
Prudential International Value Fund | 5 |
Fees and Expenses (continued)
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.
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, 2013 | Ending Account Value April 30, 2014 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,025.00 | 1.91 | % | $ | 9.59 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.32 | 1.91 | % | $ | 9.54 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,021.30 | 2.66 | % | $ | 13.33 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,011.60 | 2.66 | % | $ | 13.27 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,021.30 | 2.66 | % | $ | 13.33 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,011.60 | 2.66 | % | $ | 13.27 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,026.40 | 1.56 | % | $ | 7.84 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.06 | 1.56 | % | $ | 7.80 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2014, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2014 (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 |
The Fund’s annual expense ratios for the period ended April 30, 2014, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||||||
A | 1.96 | % | 1.91 | % | ||||
B | 2.66 | 2.66 | ||||||
C | 2.66 | 2.66 | ||||||
Z | 1.56 | 1.56 |
Net operating expenses shown above reflect any fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
Prudential International Value Fund | 7 |
Portfolio of Investments
as of April 30, 2014 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 97.5% | ||||||
COMMON STOCKS 97.5% | ||||||
Australia 4.4% | ||||||
87,600 | Arrium Ltd. | $ | 97,626 | |||
42,900 | Ausdrill Ltd. | 37,219 | ||||
16,800 | Bendigo & Adelaide Bank Ltd. | 180,055 | ||||
29,500 | Bradken Ltd. | 116,424 | ||||
32,000 | Challenger Ltd. | 210,536 | ||||
35,500 | Downer EDI Ltd. | 165,725 | ||||
166,900 | Emeco Holdings Ltd.* | 40,652 | ||||
26,500 | Fortescue Metals Group Ltd. | 125,343 | ||||
27,500 | GrainCorp Ltd. (Class A Stock) | 226,804 | ||||
7,800 | Leighton Holdings Ltd. | 138,701 | ||||
26,300 | Lend Lease Group | 317,860 | ||||
42,000 | Metcash Ltd. | 108,470 | ||||
11,000 | Mineral Resources Ltd. | 119,434 | ||||
8,000 | National Australia Bank Ltd. | 263,418 | ||||
88,300 | Pacific Brands Ltd. | 41,574 | ||||
4,700 | Rio Tinto Ltd. | 271,044 | ||||
25,300 | Toll Holdings Ltd. | 124,794 | ||||
|
| |||||
2,585,679 | ||||||
Austria 0.8% | ||||||
5,800 | OMV AG | 271,175 | ||||
3,800 | Voestalpine AG | 173,582 | ||||
|
| |||||
444,757 | ||||||
Belgium 1.5% | ||||||
32,700 | AGFA-Gevaert NV* | 125,211 | ||||
4,409 | Anheuser-Busch InBev NV | 480,562 | ||||
3,800 | Delhaize Group SA | 282,960 | ||||
4,935 | Dexia SA* | 281 | ||||
|
| |||||
889,014 | ||||||
Brazil 0.2% | ||||||
4,017 | Embraer SA , ADR | 138,185 | ||||
Canada 0.5% | ||||||
5,298 | Canadian National Railway Co. | 310,325 | ||||
China 2.6% | ||||||
2,532 | Baidu, Inc., ADR* | 389,548 |
See Notes to Financial Statements.
Prudential International Value Fund | 9 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
China (cont’d.) | ||||||
48,401 | China Mobile Ltd. | $ | 460,704 | |||
569,927 | Industrial & Commercial Bank of China Ltd. (Class H Stock) | 340,542 | ||||
1,742 | SINA Corp.* | 83,268 | ||||
35,487 | Sinopharm Group Co. Ltd. (Class H Stock) | 93,709 | ||||
3,259 | Tencent Holdings Ltd. | 205,186 | ||||
|
| |||||
1,572,957 | ||||||
Denmark 1.2% | ||||||
15,754 | Novo Nordisk A/S (Class B Stock) | 715,011 | ||||
Finland 0.9% | ||||||
6,477 | Kone OYJ (Class B Stock) | 277,639 | ||||
8,700 | Tieto OYJ | 238,078 | ||||
|
| |||||
515,717 | ||||||
France 10.9% | ||||||
4,839 | Accor SA | 236,915 | ||||
1,880 | Air Liquide SA | 268,967 | ||||
6,000 | Alstom SA | 247,944 | ||||
9,100 | AXA SA | 237,473 | ||||
3,700 | BNP Paribas SA | 278,034 | ||||
5,333 | Cie Generale des Etablissements Michelin | 653,989 | ||||
2,200 | Ciments Francais SA | 236,543 | ||||
12,800 | Credit Agricole SA* | 201,964 | ||||
5,500 | Electricite de France | 211,205 | ||||
3,408 | LVMH Moet Hennessy Louis Vuitton SA | 671,356 | ||||
6,150 | Publicis Groupe SA | 526,127 | ||||
2,200 | Renault SA | 215,093 | ||||
3,000 | Sanofi | 323,759 | ||||
3,900 | SCOR SE | 142,712 | ||||
2,800 | Societe Generale SA | 174,376 | ||||
5,100 | Thales SA | 324,743 | ||||
14,538 | Total SA | 1,040,108 | ||||
2,400 | Valeo SA | 329,590 | ||||
5,800 | Vivendi SA | 155,827 | ||||
|
| |||||
6,476,725 | ||||||
Germany 7.8% | ||||||
4,584 | Adidas AG | 490,037 | ||||
2,000 | Allianz SE | 348,059 |
See Notes to Financial Statements.
10 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Germany (cont’d.) | ||||||
2,300 | Aurubis AG | $ | 122,876 | |||
1,700 | BASF SE | 197,209 | ||||
4,900 | Daimler AG | 456,185 | ||||
12,255 | Deutsche Bank AG | 539,777 | ||||
7,600 | E.ON SE | 145,577 | ||||
7,800 | Freenet AG | 270,138 | ||||
6,650 | Fresenius Medical Care AG & Co. KGaA | 458,168 | ||||
2,000 | Hannover Rueck SE | 186,363 | ||||
1,600 | Lanxess AG | 121,842 | ||||
900 | Muenchener Rueckversicherungs AG | 208,043 | ||||
3,000 | Rheinmetall AG | 199,859 | ||||
3,700 | RWE AG | 141,196 | ||||
3,513 | SAP AG | 283,945 | ||||
2,300 | Stada Arzneimittel AG | 100,293 | ||||
1,300 | Volkswagen AG | 348,593 | ||||
|
| |||||
4,618,160 | ||||||
Hong Kong 3.4% | ||||||
105,409 | AIA Group Ltd. | 512,667 | ||||
9,000 | Cheung Kong Holdings Ltd. | 153,696 | ||||
112,000 | First Pacific Co. Ltd. | 124,546 | ||||
21,437 | Hong Kong Exchanges and Clearing Ltd. | 385,509 | ||||
354,000 | Huabao International Holdings Ltd. | 167,675 | ||||
69,720 | Kingboard Chemical Holdings Ltd. | 133,248 | ||||
42,999 | Sands China Ltd. | 315,689 | ||||
68,200 | Yue Yuen Industrial Holdings Ltd. | 211,286 | ||||
|
| |||||
2,004,316 | ||||||
Ireland 0.4% | ||||||
15,600 | Permanent TSB Group Holdings PLC* | 2,057 | ||||
9,500 | Smurfit Kappa Group PLC | 211,638 | ||||
|
| |||||
213,695 | ||||||
Israel 0.7% | ||||||
21,500 | Bank Hapoalim BM | 121,453 | ||||
2,300 | Elbit Systems Ltd. | 135,770 | ||||
3,700 | Teva Pharmaceutical Industries Ltd. | 181,374 | ||||
|
| |||||
438,597 |
See Notes to Financial Statements.
Prudential International Value Fund | 11 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Italy 2.0% | ||||||
1,440 | Banco Popolare SC* | $ | 29,759 | |||
52,200 | Enel SpA | 295,657 | ||||
14,200 | Eni SpA | 367,770 | ||||
106,979 | Intesa Sanpaolo SpA | 366,085 | ||||
112,600 | Telecom Italia SpA* | 144,694 | ||||
|
| |||||
1,203,965 | ||||||
Japan 17.2% | ||||||
8,373 | Alpine Electronics, Inc. | 99,827 | ||||
8,400 | Aoyama Trading Co. Ltd. | 208,445 | ||||
8,692 | Bridgestone Corp. | 311,222 | ||||
2,166 | FANUC Corp. | 390,824 | ||||
39,000 | Fukuoka Financial Group, Inc. | 159,276 | ||||
4,300 | Fuyo General Lease Co. Ltd. | 147,966 | ||||
17,600 | Heiwa Corp. | 292,863 | ||||
9,584 | Japan Tobacco, Inc. | 315,012 | ||||
23,900 | JX Holdings, Inc. | 124,180 | ||||
4,500 | KDDI Corp. | 239,993 | ||||
9,400 | Keihin Corp. | 136,417 | ||||
21,590 | Kubota Corp. | 278,263 | ||||
5,300 | KYORIN Holdings, Inc. | 102,158 | ||||
16,200 | Kyowa Exeo Corp. | 209,558 | ||||
29,000 | Marubeni Corp. | 193,790 | ||||
2,400 | Miraca Holdings, Inc. | 104,034 | ||||
5,900 | Mitsubishi Corp. | 105,653 | ||||
13,249 | Mitsubishi Estate Co. Ltd. | 300,625 | ||||
125,538 | Mitsubishi UFJ Financial Group, Inc. | 667,799 | ||||
18,800 | Mitsui & Co. Ltd. | 266,629 | ||||
186,800 | Mizuho Financial Group, Inc. | 365,868 | ||||
66,000 | Morinaga Milk Industry Co. Ltd. | 246,365 | ||||
13,800 | Nichii Gakkan Co. | 121,722 | ||||
8,000 | Nippon Telegraph & Telephone Corp. | 443,942 | ||||
48,000 | Nishi-Nippon City Bank Ltd. (The) | 109,181 | ||||
16,200 | NTT DoCoMo, Inc. | 258,399 | ||||
5,800 | Otsuka Holdings Co. Ltd. | 167,085 | ||||
65,400 | Resona Holdings, Inc. | 334,390 | ||||
49,800 | Sankyu, Inc. | 189,829 | ||||
12,000 | Seino Holdings Co. Ltd. | 118,605 | ||||
6,200 | Shimachu Co. Ltd. | 136,230 | ||||
25,400 | Shizuoka Gas Co. Ltd. | 152,838 |
See Notes to Financial Statements.
12 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Japan (cont’d.) | ||||||
4,986 | SoftBank Corp. | $ | 371,347 | |||
15,100 | Sumitomo Corp. | 196,005 | ||||
9,000 | Sumitomo Metal Mining Co. Ltd. | 135,941 | ||||
9,900 | Sumitomo Mitsui Financial Group, Inc. | 391,350 | ||||
101,998 | Sumitomo Mitsui Trust Holdings, Inc. | 420,303 | ||||
33,000 | Toagosei Co. Ltd. | 138,088 | ||||
16,700 | Toppan Forms Co. Ltd. | 153,444 | ||||
11,054 | Toyota Motor Corp. | 597,227 | ||||
4,300 | Tsumura & Co. | 102,207 | ||||
3,900 | West Japan Railway Co. | 158,156 | ||||
31,000 | Yokohama Rubber Co. Ltd. (The) | 276,893 | ||||
|
| |||||
10,239,949 | ||||||
Liechtenstein 0.2% | ||||||
1,400 | VP Bank AG | 139,507 | ||||
Netherlands 4.1% | ||||||
18,800 | Aegon NV | 172,328 | ||||
3,610 | ASML Holding NV | 294,627 | ||||
53,454 | ING Groep NV, CVA* | 764,116 | ||||
15,415 | Koninklijke Ahold NV | 298,008 | ||||
21,700 | Royal Dutch Shell PLC (Class B Stock) | 921,399 | ||||
|
| |||||
2,450,478 | ||||||
New Zealand 0.6% | ||||||
185,600 | Air New Zealand Ltd. | 336,319 | ||||
Norway 1.1% | ||||||
10,900 | DnB ASA | 193,208 | ||||
8,300 | Statoil ASA | 253,029 | ||||
4,500 | Yara International ASA | 212,722 | ||||
|
| |||||
658,959 | ||||||
Spain 2.7% | ||||||
7,638 | Amadeus IT Holding SA (Class A Stock) | 317,668 | ||||
33,538 | Banco Bilbao Vizcaya Argentaria SA | 413,112 | ||||
29,000 | Banco Santander SA | 288,424 | ||||
17,300 | Repsol SA | 465,792 | ||||
8,000 | Telefonica SA | 134,257 | ||||
|
| |||||
1,619,253 |
See Notes to Financial Statements.
Prudential International Value Fund | 13 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
Sweden 2.4% | ||||||
8,600 | Boliden AB | $ | 131,342 | |||
9,229 | Hennes & Mauritz AB (Class B Stock) | 377,770 | ||||
3,400 | NCC AB (Class B Stock) | 119,121 | ||||
5,700 | Oriflame Cosmetics SA, SDR | 145,960 | ||||
12,600 | Securitas AB (Class B Stock) | 152,317 | ||||
8,900 | Swedbank AB (Class A Stock) | 238,181 | ||||
33,900 | TeliaSonera AB | 246,760 | ||||
|
| |||||
1,411,451 | ||||||
Switzerland 8.8% | ||||||
2,200 | Baloise Holding AG | 267,902 | ||||
8,200 | Credit Suisse Group AG* | 259,962 | ||||
400 | Georg Fischer AG* | 317,322 | ||||
6,789 | Julius Baer Group Ltd.* | 318,000 | ||||
1,100 | Lonza Group AG* | 115,127 | ||||
9,030 | Nestle SA | 697,877 | ||||
12,537 | Novartis AG | 1,089,874 | ||||
2,687 | Roche Holding AG | 788,221 | ||||
1,100 | Swiss Life Holding AG* | 271,013 | ||||
4,200 | Swiss Re AG* | 367,252 | ||||
21,951 | UBS AG* | 459,081 | ||||
1,000 | Zurich Insurance Group AG* | 286,759 | ||||
|
| |||||
5,238,390 | ||||||
Taiwan 0.7% | ||||||
20,492 | Taiwan Semiconductor Manufacturing Co. Ltd., ADR | 411,889 | ||||
United Kingdom 17.3% | ||||||
16,900 | Alent PLC | 90,738 | ||||
8,800 | AMEC PLC | 183,789 | ||||
8,700 | Anglo American PLC | 232,577 | ||||
5,477 | ARM Holdings PLC | 82,895 | ||||
8,200 | AstraZeneca PLC | 647,261 | ||||
54,262 | Aviva PLC | 483,569 | ||||
63,500 | BAE Systems PLC | 429,606 | ||||
56,600 | Barclays PLC | 241,683 | ||||
31,500 | Beazley PLC | 130,673 | ||||
76,000 | BP PLC | 641,674 | ||||
42,700 | BT Group PLC | 266,560 | ||||
12,458 | Burberry Group PLC | 312,872 |
See Notes to Financial Statements.
14 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
United Kingdom (cont’d.) | ||||||
49,700 | Centrica PLC | $ | 277,177 | |||
17,110 | Compass Group PLC | 272,543 | ||||
24,700 | Dairy Crest Group PLC | 192,711 | ||||
19,625 | Experian PLC | 377,328 | ||||
8,900 | GlaxoSmithKline PLC | 245,911 | ||||
40,400 | Home Retail Group PLC | 139,594 | ||||
26,155 | HSBC Holdings PLC | 267,458 | ||||
25,000 | Intermediate Capital Group PLC | 187,644 | ||||
53,500 | J. Sainsbury PLC | 303,493 | ||||
87,708 | Kingfisher PLC | 620,652 | ||||
34,000 | Legal & General Group PLC | 121,711 | ||||
715 | Liberty Global PLC (Class A Stock)* | 28,471 | ||||
48,900 | Marston’s PLC | 121,588 | ||||
6,900 | Mondi PLC | 114,704 | ||||
65,800 | Old Mutual PLC | 222,409 | ||||
12,496 | Pearson PLC | 234,323 | ||||
7,116 | Reckitt Benckiser Group PLC | 574,443 | ||||
12,935 | Rolls-Royce Holdings PLC* | 229,757 | ||||
71,100 | RSA Insurance Group PLC | 117,824 | ||||
6,948 | SABMiller PLC | 378,323 | ||||
14,678 | Standard Chartered PLC | 317,883 | ||||
51,800 | Tesco PLC | 256,612 | ||||
37,100 | Tullett Prebon PLC | 199,416 | ||||
14,800 | Vesuvius PLC | 104,392 | ||||
88,600 | WM Morrison Supermarkets PLC | 300,766 | ||||
14,886 | WPP PLC | 320,964 | ||||
|
| |||||
10,271,994 | ||||||
United States 5.1% | ||||||
4,991 | Accenture PLC (Class A Stock) | 400,378 | ||||
1,957 | Actavis, Inc. | 399,874 | ||||
9,163 | Carnival PLC | 366,037 | ||||
8,750 | Liberty Global PLC (Class C Stock) | 336,262 | ||||
6,289 | Lululemon Athletica, Inc.* | 288,854 | ||||
5,000 | MasterCard, Inc. (Class A Stock) | 367,750 | ||||
4,758 | Schlumberger Ltd. | 483,175 | ||||
4,803 | Yum! Brands, Inc. | 369,783 | ||||
|
| |||||
3,012,113 | ||||||
|
| |||||
TOTAL COMMON STOCKS | 57,917,405 | |||||
|
|
See Notes to Financial Statements.
Prudential International Value Fund | 15 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
PREFERRED STOCK | ||||||
United Kingdom | ||||||
1,933,352 | Rolls-Royce Holdings PLC (PRFC C)*(a) | $ | 3,264 | |||
|
| |||||
TOTAL LONG-TERM INVESTMENTS | 57,920,669 | |||||
|
| |||||
SHORT-TERM INVESTMENT 1.5% | ||||||
AFFILIATED MONEY MARKET MUTUAL FUND | ||||||
880,849 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 880,849 | ||||
|
| |||||
TOTAL INVESTMENTS 99.0% | 58,801,518 | |||||
Other assets in excess of liabilities(c) 1.0% | 594,582 | |||||
|
| |||||
NET ASSETS 100.0% | $ | 59,396,100 | ||||
|
|
The following abbreviations are used in the portfolio descriptions:
ADR—American Depositary Receipt
CVA—Certificate Van Aandelen (Bearer)
PRFC—Preference Shares
SDR—Swedish Depositary Receipt
EUR—Euro
JPY—Japanese Yen
* | Non-income producing security. |
(a) | Indicates a security or securities that have been deemed illiquid. |
(b) | Prudential Investments LLC, the manager of the Series also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
See Notes to Financial Statements.
16 |
(c) | Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end: |
Forward foreign currency exchange contracts outstanding at April 30, 2014:
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Payable | Current Value | Unrealized Depreciation | |||||||||||||
Japanese Yen, | ||||||||||||||||||
Expiring 07/07/14 | State Street Bank | JPY | 92,231 | $ | 911,905 | $ | 902,518 | $ | (9,387 | ) | ||||||||
Expiring 07/07/14 | State Street Bank | JPY | 152,265 | 1,496,359 | 1,489,975 | (6,384 | ) | |||||||||||
Expiring 07/07/14 | State Street Bank | JPY | 28,936 | 283,396 | 283,151 | (245 | ) | |||||||||||
|
|
|
|
|
| |||||||||||||
$ | 2,691,660 | $ | 2,675,644 | $ | (16,016 | ) | ||||||||||||
|
|
|
|
|
|
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Receivable | Current Value | Unrealized Depreciation | |||||||||||||
Euro, | ||||||||||||||||||
Expiring 10/28/14 | State Street Bank | EUR | 1,209 | $ | 1,669,226 | $ | 1,676,597 | $ | (7,371 | ) | ||||||||
Japanese Yen, | ||||||||||||||||||
Expiring 07/07/14 | State Street Bank | JPY | 460,612 | 4,397,757 | 4,507,278 | (109,521 | ) | |||||||||||
|
|
|
|
|
| |||||||||||||
$ | 6,066,983 | $ | 6,183,875 | $ | (116,892 | ) | ||||||||||||
|
|
|
|
|
|
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 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.
See Notes to Financial Statements.
Prudential International Value Fund | 17 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
The following is a summary of the inputs used as of April 30, 2014 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Australia | $ | 108,470 | $ | 2,477,209 | $ | — | ||||||
Austria | — | 444,757 | — | |||||||||
Belgium | 125,492 | 763,522 | — | |||||||||
Brazil | 138,185 | — | — | |||||||||
Canada | 310,325 | — | — | |||||||||
China | 472,816 | 1,100,141 | — | |||||||||
Denmark | — | 715,011 | — | |||||||||
Finland | — | 515,717 | — | |||||||||
France | 236,543 | 6,240,182 | — | |||||||||
Germany | — | 4,618,160 | — | |||||||||
Hong Kong | — | 2,004,316 | — | |||||||||
Ireland | 2,057 | 211,638 | — | |||||||||
Israel | — | 438,597 | — | |||||||||
Italy | — | 1,203,965 | — | |||||||||
Japan | — | 10,239,949 | — | |||||||||
Liechtenstein | 139,507 | — | — | |||||||||
Netherlands | — | 2,450,478 | — | |||||||||
New Zealand | — | 336,319 | — | |||||||||
Norway | — | 658,959 | — | |||||||||
Spain | — | 1,619,253 | — | |||||||||
Sweden | — | 1,411,451 | — | |||||||||
Switzerland | — | 5,238,390 | — | |||||||||
Taiwan | 411,889 | — | — | |||||||||
United Kingdom | 237,033 | 10,034,961 | — | |||||||||
United States | 3,012,113 | — | — | |||||||||
Preferred Stock | ||||||||||||
United Kingdom | — | 3,264 | — | |||||||||
Affiliated Money Market Mutual Fund | 880,849 | — | — | |||||||||
Other Financial Instruments* | ||||||||||||
Forward Foreign Currency Exchange Contracts | — | (132,908 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 6,075,279 | $ | 52,593,331 | $ | — | ||||||
|
|
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swaps contracts, which are recorded at the unrealized appreciation/depreciation of the instrument. |
See Notes to Financial Statements.
18 |
Fair value of Level 2 investments at October 31, 2013 was $93,707,407, which was a result of valuing investments using third party vendor modeling tools. An amount of $869,545 was transferred from Level 2 into Level 1 at April 30, 2014 as a result of using quoted prices in active markets for such foreign securities.
The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2014 were as follows:
Banks | 10.8 | % | ||
Pharmaceuticals | 8.2 | |||
Insurance | 7.0 | |||
Oil, Gas & Consumable Fuels | 6.8 | |||
Capital Markets | 3.4 | |||
Textiles, Apparel & Luxury Goods | 3.3 | |||
Auto Components | 2.9 | |||
Automobiles | 2.8 | |||
Hotels, Restaurants & Leisure | 2.8 | |||
Wireless Telecommunication Services | 2.7 | |||
Diversified Financial Services | 2.6 | |||
Food & Staples Retailing | 2.6 | |||
Machinery | 2.6 | |||
Media | 2.5 | |||
Diversified Telecommunication Services | 2.3 | |||
Food Products | 2.3 | |||
IT Services | 2.2 | |||
Metals & Mining | 2.2 | |||
Specialty Retail | 2.2 | |||
Chemicals | 2.1 | |||
Aerospace & Defense | 2.0 | |||
Affiliated Money Market Mutual Fund | 1.5 | |||
Beverages | 1.4 | |||
Health Care Providers & Services | 1.4 | |||
Real Estate Management & Development | 1.3 | |||
Road & Rail | 1.3 | |||
Semiconductors & Semiconductor Equipment | 1.3 | |||
Trading Companies & Distributors | 1.3 | |||
Commercial Services & Supplies | 1.1 | |||
Energy Equipment & Services | 1.1 | |||
Household Products | 1.0 | % | ||
Internet Software & Services | 1.0 | |||
Construction & Engineering | 0.9 | |||
Electric Utilities | 0.9 | |||
Multi-Utilities | 0.9 | |||
Airlines | 0.6 | |||
Professional Services | 0.6 | |||
Leisure Products | 0.5 | |||
Software | 0.5 | |||
Tobacco | 0.5 | |||
Construction Materials | 0.4 | |||
Containers & Packaging | 0.4 | |||
Electrical Equipment | 0.4 | |||
Gas Utilities | 0.3 | |||
Industrial Conglomerates | 0.3 | |||
Personal Products | 0.3 | |||
Air Freight & Logistics | 0.2 | |||
Electronic Equipment, Instruments & Components | 0.2 | |||
Health Care Technology | 0.2 | |||
Household Durables | 0.2 | |||
Internet & Catalog Retail | 0.2 | |||
Life Sciences Tools & Services | 0.2 | |||
Paper & Forest Products | 0.2 | |||
Distributors | 0.1 | |||
|
| |||
99.0 | ||||
Other assets in excess of liabilities | 1.0 | |||
|
| |||
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 | 19 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Fair values of derivative instruments as of April 30, 2014 as presented in the Statement of Assets and Liabilities:
Derivatives not accounted for | Asset Derivatives | Liability Derivatives | ||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | |||||||||
Foreign exchange contracts | — | $ | — | Unrealized depreciation on forward foreign currency exchange contracts | $ | 132,908 | ||||||
|
|
|
|
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2014 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||
Derivatives not accounted for as hedging | Rights(1) | Forward Currency Contracts(2) | Total | |||||||||
Foreign exchange contracts | — | $ | 126,354 | $ | 126,354 | |||||||
Equity contracts | $ | (48,128 | ) | — | (48,128 | ) | ||||||
|
|
|
|
|
| |||||||
Total | $ | (48,128 | ) | $ | 126,354 | $ | 78,226 | |||||
|
|
|
|
|
|
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging instruments, carried at fair value | Forward Currency Contracts(3) | |||
Foreign exchange contracts | $ | (79,581 | ) | |
|
|
(1) | Included in net realized gain (loss) on investment transactions in the Statement of Operations. |
(2) | Included in net realized gain (loss) on foreign currency transactions in the Statement of Operations. |
(3) | Included in net change in unrealized appreciation (depreciation) on foreign currencies in the Statement of Operations. |
For the six months ended April 30, 2014, the Series’ average value at settlement date payable for forward foreign currency exchange purchase contracts was $2,353,773 and the Series’ average value at settlement date receivable for forward foreign currency exchange sale contracts was $8,300,985.
See Notes to Financial Statements.
20 |
Offsetting of over-the-counter (OTC) derivative assets and liabilities:
The Series invested in OTC derivatives during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for OTC derivatives, where the legal right to set-off exists, is presented in the summary below.
Counterparty | Gross Amounts of Recognized Assets(1) | Gross Amounts Available for Offset | Collateral Received(3) | Net Amount | ||||||||||
State Street Bank | $ — | $ | — | $ | — | $ | — |
Counterparty | Gross Amounts of Recognized Liabilities(2) | Gross Amounts Available for Offset | Collateral Pledged(3) | Net Amount | ||||||||||||
State Street Bank | $ | (132,908 | ) | $ | — | $ | — | $ | (132,908 | ) |
(1) | Includes unrealized appreciation on swaps and forwards, premiums paid on swap agreements and market value of purchased options. |
(2) | Includes unrealized depreciation on swaps and forwards, premiums received on swap agreements and market value of written options. |
(3) | Amounts shown reflect actual collateral received or pledged by the Series. Such amounts are applied up to 100% of the Series’ OTC derivative exposure by counterparty. |
See Notes to Financial Statements.
Prudential International Value Fund | 21 |
Statement of Assets & Liabilities
as of April 30, 2014 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated Investments (cost $45,608,019) | $ | 57,920,669 | ||
Affiliated Investments (cost $880,849) | 880,849 | |||
Foreign currency, at value (cost $389,561) | 394,272 | |||
Receivable for investments sold | 453,399 | |||
Dividends and interest receivable | 305,490 | |||
Tax reclaim receivable | 272,386 | |||
Receivable for Fund shares sold | 11,251 | |||
Prepaid expenses | 361 | |||
|
| |||
Total assets | 60,238,677 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 499,549 | |||
Unrealized depreciation on forward foreign currency exchange contracts | 132,908 | |||
Accrued expenses | 105,838 | |||
Management fee payable | 48,352 | |||
Payable for Fund shares reacquired | 32,157 | |||
Distribution fee payable | 12,626 | |||
Affiliated transfer agent fee payable | 11,147 | |||
|
| |||
Total liabilities | 842,577 | |||
|
| |||
Net Assets | $ | 59,396,100 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par value | $ | 25,501 | ||
Paid-in capital in excess of par | 56,878,042 | |||
|
| |||
56,903,543 | ||||
Undistributed net investment income | 94,107 | |||
Accumulated net realized loss on investment and foreign currency transactions | (9,812,139 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 12,210,589 | |||
|
| |||
Net assets, April 30, 2014 | $ | 59,396,100 | ||
|
|
See Notes to Financial Statements.
22 |
Class A | ||||
Net asset value and redemption price per share | $ | 23.37 | ||
Maximum sales charge (5.50% of offering price) | 1.36 | |||
|
| |||
Maximum offering price to public | $ | 24.73 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share | $ | 22.28 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | $ | 22.32 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | $ | 23.52 | ||
|
|
See Notes to Financial Statements.
Prudential International Value Fund | 23 |
Statement of Operations
Six Months Ended April 30, 2014 (Unaudited)
Net Investment Income | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $69,216) | $ | 987,665 | ||
Interest income | 2,225 | |||
Affiliated dividend income | 1,243 | |||
|
| |||
Total income | 991,133 | |||
|
| |||
Expenses | ||||
Management fee | 435,394 | |||
Distribution fee—Class A | 54,112 | |||
Distribution fee—Class B | 7,405 | |||
Distribution fee—Class C | 24,248 | |||
Custodian’s fees and expenses | 94,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $42,000) | 79,000 | |||
Registration fees | 26,000 | |||
Reports to shareholders | 17,000 | |||
Audit fee | 15,000 | |||
Legal fees and expenses | 10,000 | |||
Directors’ fees | 7,000 | |||
Insurance fees | 1,000 | |||
Interest expense | 58 | |||
Miscellaneous | 17,654 | |||
|
| |||
Total expenses | 787,871 | |||
Less: Distribution fee waiver—Class A | (9,019 | ) | ||
|
| |||
Net expenses | 778,852 | |||
|
| |||
Net investment income | 212,281 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currencies | ||||
Net realized gain on: | ||||
Investment transactions | 12,050,285 | |||
Foreign currency transactions | 127,629 | |||
|
| |||
12,177,914 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (9,963,562 | ) | ||
Foreign currencies | (65,503 | ) | ||
|
| |||
(10,029,065 | ) | |||
|
| |||
Net gain on investments and foreign currencies | 2,148,849 | |||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 2,361,130 | ||
|
|
See Notes to Financial Statements.
24 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended April 30, 2014 | Year Ended October 31, 2013 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 212,281 | $ | 1,233,561 | ||||
Net realized gain on investment and foreign currency transactions | 12,177,914 | 4,554,824 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (10,029,065 | ) | 13,824,095 | |||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 2,361,130 | 19,612,480 | ||||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (379,684 | ) | (674,229 | ) | ||||
Class B | (7,698 | ) | (19,472 | ) | ||||
Class C | (25,260 | ) | (65,031 | ) | ||||
Class Z | (759,858 | ) | (1,269,401 | ) | ||||
|
|
|
| |||||
(1,172,500 | ) | (2,028,133 | ) | |||||
|
|
|
| |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 4,961,380 | 11,093,355 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 1,154,922 | 2,004,448 | ||||||
Cost of shares reacquired | (53,736,476 | ) | (21,607,276 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from Series share transactions | (47,620,174 | ) | (8,509,473 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | (46,431,544 | ) | 9,074,874 | |||||
Net Assets: | ||||||||
Beginning of period | 105,827,644 | 96,752,770 | ||||||
|
|
|
| |||||
End of period(a) | $ | 59,396,100 | $ | 105,827,644 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 94,107 | $ | 1,054,326 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential International Value Fund | 25 |
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 six series: Prudential International Value Fund (the “Series”), Prudential Jennison Global Infrastructure Fund, 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 long-term growth of capital.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of the financial statements.
Security Valuation: The Series holds 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 (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.
Common stocks, exchange-traded funds, and derivative instruments that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange. Securities traded via NASDAQ are valued at the
26 |
NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy except for exchange-traded and cleared swaps which are classified as Level 2 in the fair value hierarchy, as the prices marked at the official settle are not public.
In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and asked prices, or at the last bid price in the absence of an asked price. These securities are classified as Level 2 in the fair value hierarchy, as the inputs are observable and considered to be significant to the valuation.
Common stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Securities not valued using such model prices are valued in accordance with exchange-traded common stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after evaluating observable inputs including, but not limited to yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations, and reported trades. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the
Prudential International Value Fund | 27 |
Notes to Financial Statements
(Unaudited) continued
event that significant unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
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
28 |
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 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.
Warrants and Rights: The Series may hold warrants and rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Warrants and rights entitle the holder to buy a proportionate amount of common stock at a specific price and time through the expiration dates. Such warrants and rights are held as long positions by the Series until exercised, sold or expired. Warrants and rights are valued at fair value in accordance with the Board of Directors’ approved fair valuation procedures.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market
Prudential International Value Fund | 29 |
Notes to Financial Statements
(Unaudited) continued
or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. 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. The right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there were no instances where the right of set-off existed and management has not elected to offset.
The Series is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern over-the-counter derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the Series is held in a segregated account by the Series’ custodian and with respect to those amounts which can be sold or re-pledged, is presented in the Portfolio of Investments. Collateral pledged by the Series is segregated by the Series’ custodian and identified in the Portfolio of Investments. Collateral can be in the form of cash or debt securities
30 |
issued by the U.S. Government or related agencies or other securities as agreed to by the Series and the applicable counterparty. Collateral requirements are determined based on the Series’ net position with each counterparty. Termination events applicable to the Series may occur upon a decline in the Series’ net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the Series’ counterparties to elect early termination could impact the Series’ future derivative activity.
In addition to each instrument’s primary underlying risk exposure (e.g. interest rate, credit, equity or foreign exchange, etc.), swap agreements involve, to varying degrees, elements of credit, market and documentation risk. Such risks involve the possibility that no liquid market for these agreements will exist, the counterparty to the agreement may default on its obligation to perform or disagree on the contractual terms of the agreement, and changes in net interest rates will be unfavorable. In connection with these agreements, securities in the portfolio may be identified or received as collateral from the counterparty in accordance with the terms of the respective swap agreements to provide or receive assets of value and to serve as recourse in the event of default or bankruptcy/insolvency of either party. Such 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, 2014, the Series has not met conditions under such agreements which give the counterparty the right to call for an early termination.
Forward currency contracts, written options, short sales, swaps and financial futures contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Such risks may be mitigated by engaging in master netting arrangements.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized and unrealized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on
Prudential International Value Fund | 31 |
Notes to Financial Statements
(Unaudited) continued
an accrual basis. Expenses are recorded on the accrual basis, which may require the use of certain estimates by management, that may differ from actual.
Net investment income or loss, (other than distribution fees which are charged directly to the respective class) and 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 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 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, Inc. (“Thornburg”) for the Series.
32 |
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 was 1.00% for the six months ended April 30, 2014.
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 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, 2014, PIMS contractually agreed to limit such fee to .25% of the average daily net assets of the Class A shares.
PIMS has advised the Series that it received $14,135 in front-end sales charges resulting from sales of Class A shares, during the six months ended April 30, 2014. 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, 2014, it received $842 and $341 in contingent deferred sales charges imposed upon certain redemptions by Class B and Class C shareholders, respectively.
PI and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Prudential International Value Fund | 33 |
Notes to Financial Statements
(Unaudited) continued
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, 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, 2014 were $10,797,316 and $58,321,148, 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, 2014 were as follows:
Tax Basis | $ | 47,151,571 | ||
|
| |||
Appreciation | 14,720,683 | |||
Depreciation | (3,070,736 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 11,649,947 | ||
|
|
The book basis may differ from tax basis due to certain tax related adjustments.
Under the Regulated Investment Company Modernization Act of 2010 (“the Act”), the Series is permitted to carryforward capital losses incurred in the fiscal year ended October 31, 2012 and October 31, 2013 (“post-enactment losses”) for an unlimited period. 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 taxable years ending before October 31, 2012 (“pre-enactment losses”) may have an increased likelihood to expire unused. The Series utilized approximately $4,553,000 of its capital loss carryforward to offset net
34 |
taxable gains realized in the fiscal year ended October 31, 2013. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses. As of October 31, 2013, the pre and post-enactment losses were approximately:
Post-Enactment Losses: | $ | 0 | ||
|
| |||
Pre-Enactment Losses: | ||||
Expiring 2017 | 20,514,000 | |||
Expiring 2018 | 978,000 | |||
|
| |||
$ | 21,492,000 | |||
|
|
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 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. 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.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.
There are 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.
Prudential International Value 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, 2014: | ||||||||
Shares sold | 51,992 | $ | 1,184,490 | |||||
Shares issued in reinvestment of dividends and distributions | 16,103 | 364,728 | ||||||
Shares reacquired | (112,965 | ) | (2,601,755 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (44,870 | ) | (1,052,537 | ) | ||||
Shares issued upon conversion from Class B | 5,081 | 114,261 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (39,789 | ) | $ | (938,276 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 122,524 | $ | 2,555,126 | |||||
Shares issued in reinvestment of dividends and distributions | 32,904 | 653,810 | ||||||
Shares reacquired | (311,730 | ) | (6,480,038 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (156,302 | ) | (3,271,102 | ) | ||||
Shares issued upon conversion from Class B | 17,629 | 368,731 | ||||||
Shares reacquired upon conversion into Class Z | (2,840 | ) | (57,629 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (141,513 | ) | $ | (2,960,000 | ) | |||
|
|
|
| |||||
Class B | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 5,554 | $ | 121,037 | |||||
Shares issued in reinvestment of dividends and distributions | 335 | 7,255 | ||||||
Shares reacquired | (5,712 | ) | (124,297 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 177 | 3,995 | ||||||
Shares reacquired upon conversion into Class A | (5,332 | ) | (114,261 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (5,155 | ) | $ | (110,266 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 17,604 | $ | 353,419 | |||||
Shares issued in reinvestment of dividends and distributions | 966 | 18,389 | ||||||
Shares reacquired | (8,813 | ) | (172,803 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 9,757 | 199,005 | ||||||
Shares reacquired upon conversion into Class A | (18,476 | ) | (368,731 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (8,719 | ) | $ | (169,726 | ) | |||
|
|
|
|
36 |
Class C | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 13,898 | $ | 305,453 | |||||
Shares issued in reinvestment of dividends and distributions | 1,130 | 24,530 | ||||||
Shares reacquired | (16,564 | ) | (362,319 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,536 | ) | $ | (32,336 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 18,448 | $ | 377,849 | |||||
Shares issued in reinvestment of dividends and distributions | 3,380 | 64,459 | ||||||
Shares reacquired | (58,936 | ) | (1,181,776 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (37,108 | ) | $ | (739,468 | ) | |||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 145,298 | $ | 3,350,400 | |||||
Shares issued in reinvestment of dividends and distributions | 33,293 | 758,409 | ||||||
Shares reacquired | (2,169,829 | ) | (50,648,105 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,991,238 | ) | $ | (46,539,296 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 371,363 | $ | 7,806,961 | |||||
Shares issued in reinvestment of dividends and distributions | 63,485 | 1,267,790 | ||||||
Shares reacquired | (656,863 | ) | �� | (13,772,659 | ) | |||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (222,015 | ) | (4,697,908 | ) | ||||
Shares reacquired upon conversion into Class A | 2,824 | 57,629 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (219,191 | ) | $ | (4,640,279 | ) | |||
|
|
|
|
Prudential International Value Fund | 37 |
Notes to Financial Statements
(Unaudited) continued
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 November 5, 2013 through November 4, 2014. The Funds pay an annualized commitment fee of .08% of the unused portion of the SCA. Prior to November 5, 2013, the Funds had another SCA with substantially similar terms. 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, 2014. The average daily balance for the 7 days the Series had loans outstanding during the period was $213,000, borrowed at a weighted average interest rate of 1.41%. At April 30, 2014, the Series did not have an outstanding loan amount.
38 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $23.04 | $19.36 | $18.80 | $20.29 | $18.45 | $15.28 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .12 | .24 | .29 | .32 | .22 | .20 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .45 | 3.83 | .57 | (1.64 | ) | 1.71 | 3.59 | |||||||||||||||||||
Total from investment operations | .57 | 4.07 | .86 | (1.32 | ) | 1.93 | 3.79 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.24 | ) | (.39 | ) | (.30 | ) | (.17 | ) | (.12 | ) | (.62 | ) | ||||||||||||||
Capital Contributions(d) | - | - | - | - | .03 | - | ||||||||||||||||||||
Net asset value, end of period | $23.37 | $23.04 | $19.36 | $18.80 | $20.29 | $18.45 | ||||||||||||||||||||
Total Return(a): | 2.50% | 21.37% | 4.71% | (6.56)% | 10.68% | 26.03% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $36,517 | $36,920 | $33,759 | $38,858 | $45,598 | $45,945 | ||||||||||||||||||||
Average net assets (000) | $36,373 | $35,050 | $34,669 | $44,169 | $44,626 | $39,582 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.91% | (e) | 1.79% | 1.79% | 1.78% | 1.66% | 1.65% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.96% | (e) | 1.84% | 1.84% | 1.83% | 1.71% | 1.70% | |||||||||||||||||||
Net investment income | 1.02% | (e) | 1.14% | 1.59% | 1.56% | 1.17% | 1.30% | |||||||||||||||||||
Portfolio turnover rate | 13% | (f) | 21% | 16% | 25% | 40% | 40% |
(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) Calculated based on the average shares outstanding during the period.
(c) Does not include expenses of the underlying portfolio in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal year ended October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of the settlement.
(e) Annualized.
(f) Not Annualized.
See Notes to Financial Statements.
Prudential International Value Fund | 39 |
Financial Highlights
(Unaudited) continued
Class B Shares | ||||||||||||||||||||||||||
Six Months | Year Ended October 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $21.93 | $18.46 | $17.93 | $19.37 | $17.64 | $14.58 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .03 | .08 | .15 | .16 | .08 | .08 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .43 | 3.65 | .54 | (1.56 | ) | 1.63 | 3.45 | |||||||||||||||||||
Total from investment operations | .46 | 3.73 | .69 | (1.40 | ) | 1.71 | 3.53 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.11 | ) | (.26 | ) | (.16 | ) | (.04 | ) | (.01 | ) | (.47 | ) | ||||||||||||||
Capital Contributions(d) | - | - | - | - | .03 | - | ||||||||||||||||||||
Net asset value, end of period | $22.28 | $21.93 | $18.46 | $17.93 | $19.37 | $17.64 | ||||||||||||||||||||
Total Return(a): | 2.13% | 20.43% | 3.91% | (7.26)% | 9.86% | 25.11% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $1,450 | $1,540 | $1,457 | $1,975 | $3,093 | $3,839 | ||||||||||||||||||||
Average net assets (000) | $1,493 | $1,468 | $1,655 | $2,651 | $3,314 | $3,985 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.66% | (e) | 2.54% | 2.54% | 2.52% | 2.41% | 2.40% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.66% | (e) | 2.54% | 2.54% | 2.52% | 2.41% | 2.40% | |||||||||||||||||||
Net investment income | .25% | (e) | .40% | .83% | .81% | .43% | .58% | |||||||||||||||||||
Portfolio turnover rate | 13% | (f) | 21% | 16% | 25% | 40% | 40% |
(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) Calculated based on the average shares outstanding during the period.
(c) Does not include expenses of the underlying portfolio in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal year ended October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of the settlement.
(e) Annualized.
(f) Not Annualized.
See Notes to Financial Statements.
40 |
Class C Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $21.97 | $18.49 | $17.96 | $19.40 | $17.66 | $14.60 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .03 | .08 | .15 | .16 | .07 | .08 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .43 | 3.66 | .54 | (1.56 | ) | 1.65 | 3.45 | |||||||||||||||||||
Total from investment operations | .46 | 3.74 | .69 | (1.40 | ) | 1.72 | 3.53 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.11 | ) | (.26 | ) | (.16 | ) | (.04 | ) | (.01 | ) | (.47 | ) | ||||||||||||||
Capital Contributions(d) | - | - | - | - | .03 | - | ||||||||||||||||||||
Net asset value, end of period | $22.32 | $21.97 | $18.49 | $17.96 | $19.40 | $17.66 | ||||||||||||||||||||
Total Return(a): | 2.13% | 20.45% | 3.90% | (7.25)% | 9.91% | 25.08% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $4,913 | $4,870 | $4,784 | $5,947 | $6,828 | $7,507 | ||||||||||||||||||||
Average net assets (000) | $4,890 | $4,802 | $5,132 | $6,690 | $6,760 | $6,807 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.66% | (e) | 2.54% | 2.54% | 2.53% | 2.41% | 2.40% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 2.66% | (e) | 2.54% | 2.54% | 2.53% | 2.41% | 2.40% | |||||||||||||||||||
Net investment income | .30% | (e) | .38% | .83% | .81% | .42% | .58% | |||||||||||||||||||
Portfolio turnover rate | 13% | (f) | 21% | 16% | 25% | 40% | 40% |
(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) Calculated based on the average shares outstanding during the period.
(c) Does not include expenses of the underlying portfolio in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal year ended October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of the settlement.
(e) Annualized.
(f) Not Annualized.
See Notes to Financial Statements.
Prudential International Value Fund | 41 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | |||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $23.20 | $19.48 | $18.93 | $20.42 | $18.55 | $15.37 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .01 | .29 | .34 | .24 | .26 | .24 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investments | .59 | 3.87 | .56 | (1.51 | ) | 1.74 | 3.62 | |||||||||||||||||||
Total from investment operations | .60 | 4.16 | .90 | (1.27 | ) | 2.00 | 3.86 | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||
Dividends from net investment income | (.28 | ) | (.44 | ) | (.35 | ) | (.22 | ) | (.16 | ) | (.68 | ) | ||||||||||||||
Capital Contributions(d) | - | - | - | - | .03 | - | ||||||||||||||||||||
Net asset value, end of period | $23.52 | $23.20 | $19.48 | $18.93 | $20.42 | $18.55 | ||||||||||||||||||||
Total Return(a): | 2.64% | 21.73% | 4.92% | (6.30)% | 11.01% | 26.41% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $16,517 | $62,498 | $56,753 | $52,086 | $159,020 | $136,238 | ||||||||||||||||||||
Average net assets (000) | $45,044 | $58,925 | $53,465 | $79,550 | $139,023 | $115,310 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.56% | (e) | 1.54% | 1.54% | 1.47% | 1.41% | 1.40% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.56% | (e) | 1.54% | 1.54% | 1.47% | 1.41% | 1.40% | |||||||||||||||||||
Net investment income | .08% | (e) | 1.37% | 1.86% | 1.16% | 1.41% | 1.58% | |||||||||||||||||||
Portfolio turnover rate | 13% | (f) | 21% | 16% | 25% | 40% | 40% |
(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) Calculated based on the average shares outstanding during the period.
(c) Does not include expenses of the underlying portfolio in which the Series invests.
(d) The Series received payments related to a former affiliate’s settlement of regulatory proceedings involving allegations of improper trading in Series shares during the fiscal year ended October 31, 2010. The Series was not involved in the proceedings or in the calculation of the amount of the settlement.
(e) | Annualized. |
(f) | Not Annualized. |
See Notes to Financial Statements.
42 |
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 Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer and Chief Compliance Officer • Deborah A. Docs, Secretary • 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 • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, 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 | ||
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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 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 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
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 0262875-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL EMERGING MARKETS DEBT LOCAL CURRENCY FUND
SEMIANNUAL REPORT · APRIL 30, 2014
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, 2014, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS). Prudential Fixed Income is a unit of Prudential Investment Management, Inc. (PIM), a registered investment adviser. PIMS and PIM are Prudential Financial companies. © 2014 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, Prudential, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
June 16, 2014
Dear Shareholder:
We hope you find the semiannual report for the Prudential Emerging Markets Debt Local Currency Fund informative and useful. The report covers performance for the six-month period that ended April 30, 2014.
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 of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks. We offer the expertise of Prudential Financial’s affiliated asset managers* that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential Emerging Markets Debt Local Currency Fund
*Most of Prudential Investments’ equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors. Prudential Investments’ fixed income and money market funds are advised by Prudential Investment Management, Inc. (PIM) 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.
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.
Cumulative Total Returns (Without Sales Charges) as of 4/30/14 | ||||||||||
Six Months | One Year | Since Inception | ||||||||
Class A | –1.55 | % | –11.32 | % | 0.14% (3/30/11) | |||||
Class C | –1.81 | –11.93 | –1.22 (3/30/11) | |||||||
Class Q | –1.16 | –10.91 | 1.44 (3/30/11) | |||||||
Class Z | –1.20 | –10.93 | 1.40 (3/30/11) | |||||||
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index | –1.48 | –9.42 | 4.35 | |||||||
Lipper Emerging Markets Local Currency Debt Funds Average | –1.58 | –9.64 | 2.75 | |||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/14 | ||||||||||
One Year | Since Inception | |||||||||
Class A | –13.29 | % | –1.85% (3/30/11) | |||||||
Class C | –10.70 | –0.77 (3/30/11) | ||||||||
Class Q | –8.81 | 0.09 (3/30/11) | ||||||||
Class Z | –8.93 | 0.04 (3/30/11) | ||||||||
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index | –7.14 | 1.13 | ||||||||
Lipper Emerging Markets Local Currency Debt Funds Average | –7.76 | 0.55 |
Source: Prudential Investments LLC and Lipper Inc.
Inception date: 3/30/11
2 | Visit our website at www.prudentialfunds.com |
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class C | Class Q | Class Z | |||||
Maximum initial sales charge | 4.50% of the public offering price | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or sale proceeds) | 1% on sales of $1 million or more made within 12 months of purchase | 1% on sales made within 12 months of purchase | None | None | ||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | .30% (.25% currently) | 1% | None | None |
Benchmark Definitions
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index
The JP Morgan Government Bond Index-Emerging Markets 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 Local Currency Debt Funds Average
Funds in the Lipper Emerging Markets Local Currency Debt Funds Average seek either current income or total return by investing at least 65% of total assets in debt issues denominated in the currency of their market of issuance. “Emerging market” is defined by a country’s GNP per capita or other economic measures.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Distributions and Yields as of 4/30/14 |
| |||||||
Total Distributions Paid for 12 Months | 30-Day SEC Yield | |||||||
Class A | $ | 0.27 | 6.28 | % | ||||
Class C | 0.23 | 5.78 | ||||||
Class Q | 0.28 | 6.71 | ||||||
Class Z | 0.28 | 6.77 |
Prudential Emerging Markets Debt Local Currency Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Issues expressed as a percentage of net assets as of 4/30/14 |
| |||
South Africa Government Bond, Sr. Unsec'd. Notes, Ser. R209, 6.250%, 03/31/36 | 5.4 | % | ||
Brazil Notas do Tesouro Nacionalie, Notes, Ser. NTNF, 10.000%, 01/01/23 | 4.3 | |||
Poland Government Bond, Bonds, Ser. 1023, 4.000%, 10/25/23 | 2.8 | |||
Mexican Bonos, Bonds, Ser. M, 8.000%, 12/07/23 | 2.7 | |||
Brazil Notas do Tesouro Nacionalie, Sr. Notes, Ser. NTNF, 10.000%,01/01/17 | 2.7 |
Issues reflect only long-term investments and are subject to change.
Credit Quality* expressed as a percentage of net assets as of 4/30/14 |
| |||
A | 13.5 | % | ||
Baa | 51.7 | |||
Ba | 7.0 | |||
B | 2.8 | |||
Not Rated | 22.2 | |||
Total Investments | 97.2 | |||
Other assets in excess of liabilities | 2.8 | |||
Net Assets | 100.0 | % | ||
|
|
*Source: Moody’s rating, defaulting to S&P when not rated by Moody’s.
**Approximately 1.0% of Not Rated is invested in affiliated money market mutual fund.
Credit Quality is 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, 2013, at the beginning of the period, and held through the six-month period ended April 30, 2014. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of
Prudential Emerging Markets Debt Local Currency Fund | 5 |
Fees and Expenses (continued)
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.
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, 2013 | Ending Account April 30, 2014 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 984.50 | 1.30 | % | $ | 6.40 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.35 | 1.30 | % | $ | 6.51 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 981.90 | 2.05 | % | $ | 10.07 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,014.63 | 2.05 | % | $ | 10.24 | ||||||||||
Class Q | Actual | $ | 1,000.00 | $ | 988.40 | 1.05 | % | $ | 5.18 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.89 | 1.05 | % | $ | 5.26 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 988.00 | 1.05 | % | $ | 5.18 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.59 | 1.05 | % | $ | 5.26 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2014, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2014 (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 |
The Fund’s annual expense ratios for the period ended April 30, 2014, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||
A | 2.09% | 1.30% | ||
C | 2.77 | 2.05 | ||
Q | 1.68 | 1.05 | ||
Z | 1.77 | 1.05 |
Net operating expenses shown above reflect any fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
Prudential Emerging Markets Debt Local Currency Fund | 7 |
Portfolio of Investments
as of April 30, 2014 (Unaudited)
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
LONG-TERM INVESTMENTS 96.2% | ||||||||||||||
FOREIGN BONDS | ||||||||||||||
Argentina 1.1% | ||||||||||||||
Argentina Boden Bonds, Bond | 7.000% | 10/03/15 | 410 | $ | 397,598 | |||||||||
Brazil 16.0% | ||||||||||||||
Banco BMG SA, Sr. Unsec’d. Notes, RegS | 9.150 | 01/15/16 | 80 | 84,300 | ||||||||||
Banco Santander Brasil SA, Sr. Unsec’d. Notes, MTN, 144A | 8.000 | 03/18/16 | BRL | 2,250 | 927,851 | |||||||||
Brazil Notas do Tesouro Nacionalie, | ||||||||||||||
Notes, Ser. NTNF | 10.000 | 01/01/18 | BRL | 1,262 | 528,956 | |||||||||
Notes, Ser. NTNF | 10.000 | 01/01/19 | BRL | 650 | 268,940 | |||||||||
Notes, Ser. NTNF | 10.000 | 01/01/21 | BRL | 1,983 | 797,384 | |||||||||
Notes, Ser. NTNF | 10.000 | 01/01/23 | BRL | 4,177 | 1,640,170 | |||||||||
Notes, Ser. NTNF | 10.000 | 01/01/25 | BRL | 1,220 | 466,574 | |||||||||
Brazil Notas do Tesouro Nacionalie, Sr. Notes, Ser. NTNF | 10.000 | 01/01/17 | BRL | 2,345 | 1,000,458 | |||||||||
Brazilian Government International Bond, Sr. Unsec’d. Notes | 8.500 | 01/05/24 | BRL | 54 | 23,370 | |||||||||
Itau Unibanco Holding SA, Sr. Unsec’d. Notes, RegS | 10.500 | 11/23/15 | BRL | 300 | 131,853 | |||||||||
JBS Finance II Ltd., Gtd. Notes, RegS | 8.250 | 01/29/18 | 150 | 160,500 | ||||||||||
|
| |||||||||||||
6,030,356 | ||||||||||||||
|
| |||||||||||||
Colombia 4.7% | ||||||||||||||
Colombia Government International Bond, Sr. Unsec’d. Notes | 9.850 | 06/28/27 | COP | 180,000 | 121,324 | |||||||||
Colombian TES, | ||||||||||||||
Bonds, Ser. B | 7.250 | 06/15/16 | COP | 300,000 | 161,024 | |||||||||
Bonds, Ser. B | 8.000 | 10/28/15 | COP | 466,000 | 251,026 | |||||||||
Bonds, Ser. B | 11.000 | 07/24/20 | COP | 1,102,800 | 708,629 | |||||||||
Bonds, Ser. B | 11.250 | 10/24/18 | COP | 590,200 | 368,461 | |||||||||
Empresas Publicas de Medellin ESP, Sr. Unsec’d. Notes, RegS | 8.375 | 02/01/21 | COP | 300,000 | 164,750 | |||||||||
|
| |||||||||||||
1,775,214 | ||||||||||||||
|
| |||||||||||||
Dominican Republic 0.4% | ||||||||||||||
Dominican Republic International Bond, Sr. Unsec’d. Notes, RegS | 9.040 | 01/23/18 | 122 | 134,196 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 9 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
FOREIGN BONDS (Continued) | ||||||||||||||
Ghana | ||||||||||||||
Ghana Government Bond, Bonds, Ser. 3Y | 16.900% | 03/07/16 | GHS | 10 | $ | 3,147 | ||||||||
Hungary 5.2% | ||||||||||||||
Hungary Government Bond, | ||||||||||||||
Bonds, Ser. 16/C | 5.500 | 02/12/16 | HUF | 33,080 | 155,612 | |||||||||
Bonds, Ser. 17/A | 6.750 | 11/24/17 | HUF | 148,570 | 736,517 | |||||||||
Bonds, Ser. 17/B | 6.750 | 02/24/17 | HUF | 50,270 | 245,728 | |||||||||
Hungary Government International Bond, Sr. Unsec’d. Notes | 4.000 | 03/25/19 | 184 | 185,840 | ||||||||||
Magyar Export-Import Bank Zrt, Gov’t. Gtd. Notes, RegS | 5.500 | 02/12/18 | 400 | 424,712 | ||||||||||
MFB Magyar Fejlesztesi Bank Zrt, Gov’t. Gtd. Notes, 144A | 6.250 | 10/21/20 | 200 | 215,000 | ||||||||||
|
| |||||||||||||
1,963,409 | ||||||||||||||
|
| |||||||||||||
Indonesia 10.8% | ||||||||||||||
Berau Capital Resources Pte Ltd., Sr. Sec’d. Notes, RegS | 12.500 | 07/08/15 | 145 | 150,437 | ||||||||||
Indonesia Government International Bond, Sr. Unsec’d. Notes, RegS | 11.625 | 03/04/19 | 140 | 188,650 | ||||||||||
Indonesia Treasury Bond, | ||||||||||||||
Sr. Unsec’d. Notes, Ser. FR53 | 8.250 | 07/15/21 | IDR | 6,500,000 | 570,644 | |||||||||
Sr. Unsec’d. Notes, Ser. FR56 | 8.375 | 09/15/26 | IDR | 1,000,000 | 86,494 | |||||||||
Sr. Unsec’d. Notes, Ser. FR58 | 8.250 | 06/15/32 | IDR | 1,700,000 | 142,775 | |||||||||
Sr. Unsec’d. Notes, Ser. FR59 | 7.000 | 05/15/27 | IDR | 3,800,000 | 292,523 | |||||||||
Sr. Unsec’d. Notes, Ser. FR61 | 7.000 | 05/15/22 | IDR | 2,000,000 | 162,609 | |||||||||
Sr. Unsec’d. Notes, Ser. FR63 | 5.625 | 05/15/23 | IDR | 3,100,000 | 226,925 | |||||||||
Sr. Unsec’d. Notes, Ser. FR65 | 6.625 | 05/15/33 | IDR | 7,500,000 | 527,073 | |||||||||
Sr. Unsec’d. Notes, Ser. FR67 | 8.750 | 02/15/44 | IDR | 2,700,000 | 231,782 | |||||||||
Sr. Unsec’d. Notes, Ser. FR69 | 7.875 | 04/15/19 | IDR | 5,900,000 | 515,417 | |||||||||
Sr. Unsec’d. Notes, Ser. FR69 | 8.375 | 03/15/24 | IDR | 1,100,000 | 97,189 | |||||||||
Sr. Unsec’d. Notes, Ser. FR69 | 9.000 | 03/15/29 | IDR | 4,400,000 | 396,748 | |||||||||
Majapahit Holding BV, Gtd. Notes, RegS | 7.750 | 10/17/16 | 100 | 112,500 | ||||||||||
Perusahaan Penerbit SBSN Indonesia, Sr. Unsec’d. Notes, RegS | 4.000 | 11/21/18 | 375 | 384,375 | ||||||||||
|
| |||||||||||||
4,086,141 | ||||||||||||||
|
|
See Notes to Financial Statements.
10 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
FOREIGN BONDS (Continued) | ||||||||||||||
Kazakhstan 0.5% | ||||||||||||||
KazMunayGas National Co. JSC, Sr. Unsec’d. Notes, MTN, RegS | 9.125% | 07/02/18 | 150 | $ | 179,250 | |||||||||
Luxembourg 0.5% | ||||||||||||||
Millicom International Cellular SA, Sr. Unsec’d. Notes, 144A | 4.750 | 05/22/20 | 200 | 193,000 | ||||||||||
Malaysia 2.9% | ||||||||||||||
Malaysia Government Bond, | ||||||||||||||
Sr. Unsec’d. Notes, Ser. 0311 | 4.392 | 04/15/26 | MYR | 580 | 179,496 | |||||||||
Sr. Unsec’d. Notes, Ser. 0412 | 4.127 | 04/15/32 | MYR | 2,200 | 640,832 | |||||||||
Sr. Unsec’d. Notes, Ser. 0413 | 3.844 | 04/15/33 | MYR | 500 | 138,957 | |||||||||
Sr. Unsec’d. Notes, Ser. 0612 | 3.492 | 03/31/20 | MYR | 430 | 129,201 | |||||||||
|
| |||||||||||||
1,088,486 | ||||||||||||||
|
| |||||||||||||
Mexico 10.7% | ||||||||||||||
America Movil SAB de CV, Sr. Unsec’d. Notes, Ser. 12 | 6.450 | 12/05/22 | MXN | 7,500 | 537,330 | |||||||||
Cemex SAB de CV, Sr. Sec’d. Notes, RegS | 9.500 | 06/15/18 | 200 | 228,500 | ||||||||||
Mexican Bonos, | ||||||||||||||
Bonds, Ser. M | 6.500 | 06/10/21 | MXN | 2,000 | 159,469 | |||||||||
Bonds, Ser. M | 6.500 | 06/09/22 | MXN | 7,225 | 569,719 | |||||||||
Bonds, Ser. M | 7.750 | 05/29/31 | MXN | 9,356 | 770,262 | |||||||||
Bonds, Ser. M | 8.000 | 06/11/20 | MXN | 2,700 | 232,462 | |||||||||
Bonds, Ser. M | 8.000 | 12/07/23 | MXN | 11,710 | 1,012,251 | |||||||||
Bonds, Ser. M 10 | 7.750 | 12/14/17 | MXN | 2,170 | 182,189 | |||||||||
Petroleos Mexicanos, Gtd. Notes, 144A | 7.650 | 11/24/21 | MXN | 4,120 | 328,628 | |||||||||
|
| |||||||||||||
4,020,810 | ||||||||||||||
|
| |||||||||||||
Nigeria 1.7% | ||||||||||||||
Nigeria Government Bond, Bonds, | ||||||||||||||
Ser. 5YR | 15.100 | 04/27/17 | NGN | 33,495 | 218,817 | |||||||||
Ser. 10YR | 7.000 | 10/23/19 | NGN | 78,721 | 376,481 | |||||||||
Ser. 20YR | 10.000 | 07/23/30 | NGN | 10,680 | 51,522 | |||||||||
|
| |||||||||||||
646,820 | ||||||||||||||
|
| |||||||||||||
Peru 2.4% | ||||||||||||||
Peruvian Government Bond, Sr. Unsec’d. Notes | 6.950 | 08/12/31 | PEN | 190 | 69,593 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 11 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
FOREIGN BONDS (Continued) | ||||||||||||||
Peru (cont’d.) | ||||||||||||||
Peruvian Government International Bond, | ||||||||||||||
Sr. Unsec’d. Notes, RegS | 6.950% | 08/12/31 | PEN | 620 | $ | 227,094 | ||||||||
Sr. Unsec’d. Notes, RegS | 7.840 | 08/12/20 | PEN | 845 | 335,902 | |||||||||
Sr. Unsec’d. Notes, 144A | 7.840 | 08/12/20 | PEN | 650 | 258,386 | |||||||||
|
| |||||||||||||
890,975 | ||||||||||||||
|
| |||||||||||||
Philippines 0.9% | ||||||||||||||
Philippine Government International Bond, | ||||||||||||||
Sr. Unsec’d. Notes | 4.950 | 01/15/21 | PHP | 5,000 | 116,925 | |||||||||
Sr. Unsec’d. Notes | 6.250 | 01/14/36 | PHP | 10,000 | 230,484 | |||||||||
|
| |||||||||||||
347,409 | ||||||||||||||
|
| |||||||||||||
Poland 4.3% | ||||||||||||||
Poland Government Bond, | ||||||||||||||
Bonds, Ser. 1017 | 5.250 | 10/25/17 | PLN | 520 | 183,206 | |||||||||
Bonds, Ser. 1020 | 5.250 | 10/25/20 | PLN | 1,070 | 384,580 | |||||||||
Bonds, Ser. 1023 | 4.000 | 10/25/23 | PLN | 3,235 | 1,065,921 | |||||||||
|
| |||||||||||||
1,633,707 | ||||||||||||||
|
| |||||||||||||
Romania 0.6% | ||||||||||||||
Romania Government Bond, Bonds, Ser. 5YR | 5.600 | 11/28/18 | RON | 690 | 227,741 | |||||||||
Russia 10.3% | ||||||||||||||
AHML Finance Ltd., Unsec’d. Notes, 144A | 7.750 | 02/13/18 | RUB | 12,250 | 307,160 | |||||||||
Gazprom OAO Via Gaz Capital SA, Sr. Unsec’d. Notes, RegS | 9.250 | 04/23/19 | 225 | 258,187 | ||||||||||
Russian Agricultural Bank OJSC Via RSHB Capital SA, Sr. Unsec’d. Notes, RegS | 8.625 | 02/17/17 | RUB | 13,400 | 346,049 | |||||||||
Russian Agricultural Bank OJSC Via RSHB Capital SA, Sr. Unsec’d. Notes, MTN, RegS | 8.700 | 03/17/16 | RUB | 6,000 | 157,904 | |||||||||
Russian Federal Bond - OFZ, | ||||||||||||||
Bonds, Ser. 6211 | 7.000 | 01/25/23 | RUB | 13,190 | 321,188 | |||||||||
Bonds, Ser. 6212 | 7.050 | 01/19/28 | RUB | 17,955 | 415,084 | |||||||||
Bonds, Ser. 6215 | 7.000 | 08/16/23 | RUB | 14,039 | 338,788 | |||||||||
Bonds, Ser. 6216 | 6.700 | 05/15/19 | RUB | 4,400 | 111,615 | |||||||||
Russian Foreign Bond - Eurobond, Sr. Unsec’d. Notes, RegS | 7.500 | 03/31/30 | 476 | �� | 530,824 |
See Notes to Financial Statements.
12 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
FOREIGN BONDS (Continued) | ||||||||||||||
Russia (cont’d.) | ||||||||||||||
Russian Railways via RZD Capital PLC, Sr. Unsec’d. Notes, RegS | 8.300% | 04/02/19 | RUB | 30,200 | $ | 771,425 | ||||||||
VimpelCom Holdings BV, | ||||||||||||||
Gtd. Notes, 144A | 4.234(a) | 06/29/14 | 200 | 200,251 | ||||||||||
Gtd. Notes, 144A | 9.000 | 02/13/18 | RUB | 5,000 | 131,291 | |||||||||
|
| |||||||||||||
3,889,766 | ||||||||||||||
|
| |||||||||||||
South Africa 8.8% | ||||||||||||||
Eskom Holdings SOC Ltd., Gov. Gtd., Ser. ES23, MTN | 10.000 | 01/25/23 | ZAR | 7,500 | 764,311 | |||||||||
South Africa Government Bond, | ||||||||||||||
Bonds, Ser. 2023 | 7.750 | 02/28/23 | ZAR | 470 | 43,049 | |||||||||
Bonds, Ser. R204 | 8.000 | 12/21/18 | ZAR | 950 | 91,054 | |||||||||
Sr. Unsec’d. Notes, Ser. R208 | 6.750 | 03/31/21 | ZAR | 4,390 | 387,057 | |||||||||
Sr. Unsec’d. Notes, Ser. R209 | 6.250 | 03/31/36 | ZAR | 28,884 | 2,023,102 | |||||||||
|
| |||||||||||||
3,308,573 | ||||||||||||||
|
| |||||||||||||
Spain 1.4% | ||||||||||||||
Spain Government International Bond, Sr. Unsec’d. Notes, MTN, 144A | 4.000 | 03/06/18 | 500 | 534,140 | ||||||||||
Sri Lanka 1.1% | ||||||||||||||
Bank of Ceylon, Sr. Unsec’d. Notes, RegS | 6.875 | 05/03/17 | 400 | 418,000 | ||||||||||
Thailand 3.3% | ||||||||||||||
Thailand Government Bond, | ||||||||||||||
Sr. Unsec’d. Notes | 3.580 | 12/17/27 | THB | 5,000 | 149,990 | |||||||||
Sr. Unsec’d. Notes | 3.625 | 06/16/23 | THB | 12,077 | 375,530 | |||||||||
Sr. Unsec’d. Notes | 3.650 | 12/17/21 | THB | 2,000 | 62,766 | |||||||||
Sr. Unsec’d. Notes | 3.775 | 06/25/32 | THB | 600 | 17,876 | |||||||||
Sr. Unsec’d. Notes | 3.850 | 12/12/25 | THB | 2,000 | 62,455 | |||||||||
Sr. Unsec’d. Notes | 5.670 | 03/13/28 | THB | 5,000 | 184,080 | |||||||||
Sr. Unsec’d. Notes - Inflation Linked | 1.200 | 07/14/21 | THB | 9,381 | 277,469 | |||||||||
Unsec’d. - Inflation Linked | 1.250 | 03/12/28 | THB | 4,091 | 111,437 | |||||||||
|
| |||||||||||||
1,241,603 | ||||||||||||||
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 13 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
FOREIGN BONDS (Continued) | ||||||||||||||
Turkey 8.0% | ||||||||||||||
Turkey Government Bond, | ||||||||||||||
Bonds | 7.100% | 03/08/23 | TRY | 465 | $ | 192,690 | ||||||||
Bonds | 8.300 | 06/20/18 | TRY | 750 | 346,665 | |||||||||
Bonds | 8.500 | 09/14/22 | TRY | 1,245 | 565,145 | |||||||||
Bonds | 8.800 | 09/27/23 | TRY | 730 | 336,694 | |||||||||
Bonds | 9.500 | 01/12/22 | TRY | 415 | 199,486 | |||||||||
Bonds | 10.000 | 06/17/15 | TRY | 490 | 234,030 | |||||||||
Bonds | 10.500 | 01/15/20 | TRY | 625 | 313,455 | |||||||||
Bonds, Ser. 5YR | 9.000 | 03/08/17 | TRY | 1,765 | 835,795 | |||||||||
|
| |||||||||||||
3,023,960 | ||||||||||||||
|
| |||||||||||||
Uruguay | ||||||||||||||
Uruguay Government International Bond, | 4.375 | 12/15/28 | UYU | 247 | 11,412 | |||||||||
Venezuela 0.6% | ||||||||||||||
Petroleos de Venezuela SA, Sr. Unsec’d. Notes | 4.900 | 10/28/14 | 240 | 232,560 | ||||||||||
|
| |||||||||||||
TOTAL LONG-TERM INVESTMENTS | 36,278,273 | |||||||||||||
|
| |||||||||||||
Shares | ||||||||||||||
SHORT-TERM INVESTMENTS 1.0% | ||||||||||||||
AFFILIATED MONEY MARKET MUTUAL FUND 1.0% | ||||||||||||||
Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 361,089 | 361,089 | ||||||||||||
|
| |||||||||||||
Counterparty | Notional | |||||||||||||
OPTIONS PURCHASED* | ||||||||||||||
Put Options | ||||||||||||||
Currency Option EUR vs USD, expiring 07/24/14, @ FX Rate 1.38 | | Credit Suisse First Boston Corp. | | EUR | 1,230 | 13,169 |
See Notes to Financial Statements.
14 |
Description | Counterparty | Notional Amount (000)# | Value (Note 1) | |||||||||
OPTIONS PURCHASED* (Continued) | ||||||||||||
Put Options (cont’d.) | ||||||||||||
Currency Option USD vs RUB, expiring 09/11/14, @ FX Rate 34.72 | Credit Suisse First Boston Corp. | 630 | $ | 3,063 | ||||||||
|
| |||||||||||
TOTAL OPTIONS PURCHASED | 16,232 | |||||||||||
|
| |||||||||||
TOTAL SHORT-TERM INVESTMENTS | 377,321 | |||||||||||
|
| |||||||||||
TOTAL INVESTMENTS, BEFORE OPTIONS WRITTEN 97.2% | 36,655,594 | |||||||||||
|
| |||||||||||
OPTIONS WRITTEN* | ||||||||||||
PUT OPTIONS | ||||||||||||
Currency Option EUR vs USD, expiring 07/24/14, @ FX Rate 1.34 (premiums received $5,298) | Credit Suisse First Boston Corp. | EUR | 1,230 | (4,069 | ) | |||||||
|
| |||||||||||
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN 97.2% | 36,651,525 | |||||||||||
Other assets in excess of liabilities(c) 2.8% | 1,071,404 | |||||||||||
|
| |||||||||||
NET ASSETS 100.0% | $ | 37,722,929 | ||||||||||
|
|
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.
BUBOR—Budapest Interbank Offered Rate
MTN—Medium Term Note
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.
AUD—Australian Dollar
BRL—Brazilian Real
CLP—Chilean Peso
CNH—Chinese Renminbi
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 15 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
CNY—Chinese Yuan
COP—Colombian Peso
EUR—Euro
GHS—Ghana Cedi
HUF—Hungarian Forint
IDR—Indonesian Rupiah
ILS—Israeli New Shekel
JPY—Japanese Yen
KRW—South Korean Won
MXN—Mexican Peso
MYR—Malaysian Ringgit
NGN—Nigerian Naira
PEN—Peruvian Nuevo Sol
PHP—Philippine Peso
PLN—Polish Zloty
RON—Romanian Leu
RUB—Russian Ruble
THB—Thai Baht
TRY—Turkish Lira
USD—United States Dollar
UYU—Uruguayan Peso
ZAR—South African Rand
* | Non-income producing security. |
# | Principal or notional 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, 2014. |
(b) | Prudential Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
(c) | Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end: |
Forward foreign currency exchange contracts outstanding at April 30, 2014:
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Payable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
Australian Dollar, | ||||||||||||||||||
Expiring 07/15/14 | Barclays Capital Group | AUD | 301 | $ | 281,581 | $ | 278,459 | $ | (3,122 | ) | ||||||||
Brazilian Real, | ||||||||||||||||||
Expiring 07/01/14 | Toronto Dominion | BRL | 181 | 78,849 | 79,475 | 626 | ||||||||||||
Expiring 07/01/14 | Toronto Dominion | BRL | 411 | 180,000 | 180,994 | 994 |
See Notes to Financial Statements.
16 |
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Payable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
Chilean Peso, | ||||||||||||||||||
Expiring 05/30/14 | Citigroup Global Markets | CLP | 30,599 | $ | 54,134 | $ | 54,034 | $ | (100 | ) | ||||||||
Expiring 05/30/14 | Hong Kong & Shanghai Bank | CLP | 51,848 | 93,000 | 91,556 | (1,444 | ) | |||||||||||
Expiring 05/30/14 | Hong Kong & Shanghai Bank | CLP | 51,957 | 94,184 | 91,748 | (2,436 | ) | |||||||||||
Expiring 05/30/14 | Toronto Dominion | CLP | 51,294 | 91,925 | 90,578 | (1,347 | ) | |||||||||||
Expiring 05/30/14 | Toronto Dominion | CLP | 51,581 | 92,689 | 91,086 | (1,603 | ) | |||||||||||
Expiring 05/30/14 | Toronto Dominion | CLP | 102,007 | 181,346 | 180,131 | (1,215 | ) | |||||||||||
Chinese Renminbi, | ||||||||||||||||||
Expiring 06/26/14 | Barclays Capital Group | CNH | 1,115 | 179,862 | 177,583 | (2,279 | ) | |||||||||||
Expiring 05/08/14 | Citigroup Global Markets | CNH | 94 | 15,000 | 14,969 | (31 | ) | |||||||||||
Expiring 07/14/14 | Citigroup Global Markets | CNH | 4,415 | 704,152 | 702,986 | (1,166 | ) | |||||||||||
Expiring 05/08/14 | Credit Suisse First Boston Corp. | CNH | 1,027 | 164,000 | 164,241 | 241 | ||||||||||||
Chinese Yuan, | ||||||||||||||||||
Expiring 07/10/14 | Citigroup Global Markets | CNY | 1,159 | 187,321 | 184,633 | (2,688 | ) | |||||||||||
Colombian Peso, | ||||||||||||||||||
Expiring 07/01/14 | Citigroup Global Markets | COP | 103,162 | 53,034 | 52,945 | (89 | ) | |||||||||||
Euro, | ||||||||||||||||||
Expiring 07/28/14 | Citigroup Global Markets | EUR | 272 | 376,377 | 377,857 | 1,480 | ||||||||||||
Hungarian Forint, | ||||||||||||||||||
Expiring 07/24/14 | Barclays Capital Group | HUF | 15,056 | 67,660 | 67,786 | 126 | ||||||||||||
Expiring 07/24/14 | Citigroup Global Markets | HUF | 39,704 | 175,580 | 178,759 | 3,179 | ||||||||||||
Expiring 07/24/14 | Citigroup Global Markets | HUF | 258,265 | 1,157,154 | 1,162,793 | 5,639 | ||||||||||||
Indonesian Rupiah, | ||||||||||||||||||
Expiring 07/17/14 | Barclays Capital Group | IDR | 744,319 | 63,901 | 63,470 | (431 | ) | |||||||||||
Expiring 07/17/14 | Barclays Capital Group | IDR | 2,199,120 | 187,000 | 187,523 | 523 | ||||||||||||
Expiring 07/17/14 | Toronto Dominion | IDR | 4,309,998 | 371,712 | 367,522 | (4,190 | ) |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 17 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Payable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
Malaysian Ringgit, | ||||||||||||||||||
Expiring 07/10/14 | Barclays Capital Group | MYR | 911 | $ | 280,000 | $ | 277,439 | $ | (2,561 | ) | ||||||||
Expiring 07/10/14 | BNP Paribas | MYR | 73 | 22,296 | 22,235 | (61 | ) | |||||||||||
Expiring 07/10/14 | BNP Paribas | MYR | 5,502 | 1,669,751 | 1,675,790 | 6,039 | ||||||||||||
Expiring 07/10/14 | JP Morgan Chase | MYR | 5,502 | 1,666,513 | 1,675,790 | 9,277 | ||||||||||||
Mexican Peso, | ||||||||||||||||||
Expiring 07/22/14 | Barclays Capital Group | MXN | 495 | 37,589 | 37,582 | (7 | ) | |||||||||||
Expiring 07/22/14 | JP Morgan Chase | MXN | 5,825 | 441,361 | 442,178 | 817 | ||||||||||||
Nigerian Naira, | ||||||||||||||||||
Expiring 07/10/14 | Barclays Capital Group | NGN | 29,476 | 178,104 | 180,207 | 2,103 | ||||||||||||
Expiring 07/10/14 | Barclays Capital Group | NGN | 32,025 | 191,079 | 195,788 | 4,709 | ||||||||||||
Expiring 08/20/14 | Barclays Capital Group | NGN | 77,517 | 440,440 | 467,244 | 26,804 | ||||||||||||
Peruvian Nuevo Sol, | ||||||||||||||||||
Expiring 07/11/14 | Barclays Capital Group | PEN | 53 | 18,795 | 18,730 | (65 | ) | |||||||||||
Expiring 07/11/14 | Barclays Capital Group | PEN | 157 | 56,000 | 55,551 | (449 | ) | |||||||||||
Expiring 07/11/14 | Citigroup Global Markets | PEN | 529 | 187,000 | 186,753 | (247 | ) | |||||||||||
Philippine Peso, | ||||||||||||||||||
Expiring 06/09/14 | BNP Paribas | PHP | 25,041 | 554,300 | 561,306 | 7,006 | ||||||||||||
Expiring 06/09/14 | Citigroup Global Markets | PHP | 4,049 | 91,004 | 90,773 | (231 | ) | |||||||||||
Expiring 06/09/14 | Hong Kong & Shanghai Bank | PHP | 8,730 | 196,074 | 195,695 | (379 | ) | |||||||||||
Polish Zloty, | ||||||||||||||||||
Expiring 07/24/14 | Barclays Capital Group | PLN | 69 | 22,553 | 22,541 | (12 | ) | |||||||||||
Expiring 07/24/14 | JP Morgan Chase | PLN | 3,911 | 1,281,893 | 1,284,648 | 2,755 | ||||||||||||
Expiring 07/24/14 | JP Morgan Chase | PLN | 3,911 | 1,281,892 | 1,284,648 | 2,756 | ||||||||||||
Romanian Leu, | ||||||||||||||||||
Expiring 07/24/14 | Barclays Capital Group | RON | 411 | 127,803 | 127,904 | 101 | ||||||||||||
Expiring 07/24/14 | JP Morgan Chase | RON | 1,324 | 407,134 | 411,985 | 4,851 |
See Notes to Financial Statements.
18 |
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Payable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
Russian Ruble, | ||||||||||||||||||
Expiring 07/17/14 | Barclays Capital Group | RUB | 1,502 | $ | 41,349 | $ | 41,268 | $ | (81 | ) | ||||||||
Expiring 07/17/14 | BNP Paribas | RUB | 1,607 | 44,221 | 44,161 | (60 | ) | |||||||||||
Expiring 07/17/14 | Credit Suisse First Boston Corp. | RUB | 2,736 | 75,177 | 75,178 | 1 | ||||||||||||
Expiring 07/17/14 | Goldman Sachs & Co. | RUB | 14,370 | 393,472 | 394,882 | 1,410 | ||||||||||||
South African Rand, | ||||||||||||||||||
Expiring 07/25/14 | Barclays Capital Group | ZAR | 361 | 33,830 | 33,820 | (10 | ) | |||||||||||
Expiring 07/25/14 | Citigroup Global Markets | ZAR | 2,023 | 188,000 | 189,529 | 1,529 | ||||||||||||
Expiring 07/25/14 | Citigroup Global Markets | ZAR | 2,069 | 193,598 | 193,836 | 238 | ||||||||||||
Expiring 07/25/14 | JP Morgan Chase | ZAR | 4,695 | 436,280 | 439,971 | 3,691 | ||||||||||||
Expiring 07/25/14 | UBS AG | ZAR | 995 | 93,000 | 93,271 | 271 | ||||||||||||
South Korean Won, | ||||||||||||||||||
Expiring 07/10/14 | BNP Paribas | KRW | 354,754 | 333,566 | 342,019 | 8,453 | ||||||||||||
Thai Baht, | ||||||||||||||||||
Expiring 06/18/14 | Barclays Capital Group | THB | 717 | 22,042 | 22,122 | 80 | ||||||||||||
Expiring 06/18/14 | UBS AG | THB | 38,403 | 1,177,278 | 1,184,123 | 6,845 | ||||||||||||
Turkish Lira, | ||||||||||||||||||
Expiring 07/25/14 | Barclays Capital Group | TRY | 1,502 | 689,874 | 695,529 | 5,655 | ||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 17,723,729 | $ | 17,805,624 | $ | 81,895 | |||||||||||||
|
|
|
|
|
|
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Receivable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
Australian Dollar, | ||||||||||||||||||
Expiring 07/15/14 | Citigroup Global Markets | AUD | 141 | $ | 131,444 | $ | 130,623 | $ | 821 | |||||||||
Expiring 07/15/14 | Credit Suisse First Boston Corp. | AUD | 160 | 148,489 | 147,836 | 653 |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 19 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Receivable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
Brazilian Real, | ||||||||||||||||||
Expiring 07/01/14 | Barclays Capital Group | BRL | 188 | $ | 82,695 | $ | 82,770 | $ | (75 | ) | ||||||||
Expiring 07/01/14 | Barclays Capital Group | BRL | 253 | 112,073 | 111,197 | 876 | ||||||||||||
Expiring 07/01/14 | Goldman Sachs & Co. | BRL | 1,590 | 692,330 | 699,626 | (7,296 | ) | |||||||||||
Expiring 07/01/14 | Goldman Sachs & Co. | BRL | 3,179 | 1,392,018 | 1,399,274 | (7,256 | ) | |||||||||||
Chinese Renminbi, | ||||||||||||||||||
Expiring 05/08/14 | Barclays Capital Group | CNH | 1,027 | 164,486 | 164,047 | 439 | ||||||||||||
Expiring 07/14/14 | BNP Paribas | CNH | 2,137 | 340,382 | 340,230 | 152 | ||||||||||||
Expiring 07/14/14 | BNP Paribas | CNH | 2,223 | 354,366 | 353,870 | 496 | ||||||||||||
Expiring 05/08/14 | Citigroup Global Markets | CNH | 94 | 14,995 | 14,951 | 44 | ||||||||||||
Colombian Peso, | ||||||||||||||||||
Expiring 07/01/14 | Barclays Capital Group | COP | 43,820 | 22,553 | 22,490 | 63 | ||||||||||||
Expiring 07/01/14 | Barclays Capital Group | COP | 506,674 | 259,566 | 260,036 | (470 | ) | |||||||||||
Expiring 07/01/14 | Toronto Dominion | COP | 181,786 | 93,998 | 93,297 | 701 | ||||||||||||
Expiring 07/01/14 | Toronto Dominion | COP | 220,873 | 113,723 | 113,357 | 366 | ||||||||||||
Expiring 07/01/14 | Toronto Dominion | COP | 386,816 | 199,000 | 198,522 | 478 | ||||||||||||
Euro, | ||||||||||||||||||
Expiring 07/28/14 | Barclays Capital Group | EUR | 8 | 10,929 | 10,962 | (33 | ) | |||||||||||
Expiring 07/28/14 | Citigroup Global Markets | EUR | 798 | 1,102,294 | 1,106,264 | (3,970 | ) | |||||||||||
Expiring 07/28/14 | Credit Suisse First Boston Corp. | EUR | 141 | 194,583 | 195,409 | (826 | ) | |||||||||||
Indonesian Rupiah, | ||||||||||||||||||
Expiring 07/17/14 | BNP Paribas | IDR | 1,087,880 | 92,942 | 92,766 | 176 | ||||||||||||
Expiring 07/17/14 | BNP Paribas | IDR | 8,169,644 | 710,094 | 696,642 | 13,452 | ||||||||||||
Expiring 07/17/14 | UBS AG | IDR | 2,003,169 | 171,387 | 170,814 | 573 | ||||||||||||
Israeli New Shekel, | ||||||||||||||||||
Expiring 07/10/14 | Barclays Capital Group | ILS | 974 | 280,000 | 281,212 | (1,212 | ) | |||||||||||
Expiring 07/10/14 | JP Morgan Chase | ILS | 972 | 280,000 | 280,682 | (682 | ) |
See Notes to Financial Statements.
20 |
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Receivable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
Japanese Yen, | ||||||||||||||||||
Expiring 07/28/14 | Credit Suisse First Boston Corp. | JPY | 14,666 | $ | 143,407 | $ | 143,537 | $ | (130 | ) | ||||||||
Expiring 07/28/14 | Credit Suisse First Boston Corp. | JPY | 139,661 | 1,363,932 | 1,366,826 | (2,894 | ) | |||||||||||
Nigerian Naira, | ||||||||||||||||||
Expiring 07/10/14 | Barclays Capital Group | NGN | 6,662 | 40,449 | 40,729 | (280 | ) | |||||||||||
Expiring 07/10/14 | Citigroup Global Markets | NGN | 3,068 | 18,795 | 18,758 | 37 | ||||||||||||
Expiring 08/20/14 | Citigroup Global Markets | NGN | 30,202 | 168,116 | 182,046 | (13,930 | ) | |||||||||||
Expiring 08/20/14 | Citigroup Global Markets | NGN | 47,315 | 261,700 | 285,198 | (23,498 | ) | |||||||||||
Peruvian Nuevo Sol, | ||||||||||||||||||
Expiring 07/11/14 | JP Morgan Chase | PEN | 501 | 178,319 | 176,744 | 1,575 | ||||||||||||
Philippine Peso, | ||||||||||||||||||
Expiring 06/09/14 | UBS AG | PHP | 3,645 | 81,218 | 81,707 | (489 | ) | |||||||||||
Polish Zloty, | ||||||||||||||||||
Expiring 07/24/14 | BNP Paribas | PLN | 570 | 187,000 | 187,104 | (104 | ) | |||||||||||
South African Rand, | ||||||||||||||||||
Expiring 07/25/14 | Credit Suisse First Boston Corp. | ZAR | 1,440 | 135,000 | 134,953 | 47 | ||||||||||||
South Korean Won, | ||||||||||||||||||
Expiring 07/10/14 | Citigroup Global Markets | KRW | 99,249 | 95,239 | 95,686 | (447 | ) | |||||||||||
Thai Baht, | ||||||||||||||||||
Expiring 06/18/14 | Barclays Capital Group | THB | 9,027 | 278,159 | 278,327 | (168 | ) | |||||||||||
Expiring 06/18/14 | Citigroup Global Markets | THB | 3,604 | 111,451 | 111,120 | 331 | ||||||||||||
Expiring 06/18/14 | Citigroup Global Markets | THB | 18,080 | 554,301 | 557,473 | (3,172 | ) | |||||||||||
Turkish Lira, | ||||||||||||||||||
Expiring 07/25/14 | Barclays Capital Group | TRY | 401 | 184,479 | 185,690 | (1,211 | ) | |||||||||||
|
|
|
|
|
| |||||||||||||
$ | 10,765,912 | $ | 10,812,775 | $ | (46,863 | ) | ||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 35,032 | |||||||||||||||||
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 21 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Cross currency exchange contracts outstanding at April 30, 2014:
Settlement | Type | Notional Amount (000) | In Exchange For (000) | Unrealized Appreciation | Counterparty | |||||||||||||||||||||
07/24/14 | Buy | PLN | 571 | EUR | 135 | $ | 158 | Citigroup Global Markets |
Interest rate swap agreements outstanding at April 30, 2014:
Notional | Termination Date | Fixed | Floating Rate | Fair Value | Upfront Premiums Paid (Received) | Unrealized | Counterparty | |||||||||||||||
| Over-the-counter swap agreements: |
| ||||||||||||||||||||
MXN | 3,300 | 02/21/22 | 6.620% | 28 Day Mexican Interbank Rate(1) | $ | 6,757 | $ | — | $6,757 | Barclays Capital Group | ||||||||||||
HUF | 140,000 | 06/28/23 | 6.150% | 6 Month BUBOR(1) | 101,563 | — | 101,563 | Barclays Capital Group | ||||||||||||||
MXN | 6,200 | 08/09/28 | 7.640% | 28 Day Mexican Interbank Rate(1) | 23,796 | — | 23,796 | Hong Kong & Shanghai Bank | ||||||||||||||
|
|
|
|
| ||||||||||||||||||
$ | 132,116 | $ | — | $132,116 | ||||||||||||||||||
|
|
|
|
|
(1) | The Series pays the floating rate and receives the fixed rate. |
# | Notional Amount is shown in U.S. dollars unless otherwise stated. |
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 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.
See Notes to Financial Statements.
22 |
The following is a summary of the inputs used as of April 30, 2014 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Foreign Bonds | ||||||||||||
Argentina | $ | — | $ | 397,598 | $ | — | ||||||
Brazil | — | 6,030,356 | — | |||||||||
Colombia | — | 1,775,214 | — | |||||||||
Dominican Republic | — | 134,196 | — | |||||||||
Ghana | — | 3,147 | — | |||||||||
Hungary | — | 1,963,409 | — | |||||||||
Indonesia | — | 4,086,141 | — | |||||||||
Kazakhstan | — | 179,250 | — | |||||||||
Luxembourg | — | 193,000 | — | |||||||||
Malaysia | — | 1,088,486 | — | |||||||||
Mexico | — | 4,020,810 | — | |||||||||
Nigeria | — | 646,820 | — | |||||||||
Peru | — | 890,975 | — | |||||||||
Philippines | — | 347,409 | — | |||||||||
Poland | — | 1,633,707 | — | |||||||||
Romania | — | 227,741 | — | |||||||||
Russia | — | 3,889,766 | — | |||||||||
South Africa | — | 3,308,573 | — | |||||||||
Spain | — | 534,140 | — | |||||||||
Sri Lanka | — | 418,000 | — | |||||||||
Thailand | — | 1,241,603 | — | |||||||||
Turkey | — | 3,023,960 | — | |||||||||
Uruguay | — | 11,412 | — | |||||||||
Venezuela | — | 232,560 | — | |||||||||
Affiliated Money Market Mutual Fund | 361,089 | — | — | |||||||||
Options Purchased | — | 16,232 | — | |||||||||
Options Written | — | (4,069 | ) | — | ||||||||
Other Financial Instruments* | ||||||||||||
Forward Foreign Currency Exchange Contracts | — | 35,190 | — | |||||||||
Interest Rate Swap Agreements | — | 132,116 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 361,089 | $ | 36,457,742 | $ | — | ||||||
|
|
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and swaps contracts, which are recorded at the unrealized appreciation/depreciation of the instrument. |
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 23 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2014 was as follows:
Foreign Government Obligations | 78.5 | % | ||
Foreign Corporations | 15.1 | |||
Foreign Agencies | 2.6 | |||
Affiliated Money Market Mutual Fund | 1.0 | |||
Options Purchased | — | * | ||
Options Written | — | * | ||
|
| |||
97.2 | ||||
Other assets in excess of liabilities | 2.8 | |||
|
| |||
100.0 | % | |||
|
|
* | Less than 0.05% |
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, 2014 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 forward foreign currency contracts | $ | 129,637 | Unrealized depreciation on forward foreign currency contracts | $ | 94,447 | ||||||
Foreign exchange contracts | Unaffiliated investments | 16,232 | Options written outstanding, at value | 4,069 | ||||||||
Interest rate contracts | Unrealized appreciation on swap agreements | 132,116 | — | — | ||||||||
|
|
|
| |||||||||
$ | 277,985 | $ | 98,516 | |||||||||
|
|
|
|
See Notes to Financial Statements.
24 |
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2014 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||
Derivatives not accounted for as hedging | Options Purchased* | Forward Currency Contracts** | Swaps | Total | ||||||||||||
Foreign exchange contracts | $ | (35,023 | ) | $ | (82,476 | ) | $ | — | $ | (117,499 | ) | |||||
Interest rate contracts | — | — | 21,523 | 21,523 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | (35,023 | ) | $ | (82,476 | ) | $ | 21,523 | $ | (95,976 | ) | |||||
|
|
|
|
|
|
|
|
* | Included in net realized gain (loss) on investment transactions in the Statement of Operations. |
** | Included in net realized gain (loss) on foreign currency transactions in the Statement of Operations. |
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||||||||||
Derivatives not accounted for as | Options Purchased* | Options Written | Forward Currency Contracts** | Swaps | Total | |||||||||||||||
Foreign exchange contracts | $ | (2,328 | ) | $ | 1,229 | $ | 10,413 | $ | — | $ | 9,314 | |||||||||
Interest rate contracts | — | — | — | 15,959 | 15,959 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | (2,328 | ) | $ | 1,229 | $ | 10,413 | $ | 15,959 | $ | 25,273 | |||||||||
|
|
|
|
|
|
|
|
|
|
* | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
** | Included in net change in unrealized appreciation (depreciation) on foreign currencies in the Statement of Operations. |
For the six months ended April 30, 2014, the Series’ average volume of derivative activities are as follows:
Options Purchased (Cost) | Options Written (Premiums Received) | 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)) | ||||||||||||||
$ | 50,809 | $ | 1,766 | $ | 24,691,741 | $ | 16,868,085 | $ | 1,901 |
Offsetting of over-the-counter (OTC) derivative assets and liabilities:
The Series invested in OTC derivatives during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 25 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
about offsetting and related netting arrangements for OTC derivatives, where the legal right to set-off exists, is presented in the summary below.
Counterparty | Gross amounts of recognized assets(1) | Gross amounts available for offset | Collateral Received(3) | Net Amount | ||||||||||||
Barclays Capital Group | $ | 149,799 | $ | (12,466 | ) | $ | — | $ | 137,333 | |||||||
BNP Paribas | 35,774 | (225 | ) | — | 35,549 | |||||||||||
Citigroup Global Markets | 13,456 | (13,456 | ) | — | — | |||||||||||
Credit Suisse First Boston Corp. | 17,174 | (7,919 | ) | — | 9,255 | |||||||||||
Goldman Sachs & Co. | 1,410 | (1,410 | ) | — | — | |||||||||||
Hong Kong & Shanghai Bank | 23,796 | (4,259 | ) | — | 19,537 | |||||||||||
JPMorgan Chase | 25,722 | (682 | ) | — | 25,040 | |||||||||||
Toronto Dominion | 3,165 | (3,165 | ) | — | — | |||||||||||
UBS AG | 7,689 | (489 | ) | — | 7,200 | |||||||||||
|
| |||||||||||||||
$ | 277,985 | |||||||||||||||
|
| |||||||||||||||
Counterparty | Gross amounts of recognized liabilities(2) | Gross amounts available for offset | Collateral Pledged(3) | Net Amount | ||||||||||||
Barclays Capital Group | $ | (12,466 | ) | $ | 12,466 | $ | — | $ | — | |||||||
BNP Paribas | (225 | ) | 225 | — | — | |||||||||||
Citigroup Global Markets | (49,569 | ) | 13,456 | — | (36,113 | ) | ||||||||||
Credit Suisse First Boston Corp. | (7,919 | ) | 7,919 | — | — | |||||||||||
Goldman Sachs & Co. | (14,552 | ) | 1,410 | — | (13,142 | ) | ||||||||||
Hong Kong & Shanghai Bank | (4,259 | ) | 4,259 | — | — | |||||||||||
JPMorgan Chase | (682 | ) | 682 | — | — | |||||||||||
Toronto Dominion | (8,355 | ) | 3,165 | — | (5,190 | ) | ||||||||||
UBS AG | (489 | ) | 489 | — | — | |||||||||||
|
| |||||||||||||||
$ | (98,516 | ) | ||||||||||||||
|
|
(1) | Includes unrealized appreciation on swaps and forwards, premiums paid on swap agreements and market value of purchased options. |
(2) | Includes unrealized depreciation on swaps and forwards, premiums received on swap agreements and market value of written options. |
(3) | Amounts shown reflect actual collateral received or pledged by the Series. Such amounts are applied up to 100% of the Series’ OTC derivative exposure by counterparty. |
See Notes to Financial Statements.
26 |
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
FINANCIAL STATEMENTS
(UNAUDITED)
SEMIANNUAL REPORT · APRIL 30, 2014
Prudential Emerging Markets Debt Local Currency Fund
Statement of Assets and Liabilities
as of April 30, 2014 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated Investments (cost $39,620,588) | $ | 36,294,505 | ||
Affiliated Investments (cost $361,089) | 361,089 | |||
Cash | 78,435 | |||
Foreign currency, at value (cost $35,308) | 35,249 | |||
Dividends and interest receivable | 734,978 | |||
Receivable for Series shares sold | 137,812 | |||
Unrealized appreciation on over-the-counter swap agreements | 132,116 | |||
Unrealized appreciation on forward foreign currency exchange contracts | 129,637 | |||
Tax reclaim receivable | 14,735 | |||
Prepaid expenses | 270 | |||
|
| |||
Total assets | 37,918,826 | |||
|
| |||
Liabilities | ||||
Unrealized depreciation on forward foreign currency exchange contracts | 94,447 | |||
Payable for Series shares reacquired | 59,167 | |||
Accrued expenses | 19,851 | |||
Dividends payable | 12,931 | |||
Options written outstanding, at value (premiums received $5,298) | 4,069 | |||
Distribution fee payable | 2,243 | |||
Management fee payable | 1,557 | |||
Payable for investments purchased | 964 | |||
Affiliated transfer agent fee payable | 668 | |||
|
| |||
Total liabilities | 195,897 | |||
|
| |||
Net Assets | $ | 37,722,929 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 45,357 | ||
Paid-in capital in excess of par | 44,725,994 | |||
|
| |||
44,771,351 | ||||
Distributions in excess of net investment income | (432,659 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (3,471,539 | ) | ||
Net unrealized depreciation on investments and foreign currencies | (3,144,224 | ) | ||
|
| |||
Net assets, April 30, 2014 | $ | 37,722,929 | ||
|
|
See Notes to Financial Statements.
28 |
Class A | ||||
Net asset value and redemption price per share | ||||
($6,017,062 ÷ 728,338 shares of common stock issued and outstanding) | $ | 8.26 | ||
Maximum sales charge (4.50% of offering price) | 0.39 | |||
|
| |||
Maximum offering price to public | $ | 8.65 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | ||||
($1,196,484 ÷ 143,779 shares of common stock issued and outstanding) | $ | 8.32 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share | ||||
($1,014 ÷ 121.9 shares of common stock issued and outstanding) | $ | 8.32 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | ||||
($30,508,369 ÷ 3,663,507 shares of common stock issued and outstanding) | $ | 8.33 | ||
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 29 |
Statement of Operations
Six Months Ended April 30, 2014 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest income (net of foreign withholding taxes of $30,207) | $ | 1,344,089 | ||
Affiliated dividend income | 255 | |||
|
| |||
Total income | 1,344,344 | |||
|
| |||
Expenses | ||||
Management fee | 149,905 | |||
Distribution fee—Class A | 10,668 | |||
Distribution fee—Class C | 6,498 | |||
Custodian’s fees and expenses | 77,000 | |||
Audit fee | 30,000 | |||
Registration fees | 27,000 | |||
Shareholders’ reports | 14,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $2,000) | 11,000 | |||
Legal fees and expenses | 10,000 | |||
Directors’ fees | 6,000 | |||
Insurance expenses | 1,000 | |||
Interest expense | 458 | |||
Miscellaneous | 7,131 | |||
|
| |||
Total expenses | 350,660 | |||
Less: Expense reimbursement | (135,734 | ) | ||
Distribution fee waiver—Class A | (1,778 | ) | ||
|
| |||
Net expenses | 213,148 | |||
|
| |||
Net investment income | 1,131,196 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (2,794,130 | ) | ||
Swap agreements transactions | 21,523 | |||
Foreign currency transactions | (173,649 | ) | ||
|
| |||
(2,946,256 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (net of capital gains tax) | 987,756 | |||
Options written | 1,229 | |||
Swap agreements | 15,959 | |||
Foreign currencies | 27,650 | |||
|
| |||
1,032,594 | ||||
|
| |||
Net loss on investment and foreign currency transactions | (1,913,662 | ) | ||
|
| |||
Net Decrease In Net Assets Resulting From Operations | $ | (782,466 | ) | |
|
|
See Notes to Financial Statements.
30 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended April 30, 2014 | Year Ended October 31, 2013 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 1,131,196 | $ | 2,571,128 | ||||
Net realized loss on investment and foreign currency transactions | (2,946,256 | ) | (983,511 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 1,032,594 | (4,483,628 | ) | |||||
|
|
|
| |||||
Net decrease in net assets resulting from operations | (782,466 | ) | (2,896,011 | ) | ||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (236,712 | ) | (408,643 | ) | ||||
Class C | (37,622 | ) | (44,305 | ) | ||||
Class Q | (33 | ) | (36 | ) | ||||
Class Z | (985,756 | ) | (1,194,303 | ) | ||||
|
|
|
| |||||
(1,260,123 | ) | (1,647,287 | ) | |||||
|
|
|
| |||||
Tax Return of Capital | ||||||||
Class A | — | (392,499 | ) | |||||
Class C | — | (42,579 | ) | |||||
Class Q | — | (36 | ) | |||||
Class Z | — | (1,148,753 | ) | |||||
|
|
|
| |||||
— | (1,583,867 | ) | ||||||
|
|
|
| |||||
Distributions from net realized gains | ||||||||
Class A | — | (37,964 | ) | |||||
Class C | — | (5,081 | ) | |||||
Class Q | — | (4 | ) | |||||
Class Z | — | (171,012 | ) | |||||
|
|
|
| |||||
— | (214,061 | ) | ||||||
|
|
|
| |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 3,303,894 | 30,796,003 | ||||||
Net asset value of shares issued in reinvestment of dividends and tax return of capital | 1,174,619 | 3,330,196 | ||||||
Cost of shares reacquired | (8,374,918 | ) | (24,693,903 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Series share transactions | (3,896,405 | ) | 9,432,296 | |||||
|
|
|
| |||||
Total increase (decrease) | (5,938,994 | ) | 3,091,070 | |||||
Net Assets: | ||||||||
Beginning of period | 43,661,923 | 40,570,853 | ||||||
|
|
|
| |||||
End of period | $ | 37,722,929 | $ | 43,661,923 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 31 |
Notes to Financial Statements
(Unaudited)
Prudential World Fund, Inc. (the “Fund”) is an open-end management investment company, registered under the Investment Company Act of 1940, as amended, (“1940 Act”) and currently consists of six series: Prudential International Equity Fund, Prudential Jennison Global Infrastructure 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 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 Series is non-diversified. The investment objective of the Series is total return, through a combination of current income and capital appreciation.
Note 1. Accounting Policies
The following accounting policies conform to U.S. generally accepted accounting principles. The Fund and the Series consistently follow such policies in the preparation of their financial statements.
Security Valuation: The Series holds 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 (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.
32 |
Common stocks, exchange-traded funds, and derivative instruments that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy except for exchange-traded and cleared swaps which are classified as Level 2 in the fair value hierarchy, as the prices marked at the official settle are not public.
In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and asked prices, or at the last bid price in the absence of an asked price. These securities are classified as Level 2 in the fair value hierarchy, as the inputs are observable and considered to be significant to the valuation.
Common stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Securities not valued using such model prices are valued in accordance with exchange-traded common stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after evaluating observable inputs including, but not limited to yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations, and reported trades. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Prudential Emerging Markets Debt Local Currency Fund | 33 |
Notes to Financial Statements
(Unaudited) continued
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that significant unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Series may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Series has valued the investment. Therefore, the Series may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur expenses that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Directors of the Series. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.
34 |
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not 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, these 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 sales and maturities of short-term securities and forward currency contracts, disposition of foreign currencies, currency gains or losses realized between the trade and settlement dates 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 foreign currencies.
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 U.S. companies as a result of, among other factors, the possibility of political or economic instability, or the level of governmental supervision and regulation of foreign securities markets.
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
Prudential Emerging Markets Debt Local Currency Fund | 35 |
Notes to Financial Statements
(Unaudited) continued
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.
Options: The Series purchased options and wrote options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates or foreign currency exchange rates, with respect to securities which the Series currently owns or intends to purchase. The Series’ principal reason for writing options would be to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Series purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Series writes an option, it receives a premium and an amount equal to that premium is recorded as a liability.
The asset or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Series realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Series has realized a gain or loss. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in net realized gain or loss on investment transactions. Gain or loss on written options is presented separately as net realized gain or loss on options written. The Series, as writer of an option, may have no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Series bears the market risk of an unfavorable change in the price of the security underlying the written option. Over-the-counter options involve the risk of the potential inability of the counterparties to meet the terms of their contracts.
36 |
With exchange-traded options contracts, there is minimal counterparty credit risk to the Series since the exchanges’ clearinghouse acts as counterparty to all exchange traded options and guarantees the options contracts against default.
Swap Agreements: The Series entered into interest rate swap agreements. A swap agreement is an agreement to exchange the return generated by one instrument for the return generated by another instrument. Swap agreements are negotiated in the 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. Exchange-traded swaps pay or receive an amount known as “variation margin”, based on daily changes in the valuation of the swap contract. Payments received or paid by the Series are recorded as realized gains 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 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 is subject to interest rate risk exposure in the normal course of pursuing its investment objectives.
Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. 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. The right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there were no instances where the right of set-off existed and management has not elected to offset.
Prudential Emerging Markets Debt Local Currency Fund | 37 |
Notes to Financial Statements
(Unaudited) continued
The Series is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements (Master Agreements) with certain counterparties that govern over-the-counter derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the Series is held in a segregated account by the Series’ custodian and with respect to those amounts which can be sold or re-pledged, is presented in the Portfolio of Investments. Collateral pledged by the Series is segregated by the Series’ custodian and identified in the Portfolio of Investments. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the Series and the applicable counterparty. Collateral requirements are determined based on the Series’ net position with each counterparty. Termination events applicable to the Series may occur upon a decline in the Series’ net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the Series’ counterparties to elect early termination could impact the Series’ future derivative activity.
In addition to each instrument’s primary underlying risk exposure (e.g. interest rate, credit, equity or foreign exchange, etc.), swap agreements involve, to varying degrees, elements of credit, market and documentation risk. Such risks involve the possibility that no liquid market for these agreements will exist, the counterparty to the agreement may default on its obligation to perform or disagree on the contractual terms of the agreement, and changes in net interest rates will be unfavorable. In connection with these agreements, securities in the portfolio may be identified or received as collateral from the counterparty in accordance with the terms of the respective swap agreements to provide or receive assets of value and to serve as recourse in the event of default or bankruptcy/insolvency of either party. Such 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.
38 |
As of April 30, 2014, the Series has not met conditions under such agreements which give the counterparty the right to call for an early termination.
Forward currency contracts, written options, short sales, swaps and financial futures contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Such risks may be mitigated by engaging in master netting arrangements.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual.
Net investment income or loss (other than distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) and unrealized and realized gains 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 from 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 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.
Prudential Emerging Markets Debt Local Currency Fund | 39 |
Notes to Financial Statements
(Unaudited) continued
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, 2015 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. For the six months ended April 30, 2014, PIMS contractually agreed to limit such expenses to .25% of the average daily net assets of the Class A shares.
40 |
PIMS has advised the Series that it received $7,362 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2014. 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, 2014, it received $411 in contingent deferred sales charges imposed upon certain redemptions by Class C shareholders.
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 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 and U.S. Government securities, for the six months ended April 30, 2014, were $19,652,981 and $24,054,757, respectively.
Transactions in options written during the six months ended April 30, 2014, were as follows:
Notional Amount | Premiums Received | |||||||
Options outstanding at October 31, 2013 | $ | — | $ | — | ||||
Options written | 1,230,000 | 5,298 | ||||||
Options terminated in closing purchase transactions | — | — | ||||||
Options expired | — | — | ||||||
|
|
|
| |||||
Options outstanding at April 30, 2014 | $ | 1,230,000 | $ | 5,298 | ||||
|
|
|
|
Prudential Emerging Markets Debt Local Currency Fund | 41 |
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 depreciation as of April 30, 2014 were as follows:
Tax Basis | $ | 40,603,970 | ||
|
| |||
Appreciation | 21,490 | |||
Depreciation | (3,973,935 | ) | ||
|
| |||
Net Unrealized Depreciation | $ | (3,952,445 | ) | |
|
|
The book basis may differ from tax basis due to certain tax related adjustments.
For federal income tax purposes, the Series had a capital loss carryforward as of October 31, 2013 of approximately $129,000 which can be carried forward for an unlimited period. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.
Management has analyzed the Series’ tax positions taken on federal 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 CDSC of 1% on shares redeemed within the first 12 months after purchase. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class Q and Z shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table
42 |
of transactions in shares of common stock. For the six months ended April 30, 2014, no such exchanges were made.
As of April 30, 2014, Prudential Financial, Inc. through its affiliates owned 122 Class Q shares and 2,878,563 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, 2014: | ||||||||
Shares sold | 131,993 | $ | 1,079,783 | |||||
Shares issued in reinvestment of dividends and distributions | 20,183 | 163,607 | ||||||
Shares reacquired | (676,305 | ) | (5,527,732 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (524,129 | ) | (4,284,342 | ) | ||||
Shares reacquired upon conversion into Class Z | — | (2 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (524,129 | ) | $ | (4,284,344 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 1,778,574 | $ | 17,221,493 | |||||
Shares issued in reinvestment of dividends and tax return of capital | 81,238 | 743,125 | ||||||
Shares reacquired | (1,229,880 | ) | (11,043,144 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 629,932 | $ | 6,921,474 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 18,065 | $ | 148,751 | |||||
Shares issued in reinvestment of dividends and distributions | 3,803 | 31,007 | ||||||
Shares reacquired | (44,835 | ) | (365,845 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (22,967 | ) | (186,087 | ) | ||||
Shares reacquired upon conversion into Class Z | (1,820 | ) | (15,115 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (24,787 | ) | $ | (201,202 | ) | |||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 160,719 | $ | 1,568,898 | |||||
Shares issued in reinvestment of dividends and tax return of capital | 8,863 | 81,701 | ||||||
Shares reacquired | (107,280 | ) | (977,299 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 62,302 | $ | 673,300 | |||||
|
|
|
|
Prudential Emerging Markets Debt Local Currency Fund | 43 |
Notes to Financial Statements
(Unaudited) continued
Class Q | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares issued in reinvestment of dividends and distributions | 4.1 | $ | 33 | |||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 4.1 | $ | 33 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares issued in reinvestment of dividends and tax return of capital | 8.3 | $ | 76 | |||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 8.3 | $ | 76 | |||||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 252,579 | $ | 2,075,360 | |||||
Shares issued in reinvestment of dividends and distributions | 120,112 | 979,972 | ||||||
Shares reacquired | (303,288 | ) | (2,481,341 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 69,403 | 573,991 | ||||||
Shares issued upon conversion from Class A and Class C | 1,824 | 15,117 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 71,227 | $ | 589,108 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 1,250,099 | $ | 12,005,612 | |||||
Shares issued in reinvestment of dividends and tax return of capital | 270,309 | 2,505,294 | ||||||
Shares reacquired | (1,401,122 | ) | (12,673,460 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 119,286 | $ | 1,837,446 | |||||
|
|
|
|
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 November 5, 2013 through November 4, 2014. The Funds pay an annualized commitment fee of 0.08% on the unused portion of the SCA. Prior to November 5, 2013, the Funds had another SCA with substantially similar terms. 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, 2014. The average daily balance for the 55 days the Series had loans outstanding during the period was $193,327 borrowed at a weighted average interest rate of 1.56%. At April 30, 2014, the Series did not have an outstanding loan amount.
44 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 30, 2011(a) through October 31, | ||||||||||||||||||||
2014(b) | 2013(b) | 2012(b) | 2011 | |||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $8.67 | $9.61 | $9.36 | $10.00 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||
Net investment income | .24 | .47 | .42 | .32 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.38 | ) | (.76 | ) | .35 | (.62 | ) | |||||||||||||||
Total from investment operations | (.14 | ) | (.29 | ) | .77 | (.30 | ) | |||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||
Dividends from net investment income | (.27 | ) | (.30 | ) | (.52 | ) | (.13 | ) | ||||||||||||||
Distributions from net realized gains | - | (.05 | ) | - | - | |||||||||||||||||
Tax return of capital | - | (.30 | ) | - | (.21 | ) | ||||||||||||||||
Total dividends and distributions | (.27 | ) | (.65 | ) | (.52 | ) | (.34 | ) | ||||||||||||||
Net asset value, end of period | $8.26 | $8.67 | $9.61 | $9.36 | ||||||||||||||||||
Total Return(c): | (1.55)% | (3.23)% | 8.53% | (3.14)% | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||
Net assets, end of period (000) | $6,017 | $10,862 | $5,985 | $2,620 | ||||||||||||||||||
Average net assets (000) | $7,171 | $12,797 | $2,721 | $1,634 | ||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | 1.30% | (e) | 1.30% | 1.30% | 1.30% | (e) | ||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 2.09% | (e) | 1.78% | 2.09% | 2.81% | (e) | ||||||||||||||||
Net investment income | 5.97% | (e) | 5.07% | 4.73% | 4.85% | (e) | ||||||||||||||||
Portfolio turnover rate | 53% | (f) | 102% | 70% | 60% | (f) |
(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of 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.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 45 |
Financial Highlights
(Unaudited) continued
Class C Shares | ||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 30, 2011(a) through October 31, | ||||||||||||||||||||
2014(b) | 2013(b) | 2012(b) | 2011 | |||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $8.72 | $9.65 | $9.41 | $10.00 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||
Net investment income | .21 | .40 | .37 | .31 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.38 | ) | (.75 | ) | .32 | (.57 | ) | |||||||||||||||
Total from investment operations | (.17 | ) | (.35 | ) | .69 | (.26 | ) | |||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||
Dividends from net investment income | (.23 | ) | (.23 | ) | (.45 | ) | (.12 | ) | ||||||||||||||
Distributions from net realized gains | - | (.05 | ) | - | - | |||||||||||||||||
Tax return of capital | - | (.30 | ) | - | (.21 | ) | ||||||||||||||||
Total dividends and distributions | (.23 | ) | (.58 | ) | (.45 | ) | (.33 | ) | ||||||||||||||
Net asset value, end of period | $8.32 | $8.72 | $9.65 | $9.41 | ||||||||||||||||||
Total Return(c): | (1.81)% | (3.85)% | 7.55% | (2.72)% | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||
Net assets, end of period (000) | $1,196 | $1,469 | $1,025 | $398 | ||||||||||||||||||
Average net assets (000) | $1,310 | $1,585 | $786 | $211 | ||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | 2.05% | (e) | 2.05% | 2.05% | 2.05% | (e) | ||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 2.77% | (e) | 2.47% | 2.78% | 3.52% | (e) | ||||||||||||||||
Net investment income | 5.10% | (e) | 4.26% | 3.89% | 4.09% | (e) | ||||||||||||||||
Portfolio turnover rate | 53% | (f) | 102% | 70% | 60% | (f) |
(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of 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.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
46 |
Class Q Shares | ||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 30, 2011(a) through October 31, | ||||||||||||||||||||
2014(b) | 2013(b) | 2012(b) | 2011 | |||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $8.71 | $9.66 | $9.37 | $10.00 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||
Net investment income | .25 | .58 | .47 | .29 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.36 | ) | (.86 | ) | .37 | (.59 | ) | |||||||||||||||
Total from investment operations | (.11 | ) | (.28 | ) | .84 | (.30 | ) | |||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||
Dividends from net investment income | (.28 | ) | (.32 | ) | (.55 | ) | (.12 | ) | ||||||||||||||
Distributions from net realized gains | - | (.05 | ) | - | - | |||||||||||||||||
Tax return of capital | - | (.30 | ) | - | (.21 | ) | ||||||||||||||||
Total dividends and distributions | (.28 | ) | (.67 | ) | (.55 | ) | (.33 | ) | ||||||||||||||
Net asset value, end of period | $8.32 | $8.71 | $9.66 | $9.37 | ||||||||||||||||||
Total Return(c): | (1.16)% | (3.06)% | 9.31% | (3.14)% | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||
Net assets, end of period (000) | $1 | $1 | $1 | $1 | ||||||||||||||||||
Average net assets (000) | $1 | $1 | $1 | $1 | ||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | 1.05% | (e) | 1.05% | 1.05% | 1.05% | (e) | ||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 1.68% | (e) | 1.39% | 1.71% | 2.67% | (e) | ||||||||||||||||
Net investment income | 6.12% | (e) | 6.22% | 5.06% | 4.98% | (e) | ||||||||||||||||
Portfolio turnover rate | 53% | (f) | 102% | 70% | 60% | (f) |
(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of 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.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Emerging Markets Debt Local Currency Fund | 47 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | March 30, 2011(a) through October 31, | ||||||||||||||||||||
2014(b) | 2013(b) | 2012(b) | 2011 | |||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $8.72 | $9.66 | $9.37 | $10.00 | ||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||
Net investment income | .25 | .49 | .47 | .29 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.36 | ) | (.76 | ) | .36 | (.59 | ) | |||||||||||||||
Total from investment operations | | (.11 | ) | (.27 | ) | .83 | (.30 | ) | ||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||
Dividends from net investment income | (.28 | ) | (.32 | ) | (.54 | ) | (.12 | ) | ||||||||||||||
Distributions from net realized gains | - | (.05 | ) | - | - | |||||||||||||||||
Tax return of capital | - | (.30 | ) | - | (.21 | ) | ||||||||||||||||
Total dividends and distributions | (.28 | ) | (.67 | ) | (.54 | ) | (.33 | ) | ||||||||||||||
Net asset value, end of period | $8.33 | $8.72 | $9.66 | $9.37 | ||||||||||||||||||
Total Return(c): | (1.20)% | (2.98)% | 9.21% | (3.14)% | ||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||
Net assets, end of period (000) | $30,508 | $31,330 | $33,559 | $26,532 | ||||||||||||||||||
Average net assets (000) | $29,308 | $35,341 | $30,441 | $25,697 | ||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||
Expenses after advisory fee waivers and/or expense reimbursement | 1.05% | (e) | 1.05% | 1.05% | 1.05% | (e) | ||||||||||||||||
Expenses before advisory fee waivers and/or expense reimbursement | 1.77% | (e) | 1.49% | 1.81% | 2.72% | (e) | ||||||||||||||||
Net investment income | 6.09% | (e) | 5.25% | 4.96% | 4.99% | (e) | ||||||||||||||||
Portfolio turnover rate | 53% | (f) | 102% | 70% | 60% | (f) |
(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of 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.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
48 |
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 Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer and Chief Compliance Officer • Deborah A. Docs, Secretary • 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 • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer |
MANAGER | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
| ||||
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 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
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 0263091-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL JENNISON GLOBAL OPPORTUNITIES FUND
SEMIANNUAL REPORT · APRIL 30, 2014
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, 2014, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. © 2014 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, Prudential, Jennison Associates, Jennison, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
June 16, 2014
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison Global Opportunities Fund informative and useful. The report covers performance for the six-month period that ended April 30, 2014.
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 of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks. We offer the expertise of Prudential Financial’s affiliated asset managers* that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential Jennison Global Opportunities Fund
*Most of Prudential Investments’ equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors. Prudential Investments’ fixed income and money market funds are advised by Prudential Investment Management, Inc. (PIM) through its Prudential Fixed Income unit. Jennison Associates LLC, QMA, and PIM are registered investment advisers and Prudential Financial companies. Prudential Real Estate Investors is a unit of PIM.
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.
Cumulative Total Returns (Without Sales Charges) as of 4/30/14 | ||||||||||||
Six Months | One Year | Since Inception | ||||||||||
Class A | 1.24 | % | 18.23 | % | 31.00% (3/14/12) | |||||||
Class C | 0.86 | 17.30 | 28.80 (3/14/12) | |||||||||
Class Z | 1.39 | 18.54 | 31.70 (3/14/12) | |||||||||
MSCI AC World ND Index | 5.28 | 14.40 | 30.94 | |||||||||
Lipper Global Multi-Cap Core Funds Average | 5.12 | 14.59 | 30.55 | |||||||||
Lipper Global Multi-Cap Growth Funds Average | 3.83 | 15.46 | 29.13 | |||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/14 | ||||||||||||
One Year | Since Inception | |||||||||||
Class A | 18.84 | % | 13.72% (3/14/12) | |||||||||
Class C | 23.88 | 15.99 (3/14/12) | ||||||||||
Class Z | 26.05 | 17.20 (3/14/12) | ||||||||||
MSCI AC World ND Index | 16.58 | 13.30 | ||||||||||
Lipper Global Multi-Cap Core Funds Average | 16.68 | 13.36 | ||||||||||
Lipper Global Multi-Cap Growth Funds Average | 18.98 | 13.54 |
Source: Prudential Investments LLC and Lipper Inc.
Inception Date: 3/14/12
2 | Visit our website at www.prudentialfunds.com |
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class C | Class Z | ||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | |||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or sale proceeds) | 1% on sales of $1 million or more made within 12 months of purchase | 1% on sales made within 12 months of purchase | None | |||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | .30% (.25% | 1% | None |
Benchmark Definitions
Morgan Stanley Capital International (MSCI) All Country (AC) World Net Dividend (ND) Index
The MSCI AC World ND Index (MSCI AC World ND) is an unmanaged free-float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of developed and emerging markets. The MSCI AC World ND Index comprises 23 developed market country indexes and 21 emerging market country indexes. The developed market country indexes include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States. The emerging market country indexes 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.
Lipper Global Multi-Cap Core Funds Average
Funds in the 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
Funds in the 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.
Note: Although the Fund is classified by Lipper in its Global Multi-Cap Core Funds Performance Universe, the Global Multi-Cap Growth Funds Performance Universe was utilized for performance comparisons, because the Fund’s investment manager believes that the Global Multi-Cap Growth Funds Performance Universe provides a more appropriate basis for Fund performance comparisons.
Prudential Jennison Global Opportunities 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 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 4/30/14 | ||||
MasterCard, Inc. (Class A Stock), United States | 4.4 | % | ||
Priceline Group, Inc. (The), United States | 4.3 | |||
Biogen Idec, Inc., United States | 3.8 | |||
Bristol-Myers Squibb Co., United States | 3.5 | |||
Azimut Holding SpA, United States | 3.2 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/14 | ||||
Textiles, Apparel & Luxury Goods | 14.4 | % | ||
Internet & Catalog Retail | 11.9 | |||
Biotechnology | 11.7 | |||
Internet Software & Services | 10.9 | |||
Pharmaceuticals | 9.0 |
Industry weightings reflect long-term investments and are subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on November 1, 2013, at the beginning of the period, and held through the six-month period ended April 30, 2014. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of Prudential Investments funds, including the Fund, that you own. You should consider the additional fees that
Prudential Jennison Global Opportunities Fund | 5 |
Fees and Expenses (continued)
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.
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, 2013 | Ending Account Value April 30, 2014 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,012.40 | 1.60 | % | $ | 7.98 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.86 | 1.60 | % | $ | 8.00 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,008.60 | 2.35 | % | $ | 11.70 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.14 | 2.35 | % | $ | 11.73 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,013.90 | 1.35 | % | $ | 6.74 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.10 | 1.35 | % | $ | 6.76 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2014, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2014 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
The Fund’s annualized expense ratios for the period ended April 30, 2014, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||||||
A | 1.72 | % | 1.60 | % | ||||
C | 2.41 | 2.35 | ||||||
Z | 1.43 | 1.35 |
Net operating expenses shown above reflect any fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
6 | Visit our website at www.prudentialfunds.com |
Portfolio of Investments
as of April 30, 2014 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 97.1% |
| |||||
COMMON STOCKS |
| |||||
Canada 2.0% |
| |||||
7,681 | Canadian Pacific Railway Ltd. | $ | 1,198,006 | |||
China 2.8% |
| |||||
26,069 | Tencent Holdings Ltd. | 1,641,303 | ||||
Denmark 1.6% |
| |||||
20,798 | Novo Nordisk A/S (Class B Stock) | 943,938 | ||||
Germany 1.8% |
| |||||
7,448 | Bayer AG | 1,035,581 | ||||
Hong Kong 3.5% |
| |||||
101,675 | Galaxy Entertainment Group Ltd.* | 802,640 | ||||
168,428 | Sands China Ltd. | 1,236,559 | ||||
|
| |||||
2,039,199 | ||||||
Italy 9.8% |
| |||||
60,806 | Azimut Holding SpA | 1,898,225 | ||||
17,820 | Luxottica Group SpA | 1,022,092 | ||||
50,893 | Moncler SpA* | 896,160 | ||||
70,534 | World Duty Free SpA* | 947,581 | ||||
26,267 | Yoox SpA* | 943,240 | ||||
|
| |||||
5,707,298 | ||||||
Japan 1.6% |
| |||||
11,224 | Murata Manufacturing Co. Ltd. | 935,676 | ||||
Spain 2.4% |
| |||||
9,307 | Inditex SA | 1,398,346 | ||||
Switzerland 4.4% |
| |||||
13,484 | Cie Financiere Richemont SA | 1,371,863 | ||||
4,170 | Roche Holding AG | 1,223,254 | ||||
|
| |||||
2,595,117 | ||||||
United Kingdom 8.1% |
| |||||
61,583 | ARM Holdings PLC | 932,067 | ||||
94,173 | Ashtead Group PLC | 1,395,278 | ||||
16,500 | ASOS PLC* | 1,195,703 |
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 7 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) | ||||||
United Kingdom (cont’d.) | ||||||
95,412 | St. James’s Place PLC | $ | 1,243,467 | |||
|
| |||||
4,766,515 | ||||||
United States 59.1% |
| |||||
2,271 | Amazon.com, Inc.* | 690,679 | ||||
2,935 | Apple, Inc. | 1,731,914 | ||||
7,767 | Biogen Idec, Inc.* | 2,230,061 | ||||
40,773 | Bristol-Myers Squibb Co. | 2,042,320 | ||||
6,456 | Celgene Corp.* | 949,097 | ||||
6,475 | Core Laboratories NV | 1,215,228 | ||||
13,005 | EOG Resources, Inc. | 1,274,490 | ||||
31,451 | Facebook, Inc. (Class A Stock)* | 1,880,141 | ||||
23,324 | Gilead Sciences, Inc.* | 1,830,701 | ||||
2,185 | Google, Inc. (Class A Stock)* | 1,168,713 | ||||
2,185 | Google, Inc. (Class C Stock)* | 1,150,752 | ||||
21,338 | Incyte Corp Ltd.* | 1,036,173 | ||||
32,413 | Kate Spade & Co.* | 1,127,000 | ||||
3,447 | LinkedIn Corp. (Class A Stock)* | 529,011 | ||||
35,015 | MasterCard, Inc. (Class A Stock) | 2,575,353 | ||||
17,677 | Michael Kors Holdings Ltd.* | 1,612,142 | ||||
6,435 | Monsanto Co. | 712,354 | ||||
2,171 | Netflix, Inc.* | 699,149 | ||||
16,948 | NIKE, Inc. (Class B Stock) | 1,236,357 | ||||
2,195 | Priceline Group, Inc. (The)* | 2,541,261 | ||||
9,922 | Splunk, Inc.* | 541,444 | ||||
6,388 | Tesla Motors, Inc.* | 1,328,001 | ||||
15,743 | TJX Cos., Inc. (The) | 915,928 | ||||
24,475 | Under Armour, Inc. (Class A Stock)* | 1,196,583 | ||||
12,327 | Vertex Pharmaceuticals, Inc.* | 834,538 | ||||
8,096 | Workday, Inc. (Class A Stock)* | 591,575 | ||||
21,539 | �� | zulily, Inc. (Class A Stock)* | 915,838 | |||
|
| |||||
34,556,803 | ||||||
|
| |||||
TOTAL LONG-TERM INVESTMENTS | 56,817,782 | |||||
|
|
See Notes to Financial Statements.
8 |
Shares | Description | Value (Note 1) | ||||
SHORT-TERM INVESTMENT 3.8% |
| |||||
AFFILIATED MONEY MARKET MUTUAL FUND |
| |||||
2,212,066 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | $ | 2,212,066 | |||
|
| |||||
TOTAL INVESTMENTS 100.9% | 59,029,848 | |||||
Liabilities in excess of other assets (0.9)% | (523,092 | ) | ||||
|
| |||||
NET ASSETS 100.0% | $ | 58,506,756 | ||||
|
|
* | 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 Series’ 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.
The following is a summary of the inputs used as of April 30, 2014 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities |
| |||||||||||
Common Stocks |
| |||||||||||
Canada | $ | 1,198,006 | $ | — | $ | — | ||||||
China | — | 1,641,303 | — | |||||||||
Denmark | — | 943,938 | — | |||||||||
Germany | — | 1,035,581 | — | |||||||||
Hong Kong | — | 2,039,199 | — | |||||||||
Italy | — | 5,707,298 | — | |||||||||
Japan | — | 935,676 | — | |||||||||
Spain | — | 1,398,346 | — |
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 9 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Level 1 | Level 2 | Level 3 | ||||||||||
Common Stocks (continued): |
| |||||||||||
Switzerland | $ | — | $ | 2,595,117 | $ | — | ||||||
United Kingdom | — | 4,766,515 | — | |||||||||
United States | 34,556,803 | — | — | |||||||||
Affiliated Money Market Mutual Fund | 2,212,066 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 37,966,875 | $ | 21,062,973 | $ | — | ||||||
|
|
|
|
|
|
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2014 was as follows:
Textiles, Apparel & Luxury Goods | 14.4 | % | ||
Internet & Catalog Retail | 11.9 | |||
Biotechnology | 11.7 | |||
Internet Software & Services | 10.9 | |||
Pharmaceuticals | 9.0 | |||
Specialty Retail | 5.6 | |||
IT Services | 4.4 | |||
Affiliated Money Market Mutual Fund | 3.8 | |||
Hotels, Restaurants & Leisure | 3.5 | |||
Capital Markets | 3.3 | |||
Technology Hardware, Storage & Peripherals | 3.0 | |||
Trading Companies & Distributors | 2.4 | |||
Automobiles | 2.3 | % | ||
Oil, Gas & Consumable Fuels | 2.2 | |||
Insurance | 2.1 | |||
Energy Equipment & Services | 2.1 | |||
Road & Rail | 2.0 | |||
Software | 1.9 | |||
Electronic Equipment & Instruments | 1.6 | |||
Semiconductors & Semiconductor Equipment | 1.6 | |||
Chemicals | 1.2 | |||
|
| |||
100.9 | ||||
Liabilities in excess of other assets | (0.9 | ) | ||
|
| |||
100.0 | % | |||
|
|
See Notes to Financial Statements.
10 |
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
FINANCIAL STATEMENTS
(UNAUDITED)
SEMIANNUAL REPORT · April 30, 2014
Prudential Jennison Global Opportunities Fund
Statement of Assets & Liabilities
as of April 30, 2014 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $49,807,151) | $ | 56,817,782 | ||
Affiliated investments (cost $2,212,066) | 2,212,066 | |||
Receivable for investments sold | 813,968 | |||
Receivable for Series shares sold | 494,945 | |||
Dividends receivable | 45,662 | |||
Tax reclaim receivable | 12,033 | |||
Prepaid expenses | 204 | |||
|
| |||
Total assets | 60,396,660 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 1,620,605 | |||
Payable for Series shares reacquired | 172,263 | |||
Accrued expenses | 45,254 | |||
Management fee payable | 42,267 | |||
Distribution fee payable | 8,509 | |||
Affiliated transfer agent fee payable | 1,006 | |||
|
| |||
Total liabilities | 1,889,904 | |||
|
| |||
Net Assets | $ | 58,506,756 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 44,603 | ||
Paid-in capital in excess of par | 52,549,441 | |||
|
| |||
52,594,044 | ||||
Accumulated net investment loss | (258,950 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (839,024 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 7,010,686 | |||
|
| |||
Net assets, April 30, 2014 | $ | 58,506,756 | ||
|
|
See Notes to Financial Statements.
12 |
Class A | ||||
Net asset value and redemption price per share | $ | 13.10 | ||
Maximum sales charge (5.50% of offering price) | 0.76 | |||
|
| |||
Maximum offering price to public | $ | 13.86 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | $ | 12.88 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | $ | 13.17 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 13 |
Statement of Operations
Six Months Ended April 30, 2014 (Unaudited)
Net Investment Loss | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $11,275) | $ | 174,456 | ||
Affiliated dividend income | 1,041 | |||
|
| |||
Total income | 175,497 | |||
|
| |||
Expenses | ||||
Management fee | 216,971 | |||
Distribution fee—Class A | 23,709 | |||
Distribution fee—Class C | 17,509 | |||
Custodian’s fees and expenses | 45,000 | |||
Registration fees | 23,000 | |||
Audit fee | 13,000 | |||
Shareholders’ reports | 13,000 | |||
Legal fees and expenses | 9,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $2,100) | 9,000 | |||
Directors’ fees | 6,000 | |||
Miscellaneous | 8,582 | |||
|
| |||
Total expenses | 384,771 | |||
Less: Expense reimbursement | (18,073 | ) | ||
Distribution fee waiver—Class A | (3,952 | ) | ||
|
| |||
Net expenses | 362,746 | |||
|
| |||
Net investment loss | (187,249 | ) | ||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain on: | ||||
Investment transactions | 67,891 | |||
Foreign currency transactions | 953 | |||
|
| |||
68,844 | ||||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (880,124 | ) | ||
Foreign currencies | (1,972 | ) | ||
|
| |||
(882,096 | ) | |||
|
| |||
Net loss on investment and foreign currency transactions | (813,252 | ) | ||
|
| |||
Net Decrease In Net Assets Resulting From Operations | $ | (1,000,501 | ) | |
|
|
See Notes to Financial Statements.
14 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended April 30, 2014 | Year Ended October 31, 2013 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment loss | $ | (187,249 | ) | $ | (84,763 | ) | ||
Net realized gain on investment and foreign currency transactions | 68,844 | 254,103 | ||||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (882,096 | ) | 6,847,925 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | (1,000,501 | ) | 7,017,265 | |||||
|
|
|
| |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 25,113,620 | 11,184,673 | ||||||
Cost of shares reacquired | (2,518,094 | ) | (783,244 | ) | ||||
|
|
|
| |||||
Net increase in net assets from Series share transactions | 22,595,526 | 10,401,429 | ||||||
|
|
|
| |||||
Total increase | 21,595,025 | 17,418,694 | ||||||
Net Assets: | ||||||||
Beginning of period | 36,911,731 | 19,493,037 | ||||||
|
|
|
| |||||
End of period | $ | 58,506,756 | $ | 36,911,731 | ||||
|
|
|
|
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 six series: Prudential Jennison Global Opportunities Fund (the “Series”), Prudential Jennison Global Infrastructure Fund, 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 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 seek long-term growth of capital.
Note 1. Accounting Policies
The following accounting policies conform to U.S. generally accepted accounting principles. The Fund and the Series consistently follow such policies in the preparation of their financial statements.
Security Valuation: The Series holds 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 (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.
16 |
Common stocks, exchange-traded funds, and derivative instruments that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy except for exchange-traded and cleared swaps which are classified as Level 2 in the fair value hierarchy, as the prices marked at the official settle are not public.
In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and asked prices, or at the last bid price in the absence of an asked price. These securities are classified as Level 2 in the fair value hierarchy, as the inputs are observable and considered to be significant to the valuation.
Common stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Securities not valued using such model prices are valued in accordance with exchange-traded common stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after evaluating observable inputs including, but not limited to yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations, and reported trades. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Prudential Jennison Global Opportunities Fund | 17 |
Notes to Financial Statements
(Unaudited) continued
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that significant unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not 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, these 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 sales and maturities of short-term securities and
18 |
forward currency contracts, disposition of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains 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.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual.
Net investment income or loss (other than distribution fees which are charged directly to the respective class) and 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 from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-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 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.
Prudential Jennison Global Opportunities Fund | 19 |
Notes to Financial Statements
(Unaudited) continued
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 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 .90% of the Series’ average daily net assets. PI has contractually agreed through February 28, 2015 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 assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares through February 28, 2015.
PIMS has advised the Series that they received $98,395 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2014. From these fees, PIMS paid such sales charges to affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
20 |
PIMS has advised the Series that for the six months ended April 30, 2014, it received $398 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.
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 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 portfolio 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, 2014 were $37,200,275 and $15,238,258, 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, 2014 were as follows:
Tax Basis | $ | 52,050,174 | ||
|
| |||
Appreciation | 7,832,719 | |||
Depreciation | (853,045 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 6,979,674 | ||
|
|
The book basis may differ from tax basis due to certain tax related adjustments.
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
Prudential Jennison Global Opportunities Fund | 21 |
Notes to Financial Statements
(Unaudited) continued
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 and Class Z shares. Class A shares are subject to a maximum front-end sales charge of 5.50%. All investors who purchase Class A shares in an amount of $1 million or more and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%. The Class A CDSC is waived for purchases by certain retirement or benefits plans. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. Class 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, 2014, Prudential Financial, Inc. through its affiliates owned 1,725,022 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.
22 |
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 1,051,959 | $ | 14,813,660 | |||||
Shares reacquired | (133,627 | ) | (1,833,482 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 918,332 | 12,980,178 | ||||||
Shares reacquired upon conversion into Class Z | (308 | ) | (4,440 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 918,024 | $ | 12,975,738 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 429,183 | $ | 5,230,950 | |||||
Shares reacquired | (52,529 | ) | (574,895 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 376,654 | 4,656,055 | ||||||
Shares issued upon conversion from Class Z | 3,655 | 45,724 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 380,309 | $ | 4,701,779 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 259,958 | $ | 3,566,052 | |||||
Shares reacquired | (12,362 | ) | (167,111 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 247,596 | $ | 3,398,941 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 75,679 | $ | 876,837 | |||||
Shares reacquired | (6,306 | ) | (69,558 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 69,373 | $ | 807,279 | |||||
|
|
|
| |||||
Class Z | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 485,864 | $ | 6,733,908 | |||||
Shares reacquired | (38,417 | ) | (517,501 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 447,447 | 6,216,407 | ||||||
Shares issued upon conversion from Class A | 306 | 4,440 | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 447,753 | $ | 6,220,847 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 437,242 | $ | 5,076,886 | |||||
Shares reacquired | (11,330 | ) | (138,791 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 425,912 | 4,938,095 | ||||||
Shares reacquired upon conversion into Class A | (3,640 | ) | (45,724 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 422,272 | $ | 4,892,371 | |||||
|
|
|
|
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
Prudential Jennison Global Opportunities Fund | 23 |
Notes to Financial Statements
(Unaudited) continued
capital share redemptions. The SCA provides for a commitment of $900 million for the period November 5, 2013 through November 4, 2014. The Funds pay an annualized commitment fee of 0.08% on the unused portion of the SCA. Prior to November 5, 2013, the Funds had another SCA with substantially similar terms. 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, 2014.
24 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||
Six Months Ended April 30, 2014(b) | Year Ended | March 14, 2012(a) through October 31, 2012 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $12.94 | $9.86 | $10.00 | |||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment loss | (.06 | ) | (.06 | ) | (.02 | ) | ||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .22 | 3.14 | (.12 | ) | ||||||||||||
Total from investment operations | .16 | 3.08 | (.14 | ) | ||||||||||||
Net asset value, end of period | $13.10 | $12.94 | $9.86 | |||||||||||||
Total Return(c): | 1.24% | 31.24% | (1.40)% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $22,186 | $10,035 | $3,898 | |||||||||||||
Average net assets (000) | $15,938 | $4,982 | $2,967 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.60% | (e) | 1.60% | 1.60% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | 1.72% | (e) | 2.19% | 3.10% | (e) | |||||||||||
Net investment loss | (.85)% | (e) | (.54)% | (.30)% | (e) | |||||||||||
Portfolio turnover rate | 32% | (f) | 70% | 48% | (f) |
(a) Commencement of Series.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 25 |
Financial Highlights
(Unaudited) continued
Class C Shares | ||||||||||||||||
Six Months Ended April 30, 2014(b) | Year Ended | March 14, 2012(a) through October 31, 2012 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $12.77 | $9.81 | $10.00 | |||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment loss | (.11 | ) | (.14 | ) | (.06 | ) | ||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .22 | 3.10 | (.13 | ) | ||||||||||||
Total from investment operations | .11 | 2.96 | (.19 | ) | ||||||||||||
Net asset value, end of period | $12.88 | $12.77 | $9.81 | |||||||||||||
Total Return(c): | 0.86% | 30.17% | (1.90)% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $4,862 | $1,659 | $593 | |||||||||||||
Average net assets (000) | $3,531 | $950 | $300 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.35% | (e) | 2.35% | 2.35% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | 2.41% | (e) | 2.89% | 3.85% | (e) | |||||||||||
Net investment loss | (1.59)% | (e) | (1.26)% | (.97)% | (e) | |||||||||||
Portfolio turnover rate | 32% | (f) | 70% | 48% | (f) |
(a) Commencement of Series.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
26 |
Class Z Shares | ||||||||||||||||
Six Months Ended April 30, 2014(b) | Year Ended | March 14, 2012(a) through October 31, 2012 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $12.99 | $9.87 | $10.00 | |||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment loss | (.04) | (.03) | - | (e) | ||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | .22 | 3.15 | (.13) | |||||||||||||
Total from investment operations | .18 | 3.12 | (.13) | |||||||||||||
Net asset value, end of period | $13.17 | $12.99 | $9.87 | |||||||||||||
Total Return(c): | 1.39% | 31.61% | (1.30)% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $31,459 | $25,219 | $15,002 | |||||||||||||
Average net assets (000) | $29,147 | $18,340 | $14,655 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.35% | (f) | 1.35% | 1.35% | (f) | |||||||||||
Expenses before waivers and/or expense reimbursement | 1.43% | (f) | 1.89% | 2.72% | (f) | |||||||||||
Net investment loss | (.64)% | (f) | (.25)% | (.03)% | (f) | |||||||||||
Portfolio turnover rate | 32% | (g) | 70% | 48% | (g) |
(a) Commencement of Series.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Less than $.005 per share.
(f) Annualized.
(g) Not annualized.
See Notes to Financial Statements.
Prudential Jennison Global Opportunities Fund | 27 |
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 Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer and Chief Compliance Officer • Deborah A. Docs, Secretary • 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 • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, 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 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
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 0263092-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL JENNISON INTERNATIONAL OPPORTUNITIES FUND
SEMIANNUAL REPORT · APRIL 30, 2014
Fund Type
International 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, 2014, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. © 2014 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, Prudential, Jennison Associates, Jennison, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
June 16, 2014
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison International Opportunities Fund informative and useful. The report covers performance for the six-month period that ended April 30, 2014.
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 of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks. We offer the expertise of Prudential Financial’s affiliated asset managers* that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential Jennison International Opportunities Fund
*Most of Prudential Investments’ equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors. Prudential Investments’ fixed income and money market funds are advised by Prudential Investment Management, Inc. (PIM) through its Prudential Fixed Income unit. Jennison Associates LLC, QMA, and PIM are registered investment advisers and Prudential Financial companies. Prudential Real Estate Investors is a unit of PIM.
Prudential Jennison International 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.
Cumulative Total Returns (Without Sales Charges) as of 4/30/14 |
| |||||||||||
Six Months | One Year | Since Inception | ||||||||||
Class A | –0.34 | % | 8.93 | % | 35.18% (6/5/12) | |||||||
Class C | –0.65 | 8.17 | 33.37 (6/5/12) | |||||||||
Class Z | –0.19 | 9.24 | 35.85 (6/5/12) | |||||||||
MSCI All Country World Index ex-US | 2.91 | 9.76 | 41.34 | |||||||||
Lipper International Multi-Cap Core Funds Average | 3.57 | 12.04 | 46.40 | |||||||||
Lipper International Multi-Cap Growth Funds Average | 2.89 | 11.20 | 41.18 | |||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/14 |
| |||||||||||
One Year | Since Inception | |||||||||||
Class A | 8.29 | % | 16.37% (6/5/12) | |||||||||
Class C | 12.76 | 19.18 (6/5/12) | ||||||||||
Class Z | 14.90 | 20.36 (6/5/12) | ||||||||||
MSCI All Country World Index ex-US | 12.36 | 19.91 | ||||||||||
Lipper International Multi-Cap Core Funds Average | 15.70 | 22.38 | ||||||||||
Lipper International Multi-Cap Growth Funds Average | 14.78 | 20.61 |
Source: Prudential Investments LLC and Lipper Inc.
Inception Date: 6/5/12
2 | Visit our website at www.prudentialfunds.com |
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class C | Class Z | ||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | |||
Contingent deferred sales charge (CDSC) | 1% on sales of $1 million or more made within 12 months of purchase | 1% on sales made within 12 months of purchase | None | |||
Annual distribution and service (12b-1) fees | .30% (.25% currently) | 1% | None |
Benchmark Definitions
Morgan Stanley Capital International (MSCI) All Country (AC) World Index ex-US
The MSCI AC World Index ex-US is an unmanaged free-float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of developed and emerging markets, excluding the U.S. The MSCI AC World Index ex-US comprises 23 developed market country 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, and the United Kingdom. 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.
Lipper International Multi-Cap Core Funds Average
Funds in the Lipper International 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. International multi-cap core funds typically have average characteristics compared to the MSCI EAFE Index.
Lipper International Multi-Cap Growth Funds Average
Funds in the Lipper International 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. International multi-cap growth funds typically have above-average characteristics compared to the MSCI EAFE Index.
Note: Although Lipper classifies the Fund in its International Multi-Cap Core Funds category, the Fund utilizes the Lipper International Multi-Cap Growth Funds category because the Fund’s investment manager believes
Prudential Jennison International Opportunities Fund | 3 |
Your Fund’s Performance (continued)
that the Lipper International Multi-Cap Growth Funds category provides a more appropriate basis for Fund performance comparisons.
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 4/30/14 | ||||
Michael Kors Holdings Ltd., United States | 3.6 | % | ||
Azimut Holding SpA, Italy | 3.6 | |||
Roche Holding AG, Switzerland | 3.6 | |||
Inditex SA, Spain | 3.5 | |||
Tencent Holdings Ltd., China | 3.3 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/14 | ||||
Pharmaceuticals | 15.9 | % | ||
Textiles, Apparel & Luxury Goods | 13.2 | |||
Internet & Catalog Retail | 6.9 | |||
Internet Software & Services | 6.6 | |||
Capital Markets | 6.5 |
Industry weightings reflect only long-term investments and are subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on November 1, 2013, at the beginning of the period, and held through the six-month period ended April 30, 2014. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of
Prudential Jennison International Opportunities Fund | 5 |
Fees and Expenses (continued)
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Prudential Jennison International Opportunities Fund | Beginning Account Value November 1, 2013 | Ending Account April 30, 2014 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 996.60 | 1.60 | % | $ | 7.92 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.86 | 1.60 | % | $ | 8.00 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 993.50 | 2.35 | % | $ | 11.62 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.14 | 2.35 | % | $ | 11.73 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 998.10 | 1.35 | % | $ | 6.69 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.10 | 1.35 | % | $ | 6.76 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2014, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2014 (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 |
The Fund’s annualized expense ratios for the period ended April 30, 2014, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||||||
A | 2.13 | % | 1.60 | % | ||||
C | 2.82 | 2.35 | ||||||
Z | 1.69 | 1.35 |
Net operating expenses shown above reflect any fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
Prudential Jennison International Opportunities Fund | 7 |
Portfolio of Investments
as of April 30, 2014 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 97.0% |
| |||||
COMMON STOCKS |
| |||||
Brazil 2.2% | ||||||
37,094 | Cielo SA | $ | 646,972 | |||
38,254 | Estacio Participacoes SA | 405,744 | ||||
|
| |||||
1,052,716 | ||||||
Canada 2.2% | ||||||
6,757 | Canadian Pacific Railway Ltd. | 1,053,889 | ||||
China 5.6% | ||||||
24,558 | Tencent Holdings Ltd. | 1,546,170 | ||||
94,793 | Tong Ren Tang Technologies Co. Ltd. (Class H Stock) | 273,741 | ||||
5,889 | Vipshop Holdings Ltd., ADR* | 825,579 | ||||
|
| |||||
2,645,490 | ||||||
Denmark 2.2% | ||||||
22,435 | Novo Nordisk A/S (Class B Stock) | 1,018,235 | ||||
Germany 7.7% | ||||||
9,514 | Bayer AG | 1,322,841 | ||||
5,412 | Continental AG | 1,273,467 | ||||
24,997 | Wirecard AG | 1,053,046 | ||||
|
| |||||
3,649,354 | ||||||
Hong Kong 3.5% | ||||||
75,286 | Galaxy Entertainment Group Ltd.* | 594,321 | ||||
142,636 | Sands China Ltd. | 1,047,200 | ||||
|
| |||||
1,641,521 | ||||||
Indonesia 0.5% | ||||||
309,454 | PT Tower Bersama Infrastructure Tbk | 174,314 | ||||
72,770 | PT Tower Bersama Infrastructure Tbk, 144A | 40,991 | ||||
|
| |||||
215,305 | ||||||
Ireland 2.6% | ||||||
21,708 | Shire PLC | 1,241,517 | ||||
Italy 13.8% | ||||||
32,480 | Anima Holding SpA* | 191,509 | ||||
46,949 | Anima Holding SpA, 144A* | 276,822 | ||||
54,780 | Azimut Holding SpA | 1,710,108 |
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 9 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Italy (cont’d.) | ||||||
23,248 | Brunello Cucinelli SpA | $ | 669,053 | |||
20,900 | Luxottica Group SpA | 1,198,750 | ||||
27,529 | Moncler SpA* | 484,750 | ||||
3,339 | Moncler SpA, 144A* | 58,796 | ||||
63,248 | World Duty Free SpA* | 849,698 | ||||
1,206 | World Duty Free SpA, 144A* | 16,202 | ||||
29,483 | Yoox SpA* | 1,058,725 | ||||
|
| |||||
6,514,413 | ||||||
Japan 9.4% | ||||||
29,353 | Fuji Heavy Industries Ltd. | 771,828 | ||||
57,081 | Hino Motors Ltd. | 751,993 | ||||
10,875 | Murata Manufacturing Co. Ltd. | 906,582 | ||||
14,807 | Pigeon Corp. | 662,925 | ||||
17,890 | SoftBank Corp. | 1,332,412 | ||||
|
| |||||
4,425,740 | ||||||
Mexico 1.5% | ||||||
268,748 | Alfa SAB de CV (Class A Stock) | 709,937 | ||||
Netherlands 1.3% | ||||||
10,363 | Randstad Holding NV | 605,610 | ||||
Philippines 0.9% | ||||||
125,100 | Universal Robina Corp. | 410,799 | ||||
South Africa 1.8% | ||||||
31,325 | Aspen Pharmacare Holdings Ltd. | 834,916 | ||||
1,095 | Aspen Pharmacare Holdings Ltd., 144A | 29,186 | ||||
|
| |||||
864,102 | ||||||
South Korea 2.5% | ||||||
1,664 | NAVER Corp. | 1,198,274 | ||||
Spain 3.5% | ||||||
10,901 | Inditex SA | 1,637,840 | ||||
Sweden 2.9% | ||||||
14,141 | Assa Abloy AB (Class B Stock) | 750,528 | ||||
20,068 | Hexagon AB (Class B Stock) | 642,489 | ||||
|
| |||||
1,393,017 |
See Notes to Financial Statements.
10 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Switzerland 5.7% | ||||||
5,751 | Roche Holding AG | $ | 1,687,035 | |||
1,533 | Swatch Group AG (The) (Bearer Shares) | 985,780 | ||||
|
| |||||
2,672,815 | ||||||
United Kingdom 17.4% | ||||||
48,138 | ARM Holdings PLC | 728,575 | ||||
82,951 | Ashtead Group PLC | 1,229,012 | ||||
19,200 | ASOS PLC* | 1,391,364 | ||||
215 | ASOS PLC, 144A* | 15,580 | ||||
45,201 | Burberry Group PLC | 1,135,184 | ||||
45,351 | Hargreaves Lansdown PLC | 897,751 | ||||
20,860 | Just Eat PLC* | 75,635 | ||||
79,394 | Just Eat PLC, 144A* | 287,868 | ||||
12,941 | SABMiller PLC | 704,647 | ||||
28,463 | Sports Direct International PLC* | 377,408 | ||||
13,272 | Sports Direct International PLC, 144A* | 175,981 | ||||
93,491 | St. James’s Place PLC | 1,218,431 | ||||
|
| |||||
8,237,436 | ||||||
|
| |||||
United States 9.8% | ||||||
5,193 | Core Laboratories NV | 974,622 | ||||
8,166 | Jazz Pharmaceuticals PLC* | 1,101,594 | ||||
18,805 | Michael Kors Holdings Ltd.* | 1,715,016 | ||||
8,505 | Stratasys Ltd.* | 823,878 | ||||
|
| |||||
4,615,110 | ||||||
|
| |||||
TOTAL LONG-TERM INVESTMENTS | 45,803,120 | |||||
|
| |||||
SHORT-TERM INVESTMENT 1.9% | ||||||
AFFILIATED MONEY MARKET MUTUAL FUND | ||||||
895,734 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 895,734 | ||||
|
| |||||
TOTAL INVESTMENTS 98.9% | 46,698,854 | |||||
Other assets in excess of liabilities 1.1% | 524,956 | |||||
|
| |||||
NET ASSETS 100.0% | $ | 47,223,810 | ||||
|
|
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 11 |
Portfolio of Investments
as of April 30, 2014 (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.
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 Series’ 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.
The following is a summary of the inputs used as of April 30, 2014 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Brazil | $ | 1,052,716 | $ | — | $ | — | ||||||
Canada | 1,053,889 | — | — | |||||||||
China | 825,579 | 1,819,911 | — | |||||||||
Denmark | — | 1,018,235 | — | |||||||||
Germany | — | 3,649,354 | — | |||||||||
Hong Kong | — | 1,641,521 | — | |||||||||
Indonesia | — | 215,305 | — | |||||||||
Ireland | — | 1,241,517 | — | |||||||||
Italy | 191,509 | 6,322,904 | — | |||||||||
Japan | — | 4,425,740 | — | |||||||||
Mexico | 709,937 | — | — | |||||||||
Netherlands | — | 605,610 | — | |||||||||
Philippines | — | 410,799 | — | |||||||||
South Africa | — | 864,102 | — | |||||||||
South Korea | — | 1,198,274 | — |
See Notes to Financial Statements.
12 |
Level 1 | Level 2 | Level 3 | ||||||||||
Common Stocks (continued): | ||||||||||||
Spain | $ | — | $ | 1,637,840 | $ | — | ||||||
Sweden | — | 1,393,017 | — | |||||||||
Switzerland | — | 2,672,815 | — | |||||||||
United Kingdom | 75,635 | 8,161,801 | — | |||||||||
United States | 4,615,110 | — | — | |||||||||
Affiliated Money Market Mutual Fund | 895,734 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 9,420,109 | $ | 37,278,745 | $ | — | ||||||
|
|
|
|
|
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The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2014 was as follows:
Pharmaceuticals | 15.9 | % | ||
Textiles, Apparel & Luxury Goods | 13.2 | |||
Internet & Catalog Retail | 6.9 | |||
Internet Software & Services | 6.6 | |||
Capital Markets | 6.5 | |||
Specialty Retail | 6.5 | |||
IT Services | 3.6 | |||
Hotels, Restaurants & Leisure | 3.5 | |||
Wireless Telecommunication Services | 3.3 | |||
Electronic Equipment, Instruments & Components | 3.2 | |||
Auto Components | 2.7 | |||
Trading Companies & Distributors | 2.6 | |||
Insurance | 2.6 | |||
Road & Rail | 2.2 | |||
Energy Equipment & Services | 2.1 | |||
Affiliated Money Market Mutual Fund | 1.9 | % | ||
Technology Hardware, Storage & Peripherals | 1.8 | |||
Automobiles | 1.7 | |||
Machinery | 1.6 | |||
Building Products | 1.6 | |||
Semiconductors & Semiconductor Equipment | 1.5 | |||
Industrial Conglomerates | 1.5 | |||
Beverages | 1.5 | |||
Household Products | 1.4 | |||
Professional Services | 1.3 | |||
Food Products | 0.9 | |||
Diversified Consumer Services | 0.8 | |||
|
| |||
98.9 | ||||
Other assets in excess of liabilities | 1.1 | |||
|
| |||
100.0 | % | |||
|
|
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 13 |
Statement of Assets & Liabilities
as of April 30, 2014 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $42,992,237) | $ | 45,803,120 | ||
Affiliated investments (cost $895,734) | 895,734 | |||
Foreign currency, at value (cost $22,979) | 23,040 | |||
Receivable for Series shares sold | 523,750 | |||
Dividends receivable | 57,868 | |||
Tax reclaim receivable | 23,049 | |||
Prepaid expenses | 204 | |||
|
| |||
Total assets | 47,326,765 | |||
|
| |||
Liabilities | ||||
Accrued expenses | 50,483 | |||
Management fee payable | 31,105 | |||
Payable for investments purchased | 13,507 | |||
Payable for Series shares reacquired | 7,026 | |||
Distribution fee payable | 595 | |||
Affiliated transfer agent fee payable | 239 | |||
|
| |||
Total liabilities | 102,955 | |||
|
| |||
Net Assets | $ | 47,223,810 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 36,195 | ||
Paid-in capital in excess of par | 44,458,506 | |||
|
| |||
44,494,701 | ||||
Accumulated net investment loss | (3,976 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (78,249 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 2,811,334 | |||
|
| |||
Net assets, April 30, 2014 | $ | 47,223,810 | ||
|
|
See Notes to Financial Statements.
14 |
Class A | ||||
Net asset value and redemption price per share | $ | 12.99 | ||
Maximum sales charge (5.50% of offering price) | 0.76 | |||
|
| |||
Maximum offering price to public | $ | 13.75 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | ||||
($388,411 ÷ 30,318 shares of common stock issued and outstanding) | $ | 12.81 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | ||||
($45,405,381 ÷ 3,479,090 shares of common stock issued and outstanding) | $ | 13.05 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 15 |
Statement of Operations
Six Months Ended April 30, 2014 (Unaudited)
Net Investment Loss | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $24,745) | $ | 219,589 | ||
Affiliated dividend income | 1,049 | |||
|
| |||
Total income | 220,638 | |||
|
| |||
Expenses | ||||
Management fee | 146,379 | |||
Distribution fee—Class A | 1,786 | |||
Distribution fee—Class C | 1,499 | |||
Custodian’s fees and expenses | 53,000 | |||
Registration fees | 20,000 | |||
Audit fee | 13,000 | |||
Legal fees and expenses | 9,000 | |||
Shareholders’ reports | 9,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $600) | 7,000 | |||
Directors’ fees | 6,000 | |||
Miscellaneous | 12,951 | |||
|
| |||
Total expenses | 279,615 | |||
Less: Expense reimbursement | (56,692 | ) | ||
Distribution fee waiver—Class A | (298 | ) | ||
|
| |||
Net expenses | 222,625 | |||
|
| |||
Net investment loss | (1,987 | ) | ||
|
| |||
Realized And Unrealized Loss On Investment And Foreign Currency Transactions | ||||
Net realized loss on: | ||||
Investment transactions | (47,163 | ) | ||
Foreign currency transactions | (19,820 | ) | ||
|
| |||
(66,983 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (557,504 | ) | ||
Foreign currencies | (586 | ) | ||
|
| |||
(558,090 | ) | |||
|
| |||
Net loss on investment and foreign currency transactions | (625,073 | ) | ||
|
| |||
Net Decrease In Net Assets Resulting From Operations | $ | (627,060 | ) | |
|
|
See Notes to Financial Statements.
16 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended | Year Ended October 31, 2013 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | (1,987 | ) | $ | 16,861 | |||
Net realized gain (loss) on investment and foreign currency transactions | (66,983 | ) | 734,198 | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (558,090 | ) | 1,933,930 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | (627,060 | ) | 2,684,989 | |||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | — | (532 | ) | |||||
Class C | — | (54 | ) | |||||
Class Z | — | (56,371 | ) | |||||
|
|
|
| |||||
— | (56,957 | ) | ||||||
|
|
|
| |||||
Distributions from net realized gains | ||||||||
Class A | (37,150 | ) | — | |||||
Class C | (8,564 | ) | — | |||||
Class Z | (594,595 | ) | — | |||||
|
|
|
| |||||
(640,309 | ) | — | ||||||
|
|
|
| |||||
Series share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 31,645,958 | 3,196,495 | ||||||
Net asset value of shares issued in reinvestment of dividends | 625,061 | 56,957 | ||||||
Cost of shares reacquired | (1,336,378 | ) | (392,418 | ) | ||||
|
|
|
| |||||
Net increase in net assets from Series share transactions | 30,934,641 | 2,861,034 | ||||||
|
|
|
| |||||
Total increase | 29,667,272 | 5,489,066 | ||||||
Net Assets: | ||||||||
Beginning of period | 17,556,538 | 12,067,472 | ||||||
|
|
|
| |||||
End of period | $ | 47,223,810 | $ | 17,556,538 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 17 |
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 six series: Prudential Jennison International Opportunities Fund (the “Series”), Prudential Jennison Global Infrastructure Fund, Prudential International Equity Fund, Prudential International Value Fund, Prudential Jennison Global Opportunities Fund and Prudential Emerging Markets Debt Local Currency Fund. These financial statements relate to the Prudential Jennison International Opportunities Fund. The financial statements of the other series are not presented herein. The Series commenced investment operations on June 5, 2012.
The investment objective of the Series is to seek long-term growth of capital.
Note 1. Accounting Policies
The following accounting policies conform to U.S. generally accepted accounting principles. The Fund and the Series consistently follow such policies in the preparation of their financial statements.
Security Valuation: The Series holds 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 (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.
18 |
Common stocks, exchange-traded funds, and derivative instruments that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy except for exchange-traded and cleared swaps which are classified as Level 2 in the fair value hierarchy, as the prices marked at the official settle are not public.
In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and asked prices, or at the last bid price in the absence of an asked price. These securities are classified as Level 2 in the fair value hierarchy, as the inputs are observable and considered to be significant to the valuation.
Common stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Securities not valued using such model prices are valued in accordance with exchange-traded common stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after evaluating observable inputs including, but not limited to yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations, and reported trades. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Prudential Jennison International Opportunities Fund | 19 |
Notes to Financial Statements
(Unaudited) continued
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that significant unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange.
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not 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, these 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 sales and maturities of short-term securities and
20 |
forward currency contracts, disposition 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.
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 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.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on an accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual.
Net investment income or loss (other than distribution fees, which are charged directly to the respective class) and 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 from net realized capital and currency gains, if any,
Prudential Jennison International Opportunities Fund | 21 |
Notes to Financial Statements
(Unaudited) continued
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 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 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 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 .90% of the Series’ average daily net assets.
PI has contractually agreed through February 28, 2015 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.
22 |
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 assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares through February 28, 2015.
PIMS has advised the Series that they received $11,029 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2014. 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, 2014, it received $134 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.
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 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, 2014 were $38,973,880 and $9,634,581, respectively.
Prudential Jennison International Opportunities Fund | 23 |
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, 2014 were as follows:
Tax Basis | $ | 43,890,466 | ||
|
| |||
Appreciation | 4,291,676 | |||
Depreciation | (1,483,288 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 2,808,388 | ||
|
|
The difference between book basis and tax basis is primarily attributable to deferred losses on wash sales. The other cost basis adjustments are primarily attributable to appreciation (depreciation) of foreign currencies and mark-to-market of receivables and payables.
The Series utilized approximately $77,000 of its capital loss carryforward to offset net taxable gains realized in the fiscal year ended October 31, 2013.
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 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.
24 |
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, 2014, Prudential Financial, Inc. through its affiliates owned 1,041 Class C shares and 1,041,033 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 | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 46,495 | $ | 624,711 | |||||
Shares issued in reinvestment of dividends and distributions | 2,534 | 33,628 | ||||||
Shares reacquired | (4,762 | ) | (63,279 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 44,267 | $ | 595,060 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 65,533 | $ | 824,730 | |||||
Shares issued in reinvestment of dividends | 45 | 532 | ||||||
Shares reacquired | (8,111 | ) | (101,961 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 57,467 | $ | 723,301 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 18,023 | $ | 241,097 | |||||
Shares issued in reinvestment of dividends and distributions | 627 | 8,234 | ||||||
Shares reacquired | (1,843 | ) | (24,220 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 16,807 | $ | 225,111 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 13,478 | $ | 171,150 | |||||
Shares issued in reinvestment of dividends | 5 | 54 | ||||||
Shares reacquired | (985 | ) | (12,138 | ) | ||||
|
|
|
| |||||
Net increase in shares outstanding | 12,498 | $ | 159,066 | |||||
|
|
|
|
Prudential Jennison International Opportunities Fund | 25 |
Notes to Financial Statements
(Unaudited) continued
Class Z | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 2,309,891 | $ | 30,780,150 | |||||
Shares issued in reinvestment of dividends and distributions | 43,784 | 583,199 | ||||||
Shares reacquired | (91,325 | ) | (1,248,879 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 2,262,350 | $ | 30,114,470 | |||||
|
|
|
| |||||
Year ended October 31, 2013: | ||||||||
Shares sold | 177,162 | $ | 2,200,615 | |||||
Shares issued in reinvestment of dividends | 4,798 | 56,371 | ||||||
Shares reacquired | (22,112 | ) | (278,319 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 159,848 | $ | 1,978,667 | |||||
|
|
|
|
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 November 5, 2013 through November 4, 2014. The Funds pay an annualized commitment fee of 0.08% on the unused portion of the SCA. Prior to November 5, 2013, the Funds had another SCA with substantially similar terms. 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, 2014.
26 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||
Six Months Ended April 30, 2014(b) | Year Ended | June 5, 2012(a) through October 31, 2012 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $13.51 | $11.30 | $10.00 | |||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment loss | (.03 | ) | (.01 | ) | (.01 | ) | ||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.01 | ) | 2.27 | 1.31 | ||||||||||||
Total from investment operations | (.04 | ) | 2.26 | 1.30 | ||||||||||||
Less Dividends and Distributions: | ||||||||||||||||
Dividends from net investment income | - | (.05 | ) | - | ||||||||||||
Distributions from net realized gains | (.48 | ) | - | - | ||||||||||||
Total dividends and distributions | (.48 | ) | (.05 | ) | - | |||||||||||
Net asset value, end of period | $12.99 | $13.51 | $11.30 | |||||||||||||
Total Return(c): | (.34)% | 20.04% | 13.00% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $1,430 | $889 | $94 | |||||||||||||
Average net assets (000) | $1,201 | $356 | $32 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.60% | (e) | 1.60% | 1.60% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | 2.13% | (e) | 3.16% | 4.42% | (e) | |||||||||||
Net investment loss | (.41)% | (e) | (.08)% | (.61)% | (e) | |||||||||||
Portfolio turnover rate | 29% | (f) | 86% | 28% | (f) |
(a) Commencement of Series.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 27 |
Financial Highlights
(Unaudited) continued
Class C Shares | ||||||||||||||||
Six Months Ended April 30, 2014(b) | Year Ended October 31, 2013(b) | June 5, 2012(a) through October 31, 2012 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $13.37 | $11.27 | $10.00 | |||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment loss | (.07 | ) | (.14 | ) | (.05 | ) | ||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.01 | ) | 2.29 | 1.32 | ||||||||||||
Total from investment operations | (.08 | ) | 2.15 | 1.27 | ||||||||||||
Less Dividends and Distributions: | ||||||||||||||||
Dividends from net investment income | - | (.05 | ) | - | ||||||||||||
Distributions from net realized gains | (.48 | ) | - | - | ||||||||||||
Total dividends and distributions | (.48 | ) | (.05 | ) | - | |||||||||||
Net asset value, end of period | $12.81 | $13.37 | $11.27 | |||||||||||||
Total Return(c): | (.65)% | 19.11% | 12.70% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $388 | $181 | $11 | |||||||||||||
Average net assets (000) | $302 | $38 | $11 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.35% | (e) | 2.35% | 2.35% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | 2.82% | (e) | 4.09% | 5.29% | (e) | |||||||||||
Net investment loss | (1.14)% | (e) | (1.12)% | (1.16)% | (e) | |||||||||||
Portfolio turnover rate | 29% | (f) | 86% | 28% | (f) |
(a) Commencement of Series.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
28 |
Class Z Shares | ||||||||||||||||
Six Months Ended April 30, 2014(b) | Year Ended | June 5, 2012(a) through October 31, 2012 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $13.55 | $11.32 | $10.00 | |||||||||||||
Income (loss) from investment operations: | ||||||||||||||||
Net investment income (loss) | - | (g) | .02 | (.01 | ) | |||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.02 | ) | 2.26 | 1.33 | ||||||||||||
Total from investment operations | (.02 | ) | 2.28 | 1.32 | ||||||||||||
Less Dividends and Distributions: | ||||||||||||||||
Dividends from net investment income | - | (.05 | ) | - | ||||||||||||
Distributions from net realized gains | (.48 | ) | - | - | ||||||||||||
Total dividends and distributions | (.48 | ) | (.05 | ) | - | |||||||||||
Net asset value, end of period | $13.05 | $13.55 | $11.32 | |||||||||||||
Total Return(c): | (.19)% | 20.24% | 13.20% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $45,405 | $16,487 | $11,962 | |||||||||||||
Average net assets (000) | $31,295 | $13,938 | $11,061 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.35% | (e) | 1.35% | 1.35% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | 1.69% | (e) | 2.73% | 4.28% | (e) | |||||||||||
Net investment income (loss) | .01% | (e) | .13% | (.17)% | (e) | |||||||||||
Portfolio turnover rate | 29% | (f) | 86% | 28% | (f) |
(a) Commencement of Series.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported, and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than a full year are not annualized.
(d) Does not include expenses of the underlying fund in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) Less than $.005 per share.
See Notes to Financial Statements.
Prudential Jennison International Opportunities Fund | 29 |
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 Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer and Chief Compliance Officer • Deborah A. Docs, Secretary • 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 • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, 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 International 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 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PRUDENTIAL JENNISON INTERNATIONAL OPPORTUNITIES FUND
SHARE CLASS | A | C | Z | |||
NASDAQ | PWJAX | PWJCX | PWJZX | |||
CUSIP | 743969677 | 743969669 | 743969651 |
MF215E2 0262880-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL JENNISON GLOBAL INFRASTRUCTURE FUND
SEMIANNUAL REPORT · APRIL 30, 2014
Fund Type
Sector Stock
Objective
Total return
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of April 30, 2014, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. © 2014 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, Prudential, Jennison Associates, Jennison, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
June 16, 2014
Dear Shareholder:
We hope you find the semiannual report for the Prudential Jennison Global Infrastructure Fund informative and useful. The report covers performance for the six-month period that ended April 30, 2014.
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 of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets. Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks.
We offer the expertise of Prudential Financial’s affiliated asset managers* that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential Jennison Global Infrastructure Fund
*Most of Prudential Investments’ equity funds are advised by Jennison Associates LLC, Quantitative Management Associates LLC (QMA), or Prudential Real Estate Investors. Prudential Investments’ fixed income and money market funds are advised by Prudential Investment Management, Inc. (PIM) through its Prudential Fixed Income unit. Jennison Associates LLC, QMA, and PIM are registered investment advisers and Prudential Financial companies. Prudential Real Estate Investors is a unit of PIM.
Prudential Jennison Global Infrastructure 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.
Cumulative Total Returns (Without Sales Charges) as of 4/30/14 | ||||||
Six Months | Since Inception | |||||
Class A | 13.44 | % | 18.20% (9/25/13) | |||
Class C | 12.95 | 17.58 (9/25/13) | ||||
Class Z | 13.48 | 18.24 (9/25/13) | ||||
S&P Global Infrastructure Index | 9.25 | 13.43 | ||||
S&P 500 Index | 8.35 | 13.32 | ||||
Lipper Specialty & Misc. Funds Average | 4.21 | 7.12 | ||||
Average Annual Total Returns (With Sales Charges) as of 3/31/14 | ||||||
One Year | Since Inception | |||||
Class A | N/A | N/A (9/25/13) | ||||
Class C | N/A | N/A (9/25/13) | ||||
Class Z | N/A | N/A (9/25/13) | ||||
S&P Global Infrastructure Index | N/A | N/A | ||||
S&P 500 Index | N/A | N/A | ||||
Lipper Specialty & Misc. Funds Average | N/A | N/A |
Source: Prudential Investments LLC and Lipper Inc.
Inception Date: 9/25/13
2 | Visit our website at www.prudentialfunds.com |
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class C | Class Z | ||||
Maximum initial sales charge | 5.50% of the public offering price | None | None | |||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or sale proceeds) | 1% on sales of $1 million or more made within 12 months of purchase | 1% on sales made within 12 months of purchase | None | |||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | .30% (.25% currently) | 1% | None |
Benchmark Definitions
S&P Global Infrastructure Index
The S&P Global Infrastructure Index is an unmanaged index that consists of 75 companies from around the world that represent the listed infrastructure universe. To create diversified exposure across the global listed infrastructure market, the index has balanced weights across three distinct infrastructure clusters: Utilities, Transportation, and Energy.
Lipper Specialty & Misc. Funds Average
Lipper Specialty & Miscellaneous Funds Average includes funds that limit investments to a specific industry (e.g., transportation, retailing, or paper, etc.) or ones that have not been classified into an existing investment objective.
S&P 500 Index
The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. public companies. It gives a broad look at how stock prices have performed in the United States.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes.
Prudential Jennison Global Infrastructure Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Holdings expressed as a percentage of net assets as of 4/30/14 | ||||
Targa Resources Corp., Oil, Gas & Consumable Fuels | 3.9 | % | ||
Cheniere Energy, Inc., Oil, Gas & Consumable Fuels | 3.8 | |||
Atlantia SpA, Transportation Infrastructure | 3.3 | |||
Groupe Eurotunnel SA, Transportation Infrastructure | 3.0 | |||
Huadian Fuxin Energy Corp. Ltd. (Class H Stock), Independent Power & Renewable Electricity Producers | 2.3 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 4/30/14 | ||||
Oil, Gas & Consumable Fuels | 29.0 | % | ||
Transportation Infrastructure | 13.7 | |||
Electric Utilities | 10.4 | |||
Independent Power & Renewable Electricity Producers | 8.9 | |||
Road & Rail | 7.8 |
Industry weightings reflect only long-term investments and are subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on November 1, 2013, at the Fund’s commencement of operations, and held through the initial fiscal period ended April 30, 2014. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the 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 Jennison Global Infrastructure Fund | 5 |
Fees and Expenses (continued)
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.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Prudential Jennison Global Infrastructure Fund | Beginning Account Value November 1, 2013 | Ending Account April 30, 2014 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,134.40 | 1.50 | % | $ | 7.94 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,017.36 | 1.50 | % | $ | 7.50 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,129.50 | 2.25 | % | $ | 11.88 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,013.64 | 2.25 | % | $ | 11.23 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,134.80 | 1.25 | % | $ | 6.62 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.60 | 1.25 | % | $ | 6.26 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2014, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2014 (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 |
The Fund’s annualized expense ratios for the period ended April 30, 2014, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||||||
A | 3.15 | % | 1.50 | % | ||||
C | 4.10 | 2.25 | ||||||
Z | 3.04 | 1.25 |
Net operating expenses shown above reflect any fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
Prudential Jennison Global Infrastructure Fund | 7 |
Portfolio of Investments
as of April 30, 2014 (Unaudited)
Shares | Description | Value (Note 1) | ||||
LONG-TERM INVESTMENTS 97.0% |
| |||||
COMMON STOCKS 97.0% |
| |||||
Australia 3.2% |
| |||||
81,491 | Asciano Ltd. | $ | 411,233 | |||
54,608 | Aurizon Holdings Ltd. | 263,659 | ||||
25,570 | Transurban Group | 170,365 | ||||
|
| |||||
845,257 | ||||||
Bermuda 0.7% |
| |||||
3,156 | Teekay Corp. | 177,083 | ||||
Brazil 0.5% |
| |||||
19,792 | Alupar Investimento SA, UTS | 140,246 | ||||
Canada 6.3% |
| |||||
5,882 | AltaGas Ltd. | 250,618 | ||||
3,056 | Canadian Pacific Railway Ltd. | 477,171 | ||||
8,316 | Enbridge, Inc. | 401,580 | ||||
14,731 | Secure Energy Services, Inc. | 264,232 | ||||
20,109 | Veresen, Inc. | 297,401 | ||||
|
| |||||
1,691,002 | ||||||
China 6.2% |
| |||||
444,581 | Beijing Enterprises Water Group Ltd. | 282,553 | ||||
429,700 | China Longyuan Power Group Corp. (Class H Stock) | 442,590 | ||||
1,328,744 | Huadian Fuxin Energy Corp. Ltd. (Class H Stock) | 621,326 | ||||
131,310 | Jiangsu Expressway Co. Ltd. (Class H Stock) | 147,935 | ||||
351,926 | Shenzhen Expressway Co. Ltd. (Class H Stock) | 160,576 | ||||
|
| |||||
1,654,980 | ||||||
France 6.0% |
| |||||
58,714 | Groupe Eurotunnel SA | 788,224 | ||||
17,300 | Suez Environnement Co. | 339,936 | ||||
17,249 | Veolia Environnement SA | 321,795 | ||||
1,910 | Vinci SA | 144,217 | ||||
|
| |||||
1,594,172 | ||||||
Germany 2.1% |
| |||||
4,792 | Fraport AG Frankfurt Airport Services Worldwide | 354,402 | ||||
1,575 | Siemens AG, ADR | 207,632 | ||||
|
| |||||
562,034 |
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 9 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
Italy 5.9% |
| |||||
33,523 | Atlantia SpA | $ | 873,238 | |||
72,870 | Enel SpA | 412,730 | ||||
232,203 | Telecom Italia SpA* | 298,387 | ||||
|
| |||||
1,584,355 | ||||||
Japan 3.1% |
| |||||
3,932 | East Japan Railway Co. | 286,900 | ||||
240 | Nippon Prologis REIT, Inc., REIT | 508,266 | ||||
10 | Nippon Prologis REIT, Inc., REIT, 144A | 21,178 | ||||
|
| |||||
816,344 | ||||||
Mexico 1.2% |
| |||||
21,959 | Promotora y Operadora de Infraestructura SAB de CV* | 306,656 | ||||
New Zealand 1.9% |
| |||||
65,426 | Auckland International Airport Ltd. | 224,080 | ||||
193,534 | Meridian Energy Ltd. | 205,268 | ||||
71,425 | Meridian Energy Ltd., 144A | 75,755 | ||||
|
| |||||
505,103 | ||||||
Portugal 1.0% |
| |||||
55,437 | EDP - Energias de Portugal SA | 269,294 | ||||
2,143 | EDP - Energias de Portugal SA, 144A | 10,410 | ||||
|
| |||||
279,704 | ||||||
South Korea 1.8% |
| |||||
24,903 | Korea Electric Power Corp., ADR | 476,644 | ||||
Spain 4.1% |
| |||||
27,104 | Abertis Infraestructuras SA | 610,098 | ||||
21,465 | Ferrovial SA | 477,131 | ||||
|
| |||||
1,087,229 | ||||||
Switzerland 1.3% |
| |||||
547 | Flughafen Zuerich AG | 345,092 | ||||
United Kingdom 4.1% |
| |||||
40,079 | Drax Group PLC | 448,643 | ||||
6,721 | Liberty Global PLC (Class C Stock)* | 258,288 |
See Notes to Financial Statements.
10 |
Shares | Description | Value (Note 1) | ||||
COMMON STOCKS (Continued) |
| |||||
United Kingdom (cont’d.) |
| |||||
3,364 | National Grid PLC, ADR | $ | 239,046 | |||
4,018 | Vodafone Group PLC, ADR | 152,523 | ||||
|
| |||||
1,098,500 | ||||||
United States 47.6% |
| |||||
3,299 | American Tower Corp., REIT | 275,533 | ||||
5,243 | American Water Works Co., Inc. | 238,714 | ||||
11,469 | Calpine Corp.* | 262,984 | ||||
2,125 | Charter Communications, Inc. (Class A Stock)* | 288,001 | ||||
13,021 | Cheniere Energy Partners LP Holdings LLC | 286,462 | ||||
18,154 | Cheniere Energy, Inc.* | 1,024,793 | ||||
3,891 | Dominion Resources, Inc. | 282,253 | ||||
7,417 | Edison International | 419,506 | ||||
10,517 | Energy Transfer Equity LP, MLP | 489,987 | ||||
6,684 | EnLink Midstream LLC | 236,146 | ||||
6,070 | EQT Midstream Partners LP, MLP | 467,572 | ||||
2,632 | Genesee & Wyoming, Inc. (Class A Stock)* | 260,594 | ||||
8,177 | ITC Holdings Corp. | 302,304 | ||||
2,827 | Kirby Corp.* | 284,453 | ||||
9,486 | MPLX LP, MLP | 513,477 | ||||
2,683 | NextEra Energy, Inc. | 267,898 | ||||
6,869 | NiSource, Inc. | 249,482 | ||||
8,798 | NRG Energy, Inc. | 287,871 | ||||
11,671 | NRG Yield, Inc. (Class A Stock) | 499,986 | ||||
8,903 | ONEOK, Inc. | 562,848 | ||||
9,179 | Phillips 66 Partners LP, MLP | 492,178 | ||||
12,295 | Plains GP Holdings LP, MLP (Class A Stock) | 338,973 | ||||
2,013 | Rockwell Automation, Inc. | 239,909 | ||||
5,493 | SBA Communications Corp. (Class A Stock)* | 493,052 | ||||
8,483 | SemGroup Corp. (Class A Stock) | 541,894 | ||||
4,040 | Sempra Energy | 398,384 | ||||
3,661 | SolarCity Corp.* | 194,948 | ||||
12,466 | SunEdison, Inc.* | 239,721 | ||||
9,528 | Targa Resources Corp. | 1,028,929 | ||||
1,886 | Union Pacific Corp. | 359,151 | ||||
5,010 | Verizon Communications, Inc. | 234,111 | ||||
5,937 | Western Gas Equity Partners LP | 290,497 | ||||
8,291 | Williams Cos., Inc. (The) | 349,631 | ||||
|
| |||||
12,702,242 | ||||||
|
| |||||
TOTAL COMMON STOCKS | 25,866,643 | |||||
|
|
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 11 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
Units | Description | Value (Note 1) | ||||
RIGHTS* | ||||||
Australia | ||||||
5,947 | Transurban Group, expiring 05/23/14 | $ | 2,331 | |||
|
| |||||
TOTAL LONG-TERM INVESTMENTS | 25,868,974 | |||||
|
| |||||
Shares | ||||||
SHORT-TERM INVESTMENT 2.1% | ||||||
AFFILIATED MONEY MARKET MUTUAL FUND | ||||||
555,600 | Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund | 555,600 | ||||
|
| |||||
TOTAL INVESTMENTS 99.1% | 26,424,574 | |||||
Other assets in excess of liabilities 0.9% | 245,071 | |||||
|
| |||||
NET ASSETS 100.0% | $ | 26,669,645 | ||||
|
|
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
MLP—Master Limited Partnership
REIT—Real Estate Investment Trust
UTS—Units
* | Non-income producing security. |
(a) | Prudential Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
See Notes to Financial Statements.
12 |
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.
The following is a summary of the inputs used as of April 30, 2014 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Common Stocks | ||||||||||||
Australia | $ | — | $ | 674,892 | $ | 170,365 | ||||||
Bermuda | 177,083 | — | — | |||||||||
Brazil | 140,246 | — | — | |||||||||
Canada | 1,691,002 | — | — | |||||||||
China | — | 1,654,980 | — | |||||||||
France | — | 1,594,172 | — | |||||||||
Germany | 207,632 | 354,402 | — | |||||||||
Italy | — | 1,584,355 | — | |||||||||
Japan | — | 816,344 | — | |||||||||
Mexico | 306,656 | — | — | |||||||||
New Zealand | 205,268 | 299,835 | — | |||||||||
Portugal | — | 279,704 | — | |||||||||
South Korea | 476,644 | — | — | |||||||||
Spain | — | 1,087,229 | — | |||||||||
Switzerland | — | 345,092 | — | |||||||||
United Kingdom | 649,857 | 448,643 | — | |||||||||
United States | 12,702,242 | — | — | |||||||||
Rights | ||||||||||||
Australia | — | — | 2,331 | |||||||||
Affiliated Money Market Mutual Fund | 555,600 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 17,112,230 | $ | 9,139,648 | $ | 172,696 | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 13 |
Portfolio of Investments
as of April 30, 2014 (Unaudited) continued
The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2014 was as follows:
Oil, Gas & Consumable Fuels | 29.0 | % | ||
Transportation Infrastructure | 13.7 | |||
Electric Utilities | 10.4 | |||
Independent Power & Renewable Electricity Producers | 8.9 | |||
Road & Rail | 7.8 | |||
Multi-Utilities | 6.9 | |||
Construction & Engineering | 3.5 | |||
Real Estate Investment Trusts (REITs) | 3.0 | |||
Wireless Telecommunication Services | 2.4 | |||
Affiliated Money Market Mutual Fund | 2.1 | |||
Diversified Telecommunication Services | 2.0 | % | ||
Media | 2.0 | |||
Water Utilities | 2.0 | |||
Electrical Equipment | 1.6 | |||
Marine | 1.1 | |||
Energy Equipment & Services | 1.0 | |||
Semiconductors & Semiconductor Equipment | 0.9 | |||
Industrial Conglomerates | 0.8 | |||
|
| |||
99.1 | ||||
Other assets in excess of liabilities | 0.9 | |||
|
| |||
100.0 | % | |||
|
|
The Fund invested in various derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is equity contracts risk.
The effect of such derivative instruments on the Fund’s financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
Fair values of derivative instruments as of April 30, 2014 as presented in the Statement of Assets and Liabilities:
Derivatives not accounted for | Asset Derivatives | Liability Derivatives | ||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | |||||||||
Equity contracts | Unaffiliated investments | $ | 2,331 | — | $ | — | ||||||
|
|
|
|
See Notes to Financial Statements.
14 |
The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2014 are as follows:
For the six months ended April 30, 2014, the Fund did not recognize any realized gain or (loss) on derivatives recognized in income.
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging | Rights(1) | |||
Equity contracts | $ | 2,331 | ||
|
|
(1) | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 15 |
Statement of Assets & Liabilities
as of April 30, 2014 (Unaudited)
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $24,101,039) | $ | 25,868,974 | ||
Affiliated investments (cost $555,600) | 555,600 | |||
Receivable for Fund shares sold | 346,695 | |||
Dividends and interest receivable | 55,716 | |||
Tax reclaim receivable | 3,091 | |||
Prepaid expenses | 225 | |||
|
| |||
Total assets | 26,830,301 | |||
|
| |||
Liabilities | ||||
Payable for Fund shares reacquired | 94,794 | |||
Accrued expenses | 61,708 | |||
Management fee payable | 3,330 | |||
Distribution fee payable | 589 | |||
Affiliated transfer agent fee payable | 235 | |||
|
| |||
Total liabilities | 160,656 | |||
|
| |||
Net Assets | $ | 26,669,645 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par value | $ | 22,774 | ||
Paid-in capital in excess of par | 24,889,656 | |||
|
| |||
24,912,430 | ||||
Undistributed net investment income | 74,943 | |||
Accumulated net realized loss on investment and foreign currency transactions | (85,795 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 1,768,067 | |||
|
| |||
Net assets, April 30, 2014 | $ | 26,669,645 | ||
|
|
See Notes to Financial Statements.
16 |
Class A: | ||||
Net asset value and redemption price per share | $ | 11.72 | ||
Maximum sales charge (5.50% of offering price) | 0.68 | |||
|
| |||
Maximum offering price to public | $ | 12.40 | ||
|
| |||
Class C: | ||||
Net asset value, offering price and redemption price per share | ||||
($439,680 ÷ 37,579 shares of common stock issued and outstanding) | $ | 11.70 | ||
|
| |||
Class Z: | ||||
Net asset value, offering price and redemption price per share | ||||
($24,559,415 ÷ 2,097,184 shares of common stock issued and outstanding) | $ | 11.71 | ||
|
|
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 17 |
Statement of Operations
Six Months Ended April 30, 2014 (Unaudited)
Net Investment Income | ||||
Income | ||||
Unaffiliated dividend income (net of foreign withholding taxes of $14,292) | $ | 294,153 | ||
Affiliated dividend income | 498 | |||
Interest income | 42 | |||
|
| |||
Total income | 294,693 | |||
|
| |||
Expenses | ||||
Management fee | 67,280 | |||
Distribution fee—Class A | 826 | |||
Distribution fee—Class C | 908 | |||
Custodian’s fees and expenses | 39,000 | |||
Registration fees | 29,000 | |||
Reports to shareholders | 25,000 | |||
Legal fees and expenses | 13,000 | |||
Audit fee | 12,000 | |||
Transfer agent’s fees and expenses (including affiliated expense of $400) | 7,000 | |||
Directors’ fees | 6,000 | |||
Miscellaneous | 5,640 | |||
|
| |||
Total expenses | 205,654 | |||
Less: Expense reimbursement | (119,820 | ) | ||
Less: Distribution fee waiver—Class A | (138 | ) | ||
|
| |||
Net expenses | 85,696 | |||
|
| |||
Net investment income | 208,997 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currencies | ||||
Net realized loss on: | ||||
Investment transactions | (77,063 | ) | ||
Foreign currency transactions | (7,201 | ) | ||
|
| |||
(84,264 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 1,562,009 | |||
Foreign currencies | 162 | |||
|
| |||
1,562,171 | ||||
|
| |||
Net gain on investment transactions and foreign currencies | 1,477,907 | |||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 1,686,904 | ||
|
|
See Notes to Financial Statements.
18 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended April 30, 2014 | September 25, 2013* through October 31, 2013 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 208,997 | $ | 2,939 | ||||
Net realized gain (loss) on investment and foreign currency transactions | (84,264 | ) | 2,587 | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | 1,562,171 | 205,896 | ||||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 1,686,904 | 211,422 | ||||||
|
|
|
| |||||
Dividends and Distributions (Note 1) | ||||||||
Dividends from net investment income | ||||||||
Class A | (5,333 | ) | — | |||||
Class C | (923 | ) | — | |||||
Class Z | (132,096 | ) | — | |||||
|
|
|
| |||||
(138,352 | ) | — | ||||||
|
|
|
| |||||
Distributions from net realized gains | ||||||||
Class A | (188 | ) | — | |||||
Class C | (45 | ) | — | |||||
Class Z | (5,357 | ) | — | |||||
|
|
|
| |||||
(5,590 | ) | — | ||||||
|
|
|
| |||||
Fund share transactions (Note 6) | ||||||||
Net proceeds from shares sold | 19,710,535 | 5,097,070 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 141,319 | — | ||||||
Cost of shares reacquired | (33,638 | ) | (25 | ) | ||||
|
|
|
| |||||
Net increase in net assets from Fund share transactions | 19,818,216 | 5,097,045 | ||||||
|
|
|
| |||||
Total increase | 21,361,178 | 5,308,467 | ||||||
Net Assets: | ||||||||
Beginning of period | 5,308,467 | — | ||||||
|
|
|
| |||||
End of period(a) | $ | 26,669,645 | $ | 5,308,467 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 74,943 | $ | 4,298 | ||||
|
|
|
|
* | Commencement of operations. |
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 19 |
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 six series: Prudential International Equity Fund, Prudential Jennison Global Infrastructure 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 Jennison Global Infrastructure Fund. The financial statements of the other series are not presented herein.
The investment objective of the Series is to achieve total return.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the Fund in the preparation of the financial statements.
Security Valuation: The Series holds 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 (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. The Valuation Procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly-scheduled quarterly meeting.
Various inputs determine how the Series’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the table following the Portfolio of Investments.
Common stocks, exchange-traded funds, and derivative instruments that are traded on a national securities exchange are valued at the last sale price as of the close of
20 |
trading on the applicable exchange. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy except for exchange-traded and cleared swaps which are classified as Level 2 in the fair value hierarchy, as the prices marked at the official settle are not public.
In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and asked prices, or at the last bid price in the absence of an asked price. These securities are classified as Level 2 in the fair value hierarchy, as the inputs are observable and considered to be significant to the valuation.
Common stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Securities not valued using such model prices are valued in accordance with exchange- traded common stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after evaluating observable inputs including, but not limited to yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations, and reported trades. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the
Prudential Jennison Global Infrastructure Fund | 21 |
Notes to Financial Statements
(Unaudited) continued
event that significant unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the investment adviser regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other mutual funds to calculate their net asset values.
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,
22 |
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.
Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in a highly liquid short-term money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities using the collateral in the open market. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities, and any interest on the investment of 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.
Warrants and Rights: The Series may hold warrants and rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Warrants and rights entitle the holder to buy a proportionate amount of common stock, or such other security that the issuer may specify, at a specific price and time through the expiration dates. Such warrants and rights are held as long positions by the Series until exercised, sold or expired. Warrants and rights are valued at fair value in accordance with the Board of Directors’ approved fair valuation procedures.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis.
Prudential Jennison Global Infrastructure Fund | 23 |
Notes to Financial Statements
(Unaudited) continued
Expenses are recorded on the accrual basis, which may require the use of certain estimates by management, that may differ from actual.
Net investment income or loss (other than distribution fees which are charged directly to the respective class) and 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.
The Fund invests in real estate investment trusts (“REITs”), which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from REITs during the year is estimated to be dividend income, capital gain or return of capital and is recorded accordingly. These estimates are adjusted when the actual source of distributions is disclosed by the REITs.
Dividends and Distributions: The Series expects to pay dividends from net investment income quarterly and distributions from net realized capital gains, if any, at least annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.
Taxes: It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends are recorded, net of reclaimable amounts, at the time the related income is earned.
Estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from 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
24 |
the subadvisor’s performance of such services. PI 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 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 1.00% of the average daily net assets of the Series.
PI has contractually agreed, to limit net annual Fund operating expenses (exclusive of distribution and service (12b-1) fees, acquired fund fees and expenses, extraordinary and certain other expenses, including taxes, interest and brokerage commissions) of each class of shares to 1.25% of the Fund’s 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, C, and Z shares of the Series. The Series compensates PIMS for distributing and servicing the Fund’s Class A and C shares, pursuant to plans of distribution (the “Distribution Plans”) regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor for Class Z shares of the Fund.
Pursuant to the Distribution Plans, the Fund 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. For the six months ended April 30, 2014, PIMS contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares.
PIMS has advised the Series that it has received $13,011 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2014. 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, 2014 it has received $43 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.
PI, Jennison and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Prudential Jennison Global Infrastructure Fund | 25 |
Notes to Financial Statements
(Unaudited) continued
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.
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, 2014 aggregated $21,226,525 and $2,212,595, 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, 2014 were as follows:
Tax Basis | $ | 24,657,563 | ||
|
| |||
Appreciation | 2,145,010 | |||
Depreciation | (377,999 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 1,767,011 | ||
|
|
The difference between book basis and tax basis is primarily attributable to deferred losses on wash sales, investment in passive foreign investment company and other cost basis differences between financial and tax reporting.
Management has analyzed the Series’ tax positions and has concluded that as of April 30, 2014, no provision for income tax is required in the Fund’s financial statements for the current reporting period.
26 |
Note 6. Capital
The Series offers Class A, C, and 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%. The Class A CDSC is waived for purchases by certain retirement and/or benefit plans. Class C shares are sold with a CDSC of 1% on shares redeemed within the first 12 months after purchase. A special exchange privilege is also available for shareholders who 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.
There are 900 million authorized shares of common stock at $.01 par value per share, designated Class A, Class C, and Class Z, each of which consists of 400 million, 100 million, and 400 million authorized shares, respectively. As of April 30, 2014, PI owned 1,009, 1,005 and 505,889 Class A, C and Z shares of the Series, respectively.
Class A | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 141,952 | $ | 1,603,474 | |||||
Shares issued in reinvestment of dividends and distributions | 268 | 2,986 | ||||||
Shares reacquired | (1,685 | ) | (19,301 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 140,535 | $ | 1,587,159 | |||||
|
|
|
| |||||
Period* ended October 31, 2013: | ||||||||
Shares sold | 2,064 | $ | 20,615 | |||||
Shares reacquired | — | — | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 2,064 | $ | 20,615 | |||||
|
|
|
| |||||
Class C | ||||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 34,073 | $ | 382,279 | |||||
Shares issued in reinvestment of dividends and distributions | 78 | 879 | ||||||
Shares reacquired | (382 | ) | (4,379 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 33,769 | $ | 378,779 | |||||
|
|
|
| |||||
Period* ended October 31, 2013: | ||||||||
Shares sold | 3,810 | $ | 39,025 | |||||
Shares reacquired | — | — | ||||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 3,810 | $ | 39,025 | |||||
|
|
|
|
Prudential Jennison Global Infrastructure Fund | 27 |
Notes to Financial Statements
(Unaudited) continued
Class Z | Shares | Amount | ||||||
Six months ended April 30, 2014: | ||||||||
Shares sold | 1,582,090 | $ | 17,724,782 | |||||
Shares issued in reinvestment of dividends and distributions | 12,296 | 137,454 | ||||||
Shares reacquired | (871 | ) | (9,958 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,593,515 | $ | 17,852,278 | |||||
|
|
|
| |||||
Period* ended October 31, 2013: | ||||||||
Shares sold | 503,671 | $ | 5,037,430 | |||||
Shares reacquired | (2 | ) | (25 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 503,669 | $ | 5,037,405 | |||||
|
|
|
|
* | Commencement of operations was September 25, 2013. |
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 November 5, 2013 through November 4, 2014. The Funds pay an annualized commitment fee of ..08% of the unused portion of the SCA. Prior to November 5, 2013, the Funds had another SCA with substantially similar terms. 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, 2014.
28 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||
Six Months Ended April 30, 2014(c) | September 25, 2013(b) through October 31, 2013(c) | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning Of Period | $10.42 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .15 | - | (g) | |||||||
Net realized and unrealized gain on investments | 1.24 | .42 | ||||||||
Total from investment operations | 1.39 | .42 | ||||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.08 | ) | - | |||||||
Distributions from net realized gains | (.01 | ) | - | |||||||
Total dividends and distributions | (.09 | ) | - | |||||||
Net asset value, end of period | $11.72 | $10.42 | ||||||||
Total Return(a): | 13.44% | 4.20% | ||||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $1,671 | $21 | ||||||||
Average net assets (000) | $555 | $17 | ||||||||
Ratios to average net assets(d): | ||||||||||
Expenses after waivers and/or expense reimbursement | 1.50% | (e) | 1.50% | (e) | ||||||
Expenses before waivers and/or expense reimbursement | 3.15% | (e) | 25.87% | (e) | ||||||
Net investment income | 2.72% | (e) | .28% | (e) | ||||||
Portfolio turnover rate | 16% | (f) | 10% | (f) |
(a) Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on the average shares outstanding during the period.
(d) Does not include expenses of the underlying portfolio in which the Fund invests.
(e) Annualized.
(f) Not Annualized.
(g) Less than $.005.
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 29 |
Financial Highlights
(Unaudited) continued
Class C Shares | ||||||||||
Six Months Ended April 30, 2014(c) | September 25, 2013(b) through October 31, 2013(c) | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning Of Period | $10.41 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .10 | .01 | ||||||||
Net realized and unrealized gain on investments | 1.24 | .40 | ||||||||
Total from investment operations | 1.34 | .41 | ||||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.04 | ) | - | |||||||
Distributions from net realized gains | (.01 | ) | - | |||||||
Total dividends and distributions | (.05 | ) | - | |||||||
Net asset value, end of period | $11.70 | $10.41 | ||||||||
Total Return(a): | 12.95% | 4.10% | ||||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $440 | $40 | ||||||||
Average net assets (000) | $183 | $17 | ||||||||
Ratios to average net assets(d): | ||||||||||
Expenses after waivers and/or expense reimbursement | 2.25% | (e) | 2.25% | (e) | ||||||
Expenses before waivers and/or expense reimbursement | 4.10% | (e) | 38.05% | (e) | ||||||
Net investment income | 1.83% | (e) | .52% | (e) | ||||||
Portfolio turnover rate | 16% | (f) | 10% | (f) |
(a) Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on the average shares outstanding during the period.
(d) Does not include expenses of the underlying portfolio in which the Fund invests.
(e) Annualized.
(f) Not Annualized.
See Notes to Financial Statements.
30 |
Class Z Shares | ||||||||||
Six Months Ended April 30, 2014(c) | September 25, 2013(b) through October 31, 2013(c) | |||||||||
Per Share Operating Performance: | ||||||||||
Net Asset Value, Beginning Of Period | $10.42 | $10.00 | ||||||||
Income (loss) from investment operations: | ||||||||||
Net investment income | .18 | .01 | ||||||||
Net realized and unrealized gain on investments | 1.22 | .41 | ||||||||
Total from investment operations | 1.40 | .42 | ||||||||
Less Dividends and Distributions: | ||||||||||
Dividends from net investment income | (.10 | ) | - | |||||||
Distributions from net realized gains | (.01 | ) | - | |||||||
Total dividends and distributions | (.11 | ) | - | |||||||
Net asset value, end of period | $11.71 | $10.42 | ||||||||
Total Return(a): | 13.48% | 4.20% | ||||||||
Ratios/Supplemental Data: | ||||||||||
Net assets, end of period (000) | $24,559 | $5,247 | ||||||||
Average net assets (000) | $12,829 | $5,113 | ||||||||
Ratios to average net assets(d): | ||||||||||
Expenses after waivers and/or expense reimbursement | 1.25% | (e) | 1.25% | (e) | ||||||
Expenses before waivers and/or expense reimbursement | 3.04% | (e) | 22.65% | (e) | ||||||
Net investment income | 3.14% | (e) | .56% | (e) | ||||||
Portfolio turnover rate | 16% | (f) | 10% | (f) |
(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on the average shares outstanding during the period.
(d) Does not include expenses of the underlying portfolio in which the Fund invests.
(e) Annualized.
(f) Not Annualized.
See Notes to Financial Statements.
Prudential Jennison Global Infrastructure Fund | 31 |
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 Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Keith F. Hartstein • Michael S. Hyland • Douglas H. McCorkindale • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Robin B. Smith • Stephen G. Stoneburn |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer and Chief Compliance Officer • Deborah A. Docs, Secretary • 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 • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, 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 Infrastructure 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 INFRASTRUCTURE FUND
SHARE CLASS | A | C | Z | |||
NASDAQ | PGJAX | PGJCX | PGJZX | |||
CUSIP | 743969792 | 743969784 | 743969776 |
MF217E2 0263050-00001-00
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 | ||||
(3) Any written solicitation to purchase securities under Rule 23c-1. – Not applicable. | ||||
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | Prudential World Fund, Inc. | |
By: | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary | ||
Date: | June 19, 2014 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Stuart S. Parker | |
Stuart S. Parker | ||
President and Principal Executive Officer | ||
Date: | June 19, 2014 | |
By: | /s/ M. Sadiq Peshimam | |
M. Sadiq Peshimam | ||
Treasurer and Principal Financial and Accounting Officer | ||
Date: | June 19, 2014 |