N-CSRS 1 d339719dncsrs.htm PRUDENTIAL WORLD FUND, INC. Prudential World Fund, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT

INVESTMENT COMPANIES

 

Investment Company Act file number:    811-03981
Exact name of registrant as specified in charter:    Prudential World Fund, Inc
Address of principal executive offices:    655 Broad Street, 17th Floor
   Newark, New Jersey 07102
Name and address of agent for service:    Deborah A. Docs
   655 Broad Street, 17th Floor
   Newark, New Jersey 07102
Registrant’s telephone number, including area code:    800-225-1852
Date of fiscal year end:    10/31/2018
Date of reporting period:    4/30/2018

Item 1 – Reports to Stockholders

LOGO

 

PGIM QMA INTERNATIONAL EQUITY FUND

(Formerly known as Prudential QMA International Equity Fund)

 

 

SEMIANNUAL REPORT

APRIL 30, 2018

 

LOGO

 

To enroll in e-delivery, go to pgiminvestments.com/edelivery

Objective: Long-term growth of capital

 

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.

 

The accompanying financial statements as of April 30, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company and member SIPC. QMA is the primary business name of Quantitative Management Associates LLC, a wholly owned subsidiary of PGIM, Inc. (PGIM), a Prudential Financial company. © 2018 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

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Table of Contents

 

Letter from the President

      5  

Your Fund’s Performance

      6  

Fees and Expenses

      9  

Holdings and Financial Statements

      11  

 

PGIM QMA International Equity Fund     3  

This Page Intentionally Left Blank

Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for PGIM QMA International Equity Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.

 

We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*

 

Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors

participate in opportunities across global markets while meeting their toughest investment

challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

PGIM QMA International Equity Fund

June 15, 2018

 

*The Prudential Day One Funds did not change their names.

 

PGIM QMA International Equity Fund     5  

Your Fund’s Performance (unaudited)

 

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

   

Total Returns as of 4/30/18

(without sales charges)

  

Average Annual Total Returns as of 4/30/18

(with sales charges)

    Six Months* (%)   One Year (%)   Five Years (%)   Ten Years (%)   Since Inception (%)
Class A   2.01     9.32   3.82   0.71   —
Class B   1.41     9.52   4.05   0.55   —
Class C   1.67   13.82   4.28   0.58   —
Class Z   2.15   15.87   5.34   1.56   —
Class R6**   2.31   16.35   N/A   N/A   21.76 (12/28/16)
MSCI All Country World Ex-US Index      
  3.47   15.91   5.46   2.26   —
Lipper International Multi-Cap Core Funds Average    
    2.50   13.78   5.89   2.46   —

 

Source: PGIM Investments LLC and Lipper Inc.

*Not annualized

**Formerly known as Class Q shares.

Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the class’ inception date.

 

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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.

 

     Class A   Class B*   Class C   Class Z   Class R6**
Maximum initial sales charge   5.50% of the public offering price   None   None   None   None
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase
price or net asset value at redemption)		   1.00% on sales of $1 million or more made within 12 months of purchase   5.00% (Yr.1) 4.00% (Yr.2) 3.00% (Yr.3) 2.00% (Yr.4) 1.00% (Yr.5) 1.00% (Yr.6) 0.00% (Yr.7)   1.00% on sales made within 12 months of purchase   None   None
Annual distribution and service (12b-1) fees
(shown as a percentage of average daily net assets)		   0.30%   1.00%   1.00%   None   None

 

*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.

**Formerly known as Class Q shares.

 

Benchmark Definitions

 

MSCI All Country World Ex-US Index—The Morgan Stanley Capital International All Country World ex-US Index (MSCI ACWI ex-US Index) is an unmanaged free float-adjusted market-capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets, excluding the US. The average annual total return for the Index measured from the month-end closest to the inception date of the Fund’s Class R6 shares is 20.12%.

 

Lipper International Multi-Cap Core Funds Average—The Lipper International Multi-Cap Core Funds Average (Lipper Average) is based on the average return of all funds in the Lipper International Multi-Cap Core Funds universe for the periods noted. Funds in the Lipper Average are funds that, by portfolio practice, invest in a variety of market-capitalization ranges without concentrating 75% of their equity assets in any one market-capitalization range over an extended period of time. International multi-cap core funds typically have above-average characteristics compared to the MSCI EAFE Index. The average annual total return for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class R6 shares is 18.69%.

 

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 of a mutual fund, but not sales charges or taxes.

 

PGIM QMA International Equity Fund     7  

Your Fund’s Performance (continued)

 

 

Presentation of Fund Holdings

 

Five Largest Holdings expressed as a
percentage of net assets as of 4/30/18 (%)		  
Toyota Motor Corp., Automobiles     1.3  
Roche Holding AG, Pharmaceuticals     1.3  
Novartis AG, Pharmaceuticals     1.3  
Allianz SE, Insurance     1.2  
Toronto-Dominion Bank (The), Banks     1.1  

 

Holdings reflect only long-term investments and are subject to change.

 

Five Largest Industries expressed as a
percentage of net assets as of 4/30/18 (%)		  
Banks     15.2  
Oil, Gas & Consumable Fuels     7.3  
Pharmaceuticals     5.7  
Metals & Mining     5.6  
Insurance     4.2  

 

Industry weightings reflect only long-term investments and are subject to change.

 

 

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Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the

 

PGIM QMA International Equity Fund     9  

Fees and Expenses (continued)

 

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.

 

PGIM QMA
International
Equity Fund		   Beginning  Account
Value
November 1, 2017		    

Ending Account
Value

April 30, 2018

     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses  Paid
During the
Six-Month Period*		  
Class A   Actual   $ 1,000.00     $ 1,020.10       1.35 %    $ 6.76  
  Hypothetical   $ 1,000.00     $ 1,018.10       1.35 %    $ 6.76  
Class B   Actual   $ 1,000.00     $ 1,014.10       2.53 %    $ 12.63  
  Hypothetical   $ 1,000.00     $ 1,012.25       2.53 %    $ 12.62  
Class C   Actual   $ 1,000.00     $ 1,016.70       2.11 %    $ 10.55  
  Hypothetical   $ 1,000.00     $ 1,014.33       2.11 %    $ 10.54  
Class Z   Actual   $ 1,000.00     $ 1,021.50       1.00 %    $ 5.01  
  Hypothetical   $ 1,000.00     $ 1,019.84       1.00 %    $ 5.01  
Class R6**   Actual   $ 1,000.00     $ 1,023.10       0.78 %    $ 3.91  
    Hypothetical   $ 1,000.00     $ 1,020.93       0.78 %    $ 3.91  

 

*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.

**Formerly known as Class Q shares.

 

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Schedule of Investments (unaudited)

as of April 30, 2018

 

Description    Shares      Value  

LONG-TERM INVESTMENTS    99.2%

 

COMMON STOCKS    96.3%

 

Australia    3.9%

 

Aristocrat Leisure Ltd.

      96,093      $ 1,927,675  

BHP Billiton Ltd.

      41,282        963,075  

BHP Billiton PLC

      27,058        576,946  

CIMIC Group Ltd.

      31,900        1,085,515  

CSL Ltd.

      16,626        2,129,602  

Insurance Australia Group Ltd.

      29,591        175,176  

Macquarie Group Ltd.

      24,094        1,962,167  

Metcash Ltd.

      393,032        1,060,833  

Wesfarmers Ltd.

      30,107        990,505  
     

 

 

  
        10,871,494  

Austria    1.2%

 

Austria Technologie & Systemtechnik AG

      23,904        590,252  

OMV AG

      21,582        1,336,681  

voestalpine AG

      25,850        1,363,773  
     

 

 

  
        3,290,706  

Belgium    0.6%

 

KBC Group NV

      19,811        1,722,366  

Brazil    1.3%

 

Banco Bradesco SA

      13,000        118,897  

Banco Santander Brasil SA

      161,600        1,759,370  

Engie Brasil Energia SA

      120,900        1,285,546  

Petroleo Brasileiro SA*

      40,600        286,722  

SLC Agricola SA

      20,000        256,280  
     

 

 

  
        3,706,815  

Canada    5.2%

 

Bank of Montreal

      8,400        637,941  

BRP, Inc.

      24,200        978,970  

Canadian Imperial Bank of Commerce

      20,500        1,785,517  

CGI Group, Inc. (Class A Stock)*

      17,300        1,002,469  

Genworth MI Canada, Inc.(a)

      10,100        326,453  

Magna International, Inc.

      4,300        253,958  

Royal Bank of Canada

      34,900        2,654,025  

Shopify, Inc. (Class A Stock)*

      1,100        147,366  

Sun Life Financial, Inc.

      28,800        1,188,831  

Suncor Energy, Inc.

      6,300        240,921  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     11  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Canada (cont’d.)

                  

Teck Resources Ltd. (Class B Stock)

      66,400      $ 1,666,788  

Toronto-Dominion Bank (The)

      56,300        3,161,956  

TransCanada Corp.

      11,200        474,885  
     

 

 

  
        14,520,080  

Chile    0.0%

 

Enel Chile SA

      333,925        41,577  

China    7.5%

 

Agricultural Bank of China Ltd. (Class H Stock)

      3,109,000        1,752,893  

Alibaba Group Holding Ltd., ADR*(a)

      6,600        1,178,364  

China Construction Bank Corp. (Class H Stock)

      2,742,000        2,872,681  

China Resources Land Ltd.

      36,000        135,206  

China Shenhua Energy Co. Ltd. (Class H Shares)

      44,500        109,152  

China Telecom Corp. Ltd. (Class H Stock)

      3,028,000        1,467,768  

Citic Ltd.

      137,000        208,925  

CNOOC Ltd. (Class H Stock)

      228,000        385,711  

Country Garden Holdings Co. Ltd.

      832,000        1,696,503  

Future Land Development Holdings Ltd.

      388,000        321,290  

Geely Automobile Holdings Ltd.

      219,000        575,977  

Industrial & Commercial Bank of China Ltd. (Class H Stock)

      2,758,000        2,421,198  

Lonking Holdings Ltd.

      1,556,000        707,080  

Ping An Insurance Group Co. of China Ltd. (Class H Stock)

      65,000        635,141  

Shanghai Industrial Holdings Ltd.

      40,000        104,892  

Sino-Ocean Group Holdings Ltd.

      1,872,000        1,299,846  

Sinotruk Hong Kong Ltd.

      722,000        845,913  

Soho China Ltd.

      263,000        135,047  

Tencent Holdings Ltd.

      42,600        2,094,341  

Weibo Corp., ADR*

      900        103,068  

Weichai Power Co. Ltd. (Class H Stock)

      902,000        1,044,198  

West China Cement Ltd.*

      1,296,000        262,862  

Yanzhou Coal Mining Co. Ltd.

      86,000        107,614  

Yuexiu Property Co. Ltd.

      1,350,000        303,725  

YY, Inc., ADR*

      1,100        106,029  
     

 

 

  
        20,875,424  

Colombia    0.0%

 

Ecopetrol SA

      126,571        139,235  

Denmark    1.2%

 

Danske Bank A/S

      6,810        237,003  

Novo Nordisk A/S (Class B Stock)

      24,004        1,128,859  

 

See Notes to Financial Statements.

 

12  

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Denmark (cont’d.)

                  

Orsted A/S, 144A

      5,319      $ 350,179  

Scandinavian Tobacco Group A/S, 144A

      49,524        827,204  

Topdanmark A/S*

      20,292        954,326  
     

 

 

  
        3,497,571  

Finland    0.2%

 

Finnair OYJ

      7,774        105,965  

UPM-Kymmene OYJ

      13,199        470,961  
     

 

 

  
        576,926  

France    6.2%

 

AXA SA

      86,293        2,467,860  

Derichebourg SA

      105,743        935,833  

Edenred

      3,116        107,348  

Eiffage SA

      1,013        120,579  

Faurecia SA

      17,203        1,404,776  

Kering SA

      370        214,044  

LVMH Moet Hennessy Louis Vuitton SE

      7,755        2,698,830  

Natixis SA

      161,323        1,324,935  

Orange SA

      101,146        1,838,794  

Sanofi

      30,089        2,378,903  

Television Francaise 1

      22,088        276,129  

Total SA

      24,974        1,569,657  

Vinci SA

      20,238        2,023,467  
     

 

 

  
        17,361,155  

Germany    4.6%

 

Allianz SE

      14,048        3,322,683  

BASF SE

      13,654        1,420,608  

Bayer AG

      22,070        2,637,794  

Covestro AG, 144A

      12,330        1,120,362  

CTS Eventim AG & Co. KGaA

      8,739        408,690  

Deutsche Lufthansa AG

      48,733        1,416,434  

E.ON SE

      75,702        828,918  

Henkel AG & Co. KGaA

      1,391        165,589  

Linde AG*

      2,350        520,608  

Siemens Healthineers AG, 144A*

      3,161        123,239  

Siltronic AG*

      5,730        917,525  
     

 

 

  
        12,882,450  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     13  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Greece    0.5%

                  

Hellenic Petroleum SA

      39,867      $ 405,643  

Motor Oil Hellas Corinth Refineries SA

      43,154        1,028,232  
     

 

 

  
        1,433,875  

Hong Kong    3.3%

                  

Galaxy Entertainment Group Ltd.

      160,402        1,403,940  

Haitong International Securities Group Ltd.(a)

      1,641,000        956,601  

Hang Seng Bank Ltd.

      61,400        1,555,257  

I-CABLE Communications Ltd.*

      62,085        1,321  

Jardine Matheson Holdings Ltd.

      17,200        1,044,556  

Kerry Properties Ltd.

      344,000        1,644,500  

Kingboard Laminates Holdings Ltd.

      323,000        430,524  

WH Group Ltd., 144A

      1,739,500        1,800,862  

Wharf Holdings Ltd. (The)

      103,000        342,666  
     

 

 

  
        9,180,227  

Hungary    0.1%

                  

Magyar Telekom Telecommunications PLC

      81,603        141,146  

MOL Hungarian Oil & Gas PLC

      22,056        254,874  
     

 

 

  
        396,020  

India    1.4%

                  

Infosys Ltd.

      66,384        1,189,754  

Larsen & Toubro Infotech Ltd., 144A

      43,421        1,016,626  

PC Jeweller Ltd.

      21,351        46,010  

Tech Mahindra Ltd.

      153,143        1,532,140  
     

 

 

  
        3,784,530  

Israel    0.1%

                  

Check Point Software Technologies Ltd.*

      1,700        164,067  

Italy    2.0%

                  

Enel SpA

      110,951        703,842  

Intesa Sanpaolo SpA

      548,274        2,085,608  

Mediobanca Banca di Credito Finanziario SpA

      135,978        1,647,714  

Telecom Italia SpA*(a)

      1,140,083        1,124,699  
     

 

 

  
        5,561,863  

Japan    17.5%

                  

Astellas Pharma, Inc.

      115,000        1,682,017  

Canon, Inc.

      53,500        1,840,357  

Central Japan Railway Co.

      5,300        1,062,038  

 

See Notes to Financial Statements.

 

14  

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Japan (cont’d.)

                  

Daiwa House Industry Co. Ltd.

      46,300      $ 1,692,787  

Fast Retailing Co. Ltd.

      3,800        1,668,260  

Hitachi Ltd.

      286,000        2,087,388  

Honda Motor Co. Ltd.

      63,600        2,186,947  

ITOCHU Corp.

      118,200        2,363,814  

Japan Tobacco, Inc.

      44,200        1,188,149  

JFE Holdings, Inc.

      69,900        1,434,512  

JXTG Holdings, Inc.

      267,900        1,746,378  

KDDI Corp.

      49,100        1,318,021  

Kirin Holdings Co. Ltd.

      10,600        297,532  

Komatsu Ltd.

      3,600        122,719  

Marubeni Corp.

      69,400        521,163  

MINEBEA MITSUMI, Inc.

      5,000        100,004  

Mitsubishi Chemical Holdings Corp.

      187,500        1,773,675  

Mitsubishi Corp.

      81,500        2,247,407  

Mitsui & Co. Ltd.

      64,200        1,157,088  

Nexon Co. Ltd.*

      96,000        1,396,934  

Nippon Telegraph & Telephone Corp.

      46,284        2,196,416  

Olympus Corp.

      9,300        346,802  

ORIX Corp.

      125,400        2,199,372  

Shin-Etsu Chemical Co. Ltd.

      5,600        561,959  

Shionogi & Co. Ltd.

      3,800        195,288  

Sony Corp.

      54,500        2,545,483  

Sumitomo Chemical Co. Ltd.

      20,000        114,433  

Sumitomo Corp.

      114,800        2,060,723  

Sumitomo Mitsui Financial Group, Inc.

      19,700        821,062  

Suzuki Motor Corp.

      17,200        924,463  

Taisei Corp.

      37,400        2,017,579  

Tokyo Electron Ltd.

      10,500        2,016,557  

Tosoh Corp.

      5,300        93,748  

Toyota Motor Corp.

      55,833        3,661,104  

Toyota Tsusho Corp.

      4,500        161,354  

TS Tech Co. Ltd.

      22,500        910,341  
     

 

 

  
        48,713,874  

Luxembourg    0.6%

                  

ArcelorMittal*

      53,000        1,796,362  

Malaysia    1.1%

                  

AirAsia Group Bhd

      1,591,000        1,554,277  

Tenaga Nasional Bhd

      378,900        1,525,707  
     

 

 

  
        3,079,984  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     15  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Mexico    0.9%

                  

America Movil SAB de CV (Class L Stock)

      424,400      $ 392,584  

Grupo Financiero Banorte SAB de CV (Class O Stock)

      288,400        1,803,613  

Wal-Mart de Mexico SAB de CV

      67,900        188,792  
     

 

 

  
        2,384,989  

Netherlands    3.1%

                  

ABN AMRO Group NV, CVA, 144A

      45,981        1,425,926  

BE Semiconductor Industries NV*

      9,464        654,086  

Koninklijke Ahold Delhaize NV

      77,493        1,869,477  

Philips Lighting NV, 144A

      25,244        767,716  

Randstad NV

      1,647        106,006  

Royal Dutch Shell PLC (Class A Stock)

      56,521        1,966,447  

Royal Dutch Shell PLC (Class B Stock)

      50,070        1,787,454  
     

 

 

  
        8,577,112  

New Zealand    0.3%

                  

Air New Zealand Ltd.

      405,982        931,552  

Norway    1.4%

                  

Aker ASA

      15,503        968,929  

DNB ASA

      57,058        1,067,062  

Marine Harvest ASA*

      76,095        1,656,426  

Orkla ASA

      10,436        96,587  
     

 

 

  
        3,789,004  

Pakistan    0.2%

                  

SUI Northern Gas Pipeline

      444,300        436,206  

Poland    0.2%

                  

Enea SA

      158,480        469,455  

Portugal    0.3%

                  

Sonae SGPS SA

      660,449        898,115  

Qatar    0.1%

                  

Ooredoo QPSC

      18,518        402,856  

Russia    0.9%

                  

Gazprom PJSC, ADR

      134,274        621,420  

Lukoil PJSC, ADR

      9,593        640,812  

Novatek PJSC, GDR

      1,121        142,367  

Sberbank of Russia PJSC, ADR

      48,247        718,880  

Tatneft PJSC

      5,629        363,071  
     

 

 

  
        2,486,550  

 

See Notes to Financial Statements.

 

16  

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Singapore    1.0%

                  

Oversea-Chinese Banking Corp. Ltd.

      211,300      $ 2,182,431  

Venture Corp. Ltd.

      38,600        603,745  

Wilmar International Ltd.

      45,900        112,291  
     

 

 

  
        2,898,467  

South Africa    1.5%

                  

Adcock Ingram Holdings Ltd.

      101,208        551,291  

Astral Foods Ltd.

      37,309        920,321  

Growthpoint Properties Ltd.

      709,923        1,657,155  

RMB Holdings Ltd.

      16,936        106,227  

Standard Bank Group Ltd.

      15,473        265,371  

Tongaat Hulett Ltd.

      84,512        612,624  
     

 

 

  
        4,112,989  

South Korea    4.4%

                  

F&F Co. Ltd.

      13,057        532,067  

Hana Financial Group, Inc.

      34,022        1,511,707  

Kakao M Corp.

      2,828        236,275  

KB Financial Group, Inc.

      19,201        1,090,906  

LG Electronics, Inc.

      1,418        134,453  

Lotte Chemical Corp.*

      3,420        1,316,963  

Orion Holdings Corp.

      4,532        103,505  

POSCO

      5,979        2,060,129  

Samsung Electronics Co. Ltd.

      556        1,378,106  

Samsung SDS Co. Ltd.

      477        108,345  

SK Hynix, Inc.

      32,646        2,567,413  

SK Innovation Co. Ltd.

      6,069        1,112,122  

SK Telecom Co. Ltd.

      518        110,678  
     

 

 

  
        12,262,669  

Spain    1.2%

                  

Amadeus IT Group SA

      30,116        2,197,255  

Iberdrola SA

      14,802        114,359  

Repsol SA

      52,797        1,007,514  
     

 

 

  
        3,319,128  

Sweden    2.3%

                  

Atlas Copco AB (Class A Stock)

      24,961        976,133  

Atlas Copco AB (Class B Stock)

      5,159        182,853  

Hexagon AB (Class B Stock)

      3,321        191,751  

Peab AB

      90,568        801,831  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     17  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Sweden (cont’d.)

                  

Sandvik AB

      37,866      $ 645,632  

Swedish Match AB

      41,507        1,862,013  

Volvo AB (Class B Stock)

      100,392        1,701,281  
     

 

 

  
        6,361,494  

Switzerland    4.7%

                  

Ferrexpo PLC

      223,474        723,544  

Georg Fischer AG

      233        289,632  

Nestle SA

      22,881        1,772,593  

Novartis AG

      46,235        3,558,908  

Oriflame Holding AG*

      18,783        890,073  

Resurs Holding AB, 144A

      27,281        175,762  

Roche Holding AG

      16,161        3,590,772  

Swiss Re AG

      19,777        1,884,141  

Zurich Insurance Group AG

      1,028        328,380  
     

 

 

  
        13,213,805  

Taiwan    2.6%

                  

AU Optronics Corp.

      2,055,000        847,391  

Chroma Ate, Inc.

      162,000        814,575  

CTBC Financial Holding Co. Ltd.

      231,000        164,741  

Formosa Petrochemical Corp.

      29,000        118,330  

Globalwafers Co. Ltd.

      7,000        112,928  

Gourmet Master Co. Ltd.

      61,385        707,304  

King’s Town Bank Co. Ltd.

      523,000        626,453  

Lien Hwa Industrial Corp.

      394,000        502,992  

Nanya Technology Corp.

      447,000        1,391,458  

President Chain Store Corp.

      55,000        540,621  

Taiwan Semiconductor Manufacturing Co. Ltd.

      128,000        975,020  

Uni-President Enterprises Corp.

      61,000        146,807  

Walsin Lihwa Corp.

      258,000        175,420  

Yuanta Financial Holding Co. Ltd.

      280,000        133,631  
     

 

 

  
        7,257,671  

Thailand    1.6%

                  

Airports of Thailand PCL

      308,200        693,476  

Beauty Community PCL

      1,383,695        1,016,714  

PTT Global Chemical PCL

      37,500        115,898  

PTT PCL

      650,000        1,159,319  

Thai Oil PCL

      390,700        1,163,092  

Thanachart Capital PCL

      216,600        367,802  
     

 

 

  
        4,516,301  

 

See Notes to Financial Statements.

 

18  

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Turkey    1.1%

                  

Akbank Turk A/S

      44,973      $ 93,574  

Aygaz A/S

      129,156        429,333  

Ford Otomotiv Sanayi A/S

      21,454        295,350  

Tekfen Holding A/S

      203,079        768,500  

Turkiye Garanti Bankasi A/S

      558,794        1,265,351  

Turkiye Petrol Rafinerileri A/S

      3,678        94,018  
     

 

 

  
        2,946,126  

United Kingdom    10.0%

                  

Anglo American PLC

      96,538        2,271,483  

Berkeley Group Holdings PLC

      27,257        1,525,966  

BP PLC

      246,518        1,831,139  

British American Tobacco PLC

      20,376        1,117,580  

Britvic PLC

      84,628        836,505  

BT Group PLC

      105,261        361,294  

CMC Markets PLC, 144A

      274,412        715,833  

CNH Industrial NV

      13,244        162,961  

esure Group PLC

      120,265        372,366  

Fiat Chrysler Automobiles NV*

      14,364        319,150  

HSBC Holdings PLC

      106,372        1,059,045  

IG Group Holdings PLC

      10,840        123,777  

Imperial Brands PLC

      49,831        1,782,947  

Inchcape PLC

      94,811        947,202  

Legal & General Group PLC

      75,658        280,220  

Lloyds Banking Group PLC

      1,999,812        1,773,739  

Old Mutual PLC

      63,250        217,902  

Persimmon PLC

      45,497        1,699,571  

Rio Tinto Ltd.

      5,546        330,065  

Rio Tinto PLC

      41,503        2,262,175  

Schroders PLC

      2,307        104,371  

Smith & Nephew PLC

      89,212        1,708,514  

Spectris PLC

      25,586        944,055  

SSE PLC

      20,541        389,842  

Unilever NV, CVA

      26,298        1,507,625  

Unilever PLC

      15,216        853,502  

Vodafone Group PLC

      826,358        2,411,506  
     

 

 

  
        27,910,335  

United States    0.0%

 

Lululemon Athletica, Inc.*

      48        4,790  
     

 

 

  

TOTAL COMMON STOCKS
(cost $229,740,054)

 

      268,776,215  
     

 

 

  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     19  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

EXCHANGE TRADED FUNDS    0.9%

 

United States

 

iShares MSCI EAFE ETF

      30,266      $ 2,141,017  

iShares MSCI Emerging Markets ETF

      10,814        507,393  
     

 

 

  

TOTAL EXCHANGE TRADED FUNDS
(cost $2,637,901)

 

      2,648,410  
     

 

 

  

PREFERRED STOCKS    2.0%

 

Brazil    0.9%

 

Banco do Estado do Rio Grande do Sul SA (PRFC)(Class B Stock)

      130,900        747,316  

Cia Paranaense de Energia (PRFC)

      123,400        947,551  

Itau Unibanco Holding SA (PRFC)

      55,600        807,368  
     

 

 

  
        2,502,235  

Germany    0.9%

 

Henkel AG & Co. KGaA (PRFC)

      869        110,437  

Volkswagen AG (PRFC)

      11,856        2,445,117  
     

 

 

  
        2,555,554  

South Korea    0.2%

 

Samsung Electronics Co. Ltd. (PRFC)

      230        457,331  
     

 

 

  

TOTAL PREFERRED STOCKS
(cost $4,273,339)

 

      5,515,120  
     

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $236,651,294)

 

      276,939,745  
     

 

 

  

SHORT-TERM INVESTMENTS    1.4%

 

AFFILIATED MUTUAL FUNDS

 

Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund(w)

      207,524        207,524  

Prudential Investment Portfolios 2 - PGIM Institutional Money Market Fund
(cost $3,728,208; includes $3,725,702 of cash collateral for securities on loan)(b)(w)

      3,728,466        3,728,466  
     

 

 

  

TOTAL SHORT-TERM INVESTMENTS
(cost $3,935,732)

 

      3,935,990  
     

 

 

  

TOTAL INVESTMENTS    100.6%
(cost $240,587,026)

         280,875,735  

Liabilities in excess of other assets    (0.6)%

         (1,765,740 ) 
     

 

 

  

NET ASSETS    100.0%

       $ 279,109,995  
     

 

 

  

 

See Notes to Financial Statements.

 

20  

 

The following abbreviations are used in the semiannual report:

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

ADR—American Depositary Receipt

CVA—Certificate Van Aandelen (Bearer)

EAFE—Europe, Australasia and Far East

ETF—Exchange Traded Funds

GDR—Global Depositary Receipt

LIBOR—London Interbank Offered Rate

MSCI—Morgan Stanley Capital International

PJSC—Public Joint-Stock Company

PRFC—Preference Shares

REIT(s)—Real Estate Investment Trust(s)

* Non-income producing security.
(a) All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $3,577,193; cash collateral of $3,725,702 (included in liabilities) was received with which the Portfolio purchased highly liquid short-term investments.
(b) Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment.
(w) PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund and the PGIM Institutional Money Market Fund.

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:

 

      Level 1         Level 2         Level 3    

Investments in Securities

 

Common Stocks

 

Australia

   $ —     $   10,871,494     $     —  

Austria

     —       3,290,706       —  

Belgium

     —       1,722,366       —  

Brazil

     3,706,815       —       —  

Canada

       14,520,080       —       —  

Chile

     41,577       —       —  

China

     1,387,461       19,487,963       —  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     21  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

      Level 1         Level 2         Level 3    

Investments in Securities (continued)

 

Common Stocks (continued)

 

Colombia

   $ 139,235     $ —     $ —  

Denmark

     —       3,497,571       —  

Finland

     —       576,926       —  

France

     —       17,361,155       —  

Germany

     123,239       12,759,211       —  

Greece

     —       1,433,875       —  

Hong Kong

     1,044,556       8,135,671       —  

Hungary

     —       396,020       —  

India

     —       3,784,530       —  

Israel

     164,067       —       —  

Italy

     —       5,561,863       —  

Japan

     —       48,713,874       —  

Luxembourg

     —       1,796,362       —  

Malaysia

     —       3,079,984       —  

Mexico

     2,384,989       —       —  

Netherlands

     —       8,577,112       —  

New Zealand

     —       931,552       —  

Norway

     —       3,789,004       —  

Pakistan

     —       436,206       —  

Poland

     —       469,455       —  

Portugal

     —       898,115       —  

Qatar

     —       402,856       —  

Russia

     2,486,550       —       —  

Singapore

     —       2,898,467       —  

South Africa

     —       4,112,989       —  

South Korea

     —       12,262,669       —  

Spain

     —       3,319,128       —  

Sweden

     —       6,361,494       —  

Switzerland

     —       13,213,805       —  

Taiwan

     —       7,257,671       —  

Thailand

     —       4,516,301       —  

Turkey

     —       2,946,126       —  

United Kingdom

     —       27,910,335       —  

United States

     4,790       —       —  

Exchange Traded Funds

      

United States

     2,648,410       —       —  

Preferred Stocks

      

Brazil

     2,502,235       —       —  

Germany

     —       2,555,554       —  

South Korea

     —       457,331       —  

Affiliated Mutual Funds

     3,935,990       —       —  
 

 

 

    

 

 

    

 

 

  

Total

   $ 35,089,994     $ 245,785,741     $     —  
 

 

 

    

 

 

    

 

 

  

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

See Notes to Financial Statements.

 

22  

Industry Classification:

 

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2018 were as follows:

 

Banks

     15.2 % 

Oil, Gas & Consumable Fuels

     7.3  

Pharmaceuticals

     5.7  

Metals & Mining

     5.6  

Insurance

     4.2  

Automobiles

     3.7  

Semiconductors & Semiconductor Equipment

     3.1  

Trading Companies & Distributors

     3.0  

Food Products

     2.9  

Real Estate Management & Development

     2.7  

Diversified Telecommunication Services

     2.7  

IT Services

     2.5  

Chemicals

     2.5  

Construction & Engineering

     2.4  

Machinery

     2.4  

Tobacco

     2.4  

Electronic Equipment, Instruments & Components

     2.3  

Household Durables

     2.1  

Food & Staples Retailing

     2.0  

Capital Markets

     1.9  

Electric Utilities

     1.6  

Wireless Telecommunication Services

     1.5  

Hotels, Restaurants & Leisure

     1.4  

Airlines

     1.4  

Affiliated Mutual Funds (including 1.3% of collateral for securities on loan)

     1.4  

Technology Hardware, Storage & Peripherals

     1.3  

Internet Software & Services

     1.3  

Textiles, Apparel & Luxury Goods

     1.2  

Diversified Financial Services

     1.2  

Personal Products

     1.2  

Specialty Retail

     1.0 % 

Exchange Traded Funds

     0.9  

Auto Components

     0.9  

Health Care Equipment & Supplies

     0.8  

Biotechnology

     0.8  

Equity Real Estate Investment Trusts (REITs)

     0.6  

Software

     0.6  

Industrial Conglomerates

     0.5  

Independent Power & Renewable Electricity Producers

     0.5  

Beverages

     0.4  

Road & Rail

     0.4  

Commercial Services & Supplies

     0.4  

Leisure Products

     0.4  

Distributors

     0.3  

Electrical Equipment

     0.3  

Media

     0.3  

Gas Utilities

     0.3  

Multi-Utilities

     0.3  

Transportation Infrastructure

     0.2  

Paper & Forest Products

     0.2  

Thrifts & Mortgage Finance

     0.1  

Household Products

     0.1  

Construction Materials

     0.1  

Consumer Finance

     0.1  

Professional Services

     0.0 * 
 

 

 

  
    100.6  

Liabilities in excess of other assets

     (0.6 ) 
 

 

 

  
    100.0 % 
 

 

 

  

 

* Less than +/- 0.05%

 

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Series entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     23  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Offsetting of financial instrument/transaction assets and liabilities:

 

Description

   Gross Market
Value of
Recognized
Assets/(Liabilities)		     Collateral
Pledged/(Received)(1)		     Net Amount  

Securities on Loan

   $ 3,577,193     $ (3,577,193 )    $   —  
 

 

 

      

 

(1) Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions.

 

See Notes to Financial Statements.

 

24  

This Page Intentionally Left Blank

Statement of Assets & Liabilities (unaudited)

as of April 30, 2018

 

Assets

         

Investments at value, including securities on loan of $3,577,193:

   

Unaffiliated investments (cost $236,651,294)

    $ 276,939,745  

Affiliated investments (cost $3,935,732)

      3,935,990  

Foreign currency, at value (cost $337,804)

      336,948  

Tax reclaim receivable

      1,284,088  

Dividends receivable

      984,076  

Receivable for Series shares sold

      182,646  

Prepaid expenses

      822  
  

 

 

  

Total Assets

      283,664,315  
  

 

 

  

Liabilities

         

Payable to broker for collateral for securities on loan

      3,725,702  

Payable for Series shares reacquired

      296,535  

Transfer agent fees

      188,813  

Management fee payable

      142,368  

Distribution fee payable

      66,539  

Affiliated transfer agent fee payable

      64,417  

Foreign capital gains tax liability

      59,278  

Accrued expenses and other liabilities

      10,668  
  

 

 

  

Total Liabilities

      4,554,320  
  

 

 

  

Net Assets

    $ 279,109,995  
  

 

 

  
          

Net assets were comprised of:

   

Common stock, at par

    $ 351,027  

Paid-in capital in excess of par

      231,947,557  
  

 

 

  
     232,298,584  

Undistributed net investment income

      704,304  

Accumulated net realized gain on investment and foreign currency transactions

      5,963,138  

Net unrealized appreciation on investments and foreign currencies

      40,143,969  
  

 

 

  

Net assets, April 30, 2018

    $ 279,109,995  
  

 

 

  

 

See Notes to Financial Statements.

 

26  

Class A

 

Net asset value and redemption price per share
($204,487,965 ÷ 25,682,273 shares of common stock issued and outstanding)

    $ 7.96  

Maximum sales charge (5.50% of offering price)

      0.46  
  

 

 

  

Maximum offering price to public

    $ 8.42  
  

 

 

  

Class B

 

Net asset value, offering price and redemption price per share
($2,762,193 ÷ 362,541 shares of common stock issued and outstanding)

    $ 7.62  
  

 

 

  

Class C

 

Net asset value, offering price and redemption price per share
($16,267,918 ÷ 2,132,922 shares of common stock issued and outstanding)

    $ 7.63  
  

 

 

  

Class Z

 

Net asset value, offering price and redemption price per share
($17,794,839 ÷ 2,217,663 shares of common stock issued and outstanding)

    $ 8.02  
  

 

 

  

Class R6

 

Net asset value, offering price and redemption price per share
($37,797,080 ÷ 4,707,294 shares of common stock issued and outstanding)

    $ 8.03  
  

 

 

  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     27  

Statement of Operations (unaudited)

Six Months Ended April 30, 2018

 

Net Investment Income (Loss)

 

Income

 

Unaffiliated dividend income (net of foreign withholding taxes of $462,019)

   $ 3,944,189  

Income from securities lending, net (including affiliated income of $2,143)

     27,524  

Affiliated dividend income

     2,820  
 

 

 

  

Total income

     3,974,533  
 

 

 

  

Expenses

 

Management fee

     1,066,449  

Distribution fee(a)

     409,093  

Transfer agent’s fees and expenses (affiliated expense of $106,301)(a)

     314,398  

Custodian and accounting fees

     102,127  

Shareholders’ reports

     37,583  

Registration fees(a)

     33,557  

Audit fee

     15,184  

Legal fees and expenses

     9,769  

Directors’ fees

     8,186  

Miscellaneous

     29,766  
 

 

 

  

Total expenses

     2,026,112  

Less: Fee waiver and/or expense reimbursement(a)

     (169,597 ) 
 

 

 

  

Net expenses

     1,856,515  
 

 

 

  

Net investment income (loss)

     2,118,018  
 

 

 

  

Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions

 

Net realized gain (loss) on:

 

Investment transactions (including affiliated of $(73)) (net of foreign capital gains taxes $(67,047))

     17,978,755  

Foreign currency transactions

     (49,947 ) 
 

 

 

  
    17,928,808  
 

 

 

  

Net change in unrealized appreciation (depreciation) on:

 

Investments (net change in foreign capital gain taxes $(59,278))

     (14,095,308 ) 

Foreign currencies

     19,431  
 

 

 

  
    (14,075,877 ) 
 

 

 

  

Net gain (loss) on investment and foreign currency transactions

     3,852,931  
 

 

 

  

Net Increase (Decrease) In Net Assets Resulting From Operations

   $ 5,970,949  
 

 

 

  

 

(a) Class specific expenses and waivers were as follows:

 

    Class A     Class B     Class C     Class Z     Class R6  

Distribution fee

     311,422       14,542       83,129       —       —  

Transfer agent’s fees and expenses

     270,892       10,821       20,154       12,467       64  

Registration fees

     7,351       6,895       6,919       6,317       6,075  

Fee waiver and/or expense reimbursement

     (114,188 )      (8,426 )      (9,144 )      (9,667 )      (28,172 ) 

 

See Notes to Financial Statements.

 

28  

Statements of Changes in Net Assets (unaudited)

     Six Months
Ended
April 30, 2018		      Year
Ended
October 31, 2017		  

Increase (Decrease) in Net Assets

                  

Operations

      

Net investment income (loss)

    $ 2,118,018      $ 4,384,696  

Net realized gain (loss) on investment and foreign currency transactions

      17,928,808        27,025,193  

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

      (14,075,877 )       28,366,824  
  

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

      5,970,949        59,776,713  
  

 

 

     

 

 

  

Dividends from net investment income

      

Class A

      (3,767,555 )       (3,575,263 ) 

Class B

      (34,288 )       (42,092 ) 

Class C

      (206,355 )       (214,555 ) 

Class Z

      (363,327 )       (1,161,844 ) 

Class R6

      (939,275 )       —  
  

 

 

     

 

 

  
     (5,310,800 )       (4,993,754 ) 
  

 

 

     

 

 

  

Series share transactions (Net of share conversions)

      

Net proceeds from shares sold

      7,948,034        12,665,842  

Net asset value of shares issued in reinvestment of dividends and distributions

      5,229,466        4,913,253  

Cost of shares reacquired

      (18,757,513 )       (42,098,907 ) 
  

 

 

     

 

 

  

Net increase (decrease) in net assets from Series share transactions

      (5,580,013 )       (24,519,812 ) 
  

 

 

     

 

 

  

Total increase (decrease)

      (4,919,864 )       30,263,147  

Net Assets:

                  

Beginning of period

      284,029,859        253,766,712  
  

 

 

     

 

 

  

End of period(a)

    $ 279,109,995      $ 284,029,859  
  

 

 

     

 

 

  

(a) Includes undistributed/(distributions in excess of) net investment income of:

    $ 704,304      $ 3,897,086  
  

 

 

     

 

 

  

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     29  

Notes to Financial Statements (unaudited)

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of seven series: PGIM Jennison Emerging Markets Equity Opportunities Fund (formerly known as Prudential Jennison Emerging Markets Equity Fund), PGIM Jennison Global Infrastructure Fund, PGIM Jennison Global Opportunities Fund, PGIM Jennison International Opportunities Fund and PGIM QMA International Equity Fund, each of which are diversified funds and PGIM Emerging Markets Debt Hard Currency Fund and PGIM Emerging Markets Debt Local Currency Fund, each of which are non-diversified funds for purposes of the 1940 Act and may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. These financial statements relate only to the PGIM QMA International Equity Fund (the “Series”). Effective June 11, 2018, the Series’ name was changed by replacing “Prudential” with “PGIM” in Series’ name and Class Q shares were renamed Class R6 shares.

 

The investment objective of the Series is to seek long-term growth of capital.

 

1. Accounting Policies

 

The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Series holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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.

 

30  

For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Series’ foreign investments may change on days when investors cannot purchase or redeem Series shares.

 

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 Schedule of Investments.

 

Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.

 

Foreign equities traded on foreign securities exchanges are generally valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stock valuation policies discussed above.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of

 

PGIM QMA International Equity Fund     31  

Notes to Financial Statements (unaudited) (continued)

 

the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the 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 transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Board of the Fund. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;

 

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, holding period realized

 

32  

foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.

 

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.

 

Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral.

 

The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of

 

PGIM QMA International Equity Fund     33  

Notes to Financial Statements (unaudited) (continued)

 

the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.

 

Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.

 

Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.

 

Taxes: It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Dividends and Distributions: The Series expects to pay dividends from net investment income and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

34  

2. Agreements

 

The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Series. PGIM Investments administers the corporate affairs of the Series and, in connection therewith, furnishes the Series with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Series’ custodian (the Custodian), and the Series’ transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Series. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Series, including, but not limited to, the custodian, transfer agent, and accounting agent.

 

PGIM Investments has entered into a subadvisory agreement with Quantitative Management Associates LLC (“QMA”). The subadvisory agreement provides that QMA will furnish investment advisory services in connection with the management of the Series. In connection therewith, QMA is obligated to keep certain books and records of the Series. PGIM Investments 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 PGIM Investments is accrued daily and payable monthly, at an annual rate of 0.75% of the average daily net assets of the Series up to and including $2 billion, 0.70% of the average daily net assets of the Series in excess of $2 billion up to and including $5 billion and 0.69% of the average daily net assets of the Series over $5 billion. The effective management fee rate before any waivers and/or expense reimbursements, was 0.75% for the six months ended April 30, 2018.

 

PGIM Investments has contractually agreed, through February 29, 2020, to limit total annual Series operating expenses after fee waivers and/or expense reimbursements to 2.53% of average daily net assets for Class B shares, and 0.78% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Series expenses such as dividend and interest expense and broker charges on short sales. To the extent shared expenses which are exclusive of class specific expenses are waived and/or reimbursed for any specific share class the Manager has voluntarily agreed to waive and/or reimburse shared expenses equally for all share classes. Fees and/or expenses waived and/or reimbursed by the Manager may be recouped by the Manager within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The effective management fee rate net of waivers and/or expense reimbursements, was 0.63% for the six months ended April 30, 2018.

 

PGIM QMA International Equity Fund     35  

Notes to Financial Statements (unaudited) (continued)

 

 

The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class B, Class C, Class Z and Class R6 shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class B and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z and Class R6 shares of the Series.

 

Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to 0.30%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively.

 

PIMS has advised the Series that it has received $58,295 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Series that for the six months ended April 30, 2018 it received $1,054 and $327 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively.

 

PGIM Investments, PIMS and QMA are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Series may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended April 30, 2018 no such transactions were entered into by the Series.

 

The Series may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money

 

36  

Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30 2018, PGIM, Inc. was compensated $177 by PGIM Investments for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.

 

4. Portfolio Securities

 

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018, were $165,706,018 and $175,131,245, respectively.

 

A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:

 

Affiliated

Mutual Funds*

   Value,
Beginning
of Period		     Cost of
Purchases		     Proceeds
from Sales		     Change in
Unrealized
Gain (Loss)		     Realized
Gain
(Loss)		     Value,
End of
Period		     Shares,
End of
Period		     Dividend
Income		  

PGIM Core Ultra Short Bond Fund

   $ 234,025     $ 22,605,975     $ 22,632,476     $ —     $ —     $ 207,524     $ 207,524     $ 2,820  

PGIM Institutional Money Market Fund

     7,029,505       15,286,424       18,587,639       249       (73 )      3,728,466       3,728,466       2,143  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  
  $ 7,263,530     $ 37,892,399     $ 41,220,115     $ 249     $ (73 )    $ 3,935,990       $ 4,963  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  

 

* The Funds did not have any capital gain distributions during the reporting period.

 

5. Tax Information

 

The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2018 were as follows:

 

Tax Basis

    $ 242,481,918  
  

 

 

  

Gross Unrealized Appreciation

      43,537,758  

Gross Unrealized Depreciation

      (5,143,941 ) 
  

 

 

  

Net Unrealized Appreciation

    $ 38,393,817  
  

 

 

  

 

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 Fund is permitted to carryforward capital losses realized on or after November 1, 2011 (“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

 

PGIM QMA International Equity Fund     37  

Notes to Financial Statements (unaudited) (continued)

 

unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law. Additionally, the Series had capital loss carryforwards of approximately $180,326,000 expire unused. Additionally, the Series utilized approximately $25,475,000 of its capital loss carryforward to offset capital gains during the fiscal year ended October 31, 2017. 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, 2017, the pre and post-enactment losses were approximately:

 

Post-Enactment Losses:

    $ 2,441,000  
  

 

 

  

Pre-Enactment Losses:

   

Expiring 2018

    $ 8,337,000  
  

 

 

  

 

Management has analyzed the Series’ tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

6. Capital and Ownership

 

The Series offers Class A, Class B, Class C, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. Class B shares are closed to new purchases. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class Z and Class R6 shares are not subject to any sales or redemption charge and are available 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.

 

38  

The Fund is authorized to issue 4.8 billion shares of common stock, with a par value of $0.01 per share, which is divided into seven series. There are 700 million shares authorized for the Series, divided into six classes, designated Class A, Class B, Class C, Class Z, Class T and Class R6 common stock, each of which consists of 100 million, 5 million, 100 million, 180 million, 135 million and 180 million authorized shares, respectively.

 

The Series currently does not have any Class T shares outstanding.

 

As of April 30, 2018, Prudential, through its affiliate entities, including affiliated funds (if applicable), owned 4,646,085 Class R6 shares of the Series. At reporting period end, four shareholders of record held 41% of the Series’ outstanding shares on behalf of multiple beneficial owners, of which 5% were held by an affiliate of Prudential.

 

Transactions in shares of common stock were as follows:

 

Class A

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        582,347      $ 4,686,359  

Shares issued in reinvestment of dividends and distributions

        477,662        3,697,101  

Shares reacquired

        (1,455,130 )       (11,711,162 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (395,121 )       (3,327,702 ) 

Shares issued upon conversion from other share class(es)

        45,451        360,036  

Shares reacquired upon conversion into other share class(es)

        (84,718 )       (681,550 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (434,388 )     $ (3,649,216 ) 
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        752,431      $ 5,382,926  

Shares issued in reinvestment of dividends and distributions

        558,922        3,504,441  

Shares reacquired

        (3,695,192 )       (25,772,057 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (2,383,839 )       (16,884,690 ) 

Shares issued upon conversion from other share class(es)

        184,434        1,286,550  

Shares reacquired upon conversion into other share class(es)

        (243,609 )       (1,688,042 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (2,443,014 )     $ (17,286,182 ) 
    

 

 

     

 

 

  

Class B

                

Six months ended April 30, 2018:

        

Shares sold

        28,886      $ 223,555  

Shares issued in reinvestment of dividends and distributions

        4,495        33,444  

Shares reacquired

        (21,949 )       (170,020 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        11,432        86,979  

Shares reacquired upon conversion into other share class(es)

        (46,438 )       (353,268 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (35,006 )     $ (266,289 ) 
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        70,167      $ 511,080  

Shares issued in reinvestment of dividends and distributions

        6,760        40,832  

Shares reacquired

        (55,031 )       (363,862 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        21,896        188,050  

Shares reacquired upon conversion into other share class(es)

        (120,582 )       (808,620 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (98,686 )     $ (620,570 ) 
    

 

 

     

 

 

  

 

PGIM QMA International Equity Fund     39  

Notes to Financial Statements (unaudited) (continued)

 

Class C

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        77,914      $ 596,966  

Shares issued in reinvestment of dividends and distributions

        27,319        202,979  

Shares reacquired

        (162,096 )       (1,247,021 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (56,863 )       (447,076 ) 

Shares reacquired upon conversion into other share class(es)

        (2,871 )       (22,263 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (59,734 )     $ (469,339 ) 
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        151,352      $ 1,041,106  

Shares issued in reinvestment of dividends and distributions

        34,905        210,474  

Shares reacquired

        (470,230 )       (3,105,114 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (283,973 )       (1,853,534 ) 

Shares reacquired upon conversion into other share class(es)

        (84,714 )       (563,607 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (368,687 )     $ (2,417,141 ) 
    

 

 

     

 

 

  

Class Z

                

Six months ended April 30, 2018:

        

Shares sold

        94,174      $ 760,430  

Shares issued in reinvestment of dividends and distributions

        45,785        356,667  

Shares reacquired

        (167,919 )       (1,358,638 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (27,960 )       (241,541 ) 

Shares issued upon conversion from other share class(es)

        82,816        671,075  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        54,856      $ 429,534  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        650,610      $ 4,273,750  

Shares issued in reinvestment of dividends and distributions

        183,440        1,157,506  

Shares reacquired

        (825,492 )       (5,651,314 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        8,558        (220,058 ) 

Shares issued upon conversion from other shares class(es)

        241,534        1,676,815  

Shares reacquired upon conversion into other share class(es)

        (5,687,349 )       (35,945,590 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (5,437,257 )     $ (34,488,833 ) 
    

 

 

     

 

 

  

 

40  

Class R6

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        208,526      $ 1,680,724  

Shares issued in reinvestment of dividends and distributions

        120,574        939,275  

Shares reacquired

        (523,815 )       (4,270,672 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (194,715 )       (1,650,673 ) 

Shares issued upon conversion from other share class(es)

        3,193        25,970  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (191,522 )     $ (1,624,703 ) 
    

 

 

     

 

 

  

Period* ended October 31, 2017:

        

Shares sold

        201,769      $ 1,456,980  

Shares reacquired†

        (1,003,132 )       (7,206,560 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (801,363 )       (5,749,580 ) 

Shares issued upon conversion from other share class(es)

        5,700,179        36,042,494  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        4,898,816      $ 30,292,914  
    

 

 

     

 

 

  

 

* Commencement of offering was December 28, 2016.
† Includes affiliated redemption of 1,582 shares with a value of $12,199 for Class R6 shares.

 

7. Borrowings

 

The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCAs is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.

 

Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.

 

The Series utilized the SCA during the reporting period ended April 30, 2018. The average daily balance for the 47 days that the Series had loans outstanding during the period was $383,128, borrowed at a weighted average interest rate of 2.95%. The maximum loan balance outstanding during the period was $1,855,000. At April 30, 2018, the Series did not have an outstanding loan balance.

 

PGIM QMA International Equity Fund     41  

Financial Highlights

 

Class A Shares  
    

Six Months
Ended
April 30,

          Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $7.95               $6.48       $6.65       $7.36       $7.37       $6.02  
Income (loss) from investment operations:                                                  
Net investment income (loss)     0.06               0.11       0.11       0.11       0.15       0.12  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     0.10               1.49       (0.17 )      (0.65 )      (0.02 )      1.36  
Total from investment operations     0.16               1.60       (0.06 )      (0.54 )      0.13       1.48  
Less Dividends:                                                        
Dividends from net investment income     (0.15 )              (0.13 )      (0.11 )      (0.17 )      (0.14 )      (0.13 ) 
Net asset value, end of period     $7.96               $7.95       $6.48       $6.65       $7.36       $7.37  
Total Return(b):     2.01%               25.17%       (0.93)%       (7.37)%       1.84%       25.06%  
             
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $204,488               $207,626       $185,120       $211,314       $218,909       $234,668  
Average net assets (000)     $209,335               $192,517       $189,980       $229,598       $232,049       $221,300  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.35% (d)              1.58%       1.66%       1.62%       1.59%       1.59%  
Expenses before waivers and/or expense reimbursement     1.46% (d)              1.59%       1.66%       1.62%       1.59%       1.59%  
Net investment income (loss)     1.44% (d)              1.62%       1.69%       1.39%       2.02%       1.83%  
Portfolio turnover rate(f)     58% (e)              105%       114%       111%       134%       114%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not Annualized.
(f) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

42  

Class B Shares  
    

Six Months
Ended
April 30,

          Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $7.60               $6.21       $6.37       $7.05       $7.07       $5.78  
Income (loss) from investment operations:                                                        
Net investment income (loss)     0.01               0.05       0.06       0.05       0.10       0.07  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     0.10               10.43       (0.16 )      (0.61 )      (0.03 )      1.32  
Total from investment operations     0.11               1.48       (0.10 )      (0.56 )      0.07       1.39  
Less Dividends:                                                        
Dividends from net investment income     (0.09 )              (0.09 )      (0.06 )      (0.12 )      (0.09 )      (0.10 ) 
Net asset value, end of period     $7.62               $7.60       $6.21       $6.37       $7.05       $7.07  
Total Return(b):     1.41%               24.12%       (1.55)%       (7.96)%       1.10%       24.26%  
             
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $2,762               $3,020       $3,080       $4,774       $5,006       $6,066  
Average net assets (000)     $2,933               $2,833       $3,710       $5,313       $5,868       $5,690  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     2.53% (d)              2.39%       2.36%       2.32%       2.29%       2.29%  
Expenses before waivers and/or expense reimbursement     3.11% (d)              2.72%       2.36%       2.32%       2.29%       2.29%  
Net investment income (loss)     0.25% (d)              0.75%       0.96%       0.68%       1.35%       1.13%  
Portfolio turnover rate(f)     58% (e)              105%       114%       111%       134%       114%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not Annualized.
(f) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     43  

Financial Highlights (continued)

 

Class C Shares  
    

Six Months
Ended
April 30,

           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $7.60               $6.20       $6.37       $7.05       $7.07       $5.78  
Income (loss) from investment operations:                                                        
Net investment income (loss)     0.03               0.06       0.06       0.06       0.10       0.07  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     0.09               1.43       (0.17 )      (0.62 )      (0.03 )      1.32  
Total from investment operations     0.12               1.49       (0.11 )      (0.56 )      0.07       1.39  
Less Dividends:                                                        
Dividends from net investment income     (0.09 )              (0.09 )      (0.06 )      (0.12 )      (0.09 )      (0.10 ) 
Net asset value, end of period     $7.63               $7.60       $6.20       $6.37       $7.05       $7.07  
Total Return(b):     1.67%               24.33%       (1.71)%       (7.96)%       1.10%       24.27%  
             
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $16,268               $16,661       $15,892       $18,209       $18,146       $19,472  
Average net assets (000)     $16,763               $15,736       $16,416       $20,086       $19,402       $18,341  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     2.11% (d)              2.32%       2.36%       2.32%       2.29%       2.29%  
Expenses before waivers and/or expense reimbursement     2.22% (d)              2.33%       2.36%       2.32%       2.29%       2.29%  
Net investment income (loss)     0.69% (d)              0.86%       0.98%       0.71%       1.32%       1.13%  
Portfolio turnover rate(f)     58% (e)              105%       114%       111%       134%       114%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not annualized.
(f) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

 

See Notes to Financial Statements.

 

44  

Class Z Shares  
     Six Months
Ended
April 30, 		        Year Ended October 31,  
     2018          2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                    
Net Asset Value, Beginning of Period     $8.02           $6.54       $6.70       $7.42       $7.43       $6.07  
Income (loss) from investment operations:                                                    
Net investment income (loss)     0.07           0.11       0.13       0.13       0.16       0.15  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     0.10           1.52       (0.16 )      (0.66 )      (0.01 )      1.36  
Total from investment operations     0.17           1.63       (0.03 )      (0.53 )      0.15       1.51  
Less Dividends:                                                    
Dividends from net investment income     (0.17 )          (0.15 )      (0.13 )      (0.19 )      (0.16 )      (0.15 ) 
Net asset value, end of period     $8.02           $8.02       $6.54       $6.70       $7.42       $7.43  
Total Return(b):     2.15%           25.46%       (0.44)%       (7.15)%       2.12%       25.36%  
             
Ratios/Supplemental Data:                                        
Net assets, end of period (000)     $17,795           $17,344       $49,675       $54,726       $48,064       $71,753  
Average net assets (000)     $17,722           $21,567       $50,923       $55,405       $53,881       $60,981  
Ratios to average net assets(c):                                                    
Expenses after waivers and/or expense reimbursement     1.00% (d)          1.31%       1.36%       1.32%       1.29%       1.29%  
Expenses before waivers and/or expense reimbursement     1.11% (d)          1.32%       1.36%       1.32%       1.29%       1.29%  
Net investment income (loss)     1.81% (d)          1.57%       1.99%       1.69%       2.07%       2.17%  
Portfolio turnover rate(f)     58% (e)          105%       114%       111%       134%       114%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not annualized.
(f) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM QMA International Equity Fund     45  

Financial Highlights (continued)

 

Class R6 Shares  
     Six Months
Ended
April 30,
2018		            December 28,
2016(a)
through
October 31,
2017		  
Per Share Operating Performance(b):                        
Net Asset Value, Beginning of Period     $8.04               $6.32  
Income (loss) from investment operations:                        
Net investment income (loss)     0.08               0.15  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     0.10               1.57  
Total from investment operations     0.18               1.72  
Less Dividends:                        
Dividends from net investment income     (0.19 )              -  
Net asset value, end of period     $8.03               $8.04  
Total Return(c):     2.31%               27.22%  
     
Ratios/Supplemental Data:  
Net assets, end of period (000)     $37,797               $39,379  
Average net assets (000)     $39,991               $37,891  
Ratios to average net assets(d):                        
Expenses after waivers and/or expense reimbursement     0.78% (e)              0.95% (e) 
Expenses before waivers and/or expense reimbursement     0.92% (e)              0.99% (e) 
Net investment income (loss)     2.01% (e)              2.45% (e) 
Portfolio turnover rate(g)     58% (f)              105% (f) 

 

(a) Commencement of offering.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

46  

∎ MAIL   ∎ TELEPHONE   ∎ WEBSITE

655 Broad Street

Newark, NJ 07102

  

(800) 225-1852

  

www.pgiminvestments.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

DIRECTORS
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres

 

OFFICERS
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC   655 Broad Street
Newark, NJ 07102

 

INVESTMENT SUBADVISER   Quantitative Management Associates LLC   Gateway Center Two
100 Mulberry Street
Newark, NJ 07102

 

DISTRIBUTOR   Prudential Investment
Management Services LLC		   655 Broad Street
Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon   225 Liberty Street
New York, NY 10286

 

TRANSFER AGENT   Prudential Mutual Fund
Services LLC		   PO Box 9658
Providence, RI 02940

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP   787 Seventh Avenue
New York, NY 10019

 

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM QMA International Equity Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY
FEDERAL GOVERNMENT AGENCY		   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED
BY ANY BANK OR ANY BANK AFFILIATE

LOGO

 

 

PGIM QMA INTERNATIONAL EQUITY FUND

 

SHARE CLASS   A   B   C   Z   R6*
NASDAQ   PJRAX   PJRBX   PJRCX   PJIZX   PJRQX
CUSIP   743969859   743969867   743969875   743969883   743969578

 

*Formerly known as Class Q shares.

 

MF190E2    

LOGO

 

PGIM EMERGING MARKETS DEBT

LOCAL CURRENCY FUND

(Formerly known as Prudential Emerging Markets Debt Local Currency Fund)

 

 

SEMIANNUAL REPORT

APRIL 30, 2018

 

LOGO

 

To enroll in e-delivery, go to pgiminvestments.com/edelivery

Objective: Total return, through a combination of current income and
capital appreciation

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.

 

The accompanying financial statements as of April 30, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS), member SIPC. PGIM Fixed Income is a unit of PGIM, Inc. (PGIM), a registered investment adviser. PIMS and PGIM are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

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Table of Contents

 

Letter from the President

      5  

Your Fund’s Performance

      6  

Fees and Expenses

      9  

Holdings and Financial Statements

      11  

 

PGIM Emerging Markets Debt Local Currency Fund     3  

This Page Intentionally Left Blank

 

 

Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for PGIM Emerging Markets Debt Local Currency Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.

 

We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*

 

Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors

participate in opportunities across global markets while meeting their toughest investment

challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

PGIM Emerging Markets Debt Local Currency Fund

June 15, 2018

 

*The Prudential Day One Funds did not change their names.

 

PGIM Emerging Markets Debt Local Currency Fund     5  

Your Fund’s Performance (unaudited)

 

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

   

Total Returns as of 4/30/18

(without sales charges)

   Average Annual Total Returns as of 4/30/18 
(with sales charges)
    Six Months* (%)   One Year (%)   Five Years (%)   Since Inception (%)
Class A   4.48   2.44   –3.34     –0.68 (3/30/11)
Class C   3.89   5.22   –3.18     –0.66 (3/30/11)
Class Z   4.23   7.11   –2.19       0.27 (3/30/11)
Class R6**   4.53   7.33   –2.08       0.35 (3/30/11)
JP Morgan Government Bond Index-Emerging Markets Global Diversified Index
  5.15   8.38   –1.92       0.63               
Lipper Emerging Markets Local Currency Debt Funds Average
    3.71   6.66   –2.14       0.46               

 

Source: PGIM Investments LLC, Lipper, Inc. and JP Morgan

*Not annualized

**Formerly known as Class Q shares.

 

Since Inception returns are provided since the Fund has less than 10 fiscal years of returns. Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the Fund’s inception date.

 

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   Class R6*
Maximum initial sales charge   4.50% of the public offering price   None   None   None
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption)   1.00% on sales of $1 million or more made within 12 months of purchase   1.00% 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)   0.25%   1.00%   None   None

 

*Formerly known as Class Q shares.

 

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Benchmark Definitions

 

JP Morgan Government Bond Index-Emerging Markets Global Diversified Index—The JP Morgan Government Bond Index-Emerging Markets Global Diversified Index, an unmanaged index, is a comprehensive emerging markets debt benchmark that tracks local currency bonds issued by emerging market governments.

 

Lipper Emerging Markets Local Currency Debt Funds Average—The Lipper Emerging Markets Local Currency Debt Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Emerging Markets Local Currency Debt Funds universe for the periods noted. Funds in the Lipper Average seek either current income or total return by investing at least 65% of total assets in debt issues denominated in the currency of their market of issuance. “Emerging markets” are 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 of a mutual fund, but not sales charges or taxes.

 

Distributions and Yields as of 4/30/18
  Total Distributions
Paid for
Six Months ($)		    SEC 30-Day
Subsidized
Yield* (%)		    SEC 30-Day
Unsubsidized
Yield** (%)
Class A   0.19    5.14          4.40
Class C   0.16    4.56          2.17
Class Z   0.20    5.58          5.23
Class R6***   0.20    5.66    –200.00

 

*SEC 30-Day Subsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s net expenses (net of any expense waivers or reimbursements).

**SEC 30-Day Unsubsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s gross expenses.

***Formerly known as Class Q shares.

 

PGIM Emerging Markets Debt Local Currency Fund     7  

Your Fund’s Performance (continued)

 

 

Credit Quality expressed as a percentage of total investments as of 4/30/18 (%)  
AAA     1.5  
AA     5.3  
A     30.5  
BBB     35.4  
BB     14.9  
B     10.8  
Cash/Cash Equivalents     1.7  
Total Investments     100.0  

 

Source: PGIM Fixed Income

Credit ratings reflect the highest rating assigned by a nationally recognized statistical rating organization (NRSRO) such as Moody’s Investor Service, Inc. (Moody’s), S&P Global Ratings (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, ratings are converted to the comparable S&P/Fitch rating tier nomenclature. These rating agencies are independent and are widely used. The Not Rated category consists of securities that have not been rated by a NRSRO. Credit ratings are subject to change. Values may not sum to 100.0% due to rounding.

 

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Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period

 

PGIM Emerging Markets Debt Local Currency Fund     9  

Fees and Expenses (continued)

 

and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

PGIM 
Emerging Markets Debt
Local Currency Fund		   Beginning  Account
Value
November 1, 2017		    

Ending Account
Value

April 30, 2018

     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses  Paid
During the
Six-Month Period*		  
Class A   Actual   $ 1,000.00     $ 1,044.80       1.13 %    $ 5.73  
  Hypothetical   $ 1,000.00     $ 1,019.19       1.13 %    $ 5.66  
Class C   Actual   $ 1,000.00     $ 1,038.90       1.88 %    $ 9.50  
  Hypothetical   $ 1,000.00     $ 1,015.47       1.88 %    $ 9.39  
Class Z   Actual   $ 1,000.00     $ 1,042.30       0.88 %    $ 4.46  
  Hypothetical   $ 1,000.00     $ 1,020.43       0.88 %    $ 4.41  
Class R6**   Actual   $ 1,000.00     $ 1,045.30       0.88 %    $ 4.46  
    Hypothetical   $ 1,000.00     $ 1,020.43       0.88 %    $ 4.41  

 

*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.

**Formerly known as Class Q shares.

 

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Schedule of Investments (unaudited)

as of April 30, 2018

 

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

LONG-TERM INVESTMENTS    96.7%

 

SOVEREIGN BONDS    91.9%

 

Argentina    1.8%

 

Argentine Bonos Del Tesoro, Bonds(a)

     21.200 %      09/19/18     ARS 7,650     $ 360,405  

Argentine Republic Government International Bond, Sr. Unsec’d. Notes

     5.625       01/26/22       260       262,210  

Provincia de Buenos Aires,

        

Sr. Unsec’d. Notes

     9.125       03/16/24       350       388,500  

Sr. Unsec’d. Notes

     9.950       06/09/21       140       155,357  
       

 

 

  
          1,166,472  

Brazil    11.7%

 

Brazil Loan Trust I, Gov’t. Gtd. Notes

     5.477       07/24/23       108       111,072  

Brazil Notas do Tesouro Nacionalie,

        

Notes, Ser. NTNF

     10.000       01/01/21     BRL 3,834       1,149,416  

Notes, Ser. NTNF

     10.000       01/01/23     BRL 12,181       3,620,622  

Notes, Ser. NTNF

     10.000       01/01/25     BRL 2,751       809,671  

Notes, Ser. NTNF

     10.000       01/01/27     BRL 5,755       1,679,391  

Brazilian Government International Bond, Sr. Unsec’d. Notes

     8.500       01/05/24     BRL 54       15,922  

State of Minas Gerais, Sec’d. Notes

     5.333       02/15/28       435       432,825  
       

 

 

  
    7,818,919  

Chile    2.9%

                                

Bonos De La Tesoreria De La Republica En Pesos, Bonds

     4.500       03/01/26     CLP 1,190,000       1,947,049  

Colombia    4.0%

                                

Colombian TES,

        

Bonds, Ser. B

     6.000       04/28/28     COP  5,815,000       2,003,447  

Bonds, Ser. B

     10.000       07/24/24     COP 1,580,000       679,608  
       

 

 

  
    2,683,055  

Cote d’lvoire    0.4%

                                

Ivory Coast Government International Bond, Sr. Unsec’d. Notes

     5.375       07/23/24       250       244,650  

Czech Republic    1.9%

                                

Czech Republic Government Bond,

        

Bonds, Ser. 46

     3.750       09/12/20     CZK 6,500       328,635  

Bonds, Ser. 89

     2.400       09/17/25     CZK 9,190       460,915  

Bonds, Ser. 95

     0.450       10/25/23     CZK 3,270       148,067  

Bonds, Ser. 95

     1.000       06/26/26     CZK 7,100       319,013  
       

 

 

  
    1,256,630  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     11  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

 

Ecuador    1.0%

                                

Ecuador Government International Bond,

        

Sr. Unsec’d. Notes

     7.950 %      06/20/24       200     $ 188,000  

Sr. Unsec’d. Notes

     10.750       03/28/22       460       485,300  
       

 

 

  
    673,300  

Egypt    0.3%

                                

Egypt Government International Bond, Sr. Unsec’d. Notes, MTN

     6.125       01/31/22       215       220,633  

El Salvador    0.3%

                                

El Salvador Government International Bond, Sr. Unsec’d. Notes

     7.750       01/24/23       185       199,115  

Gabon    0.3%

                                

Gabon Government International Bond, Bonds

     6.375       12/12/24       200       194,918  

Ghana    0.6%

                                

Ghana Government International Bond, Sr. Unsec’d. Notes

     7.875       08/07/23       400       433,880  

Greece    0.6%

                                

Hellenic Republic Government Bond, Sr. Unsec’d Notes

     3.500       01/30/23     EUR 310       385,040  

Hungary    2.1%

                                

Hungary Government Bond,

        

Bonds, Ser. 21/B

     2.500       10/27/21     HUF 76,900       311,998  

Bonds, Ser. 23/A

     6.000       11/24/23     HUF 68,710       328,199  

Bonds, Ser. 25/B

     5.500       06/24/25     HUF 89,380       422,390  

Bonds, Ser. 31/A

     3.250       10/22/31     HUF 88,930       349,035  
       

 

 

  
    1,411,622  

Indonesia    10.5%

                                

Indonesia Treasury Bond,

        

Sr. Unsec’d. Notes, Ser. FR53

     8.250       07/15/21     IDR 7,820,000       590,189  

Sr. Unsec’d. Notes, Ser. FR56

     8.375       09/15/26     IDR  17,020,000       1,323,064  

Sr. Unsec’d. Notes, Ser. FR59

     7.000       05/15/27     IDR 4,890,000       354,119  

Sr. Unsec’d. Notes, Ser. FR61

     7.000       05/15/22     IDR 3,000,000       218,868  

Sr. Unsec’d. Notes, Ser. FR63

     5.625       05/15/23     IDR 250,000       17,367  

Sr. Unsec’d Notes, Ser. FR64

     6.125       05/15/28     IDR 10,305,000       696,259  

Sr. Unsec’d. Notes, Ser. FR65

     6.625       05/15/33     IDR 5,700,000       387,784  

Sr. Unsec’d. Notes, Ser. FR68

     8.375       03/15/34     IDR 13,300,000       1,040,101  

Sr. Unsec’d. Notes, Ser. FR70

     8.375       03/15/24     IDR 7,910,000       609,594  

Sr. Unsec’d. Notes, Ser. FR71

     9.000       03/15/29     IDR 7,310,000       600,990  

 

See Notes to Financial Statements.

 

12  

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

 

Indonesia (cont’d.)

                                

Indonesia Treasury Bond, (cont’d.)

        

Sr. Unsec’d. Notes, Ser. FR72

     8.250 %      05/15/36     IDR 12,850,000     $ 989,669  

Sr. Unsec’d. Notes, Ser. FR73

     8.750       05/15/31     IDR 2,705,000       218,247  
       

 

 

  
    7,046,251  

Iraq    1.0%

                                

Iraq International Bond,

        

Sr. Unsec’d. Notes

     6.752       03/09/23       480       479,649  

Sr. Unsec’d. Notes, 144A

     6.752       03/09/23       200       199,853  
       

 

 

  
    679,502  

Malaysia    7.2%

                                

Malaysia Government Bond,

        

Sr. Unsec’d. Notes, Ser. 0111

     4.160       07/15/21     MYR 130       33,510  

Sr. Unsec’d. Notes, Ser. 0116

     3.800       08/17/23     MYR 2,000       505,125  

Sr. Unsec’d. Notes, Ser. 0118

     3.882       03/14/25     MYR 1,400       354,095  

Sr. Unsec’d. Notes, Ser. 0216

     4.736       03/15/46     MYR 560       138,235  

Sr. Unsec’d. Notes, Ser. 0217

     4.059       09/30/24     MYR 335       85,949  

Sr. Unsec’d. Notes, Ser. 0311

     4.392       04/15/26     MYR 660       171,034  

Sr. Unsec’d. Notes, Ser. 0313

     3.480       03/15/23     MYR 1,750       435,579  

Sr. Unsec’d. Notes, Ser. 0315

     3.659       10/15/20     MYR 520       132,525  

Sr. Unsec’d. Notes, Ser. 0316

     3.900       11/30/26     MYR 3,070       767,796  

Sr. Unsec’d. Notes, Ser. 0411

     4.232       06/30/31     MYR 1,770       437,486  

Sr. Unsec’d. Notes, Ser. 0413

     3.844       04/15/33     MYR 1,335       310,761  

Sr. Unsec’d. Notes, Ser. 0417

     3.899       11/16/27     MYR 130       32,458  

Sr. Unsec’d. Notes, Ser. 0515

     3.759       03/15/19     MYR 520       132,828  

Sr. Unsec’d. Notes, Ser. 0517

     3.441       02/15/21     MYR 2,250       569,145  

Sr. Unsec’d. Notes, Ser. 0902

     4.378       11/29/19     MYR 710       183,078  

Malaysia Government Investment Issue Sr. Unsec’d. Notes, Ser. 0416

     3.226       04/15/20     MYR 2,180       549,697  
       

 

 

  
    4,839,301  

Mexico    10.3%

                                

Mexican Bonos,

        

Bonds, Ser. M

     6.500       06/09/22     MXN  25,750       1,333,718  

Bonds, Ser. M

     8.000       06/11/20     MXN 6,550       355,020  

Bonds, Ser. M

     8.000       11/07/47     MXN 19,850       1,101,108  

Bonds, Ser. M 20

     7.500       06/03/27     MXN 59,311       3,172,918  

Bonds, Ser. M 30

     10.000       11/20/36     MXN 11,233       741,954  

Sr. Unsec’d. Notes, Ser. M

     8.000       12/07/23     MXN 3,127       172,025  
       

 

 

  
    6,876,743  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     13  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

 

Mongolia    0.7%

                                

Mongolia Government International Bond, Sr. Unsec’d. Notes, MTN

     10.875 %      04/06/21       400     $ 457,175  

Nigeria    0.5%

                                

Nigeria Government International Bond,
Sr. Unsec’d. Notes

     5.625       06/27/22       350       356,125  

Pakistan    0.9%

                                

Pakistan Government International Bond,
Sr. Unsec’d. Notes

     8.250       04/15/24       200       207,831  

Third Pakistan International Sukuk Co. Ltd/The, Sr. Unsec’d. Notes, 144A

     5.625       12/05/22       400       385,485  
       

 

 

  
    593,316  

Peru    2.8%

                                

Peru Government Bond,

        

Bonds

     6.950       08/12/31     PEN 190       65,983  

Sr. Unsec’d. Notes, 144A

     6.150       08/12/32     PEN 285       91,732  

Peruvian Government International Bond,

        

Sr. Unsec’d. Notes

     5.200       09/12/23     PEN 233       75,028  

Sr. Unsec’d. Notes

     6.950       08/12/31     PEN 4,735       1,644,373  
       

 

 

  
    1,877,116  

Philippines    0.1%

                                

Philippine Government Bond, Sr. Unsec’d. Notes

     3.625       09/09/25     PHP 5,600       94,147  

Poland    4.7%

                                

Republic of Poland Government Bond,

        

Bonds, Ser. 0727

     2.500       07/25/27     PLN 9,750       2,656,502  

Bonds, Ser. 0123

     2.500       01/25/23     PLN 810       232,118  

Bonds, Ser. 1023

     4.000       10/25/23     PLN 870       266,613  
       

 

 

  
    3,155,233  

Romania    0.8%

                                

Romania Government Bond, Bonds, Ser. 5YR

     3.250       03/22/21     RON 2,065       530,454  

Russia    3.7%

                                

Russian Federal Bond - OFZ,

        

Bonds, Ser. 6218

     8.500       09/17/31     RUB  52,800       924,948  

Bonds, Ser. 6219

     7.750       09/16/26     RUB 29,850       492,034  

Bonds, Ser. 6221

     7.700       03/23/33     RUB 43,100       701,879  

Bonds, Ser. 6222

     7.100       10/16/24     RUB 20,650       330,223  
       

 

 

  
    2,449,084  

 

See Notes to Financial Statements.

 

14  

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

 

Singapore    1.5%

                                

Singapore Government Bond,

        

Sr. Unsec’d. Notes

     1.750 %      02/01/23     SGD 225     $ 166,443  

Sr. Unsec’d. Notes

     2.375       06/01/25     SGD 1,091       818,908  
       

 

 

  
    985,351  

South Africa    8.5%

                                

Republic of South Africa Government Bond,

        

Bonds, Ser. 2032

     8.250       03/31/32     ZAR 13,784       1,060,898  

Bonds, Ser. 2044

     8.750       01/31/44     ZAR 15,490       1,203,154  

Bonds, Ser. 2048

     8.750       02/28/48     ZAR 3,081       239,679  

Bonds, Ser. 2040

     9.000       01/31/40     ZAR 16,820       1,346,870  

Bonds, Ser. R186

     10.500       12/21/26     ZAR 20,227       1,851,036  
       

 

 

  
          5,701,637  

South Korea    0.5%

 

                        

Korea Treasury Bond, Sr. Unsec’d. Notes, Ser. 1906

     1.500       06/10/19     KRW  350,000       326,301  

Sri Lanka    0.3%

 

                        

Republic Of Sri Lanka, Sr. Unsec’d Notes

     6.250       07/27/21       200       205,840  

Thailand    4.1%

 

                        

Thailand Government Bond,

        

Sr. Unsec’d. Notes

     2.125       12/17/26     THB 11,900       367,230  

Sr. Unsec’d. Notes

     2.875       06/17/46     THB 3,150       90,110  

Sr. Unsec’d. Notes

     3.400       06/17/36     THB 31,850       1,045,292  

Sr. Unsec’d. Notes

     3.625       06/16/23     THB 8,530       291,910  

Sr. Unsec’d. Notes

     3.775       06/25/32     THB 600       20,739  

Sr. Unsec’d. Notes

     3.875       06/13/19     THB 10,200       331,783  

Sr. Unsec’d. Notes

     4.875       06/22/29     THB 15,170       578,655  
       

 

 

  
          2,725,719  

Turkey    4.6%

 

                        

Turkey Government Bond,

        

Bonds

     7.100       03/08/23     TRY 3,515       690,031  

Bonds

     8.000       03/12/25     TRY 2,258       445,808  

Bonds

     8.800       09/27/23     TRY 975       204,860  

Bonds

     10.600       02/11/26     TRY 4,664       1,050,580  

Turkey Government International Bond,

        

Sr. Unsec’d. Notes

     5.625       03/30/21       100       103,129  

Sr. Unsec’d. Notes

     6.250       09/26/22       550       578,194  
       

 

 

  
          3,072,602  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     15  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

 

Ukraine    1.0%

 

                        

Ukraine Government International Bond, Sr. Unsec’d. Notes

     7.750 %      09/01/22       665     $ 678,140  

Uruguay    0.3%

 

                        

Uruguay Government International Bond,

        

Sr. Unsec’d. Notes

     9.875       06/20/22     UYU 3,260       119,251  

Sr. Unsec’d. Notes, 144A

     8.500       03/15/28     UYU 1,870       62,782  
       

 

 

  
    182,033  
       

 

 

  

TOTAL SOVEREIGN BONDS
(cost $62,124,948)

 

     61,467,353  
       

 

 

  

CORPORATE BONDS    4.8%

 

      

Bermuda    0.3%

 

                        

Digicel Limited, Sr. Unsec’d. Notes

     6.750       03/01/23       235       214,776  

Brazil    1.4%

 

                        

Petrobras Global Finance BV,

        

Gtd. Notes

     6.250       03/17/24       865       909,980  

Gtd. Notes, 144A

     5.299       01/27/25       20       19,670  
       

 

 

  
    929,650  

Mexico    1.8%

 

                        

America Movil SAB de CV, Sr. Unsec’d. Notes

     6.450       12/05/22     MXN 7,500       369,645  

Petroleos Mexicanos,

        

Gtd. Notes, MTN

     4.625       09/21/23       280       276,351  

Gtd. Notes

     6.500       03/13/27       190       196,766  

Gtd. Notes, MTN

     6.875       08/04/26       125       133,875  

Gtd. Notes, 144A

     7.650       11/24/21     MXN  4,120       212,463  
       

 

 

  
          1,189,100  

Russia    0.3%

 

                        

Vnesheconombank Via VEB Finance PLC, Sr. Unsec’d. Notes

     5.942       11/21/23       200       207,718  

South Africa    0.7%

 

                        

Eskom Holding SOC Ltd., Sr. Unsec’d. Notes

     5.750       01/26/21       435       433,756  

Tunisia    0.3%

 

                        

Banque Centrale de Tunisie International Bond, Sr. Unsec’d. Notes

     5.625       02/17/24     EUR 180       220,988  
       

 

 

  

TOTAL CORPORATE BONDS
(cost $3,539,689)

 

         3,195,988  
       

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $65,664,637)

 

         64,663,341  
       

 

 

  

 

See Notes to Financial Statements.

 

16  

Description               Shares     Value  

SHORT-TERM INVESTMENTS    1.5%

 

      

AFFILIATED MUTUAL FUNDS    1.4%

 

      

Prudential Investment Portfolios 2 - PGIM Core
Ultra Short Bond Fund(w)

         574,168     $ 574,168  

Prudential Investment Portfolios 2 - PGIM Institutional
Money Market Fund
(cost $402,536; includes $401,905 of cash collateral for securities on loan)(b)(w)

         402,577       402,577  
       

 

 

  

TOTAL AFFILIATED MUTUAL FUNDS
(cost $976,704)

           976,745  
       

 

 

  

OPTIONS PURCHASED~*    0.1%

        

TOTAL OPTIONS PURCHASED
(cost $49,612)

           46,035  
       

 

 

  

TOTAL SHORT-TERM INVESTMENTS
(cost $1,026,316)

           1,022,780  
       

 

 

  

TOTAL INVESTMENTS, BEFORE OPTIONS WRITTEN    98.2%
(cost $66,690,953)

           65,686,121  
       

 

 

  

OPTIONS WRITTEN~*    (0.0)%

        

TOTAL OPTIONS WRITTEN
(premiums received $32,936)

           (25,087 ) 
       

 

 

  

TOTAL INVESTMENTS    98.2%
(cost $66,658,017)

           65,661,034  

Other assets in excess of liabilities(z)    1.8%

           1,201,131  
       

 

 

  

NET ASSETS    100.0%

         $ 66,862,165  
       

 

 

  

 

The following abbreviations are used in the semiannual report:

M—Monthly payment frequency for swaps

Q—Quarterly payment frequency for swaps

S—Semiannual payment frequency for swaps

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

LIBOR—London Interbank Offered Rate

MTN—Medium Term Note

OTC—Over-the-counter

ARS—Argentine Peso

AUD—Australian Dollar

BRL—Brazilian Real

CAD—Canadian Dollar

CHF—Swiss Franc

CLP—Chilean Peso

CNH—Chinese Renminbi (offshore)

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     17  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

COP—Colombian Peso

CZK—Czech Koruna

EUR—Euro

HUF—Hungarian Forint

IDR—Indonesian Rupiah

ILS—Israeli Shekel

INR—Indian Rupee

JPY—Japanese Yen

KRW—South Korean Won

MXN—Mexican Peso

MYR—Malaysian Ringgit

PEN—Peruvian Nuevo Sol

PHP—Philippine Peso

PLN—Polish Zloty

RON—Romanian Leu

RUB—Russian Ruble

SGD—Singapore Dollar

THB—Thai Baht

TRY—Turkish Lira

TWD—New Taiwanese Dollar

UYU—Uruguayan Peso

ZAR—South African Rand

* Non-income producing security.
~ See tables subsequent to the Schedule of Investments for options detail.
# Principal or notional amount is shown in U.S. dollars unless otherwise stated.
(a) All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $384,400; cash collateral of $401,905 (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) Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment.
(w) PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund.
(z) Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end, with the exception of options which are included in total investments, net of written options, at market value.

 

OTC Options Purchased:

 

OTC Traded

 

Description

   Call/Put   Counterparty   Expiration
Date		     Strike     Contracts     Notional
Amount (000)#		     Value  

Currency Option EUR vs BRL

   Call   Citigroup Global Markets     02/21/19       4.15       —       EUR 200     $ 20,384  

Currency Option USD vs MXN

   Call   UBS AG     01/25/19       18.75       —       400       25,651  
             

 

 

  

Total Options Purchased
(cost $49,612)

           $ 46,035  
             

 

 

  

 

See Notes to Financial Statements.

 

18  

OTC Options Written:

 

OTC Traded

 

Description

  

Call/Put

   Counterparty   Expiration
Date		     Strike     Contracts     Notional
Amount (000)#		     Value  

Currency Option EUR vs BRL

   Call   Citigroup Global Markets     02/21/19       4.55       —       EUR 200     $ (9,293 ) 

Currency Option USD vs MXN

   Call   UBS AG     01/25/19       20.75       —       400       (9,869 ) 

Currency Option EUR vs BRL

   Put   Citigroup Global Markets     02/21/19       3.90       —       EUR 200       (1,709 ) 

Currency Option USD vs MXN

   Put   UBS AG     01/25/19       17.75       —       400       (4,216 ) 
             

 

 

  

Total Options Written
(premiums received $32,936)

 

         $ (25,087 ) 
             

 

 

  

 

Forward foreign currency exchange contracts outstanding at April 30, 2018:

 

Purchase Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts:

 

Argentine Peso,

            

Expiring 05/03/2018

   Citigroup Global Markets   ARS 11,931     $ 586,866     $ 579,788     $ —     $ (7,078 ) 

Expiring 05/24/2018

   BNP Paribas   ARS 3,222       156,388       153,215       —       (3,173 ) 

Australian Dollar,

            

Expiring 07/12/2018

   Citigroup Global Markets   AUD 462       359,524       348,281       —       (11,243 ) 

Brazilian Real,

            

Expiring 05/03/2018

   Barclays Capital Group   BRL 130       39,815       37,165       —       (2,650 ) 

Expiring 05/03/2018

   Barclays Capital Group   BRL 155       47,273       44,227       —       (3,046 ) 

Expiring 05/03/2018

   Barclays Capital Group   BRL 684       205,785       195,053       —       (10,732 ) 

Expiring 05/03/2018

   Citigroup Global Markets   BRL 494       148,298       141,000       —       (7,298 ) 

Expiring 05/03/2018

   Goldman Sachs & Co.   BRL 752       226,820       214,473       —       (12,347 ) 

Expiring 05/03/2018

   JPMorgan Chase   BRL 342       103,583       97,459       —       (6,124 ) 

Expiring 05/03/2018

   JPMorgan Chase   BRL 448       136,792       127,901       —       (8,891 ) 

Expiring 05/03/2018

   Morgan Stanley   BRL 410       125,889       116,979       —       (8,910 ) 

Expiring 05/03/2018

   UBS AG   BRL 91       27,565       26,081       —       (1,484 ) 

Expiring 05/03/2018

   UBS AG   BRL 489       146,755       139,667       —       (7,088 ) 

Expiring 07/03/2018

   Goldman Sachs & Co.   BRL 1,275       363,638       361,647       —       (1,991 ) 

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     19  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Brazilian Real, (cont’d.)

            

Expiring 07/03/2018

   JPMorgan Chase   BRL 259     $ 74,002     $ 73,576     $ —     $ (426 ) 

Expiring 02/25/2019

   Citigroup Global Markets   BRL 857       253,700       238,941       —       (14,759 ) 

British Pound,

            

Expiring 07/26/2018

   JPMorgan Chase   GBP 247       345,882       341,302       —       (4,580 ) 

Chilean Peso,

            

Expiring 07/13/2018

   Citigroup Global Markets   CLP  129,290       214,756       210,748       —       (4,008 ) 

Expiring 07/13/2018

   Citigroup Global Markets   CLP 323,430       538,538       527,206       —       (11,332 ) 

Expiring 07/13/2018

   JPMorgan Chase   CLP 24,668       40,365       40,210       —       (155 ) 

Chinese Renminbi,

            

Expiring 07/24/2018

   Barclays Capital Group   CNH 40       6,416       6,369       —       (47 ) 

Colombian Peso,

            

Expiring 06/15/2018

   Barclays Capital Group   COP  3,186,248       1,106,835       1,133,619       26,784       —  

Expiring 06/15/2018

   Citigroup Global Markets   COP 248,935       90,932       88,567       —       (2,365 ) 

Expiring 06/15/2018

   Citigroup Global Markets   COP 488,136       170,680       173,671       2,991       —  

Expiring 06/15/2018

   Citigroup Global Markets   COP 596,077       214,756       212,075       —       (2,681 ) 

Expiring 06/15/2018

   Citigroup Global Markets   COP 3,186,248       1,109,031       1,133,619       24,588       —  

Expiring 06/15/2018

   Hong Kong & Shanghai Bank   COP 839,000       293,255       298,504       5,249       —  

Expiring 06/15/2018

   JPMorgan Chase   COP 214,154       75,027       76,193       1,166       —  

Expiring 06/15/2018

   JPMorgan Chase   COP 623,176       222,008       221,717       —       (291 ) 

Expiring 06/15/2018

   JPMorgan Chase   COP 823,572       296,249       293,015       —       (3,234 ) 

Expiring 06/15/2018

   UBS AG   COP 59,583       21,086       21,199       113       —  

Expiring 06/15/2018

   UBS AG   COP 264,469       95,279       94,094       —       (1,185 ) 

Czech Koruna,

            

Expiring 07/12/2018

   Citigroup Global Markets   CZK 2,550       121,095       120,806       —       (289 ) 

Expiring 07/12/2018

   Citigroup Global Markets   CZK 50,055       2,435,722       2,371,729       —       (63,993 ) 

Expiring 07/12/2018

   Hong Kong & Shanghai Bank   CZK 6,989       333,869       331,166       —       (2,703 ) 

Expiring 07/12/2018

   JPMorgan Chase   CZK 1,255       61,736       59,468       —       (2,268 ) 

 

See Notes to Financial Statements.

 

20  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Egyptian Pound,

            

Expiring 09/27/2018

   Citigroup Global Markets   EGP 4,643     $ 252,913     $ 255,709     $ 2,796     $ —  

Expiring 10/11/2018

   Citigroup Global Markets   EGP 3,195       171,480       175,455       3,975       —  

Expiring 10/11/2018

   JPMorgan Chase   EGP 3,157       171,259       173,395       2,136       —  

Hungarian Forint,

            

Expiring 07/24/2018

   Citigroup Global Markets   HUF 27,778       107,640       107,535       —       (105 ) 

Expiring 07/24/2018

   Citigroup Global Markets   HUF 34,413       134,077       133,224       —       (853 ) 

Expiring 07/24/2018

   Deutsche Bank AG   HUF 675,873       2,695,300       2,616,507       —       (78,793 ) 

Indian Rupee,

            

Expiring 07/20/2018

   Barclays Capital Group   INR 50,883       766,107       755,799       —       (10,308 ) 

Expiring 07/20/2018

   Citigroup Global Markets   INR 3,392       51,471       50,389       —       (1,082 ) 

Expiring 07/20/2018

   Deutsche Bank AG   INR 53,257       802,486       791,068       —       (11,418 ) 

Expiring 07/20/2018

   Morgan Stanley   INR 14,209       216,811       211,053       —       (5,758 ) 

Expiring 07/20/2018

   UBS AG   INR 3,930       58,000       58,368       368       —  

Expiring 07/20/2018

   UBS AG   INR 11,619       173,000       172,592       —       (408 ) 

Indonesian Rupiah,

            

Expiring 07/16/2018

   Barclays Capital Group   IDR  1,470,560       104,000       104,767       767       —  

Expiring 07/16/2018

   Barclays Capital Group   IDR 3,510,967       248,000       250,132       2,132       —  

Expiring 07/16/2018

   Citigroup Global Markets   IDR 824,772       59,490       58,759       —       (731 ) 

Expiring 07/16/2018

   JPMorgan Chase   IDR 3,078,900       220,000       219,350       —       (650 ) 

Israeli Shekel,

            

Expiring 07/26/2018

   Morgan Stanley   ILS 10       2,889       2,877       —       (12 ) 

Japanese Yen,

            

Expiring 07/26/2018

   Citigroup Global Markets   JPY 38,776       361,022       356,901       —       (4,121 ) 

Malaysian Ringgit,

            

Expiring 05/22/2018

   Barclays Capital Group   MYR 98       24,889       24,952       63       —  

Expiring 05/22/2018

   UBS AG   MYR 292       75,672       74,319       —       (1,353 ) 

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     21  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Mexican Peso,

            

Expiring 06/28/2018

   Citigroup Global Markets   MXN  2,780     $ 149,865     $ 147,251     $ —     $ (2,614 ) 

Expiring 06/28/2018

   Citigroup Global Markets   MXN 6,532       358,342       345,985       —       (12,357 ) 

Expiring 06/28/2018

   Goldman Sachs & Co.   MXN 8,945       470,558       473,815       3,257       —  

Expiring 06/28/2018

   Hong Kong & Shanghai Bank   MXN 5,793       312,238       306,833       —       (5,405 ) 

Expiring 06/28/2018

   JPMorgan Chase   MXN 455       24,436       24,118       —       (318 ) 

Expiring 06/28/2018

   Morgan Stanley   MXN 2,319       125,000       122,820       —       (2,180 ) 

Expiring 06/28/2018

   Morgan Stanley   MXN 4,376       236,623       231,810       —       (4,813 ) 

Expiring 01/29/2019

   JPMorgan Chase   MXN 586       30,823       30,028       —       (795 ) 

Expiring 01/29/2019

   UBS AG   MXN 3,778       191,000       193,672       2,672       —  

Expiring 01/29/2019

   UBS AG   MXN 4,131       209,000       211,780       2,780       —  

New Taiwanese Dollar,

            

Expiring 07/13/2018

   Citigroup Global Markets   TWD 2,464       84,000       83,726       —       (274 ) 

Expiring 07/13/2018

   Citigroup Global Markets   TWD 3,696       127,000       125,615       —       (1,385 ) 

Expiring 07/13/2018

   Toronto Dominion   TWD 3,795       131,000       128,971       —       (2,029 ) 

Expiring 07/13/2018

   UBS AG   TWD 2,725       92,000       92,615       615       —  

Expiring 07/13/2018

   UBS AG   TWD 2,795       95,000       94,968       —       (32 ) 

Expiring 07/13/2018

   UBS AG   TWD 3,351       115,000       113,891       —       (1,109 ) 

Expiring 07/13/2018

   UBS AG   TWD 5,331       183,000       181,166       —       (1,834 ) 

Expiring 07/13/2018

   UBS AG   TWD 6,568       223,000       223,221       221       —  

Expiring 07/13/2018

   UBS AG   TWD 7,447       255,000       253,086       —       (1,914 ) 

Peruvian Nuevo Sol,

            

Expiring 07/13/2018

   Citigroup Global Markets   PEN 143       44,135       43,900       —       (235 ) 

Expiring 07/13/2018

   Citigroup Global Markets   PEN 3,276       1,012,429       1,004,945       —       (7,484 ) 

Expiring 07/13/2018

   JPMorgan Chase   PEN 153       47,093       46,931       —       (162 ) 

Philippine Peso,

            

Expiring 06/14/2018

   Barclays Capital Group   PHP 16,746       320,000       322,843       2,843       —  

Expiring 06/14/2018

   Deutsche Bank AG   PHP 18,796       360,814       362,376       1,562       —  

 

See Notes to Financial Statements.

 

22  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Polish Zloty,

            

Expiring 07/24/2018

   Hong Kong & Shanghai Bank   PLN 464     $ 133,271     $ 132,480     $ —     $ (791 ) 

Expiring 07/24/2018

   UBS AG   PLN 14,883       4,394,465       4,247,281       —       (147,184 ) 

Romanian Leu,

            

Expiring 07/24/2018

   Citigroup Global Markets   RON 182       47,091       47,074       —       (17 ) 

Expiring 07/24/2018

   Citigroup Global Markets   RON 5,355       1,423,651       1,387,387       —       (36,264 ) 

Russian Ruble,

            

Expiring 07/13/2018

   Barclays Capital Group   RUB 13,540       217,358       213,082       —       (4,276 ) 

Expiring 07/13/2018

   Barclays Capital Group   RUB  183,019       3,142,355       2,880,296       —       (262,059 ) 

Singapore Dollar,

            

Expiring 05/11/2018

   Bank of America   SGD 359       269,720       270,453       733       —  

Expiring 05/11/2018

   Deutsche Bank AG   SGD 359       270,268       270,452       184       —  

Expiring 05/11/2018

   JPMorgan Chase   SGD 20       15,228       15,027       —       (201 ) 

Expiring 05/11/2018

   JPMorgan Chase   SGD 43       32,864       32,485       —       (379 ) 

Expiring 05/11/2018

   JPMorgan Chase   SGD 54       41,382       40,818       —       (564 ) 

Expiring 05/11/2018

   JPMorgan Chase   SGD 658       496,586       496,606       20       —  

Expiring 05/11/2018

   Morgan Stanley   SGD 45       34,304       33,898       —       (406 ) 

Expiring 05/11/2018

   Morgan Stanley   SGD 48       36,000       35,894       —       (106 ) 

South African Rand,

            

Expiring 06/12/2018

   Barclays Capital Group   ZAR 2,426       206,202       193,511       —       (12,691 ) 

Expiring 06/12/2018

   Citigroup Global Markets   ZAR 1,324       108,720       105,559       —       (3,161 ) 

Expiring 06/12/2018

   Citigroup Global Markets   ZAR 1,426       119,878       113,693       —       (6,185 ) 

Expiring 06/12/2018

   Goldman Sachs & Co.   ZAR 3,313       280,686       264,200       —       (16,486 ) 

Expiring 06/12/2018

   JPMorgan Chase   ZAR 256       21,754       20,426       —       (1,328 ) 

Expiring 06/12/2018

   JPMorgan Chase   ZAR 602       49,739       48,045       —       (1,694 ) 

Expiring 06/12/2018

   JPMorgan Chase   ZAR 1,632       135,681       130,160       —       (5,521 ) 

Expiring 06/12/2018

   JPMorgan Chase   ZAR 1,675       137,755       133,574       —       (4,181 ) 

Expiring 06/12/2018

   Morgan Stanley   ZAR 2,199       183,908       175,410       —       (8,498 ) 

Expiring 06/12/2018

   Toronto Dominion   ZAR 3,327       276,063       265,356       —       (10,707 ) 

Expiring 06/12/2018

   UBS AG   ZAR 507       42,371       40,414       —       (1,957 ) 

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     23  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

South Korean Won,

            

Expiring 05/09/2018

   Barclays Capital Group   KRW  381,922     $ 362,481     $ 357,669     $ —     $ (4,812 ) 

Expiring 05/09/2018

   Citigroup Global Markets   KRW 55,139       51,704       51,638       —       (66 ) 

Expiring 05/09/2018

   Deutsche Bank AG   KRW 3,862       3,573       3,617       44       —  

Expiring 05/09/2018

   Deutsche Bank AG   KRW 237,463       219,345       222,383       3,038       —  

Thai Baht,

            

Expiring 05/11/2018

   Barclays Capital Group   THB 643       20,514       20,393       —       (121 ) 

Expiring 05/11/2018

   BNP Paribas   THB 36,000       1,144,252       1,141,049       —       (3,203 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 1,092       35,064       34,602       —       (462 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 1,521       48,913       48,206       —       (707 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 1,772       56,000       56,161       161       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 2,423       77,680       76,794       —       (886 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 2,804       89,888       88,885       —       (1,003 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 2,930       93,000       92,853       —       (147 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 4,294       136,000       136,104       104       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 4,841       154,000       153,444       —       (556 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 7,523       242,000       238,442       —       (3,558 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 11,377       361,701       360,601       —       (1,100 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB  64,781       2,056,206       2,053,279       —       (2,927 ) 

Expiring 05/11/2018

   Hong Kong & Shanghai Bank   THB 3,314       106,247       105,054       —       (1,193 ) 

Expiring 05/11/2018

   Morgan Stanley   THB 1,640       52,465       51,993       —       (472 ) 

 

See Notes to Financial Statements.

 

24  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Turkish Lira,

            

Expiring 06/12/2018

   Barclays Capital Group   TRY 606     $ 143,809     $ 147,087     $ 3,278     $ —  

Expiring 06/12/2018

   Barclays Capital Group   TRY 1,394       343,670       338,526       —       (5,144 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 89       21,900       21,726       —       (174 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 90       22,208       21,929       —       (279 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 180       43,900       43,665       —       (235 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 231       56,389       56,032       —       (357 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 350       86,647       85,085       —       (1,562 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 899       218,570       218,183       —       (387 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 1,036       263,242       251,463       —       (11,779 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 1,288       312,918       312,778       —       (140 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 1,338       332,654       324,904       —       (7,750 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 1,466       362,550       355,926       —       (6,624 ) 

Expiring 06/12/2018

   Citigroup Global Markets   TRY 8,596       2,197,132       2,087,107       —       (110,025 ) 

Expiring 06/12/2018

   Goldman Sachs & Co.   TRY 43       10,403       10,416       13       —  

Expiring 06/12/2018

   Goldman Sachs & Co.   TRY 270       65,622       65,654       32       —  

Expiring 06/12/2018

   Goldman Sachs & Co.   TRY  1,081       259,500       262,490       2,990       —  

Expiring 06/12/2018

   Morgan Stanley   TRY 363       89,762       88,224       —       (1,538 ) 

Expiring 06/12/2018

   UBS AG   TRY 801       197,730       194,364       —       (3,366 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  
      $ 45,147,011     $ 44,182,554     $ 97,675     $ (1,062,132 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     25  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Sales Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts:

 

Argentine Peso,

            

Expiring 05/03/2018

   BNP Paribas   ARS 2,313     $ 112,840     $ 112,411     $ 429     $ —  

Expiring 05/03/2018

   Citigroup Global Markets   ARS 6,148       300,000       298,744       1,256       —  

Expiring 05/03/2018

   Citigroup Global Markets   ARS 4,139       201,467       201,142       325       —  

Expiring 05/24/2018

   Citigroup Global Markets   ARS 669       31,333       31,807       —       (474 ) 

Australian Dollar,

            

Expiring 07/12/2018

   Citigroup Global Markets   AUD 466       358,369       350,966       7,403       —  

Brazilian Real,

            

Expiring 05/03/2018

   Bank of America   BRL 321       94,210       91,636       2,574       —  

Expiring 05/03/2018

   Citigroup Global Markets   BRL 1,474       429,512       420,515       8,997       —  

Expiring 05/03/2018

   Citigroup Global Markets   BRL 125       36,620       35,528       1,092       —  

Expiring 05/03/2018

   Goldman Sachs & Co.   BRL 1,275       365,504       363,829       1,675       —  

Expiring 05/03/2018

   Goldman Sachs & Co.   BRL 398       117,349       113,576       3,773       —  

Expiring 05/03/2018

   UBS AG   BRL 403       117,000       114,921       2,079       —  

Expiring 07/03/2018

   BNP Paribas   BRL 1,240       352,171       351,635       536       —  

Chilean Peso,

            

Expiring 07/13/2018

   Barclays Capital Group   CLP 78,137       128,771       127,367       1,404       —  

Expiring 07/13/2018

   Barclays Capital Group   CLP 65,934       109,000       107,476       1,524       —  

Expiring 07/13/2018

   Barclays Capital Group   CLP 37,779       62,020       61,582       438       —  

Expiring 07/13/2018

   Citigroup Global Markets   CLP 380,882       628,331       620,855       7,476       —  

Expiring 07/13/2018

   Citigroup Global Markets   CLP 87,411       143,332       142,484       848       —  

Expiring 07/13/2018

   UBS AG   CLP 53,413       89,000       87,066       1,934       —  

Colombian Peso,

            

Expiring 06/15/2018

   Citigroup Global Markets   COP  402,696       141,000       143,273       —       (2,273 ) 

Expiring 06/15/2018

   UBS AG   COP 948,179       336,472       337,348       —       (876 ) 

 

See Notes to Financial Statements.

 

26  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Sales Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Czech Koruna,

            

Expiring 07/12/2018

   Morgan Stanley   CZK 4,612     $ 220,107     $ 218,507     $ 1,600     $ —  

Expiring 07/12/2018

   Morgan Stanley   CZK 1,224       59,000       57,997       1,003       —  

Expiring 07/12/2018

   UBS AG   CZK 7,098       336,374       336,323       51       —  

Euro,

            

Expiring 07/26/2018

   Citigroup Global Markets   EUR 554       672,748       673,300       —       (552 ) 

Expiring 07/26/2018

   Goldman Sachs & Co.   EUR 81       100,593       98,810       1,783       —  

Expiring 07/26/2018

   Toronto Dominion   EUR 132       162,436       160,507       1,929       —  

Expiring 02/25/2019

   Citigroup Global Markets   EUR 200       253,730       247,817       5,913       —  

Hungarian Forint,

            

Expiring 07/24/2018

   Morgan Stanley   HUF 59,160       230,216       229,025       1,191       —  

Expiring 07/24/2018

   Morgan Stanley   HUF 26,725       104,000       103,459       541       —  

Indian Rupee,

            

Expiring 07/20/2018

   UBS AG   INR 7,319       108,268       108,714       —       (446 ) 

Indonesian Rupiah,

            

Expiring 07/16/2018

   Citigroup Global Markets   IDR  1,407,410       101,669       100,268       1,401       —  

Expiring 07/16/2018

   JPMorgan Chase   IDR  1,792,078       127,823       127,673       150       —  

Expiring 07/16/2018

   UBS AG   IDR  6,009,963       427,756       428,168       —       (412 ) 

Israeli Shekel,

            

Expiring 07/26/2018

   Citigroup Global Markets   ILS 3,772       1,069,667       1,053,616       16,051       —  

Japanese Yen,

            

Expiring 07/26/2018

   Citigroup Global Markets   JPY 39,026       361,021       359,206       1,815       —  

Malaysian Ringgit,

            

Expiring 05/22/2018

   Barclays Capital Group   MYR 334       85,000       84,975       25       —  

Expiring 05/22/2018

   Barclays Capital Group   MYR 164       42,371       41,727       644       —  

Expiring 05/22/2018

   Barclays Capital Group   MYR 58       14,943       14,841       102       —  

Expiring 07/26/2018

   Barclays Capital Group   MYR 1,397       356,654       355,173       1,481       —  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     27  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Sales Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Mexican Peso,

            

Expiring 06/28/2018

   Bank of America   MXN 3,961     $ 214,717     $ 209,799     $ 4,918     $ —  

Expiring 06/28/2018

   Citigroup Global Markets   MXN 2,164       114,999       114,635       364       —  

Expiring 06/28/2018

   Goldman Sachs & Co.   MXN 5,776       312,931       305,953       6,978       —  

Expiring 06/28/2018

   Morgan Stanley   MXN 9,284       487,420       491,754       —       (4,334 ) 

Expiring 06/28/2018

   UBS AG   MXN 2,221       120,051       117,651       2,400       —  

New Taiwanese Dollar,

            

Expiring 07/13/2018

   Barclays Capital Group   TWD 37,209       1,284,082       1,264,495       19,587       —  

Expiring 07/13/2018

   Citigroup Global Markets   TWD 1,746       60,221       59,329       892       —  

Peruvian Nuevo Sol,

            

Expiring 07/13/2018

   Barclays Capital Group   PEN 236       73,240       72,474       766       —  

Expiring 07/13/2018

   Citigroup Global Markets   PEN 1,173       363,815       359,719       4,096       —  

Expiring 07/13/2018

   Citigroup Global Markets   PEN  1,154       356,584       354,003       2,581       —  

Expiring 07/13/2018

   UBS AG   PEN 172       53,000       52,738       262       —  

Philippine Peso,

            

Expiring 06/14/2018

   Barclays Capital Group   PHP  17,965       340,186       346,356       —       (6,170 ) 

Expiring 06/14/2018

   Barclays Capital Group   PHP 12,759       244,000       245,979       —       (1,979 ) 

Expiring 06/14/2018

   Barclays Capital Group   PHP 6,495       124,000       125,209       —       (1,209 ) 

Expiring 06/14/2018

   Barclays Capital Group   PHP 5,673       108,000       109,366       —       (1,366 ) 

Expiring 06/14/2018

   Barclays Capital Group   PHP 3,578       68,000       68,984       —       (984 ) 

Expiring 06/14/2018

   Deutsche Bank AG   PHP 6,974       132,957       134,446       —       (1,489 ) 

Polish Zloty,

            

Expiring 07/24/2018

   Citigroup Global Markets   PLN 565       161,460       161,221       239       —  

Expiring 07/24/2018

   Morgan Stanley   PLN 1,445       414,051       412,301       1,750       —  

Expiring 07/24/2018

   Morgan Stanley   PLN 604       173,000       172,275       725       —  

 

See Notes to Financial Statements.

 

28  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Sales Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Romanian Leu,

            

Expiring 07/24/2018

   Morgan Stanley   RON 405     $ 105,218     $ 104,937     $ 281     $ —  

Russian Ruble,

            

Expiring 07/13/2018

   Barclays Capital Group   RUB 13,401       211,300       210,902       398       —  

Expiring 07/13/2018

   Barclays Capital Group   RUB 10,839       173,000       170,583       2,417       —  

Expiring 07/13/2018

   Barclays Capital Group   RUB 10,101       166,220       158,963       7,257       —  

Expiring 07/13/2018

   Citigroup Global Markets   RUB 9,746       153,734       153,376       358       —  

Expiring 07/13/2018

   JPMorgan Chase   RUB 5,129       80,730       80,721       9       —  

Singapore Dollar,

            

Expiring 05/11/2018

   Citigroup Global Markets   SGD 223       169,488       167,878       1,610       —  

Expiring 05/11/2018

   JPMorgan Chase   SGD 464       349,381       350,084       —       (703 ) 

Expiring 05/11/2018

   JPMorgan Chase   SGD 240       182,895       180,770       2,125       —  

Expiring 05/11/2018

   Morgan Stanley   SGD 265       202,000       199,632       2,368       —  

Expiring 05/11/2018

   Morgan Stanley   SGD 93       70,000       69,896       104       —  

Expiring 05/11/2018

   Morgan Stanley   SGD 74       56,023       56,108       —       (85 ) 

Expiring 05/11/2018

   Morgan Stanley   SGD 73       54,999       55,136       —       (137 ) 

Expiring 05/11/2018

   Morgan Stanley   SGD 60       45,000       45,070       —       (70 ) 

South African Rand,

            

Expiring 06/12/2018

   Citigroup Global Markets   ZAR 1,013       80,730       80,813       —       (83 ) 

Expiring 06/12/2018

   JPMorgan Chase   ZAR 3,063       254,947       244,287       10,660       —  

Expiring 06/12/2018

   JPMorgan Chase   ZAR 2,030       169,583       161,896       7,687       —  

Expiring 06/12/2018

   JPMorgan Chase   ZAR 1,682       133,999       134,134       —       (135 ) 

Expiring 06/12/2018

   JPMorgan Chase   ZAR 1,137       95,317       90,678       4,639       —  

Expiring 06/12/2018

   JPMorgan Chase   ZAR 807       66,736       64,344       2,392       —  

Expiring 06/12/2018

   Morgan Stanley   ZAR 4,849       387,817       386,685       1,132       —  

South Korean Won,

            

Expiring 05/09/2018

   BNP Paribas   KRW  198,505       184,000       185,899       —       (1,899 ) 

Expiring 05/09/2018

   BNP Paribas   KRW 107,323       101,000       100,507       493       —  

Expiring 05/09/2018

   BNP Paribas   KRW 92,149       85,000       86,297       —       (1,297 ) 

Expiring 05/09/2018

   Citigroup Global Markets   KRW 146,816       137,000       137,493       —       (493 ) 

Expiring 05/09/2018

   UBS AG   KRW 29,996       27,787       28,091       —       (304 ) 

Swiss Franc,

            

Expiring 07/24/2018

   Bank of America   CHF 858       885,139       872,956       12,183       —  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     29  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Sales Contracts

  

Counterparty

   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d.):

 

Thai Baht,

            

Expiring 05/11/2018

   BNP Paribas   THB 4,260     $ 135,815     $ 135,039     $ 776     $ —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 8,043       258,000       254,918       3,082       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 3,186       100,913       100,986       —       (73 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 3,121       98,610       98,907       —       (297 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 2,670       84,409       84,631       —       (222 ) 

Expiring 05/11/2018

   Citigroup Global Markets   THB 2,516       80,000       79,759       241       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 2,451       78,000       77,679       321       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 2,393       76,000       75,850       150       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 1,882       59,899       59,652       247       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 1,224       39,000       38,796       204       —  

Expiring 05/11/2018

   Citigroup Global Markets   THB 974       31,000       30,877       123       —  

Expiring 05/11/2018

   JPMorgan Chase   THB  17,008       544,592       539,075       5,517       —  

Turkish Lira,

            

Expiring 06/12/2018

   Barclays Capital Group   TRY 812       204,740       197,041       7,699       —  

Expiring 06/12/2018

   Citigroup Global Markets   TRY 1,301       327,112       315,933       11,179       —  

Expiring 06/12/2018

   Citigroup Global Markets   TRY 1,067       264,271       258,983       5,288       —  

Expiring 06/12/2018

   Citigroup Global Markets   TRY 222       53,820       53,799       21       —  

Expiring 06/12/2018

   JPMorgan Chase   TRY 605       146,573       146,824       —       (251 ) 

Expiring 06/12/2018

   Morgan Stanley   TRY 1,143       276,453       277,418       —       (965 ) 

Expiring 06/12/2018

   Morgan Stanley   TRY 715       177,601       173,663       3,938       —  

Expiring 06/12/2018

   UBS AG   TRY 1,379       341,753       334,767       6,986       —  

Expiring 06/12/2018

   UBS AG   TRY 1,346       341,361       326,822       14,539       —  

Expiring 06/12/2018

   UBS AG   TRY 1,100       274,711       267,193       7,518       —  

Expiring 06/12/2018

   UBS AG   TRY 821       206,018       199,299       6,719       —  
     

 

 

    

 

 

    

 

 

    

 

 

  
  $ 23,025,085     $ 22,799,001     $ 255,662     $ (29,578 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  
    $ 353,337     $ (1,091,710 ) 
         

 

 

    

 

 

  

 

See Notes to Financial Statements.

 

30  

Cross currency exchange contract outstanding at April 30, 2018:

 

Settlement

   Type   Notional
Amount
(000)		     In Exchange
For (000)		     Unrealized
Appreciation		     Unrealized
Depreciation		     Counterparty  

OTC cross currency exchange contracts:

 

    

Expiring 07/24/2018

   Buy   CHF  434     EUR  362     $ 218     $   —       Citigroup Global Markets  
       

 

 

    

 

 

    

 

Interest rate swap agreements outstanding at April 30, 2018:

 

Notional

Amount

(000)#

     Termination
Date		     Fixed
Rate		     Floating Rate   Value at
Trade
Date		     Value at
April 30,
2018		     Unrealized
Appreciation
(Depreciation)		  
 

Centrally cleared swap agreements:

      
MXN  14,650       06/04/25       6.470%(Q)     28 Day Mexican Interbank Rate(2)(M)   $ 12     $ (49,938 )    $ (49,950 ) 
       

 

 

    

 

 

    

 

 

  

 

Notional

Amount

(000)#

     Termination
Date		     Fixed
Rate		    

Floating Rate

   Fair
Value		     Upfront
Premiums
Paid
(Received)		     Unrealized
Appreciation
(Depreciation)		    

Counterparty

 

OTC swap agreement:

            
  MYR 1,650       05/20/21       3.770%(Q)     3 Month KLIBOR(2)(Q)   $ (1,167 )    $   —     $ (1,167 )   

JPMorgan Chase

       

 

 

    

 

 

    

 

 

    

 

Cash of $170,000 has been segregated with Citigroup Global Markets to cover requirements for open centrally cleared swap contracts at April 30, 2018.

 

(1) The Fund pays the fixed rate and receives the floating rate.
(2) The Fund pays the floating rate and receives the fixed rate.

 

Balances Reported in the Statement of Assets and Liabilities for OTC Swap Agreements:

 

    Premiums
Paid		     Premiums
Received		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC Swap Agreements

   $   —     $   —     $   —     $ (1,167 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     31  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:

 

      Level 1         Level 2         Level 3    

Investments in Securities

      

Sovereign Bonds

      

Argentina

   $ —     $ 1,166,472     $ —  

Brazil

     —       7,818,919       —  

Chile

     —       1,947,049       —  

Colombia

     —       2,683,055       —  

Cote d’lvoire

     —       244,650       —  

Czech Republic

     —       1,256,630       —  

Ecuador

     —       673,300       —  

Egypt

     —       220,633       —  

El Salvador

     —       199,115       —  

Gabon

     —       194,918       —  

Ghana

     —       433,880       —  

Greece

     —       385,040       —  

Hungary

     —       1,411,622       —  

Indonesia

     —       7,046,251       —  

Iraq

     —       679,502       —  

Malaysia

     —       4,839,301       —  

Mexico

     —       6,876,743       —  

Mongolia

     —       457,175       —  

Nigeria

     —       356,125       —  

Pakistan

     —       593,316       —  

Peru

     —       1,877,116       —  

Philippines

     —       94,147       —  

Poland

     —       3,155,233       —  

Romania

     —       530,454       —  

Russia

     —       2,449,084       —  

Singapore

     —       985,351       —  

South Africa

     —       5,701,637       —  

South Korea

     —       326,301       —  

Sri Lanka

     —       205,840       —  

Thailand

     —       2,725,719       —  

Turkey

     —       3,072,602       —  

Ukraine

     —       678,140       —  

Uruguay

     —       182,033       —  

 

See Notes to Financial Statements.

 

32  

      Level 1         Level 2         Level 3    

Investments in Securities (continued)

      

Corporate Bonds

      

Bermuda

   $ —     $ 214,776     $ —  

Brazil

     —       929,650       —  

Mexico

     —       1,189,100       —  

Russia

     —       207,718       —  

South Africa

     —       433,756       —  

Tunisia

     —       220,988       —  

Affiliated Mutual Funds

     976,745       —       —  

Options Purchased

     —       46,035       —  

Options Written

     —       (25,087 )      —  

Other Financial Instruments*

      

OTC Forward Foreign Currency Exchange Contracts

     —       (738,373 )      —  

OTC Cross Currency Exchange Contract

     —       218       —  

Centrally Cleared Interest Rate Swap Agreement

     —       (49,950 )      —  

OTC Interest Rate Swap Agreement

     —       (1,167 )      —  
 

 

 

    

 

 

    

 

 

  

Total

   $ 976,745     $ 63,895,017     $   —  
 

 

 

    

 

 

    

 

 

  

 

* Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and centrally cleared swap contracts, which are recorded at the unrealized appreciation (depreciation) on the instrument, and OTC swap contracts which are recorded at fair value.

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

Industry Classification:

 

The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2018 were as follows:

 

Sovereign Bonds

     91.9 % 

Oil & Gas

     2.6  

Affiliated Mutual Funds (including 0.6% of collateral for securities on loan)

     1.4  

Telecommunications

     0.9  

Electric

     0.7  

Banks

     0.6  

Options Purchased

     0.1 % 
 

 

 

  
    98.2  

Options Written

     (0.0 )* 

Other assets in excess of liabilities

     1.8  
 

 

 

  
    100.0 % 
 

 

 

  

 

* Less than +/- 0.05%

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     33  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:

 

The Series invested in derivative instruments during the reporting period. The primary types of risk associated with these derivative instruments are foreign exchange contracts risk and interest rate contracts risk. The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.

 

Fair values of derivative instruments as of April 30, 2018 as presented in the Statement of Assets and Liabilities:

 

Derivatives not accounted

for as hedging instruments,

carried at fair value

   

Asset Derivatives

     

Liability Derivatives

  
  

Balance Sheet
Location

    Fair
Value		     

Balance Sheet
Location

    Fair
Value		  
Foreign exchange contracts    Unaffiliated investments      $46,035      Options written outstanding, at value    $ 25,087  
Foreign exchange contracts    Unrealized appreciation on OTC cross currency exchange contracts      218      —      —  
Foreign exchange contracts    Unrealized appreciation on OTC forward foreign currency exchange contracts      353,337      Unrealized depreciation on OTC forward foreign currency exchange contracts      1,091,710  
Interest rate contracts    —      —      Due from/to broker—variation margin swaps      49,950 * 
Interest rate contracts    —      —      Unrealized depreciation on OTC swap agreements      1,167  
     

 

 

        

 

 

  

Total

       $ 399,590         $ 1,167,914  
     

 

 

        

 

 

  

 

* Includes cumulative appreciation (depreciation) as reported in the schedule of open futures and centrally cleared swap contracts. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities.

 

The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2018 are as follows:

 

Amount of Realized Gain (Loss) on Derivatives Recognized in Income

  

Derivatives not accounted

for as hedging instruments,

carried at fair value

   Options
Purchased(1)		     Options
Written		     Forward & Cross
Currency
Contracts		     Swaps  

Foreign exchange contracts

   $ (34,937 )    $ 44,931     $ 389,730     $ —  

Interest rate contracts

     —       —       —       15,999  
 

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ (34,937 )    $ 44,931     $ 389,730     $ 15,999  
 

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Included in net realized gain (loss) on investment transactions in the Statement of Operations.

 

See Notes to Financial Statements.

 

34  

Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

  

Derivatives not accounted

for as hedging instruments,

carried at fair value

   Options
Purchased(2)		     Options
Written		     Forward & Cross
Currency Exchange
Contracts		     Swaps  

Foreign exchange contracts

   $ (11,878 )    $ (13,068 )    $ (566,060 )    $ —  

Interest rate contracts

     —       —       —       (24,995 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ (11,878 )    $ (13,068 )    $ (566,060 )    $ (24,995 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

 

(2) Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations.

 

For the six months ended April 30, 2018, the Series’ average volume of derivative activities is as follows:

 

Options

Purchased(1)

     Options
Written(4)		     Forward
Foreign
Currency
Exchange
Contracts—
Purchased(3) 		    Forward
Foreign
Currency
Exchange
Contracts—
Sold(3)		     Cross
Currency
Exchange
Contracts(2)		     Interest
Rate
Swap
Agreements(4)		  
$ 90,196     $ 2,579,253     $ 31,441,999     $ 17,733,289     $ 371,706     $ 1,582,783  

 

(1) Cost.
(2) Value at Trade Date.
(3) Value at Settlement Date.
(4) Notional Amount in USD.

 

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Series invested in OTC derivatives and entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for OTC derivatives and financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.

 

Offsetting of financial instrument/transaction assets and liabilities:

 

Description

   Gross Market
Value of
Recognized
Assets/(Liabilities)		     Collateral
Pledged/(Received)(2)		     Net Amount  

Securities on Loan

   $ 384,400     $ (384,400 )    $   —  
 

 

 

      

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     35  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Offsetting of OTC derivative assets and liabilities:

 

Counterparty

   Gross
Amounts of
Recognized
Assets(1)		     Gross
Amounts of
Recognized
Liabilities(1)		     Net
Amounts of
Recognized
Assets/
(Liabilities)		     Collateral
Pledged/
(Received)(2)		     Net
Amount		  

Bank of America

   $ 20,408     $ —     $ 20,408     $ —     $ 20,408  

Barclays Capital Group

     79,609       (327,594 )      (247,985 )      —       (247,985 ) 

BNP Paribas

     2,234       (9,572 )      (7,338 )      —       (7,338 ) 

Citigroup Global Markets

     138,790       (368,107 )      (229,317 )      —       (229,317 ) 

Deutsche Bank AG

     4,828       (91,700 )      (86,872 )      —       (86,872 ) 

Goldman Sachs & Co.

     20,501       (30,824 )      (10,323 )      —       (10,323 ) 

Hong Kong & Shanghai Bank

     5,249       (10,092 )      (4,843 )      —       (4,843 ) 

JPMorgan Chase

     36,501       (44,018 )      (7,517 )      —       (7,517 ) 

Morgan Stanley

     14,633       (38,284 )      (23,651 )      —       (23,651 ) 

Toronto Dominion

     1,929       (12,736 )      (10,807 )      —       (10,807 ) 

UBS AG

     74,908       (185,037 )      (110,129 )      —       (110,129 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 399,590     $ (1,117,964 )    $ (718,374 )    $   —     $ (718,374 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Includes unrealized appreciation/(depreciation) on swaps and forwards, premiums paid/(received) on swap agreements and market value of purchased and written options, as represented on the Statement of Assets and Liabilities.
(2) Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions and the Series’ OTC derivative exposure by counterparty.

 

See Notes to Financial Statements.

 

36  

This Page Intentionally Left Blank

Statement of Assets & Liabilities (unaudited)

as of April 30, 2018

 

Assets

 

Investments at value, including securities on loan of $384,400:

   

Unaffiliated investments (cost $65,714,249)

    $ 64,709,376  

Affiliated investments (cost $976,704)

      976,745  

Foreign currency, at value (cost $12,814,957)

      12,867,076  

Deposit with broker for centrally cleared swaps

      170,000  

Dividends and interest receivable

      1,168,202  

Receivable for investments sold

      616,360  

Unrealized appreciation on OTC forward foreign currency exchange contracts

      353,337  

Tax reclaim receivable

      37,242  

Receivable for Series shares sold

      21,570  

Unrealized appreciation on OTC cross currency exchange contracts

      218  

Prepaid expenses

      282  
  

 

 

  

Total Assets

      80,920,408  
  

 

 

  

Liabilities

         

Due to Broker

      12,141,806  

Unrealized depreciation on OTC forward foreign currency exchange contracts

      1,091,710  

Payable to broker for collateral for securities on loan

      401,905  

Payable for investments purchased

      213,679  

Due to custodian

      55,449  

Accrued expenses and other liabilities

      51,732  

Payable for Series shares reacquired

      32,903  

Options written outstanding, at value (premiums received $32,936)

      25,087  

Management fee payable

      22,756  

Foreign capital gains tax liability

      14,782  

Due to broker—variation margin swaps

      2,308  

Distribution fee payable

      1,626  

Unrealized depreciation on OTC swap agreements

      1,167  

Dividends payable

      814  

Affiliated transfer agent fee payable

      519  
  

 

 

  

Total Liabilities

      14,058,243  
  

 

 

  

Net Assets

    $ 66,862,165  
  

 

 

  
          

Net assets were comprised of:

   

Common stock, at par

    $ 101,957  

Paid-in capital in excess of par

      72,263,953  
  

 

 

  
     72,365,910  

Distributions in excess of net investment income

      (461,346 ) 

Accumulated net realized loss on investment and foreign currency transactions

      (3,166,695 ) 

Net unrealized depreciation on investments and foreign currencies

      (1,875,704 ) 
  

 

 

  

Net assets, April 30, 2018

    $ 66,862,165  
  

 

 

  

 

See Notes to Financial Statements.

 

38  

Class A

 

Net asset value and redemption price per share
($4,800,581 ÷ 738,993 shares of common stock issued and outstanding)

    $ 6.50  

Maximum sales charge (4.50% of offering price)

      0.31  
  

 

 

  

Maximum offering price to public

    $ 6.81  
  

 

 

  

Class C

         

Net asset value, offering price and redemption price per share

   

($747,528 ÷ 114,136 shares of common stock issued and outstanding)

    $ 6.55  
  

 

 

  

Class Z

         

Net asset value, offering price and redemption price per share

   

($61,313,032 ÷ 9,342,431 shares of common stock issued and outstanding)

    $ 6.56  
  

 

 

  

Class R6

         

Net asset value, offering price and redemption price per share

   

($1,024 ÷ 156 shares of common stock issued and outstanding)

    $ 6.56  
  

 

 

  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     39  

Statement of Operations (unaudited)

Six Months Ended April 30, 2018

 

Net Investment Income (Loss)

 

Income

   

Interest income (net of foreign withholding taxes of $35,665)

    $ 1,444,226  

Affiliated dividend income

      16,520  

Income from securities lending, net (including affiliated income of $84)

      84  
  

 

 

  

Total income

      1,460,830  
  

 

 

  

Expenses

   

Management fee

      183,869  

Distribution fee(a)

      8,766  

Custodian and accounting fees

      68,452  

Audit fee

      31,835  

Registration fees(a)

      27,864  

Shareholders’ reports

      16,022  

Legal fees and expenses

      8,565  

Transfer agent’s fees and expenses (including affiliated expense of $1,487)(a)

      7,100  

Directors’ fees

      5,857  

Miscellaneous

      7,020  
  

 

 

  

Total expenses

      365,350  

Less: Fee waiver and/or expense reimbursement(a)

      (154,194 ) 
  

 

 

  

Net expenses

      211,156  
  

 

 

  

Net investment income (loss)

      1,249,674  
  

 

 

  

Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions

         

Net realized gain (loss) on:

   

Investment transactions (including affiliated of $1)

      (576,584 ) 

Options written transactions

      44,931  

Swap agreement transactions

      15,999  

Forward and cross currency contract transactions

      389,730  

Foreign currency transactions

      (71,252 ) 
  

 

 

  
     (197,176 ) 
  

 

 

  

Net change in unrealized appreciation (depreciation) on:

   

Investments (net of change in foreign capital gain taxes of $15,510; including affiliated of $41)

      733  

Options written

      (13,068 ) 

Swap agreements

      (24,995 ) 

Forward and cross currency contracts

      (566,060 ) 

Foreign currencies

      (25,309 ) 
  

 

 

  
     (628,699 ) 
  

 

 

  

Net gain (loss) on investment and foreign currency transactions

      (825,875 ) 
  

 

 

  

Net Increase (Decrease) In Net Assets Resulting From Operations

    $ 423,799  
  

 

 

  

 

(a) Class specific expenses and waivers were as follows:

 

    Class A     Class C     Class Z     Class R6  

Distribution fee

     5,093       3,673       —       —  

Transfer agent’s fees and expenses

     3,124       605       3,354       17  

Registration fees

     6,966       6,966       6,966       6,966  

Fee waiver and/or expense reimbursement

     (21,656 )      (9,735 )      (115,818 )      (6,985 ) 

 

See Notes to Financial Statements.

 

40  

Statements of Changes in Net Assets (unaudited)

    Six Months
Ended
April 30, 2018		     Year
Ended
October 31, 2017		  

Increase (Decrease) in Net Assets

                

Operations

    

Net investment income (loss)

   $ 1,249,674     $ 1,701,413  

Net realized gain (loss) on investment and foreign currency transactions

     (197,176 )      (532,379 ) 

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

     (628,699 )      488,486  
 

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

     423,799       1,657,520  
 

 

 

    

 

 

  

Dividends and Distributions

    

Dividends from net investment income

    

Class A

     (115,314 )      (85,906 ) 

Class C

     (18,082 )      (13,215 ) 

Class Z

     (1,196,990 )      (640,570 ) 

Class R6

     (32 )      (23 ) 
 

 

 

    

 

 

  
    (1,330,418 )      (739,714 ) 
 

 

 

    

 

 

  

Tax return of capital distributions

    

Class A

     —       (127,487 ) 

Class C

     —       (19,611 ) 

Class Z

     —       (950,614 ) 

Class R6

     —       (35 ) 
 

 

 

    

 

 

  
    —       (1,097,747 ) 
 

 

 

    

 

 

  

Series share transactions (Net of share conversions)

    

Net proceeds from shares sold

     42,155,381       7,471,777  

Net asset value of shares issued in reinvestment of dividends and distributions

     1,324,529       1,804,721  

Cost of shares reacquired

     (6,535,047 )      (10,512,516 ) 
 

 

 

    

 

 

  

Net increase (decrease) in net assets from Series share transactions

     36,944,863       (1,236,018 ) 
 

 

 

    

 

 

  

Total increase (decrease)

     36,038,244       (1,415,959 ) 

Net Assets:

                

Beginning of period

     30,823,921       32,239,880  
 

 

 

    

 

 

  

End of period(a)

   $ 66,862,165     $ 30,823,921  
 

 

 

    

 

 

  

(a) Includes (distributions in excess of) net investment income of:

   $ (461,346 )    $ (380,602 ) 
 

 

 

    

 

 

  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     41  

Notes to Financial Statements (unaudited)

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of seven funds: PGIM Jennison Emerging Markets Equity Opportunities Fund (formerly known as Prudential Jennison Emerging Markets Equity Fund), PGIM Jennison Global Infrastructure Fund, PGIM Jennison Global Opportunities Fund, PGIM Jennison International Opportunities Fund and PGIM QMA International Equity Fund, each of which are diversified funds and PGIM Emerging Markets Debt Hard Currency Fund and PGIM Emerging Markets Debt Local Currency Fund, each of which are non-diversified funds for purposes of the 1940 Act and may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. These financial statements relate only to the PGIM Emerging Markets Debt Local Currency Fund (the “Series”). Effective June 11, 2018, the Series’ names were changed by replacing “Prudential” with “PGIM” in each Series’ name and Class Q shares were renamed Class R6 shares.

 

The investment objective of the Series is total return, through a combination of current income and capital appreciation.

 

1. Accounting Policies

 

The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Series holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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.

 

42  

For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Series’ foreign investments may change on days when investors cannot purchase or redeem Series shares.

 

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 Schedule of Investments.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Fixed income securities traded in the OTC market are generally classified as Level 2 in the fair value hierarchy. Such fixed income securities are typically valued using the market approach which generally involves obtaining data from an approved independent third-party vendor source. The Fund utilizes the market approach as the primary method to value securities when market prices of identical or comparable instruments are available. The third-party vendors’ valuation techniques used to derive the evaluated bid price are based on evaluating observable inputs, including but not limited to, yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations and reported trades. Certain Level 3 securities are also valued using the market approach when obtaining a single broker quote or when utilizing transaction prices for identical securities that have been used in excess of five business days. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.

 

OTC derivative instruments are generally classified as Level 2 in the fair value hierarchy. Such derivative instruments are typically valued using the market approach and/or income approach which generally involves obtaining data from an approved independent third-party vendor source. The Series utilizes the market approach when quoted prices in broker-dealer markets are available but also includes consideration of alternative valuation approaches, including the income approach. In the absence of reliable market quotations, the income approach is typically utilized for purposes of valuing OTC derivatives such as interest rate swaps based on a discounted cash flow analysis whereby the value of the instrument is equal to the present value of its future cash inflows or outflows. Such analysis includes projecting future cash flows and determining the discount rate (including the present value factors that affect the discount rate) used to discount the future cash flows. In addition, the third-party vendors’ valuation techniques used to derive the evaluated OTC derivative price is based on evaluating observable inputs, including but not limited to, underlying asset prices, indices, spreads, interest rates and exchange rates. Certain OTC derivatives may be classified as Level 3 when valued using the market approach by obtaining a single broker quote or when utilizing unobservable inputs in the income

 

PGIM Emerging Markets Debt Local Currency Fund     43  

Notes to Financial Statements (unaudited) (continued)

 

approach. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.

 

Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are generally valued at the daily settlement price determined by the respective exchange. These securities are classified as Level 2 in the fair value hierarchy, as the daily settlement price is not public.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the 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 transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

44  

Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;

 

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions. Notwithstanding the above, the Series does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain (loss) upon the sale or maturity of foreign currency denominated debt obligations; such amounts are included in net realized gains (losses) on foreign currency transactions.

 

Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.

 

Forward and Cross Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The Series enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or specific receivables and payables denominated in a foreign currency and to gain exposure to certain currencies. The contracts are valued daily at current forward exchange rates and any unrealized gain (loss) is included in net unrealized appreciation (depreciation) on investments and foreign currencies. Gain (loss) is realized on the settlement date of the contract equal to the difference between the settlement value of the original and negotiated forward contracts. This gain (loss), if any, is included in net realized gain (loss) on forward and cross currency contract 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

 

PGIM Emerging Markets Debt Local Currency Fund     45  

Notes to Financial Statements (unaudited) (continued)

 

loss from counterparty credit risk is the net value of the cash flows to be received from the counterparty at the end of the contract’s life. A cross currency contract is a forward contract where a specified amount of one foreign currency will be exchanged for a specified amount of another foreign currency.

 

Options: The Series purchased or wrote options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates, value of equities or foreign currency exchange rates with respect to securities or financial instruments which the Series currently owns or intends to purchase. The Series may also use options to gain additional market exposure. The Series’ principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Series purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Series writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Series realizes a gain (loss) to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Series has realized a gain (loss). The difference between the premium and the amount received or paid at the closing of a purchase or sale transaction is also treated as a realized gain (loss). Gain (loss) on purchased options is included in net realized gain (loss) on investment transactions. Gain (loss) on written options is presented separately as net realized gain (loss) on options written transactions.

 

The Series, as writer of an option, may have no control over whether the underlying securities or financial instruments 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 or financial instrument underlying the written option. The Series, as purchaser of an OTC option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts. With exchange-traded options contracts, there is minimal counterparty credit risk to the Series since the exchanges’ clearinghouse acts as counterparty to all exchange-traded options and guarantees the options contracts against default.

 

When the Series writes an option on a swap, an amount equal to any premium received by the Series is recorded as a liability and is subsequently adjusted to the current market value of the written option on the swap. If a call option on a swap is exercised, the Series becomes obligated to pay a fixed interest rate (noted as the strike price) and receive a variable interest rate on a notional amount. If a put option on a swap is exercised, the Series becomes obligated to pay a variable interest rate and receive a fixed interest rate (noted as the strike price) on a notional amount. Premiums received from writing options

 

46  

on swaps that expire or are exercised are treated as realized gains upon the expiration or exercise of such options on swaps. The risk associated with writing put and call options on swaps is that the Series will be obligated to be party to a swap agreement if an option on a swap is exercised.

 

Swap Agreements: The Series may enter into credit default, interest rate and other types of swap agreements. A swap agreement is an agreement to exchange the return generated by one instrument for the return generated by another instrument. Swap agreements are negotiated in the OTC market and may be executed either directly with counterparty (“OTC-traded”) or through a central clearing facility, such as a registered exchange. Swap agreements are valued daily at current market value and any change in value is included in the net unrealized appreciation (depreciation) on swap agreements. Centrally cleared swaps pay or receive an amount known as “variation margin”, based on daily changes in the valuation of the swap contract. Any upfront premiums paid and received are shown as swap premiums paid and swap premiums received in the Statement of Assets and Liabilities. Risk of loss may exceed amounts recognized on the Statement of Assets and Liabilities. Swap agreements outstanding at period end, if any, are listed on the Schedule of Investments.

 

Interest Rate Swaps: Interest rate swaps represent an agreement between counterparties to exchange cash flows based on the difference between two interest rates, applied to a notional principal amount for a specified period. The Series is subject to interest rate risk exposure in the normal course of pursuing its investment objective. The Series used interest rate swaps to maintain its ability to generate steady cash flow by receiving a stream of fixed-rate payments and to increase exposure to prevailing market rates by receiving floating rate payments. The Series’ maximum risk of loss from counterparty credit risk is the discounted net present value of the cash flows to be received from the counterparty over the contract’s remaining life.

 

Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

The Fund, on behalf of the Series, is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements

 

PGIM Emerging Markets Debt Local Currency Fund     47  

Notes to Financial Statements (unaudited) (continued)

 

may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the Series is held in a segregated account by the Series’ custodian and with respect to those amounts which can be sold or re-pledged, is presented in the Schedule of Investments. Collateral pledged by the Series is segregated by the Series’ custodian and identified in the Schedule of Investments. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the Series and the applicable counterparty. Collateral requirements are determined based on the Series’ net position with each counterparty. Termination events applicable to the Series may occur upon a decline in the Series’ net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the Series’ counterparties to elect early termination could impact the Series’ future derivative activity.

 

In addition to each instrument’s primary underlying risk exposure (e.g. interest rate, credit, equity or foreign exchange, etc.), swap agreements involve, to varying degrees, elements of credit, market and documentation risk. Such risks involve the possibility that no liquid market for these agreements will exist, the counterparty to the agreement may default on its obligation to perform or disagree on the contractual terms of the agreement, and changes in net interest rates will be unfavorable. In connection with these agreements, securities in the portfolio may be identified or received as collateral from the counterparty in accordance with the terms of the respective swap agreements to provide or receive assets of value and to serve as recourse in the event of default or bankruptcy/insolvency of either party. Such OTC derivative agreements include conditions which, when materialized, give the counterparty the right to cause an early termination of the transactions under those agreements. Any election by the counterparty for early termination of the contract(s) may impact the amounts reported on financial statements.

 

As of April 30, 2018, the Series has not met conditions under such agreements which give the counterparty the right to call for an early termination.

 

Forward currency contracts, forward rate agreements, written options, and swaps involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Such risks may be mitigated by engaging in master netting arrangements.

 

48  

Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral. The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.

 

Concentration of Risk: The ability of debt securities issuers (other than those issued or guaranteed by the U.S. Government) held by the Series to meet their obligations may be affected by the economic or political developments in a specific industry, region or country. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability or the level of the governmental supervision and regulation of foreign securities markets.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.

 

Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.

 

PGIM Emerging Markets Debt Local Currency Fund     49  

Notes to Financial Statements (unaudited) (continued)

 

 

Taxes: It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Dividends and Distributions: The Series expects to declare dividends of its net investment income daily and pay such dividends monthly. Distributions of net realized capital and currency gains, if any, are declared and paid 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-date. Permanent book/tax differences relating to income and gain(loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

2. Agreements

 

The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Series. PGIM Investments administers the corporate affairs of the Series and, in connection therewith, furnishes the Series with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Series’ custodian (the Custodian), and the Series’ transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Series. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Series, including, but not limited to, the custodian, transfer agent, and accounting agent.

 

PGIM Investments has entered into a subadvisory agreement with PGIM, Inc., which provides subadvisory services to the Series through its PGIM Fixed Income unit. The subadvisory agreement provides that PGIM, Inc. will furnish investment advisory services in connection with the management of the Series. In connection therewith, PGIM, Inc. is obligated to keep

 

50  

certain books and records of the Series. PGIM Investments pays for the services of PGIM, Inc., the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.

 

The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of 0.80% on average daily net assets up to and including $1 billion; 0.78% on the next $2 billion of average daily net assets; 0.76% on the next $2 billion of average daily net assets; 0.75% on the next $5 billion of average daily net assets; and 0.74% on average daily net assets exceeding $10 billion. The effective management fee rate before any waivers and/or expense reimbursements, was 0.80% for the six months ended April 30, 2018.

 

PGIM Investments has contractually agreed, through February 28, 2019, to limit Total Annual Fund Operating Expenses after fee waivers and/or expense reimbursements to 1.13% of average daily net assets for Class A shares, 1.88% of average daily net assets for Class C shares, 0.88% of average daily net assets for Class Z shares, and 0.88% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. Expenses waived/reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver/reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The effective management fee rate, net of waivers and/or expense reimbursements, was 0.13% for the six months ended April 30, 2018.

 

The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) who acts as the distributor of the Class A, Class C, Class Z and Class R6 shares. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z or Class R6 shares of the Series.

 

Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to 0.25% and 1% of the average daily net assets of the Class A and Class C shares, respectively.

 

PIMS has advised the Series that it has received $4,364 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Series that for the six months ended April 30, 2018 it received $35 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.

 

PGIM Emerging Markets Debt Local Currency Fund     51  

Notes to Financial Statements (unaudited) (continued)

 

 

PGIM Investments, PGIM, Inc. and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Series may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended April 30, 2018 no such transactions were entered into by the Series.

 

The Series may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30, 2018, PGIM, Inc. was compensated $32 by PGIM Investments for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.

 

4. Portfolio Securities

 

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018 were $61,551,708 and $25,542,673, respectively.

 

52  

A summary of cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:

 

Affiliated

Mutual Funds*

   Value,
Beginning
of Period		     Cost of
Purchases		     Proceeds
from Sales		     Change in
Unrealized
Gain (Loss)		     Realized
Gain
(Loss)		     Value,
End of
Period		     Shares,
End of
Period		     Dividend
Income		  

PGIM Core Ultra Short Bond Fund

   $ 481,154     $ 45,845,922     $ 45,752,908     $   —     $   —     $ 574,168       574,168     $ 16,520  

PGIM Institutional Money Market Fund

     —       417,983       15,448       41       1       402,577       402,577       84  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  
  $ 481,154     $ 46,263,905     $ 45,768,356     $ 41     $ 1     $ 976,745       $ 16,604  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  

 

* The Funds did not have any capital gain distributions during the reporting period.

 

5. Tax Information

 

The United States federal income tax basis of the Series’ investments and the net unrealized depreciation as of April 30, 2018 were as follows:

 

Tax Basis

    $ 67,268,231  
  

 

 

  

Gross Unrealized Appreciation

      1,783,408  

Gross Unrealized Depreciation

      (4,179,877 ) 
  

 

 

  

Net Unrealized Depreciation

    $ (2,396,469 ) 
  

 

 

  

 

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, 2017 of approximately $2,856,000 which can be carried forward for an unlimited period. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.

 

Management has analyzed the Series’ tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

6. Capital and Ownership

 

The Series offers Class A, Class C, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 4.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase

 

PGIM Emerging Markets Debt Local Currency Fund     53  

Notes to Financial Statements (unaudited) (continued)

 

Class A shares at net asset value. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class Z and Class R6 shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.

 

The Fund is authorized to issue 4.8 billion shares of common stock, with a par value of $0.01 per share, which is divided into seven series. There are 550 million shares authorized for the Series, divided into five classes, designated Class A, Class C, Class Z, Class T and Class R6 common stock, each of which consists of 10 million, 50 million, 250 million, 190 million and 50 million authorized shares, respectively.

 

The Series currently does not have any Class T shares outstanding.

 

As of April 30, 2018, Prudential, through its affiliate entities, including affiliated funds (if applicable), owned 156 Class R6 shares and 3,194,469 Class Z shares of the Series. At reporting period end, three shareholders of record held 90% of the Series’ outstanding shares on behalf of multiple beneficial owners, of which 31% were held by an affiliate of Prudential.

 

Transactions in shares of common stock were as follows:

 

Class A

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        305,511      $ 2,037,994  

Shares issued in reinvestment of dividends and distributions

        16,620        110,503  

Shares reacquired

        (59,263 )       (389,898 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        262,868        1,758,599  

Shares issued upon conversion from other share class(es)

        447        3,014  

Shares reacquired upon conversion into other share class(es)

        (6,295 )       (42,786 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        257,020      $ 1,718,827  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        411,807      $ 2,625,583  

Shares issued in reinvestment of dividends and distributions

        30,171        192,867  

Shares reacquired

        (514,542 )       (3,279,092 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (72,564 )       (460,642 ) 

Shares issued upon conversion from other share class(es)

        32,906        196,522  

Shares reacquired upon conversion into other share class(es)

        (98,133 )       (619,781 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (137,791 )     $ (883,901 ) 
    

 

 

     

 

 

  

 

54  

Class C

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        11,624      $ 77,641  

Shares issued in reinvestment of dividends and distributions

        2,668        17,862  

Shares reacquired

        (11,242 )       (74,689 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        3,050      $ 20,814  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        35,784      $ 236,548  

Shares issued in reinvestment of dividends and distributions

        4,923        31,728  

Shares reacquired

        (50,941 )       (317,283 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (10,234 )     $ (49,007 ) 
    

 

 

     

 

 

  

Class Z

                

Six months ended April 30, 2018:

        

Shares sold

        5,903,984      $ 40,039,746  

Shares issued in reinvestment of dividends and distributions

        178,332        1,196,133  

Shares reacquired

        (916,451 )       (6,070,460 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        5,165,865        35,165,419  

Shares issued upon conversion from other share class(es)

        6,231        42,786  

Shares reacquired upon conversion into other share class(es)

        (443 )       (3,014 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        5,171,653      $ 35,205,191  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        698,617      $ 4,609,646  

Shares issued in reinvestment of dividends and distributions

        244,834        1,580,068  

Shares reacquired†

        (1,059,507 )       (6,916,141 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (116,056 )       (726,427 ) 

Shares issued upon conversion from other shares class(es)

        97,078        619,781  

Shares reacquired upon conversion into other share class(es)

        (32,483 )       (196,522 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (51,461 )     $ (303,168 ) 
    

 

 

     

 

 

  

Class R6

                

Six months ended April 30, 2018:

        

Shares issued in reinvestment of dividends and distributions

        4      $ 31  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        4      $ 31  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares issued in reinvestment of dividends and distributions

        9      $ 58  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        9      $ 58  
    

 

 

     

 

 

  

 

† Includes affiliated redemptions of 455,235 shares with a value of $ 3,000,000 for Class Z.

 

7. Borrowings

 

The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the

 

PGIM Emerging Markets Debt Local Currency Fund     55  

Notes to Financial Statements (unaudited) (continued)

 

Board, is accrued daily and paid quarterly. The interest on borrowings under the SCA is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.

 

Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.

 

The Series utilized the SCA during the reporting period ended April 30, 2018. The average daily balance for the 1 day that the Series had loans outstanding during the period was $2,223,000, borrowed at a weighted average interest rate of 3.15%. The maximum loan balance outstanding during the period was $2,223,000. At April 30, 2018, the Series did not have an outstanding loan balance.

 

56  

Financial Highlights (unaudited)

Class A Shares                                                 
     Six Months
Ended
April 30,		           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $6.40               $6.44       $6.24       $7.92       $8.67       $9.61  
Income (loss) from investment operations:                                                        
Net investment income (loss)     0.17               0.35       0.33       0.37       0.49       0.47  
Net realized and unrealized gain (loss) on investment transactions     0.12               (0.02 )      0.23       (1.64 )      (0.71 )      (0.76 ) 
Total from investment operations     0.29               0.33       0.56       (1.27 )      (0.22 )      (0.29 ) 
Less Dividends and Distributions:                                                        
Dividends from net investment income(f)     (0.19 )              (0.15 )      - (e)      (0.06 )      (0.07 )      (0.30 ) 
Distributions from net realized gains     -               -       -       -       -       (0.05 ) 
Tax return of capital distributions     -               (0.22 )      (0.36 )      (0.35 )      (0.46 )      (0.30 ) 
Total dividends and distributions     (0.19 )              (0.37 )      (0.36 )      (0.41 )      (0.53 )      (0.65 ) 
Net asset value, end of period     $6.50               $6.40       $6.44       $6.24       $7.92       $8.67  
Total Return(b):     4.48%               5.36%       9.29%       (16.41)%       (2.47)%       (3.23)%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $4,801               $3,085       $3,990       $3,208       $5,991       $10,862  
Average net assets (000)     $4,108               $3,639       $3,343       $4,341       $6,701       $12,797  
Ratios to average net assets(c):                                                        
Expenses after advisory fee waivers and/or expense reimbursement     1.13% (g)              1.13%       1.28%       1.30% (d)      1.30%       1.30%  
Expenses before advisory fee waivers and/or expense reimbursement     2.19% (g)              2.15%       2.33%       2.39% (d)      2.13%       1.78%  
Net investment income (loss)     5.29% (g)              5.42%       5.20%       5.32% (d)      5.99%       5.07%  
Portfolio turnover rate(i)     60% (h)              186%       196%       101%       110%       102%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Effective March 9, 2015, the contractual distribution and service (12b-1) fees were reduced from 0.30% to 0.25% of the average daily net assets and the 0.05% contractual 12b-1 fee waiver was terminated.
(e) Less than $0.005.
(f) Dividends from net investment income may include other items that are ordinary income for tax purposes.
(g) Annualized.
(h) Not annualized.
(i) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     57  

Financial Highlights (unaudited) (continued)

Class C Shares                                                 
     Six Months
Ended
April 30,		           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $6.46               $6.49       $6.28       $7.97       $8.72       $9.65  
Income (loss) from investment operations:                                                        
Net investment income (loss)     0.15               0.30       0.28       0.32       0.43       0.40  
Net realized and unrealized gain (loss) on investment transactions     0.10               (0.01 )      0.25       (1.65 )      (0.71 )      (0.75 ) 
Total from investment operations     0.25               0.29       0.53       (1.33 )      (0.28 )      (0.35 ) 
Less Dividends and Distributions:                                                        
Dividends from net investment income(e)     (0.16 )              (0.13 )      - (d)      (0.01 )      (0.01 )      (0.23 ) 
Distributions from net realized gains     -               -       -       -       -       (0.05 ) 
Tax return of capital distributions     -               (0.19 )      (0.32 )      (0.35 )      (0.46 )      (0.30 ) 
Total dividends and distributions     (0.16 )              (0.32 )      (0.32 )      (0.36 )      (0.47 )      (0.58 ) 
Net asset value, end of period     $6.55               $6.46       $6.49       $6.28       $7.97       $8.72  
Total Return(b):     3.89%               4.66%       8.61%       (17.00)%       (3.21)%       (3.85)%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $748               $718       $787       $701       $927       $1,469  
Average net assets (000)     $741               $649       $721       $789       $1,207       $1,585  
Ratios to average net assets(c):                                                        
Expenses after advisory fee waivers and/or expense reimbursement     1.88% (f)              1.88%       2.03%       2.05%       2.05%       2.05%  
Expenses before advisory fee waivers and/or expense reimbursement     4.53% (f)              2.88%       3.07%       3.11%       2.82%       2.47%  
Net investment income (loss)     4.52% (f)              4.63%       4.40%       4.52%       5.17%       4.26%  
Portfolio turnover rate(h)     60% (g)              186%       196%       101%       110%       102%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Less than $0.005.
(e) Dividends from net investment income may include other items that are ordinary income for tax purposes.
(f) Annualized.
(g) Not annualized.
(h) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

58  

Class Z Shares                                                 
    

Six Months
Ended
April 30,

           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $6.48               $6.50       $6.31       $7.98       $8.72       $9.66  
Income (loss) from investment operations:                                                        
Net investment income (loss)     0.18               0.36       0.34       0.38       0.51       0.49  
Net realized and unrealized gain (loss) on investment transactions     0.10               0.01       0.23       (1.62 )      (0.70 )      (0.76 ) 
Total from investment operations     0.28               0.37       0.57       (1.24 )      (0.19 )      (0.27 ) 
Less Dividends and Distributions:                                                        
Dividends from net investment income(e)     (0.20 )              (0.16 )      - (d)      (0.08 )      (0.09 )      (0.32 ) 
Distributions from net realized gains     -               -       -       -       -       (0.05 ) 
Tax return of capital distributions     -               (0.23 )      (0.38 )      (0.35 )      (0.46 )      (0.30 ) 
Total dividends and distributions     (0.20 )              (0.39 )      (0.38 )      (0.43 )      (0.55 )      (0.67 ) 
Net asset value, end of period     $6.56               $6.48       $6.50       $6.31       $7.98       $8.72  
Total Return(b):     4.23%               5.85%       9.31%       (15.90)%       (2.12)%       (2.98)%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $61,313               $27,020       $27,462       $24,821       $28,578       $31,330  
Average net assets (000)     $41,499               $26,437       $25,994       $25,969       $30,288       $35,341  
Ratios to average net assets(c):                                                        
Expenses after advisory fee waivers and/or expense reimbursement     0.88% (f)              0.88%       1.03%       1.05%       1.05%       1.05%  
Expenses before advisory fee waivers and/or expense reimbursement     1.44% (f)              1.88%       2.06%       2.11%       1.82%       1.49%  
Net investment income (loss)     5.47% (f)              5.58%       5.36%       5.50%       6.14%       5.25%  
Portfolio turnover rate(h)     60% (g)              186%       196%       101%       110%       102%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Less than $0.005.
(e) Dividends from net investment income may include other items that are ordinary income for tax purposes.
(f) Annualized.
(g) Not annualized.
(h) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Local Currency Fund     59  

Financial Highlights (unaudited) (continued)

Class R6 Shares                                                 
     Six Months
Ended
April 30,		           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $6.47               $6.50       $6.30       $7.98       $8.71       $9.66  
Income (loss) from investment operations:                                                        
Net investment income (loss)     0.19               0.37       0.35       0.39       0.51       0.58  
Net realized and unrealized gain (loss) on investment transactions     0.10               - (d)      0.23       (1.63 )      (0.69 )      (0.86 ) 
Total from investment operations     0.29               0.37       0.58       (1.24 )      (0.18 )      (0.28 ) 
Less Dividends and Distributions:                                                        
Dividends from net investment income(e)     (0.20 )              (0.16 )      - (d)      (0.09 )      (0.09 )      (0.32 ) 
Distributions from net realized gains     -               -       -       -       -       (0.05 ) 
Tax return of capital distributions     -               (0.24 )      (0.38 )      (0.35 )      (0.46 )      (0.30 ) 
Total dividends and distributions     (0.20 )              (0.40 )      (0.38 )      (0.44 )      (0.55 )      (0.67 ) 
Net asset value, end of period     $6.56               $6.47       $6.50       $6.30       $7.98       $8.71  
Total Return(b):     4.53%               5.82%       9.55%       (15.94)%       (1.97)%       (3.06)%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $1               $1       $1       $1       $1       $1  
Average net assets (000)     $1               $1       $1       $1       $1       $1  
Ratios to average net assets(c):                                                        
Expenses after advisory fee waivers and/or expense reimbursement     0.88% (f)              0.88%       1.03%       1.05%       1.05%       1.05%  
Expenses before advisory fee waivers and/or expense reimbursement     1371.11% (f)              1.83%       2.06%       2.01%       1.69%       1.39%  
Net investment income (loss)     5.72% (f)              5.73%       5.47%       5.60%       6.17%       6.22%  
Portfolio turnover rate(h)     60% (g)              186%       196%       101%       110%       102%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Less than $0.005.
(e) Dividends from net investment income may include other items that are ordinary income for tax purposes.
(f) Annualized.
(g) Not annualized.
(h) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

60  

∎ MAIL   ∎ TELEPHONE   ∎ WEBSITE

655 Broad Street

Newark, NJ 07102

  

(800) 225-1852

  

www.pgiminvestments.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

DIRECTORS
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres

 

OFFICERS
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC   655 Broad Street
Newark, NJ 07102

 

INVESTMENT SUBADVISER   PGIM Fixed Income   655 Broad Street
Newark, NJ 07102

 

DISTRIBUTOR   Prudential Investment
Management Services LLC		   655 Broad Street
Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon   225 Liberty Street
New York, NY 10286

 

TRANSFER AGENT   Prudential Mutual Fund
Services LLC		   PO Box 9658
Providence, RI 02940

 

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM		   KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP   787 Seventh Avenue
New York, NY 10019

 

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM Emerging Markets Debt Local Currency Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

LOGO

 

PGIM EMERGING MARKETS DEBT LOCAL CURRENCY FUND

 

SHARE CLASS   A   C   Z   R6*
NASDAQ   EMDAX   EMDCX   EMDZX   EMDQX
CUSIP   743969750   743969743   743969727   743969735

 

*Formerly known as Class Q shares.

 

MF212E2

LOGO

 

PGIM JENNISON EMERGING MARKETS EQUITY OPPORTUNITIES FUND

(Formerly known as Prudential Jennison Emerging Markets Equity Fund)

 

 

SEMIANNUAL REPORT

APRIL 30, 2018

 

LOGO

 

To enroll in e-delivery, go to pgiminvestments.com/edelivery

Objective: Long-term growth of capital

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.

 

The accompanying financial statements as of April 30, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates LLC is a registered investment adviser. Both are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

2   Visit our website at pgiminvestments.com

Table of Contents

 

Letter from the President

      5  

Your Fund’s Performance

      6  

Fees and Expenses

      9  

Holdings and Financial Statements

      11  

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     3  

This Page Intentionally Left Blank

Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for PGIM Jennison Emerging Markets Equity Opportunities Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.

 

We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*

 

Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

PGIM Jennison Emerging Markets Equity Opportunities Fund

June 15, 2018

 

*The Prudential Day One Funds did not change their names.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     5  

Your Fund’s Performance (unaudited)

 

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

    Total Returns as of 4/30/18
(without sales charges)
   Average Annual Total Returns as of 4/30/18
(with sales charges)
    Six Months* (%)   One Year (%)   Since Inception (%)
Class A   8.32   16.89   3.79 (9/16/14)
Class C   7.87   21.81   4.65 (9/16/14)
Class Z   8.43   24.06   5.69 (9/16/14)
Class R6**   8.43   24.06   5.71 (9/16/14)
MSCI Emerging Markets Index      
  4.80   21.71   6.48               
Lipper Emerging Markets Funds Average  
    3.90   17.95   4.97               

 

Source: PGIM Investments LLC and Lipper Inc.

*Not annualized

**Formerly known as Class Q shares.

Since Inception returns are provided since the Fund has less than 10 fiscal years of returns. Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the Fund’s inception date.

 

6   Visit our website at pgiminvestments.com

The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.

 

     Class A   Class C   Class Z   Class R6*
Maximum initial sales charge   5.50% of the public offering price   None   None   None
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption)   1.00% on sales of $1 million or more made within 12 months of purchase   1.00% 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)   0.30% (0.25% currently)   1.00%   None   None

 

*Formerly known as Class Q shares.

 

Benchmark Definitions

 

MSCI Emerging Markets Index—The MSCI Emerging Markets Index is an unmanaged free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets. The MSCI Emerging Markets Index consists of the following 24 emerging market country indexes: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, South Africa, Taiwan, Thailand, Turkey, and United Arab Emirates.

 

Lipper Emerging Markets Funds Average—The Lipper Emerging Markets Funds Average (Lipper Average) includes funds that seek long-term capital appreciation by investing at least 65% of total assets in emerging market equity securities, where “emerging market” is defined by a country’s GNP per capita or other economic measures.

 

Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     7  

Your Fund’s Performance (continued)

 

 

Presentation of Fund Holdings

 

Five Largest Holdings expressed as a
percentage of net assets as of 4/30/18 (%)		  
Tencent Holdings Ltd., Internet Software & Services     7.9  
MercadoLibre, Inc., Internet Software & Services     6.4  
Alibaba Group Holding Ltd., Internet Software & Services     6.0  
MakeMyTrip Ltd., Internet & Direct Marketing Retail     4.8  
Biocon Ltd., Biotechnology     3.8  

 

Holdings reflect only long-term investments and are subject to change.

 

Five Largest Industries expressed as a
percentage of net assets as of 4/30/18 (%)		  
Internet Software & Services     24.3  
Internet & Direct Marketing Retail     11.6  
Banks     8.5  
Food & Staples Retailing     6.2  
Beverages     5.8  

 

Industry weightings reflect only long-term investments and are subject to change.

 

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Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     9  

Fees and Expenses (continued)

 

and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

PGIM
Jennison  Emerging
Markets Equity
Opportunities Fund		   Beginning  Account
Value
November 1, 2017		    

Ending Account
Value

April 30, 2018

     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses  Paid
During the
Six-Month Period*		  
Class A   Actual   $ 1,000.00     $ 1,083.20       1.45 %    $ 7.49  
  Hypothetical   $ 1,000.00     $ 1,017.60       1.45 %    $ 7.25  
Class C   Actual   $ 1,000.00     $ 1,078.70       2.20 %    $ 11.34  
  Hypothetical   $ 1,000.00     $ 1,013.88       2.20 %    $ 10.99  
Class Z   Actual   $ 1,000.00     $ 1,084.30       1.20 %    $ 6.20  
  Hypothetical   $ 1,000.00     $ 1,018.84       1.20 %    $ 6.01  
Class R6**   Actual   $ 1,000.00     $ 1,084.30       1.20 %    $ 6.20  
    Hypothetical   $ 1,000.00     $ 1,018.84       1.20 %    $ 6.01  

 

*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund's fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.

**Formerly known as Class Q shares.

 

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Schedule of Investments (unaudited)

as of April 30, 2018

 

Description    Shares      Value  

LONG-TERM INVESTMENTS    98.9%

 

COMMON STOCKS    97.1%

 

Argentina    6.4%

 

MercadoLibre, Inc.

      3,618      $ 1,228,709  

Brazil    4.9%

 

Lojas Renner SA

      38,345        355,736  

Pagseguro Digital Ltd. (Class A Stock)

      8,764        291,228  

Raia Drogasil SA

      15,070        295,618  
     

 

 

  
        942,582  

Chile    2.4%

 

Sociedad Quimica y Minera de Chile SA, ADR(a)

      8,367        459,265  

China    34.9%

 

Alibaba Group Holding Ltd., ADR*(a)

      6,539        1,167,473  

Baidu, Inc., ADR*

      2,100        526,890  

Ctrip.com International Ltd., ADR*

      13,648        558,203  

Hangzhou Hikvision Digital Technology Co. Ltd.

      500        3,036  

Hangzhou Hikvision Digital Technology Co. Ltd. (Class A Stock)

      30,185        183,265  

Iqiyi, Inc., ADR*

      13,700        247,011  

JD.com, Inc., ADR*

      14,023        511,980  

Jiangsu Hengrui Medicine Co. Ltd. (Class A Stock)

      45,840        602,288  

Kweichow Moutai Co. Ltd. (Class A Stock)

      6,550        683,681  

Tencent Holdings Ltd.

      31,031        1,525,575  

Vipshop Holdings Ltd., ADR*

      15,876        245,761  

Wuxi Biologics Cayman, Inc., 144A*

      53,951        489,386  
     

 

 

  
        6,744,549  

Hong Kong    1.3%

 

Sands China Ltd.

      42,836        247,565  

India    23.5%

 

Ashok Leyland Ltd.

      213,565        523,824  

Asian Paints Ltd.

      21,320        382,929  

Biocon Ltd.

      73,147        728,939  

Eicher Motors Ltd.

      729        339,026  

Godrej Consumer Products Ltd.

      30,913        515,609  

HDFC Bank Ltd., ADR

      3,876        371,360  

MakeMyTrip Ltd.*

      25,070        925,083  

Maruti Suzuki India Ltd.

      4,243        558,331  

Titan Co. Ltd.

      13,692        200,789  
     

 

 

  
        4,545,890  

 

See Notes to Financial Statements.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     11  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Indonesia    10.2%

 

Ace Hardware Indonesia Tbk PT

      5,467,747      $ 510,995  

Astra International Tbk PT

      680,138        348,113  

Bank Rakyat Indonesia Persero Tbk PT

      1,743,668        402,035  

Matahari Department Store Tbk PT

      348,324        257,907  

Mitra Adiperkasa Tbk PT

      763,499        452,665  
     

 

 

  
        1,971,715  

Malaysia    1.6%

 

IHH Healthcare Bhd

      205,448        317,408  

Mexico    2.3%

 

Arca Continental SAB de CV

      63,551        437,944  

Peru    1.6%

 

Credicorp Ltd.

      1,310        304,562  

Russia    1.2%

                  

X5 Retail Group NV, GDR*

      661        18,906  

X5 Retail Group NV, GDR*

      7,546        215,061  
     

 

 

  
        233,967  

South Korea    1.0%

                  

Samsung Biologics Co. Ltd., 144A*

      444        201,661  

Thailand    5.8%

                  

Bangkok Dusit Medical Services PCL (Class F Stock)

      364,036        259,321  

CP ALL PCL

      240,542        661,820  

Kasikornbank Pcl, NVDR

      32,846        202,548  
     

 

 

  
        1,123,689  
     

 

 

  

TOTAL COMMON STOCKS
(cost $13,564,278)

         18,759,506  
     

 

 

  

PREFERRED STOCK    1.8%

      

Brazil

                  

Itau Unibanco Holding SA (PRFC)
(cost $301,475)

      24,684        358,437  
     

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $13,865,753)

         19,117,943  
     

 

 

  

 

See Notes to Financial Statements.

 

12  

Description    Shares      Value  

SHORT-TERM INVESTMENTS    10.3%

      

AFFILIATED MUTUAL FUNDS

                  

Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund(b)

      381,406      $ 381,406  

Prudential Investment Portfolios 2 - PGIM Institutional Money Market Fund
(cost $1,604,857; includes $1,602,852 of cash collateral for securities on loan)(b)(w)

      1,604,903        1,604,903  
     

 

 

  

TOTAL SHORT-TERM INVESTMENTS
(cost $1,986,263)

         1,986,309  
     

 

 

  

TOTAL INVESTMENTS    109.2%
(cost $15,852,016)

         21,104,252  

Liabilities in excess of other assets    (9.2)%

         (1,775,887 ) 
     

 

 

  

NET ASSETS    100.0%

       $ 19,328,365  
     

 

 

  

 

The following abbreviations are used in the semiannual report:

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

ADR—American Depositary Receipt

GDR—Global Depositary Receipt

LIBOR—London Interbank Offered Rate

NVDR—Non-voting Depositary Receipt

PRFC—Preference Shares

* 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 $1,576,287; cash collateral of $1,602,852 (included in liabilities) was received with which the Series purchased highly liquid short-term investments.
(b) Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment.
(w) PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund.

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

See Notes to Financial Statements.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     13  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:

 

       Level 1           Level 2           Level 3     

Investments in Securities

      

Common Stocks

      

Argentina

   $ 1,228,709     $ —     $     —  

Brazil

     942,582       —       —  

Chile

     459,265       —       —  

China

     3,257,318       3,487,231       —  

Hong Kong

     —       247,565       —  

India

     1,296,443       3,249,447       —  

Indonesia

     —       1,971,715       —  

Malaysia

     —       317,408       —  

Mexico

     437,944       —       —  

Peru

     304,562       —       —  

Russia

     233,967       —       —  

South Korea

     —       201,661       —  

Thailand

     —       1,123,689       —  

Preferred Stock

 

Brazil

     358,437       —       —  

Affiliated Mutual Funds

     1,986,309       —       —  
 

 

 

    

 

 

    

 

 

  

Total

   $ 10,505,536     $ 10,598,716     $ —  
 

 

 

    

 

 

    

 

 

  

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

Industry Classification:

 

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2018 were as follows:

 

Internet Software & Services

     24.3 % 

Internet & Direct Marketing Retail

     11.6  

Affiliated Mutual Funds (including 8.3% of collateral for securities on loan)

     10.3  

Banks

     8.5  

Food & Staples Retailing

     6.2  

Beverages

     5.8  

Multiline Retail

     5.5  

Automobiles

     4.7  

Machinery

     4.5  

Chemicals

     4.3  

Biotechnology

     3.8  

Life Sciences Tools & Services

     3.6  

Pharmaceuticals

     3.1  

Health Care Providers & Services

     3.0 % 

Personal Products

     2.7  

Specialty Retail

     2.6  

IT Services

     1.5  

Hotels, Restaurants & Leisure

     1.3  

Textiles, Apparel & Luxury Goods

     1.0  

Electronic Equipment, Instruments & Components

     0.9  
 

 

 

  
    109.2  

Liabilities in excess of other assets

     (9.2 ) 
 

 

 

  
    100.0 % 
 

 

 

  

 

See Notes to Financial Statements.

 

14  

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Series entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.

 

Offsetting of financial instrument/transaction assets and liabilities:

 

Description

   Gross Market
Value of
Recognized
Assets/(Liabilities)		     Collateral
Pledged/(Received)(1)		     Net Amount  

Securities on Loan

   $ 1,576,287     $ (1,576,287 )    $   —  
 

 

 

      

 

(1) Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions.

 

See Notes to Financial Statements.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     15  

Statement of Assets & Liabilities (unaudited)

as of April 30, 2018

 

Assets

 

Investments at value, including securities on loan of $1,576,287:

   

Unaffiliated investments (cost $13,865,753)

    $ 19,117,943  

Affiliated investments (cost $1,986,263)

      1,986,309  

Foreign currency, at value (cost $3,615)

      3,621  

Receivable for Series shares sold

      32,363  

Dividends and interest receivable

      19,462  

Receivable for investments sold

      169  

Prepaid expenses

      282  
  

 

 

  

Total assets

      21,160,149  
  

 

 

  

Liabilities

 

Payable to broker for collateral for securities on loan

      1,602,852  

Payable for investments purchased

      178,053  

Accrued expenses and other liabilities

      23,708  

Foreign capital gains tax liability

      23,683  

Distribution fee payable

      2,340  

Management fee payable

      1,112  

Affiliated transfer agent fee payable

      36  
  

 

 

  

Total liabilities

      1,831,784  
  

 

 

  

Net Assets

    $ 19,328,365  
  

 

 

  
          

Net assets were comprised of:

 

Common stock, at par

    $ 15,905  

Paid-in capital in excess of par

      16,075,935  
  

 

 

  
     16,091,840  

Accumulated net investment loss

      (73,382 ) 

Accumulated net realized loss on investment and foreign currency transactions

      (1,918,296 ) 

Net unrealized appreciation on investments and foreign currencies

      5,228,203  
  

 

 

  

Net assets, April 30, 2018

    $ 19,328,365  
  

 

 

  

 

See Notes to Financial Statements.

 

16  

Class A

         

Net asset value, offering price and redemption price per share,
($3,566,819 ÷ 294,454 shares of common stock issued and outstanding)

    $ 12.11  

Maximum sales charge (5.50% of offering price)

      0.70  
  

 

 

  

Maximum offering price to public

    $ 12.81  
  

 

 

  

Class C

 

Net asset value, offering price and redemption price per share,

   

($1,941,552 ÷ 164,674 shares of common stock issued and outstanding)

    $ 11.79  
  

 

 

  

Class Z

         

Net asset value, offering price and redemption price per share,

   

($1,598,680 ÷ 130,861 shares of common stock issued and outstanding)

    $ 12.22  
  

 

 

  

Class R6

         

Net asset value, offering price and redemption price per share,

   

($12,221,314 ÷ 1,000,515 shares of common stock issued and outstanding)

    $ 12.22  
  

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     17  

Statement of Operations (unaudited)

Six Months Ended April 30, 2018

 

Net Investment Income (Loss)

         

Income

   

Unaffiliated dividend income (net of foreign withholding taxes of $7,000)

    $ 66,976  

Affiliated dividend income

      3,618  

Income from securities lending, net (including affiliated income of $386)

      1,751  
  

 

 

  

Total income

      72,345  
  

 

 

  

Expenses

   

Management fee

      95,467  

Distribution fee(a)

      13,377  

Custodian and accounting fees

      30,537  

Registration fees(a)

      27,750  

Audit fee

      14,670  

Shareholders’ reports

      10,249  

Legal fees and expenses

      8,915  

Directors’ fees

      5,756  

Transfer agent’s fees and expenses (including affiliated expense of $105)(a)

      4,257  

Miscellaneous

      8,326  
  

 

 

  

Total expenses

      219,304  

Less: Fee waiver and/or expense reimbursement(a)

      (96,821 ) 

Distribution fee waiver(a)

      (722 ) 
  

 

 

  

Net expenses

      121,761  
  

 

 

  

Net investment income (loss)

      (49,416 ) 
  

 

 

  

Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions

         

Net realized gain (loss) on:

   

Investment transactions (including affiliated of ( $124))

      320,759  

Foreign currency transactions

      (1,151 ) 
  

 

 

  
     319,608  
  

 

 

  

Net change in unrealized appreciation (depreciation) on:

   

Investments (Including affiliated of $46)

      1,026,446  

Foreign currencies

      (200 ) 
  

 

 

  
     1,026,246  
  

 

 

  

Net gain (loss) on investment and foreign currency transactions

      1,345,854  
  

 

 

  

Net Increase (Decrease) In Net Assets Resulting From Operations

    $ 1,296,438  
  

 

 

  

 

(a) Class specific expenses and waivers were as follows:

 

    Class A     Class C     Class Z     Class R6  

Distribution fee

     4,331       9,046       —       —  

Registration fees

     6,937       6,937       6,938       6,938  

Transfer agent’s fees and expenses

     2,651       799       783       24  

Fee waiver and or expense reimbursement

     (19,831 )      (14,179 )      (12,434 )      (50,377 ) 

Distribution fee waiver

     (722 )      —       —       —  

 

See Notes to Financial Statements.

 

18  

Statements of Changes in Net Assets (unaudited)

    Six Months
Ended
April 30, 2018		     Year
Ended
October 31, 2017		  

Increase (Decrease) in Net Assets

 

Operations

 

Net investment income (loss)

   $ (49,416 )    $ (29,547 ) 

Net realized gain (loss) on investment and foreign currency transactions

     319,608       (116,094 ) 

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

     1,026,246       2,602,531  
 

 

 

    

 

 

  

Net increase (decrease) in net assets resulting from operations

     1,296,438       2,456,890  
 

 

 

    

 

 

  

Series share transactions (Net of share conversions)

 

Net proceeds from shares sold

     2,640,500       3,369,561  

Cost of shares reacquired

     (579,703 )      (1,045,433 ) 
 

 

 

    

 

 

  

Net increase (decrease) in net assets from fund share transactions

     2,060,797       2,324,128  
 

 

 

    

 

 

  

Total increase (decrease)

     3,357,235       4,781,018  

Net Assets:

 

Beginning of period

     15,971,130       11,190,112  
 

 

 

    

 

 

  

End of period(a)

   $ 19,328,365     $ 15,971,130  
 

 

 

    

 

 

  

(a) Includes accumulated net investment loss of:

   $ (73,382 )    $ (23,966 ) 
 

 

 

    

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     19  

Notes to Financial Statements (unaudited)

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of seven funds: PGIM Jennison Emerging Markets Equity Opportunities Fund (formerly known as Prudential Jennison Emerging Markets Equity Fund), PGIM Jennison Global Infrastructure Fund, PGIM Jennison Global Opportunities Fund, PGIM Jennison International Opportunities Fund and PGIM QMA International Equity Fund, each of which are diversified funds and PGIM Emerging Markets Debt Hard Currency Fund and PGIM Emerging Markets Debt Local Currency Fund, each of which are non-diversified funds for purposes of the 1940 Act and may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. These financial statements relate only to the PGIM Jennison Emerging Markets Equity Opportunities Fund (the “Series”). Effective June 11, 2018, the Series’ names were changed by replacing “Prudential” with “PGIM” in each Series’ name and Class Q shares were renamed Class R6 shares.

 

The investment objective of the Series is to seek long-term growth of capital.

 

1. Accounting Policies

 

The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Series holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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.

 

20  

For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Series’ foreign investments may change on days when investors cannot purchase or redeem Series shares.

 

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 Schedule of Investments.

 

Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.

 

Foreign equities traded on foreign securities exchanges are generally valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stock valuation policies discussed above.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     21  

Notes to Financial Statements (unaudited) (continued)

 

it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the 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 transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;

 

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of

 

22  

long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.

 

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.

 

Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral.

 

The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series also continues to recognize any unrealized gain (loss) in the market price of the

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     23  

Notes to Financial Statements (unaudited) (continued)

 

securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.

 

Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.

 

Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.

 

Taxes: It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Dividends and Distributions: The Series expects to pay dividends from net investment income and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

 

24  

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

2. Agreements

 

The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Series. PGIM Investments administers the corporate affairs of the Series and, in connection therewith, furnishes the Series with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Series’ custodian (the Custodian), and the Series’ transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Series. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Series, including, but not limited to, the custodian, transfer agent, and accounting agent.

 

PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.

 

The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of 1.05% of the Series’ average daily net assets up to $5 billion and 1.025% of the Series’ average daily net assets in excess of $5 billion. The effective management fee rate before any waivers and/or expense reimbursements, was 1.05% for the six months ended April 30, 2018.

 

PGIM Investments has contractually agreed, through February 28, 2019, to limit total annual Series operating expenses after fee waivers and/or expense reimbursements to 1.45% of average daily net assets for Class A shares, 2.20% of average daily net assets for Class C shares, 1.20% of average daily net assets for Class Z shares, and 1.20% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. Fees and/or expenses waived and/or reimbursed by the Manager may be recouped by the Manager within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     25  

Notes to Financial Statements (unaudited) (continued)

 

recoupment for that fiscal year. The waiver and/or expense reimbursements exceeded the effective management fee rate for the six months ended April 30, 2018.

 

The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of the Class A, Class C, Class Z and Class R6 shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z shares and Class R6 shares of the Series.

 

Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to 0.30% and 1% of the average daily net assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fee to 0.25% of the average daily net assets of the Class A shares through February 28, 2019.

 

PIMS has advised the Series that it has received $24,411 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Series that for the six months ended April 30, 2018 it received $5 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.

 

PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Series may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers.

 

26  

Such transactions are subject to ratification by the Board. For the reporting period ended April 30, 2018 no such transactions were entered into by the Series.

 

The Series may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30 2018, PGIM, Inc. was compensated $319 by PGIM Investments for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.

 

4. Portfolio Securities

 

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018 were $3,568,919 and $1,433,666, respectively.

 

A summary of cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:

 

Affiliated

Mutual Funds*

   Value,
Beginning
of Period		     Cost of
Purchases		     Proceeds
from Sales		     Change in
Unrealized
Gain
(Loss)		     Realized
Gain
(Loss)		     Value,
End of
Period		     Shares,
End of
Period		     Dividend
Income		  

PGIM Core Ultra Short Bond Fund

   $ 380,415     $ 2,904,319     $ 2,903,328     $  —     $ —     $ 381,406       381,406     $ 3,618  

PGIM Institutional Money Market Fund

     23,897       6,656,222       5,075,138       46       (124 )      1,604,903       1,604,903       386  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  
  $ 404,312     $ 9,560,541     $ 7,978,466     $ 46     $ (124 )    $ 1,986,309       $ 4,004  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  

 

* The Series did not have any capital gain distributions during the reporting period.

 

5. Tax Information

 

The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2018 were as follows:

 

Tax Basis

    $ 15,876,051  
  

 

 

  

Gross Unrealized Appreciation

      5,478,308  

Gross Unrealized Depreciation

      (250,107 ) 
  

 

 

  

Net Unrealized Appreciation

    $ 5,228,201  
  

 

 

  

 

The book basis may differ from tax basis due to certain tax-related adjustments.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     27  

Notes to Financial Statements (unaudited) (continued)

 

 

For federal income tax purposes, the Series had a capital loss carryforward of approximately $2,238,000 which can be carried forward for an unlimited period. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.

 

The Series elected to treat late year ordinary losses of approximately $24,000 as having been incurred in the following fiscal year (October 31, 2018).

 

Management has analyzed the Series’ tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

6. Capital and Ownership

 

The Series offers Class A, Class C, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class Z and Class R6 shares are not subject to any sales or redemption charge and are available exclusively for sale to a limited group of investors.

 

Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.

 

The Fund is authorized to issue 4.8 billion shares of common stock, with a par value of $0.01 per share, which is divided into seven series. There are 865 million shares authorized for the Series, divided into five classes, designated Class A, Class C, Class Z, Class T and Class R6 common stock, each of which consists of 25 million, 65 million, 300 million, 225 million and 250 million authorized shares, respectively.

 

The Series currently does not have any Class T shares outstanding.

 

28  

As of April 30, 2018, Prudential, through its affiliate entities, including affiliated funds (if applicable), owned 1,000,515 shares of Class R6 shares of the Series. At reporting period end, three shareholders of record held 81% of the Series’ outstanding shares on behalf of multiple beneficial owners, of which 63% were held by an affiliate of Prudential.

 

Transactions in shares of common stock were as follows:

 

Class A

      Shares      Amount  

Six months ended April 30, 2018:

 

Shares sold

        124,157      $ 1,542,323  

Shares reacquired

        (25,762 )       (317,176 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        98,395        1,225,147  

Shares reacquired upon conversion into other share class(es)

        (984 )       (11,614 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        97,411      $ 1,213,533  
    

 

 

     

 

 

  

Year ended October 31, 2017:

 

Shares sold

        156,262      $ 1,561,350  

Shares reacquired

        (50,106 )       (484,454 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        106,156        1,076,896  

Shares reacquired upon conversion into other share class(es)

        (2,111 )       (22,119 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        104,045      $ 1,054,777  
    

 

 

     

 

 

  

Class C

                

Six months ended April 30, 2018:

 

Shares sold

        27,472      $ 324,316  

Shares reacquired

        (1,531 )       (17,844 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        25,941      $ 306,472  
    

 

 

     

 

 

  

Year ended October 31, 2017:

 

Shares sold

        77,848      $ 791,362  

Shares reacquired

        (10,893 )       (103,832 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        66,955      $ 687,530  

Shares reacquired upon conversion into other share class(es)

        (7,961 )       (85,348 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        58,994      $ 602,182  
    

 

 

     

 

 

  

Class Z

                

Six months ended April 30, 2018:

 

Shares sold

        62,723      $ 773,861  

Shares reacquired

        (19,831 )       (244,683 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        42,892        529,178  

Shares issued upon conversion from other share class(es)

        977        11,614  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        43,869      $ 540,792  
    

 

 

     

 

 

  

Year ended October 31, 2017:

 

Shares sold

        101,704      $ 1,016,849  

Shares reacquired

        (44,028 )       (446,412 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        57,676        570,437  

Shares issued upon conversion from other share class(es)

        9,834        107,467  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        67,510      $ 677,904  
    

 

 

     

 

 

  

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     29  

Notes to Financial Statements (unaudited) (continued)

 

Class R6

      Shares      Amount  

Six months ended April 30, 2018:

 

Shares sold

        —      $ —  

Shares reacquired

        —        —  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        —      $ —  
    

 

 

     

 

 

  

Period ended October 31, 2017:

        

Shares reacquired

        (1,000 )       (10,735 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (1,000 )     $ (10,735 ) 
    

 

 

     

 

 

  

 

7. Borrowings

 

The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCAs is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.

 

Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.

 

The Series did not utilize the SCA during the reporting period ended April 30, 2018.

 

30  

Financial Highlights (unaudited)

 

Class A Shares  
     Six Months
Ended
April 30,		         Year Ended October 31,         September 16,
2014(b)
through
October 31,		  
     2018          2017     2016     2015          2014  
Per Share Operating Performance(c):                                                
Net Asset Value, Beginning of Period     $11.19           $9.34       $8.81       $10.09           $10.00  
Income (loss) from investment operations:                                                
Net investment income (loss)     (0.04 )          (0.04 )      (0.04 )      (0.04 )          (0.01 ) 
Net realized and unrealized gain (loss) on investments     0.96           1.89       0.57       (1.24 )          0.10  
Total from investment operations     0.92           1.85       0.53       (1.28 )          0.09  
Net asset value, end of period     $12.11           $11.19       $9.34       $8.81           $10.09  
Total Return(a)     8.22%           19.81%       6.02%       (12.69)%           0.90%  
             
Ratios/Supplemental Data:  
Net assets, end of period (000)     $3,567           $2,204       $869       $311           $18  
Average net assets (000)     $2,911           $1,363       $528       $208           $15  
Ratios to average net assets(d):                                                
Expenses after waiver and/or expense reimbursement     1.45% (e)          1.45%       1.45%       1.54%           1.55% (e) 
Expenses before waiver and/or expense reimbursement     2.87% (e)          3.28%       3.87%       3.40%           14.06% (e) 
Net investment income (loss)     (0.61)% (e)          (0.35)%       (0.49)%       (0.48)%           (0.93)% (e) 
Portfolio turnover rate(g)     8% (f)          45%       44%       67%           15% (f) 

 

(a) Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on average shares outstanding during the period.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     31  

Financial Highlights (unaudited) (continued)

 

Class C Shares  
     Six Months
Ended
April 30,		        

Year Ended October 31,

         September 16,
2014(b)
through
October 31,		  
     2018          2017     2016     2015          2014  
Per Share Operating Performance(c):                                                
Net Asset Value, Beginning of Period     $10.93           $9.20       $8.74       $10.08           $10.00  
Income (loss) from investment operations:                                                
Net investment income (loss)     (0.08 )          (0.11 )      (0.11 )      (0.13 )          (0.02 ) 
Net realized and unrealized gain (loss) on investments     0.94           1.84       0.57       (1.21 )          0.10  
Total from investment operations     0.86           1.73       0.46       (1.34 )          0.08  
Net asset value, end of period     $11.79           $10.93       $9.20       $8.74           $10.08  
Total Return(a)     7.87%           18.80%       5.26%       (13.29)%           0.80%  
             
Ratios/Supplemental Data:  
Net assets, end of period (000)     $1,942           $1,516       $734       $662           $501  
Average net assets (000)     $1,824           $973       $672       $699           $296  
Ratios to average net assets(d):                                                
Expenses after waiver and/or expense reimbursement     2.20% (e)          2.20%       2.20%       2.29%           2.30% (e) 
Expenses before waiver and/or expense reimbursement     3.77% (e)          4.00%       4.62%       4.12%           15.19% (e) 
Net investment income (loss)     (1.40)% (e)          (1.17)%       (1.29)%       (1.36)%           (1.79)% (e) 
Portfolio turnover rate(g)     8% (f)          45%       44%       67%           15% (f) 

 

(a) Total return does not consider the effect of sales load. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on average shares outstanding during the period.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

32  

Class Z Shares  
     Six Months
Ended
April 30,		        

Year Ended October 31,

         September 16,
2014(b)
through
October 31,		  
     2018          2017     2016     2015          2014  
Per Share Operating Performance(c):                                                
Net Asset Value, Beginning of Period     $11.27           $9.39       $8.82       $10.09           $10.00  
Income (loss) from investment operations:                                                
Net investment income (loss)     (0.02 )          (0.02 )      (0.03 )      (0.04 )          (0.01 ) 
Net realized and unrealized gain (loss) on investments     0.97           1.90       0.60       (1.23 )          0.10  
Total from investment operations     0.95           1.88       0.57       (1.27 )          0.09  
Net asset value, end of period     $12.22           $11.27       $9.39       $8.82           $10.09  
Total Return(a)     8.43%           20.02%       6.46%       (12.59)%           0.90%  
             
Ratios/Supplemental Data:  
Net assets, end of period (000)     $1,599           $980       $183       $60           $10  
Average net assets (000)     $1,338           $490       $102       $17           $10  
Ratios to average net assets(d):                                                
Expenses after waiver and/or expense reimbursement     1.20% (e)          1.20%       1.20%       1.29%           1.30% (e) 
Expenses before waiver and/or expense reimbursement     3.07% (e)          2.94%       3.55%       3.48%           13.51% (e) 
Net investment income (loss)     (0.37)% (e)          (0.19)%       (0.31)%       (0.44)%           (0.67)% (e) 
Portfolio turnover rate(g)     8% (f)          45%       44%       67%           15% (f) 

 

(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total investment return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on average shares outstanding during the period.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison Emerging Markets Equity Opportunities Fund     33  

Financial Highlights (unaudited) (continued)

 

Class R6 Shares  
    

Six Months
Ended
April 30,

        

Year Ended October 31,

         September 16,
2014(b)
through
October 31,		  
     2018          2017     2016     2015          2014  
Per Share Operating Performance(c):                                                
Net Asset Value, Beginning of Period     $11.27           $9.39       $8.83       $10.09           $10.00  
Income (loss) from investment operations:                                                
Net investment income (loss)     (0.03 )          (0.01 )      (0.03 )      (0.04 )          (0.01 ) 
Net realized and unrealized gain (loss) on investments     0.98           1.89       0.59       (1.21 )          0.10  
Total from investment operations     0.95           1.88       0.56       (1.25 )          0.09  
Less Dividends:                                                
Dividends from net investment income     -           -       -       (0.01 )          -  
Net asset value, end of period     $12.22           $11.27       $9.39       $8.83           $10.09  
Total Return(a)     8.43%           20.02%       6.34%       (12.44)%           0.90%  
             
Ratios/Supplemental Data:  
Net assets, end of period (000)     $12,221           $11,271       $9,404       $8,840           $10,101  
Average net assets (000)     $12,261           $9,893       $8,722       $9,518           $9,785  
Ratios to average net assets(d):                                                
Expenses after waiver and/or expense reimbursement     1.20% (e)          1.20%       1.20%       1.29%           1.30% (e) 
Expenses before waiver and/or expense reimbursement     2.03% (e)          2.78%       3.13%       2.91%           13.37% (e) 
Net investment income (loss)     (0.42)% (e)          (0.13)%       (0.29)%       (0.40)%           (0.68)% (e) 
Portfolio turnover rate(g)     8% (f)          45%       44%       67%           15% (f) 

 

(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total investment return may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on average shares outstanding during the period.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

34  

∎ MAIL   ∎ TELEPHONE   ∎ WEBSITE

655 Broad Street

Newark, NJ 07102

  

(800) 225-1852

  

www.pgiminvestments.com

 

PROXY VOTING
The Board of Trustees of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

TRUSTEES
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres

 

OFFICERS
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Chad A. Earnst, Chief Compliance Officer • Deborah A. Docs, Secretary • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC  

655 Broad Street

Newark, NJ 07102

 

INVESTMENT SUBADVISER   Jennison Associates LLC   466 Lexington Avenue
New York, NY 10017

 

DISTRIBUTOR   Prudential Investment
Management Services LLC		  

655 Broad Street

Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon   225 Liberty Street
New York, NY 10286

 

TRANSFER AGENT   Prudential Mutual Fund
Services LLC		   PO Box 9658
Providence, RI 02940

 

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM		   KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP   787 Seventh Avenue
New York, NY 10019

 

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH TRUSTEES
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, PGIM Jennison Emerging Markets Equity Opportunities Fund, PGIM Investments, Attn: Board of Trustees, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

LOGO

 

 

PGIM JENNISON EMERGING MARKETS EQUITY OPPORTUNITIES FUND

 

SHARE CLASS   A   C   Z   R6*
NASDAQ   PDEAX   PDECX   PDEZX   PDEQX
CUSIP   743969644   743969636   743969610   743969628

 

*Formerly known as Class Q shares.

 

MF225E2    

LOGO

 

PGIM JENNISON GLOBAL OPPORTUNITIES FUND

(Formerly known as Prudential Jennison Global Opportunities Fund)

 

 

SEMIANNUAL REPORT

APRIL 30, 2018

 

LOGO

 

To enroll in e-delivery, go to pgiminvestments.com/edelivery

Objective: To seek long-term growth of capital

 

 

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.

 

The accompanying financial statements as of April 30, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

2   Visit our website at pgiminvestments.com

Table of Contents

 

Letter from the President

      5  

Your Fund’s Performance

      6  

Fees and Expenses

      9  

Holdings and Financial Statements

      11  

 

PGIM Jennison Global Opportunities Fund     3  

This Page Intentionally Left Blank

 

 

Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for PGIM Jennison Global Opportunities Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.

 

We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*

 

Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

PGIM Jennison Global Opportunities Fund

June 15, 2018

 

*The Prudential Day One Funds did not change their names.

 

PGIM Jennison Global Opportunities Fund     5  

Your Fund’s Performance (unaudited)

 

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

    Total Returns as of 4/30/18
(without sales charges)		   Average Annual Total Returns as of 4/30/18
(with sales charges)
    Six Months* (%)   One Year (%)   Five Years (%)   Since Inception (%)
Class A   7.48   20.05   13.69   12.91 (3/14/12)
Class C   7.10   25.10   14.13   13.09 (3/14/12)
Class Z   7.67   27.38   15.27   14.23 (3/14/12)
Class R6**   7.69   27.49   N/A     15.09 (12/22/14)
MSCI ACWI ND Index  
  3.56   14.16     8.80   —
Lipper Global Multi-Cap Growth Funds Average***
  4.79   16.93   10.33   —
Lipper Global Large-Cap Growth Funds Average***
    4.27   16.43     9.73   —

 

Source: PGIM Investments LLC and Lipper Inc.

*Not annualized

**Formerly known as Class Q shares.

***The Fund is compared to the Lipper Global Multi-Cap Growth Funds Average performance universe, although Lipper classifies the Fund in the Lipper Global Large-Cap Growth Funds performance universe. The Lipper Global Multi-Cap Growth Funds performance universe is utilized because the Fund’s manager believes that the funds included in this universe provide a more appropriate basis for fund performance comparison.

Since Inception returns are provided since the Fund has less than 10 fiscal years of returns. Since Inception returns for the Index and the Lipper Averages are measured from the closest month-end to the class’ inception date.

 

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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.

 

     Class A   Class C   Class Z   Class R6*
Maximum initial sales charge   5.50% of the public offering price   None   None   None
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption)   1.00% on sales of $1 million or more made within 12 months of purchase   1.00% 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)  

0.30%

(0.25% currently)

   1.00%   None  

None

 

*Formerly known as Class Q shares.

 

Benchmark Definitions

 

MSCI ACWI ND Index—The Morgan Stanley Capital International All Country World Net Dividend Index (MSCI ACWI ND Index) is an unmanaged free float-adjusted market capitalization-weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI ACWI ND Index consists of 46 country indexes comprising 23 developed and 23 emerging market country indexes. The ND version of the MSCI ACWI Index reflects the impact of the maximum withholding taxes on reinvested dividends. The average annual total return for the Index measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 9.45% and 8.32% for Class R6 shares.

 

Lipper Global Multi-Cap Growth Funds Average—The Lipper Global Multi-Cap Growth Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Global Multi-Cap Growth Funds universe for the periods noted. Funds in the Lipper Average are funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Global multi-cap growth funds typically have above-average characteristics compared to the MSCI World Index. The average annual total return for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 10.46% and 9.30% for Class R6 shares.

 

Lipper Global Large-Cap Growth Funds Average—The Lipper Global Large-Cap Growth Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Global Large-Cap Growth Funds universe for the periods noted. Funds in the Lipper Average are funds that, by portfolio practice, invest at least 75% of their

 

PGIM Jennison Global Opportunities Fund     7  

Your Fund’s Performance (continued)

 

equity assets in companies both inside and outside of the US with market capitalizations (on a three-year weighted basis) above Lipper’s global large-cap floor. Global large-cap growth funds typically have above average characteristics compared to their large-cap specific subset of the MSCI World Index. The average annual total return for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 10.30% and 9.40% for Class R6 shares.

 

Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.

 

Presentation of Fund Holdings

 

Five Largest Holdings expressed as a
percentage of net assets as of 4/30/18 (%)		  
Alibaba Group Holding Ltd., ADR, Internet Software & Services     5.7  
Amazon.com, Inc., Internet & Direct Marketing Retail     5.7  
Tencent Holdings Ltd., Internet Software & Services     5.5  
Kering SA, Textiles, Apparel & Luxury Goods     5.2  
Netflix, Inc., Internet & Direct Marketing Retail     4.9  

 

Holdings reflect only long-term investments and are subject to change.

 

Five Largest Industries expressed as a
percentage of net assets as of 4/30/18 (%)		  
Internet Software & Services     17.2  
Internet & Direct Marketing Retail     14.4  
Textiles, Apparel & Luxury Goods     12.0  
IT Services     10.9  
Software     5.3  

Industry weightings reflect only long-term investments and are subject to change.

 

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Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period

 

PGIM Jennison Global Opportunities Fund     9  

Fees and Expenses (continued)

 

and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

PGIM  Jennison Global
Opportunities Fund		   Beginning  Account
Value
November 1, 2017		     Ending  Account
Value
April 30, 2018		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses  Paid
During the
Six-Month Period*		  
Class A   Actual   $ 1,000.00     $ 1,074.80       1.17 %    $ 6.02  
  Hypothetical   $ 1,000.00     $ 1,018.99       1.17 %    $ 5.86  
Class C   Actual   $ 1,000.00     $ 1,071.00       1.91 %    $ 9.81  
  Hypothetical   $ 1,000.00     $ 1,015.32       1.91 %    $ 9.54  
Class Z   Actual   $ 1,000.00     $ 1,076.70       0.90 %    $ 4.63  
  Hypothetical   $ 1,000.00     $ 1,020.33       0.90 %    $ 4.51  
Class R6**   Actual   $ 1,000.00     $ 1,076.90       0.84 %    $ 4.33  
    Hypothetical   $ 1,000.00     $ 1,020.63       0.84 %    $ 4.21  

 

*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.

**Formerly known as Class Q shares.

 

10   Visit our website at pgiminvestments.com

Schedule of Investments (unaudited)

as of April 30, 2018

 

Description    Shares      Value  

LONG-TERM INVESTMENTS    98.4%

      

COMMON STOCKS

      

Argentina    2.5%

                  

MercadoLibre, Inc.(a)

      81,058      $ 27,528,107  

Brazil    1.1%

                  

Raia Drogasil SA

      643,641        12,625,888  

China    12.9%

                  

Alibaba Group Holding Ltd., ADR*(a)

      356,982        63,735,567  

JD.com, Inc., ADR*(a)

      399,026        14,568,439  

Tencent Holdings Ltd.

      1,254,109        61,655,670  

Tencent Holdings Ltd., 144A

      66,669        3,277,643  
     

 

 

  
        143,237,319  

France    10.4%

                  

Kering SA

      99,514        57,568,420  

LVMH Moet Hennessy Louis Vuitton SE

      118,622        41,281,835  

Remy Cointreau SA

      126,178        17,383,925  
     

 

 

  
        116,234,180  

Germany    3.1%

                  

Wirecard AG

      256,492        34,703,583  

India    2.3%

                  

HDFC Bank Ltd., ADR

      267,580        25,636,840  

Italy    2.4%

                  

Ferrari NV

      220,082        26,998,944  

Japan    4.2%

                  

FANUC Corp.

      71,798        15,379,895  

Keyence Corp.

      51,387        31,334,745  
     

 

 

  
        46,714,640  

Netherlands    1.9%

                  

ASML Holding NV

      108,280        20,614,729  

Switzerland    1.1%

                  

Straumann Holding AG

      17,603        11,949,392  

Thailand    2.8%

                  

CP ALL PCL

      11,226,790        30,889,072  

 

See Notes to Financial Statements.

 

PGIM Jennison Global Opportunities Fund     11  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

United Kingdom    2.5%

                  

ASOS PLC*

      348,603      $ 27,922,091  

United States    51.2%

                  

Activision Blizzard, Inc.

      234,243        15,542,023  

Adobe Systems, Inc.*

      96,975        21,489,660  

Albemarle Corp.

      139,141        13,491,111  

Alphabet, Inc. (Class A Stock)*

      14,162        14,425,130  

Amazon.com, Inc.*

      40,355        63,201,176  

Boeing Co. (The)

      116,630        38,903,103  

Charter Communications, Inc. (Class A Stock)*

      37,210        10,094,701  

Estee Lauder Cos., Inc. (The) (Class A Stock)

      245,647        36,377,864  

Facebook, Inc. (Class A Stock)*

      118,543        20,389,396  

Home Depot, Inc. (The)

      133,769        24,720,511  

Intuitive Surgical, Inc.*

      36,682        16,168,692  

Mastercard, Inc. (Class A Stock)

      202,406        36,082,918  

Netflix, Inc.*

      174,978        54,673,626  

NIKE, Inc. (Class B Stock)

      513,249        35,101,099  

PayPal Holdings, Inc.*

      432,997        32,305,906  

Square, Inc. (Class A Stock)*(a)

      378,290        17,908,248  

Tesla, Inc.*(a)

      87,673        25,767,095  

UnitedHealth Group, Inc.

      187,555        44,338,002  

Vertex Pharmaceuticals, Inc.*

      175,156        26,826,893  

Workday, Inc. (Class A Stock)*

      174,182        21,744,881  
     

 

 

  
        569,552,035  
     

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $922,894,742)

         1,094,606,820  
     

 

 

  

SHORT-TERM INVESTMENTS    13.8%

      

AFFILIATED MUTUAL FUNDS

                  

Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund(w)

      15,094,645        15,094,645  

Prudential Investment Portfolios 2 - PGIM Institutional Money Market Fund
(cost $138,431,607; includes $138,243,593 of cash collateral for securities on loan)(b)(w)

      138,436,965        138,436,965  
     

 

 

  

TOTAL SHORT-TERM INVESTMENTS
(cost $153,526,252)

         153,531,610  
     

 

 

  

TOTAL INVESTMENTS    112.2%
(cost $1,076,420,994)

         1,248,138,430  

Liabilities in excess of other assets    (12.2)%

         (136,107,380 ) 
     

 

 

  

NET ASSETS    100.0%

       $ 1,112,031,050  
     

 

 

  

 

See Notes to Financial Statements.

 

12  

 

The following abbreviations are used in the semiannual report:

ADR—American Depositary Receipt

LIBOR—London Interbank Offered Rate

* Non-income producing security.
(a) All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $135,674,940; cash collateral of $138,243,593 (included in liabilities) was received with which the Series purchased highly liquid short-term investments.
(b) Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment.
(w) PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund.

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:

 

    Level 1     Level 2     Level 3  

Investments in Securities

      

Common Stocks

      

Argentina

   $ 27,528,107     $ —     $ —  

Brazil

     12,625,888       —       —  

China

     78,304,006       64,933,313       —  

France

     —       116,234,180       —  

Germany

     —       34,703,583       —  

India

     25,636,840       —       —  

Italy

     —       26,998,944       —  

Japan

     —       46,714,640       —  

Netherlands

     —       20,614,729       —  

Switzerland

     —       11,949,392       —  

Thailand

     —       30,889,072       —  

United Kingdom

     —       27,922,091       —  

United States

     569,552,035       —       —  

Affiliated Mutual Funds

     153,531,610       —       —  
 

 

 

    

 

 

    

 

 

  

Total

   $ 867,178,486     $ 380,959,944     $     —  
 

 

 

    

 

 

    

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison Global Opportunities Fund     13  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

Industry Classification:

 

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2018 were as follows:

 

Internet Software & Services

     17.2 % 

Internet & Direct Marketing Retail

     14.4  

Affiliated Mutual Funds (including 12.4% of collateral for securities on loan)

     13.8  

Textiles, Apparel & Luxury Goods

     12.0  

IT Services

     10.9  

Software

     5.3  

Automobiles

     4.7  

Health Care Providers & Services

     4.0  

Food & Staples Retailing

     3.9  

Aerospace & Defense

     3.5  

Personal Products

     3.3  

Electronic Equipment, Instruments & Components

     2.8  

Health Care Equipment & Supplies

     2.5 % 

Biotechnology

     2.4  

Banks

     2.3  

Specialty Retail

     2.2  

Semiconductors & Semiconductor Equipment

     1.9  

Beverages

     1.6  

Machinery

     1.4  

Chemicals

     1.2  

Media

     0.9  
 

 

 

  
    112.2  

Liabilities in excess of other assets

     (12.2 ) 
 

 

 

  
    100.0 % 
 

 

 

  

 

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Series entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.

 

Offsetting of financial instrument/transaction assets and liabilities:

 

Description

   Gross Market
Value of
Recognized
Assets/(Liabilities)		     Collateral
Pledged/(Received)(1)		     Net Amount  

Securities on Loan

   $ 135,674,940     $ (135,674,940 )    $   —  
 

 

 

      

 

(1) Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions.

 

See Notes to Financial Statements.

 

14  

This Page Intentionally Left Blank

Statement of Assets & Liabilities (unaudited)

as of April 30, 2018

 

Assets

         

Investments at value, including securities on loan of $135,674,940:

   

Unaffiliated investments (cost $922,894,742)

    $ 1,094,606,820  

Affiliated investments (cost $153,526,252)

      153,531,610  

Receivable for investments sold

      14,490,038  

Receivable for Series shares sold

      7,132,913  

Dividends receivable

      1,275,857  

Tax reclaim receivable

      122,267  

Prepaid expenses

      59,302  
  

 

 

  

Total Assets

      1,271,218,807  
  

 

 

  

Liabilities

         

Payable to broker for collateral for securities on loan

      138,243,593  

Payable for investments purchased

      18,099,160  

Payable for Series shares reacquired

      1,838,974  

Management fee payable

      671,863  

Accrued expenses and other liabilities

      177,817  

Distribution fee payable

      134,992  

Affiliated transfer agent fee payable

      21,358  
  

 

 

  

Total Liabilities

      159,187,757  
  

 

 

  

Net Assets

    $ 1,112,031,050  
  

 

 

  
          

Net assets were comprised of:

   

Common stock, at par

    $ 496,531  

Paid-in capital in excess of par

      960,181,758  
  

 

 

  
     960,678,289  

Accumulated net investment loss

      (2,333,717 ) 

Accumulated net realized loss on investment and foreign currency transactions

      (18,015,446 ) 

Net unrealized appreciation on investments and foreign currencies

      171,701,924  
  

 

 

  

Net assets, April 30, 2018

    $ 1,112,031,050  
  

 

 

  

 

 

See Notes to Financial Statements.

 

16  

Class A

         

Net asset value and redemption price per share
($139,339,612 ÷ 6,258,275 shares of common stock issued and outstanding)

   

$

22.26

 

Maximum sales charge (5.50% of offering price)

      1.30  
  

 

 

  

Maximum offering price to public

    $ 23.56  
  

 

 

  

Class C

         

Net asset value, offering price and redemption price per share
($135,992,606 ÷ 6,398,827 shares of common stock issued and outstanding)

    $ 21.25  
  

 

 

  

Class Z

         

Net asset value, offering price and redemption price per share
($693,332,412 ÷ 30,672,735 shares of common stock issued and outstanding)

    $ 22.60  
  

 

 

  

Class R6

         

Net asset value, offering price and redemption price per share
($143,366,420 ÷ 6,323,309 shares of common stock issued and outstanding)

    $ 22.67  
  

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison Global Opportunities Fund     17  

Statement of Operations (unaudited)

Six Months Ended April 30, 2018

 

Net Investment Income (Loss)

         

Income

   

Unaffiliated dividend income (net of foreign withholding taxes of $243,789)

    $ 2,838,662  

Income from securities lending, net (including affiliated income of $41,272)

      160,528  

Affiliated dividend income

      152,399  
  

 

 

  

Total income

      3,151,589  
  

 

 

  

Expenses

   

Management fee

      3,176,526  

Distribution fee(a)

      701,019  

Transfer agent’s fees and expenses (affiliated expense of $56,220)(a)

      221,938  

Custodian and accounting fees

      82,074  

Registration fees(a)

      41,372  

Shareholders’ reports

      23,789  

Audit fee

      13,686  

Directors’ fees

      10,952  

Legal fees and expenses

      10,237  

Miscellaneous

      13,730  
  

 

 

  

Total expenses

      4,295,323  

Less: Fee waiver and/or expense reimbursement(a)

      (138,085 ) 

Less: Distribution fee waiver(a)

      (28,599 ) 
  

 

 

  

Net expenses

      4,128,639  
  

 

 

  

Net investment income (loss)

      (977,050 ) 
  

 

 

  

Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions

         

Net realized gain (loss) on:

   

Investment transactions (including affiliated of $(9,786))

      1,012,866  

Foreign currency transactions

      16,988  
  

 

 

  
     1,029,854  
  

 

 

  

Net change in unrealized appreciation (depreciation) on:

   

Investments (including affiliated of $4,662)

      39,504,903  

Foreign currencies

      (13,265 ) 
  

 

 

  
     39,491,638  
  

 

 

  

Net gain (loss) on investment and foreign currency transactions

      40,521,492  
  

 

 

  

Net Increase (Decrease) In Net Assets Resulting From Operations

    $ 39,544,442  
  

 

 

  

 

(a) Class specific expenses and waivers were as follows:

 

    Class A     Class C     Class Z     Class R6  

Distribution fee

     171,586       529,433       —       —  

Transfer agent’s fees and expenses

     48,607       39,307       133,969       55  

Registration fees

     11,285       8,951       13,363       7,773  

Fee waiver and/or expense reimbursement

     (24,564 )      (21,518 )      (74,609 )      (17,394 ) 

Distribution fee waiver

     (28,599 )      —       —       —  

 

See Notes to Financial Statements.

 

18  

Statements of Changes in Net Assets (unaudited)

 

    Six Months
Ended
April 30, 2018		      Year
Ended
October 31, 2017		  

Increase (Decrease) in Net Assets

                 

Operations

     

Net investment income (loss)

   $ (977,050 )     $ (1,676,165 ) 

Net realized gain (loss) on investment and foreign currency transactions

     1,029,854        10,626,478  

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

     39,491,638        97,281,693  
 

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

     39,544,442        106,232,006  
 

 

 

     

 

 

  

Series share transactions (Net of share conversions)

     

Net proceeds from shares sold

     614,466,424        276,077,034  

Cost of shares reacquired

     (75,565,136 )       (113,423,243 ) 
 

 

 

     

 

 

  

Net increase (decrease) in net assets from Series share transactions

     538,901,288        162,653,791  
 

 

 

     

 

 

  

Total increase (decrease)

     578,445,730        268,885,797  

Net Assets:

                 

Beginning of period

     533,585,320        264,699,523  
 

 

 

     

 

 

  

End of period(a)

   $ 1,112,031,050      $ 533,585,320  
 

 

 

     

 

 

  

(a) Includes accumulated net investment loss:

   $ (2,333,717 )     $ (1,356,667 ) 
 

 

 

     

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison Global Opportunities Fund     19  

Notes to Financial Statements (unaudited)

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of seven series: PGIM Jennison Emerging Markets Equity Opportunities Fund (formerly known as Prudential Jennison Emerging Markets Equity Fund), PGIM Jennison Global Infrastructure Fund, PGIM Jennison Global Opportunities Fund, PGIM Jennison International Opportunities Fund and PGIM QMA International Equity Fund, each of which are diversified funds and PGIM Emerging Markets Debt Hard Currency Fund and PGIM Emerging Markets Debt Local Currency Fund, each of which are non-diversified funds for purposes of the 1940 Act and may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. These financial statements relate only to the PGIM Jennison Global Opportunities Fund (the “Series”). Effective June 11, 2018, the Series’ names were changed by replacing “Prudential” with “PGIM” in each Series’ name and Class Q shares were renamed Class R6 shares.

 

The investment objective of the Series is to seek long-term growth of capital.

 

1. Accounting Policies

 

The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Series holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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.

 

20  

For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Series’ foreign investments may change on days when investors cannot purchase or redeem Series shares.

 

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 Schedule of Investments.

 

Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.

 

Foreign equities traded on foreign securities exchanges are generally valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stock valuation policies discussed above.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which

 

PGIM Jennison Global Opportunities Fund     21  

Notes to Financial Statements (unaudited) (continued)

 

it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the 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 transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;

 

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of

 

22  

long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.

 

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.

 

Master Netting Arrangements: The Fund, on behalf of the Series, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral.

 

The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The

 

PGIM Jennison Global Opportunities Fund     23  

Notes to Financial Statements (unaudited) (continued)

 

Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.

 

Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.

 

Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.

 

Taxes: It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Dividends and Distributions: The Series expects to pay dividends from net investment income and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

24  

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

2. Agreements

 

The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Series. PGIM Investments administers the corporate affairs of the Series and, in connection therewith, furnishes the Series with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Series’ custodian (the Custodian), and the Series’ transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Series. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Series, including, but not limited to, the custodian, transfer agent, and accounting agent.

 

PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.

 

The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of 0.825% of the Series’ average daily net assets up to $1 billion and 0.80% of such assets in excess of $1 billion. The effective management fee rate, before any waivers and/or expense reimbursements, was 0.825% for the six months ended April 30, 2018.

 

PGIM Investments has contractually agreed, through February 28, 2019, to limit the net annual Series operating expenses (exclusive of distribution and service (12b-1) fees, transfer agency expenses (including sub-transfer agency and networking fees), taxes (such as income and foreign withholdings taxes, stamp duty and deferred tax expenses), interest, acquired fund fees and expenses, brokerage, extraordinary expenses and certain other expenses, such as dividend, broker charges and interest expense on short sales) of each class of shares to 0.84% of the Series’ average daily net assets. Fees and/or expenses waived and/or reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The effective management fee rate, net of waivers and/or expense reimbursements, was 0.789% for the six months ended April 30, 2018.

 

PGIM Jennison Global Opportunities Fund     25  

Notes to Financial Statements (unaudited) (continued)

 

 

The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C, Class Z and Class R6 shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z and Class R6 shares of the Series.

 

Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to 0.30% and 1% of the average daily net assets of the Class A and Class C shares, respectively. PIMS has contractually agreed to limit such fees to 0.25% of the average daily net assets of the Class A shares through February 28, 2019.

 

PIMS has advised the Series that it has received $1,052,395 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Series that for the six months ended April 30, 2018 it received $678 and $8,137 in contingent deferred sales charges imposed upon redemptions by certain Class A and Class C shareholders.

 

PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Series may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended April 30, 2018 no such transactions were entered into by the Series.

 

26  

The Series may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30, 2018, PGIM, Inc. was compensated $34,427 by PGIM Investments for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.

 

4. Portfolio Securities

 

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018 were $769,499,507 and $241,469,616, respectively.

 

A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:

 

Affiliated Mutual Funds*

   Value,
Beginning
of Period		     Cost of
Purchases		     Proceeds
from
Sales		     Change in
Unrealized
Gain
(Loss)		     Realized
Gain
(Loss)		     Value,
End of
Period		     Shares,
End of
Period		     Dividend
Income		  

PGIM Core Ultra Short Bond Fund

   $ 5,431,483     $ 266,708,274     $ 257,045,112     $ —     $ —     $ 15,094,645       15,094,645     $ 152,399  

PGIM Institutional Money Market Fund

     56,735,133       319,027,171       237,320,215       4,662       (9,786 )      138,436,965       138,436,965       41,272  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  
  $ 62,166,616     $ 585,735,445     $ 494,365,327     $ 4,662     $ (9,786 )    $ 153,531,610       $ 193,671  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  

 

* The Funds did not have any capital gain distributions during the reporting period.

 

5. Tax Information

 

The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2018 were as follows:

 

Tax Basis

    $ 1,078,098,361  
  

 

 

  

Gross Unrealized Appreciation

      195,960,357  

Gross Unrealized Depreciation

      (25,920,288 ) 
  

 

 

  

Net Unrealized Appreciation

    $ 170,040,069  
  

 

 

  

 

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, 2017 of approximately $17,383,000 which can be carried forward for an unlimited period. The Series utilized approximately $10,095,000 of its capital loss carryforward to offset net taxable gains realized in the fiscal year ended October 31, 2017.

 

PGIM Jennison Global Opportunities Fund     27  

Notes to Financial Statements (unaudited) (continued)

 

No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.

 

The Series elected to treat certain late-year ordinary income losses of approximately $1,351,000 as having been incurred in the following fiscal year (October 31, 2018).

 

Management has analyzed the Series’ tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

6. Capital and Ownership

 

The Series offers Class A, Class C, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class Z and Class R6 shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.

 

The Fund is authorized to issue 4.8 billion shares of common stock, with a par value of $0.01 per share, which are divided into seven series. There are 725 million shares authorized for the Series, divided into five classes, designated Class A, Class C, Class Z, Class T and Class R6 common stock, each of which consists of 25 million, 65 million, 200 million, 235 million and 200 million authorized shares, respectively.

 

The Series currently does not have any Class T shares outstanding.

 

At reporting period end, eight shareholders of record held 68% of the Series’ outstanding shares.

 

28  

Transactions in shares of common stock were as follows:

 

Class A

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        2,570,256      $ 57,340,907  

Shares reacquired

        (493,188 )       (11,026,765 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        2,077,068        46,314,142  

Shares issued upon conversion from other share class(es)

        63,301        1,394,115  

Shares reacquired upon conversion into other share class(es)

        (238,123 )       (5,454,402 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        1,902,246      $ 42,253,855  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        2,078,996      $ 38,260,950  

Shares reacquired

        (1,776,496 )       (28,917,700 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        302,500        9,343,250  

Shares issued upon conversion from other share class(es)

        33,357        589,430  

Shares reacquired upon conversion into other share class(es)

        (1,897,150 )       (30,135,824 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (1,561,293 )     $ (20,203,144 ) 
    

 

 

     

 

 

  

Class C

                

Six months ended April 30, 2018:

        

Shares sold

        2,705,027      $ 57,632,703  

Shares reacquired

        (250,298 )       (5,286,957 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        2,454,729        52,345,746  

Shares reacquired upon conversion into other share class(es)

        (62,763 )       (1,323,668 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        2,391,966      $ 51,022,078  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        1,591,435      $ 28,218,908  

Shares reacquired

        (1,038,579 )       (16,015,909 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        552,856        12,202,999  

Shares reacquired upon conversion into other share class(es)

        (121,302 )       (2,004,556 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        431,554      $ 10,198,443  
    

 

 

     

 

 

  

Class Z

                

Six months ended April 30, 2018:

        

Shares sold

        17,078,744      $ 386,873,396  

Shares reacquired

        (2,565,912 )       (57,605,374 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        14,512,832        329,268,022  

Shares issued upon conversion from other share class(es)

        284,935        6,576,697  

Shares reacquired upon conversion into other share class(es)

        (64,031 )       (1,434,290 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        14,733,736      $ 334,410,429  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        10,560,611      $ 193,966,873  

Shares reacquired

        (4,030,257 )       (68,348,380 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        6,530,354        125,618,493  

Shares issued upon conversion from other shares class(es)

        1,977,600        31,909,367  

Shares reacquired upon conversion into other share class(es)

        (30,248 )       (537,355 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        8,477,706      $ 156,990,505  
    

 

 

     

 

 

  

 

PGIM Jennison Global Opportunities Fund     29  

Notes to Financial Statements (unaudited) (continued)

 

Class R6

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        5,007,233      $ 112,619,418  

Shares reacquired

        (72,512 )       (1,646,040 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        4,934,721        110,973,378  

Shares issued upon conversion from other share class(es)

        10,529        241,548  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        4,945,250      $ 111,214,926  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        811,863      $ 15,630,303  

Shares reacquired

        (7,440 )       (141,254 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        804,423        15,489,049  

Shares issued upon conversion from other share class(es)

        9,725        178,938  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        814,148      $ 15,667,987  
    

 

 

     

 

 

  

 

7. Borrowings

 

The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCAs is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.

 

Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.

 

The Series did not utilize the SCA during the reporting period ended April 30, 2018.

 

30  

Financial Highlights (unaudited)

 

Class A Shares  
     Six Months
Ended
April 30,		           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $20.72               $15.14       $15.63       $14.08       $12.94       $9.86  
Income (loss) from investment operations:                                                        
Net investment income (loss)     (0.04 )              (0.09 )      (0.05 )      (0.09 )      (0.11 )      (0.06 ) 
Net realized and unrealized gain (loss) on investment and foreign currency transactions     1.58               5.67       (0.44 )      1.64       1.25       3.14  
Total from investment operations     1.54               5.58       (0.49 )      1.55       1.14       3.08  
Net asset value, end of period     $22.26               $20.72       $15.14       $15.63       $14.08       $12.94  
Total Return(b):     7.43%               36.86%       (3.13)%       11.01%       8.81%       31.24%  
Ratios/Supplemental Data:  
Net assets, end of period (000)     $139,340               $90,247       $89,579       $74,049       $21,150       $10,035  
Average net assets (000)     $115,338               $70,810       $100,220       $36,635       $19,352       $4,982  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.17% (d)              1.19%       1.20%       1.38%       1.60%       1.60%  
Expenses before waivers and/or expense reimbursement     1.27% (d)              1.33%       1.36%       1.56%       1.71%       2.19%  
Net investment income (loss)     (0.40)% (d)              (0.55)%       (0.31)%       (0.63)%       (0.78)%       (0.54)%  
Portfolio turnover rate(f)     31% (e)              79%       88%       58%       68%       70%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not annualized.
(f) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison Global Opportunities Fund     31  

Financial Highlights (unaudited) (continued)

 

Class C Shares  
     Six Months
Ended
April 30,		           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $19.85               $14.61       $15.20       $13.79       $12.77       $9.81  
Income (loss) from investment operations:                                                        
Net investment income (loss)     (0.12 )              (0.22 )      (0.15 )      (0.20 )      (0.21 )      (0.14 ) 
Net realized and unrealized gain (loss) on investment and foreign currency transactions     1.52               5.46       (0.44 )      1.61       1.23       3.10  
Total from investment operations     1.40               5.24       (0.59 )      1.41       1.02       2.96  
Net asset value, end of period     $21.25               $19.85       $14.61       $15.20       $13.79       $12.77  
Total Return(b):     7.05%               35.87%       (3.88)%       10.22%       7.99%       30.17%  
Ratios/Supplemental Data:  
Net assets, end of period (000)     $135,993               $79,531       $52,246       $28,982       $5,723       $1,659  
Average net assets (000)     $106,764               $55,922       $50,113       $11,330       $4,361       $950  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.91% (d)              1.94%       1.95%       2.12%       2.35%       2.35%  
Expenses before waivers and/or expense reimbursement     1.95% (d)              2.03%       2.06%       2.27%       2.41%       2.89%  
Net investment income (loss)     (1.13)% (d)              (1.28)%       (1.07)%       (1.37)%       (1.54)%       (1.26)%  
Portfolio turnover rate(f)     31% (e)              79%       88%       58%       68%       70%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not annualized.
(f) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

32  

Class Z Shares  
     Six Months
Ended
April 30,		           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $21.00               $15.31       $15.77       $14.17       $12.99       $9.87  
Income (loss) from investment operations:                                                        
Net investment income (loss)     (0.01 )              (0.05 )      (0.01 )      (0.06 )      (0.08 )      (0.03 ) 
Net realized and unrealized gain (loss) on investment and foreign currency transactions     1.61               5.74       (0.45 )      1.66       1.26       3.15  
Total from investment operations     1.60               5.69       (0.46 )      1.60       1.18       3.12  
Net asset value, end of period     $22.60               $21.00       $15.31       $15.77       $14.17       $12.99  
Total Return(b):     7.62%               37.17%       (2.92)%       11.29%       9.08%       31.61%  
Ratios/Supplemental Data:  
Net assets, end of period (000)     $693,332               $334,783       $114,228       $102,800       $33,504       $25,219  
Average net assets (000)     $489,096               $193,977       $131,042       $48,494       $30,965       $18,340  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     0.90% (d)              0.94%       0.95%       1.15%       1.35%       1.35%  
Expenses before waivers and/or expense reimbursement     0.93% (d)              1.02%       1.06%       1.28%       1.42%       1.89%  
Net investment income (loss)     (0.08)% (d)              (0.28)%       (0.07)%       (0.41)%       (0.56)%       (0.25)%  
Portfolio turnover rate(f)     31% (e)              79%       88%       58%       68%       70%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not annualized.
(f) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison Global Opportunities Fund     33  

Financial Highlights (unaudited) (continued)

 

Class R6 Shares  
     Six Months
Ended
April 30,		           Year Ended October 31,           December 22,
2014(a)
through
October 31,		  
     2018            2017     2016            2015  
Per Share Operating Performance(b):                                                
Net Asset Value, Beginning of Period     $21.06               $15.33       $15.78               $14.15  
Income (loss) from investment operations:                                                
Net investment income (loss)     0.01               (0.04 )      0.01               (0.03 ) 
Net realized and unrealized gain (loss) on investment and foreign currency transactions     1.60               5.77       (0.46 )              1.66  
Total from investment operations     1.61               5.73       (0.45 )              1.63  
Net asset value, end of period     $22.67               $21.06       $15.33               $15.78  
Total Return(c):     7.64%               37.38%       (2.85)%               11.52%  
Ratios/Supplemental Data:  
Net assets, end of period (000)     $143,366               $29,023       $8,647               $11  
Average net assets (000)     $65,251               $14,700       $7,736               $11  
Ratios to average net assets(d):                                                
Expenses after waivers and/or expense reimbursement     0.84% (e)              0.84%       0.84%               1.09% (e) 
Expenses before waivers and/or expense reimbursement     0.89% (e)              0.92%       0.95%               1.18% (e) 
Net investment income (loss)     0.11% (e)              (0.23)%       0.05%               (0.27)% (e) 
Portfolio turnover rate(g)     31% (f)              79%       88%               58%  

 

(a) Commencement of offering.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Series’ portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Series’ portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

34  

∎ MAIL   ∎ TELEPHONE   ∎ WEBSITE

655 Broad Street

Newark, NJ 07102

  

(800) 225-1852

  

www.pgiminvestments.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

DIRECTORS
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres

 

OFFICERS
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC   655 Broad Street Newark, NJ 07102

 

INVESTMENT SUBADVISER   Jennison Associates LLC   466 Lexington Avenue
New York, NY 10017

 

DISTRIBUTOR   Prudential Investment
Management Services LLC		   655 Broad Street Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon   225 Liberty Street
New York, NY 10286

 

TRANSFER AGENT   Prudential Mutual Fund
Services LLC		   PO Box 9658
Providence, RI 02940

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP   787 Seventh Avenue
New York, NY 10019

 

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM Jennison Global Opportunities Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

LOGO

 

 

PGIM JENNISON GLOBAL OPPORTUNITIES FUND

 

SHARE CLASS   A   C   Z   R6*
NASDAQ   PRJAX   PRJCX   PRJZX   PRJQX
CUSIP   743969719   743969693   743969685   743969594

 

*Formerly known as Class Q shares.

 

MF214E2    

LOGO

 

PGIM JENNISON INTERNATIONAL OPPORTUNITIES FUND

(Formerly known as Prudential Jennison International Opportunities Fund)

 

 

SEMIANNUAL REPORT

APRIL 30, 2018

 

LOGO

 

To enroll in e-delivery, go to pgiminvestments.com/edelivery

Objective: To seek long-term growth of capital

 

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.

 

The accompanying financial statements as of April 30, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates is a registered investment adviser. Both are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

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Table of Contents

 

Letter from the President

     5  

Your Fund’s Performance

      6  

Fees and Expenses

      9  

Holdings and Financial Statements

      11  

 

PGIM Jennison International Opportunities Fund     3  

This Page Intentionally Left Blank

Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for PGIM Jennison International Opportunities Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.

 

We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*

 

Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

PGIM Jennison International Opportunities Fund

June 15, 2018

 

*The Prudential Day One Funds did not change their names.

 

PGIM Jennison International Opportunities Fund     5  

Your Fund’s Performance (unaudited)

 

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

   

Total Returns as of 4/30/18

(without sales charges)

   Average Annual Total Returns as of 4/30/18
(with sales  charges)
    Six Months* (%)   One Year (%)   Five Years (%)   Since Inception (%)
Class A   4.85   20.68   7.28   10.09 (6/5/12)  
Class C   4.38   25.66   7.69   10.32 (6/5/12)  
Class R**   2.16   N/A   N/A   N/A (11/20/17)
Class Z   4.98   28.10   8.78   11.43 (6/5/12)  
Class R6***   5.02   28.05   N/A     14.47 (12/23/15)
MSCI ACWI ex-US Index
  3.47   15.91   5.46   —
Lipper International Multi-Cap Growth Funds Average
    3.03   16.03   6.37   —

 

Source: PGIM Investments LLC and Lipper Inc.

* Not annualized

** Since inception

*** Formerly known as Class Q shares.

Since Inception returns are provided since the Fund has less than 10 fiscal years of returns. Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to each classes inception date.

 

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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.

 

     Class A   Class C   Class R   Class Z   Class R6*
Maximum initial sales charge   5.50% of the public offering price   None   None   None   None
Contingent deferred sales charge (CDSC)
(as a percentage of the lower of original purchase price or net asset value at redemption)		   1.00% on sales of $1 million or more made within 12 months of purchase   1.00% on sales made within 12 months of purchase   None   None   None
Annual distribution and service (12b-1) fees
(shown as a percentage of average daily net assets)		   0.30%
(0.25% currently)		   1.00%   0.75%
(0.50% currently)		   None   None

 

* Formerly known as Class Q shares.

 

Benchmark Definitions

 

MSCI All Country World Index ex-US Index—The Morgan Stanley Capital International All Country World ex-US Index (MSCI ACWI ex-US Index) is an unmanaged free float-adjusted market capitalization weighted index that is designed to provide a broad measure of stock performance throughout the world, with the exception of US-based companies. The average annual total returns for the MSCI ACWI ex-US Index measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 9.16% and 13.16% for Class R6 shares.

 

Lipper International Multi-Cap Growth Funds Average—The Lipper International Multi-Cap Growth Funds Average (Lipper Average) is based on the average return of all funds in the Lipper International Multi-Cap Growth Funds universe for the periods noted. Funds in the Lipper Average, by portfolio practice, invest in a variety of market-capitalization ranges without concentrating 75% of their equity assets in any one market-capitalization range over an extended period of time. International multi-cap growth funds typically have above-average characteristics compared to the MSCI EAFE Index. The average annual total return for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 9.80% and 11.47% for Class R6 shares.

 

PGIM Jennison International Opportunities Fund     7  

Your Fund’s Performance (continued)

 

 

Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.

 

Presentation of Fund Holdings

 

 

Five Largest Holdings expressed as a
percentage of net assets as of 4/30/18 (%)		  
Alibaba Group Holding Ltd., Internet Software & Services     7.0  
Tencent Holdings Ltd., Internet Software & Services     6.4  
Kering SA, Textiles, Apparel & Luxury Goods     6.2  
Wirecard AG, IT Services     4.0  
LVMH Moet Hennessy Louis Vuitton SE, Textiles, Apparel & Luxury Goods     3.8  

Holdings reflect only long-term investments and are subject to change.

Five Largest Industries expressed as a
percentage of net assets as of 4/30/18 (%)		  
Internet Software & Services     17.7  
Textiles, Apparel & Luxury Goods     14.5  
Health Care Equipment & Supplies     5.8  
Personal Products     5.5  
IT Services     5.1  

Industry weightings reflect only long-term investments and are subject to change.

 

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Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period

 

PGIM Jennison International Opportunities Fund     9  

Fees and Expenses (continued)

 

and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

PGIM 
Jennison International
Opportunities Fund		   Beginning  Account
Value
November 1, 2017		    

Ending Account
Value

April 30, 2018

     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses  Paid
During the
Six-Month Period*		  
Class A   Actual   $ 1,000.00     $ 1,048.50       1.17 %    $ 5.94  
  Hypothetical   $ 1,000.00     $ 1,018.99       1.17 %    $ 5.86  
Class C   Actual   $ 1,000.00     $ 1,043.80       1.91 %    $ 9.68  
  Hypothetical   $ 1,000.00     $ 1,015.32       1.91 %    $ 9.54  
Class R   Actual**   $ 1,000.00     $ 1,021.60       1.44 %    $ 6.42  
  Hypothetical   $ 1,000.00     $ 1,017.65       1.44 %    $ 7.20  
Class Z   Actual   $ 1,000.00     $ 1,049.80       0.87 %    $ 4.42  
  Hypothetical   $ 1,000.00     $ 1,020.48       0.87 %    $ 4.36  
Class R6***   Actual   $ 1,000.00     $ 1,050.20       0.84 %    $ 4.27  
    Hypothetical   $ 1,000.00     $ 1,020.63       0.84 %    $ 4.21  

 

*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.

**“Actual” expenses are calculated using the 161 days in the period ended April 30, 2018 due to the class’ inception date of November 20, 2017.

***Formerly known as Class Q shares.

 

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Schedule of Investments (unaudited)

as of April 30, 2018

 

Description    Shares      Value  

LONG-TERM INVESTMENTS    96.7%

      

COMMON STOCKS    93.9%

      

Argentina    2.5%

                  

MercadoLibre, Inc.

      31,653      $ 10,749,675  

Brazil    2.2%

                  

PagSeguro Digital Ltd. (Class A Stock)*

      136,511        4,536,260  

Raia Drogasil SA*

      247,727        4,859,500  
     

 

 

  
        9,395,760  

Canada    1.7%

                  

Shopify, Inc. (Class A Stock)*

      54,991        7,348,447  

China    15.0%

                  

Alibaba Group Holding Ltd., ADR*(a)

      167,262        29,862,958  

JD.com, Inc., ADR*(a)

      183,483        6,698,964  

Tencent Holdings Ltd.

      560,704        27,565,850  
     

 

 

  
        64,127,772  

Denmark    1.1%

                  

Novozymes A/S (Class B Stock)

      102,520        4,819,760  

France    20.7%

                  

Dassault Systemes SE

      103,713        13,440,150  

Kering SA

      45,598        26,378,247  

L’Oreal SA

      63,465        15,281,702  

LVMH Moet Hennessy Louis Vuitton SE

      47,041        16,370,815  

Pernod-Ricard SA

      51,329        8,525,019  

Remy Cointreau SA

      63,283        8,718,690  
     

 

 

  
        88,714,623  

Germany    8.4%

                  

Fresenius SE & Co. KGaA

      99,742        7,595,771  

Infineon Technologies AG

      430,523        11,023,834  

Wirecard AG

      127,423        17,240,439  
     

 

 

  
        35,860,044  

Hong Kong    2.1%

                  

Techtronic Industries Co. Ltd.

      1,514,539        8,872,460  

India    5.2%

                  

HDFC Bank Ltd., ADR

      121,418        11,633,059  

Maruti Suzuki India Ltd.

      79,570        10,470,523  
     

 

 

  
        22,103,582  

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     11  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Italy    8.5%

                  

Brembo SpA

      401,820      $ 5,919,831  

Brunello Cucinelli SpA, 144A

      5,417        179,926  

Brunello Cucinelli SpA

      296,781        9,857,568  

Ferrari NV

      89,363        10,962,762  

Moncler SpA

      207,201        9,338,930  
     

 

 

  
        36,259,017  

Japan    7.3%

                  

FANUC Corp.

      33,591        7,195,549  

Keyence Corp.

      25,423        15,502,427  

Kose Corp.

      45,377        8,385,521  
     

 

 

  
        31,083,497  

Netherlands    1.7%

                  

ASML Holding NV

      38,524        7,334,335  

Sweden    1.7%

                  

Atlas Copco AB (Class A Stock)

      184,415        7,211,796  

Switzerland    5.3%

                  

Givaudan SA

      4,392        9,776,810  

Straumann Holding AG

      19,304        13,104,077  
     

 

 

  
        22,880,887  

Thailand    2.0%

                  

CP ALL PCL

      3,077,215        8,466,562  

United Kingdom    7.1%

                  

Ashtead Group PLC

      398,068        11,055,515  

ASOS PLC*

      134,980        10,811,507  

St. James’s Place PLC

      554,294        8,634,449  
     

 

 

  
        30,501,471  

United States    1.4%

                  

Albemarle Corp.

      62,698        6,079,198  
     

 

 

  

TOTAL COMMON STOCKS
(cost $365,897,423)

         401,808,886  
     

 

 

  

 

See Notes to Financial Statements.

 

12  

Description    Shares      Value  

PREFERRED STOCK    2.8%

      

Germany

                  

Sartorius AG (PRFC)
(cost $7,169,920)

      76,871      $ 11,807,436  
     

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $373,067,343)

         413,616,322  
     

 

 

  

SHORT-TERM INVESTMENTS    10.9%

      

AFFILIATED MUTUAL FUNDS

                  

Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund(w)

      11,773,435        11,773,435  

Prudential Investment Portfolios 2 - PGIM Institutional Money Market Fund
(cost $35,120,072; includes $35,067,474 of cash collateral for securities on loan)(b)(w)

      35,121,475        35,121,475  
     

 

 

  

TOTAL SHORT-TERM INVESTMENTS
(cost $46,893,507)

         46,894,910  
     

 

 

  

TOTAL INVESTMENTS    107.6%
(cost $419,960,850)

         460,511,232  

Liabilities in excess of other assets    (7.6)%

         (32,425,051 ) 
     

 

 

  

NET ASSETS    100.0%

       $ 428,086,181  
     

 

 

  

 

The following abbreviations are used in the semiannual report:

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

ADR—American Depositary Receipt

LIBOR—London Interbank Offered Rate

PRFC—Preference Shares

* 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 $34,865,224; cash collateral of $35,067,474 (included in liabilities) was received with which the Series purchased highly liquid short-term investments.
(b) Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment.
(w) PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund.

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     13  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:

 

    Level 1     Level 2         Level 3      

Investments in Securities

      

Common Stocks

      

Argentina

   $ 10,749,675     $ —     $         —  

Brazil

     9,395,760       —       —  

Canada

     7,348,447       —       —  

China

     36,561,922       27,565,850       —  

Denmark

     —       4,819,760       —  

France

     —       88,714,623       —  

Germany

     —       35,860,044       —  

Hong Kong

     —       8,872,460       —  

India

     11,633,059       10,470,523       —  

Italy

     —       36,259,017       —  

Japan

     —       31,083,497       —  

Netherlands

     —       7,334,335       —  

Sweden

     —       7,211,796       —  

Switzerland

     —       22,880,887       —  

Thailand

     —       8,466,562       —  

United Kingdom

     —       30,501,471       —  

United States

     6,079,198       —       —  

Preferred Stock

      

Germany

     —       11,807,436       —  

Affiliated Mutual Funds

     46,894,910       —       —  
 

 

 

    

 

 

    

 

 

  

Total

   $ 128,662,971     $ 331,848,261     $ —  
 

 

 

    

 

 

    

 

 

  

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

See Notes to Financial Statements.

 

14  

Industry Classification:

 

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2018 were as follows:

 

Internet Software & Services

     17.7 % 

Textiles, Apparel & Luxury Goods

     14.5  

Affiliated Mutual Funds (including 8.2% of collateral for securities on loan)

     10.9  

Health Care Equipment & Supplies

     5.8  

Personal Products

     5.5  

IT Services

     5.1  

Automobiles

     5.0  

Chemicals

     4.8  

Semiconductors & Semiconductor Equipment

     4.3  

Internet & Direct Marketing Retail

     4.1  

Beverages

     4.0  

Electronic Equipment, Instruments & Components

     3.6  

Machinery

     3.4 % 

Software

     3.2  

Food & Staples Retailing

     3.1  

Banks

     2.7  

Trading Companies & Distributors

     2.6  

Household Durables

     2.1  

Capital Markets

     2.0  

Health Care Providers & Services

     1.8  

Auto Components

     1.4  
 

 

 

  
    107.6  

Liabilities in excess of other assets

     (7.6 ) 
 

 

 

  
    100.0 % 
 

 

 

  

 

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Series entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.

 

Offsetting of financial instrument/transaction assets and liabilities:

 

Description

   Gross Market
Value of
Recognized
Assets/(Liabilities)		     Collateral
Pledged/(Received)(1)		     Net Amount  

Securities on Loan

   $ 34,865,224     $ (34,865,224 )    $     —  
 

 

 

      

 

(1) Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions.

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     15  

Statement of Assets & Liabilities (unaudited)

as of April 30, 2018

 

Assets

         

Investments at value, including securities on loan of $34,865,224:

   

Unaffiliated investments (cost $373,067,343)

    $ 413,616,322  

Affiliated investments (cost $46,893,507)

      46,894,910  

Foreign currency, at value (cost $163,756)

      163,012  

Tax reclaim receivable

      1,996,769  

Dividends receivable

      825,327  

Receivable for Series shares sold

      242,398  

Receivable for investments sold

      163,727  

Prepaid expenses

      2,429  
  

 

 

  

Total Assets

      463,904,894  
  

 

 

  

Liabilities

         

Payable to broker for collateral for securities on loan

      35,067,474  

Payable for Series shares reacquired

      192,358  

Management fee payable

      184,396  

Payable for investments purchased

      163,251  

Distribution fee payable

      136,847  

Affiliated transfer agent fee payable

      74,387  
  

 

 

  

Total Liabilities

      35,818,713  
  

 

 

  

Net Assets

    $ 428,086,181  
  

 

 

  
          

Net assets were comprised of:

   

Common stock, at par

    $ 237,599  

Paid-in capital in excess of par

      386,838,715  
  

 

 

  
     387,076,314  

Distribution in excess of net investment income

      (142,322 ) 

Accumulated net realized gain on investment and foreign currency transactions

      581,233  

Net unrealized appreciation on investments and foreign currencies

      40,570,956  
  

 

 

  
          

Net assets, April 30, 2018

    $ 428,086,181  
  

 

 

  

 

See Notes to Financial Statements.

 

16  

Class A

         

Net asset value and redemption price per share
($10,060,190 ÷ 561,202 shares of common stock issued and outstanding)

    $ 17.93  

Maximum sales charge (5.50% of offering price)

      1.04  
  

 

 

  

Maximum offering price to public

    $ 18.97  
  

 

 

  

Class C

         

Net asset value, offering price and redemption price per share
($3,580,412 ÷ 208,748 shares of common stock issued and outstanding)

    $ 17.15  
  

 

 

  

Class R

         

Net asset value, offering price and redemption price per share
($318,396,824 ÷ 17,688,804 shares of common stock issued and outstanding)

    $ 18.00  
  

 

 

  

Class Z

         

Net asset value, offering price and redemption price per share
($70,778,620 ÷ 3,906,312 shares of common stock issued and outstanding)

    $ 18.12  
  

 

 

  

Class R6

         

Net asset value, offering price and redemption price per share
($25,270,135 ÷ 1,394,803 shares of common stock issued and outstanding)

    $ 18.12  
  

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     17  

Statement of Operations (unaudited)

Six Months Ended April 30, 2018

 

Net Investment Income (Loss)

         

Income

   

Unaffiliated dividend income (net of foreign withholding taxes of $263,938)

    $ 2,040,695  

Affiliated dividend income

      35,047  

Income from securities lending, net (including affiliated income of $11,667)

      17,993  
  

 

 

  

Total income

      2,093,735  
  

 

 

  

Expenses

   

Management fee

      1,413,887  

Distribution fee(a)

      964,758  

Transfer agent’s fees and expenses (affiliated expense of $130,179)(a)

      146,465  

Custodian and accounting fees

      64,639  

Registration fees(a)

      34,608  

Shareholders’ reports

      19,067  

Audit fee

      14,491  

Legal fees and expenses

      11,103  

Directors’ fees

      6,957  

Miscellaneous

      17,165  
  

 

 

  

Total expenses

      2,693,140  

Less: Fee waiver and/or reimbursement(a)

      (147,016 ) 

Distribution fee waiver(a)

      (315,294 ) 
  

 

 

  

Net expenses

      2,230,830  
  

 

 

  

Net investment income (loss)

      (137,095 ) 
  

 

 

  

Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions

         

Net realized gain (loss) on:

   

Investment transactions (including affiliated of $(1,299))

      3,135,142  

Foreign currency transactions

      (54,590 ) 
  

 

 

  
     3,080,552  
  

 

 

  

Net change in unrealized appreciation (depreciation) on:

   

Investments (including affiliated of $1,403)

      14,291,756  

Foreign currencies

      18,620  
  

 

 

  
     14,310,376  
  

 

 

  

Net gain (loss) on investment and foreign currency transactions

      17,390,928  
  

 

 

  

Net Increase (Decrease) In Net Assets Resulting From Operations

    $ 17,253,833  
  

 

 

  

 

(a) Class specific expenses and waivers were as follows:

 

    Class A     Class C     Class R     Class Z     Class R6  

Distribution fee

     11,819       12,968       939,971       —       —  

Transfer agent’s fees and expenses

     4,471       1,287       132,726       7,877       104  

Registration fees

     6,966       6,965       7,607       6,703       6,367  

Fee waiver and/or reimbursement

     (12,540 )      (8,632 )      (74,802 )      (29,833 )      (21,209 ) 

Distribution fee waiver

     (1,970 )      —       (313,324 )      —       —  

 

See Notes to Financial Statements.

 

18  

Statements of Changes in Net Assets (unaudited)

     Six Months
Ended
April 30, 2018		      Year
Ended
October 31, 2017		  

Increase (Decrease) in Net Assets

 

Operations

 

Net investment income (loss)

    $ (137,095 )     $ 110,477  

Net realized gain (loss) on investment and foreign currency transactions

      3,080,552        2,352,828  

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

      14,310,376        14,853,126  
  

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

      17,253,833        17,316,431  
  

 

 

     

 

 

  

Dividends from net investment income

 

Class Z

      (54,385 )       (41,518 ) 

Class R6

      (54,898 )       (71,620 ) 
  

 

 

     

 

 

  
     (109,283 )       (113,138 ) 
  

 

 

     

 

 

  

Series share transactions (Net of share conversions)

 

Net proceeds from shares sold

      33,840,487        11,624,932  

Net asset value of shares issued in reinvestment of dividends and distributions

      109,172        113,138  

Net asset value of shares issued in merger

      372,771,258        —  

Cost of shares reacquired

      (57,704,866 )       (12,451,939 ) 
  

 

 

     

 

 

  

Net increase (decrease) in net assets from Series share transactions

      349,016,051        (713,869 ) 
  

 

 

     

 

 

  

Total increase (decrease)

      366,160,601        16,489,424  

Net Assets:

 

Beginning of period

      61,925,580        45,436,156  
  

 

 

     

 

 

  

End of period(a)

    $ 428,086,181      $ 61,925,580  
  

 

 

     

 

 

  

(a) Includes undistributed/(distributions in excess of) net investment income of:

    $ (142,322 )     $ 104,056  
  

 

 

     

 

 

  

 

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     19  

Notes to Financial Statements (unaudited)

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of seven funds: PGIM Jennison Emerging Markets Equity Opportunities Fund (formerly known as Prudential Jennison Emerging Markets Equity Fund), PGIM Jennison Global Infrastructure Fund, PGIM Jennison Global Opportunities Fund, PGIM Jennison International Opportunities Fund and PGIM QMA International Equity Fund, each of which are diversified funds and PGIM Emerging Markets Debt Hard Currency Fund and PGIM Emerging Markets Debt Local Currency Fund, each of which are non-diversified funds for purposes of the 1940 Act and may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. These financial statements relate only to the PGIM Jennison International Opportunities Fund (the “Series”). Effective June 11, 2018, the Series’ name was changed by replacing “Prudential” with “PGIM” in each Series’ name and Class Q shares were renamed Class R6 shares.

 

The investment objective of the Series is to seek long-term growth of capital.

 

1. Accounting Policies

 

The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Series holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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.

 

20  

For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Series’ foreign investments may change on days when investors cannot purchase or redeem Series shares.

 

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 Schedule of Investments.

 

Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.

 

Foreign equities traded on foreign securities exchanges are generally valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stock valuation policies discussed above.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which

 

PGIM Jennison International Opportunities Fund     21  

Notes to Financial Statements (unaudited) (continued)

 

it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the 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 transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;

 

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of

 

22  

long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.

 

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.

 

Master Netting Arrangements: The Fund, on behalf of the Series, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral.

 

The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The

 

PGIM Jennison International Opportunities Fund     23  

Notes to Financial Statements (unaudited) (continued)

 

Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.

 

Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.

 

Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.

 

Taxes: It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Dividends and Distributions: The Series expects to pay dividends from net investment income and distributions from net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

24  

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

2. Agreements

 

The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Series. PGIM Investments administers the corporate affairs of the Series and, in connection therewith, furnishes the Series with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Series’ custodian (the Custodian), and the Series’ transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Series. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Series, including, but not limited to, the custodian, transfer agent, and accounting agent.

 

PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.

 

The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of 0.825% of the Series’ average daily net assets up to and including $1 billion and 0.80% of such assets in excess of $1 billion. The effective management fee rate, before any waivers and/or expense reimbursements, was 0.825% for the six months ended April 30, 2018.

 

PGIM Investments has contractually agreed, through February 29, 2020, to reimburse and/or waive fees so that the Fund’s net annual operating expenses of each class do not exceed 0.84% of the Fund’s average daily net assets (exclusive of distribution and service (12b-1) fees, transfer agencyIsub-transfer agency fees and networking expenses, extraordinary expenses and certain other expenses, such as taxes, interest and brokerage commissions). Separately, PGIM Investments has contractually agreed to waive and/or reimburse up to 0.06% of certain other expenses on an annualized basis, through February 29, 2020, to the extent that the Fund’s total net annual operating expenses (exclusive of taxes, interest, and certain extraordinary expenses) exceed 1.15% of average daily net assets for Class A shares, 1.90% of average daily net assets for Class C shares, 1.48% of average daily net assets for Class R shares, 0.90% of average daily net assets for Class Z shares, and 0.84%

 

PGIM Jennison International Opportunities Fund     25  

Notes to Financial Statements (unaudited) (continued)

 

of average daily net assets for Class R6 shares. To the extent shared expenses which are exclusive of class specific expenses are waived and/or reimbursed for any specific share class the Manager has voluntarily agreed to waive and/or reimburse shared expenses equally for all share classes. Fees and/or expenses waived and/or reimbursed by PGIM Investments may be recouped by PGIM Investments within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The effective management fee rate, net of waivers and/or expense reimbursements was 0.739% for the six months ended April 30, 2018.

 

The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C, Class R, Class Z and Class R6 shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A, Class C and Class R shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z and Class R6 shares of the Series.

 

Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to 0.30%, 1% and 0.75% of the average daily net assets of the Class A, Class C and Class R shares, respectively. PIMS has contractually agreed through February 28, 2019 to limit such expenses to 0.25% and 0.50% of the average daily net assets of the Class A and Class R shares, respectively.

 

PIMS has advised the Series that it has received $52,035 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Series that for the six months ended April 30, 2018 it received $660 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.

 

PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

26  

The Series may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended April 30, 2018 no such transactions were entered into by the Series.

 

The Series may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30 2018, PGIM, Inc. was compensated $8,697 by PGIM Investments for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.

 

4. Portfolio Securities

 

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018 were $113,639,496 and $104,015,708, respectively.

 

A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:

 

Affiliated

Mutual

Funds*

   Value,
Beginning
of Period		     Cost of
Purchases		     Proceeds
from Sales		     Change in
Unrealized
Gain
(Loss)		     Realized
Gain
(Loss)		     Value,
End of
Period		     Shares,
End of
Period		     Dividend
Income		  

PGIM Core Ultra Short Bond Fund

   $ 1,267,836     $ 471,940,705     $ 461,435,106     $ —     $ —     $ 11,773,435       11,773,435     $ 35,047  

PGIM Institutional Money Market Fund

     5,918,998       113,730,535       84,528,162       1,403       (1,299 )      35,121,475       35,121,475       11,667  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  
  $ 7,186,834     $ 585,671,240     $ 545,963,268     $ 1,403     $ (1,299 )    $ 46,894,910       $ 46,714  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  

 

* The Funds did not have any capital gain distributions during the reporting period.

 

PGIM Jennison International Opportunities Fund     27  

Notes to Financial Statements (unaudited) (continued)

 

 

5. Tax Information

 

The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2018 were as follows:

 

Tax Basis

    $ 419,974,281  
  

 

 

  

Gross Unrealized Appreciation

      50,792,536  

Gross Unrealized Depreciation

      (10,255,585 ) 
  

 

 

  

Net Unrealized Appreciation

    $ 40,536,951  
  

 

 

  

 

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, 2017 of approximately $2,465,000 which can be carried forward for an unlimited period. The Series utilized approximately $2,367,000 of its capital loss carryforward during the fiscal year ended October 31, 2017 to offset capital gains. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.

 

Management has analyzed the Series’ tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

6. Capital and Ownership

 

The Series offers Class A, Class C, Class R, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class R, Class Z and Class R6 shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.

 

28  

The Fund is authorized to issue 4.8 billion shares of common stock, with a par value of $0.01 per share, which is divided into seven series. There are 850 million shares authorized for the Series, divided into six classes, designated Class A, Class C, Class R, Class Z, Class T and Class R6 common stock, each of which consists of 40 million, 75 million, 175 million, 175 million, 210 million and 175 million authorized shares, respectively.

 

The Series currently does not have any Class T shares outstanding.

 

As of April 30, 2018, Prudential, through its affiliate entities, owned 1,385,416 Class R6 shares of the Series. At reporting period end, three shareholders of record held 46% of the Series’ outstanding shares.

 

Transactions in shares of common stock were as follows:

 

Class A

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        299,777      $ 5,404,419  

Shares reacquired

        (45,261 )       (807,436 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        254,516        4,596,983  

Shares reacquired upon conversion into other share class(es)

        (3,428 )       (62,809 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        251,088      $ 4,534,174  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        178,060      $ 2,725,886  

Shares reacquired

        (71,108 )       (952,807 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        106,952        1,773,079  

Shares reacquired upon conversion into other share class(es)

        (32,857 )       (412,542 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        74,095      $ 1,360,537  
    

 

 

     

 

 

  

Class C

                

Six months ended April 30, 2018:

        

Shares sold

        124,178      $ 2,132,957  

Shares reacquired

        (21,743 )       (376,307 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        102,435        1,756,650  

Shares reacquired upon conversion into other share class(es)

        (777 )       (13,207 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        101,658      $ 1,743,443  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        65,162      $ 925,090  

Shares reacquired

        (23,164 )       (312,798 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        41,998      $ 612,292  
    

 

 

     

 

 

  

Class R

                

Six months ended April 30, 2018*:

        

Shares sold

        276,357      $ 4,947,486  

Shares issued in merger

        19,031,205        329,810,775  

Shares reacquired

        (1,618,758 )       (29,325,315 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        17,688,804      $ 305,432,946  
    

 

 

     

 

 

  

 

PGIM Jennison International Opportunities Fund     29  

Notes to Financial Statements (unaudited) (continued)

 

Class Z

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        1,115,823      $ 20,242,619  

Shares issued in reinvestment of dividends and distributions

        3,125        54,275  

Shares issued in merger

        2,461,464        42,854,094  

Shares reacquired

        (1,333,286 )       (23,612,866 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        2,247,126        39,538,122  

Shares issued upon conversion from other share class(es)

        4,132        76,016  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        2,251,258      $ 39,614,138  
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        317,602      $ 4,781,956  

Shares issued in reinvestment of dividends and distributions

        3,504        41,518  

Shares reacquired

        (192,382 )       (2,704,237 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        128,724        2,119,237  

Shares issued upon conversion from other shares class(es)

        32,543        412,542  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        161,267      $ 2,531,779  
    

 

 

     

 

 

  

Class R6

                

Six months ended April 30, 2018:

        

Shares sold

        62,190      $ 1,113,006  

Shares issued in reinvestment of dividends and distributions

        3,160        54,897  

Shares issued in merger

        6,114        106,389  

Shares reacquired

        (195,003 )       (3,582,942 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (123,539 )     $ (2,308,650 ) 
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        252,504      $ 3,192,000  

Shares issued in reinvestment of dividends and distributions

        6,044        71,620  

Shares reacquired

        (585,779 )       (8,482,097 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (327,231 )     $ (5,218,477 ) 
    

 

 

     

 

 

  

 

* Commencement of offering was November 20, 2017.

 

7. Borrowings

 

The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCAs is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.

 

30  

Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.

 

The Series utilized the SCA during the reporting period ended April 30, 2018. The average daily balance for the 7 days that the Series had loans outstanding during the period was $4,599,714, borrowed at a weighted average interest rate of 3.14%. The maximum loan balance outstanding during the period was $5,658,000. At April 30, 2018, the Series did not have an outstanding loan balance.

 

8. Reorganization

 

On June 7, 2017, the Board approved an Agreement and Plan of Reorganization (the “Plans”) which provided for the transfer of all the assets of Target International Equity Portfolio (the “Merged Portfolio”) for shares of Jennison International Opportunities Fund (the “Acquiring Fund”) and the assumption of the liabilities of the Merged Portfolio respectively. Shareholders approved the Plan at a meeting on November 28, 2017 and the reorganization took place on December 15, 2017.

 

On the reorganization date, the Merged Portfolio had the following total investment cost and value, representing the principal assets acquired by the Acquiring Fund:

 

Merged Portfolio

   Total Investment
Value		     Total Investment
Cost		  

Target International Equity Portfolio

   $ 325,194,328     $ 319,368,212  

 

The purpose of the transaction was to combine two portfolios with substantially similar investment objectives and policies.

 

The acquisition was accomplished by a tax-free exchange of the following shares on December 15, 2017:

 

Merged Portfolio     Acquiring Fund        
Target International
Equity Portfolio		     Jennison International
Opportunities Fund		        

Class

   Shares     Class   Shares     Value  
R     28,199,749     R     19,031,205     $ 329,810,775  
Z     3,655,174     Z     2,461,464       42,854,094  
R6     9,077     R6     6,114       106,389  

 

PGIM Jennison International Opportunities Fund     31  

Notes to Financial Statements (unaudited) (continued)

 

 

For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value; however, the cost basis of the investments received from the Merged Portfolio were carried forward to reflect the tax-free status of the acquisition.

 

The net assets and net unrealized appreciation immediately before the acquisition were as follows:

 

Merged Portfolio           Acquiring Fund  
Target International
Equity Portfolio		           Jennison International
Opportunities Fund		  

Class

   Net assets     Unrealized Appreciation
on investments		     Class   Net Assets  
R   $ 329,810,775     $ 4,460,684     R   $ 9,834  
Z     42,854,094       1,007,049     Z     31,606,586  
R6     106,389       358,052     R6     26,367,768  

 

Assuming the acquisition had been completed on August 1, 2017, the Acquiring Fund's unaudited pro forma results of operations for the six months ended April 30, 2018 would have been as follows:

 

Acquiring Fund

   Net
Investment
income (a)		     Net realized
and unrealized
gain on
investments (b)		     Net increase
in net assets
resulting from
operations		  

Jennison International Opportunities Fund

   $ 1,144,264     $ 30,997,026     $ 32,141,290  

 

(a) Net investment income (loss) as reported in the Statement of Operations (Six months ended April 30, 2018) of the Acquiring Fund, plus net investment income from the Merged Portfolio pre-merger as follows: Target International Equity Portfolio $1,281,359.
(b) Net realized and unrealized gain (loss) on investments as reported in the Statement of Operations (Six months ended April 30, 2018) of the Acquiring Fund, plus net realized and unrealized gain (loss) on investments from the Merged Portfolio pre-merger as follows: Target International Equity Portfolio $13,606,098.

 

Since both the Merged Portfolio and the Acquiring Fund sold and redeemed shares throughout the period, it is not practicable to provide pro-forma information on a per-share basis.

 

Since the combined investment portfolios had been managed as a single integrated portfolio since the acquisition was completed, it is also not practicable to separate the amounts of revenue and earnings of the Merged Portfolio that have been included in the Acquiring Fund's Statement of Operations since December 15, 2017 for the Plan.

 

32  

Financial Highlights (unaudited)

 

Class A Shares                                                 
    

Six Months

Ended

April 30,

           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $17.10               $12.36       $13.09       $13.06       $13.51       $11.30  
Income (loss) from investment operations:                                                        
Net investment income (loss)     - (d)              (0.01 )      0.02       (0.05 )      (0.06 )      (0.01 ) 
Net realized and unrealized gain (loss) on investment transactions     0.83               4.75       (0.75 )      0.08       0.09       2.27  
Total from investment operations     0.83               4.74       (0.73 )      0.03       0.03       2.26  
Less Dividends and Distributions:                                                        
Dividends from net investment income     -               -       -       -       -       (0.05 ) 
Distributions from net realized gains     -               -       -       -       (0.48 )      -  
Total dividends and distributions     -               -       -       -       (0.48 )      (0.05 ) 
Net asset value, end of period     $17.93               $17.10       $12.36       $13.09       $13.06       $13.51  
Total Return(b):     4.85%               38.35%       (5.58)%       0.23%       0.20%       20.04%  
Ratios/Supplemental Data:  
Net assets, end of period (000)     $10,060               $5,303       $2,918       $4,167       $1,833       $889  
Average net assets (000)     $7,945               $3,121       $3,575       $3,179       $1,467       $356  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.17% (e)              1.15%       1.15%       1.55%       1.60%       1.60%  
Expenses before waivers and/or expense reimbursement     1.53% (e)              1.63%       1.74%       1.67%       1.90%       3.16%  
Net investment income (loss)     0.03% (e)              (0.07)%       0.15%       (0.39)%       (0.48)%       (0.08)%  
Portfolio turnover rate(g)     32% (f)              69%       65%       75%       61%       86%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Less than $0.005.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     33  

Financial Highlights (unaudited) (continued)

 

Class C Shares  
    

Six Months

Ended

April 30,

           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $16.43               $11.96       $12.77       $12.82       $13.37       $11.27  
Income (loss) from investment operations:                                                        
Net investment income (loss)     (0.06 )              (0.11 )      (0.08 )      (0.15 )      (0.16 )      (0.14 ) 
Net realized and unrealized gain (loss) on investment transactions     0.78               4.58       (0.73 )      0.10       0.09       2.29  
Total from investment operations     0.72               4.47       (0.81 )      (0.05 )      (0.07 )      2.15  
Less Dividends and Distributions:                                                        
Dividends from net investment income     -               -       -       -       -       (0.05 ) 
Distributions from net realized gains     -               -       -       -       (0.48 )      -  
Total dividends and distributions     -               -       -       -       (0.48 )      (0.05 ) 
Net asset value, end of period     $17.15               $16.43       $11.96       $12.77       $12.82       $13.37  
Total Return(b):     4.38%               37.37%       (6.34)%       (0.39)%       (0.57)%       19.11%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $3,580               $1,759       $779       $1,215       $465       $181  
Average net assets (000)     $2,615               $1,080       $895       $903       $362       $38  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     1.91% (d)              1.89%       1.90%       2.30%       2.35%       2.35%  
Expenses before waivers and/or expense reimbursement     2.58% (d)              2.32%       2.44%       2.37%       2.60%       4.09%  
Net investment income (loss)     (0.69)% (d)              (0.80)%       (0.67)%       (1.15)%       (1.21)%       (1.12)%  
Portfolio turnover rate(f)     32% (e)              69%       65%       75%       61%       86%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not annualized.
(f) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

34  

Class R Shares  
    

November 20,

2017(a)

through

April 30,

2018

  
Per Share Operating Performance(b):        
Net Asset Value, Beginning of Period     $17.62  
Income (loss) from investment operations:        
Net investment income (loss)     (0.02 ) 
Net realized and unrealized gain (loss) on investment transactions     0.40  
Total from investment operations     0.38  
Net asset value, end of period     $18.00  
Total Return(c):     2.16%  
 
Ratios/Supplemental Data:  
Net assets, end of period (000)     $318,397  
Average net assets (000)     $284,133  
Ratios to average net assets(d):        
Expenses after waivers and/or expense reimbursement     1.44% (e) 
Expenses before waivers and/or expense reimbursement     1.75% (e) 
Net investment income (loss)     (0.19)% (e) 
Portfolio turnover rate(g)     32% (f) 

 

(a) Commencement of offering.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     35  

Financial Highlights (unaudited) (continued)

 

Class Z Shares  
    

Six Months

Ended

April 30,

           Year Ended October 31,  
     2018            2017     2016     2015     2014     2013  
Per Share Operating Performance(a):                                                        
Net Asset Value, Beginning of Period     $17.29               $12.50       $13.20       $13.13       $13.55       $11.32  
Income (loss) from investment operations:                                                        
Net investment income (loss)     0.03               0.03       0.03       (0.03 )      (0.02 )      0.02  
Net realized and unrealized gain (loss) on investment transactions     0.83               4.79       (0.73 )      0.10       0.08       2.26  
Total from investment operations     0.86               4.82       (0.70 )      0.07       0.06       2.28  
Less Dividends and Distributions:                                                        
Dividends from net investment income     (0.03 )              (0.03 )      -       -       -       (0.05 ) 
Distributions from net realized gains     -               -       -       -       (0.48 )      -  
Total dividends and distributions     (0.03 )              (0.03 )      -       -       (0.48 )      (0.05 ) 
Net asset value, end of period     $18.12               $17.29       $12.50       $13.20       $13.13       $13.55  
Total Return(b):     4.98%               38.65%       (5.30)%       0.53%       0.42%       20.24%  
Ratios/Supplemental Data:                                          
Net assets, end of period (000)     $70,779               $28,612       $18,667       $46,105       $46,996       $16,487  
Average net assets (000)     $55,596               $21,756       $23,274       $47,187       $38,835       $13,938  
Ratios to average net assets(c):                                                        
Expenses after waivers and/or expense reimbursement     0.87% (d)              0.89%       0.90%       1.31%       1.35%       1.35%  
Expenses before waivers and/or expense reimbursement     0.98% (d)              1.34%       1.41%       1.40%       1.54%       2.73%  
Net investment income (loss)     0.33% (d)              0.23%       0.25%       (0.19)%       (0.13)%       0.13%  
Portfolio turnover rate(f)     32% (e)              69%       65%       75%       61%       86%  

 

(a) Calculated based on average shares outstanding during the period.
(b) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(c) Does not include expenses of the underlying funds in which the Series invests.
(d) Annualized.
(e) Not annualized.
(f) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

36  

Class R6 Shares                                   
    

Six Months

Ended

April 30,

           Year Ended
October 31,		           December 23,
2015(a)
through
October 31,
  
     2018            2017            2016  
Per Share Operating Performance(b):                                        
Net Asset Value, Beginning of Period     $17.29               $12.50               $13.25  
Income (loss) from investment operations:                                        
Net investment income (loss)     0.02               0.04               0.06  
Net realized and unrealized gain (loss) on investment transactions     0.85               4.79               (0.81 ) 
Total from investment operations     0.87               4.83               (0.75 ) 
Less Dividends:                                        
Dividends from net investment income     (0.04 )              (0.04 )              -  
Net asset value, end of period     $18.12               $17.29               $12.50  
Total Return(c):     5.02%               38.75%               (5.66)%  
Ratios/Supplemental Data:                              
Net assets, end of period (000)     $25,270               $26,252               $23,073  
Average net assets (000)     $26,709               $24,927               $23,677  
Ratios to average net assets(d):                                        
Expenses after waivers and/or expense reimbursement     0.84% (e)              0.84%               0.84% (e) 
Expenses before waivers and/or expense reimbursement     1.00% (e)              1.30%               1.43% (e) 
Net investment income (loss)     0.17% (e)              0.28%               0.60% (e) 
Portfolio turnover rate(g)     32% (f)              69%               65%  

 

(a) Commencement of offering.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods of less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison International Opportunities Fund     37  

∎ MAIL   ∎ TELEPHONE   ∎ WEBSITE

655 Broad Street

Newark, NJ 07102

  

(800) 225-1852

  

www.pgiminvestments.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

DIRECTORS
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres

 

OFFICERS
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC  

655 Broad Street

Newark, NJ 07102

 

INVESTMENT SUBADVISER   Jennison Associates LLC   466 Lexington Avenue
New York, NY 10017

 

DISTRIBUTOR   Prudential Investment
Management Services LLC		  

655 Broad Street

Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon   225 Liberty Street
New York, NY 10286

 

TRANSFER AGENT   Prudential Mutual Fund
Services LLC		   PO Box 9658
Providence, RI 02940

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP   787 Seventh Avenue
New York, NY 10019

 

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM Jennison International Opportunities Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

LOGO

 

 

PGIM JENNISON INTERNATIONAL OPPORTUNITIES FUND

 

SHARE CLASS   A   C   R   Z   R6*
NASDAQ   PWJAX   PWJCX   PWJRX   PWJZX   PWJQX
CUSIP   743969677   743969669   743969487   743969651   743969586

 

*Formerly known as Class Q shares.

 

MF215E2

LOGO

 

PGIM JENNISON GLOBAL INFRASTRUCTURE FUND

(Formerly known as Prudential Jennison Global Infrastructure Fund)

 

 

SEMIANNUAL REPORT

APRIL 30, 2018

 

LOGO

 

To enroll in e-delivery, go to pgiminvestments.com/edelivery

Objective: Total return

 

 

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.

 

The accompanying financial statements as of April 30, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates LLC is a registered investment adviser. Both are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

2   Visit our website at pgiminvestments.com

Table of Contents

 

Letter from the President

      5  

Your Fund’s Performance

      6  

Fees and Expenses

      9  

Holdings and Financial Statements

      11  

 

PGIM Jennison Global Infrastructure Fund     3  

This Page Intentionally Left Blank

Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for PGIM Jennison Global Infrastructure Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.

 

We have important information to share with you. Effective June 11, 2018,

Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*

 

Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors

participate in opportunities across global markets while meeting their toughest investment

challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

PGIM Jennison Global Infrastructure Fund

June 15, 2018

 

*The Prudential Day One Funds did not change their names.

 

PGIM Jennison Global Infrastructure Fund     5  

Your Fund’s Performance (unaudited)

 

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

   

Total Returns as of 4/30/18

(without sales charges)

   Average Annual Total Returns as of 4/30/18
(with sales charges)
    Six Months* (%)   One Year (%)   Since Inception (%)
Class A     1.43     1.60     6.12 (9/25/13)
Class C     0.95     5.59     6.61 (9/25/13)
Class Z     1.46     7.77   12.95 (9/25/13)
Class R6**     1.46     7.77       7.68 (12/28/16)
S&P Global Infrastructure Index    
  –2.75     4.98   —
S&P 500 Index      
    3.82   13.26   —
Lipper Global Infrastructure Funds Average    
    –1.63     4.13   —

 

Source: PGIM Investments LLC and Lipper Inc.

*Not annualized

**Formerly known as Class Q shares.

Since Inception returns are provided since the Fund has less than 10 fiscal years of returns. Since Inception returns for the Indexes and the Lipper Average are measured from the closest month-end to the class’ inception date.

 

6   Visit our website at pgiminvestments.com

The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.

 

     Class A   Class C   Class Z   Class R6*
Maximum initial sales charge   5.50% of the public offering price   None   None   None
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption)   1.00% on sales of $1 million or more made within 12 months of purchase   1.00% 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)   0.30% (0.25% currently)   1.00%   None   None

 

*Formerly known as Class Q shares.

 

Benchmark Definitions

 

S&P Global Infrastructure Index—The S&P Global Infrastructure Index is an unmanaged index that consists of 75 companies from around the world that represent the listed infrastructure universe. To create diversified exposure across the global listed infrastructure market, the Index has balanced weights across three distinct infrastructure clusters: Utilities, Transportation, and Energy. The average annual total return for the Index measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 6.18% and 11.06% for Class R6 shares.

 

S&P 500 Index—The Standard & Poor’s 500 Composite Stock Price Index is an unmanaged index of over 500 stocks of large US public companies. It gives a broad look at how stock prices in the United States have performed. The average annual total return for the Index measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 12.70% and 15.62% for Class R6 shares.

 

Lipper Global Infrastructure Funds Average—The Lipper Global Infrastructure Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Global Infrastructure Funds universe for the periods noted. Funds in the Lipper Average invest primarily in equity securities of domestic and foreign companies engaged in an infrastructure industry, including but not limited to transportation, communication, and waste management. The average annual total return for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class A, Class C, and Class Z shares is 6.25% and 10.30% for Class R6 shares.

 

PGIM Jennison Global Infrastructure Fund     7  

Your Fund’s Performance (continued)

 

 

Investors cannot invest directly in an index or average. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.

 

Presentation of Fund Holdings

 

 

Five Largest Holdings expressed as a
percentage of net assets as of 4/30/18 (%)		  
Eiffage SA, Construction & Engineering     4.7  
NextEra Energy, Inc., Electric Utilities     4.5  
NRG Energy, Inc., Independent Power & Renewable Electricity Producers     3.9  
Italgas SpA, Gas Utilities     3.5  
Vinci SA, Construction & Engineering     3.4  

 

Holdings reflect only long-term investments and are subject to change.

 

Five Largest Industries expressed as a
percentage of net assets as of 4/30/18 (%)		  
Transportation Infrastructure     19.3  
Oil, Gas & Consumable Fuels     16.9  
Electric Utilities     15.2  
Construction & Engineering     9.1  
Independent Power & Renewable Electricity Producers     8.7  

 

Industry weightings reflect only long-term investments and are subject to change.

 

8   Visit our website at pgiminvestments.com

Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the

 

PGIM Jennison Global Infrastructure Fund     9  

Fees and Expenses (continued)

 

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.

 

PGIM
Jennison Global
Infrastructure Fund		   Beginning  Account
Value
November 1, 2017		     Ending  Account
Value
April 30, 2018		     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses  Paid
During the
Six-Month Period*		  
Class A   Actual   $ 1,000.00     $  1,014.30       1.50 %    $ 7.49  
  Hypothetical   $ 1,000.00     $ 1,017.36       1.50 %    $ 7.50  
Class C   Actual   $ 1,000.00     $ 1,009.50       2.25 %    $  11.21  
  Hypothetical   $ 1,000.00     $ 1,013.64       2.25 %    $ 11.23  
Class Z   Actual   $ 1,000.00     $ 1,014.60       1.25 %    $ 6.24  
  Hypothetical   $ 1,000.00     $ 1,018.60       1.25 %    $ 6.26  
Class R6**   Actual   $ 1,000.00     $ 1,014.60       1.25 %    $ 6.24  
    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, 2018, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.

**Formerly known as Class Q shares.

 

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Schedule of Investments (unaudited)

as of April 30, 2018

 

Description    Shares      Value  

LONG-TERM INVESTMENTS    99.1%

      

COMMON STOCKS

      

Argentina    0.9%

                  

Pampa Energia SA, ADR*(a)

      9,624      $ 548,953  

Australia    6.0%

                  

Macquarie Atlas Roads Group

      196,768        951,403  

Sydney Airport

      144,491        773,615  

Transurban Group

      208,686        1,818,423  
     

 

 

  
        3,543,441  

Canada    7.4%

                  

Pembina Pipeline Corp.

      49,797        1,586,532  

TransCanada Corp.

      43,963        1,864,049  

Westshore Terminals Investment Corp.

      50,493        871,864  
     

 

 

  
        4,322,445  

China    3.3%

                  

ENN Energy Holdings Ltd.

      65,374        611,347  

Huaneng Renewables Corp. Ltd. (Class H Stock)

      2,995,225        1,330,188  
     

 

 

  
        1,941,535  

France    9.9%

                  

Aeroports de Paris

      4,755        1,046,685  

Eiffage SA

      22,965        2,733,558  

Vinci SA

      20,092        2,008,869  
     

 

 

  
        5,789,112  

Germany    1.8%

                  

E.ON SE

      50,288        550,641  

RWE AG

      22,218        531,048  
     

 

 

  
        1,081,689  

India    2.5%

                  

NTPC Ltd.

      560,388        1,442,211  

Italy    10.8%

                  

Atlantia SpA

      53,269        1,763,194  

Enav SpA, 144A

      113,943        621,077  

Enel SpA

      302,291        1,917,647  

Italgas SpA

      316,495        2,048,073  
     

 

 

  
        6,349,991  

Malaysia    1.1%

                  

Malaysia Airports Holdings Bhd

      286,407        656,155  

 

See Notes to Financial Statements.

 

PGIM Jennison Global Infrastructure Fund     11  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description    Shares      Value  

COMMON STOCKS (Continued)

      

Mexico    2.0%

                  

CFE Capital S de RL de CV, REIT*

      114,049      $ 114,646  

CFE Capital S de RL de CV, REIT, 144A*

      491,373        493,947  

Infraestructura Energetica Nova SAB de CV

      121,524        535,492  
     

 

 

  
        1,144,085  

Philippines    0.4%

                  

International Container Terminal Services, Inc.

      153,077        249,674  

Spain    5.4%

                  

Aena SME SA, 144A

      8,458        1,743,433  

Cellnex Telecom SA, 144A

      31,624        848,131  

Ferrovial SA

      27,589        589,277  
     

 

 

  
        3,180,841  

Switzerland    1.5%

                  

Flughafen Zurich AG

      4,125        861,425  

United States    46.1%

                  

American Electric Power Co., Inc.

      24,892        1,741,942  

American Tower Corp., REIT

      9,349        1,274,830  

American Water Works Co., Inc.

      7,137        617,922  

Cheniere Energy Partners LP Holdings LLC

      33,670        939,393  

Cheniere Energy, Inc.*

      20,328        1,182,277  

CSX Corp.

      29,328        1,741,790  

Equinix, Inc., REIT

      1,422        598,363  

Exelon Corp.

      32,408        1,285,949  

FedEx Corp.

      4,367        1,079,522  

Genesee & Wyoming, Inc. (Class A Stock)*

      15,231        1,084,447  

Great Plains Energy, Inc.

      22,749        744,575  

NextEra Energy, Inc.

      16,180        2,652,064  

NRG Energy, Inc.

      73,098        2,266,038  

ONEOK, Inc.

      25,449        1,532,539  

Public Service Enterprise Group, Inc.

      19,015        991,632  

SBA Communications Corp., REIT*

      7,133        1,142,921  

Sempra Energy

      15,489        1,731,670  

Targa Resources Corp.

      21,534        1,011,452  

Union Pacific Corp.

      12,094        1,616,121  

Williams Cos., Inc. (The)

      70,691        1,818,879  
     

 

 

  
        27,054,326  
     

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $47,874,713)

        58,165,883  
     

 

 

  

 

See Notes to Financial Statements.

 

12  

Description    Shares      Value  

SHORT-TERM INVESTMENTS    1.4%

      

AFFILIATED MUTUAL FUNDS

                  

Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund(w)

      286,035      $ 286,035  

Prudential Investment Portfolios 2 - PGIM Institutional Money Market Fund (cost $525,525; includes $524,652 of cash collateral for securities on loan)(b)(w)

      525,508        525,507  
     

 

 

  

TOTAL SHORT-TERM INVESTMENTS
(cost $811,560)

        811,542  
     

 

 

  

TOTAL INVESTMENTS    100.5%
(cost $48,686,273)

         58,977,425  

Liabilities in excess of other assets (0.5)%

         (297,572 ) 
     

 

 

  

NET ASSETS    100.0%

       $ 58,679,853  
     

 

 

  

 

The following abbreviations are used in the semiannual report:

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

ADR—American Depositary Receipt

LIBOR—London Interbank Offered Rate

REIT(s)—Real Estate Investment Trust(s)

* Non-income producing security.
(a) All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $536,176; cash collateral of $524,652 (included in liabilities) was received with which the Series purchased highly liquid short-term investments.
(b) Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment.
(w) PGIM Investments LLC, the manager of the Series, also serves as manager of the Prudential Investment Portfolios 2—PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund.

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

See Notes to Financial Statements.

 

PGIM Jennison Global Infrastructure Fund     13  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:

 

    Level 1     Level 2     Level 3  

Investments in Securities

      

Common Stocks

      

Argentina

   $ 548,953     $ —     $     —  

Australia

     —       3,543,441       —  

Canada

     4,322,445       —       —  

China

     —       1,941,535       —  

France

     —       5,789,112       —  

Germany

     —       1,081,689       —  

India

     —       1,442,211       —  

Italy

     —       6,349,991       —  

Malaysia

     —       656,155       —  

Mexico

     1,144,085       —       —  

Philippines

     —       249,674       —  

Spain

     —       3,180,841       —  

Switzerland

     —       861,425       —  

United States

     27,054,326       —       —  

Affiliated Mutual Funds

     811,542       —       —  
 

 

 

    

 

 

    

 

 

  

Total

   $ 33,881,351     $ 25,096,074     $ —  
 

 

 

    

 

 

    

 

 

  

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

Industry Classification:

 

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of April 30, 2018 were as follows:

 

Transportation Infrastructure

     19.3 % 

Oil, Gas & Consumable Fuels

     16.9  

Electric Utilities

     15.2  

Construction & Engineering

     9.1  

Independent Power & Renewable Electricity Producers

     8.7  

Road & Rail

     7.6  

Multi-Utilities

     6.4  

Gas Utilities

     5.4  

Equity Real Estate Investment Trusts (REITs)

     5.1  

Air Freight & Logistics

     1.8 % 

Diversified Telecommunication Services

     1.4  

Affiliated Mutual Funds (including 0.9% of collateral for securities on loan)

     1.4  

Water Utilities

     1.1  

Banks

     1.1  
 

 

 

  
    100.5  

Liabilities in excess of other assets

     (0.5 ) 
 

 

 

  
    100.0 % 
 

 

 

  

 

See Notes to Financial Statements.

 

14  

Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:

 

The Series invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is equity contracts risk. The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.

 

The Series did not hold any derivative instruments as of April 30, 2018, accordingly, no

derivative positions were presented in the Statement of Assets and Liabilities.

 

The effects of derivative instruments on the Statement of Operations for the six months ended April 30, 2018 are as follows:

 

Amount of Realized Gain (Loss) on Derivatives Recognized in Income

  

Derivatives not accounted for as hedging
instruments, carried at fair value

   Rights(1)  

Equity contracts

   $ 7,654  
 

 

 

  

 

(1) Included in net realized gain (loss) on investment transactions in the Statement of Operations.

 

Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

  

Derivatives not accounted for as hedging
instruments, carried at fair value

   Rights(2)  

Equity contracts

   $ (1,126 ) 
 

 

 

  

 

(2) Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations.

 

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Series entered into financial instruments/transactions during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for financial instruments/transactions, where the legal right to set-off exists, is presented in the summary below.

 

See Notes to Financial Statements.

 

PGIM Jennison Global Infrastructure Fund     15  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Offsetting of financial instrument/transaction assets and liabilities:

 

Description

   Gross Market
Value of
Recognized
Assets/(Liabilities)		     Collateral
Pledged/(Received)(1)		     Net Amount  

Securities on Loan

   $ 536,176     $ (524,652 )    $ 11,524  
 

 

 

      

 

(1) Collateral amount disclosed by the Series is limited to the market value of financial instruments/transactions.

 

See Notes to Financial Statements.

 

16  

This Page Intentionally Left Blank

Statement of Assets & Liabilities (unaudited)

as of April 30, 2018

 

Assets

         

Investments at value, including securities on loan of $536,176:

   

Unaffiliated investments (cost $47,874,713)

    $ 58,165,883  

Affiliated investments (cost $811,560)

      811,542  

Receivable for investments sold

      160,370  

Dividends and interest receivable

      83,232  

Receivable for Series shares sold

      65,283  

Tax reclaim receivable

      58,262  

Prepaid expenses

      332  
  

 

 

  

Total assets

      59,344,904  
  

 

 

  

Liabilities

         

Payable to broker for collateral for securities on loan

      524,652  

Payable for Series shares reacquired

      49,371  

Management fee payable

      35,526  

Accrued expenses and other liabilities

      30,270  

Audit fee payable

      13,902  

Distribution fee payable

      6,739  

Foreign capital gains tax liability

      2,338  

Affiliated transfer agent fee payable

      2,253  
  

 

 

  

Total liabilities

      665,051  
  

 

 

  

Net Assets

    $ 58,679,853  
  

 

 

  
          

Net assets were comprised of:

   

Common stock, at par

    $ 44,530  

Paid-in capital in excess of par

      54,124,395  
  

 

 

  
     54,168,925  

Undistributed net investment income

      193,868  

Accumulated net realized loss on investment and foreign currency transactions

      (5,973,389 ) 

Net unrealized appreciation on investments and foreign currencies

      10,290,449  
  

 

 

  

Net assets, April 30, 2018

    $ 58,679,853  
  

 

 

  

 

See Notes to Financial Statements.

 

18  

Class A

         

Net asset value and redemption price per share,
($10,317,913 ÷ 782,467 shares of common stock issued and outstanding)

    $ 13.19  

Maximum sales charge (5.50% of offering price)

      0.77  
  

 

 

  

Maximum offering price to public

    $ 13.96  
  

 

 

  

Class C

         

Net asset value, offering price and redemption price per share,
($5,666,059 ÷ 433,095 shares of common stock issued and outstanding)

    $ 13.08  
  

 

 

  

Class Z

         

Net asset value, offering price and redemption price per share,
($27,880,693 ÷ 2,113,893 shares of common stock issued and outstanding)

    $ 13.19  
  

 

 

  

Class R6

         

Net asset value, offering price and redemption price per share,
($14,815,188 ÷ 1,123,498 shares of common stock issued and outstanding)

    $ 13.19  
  

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison Global Infrastructure Fund     19  

Statement of Operations (unaudited)

Six Months Ended April 30, 2018

 

Net Investment Income (Loss)

         

Income

   

Unaffiliated dividend income (net of foreign withholding taxes of $64,099)

    $ 906,992  

Affiliated dividend income

      8,986  

Interest income

      2,392  

Income from securities lending, net (including affiliated income of $292)

      563  
  

 

 

  

Total income

      918,933  
  

 

 

  

Expenses

   

Management fee

      331,735  

Distribution fee(a)

      45,552  

Custodian and accounting fees

      35,511  

Registration fees(a)

      31,678  

Transfer agent’s fees and expenses (including affiliated expense of $6,979)(a)

      28,055  

Shareholders’ reports

      19,916  

Audit fee

      13,902  

Legal fees and expenses

      8,970  

Directors’ fees

      6,483  

Miscellaneous

      9,130  
  

 

 

  

Total expenses

      530,932  

Less: Fee waiver and/or expense reimbursement(a)

      (69,622 ) 

Distribution fee waiver(a)

      (2,707 ) 
  

 

 

  

Net expenses

      458,603  
  

 

 

  

Net investment income (loss)

      460,330  
  

 

 

  

Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions

         

Net realized gain (loss) on:

   

Investment transactions (including affiliated of $(57))

      832,981  

Foreign currency transactions

      10,390  
  

 

 

  
     843,371  
  

 

 

  

Net change in unrealized appreciation (depreciation) on:

   

Investments (including affiliated of $(18)) (net of change in foreign capital gain taxes $18,254)

      (549,808 ) 

Foreign currencies

      2,171  
  

 

 

  
     (547,637 ) 
  

 

 

  

Net gain (loss) on investment and foreign currency transactions

      295,734  
  

 

 

  

Net Increase (Decrease) In Net Assets Resulting From Operations

    $ 756,064  
  

 

 

  

 

(a) Class specific expenses were as follows:

 

    Class A     Class C     Class Z     Class R6  

Distribution fee

     16,245       29,307       —       —  

Transfer Agency fees and expenses

     9,986       4,526       13,519       24  

Registration fees

     8,013       7,792       8,150       7,723  

Fee waiver and/or expense reimbursement

     (19,650 )      (13,215 )      (26,101 )      (10,656 ) 

Distribution fee waiver

     (2,707 )      —       —       —  

 

See Notes to Financial Statements.

 

20  

Statements of Changes in Net Assets (unaudited)

     Six Months
Ended
April 30, 2018		      Year
Ended
October 31, 2017		  

Increase (Decrease) in Net Assets

                  

Operations

      

Net investment income (loss)

    $ 460,330      $ 749,814  

Net realized gain (loss) on investment and foreign currency transactions

      843,371        1,768,892  

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

      (547,637 )       5,851,698  
  

 

 

     

 

 

  

Net increase (decrease) in net assets resulting from operations

      756,064        8,370,404  
  

 

 

     

 

 

  

Dividends and Distributions

      

Dividends from net investment income

      

Class A

      (38,819 )       (118,512 ) 

Class C

      (5,795 )       (39,550 ) 

Class Z

      (128,718 )       (379,823 ) 

Class R6

      (93,130 )       (159,950 ) 
  

 

 

     

 

 

  
     (266,462 )       (697,835 ) 
  

 

 

     

 

 

  

Tax return of capital distributions

      

Class A

      —        (58,583 ) 

Class C

      —        (19,550 ) 

Class Z

      —        (187,756 ) 

Class R6

      —        (79,068 ) 
  

 

 

     

 

 

  
     —        (344,957 ) 
  

 

 

     

 

 

  

Series share transactions (Net of share conversions)

      

Net proceeds from shares sold

      8,082,134        24,826,946  

Net asset value of shares issued in reinvestment of dividends and distributions

      259,578        1,001,786  

Cost of shares reacquired

      (18,751,794 )       (23,382,391 ) 
  

 

 

     

 

 

  

Net increase (decrease) in net assets from share transactions

      (10,410,082 )       2,446,341  
  

 

 

     

 

 

  

Total increase (decrease)

      (9,920,480 )       9,773,953  

Net Assets:

                  

Beginning of period

      68,600,333        58,826,380  
  

 

 

     

 

 

  

End of period(a)

    $ 58,679,853      $ 68,600,333  
  

 

 

     

 

 

  

(a) Includes undistributed/(distributions in excess of) net investment income of:

    $ 193,868      $ —  
  

 

 

     

 

 

  

 

See Notes to Financial Statements.

 

PGIM Jennison Global Infrastructure Fund     21  

Notes to Financial Statements (unaudited)

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of seven funds: PGIM Jennison Emerging Markets Equity Opportunity Fund (formerly known as Prudential Jennison Emerging Markets Equity Fund), PGIM Jennison Global Infrastructure Fund, PGIM Jennison Global Opportunities Fund, PGIM Jennison International Opportunities Fund and PGIM QMA International Equity Fund, each of which are diversified funds and PGIM Emerging Markets Debt Hard Currency Fund and PGIM Emerging Markets Debt Local Currency Fund, each of which are non-diversified funds for purposes of the 1940 Act and may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. These financial statements relate only to the PGIM Jennison Global Infrastructure Fund (the “Series”). Effective June 11, 2018, the Series’ Funds’ name were changed by replacing “Prudential” with “PGIM” in each Series’ Fund’s name and Class Q shares were renamed Class R6 shares.

 

The investment objective of the Series is to achieve total return.

 

1. Accounting Policies

 

The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Series holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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.

 

22  

For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Series’ foreign investments may change on days when investors cannot purchase or redeem Series shares.

 

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 Schedule of Investments.

 

Common and preferred stocks, exchange-traded funds, and derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.

 

Foreign equities traded on foreign securities exchanges are generally valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy. The models generate an evaluated adjustment factor for each security, which is applied to the local closing price to adjust it for post closing market movements. Utilizing that evaluated adjustment factor, the vendor provides an evaluated price for each security. If the vendor does not provide an evaluated price, securities are valued in accordance with exchange-traded common and preferred stock valuation policies discussed above.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which

 

PGIM Jennison Global Infrastructure Fund     23  

Notes to Financial Statements (unaudited) (continued)

 

it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the 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 transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities — at the current rates of exchange;

 

(ii) purchases and sales of investment securities, income and expenses — at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of

 

24  

long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions.

 

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.

 

Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

Rights: The Series may hold rights acquired either through a direct purchase, included as part of a private placement, or pursuant to corporate actions. Rights entitle the holder to buy a proportionate amount of common stock, or such other security that the issuer may specify, at a specific price and time through the expiration dates. Such rights are held as long positions by the Series until exercised, sold or expired. Rights are valued at fair value in accordance with the Board approved fair valuation procedures.

 

Securities Lending: The Series may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to termination at the option of the borrower or the Series. Upon termination of the loan, the borrower will return to the Series securities identical to the loaned securities. Should the

 

PGIM Jennison Global Infrastructure Fund     25  

Notes to Financial Statements (unaudited) (continued)

 

borrower of the securities fail financially, the Series has the right to repurchase the securities in the open market using the collateral.

 

The Series recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Series also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.

 

Concentration of Risk: Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.

 

Equity and Mortgage Real Estate Investment Trusts (REITs): The Series invests in equity REITs, which report information on the source of their distributions annually. Based on current and historical information, a portion of distributions received from equity REITs during the period is estimated to be dividend income, capital gain or return of capital and recorded accordingly. When material, these estimates are adjusted periodically when the actual source of distributions is disclosed by the equity REITs.

 

Concentration of Risk for REITs: Real estate securities are subject to similar risks as direct investments in real estate and mortgages, and their value will depend on the value of the underlying properties or the underlying loans or interests. The underlying loans may be subject to the risks of default or of prepayments that occur earlier or later than expected, and such loans may also include so-called “subprime” mortgages. The value of these securities will rise and fall in response to many factors, including economic conditions, the demand for rental property and interest rates. In particular, the value of these securities may decline when interest rates rise and will also be affected by the real estate market and by the management of the underlying properties.

 

In addition, investing in REITs involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. Equity REITs may be affected by changes in the value of the underlying property owned by the REITs, while mortgage REITs may be affected by the quality of any credit extended. REITs are

 

26  

dependent upon management skills, may not be diversified geographically or by property/mortgage asset type, and are subject to heavy cash flow dependency, default by borrowers and self-liquidation. REITs may be more volatile and/or more illiquid than other types of equity securities. REITs (especially mortgage REITs) are subject to interest rate risks. REITs may incur significant amounts of leverage. The Series will indirectly bear a portion of the expenses, including management fees, paid by each REIT in which it invests, in addition to the expenses of the Series.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.

 

Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.

 

Taxes: It is the Series’ policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Dividends and Distributions: The Series expects to pay dividends from net investment income quarterly. Distributions from net realized capital and currency gains, if any, are declared and paid annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

PGIM Jennison Global Infrastructure Fund     27  

Notes to Financial Statements (unaudited) (continued)

 

 

2. Agreements

 

The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Series. PGIM Investments administers the corporate affairs of the Series and, in connection therewith, furnishes the Series with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Series’ custodian (the Custodian), and the Series’ transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Series. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Series, including, but not limited to, the custodian, transfer agent, and accounting agent.

 

PGIM Investments has entered into a subadvisory agreement with Jennison Associates LLC (“Jennison”). The subadvisory agreement provides that Jennison will furnish investment advisory services in connection with the management of the Series. In connection therewith, Jennison is obligated to keep certain books and records of the Series. PGIM Investments pays for the services of Jennison, the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.

 

The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of 1.00% of the Series’ average daily net assets up to $1 billion, 0.98% of the next $2 billion, 0.96% of the next $2 billion, 0.95% of the next $5 billion and 0.94% of the Series’ average daily net assets in excess of $10 billion. The effective management fee rate before any waivers and/or expense reimbursements was 1.00% for the six months ended April 30, 2018.

 

PGIM Investments has contractually agreed, through February 28, 2019, to limit total annual fund operating expenses after fee waivers and/or reimbursements to 1.50% of average daily net assets for Class A shares, 2.25% of average daily net assets for Class C shares, 1.25% of average daily net assets for Class Z shares, and 1.25% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. Expenses waived/reimbursed by the Manager in accordance with this agreement may be recouped by the Manager within the same fiscal year during which such waiver/reimbursement is made if

 

28  

such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The effective management fee rate, net of waivers and/or expense reimbursements was 0.79% for the six months ended April 30, 2018.

 

The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of the Class A, Class C, Class Z and Class R6 shares of the Series. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C shares, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z and Class R6 shares of the Series.

 

Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to 0.30% 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 0.25% of the average daily net assets of the Class A shares through February 28, 2019.

 

PIMS has advised the Series that it has received $10,878 in front-end sales charges resulting from sales of Class A shares during the six months ended April 30, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.

 

PIMS has advised the Series that for the six months ended April 30, 2018 it received $55 in contingent deferred sales charges imposed upon redemptions by certain Class C shareholders.

 

PGIM Investments, PIMS and Jennison are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Series may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended April 30, 2018 no such transactions were entered into by the Series.

 

The Series may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money

 

PGIM Jennison Global Infrastructure Fund     29  

Notes to Financial Statements (unaudited) (continued)

 

Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended April 30, 2018, PGIM, Inc. was compensated $211 by PGIM Investments for managing the Series’ securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.

 

4. Portfolio Securities

 

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended April 30, 2018 were $18,755,154 and $29,345,538, respectively.

 

A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended April 30, 2018, is presented as follows:

 

Affiliated Mutual Funds*

   Value,
Beginning
of Period		     Cost of
Purchases		     Proceeds
from
Sales		     Unrealized
Gain
(Loss)		     Realized
Gain
(Loss)		     Value,
End of
Period		     Shares,
End of
Period		     Dividend
Income		  

PGIM Core Ultra Short Bond Fund

   $ 135,581     $ 19,988,750     $ 19,838,296     $ —     $ —     $ 286,035       286,035     $ 8,986  

PGIM Institutional Money Market Fund

     —       1,375,428       849,846       (18 )      (57 )      525,507       525,508       292  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  
  $ 135,581     $ 21,364,178     $ 20,688,142     $ (18 )    $ (57 )    $ 811,542       $ 9,278  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

 

  

 

* The Series did not have any capital gain distributions during the reporting period.

 

5. Tax Information

 

The United States federal income tax basis of the Series’ investments and the net unrealized appreciation as of April 30, 2018 were as follows:

 

Tax Basis

    $ 49,414,582  
  

 

 

  

Gross Unrealized Appreciation

      10,658,214  

Gross Unrealized Depreciation

      (1,095,371 ) 
  

 

 

  

Net Unrealized Appreciation

    $ 9,562,843  
  

 

 

  

 

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 at October 31, 2017 of approximately $6,089,000 which can be carried forward for an unlimited period. During the year ended October 31, 2017, the Series utilized approximately $1,785,000 to offset capital gains. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.

 

30  

Management has analyzed the Series’ tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Series’ financial statements for the current reporting period. The Series’ federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

6. Capital and Ownership

 

The Series offers Class A, Class C, Class Z, and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 5.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class Z and Class R6 shares are not subject to any sales or redemption charge and are available exclusively for sale to a limited group of investors.

 

Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.

 

The Fund is authorized to issue 4.8 billion shares of common stock, with a par value of $0.01 per share, which is divided into seven series. There are 510 million shares authorized for the Series, divided into five classes, designated Class A, Class C, Class Z, Class T and Class R6 common stock, each of which consists of 20 million, 100 million, 150 million, 115 million and 125 million authorized shares, respectively.

 

The Series currently does not have any Class T shares outstanding.

 

As of April 30, 2018, Prudential, through its affiliate entities, including affiliated funds (if applicable), owned 532,634 Class Z shares and 1,123,498 Class R6 shares of the Series. At reporting period end, five shareholders of record held 77% of the Series’ outstanding shares on behalf of multiple beneficial owners, of which 37% were held by an affiliate of Prudential.

 

PGIM Jennison Global Infrastructure Fund     31  

Notes to Financial Statements (unaudited) (continued)

 

 

Transactions in shares of common stock were as follows:

 

Class A

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        114,374      $ 1,534,731  

Shares issued in reinvestment of dividends and distributions

        2,915        38,453  

Shares reacquired

        (116,061 )       (1,525,510 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        1,228        47,674  

Shares issued upon conversion from other share class(es)

        758        10,337  

Shares reacquired upon conversion into other share class(es)

        (114,962 )       (1,557,565 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (112,976 )     $ (1,499,554 ) 
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        279,822      $ 3,391,012  

Shares issued in reinvestment of dividends and distributions

        13,824        168,066  

Shares reacquired

        (184,608 )       (2,241,919 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        109,038        1,317,159  

Shares issued upon conversion from other share class(es)

        9,426        116,828  

Shares reacquired upon conversion into other share class(es)

        (280,568 )       (3,367,052 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (162,104 )     $ (1,933,065 ) 
    

 

 

     

 

 

  

Class C

                

Six months ended April 30, 2018:

        

Shares sold

        23,646      $ 307,627  

Shares issued in reinvestment of dividends and distributions

        388        5,115  

Shares reacquired

        (59,455 )       (778,183 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (35,421 )       (465,441 ) 

Shares reacquired upon conversion into other share class(es)

        (1,973 )       (25,470 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (37,394 )     $ (490,911 ) 
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        143,195      $ 1,702,514  

Shares issued in reinvestment of dividends and distributions

        4,347        52,151  

Shares reacquired

        (149,323 )       (1,820,597 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (1,781 )       (65,932 ) 

Shares reacquired upon conversion into other share class(es)

        (24,441 )       (298,815 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (26,222 )     $ (364,747 ) 
    

 

 

     

 

 

  

 

32  

Class Z

      Shares      Amount  

Six months ended April 30, 2018:

        

Shares sold

        240,802      $ 3,139,965  

Shares issued in reinvestment of dividends and distributions

        9,330        122,879  

Shares reacquired

        (460,731 )       (6,002,101 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (210,599 )       (2,739,257 ) 

Shares issued upon conversion from other share class(es)

        116,833        1,583,035  

Shares reacquired upon conversion into other share class(es)

        (758 )       (10,337 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (94,524 )     $ (1,166,559 ) 
    

 

 

     

 

 

  

Year ended October 31, 2017:

        

Shares sold

        758,227      $ 9,087,558  

Shares issued in reinvestment of dividends and distributions

        45,023        542,551  

Shares reacquired

        (963,920 )       (11,483,699 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        (160,670 )       (1,853,590 ) 

Shares issued upon conversion from other share class(es)

        296,886        3,566,596  

Shares reacquired upon conversion into other share class(es)

        (1,443,112 )       (16,437,911 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (1,306,896 )     $ (14,724,905 ) 
    

 

 

     

 

 

  

Class R6

                

Six months ended April 30, 2018:

        

Shares sold

        234,689      $ 3,099,811  

Shares issued in reinvestment of dividends and distributions

        7,057        93,131  

Shares reacquired

        (801,753 )       (10,446,000 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        (560,007 )     $ (7,253,058 ) 
    

 

 

     

 

 

  

Period ended October 31, 2017*:

        

Shares sold

        851,072      $ 10,645,862  

Shares issued in reinvestment of dividends and distributions

        18,790        239,018  

Shares reacquired

        (628,004 )       (7,836,176 ) 
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding before conversion

        241,858        3,048,704  
       

Shares issued upon conversion from other share class(es)

        1,441,647        16,420,354  
    

 

 

     

 

 

  

Net increase (decrease) in shares outstanding

        1,683,505      $ 19,469,058  
    

 

 

     

 

 

  

 

* Commencement of operations was December 28, 2016.

 

7. Borrowings

 

The Fund, on behalf of the Series, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Series’ portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly. The interest on borrowings under the SCAs is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.

 

PGIM Jennison Global Infrastructure Fund     33  

Notes to Financial Statements (unaudited) (continued)

 

 

Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.

 

The Series utilized the SCA during the reporting period ended April 30, 2018. The average daily balance for the 9 days that the Series had loans outstanding during the period was $1,430,556 borrowed at a weighted average interest rate of 3.05%. The maximum loan balance outstanding during the period was $3,353,000. At April 30, 2018, the Series did not have an outstanding loan balance.

 

34  

Financial Highlights (unaudited)

Class A Shares  
     Six Months
Ended
April 30,		           Year Ended October 31,           September 25,
2013(b)
through
October 31,		  
     2018            2017     2016     2015     2014            2013  
Per Share Operating Performance(c):                                                                
Net Asset Value, Beginning of Period     $13.05               $11.61       $11.48       $12.62       $10.42               $10.00  
Income (loss) from investment operations:                                                                
Net investment income (loss)     0.09               0.14       0.09       0.06       0.09               - (g) 
Net realized and unrealized gain (loss) on investments     0.10               1.49       0.21       (1.12 )      2.26               0.42  
Total from investment operations     0.19               1.63       0.30       (1.06 )      2.35               0.42  
Less Dividends and Distributions:                                                                
Dividends from net investment income     (0.05 )              (0.13 )      (0.08 )      (0.05 )      (0.14 )              -  
Tax return of capital distributions     -               (0.06 )      (0.09 )      (0.03 )      -               -  
Distributions from net realized gains     -               -       -       -       (0.01 )              -  
Total dividends and distributions     (0.05 )              (0.19 )      (0.17 )      (0.08 )      (0.15 )              -  
Net Asset Value, end of period     $13.19               $13.05       $11.61       $11.48       $12.62               $10.42  
Total Return(a):     1.43%               14.15%       2.62%       (8.46)%       22.67%               4.20%  
Ratios/Supplemental Data:                                                
Net assets, end of period (000)     $10,318               $11,689       $12,277       $22,353       $15,521               $21  
Average net assets (000)     $10,919               $11,433       $16,694       $22,695       $4,906               $17  
Ratios to average net assets(d):                                                                
Expenses after waivers and/or expense reimbursement     1.50% (e)              1.50%       1.50%       1.50%       1.50%               1.50% (e) 
Expenses before waivers and/or expense reimbursement     1.92% (e)              1.81%       1.79%       1.78%       1.95%               25.87% (e) 
Net investment income (loss)     1.30% (e)              1.10%       0.76%       0.52%       0.73%               0.28% (e) 
Portfolio turnover rate(h)     29% (f)              80%       82%       94%       49%               10% (f) 

 

(a) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on the average shares outstanding during the period.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not Annualized.
(g) Less than $0.005.
(h) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison Global Infrastructure Fund     35  

Financial Highlights (unaudited) (continued)

 

Class C Shares  
     Six Months
Ended
April 30,		           Year Ended October 31,           September 25,
2013(b)
through
October 31,		  
     2018            2017     2016     2015     2014            2013  
Per Share Operating Performance(c):                                                                
Net Asset Value, Beginning of Period     $12.97               $11.55       $11.42       $12.58       $10.41               $10.00  
Income (loss) from investment operations:                                                                
Net investment income (loss)     0.04               0.04       - (g)      (0.03 )      0.01               0.01  
Net realized and unrealized gain (loss) on investments     0.08               1.50       0.21       (1.13 )      2.25               0.40  
Total from investment operations     0.12               1.54       0.21       (1.16 )      2.26               0.41  
Less Dividends and Distributions:                                                                
Dividends from net investment income     (0.01 )              (0.08 )      (0.04 )      - (g)      (0.08 )              -  
Tax return of capital distributions     -               (0.04 )      (0.04 )      - (g)      -               -  
Distributions from net realized gains     -               -       -       -       (0.01 )              -  
Total dividends and distributions     (0.01 )              (0.12 )      (0.08 )      -       (0.09 )              -  
Net Asset Value, end of period     $13.08               $12.97       $11.55       $11.42       $12.58               $10.41  
Total Return(a):     0.95%               13.39%       1.88%       (9.21)%       21.76%               4.10%  
               
Ratios/Supplemental Data:  
Net assets, end of period (000)     $5,666               $6,101       $5,738       $6,775       $3,835               $40  
Average net assets (000)     $5,910               $6,111       $5,783       $6,353       $1,104               $17  
Ratios to average net assets(d):                                                                
Expenses after waivers and/or expense reimbursement     2.25% (e)              2.25%       2.25%       2.25%       2.25%               2.25% (e) 
Expenses before waivers and/or expense reimbursement     2.70% (e)              2.51%       2.49%       2.48%       2.70%               38.05% (e) 
Net investment income (loss)     0.55% (e)              0.34%       (0.02)%       (0.22)%       0.12%               0.52% (e) 
Portfolio turnover rate(h)     29% (f)              80%       82%       94%       49%               10% (f) 

 

(a) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on the average shares outstanding during the period.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not Annualized.
(g) Less than $0.005.
(h) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

36  

Class Z Shares  
     Six Months
Ended
April 30,		          

Year Ended October 31,

           September 25,
2013(b)
through
October 31,		  
     2018            2017     2016     2015     2014            2013  
Per Share Operating Performance(c):                                                                
Net Asset Value, Beginning of Period     $13.06               $11.61       $11.47       $12.62       $10.42               $10.00  
Income (loss) from investment operations:                                                                
Net investment income (loss)     0.10               0.18       0.11       0.09       0.22               0.01  
Net realized and unrealized gain (loss) on investments     0.09               1.49       0.23       (1.13 )      2.15               0.41  
Total from investment operations     0.19               1.67       0.34       (1.04 )      2.37               0.42  
Less Dividends and Distributions:                                                                
Dividends from net investment income     (0.06 )              (0.14 )      (0.09 )      (0.08 )      (0.16 )              -  
Tax return of capital distributions     -               (0.08 )      (0.11 )      (0.03 )      -               -  
Distributions from net realized gains     -               -       -       -       (0.01 )              -  
Total dividends and distributions     (0.06 )              (0.22 )      (0.20 )      (0.11 )      (0.17 )              -  
Net Asset Value, end of period     $13.19               $13.06       $11.61       $11.47       $12.62               $10.42  
Total Return(a):     1.46%               14.51%       2.96%       (8.28)%       22.91%               4.20%  
Ratios/Supplemental Data:  
Net assets, end of period (000)     $27,881               $28,831       $40,811       $47,305       $31,788               $5,247  
Average net assets (000)     $28,578               $29,597       $40,236       $42,210       $20,117               $5,113  
Ratios to average net assets(d):                                                                
Expenses after waivers and/or expense reimbursement     1.25% (e)              1.25%       1.25%       1.25%       1.25%               1.25% (e) 
Expenses before waivers and/or expense reimbursement     1.44% (e)              1.51%       1.49%       1.48%       2.08%               22.65% (e) 
Net investment income (loss)     1.57% (e)              1.49%       0.94%       0.75%       1.79%               0.56% (e) 
Portfolio turnover rate(g)     29% (f)              80%       82%       94%       49%               10% (f) 

 

(a) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(b) Commencement of operations.
(c) Calculated based on the average shares outstanding during the period.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not Annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Jennison Global Infrastructure Fund     37  

Financial Highlights (unaudited) (continued)

 

Class R6 Shares                     
     Six Months
Ended
April 30,
2018		           

December 28,
2016(a)
through

October 31,

2017

  
Per Share Operating Performance(b):                        
Net Asset Value, Beginning of Period     $13.06               $11.39  
Income (loss) from investment operations:                        
Net investment income (loss)     0.09               0.11  
Net realized and unrealized gain (loss) on investment transactions     0.10               1.71  
Total from investment operations     0.19               1.82  
Less Dividends and Distributions:                        
Dividends from net investment Income     (0.06 )              (0.10 ) 
Tax return of capital distributions     -               (0.05 ) 
Total dividends and distributions     (0.06 )              (0.15 ) 
Net asset value, end of period     $13.19               $13.06  
Total Return(c):     1.46%               16.02%  
Ratios/Supplemental Data:                  
Net assets, end of period (000)     $14,815               $21,979  
Average net assets (000)     $21,489               $19,274  
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     1.35% (e)              1.40% (e) 
Net investment income (loss)     1.42% (e)              1.00% (e) 
Portfolio turnover rate(g)     29% (f)              80% (f) 

 

(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

38  

∎ MAIL   ∎ TELEPHONE   ∎ WEBSITE

655 Broad Street

Newark, NJ 07102

  

(800) 225-1852

  

www.pgiminvestments.com

 

PROXY VOTING
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

DIRECTORS
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres

 

OFFICERS
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC   655 Broad Street
Newark, NJ 07102

 

INVESTMENT SUBADVISER   Jennison Associates LLC   466 Lexington Avenue
New York, NY 10017

 

DISTRIBUTOR   Prudential Investment
Management Services LLC		   655 Broad Street
Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon   225 Liberty Street
New York, NY 10286

 

TRANSFER AGENT   Prudential Mutual Fund
Services LLC		   PO Box 9658
Providence, RI 02940

 

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP   787 Seventh Avenue
New York, NY 10019

 

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH DIRECTORS
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM Jennison Global Infrastructure Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

LOGO

 

PGIM JENNISON GLOBAL INFRASTRUCTURE FUND

 

SHARE CLASS   A   C   Z   R6*
NASDAQ   PGJAX   PGJCX   PGJZX   PGJQX
CUSIP   743969792   743969784   743969776   743969560

 

*Formerly known as Class Q shares.

 

MF217E2

LOGO

 

PGIM EMERGING MARKETS DEBT HARD

CURRENCY FUND

(Formerly known as Prudential Emerging Markets Debt Hard Currency Fund)

 

 

SEMIANNUAL REPORT

APRIL 30, 2018

 

LOGO

 

To enroll in e-delivery, go to pgiminvestments.com/edelivery

Objective: Total return, through a combination of current income and capital appreciation

 

 

 

This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.

 

The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.

 

The accompanying financial statements as of April 30, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.

 

Mutual funds are distributed by Prudential Investment Management Services LLC, member SIPC. Jennison Associates LLC is a registered investment adviser. Both are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

2   Visit our website at pgiminvestments.com

Table of Contents

 

Letter from the President

      5  

Your Fund’s Performance

      6  

Fees and Expenses

     9  

Holdings and Financial Statements

      11  

 

PGIM Emerging Markets Debt Hard Currency Fund     3  

This Page Intentionally Left Blank

 

 

Letter from the President

 

LOGO

 

Dear Shareholder:

 

We hope you find the semiannual report for PGIM Emerging Markets Debt Hard Currency Fund informative and useful. The report covers performance for the six-month period ended April 30, 2018.

 

We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*

 

Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.

 

Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.

 

At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.

 

Thank you for choosing our family of funds.

 

Sincerely,

 

LOGO

 

Stuart S. Parker, President

PGIM Emerging Markets Debt Hard Currency Fund

June 15, 2018

 

*The Prudential Day One Funds did not change their names.

 

PGIM Emerging Markets Debt Hard Currency Fund     5  

Your Fund’s Performance (unaudited)

 

Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.

 

    Total Returns as of 4/30/18
(without sales charges)
    Since Inception* (%)
Class A   –3.09 (12/12/17)
Class C   –3.47 (12/12/17)
Class Z   –3.00 (12/12/17)
Class R6**   –2.98 (12/12/17)
JP Morgan EMBI Global Diversified Index  
  –2.46
Lipper Emerging Market Debt Hard Currency Debt Funds Average  
    –1.16

 

Source: PGIM Investments LLC and Lipper Inc.

*Not annualized

**Formerly known as Class Q shares.

 

Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Indexes and the Lipper Averages are measured from closest month-end to the fund’s inception date.

 

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   Class R6*
Maximum initial sales charge   4.50% of the public offering price   None   None   None
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption)   1.00% on sales of $1 million or more made within 12 months of purchase   1.00% 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)   0.25%   1.00%   None   None

 

*Formerly known as Class Q shares.

 

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Benchmark Definitions

 

JP Morgan EMBI Global Diversified Index—The JP Morgan EMBI Global Diversified Index is an unmanaged, comprehensive emerging markets index that tracks hard currency bonds issued by emerging markets issuers.

 

Lipper Emerging Market Hard Currency Debt Funds Average—The Lipper Emerging Market Hard Currency Debt Funds Average (Lipper Average) is based upon the return of all mutual funds in the Lipper Emerging Market Hard Currency Debt Funds universe.

 

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 of a mutual fund, but not sales charges or taxes.

 

Credit Quality expressed as a percentage of total investments as of 4/30/18 (%)  
A     6.7  
BBB     23.8  
BB     24.2  
B     43.0  
CCC     0.3  
C     1.7  
Cash/Cash Equivalents     0.3  
Total     100.0  

 

Source: PGIM Fixed Income

Credit ratings reflect the highest rating assigned by a nationally recognized statistical rating organization (NRSRO) such as Moody’s Investor Service, Inc. (Moody’s), S&P Global Ratings (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, ratings are converted to the comparable S&P/Fitch rating tier nomenclature. These rating agencies are independent and are widely used. The Not Rated category consists of securities that have not been rated by a NRSRO. Credit ratings are subject to change. Values may not sum to 100.0% due to rounding.

 

Distributions and Yields as of 4/30/18
  Total Distributions
Paid for
Six Months ($)		    SEC 30-Day
Subsidized
Yield* (%)		    SEC 30-Day
Unsubsidized
Yield** (%)
Class A   0.18    4.60    –133.29
Class C   0.16    4.05    –137.55
Class Z   0.19    5.10       –8.97
Class R6   0.20    5.16         4.22

 

PGIM Emerging Markets Debt Hard Currency Fund     7  

Your Fund’s Performance (continued)

 

 

*SEC 30-Day Subsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s net expenses (net of any expense waivers or reimbursements).

**SEC 30-Day Unsubsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s gross expenses.

 

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Fees and Expenses (unaudited)

 

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution, and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

 

The example is based on an investment of $1,000 held through the six-month period ended April 30, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

 

Actual Expenses

The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.

 

Hypothetical Example for Comparison Purposes

The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.

 

The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period

 

PGIM Emerging Markets Debt Hard Currency Fund     9  

Fees and Expenses (continued)

 

and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.

 

Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.

 

PGIM  Emerging
Markets Debt Hard
Currency Fund		   Beginning  Account
Value
November 1, 2017		    

Ending Account
Value

April 30, 2018

     Annualized
Expense Ratio
Based on the
Six-Month Period		     Expenses  Paid
During the
Six-Month Period*		  
Class A   Actual**   $ 1,000.00     $ 969.10       1.05 %    $ 3.97  
  Hypothetical   $ 1,000.00     $ 1,019.59       1.05 %    $ 5.26  
Class C   Actual**   $ 1,000.00     $ 965.30       1.80 %    $ 6.78  
  Hypothetical   $ 1,000.00     $ 1,015.87       1.80 %    $ 9.00  
Class Z   Actual**   $ 1,000.00     $ 970.00       0.80 %    $ 3.02  
  Hypothetical   $ 1,000.00     $ 1,020.83       0.80 %    $ 4.01  
Class R6***   Actual**   $ 1,000.00     $ 970.20       0.74 %    $ 2.80  
    Hypothetical   $ 1,000.00     $ 1,021.12       0.74 %    $ 3.71  

 

* Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended April 30, 2018, and divided by the 365 days in the Fund’s fiscal year ending October 31, 2018 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying funds in which the Fund may invest.

**“Actual” expenses are calculated using the 140 days in the period ended April 30, 2018 due to the Fund’s inception date of December 12, 2017.

***Formerly known as Class Q shares.

 

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Schedule of Investments (unaudited)

as of April 30, 2018

 

Description   Interest
Rate		      Maturity
Date		     Principal
Amount (000)#		     Value  

LONG-TERM INVESTMENTS    97.8%

 

CORPORATE BONDS    18.0%

 

Argentina    0.7%

                                 

YPF SA, Sr. Unsec’d. Notes

     8.500 %       07/28/25       155     $ 169,260  

Brazil    1.5%

                                 

Petrobras Global Finance BV,

         

Gtd. Notes

     5.299        01/27/25       125       122,938  

Gtd. Notes

     5.999        01/27/28       85       82,862  

Gtd. Notes

     6.250        03/17/24       15       15,780  

Gtd. Notes

     6.750        01/27/41       60       56,940  

Gtd. Notes

     7.375        01/17/27       10       10,725  

Gtd. Notes

     8.750        05/23/26       65       76,131  
        

 

 

  
           365,376  

Chile    0.8%

                                 

Corp Nacional del Cobre de Chile, Sr. Unsec’d. Notes, 144A

     4.875        11/04/44       200       206,930  

China    1.6%

                                 

CNAC HK Finbridge Co. Ltd., Gtd. Notes

     4.875        03/14/25       240       237,939  

Sinochem Overseas Capital Co. Ltd., Gtd. Notes

     6.300        11/12/40       130       158,664  
        

 

 

  
           396,603  

India    0.8%

                                 

HPCL-Mittal Energy Ltd., Sr. Unsec’d. Notes

     5.250        04/28/27       200       192,154  

Indonesia    1.0%

                                 

Saka Energi Indonesia PT, Sr. Unsec’d. Notes

     4.450        05/05/24       250       241,799  

Malaysia    0.8%

                                 

Petronas Capital Ltd., Gtd. Notes

     3.500        03/18/25       200       194,347  

Mexico    4.7%

                                 

Mexichem SAB de CV, Gtd. Notes

     5.500        01/15/48       200       182,250  

Petroleos Mexicanos,

         

Gtd. Notes

     4.875        01/18/24       140       138,880  

Gtd. Notes

     6.500        03/13/27       275       284,793  

Gtd. Notes

     6.500        06/02/41       410       392,575  

Gtd. Notes

     6.875        08/04/26       140       149,940  
        

 

 

  
           1,148,438  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     11  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description   Interest
Rate		      Maturity
Date		     Principal
Amount (000)#		     Value  

CORPORATE BONDS (Continued)

 

Russia    1.5%

                                 

Gazprom OAO Via Gaz Capital SA, Sr. Unsec’d. Notes, EMTN

     8.625 %       04/28/34       120     $ 152,165  

Vnesheconombank Via VEB Finance PLC, Sr. Unsec’d. Notes

     5.942        11/21/23       205       212,911  
        

 

 

  
           365,076  

South Africa    1.9%

                                 

Eskom Holdings SOC Ltd.,

         

Sr. Unsec’d. Notes

     5.750        01/26/21       200       199,428  

Sr. Unsec’d. Notes, EMTN

     6.750        08/06/23       250       253,125  
        

 

 

  
           452,553  

Trinidad and Tobago    0.6%

                                 

Petroleum Co. of Trinidad & Tobago Ltd., Sr. Unsec’d. Notes

     6.000        05/08/22       137       137,012  

Tunisia    0.7%

                                 

Banque Centrale de Tunisie International Bond, Sr. Unsec’d. Notes

     5.625        02/17/24     EUR  140       171,879  

Venezuela    1.4%

                                 

Petroleos de Venezuela SA,

         

Gtd. Notes(d)

     5.375        04/12/27       205       53,607  

Gtd. Notes(d)

     6.000        05/16/24       45       11,363  

Gtd. Notes(d)

     6.000        11/15/26       65       16,309  

Sr. Sec’d. Notes

     8.500        10/27/20       308       266,295  
        

 

 

  
           347,574  
        

 

 

  

TOTAL CORPORATE BONDS
(cost $4,560,585)

            4,389,001  
        

 

 

  

SOVEREIGN BONDS    79.8%

         

Angola    0.9%

                                 

Angolan Government International Bond, Sr. Unsec’d. Notes

     9.500        11/12/25       200       224,540  

Argentina    6.2%

                                 

Provincia de Buenos Airesgentina, Sr. Unsec’d. Notes, 144A

     9.125        03/16/24       245       271,950  

 

See Notes to Financial Statements.

 

12  

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

        

Argentina (cont’d.)

                                

Argentine Republic Government International Bond,

        

Sr. Unsec’d. Notes

     2.500 %(cc)      12/31/38       110     $ 71,775  

Sr. Unsec’d. Notes

     8.280       12/31/33       210       225,553  

Sr. Unsec’d. Notes

     6.875       04/22/21       150       157,425  

Sr. Unsec’d. Notes

     7.500       04/22/26       240       251,520  

Sr. Unsec’d. Notes

     4.625       01/11/23       40       38,220  

Sr. Unsec’d. Notes

     6.875       01/11/48       30       26,655  

Sr. Unsec’d. Notes

     2.260 (cc)      12/31/38     EUR 70       57,921  

Sr. Unsec’d. Notes

     8.280       12/31/33       42       44,059  

Sr. Unsec’d. Notes

     7.820       12/31/33     EUR 179       236,598  

Provincia de Buenos Airesgentina, Sr. Unsec’d. Notes

     5.375       01/20/23     EUR  100       124,983  
       

 

 

  
          1,506,659  

Armenia    0.9%

                                

Republic of Armenia International Bond, Sr. Unsec’d. Notes

     7.150       03/26/25       200       214,650  

Azerbaijan    1.1%

                                

Republic of Azerbaijan International Bond, Sr. Unsec’d. Notes

     4.750       03/18/24       275       273,665  

Bahrain    0.8%

                                

Bahrain Government International Bond, Sr. Unsec’d. Notes

     6.750       09/20/29       200       184,320  

Belarus    0.9%

                                

Republic of Belarus International Bond, Sr. Unsec’d. Notes

     6.875       02/28/23       200       209,304  

Brazil    4.0%

                                

Brazilian Government International Bond,

        

Sr. Unsec’d. Notes

     8.250       01/20/34       205       253,997  

Sr. Unsec’d. Notes

     7.125       01/20/37       120       136,800  

Sr. Unsec’d. Notes

     5.625       01/07/41       120       114,061  

Brazil Minas SPE via State of Minas Gerais, Gov’t. Gtd. Notes

     5.333       02/15/28       485       482,575  
       

 

 

  
          987,433  

Colombia    2.0%

                                

Colombia Government International Bond,

        

Sr. Unsec’d. Notes

     7.375       09/18/37       275       348,562  

Sr. Unsec’d. Notes

     6.125       01/18/41       135       152,550  
       

 

 

  
          501,112  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     13  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

        

Congo    0.2%

                                

Congolese International Bond, Sr. Unsec’d. Notes

     6.000 %(cc)      06/30/29       69     $ 59,555  

Costa Rica    1.6%

                                

Costa Rica Government International Bond,

        

Sr. Unsec’d. Notes

     7.158       03/12/45       200       202,532  

Sr. Unsec’d. Notes

     4.375       04/30/25       200       184,856  
       

 

 

  
          387,388  

Cote d’lvoire    1.3%

                                

Ivory Coast Government International Bond,

        

Sr. Unsec’d. Notes

     6.375       03/03/28       200       201,290  

Sr. Unsec’d. Notes

     5.125       06/15/25     EUR  100       127,562  
       

 

 

  
          328,852  

Dominican Republic    2.8%

                                

Dominican Republic International Bond,

        

Sr. Unsec’d. Notes

     7.450       04/30/44       240       262,800  

Sr. Unsec’d. Notes

     7.500       05/06/21       110       116,215  

Sr. Unsec’d. Notes

     5.875       04/18/24       305       314,912  
       

 

 

  
          693,927  

Ecuador    2.9%

                                

Ecuador Government International Bond,

        

Sr. Unsec’d. Notes

     8.875       10/23/27       300       282,750  

Sr. Unsec’d. Notes

     10.500       03/24/20       200       206,000  

Sr. Unsec’d. Notes

     10.750       03/28/22       200       211,000  
       

 

 

  
          699,750  

Egypt    2.4%

                                

Egypt Government International Bond,

        

Sr. Unsec’d. Notes

     8.500       01/31/47       250       267,839  

Sr. Unsec’d. Notes

     6.125       01/31/22       300       307,860  
       

 

 

  
          575,699  

El Salvador    2.2%

                                

El Salvador Government International Bond,

        

Sr. Unsec’d. Notes

     6.375       01/18/27       75       74,062  

Sr. Unsec’d. Notes

     7.750       01/24/23       250       269,075  

Sr. Unsec’d. Notes

     8.250       04/10/32       45       49,591  

Sr. Unsec’d. Notes

     7.375       12/01/19       135       139,270  
       

 

 

  
          531,998  

 

See Notes to Financial Statements.

 

14  

Description   Interest
Rate		     Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

        

Gabon    0.8%

                                

Gabon Government International Bond, Bonds

     6.375 %      12/12/24       200     $ 194,918  

Ghana    1.1%

                                

Ghana Government International Bond, Bank Gtd. Notes

     10.750       10/14/30       200       258,540  

Greece    0.9%

                                

Hellenic Republic Government Bond, Bonds

     3.000 (cc)      02/24/37     EUR  200       215,225  

Honduras    0.9%

                                

Honduras Government International Bond, Sr. Unsec’d. Notes

     7.500       03/15/24       200       216,920  

Hungary    0.9%

                                

Hungary Government International Bond, Sr. Unsec’d. Notes

     7.625       03/29/41       154       216,737  

Indonesia    3.3%

                                

Indonesia Government International Bond,

        

Sr. Unsec’d. Notes, EMTN

     6.750       01/15/44       300       372,109  

Sr. Unsec’d. Notes

     8.500       10/12/35       150       210,114  

Sr. Unsec’d. Notes

     7.750       01/17/38       160       213,038  
       

 

 

  
          795,261  

Iraq    1.8%

                                

Iraq International Bond,

        

Unsec’d. Notes

     5.800       01/15/28       250       235,805  

Sr. Unsec’d. Notes

     6.752       03/09/23       200       199,854  
       

 

 

  
          435,659  

Jamaica    1.1%

                                

Jamaica Government International Bond, Sr. Unsec’d. Notes

     7.625       07/09/25       225       259,875  

Jordan    0.8%

                                

Jordan Government International Bond, Sr. Unsec’d. Notes

     7.375       10/10/47       200       194,764  

Kazakhstan    1.0%

                                

Kazakhstan Government International Bond, Sr. Unsec’d. Notes, EMTN

     6.500       07/21/45       200       238,340  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     15  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description   Interest
Rate		      Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

         

Kenya    1.7%

                                 

Kenya Government International Bond,

         

Sr. Unsec’d. Notes, 144A

     7.250 %       02/28/28       200     $ 206,435  

Sr. Unsec’d. Notes

     6.875        06/24/24       200       207,224  
        

 

 

  
           413,659  

Lebanon    2.7%

                                 

Lebanon Government International Bond,

         

Sr. Unsec’d. Notes, EMTN

     6.400        05/26/23       150       141,751  

Sr. Unsec’d. Notes, EMTN

     8.250        04/12/21       245       250,524  

Sr. Unsec’d. Notes, EMTN

     6.100        10/04/22       100       95,137  

Sr. Unsec’d. Notes

     6.650        04/22/24       75       71,017  

Sr. Unsec’d. Notes

     6.000        01/27/23       102       96,125  
        

 

 

  
           654,554  

Malaysia    0.5%

                                 

Malaysia Government Bond,

         

Sr. Unsec’d. Notes

     4.378        11/29/19     MYR  305       78,646  

Sr. Unsec’d. Notes

     3.580        09/28/18     MYR  200       51,004  
        

 

 

  
           129,650  

Mexico    0.8%

                                 

Mexico Government International Bond,

         

Sr. Unsec’d. Notes

     6.050        01/11/40       92       101,108  

Sr. Unsec’d. Notes, GMTN

     5.750        10/12/2110       94       92,590  
        

 

 

  
           193,698  

Mongolia    1.0%

                                 

Mongolia Government International Bond, Sr. Unsec’d. Notes, EMTN

     8.750        03/09/24       220       243,648  

Nigeria    2.2%

                                 

Nigeria Government International Bond,

         

Sr. Unsec’d. Notes, 144A

     7.143        02/23/30       200       204,500  

Sr. Unsec’d. Notes, 144A

     7.696        02/23/38       200       205,500  

Sr. Unsec’d. Notes

     5.625        06/27/22       130       132,275  
        

 

 

  
           542,275  

Oman    1.6%

                                 

Oman Government International Bond,

         

Sr. Unsec’d. Notes

     6.500        03/08/47       225       207,472  

Sr. Unsec’d. Notes, 144A

     6.750        01/17/48       200       188,280  
        

 

 

  
           395,752  

 

See Notes to Financial Statements.

 

16  

Description   Interest
Rate		      Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

         

Pakistan    2.1%

                                 

Pakistan Government International Bond, Sr. Unsec’d. Notes

     8.250 %       04/15/24       300     $ 311,747  

Second Pakistan International Sukuk Co. Ltd. (The), Sr. Unsec’d. Notes

     6.750        12/03/19       200       204,136  
        

 

 

  
           515,883  

Panama    1.7%

                                 

Panama Government International Bond,

         

Sr. Unsec’d. Notes

     9.375        04/01/29       105       149,363  

Sr. Unsec’d. Notes

     6.700        01/26/36       220       271,700  
        

 

 

  
           421,063  

Peru    2.0%

                                 

Peruvian Government International Bond,

         

Sr. Unsec’d. Notes

     8.750        11/21/33       265       390,212  

Sr. Unsec’d. Notes

     6.550        03/14/37       75       94,238  
        

 

 

  
           484,450  

Philippines    1.1%

                                 

Philippine Government International Bond, Sr. Unsec’d. Notes

     7.750        01/14/31       200       268,886  

Romania    0.5%

                                 

Romanian Government International Bond,

         

Sr. Unsec’d. Notes, EMTN

     3.875        10/29/35     EUR 11       14,094  

Sr. Unsec’d. Notes, EMTN

     6.125        01/22/44       98       113,680  
        

 

 

  
           127,774  

Russia    2.0%

                                 

Russian Foreign Bond,

         

Sr. Unsec’d. Notes

     12.750        06/24/28       50       80,809  

Sr. Unsec’d. Notes

     4.750        05/27/26        200       203,162  

Sr. Unsec’d. Notes

     5.625        04/04/42       200       209,600  
        

 

 

  
           493,571  

Senegal    0.8%

                                 

Senegal Government International Bond,
Sr. Unsec’d. Notes, 144A

     6.750        03/13/48       205       193,213  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     17  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

Description   Interest
Rate		      Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

         

South Africa    1.8%

                                 

Republic of South Africa Government International Bond,

         

Sr. Unsec’d. Notes

     4.665 %       01/17/24       100     $ 99,522  

Sr. Unsec’d. Notes

     6.250        03/08/41       130       135,597  

Sr. Unsec’d. Notes

     4.875        04/14/26       200       196,433  
        

 

 

  
           431,552  

Sri Lanka    2.4%

                                 

Sri Lanka Government International Bond,

         

Sr. Unsec’d. Notes, 144A

     5.750        04/18/23       200       198,735  

Sr. Unsec’d. Notes

     6.200        05/11/27       200       192,965  

Sr. Unsec’d. Notes

     5.750        01/18/22       200       201,482  
        

 

 

  
           593,182  

Turkey    4.7%

                                 

Turkey Government International Bond,

         

Sr. Unsec’d. Notes

     7.375        02/05/25       10       10,959  

Sr. Unsec’d. Notes

     6.875        03/17/36       230       236,213  

Sr. Unsec’d. Notes

     5.125        03/25/22       350       353,868  

Sr. Unsec’d. Notes

     4.875        04/16/43       200       159,050  

Sr. Unsec’d. Notes

     5.750        03/22/24       200       202,754  

Export Credit Bank of Turkey, Sr. Unsec’d. Notes

     5.375        10/24/23       200       195,600  
        

 

 

  
           1,158,444  

Ukraine    4.4%

                                 

Ukraine Government International Bond,

         

Sr. Unsec’d. Notes

     7.750        09/01/21       110       113,597  

Sr. Unsec’d. Notes

     7.750        09/01/23       160       161,286  

Sr. Unsec’d. Notes

     7.750        09/01/24       135       134,662  

Sr. Unsec’d. Notes

     7.750        09/01/25       115       114,138  

Sr. Unsec’d. Notes

     7.750        09/01/26       200       197,152  

Sr. Unsec’d. Notes

     7.750        09/01/27       150       147,078  

Ukreximbank Via Biz Finance PLC, Sr. Unsec’d. Notes

     9.750        01/22/25       200       209,250  
        

 

 

  
           1,077,163  

Uruguay    1.2%

                                 

Uruguay Government International Bond,

         

Sr. Unsec’d. Notes

     7.625        03/21/36       185       240,787  

Sr. Unsec’d. Notes

     5.100        06/18/50       60       58,950  
        

 

 

  
           299,737  

 

See Notes to Financial Statements.

 

18  

Description   Interest
Rate		      Maturity
Date		     Principal
Amount (000)#		     Value  

SOVEREIGN BONDS (Continued)

         

Venezuela    0.2%

                                 

Venezuela Government International Bond, Sr. Unsec’d. Notes(d)

     12.750 %       08/23/22       180     $ 56,700  

Vietnam    0.8%

                                 

Vietnam Government International Bond, Sr. Unsec’d. Notes

     4.800        11/19/24       200       203,251  

Zambia    0.8%

                                 

Zambia Government International Bond, Sr. Unsec’d. Notes

     8.500        04/14/24       200       201,970  
        

 

 

  

TOTAL SOVEREIGN BONDS
(cost $20,406,748)

            19,505,166  
        

 

 

  

TOTAL LONG-TERM INVESTMENTS
(cost $24,967,333)

            23,894,167  
        

 

 

  
                

Shares

        

SHORT-TERM INVESTMENT    0.8%

         

AFFILIATED MUTUAL FUND

         

Prudential Investment Portfolios 2 - PGIM Core
Ultra Short Bond Fund
(cost $183,504)(w)

          183,504       183,504  
        

 

 

  

TOTAL INVESTMENTS    98.6%
(cost $25,150,837)

            24,077,671  

Other assets in excess of liabilities(z)    1.4%

            351,788  
        

 

 

  

NET ASSETS    100.0%

          $ 24,429,459  
        

 

 

  

 

The following abbreviations are used in the semiannual report:

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.

EMTN—Euro Medium Term Note

GMTN—Global Medium Term Note

ARS—Argentine Peso

AUD—Australian Dollar

BRL—Brazilian Real

CHF—Swiss Franc

CLP—Chilean Peso

CNH—Chinese Renminbi (offshore)

COP—Colombian Peso

CZK—Czech Koruna

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     19  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

EUR—Euro

GBP—British Pound

HUF—Hungarian Forint

IDR—Indonesian Rupiah

ILS—Israeli Shekel

INR—Indian Rupee

JPY—Japanese Yen

KRW—South Korean Won

MXN—Mexican Peso

MYR—Malaysian Ringgit

PEN—Peruvian Nuevo Sol

PHP—Philippine Peso

PLN—Polish Zloty

RUB—Russian Ruble

SGD—Singapore Dollar

THB—Thai Baht

TRY—Turkish Lira

TWD—New Taiwanese Dollar

USD—United States Dollar

ZAR—South African Rand

# Principal amount is shown in U.S. dollars unless otherwise stated.
(cc) Variable rate instrument. The rate shown is based on the latest available information as of April 30, 2018. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description.
(d) Represents issuer in default on interest payments and/or principal repayment. Non-income producing security. Such securities may be post maturity.
(w) PGIM Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - PGIM Core Ultra Short Bond Fund.
(z) Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end:

 

Forward foreign currency exchange contracts outstanding at April 30, 2018:

 

Purchase Contracts

   Counterparty   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts:

 

Argentine Peso,

            

Expiring 05/03/18

   Citigroup Global Markets   ARS 2,462     $ 121,079     $ 119,608     $   —     $ (1,471 ) 

Australian Dollar,

            

Expiring 07/12/18

   Citigroup Global Markets   AUD 121       93,851       90,916       —       (2,935 ) 

 

See Notes to Financial Statements.

 

20  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

   Counterparty   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d):

 

Brazilian Real,

            

Expiring 05/03/18

   Barclays Capital Group   BRL 154     $ 46,434     $ 44,012     $ —     $ (2,422 ) 

Expiring 05/03/18

   Goldman Sachs & Co.   BRL 154       46,328       43,806       —       (2,522 ) 

Expiring 05/03/18

   Morgan Stanley   BRL 1,061       325,947       302,878       —       (23,069 ) 

Expiring 07/03/18

   Goldman Sachs & Co.   BRL 847       241,683       240,359       —       (1,324 ) 

British Pound,

            

Expiring 07/26/18

   JPMorgan Chase   GBP 67       94,404       93,154       —       (1,250 ) 

Chilean Peso,

            

Expiring 07/13/18

   Citigroup Global Markets   CLP 33,696       55,971       54,926       —       (1,045 ) 

Expiring 07/13/18

   Citigroup Global Markets   CLP 42,446       70,022       69,188       —       (834 ) 

Chinese Renminbi,

            

Expiring 07/24/18

   Barclays Capital Group   CNH 1       206       204       —       (2 ) 

Colombian Peso,

            

Expiring 06/15/18

   Barclays Capital Group   COP 252,504       87,715       89,837       2,122       —  

Expiring 06/15/18

   Citigroup Global Markets   COP 133,446       46,660       47,478       818       —  

Expiring 06/15/18

   Citigroup Global Markets   COP 155,353       55,971       55,272       —       (699 ) 

Expiring 06/15/18

   Citigroup Global Markets   COP 252,504       87,889       89,837       1,948       —  

Czech Koruna,

            

Expiring 07/12/18

   Citigroup Global Markets   CZK 3,007       146,318       142,474       —       (3,844 ) 

Hungarian Forint,

            

Expiring 07/24/18

   Deutsche Bank AG   HUF 28,715       114,514       111,166       —       (3,348 ) 

Indian Rupee,

            

Expiring 07/20/18

   Barclays Capital Group   INR 15,575       234,496       231,340       —       (3,156 ) 

Expiring 07/20/18

   Deutsche Bank AG   INR 16,301       245,631       242,136       —       (3,495 ) 

Expiring 07/20/18

   Morgan Stanley   INR 3,705       56,538       55,036       —       (1,502 ) 

Expiring 07/20/18

   UBS AG   INR 1,355       20,000       20,127       127       —  

Expiring 07/20/18

   UBS AG   INR 4,030       60,000       59,858       —       (142 ) 

Indonesian Rupiah,

          

Expiring 07/16/18

   Barclays Capital Group   IDR 509,040       36,000       36,266       266       —  

Expiring 07/16/18

   Barclays Capital Group   IDR 1,189,199       84,000       84,722       722       —  

Expiring 07/16/18

   Deutsche Bank AG   IDR 1,856,542       134,066       132,266       —       (1,800 ) 

Expiring 07/16/18

   JPMorgan Chase   IDR 1,133,595       81,000       80,761       —       (239 ) 

Japanese Yen,

            

Expiring 07/26/18

   Citigroup Global Markets   JPY 10,002       93,125       92,062       —       (1,063 ) 

Mexican Peso,

            

Expiring 06/28/18

   Morgan Stanley   MXN 835       45,000       44,215       —       (785 ) 

Expiring 06/28/18

   Morgan Stanley   MXN 7,233       384,608       383,132       —       (1,476 ) 

New Taiwanese Dollar,

          

Expiring 07/13/18

   Citigroup Global Markets   TWD 851       29,000       28,905       —       (95 ) 

Expiring 07/13/18

   Citigroup Global Markets   TWD 1,252       43,000       42,531       —       (469 ) 

Expiring 07/13/18

   Toronto Dominion   TWD 1,304       45,000       44,303       —       (697 ) 

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     21  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

   Counterparty   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d):

 

New Taiwanese Dollar, (cont’d.)

 

        

Expiring 07/13/18

   UBS AG   TWD 1,166     $ 40,000     $ 39,614     $ —     $ (386 ) 

Expiring 07/13/18

   UBS AG   TWD 1,835       63,000       62,369       —       (631 ) 

Expiring 07/13/18

   UBS AG   TWD 2,541       87,000       86,347       —       (653 ) 

Expiring 07/13/18

   UBS AG   TWD 918       31,000       31,207       207       —  

Expiring 07/13/18

   UBS AG   TWD 941       32,000       31,989       —       (11 ) 

Expiring 07/13/18

   UBS AG   TWD 2,239       76,000       76,075       75       —  

Peruvian Nuevo Sol,

          

Expiring 07/13/18

   Citigroup Global Markets   PEN 49       15,000       14,889       —       (111 ) 

Philippine Peso,

          

Expiring 06/14/18

   Deutsche Bank AG   PHP 4,899       94,038       94,445       407       —  

Expiring 06/14/18

   Barclays Capital Group   PHP 5,704       109,000       109,968       968       —  

Polish Zloty,

            

Expiring 07/24/18

   UBS AG   PLN 592       174,803       168,948       —       (5,855 ) 

Russian Ruble,

            

Expiring 07/13/18

   Barclays Capital Group   RUB 3,512       56,388       55,278       —       (1,110 ) 

Expiring 07/13/18

   Barclays Capital Group   RUB 5,898       101,269       92,823       —       (8,446 ) 

Singapore Dollar,

            

Expiring 05/11/18

   Bank of America   SGD 234       176,251       176,730       479       —  

Expiring 05/11/18

   Deutsche Bank AG   SGD 234       176,610       176,730       120       —  

Expiring 05/11/18

   Morgan Stanley   SGD 29       22,000       21,935       —       (65 ) 

South African Rand,

            

Expiring 06/12/18

   Barclays Capital Group   ZAR 654       55,594       52,172       —       (3,422 ) 

Expiring 06/12/18

   Citigroup Global Markets   ZAR 343       28,174       27,355       —       (819 ) 

Expiring 06/12/18

   Toronto Dominion   ZAR 2,574       213,556       205,273       —       (8,283 ) 

South Korean Won,

            

Expiring 05/09/18

   Barclays Capital Group   KRW 98,711       93,687       92,443       —       (1,244 ) 

Expiring 05/09/18

   Deutsche Bank AG   KRW  201,390       186,317       188,601       2,284       —  

Thai Baht,

            

Expiring 05/11/18

   Citigroup Global Markets   THB 1,071       34,000       33,946       —       (54 ) 

Expiring 05/11/18

   Citigroup Global Markets   THB 1,107       35,000       35,101       101       —  

Expiring 05/11/18

   Citigroup Global Markets   THB 1,484       47,000       47,036       36       —  

Expiring 05/11/18

   Citigroup Global Markets   THB 1,635       52,000       51,812       —       (188 ) 

Expiring 05/11/18

   Citigroup Global Markets   THB 2,611       84,000       82,765       —       (1,235 ) 

Expiring 05/11/18

   Citigroup Global Markets   THB 6,193       196,557       196,277       —       (280 ) 

Turkish Lira,

            

Expiring 06/12/18

   Barclays Capital Group   TRY 158       37,540       38,395       855       —  

Expiring 06/12/18

   Barclays Capital Group   TRY 376       92,656       91,268       —       (1,388 ) 

Expiring 06/12/18

   Citigroup Global Markets   TRY 30       7,400       7,341       —       (59 ) 

 

See Notes to Financial Statements.

 

22  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Purchase Contracts

   Counterparty   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d):

 

Turkish Lira, (cont’d.)

 

        

Expiring 06/12/18

   Citigroup Global Markets   TRY 75     $ 18,470     $ 18,137     $ —     $ (333 ) 

Expiring 06/12/18

   Citigroup Global Markets   TRY 149       37,977       36,075       —       (1,902 ) 

Expiring 06/12/18

   Citigroup Global Markets   TRY 231       56,288       56,187       —       (101 ) 

Expiring 06/12/18

   Citigroup Global Markets   TRY 261       63,516       63,486       —       (30 ) 

Expiring 06/12/18

   Citigroup Global Markets   TRY 303       74,933       73,563       —       (1,370 ) 

Expiring 06/12/18

   Goldman Sachs & Co.   TRY 285       68,300       69,086       786       —  
     

 

 

    

 

 

    

 

 

    

 

 

  
      $ 5,963,780     $ 5,878,441     $ 12,321     $ (97,660 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  

Sales Contracts

   Counterparty   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts:

 

Argentine Peso,

            

Expiring 05/03/18

   BNP Paribas   ARS 479     $ 23,365     $ 23,274     $ 91     $ —  

Expiring 05/03/18

   Citigroup Global Markets   ARS  1,117       54,519       54,286       233       —  

Expiring 05/03/18

   Citigroup Global Markets   ARS 857       41,716       41,645       71       —  

Australian Dollar,

            

Expiring 07/12/18

   Citigroup Global Markets   AUD 121       93,338       91,410       1,928       —  

Brazilian Real,

            

Expiring 05/03/18

   Citigroup Global Markets   BRL 384       111,942       109,597       2,345       —  

Expiring 05/03/18

   Goldman Sachs & Co.   BRL 847       242,923       241,810       1,113       —  

Expiring 05/03/18

   UBS AG   BRL 138       40,000       39,289       711       —  

Expiring 07/03/18

   BNP Paribas   BRL 325       92,278       92,137       141       —  

Chilean Peso,

            

Expiring 07/13/18

   Barclays Capital Group   CLP 23,591       39,000       38,455       545       —  

Expiring 07/13/18

   Barclays Capital Group   CLP 21,596       35,590       35,202       388       —  

Expiring 07/13/18

   Barclays Capital Group   CLP 10,441       17,141       17,020       121       —  

Expiring 07/13/18

   Citigroup Global Markets   CLP 24,159       39,614       39,380       234       —  

Expiring 07/13/18

   UBS AG   CLP 18,005       30,000       29,348       652       —  

Colombian Peso,

            

Expiring 06/15/18

   Citigroup Global Markets   COP  102,816       36,000       36,580       —       (580 ) 

Czech Koruna,

            

Expiring 07/12/18

   Morgan Stanley   CZK 394       19,000       18,677       323       —  

Expiring 07/12/18

   UBS AG   CZK 1,947       92,289       92,275       14       —  

Euro,

            

Expiring 07/26/18

   Citigroup Global Markets   EUR 152       184,578       184,729       —       (151 ) 

Expiring 07/26/18

   Goldman Sachs & Co.   EUR 23       28,640       28,132       508       —  

Expiring 07/26/18

   Toronto Dominion   EUR 611       751,589       742,658       8,931       —  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     23  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Sales Contracts

   Counterparty   Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d):

 

Hungarian Forint,

            

Expiring 07/24/18

   Morgan Stanley   HUF 9,765     $ 38,000     $ 37,802     $ 198     $ —  

Israeli Shekel,

            

Expiring 07/26/18

   Citigroup Global Markets   ILS 566       160,603       158,193       2,410       —  

Japanese Yen,

            

Expiring 07/26/18

   Citigroup Global Markets   JPY 10,067       93,125       92,657       468       —  

Mexican Peso,

            

Expiring 06/28/18

   Citigroup Global Markets   MXN 715       38,000       37,880       120       —  

New Taiwanese Dollar,

            

Expiring 07/13/18

   Barclays Capital Group   TWD 12,528       432,347       425,751       6,596       —  

Peruvian Nuevo Sol,

            

Expiring 07/13/18

   UBS AG   PEN 65       20,000       19,901       99       —  

Philippine Peso,

            

Expiring 06/14/18

   Barclays Capital Group   PHP 4,896       92,716       94,398       —       (1,682 ) 

Expiring 06/14/18

   Barclays Capital Group   PHP 4,392       84,000       84,681       —       (681 ) 

Expiring 06/14/18

   Barclays Capital Group   PHP 2,147       41,000       41,400       —       (400 ) 

Expiring 06/14/18

   Barclays Capital Group   PHP 1,996       38,000       38,480       —       (480 ) 

Expiring 06/14/18

   Barclays Capital Group   PHP 1,263       24,000       24,347       —       (347 ) 

Expiring 06/14/18

   Deutsche Bank AG   PHP 1,349       25,715       26,003       —       (288 ) 

Polish Zloty,

            

Expiring 07/24/18

   Morgan Stanley   PLN 220       63,000       62,736       264       —  

Russian Ruble,

            

Expiring 07/13/18

   Barclays Capital Group   RUB 3,717       58,600       58,489       111       —  

Expiring 07/13/18

   Barclays Capital Group   RUB 1,867       29,800       29,383       417       —  

Expiring 07/13/18

   Barclays Capital Group   RUB 1,772       29,160       27,887       1,273       —  

Singapore Dollar,

            

Expiring 05/11/18

   JPMorgan Chase   SGD 40       30,000       30,045       —       (45 ) 

Expiring 05/11/18

   Morgan Stanley   SGD 90       69,000       68,191       809       —  

Expiring 05/11/18

   Morgan Stanley   SGD 32       24,000       23,964       36       —  

Expiring 05/11/18

   Morgan Stanley   SGD 25       19,000       19,047       —       (47 ) 

South African Rand,

            

Expiring 06/12/18

   Morgan Stanley   ZAR 615       49,000       49,050       —       (50 ) 

South Korean Won,

            

Expiring 05/09/18

   BNP Paribas   KRW 66,887       62,000       62,640       —       (640 ) 

Expiring 05/09/18

   BNP Paribas   KRW 37,191       35,000       34,829       171       —  

Expiring 05/09/18

   BNP Paribas   KRW 32,523       30,000       30,458       —       (458 ) 

Expiring 05/09/18

   Citigroup Global Markets   KRW   52,511       49,000       49,176       —       (176 ) 

Swiss Franc,

            

Expiring 07/24/18

   Bank of America   CHF 194       200,447       197,689       2,758       —  

 

See Notes to Financial Statements.

 

24  

Forward foreign currency exchange contracts outstanding at April 30, 2018 (continued):

 

Sales Contracts

   Counterparty     Notional
Amount
(000)		     Value at
Settlement
Date		     Current
Value		     Unrealized
Appreciation		     Unrealized
Depreciation		  

OTC forward foreign currency exchange contracts (cont’d):

 

Thai Baht,

            

Expiring 05/11/18

     Citigroup Global Markets     THB  2,743     $ 88,000     $ 86,949     $ 1,051     $ —  

Expiring 05/11/18

     Citigroup Global Markets     THB 1,573       50,000       49,850       150       —  

Expiring 05/11/18

     Citigroup Global Markets     THB 1,540       49,000       48,798       202       —  

Expiring 05/11/18

     Citigroup Global Markets     THB 913       29,000       28,943       57       —  

Expiring 05/11/18

     Citigroup Global Markets     THB 690       22,000       21,885       115       —  

Expiring 05/11/18

     Citigroup Global Markets     THB 566       18,000       17,929       71       —  

Turkish Lira,

            

Expiring 06/12/18

     Barclays Capital Group     TRY 222       56,065       53,956       2,109       —  

Expiring 06/12/18

     UBS AG     TRY 375       92,838       90,939       1,899       —  

Expiring 06/12/18

     UBS AG     TRY 368       93,321       89,345       3,976       —  

Expiring 06/12/18

     UBS AG     TRY 299       74,742       72,695       2,047       —  

Expiring 06/12/18

     UBS AG     TRY 223       56,038       54,209       1,829       —  
     

 

 

    

 

 

    

 

 

    

 

 

  
        $4,438,039     $ 4,396,479       47,585       (6,025 ) 
     

 

 

    

 

 

    

 

 

    

 

 

  
          $ 59,906     $ (103,685 ) 
         

 

 

    

 

 

  

 

Settlement

   Type   Notional
Amount
(000)		     In Exchange
For (000)		     Unrealized
Appreciation		     Unrealized
Depreciation		     Counterparty  

OTC cross currency exchange contract:

 

  

07/24/2018

   Buy   CHF   98       EUR       82     $ 50     $   —       Citigroup Global Markets  

 

Fair Value Measurements:

 

Various inputs are used in determining the value of the Series’ investments. These inputs are summarized in the three broad levels listed below.

 

Level 1—unadjusted quoted prices generally in active markets for identical securities.

 

Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.

 

Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     25  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

The following is a summary of the inputs used as of April 30, 2018 in valuing such portfolio securities:

 

       Level 1           Level 2           Level 3     

Investments in Securities

      

Corporate Bonds

      

Argentina

   $   —     $ 169,260     $   —  

Brazil

     —       365,376       —  

Chile

     —       206,930       —  

China

     —       396,603       —  

India

     —       192,154       —  

Indonesia

     —       241,799       —  

Malaysia

     —       194,347       —  

Mexico

     —       1,148,438       —  

Russia

     —       365,076       —  

South Africa

     —       452,553       —  

Trinidad and Tobago

     —       137,012       —  

Tunisia

     —       171,879       —  

Venezuela

     —       347,574       —  

Sovereign Bonds

      

Angola

     —       224,540       —  

Argentina

     —       1,506,659       —  

Armenia

     —       214,650       —  

Azerbaijan

     —       273,665       —  

Bahrain

     —       184,320       —  

Belarus

     —       209,304       —  

Brazil

     —       987,433       —  

Colombia

     —       501,112       —  

Congo

     —       59,555       —  

Costa Rica

     —       387,388       —  

Cote d’lvoire

     —       328,852       —  

Dominican Republic

     —       693,927       —  

Ecuador

     —       699,750       —  

Egypt

     —       575,699       —  

El Salvador

     —       531,998       —  

Gabon

     —       194,918       —  

Ghana

     —       258,540       —  

Greece

     —       215,225       —  

Honduras

     —       216,920       —  

Hungary

     —       216,737       —  

Indonesia

     —       795,261       —  

Iraq

     —       435,659       —  

Jamaica

     —       259,875       —  

Jordan

     —       194,764       —  

Kazakhstan

     —       238,340       —  

Kenya

     —       413,659       —  

 

See Notes to Financial Statements.

 

26  

       Level 1           Level 2           Level 3     

Investments in Securities (continued)

      

Sovereign Bonds (continued)

      

Lebanon

   $ —     $ 654,554     $ —  

Malaysia

     —       129,650       —  

Mexico

     —       193,698       —  

Mongolia

     —       243,648       —  

Nigeria

     —       542,275       —  

Oman

     —       395,752       —  

Pakistan

     —       515,883       —  

Panama

     —       421,063       —  

Peru

     —       484,450       —  

Philippines

     —       268,886       —  

Romania

     —       127,774       —  

Russia

     —       493,571       —  

Senegal

     —       193,213       —  

South Africa

     —       431,552       —  

Sri Lanka

     —       593,182       —  

Turkey

     —       1,158,444       —  

Ukraine

     —       1,077,163       —  

Uruguay

     —       299,737       —  

Venezuela

     —       56,700       —  

Vietnam

     —       203,251       —  

Zambia

     —       201,970       —  

Affiliated Mutual Fund

     183,504       —       —  

Other Financial Instruments*

 

OTC Forward Foreign Currency Exchange Contracts

     —       (43,779 )      —  

OTC Cross Currency Exchange Contract

     —       50       —  
 

 

 

    

 

 

    

 

 

  

Total

   $ 183,504     $ 23,850,438     $   —  
 

 

 

    

 

 

    

 

 

  

 

* Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards and centrally cleared swap contracts, which are recorded at the unrealized appreciation (depreciation) on the instrument, and OTC swap contracts which are recorded at fair value.

 

During the period, there were no transfers between Level 1, Level 2 and Level 3 to report.

 

The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of April 30, 2018 were as follows:

 

Industry Classification:

 

Sovereign Bonds

     79.8 % 

Oil & Gas

     11.4  

Electric

     1.9  

Chemicals

     1.7  

Banks

     1.6  

Mining

     0.8  

Affiliated Mutual Fund

     0.8 % 

Holding Companies—Diversified

     0.6  
 

 

 

  
    98.6  
Other assets in excess of liabilities     1.4  
 

 

 

  
    100.0 % 
 

 

 

  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     27  

Schedule of Investments (unaudited) (continued)

as of April 30, 2018

 

 

Effects of Derivative Instruments on the Financial Statements and Primary Underlying Risk Exposure:

 

The Series invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is foreign exchange contracts risk. The effect of such derivative instruments on the Series’ financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.

 

Fair values of derivative instruments as of April 30, 2018 as presented in the Statement of Assets and Liabilities:

 

Derivatives not accounted

for as hedging instruments,

carried at fair value

  

Asset Derivatives

    

Liability Derivatives

  
 

Balance Sheet
Location

   Fair
Value		    

Balance Sheet
Location

    Fair
Value		  
Foreign exchange contracts   Unrealized appreciation on OTC cross currency exchange contracts   $ 50     —    $ —  
Foreign exchange contracts   Unrealized appreciation on OTC forward foreign currency exchange contracts     59,906     Unrealized depreciation on OTC forward foreign currency exchange contracts      103,685  
   

 

 

       

 

 

  

Total

     $ 59,956        $ 103,685  
   

 

 

       

 

 

  

 

The effects of derivative instruments on the Statement of Operations for the period ended April 30, 2018 are as follows:

 

Amount of Realized Gain (Loss) on Derivatives Recognized in Income

  

Derivatives not accounted for as hedging

instruments, carried at fair value

   Forward & Cross
Currency
Exchange
Contracts		  

Foreign exchange contracts

   $ (34,499 ) 
 

 

 

  

 

Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income

  

Derivatives not accounted for as hedging

instruments, carried at fair value

   Forward & Cross
Currency
Contracts		  

Foreign exchange contracts

   $ (43,729 ) 
 

 

 

  

 

See Notes to Financial Statements.

 

28  

For the period ended April 30, 2018, the Series’ average volume of derivative activities is as follows:

 

Forward

Foreign

Currency

Exchange

Contracts—

Purchased(1)

     Forward
Foreign
Currency
Exchange
Contracts—
Sold(1)		     Cross
Currency
Exchange
Contracts(2)		  
$ 5,824,551     $ 4,378,627     $ 49,643  

 

(1) Value at Settlement Date.
(2) Value at Trade Date.

 

Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:

 

The Series invested in OTC derivatives during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for OTC derivatives, where the legal right to set-off exists, is presented in the summary below.

 

Offsetting of OTC derivative assets and liabilities:

 

Counterparty

   Gross
Amounts of
Recognized
Assets(1)		     Gross
Amounts of
Recognized
Liabilities(1)		     Net
Amounts of
Recognized
Assets/
(Liabilities)		     Collateral
Pledged/
(Received)(2)		     Net
Amount		  

Bank of America

   $ 3,237     $ —     $ 3,237     $   —     $ 3,237  

Barclays Capital Group

     16,493       (24,780 )      (8,287 )      —       (8,287 ) 

BNP Paribas

     403       (1,098 )      (695 )      —       (695 ) 

Citigroup Global Markets

     12,408       (19,844 )      (7,436 )      —       (7,436 ) 

Deutsche Bank AG

     2,811       (8,931 )      (6,120 )      —       (6,120 ) 

Goldman Sachs & Co.

     2,407       (3,846 )      (1,439 )      —       (1,439 ) 

JPMorgan Chase

     —       (1,534 )      (1,534 )      —       (1,534 ) 

Morgan Stanley

     1,630       (26,994 )      (25,364 )      —       (25,364 ) 

Toronto Dominion

     8,931       (8,980 )      (49 )      —       (49 ) 

UBS AG

     11,636       (7,678 )      3,958       —       3,958  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 59,956     $ (103,685 )    $ (43,729 )    $ —     $ (43,729 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Includes unrealized appreciation/(depreciation) on swaps and forwards, premiums paid/(received) on swap agreements and market value of purchased and written options, as represented on the Statement of Assets and Liabilities.
(2) Collateral amount disclosed by the Fund is limited to the Fund's OTC derivative exposure by counterparty.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     29  

Statement of Assets & Liabilities (unaudited)

as of April 30, 2018

 

Assets

         

Investments at value:

   

Unaffiliated investments (cost $24,967,333)

    $ 23,894,167  

Affiliated investments (cost $183,504)

      183,504  

Cash

      8,940  

Foreign currency, at value (cost $2,389)

      2,330  

Interest receivable

      328,638  

Receivable for investments sold

      258,118  

Unrealized appreciation on OTC forward foreign currency exchange contracts

      59,906  

Due from Manager

      9,212  

Unrealized appreciation on OTC cross currency exchange contracts

      50  

Prepaid expenses

      49,270  
  

 

 

  

Total assets

      24,794,135  
  

 

 

  

Liabilities

         

Payable for investments purchased

      239,621  

Unrealized depreciation on OTC forward foreign currency exchange contracts

      103,685  

Custodian and accounting fees payable

      20,799  

Accrued expenses and other liabilities

      530  

Affiliated transfer agent fee payable

      31  

Distribution fee payable

      10  
  

 

 

  

Total liabilities

      364,676  
  

 

 

  

Net Assets

    $ 24,429,459  
  

 

 

  
          

Net assets were comprised of:

   

Common Stock, at par

    $ 25,699  

Paid-in capital in excess of par

      25,661,605  
  

 

 

  
     25,687,304  

Distributions in excess of net investment income

      (69,008 ) 

Accumulated net realized loss on investment and foreign currency transactions

      (66,327 ) 

Net unrealized depreciation on investments and foreign currencies

      (1,122,510 ) 
  

 

 

  

Net assets, April 30, 2018

    $ 24,429,459  
  

 

 

  

 

See Notes to Financial Statements.

 

30  

Class A

         

Net asset value, offering price and redemption price per share,
($9,686 ÷ 1,019 shares of beneficial interest issued and outstanding)

    $ 9.51  

Maximum sales charge (4.50% of offering price)

      0.45  
  

 

 

  

Maximum offering price to public

    $ 9.96  
  

 

 

  

Class C

         

Net asset value, offering price and redemption price per share,
($9,659 ÷ 1,016 shares of beneficial interest issued and outstanding)

    $ 9.50  
  

 

 

  

Class Z

         

Net asset value, offering price and redemption price per share,
($154,914 ÷ 16,295 shares of beneficial interest issued and outstanding)

    $ 9.51  
  

 

 

  

Class R6

         

Net asset value, offering price and redemption price per share,
($24,255,200 ÷ 2,551,539 shares of beneficial interest issued and outstanding)

    $ 9.51  
  

 

 

  

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     31  

Statement of Operations (unaudited)

Period Ended April 30, 2018*

 

Net Investment Income (Loss)

         

Income

   

Interest income

    $ 492,790  

Affiliated dividend income

      5,832  
  

 

 

  

Total income

      498,622  
  

 

 

  

Expenses

   

Management fee

      68,342  

Distribution fee(a)

      48  

Custodian and accounting fees

      37,855  

Registration fees(a)

      29,384  

Audit fee

      15,123  

Legal fees and expenses

      10,802  

Shareholders’ reports

      6,913  

Directors’ fees

      4,320  

Transfer agent’s fees and expenses (including affiliated expense of $86)(a)

      2,116  

Miscellaneous

      6,698  
  

 

 

  

Total expenses

      181,601  

Less: Fee waiver and/or expense reimbursement(a)

      (111,275 ) 
  

 

 

  

Net expenses

      70,326  
  

 

 

  

Net investment income (loss)

      428,296  
  

 

 

  

Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions

         

Net realized gain (loss) on:

   

Investment transactions

      (39,670 ) 

Forward and cross currency transactions

      (34,499 ) 

Foreign currency transactions

      7,842  
  

 

 

  
     (66,327 ) 
  

 

 

  

Net change in unrealized appreciation (depreciation) on:

   

Investments

      (1,073,166 ) 

Forward and cross currency contracts

      (43,729 ) 

Foreign currencies

      (5,615 ) 
  

 

 

  
     (1,122,510 ) 
  

 

 

  

Net gain (loss) on investment and foreign currency transactions

      (1,188,837 ) 
  

 

 

  

Net Increase (Decrease) In Net Assets Resulting From Operations

    $ (760,541 ) 
  

 

 

  

 

* Commencement of operations was December 12, 2017.
(a) Class specific expenses and waivers were as follows:

 

    Class A     Class C     Class Z     Class R6  

Distribution fee

     10       38       —       —  

Registration fees

     7,346       7,346       7,346       7,346  

Transfer agent’s fees and expenses

     691       691       691       43  

Fee waiver and/or expense reimbursement

     (8,067 )      (8,066 )      (8,488 )      (86,654 ) 

 

See Notes to Financial Statements.

 

32  

Statements of Changes in Net Assets (unaudited)

 

     December 12, 2017*
through
April 30, 2018		  

Increase (Decrease) in Net Assets

         

Operations

   

Net investment income (loss)

    $ 428,296  

Net realized gain (loss) on investment and foreign currency transactions

      (66,327 ) 

Net change in unrealized appreciation (depreciation) on investments and foreign currencies

      (1,122,510 ) 
  

 

 

  

Net increase (decrease) in net assets resulting from operations

      (760,541 ) 
  

 

 

  

Dividends from net investment income

   

Class A

      (186 ) 

Class C

      (158 ) 

Class Z

      (3,026 ) 

Class R6

      (493,934 ) 
  

 

 

  
     (497,304 ) 
  

 

 

  

Series share transactions

   

Net proceeds from shares sold

      25,190,000  

Net asset value of shares issued in reinvestment of dividends and distributions

      497,304  
  

 

 

  

Net increase (decrease) in net assets from share transactions

      25,687,304  
  

 

 

  

Total increase (decrease)

      24,429,459  

Net Assets:

         

Beginning of period

      —  
  

 

 

  

End of period(a)

    $ 24,429,459  
  

 

 

  

(a) Includes undistributed/(distributions in excess of) net investment income of:

    $ (69,008 ) 
  

 

 

  

 

* Commencement of operations.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     33  

Notes to Financial Statements (unaudited)

 

Prudential World Fund, Inc. (the “Fund”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company and currently consists of seven series: PGIM Jennison Emerging Markets Equity Opportunities Fund (formerly known as Prudential Jennison Emerging Markets Equity Fund), PGIM Jennison Global Infrastructure Fund, PGIM Jennison Global Opportunities Fund, PGIM Jennison International Opportunities Fund and PGIM QMA International Equity Fund, each of which are diversified funds and PGIM Emerging Markets Debt Hard Currency Fund and PGIM Emerging Markets Debt Local Currency Fund, each of which are non-diversified funds for purposes of the 1940 Act and may invest a greater percentage of their assets in the securities of a single company or other issuer than a diversified fund. Investing in a non-diversified fund involves greater risk than investing in a diversified fund because a loss resulting from the decline in value of any one security may represent a greater portion of the total assets of a non-diversified fund. These financial statements relate only to the PGIM Emerging Markets Debt Hard Currency Fund (the “Series”). The Fund commenced operations on December 12, 2017. Effective June 11, 2018, the Series’ name was changed by replacing “Prudential” with “PGIM” in each Series’ name and Class Q shares were renamed Class R6 shares.

 

The investment objective of the Series is total return, through a combination of current income and capital appreciation.

 

1. Accounting Policies

 

The Series follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Series consistently follows such policies in the preparation of its financial statements.

 

Securities Valuation: The Series holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Under the current valuation procedures, the Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the Series to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily

 

34  

available or not deemed representative of fair value. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.

 

For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some of the Series’ foreign investments may change on days when investors cannot purchase or redeem Series shares.

 

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 Schedule of Investments.

 

Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.

 

Fixed income securities traded in the OTC market are generally classified as Level 2 in the fair value hierarchy. Such fixed income securities are typically valued using the market approach which generally involves obtaining data from an approved independent third-party vendor source. The Series utilizes the market approach as the primary method to value securities when market prices of identical or comparable instruments are available. The third-party vendors’ valuation techniques used to derive the evaluated bid price are based on evaluating observable inputs, including but not limited to, yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations and reported trades. Certain Level 3 securities are also valued using the market approach when obtaining a single broker quote or when utilizing transaction prices for identical securities that have been used in excess of five business days. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.

 

OTC derivative instruments are generally classified as Level 2 in the fair value hierarchy. Such derivative instruments are typically valued using the market approach and/or income approach which generally involves obtaining data from an approved independent third-party vendor source. The Series utilizes the market approach when quoted prices in broker-dealer markets are available but also includes consideration of alternative valuation approaches, including the income approach. In the absence of reliable market quotations, the income approach is typically utilized for purposes of valuing OTC derivatives such as interest rate swaps based on a discounted cash flow analysis whereby the value of the instrument is equal to the present value of its future cash inflows or outflows. Such analysis includes projecting future cash flows and determining the discount rate (including the present value factors that affect the discount rate) used to discount the future cash flows.

 

PGIM Emerging Markets Debt Hard Currency Fund     35  

Notes to Financial Statements (unaudited) (continued)

 

In addition, the third-party vendors’ valuation techniques used to derive the evaluated OTC derivative price is based on evaluating observable inputs, including but not limited to, underlying asset prices, indices, spreads, interest rates and exchange rates. Certain OTC derivatives may be classified as Level 3 when valued using the market approach by obtaining a single broker quote or when utilizing unobservable inputs in the income approach. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.

 

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.

 

When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.

 

Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the 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 transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Series’ Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Series’ investments in Rule 144A securities could be impaired if trading does not develop or declines.

 

36  

Foreign Currency Translation: The books and records of the Series are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:

 

(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;

 

(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.

 

Although the net assets of the Series are presented at the foreign exchange rates and market values at the close of the period, the Series does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Series does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions. Notwithstanding the above, the Series does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain (loss) upon the sale or maturity of foreign currency denominated debt obligations; such amounts are included in net realized gains (losses) on foreign currency transactions.

 

Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Series’ books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.

 

Forward and Cross Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The Series enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or specific receivables and payables denominated in a foreign currency and to gain exposure to certain currencies. The contracts are valued daily at current forward exchange rates and any unrealized gain (loss) is included in net unrealized appreciation (depreciation) on investments and foreign currencies. Gain (loss) is realized on the settlement date of the contract equal to the difference between the settlement value of the original and negotiated forward contracts. This gain (loss), if any, is included in net realized gain (loss) on forward and cross currency contract 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

 

PGIM Emerging Markets Debt Hard Currency Fund     37  

Notes to Financial Statements (unaudited) (continued)

 

counterparty at the end of the contract’s life. A cross currency contract is a forward contract where a specified amount of one foreign currency will be exchanged for a specified amount of another foreign currency.

 

Master Netting Arrangements: The Series is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Series. A master netting arrangement between the Series and the counterparty permits the Series to offset amounts payable by the Series to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Series to cover the Series’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.

 

Forward and cross currency 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.

 

Concentration of Risk: The ability of debt securities issuers (other than those issued or guaranteed by the U.S. Government) held by the Series to meet their obligations may be affected by the economic or political developments in a specific industry, region or country. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political or economic instability or the level of the governmental supervision and regulation of foreign securities markets.

 

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day.

 

 

38  

Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements.

 

Taxes: It is the Series’ policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net investment income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends, interest and capital gains, if any, are recorded, net of reclaimable amounts, at the time the related income is earned.

 

Dividends and Distributions: The Series expects to declare dividends of its net investment income daily and pay such dividends monthly. Distributions of net realized capital and currency gains, if any, are declared and paid 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-date. Permanent book/tax differences relating to income and gain(loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.

 

Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.

 

2. Agreements

 

The Fund, on behalf of the Series, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Series. PGIM Investments administers the corporate affairs of the Series and, in connection therewith, furnishes the Series with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Series’ custodian (the Custodian), and the Series’ transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Series. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Series, including, but not limited to, the custodian, transfer agent, and accounting agent.

 

PGIM Investments has entered into a subadvisory agreement with PGIM, Inc., which provides subadvisory services to the Series through its PGIM Fixed Income unit. The subadvisory agreement provides that PGIM, Inc. will furnish investment advisory services in connection with the management of the Series. In connection therewith, PGIM, Inc. is

 

PGIM Emerging Markets Debt Hard Currency Fund     39  

Notes to Financial Statements (unaudited) (continued)

 

obligated to keep certain books and records of the Series. PGIM Investments pays for the services of PGIM, Inc., the cost of compensation of officers of the Series, occupancy and certain clerical and bookkeeping costs of the Series. The Series bears all other costs and expenses.

 

The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of 0.72% on average daily net assets up to and including $1 billion; 0.70% from $1 billion to 3 billion of average daily net assets; 0.68% from $3 billion to 5 billion of average daily net assets; 0.67% from 5 billion to 10 billion of average daily net assets; and 0.66% on average daily net assets exceeding $10 billion. The effective management fee rate before any waivers and/or expense reimbursements, was 0.72% for the period ended April 30, 2018.

 

PGIM Investments has contractually agreed, through February 28, 2019, to limit total annual Series operating expenses after fee waivers and/or expense reimbursements to 1.05% of average daily net assets for Class A shares, 1.80% of average daily net assets for Class C shares, 0.80% of average daily net assets for Class Z shares, and 0.74% of average daily net assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Series expenses such as dividend and interest expense and broker charges on short sales. Fees and/or expenses waived and/or reimbursed by the Manager may be recouped by the Manager within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year. The waivers and/or expense reimbursements exceeded the effective management fee rate for the period ended April 30, 2018.

 

The Fund, on behalf of the Series, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) who acts as the distributor of the Class A, Class C, Class Z and Class R6 shares. The Series compensates PIMS for distributing and servicing the Series’ Class A and Class C, pursuant to plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z or Class R6 shares of the Series.

 

Pursuant to the Distribution Plans, the Series compensates PIMS for distribution related activities at an annual rate of up to 0.25% and 1% of the average daily net assets of the Class A and C shares, respectively.

 

PIMS has advised the Series that it has not received any front-end sales charges resulting from sales of Class A shares during the period ended April 30, 2018. From these fees,

 

40  

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 period ended April 30, 2018 it did not received any contingent deferred sales charges imposed upon redemptions by certain Class A and Class C shareholders.

 

PGIM Investments, PGIM, Inc. and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).

 

3. Other Transactions with Affiliates

 

Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the Series’ transfer agent. Transfer agent’s fees and expenses in the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.

 

The Series may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended April 30, 2018 no such transactions were entered into by the Series.

 

The Series may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. Earnings from the Core Fund are disclosed on the Statement of Operations as “Affiliated dividend income”.

 

4. Portfolio Securities

 

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the period ended April 30, 2018 were $26,951,274 and $1,932,713, respectively.

 

A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual fund for the period ended April 30, 2018, is presented as follows:

 

Affiliated

Mutual Fund*

   Value,
Beginning
of Period		     Cost of
Purchases		     Proceeds
from Sales		     Change in
Unrealized
Gain
(Loss)		     Realized
Gain
(Loss)		     Value,
End of
Period		     Shares,
End of
Period		     Dividend
Income		  

PGIM Core Ultra Short Bond Fund

   $             —     $ 26,230,135     $ 26,046,631     $             —     $             —     $ 183,504       183,504     $ 5,832  

 

* The Fund did not have any capital gain distributions during the reporting period.

 

PGIM Emerging Markets Debt Hard Currency Fund     41  

Notes to Financial Statements (unaudited) (continued)

 

 

5. Tax Information

 

The United States federal income tax basis of the Series’ investments and the net unrealized depreciation as of April 30, 2018 were as follows:

 

Tax Basis

    $ 25,156,452  
  

 

 

  

Gross Unrealized Appreciation

      58,289  

Gross Unrealized Depreciation

      (1,180,799 ) 
  

 

 

  

Net Unrealized Depreciation

    $ (1,122,510 ) 
  

 

 

  

 

Management has analyzed the Series’ tax positions taken and has concluded that no provision for income tax is required in the Series’ financial statements for the current reporting period. The Series’ federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.

 

6. Capital and Ownership

 

The Series offers Class A, Class C, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 4.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class Z and Class R6 shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.

 

Under certain circumstances, an exchange may be made from specified share classes of the Series to one or more other share classes of the Series as presented in the table of transactions in shares of common stock.

 

The Fund is authorized to issue 4.8 billion shares of common stock, with a par value of $0.01 per share, which is divided into seven series. There are 600 million shares authorized for the Series, divided into four classes, designated Class A, Class C, Class Z and Class R6 common stock, each of which consists of 100 million, 100 million, 200 million, and 200 million authorized shares, respectively.

 

As of April 30, 2018, Prudential, through its affiliate entities, owned 1,019 Class A shares, 1,016 Class C shares, 1,020 Class Z shares and 2,551,539 Class R6 shares of the Series. At reporting period end, Prudential owned 99.3% of the Series’ outstanding shares.

 

42  

Transactions in shares of common stock were as follows:

 

Class A

      Shares        Amount  

Period ended April 30, 2018*:

          

Shares sold

        1,000        $ 10,000  

Shares issued in reinvestment of dividends and distributions

        19          186  
    

 

 

       

 

 

  

Net increase (decrease) in shares outstanding

        1,019        $ 10,186  
    

 

 

       

 

 

  

Class C

                  

Period ended April 30, 2018*:

          

Shares sold

        1,000        $ 10,000  

Shares issued in reinvestment of dividends and distributions

        16          158  
    

 

 

       

 

 

  

Net increase (decrease) in shares outstanding

        1,016        $ 10,158  
    

 

 

       

 

 

  

Class Z

                  

Period ended April 30, 2018*:

          

Shares sold

        15,985        $ 160,000  

Shares issued in reinvestment of dividends and distributions

        310          3,026  
    

 

 

       

 

 

  

Net increase (decrease) in shares outstanding

        16,295        $ 163,026  
    

 

 

       

 

 

  

Class R6

                  

Period ended April 30, 2018*:

          

Shares sold

        2,501,000        $ 25,010,000  

Shares issued in reinvestment of dividends and distributions

        50,539          493,934  
    

 

 

       

 

 

  

Net increase (decrease) in shares outstanding

        2,551,539        $ 25,503,934  
    

 

 

       

 

 

  

 

* Commencement of operations was December 12, 2017.

 

PGIM Emerging Markets Debt Hard Currency Fund     43  

 

Financial Highlights (unaudited)

Class A Shares  
    

December 12,

2017(a)

through

April 30,

2018

  
Per Share Operating Performance(b):        
Net Asset Value, Beginning of Period     $10.00  
Income (loss) from investment operations:        
Net investment income (loss)     0.16  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     (0.47 ) 
Total from investment operations     (0.31 ) 
Less Dividends:        
Dividends from net investment income     (0.18 ) 
Net asset value, end of period     $9.51  
Total Return(c):     (3.09)%  
 
Ratios/Supplemental Data:  
Net assets, end of period (000)     $10  
Average net assets (000)     $10  
Ratios to average net assets(d):        
Expenses after waivers and/or expense reimbursement     1.05% (e) 
Expenses before waivers and/or expense reimbursement     213.63% (e) 
Net investment income (loss)     4.16% (e) 
Portfolio turnover rate(g)     8% (f) 

 

(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

44  

Class C Shares  
    

December 12,

2017(a)

through

April 30,

2018

  
Per Share Operating Performance(b):        
Net Asset Value, Beginning of Period     $10.00  
Income (loss) from investment operations:        
Net investment income (loss)     0.13  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     (0.47 ) 
Total from investment operations     (0.34 ) 
Less Dividends:        
Dividends from net investment income     (0.16 ) 
Net asset value, end of period     $9.50  
Total Return(c):     (3.47)%  
 
Ratios/Supplemental Data:  
Net assets, end of period (000)     $10  
Average net assets (000)     $10  
Ratios to average net assets(d):        
Expenses after waivers and/or expense reimbursement     1.80% (e) 
Expenses before waivers and/or expense reimbursement     214.59% (e) 
Net investment income (loss)     3.41% (e) 
Portfolio turnover rate(g)     8% (f) 

 

(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     45  

Financial Highlights (unaudited) (continued)

 

Class Z Shares  
    

December 12,

2017(a)

through

April 30,

2018

  
Per Share Operating Performance(b):        
Net Asset Value, Beginning of Period     $10.00  
Income (loss) from investment operations:        
Net investment income (loss)     0.17  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     (0.47 ) 
Total from investment operations     (0.30 ) 
Less Dividends:        
Dividends from net investment income     (0.19 ) 
Net asset value, end of period     $9.51  
Total Return(c):     (3.00)%  
 
Ratios/Supplemental Data:  
Net assets, end of period (000)     $155  
Average net assets (000)     $150  
Ratios to average net assets(d):        
Expenses after waivers and/or expense reimbursement     0.80% (e) 
Expenses before waivers and/or expense reimbursement     15.59% (e) 
Net investment income (loss)     4.53% (e) 
Portfolio turnover rate(g)     8% (f) 

 

(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

46  

Class R6 Shares  
     December 12,
2017(a)
through
April 30,
2018		  
Per Share Operating Performance(b):        
Net Asset Value, Beginning of Period     $10.00  
Income (loss) from investment operations:        
Net investment income (loss)     0.17  
Net realized and unrealized gain (loss) on investment and foreign currency transactions     (0.46 ) 
Total from investment operations     (0.29 ) 
Less Dividends:        
Dividends from net investment income     (0.20 ) 
Net asset value, end of period     $9.51  
Total Return(c):     (2.98)%  
 
Ratios/Supplemental Data:  
Net assets, end of period (000)     $24,255  
Average net assets (000)     $24,577  
Ratios to average net assets(d):        
Expenses after waivers and/or expense reimbursement     0.74% (e) 
Expenses before waivers and/or expense reimbursement     1.66% (e) 
Net investment income (loss)     4.51% (e) 
Portfolio turnover rate(g)     8% (f) 

 

(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized.
(d) Does not include expenses of the underlying funds in which the Series invests.
(e) Annualized.
(f) Not annualized.
(g) The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

 

PGIM Emerging Markets Debt Hard Currency Fund     47  

∎ MAIL   ∎ TELEPHONE   ∎ WEBSITE

655 Broad Street

Newark, NJ 07102

  

(800) 225-1852

  

www.pgiminvestments.com

 

PROXY VOTING
The Board of Trustees of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website.

 

TRUSTEES
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres

 

OFFICERS
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Chad A. Earnst, Chief Compliance Officer • Deborah A. Docs, Secretary • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer

 

MANAGER   PGIM Investments LLC  

655 Broad Street

Newark, NJ 07102

 

INVESTMENT SUBADVISER  

PGIM Fixed Income

  

655 Broad Street

Newark, NJ 07102

 

DISTRIBUTOR   Prudential Investment
Management Services LLC		  

655 Broad Street

Newark, NJ 07102

 

CUSTODIAN   The Bank of New York Mellon   225 Liberty Street
New York, NY 10286

 

TRANSFER AGENT   Prudential Mutual Fund
Services LLC		   PO Box 9658
Providence, RI 02940

 

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM		   KPMG LLP  

345 Park Avenue

New York, NY 10154

 

FUND COUNSEL   Willkie Farr & Gallagher LLP   787 Seventh Avenue
New York, NY 10019

 

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing.

 

E-DELIVERY
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above.

 

SHAREHOLDER COMMUNICATIONS WITH TRUSTEES
Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, PGIM Emerging Markets Debt Hard Currency Fund, PGIM Investments, Attn: Board of Trustees, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO SCHEDULE
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month.

 

 

 

Mutual Funds:

ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY   MAY LOSE VALUE   ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE

LOGO

 

 

PGIM EMERGING MARKETS DEBT HARD CURRENCY FUND

 

SHARE CLASS   A   C   Z  

R6*

NASDAQ   PDHAX   PDHCX   PDHVX   PDHQX
CUSIP   743969479   743969461   743969446   743969453

 

*Formerly known as Class Q shares.

 

MF239E2    

Item 2 – Code of Ethics – Not required, as this is not an annual filing.

Item 3 – Audit Committee Financial Expert – Not required, as this is not an annual filing.

Item 4 – Principal Accountant Fees and Services – Not required, as this is not an annual filing.

Item 5 – Audit Committee of Listed Registrants – Not applicable.

 

Item 6 –  Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this  Form.

 

Item 7 –  Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not  applicable.

 

Item 8 –  Portfolio Managers of Closed-End Management Investment Companies – Not applicable.

 

Item 9 –  Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not  applicable.

Item 10 – Submission of Matters to a Vote of Security Holders – Not applicable.

Item 11 – Controls and Procedures

 

  (a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

 

  (b) There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting.

Item 12 – Exhibits

 

  (a)  (1)   Code of Ethics – Not required, as this is not an annual filing.

 

        (2)   Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT.

 

        (3)   Any written solicitation to purchase securities under Rule 23c-1. – Not applicable.

 

  (b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Registrant:   Prudential World Fund, Inc.
By:   /s/ Deborah A. Docs
  Deborah A. Docs
                             Secretary
Date:   June 18, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:   /s/ Stuart S. Parker
  Stuart S. Parker
                     President and Principal Executive Officer
Date:   June 18, 2018
By:   /s/ M. Sadiq Peshimam
  M. Sadiq Peshimam
                             Treasurer and Principal Financial and Accounting Officer
Date:   June 18, 2018