Term | Definition |
ADR | American Depositary Receipt |
ADS | American Depositary Share |
Board | Fund’s Board of Directors or Trustees |
Board Member | A trustee or director of the Fund’s Board |
CEA | Commodity Exchange Act, as amended |
CFTC | US Commodity Futures Trading Commission |
Code | Internal Revenue Code of 1986, as amended |
CMO | Collateralized Mortgage Obligation |
ETF | Exchange-Traded Fund |
EDR | European Depositary Receipt |
Fannie Mae | Federal National Mortgage Association |
FDIC | Federal Deposit Insurance Corporation |
Fitch | Fitch Ratings, Inc. |
Freddie Mac | Federal Home Loan Mortgage Corporation |
GDR | Global Depositary Receipt |
Ginnie Mae | Government National Mortgage Association |
IPO | Initial Public Offering |
IRS | Internal Revenue Service |
1933 Act | Securities Act of 1933, as amended |
1934 Act | Securities Exchange Act of 1934, as amended |
1940 Act | Investment Company Act of 1940, as amended |
1940 Act Laws, Interpretations and Exemptions | Exemptive order, SEC release, no-action letter or similar relief or interpretations, collectively |
LIBOR | London Interbank Offered Rate |
Manager or PGIM Investments | PGIM Investments LLC |
Moody’s | Moody’s Investor Services, Inc. |
NASDAQ | National Association of Securities Dealers Automated Quotations System |
NAV | Net Asset Value |
NRSRO | Nationally Recognized Statistical Rating Organization |
NYSE | New York Stock Exchange |
Term | Definition |
OTC | Over the Counter |
Prudential | Prudential Financial, Inc. |
PMFS | Prudential Mutual Fund Services LLC |
REIT | Real Estate Investment Trust |
RIC | Regulated Investment Company, as the term is used in the Internal Revenue Code of 1986, as amended |
S&P | S&P Global Ratings |
SEC | US Securities & Exchange Commission |
World Bank | International Bank for Reconstruction and Development |
■ | Junk bonds are issued by less creditworthy issuers. These securities are vulnerable to adverse changes in the issuer's economic condition and to general economic conditions. Issuers of junk bonds may be unable to meet their interest or principal payment obligations because of an economic downturn, specific issuer developments or the unavailability of additional financing. |
■ | The issuers of junk bonds may have a larger amount of outstanding debt relative to their assets than issuers of investment grade bonds. If the issuer experiences financial stress, it may be unable to meet its debt obligations. |
■ | Junk bonds are frequently ranked junior to claims by other creditors. If the issuer cannot meet its obligations, the senior obligations are generally paid off before the junior obligations. |
■ | Junk bonds frequently have redemption features that permit an issuer to repurchase the security from the Fund before it matures. If an issuer redeems the junk bonds, the Fund may have to invest the proceeds in bonds with lower yields and may lose income. |
■ | Prices of junk bonds are subject to extreme price fluctuations. Negative economic developments may have a greater impact on the prices of junk bonds than on other higher rated fixed-income securities. |
■ | Junk bonds may be less liquid than higher rated fixed-income securities even under normal economic conditions. There are fewer dealers in the junk bond market, and there may be significant differences in the prices quoted for junk bonds by the dealers. Because they are less liquid, judgment may play a greater role in valuing certain of the Fund’s portfolio securities than in the case of securities trading in a more liquid market. |
■ | A Fund may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms with a defaulting issuer. |
Independent Board Members | |||
Name, Address, Age Position(s) Portfolios Overseen | Principal Occupation(s) During Past Five Years | Other Directorships Held During Past Five Years | Length of Board Service |
Ellen S. Alberding (60) Board Member Portfolios Overseen: 91 | President and Board Member, The Joyce Foundation (charitable foundation) (since 2002); Vice Chair, City Colleges of Chicago (community college system) (2011-2015); Trustee, National Park Foundation (charitable foundation for national park system) (2009-2018); Trustee, Economic Club of Chicago (since 2009); Trustee, Loyola University (since 2018). | None. | Since September 2013 |
Kevin J. Bannon (65) Board Member Portfolios Overseen: 91 | Retired; Managing Director (April 2008-May 2015) and Chief Investment Officer (October 2008-November 2013) of Highmount Capital LLC (registered investment adviser); formerly Executive Vice President and Chief Investment Officer (April 1993-August 2007) of Bank of New York Company; President (May 2003-May 2007) of BNY Hamilton Family of Mutual Funds. | Director of Urstadt Biddle Properties (equity real estate investment trust) (since September 2008). | Since July 2008 |
Linda W. Bynoe (65) Board Member Portfolios Overseen: 91 | President and Chief Executive Officer (since March 1995) and formerly Chief Operating Officer (December 1989-February 1995) of Telemat Ltd. (management consulting); formerly Vice President (January 1985-June 1989) at Morgan Stanley & Co. (broker-dealer). | Director of Anixter International, Inc. (communication products distributor) (since January 2006); Director of Northern Trust Corporation (financial services) (since April 2006); Trustee of Equity Residential (residential real estate) (since December 2009). | Since March 2005 |
Barry H. Evans (57)± Board Member Portfolios Overseen: 90 | Retired; formerly President (2005 – 2016), Global Chief Operating Officer (2014– 2016), Chief Investment Officer – Global Head of Fixed Income (1998-2014), and various portfolio manager roles (1986-2006), Manulife Asset Management U.S. | Director, Manulife Trust Company (since 2011); formerly Director, Manulife Asset Management Limited (2015-2017); formerly Chairman of the Board of Directors of Manulife Asset Management U.S. (2005-2016); formerly Chairman of the Board, Declaration Investment Management and Research (2008-2016). | Since September 2017 |
Independent Board Members | |||
Name, Address, Age Position(s) Portfolios Overseen | Principal Occupation(s) During Past Five Years | Other Directorships Held During Past Five Years | Length of Board Service |
Keith F. Hartstein (61) Board Member & Independent Chair Portfolios Overseen: 91 | Retired; Member (since November 2014) of the Governing Council of the Independent Directors Council (organization of independent mutual fund directors); formerly President and Chief Executive Officer (2005-2012), Senior Vice President (2004-2005), Senior Vice President of Sales and Marketing (1997-2004), and various executive management positions (1990-1997), John Hancock Funds, LLC (asset management); Chairman, Investment Company Institute’s Sales Force Marketing Committee (2003-2008). | None. | Since September 2013 |
Laurie Simon Hodrick (55)± Board Member Portfolios Overseen: 90 | A. Barton Hepburn Professor Emerita of Economics in the Faculty of Business, Columbia Business School (since 2018); Visiting Professor of Law, Stanford Law School (since 2015); Visiting Fellow at the Hoover Institution, Stanford University (since 2015); Sole Member, ReidCourt LLC (since 2008) (a consulting firm); formerly A. Barton Hepburn Professor of Economics in the Faculty of Business, Columbia Business School (1996-2017); formerly Managing Director, Global Head of Alternative Investment Strategies, Deutsche Bank (2006-2008). | Independent Director, Corporate Capital Trust (since April 2017) (a business development company). | Since September 2017 |
Michael S. Hyland, CFA (72) Board Member Portfolios Overseen: 91 | Retired (since February 2005); formerly Senior Managing Director (July 2001-February 2005) of Bear Stearns & Co, Inc.; Global Partner, INVESCO (1999-2001); Managing Director and President of Salomon Brothers Asset Management (1989-1999). | None. | Since July 2008 |
Richard A. Redeker (74) Board Member Portfolios Overseen: 91 | Retired Mutual Fund Senior Executive (50 years); Management Consultant; Director, Mutual Fund Directors Forum (since 2014); Independent Directors Council (organization of independent mutual fund directors)-Executive Committee, Chair of Policy Steering Committee, Governing Council. | None. | Since October 1993 |
Brian K. Reid (56)# Board Member Portfolios Overseen: 90 | Retired; formerly Chief Economist for the Investment Company Institute (ICI) (2005-2017); formerly Senior Economist and Director of Industry and Financial Analysis at the ICI (1998-2004); formerly Senior Economist, Industry and Financial Analysis at the ICI (1996-1998); formerly Staff Economist at the Federal Reserve Board (1989-1996); Director, ICI Mutual Insurance Company (2012-2017). | None. | Since March 2018 |
Stephen G. Stoneburn (74) Board Member Portfolios Overseen: 91 | Chairman (since July 2011), President and Chief Executive Officer (since June 1996) of Frontline Medical Communications (publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media; Senior Vice President of Fairchild Publications, Inc. (1975-1989). | None. | Since July 2003 |
Interested Board Members | |||
Name, Address, Age Position(s) Portfolios Overseen | Principal Occupation(s) During Past Five Years | Other Directorships Held During Past Five Years | Length of Board Service |
Stuart S. Parker (55) Board Member & President Portfolios Overseen: 91 | President of PGIM Investments LLC (formerly known as Prudential Investments LLC) (since January 2012); Executive Vice President of Prudential Investment Management Services LLC (since December 2012); formerly Executive Vice President of Jennison Associates LLC and Head of Retail Distribution of PGIM Investments LLC (June 2005-December 2011). | None. | Since January 2012 |
Scott E. Benjamin (44) Board Member & Vice President Portfolios Overseen:91 | Executive Vice President (since June 2009) of PGIM Investments LLC; Executive Vice President (June 2009-June 2012) and Vice President (since June 2012) of Prudential Investment Management Services LLC; Executive Vice President (since September 2009) of AST Investment Services, Inc.; Senior Vice President of Product Development and Marketing, PGIM Investments (since February 2006); formerly Vice President of Product Development and Product Management, PGIM Investments LLC (2003-2006). | None. | Since March 2010 |
Grace C. Torres* (58) Board Member Portfolios Overseen: 90 | Retired; formerly Treasurer and Principal Financial and Accounting Officer of the Prudential Funds, Target Funds, Advanced Series Trust, Prudential Variable Contract Accounts and The Prudential Series Fund (1998-June 2014); Assistant Treasurer (March 1999-June 2014) and Senior Vice President (September 1999-June 2014) of PGIM Investments LLC; Assistant Treasurer (May 2003-June 2014) and Vice President (June 2005-June 2014) of AST Investment Services, Inc.; Senior Vice President and Assistant Treasurer (May 2003-June 2014) of Prudential Annuities Advisory Services, Inc. | Director (July 2015-January 2018) of Sun Bancorp, Inc. N.A. and Sun National Bank; Director (since January 2018) of OceanFirst Financial Corp. and OceanFirst Bank. | Since November 2014 |
Fund Officers(a) | ||
Name, Address and Age Position with Fund | Principal Occupation(s) During Past Five Years | Length of Service as Fund Officer |
Raymond A. O’Hara (62) Chief Legal Officer | Vice President and Corporate Counsel (since July 2010) of Prudential Insurance Company of America (Prudential); Vice President (March 2011-Present) of Pruco Life Insurance Company and Pruco Life Insurance Company of New Jersey; Vice President and Corporate Counsel (March 2011-Present) of Prudential Annuities Life Assurance Corporation; Chief Legal Officer of PGIM Investments LLC (since June 2012); Chief Legal Officer of Prudential Mutual Fund Services LLC (since June 2012) and Corporate Counsel of AST Investment Services, Inc. (since June 2012); formerly Assistant Vice President and Corporate Counsel (September 2008-July 2010) of The Hartford Financial Services Group, Inc.; formerly Associate (September 1980-December 1987) and Partner (January 1988–August 2008) of Blazzard & Hasenauer, P.C. (formerly, Blazzard, Grodd & Hasenauer, P.C.). | Since June 2012 |
Chad A. Earnst (42) Chief Compliance Officer | Chief Compliance Officer (September 2014-Present) of PGIM Investments LLC; Chief Compliance Officer (September 2014-Present) of the Prudential Funds, Target Funds, Advanced Series Trust, The Prudential Series Fund, Prudential's Gibraltar Fund, Inc., Prudential Global Short Duration High Yield Income Fund, Inc., Prudential Short Duration High Yield Fund, Inc. and Prudential Jennison MLP Income Fund, Inc.; formerly Assistant Director (March 2010-August 2014) of the Asset Management Unit, Division of Enforcement, US Securities & Exchange Commission; Assistant Regional Director (January 2010-August 2014), Branch Chief (June 2006–December 2009) and Senior Counsel (April 2003-May 2006) of the Miami Regional Office, Division of Enforcement, US Securities & Exchange Commission. | Since September 2014 |
Fund Officers(a) | ||
Name, Address and Age Position with Fund | Principal Occupation(s) During Past Five Years | Length of Service as Fund Officer |
Dino Capasso (43) Deputy Chief Compliance Officer | Vice President and Deputy Chief Compliance Officer (June 2017-Present) of PGIM Investments LLC; formerly, Senior Vice President and Senior Counsel (January 2016-June 2017), and Vice President and Counsel (February 2012-December 2015) of Pacific Investment Management Company LLC. | Since March 2018 |
Deborah A. Docs (60) Secretary | Vice President and Corporate Counsel (since January 2001) of Prudential; Vice President (since December 1996) and Assistant Secretary (since March 1999) of PGIM Investments LLC; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc. | Since May 2004 |
Jonathan D. Shain (59) Assistant Secretary | Vice President and Corporate Counsel (since August 1998) of Prudential; Vice President and Assistant Secretary (since May 2001) of PGIM Investments LLC; Vice President and Assistant Secretary (since February 2001) of Prudential Mutual Fund Services LLC; formerly Vice President and Assistant Secretary (May 2003-June 2005) of AST Investment Services, Inc. | Since May 2005 |
Claudia DiGiacomo (43) Assistant Secretary | Vice President and Corporate Counsel (since January 2005) of Prudential; Vice President and Assistant Secretary of PGIM Investments LLC (since December 2005); formerly Associate at Sidley Austin Brown & Wood LLP (1999-2004). | Since December 2005 |
Andrew R. French (55) Assistant Secretary | Vice President and Corporate Counsel (since February 2010) of Prudential; formerly Director and Corporate Counsel (2006-2010) of Prudential; Vice President and Assistant Secretary (since January 2007) of PGIM Investments LLC; Vice President and Assistant Secretary (since January 2007) of Prudential Mutual Fund Services LLC. | Since October 2006 |
Charles H. Smith (45) Anti-Money Laundering Compliance Officer | Vice President, Corporate Compliance, Anti-Money Laundering Unit (since January 2015) of Prudential; committee member of the American Council of Life Insurers Anti-Money Laundering and Critical Infrastructure Committee (since January 2016); formerly Global Head of Economic Sanctions Compliance at AIG Property Casualty (February 2007 – December 2014); Assistant Attorney General at the New York State Attorney General's Office, Division of Public Advocacy. (August 1998 —January 2007). | Since January 2017 |
M. Sadiq Peshimam (54) Treasurer and Principal Financial and Accounting Officer | Vice President (since 2005) of PGIM Investments LLC; formerly Assistant Treasurer of funds in the Prudential Mutual Fund Complex (2006-2014). | Since February 2006 |
Peter Parrella (59) Assistant Treasurer | Vice President (since 2007) and Director (2004-2007) within Prudential Mutual Fund Administration; formerly Tax Manager at SSB Citi Fund Management LLC (1997-2004). | Since June 2007 |
Lana Lomuti (50) Assistant Treasurer | Vice President (since 2007) and Director (2005-2007), within Prudential Mutual Fund Administration; formerly Assistant Treasurer (December 2007-February 2014) of The Greater China Fund, Inc. | Since April 2014 |
Linda McMullin (56) Assistant Treasurer | Vice President (since 2011) and Director (2008-2011) within Prudential Mutual Fund Administration. | Since April 2014 |
Kelly A. Coyne (49) Assistant Treasurer | Director, Investment Operations of Prudential Mutual Fund Services LLC (since 2010). | Since March 2015 |
■ | Board Members are deemed to be “Interested,” as defined in the 1940 Act, by reason of their affiliation with PGIM Investments LLC and/or an affiliate of PGIM Investments LLC. |
■ | Unless otherwise noted, the address of all Board Members and Officers is c/o PGIM Investments LLC, 655 Broad Street, Newark, New Jersey 07102-4410. |
■ | There is no set term of office for Board Members or Officers. The Board Members have adopted a retirement policy, which calls for the retirement of Board Members on December 31 of the year in which they reach the age of 75. |
■ | “Other Directorships Held” includes only directorships of companies required to register or file reports with the SEC under the 1934 Act (that is, “public companies”) or other investment companies registered under the 1940 Act. |
■ | “Portfolios Overseen” includes all investment companies managed by PGIM Investments LLC. The investment companies for which PGIM Investments LLC serves as manager include the Prudential Mutual Funds, The Prudential Variable Contract Accounts, PGIM ETF Trust, Prudential Short Duration High Yield Fund, Inc., Prudential Global Short Duration High Yield Fund, Inc., The Prudential Series Fund, Prudential's Gibraltar Fund, Inc. and the Advanced Series Trust. |
Compensation Received by Independent Board Members | ||||
Name | Aggregate Fiscal Year Compensation from Fund | Pension or Retirement Benefits Accrued as Part of Fund Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation from Fund and Fund Complex for Most Recent Calendar Year |
Ellen S. Alberding | $1,867 | None | None | $250,000 (31/90)* |
Kevin J. Bannon | $1,843 | None | None | $254,000 (31/90)* |
Linda W. Bynoe** | $1,870 | None | None | $254,000 (31/90)* |
Barry H. Evans± ** | $293 | None | None | $82,000 (31/90)* |
Keith F. Hartstein** | $2,083 | None | None | $315,000 (31/90)* |
Laurie Simon Hodrick± ** | $297 | None | None | $83,000 (31/90)* |
Michael S. Hyland** | $1,840 | None | None | $248,000 (31/90)* |
Richard A. Redeker** | $1,933 | None | None | $263,500 (31/90)* |
Stephen G. Stoneburn** | $1,800 | None | None | $242,000 (31/90)* |
Compensation Received by Non-Management Interested Board Member | ||||
Name | Aggregate Fiscal Year Compensation from Fund | Pension or Retirement Benefits Accrued as Part of Fund Expenses | Estimated Annual Benefits Upon Retirement | Total Compensation from Fund and Fund Complex for Most Recent Calendar Year |
Grace C. Torres‡ | $1,707 | None | None | $217,645 (30/89)* |
Board Committee Meetings (for most recently completed fiscal year) | ||
Audit Committee | Nominating & Governance Committee | Gibraltar Investment Committee |
4 | 6 | 3 |
Name | Dollar Range of Equity Securities in the Fund | Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Board Member in Fund Complex |
Board Member Share Ownership: Independent Board Members | ||
Ellen Alberding | None | Over $100,000 |
Kevin J. Bannon | None | Over $100,000 |
Linda W. Bynoe | None | Over $100,000 |
Barry H. Evans | None | Over $100,000 |
Keith Hartstein | None | Over $100,000 |
Laurie Simon Hodrick | None | $50,001 - $100,000 |
Michael S. Hyland | None | Over $100,000 |
Richard A. Redeker | None | Over $100,000 |
Stephen G. Stoneburn | None | Over $100,000 |
Board Member Share Ownership: Interested Board Members | ||
Stuart S. Parker | None | Over $100,000 |
Scott E. Benjamin | None | Over $100,000 |
Grace C. Torres | None | Over $100,000 |
■ | the salaries and expenses of all of its and the Fund's personnel except the fees and expenses of Independent Board Members and Non-Management Interested Board Members; |
■ | all expenses incurred by the Manager or the Fund in connection with managing the ordinary course of a Fund's business, other than those assumed by the Fund as described below; and |
■ | the fees, costs and expenses payable to any investment subadviser pursuant to a subadvisory agreement between PGIM Investments and such investment subadviser. |
■ | the fees and expenses incurred by the Fund in connection with the management of the investment and reinvestment of the Fund's assets payable to the Manager; |
■ | the fees and expenses of Independent Board Members and Non-Management Interested Board Members; |
■ | the fees and certain expenses of the Custodian and transfer and dividend disbursing agent, including the cost of providing records to the Manager in connection with its obligation of maintaining required records of the Fund and of pricing the Fund's shares; |
■ | the charges and expenses of the Fund's legal counsel and independent auditors and counsel to the Independent Board Members; |
■ | brokerage commissions and any issue or transfer taxes chargeable to the Fund in connection with its securities (and futures, if applicable) transactions; |
■ | all taxes and corporate fees payable by the Fund to governmental agencies; |
■ | the fees of any trade associations of which the Fund may be a member; |
■ | the cost of share certificates representing, and/or non-negotiable share deposit receipts evidencing, shares of the Fund; |
■ | the cost of fidelity, directors and officers and errors and omissions insurance; |
■ | the fees and expenses involved in registering and maintaining registration of the Fund and of its shares with the SEC and paying notice filing fees under state securities laws, including the preparation and printing of the Fund's registration statements and prospectuses for such purposes; allocable communications expenses with respect to investor services and all expenses of shareholders' and Board meetings and of preparing, printing and mailing reports and notices to shareholders; and |
■ | litigation and indemnification expenses and other extraordinary expenses not incurred in the ordinary course of the Fund's business and distribution and service (12b-1) fees. |
Management Fees Paid by Prudential Income Builder Fund | |||
2017 | 2016 | 2015 | |
Gross Fee | $2,893,132 | $2,093,137 | $1,425,819 |
Amount Waived/Reimbursed by PGIM Investments | $(1,560,570) | $(1,258,611) | $(1,047,284) |
Net Fee | $1,332,562 | $834,526 | $378,535 |
Subadvisory Fee Rates & Subadvisory Fees Paid | ||||
Subadviser | Fee Rate | 2017 | 2016 | 2015 |
Quantitative Management Associates LLC (QMA)* | 0.175% | $723,283 | $523,284 | $356,455 |
Jennison Associates LLC (Jennison) | 0.425% to $500 million; 0.40% over $500 million to $1 billion; 0.375% over $1 billion | $356,952 | $260,231 | $172,419 |
Jennison | Fee for direct investments in MLPs: 0.60% of average daily net assets to $300 million; and 0.50% of daily net assets over $300 million** | $339,360 | $118,853 | $46,947 |
PGIM Fixed Income (Broad Market High Yield strategy) | 0.25% | $225,046 | $158,265 | $127,260 |
PGIM Fixed Income (Emerging Markets Debt strategy) | 0.45% to $200 million; 0.40% over $200 million | $271,500 | $240,715 | $148,333 |
PGIM Real Estate | 0.40% | $155,569 | $134,844 | $96,368 |
Other Funds and Investment Accounts Managed by the Portfolio Managers | ||||
Subadviser | Portfolio Managers | Registered Investment Companies/Total Assets | Other Pooled Investment Vehicles/ Total Assets | Other Accounts/ Total Assets |
Quantitative Management Associates LLC | Ted Lockwood, MBA, MS | 39 / $83,604,392,120 | 5 / $1,831,607,159 | 22 / $1,702,038,323 1 / $31,533,839 |
Edward L. Campbell, MBA, CFA | 38 / $83,110,022,899 | 5 / $1,831,607,159 | 19 / $1,460,802,287 | |
Rory Cummings, MBA, CFA | 38 / $83,110,022,899 | 5 / $1,831,607,159 | 19 / $1,460,802,287 | |
Peter Vaiciunas, MBA, CFA | 38 / $83,604,392,120 | 5 / $1,831,607,159 | 19 / $1,460,802,287 | |
Jennison Associates LLC | Ubong “Bobby” Edemeka | 7 / $5,891,266 | None | None |
Shaun Hong, CFA | 7 / $5,891,266 | None | None | |
Stephen J. Maresca, CFA | None | None | None | |
PGIM Fixed Income* | David Bessey | 18 / $2,461,594,866 | 24 / $2,805,892,990 1 / $(22,612,782) | 165 / $39,205,724,771 1 / $9,192,032 |
Cathy L. Hepworth, CFA | 18 / $2,461,594,866 | 24 / $2,805,892,990 1 / $(22,612,782) | 165 / $39,205,724,771 1 / $9,192,032 | |
Mariusz Banasiak, CFA | 18 / $2,461,594,866 | 24 / $2,805,892,990 1 / $(22,612,782) | 165 / $39,205,724,771 1 / $9,192,032 | |
Robert Cignarella, CFA | 29 / $17,633,132,240 | 19 / $4,894,475,646 | 113 / $16,493,797,580 | |
Brian Clapp, CFA | 29 / $17,104,772,616 | 19 / $4,894,475,646 | 113 / $15,986,930,710 | |
Terence Wheat, CFA | 29 / $17,104,773,591 | 19 / $4,894,475,646 | 113 / $15,987,320,875 | |
Robert Spano, CFA, CPA | 29 / $17,104,773,591 | 19 / $4,894,475,646 | 113 / $15,986,930,710 | |
Daniel Thorogood, CFA | 29 / $17,104,772,616 | 19 / $4,894,475,646 | 113 / $15,986,930,710 | |
Ryan Kelly, CFA | 29 / $17, 104,773,591 | 19 / $4,894,475,646 | 113 / $15,986,930,710 | |
PGIM Real Estate | Marc R. Halle | 8 / $3,216,003,735 | None | 6 / $880,942,092 |
Rick J. Romano, CFA | 8 / $3,216,003,735 | None | 6 / $880,942,092 | |
Michael Gallagher | 8 / $3,216,003,735 | None | 6 / $880,942,092 | |
Kwok Wing Cheong, CFA | 8 / $3,216,003,735 | None | 6 / $880,942,092 |
Personal Investments and Financial Interests of the Portfolio Managers | ||
Subadviser | Portfolio Managers | Investments and Other Financial Interests in the Fund and Similar Strategies* |
Quantitative Management Associates LLC | Ted Lockwood, MBA, MS | None |
Edward L. Campbell, MBA, CFA | $10,001 - $50,000 | |
Rory Cummings | $1 - $10,000 | |
Peter Vaiciunas, MBA, CFA | None | |
Jennison Associates LLC | Ubong “Bobby” Edemeka | $100,001 - $500,000 |
Shaun Hong, CFA | Over $1,000,000 |
Personal Investments and Financial Interests of the Portfolio Managers | ||
Subadviser | Portfolio Managers | Investments and Other Financial Interests in the Fund and Similar Strategies* |
Stephen J. Maresca, CFA | $100,001 - $500,000 | |
PGIM Fixed Income | David Bessey | None |
Cathy L. Hepworth, CFA | None | |
Mariusz Banasiak, CFA | None | |
Robert Cignarella, CFA | $10,001 - $50,000 | |
Brian Clapp, CFA | None | |
Terence Wheat, CFA | None | |
Robert Spano, CFA, CPA | None | |
Daniel Thorogood, CFA | None | |
Ryan Kelly, CFA | None | |
PGIM Real Estate | Marc R. Halle | None |
Rick J. Romano, CFA | None | |
Michael Gallagher | None | |
Kwok Wing Cheong, CFA | None |
■ | Elimination of the conflict; |
■ | Disclosure of the conflict; or |
■ | Management of the conflict through the adoption of appropriate policies and procedures. |
■ | Asset-Based Fees vs. Performance-Based Fees; Other Fee Considerations. QMA manages accounts with asset-based fees alongside accounts with performance-based fees. Asset-based fees are calculated based on the value of a client’s portfolio at periodic measurement dates or over specified periods of time. Performance-based fees are generally based on a share of the total return of a portfolio, and may offer greater upside potential to QMA than asset-based fees, depending on how the fees are structured. This side-by-side management could create an incentive for QMA to favor one account over another. Specifically, QMA could have the incentive to favor accounts for which it receives performance fees, and possibly take greater investment risks in those accounts, in order to bolster performance and increase its fees. In addition, since fees are negotiable, one client may be paying a higher fee than another client with similar investment objectives or goals. In negotiating fees, QMA takes into account a number of factors including, but not limited to, the investment strategy, the size of a portfolio being managed, the relationship with the client, and the required level of service. Fees may also differ based on account type. For example, fees for commingled vehicles, including those that QMA subadvises, may differ from fees charged for single client accounts. |
■ | Long Only/Long-Short Accounts. QMA manages accounts that only allow it to hold securities long as well as accounts that permit short selling. QMA may, therefore, sell a security short in some client accounts while holding the same security long in other client accounts, creating the possibility that QMA is taking inconsistent positions with respect to a particular security in different client accounts. |
■ | Compensation/Benefit Plan Accounts/Other Investments by Investment Professionals. QMA manages certain funds and strategies whose performance is considered in determining long-term incentive plan benefits for certain investment professionals. Investment professionals involved in the management of accounts in these strategies have an incentive to favor them over other accounts they manage in order to increase their compensation. Additionally, QMA’s investment professionals may have an interest in those strategies if the funds are chosen as options in their 401(k) or deferred compensation plans offered by Prudential or if they otherwise invest in those funds directly. |
■ | Affiliated Accounts. QMA manages accounts on behalf of its affiliates as well as unaffiliated accounts. QMA could have an incentive to favor accounts of affiliates over others. |
■ | Non-Discretionary Accounts or Model Portfolios. QMA provides non-discretionary model portfolios to some clients and manages other portfolios on a discretionary basis. When QMA manages accounts on a non-discretionary basis, the investment team will typically deliver a model portfolio to a non-discretionary client at or around the same time as executing discretionary trades in the same strategy. The non-discretionary clients may be disadvantaged if QMA delivers the model investment portfolio to them after it initiates trading for the discretionary clients, or vice versa. |
■ | Large Accounts/Higher Fee Strategies. Large accounts typically generate more revenue than do smaller accounts and certain strategies have higher fees than others. As a result, a portfolio manager has an incentive when allocating scarce investment opportunities to favor accounts that pay a higher fee or generate more income for QMA. |
■ | Securities of the Same Kind or Class. QMA sometimes buys or sells, or directs or recommends that one client buy or sell, securities of the same kind or class that are purchased or sold for another client, at prices that may be different. QMA may also, at any time, execute trades of securities of the same kind or class in one direction for an account and in the opposite direction for another account, due to differences in investment strategy or client direction. Different strategies effecting trading in the same securities or types of securities can appear as inconsistencies in QMA’s management of multiple accounts side-by-side. |
■ | Conflicts Arising Out of Legal Restrictions. QMA may be restricted by law, regulation, contract or other constraints as to how much, if any, of a particular security it may purchase or sell on behalf of a client, and as to the timing of such purchase or sale. Sometimes, these restrictions apply as a result of QMA’s relationship with Prudential Financial and its other affiliates. For example, QMA’s holdings of a security on behalf of its clients are required, under certain regulations, to be aggregated with the holdings of that security by other Prudential Financial affiliates. These holdings could, on an aggregate basis, exceed certain reporting or ownership thresholds. QMA tracks these aggregate holdings and may restrict purchases to avoid crossing such thresholds because of the potential consequences to Prudential if such thresholds are exceeded. In addition, QMA could receive material, non-public information with respect to a particular issuer from an affiliate and, as a result, be unable to execute purchase or sale transactions in securities of that issuer for its clients. QMA is generally able to avoid receiving material, non-public information from its affiliates by maintaining information barriers to prevent the transfer of information between affiliates. |
■ | The Fund may be prohibited from engaging in transactions with its affiliates even when such transactions may be beneficial for the Fund. Certain affiliated transactions are permitted in accordance with procedures adopted by the Fund and reviewed by the independent board members of the Fund. |
■ | QMA performs asset allocation services as subadviser for affiliated mutual funds managed or co-managed by the Manager, including for some portfolios offered by the Funds (the Funds). Where, in these arrangements, QMA also manages underlying funds or accounts within asset classes included in the mutual fund guidelines (as is the case with the Funds), QMA will allocate assets to such underlying funds or accounts. In these circumstances, QMA receives both an asset allocation fee and a management fee. As a result, QMA has an incentive to allocate assets to an asset class or underlying fund that it manages in order to increase its fees. To help mitigate this conflict, the compliance group reviews the asset allocation to determine that the investments were made within the guidelines established for each asset class or fund (including the Funds). QMA’s affiliates can have an incentive to seek to influence |
QMA’s asset allocation decisions, for example to facilitate hedging or improve profit margins. Through training and the establishment of communication barriers, however, QMA seeks to avoid any influence by its affiliates and implements its asset allocation decisions solely in what QMA believes to be the best interests of the funds and in compliance with applicable guidelines. QMA also believes that it makes such allocations in a manner consistent with its fiduciary obligations. | |
■ | In certain arrangements, QMA subadvises mutual funds for the Manager through a program where they have selected QMA as a manager, resulting in QMA’s collection of subadvisory fees from them. The Manager also selects managers for some of QMA’s asset allocation products and, in certain cases, is compensated by QMA for these services under service agreements. The Manager and QMA may have a mutual incentive to continue these types of arrangements that benefit both companies. These and other types of conflicts of interest are reviewed to verify that appropriate oversight is performed. |
■ | QMA, Prudential Financial, Inc., The Prudential Insurance Company of America (PICA) and other affiliates of QMA have financial interests in, or relationships with, companies whose securities QMA holds, purchases or sells in its client accounts. Certain of these interests and relationships are material to QMA or to the Prudential enterprise. At any time, these interests and relationships could be inconsistent or in potential or actual conflict with positions held or actions taken by QMA on behalf of its client accounts. For example, QMA invests in the securities of one or more clients for the accounts of other clients. QMA’s affiliates sell various products and/or services to certain companies whose securities QMA purchases and sells for its clients. QMA’s affiliates hold public and private debt and equity securities of a large number of issuers. QMA invests in some of the same issuers for its client accounts but at different levels in the capital structure. For instance, QMA may invest client assets in the equity of companies whose debt is held by an affiliate. Certain of QMA’s affiliates (as well as directors of QMA’s affiliates) are officers or directors of issuers in which QMA invests from time to time. These issuers may also be service providers to QMA or its affiliates. In general, conflicts related to the financial interests described above are addressed by the fact that QMA makes investment decisions for each client independently considering the best economic interests of such client. |
■ | Certain of QMA’s employees may offer and sell securities of, and interests in, commingled funds that QMA manages or subadvises. Employees may offer and sell securities in connection with their roles as registered representatives of Prudential Investment Management Services LLC (a broker-dealer affiliate), or as officers, agents, or approved persons of other affiliates. There is an incentive for QMA’s employees to offer these securities to investors regardless of whether the investment is appropriate for such investor since increased assets in these vehicles will result in increased advisory fees to QMA. In addition, although sales commissions are not paid for such activities, such sales could result in increased compensation to the employee. To mitigate this conflict, QMA performs suitability checks on new clients as well as on an annual basis with respect to all clients. |
■ | A portion of the long-term incentive grant of some of QMA’s investment professionals will increase or decrease based on the performance of several of QMA’s strategies over defined time periods. Consequently, some of QMA’s portfolio managers from time to time have financial interests in the accounts they advise. To address potential conflicts related to these financial interests, QMA has procedures, including supervisory review procedures, designed to verify that each of its accounts is managed in a manner that is consistent with QMA’s fiduciary obligations, as well as with the account’s investment objectives, investment strategies and restrictions. Specifically, QMA’s chief investment officer will perform a comparison of trading costs between accounts in the strategies whose performance is considered in connection with the long-term incentive grant and other accounts, to verify that such costs are consistent with each other or otherwise in line with expectations. The results of the analysis are discussed at a meeting of QMA's Trade Management Oversight Committee. |
■ | QMA and its affiliates, from time to time, have service agreements with various vendors that are also investment consultants. Under these agreements, QMA or its affiliates compensate the vendors for certain services, including software, market data and technology services. QMA’s clients may also retain these vendors as investment consultants. The existence of service agreements between these consultants and QMA may provide an incentive for the investment consultants to favor QMA when they advise their clients. QMA does not, however, condition its purchase of services from consultants upon their recommending QMA to their clients. QMA will provide clients with information about services that QMA or its affiliates obtain from these consultants upon request. QMA retains third party advisors and other service providers to provide various services for QMA as well as for funds that QMA manages or subadvises. A service provider may provide services to QMA or one of its funds while also providing services to PGIM, Inc. (PGIM), other PGIM-advised funds, or affiliates of PGIM, and may negotiate rates in the context of the overall relationship. QMA may benefit from negotiated fee rates offered to its funds and vice-versa. There is no assurance that QMA will be able to obtain advantageous fee rates from a given service provider negotiated by its affiliates based on their relationship with the service provider, or that it will know of such negotiated fee rates. |
■ | One-, three-, five-year and longer term pre-tax investment performance groupings of accounts managed by the portfolio manager in the same strategy (composite) relative to market conditions, pre-determined passive indices and industry peer group data for the product strategy (e.g., large cap growth, large cap value) for which the portfolio manager is responsible. Some portfolio managers may manage or contribute ideas to more than one product strategy, and the performance of the other product strategies is also considered in determining the portfolio manager’s overall compensation. |
■ | The investment professional’s contribution to client portfolio’s pre-tax one-, three-, five-year and longer-term performance from the investment professional’s recommended stocks relative to market conditions, the strategy’s passive benchmarks, and the investment professional’s respective coverage universes. |
■ | The quality of the portfolio manager’s investment ideas and consistency of the portfolio manager’s judgment; |
■ | Historical and long-term business potential of the product strategies; |
■ | Qualitative factors such as teamwork and responsiveness; and |
■ | Individual factors such as years of experience and responsibilities specific to the individual’s role such as being a team leader or supervisor are also factored into the determination of an investment professional’s total compensation. |
■ | Long only accounts/long-short accounts: Jennison manages accounts in strategies that only hold long securities positions as well as accounts in strategies that are permitted to sell securities short. Jennison may hold a long position in a security in some client accounts while selling the same security short in other client accounts. For example, Jennison permits quantitatively hedged strategies to short securities that are held long in other strategies. Additionally, Jennison permits securities that are held long in quantitatively derived strategies to be shorted by other strategies. The strategies that sell a security short held long by another strategy could lower the price for the security held long. Similarly, if a strategy is purchasing a security that is held short in other strategies, the strategies purchasing the security could increase the price of the security held short. |
■ | Large accounts: Large accounts typically generate more revenue than do smaller accounts. As a result, a portfolio manager has an incentive when allocating scarce investment opportunities to favor accounts that pay a higher fee or generate more income for Jennison. |
■ | Multiple strategies: Jennison may buy or sell, or may direct or recommend that one client buy or sell, securities of the same kind or class that are purchased or sold for another client, at prices that may be different. Jennison may also, at any time, execute trades of |
securities of the same kind or class in one direction for an account and in the opposite direction for another account, due to differences in investment strategy or client direction. Different strategies effecting trading in the same securities or types of securities may appear as inconsistencies in Jennison’s management of multiple accounts side-by-side. | |
■ | Affiliated accounts/unaffiliated accounts and seeded/nonseeded accounts and accounts receiving asset allocation assets from affiliated investment advisers: Jennison manages accounts for its affiliates and accounts in which it has an interest alongside unaffiliated accounts. Jennison could have an incentive to favor its affiliated accounts over unaffiliated accounts. Additionally, Jennison’s affiliates may provide initial funding or otherwise invest in vehicles managed by Jennison. When an affiliate provides “seed capital” or other capital for a fund or account, it may do so with the intention of redeeming all or part of its interest at a particular future point in time or when it deems that sufficient additional capital has been invested in that fund or account. Jennison typically requests seed capital to start a track record for a new strategy or product. Managing “seeded” accounts alongside “non-seeded” accounts can create an incentive to favor the “seeded” accounts to establish a track record for a new strategy or product. Additionally, Jennison’s affiliated investment advisers could allocate their asset allocation clients’ assets to Jennison. Jennison could favor accounts used by its affiliate for their asset allocation clients to receive more assets from the affiliate. |
■ | Non-discretionary accounts or models: Jennison provides non-discretionary model portfolios to some clients and manages other portfolios on a discretionary basis. Recommendations for some non-discretionary models that are derived from discretionary portfolios are communicated after the discretionary portfolio has traded. The non-discretionary clients could be disadvantaged if Jennison delivers the model investment portfolio to them after Jennison initiates trading for the discretionary clients, or vice versa. |
■ | Higher fee paying accounts or products or strategies: Jennison receives more revenues from (1) larger accounts or client relationships than smaller accounts or client relationships and from (2) managing discretionary accounts than advising nondiscretionary models and from (3) non-wrap fee accounts than from wrap fee accounts and from (4) charging higher fees for some strategies than others. The differences in revenue that Jennison receives could create an incentive for Jennison to favor the higher fee paying or higher revenue generating account or product or strategy over another. |
■ | Personal interests: The performance of one or more accounts managed by Jennison’s investment professionals is taken into consideration in determining their compensation. Jennison also manages accounts that are investment options in its employee benefit plans such as its defined contribution plans or deferred compensation arrangements and where its employees may have personally invested alongside other accounts where there is no personal interest. These factors could create an incentive for Jennison to favor the accounts where it has a personal interest over accounts where Jennison does not have a personal interest. |
■ | Jennison has adopted trade aggregation and allocation procedures that seek to treat all clients (including affiliated accounts) fairly and equitably. These policies and procedures address the allocation of limited investment opportunities, such as initial public offerings (IPOs) and new issues, the allocation of transactions across multiple accounts, and the timing of transactions between its non-wrap accounts and its wrap fee accounts and between wrap fee program sponsors. |
■ | Jennison has policies that limit the ability to short securities in portfolios that primarily rely on its fundamental research and investment processes (fundamental portfolios) if the security is held long in other fundamental portfolios. |
■ | Jennison has adopted procedures to review allocations or performance dispersion between accounts with performance fees and non-performance fee based accounts and to review overlapping long and short positions among long accounts and long-short accounts. |
■ | Jennison has adopted a code of ethics and policies relating to personal trading. |
■ | Jennison provides disclosure of these conflicts as described in its Form ADV. |
■ | business initiatives; |
■ | the number of investment professionals receiving a bonus and related peer group compensation; |
■ | financial metrics of the business relative to those of appropriate peer groups; and |
■ | investment performance of portfolios: (i) relative to appropriate peer groups; and/or (ii) as measured against relevant investment indices. |
■ | elimination of the conflict; |
■ | disclosure of the conflict; or |
■ | management of the conflict through the adoption of appropriate policies, procedures or other mitigants. |
■ | Performance Fees - PGIM Fixed Income manages accounts with asset-based fees alongside accounts with performance-based fees. This side-by-side management may be deemed to create an incentive for PGIM Fixed Income and its investment professionals to favor one account over another. Specifically, PGIM Fixed Income or its affiliates could be considered to have the incentive to favor accounts for which PGIM Fixed Income or an affiliate receives performance fees, and possibly take greater investment risks in those accounts, in order to bolster performance and increase its fees. |
■ | Affiliated accounts - PGIM Fixed Income manages accounts on behalf of its affiliates as well as unaffiliated accounts. PGIM Fixed Income could be considered to have an incentive to favor accounts of affiliates over others. |
■ | Large accounts/higher fee strategies - large accounts and clients typically generate more revenue than do smaller accounts or clients and certain of PGIM Fixed Income’s strategies have higher fees than others. As a result, a portfolio manager could be considered to have an incentive when allocating scarce investment opportunities to favor accounts that pay a higher fee or generate more income for PGIM Fixed Income. |
■ | Long only and long/short accounts - PGIM Fixed Income manages accounts that only allow it to hold securities long as well as accounts that permit short selling. PGIM Fixed Income may, therefore, sell a security short in some client accounts while holding the same security long in other client accounts. These short sales could reduce the value of the securities held in the long only accounts. In addition, purchases for long only accounts could have a negative impact on the short positions. |
■ | Securities of the same kind or class - PGIM Fixed Income sometimes buys or sells for one client account securities of the same kind or class that are purchased or sold for another client at prices that may be different. PGIM Fixed Income may also, at any time, execute trades of securities of the same kind or class in one direction for an account and in the opposite direction for another account due to differences in price, investment strategy or client direction. Different strategies trading in the same securities or types of securities may appear as inconsistencies in PGIM Fixed Income’s management of multiple accounts side-by-side. |
■ | Investment at different levels of an issuer’s capital structure – PGIM Fixed Income may invest client assets in the same issuer, but at different levels in the capital structure. In the event of restructuring or insolvency, PGIM Fixed Income may exercise remedies and take other actions on behalf of the holders of senior debt that are not in the interest of, or are adverse to, other clients that are the holders of junior debt, or vice versa. |
■ | Financial interests of investment professionals - PGIM Fixed Income investment professionals may invest in certain investment vehicles that it manages, including mutual funds and private funds. Also, certain of these investment vehicles are options under the 401(k) and deferred compensation plans offered by Prudential Financial, Inc. In addition, the value of grants under PGIM Fixed Income’s long-term incentive plan and targeted long-term incentive plan is affected by the performance of certain client accounts. As a result, PGIM Fixed Income investment professionals may have financial interests in accounts managed by PGIM Fixed Income or that are related to the performance of certain client accounts. |
■ | Non-discretionary accounts - PGIM Fixed Income provides non-discretionary investment advice to some clients and manages others on a discretionary basis. Trades in non-discretionary accounts or accounts where discretion is limited could occur before, in concert with, or after PGIM Fixed Income executes similar trades in its discretionary accounts. The non-discretionary/limited discretion clients may be disadvantaged if PGIM Fixed Income delivers investment advice to them after it initiates trading for the discretionary clients, or vice versa. |
■ | Quarterly Strategy Reviews. Each quarter, the chief investment officer/head of PGIM Fixed Income holds a series of meetings with the senior portfolio managers and team responsible for the management of each of PGIM Fixed Income’s investment strategies. At each meeting, the chief investment officer/head of PGIM Fixed Income and strategy teams review and discuss the investment performance and performance attribution for each client account managed in the applicable strategy. These meetings are also typically attended by PGIM Fixed Income’s chief compliance officer or his designee and head of investment risk management or his designee. |
■ | Quarterly Senior Management Investment Review. Each quarter, the chief investment officer/head of PGIM Fixed Income reviews the investment performance and performance attribution of each of our strategies during a meeting typically attended by members of PGIM Fixed Income’s senior leadership team, chief compliance officer or his designee, head of investment risk management or his designee and senior portfolio managers. |
■ | In keeping with PGIM Fixed Income’s fiduciary obligations, its policy with respect to trade aggregation and allocation is to treat all of its client accounts fairly and equitably over time. PGIM Fixed Income’s trade management oversight committee, which generally meets quarterly, is responsible for providing oversight with respect to trade aggregation and allocation. Its compliance group periodically reviews a sampling of new issue allocations and related documentation to confirm compliance with the trade aggregation and allocation procedures. In addition, the compliance and investment risk management groups review forensic reports regarding new issue and secondary trade activity on a quarterly basis. This forensic analysis includes such data as the: (i) number of new issues allocated in the strategy; (ii) size of new issue allocations to each portfolio in the strategy; (iii) profitability of new issue transactions; and (iv) portfolio turnover. The results of these analyses are reviewed and discussed at PGIM Fixed Income’s trade management oversight committee meetings. The procedures above are designed to detect patterns and anomalies in PGIM Fixed Income’s side-by-side management and trading so that it may assess and improve its processes. |
■ | PGIM Fixed Income has procedures that specifically address its side-by-side management of long/short and long only portfolios. These procedures address potential conflicts that could arise from differing positions between long/short and long only portfolios. In addition, lending opportunities with respect to securities for which the market is demanding a slight premium rate over normal market rates are allocated to long only accounts prior to allocating the opportunities to long/short accounts. |
■ | Conflicts Arising Out of Legal Restrictions. PGIM Fixed Income may be restricted by law, regulation, contract or other constraints as to how much, if any, of a particular security it may purchase or sell on behalf of a client, and as to the timing of such purchase or sale. Sometimes these restrictions apply as a result of its relationship with Prudential Financial, Inc. and its other affiliates. For example, PGIM Fixed Income does not purchase securities issued by Prudential Financial, Inc. for client accounts. In addition, PGIM Fixed Income’s holdings of a security on behalf of its clients are required, under certain regulations, to be aggregated with the holdings of that security by other Prudential Financial, Inc. affiliates. These holdings could, on an aggregate basis, exceed certain reporting or |
ownership thresholds. Prudential Financial, Inc. tracks these aggregated holdings and may restrict purchases to avoid crossing such thresholds because of the potential consequences to Prudential Financial, Inc. if such thresholds are exceeded. In addition, PGIM Fixed Income could receive material, non-public information with respect to a particular issuer and, as a result, be unable to execute transactions in securities of that issuer for its clients. For example, PGIM Fixed Income’s bank loan team often invests in private bank loans in connection with which the borrower provides material, non-public information, resulting in restrictions on trading securities issued by those borrowers. PGIM Fixed Income has procedures in place to carefully consider whether to intentionally accept material, non-public information with respect to certain issuers. PGIM Fixed Income is generally able to avoid receiving material, non-public information from its affiliates and other units within PGIM by maintaining information barriers. In some instances, it may create an isolated information barrier around a small number of its employees so that material, non-public information received by such employees is not attributed to the rest of PGIM Fixed Income. | |
■ | Conflicts Related to Outside Business Activity. From time to time, certain of PGIM Fixed Income employees or officers may engage in outside business activity, including outside directorships. Any outside business activity is subject to prior approval pursuant to PGIM Fixed Income’s personal conflicts of interest and outside business activities policy. Actual and potential conflicts of interest are analyzed during such approval process. PGIM Fixed Income could be restricted in trading the securities of certain issuers in client portfolios in the unlikely event that an employee or officer, as a result of outside business activity, obtains material, non-public information regarding an issuer. |
■ | Conflicts Related to Investment of Client Assets in Affiliated Funds. PGIM Fixed Income may invest client assets in funds that it manages or subadvises for an affiliate. PGIM Fixed Income may also invest cash collateral from securities lending transactions in these funds. These investments benefit both PGIM Fixed Income and its affiliate. |
■ | PICA General Account. Because of the substantial size of the general accounts of our affiliated insurance companies, trading by these general accounts, including PGIM Fixed Income’s trades on behalf of the accounts, may affect the market prices or limit the availability of the securities or instruments transacted. Although PGIM Fixed Income does not expect that the general account will execute transactions that will move a market frequently, and generally only in response to unusual market or issuer events, the execution of these transactions could have an adverse effect on transactions for or positions held by other clients. |
■ | PGIM Fixed Income invests in the securities of one or more clients for the accounts of other clients. |
■ | PGIM Fixed Income’s affiliates sell various products and/or services to certain companies whose securities PGIM Fixed Income purchases and sells for PGIM Fixed Income clients. |
■ | PGIM Fixed Income invests in the debt securities of companies whose equity is held by its affiliates. |
■ | PGIM Fixed Income’s affiliates hold public and private debt and equity securities of a large number of issuers and may invest in some of the same issuers for other client accounts but at different levels in the capital structure. For example: |
■ | Affiliated accounts can hold the senior debt of an issuer whose subordinated debt is held by PGIM Fixed Income’s clients or hold secured debt of an issuer whose public unsecured debt is held in client accounts. In the event of restructuring or insolvency, the affiliated accounts as holders of senior debt may exercise remedies and take other actions that are not in the interest of, or are adverse to, other clients that are the holders of junior debt. |
■ | To the extent permitted by applicable law, PGIM Fixed Income may also invest client assets in offerings of securities the proceeds of which are used to repay debt obligations held in affiliated accounts or other client accounts. PGIM Fixed Income’s interest in having the debt repaid creates a conflict of interest. PGIM Fixed Income has adopted a refinancing policy to address this conflict. |
■ | Certain of PGIM Fixed Income’s affiliates (as well as directors or officers of its affiliates) are officers or directors of issuers in which PGIM Fixed Income invests from time to time. These issuers may also be service providers to PGIM Fixed Income or its affiliates. |
■ | In addition, PGIM Fixed Income may invest client assets in securities backed by commercial mortgage loans that were originated or are serviced by an affiliate. |
Securities Lending Activities | |
Gross income from securities lending activities | $308,470 |
Fees and/or compensation for securities lending activities and related services | |
Fees paid to securities lending agent from a revenue split | $(2,545) |
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) | $(13,048) |
Administrative fees not included in revenue split | - |
Indemnification fee not included in revenue split | - |
Rebate (paid to borrower) | $(159,918) |
Other fees not included in revenue split (specify) | - |
Aggregate fees/compensation for securities lending activities | $(175,511) |
Net income from securities lending activities | $132,959 |
Fees Paid to PMFS | Amount |
$96,300 |
Payments Received by the Distributor | |
Income Builder Fund | |
Class A Distribution and service (12b-1) fees | $417,697 |
Class A Initial Sales Charges | $859,603 |
Class A Contingent Deferred Sales Charges (CDSC’s) | $1,097 |
Class B Distribution and service (12b-1) fees | $25,322 |
Class B Contingent Deferred Sales Charges (CDSC’s) | $1,796 |
Class C Distribution and service (12b-1) fees | $1,221,742 |
Class C Contingent Deferred Sales Charges (CDSC’s) | $23,905 |
Class R Distribution and service (12b-1) fees | $2,894 |
Amounts Spent by Distributor | |||||
Fund | Share Class | Printing & Mailing Prospectuses to Other than Current Shareholders | Compensation to Broker/Dealers for Commissions to Representatives and Other Expenses* | Overhead Costs ** | Total Amount Spent by Distributor |
Income Builder Fund | |||||
Class A | $0 | $391,086 | $219,434 | $610,520 |
Amounts Spent by Distributor | |||||
Fund | Share Class | Printing & Mailing Prospectuses to Other than Current Shareholders | Compensation to Broker/Dealers for Commissions to Representatives and Other Expenses* | Overhead Costs ** | Total Amount Spent by Distributor |
Class B | $0 | $6,258 | $1,432 | $7,690 | |
Class C | $0 | $1,109,434 | $172,567 | $1,282,001 | |
Class R | $0 | $2,360 | $2,358 | $4,718 |
■ | Prudential Retirement |
■ | Wells Fargo Advisors, LLC |
■ | Ameriprise |
■ | Charles Schwab & Co., Inc. |
■ | Merrill Lynch Pierce Fenner & Smith Inc. |
■ | Morgan Stanley Smith Barney |
■ | Raymond James |
■ | Fidelity |
■ | UBS Financial Services Inc. |
■ | LPL Financial |
■ | GWFS Equities, Inc. |
■ | Principal Life Insurance Company |
■ | Commonwealth Financial Network |
■ | Cetera |
■ | MSCS Financial Services |
■ | Nationwide Financial Services Inc. |
■ | American United Life Insurance Company |
■ | ADP Broker-Dealer, Inc. |
■ | Voya Financial |
■ | Massachusetts Mutual |
■ | PNC |
■ | John Hancock |
■ | AIG Advisor Group |
■ | Ascensus |
■ | MidAtlantic Capital Corp. |
■ | Edward Jones |
■ | Hartford Life |
■ | Alight Solutions LLC |
■ | TIAA Cref |
■ | Standard Insurance Company |
■ | Lincoln Retirement Services Company LLC |
■ | Reliance Trust Company |
■ | T. Rowe Price Retirement Plan Services |
■ | TD Ameritrade Trust Company |
■ | Securities America, Inc. |
■ | Cambridge |
■ | Northwestern |
■ | RBC Capital Markets Corporation |
■ | Vanguard Group, Inc. |
■ | VALIC Retirement Services Company |
■ | The Ohio National Life Insurance Company |
■ | Sammons Retirement Solutions, Inc. |
■ | Conduent HR Services LLC |
■ | Genworth |
■ | Security Benefit Life Insurance Company |
■ | Citigroup |
■ | Newport Retirement Plan Services, Inc. |
■ | Janney Montgomery & Scott, Inc. |
■ | Transamerica |
■ | Mercer HR Services, LLC |
■ | Securities Service Network |
■ | Triad Advisors Inc. |
■ | KMS Financial Services |
■ | Northern Trust |
■ | Investacorp |
■ | Oppenheimer & Co. |
■ | United Planners Financial Services of America |
■ | 1st Global Capital Corp. |
■ | AXA Equitable Life Insurance Company |
■ | BPAS |
■ | National Security Life |
Class A | |
NAV and redemption price per Class A share | $9.62 |
Maximum initial sales charge (4.50% of public offering price)* | $0.45 |
Maximum offering price to public | $10.07 |
Class B | |
NAV, offering price and redemption price per Class B share | $9.45 |
Class C | |
NAV, offering price and redemption price per Class C share | $9.44 |
Class Q | |
NAV, offering price and redemption price per Class Q share | $9.69 |
Class R | |
NAV, offering price and redemption price per Class R share | $9.61 |
Class Z | |
NAV, offering price and redemption price per Class Z share | $9.69 |
Total brokerage commissions paid by the Fund | 2017 | 2016 | 2015 |
$351,478 | $233,601 | $238,383 | |
Total brokerage commissions paid to affiliated brokers | None | None | None |
Percentage of total brokerage commissions paid to affiliated brokers | 0.00% | 0.00% | 0.00% |
Percentage of the aggregate dollar amount of portfolio transactions involving the payment of commissions to affiliated brokers | 0.00% | 0.00% | 0.00% |
Broker-Dealer Securities Holdings ($) (as of most recently completed fiscal year) | |||
Fund Name | Broker/Dealer Name | Equity (E)/Debt (D) | Amount |
Prudential Income Builder Fund | Banc of America Securities LLC | Debt | $25,790 |
Banc of America Securities LLC | Equity | $3,438,541 | |
Citigroup Global Markets, Inc. | Debt | $105,518 | |
Citigroup Global Markets, Inc. | Equity | $2,929,930 | |
Goldman Sachs & Co. | Equity | $651,059 | |
JPMorgan Chase & Co. | Equity | $3,307,755 |
Principal Fund Shareholders (as of February 9, 2018) | |||
Fund Name and Share Class | Shareholder Name and Address | No. of Shares | % of Class |
PRUDENTIAL INCOME BUILDER CL A | NATIONAL FINANCIAL SERVICES LLC FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT - 4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310 | 3,367,913.785 | 18.46% |
PRUDENTIAL INCOME BUILDER CL A | EDWARD D JONES & CO ATTN: MUTUAL FUND SHAREHOLDER ACCOUNTING 201 PROGRESS PKWY MARYLAND HTS MO 63043-3003 | 1,202,744.342 | 6.59% |
Principal Fund Shareholders (as of February 9, 2018) | |||
Fund Name and Share Class | Shareholder Name and Address | No. of Shares | % of Class |
PRUDENTIAL INCOME BUILDER CL A | WELLS FARGO CLEARING SVCS LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 | 2,420,920.177 | 13.27% |
PRUDENTIAL INCOME BUILDER CL A | PERSHING LLC 1 PERSHING PLAZA JERSEY CITY NJ 07399-0002 | 980,409.373 | 5.37% |
PRUDENTIAL INCOME BUILDER CL B | NATIONAL FINANCIAL SERVICES LLC FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT - 4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310 | 58,777.697 | 24.31% |
PRUDENTIAL INCOME BUILDER CL B | WELLS FARGO CLEARING SVCS LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 | 24,563.035 | 10.16% |
PRUDENTIAL INCOME BUILDER CL B | MORGAN STANLEY & CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FLOOR JERSEY CITY NJ 07311 | 20,076.065 | 8.30% |
PRUDENTIAL INCOME BUILDER CL C | LPL FINANCIAL 4707 EXECUTIVE DRIVE SAN DIEGO CA 92121-3091 | 871,784.241 | 6.41% |
PRUDENTIAL INCOME BUILDER CL C | NATIONAL FINANCIAL SERVICES LLC FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT - 4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310 | 1,344,254.076 | 9.88% |
PRUDENTIAL INCOME BUILDER CL C | WELLS FARGO CLEARING SVCS LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 | 2,965,009.786 | 21.79% |
PRUDENTIAL INCOME BUILDER CL C | MORGAN STANLEY & CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FLOOR JERSEY CITY NJ 07311 | 1,317,570.740 | 9.68% |
PRUDENTIAL INCOME BUILDER CL C | MERRILL LYNCH,PIERCE,FENNER&SMITH FOR THE SOLE BENEFIT OF ITS CUST 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 | 759,847.888 | 5.58% |
PRUDENTIAL INCOME BUILDER CL C | PERSHING LLC 1 PERSHING PLAZA JERSEY CITY NJ 07399-0002 | 1,173,191.210 | 8.62% |
PRUDENTIAL INCOME BUILDER CL C | RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM ATTN COURTNEY WALLER 880 CARILLON PARKWAY ST PETERSBURG FL 33716 | 1,609,850.385 | 11.83% |
PRUDENTIAL INCOME BUILDER CL R | ASCENSUS TRUST COMPANY FBO COSCO, INC. 401(K) PROFIT SHARING ASCENSUS TRUST COMPANY PO BOX 10577 FARGO, ND 58106 | 23,686.711 | 25.58% |
Principal Fund Shareholders (as of February 9, 2018) | |||
Fund Name and Share Class | Shareholder Name and Address | No. of Shares | % of Class |
PRUDENTIAL INCOME BUILDER CL R | NATIONAL FINANCIAL SERVICES LLC FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT 4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310 | 60,322.255 | 65.15% |
PRUDENTIAL INCOME BUILDER CL Z | LPL FINANCIAL 4707 EXECUTIVE DRIVE SAN DIEGO CA 92121-3091 | 1,327,608.996 | 8.94% |
PRUDENTIAL INCOME BUILDER CL Z | NATIONAL FINANCIAL SERVICES LLC FOR EXCLUSIVE BENEFIT OF OUR CUSTOMERS ATTN MUTUAL FUNDS DEPT 4TH FLOOR 499 WASHINGTON BLVD JERSEY CITY NJ 07310 | 1,126,823.474 | 7.59% |
PRUDENTIAL INCOME BUILDER CL Z | WELLS FARGO CLEARING SVCS LLC SPECIAL CUSTODY ACCT FOR THE EXCLUSIVE BENEFIT OF CUSTOMER 2801 MARKET ST SAINT LOUIS MO 63103-2523 | 2,115,156.352 | 14.24% |
PRUDENTIAL INCOME BUILDER CL Z | MORGAN STANLEY & CO HARBORSIDE FINANCIAL CENTER PLAZA II 3RD FLOOR JERSEY CITY NJ 07311 | 1,383,963.632 | 9.32% |
PRUDENTIAL INCOME BUILDER CL Z | CHARLES SCHWAB CO 211 MAIN ST SAN FRANCISCO CA 94105-1901 | 910,742.446 | 6.13% |
PRUDENTIAL INCOME BUILDER CL Z | MERRILL LYNCH,PIERCE,FENNER&SMITH FOR THE SOLE BENEFIT OF ITS CUST 4800 DEER LAKE DR E JACKSONVILLE FL 32246-6484 | 2,417,787.809 | 16.28% |
PRUDENTIAL INCOME BUILDER CL Z | PERSHING LLC 1 PERSHING PLAZA JERSEY CITY NJ 07399-0002 | 1,365,174.357 | 9.19% |
PRUDENTIAL INCOME BUILDER CL Z | RAYMOND JAMES OMNIBUS FOR MUTUAL FUNDS HOUSE ACCT FIRM ATTN COURTNEY WALLER 880 CARILLON PARKWAY ST PETERSBURG FL 33716 | 867,759.030 | 5.84% |
PRUDENTIAL INCOME BUILDER CL Q | EDWARD D JONES & CO ATTN: MUTUAL FUND SHAREHOLDER ACCOUNTING 201 PROGRESS PKWY MARYLAND HTS MO 63043-3003 | 297,211.893 | 99.89% |
■ | After a shareholder is deceased or permanently disabled (or, in the case of a trust account, after the death or disability of the grantor). This waiver applies to individual shareholders as well as shares held in joint tenancy, provided the shares were purchased before the death or permanent disability, |
■ | To provide for certain distributions—made without IRS penalty—from a qualified or tax-deferred retirement plan, benefit plan, IRA or Section 403(b) custodial account, |
■ | To withdraw excess contributions from a qualified or tax-deferred retirement plan, IRA or Section 403(b) custodial account, and |
■ | On certain redemptions effected through a Systematic Withdrawal Plan (Class B shares only). |
■ | A request for release of portfolio holdings shall be prepared setting forth a legitimate business purpose for such release which shall specify the Fund(s), the terms of such release, and frequency (e.g., level of detail, staleness). Such request shall address whether there are any conflicts of interest between the Fund and the investment adviser, subadviser, principal underwriter or any affiliated person thereof and how such conflicts shall be dealt with to demonstrate that the disclosure is in the best interest of the shareholders of the Fund(s). |
■ | The request shall be forwarded to PGIM Investments’ Product Development Group and to the Chief Compliance Officer or his delegate for review and approval. |
■ | A confidentiality agreement in the form approved by a Fund officer must be executed by the recipient of the portfolio holdings. |
■ | A Fund officer shall approve the release and the agreement. Copies of the release and agreement shall be sent to PGIM Investments’ Law Department. |
■ | Written notification of the approval shall be sent by such officer to PGIM Investments’ Fund Administration Group to arrange the release of portfolio holdings. |
■ | PGIM Investments’ Fund Administration Group shall arrange the release by the Custodian Bank. |
■ | Full holdings on a daily basis to Institutional Shareholder Services (ISS), Broadridge and Glass, Lewis & Co. (proxy voting administrator/agents) at the end of each day; |
■ | Full holdings on a daily basis to ISS (securities class action claims administrator) at the end of each day; |
■ | Full holdings on a daily basis to a Fund's Subadviser(s), Custodian Bank, sub-custodian (if any) and accounting agents (which includes the Custodian Bank and any other accounting agent that may be appointed) at the end of each day. When a Fund has more than one Subadviser, each Subadviser receives holdings information only with respect to the “sleeve” or segment of the Fund for which the Subadviser has responsibility; |
■ | Full holdings on a daily basis to eSecLending (securities lending agent) at the end of each day; |
■ | Full holdings to a Fund's independent registered public accounting firm as soon as practicable following the Fund's fiscal year-end or on an as-needed basis; |
■ | Full holdings to a Fund’s counsel on an as-needed basis; |
■ | Full holdings to counsel of a Fund’s independent board members on an as-needed basis; and |
■ | Full holdings to financial printers as soon as practicable following the end of a Fund's quarterly, semi-annual and annual period-ends. |
■ | Fund trades on a quarterly basis to Abel/Noser Corp. (an agency-only broker and transaction cost analysis company) as soon as practicable following a Fund's fiscal quarter-end; |
■ | Full holdings on a daily basis to FactSet Research Systems, Inc. (investment research provider) at the end of each day; |
■ | Full holdings on a daily basis to FT Interactive Data (a fair value information service) at the end of each day; |
■ | Full holdings on a quarterly basis to Frank Russell Company (investment research provider) when made available ; |
■ | Full holdings on a monthly basis to Fidelity Advisors (wrap program provider) approximately five days after the end of each month (Prudential Jennison Growth Fund and certain other selected Prudential Funds only); |
■ | Full holdings on a daily basis to ICE (InterContinental Exchange), IHS Markit and Thompson Reuters (securities valuation); |
■ | Full holdings on a daily basis to Standard & Poor’s Corporation (securities valuation); |
■ | Full holdings on a monthly basis to FX Transparency (foreign exchange/transaction analysis) when made available. |
I. | Policy |
II. | Procedures |
■ | Jennison managing the pension plan of the issuer. |
■ | Jennison or its affiliates have a material business relationship with the issuer. |
■ | Jennison investment professionals who are related to a person who is senior management or a director at a public company. |
III. | Internal Controls |
■ | Review potential Material Conflicts and decide whether a material conflict is present, and needs to be addressed according to these policies and procedures. |
■ | Review the Guidelines in consultation with the Investment Professionals and make revisions as appropriate. |
■ | Review these Policies and Procedures annually for accuracy and effectiveness, and recommend and adopt any necessary changes. |
■ | Review all Guideline overrides. |
■ | Review quarterly voting metrics and analysis published by the Proxy Team. |
■ | Review the performance of the proxy voting vendor and determine whether Jennison should continue to retain their services. |
IV. | Escalating Concerns |
V. | Discipline and Sanctions |
■ | Leading market positions in well-established industries. |
■ | High rates of return on funds employed. |
■ | Conservative capitalization structure with moderate reliance on debt and ample asset protection. |
■ | Broad margins in earnings coverage of fixed financial charges and high internal cash generation. |
■ | Well-established access to a range of financial markets and assured sources of alternate liquidity. |
■ | Amortization schedule-the longer the final maturity relative to other maturities the more likely it will be treated as a note. |
■ | Source of payment-the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note. |
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