PGIM INCOME BUILDER FUND | |||||
A: PCGAX | B: PBCFX | C: PCCFX | R: PCLRX | Z: PDCZX | R6: PCGQX |
IMPORTANT INFORMATION |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website (www.pgiminvestments.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report. |
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 1-800-225-1852 or by sending an e-mail request to PGIM Investments at shareholderreports@pgim.com. |
Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary or follow instructions included with this notice to elect to continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 1-800-225-1852 or send an email request to shareholderreports@pgim.com to let the Fund know you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Fund. |
To enroll in e-delivery, go to pgiminvestments.com/edelivery | |
As with all mutual funds, the Securities and Exchange Commission has not approved or disapproved the Fund's shares, nor has the SEC determined that this prospectus is complete or accurate. It is a criminal offense to state otherwise.Mutual funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company, member SIPC. Jennison Associates and PGIM, Inc. (PGIM) are registered investment advisers and Prudential Financial companies. QMA is the primary business name of Quantitative Management Associates LLC, a wholly owned subsidiary of PGIM. PGIM Fixed Income and PGIM Real Estate Investors are units of PGIM. © 2018 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, the Prudential logo, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. | ![]() |
Shareholder Fees (fees paid directly from your investment) | ||||||
Class A | Class B | Class C | Class R | Class Z | Class R6† | |
Maximum sales charge (load) imposed on purchases (as a percentage of offering price) | 4.50% | None | None | None | None | None |
Maximum deferred sales charge (load) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1.00% | 5.00% | 1.00% | None | None | None |
Maximum sales charge (load) imposed on reinvested dividends and other distributions | None | None | None | None | None | None |
Redemption fee | None | None | None | None | None | None |
Exchange fee | None | None | None | None | None | None |
Maximum account fee (accounts under $10,000) | $15 | $15 | $15 | None | None* | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||||
Class A | Class B | Class C | Class R | Class Z | Class R6(1) | |
Management fees | 0.70% | 0.70% | 0.70% | 0.70% | 0.70% | 0.70% |
Distribution and service (12b-1) fees | 0.30% | 1.00% | 1.00% | 0.75% | None | None |
Other expenses | 0.25% | 1.26% | 0.24% | 1.57% | 0.26% | 0.62% |
Acquired Fund fees and expenses | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% | 0.10% |
Total annual Fund operating expenses | 1.35% | 3.06% | 2.04% | 3.12% | 1.06% | 1.42% |
Fee waiver and/or expense reimbursement | (0.40)% | (1.36)% | (0.34)% | (1.92)% | (0.36)% | (0.72)% |
Total annual Fund operating expenses after fee waiver and/or expense reimbursement(2,3) | 0.95% | 1.70% | 1.70% | 1.20% | 0.70% | 0.70% |
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If Shares Are Redeemed | If Shares Are Not Redeemed | |||||||
Share Class | 1 Year | 3 Years | 5 Years | 10 Years | 1 Year | 3 Years | 5 Years | 10 Years |
Class A | $543 | $821 | $1,120 | $1,968 | $543 | $821 | $1,120 | $1,968 |
Class B | $673 | $1,117 | $1,587 | $2,679 | $173 | $817 | $1,487 | $2,679 |
Class C | $273 | $607 | $1,067 | $2,342 | $173 | $607 | $1,067 | $2,342 |
Class R | $122 | $782 | $1,467 | $3,296 | $122 | $782 | $1,467 | $3,296 |
Class Z | $72 | $301 | $550 | $1,262 | $72 | $301 | $550 | $1,262 |
Class R6† | $72 | $378 | $708 | $1,640 | $72 | $378 | $708 | $1,640 |
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■ | regulation by various government authorities; |
■ | government regulation of rates charged to customers; |
■ | service interruption due to environmental, operational or other mishaps as well as political and social unrest; |
■ | the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards; and |
■ | general changes in market sentiment towards the assets of infrastructure companies. |
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Average Annual Total Returns % (including sales charges) (as of 12-31-17) | ||||
Return Before Taxes | One Year | Five Years | Ten Years | Since Inception |
Class A shares | 2.99% | 4.40% | 4.03% | - |
Class B shares | 2.08% | 4.45% | 3.74% | - |
Class C shares | 6.08% | 4.60% | 3.74% | - |
Class R shares | 7.58% | 5.11% | 4.26% | - |
Class R6 shares† | 8.21% | N/A | N/A | 8.17% (12-30-16) |
Class Z Shares % | ||||
Return Before Taxes | 8.16% | 5.63% | 4.78% | - |
Return After Taxes on Distributions | 6.49% | 3.32% | 3.19% | - |
Return After Taxes on Distributions and Sale of Fund Shares | 4.81% | 3.75% | 3.30% | - |
Index % (reflects no deduction for fees, expenses or taxes) | ||||
S&P 500 Index | 21.82% | 15.78% | 8.49% | - |
Bloomberg Barclays US Aggregate Bond Index | 3.54% | 2.10% | 4.01% | - |
Lipper Average % (reflects no deduction for sales charges or taxes) | ||||
Lipper Flexible Portfolio Funds Average | 12.70% | 6.14% | 4.43% | - |
Investment Manager | Subadviser | Portfolio Managers | Title | Service Date |
PGIM Investments LLC | Quantitative Management Associates LLC | Edward L. Campbell, MBA, CFA | Managing Director and Portfolio Manager | September 2014 |
Rory Cummings, MBA, CFA | Vice President and Portfolio Manager | September 2014 | ||
Peter Vaiciunas, MBA, CFA | Senior Investment Associate and Portfolio Manager | February 2018 | ||
Jennison Associates LLC | Ubong “Bobby” Edemeka | Managing Director | September 2014 | |
Shaun Hong, CFA | Managing Director | September 2014 | ||
Stephen J. Maresca, CFA | Managing Director | July 2016 |
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Investment Manager | Subadviser | Portfolio Managers | Title | Service Date |
PGIM Fixed Income | David Bessey | Managing Director and Co-Head of PGIM Fixed Income's Emerging Markets Debt Team | September 2014 | |
Cathy L. Hepworth, CFA | Managing Director and Co-Head of PGIM Fixed Income's Emerging Markets Debt Team | September 2014 | ||
Mariusz Banasiak, CFA | Principal and Head of PGIM Fixed Income’s Foreign Exchange Team | June 2017 | ||
Robert Cignarella, CFA | Managing Director and Head of PGIM Fixed Income’s Leveraged Finance Team | September 2014 | ||
Brian Clapp, CFA | Principal and a high yield portfolio manager | September 2014 | ||
Robert Spano, CFA, CPA | Principal and a high yield portfolio manager | September 2014 | ||
Daniel Thorogood, CFA | Vice President and a high yield portfolio manager | September 2014 | ||
Ryan Kelly, CFA | Principal and a high yield portfolio manager | September 2014 | ||
PGIM Real Estate | Rick J. Romano, CFA | Managing Director and Head of Global Real Estate Securities | September 2014 | |
Daniel Cooney, CFA | Vice President & Portfolio Manager: North American Real Estate Securities | June 2018 | ||
Kwok Wing Cheong, CFA | Executive Director and Portfolio Manager: Asian Real Estate Securities | May 2015 | ||
PGIM Limited | Michael Gallagher | Executive Director and Portfolio Manager: European Real Estate Securities | September 2014 |
Class A** | Class C** | Class R** | Class Z** | Class R6† | |
Minimum initial investment* | $2,500 | $2,500 | None | Institutions: $5 million Group Retirement Plans: None | Institutions: $5 million Group Retirement Plans: None |
Minimum subsequent investment* | $100 | $100 | None | None | None |
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Underlying Funds | ||
Market Segment/ Strategy | Name of Underlying Fund | Investment Objective and Investment Strategies of Underlying Fund |
Equity | PGIM Jennison MLP Fund(1) | The Fund seeks to provide total return through a combination of current income and capital appreciation. The Fund normally invests at least 80% of its investable assets in MLPs and MLP related investments (together, MLP investments). The Fund’s investments may be of any capitalization size. The Fund’s MLP investments may include, but are not limited to: MLPs structured as LPs or LLCs; MLPs that are taxed as “C” corporations; I-Units issued by MLP affiliates; parent companies of MLPs; shares of companies owning MLP general partnership interests and other securities representing indirect beneficial interest ownership interests in MLP common units, “C” corporations that hold significant interests in MLPs; and other equity and fixed income securities and derivative instruments, including pooled investment vehicles and ETPs, that provide exposure to MLP investments. MLPs generally own and operate assets that are used in the energy sector, including assets used in exploring, developing, producing, generating, transporting (including marine), transmitting, terminal operation, storing, gathering, processing, refining, distributing, mining or marketing of natural gas, natural gas liquids, crude oil, refined products, coal or electricity, or that provide energy related equipment or services. Many of the MLPs in which the Fund invests operate oil, gas or petroleum facilities, or other facilities within the energy sector. The Fund intends to concentrate its investments in the energy sector. In deciding which stocks to buy, the investment subadviser relies on proprietary fundamental research, focused on the discovery of quality companies with predictable and sustainable cash flows. In narrowing the investment universe, the investment team compares prospective candidates’ competitive positioning, including strategically located assets; distribution coverage ratios; organic growth opportunities; expected dividend or distribution growth; the quality of the management team; balance sheet strength; and the support of the general partner. Valuation and the investment’s degree of liquidity factor into the portfolio managers’ decision calculus, as well. The team also monitors wider industry dynamics and interacts continually with the investment subadviser’s Natural Resources investment professionals to gain insights into emerging trends, such as the anticipation of an acceleration or reduction in production of particular oil and gas plays or a shift in regulatory or tax policy, which could affect potential or current positions. |
Equity | PGIM Jennison Utility Fund(1) | The Fund seeks total return through a combination of capital appreciation and current income. The Fund seeks investments whose prices will increase as well as pay the Fund dividends and other income. The Fund normally invests at least 80% of the Fund's investable assets in equity and equity-related and investment-grade debt securities of utility companies. This means the Fund concentrates its investments in utility companies, including electric utilities, gas utilities, water utilities, multi-utilities, independent power producers, diversified telecommunication services, wireless telecommunication services and oil & gas storage & transportation. The Fund may invest more than 5% of the Fund's assets in any one issuer. The Fund may invest up to 50% of its investable assets in foreign securities. |
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Underlying Funds | ||
Market Segment/ Strategy | Name of Underlying Fund | Investment Objective and Investment Strategies of Underlying Fund |
Equity | PGIM Jennison Global Infrastructure Fund(1) | The Fund seeks total return. The Fund normally will invest at least 80% of its investable assets in securities of US and foreign (non-US based) infrastructure companies. The Fund will consider a company an infrastructure company if the company is categorized, based on the Global Industry Classification Standard (GICS) industry classifications, as they may be amended from time to time, within the following industries: Aerospace and Defense, Air Freight and Logistics, Airlines, Building Products, Commercial Services and Supplies, Communications Equipment, Construction and Engineering, Construction Equipment, Diversified Telecommunication Services, Electrical Equipment, Electric Utilities, Energy Equipment and Services, Gas Utilities, Health Care Providers and Services, Independent Power Producers and Energy Traders, Industrial Conglomerates, Machinery, Marine, Metals and Mining, Multi-Utilities, Oil, Gas and Consumable Fuels, Rail and Road, Transportation Infrastructure, Water Utilities and Wireless Telecommunication Services, and the following infrastructure-related real estate investment trusts (REITs) identified under the GIC Sub-Industry classifications: Industrial REITs, Health Care REITs, and Specialized REIT. Examples of assets held by infrastructure companies include toll roads, airports, rail track, shipping ports, telecom infrastructure, hospitals, schools, utilities such as electricity, gas distribution networks and water, and oil and gas pipelines. |
Equity | PowerShares Preferred Portfolio(3) | The Fund seeks investment results that generally correspond to the price and yield (before fees and expenses) of The BofA Merrill Lynch Core Plus Fixed Rate Preferred Securities Index (the “Index”). The Fund normally will invest at least 80% of its total assets in fixed rate US dollar-denominated preferred securities that comprise the Index. The Index tracks the performance of fixed rate US dollar-denominated preferred securities issued in the US domestic market. Securities must be rated at least B3, based on an average of three leading ratings agencies: Moody’s, S&P and Fitch, Inc. (Fitch) and must have an investment-grade country risk profile (based on an average of Moody’s, S&P and Fitch foreign currency long-term sovereign debt ratings). The Fund will concentrate its investments (i.e., invest 25% or more of the value of its total assets) in securities of issuers in any one industry or sector only to the extent that the Index reflects a concentration in that industry or sector. |
Equity | iShares U.S. Preferred Stock ETF(4) | The Fund seeks to track the investment results of an index composed of U.S. preferred stocks. The Fund seeks to track the investment results of the S&P U.S. Preferred Stock IndexTM (the “Underlying Index”), which measures the performance of a select group of preferred stocks listed on the New York Stock Exchange (“NYSE”), NYSE Arca, Inc. (“NYSE Arca”), NYSE Amex, NASDAQ Global Select Market, NASDAQ Select Market or NASDAQ Capital Market. The Underlying Index does not seek to directly reflect the performance of the companies issuing the preferred stock. The Underlying Index includes preferred stocks with a market capitalization over $100 million that meet minimum price, liquidity, trading volume, maturity and other requirements determined by S&P Dow Jones Indices LLC (the “Index Provider” or “SPDJI”), a subsidiary of S&P Global, Inc. The Underlying Index excludes certain issues of preferred stock, such as those that are issued by special ventures (e.g., toll roads or dam operators) or structured products and brand name products issued by financial institutions that are packaged securities linked to indices or other stocks. |
Equity | SPDR Wells Fargo Preferred Stock ETF(3) | The SPDR Wells Fargo Preferred Stock ETF (the “Fund”) seeks to provide nvestment results that, before fees and expenses, correspond generally to the total return performance of an index based upon Preferred Securities. In seeking to track the performance of Wells Fargo Hybrid and Preferred Securities Aggregate Index (the “Index”), the Fund employs a sampling strategy, which means that the Fund is not required to purchase all of the securities represented in the Index. Instead, the Fund may purchase a subset of the securities in the Index in an effort to hold a portfolio of securities with generally the same risk and return characteristics of the Index. The quantity of holdings in the Fund will be based on a number of factors, including asset size of the Fund. |
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Underlying Funds | ||
Market Segment/ Strategy | Name of Underlying Fund | Investment Objective and Investment Strategies of Underlying Fund |
Fixed Income | PGIM Short-Term Corporate Bond Fund(2) | The Fund seeks high current income consistent with the preservation of principal. The Fund invests, under normal circumstances, at least 80% of its investable assets in bonds of corporations with varying maturities. For purposes of this policy, bonds include all fixed income securities, other than preferred stock, and corporations include all private issuers. The effective duration of the Fund's portfolio will generally be less than three years. The Fund will buy and sell securities to take advantage of investment opportunities based on the subadviser's fundamental credit research as well as analysis of market conditions, interest rates and general economic factors. |
Fixed Income | PGIM Short Duration High Yield Income Fund(2) | The Funds seeks to provide a high level of current income. The Fund will seek to achieve its investment objective by investing primarily in a diversified portfolio of high yield fixed income instruments that are rated below investment grade by a NRSRO or, if unrated, are considered by the investment subadviser to be of comparable quality. Under normal market conditions, the Fund will invest at least 80% of its investable assets in a diversified portfolio of high yield fixed income instruments that are below investment grade (commonly referred to as junk bonds) with varying maturities and other investments (including derivatives) with similar economic characteristics. The term “below investment grade” refers to instruments either rated Ba1 or lower by Moody’s, BB+ or lower by S&P or Fitch, or comparably rated by another NRSRO, or, if unrated, are considered by the investment subadviser to be of comparable quality. Although the Fund may invest in instruments of any duration or maturity, the Fund normally will seek to maintain a weighted average portfolio duration of three years or less and a weighted average maturity of five years or less. |
Fixed Income | PGIM Floating Rate Income Fund(2) | The Fund seeks to maximize current income. In addition the Fund seeks capital appreciation as a secondary investment objective, but only when consistent with the Fund's primary investment objective of seeking to maximize current income. Under normal market conditions, the Fund will invest at least 80% of its investable assets (net assets plus borrowings for investment purposes, if any) in floating rate loans and other floating rate debt securities. Floating rate loans are debt obligations that have interest rates which adjust or “float” periodically (normally on a monthly or quarterly basis) based on a generally recognized base rate such as the London Interbank Offered Rate (LIBOR) or the prime rate offered by one or more major US banks. |
Fixed Income | PGIM Short Duration Multi-Sector Bond Fund(2) | The Fund seeks total return. The Fund seeks to achieve its objective by investing in fixed income instruments, whereby issuers borrow money from investors in return for either a fixed or variable rate of interest and eventual repayment of the amount borrowed. The Fund invests, under normal circumstances, at least 80% of the Fund's investable assets in fixed income instruments with varying maturities. The Fund has the flexibility to allocate its investments across different sectors of the fixed income securities markets. The Fund's investment subadviser allocates assets among different sectors of the fixed income markets, including (but not limited to) US Government securities, mortgage-related and asset-backed securities, corporate debt securities, foreign debt securities and loan participations and assignments. The Fund is not obligated to invest in all of these sectors at a given time and, at times, may invest all of its assets in only one sector. Although the Fund may invest in instruments of any duration or maturity, the Fund normally will seek to maintain a weighted average portfolio duration of three years or less and a weighted average maturity of five years or less. The Fund's weighted average portfolio duration, however, may be longer at any time or from time to time depending on market conditions. |
Fixed Income | PGIM Absolute Return Bond Fund(2) | The Fund seeks positive returns over the long term, regardless of market conditions. The Fund has a flexible investment strategy and will invest in a variety of securities and instruments. The Fund will also use a variety of investment techniques in pursuing its investment objective, which may include managing duration, credit quality, yield curve positioning and currency exposure, as well as sector and security selection. Under normal market conditions, the Fund will invest at least 80% of its investable assets in debt securities and/or investments that provide exposure to bonds. The Fund may invest up to 50% of its total assets in debt securities that are rated below investment grade (which are sometimes referred to as junk bonds) or, if unrated, of comparable quality at the time of purchase as determined by the Fund’s investment subadviser. |
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Underlying Funds | ||
Market Segment/ Strategy | Name of Underlying Fund | Investment Objective and Investment Strategies of Underlying Fund |
Fixed Income | SPDR® Bloomberg Barclays Convertible Securities ETF(5) | The Fund seeks to provide investment results that, before fees and expenses, correspond generally to the price and yield performance of an index that tracks US convertible securities markets. Under normal market conditions, the Fund generally invests substantially all, but at least 80%, of its total assets in the securities comprising the Index or in securities that are determined to have economic characteristics that are substantially identical to the economic characteristics of the securities that comprise the Index. In addition, the Fund may invest in debt securities that are not included in the Index, cash and cash equivalents or money market instruments, such as repurchase agreements and money market funds. |
Fixed Income | PGIM Government Income Fund(2) | The investment objective of the Fund is to seek high current return. The Fund invests, under normal circumstances, at least 80% of its investable assets in US Government securities, including US Treasury bills, notes, bonds, strips and other debt securities issued by the US Treasury, and obligations, including mortgage-related securities, issued or guaranteed by US Government agencies or instrumentalities. The Fund may also invest in derivatives, including futures, swaps, and options, for purposes of hedging and/or improving the Fund’s returns. Some (but not all) of the US Government securities and mortgage-related securities in which the Fund will invest are backed by the full faith and credit of the US Government, which means that payment of interest and principal is guaranteed, but yield and market value are not. Most, if not all, of the Fund's debt securities are “investment-grade.” This means major rating services, like S&P or Moody's, have rated the securities within one of their four highest quality grades. Debt obligations in the fourth highest grade are regarded as investment-grade, but have speculative characteristics and are riskier than higher rated securities. |
Fixed Income | PGIM Total Return Bond Fund(2) | The investment objective of the Fund is total return. The Fund will seek to achieve its objective through a mix of current income and capital appreciation as determined by the Fund's investment subadviser. The Fund invests, under normal circumstances, at least 80% of the Fund's investable assets in bonds. For purposes of this policy, bonds include all fixed income securities, other than preferred stock, with a maturity at date of issue of greater than one year. The Fund's investment subadviser allocates assets among different debt securities, including (but not limited to) US Government securities, mortgage-related and asset-backed securities, corporate debt securities and foreign securities. The Fund may invest up to 30% of its investable assets in speculative high risk, below investment-grade securities having a rating of not lower than CCC. These securities are also known as high-yield debt securities or junk bonds. The Fund may invest up to 30% of its investable assets in foreign debt securities. |
Fixed Income | PGIM Global Total Return Fund(2) | The Fund's investment objective is to seek total return, made up of current income and capital appreciation. The Fund seeks investments that will increase in value, as well as pay the Fund interest and other income. The Fund generally invests in global developed market sovereign, corporate, mortgage related, and asset-backed debt securities. The Fund may also invest in the debt securities of emerging market sovereign, quai-sovereign, and corporate issuers. The Fund may invest in countries anywhere in the world, and normally invests at least 65% of its total assets in income-producing debt securities of US and foreign corporations and governments, supranational organizations, semi-governmental entities or government agencies, authorities or instrumentalities, investment-grade US or foreign mortgages and mortgage-related securities and US or foreign short-term and long-term bank debt securities or bank deposits. The Fund may invest in debt securities that are denominated in US dollars or foreign currencies. The Fund may invest up to 35% of its total assets in speculative lower-rated securities, also known as “junk” bonds, and unrated securities that the investment subadviser determines are of comparable quality to investment grade securities. |
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Underlying Funds | ||
Market Segment/ Strategy | Name of Underlying Fund | Investment Objective and Investment Strategies of Underlying Fund |
Fixed Income | iShares Convertible Bond ETF(4) | The Fund seeks to track the investment results of the Bloomberg Barclays U.S. Convertible Cash Pay Bond > $250MM Index (the “Underlying Index”). The Underlying Index is a subset of the Bloomberg Barclays U.S. Convertibles: Cash Pay Bonds Index, which is one of the four classes of the Bloomberg Barclays U.S. Convertibles Index (the “Parent Index”) (i.e., cash pay, zero coupon, preferred and mandatory convertible bonds) and measures the performance of the US dollar denominated convertibles market. The Underlying Index is market capitalization-weighted and consists of only cash pay convertible bonds. Cash pay convertible bonds allow the holder of the bond the option to convert into a pre-specified number of shares of the issuer’s common stock, but do not require conversion. |
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Principal Strategies: Investment Limits |
■ Equity and Equity-Related Securities: May range between 20% to 80% of total assets■ Fixed Income Instruments: May range between 20% to 80% of total assets |
Non-Principal Strategies: Investment Limits |
■ MLPs: Up to 25% of total assets ■ Derivatives: Up to 25% of total assets ■ Illiquid Securities: Up to 15% of net assets ■ Money Market Instruments: Up to 100% of total assets on a temporary basis ■ Short Sales (excluding Short Sales “against the box”): Up to 25% of net assets■ ETFs: Percentages vary |
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■ | regulation by various government authorities; |
■ | government regulation of rates charged to customers; |
■ | service interruption due to environmental, operational or other mishaps as well as political and social unrest; |
■ | the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards; and |
■ | general changes in market sentiment towards the assets of infrastructure companies. |
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Expected Distribution Schedule* | |
Dividends | Monthly |
Short-Term Capital Gains | Annually |
Long-Term Capital Gains | Annually |
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Share Class | Eligibility |
Class A** | Individual investors |
Class B* | Individual investors |
Class C** | Individual investors |
Class R** | Certain group retirement plans |
Class Z** | Certain group retirement plans, institutional investors and certain other investors |
Class R6† | Certain group retirement plans, institutional investors and certain other investors |
■ | Class A shares purchased in amounts of less than $1 million require you to pay a sales charge at the time of purchase, but the operating expenses of Class A shares are lower than the operating expenses of Class C shares. |
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Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are also subject to a contingent deferred sales charge (CDSC) of 1.00%. The CDSC is waived for certain retirement and/or benefit plans. | |
■ | Class C shares do not require you to pay a sales charge at the time of purchase, but do require you to pay a contingent deferred sales charge (CDSC) if you sell your shares within 12 months of purchase. The operating expenses of Class C shares are higher than the operating expenses of Class A shares. |
■ | The amount of your investment and any previous or planned future investments, which may qualify you for reduced sales charges for Class A shares under Rights of Accumulation or a Letter of Intent. |
■ | The length of time you expect to hold the shares and the impact of varying distribution fees. Over time, these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. For this reason, Class C shares are generally appropriate only for investors who plan to hold their shares for no more than 3 years. |
■ | The different sales charges that apply to each share class—Class A's front-end sales charge (and, in certain instances, CDSC) vs. Class C's CDSC. |
■ | Class C shares purchased in single amounts greater than $1 million are generally less advantageous than purchasing Class A shares. Purchase orders for Class C shares above this amount generally will not be accepted. |
■ | Because Class Z and Class R6 shares have lower operating expenses than Class A or Class C shares, as applicable, you should consider whether you are eligible to purchase such share classes. |
Class A** | Class B* | Class C** | Class Z** | Class R** | Class R6† | |
Minimum purchase amount | $2,500 | $2,500 | $2,500 | Institutions: $5 million Group Retirement Plans: None | None | Institutions: $5 million Group Retirement Plans: None |
Minimum amount for subsequent purchases | $100 | $100 | $100 | None | None | None |
Maximum initial sales charge | 4.50% of the public offering price | None | None | None | None | None |
Contingent Deferred Sales Charge (CDSC) (as a percentage of the lower of the original purchase price or the net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 5.00%(Year 1) 4.00%(Year 2) 3.00%(Year 3) 2.00%(Year 4) 1.00%(Years 5/6) 0.00%(Year 7) | 1.00% on sales made within 12 months of purchase | None | None | None |
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Class A** | Class B* | Class C** | Class Z** | Class R** | Class R6† | |
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.30% (0.25% currently) | 1.00% | 1.00% | None | 0.75% (0.50% currently) | None |
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Class A | Class C | Class Z | Class R | |
Existing Investors (Group Retirement Plans, IRAs, and all other investors) | No Change | No Change | No Change | No Change |
New Group Retirement Plans | Closed to group retirement plans wishing to add the share classes as new additions to plan menus on June 1, 2018, subject to certain exceptions below | |||
New IRAs | No Change | No Change | No Change | Closed to all new investors on June 1, 2018, subject to certain exceptions below |
All Other New Investors | No Change | No Change | No Change |
■ | Eligible group retirement plans who are exercising their one-time 90-day repurchase privilege in the Fund will be permitted to purchase such share classes. |
■ | Plan participants in a group retirement plan that offers Class A, Class C, Class R or Class Z shares of the Fund, as applicable, as of the Effective Date will be permitted to purchase such share classes of the Fund, even if the plan participant did not own shares of that class of the Fund as of the Effective Date. |
■ | Certain new group retirement plans will be permitted to offer such share classes of the Fund after the Effective Date, provided that the plan has or is actively negotiating a contractual agreement with the Fund’s distributor or service provider to offer such share classes of the Fund prior to or on the Effective Date. |
■ | New group retirement plans that combine with, replace or are otherwise affiliated with a current plan that invests in such share classes prior to or on the Effective Date will be permitted to purchase such share classes. |
■ | The Fund also reserves the right to refuse any purchase order that might disrupt management of the Fund or to otherwise modify the closure policy at any time on a case-by-case basis. |
■ | Shareholders owning Class C shares may continue to hold their Class C shares until the shares automatically convert to Class A shares under the conversion schedule, or until the shareholder redeems their Class C shares. |
Amount of Purchase | Sales Charge as a % of Offering Price* | Sales Charge as a % of Amount Invested* | Dealer Reallowance*** |
Less than $50,000 | 4.50% | 4.71% | 4.00% |
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Amount of Purchase | Sales Charge as a % of Offering Price* | Sales Charge as a % of Amount Invested* | Dealer Reallowance*** |
$50,000 to $99,999 | 4.00% | 4.17% | 3.50% |
$100,000 to $249,999 | 3.50% | 3.63% | 3.00% |
$250,000 to $499,999 | 2.50% | 2.56% | 2.00% |
$500,000 to $999,999 | 2.00% | 2.04% | 1.75% |
$1 million to $4,999,999** | None | None | 1.00% |
$5 million to $9,999,999** | None | None | 0.50% |
$10 million and over** | None | None | 0.25% |
■ | Use your Rights of Accumulation, which allow you or an eligible group of related investors to combine (1) the current value of Class A, Class B and Class C PGIM Fund shares you or the group already own, (2) the value of money market shares (other than Direct Purchase money market shares) you or an eligible group of related investors have received for shares of other PGIM Funds in an exchange transaction, and (3) the value of the shares you or an eligible group of related investors are purchasing; or |
■ | Sign a Letter of Intent, stating in writing that you or an eligible group of related investors will purchase a certain amount of shares in the Fund and other PGIM Funds within 13 months. |
■ | Purchases made prior to the effective date of the Letter of Intent will be applied toward the satisfaction of the Letter of Intent to determine the level of sales charge that will be paid pursuant to the Letter of Intent, but will not result in any reduction in the amount of any previously paid sales charge. |
■ | All accounts held in your name (alone or with other account holders) and taxpayer identification number (“TIN”); |
■ | Accounts held in your spouse's name (alone or with other account holders) and TIN (see definition of spouse below); |
■ | Accounts for your children or your spouse's children, including children for whom you and/or your spouse are legal guardian(s) (e.g., UGMAs and UTMAs); |
■ | Accounts in the name and TINs of your parents; |
■ | Trusts with you, your spouse, your children, your spouse's children and/or your parents as the beneficiaries; |
■ | With limited exclusions, accounts with the same address (exclusions include, but are not limited to, addresses for brokerage firms and other intermediaries and Post Office boxes); and |
■ | Accounts held in the name of a company controlled by you (a person, entity or group that holds 25% or more of the outstanding voting securities of a company will be deemed to control the company, and a partnership will be deemed to be controlled by each of its general partners), including employee benefit plans of the company where the accounts are held in the plan's TIN. |
■ | The person to whom you are legally married. We also consider your spouse to include the following: |
■ | An individual of the same gender with whom you have been joined in a civil union, or legal contract similar to marriage; |
■ | A domestic partner, who is an individual (including one of the same gender) with whom you have shared a primary residence for at least six months, in a relationship as a couple where you, your domestic partner or both provide for the personal or financial welfare of the other without a fee, to whom you are not related by blood; or |
■ | An individual with whom you have a common law marriage, which is a marriage in a state where such marriages are recognized between a man and a woman arising from the fact that the two live together and hold themselves out as being married. |
46 | PGIM Income Builder Fund |
■ | Mutual fund “wrap” or asset allocation programs, where the sponsor places fund trades, links its clients' accounts to a master account in the sponsor's name and charges its clients a management, consulting or other fee for its services; or |
■ | Mutual fund “supermarket” programs, where the sponsor links its clients' accounts to a master account in the sponsor's name and the sponsor charges a fee for its services. |
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■ | Certain directors, officers, current employees (including their spouses, children and parents) and former employees (including their spouses, children and parents) of Prudential and its affiliates, the PGIM Funds, and the subadvisers of the PGIM Funds; former employees must have an existing investment in the Fund; |
■ | Persons who have retired directly from active service with Prudential or one of its subsidiaries; |
■ | Registered representatives and employees of broker-dealers (including their spouses, children and parents) that offer Class A shares; |
■ | Investors in IRAs, provided that: (a) the purchase is made either from a directed rollover to such IRA or with the proceeds of a tax-free rollover of assets from a Benefit Plan for which Prudential Retirement (the institutional Benefit Plan recordkeeping entity of Prudential) provides administrative or recordkeeping services, in each case provided that such purchase is made within 60 days of receipt of the Benefit Plan distribution, and (b) the IRA is established through Prudential Retirement as part of its “Rollover IRA” program (regardless of whether or not the purchase consists of proceeds of a tax-free rollover of assets from a Benefit Plan described above); and |
■ | Clients of financial intermediaries, who (i) offer Class A shares through a no-load network or platform, (ii) charge clients an ongoing fee for advisory, investment, consulting or similar services, or (iii) offer self-directed brokerage accounts or other similar types of accounts that may or may not charge transaction fees to customers. |
48 | PGIM Income Builder Fund |
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■ | Mutual fund “wrap” or asset allocation programs where the sponsor places fund trades, links its clients' accounts to a master account in the sponsor's name and charges its clients a management, consulting or other fee for its services; or |
■ | Mutual fund “supermarket” programs where the sponsor links its clients' accounts to a master account in the sponsor's name and the sponsor charges a fee for its services. |
■ | Certain participants in the MEDLEY Program (group variable annuity contracts) sponsored by Prudential for whom Class Z shares of the PGIM Funds are an available option; |
■ | Current and former Directors/Trustees of mutual funds managed by PGIM Investments or any other affiliate of Prudential; |
■ | Current and former employees (including their spouses, children and parents) of Prudential and its affiliates; former employees must have an existing investment in the Fund; |
■ | Prudential (including any program or account sponsored by Prudential or an affiliate that includes the Fund as an available option); |
■ | PGIM Funds, including PGIM funds-of-funds; |
■ | Qualified state tuition programs (529 plans); and |
■ | Investors working with fee-based consultants for investment selection and allocations. |
50 | PGIM Income Builder Fund |
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52 | PGIM Income Builder Fund |
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54 | PGIM Income Builder Fund |
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■ | You are selling more than $100,000 of shares; |
■ | You want the redemption proceeds made payable to someone that is not in the Transfer Agent’s records; |
■ | You want the redemption proceeds sent to an address that is not in the Transfer Agent’s records; |
■ | You are a business or a trust; or |
■ | You are redeeming due to the death of the shareholder or on behalf of the shareholder. |
56 | PGIM Income Builder Fund |
■ | Amounts representing shares you purchased with reinvested dividends and distributions, |
■ | Amounts representing the increase in NAV above the total amount of payments for shares made during the past 12 months for Class A shares (in certain cases), six years for Class B shares, and 12 months for Class C shares, and |
■ | Amounts representing the cost of shares held beyond the CDSC period (12 months for Class A shares (in certain cases), six years for Class B shares, and 12 months for Class C shares). |
■ | After a shareholder is deceased or permanently disabled (or, in the case of a trust account, after the death or permanent 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; and |
■ | To withdraw excess contributions from a qualified or tax-deferred retirement plan, IRA or Section 403(b) custodial account. |
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■ | After a shareholder is deceased or permanently disabled (or, in the case of a trust account, after the death or permanent 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. |
■ | After a shareholder is deceased or permanently disabled (or, in the case of a trust account, after the death or permanent 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; and |
■ | To withdraw excess contributions from a qualified or tax-deferred retirement plan, IRA or Section 403(b) custodial account. |
58 | PGIM Income Builder Fund |
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60 | PGIM Income Builder Fund |
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62 | PGIM Income Builder Fund |
Class A Shares | ||||||||
Year Ended October 31, | Three Months Ended October 31, 2014(a) | Year Ended July 31, 2014 | ||||||
2018 | 2017 | 2016 | 2015 | |||||
Per Share Operating Performance(b): | ||||||||
Net Asset Value, Beginning of Period | $9.62 | $9.36 | $9.39 | $11.90 | $11.78 | $11.55 | ||
Income (loss) from investment operations: | ||||||||
Net investment income (loss) | 0.35 | 0.35 | 0.37 | 0.39 | 0.05 | 0.05 | ||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.46) | 0.32 | 0.06 | (0.70) | 0.14 | 0.89 | ||
Total from investment operations | (0.11) | 0.67 | 0.43 | (0.31) | 0.19 | 0.94 | ||
Less Dividends and Distributions | ||||||||
Dividends from net investment income | (0.33) | (0.36) | (0.40) | (0.44) | (0.07) | (0.12) | ||
Tax return of capital distributions | (0.06) | (0.05) | (0.06) | - | - | - | ||
Distributions from net realized gains | - | - | - | (1.76) | - | (0.59) | ||
Total dividends and distributions | (0.39) | (0.41) | (0.46) | (2.20) | (0.07) | (0.71) | ||
Net asset value, end of period | $9.12 | $9.62 | $9.36 | $9.39 | $11.90 | $11.78 | ||
Total Return(c): | (1.22)% | 7.34% | 4.76% | (2.59)% | 1.63% | 8.37% | ||
Ratios/Supplemental Data: | ||||||||
Net assets, end of period (000) | $153,762 | $171,047 | $165,090 | $141,432 | $84,863 | $85,292 | ||
Average net assets (000) | $169,651 | $167,079 | $143,159 | $109,965 | $84,889 | $86,591 | ||
Ratios to average net assets(d): | ||||||||
Expenses after waivers and/or expense reimbursement | 0.85% | 0.85% | 0.83% | 0.78% | 1.03%(e) | 1.51% | ||
Expenses before waivers and/or expense reimbursement | 1.25%(f) | 1.27% | 1.30% | 1.37% | 1.92%(e) | 1.56% | ||
Net investment income (loss) | 3.63% | 3.69% | 4.05% | 3.96% | 1.58%(e) | 0.43% | ||
Portfolio turnover rate(g) | 114% | 102% | 90% | 93% | 140% | 478% |
(a) | For the three month period ended October 31, 2014. The Fund changed its fiscal year end from July 31 to October 31, effective October 31, 2014. |
(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 Fund invests. |
(e) | Annualized. |
(f) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(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. |
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Class B Shares | ||||||||
Year Ended October 31, | Three Months Ended October 31, 2014(a) | Year Ended July 31, 2014 | ||||||
2018 | 2017 | 2016 | 2015 | |||||
Per Share Operating Performance(b): | ||||||||
Net Asset Value, Beginning of Period | $9.45 | $9.19 | $9.23 | $11.74 | $11.59 | $11.38 | ||
Income (loss) from investment operations: | ||||||||
Net investment income (loss) | 0.27 | 0.28 | 0.30 | 0.32 | 0.02 | (0.04) | ||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.46) | 0.33 | 0.05 | (0.70) | 0.15 | 0.88 | ||
Total from investment operations | (0.19) | 0.61 | 0.35 | (0.38) | 0.17 | 0.84 | ||
Less Dividends and Distributions | ||||||||
Dividends from net investment income | (0.27) | (0.31) | (0.34) | (0.37) | (0.02) | (0.04) | ||
Tax return of capital distributions | (0.05) | (0.04) | (0.05) | - | - | - | ||
Distributions from net realized gains | - | - | - | (1.76) | - | (0.59) | ||
Total dividends and distributions | (0.32) | (0.35) | (0.39) | (2.13) | (0.02) | (0.63) | ||
Net asset value, end of period | $8.94 | $9.45 | $9.19 | $9.23 | $11.74 | $11.59 | ||
Total Return(c): | (2.08)% | 6.69% | 3.97% | (3.35)% | 1.47% | 7.52% | ||
Ratios/Supplemental Data: | ||||||||
Net assets, end of period (000) | $1,720 | $2,332 | $2,575 | $3,083 | $4,810 | $5,180 | ||
Average net assets (000) | $2,080 | $2,532 | $2,762 | $3,824 | $5,005 | $5,826 | ||
Ratios to average net assets(d): | ||||||||
Expenses after waivers and/or expense reimbursement | 1.60% | 1.60% | 1.58% | 1.51% | 1.78%(e) | 2.26% | ||
Expenses before waivers and/or expense reimbursement | 2.96%(f) | 1.97% | 2.00% | 2.09% | 2.59%(e) | 2.26% | ||
Net investment income (loss) | 2.88% | 2.95% | 3.34% | 3.24% | 0.80%(e) | (0.31)% | ||
Portfolio turnover rate(g) | 114% | 102% | 90% | 93% | 140% | 478% |
(a) | For the three month period ended October 31, 2014. The Fund changed its fiscal year end from July 31 to October 31, effective October 31, 2014. |
(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 Fund invests. |
(e) | Annualized. |
(f) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(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. |
64 | PGIM Income Builder Fund |
Class C Shares | ||||||||
Year Ended October 31, | Three Months Ended October 31, 2014(a) | Year Ended July 31, 2014 | ||||||
2018 | 2017 | 2016 | 2015 | |||||
Per Share Operating Performance(b): | ||||||||
Net Asset Value, Beginning of Period | $9.44 | $9.18 | $9.23 | $11.74 | $11.59 | $11.38 | ||
Income (loss) from investment operations: | ||||||||
Net investment income (loss) | 0.27 | 0.27 | 0.30 | 0.31 | 0.02 | (0.04) | ||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.45) | 0.34 | 0.04 | (0.69) | 0.15 | 0.88 | ||
Total from investment operations | (0.18) | 0.61 | 0.34 | (0.38) | 0.17 | 0.84 | ||
Less Dividends and Distributions | ||||||||
Dividends from net investment income | (0.27) | (0.31) | (0.34) | (0.37) | (0.02) | (0.04) | ||
Tax return of capital distributions | (0.05) | (0.04) | (0.05) | - | - | - | ||
Distributions from net realized gains | - | - | - | (1.76) | - | (0.59) | ||
Total dividends and distributions | (0.32) | (0.35) | (0.39) | (2.13) | (0.02) | (0.63) | ||
Net asset value, end of period | $8.94 | $9.44 | $9.18 | $9.23 | $11.74 | $11.59 | ||
Total Return(c): | (1.98)% | 6.69% | 3.86% | (3.35)% | 1.47% | 7.53% | ||
Ratios/Supplemental Data: | ||||||||
Net assets, end of period (000) | $109,767 | $129,397 | $108,543 | $75,622 | $17,474 | $17,887 | ||
Average net assets (000) | $123,584 | $122,174 | $88,099 | $44,389 | $17,513 | $17,793 | ||
Ratios to average net assets(d): | ||||||||
Expenses after waivers and/or expense reimbursement | 1.60% | 1.60% | 1.58% | 1.55% | 1.78%(e) | 2.26% | ||
Expenses before waivers and/or expense reimbursement | 1.94%(f) | 1.98% | 2.00% | 2.05% | 2.61%(e) | 2.26% | ||
Net investment income (loss) | 2.88% | 2.93% | 3.27% | 3.19% | 0.82%(e) | (0.32)% | ||
Portfolio turnover rate(g) | 114% | 102% | 90% | 93% | 140% | 478% |
(a) | For the three month period ended October 31, 2014. The Fund changed its fiscal year end from July 31 to October 31, effective October 31, 2014. |
(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 Fund invests. |
(e) | Annualized. |
(f) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(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. |
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Class R Shares | ||||||||
Year Ended October 31, | Three Months Ended October 31, 2014(a) | Year Ended July 31, 2014 | ||||||
2018 | 2017 | 2016 | 2015 | |||||
Per Share Operating Performance(b): | ||||||||
Net Asset Value, Beginning of Period | $9.61 | $9.34 | $9.38 | $11.89 | $11.75 | $11.52 | ||
Income (loss) from investment operations: | ||||||||
Net investment income (loss) | 0.31 | 0.33 | 0.35 | 0.36 | 0.04 | 0.02 | ||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.45) | 0.33 | 0.05 | (0.69) | 0.15 | 0.89 | ||
Total from investment operations | (0.14) | 0.66 | 0.40 | (0.33) | 0.19 | 0.91 | ||
Less Dividends and Distributions | ||||||||
Dividends from net investment income | (0.31) | (0.34) | (0.38) | (0.42) | (0.05) | (0.09) | ||
Tax return of capital distributions | (0.06) | (0.05) | (0.06) | - | - | - | ||
Distributions from net realized gains | - | - | - | (1.76) | - | (0.59) | ||
Total dividends and distributions | (0.37) | (0.39) | (0.44) | (2.18) | (0.05) | (0.68) | ||
Net asset value, end of period | $9.10 | $9.61 | $9.34 | $9.38 | $11.89 | $11.75 | ||
Total Return(c): | (1.58)% | 7.20% | 4.40% | (2.83)% | 1.60% | 8.13% | ||
Ratios/Supplemental Data: | ||||||||
Net assets, end of period (000) | $1,768 | $610 | $561 | $359 | $393 | $288 | ||
Average net assets (000) | $1,196 | $579 | $404 | $427 | $347 | $275 | ||
Ratios to average net assets(d): | ||||||||
Expenses after waivers and/or expense reimbursement | 1.10% | 1.10% | 1.08% | 1.03% | 1.25%(e) | 1.76% | ||
Expenses before waivers and/or expense reimbursement | 3.02%(f) | 1.73% | 1.75% | 1.82% | 2.45%(e) | 2.01% | ||
Net investment income (loss) | 3.25% | 3.41% | 3.76% | 3.69% | 1.45%(e) | 0.19% | ||
Portfolio turnover rate(g) | 114% | 102% | 90% | 93% | 140% | 478% |
(a) | For the three month period ended October 31, 2014. The Fund changed its fiscal year end from July 31 to October 31, effective October 31, 2014. |
(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 Fund invests. |
(e) | Annualized. |
(f) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(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. |
66 | PGIM Income Builder Fund |
Class Z Shares | ||||||||
Year Ended October 31, | Three Months Ended October 31, 2014(a) | Year Ended July 31, 2014 | ||||||
2018 | 2017 | 2016 | 2015 | |||||
Per Share Operating Performance(b): | ||||||||
Net Asset Value, Beginning of Period | $9.69 | $9.42 | $9.45 | $11.96 | $11.85 | $11.62 | ||
Income (loss) from investment operations: | ||||||||
Net investment income (loss) | 0.37 | 0.38 | 0.40 | 0.41 | 0.06 | 0.08 | ||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.46) | 0.33 | 0.05 | (0.69) | 0.15 | 0.89 | ||
Total from investment operations | (0.09) | 0.71 | 0.45 | (0.28) | 0.21 | 0.97 | ||
Less Dividends and Distributions | ||||||||
Dividends from net investment income | (0.36) | (0.39) | (0.42) | (0.47) | (0.10) | (0.15) | ||
Tax return of capital distributions | (0.06) | (0.05) | (0.06) | - | - | - | ||
Distributions from net realized gains | - | - | - | (1.76) | - | (0.59) | ||
Total dividends and distributions | (0.42) | (0.44) | (0.48) | (2.23) | (0.10) | (0.74) | ||
Net asset value, end of period | $9.18 | $9.69 | $9.42 | $9.45 | $11.96 | $11.85 | ||
Total Return(c): | (1.08)% | 7.67% | 4.98% | (2.33)% | 1.74% | 8.59% | ||
Ratios/Supplemental Data: | ||||||||
Net assets, end of period (000) | $133,029 | $142,478 | $84,046 | $74,114 | $5,965 | $5,287 | ||
Average net assets (000) | $141,463 | $119,795 | $64,595 | $45,082 | $5,426 | $4,306 | ||
Ratios to average net assets(d): | ||||||||
Expenses after waivers and/or expense reimbursement | 0.60% | 0.60% | 0.58% | 0.56% | 0.77%(e) | 1.26% | ||
Expenses before waivers and/or expense reimbursement | 0.96%(f) | 0.98% | 1.00% | 1.03% | 1.64%(e) | 1.26% | ||
Net investment income (loss) | 3.87% | 3.90% | 4.35% | 4.15% | 1.87%(e) | 0.69% | ||
Portfolio turnover rate(g) | 114% | 102% | 90% | 93% | 140% | 478% |
(a) | For the three month period ended October 31, 2014. The Fund changed its fiscal year end from July 31 to October 31, effective October 31, 2014. |
(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 Fund invests. |
(e) | Annualized. |
(f) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(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. |
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Class R6 Shares | |||||
Year Ended October 31, 2018 | December 30, 2016(a) through October 31, 2017 | ||||
Per Share Operating Performance(b): | |||||
Net Asset Value, Beginning of Period | $9.69 | $9.44 | |||
Income (loss) from investment operations: | |||||
Net investment income (loss) | 0.37 | 0.30 | |||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.46) | 0.31 | |||
Total from investment operations | (0.09) | 0.61 | |||
Less Dividends and Distributions | |||||
Dividends from net investment income | (0.36) | (0.31) | |||
Tax return of capital distributions | (0.06) | (0.05) | |||
Total dividends and distributions | (0.42) | (0.36) | |||
Net asset value, end of period | $9.18 | $9.69 | |||
Total Return(c): | (1.07)% | 6.58% | |||
Ratios/Supplemental Data: | |||||
Net assets, end of period (000) | $3,343 | $2,622 | |||
Average net assets (000) | $3,088 | $1,384 | |||
Ratios to average net assets(d): | |||||
Expenses after waivers and/or expense reimbursement | 0.60% | 0.60%(e) | |||
Expenses before waivers and/or expense reimbursement | 1.32%(f) | 0.90%(e) | |||
Net investment income (loss) | 3.85% | 3.74%(e) | |||
Portfolio turnover rate(g) | 114% | 102% |
(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 Fund invests. |
(e) | Annualized. |
(f) | Effective November 1, 2017, class specific expenses include transfer agent fees and expenses and registration fees, which are charged to their respective share class. |
(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. |
68 | PGIM Income Builder Fund |
Visit our website at www.pgiminvestments.com | 69 |
■ | Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan |
■ | Shares purchased by or through a 529 Plan, if applicable |
■ | Shares purchased through a Merrill Lynch affiliated investment advisory program |
■ | Shares purchased by third party investment advisors on behalf of their advisory clients through Merrill Lynch’s platform |
■ | Shares of funds purchased through the Merrill Edge Self-Directed platform |
■ | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family) |
■ | Shares exchanged from Class C (i.e. level-load) shares of the same fund in the month of or following the 10-year anniversary of the purchase date |
■ | Employees and registered representatives of Merrill Lynch or its affiliates and their family members |
■ | Directors or Trustees of the Fund, and employees of the Fund’s investment adviser or any of its affiliates, as described in this prospectus |
■ | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement) |
■ | Death or disability of the shareholder |
■ | Shares sold as part of a systematic withdrawal plan as described in this prospectus |
■ | Return of excess contributions from an IRA Account |
■ | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70 1⁄2 |
■ | Shares sold to pay Merrill Lynch fees but only if the transaction is initiated by Merrill Lynch |
■ | Shares acquired through a Right of Reinstatement |
■ | Shares held in retirement brokerage accounts, that are exchanged for a lower cost share class due to transfer to certain fee based accounts or platforms (applicable to Class A and C shares only) |
■ | Breakpoints as described in this prospectus |
■ | Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Merrill Lynch. Eligible fund family assets not held at Merrill Lynch may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets |
■ | Letters of Intent (LOI) which allow for breakpoint discounts based on anticipated purchases within a fund family, through Merrill Lynch, over a 13-month period of time (if applicable) |
■ | Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans |
■ | Morgan Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules |
■ | Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund |
■ | Shares purchased through a Morgan Stanley self-directed brokerage account |
■ | Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion program |
■ | Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge. |
■ | Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs. |
■ | Shares purchased through an Ameriprise Financial investment advisory program (if an Advisory or similar share class for such investment advisory program is not available). |
■ | Shares purchased by third party investment advisors on behalf of their advisory clients through Ameriprise Financial’s platform (if an Advisory or similar share class for such investment advisory program is not available). |
■ | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
■ | Shares exchanged from Class C shares of the same fund in the month of or following the 10-year anniversary of the purchase date. To the extent that this prospectus elsewhere provides for a waiver with respect to such shares following a shorter holding period, that waiver will apply to exchanges following such shorter period. To the extent that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares for load waived shares, that waiver will also apply to such exchanges. |
■ | Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family members. |
■ | Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s spouse, advisor’s lineal ascendant (mother, father, |
grandmother, grandfather, great grandmother, great grandfather), advisor’s lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a covered family member who is a lineal descendant. | |
■ | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e. Rights of Reinstatement). |
■ | Shares purchased in an investment advisory program. |
■ | Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family). |
■ | Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James. |
■ | Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement). |
■ | A shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James. |
■ | Death or disability of the shareholder. |
■ | Shares sold as part of a systematic withdrawal plan as described in the fund’s prospectus. |
■ | Return of excess contributions from an IRA Account. |
■ | Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70 1⁄2 as described in the fund’s prospectus. |
■ | Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James. |
■ | Shares acquired through a right of reinstatement. |
■ | Breakpoints as described in this prospectus. |
■ | Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the rights of accumulation calculation only if the shareholder notifies his or her financial advisor about such assets. |
FOR MORE INFORMATION Please read this Prospectus before you invest in the Fund and keep it for future reference. For information or shareholder questions contact: | |
■ MAIL Prudential Mutual Fund Services LLC PO Box 9658 Providence, RI 02940■ WEBSITE www.pgiminvestments.com | ■ TELEPHONE (800) 225-1852 (973) 367-3529 (from outside the US) |
■ E-DELIVERY To receive your mutual fund documents on-line, 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. |
The Annual and Semi-Annual Reports and the SAI contain additional information about the Fund. Shareholders may obtain free copies of the SAI, Annual Report and Semi-Annual Report as well as other information about the Fund and may make other shareholder inquiries through the telephone number, address and website listed above. | |
■ STATEMENT OF ADDITIONAL INFORMATION (SAI) (incorporated by reference into this Prospectus) ■ SEMI-ANNUAL REPORT | ■ ANNUAL REPORT (contains a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during the last fiscal year) |
You can also obtain copies of Fund documents, including the SAI, from the Securities and Exchange Commission as follows (the SEC charges a fee to copy documents): | |
■ ELECTRONIC REQUEST publicinfo@sec.gov | ■ VIA THE INTERNET on the EDGAR Database at www.sec.gov |
PGIM Income Builder Fund | ||||||
Share Class | A | B | C | R | Z | R6 |
NASDAQ | PCGAX | PBCFX | PCCFX | PCLRX | PDCZX | PCGQX |
CUSIP | 74442X108 | 74442X207 | 74442X306 | 74442X405 | 74442X504 | 74442X769 |
MFSP504STAT | The Fund's Investment Company Act File No. 811-08915 |
Term | Definition |
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 |
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 |
LIBOR | London Interbank Offered Rate |
Manager or PGIM Investments | PGIM Investments LLC |
Moody’s | Moody’s Investors Service, 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 |
OTC | Over the Counter |
Prudential | Prudential Financial, Inc. |
PMFS | Prudential Mutual Fund Services LLC |
QPTP | “Qualified publicly traded partnership” as the term is used in the Internal Revenue Code of 1986, as amended |
REIT | Real Estate Investment Trust |
RIC | Regulated Investment Company, as the term is used in the Internal Revenue Code of 1986, as amended |
Term | Definition |
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: 96 | 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 (66) Board Member Portfolios Overseen: 96 | 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 (66) Board Member Portfolios Overseen: 96 | 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 (58) Board Member Portfolios Overseen: 95 | 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 |
Keith F. Hartstein (62) Board Member & Independent Chair Portfolios Overseen: 96 | 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 (56) Board Member Portfolios Overseen: 95 | 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, Kabbage, Inc. (since July 2018) (financial services); Independent Director, Corporate Capital Trust (2017-2018) (a business development company). | Since September 2017 |
Michael S. Hyland, CFA (73) Board Member Portfolios Overseen: 96 | 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 |
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 |
Richard A. Redeker (75) Board Member Portfolios Overseen: 96 | 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: 95 | 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 |
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 (56) Board Member & President Portfolios Overseen: 96 | 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 (45) Board Member & Vice President Portfolios Overseen:96 | 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* (59) Board Member Portfolios Overseen: 95 | Retired; formerly Treasurer and Principal Financial and Accounting Officer of the PGIM 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. | Formerly 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 (63) 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 (43) Chief Compliance Officer | Chief Compliance Officer (September 2014-Present) of PGIM Investments LLC; Chief Compliance Officer (September 2014-Present) of the PGIM Funds, Target Funds, Advanced Series Trust, The Prudential Series Fund, Prudential's Gibraltar Fund, Inc., PGIM Global Short Duration High Yield Income Fund, Inc., PGIM Short Duration High Yield Fund, Inc. and PGIM 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 |
Dino Capasso (44) 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 |
Andrew R. French (56) 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 |
Jonathan D. Shain (60) 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 (44) 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 |
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 |
Brian D. Nee (52) Treasurer and Principal Financial and Accounting Officer | Vice President and Head of Finance of PGIM Investments LLC (since August 2015) and PGIM Global Partners (since February 2017); formerly, Vice President, Treasurer’s Department of Prudential (September 2007-August 2015). | Since July 2018 |
Peter Parrella (60) 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 (51) 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 (57) Assistant Treasurer | Vice President (since 2011) and Director (2008-2011) within Prudential Mutual Fund Administration. | Since April 2014 |
Kelly A. Coyne (50) 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 PGIM Funds, The Prudential Variable Contract Accounts, PGIM ETF Trust, PGIM Short Duration High Yield Fund, Inc., PGIM 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 | $1,953 | None | None | $250,000 (31/90)* |
Kevin J. Bannon | $1,973 | None | None | $254,000 (31/90)* |
Linda W. Bynoe** | $2,027 | None | None | $254,000 (31/90)* |
Barry H. Evans** | $1,883 | None | None | $82,000 (30/89)* |
Keith F. Hartstein** | $2,237 | None | None | $315,000 (31/90)* |
Laurie Simon Hodrick** | $1,893 | None | None | $83,000 (30/89)* |
Michael S. Hyland** | $1,950 | None | None | $248,000 (31/90)* |
Richard A. Redeker** | $1,943 | None | None | $263,500 (31/90)* |
Brian K. Reid # | $1,277 | None | None | None |
Stephen G. Stoneburn**† | $1,170 | 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‡ | $1,777 | None | None | $217,645 (30/89)* |
Board Committee Meetings (for most recently completed fiscal year) | ||
Audit Committee | Nominating & Governance Committee | Gibraltar Investment Committee |
4 | 4 | 4 |
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 | Over $100,000 |
Michael S. Hyland | None | Over $100,000 |
Richard A. Redeker | Over $100,000 | Over $100,000 |
Brian K. Reid | 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 subadviser pursuant to a subadvisory agreement between PGIM Investments and such 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 | |||
2018 | 2017 | 2016 | |
Gross Fee | $3,087,433 | $2,893,132 | $2,093,137 |
Amount Waived/Reimbursed by PGIM Investments | $(1,606,130) | $(1,560,570) | $(1,258,611) |
Net Fee | $1,481,303 | $1,332,562 | $834,526 |
Subadvisory Fee Rates & Subadvisory Fees Paid | ||||
Subadviser | Fee Rate | 2018 | 2017 | 2016 |
Quantitative Management Associates LLC (QMA)* | 0.175% | $771,858 | $723,283 | $523,284 |
Jennison Associates LLC (Jennison) (Non-MLP investments) | 0.425% to $500 million; 0.40% over $500 million to $1 billion; 0.375% over $1 billion | $434,749 | $356,952 | $260,231 |
Jennison (MLPs) | 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** | $266,560 | $339,360 | $118,853 |
PGIM Fixed Income (Broad Market High Yield strategy) | 0.25% | $205,888 | $225,046 | $158,265 |
PGIM Fixed Income (Emerging Markets Debt strategy) | 0.45% to $200 million; 0.40% over $200 million | $258,602 | $271,500 | $240,715 |
PGIM Real Estate | 0.40% | $193,369 | $155,569 | $134,844 |
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 | Edward L. Campbell, MBA, CFA | 34/$84,685,398,281 | 5/$2,497,496,407 | 21/$1,458,034,859 |
Rory Cummings, MBA, CFA | 34/$84,685,398,281 | 5/$2,497,496,407 | 21/$1,458,034,859 | |
Peter Vaiciunas, MBA, CFA | 34/$84,685,398,281 | 5/$2,497,496,407 | 21/$1,458,034,859 | |
Jennison Associates LLC | Ubong “Bobby” Edemeka | 7/$5,437,741,000 | 1/$11,997,000 | None |
Shaun Hong, CFA | 7/$5,437,741,000 | 1/$11,997,000 | None | |
Stephen J. Maresca, CFA | 1/$529,628,000 | None | None | |
PGIM Fixed Income* | David Bessey | 22/ $4,364,146,020 | 24/ $3,384,626,366 1/ $39,857,084 | 184/ $42,034,493,622 1/ $10,742,606 |
Cathy L. Hepworth, CFA | 22/ $4,364,146,020 | 24/ $3,384,626,366 1/ $39,857,084 | 184/ $42,034,493,622 1/ $10,742,606 | |
Mariusz Banasiak, CFA | 22/ $4,364,146,020 | 24/ $3,384,626,366 1/ $39,857,084 | 184/ $42,034,493,622 1/ $10,742,606 | |
Robert Cignarella, CFA | 31/ $16,139,240,805 | 17/ $6,693,555,248 | 106/ $13,910,617,214 | |
Brian Clapp, CFA | 31/ $14,916,287,558 | 17/ $6,693,555,248 | 106/ $13,391,881,235 | |
Robert Spano, CFA, CPA | 31/ $14,916,287,558 | 17/ $6,693,555,248 | 106/ $13,391,881,235 | |
Daniel Thorogood, CFA | 31/ $14,916,287,558 | 17/ $6,693,555,248 | 106/ $13,391,881,235 | |
Ryan Kelly, CFA | 31/ $14,916,287,558 | 17/ $6,693,555,248 | 106/ $13,391,881,235 | |
PGIM Real Estate | Rick J. Romano, CFA | 9/$2,644,169,933 | None | 4/$581,667,062 |
Kwok Wing Cheong, CFA | 9/$2,644,169,933 | None | 4/$581,667,062 | |
Daniel Cooney | 9/$2,644,169,933 | None | 4/$581,667,062 | |
PGIM Limited | Michael Gallagher | 9/$2,644,169,933 | None | 4/$581,667,062 |
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 | Edward L. Campbell, MBA, CFA | $10,001 - $50,000 |
Rory Cummings, MBA, CFA | $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 | |
Stephen J. Maresca, CFA | $100,001 - $500,000 | |
PGIM Fixed Income | David Bessey | None |
Personal Investments and Financial Interests of the Portfolio Managers | ||
Subadviser | Portfolio Managers | Investments and Other Financial Interests in the Fund and Similar Strategies* |
Cathy L. Hepworth, CFA | None | |
Mariusz Banasiak, CFA | None | |
Robert Cignarella, CFA | $10,001 - $50,000 | |
Brian Clapp, CFA | None | |
Robert Spano, CFA, CPA | None | |
Daniel Thorogood, CFA | None | |
Ryan Kelly, CFA | None | |
PGIM Real Estate | Rick J. Romano, CFA | None |
Kwok Wing Cheong, CFA | None | |
Daniel Cooney | None | |
PGIM Limited | Michael Gallagher | 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. 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 accounts 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 | $535,400 |
Fees and/or compensation for securities lending activities and related services | |
Fees paid to securities lending agent from a revenue split | $(9,871) |
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) | $(15,870) |
Administrative fees not included in revenue split | None |
Indemnification fee not included in revenue split | None |
Rebate (paid to borrower) | $(342,312) |
Other fees not included in revenue split (specify) | None |
Aggregate fees/compensation for securities lending activities | $(368,053) |
Net income from securities lending activities | $167,347 |
Fees Paid to PMFS | Amount |
$95,565 |
Payments Received by the Distributor | |
PGIM Income Builder Fund | |
Class A Distribution and Service (12b-1) fees | $424,126 |
Class A Initial Sales Charges | $431,838 |
Class A Contingent Deferred Sales Charges (CDSC’s) | $581 |
Class B Distribution and Service (12b-1) fees | $20,802 |
Class B Contingent Deferred Sales Charges (CDSC’s) | $682 |
Class C Distribution and Service (12b-1) fees | $1,235,842 |
Class C Contingent Deferred Sales Charges (CDSC’s) | $20,681 |
Class R Distribution and Service (12b-1) fees | $5,980 |
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 |
PGIM Income Builder Fund | |||||
Class A | $0 | $387,142 | $68,302 | $455,444 |
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 | $5,089 | $111 | $5,200 | |
Class C | $0 | $1,044,480 | $24,693 | $1,069,173 | |
Class R | $0 | $1,597 | $3,752 | $5,349 |
■ | 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 | $9.12 |
Maximum initial sales charge (4.50% of public offering price)* | $0.43 |
Maximum offering price to public | $9.55 |
Class B | |
NAV, offering price and redemption price per Class B share | $8.94 |
Class C | |
NAV, offering price and redemption price per Class C share | $8.94 |
Class R | |
NAV, offering price and redemption price per Class R share | $9.10 |
Class Z | |
NAV, offering price and redemption price per Class Z share | $9.18 |
Class R6 (formerly, Class Q) | |
NAV, offering price and redemption price per Class R6 share | $9.18 |
Total brokerage commissions paid by the Fund | 2018 | 2017 | 2016 |
$325,565 | $351,478 | $233,601 | |
Total brokerage commissions paid to affiliated brokers | None | None | None |
Percentage of total brokerage commissions paid to affiliated brokers | 0.00% | 0.00% | 0.00% |
Percentage of the aggregate dollar amount of portfolio transactions involving the payment of commissions to affiliated brokers | 0.00% | 0.00% | 0.00% |
Broker-Dealer Securities Holdings ($) (as of most recently completed fiscal year) | |||
Fund Name | Broker/Dealer Name | Equity/Debt | Amount |
PGIM Income Builder Fund | Banc of America Securities LLC | Equity | $1,922,085 |
Citigroup Global Markets, Inc. | Debt | $101,625 | |
JPMorgan Chase & Co. | Equity | $3,136,505 |
Principal Fund Shareholders (as of December 03, 2018) | |||
Fund Name and Share Class | Shareholder Name and Address | No. of Shares | % of Class |
PGIM Income Builder Fund – Class A | National Financial Services LLC For Exclusive Benefit of Our Customers Attn: Mutual Funds Dept – 4th Floor 499 Washington Blvd Jersey City, NJ 07310 | 3,096,701.220 | 18.43% |
Wells Fargo Clearing Svcs LLC Special Custody Acct for the Exclusive Benefit of Customer 2801 Market St. Saint Louis, MO 63103-2523 | 2,257,036.651 | 13.44% | |
Edward Jones & Co. Attn: Mutual Fund Shareholder Accounting 201 Progress Pkwy Maryland Hts, MO 63043-3003 | 1,475,834.464 | 8.79% |
Principal Fund Shareholders (as of December 03, 2018) | |||
Fund Name and Share Class | Shareholder Name and Address | No. of Shares | % of Class |
Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0002 | 1,085,882.688 | 6.46% | |
PGIM Income Builder Fund – Class B | National Financial Services LLC For Exclusive Benefit of Our Customers Attn: Mutual Funds Dept – 4th Floor 499 Washington Blvd Jersey City, NJ 07310 | 44,972.474 | 23.61% |
Wells Fargo Clearing Svcs LLC Special Custody Acct for the Exclusive Benefit of Customer 2801 Market St. Saint Louis, MO 63103-2523 | 23,396.987 | 12.28% | |
Morgan Stanley Smith Barney LLC For Exclusive Benefit of its Customers 1 New York Plaza – Fl 12 New York, NY 10004-1901 | 19,447.819 | 10.21% | |
American Enterprise Investment Svc (FBO) 41999970 707 2nd Ave South Minneapolis, MN 55402-2405 | 16,094.998 | 8.45% | |
PGIM Income Builder Fund – Class C | Wells Fargo Clearing Svcs LLC Special Custody Acct for the Exclusive Benefit of Customer 2801 Market St. Saint Louis, MO 63103-2523 | 2,543,757.526 | 20.85% |
Raymond James Omnibus For Mutual Funds House Acct Firm 92500015 Attn: Courtney Waller 880 Carillon Parkway St. Petersburg, FL 33716 | 1,352,472.358 | 11.08% | |
American Enterprise Investment Svc (FBO) 41999970 707 2nd Ave South Minneapolis, MN 55402-2405 | 1,215,381.939 | 9.96% | |
Morgan Stanley Smith Barney LLC For Exclusive Benefit of its Customers 1 New York Plaza – Fl 12 New York, NY 10004-1901 | 1,132,175.944 | 9.28% | |
National Financial Services LLC For Exclusive Benefit of Our Customers Attn: Mutual Funds Dept – 4th Floor 499 Washington Blvd Jersey City, NJ 07310 | 1,110,604.619 | 9.10% | |
Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0002 | 998,618.156 | 8.18% | |
LPL Financial A/C 1000-0005 4707 Executive Drive San Diego, CA 92121-3091 | 848,107.381 | 6.95% | |
Charles Schwab Co. Special Custody Acct FBO Customers Attn: Mutual Funds 211 Main St. San Francisco, CA 94105-1901 | 723,319.727 | 5.93% | |
Merrill Lynch, Pierce, Fenner & Smith For the Sole Benefit of its Customer 4800 Deer Lake Dr. E Jacksonville, FL 32246-6484 | 665,561.235 | 5.45% |
Principal Fund Shareholders (as of December 03, 2018) | |||
Fund Name and Share Class | Shareholder Name and Address | No. of Shares | % of Class |
PGIM Income Builder Fund – Class Z | Merrill Lynch, Pierce, Fenner & Smith For the Sole Benefit of its Customer 4800 Deer Lake Dr. E Jacksonville, FL 32246-6484 | 2,195,193.827 | 15.12% |
American Enterprise Investment Svc (FBO) 41999970 707 2nd Ave South Minneapolis, MN 55402-2405 | 2,036,863.816 | 14.03% | |
Wells Fargo Clearing Svcs LLC Special Custody Acct for the Exclusive Benefit of Customer 2801 Market St. Saint Louis, MO 63103-2523 | 1,910,147.879 | 13.16% | |
Morgan Stanley Smith Barney LLC For Exclusive Benefit of its Customers 1 New York Plaza – Fl 12 New York, NY 10004-1901 | 1,631,950.832 | 11.24% | |
LPL Financial A/C 1000-0005 4707 Executive Drive San Diego, CA 92121-3091 | 1,515,821.891 | 10.44% | |
National Financial Services LLC For Exclusive Benefit of Our Customers Attn: Mutual Funds Dept – 4th Floor 499 Washington Blvd Jersey City, NJ 07310 | 1,137,980.311 | 7.84% | |
Pershing LLC 1 Pershing Plaza Jersey City, NJ 07399-0002 | 1,016,908.651 | 7.00% | |
Raymond James Omnibus For Mutual Funds House Acct Firm 92500015 Attn: Courtney Waller 880 Carillon Parkway St. Petersburg, FL 33716 | 961,333.757 | 6.62% | |
Charles Schwab Co. Special Custody Acct FBO Customers Attn: Mutual Funds 211 Main St. San Francisco, CA 94105-1901 | 915,281.660 | 6.30% | |
PGIM Income Builder Fund – Class R | National Financial Services LLC For Exclusive Benefit of Our Customers Attn: Mutual Funds Dept – 4th Floor 499 Washington Blvd Jersey City, NJ 07310 | 157,143.747 | 81.23% |
Ascensus Trust Company FBO Cosco, Inc. 401(K) Profit Sharing P 222785 Ascensus Trust Company PO BOX 10577 Fargo, ND 58106“ | 28,829.267 | 14.90% | |
PGIM Income Builder Fund – Class R6 | Edward Jones & Co. Attn: Mutual Fund Shareholder Accounting 201 Progress Pkwy Maryland Hts, MO 63043-3003 | 372,544.370 | 97.96% |
■ | 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 (PGIM Jennison Growth Fund and certain other selected PGIM 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. |
■ | Jennison has a material investment in a security that the investment professional who is responsible for voting that security’s proxy also holds the same security personally. |
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. |
Name and Principal Business Address | Positions and Offices with Underwriter | Positions and Offices with Registrant | ||
Adam Scaramella (1) | President | N/A | ||
Gary F. Neubeck (2) | Executive Vice President | N/A | ||
Stuart S. Parker (2) | Executive Vice President | Board Member and President | ||
James Gemus (2) | Executive Vice President | N/A | ||
Scott E. Benjamin (2) | Vice President | Board Member and Vice President | ||
Francine Boucher (1) | Senior Vice President, Chief Legal Officer and Secretary | N/A | ||
Peter J. Boland (2) | Senior Vice President and Chief Operating Officer | N/A | ||
John N. Christolini (3) | Senior Vice President | N/A | ||
Mark R. Hastings (2) | Senior Vice President and Chief Compliance Officer | N/A | ||
Michael J. McQuade (2) | Senior Vice President, Comptroller and Chief Financial Officer | N/A | ||
Hansjerg Schlenker (2) | Senior Vice President and Chief Operations Officer | N/A | ||
Monica Oswald (3) | Senior Vice President and Co-Chief Operations Officer | N/A | ||
Charles Smith (4) | Vice President and Anti-Money Laundering Officer | Anti-Money Laundering Compliance Officer |
(1) | 213 Washington Street, Newark, NJ 07102 |
(2) | 655 Broad Street, Newark, NJ 07102 |
(3) | 280 Trumbull Street, Hartford, CT 06103 |
(4) | 751 Broad Street, Newark NJ, 07102 |
Prudential Investment Portfolios 16 |
* |
Stuart S. Parker, President |
Signature | Title | Date | ||
* Ellen S. Alberding | Trustee | |||
* Kevin J. Bannon | Trustee | |||
* Scott E. Benjamin | Trustee | |||
* Linda W. Bynoe | Trustee | |||
* Barry H. Evans | Trustee | |||
* Keith F. Hartstein | Trustee | |||
* Laurie Simon Hodrick | Trustee | |||
* Michael S. Hyland | Trustee | |||
* Stuart S. Parker | Trustee and President, Principal Executive Officer | |||
* Richard A. Redeker | Trustee | |||
* Brian K. Reid | Trustee | |||
* Grace C. Torres | Trustee | |||
* Brian D. Nee | Treasurer, Principal Financial and Accounting Officer |
Signature | Title | Date | ||
*By: /s/ Jonathan D. Shain Jonathan D. Shain | Attorney-in-Fact | December 27, 2018 |
/s/ Ellen S. Alberding Ellen S. Alberding | /s/ Michael S. Hyland Michael S. Hyland |
/s/ Kevin J. Bannon Kevin J. Bannon | /s/ Brian D. Nee Brian D. Nee |
/s/ Scott E. Benjamin Scott E. Benjamin | /s/ Stuart S. Parker Stuart S. Parker |
/s/ Linda W. Bynoe Linda W. Bynoe | /s/ Richard A. Redeker Richard A. Redeker |
/s/ Barry H. Evans Barry H. Evans | /s/ Brian K. Reid Brian K. Reid |
/s/ Keith F. Hartstein Keith F. Hartstein | /s/ Grace C. Torres Grace C. Torres |
/s/ Laurie Simon Hodrick Laurie Simon Hodrick | |
Dated: September 20, 2018 |
Item 28 Exhibit No. | Description | |
(d)(7) | Subadvisory Agreement between PI and PGIM, Inc. and PGIM Limited, with respect to the PGIM Income Builder Fund, dated December 12, 2018. | |
(d)(8) | Contractual expense cap for PGIM Income Builder Fund. | |
(j) | Consent of independent registered public accounting firm. | |
(m)(5) | Rule 12b-1 fee waiver for Class A shares and Class R shares of PGIM Income Builder Fund. |
PRUDENTIAL INVESTMENT PORTFOLIOS 16
PGIM Income Builder Fund
AMENDED AND RESTATED SUBADVISORY AGREEMENT
Agreement amended and restated made as of this 12th day of December, 2018 between PGIM Investments LLC (PGIM Investments or the Manager), a New York limited liability company, and PGIM, Inc. (PGIM), a New Jersey corporation, and PGIM Limited (PGIM Limited and together with PGIM, the Subadvisers).
WHEREAS, the Manager has entered into a Management Agreement (the Management Agreement) dated May 25, 2004, as amended on September 1, 2014, with Prudential Investment Portfolios 16, a Delaware business trust (the Trust) and a diversified, open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), pursuant to which PGIM Investments acts as Manager of the PGIM Income Builder Fund (the Fund), a series of the Trust; and
WHEREAS, the Manager, acting pursuant to the Management Agreement, desires to retain the Subadvisers to provide investment advisory services to the Fund and to manage such portion of the Fund as the Manager shall from time to time direct, and the Subadvisers are willing to render such investment advisory services; and
WHEREAS, PGIM Limited is authorized and regulated in the United Kingdom by the Financial Conduct Authority and both PGIM Limited and PGIM are each registered with the Securities and Exchange Commission (the Commission) as an investment adviser under the Investment Advisers Act of 1940, as amended (the Advisers Act).
NOW, THEREFORE, the Parties agree as follows:
1. (a) Subject to the supervision of the Manager and the Board of Trustees of the Trust, the Subadvisers shall manage such portion of the Fund’s portfolio as delegated to the Subadvisers by the Manager, including the purchase, retention and disposition thereof, in accordance with the Fund’s investment objectives, policies and restrictions as stated in its then current prospectus and statement of additional information (such Prospectus and Statement of Additional Information as currently in effect and as amended or supplemented from time to time, being herein called the Prospectus), and subject to the following understandings:
(i) The Subadvisers shall provide supervision of such portion of the Fund's investments as the Manager shall direct, and shall determine from time to time what investments and securities will be purchased, retained, sold or loaned by the Fund, and what portion of the assets will be invested or held uninvested as cash.
(ii) In the performance of their duties and obligations under this Agreement, the Subadvisers shall act in conformity with the copies of the Agreement and Declaration of Trust of the Trust, as amended, the By-laws of the Trust, the Prospectus of the Fund, and the Trust’s valuation procedures and any other procedures adopted by the Board applicable to the Fund (and any amendments thereto) as provided to it by the Manager (the Trust Documents) and with the instructions and directions of the Manager and of the Board of Trustees of the Trust, co-operate with the Manager' (or their designees') personnel responsible for monitoring the Trust’s compliance and will conform to, and comply with, the requirements of the 1940 Act, the Internal Revenue Code of 1986, as amended, and all other applicable federal and state laws and regulations. In connection therewith, the Subadvisers shall, among other things, prepare and file such reports as are, or may in the future be, required by the Securities and Exchange Commission (the Commission). The Manager shall provide the Subadvisers timely with copies of any updated Trust Documents.
(iii) The Subadvisers shall determine the securities and futures contracts to be purchased or sold by such portion of the Fund's portfolio, as applicable, and may place orders with or through such persons, brokers, dealers or futures commission merchants (including but not limited to any broker, dealer or futures commission merchants affiliated with the Manager or the Subadvisers) to carry out the policy with respect to brokerage as set forth in the Fund's Prospectus or as the Board of Trustees may direct in writing from time to time. In providing the Fund with investment supervision, it is recognized that the Subadvisers will give primary consideration to securing the most favorable price and efficient execution. Within the framework of this policy, the Subadvisers may consider the financial responsibility, research and investment information and other services provided by brokers, dealers or futures commission merchants who may effect or be a party to any such transaction or other transactions to which the Subadvisers’ other clients may be a party. The Manager (or Subadvisers) to the Fund each shall have discretion to effect investment transactions for the Fund through broker-dealers (including, to the extent legally permissible, broker-dealers affiliated with the Subadviser(s)) qualified to obtain best execution of such transactions who provide brokerage and/or research services, as such services are defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the 1934 Act), and to cause the Fund to pay any such broker-dealers an amount of commission for effecting a portfolio transaction in excess of the amount of commission another broker-dealer would have charged for effecting that transaction, if the brokerage or research services provided by such broker-dealer, viewed in light of either that particular investment transaction or the overall responsibilities of the Manager (or the Subadvisers) with respect to the Fund and other accounts as to which they or it may exercise investment discretion (as such term is defined in Section 3(a)(35) of the 1934 Act), are reasonable in relation to the amount of commission. Pursuant to the rules promulgated under Section 326 of the USA Patriot Act, broker-dealers are required to obtain, verify and record information that identifies each person who opens an account with them. In accordance therewith, broker-dealers whom the Subadvisers select to execute transactions in the Fund’s account may seek identifying information about the Trust and/or the Fund.
On occasions when the Subadvisers deem the purchase or sale of a security or futures contract to be in the best interest of the Fund as well as other clients of the Subadvisers, the Subadvisers, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities or futures contracts to be sold or purchased. In such event, allocation of the securities or futures contracts so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Subadvisers in the manner the Subadvisers consider to be the most equitable and consistent with their fiduciary obligations to the Trust and to such other clients.
(iv) The Subadvisers shall maintain all books and records with respect to the Fund’s portfolio transactions effected by it as required by subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act, and shall render to the Board of Trustees such periodic and special reports as the Trustees may reasonably request. The Subadvisers shall make reasonably available their employees and officers for consultation with any of the Trustees or officers or employees of the Fund with respect to any matter discussed herein, including, without limitation, the valuation of the Fund’s securities.
(v) The Subadvisers or an affiliate shall provide the Fund's custodian (the Custodian) on each business day with information relating to all transactions concerning the portion of the Fund’s assets they manage, and shall provide the Manager with such information upon request of the Manager.
(vi) The investment management services provided by the Subadvisers hereunder are not to be deemed exclusive, and the Subadvisers shall be free to render similar services to others. Conversely, the Subadvisers and Manager understand and agree that if the Manager manage the Fund in a “manager-of-managers” style, the Manager will, among other things, (i) continually evaluate the performance of the Subadvisers through quantitative and qualitative analysis and consultations with the Subadvisers, (ii) periodically make recommendations to the Trust’s Board as to whether the contract with one or more subadvisers should be renewed, modified, or terminated, and (iii) periodically report to the Trust’s Board regarding the results of its evaluation and monitoring functions. The Subadvisers recognize that their services may be terminated or modified pursuant to this process.
(vii) The Subadvisers acknowledge that the Manager and the Trust intend to rely on Rule 17a-10, Rule 10f-3, Rule 12d3-1 and Rule 17e-1 under the 1940 Act, and the Subadvisers hereby agree that they shall not consult with any other subadviser to the Trust with respect to transactions in securities for the Fund’s portfolio or any other transactions of Fund assets.
(b) The Subadvisers shall authorize and permit any of their directors, officers and employees who may be elected as Trustees or officers of the Trust to serve in the capacities in which they are elected. Services to be furnished by the Subadvisers under this Agreement may be furnished through the medium of any of such directors, officers or employees.
(c) The Subadvisers shall keep the Fund’s books and records required to be maintained by the Subadvisers pursuant to paragraph 1(a) hereof and shall timely furnish to the Manager all information relating to the Subadvisers’ services hereunder needed by the Manager to keep the other books and records of the Fund required by Rule 31a-1 under the 1940 Act or any successor regulation. The Subadvisers agree that all records which they maintain for the Fund are the property of the Fund, and the Subadvisers will surrender promptly to the Fund any of such records upon the Fund’s request, provided, however, that the Subadvisers may retain a copy of such records. The Subadvisers further agree to preserve for the periods prescribed by Rule 31a-2 of the Commission under the 1940 Act or any successor regulation any such records as are required to be maintained by it pursuant to paragraph 1(a) hereof.
(d) In connection with their duties under this Agreement, the Subadvisers agree to maintain adequate compliance procedures to ensure their compliance with the 1940 Act, the Investment Advisers Act of 1940, as amended, and other applicable state and federal regulations.
(e) The Subadvisers shall maintain a written code of ethics (the Code of Ethics) that they reasonably believe complies with the requirements of Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act, a copy of which shall be provided to the Manager and the Fund, and shall institute procedures reasonably necessary to prevent any Access Person (as defined in Rule 17j-1 under the 1940 Act and Rule 204A-1 under the Advisers Act) from violating their Code of Ethics. The Subadvisers shall follow such Code of Ethics in performing their services under this Agreement. Further, the Subadvisers represent that they maintain adequate compliance procedures to ensure compliance with the 1940 Act, the Advisers Act, and other applicable federal and state laws and regulations. In particular, the Subadvisers represent that they have policies and procedures regarding the detection and prevention of the misuse of material, nonpublic information by the Subadvisers and their employees as required by the Insider Trading and Securities Fraud Enforcement Act of 1988, a copy of which shall be provided to the Manager and the Fund upon reasonable request. The Subadvisers shall assure that their employees comply in all material respects with the provisions of Section 16 of the 1934 Act, and to cooperate reasonably with the Manager for purposes of filing any required reports with the Securities and Exchange Commission (the Commission) or such other regulator having appropriate jurisdiction.
(f) The Subadvisers shall furnish to the Manager copies of all records prepared in connection with (i) the performance of this Agreement and (ii) the maintenance of compliance procedures pursuant to paragraph 1(d) hereof as the Manager may reasonably request.
(g) The Subadvisers shall be responsible for the voting of all shareholder proxies with respect to the investments and securities held in the Fund’s portfolio, subject to such reasonable reporting and other requirements as shall be established by the Manager.
(h) The Subadvisers acknowledge that they are responsible for evaluating whether market quotations are readily available for the Fund’s portfolio securities, evaluating whether those market quotations are reliable for purposes of valuing the Fund’s portfolio securities, evaluating whether those market quotations are reliable for determining the Fund’s net asset value per share and promptly notifying the Manager upon the occurrence of any significant event with respect to any of the Fund’s portfolio securities in accordance with the requirements of the 1940 Act and any related written guidance from the Commission and the Commission staff. Upon reasonable request from the Manager, the Subadvisers (through a qualified person) will assist the valuation committee of the Trust or the Manager in valuing securities of the Fund as may be required from time to time, including making available information of which the Subadvisers have knowledge related to the securities being valued.
(i) The Subadvisers shall provide the Manager with any information reasonably requested regarding their management of the Fund’s portfolio required for any shareholder report, amended registration statement, or prospectus supplement to be filed by the Trust with the Commission. The Subadvisers shall provide the Manager with any reasonable certification, documentation or other information reasonably requested or required by the Manager for purposes of the certifications of shareholder reports by the Trust’s principal financial officer and principal executive officer pursuant to the Sarbanes Oxley Act of 2002 or other law or regulation. The Subadvisers shall promptly inform the Fund and the Manager if the Subadvisers become aware of any information in the Prospectus that is (or will become) materially inaccurate or incomplete.
(j) The Subadvisers shall comply with the Trust Documents provided to the Subadvisers by the Manager or the Fund. The Subadvisers shall notify the Manager as soon as reasonably practicable upon detection of any material breach of such Trust Documents.
(k) The Subadvisers shall keep the Fund and the Manager informed of developments relating to their duties as Subadvisers of which the Subadvisers have, or should have, knowledge that would materially affect the Fund. In this regard, the Subadvisers shall provide the Trust, the Manager, and their respective officers with such periodic reports concerning the obligations the Subadvisers have assumed under this Agreement as the Fund and the Manager may from time to time reasonably request. Additionally, prior to each Board meeting, the Subadvisers shall provide the Manager and the Board with reports regarding the Subadvisers’ management of the Fund’s portfolio during the most recently completed quarter, in such form as may be mutually agreed upon by the Subadvisers and the Manager. The Subadvisers shall certify quarterly to the Fund and the Manager that they and their “Advisory Persons” (as defined in Rule 17j-under the 1940 Act) have complied materially with the requirements of Rule 17j-1 under the 1940 Act during the previous quarter or, if not, explain what the Subadvisers have done to seek to ensure such compliance in the future. Annually, the Subadvisers shall furnish a written report, which complies with the requirements of Rule 17j-1 and Rule 38a-1 under the 1940 Act, concerning the Subadvisers’ Code of Ethics and compliance program, respectively, to the Fund and the Manager. Upon written request of the Fund or the Manager with respect to material violations of the Code of Ethics directly affecting the Fund, the Subadvisers shall permit representatives of the Fund or the Manager to examine reports (or summaries of the reports) required to be made by Rule 17j-1(d)(1) relating to enforcement of the Code of Ethics.
2. The Manager shall continue to have responsibility for all services to be provided to the Fund pursuant to the Management Agreement and, as more particularly discussed above, shall oversee and review the Subadvisers’ performance of their duties under this Agreement. The Manager shall provide (or cause the Custodian to provide) timely information to the Subadvisers regarding such matters as the composition of assets in the portion of the Fund managed by the Subadvisers, cash requirements and cash available for investment in such portion of the Fund, and all other information as may be reasonably necessary for the Subadvisers to perform their duties hereunder (including any excerpts of minutes of meetings of the Board of Trustees of the Trust that affect the duties of the Subadvisers).
3. For the services provided pursuant to this Agreement, the Manager shall pay the Subadvisers as full compensation therefor, a fee equal to the percentage of the Fund’s average daily net assets of the portion of the Fund managed by the Subadvisers as described in the attached Schedule A. Liability for payment of compensation by the Manager to the Subadvisers under this Agreement is contingent upon the Manager’ receipt of payment from the Trust for management services described under the Management Agreement between the Trust and the Manager. Expense caps or fee waivers for the Fund that may be agreed to by the Manager, but not agreed to by the Subadvisers, shall not cause a reduction in the amount of the payment to the Subadvisers by the Manager.
4. The Subadvisers shall not be liable for any error of judgment or for any loss suffered by the Fund or the Manager in connection with the matters to which this Agreement relates, except a loss resulting from willful misfeasance, bad faith or gross negligence on the Subadvisers’ part in the performance of their duties or from their reckless disregard of their obligations and duties under this Agreement, provided, however, that nothing in this Agreement shall be deemed to waive any rights the Manager or the Fund may have against the Subadvisers under federal or state securities laws. The Manager shall indemnify the Subadvisers, their affiliated persons, their officers, directors and employees, for any liability and expenses, including attorneys’ fees, which may be sustained as a result of the Manager' willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder or violation of applicable law, including, without limitation, the 1940 Act and federal and state securities laws. The Subadvisers shall indemnify the Manager, their affiliated persons, their officers, directors and employees, for any liability and expenses, including attorneys’ fees, which may be sustained as a result of the Subadvisers’ willful misfeasance, bad faith, gross negligence, or reckless disregard of their duties hereunder or violation of applicable law, including, without limitation, the 1940 Act and federal and state securities laws.
5. This Agreement shall continue in effect for a period of more than two years from the date hereof only so long as such continuance is specifically approved at least annually in conformity with the requirements of the 1940 Act; provided, however, that this Agreement may be terminated by the Fund at any time, without the payment of any penalty, by the Board or by vote of a majority of the outstanding voting securities (as defined in the 1940 Act) of the Fund, or by the Manager or the Subadvisers at any time, without the payment of any penalty, on not more than 60 days’ nor less than 30 days’ written notice to the other party. This Agreement shall terminate automatically in the event of its assignment (as defined in the 1940 Act) or upon the termination of the Management Agreement. The Subadvisers agree that they will promptly notify the Fund and the Manager of the occurrence of any event that would result in the assignment (as defined in the 1940 Act) of this Agreement, including, but not limited to, a change of control (as defined in the 1940 Act) of the Subadvisers.
Any notice or other communication required to be given pursuant to this Agreement shall be deemed duly given if delivered or mailed by registered mail, postage prepaid, (1) to the Manager and/or Fund at 655 Broad Street, Newark, NJ 07102-4077, Attention: Secretary; and (2) to the Subadvisers at 7 Giralda Farms, Madison, New Jersey 07940, Attention: Chief Legal Officer (for PGIM) and at Grand Buildings 1-3 Strand Trafalgar Square, London, WC2N 5HR, Attention: Chief Legal Officer (for PGIM Limited).
6. Nothing in this Agreement shall limit or restrict the right of any of the Subadvisers’ directors, officers or employees who may also be a Trustee, officer or employee of the Fund to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any business, whether of a similar or a dissimilar nature, nor limit or restrict the Subadvisers’ right to engage in any other business or to render services of any kind to any other corporation, firm, individual or association.
7. During the term of this Agreement, the Manager agree to furnish the Subadvisers at their principal office all prospectuses, proxy statements, reports to shareholders, sales literature or other material prepared for distribution to shareholders of the Fund or the public, which refer to the Subadvisers in any way, prior to use thereof and not to use material if the Subadvisers reasonably object in writing five business days (or such other time as may be mutually agreed) after receipt thereof. Sales literature may be furnished to the Subadvisers hereunder by first-class or overnight mail, facsimile transmission equipment or hand delivery.
8. This Agreement may be amended by mutual consent, but the consent of the Fund must be obtained in conformity with the requirements of the 1940 Act.
9. This Agreement shall be governed by the laws of the State of New York.
10. Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act, shall be resolved by reference to such term or provision of the 1940 Act and to interpretations thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Commission issued pursuant to the 1940 Act. In addition, where the effect of a requirement of the 1940 Act, reflected in any provision of this Agreement, is related by rules, regulation or order of the Commission, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written.
PGIM INVESTMENTS LLC
By:/s/Scott E. Benjamin
Name:Scott E. Benjamin
Title:Executive Vice President
PGIM, Inc.
By:/s/Leonard Kaplan
Name:Leonard Kaplan
Title:Vice President
By:/s/Philip Barrett
Name:Philip Barrett
Title:Director
SCHEDULE A
PRUDENTIAL INVESTMENT PORFOLIOS 16
As compensation for services provided by PGIM Real Estate, a business unit of PGIM, and PGIM Limited, PGIM Investments LLC will pay the Subadvisers an advisory fee on the net asset value of the portion of the Fund’s portfolio that is managed by the Subadvisers that is equal, on an annualized basis, to the following:
Portfolio Name |
Advisory Fee |
PGIM Income Builder Fund |
0.40% as a percentage of average daily net assets |
Dated as of December 12, 2018.
1
PGIM Investments LLC
655 Broad Street – 17th Floor
Newark, New Jersey 07102
November 1, 2018
The Board of Trustees
Prudential Investment Portfolios 16
655 Broad Street—17th Floor
Newark, New Jersey 07102
Re: PGIM Income Builder Fund (the Fund)
To the Board of Trustees:
PGIM Investments LLC (PGIM Investments) has contractually agreed, through February 29, 2020, to limit Total Annual Fund Operating Expenses after fee waivers and/or expense reimbursements to 0.95% of average daily net assets for Class A shares, 1.70% of average daily net assets for Class B shares, 1.70% of average daily net assets for Class C shares, 1.20% of average daily net assets for Class R shares, 0.70% of average daily net assets for Class Z shares, and 0.70% of average daily net assets for Class R6 shares. This contractual waiver includes acquired fund fees and expenses, and excludes Fund and any acquired fund interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. Where applicable, PGIM Investments agrees to waive management fees or shared operating expenses on any share class to the same extent that it waives similar expenses on any other share class. In addition, Total Annual Fund Operating Expenses for Class R6 shares will not exceed Total Annual Fund Operating Expenses for Class Z shares. 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. This waiver may not be terminated prior to February 29, 2020 without the prior approval of the Fund’s Board of Trustees.
Very truly yours,
PGIM INVESTMENTS LLC
By:/s/ Scott E. Benjamin
Name:Scott E. Benjamin
Title:Executive Vice President
Consent of Independent Registered Public Accounting Firm
The Board of Trustees
Prudential Investment Portfolios 16:
We consent to the use of our report, dated December 18, 2018, with respect to the financial statements and financial highlights of PGIM Income Builder Fund (formerly Prudential Income Builder Fund), a series of Prudential Investment Portfolios 16, as of October 31, 2018, and for the respective years or periods presented therein, incorporated by reference herein. We also consent to the references to our firm under the headings “Financial Highlights” in the prospectus and “Other Service Providers – Independent Registered Public Accounting Firm” and “Financial Statements” in the statement of additional information.
New York, New York
December 21, 2018
PRUDENTIAL INVESTMENT PORTFOLIOS 16
PGIM Income Builder Fund
Notice of Rule 12b-1 Fee Waiver
Class A Shares
Class R Shares
THIS NOTICE OF RULE 12b-1 FEE WAIVER is signed as of November 1, 2018 by PRUDENTIAL INVESTMENT MANAGEMENT SERVICES LLC (PIMS), the Principal Underwriter of PGIM Income Builder Fund (the Fund), a series of PRUDENTIAL INVESTMENT PORTFOLIOS 16 (the RIC), an open-end management investment company.
WHEREAS, PIMS desires to waive a portion of its distribution and shareholder services fees payable on Class A shares of the Fund (Rule 12b-1 fees); and
WHEREAS, PIMS desires to waive a portion of its distribution and shareholder services fees payable on Class R shares of the Fund (Rule 12b-1 fees); and
WHEREAS, PIMS understands and intends that the RIC will rely on this Notice and agreement in preparing a registration statement on Form N-1A and in accruing the Fund’s expenses for purposes of calculating net asset value and for other purposes, and expressly permits the Fund to do so; and
WHEREAS, shareholders of the Fund will benefit from the ongoing contractual waiver by incurring lower Fund operating expenses than they would absent such waiver.
NOW, THEREFORE, PIMS hereby provides notice that it has agreed to limit the distribution and service (12b-1) fees incurred by Class A shares of the Fund to 0.25% of the average daily net assets of the Fund’s Class A shares, and it has agreed to limit the distribution and service (12b-1) fees incurred by Class R shares of the Fund to 0.50% of the average daily net assets of the Fund’s Class R shares. This contractual waiver shall be effective from the date hereof through February 29, 2020.
IN WITNESS WHEREOF, PIMS has signed this Notice of Rule 12b-1 Fee Waiver as of the day and year first above written.
PRUDENTIAL INVESTMENT
MANAGEMENT SERVICES LLC
By: /s/ Scott E. Benjamin
Name: Scott E. Benjamin
Title: Vice President
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