0001193125-22-089898.txt : 20220330 0001193125-22-089898.hdr.sgml : 20220330 20220330163806 ACCESSION NUMBER: 0001193125-22-089898 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20220131 FILED AS OF DATE: 20220330 DATE AS OF CHANGE: 20220330 EFFECTIVENESS DATE: 20220330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUDENTIAL INVESTMENT PORTFOLIOS 2 CENTRAL INDEX KEY: 0001099692 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-09999 FILM NUMBER: 22787031 BUSINESS ADDRESS: STREET 1: 655 BROAD STREET STREET 2: PRUDENTIAL TOWER SOUTH , 17TH FLOOR CITY: NEWARK STATE: NJ ZIP: 07102 BUSINESS PHONE: (973) 367-8982 MAIL ADDRESS: STREET 1: 655 BROAD STREET STREET 2: PRUDENTIAL TOWER SOUTH , 17TH FLOOR CITY: NEWARK STATE: NJ ZIP: 07102 FORMER COMPANY: FORMER CONFORMED NAME: DRYDEN CORE INVESTMENT FUND DATE OF NAME CHANGE: 20030721 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL CORE INVESTMENT FUND DATE OF NAME CHANGE: 20000623 0001099692 S000004538 PGIM Core Short-Term Bond Fund C000012440 PGIM Core Short-Term Bond Fund 0001099692 S000004539 PGIM Core Ultra Short Bond Fund C000012441 PGIM Core Ultra Short Bond Fund 0001099692 S000055237 PGIM Institutional Money Market Fund C000173696 PGIM Institutional Money Market Fund N-CSR 1 d311631dncsr.htm PRUDENTIAL INVESTMENT PORTFOLIOS 2 Prudential Investment Portfolios 2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT

COMPANIES

 

Investment Company Act file number:   

811-09999

Exact name of registrant as specified in charter:   

Prudential Investment Portfolios 2

(This Form N-CSR relates solely to the Registrant’s: PGIM Core Short-Term Bond Fund, PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund)
Address of principal executive offices:   

655 Broad Street, 17th Floor

Newark, New Jersey 07102

Name and address of agent for service:   

Andrew R. French

655 Broad Street, 17th Floor

Newark, New Jersey 07102

Registrant’s telephone number, including area code:   

800-225-1852

Date of fiscal year end:   

1/31/2022

Date of reporting period:   

1/31/2022


Item 1 – Reports to Stockholders

 


LOGO

 

 

PGIM CORE SHORT-TERM BOND FUND

PGIM CORE ULTRA SHORT BOND FUND

PGIM INSTITUTIONAL MONEY

MARKET FUND

 

 

 

 

ANNUAL REPORT

JANUARY 31, 2022

 

LOGO

 

 

To enroll in e-delivery, go to pgim.com/investments/resource/edelivery

 

 


Table of Contents

 

PGIM Core Short-Term Bond Fund

 

    

 

3

 

 

 

PGIM Core Ultra Short Bond Fund

 

    

 

7

 

 

 

PGIM Institutional Money Market Fund

 

    

 

11

 

 

 

Strategy and Performance Overview

 

    

 

14

 

 

 

Fees and Expenses

 

    

 

20

 

 

 

Holdings and Financial Statements

 

    

 

23

 

 

 

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

The views expressed in this report and information about the Funds’ portfolio holdings are for the period covered by this report and are subject to change thereafter.

Mutual funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company and member SIPC. PGIM Fixed Income is a unit of PGIM, Inc. (PGIM), a registered investment adviser. PGIM is a Prudential Financial company. © 2022 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

 

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PGIM Core Short-Term Bond Fund

Your Fund’s Performance (unaudited)

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted.

 

     Average Annual Total Returns as of 1/31/22
       One Year (%)        Five Years (%)        Ten Years (%)  
  Fund    0.24    1.96    2.15
  ICE US 1-Month Treasury Bill Index *
   0.04    1.02    0.55
  ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index
   0.10    1.22    0.74
  ICE BofA USD 3-Month Deposit Offered Rate Constant Maturity Index
   0.14    1.39    0.89
  Bloomberg US Short Treasury Index
     -0.04    1.20    0.71

* The ICE US 1-Month Treasury Bill Index was adopted as the Fund’s primary benchmark in March 2022 due to the pending discontinuation of LIBOR.

The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

 

Prudential Investment Portfolios 2

    3  


PGIM Core Short-Term Bond Fund

Your Fund’s Performance (continued)

 

Growth of a $10,000 Investment

 

LOGO

The graph compares a $10,000 investment in the Fund with a similar investment in the ICE US 1-Month Treasury Bill Index, the ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index and the ICE BofA USD 3-Month Deposit Offered Rate Constant Maturity Index by portraying the initial account values at the beginning of the 10-year period (January 31, 2012) and the account values at the end of the current fiscal year (January 31, 2022), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) all recurring fees (including management fees) were deducted and (b) all dividends and distributions were reinvested. Without waiver of fees and/or expense reimbursements, if any, the returns would have been lower.

Past performance does not predict future performance. Total returns and the ending account values in the graph include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund’s total returns do not reflect the deduction of income taxes on an individual’s investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares.

 

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Benchmark Definitions

ICE US 1-Month Treasury Bill Index—an unmanaged index that is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding Treasury Bill that matures closest to, but not less than, one month from the rebalancing date. To qualify for selection, an issue must have settled on or before the month-end rebalancing date.

ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index—an unmanaged index which tracks the performance of a synthetic asset paying LIBOR to a stated maturity. The 1 Month Current Index is based on the assumed purchase at par of a synthetic instrument having exactly its stated maturity and with a coupon equal to that day’s fixing rate. That issue is assumed to be sold the following business day (priced at a yield equal to the current day fixing rate) and rolled into a new instrument.

ICE BofA US Dollar 3-Month Deposit Offered Rate Constant Maturity Index—tracks the performance of a basket of synthetic assets paying LIBID to a stated maturity. The index purchases a new instrument each day, priced at par, having exactly its stated maturity and with a coupon equal to that day’s fixing rate. All issues are held to maturity. Therefore, each day the index is comprised of a basket of securities. The index is not marked to market. The returns of the index represent the accrued income generated by the equally weighted average of all the coupons in the basket for a given day.

Bloomberg US Short Treasury Index—The Bloomberg US Short Treasury Index includes aged U.S. Treasury bills, notes and bonds with a remaining maturity from 1 up to (but not including) 12 months. It excludes zero coupon strips.

Investors cannot invest directly in an index. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes that may be paid by an investor.

 

  Distributions and Yields as of 1/31/22
    Total Distributions  

Paid for
12 Months ($)

    SEC 30-Day  
Subsidized
Yield* (%)
  SEC 30-Day
  Unsubsidized  

Yield** (%)

  PGIM Core Short-Term Bond Fund   0.08   0.94   0.94

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

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

 

Prudential Investment Portfolios 2

    5  


PGIM Core Short-Term Bond Fund

Your Fund’s Performance (continued)

 

  Credit Quality expressed as a percentage of total investments as of 1/31/22 (%)  
  AAA      20.2  
  AA      12.7  
  A      35.8  
  BBB      9.6  
  BB      0.1  
  B      0.1  
  CCC      0.2  
  Not Rated      21.3  
   

Total

     100.0  

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

 

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PGIM Core Ultra Short Bond Fund

Your Fund’s Performance (unaudited)

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted.

 

    Average Annual Total Returns as of 1/31/22
      One Year (%)       Five Years (%)       Ten Years (%)  
  Fund   0.13   1.30   0.78
  ICE US 1-Month Treasury Bill Index *      
  0.04   1.02   0.55
  ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index    
  0.10   1.22   0.74
  Bloomberg 1-3 Month US Treasury Bill      
  0.03   1.08   0.58
  iMoneyNet Prime Institutional Funds Average      
    0.01   1.04   0.56

* The ICE US 1-Month Treasury Bill Index was adopted as the Fund’s primary benchmark in March 2022 due to the pending discontinuation of LIBOR.

The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

 

Prudential Investment Portfolios 2

    7  


PGIM Core Ultra Short Bond Fund

Your Fund’s Performance (continued)

 

Growth of a $10,000 Investment

 

LOGO

The graph compares a $10,000 investment in the Fund with a similar investment in the ICE US 1-Month Treasury Bill Index and the ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index as its current Index by portraying the initial account values at the beginning of the 10-year period (January 31, 2012) and the account values at the end of the current fiscal year (January 31, 2022), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) all recurring fees (including management fees) were deducted and (b) all dividends and distributions were reinvested. Without waiver of fees and/or expense reimbursements, if any, the returns would have been lower.

Past performance does not predict future performance. Total returns and the ending account values in the graph include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. The Fund’s total returns do not reflect the deduction of income taxes on an individual’s investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares.

Benchmark Definitions

ICE US 1-Month Treasury Bill Index— an unmanaged index that is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding

 

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Treasury Bill that matures closest to, but not less than, one month from the rebalancing date. To qualify for selection, an issue must have settled on or before the month-end rebalancing date.

ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index—an unmanaged index which tracks the performance of a synthetic asset paying LIBOR to a stated maturity. The 1 Month Current Index is based on the assumed purchase at par of a synthetic instrument having exactly its stated maturity and with a coupon equal to that day’s fixing rate. That issue is assumed to be sold the following business day (priced at a yield equal to the current day fixing rate) and rolled into a new instrument.

Bloomberg 1–3 Month US Treasury Bill Index—The Bloomberg 1–3 Month US Treasury Bill Index includes all publicly issued zero-coupon US Treasury Bills that have a remaining maturity of less than 3 months and more than 1 month, are rated investment grade, and have $250 million or more of outstanding face value.

iMoneyNet Prime Institutional Funds Average—The iMoneyNet Prime Institutional Funds Average is based on the average return of all funds in the iMoneyNet Prime Institutional Funds universe for the periods noted. Funds in the iMoneyNet Prime Institutional Funds Average primarily invest in a variety of taxable short-term corporate and bank debt securities.

 

  Distributions and Yields as of 1/31/22
   Total
Distributions
Paid for
  12 Months ($)  
     SEC 30-Day  
Subsidized
Yield* (%)
   SEC 30-Day
  Unsubsidized  
Yield** (%)
 PGIM Core Ultra Short Bond Fund    0.00    0.15    0.15

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

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

 

  Credit Quality expressed as a percentage of total investments as of 1/31/22 (%)  
  A-1+/P-1     71.7  
  A-1/P-1     28.3  
   

Total

    100.0  

Credit ratings reflect the highest rating assigned by a nationally recognized statistical rating organization (NRSRO) such as Moody’s Investors Service, Inc. (Moody’s), S&P Global Ratings (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, ratings are converted to the comparable S&P/Fitch

 

Prudential Investment Portfolios 2

    9  


PGIM Core Ultra Short Bond Fund

Your Fund’s Performance (continued)

 

rating tier nomenclature. These rating agencies are independent and are widely used. The Not Rated category consists of securities that have not been rated by an NRSRO. Credit ratings are subject to change.

 

10  

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PGIM Institutional Money Market Fund

Your Fund’s Performance (unaudited)

 

Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted.

 

    Average Annual Total Returns as of 1/31/22
      One Year (%)       Five Years (%)       Since Inception (%)  

Fund

  0.06   1.24   1.18 (07/19/2016)

ICE US 1-Month Treasury Bill Index *

  0.04   1.02   0.55                      

ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index

  0.10   1.22   0.74                      

iMoneyNet Prime Institutional Funds Average

    0.01   1.04   5.36                      

* The ICE US 1-Month Treasury Bill Index was adopted as the Fund’s primary benchmark in March 2022 due to the pending discontinuation of LIBOR.

The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares.

Institutional Money Market Fund Yield Comparison

 

LOGO

 

Prudential Investment Portfolios 2

    11  


PGIM Institutional Money Market Fund

Your Fund’s Performance (continued)

 

Weighted Average Maturity* (WAM) Comparison

 

LOGO

The graphs portray weekly 7-day current yields and weekly WAMs for PGIM Institutional Money Market Fund and the iMoneyNet Prime Institutional Funds Average every Tuesday from January 26, 2021 to January 25, 2022, the closest dates prior to the beginning and end of the Fund’s reporting period. Note: iMoneyNet, Inc. regularly reports a 7-day current yield and WAM on Tuesdays. As a result, the data portrayed for the Fund at the end of the reporting period in the graphs may not match the data portrayed in the Fund’s performance table as of January 31, 2022.

* Weighted Average Maturity is based on the dollar-weighted average length of time until principal payments are expected or until securities reach maturity, taking into account any maturity shortening feature such as a call, refunding, or redemption provision.

Benchmark Definitions

ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index—an unmanaged index which tracks the performance of a synthetic asset paying LIBOR to a stated maturity. The 1 Month Current Index is based on the assumed purchase at par of a synthetic instrument having exactly its stated maturity and with a coupon equal to that day’s fixing rate. That issue is assumed to be sold the following business day (priced at a yield equal to the current day fixing rate) and rolled into a new instrument.

ICE US 1-Month Treasury Bill Index—an unmanaged index that is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding

 

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Treasury Bill that matures closest to, but not less than, one month from the rebalancing date. To qualify for selection, an issue must have settled on or before the month-end rebalancing date.

iMoneyNet Prime Institutional Funds Average—The iMoneyNet Prime Institutional Funds Average is based on the average return of all funds in the iMoneyNet Prime Institutional Funds universe for the periods noted. Funds in the iMoneyNet Prime Institutional Funds Average primarily invest in a variety of taxable short-term corporate and bank debt securities.

 

Prudential Investment Portfolios 2

    13  


PGIM Core Short-Term Bond Fund

Strategy and Performance Overview* (unaudited)

 

How did the Fund perform?

The PGIM Core Short-Term Bond Fund returned 0.24% in the 12-month reporting period that ended January 31, 2022, outperforming the 0.10% return of the ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index (the Index).

What were the market conditions?

The strong global rebound from the depths of the COVID-19 pandemic continued throughout much of the reporting period, as economies continued to respond to monetary and fiscal stimulus. The rollout of COVID-19 vaccines, along with the potential for further stimulus, shifted the prospects for growth and inflation in the first half of the period, kicking off a robust “reflation trade” in bond markets. This caused the US Treasury yield curve to steepen sharply over the first half of the period before flattening again in the second half of the period, as the market pulled forward its expectation for interest rate hikes. (A yield curve is a line graph that illustrates the relationship between the yields and maturities of fixed income securities. It is created by plotting the yields of different maturities for the same type of bonds.)

 

While the yield on the 2-year Treasury note began rising sharply in the fourth quarter of 2021 as markets began pricing in more interest rate hikes in 2022, long-end Treasury yields declined amid uncertainty around the Omicron variant of COVID-19 and the prospect of slower economic growth. Despite steepening in the beginning of the period, the US Treasury yield curve flattened over the full period, with the 10-year/2-year Treasury spread declining from 0.98% to 0.61% as of January 31, 2022. Meanwhile, the yield on the 3-month Treasury bill rose from 0.06% to 0.23%, while the 3-month LIBOR (London Interbank Offered Rate) rose from 0.20% to 0.31%. In the short-term credit markets, investment-grade credit spreads widened during the period. The Bloomberg 1-3 Year Credit Index, a proxy for the short-term spread market, outperformed similar short-duration Treasuries by 0.11% during the period. (Duration is a measure of a bond’s price sensitivity to interest rate changes over time.)

What strategies or holdings affected the Fund’s performance?

The Fund emphasizes spread assets, including short-term investment-grade corporates, commercial mortgage-backed securities, and asset-backed securities such as non-agency residential mortgages and credit card receivables. This positioning helped the Fund outperform its benchmark during the period.

Did the Fund use derivatives?

During the period, the Fund used swap agreements for hedging interest rate risk and to add value versus cash securities. The use of these derivatives had a positive impact on performance of the Fund for the period.

 

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Current outlook

PGIM Fixed Income continues to find value within investment-grade corporates and structured products, which represent attractive value in relation to Treasuries and agency mortgage-backed securities. PGIM Fixed Income adopted a more defensive posture versus all front-end spread markets over the last half of the period, with caution growing toward the end of the period as it believed spreads were too tight in light of the anticipated higher-rate environment.

* This strategy and performance overview, which discusses what strategies or holdings (including derivatives, if applicable) affected the Fund’s performance, is compiled based on how the Fund performed relative to the Fund’s assigned index and is viewed for performance attribution purposes at the aggregate Fund level, which in most instances will not directly correlate to the amounts disclosed in the Statement of Operations which conform to U.S. generally accepted accounting principles.

 

Prudential Investment Portfolios 2

    15  


PGIM Core Ultra Short Bond Fund

Strategy and Performance Overview*

 

How did the Fund perform?

The PGIM Core Ultra Short Bond Fund returned 0.13% in the 12-month reporting period that ended January 31, 2022, outperforming the 0.10% return of the ICE BofA US Dollar 1-Month Deposit Offered Rate Constant Maturity Index (the Index).

What were the market conditions?

The strong global rebound from the depths of the COVID-19 pandemic continued throughout much of the reporting period, as economies continued to respond to monetary and fiscal stimulus. The rollout of COVID-19 vaccines, along with the potential for further stimulus, shifted the prospects for growth and inflation in the first half of the period, kicking off a robust “reflation trade” in bond markets. This caused the US Treasury yield curve to steepen sharply over the first half of the period before flattening again in the second half of the period, as the market pulled forward its expectation for interest rate hikes. (A yield curve is a line graph that illustrates the relationship between the yields and maturities of fixed income securities. It is created by plotting the yields of different maturities for the same type of bonds.)

 

While the yield on the 2-year Treasury note began rising sharply in the fourth quarter of 2021 as markets began pricing in more interest rate hikes in 2022, long-end Treasury yields declined amid uncertainty around the Omicron variant of COVID-19 and the prospect of slower economic growth. Despite steepening in the beginning of the period, the US Treasury yield curve flattened over the full period, with the 10-year/2-year Treasury spread declining from 0.98% to 0.61% as of January 31, 2022. Meanwhile, the yield on the 3-month Treasury bill rose from 0.06% to 0.23%, while the 3-month LIBOR (London Interbank Offered Rate) rose from 0.20% to 0.31%. In the short-term credit markets, investment-grade credit spreads widened during the period. The Bloomberg 1-3 Year Credit Index, a proxy for the short-term spread market, outperformed similar short-duration Treasuries by 0.11% during the period. (Duration is a measure of a bond’s price sensitivity to interest rate changes over time.)

What strategies or holdings affected the Fund’s performance?

The Fund’s weighted average maturity (WAM) remained shorter than peers or near neutral for the entirety of the period. The Fund’s weighted average life (WAL) remained extended through floating rate securities through the first quarter of 2021, shortened toward the middle of the period, and then remained extended for the entirety of the fourth quarter of 2021.

 

At different times throughout the period, the Fund’s managers also tactically adjusted the portfolio to take advantage of wider floating rate spreads and moderated those positions in the LIBOR floaters accordingly as spreads tightened. This allocation consisted primarily of foreign bank positions, as the floating rate paper is attractive for the Fund’s mandate. The issuance of LIBOR based floating rate securities declined substantially over the period leading to less ownership of LIBOR based Floating Rate

 

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Securities and the addition of Federal Funds (Fed Funds) and Secured Overnight Financing Rate (SOFR) to replace the LIBOR based securities. Additionally, the Fund’s position in agency discount notes versus corporates, repurchase agreements, and Treasuries shifted tactically based on relative value between the sectors throughout the period.

 

The Fund’s managers became more defensive toward the end of the period, increasing cash in anticipation of higher interest rates and the potential for widening spreads.

Current outlook

The Fund continues to emphasize well-researched, short-term credit sectors as PGIM Fixed Income expects these assets to offer the most value from a total return perspective. As relative value between floating rate and fixed rate assets fluctuates, PGIM Fixed Income will seek to rotate into more attractively priced holdings.

* This strategy and performance overview, which discusses what strategies or holdings (including derivatives, if applicable) affected the Fund’s performance, is compiled based on how the Fund performed relative to the Fund’s assigned index and is viewed for performance attribution purposes at the aggregate Fund level, which in most instances will not directly correlate to the amounts disclosed in the Statement of Operations which conform to U.S. generally accepted accounting principles.

 

Prudential Investment Portfolios 2

    17  


PGIM Institutional Money Market Fund

Strategy and Performance Overview*

 

How did the Fund perform?

The PGIM Institutional Money Market Fund returned 0.06% in the 12-month reporting period that ended January 31, 2022.

What were the market conditions?

The strong global rebound from the depths of the COVID-19 pandemic continued throughout much of the reporting period, as economies continued to respond to monetary and fiscal stimulus. The rollout of COVID-19 vaccines, along with the potential for further stimulus, shifted the prospects for growth and inflation in the first half of the period, kicking off a robust “reflation trade” in bond markets. This caused the US Treasury yield curve to steepen sharply over the first half of the period before flattening again in the second half of the period, as the market pulled forward its expectation for interest rate hikes. (A yield curve is a line graph that illustrates the relationship between the yields and maturities of fixed income securities. It is created by plotting the yields of different maturities for the same type of bonds.)

 

While the yield on the 2-year Treasury note began rising sharply in the fourth quarter of 2021 as markets began pricing in more interest rate hikes in 2022, long-end Treasury yields declined amid uncertainty around the Omicron variant of COVID-19 and the prospect of slower economic growth. Despite steepening in the beginning of the period, the US Treasury yield curve flattened over the full period, with the 10-year/2-year Treasury spread declining from 0.98% to 0.61% as of January 31, 2022. Meanwhile, the yield on the 3-month Treasury bill rose from 0.06% to 0.23%, while the 3-month LIBOR (London Interbank Offered Rate) rose from 0.20% to 0.31%. In the short-term credit markets, investment-grade credit spreads widened during the period. The Bloomberg 1-3 Year Credit Index, a proxy for the short-term spread market, outperformed similar short-duration Treasuries by 0.11% during the period. (Duration is a measure of a bond’s price sensitivity to interest rate changes over time.)

What strategies or holdings affected the Fund’s performance?

The Fund’s weighted average maturity (WAM) remained longer than that of peers for most of the first quarter of 2021, shortening to near neutral into quarter end, and it remained shorter than that of peers for most of the second quarter of 2021. The Fund’s WAM extended to a near-neutral position into the end of the second quarter and then remained longer than that of peers for the majority of the third and fourth quarters. The Fund’s weighted average life (WAL) remained extended through floating-rate securities throughout the period in light of anticipated short-term (overnight) rates hovering around zero for the foreseeable future.

 

At different times throughout the period, the Fund’s managers also tactically adjusted the Fund to take advantage of wider floating-rate spreads and moderated those positions in the LIBOR floaters accordingly as spreads tightened. This allocation consisted primarily of foreign bank positions, as the floating-rate paper is attractive for

 

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the Fund’s mandate. The issuance of LIBOR based floating rate securities declined substantially over the period leading to less ownership of LIBOR based Floating Rate Securities and the addition of Federal Funds (Fed Funds) and Secured Overnight Financing Rate (SOFR) to replace the LIBOR based securities. Additionally, the Fund’s position in agency discount notes versus corporates, repurchase agreements, and Treasuries shifted tactically based on relative value between the sectors throughout the period.

 

The Fund’s managers became more defensive toward the end of the period, increasing cash in anticipation of higher interest rates and the potential for widening spreads.

Current outlook

PGIM Fixed Income continues to emphasize well-researched, short-term credit sectors and expects these assets to offer the most value from a total return perspective. As relative value between floating rate and fixed rate assets fluctuates, PGIM Fixed Income will seek to rotate into more attractively priced holdings.

* This strategy and performance overview, which discusses what strategies or holdings (including derivatives, if applicable) affected the Fund’s performance, is compiled based on how the Fund performed relative to the Fund’s assigned index and is viewed for performance attribution purposes at the aggregate Fund level, which in most instances will not directly correlate to the amounts disclosed in the Statement of Operations which conform to U.S. generally accepted accounting principles.

 

Prudential Investment Portfolios 2

    19  


Fees and Expenses (unaudited)

 

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

The example is based on an investment of $1,000 held through the six-month period ended January 31, 2022. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.

Actual Expenses

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

Hypothetical Example for Comparison Purposes

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

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

 

       

  PGIM Core Short-Term  

Bond Fund

 

Beginning 

  Account Value  

August 1, 2021 

 

Ending 

  Account Value  

January 31, 2022 

 

  Annualized Expense  

Ratio Based on the

Six-Month Period 

 

Expenses Paid 

During the 

  Six-Month Period*  

       

Actual

  $1,000.00   $   998.60                   0.04%   $0.20
       

Hypothetical

  $1,000.00   $1,025.00                   0.04%   $0.20

 

20  

Visit our website at pgim.com/investments


       

PGIM Core Ultra Short  

  Bond Fund  

 

  Beginning  

  Account Value  

  August 1, 2021  

 

  Ending  

  Account Value  

  January 31, 2022  

 

  Annualized Expense  

  Ratio Based on the  

  Six-Month Period  

 

  Expenses Paid  

  During the  

  Six-Month Period*  

       

Actual

 

$1,000.00

  $1,000.60   0.00%**   $0.02
       

Hypothetical

  $1,000.00   $1,025.18   0.00%**   $0.02

 

       

PGIM Institutional

    Money Market Fund    

 

  Beginning  

  Account Value  

  August 1, 2021  

 

  Ending  

  Account Value  

  January 31, 2022  

 

  Annualized Expense  

  Ratio Based on the  

  Six-Month Period  

 

  Expenses Paid  

  During the  

  Six-Month Period*  

       

Actual

  $1,000.00   $1,000.20   0.07%   $0.35
       

Hypothetical

  $1,000.00   $1,024.85   0.07%   $0.36

*Fund expenses (net of fee waivers or subsidies, if any) are equal to the annualized expense ratio (provided in the table), multiplied by the average account value over the period, multiplied by the 184 days in the six-month period ended January 31, 2022, and divided by the 365 days in the Fund’s fiscal year ended January 31, 2022 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which each Fund may invest.

**Less than 0.005%

 

Prudential Investment Portfolios 2

    21  


Glossary

 

The following abbreviations are used in the Funds’ descriptions:

USD—US Dollar

144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and, pursuant to the requirements of Rule 144A, may not be resold except to qualified institutional buyers.

A—Annual payment frequency for swaps

ABS—Asset-Backed Security

ADBB—Asian Development Bank Bonds

BSBY—Bloomberg Short-Term Bank Yield Index

EMTN—Euro Medium Term Note

FFCSB—Federal Farm Credit System Bank

FHLB—Federal Home Loan Bank

FHLMC—Federal Home Loan Mortgage Corporation

FNMA—Federal National Mortgage Association

GMTN—Global Medium Term Note

GNMA—Government National Mortgage Association

LIBOR—London Interbank Offered Rate

MASTR—Morgan Stanley Structured Asset Security

MTN—Medium Term Note

OTC—Over-the-counter

Q—Quarterly payment frequency for swaps

REITs—Real Estate Investment Trust

S—Semiannual payment frequency for swaps

SOFR—Secured Overnight Financing Rate

TVA—Tennessee Valley Authority

USOIS—United States Overnight Index Swap

 

    23


PGIM Core Short-Term Bond Fund

Schedule of Investments

as of January 31, 2022

 

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

LONG-TERM INVESTMENTS    81.5%

       

ASSET-BACKED SECURITIES    5.5%

       

Automobiles    2.0%

                           

Ally Auto Receivables Trust,

       

Series 2019-02, Class A3

  2.230%     01/16/24       1,211     $ 1,217,710  

CarMax Auto Owner Trust,

       

Series 2018-03, Class A3

  3.130     06/15/23       521       521,615  

Series 2018-04, Class A3

  3.360     09/15/23       1,873       1,884,264  

Series 2019-02, Class A3

  2.680     03/15/24       1,395       1,405,542  

Series 2020-04, Class A3

  0.500     08/15/25       2,400       2,385,063  

Fifth Third Auto Trust,

       

Series 2019-01, Class A3

  2.640     12/15/23       608       610,758  

Ford Credit Auto Owner Trust,

       

Series 2017-01, Class A, 144A

  2.620     08/15/28       4,600       4,603,373  

Ford Credit Floorplan Master Owner Trust,

       

Series 2019-01, Class A

  2.840     03/15/24       8,400       8,424,808  

Series 2019-03, Class A1

  2.230     09/15/24       3,800       3,835,085  

GM Financial Consumer Automobile Receivables Trust,

       

Series 2018-03, Class A3

  3.020     05/16/23       153       152,705  

Series 2018-04, Class A3

  3.210     10/16/23       757       760,830  

GMF Floorplan Owner Revolving Trust,

       

Series 2019-01, Class A, 144A

  2.700     04/15/24       10,500       10,548,289  

Honda Auto Receivables Owner Trust,

       

Series 2019-02, Class A3

  2.520     06/21/23       621       624,552  

Hyundai Auto Lease Securitization Trust,

       

Series 2020-B, Class A2, 144A

  0.360     01/17/23       439       438,552  

Nissan Auto Receivables Owner Trust,

       

Series 2018-B, Class A3

  3.060     03/15/23       197       197,323  

Santander Retail Auto Lease Trust,

       

Series 2020-B, Class A2, 144A

  0.420     11/20/23       5,312       5,305,416  

Toyota Auto Receivables Owner Trust,

       

Series 2018-C, Class A3

  3.020     12/15/22       26       25,622  

World Omni Auto Receivables Trust,

       

Series 2018-C, Class A3

  3.130     11/15/23       1,088       1,092,231  

Series 2018-D, Class A3

  3.330     04/15/24       1,992       2,007,553  

Series 2019-A, Class A3

  3.040     05/15/24       502       505,666  
       

 

 

 
                  46,546,957  

Credit Cards    2.3%

                           

American Express Credit Account Master Trust,

       

Series 2019-01, Class A

  2.870     10/15/24       15,000       15,044,626  

Series 2019-02, Class A

  2.670     11/15/24       6,900       6,933,755  

 

See Notes to Financial Statements.

24


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

ASSET-BACKED SECURITIES (Continued)

       

Credit Cards (cont’d.)

                           

American Express Credit Account Master Trust, (cont’d.)

       

Series 2019-03, Class A

  2.000%     04/15/25       14,800     $ 14,921,992  

BA Credit Card Trust,

       

Series 2019-A01, Class A1

  1.740     01/15/25       16,600       16,702,661  
       

 

 

 
                  53,603,034  

Home Equity Loans    0.9%

                           

Accredited Mortgage Loan Trust,

       

Series 2004-04, Class A2D, 1 Month LIBOR +
0.700% (Cap N/A, Floor 0.700%)

  0.808(c)     01/25/35       827       819,933  

Ameriquest Mortgage Securities, Inc., Asset-Backed Pass-Through Certificates,

       

Series 2003-11, Class AV2, 1 Month LIBOR + 0.740%
(Cap N/A, Floor 0.740%)

  0.848(c)     12/25/33       180       178,647  

Argent Securities, Inc., Asset-Backed Pass-Through Certificates,

       

Series 2003-W03, Class M2, 1 Month LIBOR +
2.700% (Cap N/A, Floor 2.700%)

  2.802(c)     09/25/33       5,093       5,140,885  

Asset-Backed Funding Certificate Trust,

       

Series 2003-AHL01, Class A1

  4.184     03/25/33       169       169,708  

Series 2003-OPT01, Class A3, 1 Month LIBOR +
0.680% (Cap N/A, Floor 0.680%)

  0.788(c)     04/25/33       586       570,238  

Series 2004-HE01, Class M1, 1 Month LIBOR +
0.900% (Cap N/A, Floor 0.900%)

  1.008(c)     03/25/34       369       366,345  

Asset-Backed Securities Corp. Home Equity Loan Trust,

       

Series 2003-HE06, Class A2, 1 Month LIBOR +
0.680% (Cap N/A, Floor 0.680%)

  0.788(c)     11/25/33       180       178,507  

Bear Stearns Asset-Backed Securities Trust,

       

Series 2003-03, Class M1, 1 Month LIBOR + 1.230%
(Cap 11.000%, Floor 1.230%)

  1.338(c)     06/25/43       220       223,463  

CDC Mortgage Capital Trust,

       

Series 2003-HE03, Class M1, 1 Month LIBOR +
1.050% (Cap N/A, Floor 1.050%)

  1.158(c)     11/25/33       954       946,912  

Equifirst Mortgage Loan Trust,

       

Series 2003-01, Class M2, 1 Month LIBOR + 2.850%
(Cap N/A, Floor 2.850%)

  2.958(c)     12/25/32       23       22,848  

Home Equity Asset Trust,

       

Series 2002-03, Class M1, 1 Month LIBOR + 1.350%
(Cap N/A, Floor 1.350%)

  1.458(c)     02/25/33       294       295,905  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    25


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

ASSET-BACKED SECURITIES (Continued)

       

Home Equity Loans (cont’d.)

                           

Home Equity Asset Trust, (cont’d.)

       

Series 2003-02, Class M1, 1 Month LIBOR + 1.320%
(Cap N/A, Floor 1.320%)

  1.428%(c)     08/25/33       633     $ 636,695  

Series 2003-03, Class M1, 1 Month LIBOR + 1.290%
(Cap N/A, Floor 1.290%)

  1.398(c)     08/25/33       549       549,856  

Series 2003-08, Class M1, 1 Month LIBOR + 1.080%
(Cap N/A, Floor 1.080%)

  1.188(c)     04/25/34       223       223,244  

MASTR Asset-Backed Securities Trust,

       

Series 2004-OPT02, Class A2, 1 Month LIBOR +
0.700% (Cap N/A, Floor 0.700%)

  0.808(c)     09/25/34       130       125,569  

Merrill Lynch Mortgage Investors Trust,

       

Series 2004-HE02, Class A1A, 1 Month LIBOR +
0.800% (Cap N/A, Floor 0.800%)

  0.908(c)     08/25/35       45       44,356  

Series 2004-HE02, Class M1, 1 Month LIBOR +
1.200% (Cap N/A, Floor 1.200%)

  1.308(c)     08/25/35       171       169,723  

Morgan Stanley ABS Capital I, Inc. Trust,

       

Series 2003-NC05, Class M1, 1 Month LIBOR +
1.275% (Cap N/A, Floor 1.275%)

  1.383(c)     04/25/33       633       632,993  

Series 2003-NC05, Class M3, 1 Month LIBOR +
3.450% (Cap N/A, Floor 3.450%)

  3.558(c)     04/25/33       82       83,101  

Series 2003-NC08, Class M1, 1 Month LIBOR +
1.050% (Cap N/A, Floor 1.050%)

  1.158(c)     09/25/33       621       621,073  

Series 2003-NC08, Class M2, 1 Month LIBOR +
2.625% (Cap N/A, Floor 2.625%)

  2.733(c)     09/25/33       4       4,474  

Series 2003-NC10, Class M1, 1 Month LIBOR +
1.020% (Cap N/A, Floor 1.020%)

  1.128(c)     10/25/33       107       107,074  

Series 2004-HE07, Class M1, 1 Month LIBOR +
0.900% (Cap N/A, Floor 0.900%)

  1.008(c)     08/25/34       2,202               2,189,750  

New Century Home Equity Loan Trust,

       

Series 2004-01, Class M1, 1 Month LIBOR + 0.885%
(Cap 11.500%, Floor 0.885%)

  0.993(c)     05/25/34       2,433       2,422,135  

Renaissance Home Equity Loan Trust,

       

Series 2003-01, Class A, 1 Month LIBOR + 0.860%
(Cap N/A, Floor 0.860%)

  0.968(c)     06/25/33       238       229,720  

 

See Notes to Financial Statements.

26


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

ASSET-BACKED SECURITIES (Continued)

       

Home Equity Loans (cont’d.)

                           

Residential Asset Securities Trust,

       

Series 2004-KS05, Class AI5

  4.513%(cc)     06/25/34       3,160     $ 3,207,330  

Saxon Asset Securities Trust,

       

Series 2003-03, Class M2, 1 Month LIBOR + 2.400%
(Cap N/A, Floor 2.400%)

  2.508(c)     12/25/33       26       26,173  
       

 

 

 
                  20,186,657  

Residential Mortgage-Backed Securities    0.3%

                           

Ameriquest Mortgage Securities, Inc., Asset-Backed Pass-Through Certificates,

       

Series 2004-R05, Class M1, 1 Month LIBOR +
0.870% (Cap N/A, Floor 0.870%)

  0.978(c)     07/25/34       235       235,623  

Amortizing Residential Collateral Trust,

       

Series 2002-BC05, Class M2, 1 Month LIBOR +
1.800% (Cap N/A, Floor 1.800%)

  1.908(c)     07/25/32       70       70,388  

Chase Funding Trust,

       

Series 2002-02, Class 2A1, 1 Month LIBOR + 0.500%
(Cap N/A, Floor 0.500%)

  0.608(c)     05/25/32       264       262,284  

Series 2003-01, Class 2A2, 1 Month LIBOR + 0.660%
(Cap N/A, Floor 0.660%)

  0.768(c)     11/25/32       187       185,818  

Countrywide Asset-Backed Certificates,

       

Series 2003-BC04, Class M1, 1 Month LIBOR +
1.050% (Cap N/A, Floor 1.050%)

  1.158(c)     07/25/33       107       107,093  

Series 2004-01, Class M1, 1 Month LIBOR + 0.750%
(Cap N/A, Floor 0.750%)

  0.858(c)     03/25/34       77       77,185  

Equity One Mortgage Pass-Through Trust,

       

Series 2003-01, Class M1

  4.860(cc)     08/25/33       37       36,855  

First Franklin Mortgage Loan Trust,

       

Series 2004-FF05, Class A1, 1 Month LIBOR +
0.720% (Cap N/A, Floor 0.720%)

  0.828(c)     08/25/34       138       137,430  

HSI Asset Securitization Corp. Trust,

       

Series 2006-OPT04, Class 2A4, 1 Month LIBOR +
0.500% (Cap N/A, Floor 0.500%)

  0.608(c)     03/25/36       127       126,852  

Long Beach Mortgage Loan Trust,

       

Series 2003-03, Class M1, 1 Month LIBOR + 1.125%
(Cap N/A, Floor 1.125%)

  1.233(c)     07/25/33       610       610,018  

Series 2003-04, Class M1, 1 Month LIBOR + 1.020%
(Cap N/A, Floor 1.020%)

  1.128(c)     08/25/33       216       215,209  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    27


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

ASSET-BACKED SECURITIES (Continued)

       

Residential Mortgage-Backed Securities (cont’d.)

                           

Long Beach Mortgage Loan Trust, (cont’d.)

       

Series 2004-02, Class M1, 1 Month LIBOR + 0.795%
(Cap N/A, Floor 0.795%)

  0.903%(c)     06/25/34       1,571     $ 1,555,858  

Series 2004-03, Class M1, 1 Month LIBOR + 0.855%
(Cap N/A, Floor 0.855%)

  0.963(c)     07/25/34       2,151       2,138,176  

Merrill Lynch Mortgage Investors Trust,

       

Series 2003-WMC02, Class M2, 1 Month LIBOR + 2.850%
(Cap N/A, Floor 2.850%)

  2.958(c)     02/25/34       146       148,721  

Series 2004-WMC01, Class M2, 1 Month LIBOR + 1.650%
(Cap N/A, Floor 1.650%)

  1.758(c)     10/25/34       538       537,569  

Morgan Stanley ABS Capital I, Inc. Trust,

       

Series 2004-NC05, Class M1, 1 Month LIBOR +
0.900% (Cap N/A, Floor 0.900%)

  1.008(c)     05/25/34       366       359,108  

Structured Asset Investment Loan Trust,

       

Series 2003-BC01, Class A2, 1 Month LIBOR +
0.680% (Cap N/A, Floor 0.680%)

  0.788(c)     01/25/33       80       79,567  
       

 

 

 
          6,883,754  
       

 

 

 

TOTAL ASSET-BACKED SECURITIES
   
(cost $123,757,250)

                  127,220,402  
       

 

 

 

CERTIFICATES OF DEPOSIT    3.1%

       

Lloyds Bank Corporate Markets PLC (United Kingdom),
   SOFR + 0.540%

  0.580(c)     01/31/24       17,000       17,047,195  

Nordea Bank Abp (Finland), 3 Month LIBOR + 0.200%

  0.356(c)     02/14/22       20,000       19,997,131  

Standard Chartered Bank (United Kingdom), SOFR +
   0.420%

  0.040(c)     07/28/23       16,000       15,997,628  

Svenska Handelsbanken (Sweden), 3 Month LIBOR +
   0.200%

  0.360(c)     02/18/22       20,000       19,994,475  
       

 

 

 

TOTAL CERTIFICATES OF DEPOSIT
   
(cost $72,992,853)

          73,036,429  
       

 

 

 

COMMERCIAL MORTGAGE-BACKED SECURITIES    14.1%

       

Barclays Commercial Mortgage Securities Trust,

       

Series 2018-TALL, Class A, 144A, 1 Month LIBOR +
0.722% (Cap N/A, Floor 0.722%)

  0.828(c)     03/15/37       22,479       22,254,401  

Benchmark Mortgage Trust,

       

Series 2018-B03, Class A2

  3.848     04/10/51       1,587       1,614,415  

Series 2018-B05, Class A2

  4.077     07/15/51       1,800       1,845,867  

 

See Notes to Financial Statements.

28


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL MORTGAGE-BACKED SECURITIES (Continued)

     

BX Commercial Mortgage Trust,

       

Series 2018-BIOA, Class A, 144A, 1 Month LIBOR +
0.671% (Cap N/A, Floor 0.648%)

  0.777%(c)     03/15/37       33,876     $ 33,876,681  

Series 2020-BXLP, Class A, 144A, 1 Month LIBOR +
0.800% (Cap N/A, Floor 0.800%)

  0.906(c)     12/15/36       4,933       4,929,872  

BX Trust,

       

Series 2018-EXCL, Class A, 144A, 1 Month LIBOR +
1.088% (Cap N/A, Floor 1.088%)

  1.194(c)     09/15/37       8,507       8,453,888  

CAMB Commercial Mortgage Trust,

       

Series 2019-LIFE, Class A, 144A, 1 Month LIBOR +
1.070% (Cap N/A, Floor 1.070%)

  1.176(c)     12/15/37       9,500       9,499,885  

Citigroup Commercial Mortgage Trust,

       

Series 2014-GC25, Class A3

  3.372     10/10/47       13,416       13,777,726  

Series 2016-P04, Class A2

  2.450     07/10/49       8,843       8,864,970  

Commercial Mortgage Trust,

       

Series 2014-UBS05, Class A2

  3.031     09/10/47       347       351,028  

Series 2018-HCLV, Class A, 144A, 1 Month LIBOR +
1.000% (Cap N/A, Floor 1.000%)

  1.106(c)     09/15/33       11,508       11,421,723  

Credit Suisse Mortgage Capital Certificates,

       

Series 2019-ICE04, Class A, 144A, 1 Month LIBOR +
0.980% (Cap N/A, Floor 0.980%)

  1.086(c)     05/15/36       35,000       35,011,228  

CSAIL Commercial Mortgage Trust,

       

Series 2015-C03, Class A4

  3.718     08/15/48       12,000       12,569,700  

GS Mortgage Securities Corp. Trust,

       

Series 2021-RENT, Class A, 144A, 1 Month LIBOR +
0.700% (Cap N/A, Floor 0.700%)

  0.809(c)     11/21/35       5,359       5,322,319  

GS Mortgage Securities Trust,

       

Series 2018-HART, Class A, 144A, 1 Month LIBOR +
1.090% (Cap N/A, Floor 1.090%)

  1.200(c)     10/15/31       11,300       11,250,031  

JPMBB Commercial Mortgage Securities Trust,

       

Series 2013-C15, Class ASB

  3.659     11/15/45       432       439,914  

Series 2014-C18, Class A4A2, 144A

  3.794     02/15/47       6,803       6,970,655  

Series 2014-C24, Class A3

  3.098     11/15/47       19,500       19,633,850  

Series 2014-C24, Class A4A2, 144A

  3.373     11/15/47       25,000       25,551,980  

JPMDB Commercial Mortgage Securities Trust,

       

Series 2020-COR07, Class A2

  2.215     05/13/53       25,000       25,043,828  

JPMorgan Chase Commercial Mortgage Securities Trust,

       

Series 2018-WPT, Class AFL, 144A, 1 Month LIBOR +
1.200% (Cap N/A, Floor 0.950%)

  1.450(c)     07/05/33       19,358       19,362,425  

Series 2019-BKWD, Class A, 144A, 1 Month LIBOR +
1.000% (Cap N/A, Floor 1.000%)

  1.106(c)     09/15/29       3,959       3,943,700  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    29


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL MORTGAGE-BACKED SECURITIES (Continued)

     

LSTAR Commercial Mortgage Trust,

       

Series 2017-05, Class A2, 144A

  2.776%     03/10/50       839     $ 838,886  

Morgan Stanley Bank of America Merrill Lynch Trust,

       

Series 2012-C06, Class A4

  2.858     11/15/45       3,211       3,223,395  

Series 2013-C07, Class A3

  2.655     02/15/46       3,885       3,893,233  

Morgan Stanley Capital I Trust,

       

Series 2018-H03, Class A2

  3.997     07/15/51       1,294       1,327,222  

One New York Plaza Trust,

       

Series 2020-01NYP, Class A, 144A, 1 Month LIBOR +
0.950% (Cap N/A, Floor 0.950%)

  1.056(c)     01/15/36       11,900       11,892,885  

UBS Commercial Mortgage Trust,

       

Series 2018-C08, Class A2

  3.713     02/15/51       2,400       2,437,914  

UBS-Barclays Commercial Mortgage Trust,

       

Series 2012-C03, Class A4

  3.091     08/10/49       7,345       7,379,617  

Series 2012-C04, Class A3

  2.533     12/10/45       11,714       11,754,205  

Series 2012-C04, Class A5

  2.850     12/10/45       4,512       4,537,256  
       

 

 

 

TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
   
(cost $332,923,745)

                  329,274,699  
       

 

 

 

CORPORATE BONDS    58.8%

       

Agriculture    0.1%

                           

Cargill, Inc.,

       

Sr. Unsec’d. Notes, 144A

  1.375     07/23/23       3,000       3,005,104  

Airlines    0.8%

                           

Southwest Airlines Co.,

       

Sr. Unsec’d. Notes

  4.750     05/04/23       17,500       18,175,579  

Apparel    0.3%

                           

VF Corp.,

       

Sr. Unsec’d. Notes

  2.050     04/23/22       7,500       7,524,484  

Auto Manufacturers    3.3%

                           

American Honda Finance Corp.,

       

Sr. Unsec’d. Notes, MTN

  0.750     08/09/24       7,500       7,334,306  

BMW US Capital LLC (Germany),

       

Gtd. Notes, 144A, SOFR + 0.530%

  0.580(c)     04/01/24       8,500       8,543,231  

Gtd. Notes, 144A

  3.800     04/06/23       10,000       10,293,036  

Daimler Finance North America LLC (Germany),

       

Gtd. Notes, 144A

  0.750     03/01/24       31,500       30,917,893  

 

See Notes to Financial Statements.

30


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

CORPORATE BONDS (Continued)

       

Auto Manufacturers (cont’d.)

                           

Toyota Motor Credit Corp.,

       

Sr. Unsec’d. Notes, MTN, SOFR + 0.300%

  0.350%(c)     06/13/22       10,000     $ 10,002,156  

Volkswagen Group of America Finance LLC (Germany),

       

Gtd. Notes, 144A

  2.900     05/13/22       10,000       10,063,654  
       

 

 

 
          77,154,276  

Banks     17.1%

                           

Banco Santander SA (Spain),

       

Sr. Unsec’d. Notes, 3 Month LIBOR + 1.560%

  1.796(c)     04/11/22       12,200       12,231,082  

Sr. Unsec’d. Notes

  3.500     04/11/22       4,000       4,022,140  

Bank of America Corp.,

       

Sr. Unsec’d. Notes, MTN, 3 Month BSBY + 0.430%

  0.593(c)     05/28/24       33,500       33,523,514  

Bank of New York Mellon Corp. (The),

       

Sr. Unsec’d. Notes, MTN, 3 Month LIBOR + 1.050%

  1.349(c)     10/30/23       1,927       1,939,946  

Sr. Unsec’d. Notes, MTN

  1.950     08/23/22       6,700       6,749,097  

Bank of Nova Scotia (The) (Canada),

       

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.620%

  0.834(c)     09/19/22       1,750       1,755,181  

Sr. Unsec’d. Notes

  1.625     05/01/23       14,000       14,059,064  

Banque Federative du Credit Mutuel SA (France),

       

Sr. Unsec’d. Notes, 144A

  0.650     02/27/24       17,750       17,357,906  

Sr. Unsec’d. Notes, 144A, MTN, 3 Month LIBOR + 0.730%

  0.984(c)     07/20/22       960       962,565  

Barclays Bank PLC (United Kingdom),

       

Sr. Unsec’d. Notes

  1.700     05/12/22       26,000       26,059,514  

Canadian Imperial Bank of Commerce (Canada),

       

Sr. Unsec’d. Notes, SOFR + 0.800%

  0.849(c)     03/17/23       21,000       21,105,048  

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.720%

  0.931(c)     06/16/22       2,260       2,265,201  

Commonwealth Bank of Australia (Australia),

       

Sr. Unsec’d. Notes, 144A, 3 Month LIBOR + 0.700%

  0.901(c)     03/10/22       5,000       5,003,312  

Sr. Unsec’d. Notes, 144A, MTN, 3 Month LIBOR + 0.680%

  0.894(c)     09/18/22       250       250,897  

Cooperatieve Rabobank UA (Netherlands),

       

Sr. Unsec’d. Notes, SOFR + 0.300%

  0.350(c)     01/12/24       14,000       14,002,432  

Credit Agricole Corporate & Investment Bank SA (France),

       

Bank Gtd. Notes, MTN

  0.400     01/15/23       8,200       8,153,345  

Credit Suisse AG (Switzerland),

       

Sr. Unsec’d. Notes, SOFR + 0.390%

  0.440(c)     02/02/24       7,500       7,497,168  

Sr. Unsec’d. Notes, SOFR + 0.450%

  0.499(c)     02/04/22       18,000       18,000,181  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    31


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

CORPORATE BONDS (Continued)

           

Banks (cont’d.)

                               

Fifth Third Bank NA,

           

Sr. Unsec’d. Notes, MTN

   1.800%      01/30/23        7,000      $ 7,053,166  

Goldman Sachs Group, Inc. (The),

           

Sr. Unsec’d. Notes

   0.627(ff)      11/17/23        20,000        19,881,010  

Huntington National Bank (The),

           

Sr. Unsec’d. Notes

   1.800      02/03/23        8,000        8,054,747  

JPMorgan Chase & Co.,

           

Sr. Unsec’d. Notes

   0.768(ff)      08/09/25        25,000        24,296,052  

KeyBank NA,

           

Sr. Unsec’d. Notes

   1.250      03/10/23        12,500        12,500,601  

Mitsubishi UFJ Financial Group, Inc. (Japan),

           

Sr. Unsec’d. Notes

   2.623      07/18/22        20,000        20,171,544  

Morgan Stanley,

           

Sr. Unsec’d. Notes, MTN, 3 Month LIBOR + 1.400%

   1.659(c)      10/24/23        11,551        11,643,312  

National Securities Clearing Corp.,

           

Sr. Unsec’d. Notes, 144A

   0.400      12/07/23        12,750        12,522,510  

Sr. Unsec’d. Notes, 144A

   1.200      04/23/23        5,000        5,007,985  

PNC Bank NA,

           

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.325%

   0.495(c)      02/24/23        14,000        13,974,485  

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.500%

   0.768(c)      07/27/22        350        350,553  

Skandinaviska Enskilda Banken AB (Sweden),

           

Sr. Unsec’d. Notes, 144A

   0.650      09/09/24        9,750        9,494,454  

Toronto-Dominion Bank (The) (Canada),

           

Sr. Unsec’d. Notes, MTN, SOFR + 0.350%

   0.399(c)      09/10/24        20,000        19,979,459  

Sr. Unsec’d. Notes, MTN, SOFR + 0.480%

   0.530(c)      01/27/23        2,750        2,756,202  

Truist Bank,

           

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.590%

   0.748(c)      05/17/22        15,000        15,016,524  

Sr. Unsec’d. Notes, SOFR + 0.730% (Cap N/A, Floor 0.000%)

   0.779(c)      03/09/23        2,750        2,762,767  

UBS AG (Switzerland),

           

Sr. Unsec’d. Notes, 144A, MTN, SOFR + 0.360%

   0.409(c)      02/09/24        7,500        7,486,254  

Sr. Unsec’d. Notes, 144A, MTN

   0.450      02/09/24        5,000        4,885,099  

US Bank NA,

           

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.440%

   0.604(c)      05/23/22        6,300        6,304,023  

Westpac Banking Corp. (Australia),

           

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.720%

   0.876(c)      05/15/23        175        176,301  
           

 

 

 
                      399,254,641  

 

See Notes to Financial Statements.

32


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount
(000)#

             Value          

CORPORATE BONDS (Continued)

          

Beverages    1.1%

                                  

Coca-Cola Europacific Partners PLC (United Kingdom),

          

Sr. Unsec’d. Notes, 144A

     0.500%       05/05/23        8,000      $ 7,901,829  

Sr. Unsec’d. Notes, 144A

     0.800       05/03/24        3,000        2,931,934  

PepsiCo, Inc.,

          

Sr. Unsec’d. Notes

     0.400       10/07/23        14,500        14,305,311  
          

 

 

 
                     25,139,074  

Biotechnology    0.2%

                                  

Gilead Sciences, Inc.,

          

Sr. Unsec’d. Notes

     0.750       09/29/23        4,500        4,447,905  

Building Materials    0.2%

                                  

Martin Marietta Materials, Inc.,

          

Sr. Unsec’d. Notes

     0.650       07/15/23        3,750        3,709,184  

Chemicals    0.5%

                                  

Air Liquide Finance SA (France),

          

Gtd. Notes, 144A

     2.250       09/27/23        2,780        2,815,543  

Nutrien Ltd. (Canada),

          

Sr. Unsec’d. Notes

     1.900       05/13/23        5,000        5,029,705  

Westlake Chemical Corp.,

          

Sr. Unsec’d. Notes

     0.875       08/15/24        4,000        3,899,248  
          

 

 

 
             11,744,496  

Commercial Services    0.4%

                                  

PayPal Holdings, Inc.,

          

Sr. Unsec’d. Notes

     1.350       06/01/23        9,000        9,015,868  

Computers    0.2%

                                  

Apple, Inc.,

          

Sr. Unsec’d. Notes

     1.700       09/11/22        5,000        5,035,965  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    33


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount

(000)#

             Value          

CORPORATE BONDS (Continued)

          

Cosmetics/Personal Care    0.7%

                                  

Procter & Gamble Co. (The),

          

Sr. Unsec’d. Notes

     2.150%       08/11/22        6,499      $ 6,550,547  

Unilever Capital Corp. (United Kingdom),

          

Gtd. Notes

     0.375       09/14/23        10,000        9,851,405  
          

 

 

 
             16,401,952  

Diversified Financial Services    2.2%

                                  

AIG Global Funding,

          

Sr. Sec’d. Notes, 144A

     0.650       06/17/24        21,000        20,427,721  

Air Lease Corp.,

          

Sr. Unsec’d. Notes, MTN, 3 Month LIBOR + 0.350%

     0.553(c)       12/15/22        25,000        24,973,137  

Capital One Bank USA NA,

          

Sub. Notes

     3.375       02/15/23        6,000        6,140,211  
          

 

 

 
             51,541,069  

Electric    4.8%

                                  

American Electric Power Co., Inc.,

          

Sr. Unsec’d. Notes, Series A, 3 Month LIBOR + 0.480%

     0.797(c)       11/01/23        12,000        12,002,004  

CenterPoint Energy, Inc.,

          

Sr. Unsec’d. Notes, SOFR + 0.650%

     0.699(c)       05/13/24        13,500        13,500,154  

DTE Energy Co.,

          

Sr. Unsec’d. Notes

     2.250       11/01/22        27,000        27,250,866  

Entergy Louisiana LLC,

          

First Mortgage

     0.620       11/17/23        10,750        10,611,244  

Florida Power & Light Co.,

          

Sr. Unsec’d. Notes, SOFR + 0.250%

     0.299(c)       05/10/23        11,250        11,245,153  

OGE Energy Corp.,

          

Sr. Unsec’d. Notes

     0.703       05/26/23        6,750        6,668,120  

PPL Electric Utilities Corp.,

          

First Mortgage, SOFR + 0.330%

     0.380(c)       06/24/24        4,750        4,742,124  

First Mortgage

     2.500       09/01/22        9,000        9,052,311  

WEC Energy Group, Inc.,

          

Sr. Unsec’d. Notes

     0.800       03/15/24        17,000        16,670,027  
          

 

 

 
                     111,742,003  

 

See Notes to Financial Statements.

34


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount

(000)#

             Value          

CORPORATE BONDS (Continued)

          

Foods    1.6%

                                  

Hormel Foods Corp.,

          

Sr. Unsec’d. Notes

     0.650%       06/03/24        6,000      $ 5,881,144  

Mondelez International, Inc.,

          

Sr. Unsec’d. Notes

     0.625       07/01/22        21,900        21,894,282  

Nestle Holdings, Inc.,

          

Gtd. Notes, 144A

     0.375       01/15/24        10,000        9,784,510  
          

 

 

 
                     37,559,936  

Forest Products & Paper    0.6%

                                  

Georgia-Pacific LLC,

          

Sr. Unsec’d. Notes, 144A

     3.734       07/15/23        14,126        14,528,456  

Gas    0.5%

                                  

Atmos Energy Corp.,

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.380%

     0.578(c)       03/09/23        12,000        12,000,456  

Healthcare-Products    0.4%

                                  

Stryker Corp.,

          

Sr. Unsec’d. Notes

     0.600       12/01/23        4,750        4,673,090  

Thermo Fisher Scientific, Inc.,

          

Sr. Unsec’d. Notes, SOFR + 0.530%

     0.580(c)       10/18/24        5,000        5,005,015  
          

 

 

 
             9,678,105  

Healthcare-Services    0.5%

                                  

UnitedHealth Group, Inc.,

          

Sr. Unsec’d. Notes

     0.550       05/15/24        12,000        11,753,696  

Household Products/Wares    0.8%

                                  

Reckitt Benckiser Treasury Services PLC (United Kingdom),

          

Gtd. Notes, 144A, 3 Month LIBOR + 0.560%

     0.780(c)       06/24/22        18,050        18,077,679  

Insurance    5.0%

                                  

Berkshire Hathaway, Inc.,

          

Sr. Unsec’d. Notes

     2.750       03/15/23        13,000        13,207,836  

Equitable Financial Life Global Funding,

          

Sec’d. Notes, 144A, SOFR + 0.390%

     0.439(c)       04/06/23        25,000        24,998,101  

Sec’d. Notes, 144A

     0.800       08/12/24        3,000        2,918,336  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    35


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount

(000)#

             Value          

CORPORATE BONDS (Continued)

          

Insurance (cont’d.)

                                  

New York Life Global Funding,

          

Sec’d. Notes, 144A

     2.900%       01/17/24        2,000      $ 2,054,544  

Sr. Sec’d. Notes, 144A, 3 Month LIBOR + 0.440%

     0.678(c)       07/12/22        16,760        16,783,397  

Pacific Life Global Funding II,

          

Sr. Sec’d. Notes, 144A

     0.500       09/23/23        12,000        11,817,931  

Principal Life Global Funding II,

          

Sec’d. Notes, 144A

     0.500       01/08/24        17,750        17,394,113  

Sec’d. Notes, 144A, SOFR + 0.450%

     0.500(c)       04/12/24        2,750        2,758,144  

Protective Life Global Funding,

          

Sec’d. Notes, 144A

     0.631       10/13/23        10,750        10,609,003  

Sr. Sec’d. Notes, 144A

     0.473       01/12/24        15,000        14,682,691  
          

 

 

 
                     117,224,096  

Machinery-Construction & Mining    0.6%

                                  

Caterpillar Financial Services Corp.,

          

Sr. Unsec’d. Notes, MTN

     0.450       09/14/23        15,000        14,815,644  

Media    0.5%

                                  

TWDC Enterprises 18 Corp.,

          

Gtd. Notes, MTN, 3 Month LIBOR + 0.390%

     0.570(c)       03/04/22        3,750        3,751,172  

Walt Disney Co. (The),

          

Gtd. Notes, 3 Month LIBOR + 0.390%

     0.561(c)       09/01/22        8,000        8,013,418  
          

 

 

 
             11,764,590  

Oil & Gas    3.0%

                                  

Exxon Mobil Corp.,

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.370%

     0.550(c)       03/06/22        1,362        1,362,440  

Sr. Unsec’d. Notes

     1.571       04/15/23        21,000        21,117,727  

Phillips 66,

          

Gtd. Notes

     0.900       02/15/24        16,000        15,801,150  

Gtd. Notes

     4.300       04/01/22        2,000        2,012,437  

Pioneer Natural Resources Co.,

          

Sr. Unsec’d. Notes

     0.550       05/15/23        6,750        6,685,398  

Sr. Unsec’d. Notes

     0.750       01/15/24        10,750        10,530,560  

Saudi Arabian Oil Co. (Saudi Arabia),

          

Sr. Unsec’d. Notes, 144A, MTN

     2.750       04/16/22        13,020        13,076,145  
          

 

 

 
             70,585,857  

 

See Notes to Financial Statements.

36


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount

(000)#

             Value          

CORPORATE BONDS (Continued)

          

Pharmaceuticals    3.8%

                                  

AbbVie, Inc.,

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.650%

     0.810%(c)       11/21/22        4,000      $ 4,016,596  

AmerisourceBergen Corp.,

          

Sr. Unsec’d. Notes

     0.737       03/15/23        26,500        26,328,844  

Astrazeneca Finance LLC (United Kingdom),

          

Gtd. Notes

     0.700       05/28/24        21,500        21,077,346  

Bristol-Myers Squibb Co.,

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.380%

     0.535(c)       05/16/22        4,000        4,002,813  

Sr. Unsec’d. Notes

     0.537       11/13/23        20,000        19,754,804  

GlaxoSmithKline Capital PLC (United Kingdom),

          

Gtd. Notes

     0.534       10/01/23        13,500        13,329,302  
          

 

 

 
                     88,509,705  

Pipelines    1.9%

                                  

Enterprise Products Operating LLC,

          

Gtd. Notes

     3.500       02/01/22        21,259        21,259,000  

Gtd. Notes

     3.900       02/15/24        4,376        4,554,632  

Southern Natural Gas Co. LLC,

          

Sr. Unsec’d. Notes, 144A

     0.625       04/28/23        4,250        4,205,420  

TransCanada PipeLines Ltd. (Canada),

          

Sr. Unsec’d. Notes

     1.000       10/12/24        8,000        7,826,197  

Sr. Unsec’d. Notes

     2.500       08/01/22        7,000        7,053,486  
          

 

 

 
             44,898,735  

Real Estate Investment Trusts (REITs)    0.9%

                                  

Public Storage,

          

Sr. Unsec’d. Notes, SOFR + 0.470%

     0.520(c)       04/23/24        20,000        19,999,537  

Retail    1.0%

                                  

7-Eleven, Inc.,

          

Sr. Unsec’d. Notes, 144A

     0.625       02/10/23        5,000        4,973,610  

Sr. Unsec’d. Notes, 144A

     0.800       02/10/24        7,000        6,865,420  

Home Depot, Inc. (The),

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.310%

     0.481(c)       03/01/22        2,419        2,419,428  

Sr. Unsec’d. Notes

     2.625       06/01/22        6,000        6,032,605  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    37


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount

(000)#

             Value          

CORPORATE BONDS (Continued)

          

Retail (cont’d.)

                                  

Starbucks Corp.,

          

Sr. Unsec’d. Notes

     1.300%       05/07/22        2,000      $ 2,004,498  
          

 

 

 
             22,295,561  

Savings & Loans    1.0%

                                  

Nationwide Building Society (United Kingdom),

          

Sr. Unsec’d. Notes, 144A

     0.550       01/22/24        25,000        24,437,152  

Semiconductors    0.4%

                                  

Intel Corp.,

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.350%

     0.504(c)       05/11/22        10,000        10,006,038  

Software    0.7%

                                  

Fidelity National Information Services, Inc.,

          

Sr. Unsec’d. Notes

     0.600       03/01/24        14,250        13,906,443  

Infor, Inc.,

          

Sr. Unsec’d. Notes, 144A

     1.450       07/15/23        1,800        1,792,141  
          

 

 

 
                     15,698,584  

Telecommunications    2.7%

                                  

NTT Finance Corp. (Japan),

          

Gtd. Notes, 144A

     0.583       03/01/24        15,250        14,925,470  

Rogers Communications, Inc. (Canada),

          

Gtd. Notes, 3 Month LIBOR + 0.600%

     0.814(c)       03/22/22        10,400        10,406,713  

Verizon Communications, Inc.,

          

Sr. Unsec’d. Notes, SOFR + 0.500%

     0.549(c)       03/22/24        23,000        23,061,437  

Sr. Unsec’d. Notes

     0.750       03/22/24        12,000        11,812,414  

Vodafone Group PLC (United Kingdom),

          

Sr. Unsec’d. Notes

     2.500       09/26/22        3,600        3,637,241  
          

 

 

 
             63,843,275  

Transportation    1.0%

                                  

Ryder System, Inc.,

          

Sr. Unsec’d. Notes, MTN

     2.875       06/01/22        6,000        6,033,566  

 

See Notes to Financial Statements.

38


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount

(000)#

             Value          

CORPORATE BONDS (Continued)

          

Transportation (cont’d.)

                                  

United Parcel Service, Inc.,

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.380%

     0.535%(c)       05/16/22        11,800      $ 11,807,930  

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.450%

     0.664(c)       04/01/23        5,144        5,157,618  
          

 

 

 
             22,999,114  
          

 

 

 

TOTAL CORPORATE BONDS
(cost $1,381,649,743)

                     1,374,567,816  
          

 

 

 

TOTAL LONG-TERM INVESTMENTS
(cost $1,911,323,591)

             1,904,099,346  
          

 

 

 

SHORT-TERM INVESTMENTS    18.2%

          

CERTIFICATE OF DEPOSIT    0.2%

          

Bank of Nova Scotia (The)
(cost $5,000,000)

     0.230       05/10/22        5,000        4,999,527  
          

 

 

 

COMMERCIAL PAPER(n)    13.0%

          

Alexandria Real Estate Equities, Inc.,

          

144A

     0.260       02/16/22        9,000        8,999,288  

BAT International Finance PLC,

          

144A

     0.300       02/10/22        10,000        9,999,503  

144A

     0.300       02/25/22        10,000        9,998,354  

Danaher Corp.,

          

144A

     0.180       02/04/22        10,000        9,999,849  

Enbridge, Inc.,

          

144A

     0.451       03/15/22        10,000        9,995,234  

Enel Finance America LLC,

          

144A

     0.392       07/14/22        6,750        6,732,257  

144A

     0.392       07/15/22        6,750        6,732,056  

Evergy Kansas Central, Inc.,

          

144A

     0.200       02/02/22        19,000        18,999,839  

144A

     0.200       02/03/22        11,000        10,999,859  

HCP, Inc.,

          

144A

     0.320       03/08/22        20,000        19,994,120  

Hitachi America Capital Ltd.,

          

144A

     0.160       02/02/22        20,000        19,999,830  

Hyundai Capital America,

          

144A

     0.390       03/18/22        10,000        9,996,333  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    39


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

   

Maturity

Date

    

    Principal    

Amount

(000)#

             Value          

COMMERCIAL PAPER (Continued)

          

Ingredion, Inc.,

          

144A

     0.270%       03/09/22        10,000      $ 9,997,307  

Intercontinental Exchange, Inc.,

          

144A

     0.240       02/15/22        16,815        16,813,223  

Nutrien Ltd.,

          

144A

     0.400       03/21/22        15,000        14,993,324  

PPG Industries, Inc.

     0.250       02/22/22        7,000        6,999,021  

Public Service Enterprise Group, Inc.,

          

144A

     0.340       03/18/22        14,000        13,994,866  

Sempra Energy,

          

144A

     0.270       02/14/22        6,000        5,999,505  

144A

     0.270       02/23/22        14,335        14,332,793  

144A

     0.280       02/22/22        5,900        5,899,138  

TELUS Corp.,

          

144A

     0.370       03/24/22        10,000        9,995,652  

TransCanada PipeLines Ltd.,

          

144A

     0.390       03/14/22        5,000        4,998,378  

Walt Disney Co. (The),

          

144A

     0.271       03/31/22        5,500        5,497,593  

Waste Management, Inc.,

          

144A

     0.321       07/11/22        12,500        12,471,154  

Welltower, Inc.,

          

144A

     0.230       02/09/22        21,000        20,999,092  

Western Union Co. (The),

          

144A

     0.210       02/04/22        19,617        19,616,623  
          

 

 

 

TOTAL COMMERCIAL PAPER
(cost $305,070,346)

                     305,054,191  
          

 

 

 

CORPORATE BOND    0.2%

          

Banks

                                  

ING Groep NV (Netherlands),

          

Sr. Unsec’d. Notes, 3 Month LIBOR + 1.150%
(cost $4,006,310)

     1.370%(c)       03/29/22        4,000        4,006,318  
          

 

 

 

 

See Notes to Financial Statements.

40


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description    Shares      Value  

UNAFFILIATED FUND    4.8%

     

Dreyfus Government Cash Management (Institutional Shares)
   (cost $111,125,793)

     111,125,793      $ 111,125,793  
     

 

 

 

TOTAL SHORT-TERM INVESTMENTS
   
(cost $425,202,449)

        425,185,829  
     

 

 

 

TOTAL INVESTMENTS    99.7%
   (cost $2,336,526,040)

        2,329,285,175  

Other assets in excess of liabilities(z)    0.3%

        7,917,861  
     

 

 

 

NET ASSETS    100.0%

      $ 2,337,203,036  
     

 

 

 
     

 

 

 

 

See the Glossary for a list of the abbreviation(s) used in the annual report.

#

Principal or notional amount is shown in U.S. dollars unless otherwise stated.

(c)

Variable rate instrument. The interest rate shown reflects the rate in effect at January 31, 2022.

(cc)

Variable rate instrument. The rate shown is based on the latest available information as of January 31, 2022. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description.

(ff)

Variable rate security. Security may be issued at a fixed coupon rate, which converts to a variable rate at a specified date. Rate shown is the rate in effect as of period end.

(n)

Rate shown reflects yield to maturity at purchased date.

(z)

Includes net unrealized appreciation/(depreciation) and/or market value of the below holdings which are excluded from the Schedule of Investments:

Interest rate swap agreements outstanding at January 31, 2022

 

Notional

Amount

    (000)#    

   

 

   

Termination
      Date      

   

            Fixed            

Rate

 

Floating

Rate

 

Value at

Trade Date

   

Value at

January 31,

        2022         

   

Unrealized

Appreciation

 (Depreciation) 

 
 

Centrally Cleared Interest Rate Swap Agreements:

       
  24,550         04/01/22         2.265%(S)   3 Month LIBOR(1)(Q)          $   11,634                       $ (267,216              $ (278,850        
  49,030         04/12/22         2.357%(S)   3 Month LIBOR(1)(Q)       (286,839         (553,678         (266,839  
  74,000         06/15/22         1.873%(S)   3 Month LIBOR(1)(Q)       (116,415         (565,084         (448,669  
  21,900         07/02/22         (0.001)%(A)   1 Day USOIS(1)(A)                 47,690           47,690    
  18,500         08/22/22         1.421%(S)   3 Month LIBOR(1)(Q)       (17,603         (198,061         (180,458  
  59,800         09/03/22         1.919%(S)   3 Month LIBOR(1)(Q)       (586,731         (927,276         (340,545  
  15,000         01/30/23         1.467%(S)   3 Month LIBOR(1)(Q)                 (90,325         (90,325  
  65,700         05/11/23         2.250%(A)   1 Day USOIS(1)(A)       (3,959,253         (2,171,510         1,787,743    
  100,000         07/26/23         0.192%(A)   1 Day USOIS(1)(A)                 1,154,480           1,154,480    
  19,250         02/04/24         0.133%(A)   1 Day USOIS(1)(A)       24,122           391,536           367,414    
  47,000         03/01/24         0.230%(A)   1 Day USOIS(1)(A)       58,857           870,315           811,458    
  12,000         03/15/24         0.276%(A)   1 Day USOIS(1)(A)                 212,716           212,716    
  17,000         03/18/24         0.278%(A)   1 Day USOIS(1)(A)                 302,545           302,545    
  3,000         04/26/24         0.305%(A)   1 Day USOIS(1)(A)                 56,040           56,040    

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    41


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

Interest rate swap agreements outstanding at January 31, 2022 (continued)

 

Notional

Amount

    (000)#    

   

Termination
      Date      

   

Fixed

Rate

 

Floating

Rate

 

Value at

Trade Date

   

Value at

January 31,

        2022         

   

Unrealized

Appreciation

 (Depreciation) 

 
 

Centrally Cleared Interest Rate Swap Agreements (cont’d.):

                         
  9,750       05/11/24         0.300%(A)   1 Day SOFR(1)(A)              $    (2,320                     $ 182,213                       $ 184,533          
  12,000       05/20/24         0.296%(A)   1 Day USOIS(1)(A)                 239,956           239,956    
  21,000       06/16/24         0.304%(A)   1 Day USOIS(1)(A)                 440,317           440,317    
  25,000       08/05/24         0.261%(A)   1 Day SOFR(1)(A)                 587,355           587,355    
  3,000       08/13/24         0.368%(A)   1 Day SOFR(1)(A)                 61,888           61,888    
  15,000       08/31/24         0.399%(A)   1 Day USOIS(1)(A)                 319,114           319,114    
  7,500       09/09/24         0.368%(A)   1 Day SOFR(1)(A)       (293         163,313           163,606    
  8,000       10/12/24         0.511%(A)   1 Day SOFR(1)(A)                 151,898           151,898    
  25,000       11/29/24         0.090%(A)   1 Day USOIS(1)(A)       (2,470         859,572           862,042    
  12,000       05/11/25         0.450%(A)   1 Day SOFR(1)(A)       105,148           212,809           107,661    
         

 

 

       

 

 

       

 

 

   
            $(4,772,163       $ 1,480,607         $ 6,252,770    
         

 

 

       

 

 

       

 

 

   

 

(1)

The Fund pays the fixed rate and receives the floating rate.

(2)

The Fund pays the floating rate and receives the fixed rate.

Summary of Collateral for Centrally Cleared/Exchange-traded Derivatives:

Cash and securities segregated as collateral, including pending settlement for closed positions, to cover requirements for centrally cleared/exchange-traded derivatives are listed by broker as follows:

 

Broker                                                                                    

  

                  Cash and/or Foreign Currency             

  

                     Securities Market Value                    

Citigroup Global Markets, Inc.

     $ 4,940,000      $
    

 

 

      

 

 

 

 

Fair Value Measurements:          

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

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

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

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

 

See Notes to Financial Statements.

42


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

The following is a summary of the inputs used as of January 31, 2022 in valuing such portfolio securities:

 

     Level 1      Level 2    

Level 3

 

Investments in Securities

                       

Assets

           

Long-Term Investments

           

Asset-Backed Securities

           

Automobiles

   $      $ 46,546,957       $    

Credit Cards

            53,603,034            

Home Equity Loans

            20,186,657            

Residential Mortgage-Backed Securities

            6,883,754            

Certificates of Deposit

            73,036,429            

Commercial Mortgage-Backed Securities

            329,274,699            

Corporate Bonds

            1,374,567,816            

Short-Term Investments

           

Certificate of Deposit

            4,999,527            

Commercial Paper

            305,054,191            

Corporate Bond

            4,006,318            

Unaffiliated Fund

     111,125,793                   
  

 

 

    

 

 

     

 

 

   

Total

   $ 111,125,793      $ 2,218,159,382       $    
  

 

 

    

 

 

   

 

 

 

Other Financial Instruments*

           

Assets

           

Centrally Cleared Interest Rate Swap Agreements

   $      $ 7,858,456       $    
  

 

 

    

 

 

   

 

 

 

Liabilities

           

Centrally Cleared Interest Rate Swap Agreements

   $      $ (1,605,686     $    
  

 

 

    

 

 

   

 

 

 
           

 

 

*

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

Industry Classification:

The industry classification of investments and other assets in excess of liabilities shown as a percentage of net assets as of January 31, 2022 were as follows (unaudited):

 

Banks

     17.3

Commercial Mortgage-Backed Securities

     14.1  

Commercial Paper

     13.0  

Insurance

     5.0  

Electric

     4.8  

Unaffiliated Fund

     4.8  

Pharmaceuticals

     3.8  

Certificates of Deposit

     3.3  

Auto Manufacturers

     3.3  

Oil & Gas

     3.0  

Telecommunications

     2.7

Credit Cards

     2.3  

Diversified Financial Services

     2.2  

Automobiles

     2.0  

Pipelines

     1.9  

Foods

     1.6  

Beverages

     1.1  

Savings & Loans

     1.0  

Transportation

     1.0  

Retail

     1.0  
 

 

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    43


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

Industry Classification (continued):

 

Home Equity Loans

     0.9

Real Estate Investment Trusts (REITs)

     0.9  

Airlines

     0.8  

Household Products/Wares

     0.8  

Cosmetics/Personal Care

     0.7  

Software

     0.7  

Machinery-Construction & Mining

     0.6  

Forest Products & Paper

     0.6  

Gas

     0.5  

Media

     0.5  

Healthcare-Services

     0.5  

Chemicals

     0.5  

Semiconductors

     0.4  

Healthcare-Products

     0.4

Commercial Services

     0.4  

Apparel

     0.3  

Residential Mortgage-Backed Securities

     0.3  

Computers

     0.2  

Biotechnology

     0.2  

Building Materials

     0.2  

Agriculture

     0.1  
  

 

 

 
     99.7  

Other assets in excess of liabilities

     0.3  
  

 

 

 
     100.0
  

 

 

 
 

 

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

The Fund invested in derivative instruments during the reporting period. The primary type of risk associated with these derivative instruments is interest rate contracts risk. See the Notes to Financial Statements for additional detail regarding these derivative instruments and their risks. The effect of such derivative instruments on the Fund’s financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.

Fair values of derivative instruments as of January 31, 2022 as presented in the Statement of Assets and Liabilities:

 

        

Asset Derivatives

   

Liability Derivatives

 

Derivatives not accounted for

as hedging instruments,

carried at fair value

 

 

  

Statement of

Assets and

Liabilities Location

   Fair
Value
   

Statement of

Assets and

Liabilities Location

   Fair Value  

Interest rate contracts

     Due from/to broker-variation margin swaps    $ 7,858,456   Due from/to broker-variation margin swaps    $ 1,605,686
       

 

 

      

 

 

 

 

*

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

The effects of derivative instruments on the Statement of Operations for the year ended January 31, 2022 are as follows:

 

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

Derivatives not accounted for as hedging

instruments, carried at fair value

   Swaps  

Interest rate contracts

   $ (11,984,058
  

 

 

 

 

See Notes to Financial Statements.

44


PGIM Core Short-Term Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

Derivatives not accounted for

as hedging instruments,

carried at fair value

   Swaps  

Interest rate contracts

   $ 19,181,303  
  

 

 

 

For the year ended January 31, 2022, the Fund’s average volume of derivative activities is as follows:

 

Interest Rate

Swap

Agreements(1)

$713,947,600

 

 

 

(1)

Notional Amount in USD.

Average volume is based on average quarter end balances as noted for the year ended January 31, 2022.

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    45


PGIM Core Short-Term Bond Fund

Statement of Assets & Liabilities

as of January 31, 2022

 

Assets

 

        

Unaffiliated investments (cost $2,336,526,040)

   $ 2,329,285,175  

Deposit with broker for centrally cleared/exchange-traded derivatives

     4,940,000  

Interest receivable

     4,470,348  

Prepaid expenses

     8,205  
  

 

 

 

Total Assets

     2,338,703,728  
  

 

 

 

Liabilities

 

        

Dividends payable

     1,197,934  

Due to broker—variation margin swaps

     153,821  

Accrued expenses and other liabilities

     70,430  

Management fee payable

     61,040  

Affiliated transfer agent fee payable

     16,667  

Trustees’ fees payable

     800  
  

 

 

 

Total Liabilities

     1,500,692  
  

 

 

 

Net Assets

   $ 2,337,203,036  
  

 

 

 
          

Net assets were comprised of:

  

Paid-in capital

   $ 2,373,078,114  

Total distributable earnings (loss)

     (35,875,078
  

 

 

 

Net assets, January 31, 2022

   $ 2,337,203,036  
  

 

 

 

Net asset value and redemption price per share

($2,337,203,036 ÷ 254,866,922 shares of beneficial interest issued and outstanding)

   $ 9.17  
  

 

 

 

 

See Notes to Financial Statements.

46


PGIM Core Short-Term Bond Fund

Statement of Operations

Year Ended January 31, 2022

 

Net Investment Income (Loss)

 

 

Income

  

Interest income

   $ 33,195,699  

Affiliated dividend income

     133,395  

Unaffiliated dividend income

     4,092  
  

 

 

 

Total income

     33,333,186  
  

 

 

 

Expenses

  

Management fee

     710,661  

Transfer agent’s fees and expenses (including affiliated expense of $ 100,000)

     100,046  

Custodian and accounting fees

     59,715  

Audit fee

     40,557  

Legal fees and expenses

     20,998  

Trustees’ fees

     9,501  

Shareholders’ reports

     8,464  

Miscellaneous

     40,113  
  

 

 

 

Total expenses

     990,055  
  

 

 

 

Net investment income (loss)

     32,343,131  
  

 

 

 

Realized And Unrealized Gain (Loss) On Investments

 

 

Net realized gain (loss) on:

  

Investment transactions

     1,627,120  

Swap agreement transactions

     (11,984,058
  

 

 

 
     (10,356,938
  

 

 

 

Net change in unrealized appreciation (depreciation) on:

  

Investments

     (33,808,021

Swap agreements

     19,181,303  
  

 

 

 
     (14,626,718
  

 

 

 

Net gain (loss) on investment transactions

     (24,983,656
  

 

 

 

Net Increase (Decrease) In Net Assets Resulting From Operations

   $ 7,359,475  
  

 

 

 

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    47


PGIM Core Short-Term Bond Fund

Statements of Changes in Net Assets

 

    

Year Ended

January 31,

 
  

 

 

 
     2022     2021  

Increase (Decrease) in Net Assets

 

                

Operations

    

Net investment income (loss)

   $ 32,343,131     $ 52,584,946  

Net realized gain (loss) on investment transactions

     (10,356,938     (47,266,571

Net change in unrealized appreciation (depreciation) on investments

     (14,626,718     40,679,704  
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     7,359,475       45,998,079  
  

 

 

   

 

 

 

Dividends and Distributions

    

Distributions from distributable earnings

     (23,901,687     (37,768,493

Tax return of capital distributions

     (291,540     (1,515,195
  

 

 

   

 

 

 

Total dividends and distributions

     (24,193,227     (39,283,688
  

 

 

   

 

 

 

Fund share transactions

    

Net proceeds from shares sold

     277,486,085       1,738,879,927  

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

     7,137,574       11,638,591  

Cost of shares purchased

     (680,113,269     (1,719,601,850
  

 

 

   

 

 

 

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

     (395,489,610     30,916,668  
  

 

 

   

 

 

 

Total increase (decrease)

     (412,323,362     37,631,059  

Net Assets:

 

                

Beginning of year

     2,749,526,398       2,711,895,339  
  

 

 

   

 

 

 

End of year

   $ 2,337,203,036     $ 2,749,526,398  
  

 

 

   

 

 

 

 

See Notes to Financial Statements.

48


PGIM Core Short-Term Bond Fund

Financial Highlights

 

   
                               
      Year Ended January 31,  
   
      2022     2021     2020     2019     2018
           

Per Share Operating Performance(a):

                                        
   

Net Asset Value, Beginning of Year

     $9.23       $9.21       $9.22       $9.28       $9.27  
   

Income (loss) from investment operations:

                                        
   

Net investment income (loss)

     0.11       0.18       0.27       0.26       0.19  
   

Net realized and unrealized gain (loss) on investment transactions

     (0.09     (0.03     0.02       (0.04     0.03  
   

Total from investment operations

     0.02       0.15       0.29       0.22       0.22  
   

Less Dividends and Distributions:

                                        
   

Dividends from net investment income

     (0.08     (0.12     (0.29     (0.28     (0.21
   

Tax return of capital distributions

     - (b)      (0.01     -       -       -  
   

Distributions from net realized gains

     -       -       (0.01     -       -  
   

Total dividends and distributions

     (0.08     (0.13     (0.30     (0.28     (0.21
   

Net asset value, end of year

     $9.17       $9.23       $9.21       $9.22       $9.28  
   

Total Return(c):

     0.24     1.67     3.16     2.42     2.36
                                          
   

Ratios/Supplemental Data:

                                        
   

Net assets, end of year (000)

     $2,337,203       $2,749,526       $2,711,895       $2,911,225       $3,119,050  
   

Average net assets (000)

     $2,704,291       $2,734,881       $2,860,307       $2,997,474       $3,082,883  
   

Ratios to average net assets(d):

                                        
   

Expenses after waivers and/or expense reimbursement

     0.04     0.04     0.04     0.03     0.03
   

Expenses before waivers and/or expense reimbursement

     0.04     0.04     0.04     0.03     0.03
   

Net investment income (loss)

     1.20     1.92     2.91     2.76     2.04
   

Portfolio turnover rate(e)

     26     54     43     35     53

 

(a)

Calculated based on average shares outstanding during the year.

(b)

Amount rounds to zero.

(c)

Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to GAAP.

(d)

Does not include expenses of the underlying funds in which the Fund invests.

(e)

The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short-term investments, certain derivatives and in-kind transactions (if any). If such transactions were included, the Fund’s portfolio turnover rate may be higher.

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Short-Term Bond Fund    49


PGIM Core Ultra Short Bond Fund

Schedule of Investments

as of January 31, 2022

 

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

LONG-TERM INVESTMENTS     7.7%

         

CERTIFICATES OF DEPOSIT     6.1%

         

Bank of America NA, SOFR + 0.150%

     0.200%(c)        10/11/22       55,000     $ 54,980,851  

Bank of Montreal

     0.200        07/20/22       135,000       134,849,206  

Bank of Montreal, 3 Month LIBOR + 0.040%

     0.220(c)        02/25/22       32,000       32,003,225  

Bank of Nova Scotia (Canada),

         

SOFR + 0.150%

     0.200(c)        08/19/22       98,000       97,985,310  

SOFR + 0.150%

     0.200(c)        10/17/22       70,000       69,971,826  

SOFR + 0.150%

     0.200(c)        10/20/22       80,000       79,966,847  

SOFR + 0.160%

     0.210(c)        07/08/22       100,000       100,014,031  

Canadian Imperial Bank of Commerce (Canada),

         

SOFR + 0.150%

     0.200(c)        10/13/22       150,000       149,939,918  

US Federal Funds Effective Rate + 0.110%

     0.190(c)        08/15/22       75,000       74,975,564  

MUFG Bank Ltd.

     0.300        10/25/22       30,000       29,895,424  

Skandinaviska Enskilda Banken AB

     0.230        05/03/22       21,000       20,996,344  

Toronto-Dominion Bank (The)

     0.200        07/28/22       115,000       114,787,023  

Toronto-Dominion Bank (The)

     0.210        07/18/22       250,000       249,601,227  

Westpac Banking Corp. (Australia),

         

SOFR + 0.130%

     0.180(c)        09/02/22       55,000       54,986,605  

SOFR + 0.140%

     0.190(c)        10/07/22       150,000       149,955,426  
         

 

 

 

TOTAL CERTIFICATES OF DEPOSIT
  
(cost $1,416,001,672)

            1,414,908,827  
         

 

 

 

COMMERCIAL PAPER     0.6%

         

HSBC Bank PLC,

         

144A

     0.271(n)        02/03/22       50,000       49,999,542  

Royal Bank of Canada,

         

144A, 3 Month LIBOR + 0.050%

     0.182(c)        08/01/22       100,000       100,034,228  
         

 

 

 

TOTAL COMMERCIAL PAPER
  
(cost $149,999,250)

            150,033,770  
         

 

 

 

CORPORATE BONDS     0.8%

         

Auto Manufacturers

                                 

Toyota Motor Credit Corp.,

         

Sr. Unsec’d. Notes, GMTN, SOFR + 0.220% (Cap N/A, Floor 0.000%)

     0.260(c)        03/28/22       100,000       99,995,582  

Sr. Unsec’d. Notes, MTN, SOFR + 0.280%

     0.320(c)        12/14/22       87,000       87,016,393  
         

 

 

 

TOTAL CORPORATE BONDS
  (cost $187,000,000)

            187,011,975  
         

 

 

 

 

See Notes to Financial Statements.

50


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

MUNICIPAL BONDS     0.2%

         

Arizona     0.1%

                                 

Maricopa County Industrial Development Authority,

         

Taxable, Revenue Bonds, Series 2021 B-2

     0.070%(cc)        01/01/61       16,500     $ 16,500,000  

Texas     0.1%

                                 

Board of Regents of the University of Texas System,

         

Taxable, Revenue Bonds, Sub-Series G-2

     0.070(cc)        08/01/45       32,090       32,090,000  
         

 

 

 

TOTAL MUNICIPAL BONDS
  
(cost $48,590,000)

            48,590,000  
         

 

 

 

TOTAL LONG-TERM INVESTMENTS
  (cost $1,801,590,922)

            1,800,544,572  
         

 

 

 

SHORT-TERM INVESTMENTS     92.9%

         

CERTIFICATES OF DEPOSIT     13.1%

         

Bank of America NA

     0.210        05/16/22       60,000       59,957,765  

Bank of Montreal (Canada),

         

3 Month LIBOR + 0.050%

     0.214(c)        02/23/22       94,000       93,977,419  

SOFR + 0.150%

     0.200(c)        09/28/22       72,500       72,475,855  

US Federal Funds Effective Rate + 0.120%

     0.200(c)        09/22/22       50,000       49,983,997  

BNP Paribas SA (France),

         

SOFR + 0.130%

     0.180(c)        05/05/22       65,000       65,009,501  

SOFR + 0.130%

     0.180(c)        06/10/22       31,000       31,002,238  

Canadian Imperial Bank of Commerce, US Federal Funds Effective Rate + 0.100%

     0.180(c)        06/08/22       150,000       149,984,037  

Citibank NA

     0.160        06/06/22       175,000       174,886,164  

Citibank NA

     0.180        02/03/22       29,000       29,000,314  

Credit Agricole Corporate & Investment Bank,

         

SOFR + 0.120%

     0.170(c)        05/27/22       90,000       90,006,958  

US Federal Funds Effective Rate + 0.080%

     0.160(c)        05/17/22       100,000       99,889,944  

US Federal Funds Effective Rate + 0.080%

     0.160(c)        05/20/22       90,000       89,991,804  

Credit Agricole Corporate & Investment Bank

     0.230        03/09/22       35,000       35,004,459  

Credit Industriel et Commercial (France),

         

3 Month LIBOR + 0.010%

     0.211(c)        03/11/22       245,000       245,028,476  

US Federal Funds Effective Rate + 0.090%

     0.170(c)        05/03/22       190,000       189,990,259  

Mizuho Bank Ltd.

     0.220        02/09/22       97,000       97,003,562  

Mizuho Bank Ltd.

     0.250        03/18/22       35,000       35,005,274  

MUFG Bank Ltd.

     0.250        05/23/22       150,000       149,955,155  

Natixis SA, SOFR + 0.120%

     0.170(c)        06/17/22       50,000       50,000,569  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    51


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

CERTIFICATES OF DEPOSIT (Continued)

         

Norinchukin Bank

   0.180%    02/17/22     165,000     $ 165,007,243  

Sumitomo Mitsui Banking Corp.

   0.170    02/01/22     17,000       17,000,047  

Sumitomo Mitsui Banking Corp.

   0.180    02/14/22     110,000       110,004,191  

Sumitomo Mitsui Banking Corp.

   0.200    04/25/22     35,000       34,997,051  

Sumitomo Mitsui Banking Corp.

   0.200    05/04/22     50,000       49,991,332  

Sumitomo Mitsui Banking Corp.

   0.210    03/18/22     74,000       74,007,935  

Sumitomo Mitsui Banking Corp.

   0.220    03/16/22     150,000       150,017,585  

Sumitomo Mitsui Trust Bank Ltd.

   0.150    02/01/22     42,000       42,000,093  

Sumitomo Mitsui Trust Bank Ltd.

   0.180    02/09/22     80,000       80,002,119  

Sumitomo Mitsui Trust Bank Ltd.

   0.200    03/16/22     60,000       60,005,567  

Svenska Handelsbanken AB (Sweden),
   3 Month LIBOR + 0.030%

   0.205(c)       05/31/22     145,000       145,003,758  

SOFR + 0.150% (Cap N/A, Floor 0.000%)

   0.200(c)    05/09/22     4,000       4,000,784  

Toronto-Dominion Bank (The), SOFR + 0.140%

   0.190(c)    08/02/22     193,000       192,968,630  

Westpac Banking Corp. (Australia),

         

SOFR + 0.130%

   0.180(c)    09/01/22     39,500       39,490,425  

SOFR + 0.130%

   0.180(c)    09/09/22     80,000       79,978,406  
         

 

 

 

TOTAL CERTIFICATES OF DEPOSIT
  
(cost $3,053,008,093)

            3,052,628,916  
         

 

 

 

COMMERCIAL PAPER     41.5%

         

Bank of America Securities, Inc.,
   144A

   0.140(n)    02/07/22     48,000       47,999,160  

144A

   0.160(n)    03/21/22     73,600       73,585,875  

144A

   0.210(n)    05/20/22     142,000       141,870,587  

144A, USOIS + 0.120%

   0.200(c)    10/14/22     25,000       24,994,720  

144A, USOIS + 0.140%

   0.220(c)    10/26/22     27,000       26,994,029  

Banner Health

   0.130(n)    02/09/22     25,000       24,999,375  

Banner Health

   0.170(n)    04/06/22     25,000       24,988,399  

Baptist Health South Florida, Inc.

   0.150(n)    02/04/22     25,000       24,999,361  

Baptist Health South Florida, Inc.

   0.150(n)    03/07/22     15,000       14,996,252  

BNP Paribas SA,
   144A

   0.160(n)    03/07/22     25,000       24,998,347  

144A, 3 Month LIBOR + 0.030%

   0.162(c)    02/02/22     135,000       135,000,000  

Caisse des Depots et Consignations,
   144A

   0.135(n)    02/22/22     122,000       121,994,706  

144A

   0.140(n)    02/28/22     100,000       99,993,933  

144A

   0.150(n)    03/01/22     50,000       49,996,818  

CDP Financial, Inc.,
   144A

   0.100(n)    02/03/22     5,000       4,999,971  

 

See Notes to Financial Statements.

52


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL PAPER (Continued)

         

CDP Financial, Inc., (cont’d.)
   144A

   0.100%(n)       02/04/22     35,000     $ 34,999,728  

144A

   0.130(n)    02/01/22     134,000       133,999,740  

144A

   0.145(n)    03/21/22     93,000       92,984,684  

144A

   0.150(n)    03/01/22     20,000       19,998,566  

144A

   0.150(n)    03/22/22     88,000       87,984,967  

144A

   0.170(n)    03/17/22     100,000       99,986,250  

144A

   0.200(n)    03/10/22     49,000       48,994,776  

144A

   0.210(n)    05/11/22     75,000       74,947,291  

Citigroup Global Markets Inc.,
   144A

   0.180(n)    04/01/22     8,000       7,997,867  

144A

   0.190(n)    09/23/22     45,000       44,813,469  

144A

   0.210(n)    07/12/22     97,000       96,802,702  

144A

   0.341(n)    08/02/22     56,000       55,848,272  

144A

   0.351(n)    07/07/22     100,000       99,812,472  

European Investment Bank

   0.200(n)    05/23/22     273,000       272,834,379  

Federation Des Caisses Desjardins,
   144A

   0.135(n)    02/08/22     178,000       177,997,586  

144A

   0.140(n)    03/15/22     15,000       14,997,904  

144A

   0.145(n)    02/22/22     100,000       99,995,111  

144A

   0.190(n)    03/29/22     6,000       5,998,556  

144A

   0.200(n)    03/08/22     100,000       99,989,200  

144A

   0.200(n)    03/21/22     58,525       58,514,564  

144A

   0.210(n)    03/18/22     138,000       137,978,311  

FMS Wertmanagement,
   144A

   0.135(n)    02/02/22     10,250       10,249,954  

144A

   0.135(n)    02/03/22     100,000       99,999,333  

144A

   0.145(n)    02/09/22     120,000       119,997,540  

144A

   0.145(n)    02/10/22     100,000       99,997,667  

144A

   0.145(n)    02/15/22     98,200       98,196,317  

Goldman Sachs International,
   144A

   0.150(n)    02/01/22     130,000       129,999,711  

144A

   0.230(n)    03/01/22     250,000       249,976,640  

144A

   0.230(n)    03/07/22     50,000       49,993,827  

144A

   0.233(n)    03/03/22     99,500       99,489,633  

144A

   0.250(n)    04/01/22     99,000       98,970,300  

144A

   0.251(n)    09/23/22     45,000       44,804,656  

144A

   0.251(n)    09/26/22     65,000       64,710,367  

HSBC Bank PLC,
   144A

   0.180(n)    02/02/22     30,000       29,999,817  

Hydro-Quebec,
   144A

   0.110(n)    03/15/22     21,000       20,997,567  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    53


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL PAPER (Continued)

         

Hydro-Quebec, (cont’d.)
   144A

   0.120%(n)       03/16/22     50,000     $ 49,993,950  

144A

   0.120(n)    03/17/22     83,000       82,989,625  

144A

   0.120(n)    03/18/22     57,000       56,992,498  

Indiana University Health, Inc. Obligated Group

   0.120    02/17/22     10,000       9,999,907  

John Deere Ltd.,
   144A

   0.130(n)    02/10/22     50,000       49,999,167  

JPMorgan Securities LLC,
   144A

   0.150(n)    03/04/22     20,000       19,997,280  

144A

   0.170(n)    04/12/22     75,000       74,964,648  

144A

   0.200(n)    07/14/22     62,000       61,859,907  

144A

   0.200(n)    07/27/22     5,000       4,986,353  

144A

   0.220    10/04/22     50,000       49,842,664  

144A

   0.231(n)    04/05/22     91,000       90,964,247  

144A, SOFR + 0.120%

   0.160(c)    06/15/22     95,000       94,998,219  

144A, SOFR + 0.140%

   0.180(c)    09/01/22     30,000       29,987,408  

144A, SOFR + 0.140%

   0.190(c)    08/08/22     75,000       74,981,900  

144A, SOFR + 0.140%

   0.190(c)    08/11/22     76,500       76,480,430  

144A, SOFR Index + 0.120%

   0.170(c)    05/17/22     200,000       200,011,184  

JPMorgan Securities LLC

   0.170(n)    03/28/22     60,000       59,981,426  

KFW,
   144A

   0.110(n)    03/17/22     135,000       134,984,812  

144A

   0.120(n)    02/10/22     16,000       15,999,733  

LVMH Moet Hennessy Louis Vuitton SE,
   144A

   0.120(n)    02/02/22     50,000       49,999,834  

144A

   0.130(n)    03/17/22     35,000       34,994,313  

Michigan State University Board of Trustee

   0.140    03/11/22     13,470       13,469,693  

Mitsubishi International Corp.,
   144A

   0.120(n)    02/04/22     38,000       37,999,704  

144A

   0.120(n)    02/08/22     40,000       39,999,378  

144A

   0.150(n)    02/22/22     106,000       105,995,077  

144A

   0.150(n)    02/23/22     55,000       54,997,295  

144A

   0.160(n)    02/01/22     150,000       149,999,709  

Mitsubishi UFJ Trust & Banking Corp.,
   144A

   0.160(n)    02/15/22     63,000       62,997,979  

144A

   0.160(n)    02/22/22     75,000       74,996,196  

National Australia Bank Ltd.,
   144A, 1 Month LIBOR + 0.070%

   0.175(c)    02/11/22     30,000       30,000,764  

144A, USOIS + 0.060%

   0.140(c)    03/23/22     144,000       143,998,037  

National Securities Clearing Corp.,
   144A

   0.100(n)    02/08/22     67,000       66,998,957  

144A

   0.110(n)    02/09/22     114,000       113,998,005  

 

See Notes to Financial Statements.

54


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL PAPER (Continued)

         

National Securities Clearing Corp., (cont’d.)
   144A

     0.110%(n)        02/14/22       150,000     $ 149,995,917  

144A

     0.120(n)        02/11/22       145,000       144,996,898  

144A

     0.120(n)        02/16/22       90,000       89,997,160  

144A

     0.120(n)        02/17/22       39,000       38,998,656  

Nordea Bank Abp,
   144A

     0.150(n)        02/18/22       85,000       84,996,812  

OMERS Finance Trust,
   144A

     0.200(n)        03/29/22       30,000       29,992,780  

Ontario Teachers’ Finance Trust,
   144A

     0.200(n)        04/27/22       75,000       74,968,645  

144A

     0.210(n)        05/05/22       74,000       73,964,641  

Port Authority of New York & New Jersey

     0.220        02/10/22       10,000       10,000,082  

Port Authority of New York & New Jersey

     0.230        03/08/22       5,325       5,324,842  

Province of Alberta,
   144A

     0.130(n)        02/09/22       55,000       54,999,313  

144A

     0.130(n)        02/10/22       24,000       23,999,667  

144A

     0.140(n)        02/02/22       105,000       104,999,708  

144A

     0.145(n)        03/01/22       50,000       49,996,859  

144A

     0.150(n)        02/07/22       50,000       49,999,514  

144A

     0.180(n)        02/16/22       22,500       22,499,480  

144A

     0.190(n)        04/13/22       50,000       49,984,400  

144A

     0.200(n)        04/19/22       99,000       98,964,822  

144A

     0.240(n)        05/16/22       100,000       99,944,583  

Province of British Columbia

     0.100(n)        02/09/22       45,000       44,999,438  

Province of British Columbia

     0.120(n)        02/17/22       15,600       15,599,602  

Province of British Columbia

     0.130(n)        02/18/22       16,000       15,999,552  

Province of British Columbia

     0.130(n)        02/23/22       62,000       61,997,385  

Province of British Columbia

     0.140(n)        02/28/22       31,500       31,498,138  

Province of British Columbia

     0.140(n)        03/24/22       5,000       4,999,076  

Province of British Columbia

     0.160(n)        03/22/22       76,700       76,687,216  

PSP Capital, Inc.,
   144A

     0.120(n)        02/01/22       70,000       69,999,864  

144A

     0.120(n)        02/03/22       100,000       99,999,417  

144A

     0.120(n)        02/10/22       100,000       99,998,056  

144A

     0.120(n)        03/16/22       37,000       36,995,071  

144A

     0.120(n)        03/17/22       20,000       19,997,250  

144A

     0.150(n)        02/24/22       75,000       74,995,900  

144A

     0.190(n)        05/04/22       100,000       99,938,517  

144A

     0.200(n)        05/09/22       65,000       64,955,587  

Queensland Treasury Corp.

     0.150(n)        03/18/22       94,000       93,987,629  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    55


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL PAPER (Continued)

         

Royal Bank of Canada,
   144A, 3 Month LIBOR + 0.040%

   0.260%(c)       03/25/22     47,500     $ 47,506,786  

144A, USOIS + 0.110%

   0.190(c)    07/13/22     125,000       124,977,606  

Sumitomo Mitsui Trust Bank Ltd.,
   144A

   0.160(n)    02/09/22     42,000       41,999,234  

TotalEnergies Capital Canada Ltd.,
   144A

   0.125(n)    02/22/22     157,900       157,891,412  

144A

   0.147(n)    02/28/22     420,000       419,968,315  

Toyota Finance Australia Ltd.

   0.240(n)    05/17/22     51,000       50,942,636  

Toyota Industries Commercial Finance, Inc.,
   144A

   0.140(n)    02/04/22     45,000       44,999,600  

Toyota Motor Finance Netherlands BV

   0.160(n)    02/10/22     100,000       99,997,222  

UBS AG,
   144A

   0.251(n)    07/12/22     178,000       177,649,162  

144A, SOFR + 0.170%

   0.210(c)    08/18/22     25,000       25,000,004  

144A, SOFR + 0.170%

   0.220(c)    09/21/22     32,000       31,992,136  

144A, SOFR + 0.190%

   0.240(c)    06/15/22     50,000       50,003,503  

Unilever Finance Netherlands BV,
   144A

   0.150(n)    03/07/22     15,000       14,998,585  

144A

   0.150(n)    03/08/22     25,000       24,997,550  

144A

   0.150(n)    03/09/22     25,000       24,997,456  

144A

   0.240(n)    04/11/22     60,000       59,979,817  

144A

   0.240(n)    04/12/22     40,000       39,986,194  

University of Texas System (The)

   0.110    02/11/22     6,500       6,500,040  

University of Texas System (The)

   0.110    02/24/22     15,000       14,999,801  

University of Texas System (The)

   0.150    02/14/22     12,500       12,500,340  

Yale University

   0.120(n)    03/16/22     10,000       9,998,497  
         

 

 

 

TOTAL COMMERCIAL PAPER
  
(cost $9,701,864,239)

            9,700,889,929  
         

 

 

 

CORPORATE BONDS     0.7%

         

Auto Manufacturers     0.3%

                         

Toyota Motor Credit Corp.,

         

Sr. Unsec’d. Notes, MTN, SOFR + 0.150%

   0.190(c)    08/15/22     18,000       17,991,121  

Sr. Unsec’d. Notes, MTN, 3 Month LIBOR + 0.150%

   0.306(c)    02/14/22     57,000       57,001,260  
         

 

 

 
            74,992,381  

 

See Notes to Financial Statements.

56


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

CORPORATE BONDS (Continued)

         

Banks     0.3%

                                 

BPCE SA (France),

         

Sr. Unsec’d. Notes, 144A, SOFR + 0.440%

     0.489%(c)        02/17/22       65,000     $ 65,009,750  

Oil & Gas     0.1%

                                 

Chevron Corp.,

         

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.480%

     0.655%(c)        03/03/22       23,000       23,007,115  
         

 

 

 

TOTAL CORPORATE BONDS
  
(cost $163,014,846)

            163,009,246  
         

 

 

 

REPURCHASE AGREEMENTS     20.5%

         

Amherst Pierpont Securities LLC,

         

0.055%, dated 01/25/22, due 02/01/22 in the amount of $125,001,337 collateralized by FHLMC (coupon rates 2.000%-3.500%, maturity dates 01/01/37-02/01/52) and FNMA (coupon rates 3.000%-4.500%, maturity dates 09/01/29-08/01/50), with the aggregate value, including accrued interest, of $127,501,364

          125,000       125,000,000  

0.055%, dated 01/26/22, due 02/02/22 in the amount of $125,001,337 collateralized by FFCSB (coupon rates 1.550%-1.940%, maturity dates 03/30/27-05/22/29), FHLMC (coupon rates 3.000%-4.500%, maturity dates 01/01/27-07/01/51), FNMA (coupon rates 2.000%- 7.250%, maturity dates 10/01/27-01/01/52) and GNMA (coupon rate 2.940%, maturity date 03/15/60), with the aggregate value, including accrued interest, of $127,501,364

          125,000       125,000,000  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    57


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   Principal    
Amount    
(000)#    
             Value           

REPURCHASE AGREEMENTS (Continued)

   

Amherst Pierpont Securities LLC, (cont’d.)

   

0.050%, dated 01/31/22, due 02/01/22 in the amount of $500,000,694 collateralized by FHLB (coupon rate 2.400%, maturity date 01/28/30), FHLMC (coupon rates 1.855%-4.500%, maturity dates 02/01/34-02/01/52), FNMA (coupon rates 1.568%-7.250%, maturity dates 05/15/30-02/01/52), GNMA (coupon rates 1.868%-3.000%, maturity dates 01/20/52-08/20/71) and TVA (coupon rate 5.250%, maturity date 09/15/39), with the aggregate value, including accrued interest, of $510,000,708

    500,000     $     500,000,000  

Canadian Imperial Bank of Commerce,

   

0.055%, dated 11/04/21, due 02/02/22 in the amount of $212,029,150 collateralized by U.S. Treasury Securities (coupon rates 0.000%-4.625%, maturity dates 07/14/22-11/15/50), with the aggregate value, including accrued interest, of $216,269,443

    212,000       212,000,000  

0.055%, dated 12/23/21, due 02/23/22 in the amount of $285,026,996 collateralized by FHLMC (coupon rates 2.050%-2.700%, maturity dates 08/01/23-10/01/38), FNMA (coupon rates 2.000%-4.500%, maturity dates 09/01/24-02/01/52) and GNMA (coupon rates 2.000%-3.000%, maturity dates 10/20/50-05/20/51), with the aggregate value, including accrued interest, of $290,717,765

    285,000       285,000,000  

0.060%, dated 01/24/22, due 03/17/22 in the amount of $125,010,833 collateralized by FHLMC (coupon rate 2.050%, maturity date 10/01/38) and FNMA (coupon rates 2.000%-6.000%, maturity dates 10/01/27-01/01/52), with the aggregate value, including accrued interest, of $127,501,700

    125,000       125,000,000  

 

See Notes to Financial Statements.

58


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   Principal    
Amount    
(000)#    
             Value           

REPURCHASE AGREEMENTS (Continued)

   

Cantor Fitzgerald & Co.,

   

0.050%, dated 01/31/22, due 02/01/22 in the amount of $500,000,694 collateralized by FFCSB (coupon rate 3.000%, maturity date 07/15/23), FHLMC (coupon rates 2.000%-5.875%, maturity dates 12/01/29-02/01/52), FNMA (coupon rates 1.500%-8.500%, maturity dates 10/01/22-02/01/57), GNMA (coupon rates 1.500%-4.930%, maturity dates 01/20/37-08/15/63), TVA (coupon rates 0.000%-5.250%, maturity dates 03/15/22-09/15/65) and U.S. Treasury Securities (coupon rates 0.000%-2.375%, maturity dates 07/07/22-02/15/28), with the aggregate value, including accrued interest, of $510,000,708

    500,000     $     500,000,000  

Credit Agricole Corporate & Investment Bank,

   

0.050%, dated 01/31/22, due 02/01/22 in the amount of $193,654,269 collateralized by FHLMC (coupon rate 3.000%, maturity date 10/01/49) and FNMA (coupon rates 2.000%-6.000%, maturity dates 02/01/34-01/01/52), with the aggregate value, including accrued interest, of $197,527,080

    193,654       193,654,000  

Goldman Sachs & Co.,

   

0.055%, dated 01/25/22, due 02/01/22 in the amount of $100,001,069 collateralized by GNMA (coupon rates 3.500%-4.000%, maturity dates 03/20/34-09/20/47), with the aggregate value, including accrued interest, of $102,000,935

    100,000       100,000,000  

ING Financial Markets LLC,

   

0.065%, dated 11/24/21, due 02/17/22 in the amount of $150,023,021 collateralized by FHLMC (coupon rates 1.500%-5.000%, maturity dates 11/01/29-10/01/51), FNMA (coupon rates 1.500%-5.500%, maturity dates 07/01/28-05/01/58) and GNMA (coupon rate 3.000%, maturity date 12/20/51), with the aggregate value, including accrued interest, of $153,000,001

    150,000       150,000,000  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    59


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   Principal    
Amount    
(000)#    
             Value           

REPURCHASE AGREEMENTS (Continued)

   

ING Financial Markets LLC, (cont’d.)

   

0.070%, dated 12/08/21, due 02/16/22 in the amount of $300,040,833 collateralized by FHLMC (coupon rates 1.385%-5.500%, maturity dates 09/01/29-11/01/51), FNMA (coupon rates 1.500%-4.500%, maturity dates 07/01/28-02/01/57) and GNMA (coupon rate 2.500%, maturity date 06/20/51), with the aggregate value, including accrued interest, of $306,000,000

    300,000     $     300,000,000  

0.060%, dated 01/14/22, due 02/15/22 in the amount of $120,006,400 collateralized by FHLMC (coupon rates 1.902%-5.000%, maturity dates 11/01/29-05/01/51), FNMA (coupon rates 1.500%-4.000%, maturity dates 07/01/28-01/01/57) and GNMA (coupon rate 3.000%, maturity date 12/20/51), with the aggregate value, including accrued interest, of $122,400,001

    120,000       120,000,000  

Nomura Securities International, Inc.,

   

0.050%, dated 01/31/22, due 02/01/22 in the amount of $925,001,285 collateralized by FFCSB (coupon rate 0.125%, maturity date 04/13/23), FHLMC (coupon rates 1.500%-5.000%, maturity dates 08/01/35-01/01/52), FNMA (coupon rates 1.500%-4.500%, maturity dates 04/01/35-01/01/52), GNMA (coupon rates 2.100%-5.000%, maturity dates 10/15/41-04/20/68), TVA (coupon rate 0.000%, maturity date 03/15/35) and U.S. Treasury Securities (coupon rates 0.000%-2.625%, maturity dates 04/30/22-11/15/47), with the aggregate value, including accrued interest, of $943,501,421

    925,000       925,000,000  

 

See Notes to Financial Statements.

60


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest   

Rate

      Maturity      
 Date
    Principal    
Amount    
(000)#    
             Value           

REPURCHASE AGREEMENTS (Continued)

         

RBC Dominion Securities, Inc.,

         

0.055%, dated 01/05/22, due 02/07/22 in the amount of $285,014,369 collateralized by FHLMC (coupon rate 3.000%, maturity date 12/01/50), FNMA (coupon rates 3.000%-3.500%, maturity dates 02/01/48-01/01/50), GNMA (coupon rates 2.000%-4.500%, maturity dates 10/15/40-12/20/51) and U.S. Treasury Securities (coupon rates 0.000%-6.000%, maturity dates 03/31/22-02/15/50), with the aggregate value, including accrued interest, of $290,700,000

          285,000     $ 285,000,000  

0.050%, dated 01/31/22, due 02/01/22 in the amount of $265,000,368 collateralized by FHLMC (coupon rate 3.000%, maturity date 01/01/50), GNMA (coupon rates 2.000%-5.000%, maturity dates 06/15/39-06/20/51) and U.S. Treasury Securities (coupon rates 0.000%-6.000%, maturity dates 04/05/22-08/15/49), with the aggregate value, including accrued interest, of $270,300,011

          265,000       265,000,000  

Santander Bank NA,

         

0.055%, dated 01/31/22, due 02/01/22 in the amount of $570,000,871 collateralized by FNMA (coupon rates 2.000%-4.500%, maturity dates 12/01/40-12/01/51), with the aggregate value, including accrued interest, of $581,400,889

          570,000       570,000,000  
         

 

 

 

TOTAL REPURCHASE AGREEMENTS
  
(cost $4,780,654,000)

            4,780,654,000  
         

 

 

 

SOVEREIGN BOND     0.1%

         

Export Development Canada (Canada),

         

   Gov’t. Gtd. Notes, 144A, EMTN
   (cost $25,010,344)

     0.295%            06/29/22       25,000       24,966,778  
         

 

 

 

U.S. GOVERNMENT AGENCY OBLIGATION    0.5%

         

Federal Home Loan Bank
   (cost $123,997,560)

     0.060        03/29/22       124,000       123,946,983  
         

 

 

 

U.S. TREASURY OBLIGATIONS(n)     16.5%

         

U.S. Cash Management Bills

     0.090        04/19/22       105,000       104,964,516  

U.S. Treasury Bills

     0.056        03/17/22       271,000       270,989,482  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    61


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

    Maturity      
 Date
  Principal    
Amount    
(000)#    
             Value           

U.S. TREASURY OBLIGATIONS(n) (Continued)

         

U.S. Treasury Bills

   0.063%        03/24/22     1,788,000     $ 1,787,803,695  

U.S. Treasury Bills

   0.070    03/22/22     1,008,000       1,007,900,531  

U.S. Treasury Bills

   0.082    03/31/22     318,000       317,946,204  

U.S. Treasury Bills

   0.084    05/26/22     214,000       213,820,418  

U.S. Treasury Bills

   0.086    04/07/22     145,000       144,963,675  
         

 

 

 

TOTAL U.S. TREASURY OBLIGATIONS
  
(cost $3,848,584,733)

            3,848,388,521  
         

 

 

 

TOTAL SHORT-TERM INVESTMENTS
  (cost $21,696,133,815)

            21,694,484,373  
         

 

 

 

TOTAL INVESTMENTS     100.6%
  (cost $23,497,724,737)

            23,495,028,945  

Liabilities in excess of other assets    (0.6)%

            (132,484,766
         

 

 

 

NET ASSETS     100.0%

          $ 23,362,544,179  
         

 

 

 

 

 

See the Glossary for a list of the abbreviation(s) used in the annual report.

#

Principal amount is shown in U.S. dollars unless otherwise stated.

(c)

Variable rate instrument. The interest rate shown reflects the rate in effect at January 31, 2022.

(cc)

Variable rate instrument. The rate shown is based on the latest available information as of January 31, 2022. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description.

(n)

Rate shown reflects yield to maturity at purchased date.

Fair Value Measurements:

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

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

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

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

 

See Notes to Financial Statements.

62


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

The following is a summary of the inputs used as of January 31, 2022 in valuing such portfolio securities:

 

    

Level 1

   Level 2   

Level 3

Investments in Securities

              

Assets

              

Long-Term Investments

              

Certificates of Deposit

       $—        $  1,414,908,827        $—

Commercial Paper

              150,033,770       

Corporate Bonds

              187,011,975       

Municipal Bonds

              48,590,000       

Short-Term Investments

              

Certificates of Deposit

              3,052,628,916       

Commercial Paper

              9,700,889,929       

Corporate Bonds

              163,009,246       

Repurchase Agreements

              4,780,654,000       

Sovereign Bond

              24,966,778       

U.S. Government Agency Obligation

              123,946,983       

U.S. Treasury Obligations

         —        3,848,388,521          —
         

 

 

      

Total

       $—        $23,495,028,945        $—
    

 

 

 

    

 

 

      

 

 

 

Industry Classification:

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of January 31, 2022 were as follows (unaudited):

 

Commercial Paper

     42.1

Repurchase Agreements

     20.5  

Certificates of Deposit

     19.2  

U.S. Treasury Obligations

     16.5  

Corporate Bonds

     1.5  

U.S. Government Agency Obligation

     0.5  

Municipal Bonds

     0.2  

Sovereign Bond

     0.1
  

 

 

 
     100.6  

Liabilities in excess of other assets

     (0.6
  

 

 

 
     100.0
  

 

 

 
 

 

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

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

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    63


PGIM Core Ultra Short Bond Fund

Schedule of Investments (continued)

as of January 31, 2022

 

Offsetting of financial instrument/transaction assets and liabilities:

 

         Gross Market Value of        
         Recognized   Collateral   Net

Description                         

 

                Counterparty                 

     Assets/(Liabilities)     Pledged/(Received)(1)   Amount

Repurchase Agreements

  Amherst Pierpont Securities LLC        $      750,000,000       $(750,000,000)         $—

Repurchase Agreements

  Canadian Imperial Bank of Commerce        622,000,000       (622,000,000 )      

Repurchase Agreements

  Cantor Fitzgerald & Co. Credit Agricole        500,000,000       (500,000,000 )      

Repurchase Agreements

  Corporate & Investment Bank        193,654,000       (193,654,000 )      

Repurchase Agreements

  Goldman Sachs & Co.        100,000,000       (100,000,000 )      

Repurchase Agreements

  ING Financial Markets LLC        570,000,000       (570,000,000 )      

Repurchase Agreements

  Nomura Securities International, Inc.        925,000,000       (925,000,000 )      

Repurchase Agreements

  RBC Dominion Securities, Inc.        550,000,000       (550,000,000 )      

Repurchase Agreements

  Santander Bank NA        570,000,000       (570,000,000 )      
      

 

 

         
         $    4,780,654,000        
      

 

 

         

 

 

 

(1)

Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions.

 

See Notes to Financial Statements.

64


PGIM Core Ultra Short Bond Fund

Statement of Assets & Liabilities

as of January 31, 2022

 

 

Assets

        

Investments at value:

  

Unaffiliated investments (cost $18,717,070,737)

   $ 18,714,374,945  

Repurchase Agreements (cost $4,780,654,000)

     4,780,654,000  

Cash

     12,377  

Interest receivable

     2,645,362  

Prepaid expenses

     26,750  
  

 

 

 

Total Assets

     23,497,713,434  
  

 

 

 

Liabilities

        

Payable for investments purchased

     134,981,850  

Management fee payable

     87,455  

Accrued expenses and other liabilities

     82,483  

Affiliated transfer agent fee payable

     16,667  

Trustees’ fees payable

     800  
  

 

 

 

Total Liabilities

     135,169,255  
  

 

 

 

Net Assets

   $ 23,362,544,179  
  

 

 

 
          

Net assets were comprised of:

  

Paid-in capital

   $ 23,365,239,971  

Total distributable earnings (loss)

     (2,695,792
  

 

 

 

Net assets, January 31, 2022

   $ 23,362,544,179  
  

 

 

 

Net asset value and redemption price per share

($23,362,544,179 ÷ 23,364,175,912 shares of beneficial interest issued and outstanding)

   $ 1.00  
  

 

 

 

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    65


PGIM Core Ultra Short Bond Fund

Statement of Operations

Year Ended January 31, 2022

 

Net Investment Income (Loss)

          

Interest income

     $ 39,851,305
    

 

 

 

Expenses

    

Management fee

       1,090,704

Custodian and accounting fees

       135,630

Transfer agent’s fees and expenses (including affiliated expense of $100,000)

       101,581

Audit fee

       26,908

Legal fees and expenses

       20,891

Trustees’ fees

       9,501

Shareholders’ reports

       7,098

Miscellaneous

       69,614
    

 

 

 

Total expenses

       1,461,927
    

 

 

 

Net investment income (loss)

       38,389,378
    

 

 

 

Realized And Unrealized Gain (Loss) On Investments

          

Net realized gain (loss) on investment transactions

       241,320

Net change in unrealized appreciation (depreciation) on investments

       (6,026,082 )
    

 

 

 

Net gain (loss) on investment transactions

       (5,784,762 )
    

 

 

 

Net Increase (Decrease) In Net Assets Resulting From Operations

     $ 32,604,616
    

 

 

 

 

See Notes to Financial Statements.

66


PGIM Core Ultra Short Bond Fund

Statements of Changes in Net Assets

 

     Year Ended
January 31,
 
     2022     2021  

Increase (Decrease) in Net Assets

                

Operations

    

Net investment income (loss)

   $ 38,389,378     $ 168,869,892  

Net realized gain (loss) on investment transactions

     241,320       3,628,289  

Net change in unrealized appreciation (depreciation) on investments

     (6,026,082     (1,017,386
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     32,604,616       171,480,795  
  

 

 

   

 

 

 

Dividends and Distributions

    

Distributions from distributable earnings

     (39,976,773     (172,499,588
  

 

 

   

 

 

 

Fund share transactions

    

Net proceeds from shares sold

     185,299,447,230       272,436,300,863  

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

     39,660,742       169,729,470  

Cost of shares purchased

     (192,934,824,533     (261,854,715,517
  

 

 

   

 

 

 

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

     (7,595,716,561     10,751,314,816  
  

 

 

   

 

 

 

Total increase (decrease)

     (7,603,088,718     10,750,296,023  

Net Assets:

                

Beginning of year

     30,965,632,897       20,215,336,874  
  

 

 

   

 

 

 

End of year

   $ 23,362,544,179     $ 30,965,632,897  
  

 

 

   

 

 

 

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Core Ultra Short Bond Fund    67


PGIM Core Ultra Short Bond Fund

Financial Highlights

 

   

    

            
     

Year Ended January 31,

 
   
      2022     2021     2020     2019     2018  
Per Share Operating Performance(a):                                         
Net Asset Value, Beginning of Year      $1.00       $1.00       $1.00       $1.00       $1.00  
Income (loss) from investment operations:                                         
Net investment income (loss)      - (b)      0.01       0.02       0.02       0.01  
Net realized and unrealized gain (loss) on investment transactions      - (b)      - (b)      - (b)      - (b)      - (b)  
Total from investment operations      - (b)      0.01       0.02       0.02       0.01  
Less Dividends and Distributions:                                         
Dividends from net investment income      - (b)      (0.01     (0.02     (0.02     (0.01
Net asset value, end of year      $1.00       $1.00       $1.00       $1.00       $1.00  
Total Return(c):      0.13     0.65     2.38     2.17     1.18
                                             
Ratios/Supplemental Data:                                         
Net assets, end of year (000)      $23,362,544       $30,965,633       $20,215,337       $20,975,373       $22,510,708  
Average net assets (000)      $31,545,754       $28,757,423       $20,937,015       $21,560,540       $23,440,098  
Ratios to average net assets:                                         
Expenses after waivers and/or expense reimbursement      - %(b)      0.01     0.01     0.01     0.01 %     
Expenses before waivers and/or expense reimbursement      - %(b)      0.01     0.01     0.01     0.01
Net investment income (loss)      0.12     0.59     2.35     2.14     1.17
Portfolio turnover rate(d)      72     114     61     94     111

 

(a)

Calculated based on average shares outstanding during the year.

(b)

Amount rounds to zero.

(c)

Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to GAAP.

(d)

The Portfolio turnover rate calculation, if any includes floating rate daily demand notes.

 

See Notes to Financial Statements.

68


PGIM Institutional Money Market Fund

Schedule of Investments

as of January 31, 2022

 

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

SHORT-TERM INVESTMENTS    100.7%

         

CERTIFICATES OF DEPOSIT    27.3%

         

Bank of America NA

   0.210%    05/16/22     50,000     $ 49,964,804  

Bank of America NA,

         

SOFR + 0.150%

   0.200(c)       10/11/22     35,000       34,987,814  

Bank of Montreal,
   3 Month LIBOR + 0.040%

   0.220(c)    02/25/22     118,000       118,011,891  

US Federal Funds Effective Rate + 0.120%

   0.200(c)    09/22/22     75,000       74,975,995  

Bank of Montreal

   0.200    07/20/22     60,000       59,932,981  

Bank of Montreal

   0.230    05/05/22     50,000       50,000,732  

Bank of Nova Scotia (Canada),

         

SOFR + 0.140%

   0.190(c)    06/24/22     10,000       10,000,959  

SOFR + 0.150%

   0.200(c)    08/19/22     50,000       49,992,505  

SOFR + 0.150%

   0.200(c)    10/17/22     50,000       49,979,876  

SOFR + 0.150%

   0.200(c)    10/20/22     20,000       19,991,712  

SOFR + 0.150%

   0.200(c)    10/28/22     45,000       44,979,772  

SOFR + 0.160%

   0.210(c)    07/08/22     25,000       25,003,508  

Bank of Nova Scotia (The)

   0.230    05/10/22     50,000       49,995,266  

BNP Paribas Fortis SA

   0.150    02/22/22     90,000       90,004,399  

BNP Paribas SA (France),

         

SOFR + 0.130%

   0.180(c)    05/05/22     145,000       145,021,195  

SOFR + 0.130%

   0.180(c)    06/10/22     17,000       17,001,227  

Canadian Imperial Bank of Commerce (Canada),
   3 Month LIBOR + 0.030%

   0.205(c)    03/03/22     75,000       75,003,378  

3 Month LIBOR + 0.040%

   0.194(c)    05/12/22     100,000       100,010,522  

US Federal Funds Effective Rate + 0.100%

   0.180(c)    06/08/22     45,000       44,995,211  

US Federal Funds Effective Rate + 0.110%

   0.190(c)    08/15/22     75,000       74,975,563  

Citibank NA

   0.160    06/06/22     115,000       114,925,194  

Citibank NA

   0.180    02/03/22     70,000       70,000,758  

Cooperatieve Rabobank UA (Netherlands),
   3 Month LIBOR + 0.030%

   0.246(c)    07/06/22     25,000       25,006,901  

SOFR + 0.120%

   0.170(c)    05/26/22     130,000       130,010,379  

SOFR + 0.120%

   0.170(c)    07/27/22     170,000       169,976,610  

Credit Agricole Corporate & Investment Bank,

         

SOFR + 0.120%

   0.170(c)    05/18/22     70,000       70,006,863  

SOFR + 0.120%

   0.170(c)    05/27/22     56,000       56,004,329  

US Federal Funds Effective Rate + 0.080%

   0.160(c)    05/20/22     56,000       55,994,900  

Credit Agricole Corporate & Investment Bank

   0.080    02/01/22     100,000       100,000,028  

Credit Agricole Corporate & Investment Bank

   0.230    03/09/22     50,000       50,006,369  

Credit Industriel et Commercial (France),
   3 Month LIBOR + 0.010%

   0.211(c)    03/11/22     149,000       149,017,318  

SOFR + 0.120%

   0.170(c)    05/16/22     78,500       78,508,011  

US Federal Funds Effective Rate + 0.090%

   0.170(c)    05/03/22     86,000       85,995,591  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    69


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

  

 Maturity      

 Date

 

Principal    

Amount    

(000)#    

             Value           

CERTIFICATES OF DEPOSIT (Continued)

         

Credit Suisse AG

   0.240%    02/15/22     27,000     $ 27,001,268  

Goldman Sachs Bank USA,

         

SOFR + 0.230%

   0.279(c)    10/19/22     97,000       97,002,102  

Mitsubishi UFJ Trust & Banking Corp.

   0.160    02/18/22     75,000       75,002,098  

Mizuho Bank Ltd.

   0.220    02/09/22     44,000       44,001,616  

Mizuho Bank Ltd.

   0.250    03/18/22     47,500       47,507,158  

MUFG Bank Ltd.

   0.170    03/17/22     14,000       14,000,700  

MUFG Bank Ltd.

   0.300    10/25/22     50,000       49,825,707  

Norinchukin Bank

   0.140    02/10/22     7,000       7,000,126  

Norinchukin Bank

   0.150    03/14/22     68,000       68,002,220  

Royal Bank of Canada (Canada),
   3 Month LIBOR + 0.020%

   0.174(c)    02/11/22     20,000       20,000,150  

Skandinaviska Enskilda Banken AB

   0.230    05/03/22     25,000       24,995,648  

Sumitomo Mitsui Banking Corp.

   0.180    02/14/22     50,000       50,001,905  

Sumitomo Mitsui Banking Corp.

   0.200    05/04/22     30,000       29,994,799  

Sumitomo Mitsui Banking Corp.

   0.210    03/18/22     50,000       50,005,361  

Sumitomo Mitsui Banking Corp.

   0.220    03/16/22     50,000       50,005,861  

Sumitomo Mitsui Trust Bank Ltd.

   0.070    02/07/22     100,000       100,000,000  

Sumitomo Mitsui Trust Bank Ltd.

   0.080    02/02/22     27,000       27,000,015  

Sumitomo Mitsui Trust Bank Ltd.

   0.180    02/09/22     10,000       10,000,265  

Svenska Handelsbanken AB (Sweden),
   3 Month LIBOR + 0.030%

   0.205(c)    05/31/22     50,000       50,001,296  

SOFR + 0.150% (Cap N/A, Floor 0.000%)

   0.200(c)    05/09/22     140,000       140,027,429  

Toronto-Dominion Bank (The),

         

SOFR + 0.140%

   0.190(c)    08/02/22     82,000       81,986,672  

USOIS + 0.100%

   0.180(c)    06/23/22     120,000       119,985,971  

Toronto-Dominion Bank (The)

   0.250    04/20/22     63,000       63,008,101  

Toronto-Dominion Bank (The)

   0.250    05/31/22     50,000       49,963,243  

Westpac Banking Corp. (Australia),

         

SOFR + 0.130%

   0.180(c)    05/09/22     19,000       19,002,689  

SOFR + 0.130%

   0.180(c)    09/01/22     25,000       24,993,940  

SOFR + 0.130%

   0.180(c)    09/02/22     45,000       44,989,040  

SOFR + 0.130%

   0.180(c)    09/06/22     75,000       74,980,485  

SOFR + 0.130%

   0.180(c)    09/21/22     15,000       14,995,344  

SOFR + 0.130%

   0.180(c)    09/22/22     15,000       14,995,324  
         

 

 

 

TOTAL CERTIFICATES OF DEPOSIT
  (cost $3,830,996,089)

            3,830,559,094  
         

 

 

 

 

See Notes to Financial Statements.

70


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL PAPER    35.9%

         

Bank of America Securities, Inc.,
   144A

   0.190%(n)    03/21/22     18,000     $ 17,996,545  

144A

   0.330(n)    05/20/22     87,000       86,920,712  

144A, USOIS + 0.120%

   0.200(c)    10/14/22     70,000       69,985,217  

144A, USOIS + 0.140%

   0.220(c)    10/26/22     60,000       59,986,732  

Bank of Montreal,
   144A

   0.220(n)    04/13/22     45,450       45,433,274  

Bank of Nova Scotia,
   144A

   0.160(n)    03/02/22     37,000       36,997,842  

Baptist Health South Florida, Inc.

   0.170(n)    03/07/22     10,000       9,997,501  

BNG Bank NV,
   144A

   0.080(n)    02/07/22     50,000       49,999,319  

BNP Paribas SA,
   144A

   0.070(n)    02/04/22     17,500       17,499,883  

Caisse des Depots et Consignations,
   144A

   0.160(n)    02/22/22     75,000       74,996,746  

144A

   0.170(n)    03/01/22     35,000       34,997,773  

CDP Financial, Inc.,
   144A

   0.110(n)    02/01/22     15,000       14,999,971  

144A

   0.120(n)    02/03/22     150,000       149,999,125  

144A

   0.120(n)    02/04/22     30,000       29,999,767  

144A

   0.170(n)    03/21/22     90,000       89,985,178  

144A

   0.180(n)    03/17/22     30,000       29,995,875  

144A

   0.180(n)    03/22/22     19,000       18,996,754  

144A

   0.260(n)    05/11/22     25,000       24,982,431  

Citigroup Global Markets Inc.,
   144A

   0.430(n)    07/07/22     59,000       58,889,358  

144A

   0.430(n)    07/12/22     60,000       59,877,960  

144A

   0.560(n)    09/23/22     10,000       9,958,549  

Commonwealth Bank of Australia,
   144A, SOFR + 0.110%

   0.160(c)    07/12/22     145,000       144,976,522  

Credit Agricole Corporate & Investment Bank

   0.090(n)    02/08/22     100,000       99,998,422  

European Investment Bank

   0.270(n)    05/23/22     4,000       3,997,573  

Federation Des Caisses Desjardins,
   144A

   0.120(n)    02/22/22     38,000       37,998,142  

144A

   0.160(n)    03/15/22     68,000       67,990,497  

144A

   0.200(n)    03/29/22     153,000       152,963,177  

FMS Wertmanagement,
   144A

   0.140(n)    02/02/22     76,000       75,999,663  

144A

   0.150(n)    02/10/22     41,000       40,999,043  

144A

   0.150(n)    02/08/22     40,089       40,088,278  

144A

   0.160(n)    02/15/22     100,000       99,996,250  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    71


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

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

COMMERCIAL PAPER (Continued)

         

Goldman Sachs International,
   144A

     0.110%(n)        02/01/22       9,000     $ 8,999,980  

144A

     0.160(n)        03/03/22       50,000       49,994,790  

144A

     0.510(n)        09/26/22       50,000       49,777,205  

HSBC Bank PLC,
   144A

     0.180(n)        02/02/22       10,000       9,999,939  

Hydro-Quebec,
   144A

     0.110(n)        03/15/22       20,000       19,997,683  

144A

     0.120(n)        03/17/22       73,000       72,990,875  

144A

     0.130(n)        03/16/22       35,000       34,995,765  

144A

     0.130(n)        03/18/22       109,000       108,985,655  

Indiana University Health, Inc. Obligated Group

     0.120        02/17/22       5,000       4,999,954  

JPMorgan Securities LLC,
   144A

     0.190        07/05/22       45,000       44,951,643  

144A

     0.220        10/04/22       45,000       44,858,398  

144A

     0.250(n)        04/12/22       40,000       39,981,146  

144A

     0.370(n)        07/14/22       30,000       29,932,213  

144A

     0.380(n)        07/27/22       5,000       4,986,353  

144A, SOFR + 0.140%

     0.180(c)        09/01/22       20,000       19,991,605  

144A, SOFR + 0.140%

     0.190(c)        08/08/22       25,000       24,993,967  

144A, SOFR + 0.140%

     0.190(c)        08/11/22       23,000       22,994,116  

JPMorgan Securities LLC

     0.240(n)        03/28/22       33,000       32,989,785  

KFW,

         

144A

     0.110(n)        03/17/22       103,000       102,988,412  

LVMH Moet Hennessy Louis Vuitton SE,
   144A

     0.130(n)        03/17/22       20,000       19,996,750  

Michigan State University Board of Trustee

     0.140        03/11/22       8,000       7,999,818  

Mitsubishi International Corp.,
   144A

     0.150(n)        02/22/22       25,000       24,998,839  

Mitsubishi UFJ Trust & Banking Corp.,
   144A

     0.180(n)        02/09/22       97,000       96,998,254  

144A

     0.190(n)        02/22/22       60,000       59,996,957  

MUFG Bank Ltd.

     0.170(n)        03/07/22       97,000       96,989,909  

National Australia Bank Ltd.,

144A

     0.110(n)        03/04/22       70,000       69,994,213  

144A, 1 Month LIBOR + 0.070%

     0.175(c)        02/11/22       115,000       115,002,927  

144A, USOIS + 0.060%

     0.140(c)        03/23/22       93,000       92,998,732  

National Securities Clearing Corp.,
   144A

     0.140(n)        02/08/22       75,000       74,998,833  

144A

     0.140(n)        02/16/22       22,000       21,999,306  

144A

     0.140(n)        02/17/22       30,000       29,998,966  

144A

     0.150(n)        03/01/22       20,000       19,998,566  

 

See Notes to Financial Statements.

72


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

    Maturity      
 Date
 

Principal    

Amount    

(000)#    

             Value           

COMMERCIAL PAPER (Continued)

         

National Securities Clearing Corp., (cont’d.)
   144A

   0.150%(n)    03/02/22     110,000     $ 109,991,750  

OMERS Finance Trust,
   144A

   0.180(n)    03/29/22     20,000       19,995,187  

Ontario Teachers’ Finance Trust,
   144A

   0.240(n)    04/27/22     19,000       18,992,057  

Port Authority of New York & New Jersey

   0.220    02/10/22     4,710       4,710,039  

Port Authority of New York & New Jersey

   0.230    03/08/22     10,000       9,999,703  

Province of Alberta,
   144A

   0.180(n)    02/02/22     35,000       34,999,903  

144A

   0.200(n)    02/07/22     43,000       42,999,582  

144A

   0.220(n)    03/01/22     20,000       19,998,743  

144A

   0.280(n)    04/13/22     30,000       29,990,640  

144A

   0.310(n)    05/05/22     20,000       19,990,443  

144A

   0.320(n)    05/18/22     39,000       38,977,860  

PSP Capital, Inc.,
   144A

   0.070(n)    02/01/22     30,000       29,999,942  

144A

   0.130(n)    03/08/22     100,000       99,990,200  

144A

   0.140(n)    03/16/22     61,000       60,991,874  

144A

   0.140(n)    03/17/22     80,000       79,989,000  

144A

   0.160(n)    03/22/22     100,000       99,982,917  

Royal Bank of Canada,
   144A, 3 Month LIBOR + 0.050%

   0.182(c)    08/01/22     50,000       50,017,114  

144A, SOFR + 0.150%

   0.190(c)    10/06/22     100,000       99,965,589  

Skandinaviska Enskilda Banken AB,
   144A

   0.120(n)    02/11/22     117,000       116,997,426  

Sumitomo Mitsui Trust Bank Ltd.,
   144A

   0.170(n)    02/03/22     50,000       49,999,708  

144A

   0.180(n)    02/09/22     21,000       20,999,617  

Swedbank AB

   0.120(n)    03/03/22     10,000       9,999,130  

Swedbank AB

   0.130(n)    03/07/22     35,000       34,996,427  

TotalEnergies Capital Canada Ltd.,
   144A

   0.150(n)    02/22/22     127,000       126,993,092  

Toyota Credit Canada, Inc.

   0.160(n)    03/21/22     50,000       49,981,557  

Toyota Motor Finance Netherlands BV

   0.100(n)    02/10/22     60,000       59,998,333  

UBS AG,
   144A

   0.340(n)    05/24/22     144,000       143,850,388  

144A, SOFR + 0.170%

   0.220(c)    09/21/22     53,000       52,986,975  

144A, SOFR + 0.190%

   0.240(c)    06/15/22     30,000       30,002,102  

144A, SOFR + 0.190%

   0.240(c)    06/16/22     25,000       25,001,494  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    73


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description   

Interest     

Rate

    

 Maturity      

 Date

   

Principal    

Amount    

(000)#    

             Value           

COMMERCIAL PAPER (Continued)

         

Unilever Finance Netherlands BV,
   144A

     0.270%(n)        04/12/22       60,000     $ 59,979,292  

University of Texas System (The)

     0.110        02/11/22       6,000       6,000,037  

University of Texas System (The)

     0.110        02/24/22       10,000       9,999,867  

Westpac Banking Corp.,

         

144A, 3 Month LIBOR + 0.010%

     0.154(c)        02/07/22       98,000       98,000,203  

144A, 3 Month LIBOR + 0.020%

     0.178(c)        02/17/22       34,000       34,000,686  

Yale University

     0.120(n)        03/16/22       6,605       6,604,007  
         

 

 

 

TOTAL COMMERCIAL PAPER
  (cost $5,027,450,759)

            5,026,858,517  
         

 

 

 

CORPORATE BONDS    1.2%

         

Auto Manufacturers    0.6%

                                 

Toyota Motor Credit Corp.,

         

Sr. Unsec’d. Notes, GMTN, SOFR + 0.220% (Cap N/A, Floor 0.000%)

     0.260(c)        03/28/22       73,600       73,596,749  
         

 

 

 

Banks    0.5%

                                 

BPCE SA (France),

         

Sr. Unsec’d. Notes, 144A, SOFR + 0.440%

     0.489(c)        02/17/22       70,235       70,245,535  

Swedbank AB (Sweden),

         

Sr. Unsec’d. Notes, 144A, 3 Month LIBOR + 0.700%

     0.898(c)        03/14/22       2,200       2,201,606  
         

 

 

 
            72,447,141  

Oil & Gas    0.1%

                                 

Chevron Corp.,

         

Sr. Unsec’d. Notes, 3 Month LIBOR + 0.480%

     0.655(c)        03/03/22       17,000       17,005,259  
         

 

 

 

TOTAL CORPORATE BONDS
  (cost $163,053,787)

            163,049,149  
         

 

 

 

MUNICIPAL BONDS    0.3%

         

Arizona    0.1%

                                 

Maricopa County Industrial Development Authority,

         

Taxable, Revenue Bonds, Series 2021 B-2

     0.070(cc)        01/01/61       16,000       16,000,000  
         

 

 

 

Texas    0.2%

                                 

Board of Regents of the University of Texas System,

         

Taxable, Revenue Bonds, Sub-Series G-2

     0.070(cc)        08/01/45       26,500       26,500,000  
         

 

 

 

TOTAL MUNICIPAL BONDS
  (cost $42,500,000)

            42,500,000  
         

 

 

 

 

See Notes to Financial Statements.

74


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description                                               Principal    
Amount    
(000)#    
           Value         

REPURCHASE AGREEMENTS     8.6%

         

Amherst Pierpont Securities LLC,

         

0.055%, dated 01/25/22, due 02/01/22 in the amount of $75,000,802 collateralized by FFCSB (coupon rates 1.120%-2.120%, maturity dates 03/15/29-02/05/30), FHLMC (coupon rates 2.500%-4.000%, maturity dates 02/01/31-07/01/47), FNMA (coupon rates 0.000%-7.125%, maturity dates 01/15/30-12/01/51) and GNMA (coupon rate 3.500%, maturity date 01/20/52), with the aggregate value, including accrued interest, of $76,500,818

          75,000     $ 75,000,000  

0.055%, dated 01/26/22, due 02/02/22 in the amount of $75,000,802 collateralized by FFCSB (coupon rates 0.940%-2.040%, maturity dates 05/11/29-08/11/31), FHLMC (coupon rates 0.000%-4.000%, maturity dates 07/15/32-02/01/52), FNMA (coupon rates 0.000%-7.250 %, maturity dates 02/01/29-03/01/51), GNMA (coupon rates 2.040%-3.080%, maturity dates 06/15/42-11/15/59) and TVA (coupon rate 4.700%, maturity date 07/15/33), with the aggregate value, including accrued interest, of $76,500,818

          75,000       75,000,000  

CF Secured LLC,

         

0.050%, dated 01/31/22, due 02/01/22 in the amount of $900,001,250 collateralized by FHLMC (coupon rates 0.000%-6.000%, maturity dates 07/15/28-01/01/52), FNMA (coupon rates 2.000%-5.500%, maturity dates 09/01/28-02/01/52), GNMA (coupon rates 1.934%-4.690%, maturity dates 10/20/42-01/20/69) and U.S. Treasury Securities (coupon rates 0.000%-2.875%, maturity dates 02/22/22-08/15/51), with the aggregate value, including accrued interest, of $918,001,295

          900,000       900,000,000  

Credit Agricole Corporate & Investment Bank,

         

0.050%, dated 01/31/22, due 02/01/22 in the amount of $6,124,009 collateralized by ADBB (coupon rate 2.375%, maturity date 08/10/27), with the aggregate value, including accrued interest, of $6,246,696

          6,124       6,124,000  

Goldman Sachs & Co.,

         

0.055%, dated 01/25/22, due 02/01/22 in the amount of $75,000,802 collateralized by and GNMA (coupon rates 2.500%-3.500%, maturity dates 09/15/42-01/20/52), with the aggregate value, including accrued interest, of $76,500,000

          75,000       75,000,000  

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    75


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description                                               Principal    
Amount    
(000)#    
           Value         

REPURCHASE AGREEMENTS (Continued)

         

ING Financial Markets LLC,

         

0.060%, dated 01/14/22, due 02/15/22 in the amount of $80,004,267 collateralized by FHLMC (coupon rates 1.902%-4.000%, maturity dates 07/01/36-10/01/51) and FNMA (coupon rates 1.500%-4.500%, maturity dates 06/01/27-01/01/57), with the aggregate value, including accrued interest, of $81,600,001

          80,000     $ 80,000,000  
         

 

 

 

TOTAL REPURCHASE AGREEMENTS
  
(cost $1,211,124,000)

            1,211,124,000  
         

 

 

 

 

    Interest     
Rate
      Maturity      
Date
             

TIME DEPOSITS    13.8%

           

ABN AMRO Bank NV

  0.080%     02/01/22      275,000        275,000,000  

ABN AMRO Bank NV

  0.080     02/03/22      110,000        110,000,000  

ABN AMRO Bank NV

  0.080     02/07/22      120,000        120,000,000  

Australia & New Zealand Banking Group Ltd.

  0.070     02/01/22      250,000        250,000,000  

Cooperatieve Rabobank UA

  0.060          02/01/22      240,000        240,000,000  

Credit Agricole Corporate & Investment Bank

  0.070     02/01/22      140,000        140,000,000  

Mizuho Bank Ltd.

  0.070     02/01/22      468,922        468,922,000  

Toronto-Dominion Bank (The)

  0.060     02/01/22      160,000        160,000,000  

Toronto-Dominion Bank (The)

  0.070     02/04/22      90,000        90,000,000  

U.S. Bank NA

  0.050     02/01/22      75,875        75,875,000  
           

 

 

 

TOTAL TIME DEPOSITS

           

  (cost $1,929,797,000)

              1,929,797,000  
           

 

 

 

U.S. GOVERNMENT AGENCY OBLIGATIONS    0.3%

           

Federal Farm Credit Bank, SOFR + 0.070% (Cap N/A, Floor 0.000%)

  0.120(c)     02/17/22      23,000        23,000,683  

Federal Home Loan Bank, SOFR + 0.060% (Cap N/A, Floor 0.000%)

  0.110(c)     02/11/22      22,000        22,000,342  
           

 

 

 

TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS

           

  (cost $45,000,000)

              45,001,025  
           

 

 

 

U.S. TREASURY OBLIGATIONS(n)     13.3%

           

U.S. Cash Management Bills

  0.090     04/19/22      50,000        49,983,103  

U.S. Treasury Bills

  0.057     03/17/22      174,000        173,993,247  

U.S. Treasury Bills

  0.063     03/24/22      913,000        912,899,762  

U.S. Treasury Bills

  0.074     03/22/22      493,000        492,951,351  

 

See Notes to Financial Statements.

76


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

  Description    Interest     
Rate
    Maturity      
 Date
 

Principal    

Amount    

(000)#    

             Value           

U.S. TREASURY OBLIGATIONS(n) (Continued)

      

U.S. Treasury Bills

   0.082%    03/31/22     152,000     $ 151,974,286  

U.S. Treasury Bills

   0.086    04/07/22     85,000       84,978,706  
         

 

 

 

TOTAL U.S. TREASURY OBLIGATIONS

         

  (cost $1,866,814,303)

            1,866,780,455  
         

 

 

 

TOTAL INVESTMENTS     100.7%

         

  (cost $14,116,735,938)

            14,115,669,240  

Liabilities in excess of other assets     (0.7)%

            (101,905,330
         

 

 

 

NET ASSETS     100.0%

          $ 14,013,763,910  
         

 

 

 
         

 

 

 

 

See the Glossary for a list of the abbreviation(s) used in the annual report.

 

#

Principal amount is shown in U.S. dollars unless otherwise stated.

(c)

Variable rate instrument. The interest rate shown reflects the rate in effect at January 31, 2022.

(cc)

Variable rate instrument. The rate shown is based on the latest available information as of January 31, 2022. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description.

(n)

Rate shown reflects yield to maturity at purchased date.

Fair Value Measurements:

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

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

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

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

The following is a summary of the inputs used as of January 31, 2022 in valuing such portfolio securities:

 

    

Level 1

   Level 2   

Level 3

Investments in Securities

              

Assets

              

Short-Term Investments

              

Certificates of Deposit

       $—        $    3,830,559,094        $—

Commercial Paper

              5,026,858,517       

Corporate Bonds

              163,049,149       

Municipal Bonds

              42,500,000       

Repurchase Agreements

              1,211,124,000       

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    77


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

    

Level 1

   Level 2   

Level 3

Investments in Securities (continued)

              

Assets (continued)

              

Short-Term Investments (continued)

              

Time Deposits

       $—      $ 1,929,797,000      $

U.S. Government Agency Obligations

         —        45,001,025       

U.S. Treasury Obligations

         —        1,866,780,455       
         

 

 

      

 

 

 

Total

           $—          $ 14,115,669,240      $
    

 

 

      

 

 

      

 

 

 

Industry Classification:

The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of January 31, 2022 were as follows (unaudited):

 

Commercial Paper

     35.9

Certificates of Deposit

     27.3  

Time Deposits

     13.8  

U.S. Treasury Obligations

     13.3  

Repurchase Agreements

     8.6  

Corporate Bonds

     1.2  

U.S. Government Agency Obligations

     0.3  

Municipal Bonds

     0.3
  

 

 

 
     100.7  

Liabilities in excess of other assets

     (0.7
  

 

 

 
     100.0
  

 

 

 
 

 

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

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

Offsetting of financial instrument/transaction assets and liabilities:

 

Description                

  

Counterparty

  

Gross Market Value of

Recognized

    Assets/(Liabilities)    

  

Collateral

Pledged/(Received)(1)

 

Net

Amount

Repurchase Agreements

   Amherst Pierpont Securities LLC      $ 150,000,000      $ (150,000,000 )     $

Repurchase Agreements

   CF Secured LLC Credit Agricole        900,000,000        (900,000,000 )      

Repurchase Agreements

   Corporate & Investment Bank        6,124,000        (6,124,000 )      

Repurchase Agreements

   Goldman Sachs & Co.        75,000,000        (75,000,000 )      

 

See Notes to Financial Statements.

78


PGIM Institutional Money Market Fund

Schedule of Investments (continued)

as of January 31, 2022

 

Description                

  

Counterparty

  

Gross Market Value of

Recognized

    Assets/(Liabilities)    

   Collateral
Pledged/(Received)(1)
  Net
Amount

Repurchase Agreements

   ING Financial Markets LLC      $ 80,000,000        $  (80,000,000     $
       

 

 

          
        $   1,211,124,000         
       

 

 

          

 

 

(1)

Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions.

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    79


PGIM Institutional Money Market Fund

Statement of Assets & Liabilities

as of January 31, 2022

 

Assets

 

Investments at value:

 

Unaffiliated investments (cost $14,116,735,938)

  $ 14,115,669,240  

Cash

    143  

Interest receivable

    1,957,069  

Prepaid expenses

    11,370  
 

 

 

 

Total Assets

    14,117,637,822  
 

 

 

 

Liabilities

       

Payable for investments purchased

    102,986,152  

Management fee payable

    779,785  

Accrued expenses and other liabilities

    90,508  

Affiliated transfer agent fee payable

    16,667  

Trustees’ fees payable

    800  
 

 

 

 

Total Liabilities

    103,873,912  
 

 

 

 

Net Assets

  $ 14,013,763,910  
 

 

 

 

    

       

Net assets were comprised of:

 

Paid-in capital

  $ 14,014,840,294  

Total distributable earnings (loss)

    (1,076,384
 

 

 

 

Net assets, January 31, 2022

  $ 14,013,763,910  
 

 

 

 

Net asset value, offering price and redemption price per share

($14,013,763,910 ÷ 14,023,698,065 shares of beneficial interest issued and outstanding)

  $ 0.9993  
 

 

 

 

 

See Notes to Financial Statements.

80


PGIM Institutional Money Market Fund

Statement of Operations

Year Ended January 31, 2022

 

Net Investment Income (Loss)

 

Interest income

   $ 25,953,058  
  

 

 

 

Expenses

  

Management fee

     24,793,447  

Custodian and accounting fees

     177,515  

Transfer agent’s fees and expenses (including affiliated expense of $100,000)

     175,468  

Audit fee

     27,108  

Legal fees and expenses

     20,814  

Trustees’ fees

     9,501  

Shareholders’ reports

     5,964  

Miscellaneous

     36,012  
  

 

 

 

Total expenses

     25,245,829  

Less: Fee waiver and/or expense reimbursement

     (13,675,552
  

 

 

 

Net expenses

     11,570,277  
  

 

 

 

Net investment income (loss)

     14,382,781  
  

 

 

 

Realized And Unrealized Gain (Loss) On Investments

        

Net realized gain (loss) on investment transactions

     136,324  

Net change in unrealized appreciation (depreciation) on investments

     (4,737,945
  

 

 

 

Net gain (loss) on investment transactions

     (4,601,621
  

 

 

 

Net Increase (Decrease) In Net Assets Resulting From Operations

   $ 9,781,160  
  

 

 

 

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    81


PGIM Institutional Money Market Fund

Statements of Changes in Net Assets

 

    

 

Year Ended

January 31,

 
     2022     2021  

Increase (Decrease) in Net Assets

                

Operations

    

Net investment income (loss)

   $ 14,382,781     $ 122,553,581  

Net realized gain (loss) on investment transactions

     136,324       587,861  

Net change in unrealized appreciation (depreciation) on investments

     (4,737,945     15,973  
  

 

 

   

 

 

 

Net increase (decrease) in net assets resulting from operations

     9,781,160       123,157,415  
  

 

 

   

 

 

 

Dividends and Distributions

    

Distributions from distributable earnings

     (14,519,107     (121,546,781
  

 

 

   

 

 

 

Fund share transactions

    

Net proceeds from shares sold

     124,119,430,412       164,488,986,884  

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

     14,508,120       121,488,485  

Cost of shares purchased

     (130,236,780,094     (160,983,076,991
  

 

 

   

 

 

 

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

     (6,102,841,562     3,627,398,378  
  

 

 

   

 

 

 

Total increase (decrease)

     (6,107,579,509     3,629,009,012  

Net Assets:

                

Beginning of year

     20,121,343,419       16,492,334,407  
  

 

 

   

 

 

 

End of year

   $ 14,013,763,910     $ 20,121,343,419  
  

 

 

   

 

 

 

 

See Notes to Financial Statements.

82


PGIM Institutional Money Market Fund

Financial Highlights

 

   
              
      Year Ended January 31,  
   

 

   2022     2021     2020     2019     2018  
   

Per Share Operating Performance(a):

                                        

Net Asset Value, Beginning of Year

     $0.9996       $1.0001       $1.0002       $1.0001       $1.0002  

Income (loss) from investment operations:

                                        

Net investment income (loss)

     0.0009       0.0054       0.0230       0.0214       0.0114  

Net realized and unrealized gain (loss) on investment transactions

     (0.0003     -(b )      (0.0001     -       (0.0001

Total from investment operations

     0.0006       0.0054       0.0229       0.0214       0.0113  

Less Dividends and Distributions:

                                        

Dividends from net investment income

     (0.0009     (0.0059     (0.0230     (0.0213     (0.0114

Net asset value, end of year

     $0.9993       $0.9996       $1.0001       $1.0002       $1.0001  

Total Return(c):

     0.06     0.54     2.33     2.16     1.14

    

                                        

Ratios/Supplemental Data:

                                        

Net assets, end of year (000)

     $14,013,764       $20,121,343       $16,492,334       $15,867,116       $13,215,520  

Average net assets (000)

     $16,528,965       $22,809,258       $18,124,501       $15,329,904       $14,177,712  

Ratios to average net assets:

                                        

Expenses after waivers and/or expense reimbursement

     0.07     0.07     0.07     0.07     0.07

Expenses before waivers and/or expense reimbursement

     0.15     0.15     0.16     0.16     0.16

Net investment income (loss)

     0.09     0.54     2.30     2.14     1.14

 

(a)

Calculated based on average shares outstanding during the year.

(b)

Amount rounds to zero.

(c)

Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each year reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to GAAP.

 

See Notes to Financial Statements.

Prudential Investment Portfolios 2/PGIM Institutional Money Market Fund    83


Notes to Financial Statements

 

1.

Organization

Prudential Investment Portfolios 2 (the “Registered Investment Company” or “RIC”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end management investment company. The RIC is organized as a Delaware Statutory Trust.

These financial statements relate only to the following series of the RIC: the PGIM Core Short-Term Bond Fund, the PGIM Core Ultra Short Bond Fund and the PGIM Institutional Money Market Fund (each, a “Fund” and collectively, the “Funds”). Shares of the Funds are not registered under the Securities Act of 1933, as amended. The Funds are classified as diversified funds for purposes of the 1940 Act.

The investment objective of each of the PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund is current income consistent with the preservation of capital and the maintenance of liquidity.

The investment objective of the PGIM Core Short-Term Bond Fund is income consistent with relative stability of principal.

 

2.

Accounting Policies

The Funds follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 946 Financial Services — Investment Companies. The following is a summary of significant accounting policies followed by the Funds in the preparation of its financial statements. The policies conform to U.S. generally accepted accounting principles (“GAAP”). The Funds consistently follow such policies in the preparation of their financial statements.

Securities Valuation: Each Fund holds securities and other assets and liabilities that are fair valued as of the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. As described in further detail below, the Funds’ investments are valued daily based on a number of factors, including the type of investment and whether market quotations are readily available. The RIC’s Board of Trustees (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investment’s LLC (“PGIM Investments” or the “Manager”). Pursuant to the Board’s delegation, the Manager has established a Valuation Committee responsible for supervising the fair valuation of portfolio securities and other assets and liabilities. The valuation procedures permit a Fund to utilize independent pricing vendor services, quotations from market makers, and alternative valuation methods when market quotations are either not readily available or not deemed representative of fair value.

 

84


Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A record of the Valuation Committee’s actions is subject to the Board’s review at its first quarterly meeting following the quarter in which such actions take place.

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

Various inputs determine how the Funds’ investments are valued, all of which are categorized according to the three broad levels (Level 1, 2, or 3) detailed in the Schedule of Investments and referred to herein as the “fair value hierarchy” in accordance with FASB ASC Topic 820 - Fair Value Measurement.

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

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

OTC and centrally cleared derivative instruments are generally classified as Level 2 in the fair value hierarchy. Such derivative instruments are typically valued using the market approach and/or income approach which generally involves obtaining data from an approved independent third-party vendor source. The Funds utilize the market approach when quoted prices in broker-dealer markets are available but also includes consideration of alternative valuation approaches, including the income approach. In the absence of reliable market quotations, the income approach is typically utilized for purposes of valuing derivatives such as interest rate swaps based on a discounted cash flow analysis whereby the value of the instrument is equal to the present value of its future cash inflows or outflows.

 

85


Notes to Financial Statements (continued)

 

Such analysis includes projecting future cash flows and determining the discount rate (including the present value factors that affect the discount rate) used to discount the future cash flows. In addition, the third-party vendors’ valuation techniques used to derive the evaluated derivative price is based on evaluating observable inputs, including but not limited to, underlying asset prices, indices, spreads, interest rates and exchange rates. Certain derivatives may be classified as Level 3 when valued using the market approach by obtaining a single broker quote or when utilizing unobservable inputs in the income approach. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.

Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy. Altering one or more unobservable inputs may result in a significant change to a Level 3 security’s fair value measurement.

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

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

 

86


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

Repurchase Agreements: Certain Funds entered into repurchase agreements. In connection with transactions in repurchase agreements with United States financial institutions, it is each Fund’s policy that its custodian or designated subcustodians under triparty repurchase agreements, as the case may be, take possession of the underlying collateral securities, the value of which exceeds the principal amount of the repurchase transactions, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to ensure the adequacy of the collateral. If the seller defaults and the value of the collateral declines or, if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited.

Mortgage-Backed and Asset-Backed Securities: Mortgage-backed securities are pass-through securities, meaning that principal and interest payments made by the borrower on the underlying mortgages are passed through to the Fund. Asset-backed securities directly or indirectly represent a participation interest in, or are secured by and payable from, a stream of payments generated by particular assets such as motor vehicle or credit card receivables. Asset-backed securities may be classified as pass-through certificates or collateralized obligations, such as collateralized bond obligations, collateralized loan obligations and other similarly structured securities. The value of mortgage-backed and asset-backed securities varies with changes in interest rates and may be affected by changes in credit quality or value of the mortgage loans or other assets that support the securities.

Stripped mortgage-backed securities are usually structured with two classes that receive different proportions of the interest (“IO”) and principal (“PO”) distributions on a pool of mortgage assets. Payments received for IOs are included in interest income on the Statements of Operations. Because no principal will be received at the maturity of an IO, adjustments are made to the cost of the security on a monthly basis until maturity. These adjustments are included in interest income on the Statements of Operations. Payments received for POs are treated as reductions to the cost and par value of the securities.

Master Netting Arrangements: The Funds are subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of all or a portion of a Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset

 

87


Notes to Financial Statements (continued)

 

amounts payable by the Funds to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Funds’ exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law.

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

Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date, or for certain foreign securities, when the Fund become aware of such dividends. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual.

Liquidity Fees and Gates: The PGIM Institutional Money Market Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates if the Fund’s weekly liquid assets fall below a designated threshold, subject to the discretion of the Board. If the Fund’s weekly liquid assets fall below 30% of its total assets, the Board, in its discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed and/or impose temporary gates on redemptions. In addition, if the Fund’s weekly liquid assets fall below 10% of its total assets at the end of any business day, the Fund must impose a liquidity fee in the default amount of 1% of the value of shares redeemed unless the Board determines that not doing so is in the best interests of the Fund.

 

88


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

Dividends and Distributions: The PGIM Institutional Money Market Fund and PGIM Core Ultra Short Bond Fund declare all of their net investment income and net realized short-term capital gains, if any, as dividends daily to their shareholders of record at the time of such declaration and pay monthly to their shareholders of record at the time of such declaration. The PGIM Core Short-Term Bond Fund declares all of its net investment income as dividends daily and pays monthly to its shareholders of record at the time of such declaration. Distributions of net realized capital gains, if any, are made annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from GAAP, are recorded on the ex-date. Permanent book/tax differences relating to income and gain (loss) are reclassified between total distributable earnings (loss) and paid-in capital, as appropriate.

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

 

3.

Agreements

Under a management agreement with the RIC, PGIM Investments manages each Fund’s investment operations and administers its business affairs. Pursuant to this agreement, the Manager has responsibility for all investment management services and supervises the subadviser’s performance of such services.

PGIM Investments has entered into subadvisory agreements with PGIM Limited and PGIM, Inc., which provides subadvisory services to the Funds through its PGIM Fixed Income unit (each a “subadviser”and collectively the “subadvisers”). For their services on the PGIM Core Ultra Short Bond Fund and PGIM Core Short-Term Bond Fund, the subadvisers are reimbursed by PGIM Investments for direct costs, excluding profit and overhead, incurred by the subadvisers in furnishing services to PGIM Investments. PGIM Investments pays for the services of the subadvisers on the PGIM Institutional Money Market Fund.

The PGIM Core Ultra Short Bond Fund and PGIM Core Short-Term Bond Fund reimburse PGIM Investments for its costs and expenses incurred in managing each Fund’s investment operations and administering its business affairs. The costs are accrued daily and payable monthly. For the year ended January 31, 2022, such costs were at an effective annual rate of 0.026% for the PGIM Core Short-Term Bond Fund and 0.003% for the PGIM Core Ultra Short Bond Fund. The management fee paid to the Manager by the PGIM Institutional Money Market Fund was accrued daily and payable monthly at an annual rate of 0.15% of

 

89


Notes to Financial Statements (continued)

 

the average daily net assets of the Fund. All amounts paid or payable by the Fund to the Manager, under the agreement, are reflected in the Statement of Operations.

The Manager has contractually agreed through May 31, 2023, to limit the total annual operating expenses after fee waivers and/or expense reimbursements to 0.07% of the PGIM Institutional Money Market Fund’s average daily net assets. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. Fees and/or expenses waived and/or reimbursed by the Manager may be recouped by the Manager within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.

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

 

4.

Other Transactions with Affiliates

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

The PGIM Core Short-Term Bond Fund may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), a fund of the RIC, registered under the 1940 Act and managed by PGIM Investments. PGIM Investments and/or its affiliates are paid fees or reimbursed for providing their services, to the Core Fund. In addition to the realized and unrealized gains on investments in the Core Fund, earnings from such investments are disclosed on the Statement of Operations as “Affiliated dividend income”. Effective January 2022, the PGIM Core Short-Term Bond Fund changed its overnight cash sweep vehicle from the Core Fund to an unaffiliated money market fund.

The Funds may enter into certain securities purchase or sale transactions under Board approved Rule 17a-7 procedures. Rule 17a-7 is an exemptive rule under the 1940 Act, that subject to certain conditions, permits purchase and sale transactions among affiliated investment companies, or between an investment company and a person that is affiliated solely by reason of having a common (or affiliated) investment adviser, common directors/trustees, and/or common officers.

 

90


For the year ended January 31, 2022, the Funds’ purchase and sales transactions under Rule 17a-7 and realized gain (loss) as a result of 17a-7 sales transactions were as follows:

 

     Purchases      Sales      Realized
Gain

PGIM Core Ultra Short Bond Fund

   $ 5,450,188      $ 5,450,214      $—

 

5.

Portfolio Securities

The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the year ended January 31, 2022, were as follows:

 

Fund

   Cost of
Purchases
         Proceeds
from Sales
 

PGIM Core Short-Term Bond Fund

   $ 593,923,625             $ 1,048,200,471  

PGIM Core Ultra Short Bond Fund

     1,943,388,125          3,257,629,566  

A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the reporting period ended January 31, 2022, is presented as follows:

PGIM Core Short-Term Bond Fund:

 

Value,

Beginning

of Year

     

Cost of
  Purchases  

        

Proceeds

  from Sales  

    

Change in

Unrealized

Gain

    (Loss)    

    

Realized

Gain

  (Loss)  

    

Value,

End of Year

    

Shares,

End

of Year

    

Income

 

Short-Term Investments - Affiliated Mutual Fund:

 

                                                                                                                                                                            

PGIM Core Ultra Short Bond Fund(1)(wb)

 

                                  

$559,900

 

  

 

      

  $ 1,458,816,939               $ 1,459,376,839        $—         $—         $—               $ 133,395  

 

     

 

 

      

 

 

      

 

       

 

       

 

             

 

 

 

(1)     The Fund did not have any capital gain distributions during the reporting period.

(wb)   PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund.

 

6.

Distributions and Tax Information

Distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from GAAP, are recorded on the ex-date.

In order to present total distributable earnings (loss) and paid-in capital on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to total distributable earnings (loss) and paid-in capital for the funds indicated below.

 

91


Notes to Financial Statements (continued)

 

For the year ended January 31, 2022, the adjustments were as follows:

 

Fund

  

Total Distributable

  Earnings (Loss)  

  

Paid-in

 Capital 

PGIM Core Ultra Short Bond Fund (a)

     $ 15,753      $ (15,753 )

PGIM Institutional Money Market Fund (a)

       1,012        (1,012 )

 

(a)

Due to taxable over-distribution

Net investment income, net realized gain (loss) on investments and foreign currency transactions and net assets were not affected by this change.

The tax character of distributions paid during the year ended January 31, 2022 were as follows:

 

Fund

   Ordinary
Income
       Long Term
Capital Gains
      

Tax Return

  of Capital  

       Total Dividends
and Distributions

PGIM Core Short-Term Bond Fund

   $23,901,687         $     —               $291,540           $24,193,227

PGIM Core Ultra Short Bond Fund

   39,972,207        4,566               39,976,773

PGIM Institutional Money Market Fund

   14,514,243        4,864                 14,519,107

The tax character of distributions paid during the year ended January 31, 2021 were as follows:

 

Fund

   Ordinary
Income
       Long-Term
Capital Gains
      

Tax Return

  of Capital  

       Total Dividends
and Distributions

PGIM Core Short-Term Bond Fund

   $ 37,768,493      $ —            $1,515,195        $ 39,283,688

PGIM Core Ultra Short Bond Fund

   172,499,588            —                     172,499,588

PGIM Institutional Money Market Fund

   121,546,781         —                 121,546,781

As of January 31, 2022, PGIM Core Short-Term Bond Fund, PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund had no accumulated undistributed earnings on a tax basis.

The United States federal income tax basis of the Funds’ investments and the net unrealized appreciation (depreciation) as of January 31, 2022 were as follows:

 

Fund

  

        Tax Basis         

  

Gross

Unrealized

    Appreciation    

  

Gross

Unrealized

    Depreciation    

  

Net

Unrealized

Appreciation

  (Depreciation)  

PGIM Core Short-Term Bond Fund    $ 2,333,752,245    $19,182,142    $(17,396,442)    $ 1,785,700

 

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Fund

  

      Tax Basis      

  

Gross

Unrealized

    Appreciation    

  

Gross

Unrealized

    Depreciation    

 

Net

Unrealized

Appreciation

  (Depreciation)  

PGIM Core Ultra Short Bond Fund    $23,497,724,737    $    456,986    $ (3,152,778)   $(2,695,792)
PGIM Institutional Money Market Fund    14,116,735,958    318,534    (1,385,232)   (1,066,698)

The difference between GAAP basis and tax basis was primarily attributable to deferred losses on wash sales and swaps.

For federal income tax purposes, the PGIM Core Short-Term Bond Fund had a capital loss carryforward as of January 31, 2022 of approximately $36,463,000 which can be carried forward for an unlimited period. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.

The Manager has analyzed the Funds’ tax positions taken on federal, state and local income tax returns for all open tax years and has concluded that no provision for income tax is required in the Funds’ financial statements for the current reporting period. Since tax authorities can examine previously filed tax returns, the Funds’ U.S. federal and state tax returns for each of the four fiscal years up to the most recent fiscal year ended January 31, 2022 are subject to such review.

 

7.

Capital and Ownership

Shares of the PGIM Core Short-Term Bond Fund, the PGIM Core Ultra Short Bond Fund and the PGIM Institutional Money Market Fund are available only to investment companies managed by PGIM Investments and, as applicable, certain investment advisory clients of PGIM, Inc.

The RIC is authorized to issue an unlimited number of shares of beneficial interest, which may be divided into an unlimited number of series of such shares.

As of January 31, 2022, Prudential, through its affiliated entities, including affiliated funds (if applicable), owned all shares of the Funds.

At the reporting period end, the number of shareholders holding greater than 5% of the Fund are as follows:

 

     Affiliated   Unaffiliated
Fund  

Number of

  Shareholders  

 

Percentage of

  Outstanding Shares  

 

Number of

  Shareholders  

  Percentage of
  Outstanding Shares  

PGIM Core Short-Term Bond Fund

  2   97.0%     —%

PGIM Core Ultra Short Bond Fund

  6   66.7     —   

 

93


Notes to Financial Statements (continued)

 

     Affiliated   Unaffiliated
Fund  

Number of

  Shareholders  

 

Percentage of

  Outstanding Shares  

 

Number of

  Shareholders  

  Percentage of
  Outstanding Shares  

PGIM Institutional Money Market Fund

  3   33.7%     —%

Transactions in shares of beneficial interest were as follows:

 

   

PGIM Core Short-Term Bond Fund

          PGIM Core Ultra Short Bond Fund
   

Shares

 

Amount

          Shares        

Amount

Year ended January 31, 2022:                          
Shares sold       30,186,091         $ 277,486,085             185,299,449,087         $ 185,299,447,230    
Shares issued in reinvestment of dividends and distributions  

    

    774,728                     7,137,574                    39,660,742             39,660,742      
Shares purchased       (73,997,536         (680,113,269           (192,934,824,532           (192,934,824,533  
   

 

 

       

 

 

         

 

 

       

 

 

   
Net increase (decrease) in shares outstanding       (43,036,717       $ (395,489,610           (7,595,714,703       $ (7,595,716,561  
   

 

 

       

 

 

         

 

 

       

 

 

   
Year ended January 31, 2021:                          
Shares sold       190,793,878         $ 1,738,879,927             272,436,300,500         $ 272,436,300,863    
Shares issued in reinvestment of dividends and distributions       1,269,656           11,638,591             169,729,470           169,729,470    
Shares purchased       (188,479,560         (1,719,601,850           (261,854,715,517         (261,854,715,517  
   

 

 

       

 

 

         

 

 

       

 

 

   
Net increase (decrease) in shares outstanding       3,583,974         $ 30,916,668             10,751,314,453         $ 10,751,314,816    
   

 

 

       

 

 

         

 

 

       

 

 

   

 

     PGIM Institutional Money Market Fund
     Shares         Amount

Year ended January 31, 2022:

           

Shares sold

       124,192,205,521        $ 124,119,430,412

Shares issued in reinvestment of dividends and distributions

       14,516,509          14,508,120

Shares purchased

       (130,313,200,308 )          (130,236,780,094 )
    

 

 

        

 

 

 

Net increase (decrease) in shares outstanding

       (6,106,478,278 )        $ (6,102,841,562 )
    

 

 

        

 

 

 

Year ended January 31, 2021:

           

Shares sold

       164,566,353,559        $ 164,488,986,884

Shares issued in reinvestment of dividends and distributions

       121,530,035          121,488,485

Shares purchased

       (161,047,901,868 )          (160,983,076,991 )
    

 

 

        

 

 

 

Net increase (decrease) in shares outstanding

       3,639,981,726        $ 3,627,398,378
    

 

 

        

 

 

 

 

8.

Borrowings

The RIC, on behalf of the PGIM Core Short-Term Bond Fund, along with other affiliated registered investment companies (the “Participating Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The table below

 

94


provides details of the current SCA in effect at the reporting period-end as well as the prior SCA.

 

     Current SCA   Prior SCA
     

Term of Commitment

 

    10/1/2021 – 9/29/2022    

      10/2/2020 – 9/30/2021    
     

Total Commitment

 

$ 1,200,000,000

  $ 1,200,000,000
     

Annualized Commitment Fee on the Unused Portion of the SCA

 

0.15%

  0.15%
     

Annualized Interest Rate on Borrowings

 

1.20% plus the higher of (1) the effective federal funds rate, (2) the one-month LIBOR rate or (3) zero percent

 

 

1.30% plus the higher of (1) the effective federal funds rate, (2) the one-month LIBOR rate or (3) zero percent

 

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

The PGIM Core Short-Term Bond Fund did not utilize the SCA during the year ended January 31, 2022.

 

9.

Risks of Investing in the Funds

Each Fund’s risks include, but are not limited to, some or all of the risks discussed below. For further information on the risks applicable to any given Fund, please refer to the Prospectus and Statement of Additional Information of that Fund.

 

       
  Risks   

PGIM Core

Short Term

Bond Fund

  

PGIM Core

Ultra Short

Bond Fund

  

 PGIM Institutional 

Money

Market Fund

Adjustable and Floating Rate Securities

   X    X    X

Credit

   X    X    X

Cyber Security

   X    X    X

Debt Obligations

   X    X    X

Derivatives

   X      

Economic and Market Events

   X    X    X

Equity and Equity-Related Securities

   X    X   

Fees and Gates

         X

Floating Net Asset Value

         X

Foreign Securities

   X    X    X

Forward Commitments

   X    X    X

Illiquid Securities

   X    X    X

Increase in Exepnses

   X    X    X

Interest Rate

   X    X    X

Large Shareholder and Large Scale Redemption

   X    X    X

 

95


Notes to Financial Statements (continued)

 

       
  Risks    PGIM Core
Short Term
Bond Fund
   PGIM Core
Ultra Short
Bond Fund
  

 PGIM Institutional 

Money

Market Fund

Liquidity

   X    X    X

Management

   X    X    X

Market Disruption and Geopolitical

   X    X    X

Market

   X    X    X

Mortgage-Backed and Asset-Backed Securities

   X    X    X

Municipal Bonds

   X    X    X

Repurchase Agreeements

   X    X    X

Reverse Repurchase Agreements

   X    X    X

U.S. Government and Agency Securities

   X    X    X

Variable and Floating Rate Bonds

   X    X    X

When-Issued and Delayed-Delivery Transactions

   X    X    X

Yield

      X    X

Adjustable and Floating Rate Securities Risk: The value of adjustable and floating rate securities may lag behind the value of fixed rate securities when interest rates change. Such securities may be subject to extended settlement periods (longer than seven days) and in unusual market conditions, with a high volume of shareholder redemptions, may present a risk of loss to the Fund or may impair the Fund’s ability satisfy shareholder redemption requests.

Credit Risk: The debt obligations in which the Fund invests are generally subject to the risk that the issuer may be unable to repay principal and make interest payments when they are due. There is also the risk that the securities could lose value because of a loss of confidence in the ability of the borrower to pay back debt. All securities purchased by the Fund must present minimal credit risk in the opinion of the subadviser. The Fund is subject to the risk that the subadviser’s credit risk determinations may be incorrect. In addition, the credit quality of the securities held by the Fund may change rapidly in certain market conditions, which could result in significant net asset value deterioration.

Cyber Security Risk: Failures or breaches of the electronic systems of the Fund, the Fund’s manager, subadviser, distributor, and other service providers, or the issuers of securities in which the Fund invests have the ability to cause disruptions and negatively impact the Fund’s business operations, potentially resulting in financial losses to the Fund and its shareholders. While the Fund has established business continuity plans and risk management systems seeking to address system breaches or failures, there are inherent limitations in such plans and systems. Furthermore, the Fund cannot control the cyber security plans and systems of the Fund’s service providers or issuers of securities in which the Fund invests.

 

96


Debt Obligations Risk: Debt obligations are subject to credit risk, market risk and interest rate risk. The Fund’s holdings, share price, yield and total return may also fluctuate in response to bond market movements. The value of bonds may decline for issuer-related reasons, including management performance, financial leverage and reduced demand for the issuer’s goods and services. Certain types of fixed income obligations also may be subject to “call and redemption risk,” which is the risk that the issuer may call a bond held by the Fund for redemption before it matures and the Fund may lose income.

Derivatives Risk: Derivatives involve special risks and costs and may result in losses to the Fund. The successful use of derivatives requires sophisticated management, and, to the extent that derivatives are used, the Fund will depend on the subadviser’s ability to analyze and manage derivative transactions. The prices of derivatives may move in unexpected ways, especially in abnormal market conditions. Some derivatives are “leveraged” and therefore may magnify or otherwise increase investment losses to the Fund. The Fund’s use of derivatives may also increase the amount of taxes payable by shareholders. Other risks arise from the potential inability to terminate or sell derivatives positions. A liquid secondary market may not always exist for the Fund’s derivatives positions. In fact, many OTC derivative instruments will not have liquidity beyond the counterparty to the instrument. OTC derivative instruments also involve the risk that the other party will not meet its obligations to the Fund.

The U.S. Government and foreign governments have adopted (and may adopt further) regulations governing derivatives markets, including mandatory clearing of certain derivatives, margin and reporting requirements and risk exposure limitations. The ultimate impact of the regulations remains unclear. Additional regulation of derivatives may make derivatives more costly, limit their availability or utility, or otherwise adversely affect their performance or disrupt markets.

Economic and Market Events Risk: Events in the U.S. and global financial markets, including actions taken by the U.S. Federal Reserve or foreign central banks to stimulate or stabilize economic growth or the functioning of the securities markets, may at times result in unusually high market volatility, which could negatively impact performance. Relatively reduced liquidity in credit and fixed income markets could adversely affect issuers worldwide.

Equity and Equity-Related Securities Risk: Equity and equity-related securities may be subject to changes in value, and their values may be more volatile than those of other asset classes. In addition to an individual security losing value, the value of the equity markets or a sector in which the Fund invests could go down. Different parts of a market can react differently to adverse issuer, market, regulatory, political and economic developments.

Fees and Gates Risk: The Fund has adopted policies and procedures to impose liquidity fees on redemptions and/or temporary redemption gates in the event that the Fund’s weekly liquid assets fall below a designated threshold, subject to the discretion of the Fund’s Board. If the Fund’s weekly liquid assets fall below 30% of its total assets, the Board, in its

 

97


Notes to Financial Statements (continued)

 

discretion, may impose liquidity fees of up to 2% of the value of the shares redeemed and/or impose temporary gates on redemptions. In addition, if the Fund’s weekly liquid assets fall below 10% of its total assets at the end of any business day, the Fund must impose a liquidity fee in the default amount of 1% of the value of shares redeemed unless the Board determines that not doing so is in the best interests of the Fund.

Floating Net Asset Value Risk: The Fund’s NAV floats. The value of the Fund’s shares is calculated to four decimal places and will vary, reflecting the value of the portfolio of investments held by the Fund. It is possible to lose money by investing in the Fund. The Fund’s shareholders should not rely on or expect the Fund’s manager to purchase distressed assets from the Fund, enter into capital support agreements with the Fund, or make capital infusions into the Fund.

Foreign Securities Risk: Investments in securities of non-U.S. issuers (including those denominated in U.S. dollars) may involve more risk than investing in securities of U.S. issuers. Foreign political, economic and legal systems, especially those in developing and emerging market countries, may be less stable and more volatile than in the United States. Foreign legal systems generally have fewer regulatory requirements than the U.S. legal system, particularly those of emerging markets. In general, less information is publicly available with respect to non-U.S. companies than U.S. companies. Non-U.S. companies generally are not subject to the same accounting, auditing, and financial reporting standards as are U.S. companies. Additionally, the changing value of foreign currencies and changes in exchange rates could also affect the value of the assets the Fund holds and the Fund’s performance. Certain foreign countries may impose restrictions on the ability of issuers of foreign securities to make payment of principal and interest or dividends to investors located outside the country, due to blockage of foreign currency exchanges or otherwise. Investments in emerging markets are subject to greater volatility and price declines.

In addition, the Fund’s investments in non-U.S. securities may be subject to the risks of nationalization or expropriation of assets, imposition of currency exchange controls or restrictions on the repatriation of non-U.S. currency, confiscatory taxation and adverse diplomatic developments. Special U.S. tax considerations may apply.

Forward Commitments Risk: Forward commitments are subject to the risk that the counterparty to the forward commitment may fail to make payment or delivery in a timely manner or at all. Forward commitments are also subject to the risk that the value of the security to be purchased may decline prior to the settlement date.

Illiquid Securities Risk: The Fund may invest in instruments that trade in lower volumes and may make investments that may be less liquid than other investments. Liquidity risk exists when particular investments made by the Fund are difficult to purchase or sell. The Fund

 

98


may make investments that may become less liquid in response to market developments or adverse investor perceptions. If the Fund is forced to sell these investments to pay redemption proceeds or for other reasons, the Fund may lose money. In addition, when there is no willing buyer and investments cannot be readily sold at the desired time or price, the Fund may have to accept a lower price or may not be able to sell the instrument at all. An inability to sell a portfolio position can adversely affect the Fund’s value or prevent the Fund from being able to take advantage of other investment opportunities.

Increase in Expenses Risk: Your actual cost of investing in the Fund may be higher than the expenses shown in the expense table of the Fund’s prospectus for a variety of reasons. For example, expense ratios may be higher than those shown if average net assets decrease. Net assets are more likely to decrease and Fund expense ratios are more likely to increase when markets are volatile. Active and frequent trading of Fund securities can increase expenses.

Interest Rate Risk: The value of your investment may go down when interest rates rise. A rise in rates tends to have a greater impact on the prices of longer term or duration debt securities. For example, a fixed income security with a duration of three years is expected to decrease in value by approximately 3% if interest rates increase by 1%. This is referred to as “duration risk." When interest rates fall, the issuers of debt obligations may prepay principal more quickly than expected, and the Fund may be required to reinvest the proceeds at a lower interest rate. This is referred to as “prepayment risk.” When interest rates rise, debt obligations may be repaid more slowly than expected, and the value of the Fund’s holdings may fall sharply. This is referred to as “extension risk.” The Fund may lose money if short-term or long-term interest rates rise sharply or in a manner not anticipated by the subadviser.

This is the risk that the securities in which the Fund invests could lose value because of interest rate changes. For example, bonds tend to decrease in value if interest rates rise. Debt obligations with longer maturities generally are more sensitive to interest rate changes. In addition, short-term and long-term interest rates do not necessarily move in the same direction or by the same amount. An instrument’s reaction to interest rate changes depends on the timing of its interest and principal payments and the current interest rate for each of those time periods. Instruments with floating interest rates can be less sensitive to interest rate changes.

Large Shareholder and Large Scale Redemption Risk: Certain individuals, accounts, funds (including funds affiliated with the Manager) or institutions, including the Manager and its affiliates, may from time to time own or control a substantial amount of the Fund’s shares. There is no requirement that these entities maintain their investment in the Fund. There is a risk that such large shareholders or that the Fund’s shareholders generally may redeem all or a substantial portion of their investments in the Fund in a short period of time, which could have a significant negative impact on the Fund’s NAV, liquidity, and brokerage costs. Large redemptions could also result in tax consequences to shareholders and impact the Fund’s ability to implement its investment strategy. The Fund’s ability to pursue its

 

99


Notes to Financial Statements (continued)

 

investment objective after one or more large scale redemptions may be impaired and, as a result, the Fund may invest a larger portion of its assets in cash or cash equivalents.

Liquidity Risk: Liquidity risk is the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors’ interests in the Fund. The Fund may invest in instruments that trade in lower volumes and are more illiquid than other investments. If the Fund is forced to sell these investments to pay redemption proceeds or for other reasons, the Fund may lose money. In addition, when there is no willing buyer and investments cannot be readily sold at the desired time or price, the Fund may have to accept a lower price or may not be able to sell the instrument at all. An inability to sell a portfolio position can adversely affect the Fund’s value or prevent the Fund from being able to take advantage of other investment opportunities.

Management Risk: The value of your investment may decrease if judgments by the subadviser about the attractiveness, value or market trends affecting a particular security, industry or sector or about market movements are incorrect.

Market Disruption and Geopolitical Risks: Market disruption can be caused by economic, financial or political events and factors, including but not limited to, international wars or conflicts (including Russia’s military invasion of Ukraine), geopolitical developments (including trading and tariff arrangements, sanctions and cybersecurity attacks), instability in regions such as Asia, Eastern Europe and the Middle East, terrorism, natural disasters and public health epidemics (including the outbreak of COVID-19 globally).

The extent and duration of such events and resulting market disruptions cannot be predicted, but could be substantial and could magnify the impact of other risks to the Fund. These and other similar events could adversely affect the U.S. and foreign financial markets and lead to increased market volatility, reduced liquidity in the securities markets, significant negative impacts on issuers and the markets for certain securities and commodities and/or government intervention. They may also cause short- or long-term economic uncertainties in the United States and worldwide. As a result, whether or not the Fund invests in securities of issuers located in or with significant exposure to the countries directly affected, the value and liquidity of the Fund’s investments may be negatively impacted. Further, due to closures of certain markets and restrictions on trading certain securities, the value of certain securities held by the Fund could be significantly impacted, which could lead to such securities being valued at zero.

COVID-19 and the related governmental and public responses have had and may continue to have an impact on the Fund’s investments and net asset value and have led and may continue to lead to increased market volatility and the potential for illiquidity in certain classes of securities and sectors of the market. They have also had and may continue to

 

100


result in periods of business disruption, business closures, inability to obtain raw materials, supplies and component parts, and reduced or disrupted operations for the issuers in which the Fund invests. The occurrence, reoccurrence and pendency of public health epidemics could adversely affect the economies and financial markets either in specific countries or worldwide.

Market Risk: Securities markets may be volatile and the market prices of the Fund’s securities may decline. Securities fluctuate in price based on changes in an issuer’s financial condition and overall market and economic conditions.

Mortgage-Backed and Asset-Backed Securities Risk: Mortgage-backed and asset-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar risk of decline in market value during periods of rising interest rates. The values of mortgage-backed and asset-backed securities become more volatile as interest rates rise. In a period of declining interest rates, the Fund may be required to reinvest more frequent prepayments on mortgage-backed and asset-backed securities in lower-yielding investments.

Municipal Bonds Risk: Municipal bonds are subject to credit risk, market risk and interest rate risk. The Fund’s holdings, share price, yield and total return may also fluctuate in response to municipal bond market movements. Municipal bonds are also subject to the risk that potential future legislative changes could affect the market for and value of municipal bonds, which may adversely affect the Fund’s yield or the value of the Fund’s investments in municipal bonds. Certain municipal bonds with principal and interest payments that are made from the revenues of a specific project or facility, and not general tax revenues, may have increased risks. Factors affecting the project or facility, such as local business or economic conditions, could have a significant effect on the project’s ability to make payments of principal and interest on these securities. If the Fund invests a substantial amount of its assets in issuers located in a single region, state or city, there is an increased risk that environmental, economic, political and social conditions in those regions will have a significant impact on the Fund’s investment performance. For example, municipal securities of a particular state are vulnerable to events adversely affecting that state, including economic, political and regulatory occurrences, court decisions, terrorism, public health epidemics, social unrest and catastrophic natural disasters, such as hurricanes or earthquakes. Many municipal bonds are also subject to prepayment risk, which is the risk that when interest rates fall, issuers may redeem a security by repaying it early, which may reduce the Fund’s income if the proceeds are reinvested at a lower interest rate. In addition, income from municipal bonds could be declared taxable because of non-compliant conduct of a bond issuer.

Repurchase Agreements Risk: Repurchase agreements could involve certain risks in the event of default or insolvency of the seller, including losses and possible delays or restrictions upon the Fund’s ability to dispose of the underlying securities. To the extent that, in the meantime, the value of the securities that the Fund has purchased has decreased, the Fund could experience a loss.

 

101


Notes to Financial Statements (continued)

 

Reverse Repurchase Agreements Risk: Reverse repurchase agreements involve the risk that the other party may fail to return the securities in a timely manner or at all. The Fund could lose money if it is unable to recover the securities and the value of the collateral held by the Fund, including the value of investments made with cash collateral, is less than the value of the securities. These events could also trigger adverse tax consequences to the Fund. Reverse repurchase agreements also involve leverage, which may exaggerate the increase or decrease of the value of the Fund’s assets during the term of the agreement.

U.S. Government and Agency Securities Risk: U.S. Government and agency securities are subject to market risk, interest rate risk and credit risk. Not all U.S. Government securities are insured or guaranteed by the full faith and credit of the U.S. Government; some are only insured or guaranteed by the issuing agency, which must rely on its own resources to repay the debt. Some agency securities carry no guarantee whatsoever and the risk of default associated with these securities would be borne by the Fund. The maximum potential liability of the issuers of some U.S. Government securities held by the Fund may greatly exceed their current resources, including their legal right to support from the U.S. Treasury. No assurance can be given that the U.S. government would provide financial support to any such issuers if it is not obligated to do so by law. It is possible that these issuers will not have the funds to meet their payment obligations in the future. In addition, the value of U.S. Government securities may be affected by changes in the credit rating of the U.S. Government.

Variable and Floating Rate Bonds Risk: Variable and floating rate bonds are subject to credit risk, market risk and interest rate risk. In addition, the absence of an active market for these securities could make it difficult for the Fund to dispose of them if the issuer defaults.

When-Issued and Delayed-Delivery Transactions Risk: When-issued and delayed-delivery securities involve the risk that the security the Fund buys will lose value prior to its delivery. There also is the risk that the security will not be issued or that the other party to the transaction will not meet its obligation. If this occurs, the Fund may lose both the investment opportunity for the assets it set aside to pay for the security and any gain in the security’s price.

Yield Risk: The amount of income received by the Fund will go up or down depending on day-to-day variations in short-term interest rates, and when interest rates are very low the Fund’s expenses could absorb all or a significant portion of the Fund’s income. If interest rates increase, the Fund’s yield may not increase proportionately. For example, the Fund’s investment manager may discontinue any temporary voluntary fee limitation.

 

102


10.

Recent Accounting Pronouncement and Regulatory Developments

In March 2020, the FASB issued Accounting Standard Update (“ASU”) No. 2020-04, which provides optional guidance for applying GAAP to contract modifications, hedging relationships and other transactions affected by the reference rate reform if certain criteria are met. ASU 2020-04 is elective and is effective on March 12, 2020 through December 31, 2022. Management does not expect ASU 2020-04 to have a material impact on the financial statements.

On December 3, 2020, the SEC announced that it voted to adopt a new rule that establishes an updated regulatory framework for fund valuation practices (the “Rule”). The Rule, in part, provides (i) a framework for determining fair value in good faith and (ii) provides for a fund Board’s assignment of its responsibility for the execution of valuation-related activities to a fund’s investment adviser. Further, the SEC is rescinding previously issued guidance on related issues. The Rule took effect on March 8, 2021, with a compliance date of September 8, 2022. Management is currently evaluating the Rule and its impact to the Funds.

 

103


Report of Independent Registered Public Accounting Firm

 

To the Board of Trustees of Prudential Investment Portfolios 2 and Shareholders of PGIM Core Short-Term Bond Fund, PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund

Opinions on the Financial Statements

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of PGIM Core Short-Term Bond Fund, PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund (three of the funds constituting Prudential Investment Portfolios 2, hereafter collectively referred to as the “Funds”) as of January 31, 2022, the related statements of operations for the year ended January 31, 2022, the statements of changes in net assets for each of the two years in the period ended January 31, 2022, including the related notes, and the financial highlights for each of the two years in the period ended January 31, 2022 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each of the Funds as of January 31, 2022, the results of each of their operations for the year then ended, and the changes in each of their net assets and each of the financial highlights for each of the two years in the period ended January 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

The financial statements of the Funds as of and for the year ended January 31, 2020 and the financial highlights for each of the periods ended on or prior to January 31, 2020 (not presented herein, other than the financial highlights) were audited by other auditors whose report dated March 18, 2020 expressed an unqualified opinion on those financial statements and financial highlights.

Basis for Opinions

These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that

 

104


Report of Independent Registered Public Accounting Firm (continued)

 

respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of January 31, 2022 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinions.

/s/PricewaterhouseCoopers LLP

New York, New York

March 22, 2022

We have served as the auditor of one or more investment companies in the PGIM Retail Funds complex since 2020.

 

Prudential Investment Portfolios 2    105


Tax Information (unaudited)

 

For the year ended January 31, 2022, the PGIM Core Ultra Short Bond Fund reports 76.79%, the PGIM Institutional Money Market Fund reports 99.50%, and PGIM Core Short-Term Bond Fund reports 100.00% as interest-related dividends in accordance with Sections 871(k)(1) and 881(e)(1) of the Internal Revenue Code.

In January 2023, you will be advised on IRS Form 1099-DIV or substitute Form 1099, as to the Federal tax status of the distributions received by you in calendar year 2022.

We are required by Massachusetts, Missouri and Oregon to inform you that dividends which have been derived from interest on federal obligations are not taxable to shareholders providing the Mutual Fund meets certain requirements mandated by the respective state’s taxing authorities. We are pleased to report that 1.59% of the dividends paid by the PGIM Core Ultra Short Bond Fund and 3.82% of the dividends paid by the PGIM Institutional Money Market Fund qualifies for such deduction.

Please consult your tax adviser or state/local authorities to properly report this information on your tax return. If you have any questions concerning the amounts listed above, please call your financial adviser.

 

106


INFORMATION ABOUT BOARD MEMBERS AND OFFICERS (unaudited)

Information about Board Members and Officers of the Fund is set forth below. Board Members who are not deemed to be “interested persons” of the Fund, as defined in the 1940 Act, are referred to as “Independent Board Members.” Board Members who are deemed to be “interested persons” of the Fund are referred to as “Interested Board Members.” The Board Members are responsible for the overall supervision of the operations of the Fund and perform the various duties imposed on the directors of investment companies by the 1940 Act. The Board in turn elects the Officers, who are responsible for administering the day-to-day operations of the Fund.

 

     

Independent Board Members

         
       

Name

Year of Birth

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

1958

Board Member

Portfolios Overseen: 95

   President and Board Member, The Joyce Foundation (charitable foundation) (since 2002); formerly 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 (2009-2016); Trustee, Loyola University (since 2018).    None.   

Since September

2013

       

Kevin J. Bannon

1952

Board Member

Portfolios Overseen: 95

   Retired; formerly 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

 

Prudential Investment Portfolios 2


   

Independent Board Members

         
       

Name

Year of Birth

Position(s)

Portfolios Overseen

  

Principal Occupation(s)

During Past Five Years

  

Other Directorships

Held During

Past Five Years

  

Length of

Board Service

       

Linda W. Bynoe

1952

Board Member

Portfolios Overseen: 92

   President and Chief Executive Officer (since March 1995) and formerly Chief Operating Officer (December 1989-February 1995) of Telemat Limited LLC (formerly Telemat Ltd) (management consulting); formerly Vice President (January 1985-June 1989) at Morgan Stanley & Co. (broker-dealer).    Trustee of Equity Residential (residential real estate) (since December 2009); Director of Northern Trust Corporation (financial services) (since April 2006); formerly Director of Anixter International, Inc. (communication products distributor) (January 2006-June 2020).    Since March 2005
       

Barry H. Evans

1960

Board Member

Portfolios Overseen: 94

   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 (asset management).    Formerly Director, Manulife Trust Company (2011-2018); 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

1956

Board Member &

Independent Chair

Portfolios Overseen: 95

   Retired; Member (since November 2014) of the Governing Council of the Independent Directors Council (IDC) (organization of independent mutual fund directors); formerly Executive Committee of the IDC Board of Governors (October 2019-December 2021); 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

 

Visit our website at pgim.com/investments


   

Independent Board Members

         
       

Name

Year of Birth

Position(s)

Portfolios Overseen

  

Principal Occupation(s)

During Past Five Years

  

Other Directorships

Held During

Past Five Years

  

Length of

Board Service

       

Laurie Simon Hodrick

1962

Board Member

Portfolios Overseen: 91

   A. Barton Hepburn Professor Emerita of Economics in the Faculty of Business, Columbia Business School (since 2018); Visiting Fellow at the Hoover Institution, Stanford University (since 2015); Sole Member, ReidCourt LLC (since 2008) (a consulting firm); formerly Visiting Professor of Law, Stanford Law School (2015-2021); 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, Andela (since January 2022) (global talent network); Independent Director, Roku (since December 2020) (communication services); formerly Independent Director, Synnex Corporation (2019-2021) (information technology); formerly Independent Director, Kabbage, Inc. (2018-2020) (financial services); formerly Independent Director, Corporate Capital Trust (2017-2018) (a business development company).    Since September 2017
       

Brian K. Reid

1961

Board Member

Portfolios Overseen: 94

   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

 

Prudential Investment Portfolios 2


   

Independent Board Members

         
       

Name

Year of Birth

Position(s)

Portfolios Overseen

  

Principal Occupation(s)

During Past Five Years

  

Other Directorships

Held During

Past Five Years

  

Length of

Board Service

       

Grace C. Torres

1959

Board Member

Portfolios Overseen: 94

   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.   

Director (since January 2018) of OceanFirst Financial Corp. and OceanFirst Bank; formerly Director (July 2015-January 2018) of Sun Bancorp, Inc. N.A. and Sun National Bank.

  

Since November

2014

 

    

        
   

Interested Board Members

         
       

Name

Year of Birth

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

1962

Board Member &

President

Portfolios Overseen: 94

  

President, Chief Executive Officer, Chief Operating Officer and Officer in Charge of PGIM Investments LLC (formerly known as Prudential Investments LLC) (since January 2012); formerly Executive Vice President of Jennison Associates LLC and Head of Retail Distribution of PGIM Investments LLC (June 2005-December 2011); Investment Company Institute - Board of Governors (since May 2012).

   None.   

Since January

2012

 

Visit our website at pgim.com/investments


 

Interested Board Members

       

Name

Year of Birth

Position(s)

Portfolios Overseen

 

Principal Occupation(s)

During Past Five Years

  

Other Directorships

Held During

Past Five Years

  

Length of

Board Service

       

Scott E. Benjamin

1973

Board Member & Vice

President

Portfolios Overseen: 95

 

Executive Vice President (since May 2009) of PGIM Investments LLC; 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

 

    Fund Officers(a)

     

Name

Year of Birth

Fund Position

   Principal Occupation(s) During Past Five Years   

Length of

Service as Fund

Officer

     

Claudia DiGiacomo

1974

Chief Legal Officer

   Chief Legal Officer, Executive Vice President and Secretary of PGIM Investments LLC (since August 2020); Chief Legal Officer of Prudential Mutual Fund Services LLC (since August 2020); Chief Legal Officer of PIFM Holdco, LLC (since August 2020); Vice President and Corporate Counsel (since January 2005) of Prudential; and Corporate Counsel of AST Investment Services, Inc. (since August 2020); formerly Vice President and Assistant Secretary of PGIM Investments LLC (2005-2020); formerly Associate at Sidley Austin Brown & Wood LLP (1999-2004).    Since December 2005
     

Dino Capasso

1974

Chief Compliance Officer

   Chief Compliance Officer (since July 2019) of PGIM Investments LLC; Chief Compliance Officer (since July 2019) of the PGIM Funds, Target Funds, Advanced Series Trust, The Prudential Series Fund, Prudential’s Gibraltar Fund, Inc., PGIM Global High Yield Fund, Inc., PGIM High Yield Bond Fund, Inc., and PGIM Short Duration High Yield Opportunities Fund; Vice President and Deputy Chief Compliance Officer (June 2017-2019) 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

 

Prudential Investment Portfolios 2


     

Fund Officers(a)

         
     

Name

Year of Birth

Fund Position

   Principal Occupation(s) During Past Five Years   

Length of

Service as Fund

Officer

     

Andrew R. French

1962

Secretary

   Vice President (since December 2018) of PGIM Investments LLC; formerly Vice President and Corporate Counsel (2010-2018) 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
     

Diana N. Huffman

1982

Assistant Secretary

   Vice President and Corporate Counsel (since September 2015) of Prudential; Vice President and Assistant Secretary (since August 2020) of PGIM Investments LLC; formerly Associate at Willkie Farr & Gallagher LLP (2009-2015).    Since March 2019
     

Melissa Gonzalez

1980

Assistant Secretary

   Vice President and Corporate Counsel (since September 2018) of Prudential; Vice President and Assistant Secretary (since August 2020) of PGIM Investments LLC; formerly Director and Corporate Counsel (March 2014-September 2018) of Prudential.    Since March 2020
     

Patrick E. McGuinness

1986

Assistant Secretary

   Vice President and Assistant Secretary (since August 2020) of PGIM Investments LLC; Director and Corporate Counsel (since February 2017) of Prudential; and Corporate Counsel (2012-2017) of IIL, Inc.    Since June 2020
     

Debra Rubano

1975

Assistant Secretary

  

Vice President and Corporate Counsel (since November 2020) of Prudential; formerly Director and Senior Counsel of Allianz Global Investors U.S. Holdings LLC (2010-2020) and Assistant Secretary of numerous funds in the Allianz fund complex (2015-2020).

   Since December 2020
     

Kelly A. Coyne

1968

Assistant Secretary

   Director, Investment Operations of Prudential Mutual Fund Services LLC (since 2010).    Since March 2015
     

Christian J. Kelly

1975

Treasurer and Principal Financial

and Accounting Officer

  

Vice President, Head of Fund Administration of PGIM Investments LLC (since November 2018); formerly Director of Fund Administration of Lord Abbett & Co. LLC (2009-2018), Treasurer and Principal Accounting Officer of the Lord Abbett Family of Funds (2017-2018); Director of Accounting, Avenue Capital Group (2008-2009); Senior Manager, Investment Management Practice of Deloitte & Touche LLP (1998-2007).

   Since January 2019
     

Lana Lomuti

1967

Assistant Treasurer

   Vice President (since 2007) and Director (2005-2007), within PGIM Investments Fund Administration; formerly Assistant Treasurer (December 2007-February 2014) of The Greater China Fund, Inc.    Since April 2014
     

Russ Shupak

1973

Assistant Treasurer

   Vice President (since 2017) and Director (2013-2017), within PGIM Investments Fund Administration.    Since October 2019

 

Visit our website at pgim.com/investments


 

Fund Officers(a)

     

Name

Year of Birth

Fund Position

   Principal Occupation(s) During Past Five Years   

Length of

Service as Fund

Officer

     

Deborah Conway

1969

Assistant Treasurer

   Vice President (since 2017) and Director (2007-2017), within PGIM Investments Fund Administration.    Since October 2019
     

Elyse M. McLaughlin

1974

Assistant Treasurer

   Vice President (since 2017) and Director (2011-2017), within PGIM Investments Fund Administration.    Since October 2019
     

Jonathan Corbett

1983

Anti-Money Laundering Compliance Officer

  

Vice President, Corporate Compliance, Global Compliance Programs and Compliance Risk Management (since August 2019) of Prudential; formerly Vice President and Head of Key Risk Areas Compliance (March 2016 to July 2019), Chief Privacy Officer (March 2016 to July 2019) and Head of Global Financial Crimes Unit (April 2014 to March 2016) at MetLife.

   Since October 2021

 

(a)

Excludes Mr. Parker and Mr. Benjamin, interested Board Members who also serve as President and Vice President, respectively.

Explanatory Notes to Tables:

 

 

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 all 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, Target Funds, The Prudential Variable Contract Accounts, PGIM ETF Trust, PGIM High Yield Bond Fund, Inc., PGIM Global High Yield Fund, Inc., PGIM Short Duration High Yield Opportunities Fund, The Prudential Series Fund, Prudential’s Gibraltar Fund, Inc. and the Advanced Series Trust.

 

 

 

As used in the Fund Officers table “Prudential” means The Prudential Insurance Company of America.

 

 

Prudential Investment Portfolios 2


  MAIL     TELEPHONE     WEBSITE
     655 Broad Street         (800) 225-1852         pgim.com/investments
     Newark, NJ 07102          

 

PROXY VOTING

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

 

TRUSTEES

Ellen S. Alberding · Kevin J. Bannon · Scott E. Benjamin · Linda W. Bynoe · Barry H. Evans · Keith F. Hartstein · Laurie Simon Hodrick

· Stuart S. Parker · Brian K. Reid · Grace C. Torres

 

OFFICERS

Stuart S. Parker, President · Scott E. Benjamin, Vice President · Christian J. Kelly, Treasurer and Principal Financial and Accounting Officer

· Claudia DiGiacomo, Chief Legal Officer · Dino Capasso, Chief Compliance Officer · Jonathan Corbett, Anti-Money Laundering Compliance Officer

· Andrew R. French, Secretary · Melissa Gonzalez, Assistant Secretary · Diana N. Huffman, Assistant Secretary · Kelly A. Coyne, Assistant Secretary · Patrick E. McGuinness, Assistant Secretary · Debra Rubano, Assistant Secretary · Lana Lomuti, Assistant Treasurer · Russ Shupak, Assistant Treasurer · Elyse McLaughlin, Assistant Treasurer · Deborah Conway, Assistant Treasurer

 

MANAGER

   PGIM Investments LLC    655 Broad Street
          Newark, NJ 07102

SUBADVISERS

   PGIM Fixed Income    655 Broad Street
      Newark, NJ 07102
   PGIM Limited    Grand Buildings, 1-3 Strand
      Trafalgar Square
      London, WC2N 5HR
          United Kingdom

DISTRIBUTOR

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

CUSTODIAN

   The Bank of New York Mellon   

240 Greenwich Street

New York, NY 10286

TRANSFER AGENT

   Prudential Mutual Fund Services LLC   

PO Box 9658

Providence, RI 02940

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    PricewaterhouseCoopers LLP   

300 Madison Avenue

New York, NY 10017

FUND COUNSEL

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


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

 

SHAREHOLDER COMMUNICATIONS WITH TRUSTEES

Shareholders can communicate directly with the Board of Trustees by writing to the Chair of the Board, c/o PGIM Investments, Attn: Board of Trustees, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Trustee by writing to that Trustee at the same address. Communications are not screened before being delivered to the addressee.

 

AVAILABILITY OF PORTFOLIO HOLDINGS

PGIM Core Short-Term Bond Fund and PGIM Core Ultra-Short Bond Fund: The Funds’ file their complete schedules of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-PORT. The Funds’ Form N-PORT filings are available on the Commission’s website at sec.gov. Form N-PORT is filed with the Commission quarterly, and each Fund’s full portfolio holdings as of the first and third fiscal quarter-ends will be made publicly available 60 days after the end of each quarter.

PGIM Institutional Money Market Fund: The Fund files a complete schedule of portfolio holdings with the Commission monthly on Form N-MFP. The Commission delays the public availability of the information filed on Form N-MFP for 60 days after the end of the reporting period included in the filing. The Form N-MFP filings (along with the Fund’s annual report filed on Form N-CSR and semi-annual report filed on Form N-CSRS) are available on the Commission’s website at sec.gov. The Fund’s complete holdings are also available on pgiminvestments.com.

Mutual Funds:

 

     

 

ARE NOT INSURED BY THE FDIC OR ANY

FEDERAL GOVERNMENT AGENCY

 

     MAY LOSE VALUE     

 

ARE NOT A DEPOSIT OF OR GUARANTEED

BY ANY BANK OR ANY BANK AFFILIATE

 


LOGO

 

 

 

 

 

   CUSIP      

PGIM CORE SHORT-TERM BOND FUND

   74440E102

PGIM CORE ULTRA SHORT BOND FUND

   74440E201

PGIM INSTITUTIONAL MONEY MARKET FUND

   74440E300


Item 2 –

 Code of Ethics — See Exhibit (a)

As of the end of the period covered by this report, the registrant has adopted a code of ethics (the “Section 406 Standards for Investment Companies – Ethical Standards for Principal Executive and Financial Officers”) that applies to the registrant’s Principal Executive Officer and Principal Financial Officer; the registrant’s Principal Financial Officer also serves as the Principal Accounting Officer.

The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant 800-225-1852, and ask for a copy of the Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers.

 

Item 3 –

 Audit Committee Financial Expert –

The registrant’s Board has determined that Ms. Grace C. Torres, member of the Board’s Audit Committee is an “audit committee financial expert,” and that she is “independent,” for purposes of this item.

 

Item 4 –

 Principal Accountant Fees and Services –

(a) Audit Fees

For the fiscal years ended January 31, 2022 and January 31, 2021, PricewaterhouseCoopers LLP (“PwC”), the Registrant’s principal accountant, billed the Registrant $88,850 and $88,850 respectively, for professional services rendered for the audit of the Registrant’s annual financial statements or services that are normally provided in connection with statutory and regulatory filings.

(b) Audit-Related Fees

For the fiscal years ended January 31, 2022 and January 31, 2021, PwC did not bill the Registrant for audit-related services.

For the fiscal year ended January 31, 2022 and January 31, 2021, fees of $620 and $6,105 were billed to the Registrant for services rendered by KPMG LLP (the Registrant’s prior principal accountant) in connection with the auditor transition.

(c) Tax Fees

For the fiscal years ended January 31, 2022 and January 31, 2021: none.

(d) All Other Fees

For the fiscal years ended January 31, 2022 and January 31, 2021: none.

(e) (1) Audit Committee Pre-Approval Policies and Procedures

THE PGIM MUTUAL FUNDS


AUDIT COMMITTEE POLICY

on

Pre-Approval of Services Provided by the Independent

Accountants

The Audit Committee of each PGIM Mutual Fund is charged with the responsibility to monitor the independence of the Fund’s independent accountants. As part of this responsibility, the Audit Committee must pre-approve the independent accounting firm’s engagement to render audit and/or permissible non-audit services, as required by law. In evaluating a proposed engagement of the independent accountants, the Audit Committee will assess the effect that the engagement might reasonably be expected to have on the accountant’s independence. The Committee’s evaluation will be based on:

 

   

a review of the nature of the professional services expected to be provided,

 

   

a review of the safeguards put into place by the accounting firm to safeguard independence, and

 

   

periodic meetings with the accounting firm.

Policy for Audit and Non-Audit Services Provided to the Funds

On an annual basis, the scope of audits for each Fund, audit fees and expenses, and audit-related and non-audit services (and fees proposed in respect thereof) proposed to be performed by the Fund’s independent accountants will be presented by the Treasurer and the independent accountants to the Audit Committee for review and, as appropriate, approval prior to the initiation of such services.

Such presentation shall be accompanied by confirmation by both the Treasurer and the independent accountants that the proposed

non-audit services will not adversely affect the independence of the independent accountants. Such proposed non-audit services shall be described in sufficient detail to enable the Audit Committee to assess the appropriateness of such services and fees, and the compatibility of the provision of such services with the auditor’s independence. The Committee shall receive periodic reports on the progress of the audit and other services which are approved by the Committee or by the Committee Chair pursuant to authority delegated in this Policy.

The categories of services enumerated under “Audit Services”, “Audit-related Services”, and “Tax Services” are intended to provide guidance to the Treasurer and the independent accountants as to those categories of services which the Committee believes are generally consistent with the independence of the independent accountants and which the Committee (or the Committee Chair) would expect upon the presentation of specific proposals to pre-approve. The enumerated categories are not intended as an exclusive list of audit, audit-related or tax services, which the Committee (or the Committee Chair) would consider for pre-approval.

Audit Services

The following categories of audit services are considered to be consistent with the role of the Fund’s independent accountants:

 

   

Annual Fund financial statement audits

 

   

Seed audits (related to new product filings, as required)

 

   

SEC and regulatory filings and consents

Audit-related Services

The following categories of audit-related services are considered to be consistent with the role of the Fund’s independent accountants:

 

   

Accounting consultations

 

   

Fund merger support services

 

   

Agreed Upon Procedure Reports

 

   

Attestation Reports

 

   

Other Internal Control Reports

Individual audit-related services that fall within one of these categories (except for fund merger support services) and are not presented to the Audit Committee as part of the annual pre-approval process are subject to an authorized pre-approval by the Audit Committee so long as the estimated fee for those services does not exceed $30,000. Any services provided under such


pre-approval will be reported to the Audit Committee at its next regular meeting. Should the amount of such services exceed $30,000 any additional fees will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated). Fees related to fund merger support services are subject to a separate authorized pre-approval by the Audit Committee with fees determined on a per occurrence and merger complexity basis.

Tax Services

The following categories of tax services are considered to be consistent with the role of the Fund’s independent accountants:

 

   

Tax compliance services related to the filing or amendment of the following:

 

   

Federal, state and local income tax compliance; and,

 

   

Sales and use tax compliance

 

   

Timely RIC qualification reviews

 

   

Tax distribution analysis and planning

 

   

Tax authority examination services

 

   

Tax appeals support services

 

   

Accounting methods studies

 

   

Fund merger support services

 

   

Tax consulting services and related projects

Individual tax services that fall within one of these categories and are not presented to the Audit Committee as part of the annual pre-approval process are subject to an authorized pre-approval by the Audit Committee so long as the estimated fee for those services does not exceed $30,000. Any services provided under such pre-approval will be reported to the Audit Committee at its next regular meeting. Should the amount of such services exceed $30,000 any additional fees will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated).

Other Non-Audit Services

Certain non-audit services that the independent accountants are legally permitted to render will be subject to pre-approval by the Committee or by one or more Committee members to whom the Committee has delegated this authority and who will report to the full Committee any pre-approval decisions made pursuant to this Policy. Non-audit services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

Proscribed Services

The Fund’s independent accountants will not render services in the following categories of non-audit services:

 

   

Bookkeeping or other services related to the accounting records or financial statements of the Fund

 

   

Financial information systems design and implementation

 

   

Appraisal or valuation services, fairness opinions, or contribution-in-kind reports

 

   

Actuarial services

 

   

Internal audit outsourcing services

 

   

Management functions or human resources

 

   

Broker or dealer, investment adviser, or investment banking services

 

   

Legal services and expert services unrelated to the audit

 

   

Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

Pre-approval of Non-Audit Services Provided to Other Entities Within the PGIM Fund Complex


Certain non-audit services provided to PGIM Investments LLC or any of its affiliates that also provide ongoing services to the PGIM Mutual Funds will be subject to pre-approval by the Audit Committee. The only non-audit services provided to these entities that will require pre-approval are those related directly to the operations and financial reporting of the Funds. Individual projects that are not presented to the Audit Committee as part of the annual pre-approval process will be subject to pre-approval by the Committee Chair (or any other Committee member on whom this responsibility has been delegated) so long as the estimated fee for those services does not exceed $30,000. Services presented for pre-approval pursuant to this paragraph will be accompanied by a confirmation from both the Treasurer and the independent accountants that the proposed services will not adversely affect the independence of the independent accountants.

Although the Audit Committee will not pre-approve all services provided to PGIM Investments LLC and its affiliates, the Committee will receive an annual report from the Fund’s independent accounting firm showing the aggregate fees for all services provided to PGIM Investments and its affiliates.

(e) (2) Percentage of services referred to in 4(b) – 4(d) that were approved by the audit committee

For the fiscal years ended January 31, 2022 and January 31, 2021, 100% of the services referred to in Item 4(b) was approved by the audit committee.

(f) Percentage of hours expended attributable to work performed by other than full time employees of principal accountant if greater than 50%.

The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%.

(g) Non-Audit Fees

The aggregate non-audit fees billed by the Registrant’s principal accountant for services rendered to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant for the fiscal years ended January 31, 2022 and January 31, 2021 was $0 and $0, respectively.

(h) Principal Accountant’s Independence

Not applicable as the Registrant’s principal accountant has not provided non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X.

 

Item 5 –

 Audit Committee of Listed Registrants – Not applicable.

 

Item 6 –

 Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form.

 

Item 7 –

 Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable.

 

Item 8 –

 Portfolio Managers of Closed-End Management Investment Companies – Not applicable.

 

Item 9 –

 Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable.

 

Item 10 –

 Submission of Matters to a Vote of Security Holders – There have been no material changes to these procedures.

 

Item 11 –

 Controls and Procedures

 

  (a)

It is the conclusion of the registrant’s principal executive officer and principal financial officer that the


  effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.

 

  (b)

There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting.

 

Item 12 –

 Controls and Procedures - Disclosure of Securities Lending Activities for Closed-End Management Investment Companies – Not applicable.

 

Item 13 –

 Exhibits

 

  (a)

(1) Code of Ethics – Attached hereto as Exhibit EX-99.CODE-ETH.

  (2)

Certifications pursuant to Section  302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT.

  (3)

Any written solicitation to purchase securities under Rule 23c-1 – Not applicable.

  (b)

Certifications pursuant to Section  906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Registrant    Prudential Investment Portfolios 2
By:    /s/ Andrew R. French
   Andrew R. French
   Secretary
Date:    March 22, 2022

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:    /s/ Stuart S. Parker
   Stuart S. Parker
   President and Principal Executive Officer
Date:    March 22, 2022
By:    /s/ Christian J. Kelly
   Christian J. Kelly
   Treasurer and Principal Financial and Accounting Officer
Date:    March 22, 2022
EX-99.CODE ETH 2 d311631dex99codeeth.htm CODE OF ETHICS Code of Ethics

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND

PRINCIPAL FINANCIAL OFFICERS

I.    Covered Officers/Purpose of the Code

This code of ethics (the “Code”) is established for the funds listed on Attachment A hereto (each a Fund” and together the “Funds”) pursuant to Section 406 of the Sarbanes-Oxley Act and the rules adopted thereunder by the Securities and Exchange Commission (“SEC”). The Code applies to each Fund’s Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer or Controller, or senior officers performing similar functions (the “Covered Officers” each of whom are set forth in Exhibit B) for the purpose of promoting:

 

   

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

 

   

full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by a Fund;

 

   

compliance with applicable governmental laws, rules and regulations;

 

   

the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and

 

   

accountability for adherence to the Code.

Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest.

II.    Conflicts of Interest

A “conflict of interest” occurs when a Covered Officer’s private interest interferes with the interests of, or his service to, a Fund. For example, a conflict of interest would arise if a Covered Officer, or a member of his family, receives improper personal benefits as a result of his position with a Fund.

Certain conflicts of interest arise out of the relationships between Covered Officers and a Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940, as amended (the “1940 Act”) and the Investment Advisers Act of 1940, as amended (the “Advisers Act”). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with a Fund because of their status as “affiliated persons” of the Fund. A Fund’s and its investment adviser’s compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code.

Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationships between a Fund and the Fund’s investment adviser, principal underwriter, administrator, or other service providers to the Fund (together “Service Providers”), of which the Covered Officers may also be principals or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for a Fund or for a Service Provider, or for both), be involved in establishing policies and implementing decisions that will have different effects on such Service Providers and a Fund. The participation of the Covered Officers in such activities is inherent in the contractual relationships between a Fund and its Service Providers and is consistent with the performance by the Covered Officers of their duties as officers of the Fund. Thus, if performed in conformity with the provisions of the 1940 Act and the Advisers Act, such activities will be deemed to have been handled ethically. In addition, it is recognized by the Funds’ Board of Directors/Trustees (“Boards”) that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes.

Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the 1940 Act and the Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of a Fund.

Each Covered Officer must:

 

   

not use his personal influence or personal relationships improperly to influence investment decisions or


 

financial reporting by a Fund whereby the Covered Officer would benefit personally to the detriment of the Fund;

 

   

not cause a Fund to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Fund; and

 

   

not retaliate against any other Covered Officer or any employee of a Fund or its affiliated persons for reports of potential violations that are made in good faith.

There are some actual or potential conflict of interest situations that should always be brought to the attention of, and discussed with, the Funds’ Chief Legal Officer or other senior legal officer, if material. Examples of these include:

 

   

service as a director on the board of any public or private company;

 

   

the receipt of any non-nominal gifts;

 

   

the receipt of any entertainment from any company with which a Fund has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;

 

   

any ownership interest in (other than insubstantial interests in publicly traded entities), or any consulting or employment relationship with, any of a Fund’s Service Providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; and

 

   

a direct or indirect financial interest in commissions, transaction charges or spreads paid by a Fund for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer’s employment, such as compensation or equity ownership.

III.    Disclosure and Compliance

Each Covered Officer:

 

   

should familiarize himself with the disclosure requirements generally applicable to the Funds;

 

   

should not knowingly misrepresent, or cause others to misrepresent, facts about a Fund to others, whether within or outside the Fund, including to the Fund’s Board of Directors/Trustees and its auditors, and to governmental regulators and self-regulatory organizations;

 

   

should, to the extent appropriate within his area of responsibility, consult with other officers and employees of a Fund and its Service Providers with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and

 

   

is responsible to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

IV.    Reporting and Accountability

Each Covered Officer must:

 

   

upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board of Directors/Trustees that he has received, read, and understands the Code;

 

   

annually thereafter affirm to the Board of Directors/Trustees that he has complied with the requirements of the Code; and

 

   

notify the Funds’ Chief Legal Officer promptly if he knows of any violation of this Code. Failure to do so is itself a violation of this Code.

The Funds’ Chief Legal Officer is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. In such situations, the Chief Legal Officer is authorized to consult, as appropriate, with counsel to the Funds, counsel to the Independent Directors/Trustees, a Board Committee comprised of Independent Directors/Trustees, or the full Board.

The Funds will follow the following procedures in investigating and enforcing this Code:


   

the Funds Chief Legal Officer will take all appropriate action to investigate any potential violations reported to her;

 

   

if, after such investigation, the Chief Legal Officer believes that no violation has occurred, the Chief Legal Officer is not required to take any further action;

 

   

any matter that the Chief Legal Officer believes is a violation or that the Chief Legal Officer believes should be reviewed by a Fund’s Board or Board Committee comprised of Independent Directors/Trustees will be reported to the Fund’s Board or Board Committee comprised of Independent Directors/Trustees;

 

   

based upon its review of any matter referred to it, a Fund’s Board or Board Committee comprised of Independent Directors/Trustees shall determine whether or not a violation has occurred, whether a grant of waiver is appropriate or whether some other action should be taken. Based upon its determination, the Fund’s Board or Board Committee comprised of Independent Directors/Trustees may take such action as it deems appropriate, which may include without limitation: modifications of applicable policies and procedures; notification to appropriate personnel of the Fund’s investment adviser, principal underwriter or administrator, or their boards; notification to other Funds for which the Covered Officer serves as a Covered Officer; or recommendation to dismiss the Covered Officer; and

 

   

any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

V.    Other Policies and Procedures

This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of a Fund or its Service Providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds’ and their investment adviser’s and principal underwriter’s code of ethics under Rule 17j-1 under the 1940 Act are separate requirements applying to the Covered Officers and others, and are not part of this Code.

VI.    Amendments

Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of Independent Directors/Trustees.

VII.    Confidentiality

All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Fund Board of Directors/Trustees, counsel to the Fund, and counsel to the Fund Independent Directors/Trustees.

VIII.    Internal Use

The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of a Fund, as to any fact, circumstance, or legal conclusion.

IX.    Recordkeeping

A Fund shall keep the information disclosed about waivers and amendments under the Code for the period of time as specified in the rules adopted pursuant to Section 406 of the Sarbanes-Oxley Act, and furnish such information to the SEC or its staff upon request.

Adopted and approved as of September 3, 2003.


EXHIBIT A

Funds Covered by this Code of Ethics

 

   

The Prudential Investment Portfolios, Inc.

   

Prudential Investment Portfolios 2

   

Prudential Investment Portfolios 3

   

Prudential Investment Portfolios 4

   

Prudential Investment Portfolios 5

   

Prudential Investment Portfolios 6

   

Prudential Investment Portfolios 7

   

Prudential Investment Portfolios 8

   

Prudential Investment Portfolios 9

   

Prudential Investment Portfolios, Inc. 10

   

Prudential Investment Portfolios 12

   

Prudential Government Money Market Fund, Inc.

   

Prudential Investment Portfolios, Inc. 14

   

Prudential Investment Portfolios, Inc. 15

   

Prudential Investment Portfolios 16

   

Prudential Investment Portfolios, Inc. 17

   

Prudential Investment Portfolios 18

   

Prudential Global Total Return Fund, Inc.

   

Prudential Jennison Blend Fund, Inc.

   

Prudential Jennison Mid-Cap Growth Fund, Inc.

   

Prudential Jennison Natural Resources Fund, Inc.

   

Prudential Jennison Small Company Fund, Inc.

   

Prudential National Muni Fund, Inc.

   

Prudential Sector Funds, Inc.

   

Prudential Short-Term Corporate Bond Fund, Inc.

   

Prudential World Fund, Inc.

   

The Target Portfolio Trust

   

PGIM ETF Trust

   

The Prudential Variable Contract Account – 2

   

The Prudential Variable Contract Account – 10

   

PGIM High Yield Bond Fund, Inc.

   

PGIM Global High Yield Fund, Inc.

   

PGIM Short Duration High Yield Opportunities Fund

   

Advanced Series Trust

   

Prudential’s Gibraltar Fund, Inc.

   

The Prudential Series Fund


EXHIBIT B

Persons Covered by this Code of Ethics

Stuart S. Parker – President and Chief Executive Officer of the PGIM Funds, PGIM ETF Trust, the Target Mutual Funds, PGIM High Yield Bond Fund, Inc., PGIM Global High Yield Fund, Inc., PGIM Short Duration High Yield Opportunities Fund and The Prudential Variable Contract Accounts-2 and -10.

Timothy S. Cronin – President and Chief Executive Officer of Advanced Series Trust, Prudential’s Gibraltar Fund, Inc. and The Prudential Series Fund.

Christian J. Kelly – Treasurer and Chief Financial Officer for the PGIM Funds, PGIM ETF Trust, the Target Mutual Funds, PGIM High Yield Bond Fund, Inc., PGIM Global High Yield Fund, Inc., PGIM Short Duration High Yield Opportunities Fund, The Prudential Variable Contract Accounts – 2 and -10, Advanced Series Trust, Prudential’s Gibraltar Fund, Inc. and The Prudential Series Fund.

EX-99.CERT 3 d311631dex99cert.htm CERTIFICATIONS PURSUANT TO SECTION 302 Certifications pursuant to Section 302

Item 13

Prudential Investment Portfolios 2

Annual period ending 1/31/22

File No. 811-09999

CERTIFICATIONS

I, Stuart S. Parker, certify that:

 

  1.

I have reviewed this report on Form N-CSR of the above named Fund(s).

 

  2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report.

 

  4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

1


  5.

The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 22, 2022

 

/s/  Stuart S. Parker

Stuart S. Parker

President and Principal Executive Officer

 

2


Item 13

Prudential Investment Portfolios 2

Annual period ending 1/31/22

File No. 811-09999

 

CERTIFICATIONS

I, Christian J. Kelly, certify that:

 

  1.

I have reviewed this report on Form N-CSR of the above named Fund(s).

 

  2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report.

 

  4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

 

  a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

 

  d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

3


  5.

The registrant’s other certifying officer(s) and I have disclosed to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  a)

All significant deficiencies and material weaknesses in the design or operation of internal controls which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

 

  b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 22, 2022

 

/s/ Christian J. Kelly
Christian J. Kelly
Treasurer and Principal Financial and
Accounting Officer

 

4

EX-99.906 CERT 4 d311631dex99906cert.htm CERTIFICATIONS PURSUANT TO SECTION 906 Certifications pursuant to Section 906

Certification Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

Name of Issuer:                 Prudential Investment Portfolios 2

In connection with the Report on Form N-CSR of the above-named issuer that is accompanied by this certification, the undersigned hereby certifies, to his or her knowledge, that:

 

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer.

 

March 22, 2022    /s/ Stuart S. Parker
   Stuart S. Parker
   President and Principal Executive Officer
March 22, 2022    /s/ Christian J. Kelly
   Christian J. Kelly
   Treasurer and Principal Financial and Accounting
Officer

This certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

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