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: | 811-03712 | |||||
Exact name of registrant as specified in charter: | Prudential Investment Portfolios, Inc. 14 | |||||
Address of principal executive offices: | 655 Broad Street, 17th Floor | |||||
Newark, New Jersey 07102 | ||||||
Name and address of agent for service: | Deborah A. Docs | |||||
655 Broad Street, 17th Floor | ||||||
Newark, New Jersey 07102 | ||||||
Registrant’s telephone number, including area code: | 800-225-1852 | |||||
Date of fiscal year end: | 2/28/2019 | |||||
Date of reporting period: | 8/31/2018 |
Item 1 – Reports to Stockholders
PGIM GOVERNMENT INCOME FUND
(Formerly known as Prudential Government Income Fund)
SEMIANNUAL REPORT
AUGUST 31, 2018
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: To seek high current return |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.
The accompanying financial statements as of August 31, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS), member SIPC. PGIM Fixed Income is a unit of PGIM, Inc. (PGIM), a registered investment adviser. PIMS and PGIM are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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PGIM FUNDS — UPDATE
The Board of Directors/Trustees for the Fund has approved the implementation of an automatic conversion feature for Class C shares, effective as of April 1, 2019. To reflect these changes, effective April 1, 2019, the section of the Fund’s Prospectus entitled “How to Buy, Sell and Exchange Fund Shares—How to Exchange Your Shares—Frequent Purchases and Redemptions of Fund Shares” is restated to read as follows:
This supplement should be read in conjunction with your Summary Prospectus, Statutory Prospectus and Statement of Additional Information, be retained for future reference and is in addition to any existing Fund supplements.
1. | In each Fund’s Statutory Prospectus, the following is added at the end of the section entitled “Fund Distributions And Tax Issues—If You Sell or Exchange Your Shares”: |
Automatic Conversion of Class C Shares
The conversion of Class C shares into Class A shares—which happens automatically approximately 10 years after purchase—is not a taxable event for federal income tax purposes. For more information about the automatic conversion of Class C shares, see Class C Shares Automatically Convert to Class A Shares in How to Buy, Sell and Exchange Fund Shares.
2. | In each Fund’s Statutory Prospectus, the following sentence is added at the end of the section entitled “How to Buy, Sell and Exchange Shares—Closure of Certain Share Classes to New Group Retirement Plans”: |
Shareholders owning Class C shares may continue to hold their Class C shares until the shares automatically convert to Class A shares under the conversion schedule, or until the shareholder redeems their Class C shares.
3. | In each Fund’s Statutory Prospectus, the following disclosure is added immediately following the section entitled “How to Buy, Sell and Exchange Shares—How to Buy Shares—Class B Shares Automatically Convert to Class A Shares”: |
Class C Shares Automatically Convert to Class A Shares
Starting on or about April 1, 2019 (the “Effective Date”), Class C shares will be eligible for automatic conversion into Class A shares on a monthly basis approximately ten years after the original date of purchase (the “Conversion Date”). Conversion will take place based on the relative NAV of the two classes, without the imposition of any sales load, fee or other charge. All such automatic conversions of Class C shares will constitute tax-free exchanges for federal income tax purposes.
For shareholders investing in Class C shares through retirement plans or omnibus accounts, and in certain other instances, the Fund and its agents may not have
PGIM Government Income Fund | 3 |
transparency into how long a shareholder has held Class C shares for purposes of determining whether such Class C shares are eligible for automatic conversion into Class A shares, and the relevant financial intermediary may not have the ability to track purchases in order to credit individual shareholders’ holding periods. In these circumstances, the Fund will not be able to automatically convert Class C shares into Class A shares as described above. In order to determine eligibility for conversion in these circumstances, it is the responsibility of the financial intermediary to notify the Fund that the shareholder is eligible for the conversion of Class C shares to Class A shares, and the financial intermediary may be required to maintain and provide the Fund with records that substantiate the holding period of Class C shares. It is the financial intermediary’s (and not the Fund’s) responsibility to keep records of transactions made in accounts it holds and to ensure that the shareholder is credited with the proper holding period based on such records or those provided to the financial intermediary by the shareholder. Please consult with your financial intermediary for the applicability of this conversion feature to your shares.
A financial intermediary may sponsor and/or control accounts, programs or platforms that impose a different conversion schedule or different eligibility requirements for the exchange of Class C shares for Class A shares (see Appendix A: Waivers and Discounts Available From Certain Financial Intermediaries of the Prospectus). Please consult with your financial intermediary if you have any questions regarding your shares’ conversion from Class C shares to Class A shares.
4. | In Part II of each Fund’s Statement of Additional Information, the following disclosure is added immediately following the section entitled “Purchase, Redemption and Pricing of Fund Shares—Share Classes—Automatic Conversion of Class B Shares”: |
AUTOMATIC CONVERSION OF CLASS C SHARES. Starting on or about April 1, 2019 (the “Effective Date”), Class C shares will be eligible for automatic conversion into Class A shares on a monthly basis approximately ten years after the original date of purchase (the “Conversion Date”). Conversion will take place based on the relative NAV of the two classes, without the imposition of any sales load, fee or other charge. Class C shares of a Fund acquired through automatic reinvestment of dividends or distributions will convert to Class A shares of the Fund on the Conversion Date pro rata with the converting Class C shares of the Fund that were not acquired through reinvestment of dividends or distributions. All such automatic conversions of Class C shares will constitute tax-free exchanges for federal income tax purposes.
For shareholders investing in Class C shares through retirement plans or omnibus accounts, and in certain other instances, the Fund and its agents may not have transparency into how long a shareholder has held Class C shares for purposes of determining whether such Class C shares are eligible for automatic conversion into Class A shares, and the relevant financial intermediary may not have the ability to track purchases in order to credit individual shareholders’ holding periods. In these circumstances, the
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Fund will not be able to automatically convert Class C shares into Class A shares as described above. In order to determine eligibility for conversion in these circumstances, it is the responsibility of the financial intermediary to notify the Fund that the shareholder is eligible for the conversion of Class C shares to Class A shares, and the financial intermediary may be required to maintain and provide the Fund with records that substantiate the holding period of Class C shares. It is the financial intermediary’s (and not the Fund’s) responsibility to keep records of transactions made in accounts it holds and to ensure that the shareholder is credited with the proper holding period based on such records or those provided to the financial intermediary by the shareholder. Please consult with your financial intermediary for the applicability of this conversion feature to your shares.
Class C shares were generally closed to investments by new group retirement plans effective June 1, 2018. Group retirement plans (and their successor, related and affiliated plans) that have Class C shares of the Fund available to participants on or before the Effective Date may continue to open accounts for new participants in such share class and purchase additional shares in existing participant accounts.
The Fund has no responsibility for monitoring or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for conversion. A financial intermediary may sponsor and/or control accounts, programs or platforms that impose a different conversion schedule or different eligibility requirements for the exchange of Class C shares for Class A shares, as set forth on Appendix A: Waivers and Discounts Available From Certain Financial Intermediaries of the Prospectus. In these cases, Class C shareholders may have their shares exchanged for Class A shares under the policies of the financial intermediary. Financial intermediaries will be responsible for making such exchanges in those circumstances. Please consult with your financial intermediary if you have any questions regarding your shares’ conversion from Class C shares to Class A shares.
LR1094
- Not part of the Semiannual Report -
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Dear Shareholder:
We hope you find the semiannual report for the PGIM Government Income Fund informative and useful. The report covers performance for the six-month period ended August 31, 2018.
We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*
Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.
Thank you for choosing our family of funds.
Sincerely,
Stuart S. Parker, President
PGIM Government Income Fund
October 15, 2018
*The Prudential Day One Funds did not change their names.
PGIM Government Income Fund | 7 |
Your Fund’s Performance (unaudited)
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 8/31/18 (without sales charges) | Average Annual Total Returns as of 8/31/18 (with sales charges) | |||||||||
Six Months* (%) | One Year (%) | Five Years (%) | Ten Years (%) | Since Inception (%) | ||||||
Class A | 1.11 | –6.14 | 0.69 | 2.73 | — | |||||
Class B | 0.60 | –7.43 | 0.64 | 2.41 | — | |||||
Class C | 0.67 | –3.50 | 0.84 | 2.47 | — | |||||
Class R | 0.92 | –2.04 | 1.35 | 2.93 | — | |||||
Class Z | 1.26 | –1.45 | 1.88 | 3.46 | — | |||||
Class R6** | 1.33 | –1.31 | N/A | N/A | –0.62 (8/9/16) | |||||
Bloomberg Barclays US Government Bond Index | ||||||||||
1.37 | –1.50 | 1.67 | 2.80 | — | ||||||
Bloomberg Barclays US Aggregate ex-Credit Index | ||||||||||
1.38 | –1.08 | 2.00 | 3.15 | — | ||||||
Lipper General US Government Funds Average | ||||||||||
0.97 | –2.00 | 1.54 | 2.65 | — |
Source: PGIM Investments LLC and Lipper Inc.
*Not annualized
**Formerly known as Class Q shares.
Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Indexes and the Lipper Average are measured from the closest month-end to the class’ inception date.
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The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B* | Class C | Class R | Class Z | Class R6** | |||||||
Maximum initial sales charge | 4.50% of the public offering price | None | None | None | None | None | ||||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 5.00% (Yr. 1) 4.00% (Yr. 2) 3.00% (Yr. 3) 2.00% (Yr. 4) 1.00% (Yr. 5) 1.00% (Yr. 6) 0.00% (Yr. 7) | 1.00% on sales made within 12 months of purchase | None | None | None | ||||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.25% | 1.00% up to $3 billion, 0.80% next $1 billion, and 0.50% over $4 billion | 1.00% | 0.75% (0.50% currently) | None | None |
*Class B shares are closed to all purchase activity and no additional Class B shares may be purchased or acquired except by exchange from Class B shares of another Fund or through dividend or capital gains reinvestment.
**Formerly known as Class Q shares.
Benchmark Definitions
Bloomberg Barclays US Government Bond Index—The Bloomberg Barclays US Government Bond Index is an unmanaged index of securities issued or backed by the US government, its agencies, and instrumentalities with between one and 30 years remaining to maturity. It gives a broad look at how US government bonds have performed. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R6 shares is –1.37%.
Bloomberg Barclays US Aggregate ex-Credit Index—The Bloomberg Barclays US Aggregate ex-Credit Index is an unmanaged index that represents securities that are SEC registered, taxable, and dollar denominated. The Index covers the US investment-grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indexes that are calculated and reported on a regular basis. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class R6 shares is –0.70%.
PGIM Government Income Fund | 9 |
Your Fund’s Performance (continued)
Lipper General US Government Funds Average—The Lipper General US Government Funds Average (Lipper Average) is based on the average return of all funds in the Lipper General US Government Funds universe for the periods noted. Funds in the Lipper Average invest primarily in US government and agency issues. The average annual total returns for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class R6 shares is –1.63%.
Investors cannot invest directly in an index or average. The returns for the Indexes would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.
Credit Quality expressed as a percentage of total investments as of 8/31/18 (%) | ||||
AAA | 98.8 | |||
AA | 0.8 | |||
A | 0.1 | |||
Not Rated | 0.6 | |||
Cash/Cash Equivalents | –0.4 | |||
Total Investments | 100.0 |
Source: PGIM Fixed Income
Credit ratings reflect the highest rating assigned by a nationally recognized statistical rating organization (NRSRO) such as Moody’s Investor Service, Inc. (Moody’s), S&P Global Ratings (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, ratings are converted to the comparable S&P/Fitch rating tier nomenclature used by both S&P and Fitch. These ratings agencies are independent and are widely used. The Not Rated category consists of securities that have not been rated by a NRSRO and may include derivative instruments that could have a negative value. Credit ratings are subject to change. Values may not sum to 100% due to rounding.
Distributions and Yields as of 8/31/18 | ||||||
Total Distributions Paid for Six Months ($) | SEC 30-Day Subsidized Yield* (%) | SEC 30-Day Unsubsidized Yield** (%) | ||||
Class A | 0.09 | 1.89 | 1.89 | |||
Class B | 0.05 | 1.00 | –0.78 | |||
Class C | 0.05 | 1.13 | 1.13 | |||
Class R | 0.07 | 1.62 | 1.37 | |||
Class Z | 0.11 | 2.31 | 2.31 | |||
Class R6*** | 0.11 | 2.43 | 2.43 |
*SEC 30-Day Subsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s net expenses (net of any expense waivers or reimbursements).
**SEC 30-Day Unsubsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s gross expenses.
***Formerly known as Class Q shares.
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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 August 31, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account
PGIM Government Income Fund | 11 |
Fees and Expenses (continued)
over the six-month period when you estimate the total ongoing expenses paid over the period and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
PGIM Government Income Fund | Beginning Account Value March 1, 2018 | Ending Account August 31, 2018 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,011.10 | 1.04 | % | $ | 5.27 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.96 | 1.04 | % | $ | 5.30 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 1,006.00 | 2.03 | % | $ | 10.26 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,014.97 | 2.03 | % | $ | 10.31 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,006.70 | 1.90 | % | $ | 9.61 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.63 | 1.90 | % | $ | 9.65 | ||||||||||
Class R | Actual | $ | 1,000.00 | $ | 1,009.20 | 1.41 | % | $ | 7.14 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.10 | 1.41 | % | $ | 7.17 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,012.60 | 0.75 | % | $ | 3.80 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,021.42 | 0.75 | % | $ | 3.82 | ||||||||||
Class R6** | Actual | $ | 1,000.00 | $ | 1,013.30 | 0.61 | % | $ | 3.10 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,022.13 | 0.61 | % | $ | 3.11 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 184 days in the six-month period ended August 31, 2018, and divided by the 365 days in the Fund’s fiscal year ending February 28, 2019 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
**Formerly known as Class Q shares.
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Schedule of Investments (unaudited)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
LONG-TERM INVESTMENTS 99.3% |
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ASSET-BACKED SECURITIES 4.2% |
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Collateralized Loan Obligations 4.2% |
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Battalion CLO Ltd. (Cayman Islands), | 3.376 | %(c) | 07/17/28 | 1,250 | $ | 1,249,765 | ||||||||||
BlueMountain CLO Ltd. (Cayman Islands), | 3.667 | (c) | 04/13/27 | 1,250 | 1,250,287 | |||||||||||
Flagship CLO Ltd. (Cayman Islands), | 3.189 | (c) | 01/16/26 | 4,500 | 4,485,762 | |||||||||||
KVK CLO Ltd. (Cayman Islands), | 3.614 | (c) | 05/15/26 | 3,507 | 3,508,539 | |||||||||||
Limerock CLO LLC (Cayman Islands), | 3.548 | (c) | 10/20/26 | 2,450 | 2,450,165 | |||||||||||
Romark CLO Ltd. (Cayman Islands), | 3.431 | (c) | 07/25/31 | 4,000 | 3,996,052 | |||||||||||
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16,940,570 | ||||||||||||||||
Small Business Loan 0.0% |
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Small Business Administration Participation Certificates, | 6.000 | 09/01/18 | 43 | 42,998 | ||||||||||||
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TOTAL ASSET-BACKED SECURITIES | 16,983,568 | |||||||||||||||
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COMMERCIAL MORTGAGE-BACKED SECURITIES 13.4% |
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Bank, | 3.020 | 06/15/60 | 3,600 | 3,474,708 | ||||||||||||
Citigroup Commercial Mortgage Trust, | 3.515 | 09/10/58 | 2,500 | 2,499,208 | ||||||||||||
Deutsche Bank Commercial Mortgage Trust, | 3.269 | 06/10/50 | 3,600 | 3,561,702 | ||||||||||||
Fannie Mae-Aces, | ||||||||||||||||
Series 2012-M02, Class A2 | 2.717 | 02/25/22 | 244 | 241,436 | ||||||||||||
Series 2015-M01, Class AB2 | 2.465 | 09/25/24 | 654 | 635,497 | ||||||||||||
Series 2015-M17, Class A2 | 3.035 | (cc) | 11/25/25 | 2,900 | 2,844,996 | |||||||||||
Series 2016-M11, Class A2 | 2.369 | (cc) | 07/25/26 | 2,600 | 2,427,357 | |||||||||||
Series 2016-M13, Class A2 | 2.560 | (cc) | 09/25/26 | 4,400 | 4,128,721 |
See Notes to Financial Statements.
PGIM Government Income Fund | 13 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES (Continued) |
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FHLMC Multifamily Structured Pass-Through Certificates, | ||||||||||||||||
Series K008, Class X1, IO | 1.675 | %(cc) | 06/25/20 | 22,857 | $ | 488,451 | ||||||||||
Series K019, Class X1, IO | 1.773 | (cc) | 03/25/22 | 24,020 | 1,148,095 | |||||||||||
Series K020, Class X1, IO | 1.550 | (cc) | 05/25/22 | 14,050 | 600,389 | |||||||||||
Series K021, Class X1, IO | 1.587 | (cc) | 06/25/22 | 15,278 | 695,831 | |||||||||||
Series K025, Class X1, IO | 0.983 | (cc) | 10/25/22 | 39,331 | 1,168,310 | |||||||||||
Series K060, Class AM | 3.300 | (cc) | 10/25/26 | 3,860 | 3,837,218 | |||||||||||
Series K064, Class AM | 3.327 | (cc) | 03/25/27 | 2,100 | 2,082,876 | |||||||||||
Series K068, Class AM | 3.315 | 08/25/27 | 3,200 | 3,154,237 | ||||||||||||
Series K073, Class A2 | 3.350 | 01/25/28 | 3,800 | 3,780,113 | ||||||||||||
Series K076, Class A2 | 3.900 | 06/25/51 | 2,700 | 2,802,713 | ||||||||||||
Series K076, Class AM | 3.900 | 06/25/51 | 750 | 773,138 | ||||||||||||
Series K077, Class A2 | 3.850 | (cc) | 05/25/28 | 1,570 | 1,623,676 | |||||||||||
Series K077, Class AM | 3.850 | (cc) | 05/25/28 | 310 | 317,574 | |||||||||||
Series K078, Class AM | 3.920 | (cc) | 06/25/28 | 925 | 954,551 | |||||||||||
Series K079, Class AM | 3.930 | 06/25/28 | 1,225 | 1,267,189 | ||||||||||||
Series K151, Class A3 | 3.511 | 04/25/30 | 900 | 893,673 | ||||||||||||
Series K710, Class X1, IO | 1.858 | (cc) | 05/25/19 | 11,774 | 82,881 | |||||||||||
Series K711, Class X1, IO | 1.798 | (cc) | 07/25/19 | 11,274 | 88,201 | |||||||||||
Series W5FX, Class AFX | 3.336 | (cc) | 04/25/28 | 1,970 | 1,934,902 | |||||||||||
JPMBB Commercial Mortgage Securities Trust, | 3.515 | 03/15/49 | 2,500 | 2,472,587 | ||||||||||||
JPMorgan Chase Commercial Mortgage Securities Trust, | 2.694 | 04/15/46 | 549 | 537,382 | ||||||||||||
Morgan Stanley Bank of America Merrill Lynch Trust, | 2.834 | 05/15/46 | 1,000 | 978,991 | ||||||||||||
Wells Fargo Commercial Mortgage Trust, | 3.572 | 09/15/58 | 2,500 | 2,509,232 | ||||||||||||
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TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES | 54,005,835 | |||||||||||||||
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CORPORATE BONDS 2.1% | ||||||||||||||||
Diversified Financial Services | ||||||||||||||||
CDP Financial, Inc. (Canada), | 3.150 | 07/24/24 | 470 | 467,005 | ||||||||||||
Private Export Funding Corp., | ||||||||||||||||
Series BB, U.S. Gov’t. Gtd. Notes | 4.300 | 12/15/21 | 2,660 | 2,778,681 | ||||||||||||
Series KK, U.S. Gov’t. Gtd. Notes | 3.550 | 01/15/24 | 2,085 | 2,144,558 | ||||||||||||
Sr. Unsec’d. Notes, 144A | 2.650 | 02/16/21 | 3,185 | 3,165,460 | ||||||||||||
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TOTAL CORPORATE BONDS | 8,555,704 | |||||||||||||||
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See Notes to Financial Statements.
14 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
MUNICIPAL BONDS 0.3% |
| |||||||||||||||
California 0.1% |
| |||||||||||||||
California Educational Facilities Authority, Revenue Bonds | 5.000 | % | 06/01/46 | 275 | $ | 357,131 | ||||||||||
Texas 0.2% |
| |||||||||||||||
University of Texas System (The), Revenue Bonds | 5.000 | 08/15/47 | 610 | 771,754 | ||||||||||||
|
| |||||||||||||||
TOTAL MUNICIPAL BONDS |
| 1,128,885 | ||||||||||||||
|
| |||||||||||||||
RESIDENTIAL MORTGAGE-BACKED SECURITIES 0.1% |
| |||||||||||||||
Merrill Lynch Mortgage Investors Trust, | 2.685 | (c) | 10/25/28 | 66 | 65,004 | |||||||||||
Structured Adjustable Rate Mortgage Loan Trust, | 4.233 | (cc) | 02/25/34 | 280 | 282,489 | |||||||||||
|
| |||||||||||||||
TOTAL RESIDENTIAL MORTGAGE-BACKED SECURITIES |
| 347,493 | ||||||||||||||
|
| |||||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS 41.2% |
| |||||||||||||||
Federal Home Loan Mortgage Corp. | 2.000 | 01/01/32 | 540 | 509,850 | ||||||||||||
Federal Home Loan Mortgage Corp. | 2.375 | 02/16/21 | 1,755 | 1,741,394 | ||||||||||||
Federal Home Loan Mortgage Corp. | 2.375 | 01/13/22 | 275 | 271,612 | ||||||||||||
Federal Home Loan Mortgage Corp. | 2.500 | 03/01/30 | 1,238 | 1,209,860 | ||||||||||||
Federal Home Loan Mortgage Corp. | 2.500 | 09/01/31 | 789 | 766,446 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 10/01/28 | 252 | 251,586 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 06/01/29 | 711 | 708,868 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 12/01/30 | 721 | 715,904 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 01/01/37 | 1,515 | 1,494,121 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 04/01/43 | 1,764 | 1,721,764 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 11/01/46 | 937 | 907,591 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 11/01/46 | 1,136 | 1,100,917 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 12/01/46 | 923 | 894,899 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.000 | 01/01/47 | 1,965 | 1,902,490 | ||||||||||||
Federal Home Loan Mortgage Corp., MTN | 3.208 | (s) | 12/11/25 | 1,100 | 875,642 | |||||||||||
Federal Home Loan Mortgage Corp. | 3.500 | 08/01/26 | 415 | 419,708 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.500 | 01/01/27 | 218 | 220,342 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.500 | 06/01/42 | 1,831 | 1,835,527 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.500 | 06/01/43 | 1,333 | 1,335,643 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.500 | 08/01/47 | 973 | 968,623 | ||||||||||||
Federal Home Loan Mortgage Corp. | 3.500 | 10/01/47 | 484 | 482,044 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | TBA | 500 | 509,375 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 06/01/26 | 142 | 146,301 |
See Notes to Financial Statements.
PGIM Government Income Fund | 15 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | % | 09/01/26 | 374 | $ | 383,894 | ||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 11/01/39 | 1,263 | 1,297,879 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 09/01/40 | 877 | 901,318 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 12/01/40 | 478 | 490,600 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 12/01/40 | 672 | 690,035 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 04/01/42 | 1,589 | 1,632,229 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 05/01/46 | 2,182 | 2,223,635 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 08/01/46 | 438 | 446,760 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.000 | 12/01/46 | 455 | 464,606 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.500 | 09/01/39 | 1,855 | 1,946,934 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.500 | 07/01/47 | 492 | 511,692 | ||||||||||||
Federal Home Loan Mortgage Corp. | 4.500 | 07/01/47 | 493 | 512,134 | ||||||||||||
Federal Home Loan Mortgage Corp. | 5.000 | 06/01/33 | 825 | 881,157 | ||||||||||||
Federal Home Loan Mortgage Corp. | 5.000 | 03/01/34 | 75 | 80,176 | ||||||||||||
Federal Home Loan Mortgage Corp. | 5.000 | 05/01/34 | 86 | 91,793 | ||||||||||||
Federal Home Loan Mortgage Corp. | 5.000 | 05/01/34 | 1,046 | 1,112,825 | ||||||||||||
Federal Home Loan Mortgage Corp. | 5.500 | 05/01/37 | 124 | 133,999 | ||||||||||||
Federal Home Loan Mortgage Corp. | 5.500 | 01/01/38 | 108 | 116,790 | ||||||||||||
Federal Home Loan Mortgage Corp. | 6.000 | 12/01/33 | 62 | 69,262 | ||||||||||||
Federal Home Loan Mortgage Corp. | 6.000 | 09/01/34 | 148 | 160,208 | ||||||||||||
Federal Home Loan Mortgage Corp. | 6.500 | 09/01/32 | 50 | 55,670 | ||||||||||||
Federal Home Loan Mortgage Corp. | 6.500 | 09/01/32 | 155 | 171,026 | ||||||||||||
Federal Home Loan Mortgage Corp. | 7.000 | 09/01/32 | 32 | 32,440 | ||||||||||||
Federal Home Loan Mortgage Corp. | 8.000 | 03/01/22 | 12 | 12,388 | ||||||||||||
Federal Home Loan Mortgage Corp. | 8.000 | 08/01/22 | 3 | 2,771 | ||||||||||||
Federal Home Loan Mortgage Corp. | 8.500 | 09/01/19 | 1 | 1,211 | ||||||||||||
Federal Home Loan Mortgage Corp. | 9.000 | 01/01/20 | — | (r) | 238 | |||||||||||
Federal National Mortgage Assoc. | 1.000 | 10/24/19 | 5,000 | 4,914,995 | ||||||||||||
Federal National Mortgage Assoc. | 1.875 | 09/24/26 | 520 | 478,227 | ||||||||||||
Federal National Mortgage Assoc. | 2.000 | 08/01/31 | 640 | 604,465 | ||||||||||||
Federal National Mortgage Assoc. | 2.375 | 01/19/23 | 580 | 569,859 | ||||||||||||
Federal National Mortgage Assoc. | 2.500 | 08/01/28 | 782 | 765,581 | ||||||||||||
Federal National Mortgage Assoc. | 2.500 | 08/01/29 | 173 | 169,335 | ||||||||||||
Federal National Mortgage Assoc. | 2.500 | 11/01/31 | 451 | 438,550 | ||||||||||||
Federal National Mortgage Assoc. | 2.500 | 02/01/43 | 331 | 311,384 | ||||||||||||
Federal National Mortgage Assoc. | 2.500 | 12/01/46 | 1,461 | 1,369,163 | ||||||||||||
Federal National Mortgage Assoc. | 2.750 | 06/22/21 | 1,660 | 1,659,515 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 01/01/27 | 772 | 771,983 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 08/01/28 | 1,376 | 1,373,100 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 02/01/31 | 2,899 | 2,883,328 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 01/01/32 | 397 | 395,127 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 11/01/36 | 1,661 | 1,637,472 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 12/01/42 | 1,408 | 1,374,365 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 02/01/43 | 887 | 866,011 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 03/01/43 | 446 | 434,816 |
See Notes to Financial Statements.
16 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Federal National Mortgage Assoc. | 3.000 | % | 04/01/43 | 827 | $ | 807,266 | ||||||||||
Federal National Mortgage Assoc. | 3.000 | 06/01/43 | 444 | 433,236 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 06/01/43 | 968 | 944,571 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 07/01/43 | 2,634 | 2,570,776 | ||||||||||||
Federal National Mortgage Assoc. | 3.000 | 01/01/47 | 1,693 | 1,639,346 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | TBA | 1,750 | 1,769,004 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 09/01/26 | 263 | 266,112 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 03/01/27 | 652 | 660,634 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 12/01/32 | 354 | 358,441 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 10/01/41 | 2,843 | 2,849,736 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 12/01/41 | 759 | 761,129 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 03/01/42 | 718 | 719,588 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 05/01/42 | 3,463 | 3,470,884 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 12/01/42 | 1,766 | 1,769,698 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 03/01/43 | 844 | 845,742 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 06/01/45 | 7,182 | 7,158,844 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 12/01/46 | 2,251 | 2,241,275 | ||||||||||||
Federal National Mortgage Assoc. | 3.500 | 11/01/47 | 863 | 858,484 | ||||||||||||
Federal National Mortgage Assoc. | 4.000 | TBA | 1,000 | 1,017,072 | ||||||||||||
Federal National Mortgage Assoc. | 4.000 | 09/01/40 | 1,450 | 1,487,256 | ||||||||||||
Federal National Mortgage Assoc. | 4.000 | 01/01/41 | 1,888 | 1,936,905 | ||||||||||||
Federal National Mortgage Assoc. | 4.000 | 07/01/42 | 512 | 525,010 | ||||||||||||
Federal National Mortgage Assoc. | 4.000 | 09/01/44 | 1,538 | 1,569,210 | ||||||||||||
Federal National Mortgage Assoc. | 4.000 | 10/01/47 | 496 | 504,944 | ||||||||||||
Federal National Mortgage Assoc. | 4.500 | 01/01/20 | 19 | 19,533 | ||||||||||||
Federal National Mortgage Assoc. | 4.500 | 04/01/41 | 1,638 | 1,713,039 | ||||||||||||
Federal National Mortgage Assoc. | 4.500 | 01/01/45 | 396 | 413,043 | ||||||||||||
Federal National Mortgage Assoc. | 4.500 | 06/01/48 | 1,255 | 1,303,753 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 01/01/19 | 12 | 11,867 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 02/01/19 | 31 | 32,291 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 11/01/19 | 23 | 23,137 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 12/01/31 | 70 | 73,775 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 03/01/34 | 430 | 460,499 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 07/01/35 | 166 | 176,662 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 09/01/35 | 85 | 90,493 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 11/01/35 | 114 | 122,024 | ||||||||||||
Federal National Mortgage Assoc. | 5.000 | 05/01/36 | 66 | 70,888 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 02/01/34 | 389 | 424,149 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 09/01/34 | 707 | 770,584 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 02/01/35 | 591 | 644,076 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 06/01/35 | 118 | 127,072 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 06/01/35 | 262 | 282,250 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 09/01/35 | 112 | 119,893 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 09/01/35 | 266 | 284,955 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 10/01/35 | 383 | 417,174 |
See Notes to Financial Statements.
PGIM Government Income Fund | 17 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Federal National Mortgage Assoc. | 5.500 | % | 11/01/35 | 684 | $ | 738,556 | ||||||||||
Federal National Mortgage Assoc. | 5.500 | 11/01/35 | 977 | 1,064,859 | ||||||||||||
Federal National Mortgage Assoc. | 5.500 | 11/01/36 | 11 | 12,458 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 08/01/21 | 39 | 40,144 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 09/01/21 | 15 | 15,713 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 07/01/22 | 1 | 1,446 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 09/01/33 | 1 | 636 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 11/01/33 | 1 | 1,135 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 02/01/34 | — | (r) | 523 | |||||||||||
Federal National Mortgage Assoc. | 6.000 | 06/01/34 | — | (r) | 168 | |||||||||||
Federal National Mortgage Assoc. | 6.000 | 09/01/34 | — | (r) | 317 | |||||||||||
Federal National Mortgage Assoc. | 6.000 | 09/01/34 | 25 | 27,843 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 09/01/34 | 28 | 30,309 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 11/01/34 | 4 | 4,518 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 11/01/34 | 35 | 37,695 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 02/01/35 | 1 | 1,391 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 03/01/35 | 20 | 21,773 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 04/01/35 | 1 | 984 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 12/01/35 | 127 | 137,492 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 01/01/36 | 248 | 268,221 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 05/01/36 | 103 | 113,844 | ||||||||||||
Federal National Mortgage Assoc. | 6.000 | 05/01/36 | 467 | 514,586 | ||||||||||||
Federal National Mortgage Assoc. | 6.250 | 05/15/29 | 210 | 268,153 | ||||||||||||
Federal National Mortgage Assoc. | 6.500 | 07/01/32 | 770 | 857,935 | ||||||||||||
Federal National Mortgage Assoc. | 6.500 | 08/01/32 | 290 | 317,770 | ||||||||||||
Federal National Mortgage Assoc. | 6.500 | 09/01/32 | 91 | 99,550 | ||||||||||||
Federal National Mortgage Assoc. | 6.500 | 10/01/32 | 100 | 109,467 | ||||||||||||
Federal National Mortgage Assoc. | 6.500 | 10/01/32 | 741 | 832,305 | ||||||||||||
Federal National Mortgage Assoc. | 6.500 | 10/01/37 | 334 | 369,250 | ||||||||||||
Federal National Mortgage Assoc. | 6.625 | 11/15/30 | 350 | 469,584 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 05/01/24 | 4 | 4,383 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 05/01/24 | 5 | 5,405 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 05/01/24 | 12 | 11,939 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 05/01/24 | 18 | 18,079 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 05/01/24 | 22 | 23,094 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 05/01/24 | 91 | 98,542 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 12/01/31 | 1 | 1,279 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 12/01/31 | 323 | 360,915 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 09/01/33 | 68 | 69,385 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 10/01/33 | 32 | 32,279 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 11/01/33 | 11 | 11,692 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 11/01/33 | 71 | 72,335 | ||||||||||||
Federal National Mortgage Assoc. | 7.000 | 02/01/36 | 6 | 6,393 | ||||||||||||
Federal National Mortgage Assoc. | 9.000 | 04/01/25 | 4 | 4,132 | ||||||||||||
Federal National Mortgage Assoc. | 9.500 | 01/01/25 | 2 | 1,664 |
See Notes to Financial Statements.
18 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Federal National Mortgage Assoc. | 9.500 | % | 01/01/25 | 3 | $ | 2,561 | ||||||||||
Federal National Mortgage Assoc. | 9.500 | 01/01/25 | 8 | 7,859 | ||||||||||||
Federal National Mortgage Assoc. | 9.500 | 02/01/25 | 1 | 1,419 | ||||||||||||
Freddie Mac Strips Coupon | 2.875 | (s) | 01/15/21 | 360 | 335,420 | |||||||||||
Freddie Mac Strips Coupon | 2.881 | (s) | 03/15/21 | 215 | 199,324 | |||||||||||
Freddie Mac Strips Coupon | 2.910 | (s) | 07/15/21 | 195 | 178,989 | |||||||||||
Government National Mortgage Assoc. | 2.500 | 12/20/46 | 610 | 578,777 | ||||||||||||
Government National Mortgage Assoc. | 3.000 | 03/15/45 | 2,546 | 2,493,403 | ||||||||||||
Government National Mortgage Assoc. | 3.000 | 10/20/46 | 427 | 418,387 | ||||||||||||
Government National Mortgage Assoc. | 3.000 | 02/20/47 | 7,740 | 7,580,001 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 04/20/42 | 434 | 439,640 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 01/20/43 | 2,432 | 2,461,060 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 04/20/43 | 1,128 | 1,141,426 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 03/20/45 | 2,163 | 2,176,120 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 04/20/45 | 1,220 | 1,227,866 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 07/20/46 | 4,596 | 4,619,331 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 01/20/47 | 966 | 970,909 | ||||||||||||
Government National Mortgage Assoc. | 3.500 | 03/20/47 | 471 | 473,483 | ||||||||||||
Government National Mortgage Assoc. | 4.000 | 02/20/41 | 579 | 597,898 | ||||||||||||
Government National Mortgage Assoc. | 4.000 | 06/20/44 | 1,268 | 1,308,303 | ||||||||||||
Government National Mortgage Assoc. | 4.000 | 08/20/44 | 380 | 392,440 | ||||||||||||
Government National Mortgage Assoc. | 4.000 | 11/20/45 | 875 | 903,024 | ||||||||||||
Government National Mortgage Assoc. | 4.000 | 11/20/46 | 889 | 916,513 | ||||||||||||
Government National Mortgage Assoc. | 4.000 | 02/20/47 | 912 | 934,672 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | TBA | 2,750 | 2,858,247 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 02/20/40 | 346 | 364,818 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 01/20/41 | 201 | 211,331 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 02/20/41 | 1,004 | 1,058,026 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 03/20/41 | 516 | 543,593 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 06/20/44 | 763 | 804,973 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 02/20/46 | 77 | 81,089 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 03/20/46 | 392 | 410,244 | ||||||||||||
Government National Mortgage Assoc. | 4.500 | 03/20/47 | 2,626 | 2,754,009 | ||||||||||||
Government National Mortgage Assoc. | 5.000 | 07/15/33 | 560 | 598,120 | ||||||||||||
Government National Mortgage Assoc. | 5.000 | 09/15/33 | 678 | 724,918 | ||||||||||||
Government National Mortgage Assoc. | 5.000 | 04/15/34 | 65 | 68,424 | ||||||||||||
Government National Mortgage Assoc. | 5.500 | 02/15/34 | 544 | 592,458 | ||||||||||||
Government National Mortgage Assoc. | 5.500 | 02/15/36 | 137 | 150,914 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/22 | — | (r) | 338 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/22 | 1 | 1,023 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/23 | — | (r) | 477 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/23 | 2 | 1,736 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/23 | 2 | 2,003 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/23 | 3 | 2,795 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/23 | 3 | 3,413 |
See Notes to Financial Statements.
PGIM Government Income Fund | 19 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Government National Mortgage Assoc. | 7.000 | % | 02/15/23 | 3 | $ | 3,139 | ||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/23 | 2 | 2,309 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/23 | 4 | 3,734 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/23 | 1 | 1,061 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/23 | 1 | 1,228 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/23 | 2 | 2,020 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/23 | 4 | 4,550 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | — | (r) | 111 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | — | (r) | 355 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 1 | 655 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 1 | 683 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 1 | 702 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 1 | 1,508 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 2 | 1,537 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 2 | 2,195 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 6 | 5,728 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 8 | 8,389 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/23 | 23 | 23,633 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | — | (r) | 140 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | — | (r) | 393 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | — | (r) | 445 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | 1 | 1,409 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | 1 | 1,458 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | 2 | 2,054 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | 3 | 2,760 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/23 | 4 | 3,628 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | — | (r) | 262 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | — | (r) | 344 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 1 | 658 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 1 | 729 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 1 | 801 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 1 | 1,254 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 1 | 1,514 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 2 | 2,210 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 3 | 2,917 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 4 | 3,706 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/23 | 15 | 15,665 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | — | (r) | 237 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 1 | 576 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 1 | 662 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 1 | 664 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 1 | 731 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 1 | 1,036 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 1 | 1,188 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 1 | 1,462 |
See Notes to Financial Statements.
20 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Government National Mortgage Assoc. | 7.000 | % | 08/15/23 | 2 | $ | 1,706 | ||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 2 | 1,949 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 2 | 2,448 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 3 | 2,936 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 3 | 3,507 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 5 | 4,512 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 5 | 5,255 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 5 | 5,366 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 08/15/23 | 6 | 6,398 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 1 | 673 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 1 | 967 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 1 | 1,027 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 1 | 1,175 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 1 | 1,286 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 1 | 1,577 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 11 | 11,052 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 09/15/23 | 35 | 36,299 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | — | (r) | 214 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | — | (r) | 225 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | — | (r) | 349 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 1 | 611 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 1 | 838 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 1 | 1,141 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 1 | 1,195 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 1 | 1,307 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 1 | 1,422 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 2 | 1,562 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 2 | 1,670 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 2 | 1,680 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 2 | 1,773 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 2 | 1,860 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 2 | 1,910 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 2 | 2,052 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 3 | 2,904 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 4 | 3,722 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 4 | 3,934 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 4 | 4,185 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 4 | 4,620 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 5 | 4,560 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 5 | 4,973 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 6 | 5,620 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 7 | 6,707 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 7 | 6,896 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 11 | 11,654 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 14 | 14,164 |
See Notes to Financial Statements.
PGIM Government Income Fund | 21 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Government National Mortgage Assoc. | 7.000 | % | 10/15/23 | 39 | $ | 39,747 | ||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/23 | 46 | 47,740 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | — | (r) | 103 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | — | (r) | 449 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 517 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 766 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 786 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 1,039 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 1,317 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 1,402 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 1,467 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 1 | 1,546 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 2 | 1,679 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 2 | 2,246 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 3 | 2,600 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 3 | 3,483 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 3 | 3,612 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 5 | 4,585 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 5 | 4,835 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 6 | 6,223 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 6 | 6,473 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 6 | 6,527 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 7 | 6,693 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 7 | 6,887 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 13 | 12,696 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 11/15/23 | 14 | 14,265 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | — | (r) | 486 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 629 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 709 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 814 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 825 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 1,128 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 1,185 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 1,318 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 1 | 1,335 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 2 | 1,558 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 2 | 1,642 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 2 | 1,748 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 2 | 2,413 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 3 | 2,695 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 3 | 2,749 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 3 | 2,840 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 3 | 3,338 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 3 | 3,409 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 4 | 3,904 |
See Notes to Financial Statements.
22 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Government National Mortgage Assoc. | 7.000 | % | 12/15/23 | 5 | $ | 4,559 | ||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 5 | 4,694 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 5 | 4,756 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 5 | 5,256 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 5 | 5,365 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 6 | 5,954 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 6 | 6,670 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 8 | 8,145 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 8 | 8,207 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 10 | 10,226 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 12 | 12,709 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 15 | 15,622 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 12/15/23 | 24 | 25,300 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | — | (r) | 391 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 1 | 993 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 1 | 1,118 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 1 | 1,182 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 1 | 1,489 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 2 | 1,652 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 2 | 2,437 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 3 | 2,728 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 3 | 2,766 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 4 | 4,244 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 5 | 4,744 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 01/15/24 | 8 | 7,636 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/24 | — | (r) | 433 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/24 | 1 | 648 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/24 | 1 | 792 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/24 | 2 | 1,773 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/24 | 2 | 2,024 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/24 | 2 | 2,436 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/24 | 12 | 12,051 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/24 | — | (r) | 2 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/24 | — | (r) | 107 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/24 | — | (r) | 119 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/24 | 1 | 831 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/24 | 1 | 1,323 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/24 | 1 | 1,336 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 03/15/24 | 3 | 3,026 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | — | (r) | 121 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 1 | 527 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 1 | 635 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 1 | 746 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 1 | 815 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 1 | 844 |
See Notes to Financial Statements.
PGIM Government Income Fund | 23 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Government National Mortgage Assoc. | 7.000 | % | 04/15/24 | 1 | $ | 917 | ||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 1 | 1,045 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 2 | 1,669 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 2 | 2,095 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 2 | 2,224 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 2 | 2,435 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 2 | 2,506 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 5 | 4,796 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 7 | 7,050 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 04/15/24 | 11 | 11,303 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | — | (r) | 269 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 1 | 750 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 2 | 1,568 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 2 | 1,770 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 2 | 2,039 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 3 | 2,930 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 3 | 3,308 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 4 | 4,573 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 5 | 4,705 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 7 | 7,173 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 7 | 7,589 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 05/15/24 | 10 | 10,355 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | — | (r) | 456 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | — | (r) | 461 | |||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 1 | 1,211 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 1 | 1,234 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 2 | 1,686 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 4 | 3,865 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 4 | 4,310 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 6 | 5,774 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 7 | 7,367 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 06/15/24 | 10 | 10,309 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/24 | 2 | 1,759 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 07/15/24 | 3 | 3,032 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 10/15/24 | 6 | 5,832 | ||||||||||||
Government National Mortgage Assoc. | 7.000 | 02/15/29 | 7 | 7,077 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 01/15/23 | — | (r) | 152 | |||||||||||
Government National Mortgage Assoc. | 7.500 | 01/15/23 | — | (r) | 371 | |||||||||||
Government National Mortgage Assoc. | 7.500 | 03/15/23 | 1 | 1,038 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 05/15/23 | 1 | 677 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 05/15/23 | 5 | 5,087 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 06/15/23 | — | (r) | 370 | |||||||||||
Government National Mortgage Assoc. | 7.500 | 07/15/23 | — | (r) | 194 | |||||||||||
Government National Mortgage Assoc. | 7.500 | 07/15/23 | — | (r) | 229 | |||||||||||
Government National Mortgage Assoc. | 7.500 | 09/15/23 | 3 | 2,989 |
See Notes to Financial Statements.
24 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS (Continued) |
| |||||||||||||||
Government National Mortgage Assoc. | 7.500 | % | 10/15/23 | 4 | $ | 4,065 | ||||||||||
Government National Mortgage Assoc. | 7.500 | 10/15/23 | 9 | 9,709 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 11/15/23 | 1 | 776 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 11/15/23 | 10 | 10,129 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 12/15/23 | 1 | 718 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 12/15/23 | 3 | 2,940 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 01/15/24 | 2 | 1,758 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 01/15/24 | 3 | 2,667 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 01/15/24 | 3 | 3,233 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 01/15/24 | 13 | 13,602 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 01/15/24 | 14 | 13,742 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 02/15/24 | 1 | 1,035 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 02/15/24 | 12 | 12,572 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 03/15/24 | 1 | 721 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 03/15/24 | 1 | 1,383 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 03/15/24 | 3 | 3,412 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 04/15/24 | 3 | 2,763 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 04/15/24 | 3 | 2,944 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 04/15/24 | 7 | 6,703 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 05/15/24 | 1 | 650 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 05/15/24 | 1 | 1,147 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 06/15/24 | 1 | 1,389 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 06/15/24 | 2 | 2,261 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 06/15/24 | 4 | 4,237 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 06/15/24 | 6 | 5,778 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 07/15/24 | 5 | 5,419 | ||||||||||||
Government National Mortgage Assoc. | 7.500 | 07/15/24 | 13 | 12,709 | ||||||||||||
Government National Mortgage Assoc. | 8.500 | 04/15/25 | 134 | 149,082 | ||||||||||||
Government National Mortgage Assoc. | 9.500 | 07/20/21 | — | (r) | 24 | |||||||||||
Government National Mortgage Assoc. | 9.500 | 08/20/21 | 5 | 4,580 | ||||||||||||
Hashemite Kingdom of Jordan, USAID Bond, U.S. Gov’t. Gtd. Notes | 3.000 | 06/30/25 | 2,269 | 2,256,470 | ||||||||||||
Israel Government, USAID Bond, U.S. Gov’t. Gtd. Notes | 5.500 | 09/18/23 | 2,700 | 3,027,024 | ||||||||||||
Residual Funding Corp. Strips Principal, Bonds, PO | 1.627 | (s) | 01/15/21 | 3,335 | 3,122,342 | |||||||||||
Residual Funding Corp. Strips Principal, Bonds, PO | 2.862 | (s) | 01/15/30 | 1,260 | 868,235 | |||||||||||
Residual Funding Corp. Strips Principal, Bonds, PO | 3.132 | (s) | 04/15/30 | 2,215 | 1,518,097 | |||||||||||
Tennessee Valley Authority, Sr. Unsec’d. Notes | 2.250 | 03/15/20 | 650 | 645,873 | ||||||||||||
Tennessee Valley Authority, Series A, Sr. Unsec’d. Notes | 2.875 | 02/01/27 | 335 | 327,458 | ||||||||||||
Tennessee Valley Authority, Sr. Unsec’d. Notes | 5.880 | 04/01/36 | 170 | 222,404 | ||||||||||||
Tennessee Valley Authority, Series E, Sr. Unsec’d. Notes | 6.750 | 11/01/25 | 1,300 | 1,602,842 | ||||||||||||
Tennessee Valley Authority, Sr. Unsec’d. Notes | 7.125 | 05/01/30 | 1,170 | 1,597,340 | ||||||||||||
|
| |||||||||||||||
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS |
| 166,156,631 | ||||||||||||||
|
|
See Notes to Financial Statements.
PGIM Government Income Fund | 25 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. TREASURY OBLIGATIONS 38.0% |
| |||||||||||||||
U.S. Treasury Bonds | 2.500 | % | 02/15/45 | 620 | $ | 562,408 | ||||||||||
U.S. Treasury Bonds | 2.750 | 08/15/47 | 1,935 | 1,837,494 | ||||||||||||
U.S. Treasury Bonds | 2.875 | 08/15/45 | 1,565 | 1,526,058 | ||||||||||||
U.S. Treasury Bonds | 2.875 | 11/15/46 | 360 | 350,845 | ||||||||||||
U.S. Treasury Bonds | 3.000 | 11/15/44 | 1,140 | 1,138,753 | ||||||||||||
U.S. Treasury Bonds | 3.000 | 05/15/45 | 4,800 | 4,794,188 | ||||||||||||
U.S. Treasury Bonds | 3.000 | 02/15/47 | 245 | 244,703 | ||||||||||||
U.S. Treasury Bonds | 3.000 | 05/15/47 | 1,800 | 1,796,766 | ||||||||||||
U.S. Treasury Bonds | 3.125 | 05/15/48 | 75 | 76,743 | ||||||||||||
U.S. Treasury Bonds | 3.625 | 08/15/43 | 1,780 | 1,972,671 | ||||||||||||
U.S. Treasury Bonds | 3.750 | 11/15/43 | 215 | 243,185 | ||||||||||||
U.S. Treasury Notes | 1.375 | 08/31/20 | 3,465 | 3,380,676 | ||||||||||||
U.S. Treasury Notes | 1.625 | 04/30/23 | 945 | 899,264 | ||||||||||||
U.S. Treasury Notes | 1.750 | 05/15/23 | 14,050 | 13,441,898 | ||||||||||||
U.S. Treasury Notes | 1.875 | 04/30/22 | 15,233 | 14,783,746 | ||||||||||||
U.S. Treasury Notes | 2.000 | 11/30/20 | 8,210 | 8,092,623 | ||||||||||||
U.S. Treasury Notes | 2.000 | 06/30/24 | 1,000 | 958,477 | ||||||||||||
U.S. Treasury Notes | 2.125 | 09/30/21 | 15,715 | 15,448,582 | ||||||||||||
U.S. Treasury Notes | 2.125 | 06/30/22 | 4,040 | 3,952,099 | ||||||||||||
U.S. Treasury Notes | 2.125 | 02/29/24 | 6,945 | 6,719,288 | ||||||||||||
U.S. Treasury Notes | 2.125 | 05/15/25 | (k) | 29,070 | 27,867,456 | |||||||||||
U.S. Treasury Notes | 2.250 | 12/31/23 | 9,750 | 9,505,488 | ||||||||||||
U.S. Treasury Notes | 2.250 | 12/31/24 | 3,485 | 3,376,366 | ||||||||||||
U.S. Treasury Notes | 2.375 | 01/31/23 | 85 | 83,728 | ||||||||||||
U.S. Treasury Notes | 2.375 | 08/15/24 | 6,160 | 6,021,641 | ||||||||||||
U.S. Treasury Notes | 2.625 | 07/31/20 | 710 | 709,889 | ||||||||||||
U.S. Treasury Notes | 2.750 | 08/15/21 | 585 | 585,914 | ||||||||||||
U.S. Treasury Notes | 2.750 | 07/31/23 | 300 | 300,152 | ||||||||||||
U.S. Treasury Notes | 2.750 | 08/31/25 | 5,775 | 5,753,569 | ||||||||||||
U.S. Treasury Notes | 2.875 | 07/31/25 | 1,015 | 1,019,520 | ||||||||||||
U.S. Treasury Strips Coupon | 1.881 | (s) | 05/15/31 | 1,100 | 753,275 | |||||||||||
U.S. Treasury Strips Coupon | 1.898 | (s) | 08/15/29 | 1,100 | 796,331 | |||||||||||
U.S. Treasury Strips Coupon | 2.037 | (s) | 02/15/24 | (k) | 1,365 | 1,171,869 | ||||||||||
U.S. Treasury Strips Coupon | 2.100 | (s) | 11/15/35 | 2,200 | 1,312,220 | |||||||||||
U.S. Treasury Strips Coupon | 2.184 | (s) | 02/15/28 | 695 | 526,563 | |||||||||||
U.S. Treasury Strips Coupon | 2.241 | (s) | 05/15/28 | 345 | 259,466 | |||||||||||
U.S. Treasury Strips Coupon | 2.264 | (s) | 08/15/40 | 2,200 | 1,130,941 | |||||||||||
U.S. Treasury Strips Coupon | 2.280 | (s) | 02/15/29 | 345 | 253,661 | |||||||||||
U.S. Treasury Strips Coupon | 2.384 | (s) | 05/15/29 | 710 | 517,312 | |||||||||||
U.S. Treasury Strips Coupon | 2.404 | (s) | 08/15/21 | 3,185 | 2,940,022 | |||||||||||
U.S. Treasury Strips Coupon | 2.499 | (s) | 02/15/22 | (k) | 1,675 | 1,523,147 | ||||||||||
U.S. Treasury Strips Principal, PO | 2.543 | (s) | 02/15/45 | 1,365 | 616,032 | |||||||||||
U.S. Treasury Strips Principal, PO | 2.620 | (s) | 05/15/43 | 1,140 | 542,940 | |||||||||||
U.S. Treasury Strips Principal, PO | 2.873 | (s) | 05/15/45 | 2,470 | 1,108,009 | |||||||||||
U.S. Treasury Strips Principal, PO | 2.993 | (s) | 11/15/43 | 440 | 206,642 |
See Notes to Financial Statements.
26 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
U.S. TREASURY OBLIGATIONS (Continued) |
| |||||||||||||||
U.S. Treasury Strips Principal, PO | 3.005 | %(s) | 11/15/44 | 1,045 | $ | 476,601 | ||||||||||
U.S. Treasury Strips Principal, PO | 3.626 | (s) | 05/15/44 | 2,865 | 1,326,090 | |||||||||||
|
| |||||||||||||||
TOTAL U.S. TREASURY OBLIGATIONS | 152,905,311 | |||||||||||||||
|
| |||||||||||||||
TOTAL LONG-TERM INVESTMENTS | 400,083,427 | |||||||||||||||
|
| |||||||||||||||
Shares | ||||||||||||||||
SHORT-TERM INVESTMENTS 2.4% | ||||||||||||||||
AFFILIATED MUTUAL FUND 2.4% | ||||||||||||||||
PGIM Core Ultra Short Bond Fund | 9,600,586 | 9,600,586 | ||||||||||||||
|
| |||||||||||||||
OPTIONS PURCHASED*~ 0.0% | 2,627 | |||||||||||||||
|
| |||||||||||||||
TOTAL SHORT-TERM INVESTMENTS | 9,603,213 | |||||||||||||||
|
| |||||||||||||||
TOTAL INVESTMENTS 101.7% | 409,686,640 | |||||||||||||||
Liabilities in excess of other assets(z) (1.7)% | (7,008,591 | ) | ||||||||||||||
|
| |||||||||||||||
NET ASSETS 100.0% | $ | 402,678,049 | ||||||||||||||
|
|
The following abbreviations are used in the semiannual report:
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
A—Annual payment frequency for swaps
Q—Quarterly payment frequency for swaps
S—Semiannual payment frequency for swaps
T—Swap payment upon termination
Aces—Alternative Credit Enhancements Securities
bps—Basis Points
CLO—Collateralized Loan Obligation
CMS—Constant Maturity Swap
CPI—Consumer Price Index
FHLMC—Federal Home Loan Mortgage Corporation
IO—Interest Only (Principal amount represents notional)
L2—Level 2
L3—Level 3
LIBOR—London Interbank Offered Rate
MTN—Medium Term Note
See Notes to Financial Statements.
PGIM Government Income Fund | 27 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
OTC—Over-the-counter
PO—Principal Only
Strips—Separate Trading of Registered Interest and Principal of Securities
TBA—To Be Announced
USAID—United States Agency for International Development
* | Non-income producing security. |
~ | See tables subsequent to the Schedule of Investments for options detail. |
# | Principal or notional amount is shown in U.S. dollars unless otherwise stated. |
(c) | Variable rate instrument. The interest rate shown reflects the rate in effect at August 31, 2018. |
(cc) | Variable rate instrument. The rate shown is based on the latest available information as of August 31, 2018. Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description. |
(k) | Represents security, or a portion thereof, segregated as collateral for centrally cleared/exchange-traded derivatives. |
(r) | Principal or notional amount is less than $500 par. |
(s) | Represents zero coupon bond or principal only security. Rate represents yield to maturity at purchase date. |
(w) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund. |
(z) | Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end, with the exception of options which are included in total investments, at market value: |
Options Purchased:
OTC Traded
Description | Call/ Put | Counterparty | Expiration Date | Strike | Contracts | Notional Amount (000)# | Value | |||||||||||||||||||
2- Year 10 CMS Curve CAP | Call | Barclays Capital Group | 07/12/21 | 0.11 | % | — | 10,890 | $ | 292 | |||||||||||||||||
2- Year 10 CMS Curve CAP | Call | Barclays Capital Group | 07/13/21 | 0.11 | % | — | 10,590 | 287 | ||||||||||||||||||
2- Year 10 CMS Curve CAP | Call | Bank of America | 08/16/21 | 0.15 | % | — | 26,480 | 690 | ||||||||||||||||||
2- Year 10 CMS Curve CAP | Call | Bank of America | 08/20/21 | 0.15 | % | — | 52,560 | 1,358 | ||||||||||||||||||
|
| |||||||||||||||||||||||||
Total Options Purchased (cost $101,811) | $ | 2,627 | ||||||||||||||||||||||||
|
|
Futures contracts outstanding at August 31, 2018:
Number of Contracts | Type | Expiration Date | Current Notional Amount | Value / Unrealized Appreciation (Depreciation) | ||||||||||||
Long Positions: | ||||||||||||||||
648 | 2 Year U.S. Treasury Notes | Dec. 2018 | $ | 136,960,875 | $ | 1,290 | ||||||||||
43 | 5 Year U.S. Treasury Notes | Dec. 2018 | 4,876,133 | 1,521 | ||||||||||||
180 | 10 Year U.S. Treasury Notes | Dec. 2018 | 21,647,812 | 11,014 | ||||||||||||
119 | 30 Year U.S. Ultra Treasury Bonds | Dec. 2018 | 18,958,188 | (87,250 | ) | |||||||||||
|
| |||||||||||||||
(73,425 | ) | |||||||||||||||
|
| |||||||||||||||
Short Positions: | ||||||||||||||||
229 | 90 Day Euro Dollar | Dec. 2018 | 55,752,912 | 383,101 |
See Notes to Financial Statements.
28 |
Futures contracts outstanding at August 31, 2018 (continued):
Number of Contracts | Type | Expiration Date | Current Notional Amount | Value / Unrealized Appreciation (Depreciation) | ||||||||||||
Short Positions (cont’d): | ||||||||||||||||
34 | 10 Year U.S. Ultra Treasury Notes | Dec. 2018 | $ | 4,353,594 | $ | 9,779 | ||||||||||
97 | 20 Year U.S. Treasury Bonds | Dec. 2018 | 13,989,219 | 20,230 | ||||||||||||
|
| |||||||||||||||
413,110 | ||||||||||||||||
|
| |||||||||||||||
$ | 339,685 | |||||||||||||||
|
|
A security with a market value of $1,011,358 has been segregated with Citigroup Global Markets to cover requirements for open futures contracts at August 31, 2018.
Inflation swap agreements outstanding at August 31, 2018:
Notional | Termination Date | Fixed Rate | Floating Rate | Value at Trade Date | Value at August 31, 2018 | Unrealized Appreciaton (Depreciation) | ||||||||||||||||||
Centrally Cleared Inflation Swap Agreement: | ||||||||||||||||||||||||
1,050 | 10/25/27 | 2.160%(T) | U.S. CPI Urban Consumers NSA Index(2)(T) | $ | 24 | $ | (24,445 | ) | $ | (24,469 | ) | |||||||||||||
|
|
|
|
|
|
(1) | The Fund pays the fixed rate and receives the floating rate. |
(2) | The Fund pays the floating rate and receives the fixed rate. |
Interest rate swap agreements outstanding at August 31, 2018:
Notional | Termination Date | Fixed Rate | Floating Rate | Value at Trade Date | Value at August 31, 2018 | Unrealized Appreciaton (Depreciation) | ||||||||||||||||||
Centrally Cleared Interest Rate Swap Agreements: | ||||||||||||||||||||||||
736,115 | 01/30/19 | 2.261%(A) | 1 Day USOIS(1)(A) | $ | — | $ | 39,185 | $ | 39,185 | |||||||||||||||
651,590 | 03/20/19 | 2.158%(A) | 1 Day USOIS(1)(A) | — | 158,822 | 158,822 | ||||||||||||||||||
38,885 | 06/30/19 | 1.486%(A) | 1 Day USOIS(1)(A) | (14,796 | ) | 295,907 | 310,703 | |||||||||||||||||
8,820 | 06/30/19 | 1.502%(A) | 1 Day USOIS(1)(A) | (4,486 | ) | 65,725 | 70,211 | |||||||||||||||||
14,465 | 09/30/19 | 1.707%(A) | 1 Day USOIS(1)(A) | 4,073 | 104,700 | 100,627 | ||||||||||||||||||
20,905 | 12/31/19 | 1.840%(A) | 1 Day USOIS(1)(A) | 7,832 | 164,082 | 156,250 | ||||||||||||||||||
6,995 | 12/31/19 | 1.950%(A) | 1 Day USOIS(1)(A) | 1,724 | 41,604 | 39,880 | ||||||||||||||||||
2,115 | 12/31/19 | 2.040%(A) | 1 Day USOIS(1)(A) | 23 | 9,251 | 9,228 | ||||||||||||||||||
15,455 | 03/23/21 | 2.369%(A) | 1 Day USOIS(1)(A) | — | 24,830 | 24,830 | ||||||||||||||||||
6,880 | 08/31/21 | 2.015%(S) | 3 Month LIBOR(2)(Q) | 56,505 | (167,608 | ) | (224,113 | ) | ||||||||||||||||
22,835 | 08/15/24 | 2.170%(S) | 3 Month LIBOR(1)(Q) | (7,171 | ) | 884,217 | 891,388 | |||||||||||||||||
8,110 | 11/15/24 | 2.334%(S) | 3 Month LIBOR(1)(Q) | 21,190 | 203,604 | 182,414 | ||||||||||||||||||
6,650 | 02/12/25 | 2.408%(A) | 1 Day USOIS(1)(A) | — | 22,947 | 22,947 | ||||||||||||||||||
590 | 02/28/25 | 2.454%(A) | 1 Day USOIS(1)(A) | — | 2,027 | 2,027 | ||||||||||||||||||
3,684 | 05/31/25 | 2.998%(S) | 3 Month LIBOR(1)(Q) | (2,549 | ) | (25,671 | ) | (23,122 | ) | |||||||||||||||
11,445 | 01/08/26 | 2.210%(S) | 3 Month LIBOR(1)(Q) | 115,325 | 518,835 | 403,510 | ||||||||||||||||||
4,745 | 02/15/27 | 1.824%(A) | 1 Day USOIS(1)(A) | 53,761 | 256,537 | 202,776 |
See Notes to Financial Statements.
PGIM Government Income Fund | 29 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Interest rate swap agreements outstanding at August 31, 2018 (continued):
Notional | Termination Date | Fixed Rate | Floating Rate | Value at Trade Date | Value at August 31, 2018 | Unrealized Appreciaton (Depreciation) | ||||||||||||||||||
Centrally Cleared Interest Rate Swap Agreements (cont’d.): | ||||||||||||||||||||||||
1,575 | 02/15/27 | 1.899%(A) | 1 Day USOIS(1)(A) | $ | 1,998 | $ | 75,525 | $ | 73,527 | |||||||||||||||
795 | 02/15/27 | 1.965%(A) | 1 Day USOIS(1)(A) | — | 33,840 | 33,840 | ||||||||||||||||||
2,625 | 02/15/27 | 2.067%(A) | 1 Day USOIS(1)(A) | (1,635 | ) | 89,639 | 91,274 | |||||||||||||||||
525 | 05/15/27 | 2.295%(S) | 3 Month LIBOR(1)(Q) | — | 21,799 | 21,799 | ||||||||||||||||||
4,650 | 02/15/36 | 2.338%(S) | 3 Month LIBOR(2)(Q) | (30,302 | ) | (413,740 | ) | (383,438 | ) | |||||||||||||||
145 | 11/15/43 | 2.659%(S) | 3 Month LIBOR(1)(Q) | — | 7,279 | 7,279 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
$ | 201,492 | $ | 2,413,336 | $ | 2,211,844 | |||||||||||||||||||
|
|
|
|
|
|
Securities with a combined market value of $2,377,083 have been segregated with Citigroup Global Markets to cover requirements for open centrally cleared swap contracts at August 31, 2018.
(1) | The Fund pays the fixed rate and receives the floating rate. |
(2) | The Fund pays the floating rate and receives the fixed rate. |
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 August 31, 2018 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Asset-Backed Securities | ||||||||||||
Collateralized Loan Obligations | $ | — | $ | 16,940,570 | $ | — | ||||||
Small Business Loan | — | 42,998 | — | |||||||||
Commercial Mortgage-Backed Securities | — | 54,005,835 | — | |||||||||
Corporate Bonds | — | 8,555,704 | — | |||||||||
Municipal Bonds | — | 1,128,885 | — | |||||||||
Residential Mortgage-Backed Securities | — | 347,493 | — | |||||||||
U.S. Government Agency Obligations | — | 166,156,631 | — | |||||||||
U.S. Treasury Obligations | — | 152,905,311 | — | |||||||||
Affiliated Mutual Fund | 9,600,586 | — | — | |||||||||
Options Purchased | — | 2,627 | — | |||||||||
Other Financial Instruments* | ||||||||||||
Futures Contracts | 339,685 | — | — |
See Notes to Financial Statements.
30 |
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities (continued) | ||||||||||||
Other Financial Instruments* (continued) | ||||||||||||
Centrally Cleared Inflation Swap Agreement | $ | — | $ | (24,469 | ) | $ | — | |||||
Centrally Cleared Interest Rate Swap Agreements | — | 2,211,844 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 9,940,271 | $ | 402,273,429 | $ | — | ||||||
|
|
|
|
|
|
* | 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 liabilities in excess of other assets shown as a percentage of net assets as of August 31, 2018 were as follows:
U.S. Government Agency Obligations | 41.2 | % | ||
U.S. Treasury Obligations | 38.0 | |||
Commercial Mortgage-Backed Securities | 13.4 | |||
Collateralized Loan Obligations | 4.2 | |||
Affiliated Mutual Fund | 2.4 | |||
Diversified Financial Services | 2.1 | |||
Municipal Bonds | 0.3 | |||
Residential Mortgage-Backed Securities | 0.1 | |||
Small Business Loan | 0.0 | * | ||
Options Purchased | 0.0 | *% | ||
|
| |||
101.7 | ||||
Liabilities in excess of other assets | (1.7 | ) | ||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
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. 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 August 31, 2018 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 | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Due from/to broker—variation margin futures | $ | 426,935 | * | Due from/to broker—variation margin futures | $ | 87,250 | * | ||||
Interest rate contracts | Due from/to broker—variation margin swaps | 2,842,517 | * | Due from/to broker—variation margin swaps | 655,142 | * |
See Notes to Financial Statements.
PGIM Government Income Fund | 31 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Asset Derivatives | Liability Derivatives | |||||||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Statement of | Fair Value | Statement of | Fair Value | ||||||||
Interest rate contracts | Unaffiliated investments | $ | 2,627 | — | $ | — | ||||||
|
|
|
| |||||||||
$ | 3,272,079 | $ | 742,392 | |||||||||
|
|
|
|
* | Includes cumulative appreciation (depreciation) as reported in the schedule of open futures and centrally cleared swap contracts. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
The effects of derivative instruments on the Statement of Operations for the six months ended August 31, 2018 are as follows:
Amount of Realized Gain (Loss) on Derivatives Recognized in Income | ||||||||||||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Options Purchased(1) | Options Written | Futures | Swaps | ||||||||||||
Interest rate contracts | $ | (67,206 | ) | $ | 19,398 | $ | 615,055 | $ | 1,322,878 | |||||||
|
|
|
|
|
|
|
|
(1) | Included in net realized gain (loss) on investment transactions in the Statement of Operations. |
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||||||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Options Purchased(2) | Futures | Swaps | |||||||||
Interest rate contracts | $ | (99,184 | ) | $ | (129,278 | ) | $ | (744,959 | ) |
(2) | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
For the six months ended August 31, 2018, the Fund’s average volume of derivative activities is as follows:
Options | Options Written(2) | Futures Contracts— Long Positions(2) | Futures Contracts— Short Positions(2) | |||||||||||
$ | 53,971 | $ | 106,000 | $ | 222,020,613 | $ | 79,233,087 |
Inflation Swap | Interest Rate | |
$ 1,050,000 | $1,141,747,000 |
(1) | Cost. |
(2) | Notional Amount in USD. |
See Notes to Financial Statements.
32 |
Financial Instruments/Transactions—Summary of Offsetting and Netting Arrangements:
The Fund invested in OTC derivatives during the reporting period that are either offset in accordance with current requirements or are subject to enforceable master netting arrangements or similar agreements that permit offsetting. The information about offsetting and related netting arrangements for OTC derivatives where the legal right to set-off exists, is presented in the summary below.
Offsetting of OTC derivative assets and liabilities:
Counterparty | Gross Amounts of Recognized Assets(1) | Gross Amounts of Recognized Liabilities(1) | Net Amounts of Recognized Assets/ (Liabilities) | Collateral Pledged/ (Received)(2) | Net Amount | |||||||||||||||
Bank of America | $ | 2,048 | $ | — | $ | 2,048 | $ | — | $ | 2,048 | ||||||||||
Barclays Capital Group | 579 | — | 579 | — | 579 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
$ | 2,627 | $ | — | $ | 2,627 | $ | — | $ | 2,627 | |||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Includes unrealized appreciation/(depreciation) on swaps and forwards, premiums paid/(received) on swap agreements and market value of purchased and written options, as represented on the Statement of Assets and Liabilities. |
(2) | Collateral amount disclosed by the Fund is limited to the Fund’s OTC derivative exposure by counterparty. |
See Notes to Financial Statements.
PGIM Government Income Fund | 33 |
Statement of Assets & Liabilities (unaudited)
as of August 31, 2018
Assets | ||||
Investments at value: | ||||
Unaffiliated investments (cost $407,195,283) | $ | 400,086,054 | ||
Affiliated investments (cost $9,600,586) | 9,600,586 | |||
Receivable for investments sold | 9,719,090 | |||
Dividends and interest receivable | 1,742,146 | |||
Receivable for Fund shares sold | 237,640 | |||
Due from broker—variation margin futures | 66,044 | |||
|
| |||
Total Assets | 421,451,560 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 17,092,049 | |||
Payable for Fund shares reacquired | 1,009,136 | |||
Management fee payable | 169,972 | |||
Accrued expenses and other liabilities | 123,954 | |||
Payable to custodian | 120,211 | |||
Due to broker—variation margin swaps | 103,452 | |||
Distribution fee payable | 71,835 | |||
Dividends payable | 44,297 | |||
Affiliated transfer agent fee payable | 38,605 | |||
|
| |||
Total Liabilities | 18,773,511 | |||
|
| |||
Net Assets | $ | 402,678,049 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 433,225 | ||
Paid-in capital in excess of par | 413,779,898 | |||
|
| |||
414,213,123 | ||||
Distributions in excess of net investment income | (149,784 | ) | ||
Accumulated net realized loss on investment transactions | (6,801,083 | ) | ||
Net unrealized depreciation on investments | (4,584,207 | ) | ||
|
| |||
Net assets, August 31, 2018 | $ | 402,678,049 | ||
|
|
See Notes to Financial Statements.
34 |
Class A | ||||
Net asset value and redemption price per share, | $ | 9.30 | ||
Maximum sales charge (4.50% of offering price) | 0.44 | |||
|
| |||
Maximum offering price to public | $ | 9.74 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share, | $ | 9.31 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | $ | 9.32 | ||
|
| |||
Class R | ||||
Net asset value, offering price and redemption price per share, | $ | 9.31 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | $ | 9.28 | ||
|
| |||
Class R6 | ||||
Net asset value, offering price and redemption price per share, | $ | 9.27 | ||
|
|
See Notes to Financial Statements.
PGIM Government Income Fund | 35 |
Statement of Operations (unaudited)
Six Months Ended August 31, 2018
Net Investment Income (Loss) | ||||
Income | ||||
Interest income | $ | 5,548,994 | ||
Affiliated dividend income | 76,333 | |||
|
| |||
Total income | 5,625,327 | |||
|
| |||
Expenses | ||||
Management fee | 1,042,485 | |||
Distribution fee(a) | 453,919 | |||
Transfer agent’s fees and expenses (including affiliated expense of $121,715)(a) | 365,686 | |||
Custodian and accounting fees | 75,433 | |||
Registration fees(a) | 53,507 | |||
Shareholders’ reports | 32,878 | |||
Audit fee | 18,642 | |||
Legal fees and expenses | 10,456 | |||
Directors’ fees | 9,857 | |||
Miscellaneous | 8,962 | |||
|
| |||
Total expenses | 2,071,825 | |||
Less: Fee waiver and/or expense reimbursement(a) | (8,780 | ) | ||
Distribution fee waiver(a) | (17,060 | ) | ||
|
| |||
Net expenses | 2,045,985 | |||
|
| |||
Net investment income (loss) | 3,579,342 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (2,459,458 | ) | ||
Futures transactions | 615,055 | |||
Options written transactions | 19,398 | |||
Swap agreement transactions | 1,322,878 | |||
|
| |||
(502,127 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 2,521,501 | |||
Futures | (129,278 | ) | ||
Swap agreements | (744,959 | ) | ||
|
| |||
1,647,264 | ||||
|
| |||
Net gain (loss) on investment transactions | 1,145,137 | |||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 4,724,479 | ||
|
|
See Notes to Financial Statements.
36 |
(a) | Class specific expenses and waivers were as follows: |
Class A | Class B | Class C | Class R | Class Z | Class R6 | |||||||||||||||||||
Distribution fee | 353,475 | 5,168 | 44,096 | 51,180 | — | — | ||||||||||||||||||
Transfer agent’s fees and expenses | 296,278 | 3,149 | 5,896 | 15,129 | 45,142 | 92 | ||||||||||||||||||
Registration fees | 10,395 | 7,985 | 8,242 | 7,992 | 10,022 | 8,871 | ||||||||||||||||||
Fee waiver and/or expense reimbursement | — | (8,780 | ) | — | — | — | — | |||||||||||||||||
Distribution fee waiver | — | — | — | (17,060 | ) | — | — |
See Notes to Financial Statements.
PGIM Government Income Fund | 37 |
Statements of Changes in Net Assets (unaudited)
Six Months Ended August 31, 2018 | Year Ended February 28, 2018 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 3,579,342 | $ | 6,377,493 | ||||
Net realized gain (loss) on investment transactions | (502,127 | ) | (3,575,898 | ) | ||||
Net change in unrealized appreciation (depreciation) on investments | 1,647,264 | (4,596,515 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 4,724,479 | (1,794,920 | ) | |||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Dividends from net investment income | ||||||||
Class A | (2,753,619 | ) | (5,155,183 | ) | ||||
Class B | (4,910 | ) | (12,479 | ) | ||||
Class C | (48,180 | ) | (86,388 | ) | ||||
Class R | (107,631 | ) | (199,734 | ) | ||||
Class Z | (716,813 | ) | (1,766,595 | ) | ||||
Class R6 | (554,977 | ) | (804,047 | ) | ||||
|
|
|
| |||||
(4,186,130 | ) | (8,024,426 | ) | |||||
|
|
|
| |||||
Distributions from net realized gains | ||||||||
Class A | — | (1,607,061 | ) | |||||
Class B | — | (8,284 | ) | |||||
Class C | — | (52,194 | ) | |||||
Class R | — | (73,887 | ) | |||||
Class Z | — | (481,561 | ) | |||||
Class R6 | — | (177,783 | ) | |||||
|
|
|
| |||||
— | (2,400,770 | ) | ||||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 34,721,969 | 70,444,105 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 3,622,241 | 8,958,431 | ||||||
Cost of shares reacquired | (65,666,759 | ) | (126,184,108 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Fund share transactions | (27,322,549 | ) | (46,781,572 | ) | ||||
|
|
|
| |||||
Total increase (decrease) | (26,784,200 | ) | (59,001,688 | ) | ||||
Net Assets: | ||||||||
Beginning of period | 429,462,249 | 488,463,937 | ||||||
|
|
|
| |||||
End of period(a) | $ | 402,678,049 | $ | 429,462,249 | ||||
|
|
|
| |||||
(a) Includes undistributed/(distributions in excess of) net investment income of: | $ | (149,784 | ) | $ | 457,004 | |||
|
|
|
|
See Notes to Financial Statements.
38 |
Notes to Financial Statements (unaudited)
Prudential Investment Portfolios, Inc. 14 (the “Company”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as a diversified, open-end management investment company. The Company consists of two funds: PGIM Government Income Fund and PGIM Floating Rate Income Fund. These financial statements relate only to the PGIM Government Income Fund (the “Fund”). Effective June 11, 2018, the Funds’ names were changed by replacing “Prudential” with “PGIM” and each Fund’s Class Q shares were renamed Class R6 shares.
The investment objective of the Fund is to seek high current return.
1. Accounting Policies
The Fund follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Fund consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Fund holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Company’s Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Pursuant to the Board’s delegation, a Valuation Committee has been established as two persons, being one or more officers of the Fund, including: the Company’s Treasurer (or the Treasurer’s direct reports); and the Company’s Chief or Deputy Chief Compliance Officer (or Vice-President-level direct reports of the Chief or Deputy Chief Compliance Officer). Under the current valuation procedures, the Valuation Committee of the Board is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur when the NYSE is closed (including weekends and holidays). Because such foreign securities trade in markets that are open on weekends and U.S. holidays, the values of some
PGIM Government Income Fund | 39 |
Notes to Financial Statements (unaudited) (continued)
of the Fund’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
Various inputs determine how the Fund’s 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.
Derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the OTC market are generally classified as Level 2 in the fair value hierarchy. Such fixed income securities are typically valued using the market approach which generally involves obtaining data from an approved independent third-party vendor source. The Fund utilizes the market approach as the primary method to value securities when market prices of identical or comparable instruments are available. The third-party vendors’ valuation techniques used to derive the evaluated bid price are based on evaluating observable inputs, including but not limited to, yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations and reported trades. Certain Level 3 securities are also valued using the market approach when obtaining a single broker quote or when utilizing transaction prices for identical securities that have been used in excess of five business days.
During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.
Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are generally valued at the daily settlement price determined by the
40 |
respective exchange. These securities are classified as Level 2 in the fair value hierarchy, as the daily settlement price is not public.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Fund may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Fund has valued the investment. Therefore, the Fund may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Fund’s Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Fund’s investments in Rule 144A securities could be impaired if trading does not develop or declines.
Options: The Fund purchased or wrote options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates, value of equities or foreign currency exchange rates with respect to securities or financial instruments which the Fund currently owns or intends to purchase. The Fund may also use options to gain additional market exposure. The Fund’s principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Fund writes an option,
PGIM Government Income Fund | 41 |
Notes to Financial Statements (unaudited) (continued)
it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Fund realizes a gain (loss) to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Fund has realized a gain (loss). The difference between the premium and the amount received or paid at the closing of a purchase or sale transaction is also treated as a realized gain (loss). Gain (loss) on purchased options is included in net realized gain (loss) on investment transactions. Gain (loss) on written options is presented separately as net realized gain (loss) on options written transactions.
The Fund, as writer of an option, may have no control over whether the underlying securities or financial instruments may be sold (called) or purchased (put). As a result, the Fund bears the market risk of an unfavorable change in the price of the security or financial instrument underlying the written option. The Fund, as purchaser or an OTC option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts. With exchange-traded options contracts, there is minimal counterparty credit risk to the Fund since the exchanges’ clearinghouse acts as counterparty to all exchange-traded options and guarantees the options contracts against default.
When the Fund writes an option on a swap, an amount equal to any premium received by the Fund is recorded as a liability and is subsequently adjusted to the current market value of the written option on the swap. If a call option on a swap is exercised, the Fund becomes obligated to pay a fixed interest rate (noted as the strike price) and receive a variable interest rate on a notional amount. If a put option on a swap is exercised, the Fund becomes obligated to pay a variable interest rate and receive a fixed interest rate (noted as the strike price) on a notional amount. Premiums received from writing options on swaps that expire or are exercised are treated as realized gains upon the expiration or exercise of such options on swaps. The risk associated with writing put and call options on swaps is that the Fund will be obligated to be party to a swap agreement if an option on a swap is exercised.
Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the “initial margin.” Subsequent payments, known as “variation margin,” are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain (loss). When the contract expires or is closed, the gain (loss) is realized and is presented in the Statement of Operations as net realized gain (loss) on futures transactions.
42 |
The Fund invested in financial futures contracts in order to hedge its existing portfolio securities, or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. Since futures contracts are exchange-traded, there is minimal counterparty credit risk to the Fund since the exchanges’ clearinghouse acts as counterparty to all exchange-traded futures and guarantees the futures contracts against default.
Swap Agreements: The Fund may enter into credit default, interest rate and other types of swap agreements. A swap agreement is an agreement to exchange the return generated by one instrument for the return generated by another instrument. Swap agreements are negotiated in the OTC market and may be executed either directly with counterparty (“OTC-traded”) or through a central clearing facility, such as a registered exchange. Swap agreements are valued daily at current market value and any change in value is included in the net unrealized appreciation (depreciation) on swap agreements. Centrally cleared swaps pay or receive an amount known as “variation margin”, based on daily changes in the valuation of the swap contract. Any upfront premiums paid and received are shown as swap premiums paid and swap premiums received in the Statement of Assets and Liabilities. Risk of loss may exceed amounts recognized on the Statement of Assets and Liabilities. Swap agreements outstanding at period end, if any, are listed on the Schedule of Investments.
Interest Rate Swaps: Interest rate swaps represent an agreement between counterparties to exchange cash flows based on the difference between two interest rates, applied to a notional principal amount for a specified period. The Fund is subject to interest rate risk exposure in the normal course of pursuing its investment objective. The Fund used interest rate swaps to maintain its ability to generate steady cash flow by receiving a stream of fixed-rate payments and to increase exposure to prevailing market rates by receiving floating rate payments. The Fund’s 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.
Inflation Swaps: The Fund entered into inflation swap agreements to protect against fluctuations in inflation rates. Inflation swaps are characterized by one party paying a fixed rate in exchange for a floating rate that is derived from an inflation index, such as the Consumer Price Index or UK Retail Price Index. Inflation swaps subject the Fund to interest rate risk.
Master Netting Arrangements: The Fund is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset amounts payable by the Fund to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Fund’s exposure to the
PGIM Government Income Fund | 43 |
Notes to Financial Statements (unaudited) (continued)
counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
The Company, on behalf of the Fund, is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the Fund is held in a segregated account by the Fund’s custodian and with respect to those amounts which can be sold or re-pledged, is presented in the Schedule of Investments. Collateral pledged by the Fund is segregated by the Fund’s custodian and identified in the Schedule of Investments. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the Fund and the applicable counterparty. Collateral requirements are determined based on the Fund’s net position with each counterparty. Termination events applicable to the Fund may occur upon a decline in the Fund’s net assets below a specified threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the Fund’s counterparties to elect early termination could impact the Fund’s future derivative activity.
In addition to each instrument’s primary underlying risk exposure (e.g. interest rate, credit, equity or foreign exchange, etc.), swap agreements involve, to varying degrees, elements of credit, market and documentation risk. Such risks involve the possibility that no liquid market for these agreements will exist, the counterparty to the agreement may default on its obligation to perform or disagree on the contractual terms of the agreement, and changes in net interest rates will be unfavorable. In connection with these agreements, securities in the portfolio may be identified or received as collateral from the counterparty in accordance with the terms of the respective swap agreements to provide or receive assets of value and to serve as recourse in the event of default or bankruptcy/insolvency of either party. Such OTC derivative agreements include conditions which, when materialized, give the counterparty the right to cause an early termination of the transactions under those agreements. Any
44 |
election by the counterparty for early termination of the contract(s) may impact the amounts reported on financial statements.
As of August 31, 2018, the Fund has not met conditions under such agreements which give the counterparty the right to call for an early termination.
Forward currency contracts, forward rate agreements, written options, short sales, swaps and financial futures contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Such risks may be mitigated by engaging in master netting arrangements.
Mortgage Dollar Rolls: The Fund entered into mortgage dollar rolls in which the Fund sells mortgage securities for delivery in the current month, realizing a gain (loss), and simultaneously enters into contracts to repurchase somewhat similar (same type, coupon and maturity) securities on a specified future date. During the roll period, the Fund forgoes principal and interest paid on the securities. The Fund is compensated by the interest earned on the cash proceeds of the initial sale and by the lower repurchase price at the future date. The difference between the sale proceeds and the lower repurchase price is recorded as a realized gain on investment transactions. The Fund maintains a segregated account, the dollar value of which is at least equal to its obligations, with respect to dollar rolls. The Fund is subject to the risk that the market value of the securities the Fund is obligated to repurchase under the agreement may decline below the repurchase price.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day. Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, shareholder servicing fee, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements, as applicable.
Taxes: It is the 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.
PGIM Government Income Fund | 45 |
Notes to Financial Statements (unaudited) (continued)
Dividends and Distributions: The Fund expects to declare dividends of its net investment income daily and pay such dividends monthly. Distributions of net realized capital and currency gains, if any, are declared and paid at least annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain(loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.
Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
2. Agreements
The Company, on behalf of the Fund, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Fund. PGIM Investments administers the corporate affairs of the Fund and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Fund’s custodian (the Custodian), and the Fund’s transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Fund. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Fund, including, but not limited to, the custodian, transfer agent, and accounting agent.
PGIM Investments has entered into a subadvisory agreement with PGIM, Inc., which provides subadvisory services to the Fund through its PGIM Fixed Income unit. The subadvisory agreement provides that PGIM, Inc. will furnish investment advisory services in connection with the management of the Fund. In connection therewith, PGIM, Inc. is obligated to keep certain books and records of the Fund. PGIM Investments pays for the services of PGIM, Inc., the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly at an annual rate of 0.50% of the Fund’s average daily net assets up to and including $1 billion,
46 |
0.45% of the Fund’s average daily net assets of the next $1 billion, 0.35% of the Fund’s average daily net assets of the next $1 billion, and 0.30% of the average daily net assets of the Fund in excess of $3 billion. The effective management fee rate before any waivers and/or expense reimbursements, was 0.50% for the six months ended August 31, 2018.
PGIM Investments has contractually agreed, through June 30, 2020 to limit transfer agency, shareholder servicing, sub-transfer agency, and blue sky fees, as applicable, to the extent that such fees cause the total annual fund operating expenses to exceed 2.03% of average daily net assets for Class B shares. This contractual expense limitation 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 PGIM Investments may be recouped by PGIM Investments within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Company, on behalf of the Fund, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”) which acts as the distributor of the Class A, Class B, Class C, Class R, Class Z and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A, Class B, Class C and Class R shares, pursuant to the plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees for Class A, Class B, Class C and Class R are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z or Class R6 shares of the Fund.
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.25%, 1% and 0.75% of the average daily net assets of the Class A, Class C and Class R shares, respectively. PIMS has contractually agreed through June 30, 2019 to limit such expenses to 0.50% of the average daily net assets of the R shares.
Pursuant to the Class B Plan, the Fund compensates PIMS for distribution related activities at an annual rate of up to 1% of the average daily net assets of the Class B shares up to $3 billion, 0.80% of the next $1 billion of such assets and 0.50% of such assets in excess of $4 billion. The effective distribution fee rate for Class B was 1% for the six months ended August 31, 2018.
PIMS has advised the Fund that it received $28,192 in front-end sales charges resulting from sales of Class A shares during the six months ended August 31, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PGIM Government Income Fund | 47 |
Notes to Financial Statements (unaudited) (continued)
PIMS has advised the Fund that for the six months ended August 31, 2018, it received $247 and $36 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders.
PGIM Investments, PGIM, Inc. and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the 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 Fund 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, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended August 31, 2018, no such transactions were entered into by the Fund.
The Fund may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. Earnings from the Core Fund are disclosed on the Statement of Operations as “Affiliated dividend income”.
4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended August 31, 2018, were $143,705,937 and $177,630,935, respectively.
48 |
A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual fund for the six months ended August 31, 2018, is presented as follows:
Affiliated Mutual Fund* | Value, Beginning of Period | Cost of Purchases | Proceeds from Sales | Change in Unrealized Gain (Loss) | Realized Gain (Loss) | Value, End of Period | Shares, End of Period | Dividend Income | ||||||||||||||||||||||||
PGIM Core Ultra Short Bond Fund | $ | 14,788,490 | $ | 89,532,316 | $ | 94,720,220 | $ | — | $ | — | $ | 9,600,586 | 9,600,586 | $ | 76,333 | |||||||||||||||||
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* | The Fund did not have any capital gain distributions during the reporting period. |
5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized depreciation as of August 31, 2018 were as follows:
Tax Basis | $ | 417,701,397 | ||
|
| |||
Gross Unrealized Appreciation | 815,332 | |||
Gross Unrealized Depreciation | (6,303,029 | ) | ||
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| |||
Net Unrealized Depreciation | $ | (5,487,697 | ) | |
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The book basis may differ from tax basis due to certain tax-related adjustments.
The Fund elected to treat post-October capital losses of approximately $4,732,000 as having been incurred in the following fiscal year (February 28, 2019).
Management has analyzed the Fund’s 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 Fund’s financial statements for the current reporting period. The Fund’s federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
6. Capital and Ownership
The Fund offers Class A, Class B, Class C, Class R, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 4.50%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class B shares are sold with a CDSC which declines from 5% to zero depending on the period of time the shares are held. Class B shares automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. Class B shares are closed to new purchases. Class C shares are sold with a CDSC of 1% on sales made within 12 months of purchase. Class R shares are available to certain retirement plans, clearing and settlement firms. Class R, Class Z and
PGIM Government Income Fund | 49 |
Notes to Financial Statements (unaudited) (continued)
Class R6 shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund as presented in the table of transactions in shares of common stock.
There are 2.5 billion shares of common stock, $0.01 par value per share, divided into seven classes, designated Class A, Class B, Class C, Class R, Class T, Class Z and Class R6 common stock, each of which consists of 230 million, 5 million, 495 million, 500 million, 270 million, 500 million and 500 million authorized shares, respectively.
The Fund currently does not have any Class T shares outstanding.
As of August, 31, 2018, Prudential, through its affiliate entities, including affiliated funds (if applicable), owned 1,317,951 Class R6 shares of the Fund. At reporting period end, four shareholders of record held 46% of the Fund’s outstanding shares.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 1,050,405 | $ | 9,756,458 | |||||
Shares issued in reinvestment of dividends and distributions | 245,929 | 2,286,076 | ||||||
Shares reacquired | (3,034,802 | ) | (28,151,716 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (1,738,468 | ) | (16,109,182 | ) | ||||
Shares issued upon conversion from other share class(es) | 27,171 | 251,881 | ||||||
Shares reacquired upon conversion into other share class(es) | (65,833 | ) | (611,424 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (1,777,130 | ) | $ | (16,468,725 | ) | |||
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| |||||
Year ended February 28, 2018: | ||||||||
Shares sold | 2,569,711 | $ | 24,511,457 | |||||
Shares issued in reinvestment of dividends and distributions | 582,955 | 5,559,746 | ||||||
Shares reacquired | (6,418,474 | ) | (61,196,268 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (3,265,808 | ) | (31,125,065 | ) | ||||
Shares issued upon conversion from other share class(es) | 54,207 | 517,919 | ||||||
Shares reacquired upon conversion into other share class(es) | (100,707 | ) | (963,228 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (3,312,308 | ) | $ | (31,570,374 | ) | |||
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50 |
Class B | Shares | Amount | ||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 1,226 | $ | 11,405 | |||||
Shares issued in reinvestment of dividends and distributions | 450 | 4,189 | ||||||
Shares reacquired | (6,504 | ) | (60,445 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (4,828 | ) | (44,851 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (21,644 | ) | (201,028 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (26,472 | ) | $ | (245,879 | ) | |||
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Year ended February 28, 2018: | ||||||||
Shares sold | 5,465 | $ | 52,108 | |||||
Shares issued in reinvestment of dividends and distributions | 1,826 | 17,463 | ||||||
Shares reacquired | (43,268 | ) | (413,237 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (35,977 | ) | (343,666 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (42,089 | ) | (402,450 | ) | ||||
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Net increase (decrease) in shares outstanding | (78,066 | ) | $ | (746,116 | ) | |||
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Class C | ||||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 74,017 | $ | 688,117 | |||||
Shares issued in reinvestment of dividends and distributions | 5,074 | 47,264 | ||||||
Shares reacquired | (137,574 | ) | (1,276,700 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (58,483 | ) | (541,319 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (3,435 | ) | (31,963 | ) | ||||
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Net increase (decrease) in shares outstanding | (61,918 | ) | $ | (573,282 | ) | |||
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Year ended February 28, 2018: | ||||||||
Shares sold | 116,485 | $ | 1,105,194 | |||||
Shares issued in reinvestment of dividends and distributions | 13,859 | 132,586 | ||||||
Shares reacquired | (291,502 | ) | (2,782,228 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (161,158 | ) | (1,544,448 | ) | ||||
Shares reacquired upon conversion into other share class(es) | (34,315 | ) | (328,141 | ) | ||||
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Net increase (decrease) in shares outstanding | (195,473 | ) | $ | (1,872,589 | ) | |||
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Class R | ||||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 136,510 | $ | 1,268,470 | |||||
Shares issued in reinvestment of dividends and distributions | 9,227 | 85,895 | ||||||
Shares reacquired | (199,680 | ) | (1,857,189 | ) | ||||
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Net increase (decrease) in shares outstanding | (53,943 | ) | $ | (502,824 | ) | |||
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Year ended February 28, 2018: | ||||||||
Shares sold | 301,035 | $ | 2,877,091 | |||||
Shares issued in reinvestment of dividends and distributions | 22,287 | 212,931 | ||||||
Shares reacquired | (546,995 | ) | (5,226,245 | ) | ||||
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Net increase (decrease) in shares outstanding | (223,673 | ) | $ | (2,136,223 | ) | |||
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PGIM Government Income Fund | 51 |
Notes to Financial Statements (unaudited) (continued)
Class Z | Shares | Amount | ||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 1,158,852 | $ | 10,743,219 | |||||
Shares issued in reinvestment of dividends and distributions | 68,497 | 635,326 | ||||||
Shares reacquired | (3,104,833 | ) | (28,757,686 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (1,877,484 | ) | (17,379,141 | ) | ||||
Shares issued upon conversion from other share class(es) | 68,648 | 636,117 | ||||||
Shares reacquired upon conversion into other share class(es) | (6,507 | ) | (60,157 | ) | ||||
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Net increase (decrease) in shares outstanding | (1,815,343 | ) | $ | (16,803,181 | ) | |||
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Year ended February 28, 2018: | ||||||||
Shares sold | 2,770,828 | $ | 26,333,752 | |||||
Shares issued in reinvestment of dividends and distributions | 215,748 | 2,053,940 | ||||||
Shares reacquired | (5,197,283 | ) | (49,381,445 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (2,210,707 | ) | (20,993,753 | ) | ||||
Shares issued upon conversion from other share class(es) | 113,593 | 1,083,281 | ||||||
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Net increase (decrease) in shares outstanding | (2,097,114 | ) | $ | (19,910,472 | ) | |||
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Class R6 | ||||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 1,325,847 | $ | 12,254,300 | |||||
Shares issued in reinvestment of dividends and distributions | 60,799 | 563,491 | ||||||
Shares reacquired | (601,308 | ) | (5,563,023 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 785,338 | 7,254,768 | ||||||
Shares issued upon conversion from other share class(es) | 1,792 | 16,574 | ||||||
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Net increase (decrease) in shares outstanding | 787,130 | $ | 7,271,342 | |||||
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Year ended February 28, 2018: | ||||||||
Shares sold | 1,638,021 | $ | 15,564,503 | |||||
Shares issued in reinvestment of dividends and distributions | 103,313 | 981,765 | ||||||
Shares reacquired | (756,024 | ) | (7,184,685 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 985,310 | 9,361,583 | ||||||
Shares issued upon conversion from other share class(es) | 13,804 | 131,588 | ||||||
Shares reacquired upon conversion into other share class(es) | (4,072 | ) | (38,969 | ) | ||||
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Net increase (decrease) in shares outstanding | 995,042 | $ | 9,454,202 | |||||
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7. Borrowings
The Company, on behalf of the Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly.
52 |
Subsequent to the reporting period end, the SCA has been renewed effective October 4, 2018 and will continue to provide a commitment of $900 million through October 3, 2019. The commitment fee paid by the Funds will continue to be 0.15% of the unused portion of the SCA. The interest on borrowings under both SCAs is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.
The Fund did not utilize the SCA during the reporting period ended August 31, 2018.
8. Other Risks
The Fund’s risks include, but are not limited to, some or all of the risks discussed below:
Bond Obligations Risk: The Fund’s holdings, share price, yield and total return may 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 not be able to reinvest at the same level and therefore would earn less 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 derivatives 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.
Interest Rate Risk: The value of an 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 securities.
PGIM Government Income Fund | 53 |
Notes to Financial Statements (unaudited) (continued)
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 face a heightened level of interest rate risk as a result of the US Federal Reserve Board’s policies. The Fund’s investments may lose value if short-term or long-term interest rates rise sharply or in a manner not anticipated by the subadviser.
Liquidity Risk: The Fund may invest in instruments that trade in lower volumes and are less liquid than other investments. Liquidity risk exists when particular investments made by the Fund are difficult to purchase or sell. Liquidity risk includes the risk that the Fund may make investments that may become less liquid in response to market developments or adverse investor perceptions. Investments that are illiquid or that trade in lower volumes may be more difficult to value. 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. The reduction in dealer market-making capacity in the fixed-income markets that has occurred in recent years also has the potential to reduce liquidity. 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.
Market and Credit 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. If the market prices of the securities owned by the Fund fall, the value of an investment in the Fund will decline. Additionally, the Fund may also be exposed to credit risk in the event that an issuer or guarantor fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
US Government and Agency Securities Risk: US Government and agency securities are subject to market risk, interest rate risk and credit risk. Not all US Government securities are insured or guaranteed by the full faith and credit of the US Government; some are only insured or guaranteed by the issuing agency, which must rely on its own resources to repay the debt. In addition, the value of US Government securities may be affected by changes in the credit rating of the US Government.
54 |
9. Recent Accounting Pronouncements and Reporting Updates
In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-13, which changes certain fair value measurement disclosure requirements. The new ASU, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the policy for the timing of transfers between levels. For investment companies, the amendments are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Management has evaluated the implications of certain provisions of ASU No. 2018-13 and has determined to early adopt aspects related to the removal and modification of certain fair value measurement disclosures under the ASU effective immediately. At this time, management is evaluating the implications of certain provisions of the ASU related to new disclosure requirements and any impact on the financial statement disclosures has not yet been determined.
PGIM Government Income Fund | 55 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.29 | $9.55 | $9.72 | $9.79 | $9.52 | $9.78 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.08 | 0.12 | 0.10 | 0.08 | 0.11 | 0.14 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.02 | (0.17 | ) | (0.12 | ) | 0.06 | 0.28 | (0.19 | ) | |||||||||||||||||||
Total from investment operations | 0.10 | (0.05 | ) | (0.02 | ) | 0.14 | 0.39 | (0.05 | ) | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.09 | ) | (0.16 | ) | (0.11 | ) | (0.10 | ) | (0.12 | ) | (0.15 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.05 | ) | (0.04 | ) | (0.11 | ) | - | (0.06 | ) | ||||||||||||||||||
Total dividends and distributions | (0.09 | ) | (0.21 | ) | (0.15 | ) | (0.21 | ) | (0.12 | ) | (0.21 | ) | ||||||||||||||||
Net asset value, end of period | $9.30 | $9.29 | $9.55 | $9.72 | $9.79 | $9.52 | ||||||||||||||||||||||
Total Return(b): | 1.11% | (0.61)% | (0.24)% | 1.41% | 4.08% | (0.47)% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $272,935 | $289,049 | $328,835 | $371,571 | $387,663 | $412,384 | ||||||||||||||||||||||
Average net assets (000) | $280,476 | $312,816 | $353,716 | $373,443 | $403,927 | $435,734 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement(d) | 1.04% | (e) | 1.01% | 1.02% | 0.99% | 1.01% | 0.97% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement(d) | 1.04% | (e) | 1.01% | (f) | 1.02% | 0.99% | 1.06% | 1.02% | ||||||||||||||||||||
Net investment income (loss) | 1.66% | (e) | 1.30% | 1.05% | 0.79% | 1.15% | 1.48% | |||||||||||||||||||||
Portfolio turnover rate(g)(h) | 74% | (i) | 428% | 759% | 778% | 817% | 1,042% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | The distributor of the Fund had contractually agreed to limit its distribution and service (12b-1) fees to 0.25% of the average daily net assets through March 8, 2015. Effective March 9, 2015, the contractual distribution and service (12b-1) fees were reduced from 0.30% to 0.25% of the average daily net assets. |
(e) | Annualized. |
(f) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(g) | The Fund accounts for mortgage dollar roll transactions, when applicable, as purchases and sales which, as a result, can increase its portfolio turnover rate. |
(h) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(i) | Not annualized. |
See Notes to Financial Statements.
56 |
Class B Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.30 | $9.56 | $9.73 | $9.80 | $9.53 | $9.80 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.03 | 0.05 | 0.03 | - | (b) | 0.04 | 0.07 | |||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.03 | (0.18 | ) | (0.13 | ) | 0.07 | 0.27 | (0.20 | ) | |||||||||||||||||||
Total from investment operations | 0.06 | (0.13 | ) | (0.10 | ) | 0.07 | 0.31 | (0.13 | ) | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.05 | ) | (0.08 | ) | (0.03 | ) | (0.03 | ) | (0.04 | ) | (0.08 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.05 | ) | (0.04 | ) | (0.11 | ) | - | (0.06 | ) | ||||||||||||||||||
Total dividends and distributions | (0.05 | ) | (0.13 | ) | (0.07 | ) | (0.14 | ) | (0.04 | ) | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $9.31 | $9.30 | $9.56 | $9.73 | $9.80 | $9.53 | ||||||||||||||||||||||
Total Return(c): | 0.60% | (1.40)% | (1.01)% | 0.69% | 3.30% | (1.32)% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $948 | $1,193 | $1,973 | $3,085 | $3,805 | $5,687 | ||||||||||||||||||||||
Average net assets (000) | $1,025 | $1,497 | $2,802 | $3,151 | $4,682 | $7,274 | ||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 2.03% | (e) | 1.80% | 1.76% | 1.74% | 1.76% | 1.72% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 3.73% | (e) | 2.25% | (f) | 1.76% | 1.74% | 1.76% | 1.72% | ||||||||||||||||||||
Net investment income (loss) | 0.66% | (e) | 0.49% | 0.30% | 0.04% | 0.40% | 0.75% | |||||||||||||||||||||
Portfolio turnover rate(g)(h) | 74% | (i) | 428% | 759% | 778% | 817% | 1,042% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Less than $0.005 per share. |
(c) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(g) | The Fund accounts for mortgage dollar roll transactions, when applicable, as purchases and sales which, as a result, can increase its portfolio turnover rate. |
(h) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(i) | Not annualized. |
See Notes to Financial Statements.
PGIM Government Income Fund | 57 |
Financial Highlights (unaudited) (continued)
Class C Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.31 | $9.57 | $9.74 | $9.81 | $9.54 | $9.80 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.04 | 0.05 | 0.03 | - | (b) | 0.04 | 0.07 | |||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.02 | (0.18 | ) | (0.12 | ) | 0.07 | 0.27 | (0.19 | ) | |||||||||||||||||||
Total from investment operations | 0.06 | (0.13 | ) | (0.09 | ) | 0.07 | 0.31 | (0.12 | ) | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.05 | ) | (0.08 | ) | (0.04 | ) | (0.03 | ) | (0.04 | ) | (0.08 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.05 | ) | (0.04 | ) | (0.11 | ) | - | (0.06 | ) | ||||||||||||||||||
Total dividends and distributions | (0.05 | ) | (0.13 | ) | (0.08 | ) | (0.14 | ) | (0.04 | ) | (0.14 | ) | ||||||||||||||||
Net asset value, end of period | $9.32 | $9.31 | $9.57 | $9.74 | $9.81 | $9.54 | ||||||||||||||||||||||
Total Return(c): | 0.67% | (1.38)% | (1.01)% | 0.69% | 3.30% | (1.22)% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $8,437 | $9,001 | $11,126 | $12,488 | $10,016 | $11,114 | ||||||||||||||||||||||
Average net assets (000) | $8,747 | $10,053 | $12,570 | $10,548 | $10,394 | $15,601 | ||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.90% | (e) | 1.79% | 1.77% | 1.74% | 1.76% | 1.72% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.90% | (e) | 1.79% | (f) | 1.77% | 1.74% | 1.76% | 1.72% | ||||||||||||||||||||
Net investment income (loss) | 0.80% | (e) | 0.51% | 0.30% | 0.03% | 0.40% | 0.75% | |||||||||||||||||||||
Portfolio turnover rate(g)(h) | 74% | (i) | 428% | 759% | 778% | 817% | 1,042% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Less than $0.005 per share. |
(c) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(g) | The Fund accounts for mortgage dollar roll transactions, when applicable, as purchases and sales which, as a result, can increase its portfolio turnover rate. |
(h) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(i) | Not annualized. |
See Notes to Financial Statements.
58 |
Class R Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.30 | $9.56 | $9.73 | $9.80 | $9.53 | $9.80 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.06 | 0.10 | 0.08 | 0.05 | 0.09 | 0.12 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.02 | (0.18 | ) | (0.12 | ) | 0.06 | 0.27 | (0.20 | ) | |||||||||||||||||||
Total from investment operations | 0.08 | (0.08 | ) | (0.04 | ) | 0.11 | 0.36 | (0.08 | ) | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.07 | ) | (0.13 | ) | (0.09 | ) | (0.07 | ) | (0.09 | ) | (0.13 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.05 | ) | (0.04 | ) | (0.11 | ) | - | (0.06 | ) | ||||||||||||||||||
Total dividends and distributions | (0.07 | ) | (0.18 | ) | (0.13 | ) | (0.18 | ) | (0.09 | ) | (0.19 | ) | ||||||||||||||||
Net asset value, end of period | $9.31 | $9.30 | $9.56 | $9.73 | $9.80 | $9.53 | ||||||||||||||||||||||
Total Return(b): | 0.92% | (0.88)% | (0.49)% | 1.16% | 3.82% | (0.82)% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $13,235 | $13,718 | $16,243 | $15,242 | $13,089 | $10,560 | ||||||||||||||||||||||
Average net assets (000) | $13,537 | $14,559 | $16,257 | $13,851 | $12,178 | $10,227 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.41% | (d) | 1.29% | 1.27% | 1.24% | 1.26% | 1.22% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.66% | (d) | 1.54% | (e) | 1.52% | 1.49% | 1.51% | 1.47% | ||||||||||||||||||||
Net investment income (loss) | 1.29% | (d) | 1.02% | 0.81% | 0.53% | 0.90% | 1.22% | |||||||||||||||||||||
Portfolio turnover rate(f)(g) | 74% | (h) | 428% | 759% | 778% | 817% | 1,042% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(f) | The Fund accounts for mortgage dollar roll transactions, when applicable, as purchases and sales which, as a result, can increase its portfolio turnover rate. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(h) | Not annualized. |
See Notes to Financial Statements.
PGIM Government Income Fund | 59 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance(a): | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.27 | $9.53 | $9.70 | $9.77 | $9.50 | $9.76 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.09 | 0.15 | 0.13 | 0.10 | 0.13 | 0.17 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.03 | (0.18 | ) | (0.13 | ) | 0.06 | 0.28 | (0.19 | ) | |||||||||||||||||||
Total from investment operations | 0.12 | (0.03 | ) | - | 0.16 | 0.41 | (0.02 | ) | ||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.11 | ) | (0.18 | ) | (0.13 | ) | (0.12 | ) | (0.14 | ) | (0.18 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.05 | ) | (0.04 | ) | (0.11 | ) | - | (0.06 | ) | ||||||||||||||||||
Total dividends and distributions | (0.11 | ) | (0.23 | ) | (0.17 | ) | (0.23 | ) | (0.14 | ) | (0.24 | ) | ||||||||||||||||
Net asset value, end of period | $9.28 | $9.27 | $9.53 | $9.70 | $9.77 | $9.50 | ||||||||||||||||||||||
Total Return(b): | 1.26% | (0.36)% | 0.00% | 1.67% | 4.34% | (0.22)% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $57,522 | $74,262 | $96,332 | $108,544 | $98,913 | $73,888 | ||||||||||||||||||||||
Average net assets (000) | $63,744 | $93,050 | $106,342 | $98,389 | $79,893 | $83,182 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.75% | (d) | 0.76% | 0.77% | 0.74% | 0.76% | 0.72% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.75% | (d) | 0.76% | (e) | 0.77% | 0.74% | 0.76% | 0.72% | ||||||||||||||||||||
Net investment income (loss) | 1.94% | (d) | 1.55% | 1.31% | 1.03% | 1.40% | 1.74% | |||||||||||||||||||||
Portfolio turnover rate(f)(g) | 74% | (h) | 428% | 759% | 778% | 817% | 1,042% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(f) | The Fund accounts for mortgage dollar roll transactions, when applicable, as purchases and sales which, as a result, can increase its portfolio turnover rate. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(h) | Not annualized. |
See Notes to Financial Statements.
60 |
Class R6 Shares | ||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28, | August 9, 2016(a) through | ||||||||||||||||||
2018 | 2018 | 2017 | ||||||||||||||||||
Per Share Operating Performance(b): |
| |||||||||||||||||||
Net Asset Value, Beginning of Period | $9.26 | $9.52 | $9.84 | |||||||||||||||||
Income (loss) from investment operations: |
| |||||||||||||||||||
Net investment income (loss) | 0.10 | 0.17 | 0.08 | |||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | 0.02 | (0.18 | ) | (0.32 | ) | |||||||||||||||
Total from investment operations | 0.12 | (0.01 | ) | (0.24 | ) | |||||||||||||||
Less Dividends and Distributions: |
| |||||||||||||||||||
Dividends from net investment income | (0.11 | ) | (0.20 | ) | (0.08 | ) | ||||||||||||||
Distributions from net realized gains | - | (0.05 | ) | - | ||||||||||||||||
Total dividends and distributions | (0.11 | ) | (0.25 | ) | (0.08 | ) | ||||||||||||||
Net asset value, end of period | $9.27 | $9.26 | $9.52 | |||||||||||||||||
Total Return(c): | 1.33% | (0.19)% | (2.39)% | |||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000) | $49,602 | $42,239 | $33,956 | |||||||||||||||||
Average net assets (000) | $46,066 | $38,343 | $17,541 | |||||||||||||||||
Ratios to average net assets(d): |
| |||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.61% | (e) | 0.59% | 0.62% | (e) | |||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.61% | (e) | 0.59% | (f) | 0.62% | (e) | ||||||||||||||
Net investment income (loss) | 2.10% | (e) | 1.75% | 1.47% | (e) | |||||||||||||||
Portfolio turnover rate(g)(h) | 74% | (i) | 428% | 759% | (i) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(g) | The Fund accounts for mortgage dollar roll transactions, when applicable, as purchases and sales which, as a result, can increase its portfolio turnover rate. |
(h) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(i) | Not annualized. |
See Notes to Financial Statements.
PGIM Government Income Fund | 61 |
Approval of Advisory Agreements (unaudited)
The Fund’s Board of Directors
The Board of Directors (the “Board”) of PGIM Government Income Fund (the “Fund”)1 consists of twelve individuals, nine of whom are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Directors”). The Board is responsible for the oversight of the Fund and its operations, and performs the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Directors have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Director. The Board has established four standing committees: the Audit Committee, the Nominating and Governance Committee, and two Investment Committees. Each committee is chaired by, and composed of, Independent Directors.
Annual Approval of the Fund’s Advisory Agreements
As required under the 1940 Act, the Board determines annually whether to renew the Fund’s management agreement with PGIM Investments LLC (“PGIM Investments”) and the Fund’s subadvisory agreement with PGIM, Inc. (“PGIM”), on behalf of its PGIM Fixed Income unit. In considering the renewal of the agreements, the Board, including all of the Independent Directors, met on June 7, 2018 and on June 19-21, 2018 and approved the renewal of the agreements through July 31, 2019, after concluding that the renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board requested and received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with its consideration. Among other things, the Board considered comparative fee information from PGIM Investments and PGIM. Also, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups, as is further discussed below.
In approving the agreements, the Board, including the Independent Directors advised by independent legal counsel, considered the factors it deemed relevant, including the nature, quality and extent of services provided by PGIM Investments and the subadviser, the performance of the Fund, the profitability of PGIM Investments and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders as the Fund’s assets grow. In their deliberations, the Directors did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with its deliberations, the Board considered information provided by PGIM Investments throughout the year at regular Board
1 | PGIM Government Income Fund is a series of Prudential Investment Portfolios, Inc. 14. |
PGIM Government Income Fund |
Approval of Advisory Agreements (continued)
meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 7, 2018 and on June 19-21, 2018.
The Directors determined that the overall arrangements between the Fund and PGIM Investments, which serves as the Fund’s investment manager pursuant to a management agreement, and between PGIM Investments and PGIM, which, through its PGIM Fixed Income unit, serves as the Fund’s subadviser pursuant to the terms of a subadvisory agreement with PGIM Investments, are in the best interests of the Fund and its shareholders in light of the services performed, fees charged and such other matters as the Directors considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the Directors’ reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature, quality and extent of services provided to the Fund by PGIM Investments and PGIM Fixed Income. The Board considered the services provided by PGIM Investments, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of fund recordkeeping, compliance, and other services to the Fund. With respect to PGIM Investments’ oversight of the subadviser, the Board noted that PGIM Investments’ Strategic Investment Research Group (“SIRG”), which is a business unit of PGIM Investments, is responsible for monitoring and reporting to PGIM Investments’ senior management on the performance and operations of the subadviser. The Board also considered that PGIM Investments pays the salaries of all of the officers and interested Directors of the Fund who are part of Fund management. The Board also considered the investment subadvisory services provided by PGIM Fixed Income, including investment research and security selection, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PGIM Investments’ evaluation of the subadviser as well as PGIM Investments’ recommendation, based on its review of the subadviser, to renew the subadvisory agreement.
The Board considered the qualifications, backgrounds and responsibilities of PGIM Investments’ senior management responsible for the oversight of the Fund and PGIM Fixed Income, and also considered the qualifications, backgrounds and responsibilities of PGIM Fixed Income’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PGIM Investments and PGIM Fixed Income’s organizational structure, senior management, investment operations, and other relevant information pertaining to both PGIM Investments and PGIM Fixed Income. The Board also noted that it received favorable compliance reports
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from the Fund’s Chief Compliance Officer (“CCO”) as to both PGIM Investments and PGIM Fixed Income. The Board noted that PGIM Fixed Income is affiliated with PGIM Investments.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PGIM Investments and the subadvisory services provided to the Fund by PGIM Fixed Income, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PGIM Investments and PGIM Fixed Income under the management and subadvisory agreements.
Costs of Services and Profits Realized by PGIM Investments
The Board was provided with information on the profitability of PGIM Investments and its affiliates in serving as the Fund’s investment manager. The Board discussed with PGIM Investments the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. Taking these factors into account, the Board concluded that the profitability of PGIM Investments and its affiliates in relation to the services rendered was not unreasonable.
Economies of Scale
The Board received and discussed information concerning economies of scale that PGIM Investments may realize as the Fund’s assets grow beyond current levels. The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase. During the course of time, the Board has considered information regarding the launch date of the Fund, the management fees of the Fund compared to those of similarly managed funds and PGIM Investments’ investment in the Fund over time. The Board noted that economies of scale can be shared with the Fund in other ways, including low management fees from inception, additional technological and personnel investments to enhance shareholder services, and maintaining existing expense structures in the face of a rising cost environment. The Board also considered PGIM Investments’ assertion that it continually evaluates the management fee schedule of the Fund and the potential to share economies of scale through breakpoints or fee waivers as asset levels increase.
The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board’s understanding that most of PGIM Investments’ costs are not specific to individual funds, but rather are incurred across a variety of products and services.
PGIM Government Income Fund |
Approval of Advisory Agreements (continued)
Other Benefits to PGIM Investments and PGIM Fixed Income
The Board considered potential ancillary benefits that might be received by PGIM Investments, PGIM Fixed Income and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PGIM Investments included transfer agency fees received by the Fund’s transfer agent (which is affiliated with PGIM Investments), as well as benefits to its reputation or other intangible benefits resulting from PGIM Investments’ association with the Fund. The Board concluded that the potential benefits to be derived by PGIM Fixed Income included its ability to use soft dollar credits, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to its reputation. The Board concluded that the benefits derived by PGIM Investments and PGIM Fixed Income were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
Performance of the Fund / Fees and Expenses
The Board considered certain additional specific factors and made related conclusions relating to the historical performance of the Fund for the one-, three-, five- and ten-year periods ended December 31, 2017.
The Board also considered the Fund’s actual management fee, as well as the Fund’s net total expense ratio, for the fiscal year ended February 28, 2017. The Board considered the management fee for the Fund as compared to the management fee charged by PGIM Investments to other funds and the fee charged by other advisers to comparable mutual funds in a Peer Group. The actual management fee represents the fee rate actually paid by Fund shareholders and includes any fee waivers or reimbursements. The net total expense ratio for the Fund represents the actual expense ratio incurred by Fund shareholders.
The mutual funds included in the Peer Universe, which was used to consider performance, and the Peer Group, which was used to consider expenses and fees, were objectively determined by Broadridge, an independent provider of mutual fund data. In certain circumstances, PGIM Investments also may have provided supplemental Peer Universe or Peer Group information, for reasons addressed with the Board. The comparisons placed the Fund in various quartiles, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).
The section below summarizes key factors considered by the Board and the Board’s conclusions regarding the Fund’s performance, fees and overall expenses. The table sets forth gross performance comparisons (which do not reflect the impact on performance of
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fund expenses, or any subsidies, expense caps or waivers that may be applicable) with the Peer Universe, actual management fees with the Peer Group (which reflect the impact of any subsidies or fee waivers), and net total expenses with the Peer Group, each of which were key factors considered by the Board.
Gross Performance | 1 Year | 3 Years | 5 Years | 10 Years | ||||
1st Quartile | 1st Quartile | 1st Quartile | 1st Quartile | |||||
Actual Management Fees: 2nd Quartile | ||||||||
Net Total Expenses: 4th Quartile |
• | The Board noted that the Fund outperformed its benchmark over all periods. |
• | The Board noted information provided by PGIM Investments indicating that the Fund’s net total expenses were only two basis points from the median, despite the Fund’s fourth quartile ranking. |
• | The Board and PGIM Investments agreed to retain the Fund’s existing contractual expense cap, which (exclusive of certain fees and expenses) caps transfer agency, shareholder servicing, sub-transfer agency and blue sky fees to the extent that such fees cause total annual fund operating expenses to exceed 2.03% for Class B shares through June 30, 2020. |
• | The Board concluded that, in light of the above, it would be in the best interests of the Fund and its shareholders to renew the agreements. |
• | The Board concluded that the management fees (including subadvisory fees) and total expenses were reasonable in light of the services provided. |
* * *
After full consideration of these factors, the Board concluded that the approval of the agreements was in the best interests of the Fund and its shareholders.
PGIM Government Income Fund |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • Brian D. Nee, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | PGIM Fixed Income | 655 Broad Street Newark, NJ 07102 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM Government Income Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PGIM GOVERNMENT INCOME FUND
SHARE CLASS | A | B | C | R | Z | R6* | ||||||
NASDAQ | PGVAX | PBGPX | PRICX | JDRVX | PGVZX | PGIQX | ||||||
CUSIP | 74439V107 | 74439V206 | 74439V305 | 74439V503 | 74439V404 | 74439V875 |
*Formerly known as Class Q shares.
MF128E2
PGIM FLOATING RATE INCOME FUND
(Formerly known as Prudential Floating Rate Income Fund)
SEMIANNUAL REPORT
AUGUST 31, 2018
To enroll in e-delivery, go to pgiminvestments.com/edelivery
Objective: Primary objective is to maximize current income. A secondary investment objective is to seek capital appreciation, but only when consistent with the Fund’s primary objective. |
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The information about the Fund’s portfolio holdings is for the period covered by this report and is subject to change thereafter.
The accompanying financial statements as of August 31, 2018 were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS), member SIPC. PGIM Fixed Income is a unit of PGIM, Inc. (PGIM), a registered investment adviser. PIMS and PGIM are Prudential Financial companies. © 2018 Prudential Financial, Inc. and its related entities. PGIM and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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PGIM FUNDS — UPDATE
The Board of Directors/Trustees for the Fund has approved the implementation of an automatic conversion feature for Class C shares, effective as of April 1, 2019. To reflect these changes, effective April 1, 2019, the section of the Fund’s Prospectus entitled “How to Buy, Sell and Exchange Fund Shares—How to Exchange Your Shares—Frequent Purchases and Redemptions of Fund Shares” is restated to read as follows:
This supplement should be read in conjunction with your Summary Prospectus, Statutory Prospectus and Statement of Additional Information, be retained for future reference and is in addition to any existing Fund supplements.
1. | In each Fund’s Statutory Prospectus, the following is added at the end of the section entitled “Fund Distributions And Tax Issues—If You Sell or Exchange Your Shares”: |
Automatic Conversion of Class C Shares
The conversion of Class C shares into Class A shares—which happens automatically approximately 10 years after purchase—is not a taxable event for federal income tax purposes. For more information about the automatic conversion of Class C shares, see Class C Shares Automatically Convert to Class A Shares in How to Buy, Sell and Exchange Fund Shares.
2. | In each Fund’s Statutory Prospectus, the following sentence is added at the end of the section entitled “How to Buy, Sell and Exchange Shares—Closure of Certain Share Classes to New Group Retirement Plans”: |
Shareholders owning Class C shares may continue to hold their Class C shares until the shares automatically convert to Class A shares under the conversion schedule, or until the shareholder redeems their Class C shares.
3. | In each Fund’s Statutory Prospectus, the following disclosure is added immediately following the section entitled “How to Buy, Sell and Exchange Shares—How to Buy Shares—Class B Shares Automatically Convert to Class A Shares”: |
Class C Shares Automatically Convert to Class A Shares
Starting on or about April 1, 2019 (the “Effective Date”), Class C shares will be eligible for automatic conversion into Class A shares on a monthly basis approximately ten years after the original date of purchase (the “Conversion Date”). Conversion will take place based on the relative NAV of the two classes, without the imposition of any sales load, fee or other charge. All such automatic conversions of Class C shares will constitute tax-free exchanges for federal income tax purposes.
For shareholders investing in Class C shares through retirement plans or omnibus accounts, and in certain other instances, the Fund and its agents may not have transparency into how
PGIM Floating Rate Income Fund | 3 |
long a shareholder has held Class C shares for purposes of determining whether such Class C shares are eligible for automatic conversion into Class A shares, and the relevant financial intermediary may not have the ability to track purchases in order to credit individual shareholders’ holding periods. In these circumstances, the Fund will not be able to automatically convert Class C shares into Class A shares as described above. In order to determine eligibility for conversion in these circumstances, it is the responsibility of the financial intermediary to notify the Fund that the shareholder is eligible for the conversion of Class C shares to Class A shares, and the financial intermediary may be required to maintain and provide the Fund with records that substantiate the holding period of Class C shares. It is the financial intermediary’s (and not the Fund’s) responsibility to keep records of transactions made in accounts it holds and to ensure that the shareholder is credited with the proper holding period based on such records or those provided to the financial intermediary by the shareholder. Please consult with your financial intermediary for the applicability of this conversion feature to your shares.
A financial intermediary may sponsor and/or control accounts, programs or platforms that impose a different conversion schedule or different eligibility requirements for the exchange of Class C shares for Class A shares (see Appendix A: Waivers and Discounts Available From Certain Financial Intermediaries of the Prospectus). Please consult with your financial intermediary if you have any questions regarding your shares’ conversion from Class C shares to Class A shares.
4. | In Part II of each Fund’s Statement of Additional Information, the following disclosure is added immediately following the section entitled “Purchase, Redemption and Pricing of Fund Shares—Share Classes—Automatic Conversion of Class B Shares”: |
AUTOMATIC CONVERSION OF CLASS C SHARES. Starting on or about April 1, 2019 (the “Effective Date”), Class C shares will be eligible for automatic conversion into Class A shares on a monthly basis approximately ten years after the original date of purchase (the “Conversion Date”). Conversion will take place based on the relative NAV of the two classes, without the imposition of any sales load, fee or other charge. Class C shares of a Fund acquired through automatic reinvestment of dividends or distributions will convert to Class A shares of the Fund on the Conversion Date pro rata with the converting Class C shares of the Fund that were not acquired through reinvestment of dividends or distributions. All such automatic conversions of Class C shares will constitute tax-free exchanges for federal income tax purposes.
For shareholders investing in Class C shares through retirement plans or omnibus accounts, and in certain other instances, the Fund and its agents may not have transparency into how long a shareholder has held Class C shares for purposes of determining whether such Class C shares are eligible for automatic conversion into Class A shares, and the relevant financial intermediary may not have the ability to track purchases in order to credit individual shareholders’ holding periods. In these circumstances, the Fund will not be able to automatically convert Class C shares into Class A shares as described above. In order to
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determine eligibility for conversion in these circumstances, it is the responsibility of the financial intermediary to notify the Fund that the shareholder is eligible for the conversion of Class C shares to Class A shares, and the financial intermediary may be required to maintain and provide the Fund with records that substantiate the holding period of Class C shares. It is the financial intermediary’s (and not the Fund’s) responsibility to keep records of transactions made in accounts it holds and to ensure that the shareholder is credited with the proper holding period based on such records or those provided to the financial intermediary by the shareholder. Please consult with your financial intermediary for the applicability of this conversion feature to your shares.
Class C shares were generally closed to investments by new group retirement plans effective on or about June 1, 2018. Group retirement plans (and their successor, related and affiliated plans) that have Class C shares of the Fund available to participants on or before the Effective Date may continue to open accounts for new participants in such share class and purchase additional shares in existing participant accounts.
The Fund has no responsibility for monitoring or implementing a financial intermediary’s process for determining whether a shareholder meets the required holding period for conversion. A financial intermediary may sponsor and/or control accounts, programs or platforms that impose a different conversion schedule or different eligibility requirements for the exchange of Class C shares for Class A shares, as set forth on Appendix A: Waivers and Discounts Available From Certain Financial Intermediaries of the Prospectus. In these cases, Class C shareholders may have their shares exchanged for Class A shares under the policies of the financial intermediary. Financial intermediaries will be responsible for making such exchanges in those circumstances. Please consult with your financial intermediary if you have any questions regarding your shares’ conversion from Class C shares to Class A shares.
- Not part of the Semiannual Report -
PGIM Floating Rate Income Fund | 5 |
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Dear Shareholder:
We hope you find the semiannual report for the PGIM Floating Rate Income Fund informative and useful. The report covers performance for the six-month period ended August 31, 2018.
We have important information to share with you. Effective June 11, 2018, Prudential Mutual Funds were renamed PGIM Funds. This renaming is part of our ongoing effort to further build our reputation and establish our global brand, which began when our firm adopted PGIM Investments as its name in April 2017. Please note that only the Fund’s name has changed. Your Fund’s management and operation, along with its symbols, remained the same.*
Regarding your investments with PGIM, we believe it is important to maintain a diversified portfolio of funds consistent with your tolerance for risk, time horizon, and financial goals.
Your financial advisor can help you create a diversified investment plan that may include funds covering all the basic asset classes and that reflects your personal investor profile and risk tolerance. However, diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
At PGIM Investments, we consider it a great privilege and responsibility to help investors participate in opportunities across global markets while meeting their toughest investment challenges. PGIM is a top-10 global investment manager with more than $1 trillion in assets under management. This investment expertise allows us to deliver actively managed funds and strategies to meet the needs of investors around the globe.
Thank you for choosing our family of funds.
Sincerely,
Stuart S. Parker, President
PGIM Floating Rate Income Fund
October 15, 2018
*The Prudential Day One Funds did not change their names.
PGIM Floating Rate Income Fund | 7 |
Your Fund’s Performance (unaudited)
Performance data quoted represent past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the past performance data quoted. An investor may obtain performance data as of the most recent month-end by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852.
Total Returns as of 8/31/18 (without sales charges) | Average Annual Total Returns as of 8/31/18 (with sales charges) | |||||||
Six Months* (%) | One Year (%) | Five Years (%) | Since Inception (%) | |||||
Class A | 1.59 | 1.12 | 3.07 | 3.60 (3/30/11) | ||||
Class C | 1.20 | 2.74 | 2.96 | 3.29 (3/30/11) | ||||
Class Z | 1.82 | 4.89 | 4.00 | 4.34 (3/30/11) | ||||
Class R6** | 1.85 | 4.94 | N/A | 4.10 (4/27/15) | ||||
Credit Suisse Leveraged Loan Index | ||||||||
2.36 | 5.29 | 4.27 | — | |||||
Lipper Loan Participation Funds Average | ||||||||
1.74 | 4.18 | 3.30 | — |
Source: PGIM Investments LLC, Lipper Inc., and Credit Suisse
*Not annualized
**Formerly known as Class Q shares.
Since Inception returns are provided for any share class with less than 10 fiscal years of returns. Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the class’ inception date.
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class C | Class Z | Class R6* | |||||
Maximum initial sales charge | 3.25% of the public offering price | None | None | None | ||||
Contingent deferred sales charge (CDSC) (as a percentage of the lower of original purchase price or net asset value at redemption) | 1.00% on sales of $1 million or more made within 12 months of purchase | 1.00% on sales made within 12 months of purchase | None | None | ||||
Annual distribution and service (12b-1) fees (shown as a percentage of average daily net assets) | 0.25% | 1.00% | None | None |
*Formerly known as Class Q shares.
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Benchmark Definitions
Credit Suisse Leveraged Loan Index—The Credit Suisse Leveraged Loan Index (the Index) is an unmanaged index that represents the investable universe of the dollar-denominated leveraged loan market. The average annual total returns for the Index measured from the month-end closest to the inception date of the Fund’s Class A, C, and Z shares is 4.55% and 4.24% for Class R6 shares.
Lipper Loan Participation Funds Average—The Lipper Loan Participation Funds Average (Lipper Average) is based on the average return of all funds in the Lipper Loan Participation Funds universe for the periods noted. Funds in the Lipper Average invest primarily in participation interests in collateralized senior corporate loans that have floating or variable rates. The average annual total returns for the Lipper Average measured from the month-end closest to the inception date of the Fund’s Class A, C, and Z shares is 3.59% and 3.35% for Class R6 shares.
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses of a mutual fund, but not sales charges or taxes.
Credit Quality expressed as a percentage of total investments as of 8/31/18 (%) | ||||
A | 5.8 | |||
BBB | 4.8 | |||
BB | 31.9 | |||
B | 54.2 | |||
CCC | 1.5 | |||
Not Rated | 0.2 | |||
Cash/Cash Equivalents | 1.4 | |||
Total Investments | 100.0 |
Source: PGIM Fixed Income
Credit ratings reflect the highest rating assigned by a nationally recognized statistical rating organization (NRSRO) such as Moody’s Investor Service, Inc. (Moody’s), S&P Global Ratings (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, ratings are converted to the comparable S&P/Fitch rating tier nomenclature. These rating agencies are independent, and are widely used. The Not Rated category consists of securities that have not been rated by an NRSRO. Credit ratings are subject to change. Values may not sum to 100.0% due to rounding.
PGIM Floating Rate Income Fund | 9 |
Your Fund’s Performance (continued)
Distributions and Yields as of 8/31/18 | ||||||
Total Distributions Paid for Six Months ($) | SEC 30-Day Subsidized Yield* (%) | SEC 30-Day Unsubsidized Yield** (%) | ||||
Class A | 0.23 | 4.39 | 4.27 | |||
Class C | 0.19 | 3.79 | 3.68 | |||
Class Z | 0.24 | 4.79 | 4.68 | |||
Class R6*** | 0.24 | 4.83 | 4.74 |
*SEC 30-Day Subsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s net expenses (net of any expense waivers or reimbursements).
**SEC 30-Day Unsubsidized Yield (%)—A standardized yield calculation created by the Securities and Exchange Commission, it reflects the income earned during a 30-day period, after the deduction of the Fund’s gross expenses.
***Formerly known as Class Q shares.
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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 August 31, 2018. The example is for illustrative purposes only; you should consult the Prospectus for information on initial and subsequent minimum investment requirements.
Actual Expenses
The first line for each share class in the table on the following page provides information about actual account values and actual expenses. You may use the information on this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value ÷ $1,000 = 8.6), then multiply the result by the number on the first line under the heading “Expenses Paid During the Six-Month Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The second line for each share class in the table on the following page provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
The Fund’s transfer agent may charge additional fees to holders of certain accounts that are not included in the expenses shown in the table on the following page. These fees apply to individual retirement accounts (IRAs) and Section 403(b) accounts. As of the close of the six-month period covered by the table, IRA fees included an annual maintenance fee of $15 per account (subject to a maximum annual maintenance fee of $25 for all accounts held by the same shareholder). Section 403(b) accounts are charged an annual $25 fiduciary maintenance fee. Some of the fees may vary in amount, or may be waived, based on your total account balance or the number of PGIM funds, including the Fund, that you own. You should consider the additional fees that were charged to your Fund account over the six-month period when you estimate the total ongoing expenses paid over the period
PGIM Floating Rate Income Fund | 11 |
Fees and Expenses (continued)
and the impact of these fees on your ending account value, as these additional expenses are not reflected in the information provided in the expense table. Additional fees have the effect of reducing investment returns.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs such as sales charges (loads). Therefore, the second line for each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
PGIM Floating Rate Income Fund | Beginning Account Value | Ending Account Value August 31, 2018 | Annualized Expense Ratio | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,015.90 | 0.95 | % | $ | 4.83 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.42 | 0.95 | % | $ | 4.84 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,012.00 | 1.70 | % | $ | 8.62 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.64 | 1.70 | % | $ | 8.64 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,018.20 | 0.70 | % | $ | 3.56 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,021.68 | 0.70 | % | $ | 3.57 | ||||||||||
Class R6** | Actual | $ | 1,000.00 | $ | 1,018.50 | 0.65 | % | $ | 3.31 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,021.93 | 0.65 | % | $ | 3.31 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 184 days in the six-month period ended August 31, 2018, and divided by the 365 days in the Fund’s fiscal year ending February 28, 2019 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
**Formerly known as Class Q shares.
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Schedule of Investments (unaudited)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
LONG-TERM INVESTMENTS 97.9% |
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ASSET-BACKED SECURITIES 5.7% |
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Collateralized Loan Obligations |
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Battalion CLO Ltd. (Cayman Islands), | 4.092 | %(c) | 10/24/29 | 3,925 | $ | 3,933,077 | ||||||||||
KVK CLO Ltd. (Cayman Islands), | 3.981 | (c) | 05/20/29 | 2,500 | 2,499,561 | |||||||||||
MidOcean Credit CLO (Cayman Islands), | 3.851 | (c) | 04/21/31 | 5,000 | 5,000,048 | |||||||||||
Mountain View CLO Ltd. (Cayman Islands), | 4.119 | (c) | 07/15/31 | 6,500 | 6,491,349 | |||||||||||
OZLM Funding Ltd. (Cayman Islands), | 4.047 | (c) | 10/22/30 | 10,000 | 9,989,085 | |||||||||||
OZLM Ltd. (Cayman Islands), | ||||||||||||||||
Series 2014-6A, Class A2AS, 144A, 3 Month LIBOR + 1.750% | 4.086 | (c) | 04/17/31 | 4,250 | 4,245,880 | |||||||||||
Series 2018-20A, Class A2, 144A, 3 Month LIBOR + 1.650% | 3.810 | (c) | 04/20/31 | 6,000 | 5,992,540 | |||||||||||
Shackleton CLO Ltd. (Cayman Islands), | 4.063 | (c) | 05/07/31 | 3,000 | 2,999,031 | |||||||||||
Sounds Point CLO Ltd. (Cayman Islands), | 4.251 | (c) | 04/18/31 | 2,250 | 2,246,897 | |||||||||||
Trinitas CLO Ltd. (Cayman Islands), | 4.120 | (c) | 10/18/31 | 4,000 | 4,000,000 | |||||||||||
Tryon Park CLO Ltd. (Cayman Islands), | 3.848 | (c) | 04/15/29 | 6,000 | 5,984,813 | |||||||||||
Vibrant CLO Ltd. (Cayman Islands), | 4.748 | (c) | 07/20/28 | 3,000 | 3,009,398 | |||||||||||
Zais CLO Ltd. (Cayman Islands), | 4.527 | (c) | 07/15/31 | 6,000 | 6,000,325 | |||||||||||
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TOTAL ASSET-BACKED SECURITIES | 62,392,004 | |||||||||||||||
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See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 13 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS 89.6% | ||||||||||||||||
Advertising 0.4% | ||||||||||||||||
Advantage Sales & Marketing, Inc., | 5.326 | %(c) | 07/23/21 | 423 | $ | 394,744 | ||||||||||
Information Resources, Inc., | 6.567 | (c) | 01/18/24 | 1,853 | 1,862,695 | |||||||||||
Vestcom Parent Holdings, Inc., | 7.038 | (c) | 12/19/23 | 2,445 | 2,441,944 | |||||||||||
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4,699,383 | ||||||||||||||||
Aerospace & Defense 0.8% | ||||||||||||||||
Transdigm, Inc., | ||||||||||||||||
2018 New Tranche E Term Loans, 1 Month LIBOR + 2.500% | 4.576 | (c) | 05/30/25 | 3,397 | 3,388,620 | |||||||||||
New Tranche G Term Loans, 1 Month LIBOR + 2.500% | 4.576 | (c) | 08/22/24 | 4,445 | 4,436,274 | |||||||||||
WP CPP Holdings LLC, | 6.225 | (c) | 04/30/25 | 675 | 676,856 | |||||||||||
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8,501,750 | ||||||||||||||||
Apparel 0.2% | ||||||||||||||||
Oak Parent, Inc., | 6.576 | (c) | 10/26/23 | 1,061 | 978,830 | |||||||||||
Tumi, Inc., | 3.826 | (c) | 04/25/25 | 1,600 | 1,592,000 | |||||||||||
|
| |||||||||||||||
2,570,830 | ||||||||||||||||
Auto Manufacturers 1.3% | ||||||||||||||||
Ati Holdings Acquisition, Inc., | 5.567 | (c) | 05/10/23 | 3,325 | 3,326,968 | |||||||||||
Horizon Global Corp., | 8.076 | (c) | 06/30/21 | 606 | 587,417 | |||||||||||
Jaguar Holdings Co. II, | 4.576 | (c) | 08/18/22 | 2,494 | 2,490,110 | |||||||||||
Navistar Financial Corp., | 5.875 | (c) | 07/25/25 | 3,925 | 3,934,813 | |||||||||||
Navistar, Inc., | 5.580 | (c) | 11/06/24 | 2,438 | 2,440,797 |
See Notes to Financial Statements.
14 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Auto Manufacturers (cont’d.) | ||||||||||||||||
Tweddle Group, Inc., | 10.000 | %(c) | 10/24/22 | 1,113 | $ | 395,318 | ||||||||||
UOS LLC, | 7.576 | (c) | 04/18/23 | 553 | 560,159 | |||||||||||
|
| |||||||||||||||
13,735,582 | ||||||||||||||||
Auto Parts & Equipment 1.8% | ||||||||||||||||
Allflex Holdings III, Inc., | 5.586 | (c) | 07/17/20 | 1,020 | 1,023,762 | |||||||||||
American Axle & Manufacturing, Inc., | 4.385 | (c) | 04/06/24 | 2,970 | 2,965,831 | |||||||||||
Dexko Global, Inc., | 5.576 | (c) | 07/24/24 | 1,643 | 1,644,376 | |||||||||||
Exc Holdings III Corp, | 5.834 | (c) | 12/02/24 | 1,097 | 1,106,347 | |||||||||||
Innovative Xcessories & Services LLC, | 6.820 | (c) | 11/29/22 | 1,292 | 1,290,031 | |||||||||||
MGM Growth Properties Operating Partnership LP, | 4.076 | (c) | 03/21/25 | 2,263 | 2,261,842 | |||||||||||
Southcross Energy Partners LP, | 6.584 | (c) | 08/04/21 | 2,239 | 1,953,486 | |||||||||||
Superior Industries International, Inc., | 6.076 | (c) | 05/22/24 | 1,193 | 1,194,420 | |||||||||||
Tenneco, Inc., | — | (p) | 07/31/25 | 850 | 848,140 | |||||||||||
Tower Automotive Holdings USA LLC, | 4.875 | (c) | 03/07/24 | 1,428 | 1,433,382 | |||||||||||
Truck Hero, Inc., | 5.816 | (c) | 04/22/24 | 2,504 | 2,505,368 | |||||||||||
Visteon Corp., | 3.945 | (c) | 03/25/24 | 1,700 | 1,697,145 | |||||||||||
|
| |||||||||||||||
19,924,130 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 15 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Beverages 0.3% | ||||||||||||||||
Arctic Glacier USA, Inc., | 5.576 | %(c) | 03/20/24 | 2,135 | $ | 2,137,316 | ||||||||||
Refresco Group NV (Netherlands), | 5.564 | (c) | 03/28/25 | 800 | 794,000 | |||||||||||
|
| |||||||||||||||
2,931,316 | ||||||||||||||||
Building Materials 1.3% | ||||||||||||||||
Airxcel, Inc., | ||||||||||||||||
Initial Term Loan (First Lien), 1 Month LIBOR + 4.500% | 6.576 | (c) | 04/28/25 | 975 | 973,172 | |||||||||||
Second Lien Initial Term Loan, 1 Month LIBOR + 8.750%^ | 10.826 | (c) | 04/27/26 | 225 | 216,000 | |||||||||||
Diversitech Holdings, Inc., | 5.340 | (c) | 06/03/24 | 1,766 | 1,755,092 | |||||||||||
Forterra Finance LLC, | 5.076 | (c) | 10/25/23 | 1,701 | 1,591,968 | |||||||||||
Front Door Co., Inc. (The), | — | (p) | 09/30/25 | 1,325 | 1,326,656 | |||||||||||
High Liner Foods, Inc. (Canada), | 5.580 | (c) | 04/26/21 | 2,350 | 2,185,500 | |||||||||||
Janus International Group LLC, | 5.076 | (c) | 02/07/25 | 449 | 441,019 | |||||||||||
NCI Building Systems, Inc., | 4.076 | (c) | 02/07/25 | 1,703 | 1,701,314 | |||||||||||
Quikrete Holdings, Inc., | 4.826 | (c) | 11/15/23 | 2,904 | 2,899,315 | |||||||||||
Summit Materials LLC, | 4.076 | (c) | 11/21/24 | 1,000 | 1,000,312 | |||||||||||
|
| |||||||||||||||
14,090,348 | ||||||||||||||||
Cable 0.5% | ||||||||||||||||
Casa Systems, Inc., | 6.076 | (c) | 12/14/23 | 1,232 | 1,233,407 | |||||||||||
CSC Holdings LLC, | 4.314 | (c) | 07/17/25 | 997 | 993,423 | |||||||||||
Learfield Communications, Inc., | — | (p) | 12/01/23 | 1,011 | 1,015,477 | |||||||||||
Sinclair TV Grouup, Inc., | — | (p) | 03/31/25 | 2,425 | 2,418,938 | |||||||||||
|
| |||||||||||||||
5,661,245 |
See Notes to Financial Statements.
16 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Capital Goods 0.2% | ||||||||||||||||
Ilpea Parent, Inc., | 6.830 | %(c) | 03/02/23 | 966 | $ | 968,837 | ||||||||||
K & N Parent, Inc., | 7.084 | (c) | 10/20/23 | 1,650 | 1,648,987 | |||||||||||
|
| |||||||||||||||
2,617,824 | ||||||||||||||||
Chemicals 2.7% | ||||||||||||||||
Albaugh LLC, | 5.576 | (c) | 12/23/24 | 821 | 816,771 | |||||||||||
Alpha US Bidco, Inc. (United Kingdom), | 5.334 | (c) | 01/31/24 | 2,185 | 2,187,302 | |||||||||||
Alterra Mountain Co., | 5.076 | (c) | 08/08/24 | 2,000 | 2,007,500 | |||||||||||
Chemours Co., (The), | 3.830 | (c) | 04/03/25 | 3,995 | 3,985,012 | |||||||||||
Cyanco Intermediate 2 Corp., | 5.576 | (c) | 03/16/25 | 2,070 | 2,082,749 | |||||||||||
Dubois Chemicals, Inc., | ||||||||||||||||
Delayed Draw Term Loan, 1 Month LIBOR + 3.250% | 2.442 | (c) | 03/15/24 | 76 | 75,926 | |||||||||||
Repriced Initial Term Loan, 1 Month LIBOR + 3.250% | 5.327 | (c) | 03/15/24 | 961 | 953,726 | |||||||||||
Encapsys LLC, | 5.326 | (c) | 11/07/24 | 1,322 | 1,323,891 | |||||||||||
HB Fuller Company, | 4.077 | (c) | 10/20/24 | 1,944 | 1,942,387 | |||||||||||
Kmg Chemicals, Inc., | 4.826 | (c) | 06/15/24 | 765 | 765,644 | |||||||||||
Macdermid, Inc., | 5.076 | (c) | 06/07/23 | 905 | 906,996 | |||||||||||
Oxea Corp., | 5.625 | (c) | 10/14/24 | 3,083 | 3,090,692 | |||||||||||
PQ Corp., | 2.288 | (c) | 02/08/25 | 3,425 | 3,427,122 | |||||||||||
Solenis International LP, | 6.188 | (c) | 12/26/23 | 2,750 | 2,757,700 | |||||||||||
Tronox Finance LLC, | ||||||||||||||||
First Lien Blocked Dollar Term Loan, 1 Month LIBOR + 3.000% | 5.076 | (c) | 09/23/24 | 361 | 362,030 | |||||||||||
First Lien Initial Dollar Term Loan, 1 Month LIBOR + 3.000% | 5.076 | (c) | 09/23/24 | 833 | 835,453 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 17 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Chemicals (cont’d.) | ||||||||||||||||
Unifrax I LLC, | ||||||||||||||||
2017 Incremental Dollar Term Loan, 3 Month LIBOR + 3.500%^ | 5.834 | %(c) | 04/04/24 | 1,708 | $ | 1,716,321 | ||||||||||
Second Lien Initial Term Loan, 3 Month LIBOR + 7.500% | 9.802 | (c) | 11/03/25 | 275 | 277,634 | |||||||||||
|
| |||||||||||||||
29,514,856 | ||||||||||||||||
Coal 0.5% | ||||||||||||||||
Charah LLC, | 8.326 | (c) | 10/25/24 | 719 | 725,780 | |||||||||||
Consol Energy, Inc., | 8.080 | (c) | 11/28/22 | 1,368 | 1,398,908 | |||||||||||
Murray Energy Corp., | 9.326 | (c) | 10/17/22 | 797 | 741,513 | |||||||||||
Nthrive, Inc., | 6.576 | (c) | 10/20/22 | 2,970 | 2,972,457 | |||||||||||
|
| |||||||||||||||
5,838,658 | ||||||||||||||||
Commercial Services 4.9% | ||||||||||||||||
Adtalem Global Education, Inc., | 5.065 | (c) | 04/09/25 | 1,825 | 1,834,125 | |||||||||||
Arbor Pharmaceuticals LLC, | 7.485 | (c) | 07/05/23 | 1,424 | 1,429,041 | |||||||||||
AVSC Holdings Corp., | 5.534 | (c) | 03/03/25 | 449 | 446,631 | |||||||||||
Barbri, Inc., | 6.332 | (c) | 12/01/23 | 708 | 705,631 | |||||||||||
Brightview Landscapes LLC, | 4.656 | (c) | 08/15/25 | 800 | 801,000 | |||||||||||
C.H.I.Overhead Doors, Inc., | 5.326 | (c) | 07/29/22 | 2,050 | 2,052,956 | |||||||||||
Camelot US Acquisition I Co., | 5.326 | (c) | 10/03/23 | 2,945 | 2,942,892 | |||||||||||
Eab Global, Inc., | 6.088 | (c) | 11/17/24 | 2,843 | 2,832,214 | |||||||||||
Equian LLC, | 5.316 | (c) | 05/20/24 | 1,536 | 1,535,157 | |||||||||||
Explorer Holdings, Inc., | 6.084 | (c) | 05/02/23 | 1,887 | 1,891,415 | |||||||||||
Kingpin Intermediate Holdings LLC, | 5.580 | (c) | 07/03/24 | 2,382 | 2,395,147 |
See Notes to Financial Statements.
18 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Commercial Services (cont’d.) | ||||||||||||||||
Laureate Education, Inc., | 5.576 | %(c) | 04/26/24 | 4,634 | $ | 4,647,135 | ||||||||||
Legalzoom.Com, Inc., | 6.316 | (c) | 11/21/24 | 871 | 880,372 | |||||||||||
Lineage Logistics, | 5.076 | (c) | 02/16/25 | 1,272 | 1,263,864 | |||||||||||
Minerals Technologies, Inc., | 4.750 | 05/07/21 | 225 | 225,000 | ||||||||||||
Neiman Marcus Group Ltd. LLC, | 5.330 | (c) | 10/25/20 | 2,177 | 2,021,481 | |||||||||||
On Assignment, Inc., | 4.076 | (c) | 04/02/25 | 1,649 | 1,648,905 | |||||||||||
Packers Holdings LLC, | 5.321 | (c) | 12/04/24 | 3,366 | 3,358,611 | |||||||||||
Parexel International Corp., | 4.826 | (c) | 09/27/24 | 2,889 | 2,885,735 | |||||||||||
PSC Industrial Holdings Corp., | 5.810 | (c) | 10/11/24 | 2,067 | 2,069,703 | |||||||||||
Safe Fleet Holdings LLC, | 5.090 | (c) | 02/03/25 | 1,820 | 1,801,474 | |||||||||||
St. George’s University Scholastic Services LLC (Canada), | 5.580 | (c) | 07/17/25 | 2,078 | 2,091,380 | |||||||||||
Syniverse Holdings, Inc., | 7.067 | (c) | 03/09/23 | 2,919 | 2,891,207 | |||||||||||
Team Health Holdings, Inc., | 4.826 | (c) | 02/06/24 | 1,876 | 1,790,256 | |||||||||||
Tmk Hawk Parent Corp., | 5.580 | (c) | 08/28/24 | 1,099 | 1,097,094 | |||||||||||
Trugreen Limited Partnership, | 6.067 | (c) | 04/13/23 | 712 | 714,148 | |||||||||||
US Security Associates Holdings, Inc., | 5.834 | (c) | 07/14/23 | 2,050 | 2,049,811 | |||||||||||
USS Ultimate Holdings, Inc., | 5.826 | (c) | 08/26/24 | 900 | 903,375 | |||||||||||
Vantiv LLC, | 3.813 | (c) | 10/16/23 | 602 | 601,969 | |||||||||||
VT Topco, Inc., | 6.093 | (c) | 08/01/25 | 1,020 | 1,020,000 | |||||||||||
Wireco Worldgroup, Inc., | 7.076 | (c) | 09/29/23 | 1,114 | 1,123,981 | |||||||||||
|
| |||||||||||||||
53,951,710 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 19 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Computers 3.5% | ||||||||||||||||
Banff Merger Sub, Inc., | — | %(p) | 06/28/25 | 7,325 | $ | 7,327,197 | ||||||||||
Bombardier, Inc. (Canada), | 4.080 | (c) | 05/23/25 | 2,425 | 2,415,402 | |||||||||||
Conduent Business Services LLC, | 4.576 | (c) | 12/07/23 | 2,279 | 2,283,442 | |||||||||||
Dell International LLC, | 4.080 | (c) | 09/07/23 | 3,363 | 3,360,766 | |||||||||||
Everi Payments, Inc., | 5.076 | (c) | 05/09/24 | 2,234 | 2,244,897 | |||||||||||
Exela Intermediate LLC, | 8.826 | (c) | 07/12/23 | 494 | 493,711 | |||||||||||
Fullbeauty Brands Holdings Corp., | 7.092 | (c) | 10/14/22 | 1,124 | 331,176 | |||||||||||
Genuine Financial Holdings LLC, | 5.942 | (c) | 07/11/25 | 1,025 | 1,027,563 | |||||||||||
Neustar, Inc., | ||||||||||||||||
First Lien Term Loan B4, 1 Month LIBOR + 3.500% | 5.575 | (c) | 08/08/24 | 2,312 | 2,314,436 | |||||||||||
Second Lien Initial Term Loan, 1 Month LIBOR + 8.000% | 10.076 | (c) | 08/08/25 | 550 | 536,788 | |||||||||||
Peak 10 Holding Corp., | 5.834 | (c) | 08/01/24 | 3,508 | 3,443,304 | |||||||||||
Presidio LLC, | 4.999 | (c) | 02/02/24 | 1,489 | 1,489,156 | |||||||||||
Sandvine Corp. (Canada), | 7.825 | (c) | 09/21/22 | 1,490 | 1,503,031 | |||||||||||
Tempo Acquisition LLC, | 5.076 | (c) | 05/01/24 | 4,791 | 4,800,709 | |||||||||||
Verifone Systems, Inc., | 6.322 | (c) | 08/20/25 | 1,950 | 1,952,437 | |||||||||||
West Corp., | 6.076 | (c) | 10/10/24 | 2,539 | 2,518,897 | |||||||||||
|
| |||||||||||||||
38,042,912 | ||||||||||||||||
Consumer Services 0.2% | ||||||||||||||||
Ozark Holdings LLC, | 5.326 | (c) | 07/03/23 | 1,517 | 1,512,158 | |||||||||||
University Support Services LLC, | — | (p) | 07/17/25 | 647 | 650,652 | |||||||||||
|
| |||||||||||||||
2,162,810 |
See Notes to Financial Statements.
20 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Cosmetics/Personal Care 0.1% | ||||||||||||||||
Coty, Inc., | 4.333 | %(c) | 04/07/25 | 1,575 | $ | 1,521,844 | ||||||||||
Distribution/Wholesale 1.0% | ||||||||||||||||
CD&R Hydra Buyer, Inc., | 10.076 | (c) | 04/30/26 | 300 | 299,250 | |||||||||||
Evergreen Skills Lux Sarl (Luxembourg), | 6.826 | (c) | 04/28/21 | 1,805 | 1,743,603 | |||||||||||
Fastener Acquisition, Inc., | ||||||||||||||||
First Lien Initial Term Loan, 1 - 3 Month LIBOR + 4.250%^ | 6.455 | (c) | 03/21/25 | 1,122 | 1,119,382 | |||||||||||
Second Lien Initial Term Loan, 3 Month LIBOR + 8.750% | 11.084 | (c) | 03/23/26 | 87 | 84,875 | |||||||||||
FPC Holdings, Inc., | 6.576 | (c) | 11/18/22 | 973 | 978,033 | |||||||||||
Hudsons Bay Company (Canada), | 5.315 | (c) | 09/30/22 | 838 | 801,146 | |||||||||||
Nexeo Solutions LLC, | 5.580 | (c) | 06/09/23 | 1,680 | 1,688,151 | |||||||||||
Owens & Minor, Inc., | 6.673 | (c) | 05/02/25 | 2,000 | 1,951,250 | |||||||||||
Univar USA, Inc., | 4.326 | (c) | 07/01/24 | 1,118 | 1,120,799 | |||||||||||
Yak Access LLC, | 7.067 | (c) | 07/11/25 | 755 | 728,575 | |||||||||||
|
| |||||||||||||||
10,515,064 | ||||||||||||||||
Diversified Financial Services 2.7% | ||||||||||||||||
Advisor Group, Inc., | — | (p) | 09/30/25 | 1,150 | 1,155,750 | |||||||||||
Alixpartners LLP, | 4.826 | (c) | 04/04/24 | 3,677 | 3,681,288 | |||||||||||
Allied Universal Holdco LLC, | 5.826 | (c) | 07/28/22 | 2,130 | 2,099,008 | |||||||||||
Altisource Solutions Sarl, | 6.334 | (c) | 04/03/24 | 1,179 | 1,173,387 | |||||||||||
Auris Luxembourg III Sarl, | — | (p) | 07/30/25 | 850 | 855,844 | |||||||||||
Blackhawk Network Holdings, Inc., | 5.183 | (c) | 06/15/25 | 2,075 | 2,080,187 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 21 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Diversified Financial Services (cont’d.) | ||||||||||||||||
Capital Automotive L.P., | 8.080 | %(c) | 03/24/25 | 773 | $ | 784,131 | ||||||||||
Focus Financial Partners LLC, | 4.576 | (c) | 07/03/24 | 1,398 | 1,399,029 | |||||||||||
Franklin Square Holdings, L.P., | 4.625 | (c) | 07/25/25 | 1,250 | 1,253,125 | |||||||||||
Greensky Holdings LLC, | 5.375 | (c) | 03/31/25 | 1,421 | 1,428,545 | |||||||||||
Hudson River Trading LLC, | 6.326 | (c) | 03/20/25 | 1,895 | 1,916,572 | |||||||||||
IG Investments Holdings LLC, | | 5.705 | (c) | | 05/21/25 | | | 800 | | | 801,000 | | ||||
Jefferies Finance LLC, | 4.875 | (c) | 09/30/25 | 795 | 794,808 | |||||||||||
Leidos Innovations Corp., | — | (p) | 08/22/25 | 1,200 | 1,201,500 | |||||||||||
Lions Gate Capital Holdings LLC, | 4.315 | (c) | 03/24/25 | 1,197 | 1,194,007 | |||||||||||
Liquidnet Holdings, Inc., | 5.826 | (c) | 07/11/24 | 2,100 | 2,099,862 | |||||||||||
NFP Corp., | 5.076 | (c) | 01/08/24 | 1,231 | 1,228,941 | |||||||||||
Station Casinos LLC, | 4.580 | (c) | 06/08/23 | 967 | 969,736 | |||||||||||
The Edelman Financial Center LLC, | 5.592 | (c) | 07/21/25 | 1,775 | 1,782,544 | |||||||||||
Virtus Investment Partners, Inc., | 2.291 | (c) | 06/03/24 | 1,588 | 1,592,397 | |||||||||||
|
| |||||||||||||||
29,491,661 | ||||||||||||||||
Electric 1.0% | ||||||||||||||||
Calpine Corp., | 4.840 | (c) | 05/31/23 | 499 | 499,262 | |||||||||||
Contanda LLC, | 5.834 | (c) | 02/27/20 | 575 | 570,687 | |||||||||||
FTS International, Inc., | 6.826 | (c) | 04/16/21 | 94 | 93,850 | |||||||||||
Helix Gen Funding LLC, | 5.826 | (c) | 06/03/24 | 1,756 | 1,688,402 |
See Notes to Financial Statements.
22 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Electric (cont’d.) | ||||||||||||||||
Pike Corp., | 5.580 | %(c) | 03/21/25 | 1,973 | $ | 1,986,207 | ||||||||||
Vistra Operations Co. LLC, | ||||||||||||||||
2018 Incremental Term Loan, 1 Month LIBOR + 2.000% | 4.065 | (c) | 12/31/25 | 5,525 | 5,512,911 | |||||||||||
Initial Term B-1 Loan, 1 Month LIBOR + 2.000% | 4.076 | (c) | 08/04/23 | 1,000 | 997,812 | |||||||||||
|
| |||||||||||||||
11,349,131 | ||||||||||||||||
Electrical Components & Equipment 0.3% | ||||||||||||||||
Pelican Products, Inc., | 5.581 | (c) | 05/01/25 | 1,921 | 1,920,532 | |||||||||||
Southwire Co., | 4.060 | (c) | 05/15/25 | 1,325 | 1,327,484 | |||||||||||
|
| |||||||||||||||
3,248,016 | ||||||||||||||||
Electronics 0.7% | ||||||||||||||||
Calpine Corp., | 4.840 | (c) | 01/15/24 | 4,105 | 4,109,364 | |||||||||||
Celestica, Inc. (Canada), | 4.065 | (c) | 06/27/25 | 1,775 | 1,768,344 | |||||||||||
Kemet Corp., | 8.076 | (c) | 04/26/24 | 523 | 530,337 | |||||||||||
TTM Technologies, Inc., | 4.581 | (c) | 09/30/24 | 1,552 | 1,553,038 | |||||||||||
|
| |||||||||||||||
7,961,083 | ||||||||||||||||
Engineering & Construction 1.9% | ||||||||||||||||
Advantage Sales & Marketing, Inc., | 5.326 | (c) | 07/23/21 | 1,921 | 1,793,361 | |||||||||||
American Traffic Solution, | 5.825 | (c) | 02/28/25 | 998 | 1,002,990 | |||||||||||
Brand Energy & Infrastructure Services, Inc., | 6.592 | (c) | 06/21/24 | 3,490 | 3,506,228 | |||||||||||
DG Investment Intermediate Holdings 2, Inc., | ||||||||||||||||
First Lien First Amendment Incremental Term Loan, 1 Month LIBOR + 3.000% | 5.076 | (c) | 02/03/25 | 800 | 793,500 | |||||||||||
First Lien Initial Term Loan, 1 Month LIBOR + 3.000% | 5.076 | (c) | 02/03/25 | 946 | 938,330 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 23 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Engineering & Construction (cont’d.) | ||||||||||||||||
DG Investment Intermediate Holdings 2, Inc., (cont’d.) | ||||||||||||||||
Second Lien Initial Term Loan, 3 Month LIBOR + 6.750%^ | 9.084 | %(c) | 02/01/26 | 500 | $ | 502,500 | ||||||||||
Gopher Sub, Inc., | 2.846 | (c) | 02/03/25 | 101 | 102,121 | |||||||||||
Hamilton Holdco LLC (Australia), | 4.340 | (c) | 07/02/25 | 825 | 823,969 | |||||||||||
MX Holdings US, Inc., | — | (p) | 07/31/25 | 825 | 829,125 | |||||||||||
Pisces Midco, Inc., | 6.087 | (c) | 04/12/25 | 3,550 | 3,560,355 | |||||||||||
Road Infrastructure Investment Holdings, Inc., | 5.576 | (c) | 06/13/23 | 1,521 | 1,518,081 | |||||||||||
StandardAero Aviation Holdings, Inc., | 5.830 | (c) | 07/07/22 | 3,513 | 3,523,952 | |||||||||||
Trc Companies, Inc., | 5.576 | (c) | 06/21/24 | 1,319 | 1,319,637 | |||||||||||
USIC Holdings, Inc., | 5.326 | (c) | 12/08/23 | 598 | 601,523 | |||||||||||
|
| |||||||||||||||
20,815,672 | ||||||||||||||||
Entertainment 2.5% | ||||||||||||||||
Cbac Borrower LLC, | 6.076 | (c) | 07/07/24 | 2,213 | 2,216,806 | |||||||||||
CEOCL LLC, | 4.076 | (c) | 10/06/24 | 3,691 | 3,682,818 | |||||||||||
Crown Finance US, Inc. (United Kingdom), | 4.576 | (c) | 02/28/25 | 1,995 | 1,986,410 | |||||||||||
Golden Entertainment, Inc., | 5.080 | (c) | 10/21/24 | 1,716 | 1,718,520 | |||||||||||
Greektown Holdings LLC, | 4.826 | (c) | 04/25/24 | 2,129 | 2,125,839 | |||||||||||
IPC Corp., | 3.425 | (c) | 08/06/21 | 757 | 736,482 | |||||||||||
NAI Entertainment Holdings LLC, | 4.580 | (c) | 05/08/25 | 1,200 | 1,199,250 | |||||||||||
National Cinemedia LLC, | 5.125 | (c) | 06/20/25 | 1,000 | 998,750 |
See Notes to Financial Statements.
24 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Entertainment (cont’d.) | ||||||||||||||||
Penn National Gaming, Inc., | — | %(p) | 09/30/25 | 1,250 | $ | 1,251,563 | ||||||||||
Plaskolite LLC, | 5.576 | (c) | 11/03/22 | 2,802 | 2,795,067 | |||||||||||
Scientific Games International, Inc., | 4.826 | (c) | 08/14/24 | 4,391 | 4,379,735 | |||||||||||
Sonneborn LLC, | 6.092 | (c) | 12/10/20 | 641 | 643,989 | |||||||||||
Stars Group Holdings BV (Canada), | 5.831 | (c) | 07/10/25 | 1,700 | 1,712,136 | |||||||||||
Univision Communications, Inc., | 4.826 | (c) | 03/15/24 | 449 | 430,756 | |||||||||||
VIP Cinema Holdings, Inc., | 8.340 | (c) | 03/01/23 | 727 | 729,287 | |||||||||||
WMG Acquisition Corp., | 4.201 | (c) | 11/01/23 | 950 | 946,129 | |||||||||||
|
| |||||||||||||||
27,553,537 | ||||||||||||||||
Environmental Control 1.2% | ||||||||||||||||
Clean Harbors, Inc., | 3.826 | (c) | 06/30/24 | 1,025 | 1,025,000 | |||||||||||
Filtration Group Corp., | 5.076 | (c) | 03/29/25 | 2,621 | 2,627,959 | |||||||||||
Gopher Resource LLC, | 5.326 | (c) | 03/06/25 | 1,971 | 1,975,614 | |||||||||||
North American Lifting Holdings, Inc., | 6.834 | (c) | 11/27/20 | 3,328 | 3,219,939 | |||||||||||
Robertshaw US Holdings Corp., | 5.625 | (c) | 02/28/25 | 1,122 | 1,111,667 | |||||||||||
WCA Waste Systems, Inc., | 4.576 | (c) | 08/14/23 | 2,307 | 2,295,828 | |||||||||||
Wrangler Buyer Corp., | 4.826 | (c) | 09/27/24 | 299 | 300,183 | |||||||||||
|
| |||||||||||||||
12,556,190 | ||||||||||||||||
Food Service 0.1% | ||||||||||||||||
Agro Merchants North America Holdings, Inc., | 6.084 | (c) | 12/06/24 | 871 | 869,114 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 25 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Foods 2.1% | ||||||||||||||||
Albertson’s LLC, | ||||||||||||||||
Replacement 2017-1 Term B-5 Loan, 3 Month LIBOR + 3.000% | 5.337 | %(c) | 12/21/22 | 807 | $ | 804,915 | ||||||||||
Replacement 2017-1 Term B-6 Loan, 3 Month LIBOR + 3.000% | 5.311 | (c) | 06/22/23 | 488 | 486,233 | |||||||||||
American Seafoods Group LLC, | 4.830 | (c) | 08/21/23 | 2,000 | 1,995,000 | |||||||||||
H Food Holdings LLC, | 5.065 | (c) | 05/23/25 | 2,250 | 2,231,294 | |||||||||||
JBS USA Lux SA, | 4.835 | (c) | 10/30/22 | 4,810 | 4,803,921 | |||||||||||
Mastronardi Produce-USA, Inc. (Canada), | 5.332 | (c) | 05/01/25 | 925 | 929,625 | |||||||||||
Milk Specialties Company (D/B/A Msg Nutritional Ingredients), | 6.076 | (c) | 08/16/23 | 2,768 | 2,765,309 | |||||||||||
Post Holdings, Inc., | 4.070 | (c) | 05/24/24 | 2,970 | 2,970,178 | |||||||||||
Shearer’s Foods LLC, | 6.326 | (c) | 06/30/21 | 3,593 | 3,523,993 | |||||||||||
Sigma Bidco BV (Netherlands), | 5.081 | (c) | 07/02/25 | 2,575 | 2,568,563 | |||||||||||
|
| |||||||||||||||
23,079,031 | ||||||||||||||||
Hand/Machine Tools 0.4% | ||||||||||||||||
Apex Tool Group LLC, | 5.826 | (c) | 02/01/22 | 1,855 | 1,856,583 | |||||||||||
Milacron LLC, | 4.576 | (c) | 09/28/23 | 2,733 | 2,719,207 | |||||||||||
|
| |||||||||||||||
4,575,790 | ||||||||||||||||
Healthcare & Pharmaceuticals 0.3% | ||||||||||||||||
Sterigenics Nordion Holdings LLC, | 5.334 | (c) | 05/15/22 | 1,744 | 1,746,754 | |||||||||||
Syneos Health, Inc., | 4.076 | (c) | 08/01/24 | 1,501 | 1,500,204 | |||||||||||
|
| |||||||||||||||
3,246,958 |
See Notes to Financial Statements.
26 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Healthcare-Products 1.5% | ||||||||||||||||
Avantor, Inc., | 6.076 | %(c) | 11/21/24 | 2,363 | $ | 2,387,248 | ||||||||||
Citgo Petroleum Corp., | 5.837 | (c) | 07/29/21 | 3,354 | 3,351,397 | |||||||||||
CPI Holdco LLC, | 5.576 | (c) | 03/21/24 | 2,426 | 2,427,825 | |||||||||||
Greatbatch Ltd., | 4.570 | (c) | 10/27/21 | 2,884 | 2,884,390 | |||||||||||
Mallinckrodt International Finance SA, | 5.203 | (c) | 09/24/24 | 1,824 | 1,807,585 | |||||||||||
Ortho-Clinical Diagnostics, Inc. (Luxembourg), | 5.316 | (c) | 06/30/25 | 3,018 | 3,015,124 | |||||||||||
|
| |||||||||||||||
15,873,569 | ||||||||||||||||
Healthcare-Services 4.6% | ||||||||||||||||
Academy, Ltd., | 6.082 | (c) | 07/01/22 | 4,084 | 3,354,241 | |||||||||||
Advantage Sales & Marketing, Inc., | 8.576 | (c) | 07/25/22 | 750 | 623,750 | |||||||||||
Affinity Gaming LLC, | 5.326 | (c) | 07/03/23 | 1,428 | 1,421,127 | |||||||||||
Air Med Group Holdings, Inc., | 6.327 | (c) | 03/14/25 | 1,620 | 1,607,038 | |||||||||||
Air Medical Group Holdings, Inc., | 5.321 | (c) | 04/28/22 | 2,356 | 2,309,274 | |||||||||||
Air Methods Corp., | 5.834 | (c) | 04/21/24 | 2,721 | 2,480,209 | |||||||||||
Alliance Healthcare Services, Inc., | ||||||||||||||||
First Lien Initial Term Loan, 1 Month LIBOR + 4.500% | 6.576 | (c) | 10/20/23 | 3,096 | 3,094,118 | |||||||||||
Second Lien Initial Term Loan, 1 Month LIBOR + 10.000%^ | 12.076 | (c) | 04/24/24 | 825 | 812,625 | |||||||||||
BW Nhhc Holdco, Inc., | 7.064 | (c) | 05/15/25 | 1,750 | 1,719,375 | |||||||||||
Ccs Intermediate Holdings LLC, | 6.334 | (c) | 07/23/21 | 1,211 | 1,178,081 | |||||||||||
CHG Healthcare Services, Inc., | 5.209 | (c) | 06/07/23 | 675 | 675,949 | |||||||||||
Cvs Holdings I LP, | 5.080 | (c) | 02/06/25 | 1,920 | 1,912,987 | |||||||||||
Dentalcorp Perfect Smile ULC (Canada), | 2.863 | (c) | 06/06/25 | 52 | 52,042 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 27 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Healthcare-Services (cont’d.) | ||||||||||||||||
Dentalcorp Perfect Smile ULC (Canada), (cont’d.) | ||||||||||||||||
Initial Term Loan, 1 Month LIBOR + 3.750% | 5.826 | %(c) | 06/06/25 | 1,260 | $ | 1,263,150 | ||||||||||
Envision Healthcare Corp., | 5.080 | (c) | 12/01/23 | 647 | 645,356 | |||||||||||
Gentiva Health Services, Inc., | ||||||||||||||||
First Lien Closing Date Initial Term Loan, 3 Month LIBOR + 3.750%^ | 6.125 | (c) | 07/02/25 | 3,750 | 3,773,438 | |||||||||||
Second Lien Term Loan, 2 Month LIBOR + 7.000% | 9.375 | (c) | 07/02/26 | 1,125 | 1,144,688 | |||||||||||
GHX Ultimate Parent Corp., | 5.459 | (c) | 06/28/24 | 2,391 | 2,384,773 | |||||||||||
GI Chill Acquisition LLC, | 6.182 | (c) | 08/01/25 | 1,200 | 1,198,500 | |||||||||||
Heartland Dental LLC, | 5.826 | (c) | 04/30/25 | 1,674 | 1,662,057 | |||||||||||
Medical Solutions Holdings, Inc., | 5.826 | (c) | 06/14/24 | 1,144 | 1,145,778 | |||||||||||
Midwest Physician Administrative Services LLC, | 4.815 | (c) | 08/15/24 | 2,739 | 2,699,142 | |||||||||||
One Call Corp., | 7.313 | (c) | 11/27/22 | 384 | 365,576 | |||||||||||
Radnet Management, Inc., | 6.920 | (c) | 06/30/23 | 1,090 | 1,096,256 | |||||||||||
Select Medical Corp., | 6.107 | (c) | 03/01/21 | 2,771 | 2,786,262 | |||||||||||
Sterling Midco Holdings, Inc., | 1.859 | (c) | 06/19/24 | 1,711 | 1,700,197 | |||||||||||
Surgery Center Holdings, Inc., | 5.570 | (c) | 09/02/24 | 3,310 | 3,303,844 | |||||||||||
U.S. Anesthesia Partners, Inc., | 5.076 | (c) | 06/24/24 | 2,566 | 2,570,118 | |||||||||||
Wink Holdco, Inc., | 5.076 | (c) | 12/01/24 | 1,247 | 1,244,529 | |||||||||||
|
| |||||||||||||||
50,224,480 | ||||||||||||||||
Holding Companies-Diversified 0.3% | ||||||||||||||||
Travelport Finance Sarl (Luxembourg), | 4.814 | (c) | 03/17/25 | 3,730 | 3,726,804 |
See Notes to Financial Statements.
28 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Home Builders 0.5% | ||||||||||||||||
Acosta, Inc., | 5.326 | %(c) | 09/26/21 | 724 | $ | 562,040 | ||||||||||
Installed Building Products, Inc., | 4.576 | (c) | 04/15/25 | 2,550 | 2,534,858 | |||||||||||
Interior Logic Group Holdings IV LLC, | 6.342 | (c) | 05/30/25 | 2,025 | 2,023,735 | |||||||||||
|
| |||||||||||||||
5,120,633 | ||||||||||||||||
Home Furnishings 0.2% | ||||||||||||||||
Global Appliance, Inc., | 6.080 | (c) | 10/04/24 | 1,692 | 1,685,406 | |||||||||||
Household Products/Wares 0.9% | ||||||||||||||||
Csm Bakery Solutions LLC, | 6.340 | (c) | 07/03/20 | 2,811 | 2,705,914 | |||||||||||
Diamond (BC) BV, | 5.076 | (c) | 09/06/24 | 2,913 | 2,851,214 | |||||||||||
Energizer Holdings, Inc., | — | (p) | 07/31/25 | 1,325 | 1,333,281 | |||||||||||
JELD-WEN, Inc., | — | (p) | 12/16/24 | 1,177 | 1,175,973 | |||||||||||
Prestige Brands, Inc., | 4.076 | (c) | 01/26/24 | 561 | 560,569 | |||||||||||
Spectrum Brands, Inc., | 4.312 | (c) | 06/23/22 | 998 | 997,630 | |||||||||||
|
| |||||||||||||||
9,624,581 | ||||||||||||||||
Housewares 0.3% | ||||||||||||||||
Carlisle Foodservice Products, Inc., | 5.066 | (c) | 03/20/25 | 1,058 | 1,047,504 | |||||||||||
Lifetime Brands, Inc., | 5.576 | (c) | 03/13/25 | 823 | 820,880 | |||||||||||
Radio Systems Corp., | 4.826 | (c) | 05/02/24 | 1,440 | 1,441,350 | |||||||||||
|
| |||||||||||||||
3,309,734 | ||||||||||||||||
Insurance 1.0% | ||||||||||||||||
Amwins Group, Inc., | 4.828 | (c) | 01/25/24 | 2,127 | 2,127,326 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 29 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Insurance (cont’d.) | ||||||||||||||||
Asurion LLC, | ||||||||||||||||
New B-7 Term Loan, 1 Month LIBOR + 3.000% | 5.076 | %(c) | 11/03/24 | 4,725 | $ | 4,734,280 | ||||||||||
Second Lien Replacement B-2 Term Loan, 1 Month LIBOR + 6.500%^ | 8.576 | (c) | 08/04/25 | 1,075 | 1,107,250 | |||||||||||
Hub International Ltd., | 5.250 | (c) | 04/25/25 | 420 | 419,446 | |||||||||||
Hyperion Insurance Group Limited - Hyperion Refinance Sarl (United Kingdom), | 5.625 | (c) | 12/20/24 | 2,089 | 2,096,813 | |||||||||||
SCS Holdings I, Inc., | 11.576 | (c) | 10/30/23 | 250 | 250,000 | |||||||||||
|
| |||||||||||||||
10,735,115 | ||||||||||||||||
Internet 0.8% | ||||||||||||||||
Ancestry.Com Operations, Inc., | 5.330 | (c) | 10/19/23 | 2,905 | 2,903,718 | |||||||||||
Marketo, Inc., | 5.593 | (c) | 02/07/25 | 1,600 | 1,592,000 | |||||||||||
Micro Holding Corp., | 5.827 | (c) | 09/13/24 | 3,165 | 3,174,843 | |||||||||||
Ping Identity Corp., | 5.826 | (c) | 01/24/25 | 1,350 | 1,350,000 | |||||||||||
|
| |||||||||||||||
9,020,561 | ||||||||||||||||
Investment Companies 0.9% | ||||||||||||||||
EIG Management Co. LLC, | 6.060 | (c) | 02/24/25 | 723 | 728,611 | |||||||||||
Finco I LLC, | 4.076 | (c) | 12/27/22 | 1,125 | 1,126,687 | |||||||||||
GBT Group Services BV, | 4.838 | (c) | 08/13/25 | 700 | 701,750 | |||||||||||
Lannett Company, Inc., | 7.451 | (c) | 11/25/22 | 2,225 | 1,842,798 | |||||||||||
Masergy Holdings, Inc., | 5.584 | (c) | 12/15/23 | 1,527 | 1,525,318 | |||||||||||
NRG Energy, Inc., | 4.084 | (c) | 06/30/23 | 1,491 | 1,489,026 | |||||||||||
Stepstone Group, L.P., | 6.075 | (c) | 03/27/25 | 848 | 849,995 |
See Notes to Financial Statements.
30 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Investment Companies (cont’d.) | ||||||||||||||||
TKC Holdings, Inc., | ||||||||||||||||
Initial Term Loan (First Lien), 1 Month LIBOR + 3.750% | 5.830 | %(c) | 02/01/23 | 933 | $ | 932,220 | ||||||||||
Second Lien Initial Term Loan, 1 Month LIBOR + 8.000% | 10.080 | (c) | 02/01/24 | 425 | 423,938 | |||||||||||
|
| |||||||||||||||
9,620,343 | ||||||||||||||||
Iron/Steel 0.3% | ||||||||||||||||
Helix Acquisition Holdings, Inc., | 5.834 | (c) | 09/30/24 | 1,665 | 1,669,094 | |||||||||||
Phoenix Services International LLC, | 5.830 | (c) | 03/01/25 | 1,347 | 1,350,553 | |||||||||||
|
| |||||||||||||||
3,019,647 | ||||||||||||||||
Leisure Time 1.1% | ||||||||||||||||
Aristocrat Technologies, Inc. (Australia), | 4.098 | (c) | 10/19/24 | 732 | 729,365 | |||||||||||
Clubcorp Holdings, Inc., | 5.084 | (c) | 09/18/24 | 4,180 | 4,138,502 | |||||||||||
Fitness International LLC, | 5.540 | (c) | 04/18/25 | 900 | 901,800 | |||||||||||
Intrawest Resorts Holdings, Inc., | 5.076 | (c) | 07/31/24 | 2,143 | 2,158,809 | |||||||||||
Life Time, Inc., | 4.944 | (c) | 06/10/22 | 995 | 994,573 | |||||||||||
Recess Holdings, Inc., | ||||||||||||||||
First Lien Delayed Draw Term Loan, 1 Month LIBOR + 3.750%/PRIME + 2.750%^ | 5.765 | (c) | 09/18/24 | 30 | 30,612 | |||||||||||
Initial Term Loan (First Lien), 3 Month LIBOR + 3.750%^ | 6.203 | (c) | 09/30/24 | 787 | 788,878 | |||||||||||
Sabre Glbl, Inc., | 4.076 | (c) | 02/22/24 | 1,157 | 1,157,984 | |||||||||||
Sram LLC, | 6.421 | (c) | 03/15/24 | 1,225 | 1,227,843 | |||||||||||
|
| |||||||||||||||
12,128,366 | ||||||||||||||||
Lodging 0.8% | ||||||||||||||||
Caesars Resort Collection LLC, | 4.826 | (c) | 12/23/24 | 748 | 750,125 | |||||||||||
Citycenter Holdings LLC, | 4.326 | (c) | 04/18/24 | 2,194 | 2,192,499 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 31 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Lodging (cont’d.) | ||||||||||||||||
Four Seasons Hotels Ltd. (Canada), | 4.076 | %(c) | 11/30/23 | 2,893 | $ | 2,890,857 | ||||||||||
Lands’ End, Inc., | 5.325 | (c) | 04/02/21 | 1,201 | 1,152,948 | |||||||||||
Marriott Ownership Resorts, Inc., | — | (p) | 09/30/25 | 625 | 625,781 | |||||||||||
Wyndham Destinations, Inc., | 4.445 | (c) | 05/31/25 | 1,000 | 1,000,312 | |||||||||||
|
| |||||||||||||||
8,612,522 | ||||||||||||||||
Machinery-Construction & Mining 0.6% | ||||||||||||||||
Fhc Health Systems, Inc., | 6.076 | (c) | 12/23/21 | 1,613 | 1,379,526 | |||||||||||
Generac Power Systems, Inc., | 3.832 | (c) | 05/31/23 | 3,250 | 3,252,031 | |||||||||||
Vertiv Group Corp., | 6.313 | (c) | 11/30/23 | 1,571 | 1,572,491 | |||||||||||
|
| |||||||||||||||
6,204,048 | ||||||||||||||||
Machinery-Diversified 2.2% | ||||||||||||||||
CD&R Hydra Buyer, Inc., | 6.326 | (c) | 12/11/24 | 1,893 | 1,877,724 | |||||||||||
Clark Equipment Company (South Korea), | 4.334 | (c) | 05/18/24 | 2,394 | 2,391,129 | |||||||||||
Cpm Acquisition Corp., | 10.326 | (c) | 04/10/23 | 200 | 202,000 | |||||||||||
Crosby US Acquisition Corp., | 5.067 | (c) | 11/23/20 | 6,510 | 6,433,146 | |||||||||||
Douglas Dynamics LLC, | 5.080 | (c) | 12/31/21 | 1,395 | 1,393,053 | |||||||||||
DXP Enterprises, Inc., | 6.826 | (c) | 08/16/23 | 720 | 721,361 | |||||||||||
Engineered Machinery Holdings, Inc., | 5.584 | (c) | 07/19/24 | 3,424 | 3,414,046 | |||||||||||
Hyster Yale Group, Inc., | 5.326 | (c) | 05/30/23 | 456 | 457,635 | |||||||||||
Pro Mach, Inc., | 5.071 | (c) | 03/07/25 | 3,217 | 3,195,223 |
See Notes to Financial Statements.
32 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Machinery-Diversified (cont’d.) | ||||||||||||||||
Titan Acquisition Ltd. (Canada), | 5.076 | %(c) | 03/28/25 | 2,495 | $ | 2,358,164 | ||||||||||
VAC (Germany), | 6.334 | (c) | 03/08/25 | 1,646 | 1,641,760 | |||||||||||
|
| |||||||||||||||
24,085,241 | ||||||||||||||||
Media 4.4% | ||||||||||||||||
A-L Parent LLC, | 5.330 | (c) | 12/01/23 | 1,246 | 1,254,159 | |||||||||||
Altice Financing SA (Luxembourg), | 4.814 | (c) | 01/31/26 | 744 | 716,926 | |||||||||||
Beasley Mezzanine Holdings LLC, | 6.060 | (c) | 11/17/23 | 2,085 | 2,088,613 | |||||||||||
CBS Radio, Inc., | 4.816 | (c) | 11/18/24 | 1,494 | 1,477,545 | |||||||||||
Charter Communications Operating LLC, | 4.080 | (c) | 04/30/25 | 3,500 | 3,500,364 | |||||||||||
Clover Technologies Group LLC, | 6.576 | (c) | 05/08/20 | 385 | 376,942 | |||||||||||
Cogeco Communications (USA), L.P., | 4.451 | (c) | 01/03/25 | 3,731 | 3,720,548 | |||||||||||
Colouroz Midco - Colouroz Investment 2 LLCcol (Germany), | 9.592 | (c) | 09/06/22 | 118 | 98,681 | |||||||||||
CSC Holdings LLC, | 4.564 | (c) | 01/25/26 | 1,496 | 1,491,263 | |||||||||||
Deluxe Entertainment Services Group, Inc., | 1.568 | (c) | 02/28/20 | 1,215 | 1,151,300 | |||||||||||
Entravision Communications Corp., | — | (p) | 11/29/24 | 2,000 | 1,971,250 | |||||||||||
Hemisphere Media Holdings LLC, | 5.576 | (c) | 02/14/24 | 932 | 920,456 | |||||||||||
Meredith Corp., | 5.076 | (c) | 01/31/25 | 895 | 896,960 | |||||||||||
Nep/Ncp Holdco, Inc., | ||||||||||||||||
First Lien Amendment No 5 Incremental Term Loan, | 5.326 | (c) | 07/21/22 | 2,897 | 2,884,404 | |||||||||||
New Term Loan (Second Lien), 1 Month LIBOR + 7.000%^ | 9.067 | (c) | 01/23/23 | 692 | 691,866 | |||||||||||
Nielsen Finance LLC, | 4.071 | (c) | 10/04/23 | 2,750 | 2,737,108 | |||||||||||
Numericable US LLC (France), | 4.825 | (c) | 07/31/25 | 593 | 562,505 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 33 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Media (cont’d.) | ||||||||||||||||
Numericable US LLC (France), (cont’d.) | ||||||||||||||||
USD TLB-12 Term Loan, 1 Month LIBOR + 3.688% | 5.751 | %(c) | 01/31/26 | 1,712 | $ | 1,645,006 | ||||||||||
Radiate Holdco LLC, | 5.076 | (c) | 02/01/24 | 5,179 | 5,143,224 | |||||||||||
Synagro Infrastructure Company, Inc., | 7.834 | (c) | 08/21/20 | 168 | 143,092 | |||||||||||
Tribune Media Company, | 5.076 | (c) | 01/27/24 | 2,933 | 2,937,989 | |||||||||||
Unitymedia Finance LLC (Germany), | 4.313 | (c) | 01/15/26 | 2,000 | 1,995,000 | |||||||||||
Unitymedia Hessen Gmbh & Co Kg (Germany), | 4.313 | (c) | 09/30/25 | 1,000 | 997,969 | |||||||||||
UPC Financing Partnership, | 4.563 | (c) | 01/15/26 | 2,291 | 2,281,507 | |||||||||||
Virgin Media Bristol LLC, | 4.563 | (c) | 01/15/26 | 3,000 | 2,998,125 | |||||||||||
Wideopenwest Finance LLC, | 5.310 | (c) | 08/18/23 | 3,042 | 2,958,467 | |||||||||||
|
| |||||||||||||||
47,641,269 | ||||||||||||||||
Metal Fabricate/Hardware 0.4% | ||||||||||||||||
Anvil International LLC, | 6.640 | (c) | 08/01/24 | 1,986 | 1,996,303 | |||||||||||
Global Brass And Copper, Inc., | 4.625 | (c) | 05/29/25 | 2,000 | 2,005,000 | |||||||||||
Penn Engineering & Manufacturing Corp., | 4.826 | (c) | 06/27/24 | 545 | 546,202 | |||||||||||
Sonneborn Refined Products BV, | 6.092 | (c) | 12/10/20 | 113 | 114,211 | |||||||||||
|
| |||||||||||||||
4,661,716 | ||||||||||||||||
Mining 0.2% | ||||||||||||||||
Aleris International, Inc., | 6.826 | (c) | 02/27/23 | 975 | 988,000 | |||||||||||
Covia Holdings Corp., | 6.050 | (c) | 06/01/25 | 1,475 | 1,456,562 | |||||||||||
|
| |||||||||||||||
2,444,562 |
See Notes to Financial Statements.
34 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Miscellaneous Manufacturing 0.7% | ||||||||||||||||
Blount International, Inc., | 6.331 | %(c) | 04/12/23 | 1,269 | $ | 1,271,004 | ||||||||||
Chefs’ Warehouse Inc., (The), | 6.080 | (c) | 06/22/22 | 893 | 895,966 | |||||||||||
International Textile Group, Inc., | 7.081 | (c) | 05/01/24 | 1,075 | 1,077,687 | |||||||||||
Mavis Tire Express Services Corp., | ||||||||||||||||
Closing Date Term Loan (First Lien), 1 Month LIBOR + 3.250% | 5.327 | (c) | 03/20/25 | 688 | 683,579 | |||||||||||
Delayed Draw Term Loan (First Lien), 1 Month LIBOR + 3.250% | 3.164 | (c) | 03/20/25 | 6 | 6,033 | |||||||||||
Solenis International, L.P., | 10.811 | (c) | 06/18/24 | 1,500 | 1,473,750 | |||||||||||
Spectrum Holdings III Corp, | 5.326 | (c) | 01/31/25 | 794 | 790,288 | |||||||||||
Technimark LLC, | 5.833 | (c) | 08/08/25 | 850 | 850,000 | |||||||||||
Tecostar Holdings, Inc., | 6.860 | (c) | 05/01/24 | 301 | 301,710 | |||||||||||
|
| |||||||||||||||
7,350,017 | ||||||||||||||||
Oil & Gas 0.8% | ||||||||||||||||
Apro LLC, | 6.200 | (c) | 08/08/24 | 792 | 792,051 | |||||||||||
Ascent Resources Marcellus LLC, | 8.580 | (c) | 03/30/23 | 250 | 250,469 | |||||||||||
California Resources Corp., | 12.440 | (c) | 12/31/21 | 1,275 | 1,405,687 | |||||||||||
Delek US Holdings, Inc., | 4.576 | (c) | 03/14/25 | 1,746 | 1,749,261 | |||||||||||
Medallion Midland Acquisition LLC, | 5.326 | (c) | 10/30/24 | 1,119 | 1,107,714 | |||||||||||
Meg Energy Corp. (Canada), | 5.580 | (c) | 12/31/23 | 389 | 388,821 | |||||||||||
Powerteam Services LLC, | 5.584 | (c) | 03/06/25 | 2,743 | 2,724,266 | |||||||||||
|
| |||||||||||||||
8,418,269 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 35 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Oil & Gas Services 0.6% | ||||||||||||||||
Brazos Delaware II LLC, | 6.077 | %(c) | 05/21/25 | 2,000 | $ | 1,981,250 | ||||||||||
Lucid Energy Group II Borrower LLC, | 5.077 | (c) | 02/17/25 | 3,491 | 3,433,062 | |||||||||||
Thermon Holding Corp., | 5.832 | (c) | 10/30/24 | 1,141 | 1,145,404 | |||||||||||
|
| |||||||||||||||
6,559,716 | ||||||||||||||||
Oil, Gas & Coal 0.1% | ||||||||||||||||
EG America, LLC, | 10.221 | (c) | 03/23/26 | 1,400 | 1,380,166 | |||||||||||
Other Industry 0.7% | ||||||||||||||||
Harnourvest Partners LLC, | 4.313 | (c) | 03/03/25 | 3,615 | 3,610,515 | |||||||||||
Telenet Finance USD LLC (Belgium), | 4.313 | (c) | 08/15/26 | 2,750 | 2,715,053 | |||||||||||
Unitymedia Finance LLC (Germany), | 4.063 | (c) | 06/01/23 | 750 | 748,661 | |||||||||||
|
| |||||||||||||||
7,074,229 | ||||||||||||||||
Packaging & Containers 1.5% | ||||||||||||||||
Albea Beauty Holdings SA (France), | 5.390 | (c) | 04/22/24 | 1,272 | 1,259,094 | |||||||||||
Berlin Packaging LLC, | 5.213 | (c) | 11/07/25 | 1,450 | 1,448,640 | |||||||||||
BWAY Holding Co., | — | (p) | 04/03/24 | 2,000 | 1,989,584 | |||||||||||
Charter Nex US, Inc., | 5.076 | (c) | 05/16/24 | 1,411 | 1,406,783 | |||||||||||
Expera Specialty Solutions LLC, | 6.205 | (c) | 11/03/23 | 1,254 | 1,252,936 | |||||||||||
Flex Acquisition Co., Inc., | 5.751 | (c) | 06/29/25 | 2,000 | 2,000,624 | |||||||||||
Plastipak Packaging, Inc., | 4.580 | (c) | 10/14/24 | 995 | 992,500 | |||||||||||
Proampac PG Borrower LLC, | 5.781 | (c) | 11/20/23 | 1,951 | 1,942,669 | |||||||||||
Ring Container Technologies LLC, | 4.826 | (c) | 10/31/24 | 2,092 | 2,090,686 |
See Notes to Financial Statements.
36 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Packaging & Containers (cont’d.) | ||||||||||||||||
Tank Holding Corp., | 5.810 | %(c) | 03/17/22 | 910 | $ | 912,597 | ||||||||||
Trident TPI Holdings, Inc., | 5.326 | (c) | 10/17/24 | 798 | 795,003 | |||||||||||
|
| |||||||||||||||
16,091,116 | ||||||||||||||||
Pharmaceuticals 2.4% | ||||||||||||||||
Alphabet Holding Company, Inc., | 5.576 | (c) | 09/26/24 | 1,365 | 1,288,947 | |||||||||||
Amneal Pharmaceuticals LLC, | 5.625 | (c) | 05/04/25 | 3,599 | 3,608,282 | |||||||||||
Bausch Health Co., Inc., | 5.081 | (c) | 06/02/25 | 5,278 | 5,294,638 | |||||||||||
Change Healthcare Holdings LLC, | 4.826 | (c) | 03/01/24 | 4,401 | 4,401,747 | |||||||||||
Endo Luxembourg Finance Company I Sarl, | 6.375 | (c) | 04/29/24 | 2,745 | 2,758,776 | |||||||||||
Genoa A Qol Healthcare Company LLC, | 5.326 | (c) | 10/30/23 | 1,500 | 1,503,124 | |||||||||||
Nva Holdings, Inc., | 4.826 | (c) | 02/02/25 | 4,018 | 4,003,244 | |||||||||||
Pearl Intermediate Parent LLC, | ||||||||||||||||
Delayed Draw Term Loan (First Lien), 3 Month LIBOR + 2.750% | 3.042 | (c) | 02/14/25 | 35 | 33,868 | |||||||||||
Initial Term Loan (First Lien), 1 Month LIBOR + 2.750% | 4.827 | (c) | 02/14/25 | 424 | 414,929 | |||||||||||
Pharmerica Corp., | 5.567 | (c) | 12/06/24 | 1,821 | 1,831,815 | |||||||||||
Vetcor Professional Practices LLC, | 5.081 | (c) | 07/02/25 | 1,375 | 1,371,562 | |||||||||||
|
| |||||||||||||||
26,510,932 | ||||||||||||||||
Pipelines 0.7% | ||||||||||||||||
BCP Renaissance Parent LLC, | 5.842 | (c) | 10/31/24 | 2,750 | 2,757,733 | |||||||||||
Midcoast Energy LLC, | 7.843 | (c) | 07/31/25 | 1,225 | 1,232,656 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 37 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Pipelines (cont’d.) | ||||||||||||||||
Navitas Midstream Midland Basin LLC, | 6.577 | %(c) | 12/13/24 | 1,990 | $ | 1,957,663 | ||||||||||
Plaze, Inc., | 4.378 | (c) | 07/31/22 | 1,868 | 1,872,755 | |||||||||||
|
| |||||||||||||||
7,820,807 | ||||||||||||||||
Private Equity 0.3% | ||||||||||||||||
Canyon Valor Companies, Inc., | 5.584 | (c) | 06/16/23 | 2,705 | 2,715,543 | |||||||||||
Real Estate 1.2% | ||||||||||||||||
ASP MCS Acquisition Corp., | 7.084 | (c) | 05/20/24 | 1,262 | 1,109,991 | |||||||||||
DTZ US Borrower LLC, | 5.194 | (c) | 08/21/25 | 5,950 | 5,930,169 | |||||||||||
Lightstone Holdco LLC, | ||||||||||||||||
2018 Refinancing Term B Facility, 1 Month LIBOR + 3.750% | 5.826 | (c) | 01/30/24 | 4,245 | 4,236,444 | |||||||||||
2018 Refinancing Term C Facility, 1 Month LIBOR + 3.750% | 5.826 | (c) | 01/30/24 | 272 | 270,278 | |||||||||||
Revlon Consumer Products Corp., | 5.734 | (c) | 09/07/23 | 1,942 | 1,447,406 | |||||||||||
|
| |||||||||||||||
12,994,288 | ||||||||||||||||
Real Estate Investment Trusts (REITs) 1.2% | ||||||||||||||||
Calceus Acquisition, Inc., | 6.080 | (c) | 01/31/20 | 3,204 | 3,164,516 | |||||||||||
Geo Group, Inc., | 4.080 | (c) | 03/22/24 | 1,870 | 1,862,083 | |||||||||||
Istar, Inc., | 4.829 | (c) | 06/28/23 | 1,646 | 1,643,928 | |||||||||||
Pregis Holding I Corp., | 5.834 | (c) | 05/20/21 | 2,121 | 2,123,247 | |||||||||||
RHP Hotel Properties, L.P., | 3.472 | (c) | 05/11/24 | 2,750 | 2,745,187 | |||||||||||
Vici Properties 1 LLC, | 4.067 | (c) | 12/20/24 | 1,000 | 999,444 | |||||||||||
|
| |||||||||||||||
12,538,405 |
See Notes to Financial Statements.
38 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Retail 6.7% | ||||||||||||||||
1011778 Bc Unlimited Liability Co. (Canada), | 4.326 | %(c) | 02/16/24 | 2,743 | $ | 2,740,756 | ||||||||||
Albertsons Co., Inc., | — | (p) | 12/31/23 | 1,523 | 1,523,000 | |||||||||||
Ashco LLC, | 7.076 | (c) | 09/25/24 | 1,911 | 1,925,847 | |||||||||||
At Home Holding III, Inc., | 5.842 | (c) | 06/03/22 | 3,392 | 3,396,313 | |||||||||||
Beacon Roofing Supply, Inc., | 4.321 | (c) | 01/02/25 | 4,044 | 4,022,088 | |||||||||||
Brookfield Retail Holdings VII Sub 3 LLC, | — | (p) | 06/30/25 | 8,175 | 8,120,988 | |||||||||||
CEC Entertainment, Inc., | 5.326 | (c) | 02/15/21 | 1,521 | 1,430,502 | |||||||||||
CWGS Group LLC, | 4.828 | (c) | 11/08/23 | 2,241 | 2,208,513 | |||||||||||
EG America LLC (United Kingdom), | 6.334 | (c) | 02/07/25 | 2,070 | 2,072,400 | |||||||||||
Euro Garages Ltd. (United Kingdom), | 3.133 | (c) | 02/07/25 | 923 | 921,149 | |||||||||||
Fogo De Chao, Inc., | 6.576 | (c) | 04/07/25 | 1,300 | 1,301,625 | |||||||||||
Foundation Building Materials LLC, | — | (p) | 06/30/25 | 2,225 | 2,227,781 | |||||||||||
Gobp Holdings, Inc., | 5.576 | (c) | 10/21/21 | 2,345 | 2,344,950 | |||||||||||
Harbor Freight Tools USA, Inc., | 4.576 | (c) | 08/18/23 | 2,535 | 2,531,069 | |||||||||||
Highline Aftermarket Acquisition LLC, | 5.625 | (c) | 04/28/25 | 1,470 | 1,458,617 | |||||||||||
Hoffmaster Group, Inc., | 6.076 | (c) | 11/21/23 | 3,025 | 3,034,461 | |||||||||||
K-Mac Holdings Corp., | 5.327 | (c) | 03/07/25 | 1,796 | 1,788,890 | |||||||||||
LBM Borrower LLC, | 5.945 | (c) | 08/19/22 | 2,103 | 2,111,743 | |||||||||||
Leslies Poolmart, Inc., | 5.695 | (c) | 08/16/23 | 1,746 | 1,744,680 | |||||||||||
Michaels Stores, Inc., | 4.570 | (c) | 01/30/23 | 1,746 | 1,740,388 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 39 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Retail (cont’d.) | ||||||||||||||||
Petco Animal Supplies, Inc., | 5.592 | %(c) | 01/26/23 | 4,435 | $ | 3,237,781 | ||||||||||
Petsmart, Inc., | 5.090 | (c) | 03/11/22 | 2,305 | 1,967,562 | |||||||||||
Pf Changs China Bistro, Inc., | 7.562 | (c) | 09/01/22 | 1,390 | 1,379,795 | |||||||||||
Rough Country LLC, | 5.826 | (c) | 05/25/23 | 1,971 | 1,949,197 | |||||||||||
Sage Automotive Interiors, Inc., | 7.076 | (c) | 11/08/22 | 2,512 | 2,521,169 | |||||||||||
Sally Holdings LLC, | ||||||||||||||||
New Term B-1 Loan, 1 Month LIBOR + 2.250% | 4.330 | (c) | 07/05/24 | 497 | 484,124 | |||||||||||
Term B-2 Loan^ | 4.500 | 07/05/24 | 3,550 | 3,372,500 | ||||||||||||
Serta Simmons Bedding LLC, | 5.576 | (c) | 11/08/23 | 2,143 | 1,828,321 | |||||||||||
Staples, Inc., | 6.343 | (c) | 09/12/24 | 3,103 | 3,093,324 | |||||||||||
Tacala LLC, | 5.326 | (c) | 01/31/25 | 1,845 | 1,849,988 | |||||||||||
The Men’s Wearhouse, Inc., | 5.582 | (c) | 04/09/25 | 3,159 | 3,177,552 | |||||||||||
|
| |||||||||||||||
73,507,073 | ||||||||||||||||
Semiconductors 0.5% | ||||||||||||||||
Bright Bidco BV (Netherlands), | 5.662 | (c) | 06/30/24 | 3,350 | 3,325,164 | |||||||||||
Brooks Automation, Inc., | 4.850 | (c) | 10/04/24 | 1,318 | 1,316,727 | |||||||||||
Maxlinear, Inc., | 4.563 | (c) | 05/12/24 | 666 | 665,865 | |||||||||||
|
| |||||||||||||||
5,307,756 | ||||||||||||||||
Software 8.6% | ||||||||||||||||
Almonde, Inc., | 5.576 | (c) | 06/13/24 | 4,724 | 4,701,719 | |||||||||||
Aptean, Inc., | 6.590 | (c) | 12/20/22 | 1,538 | 1,538,067 | |||||||||||
Ascend Learning LLC, | 5.076 | (c) | 07/12/24 | 2,132 | 2,125,519 |
See Notes to Financial Statements.
40 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Software (cont’d.) | ||||||||||||||||
BMC Software Finance, Inc., | 5.326 | %(c) | 09/10/22 | 7,161 | $ | 7,163,277 | ||||||||||
Bracket Intermediate Holding Corp., | — | (p) | 09/30/25 | 1,575 | 1,567,125 | |||||||||||
CommerceHub, Inc., | 5.826 | (c) | 05/21/25 | 2,375 | 2,375,000 | |||||||||||
CPM Acquisition Corp., | 5.576 | (c) | 04/11/22 | 2,404 | 2,414,952 | |||||||||||
Csm Bakery Solutions LLC, | 10.090 | (c) | 07/05/21 | 900 | 857,250 | |||||||||||
Cypress Intermediate Holdings III, Inc., | 5.080 | (c) | 04/29/24 | 2,500 | 2,497,500 | |||||||||||
Dynacast International LLC, | 5.584 | (c) | 01/28/22 | 2,582 | 2,568,776 | |||||||||||
Dynatrace LLC, | 5.316 | (c) | 08/25/25 | 1,950 | 1,956,704 | |||||||||||
Eagleview Technology Corp., | 5.567 | (c) | 08/14/25 | 2,400 | 2,395,999 | |||||||||||
First Data Corp., | ||||||||||||||||
2022D New Dollar Term Loan, 1 Month LIBOR + 2.000% | 4.066 | (c) | 07/08/22 | 1,093 | 1,090,799 | |||||||||||
2024A New Dollar Term Loan, 1 Month LIBOR + 2.000% | 4.066 | (c) | 04/26/24 | 1,000 | 998,250 | |||||||||||
Global Tel Link Corp., | 6.334 | (c) | 05/23/20 | 2,458 | 2,468,729 | |||||||||||
Globallogic Holdings, Inc., | 5.424 | (c) | 08/01/25 | 1,225 | 1,231,125 | |||||||||||
Greeneden Us Holdings II LLC, | 5.576 | (c) | 12/01/23 | 4,144 | 4,150,318 | |||||||||||
Hyland Software, Inc., | 5.326 | (c) | 07/01/22 | 582 | 584,696 | |||||||||||
Informatica LLC, | 5.326 | (c) | 08/05/22 | 2,345 | 2,354,607 | |||||||||||
Inovalon Holdings, Inc., | 5.625 | (c) | 04/02/25 | 862 | 851,373 | |||||||||||
Iqvia, Inc., | 4.084 | (c) | 06/11/25 | 1,000 | 998,438 | |||||||||||
Kronos, Inc., | 5.252 | (c) | 11/01/23 | 1,526 | 1,528,895 | |||||||||||
Lattice Semiconductor Corp., | 6.321 | (c) | 03/10/21 | 2,934 | 2,940,834 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 41 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Software (cont’d.) | ||||||||||||||||
MA Financeco LLC (United Kingdom), | 4.576 | %(c) | 06/21/24 | 630 | $ | 623,912 | ||||||||||
Merrill Communications LLC, | 7.592 | (c) | 06/01/22 | 883 | 889,558 | |||||||||||
Mitel US Holdings, Inc. (Canada), | 5.826 | (c) | 09/25/23 | 1,779 | 1,781,956 | |||||||||||
Mph Acquisition Holdings LLC, | 5.084 | (c) | 06/07/23 | 4,425 | 4,418,967 | |||||||||||
Omnitracs LLC, | 5.085 | (c) | 03/21/25 | 3,901 | 3,886,641 | |||||||||||
Quest Software Us Holdings, Inc., | 6.572 | (c) | 05/17/25 | 2,525 | 2,511,850 | |||||||||||
Rackspace Hosting, Inc., | 5.265 | (c) | 11/03/23 | 5,008 | 4,979,189 | |||||||||||
Renaissance Holding Corp., | 5.584 | (c) | 05/30/25 | 1,650 | 1,644,501 | |||||||||||
RP Crown Parent LLC, | 4.826 | (c) | 10/12/23 | 2,000 | 2,004,000 | |||||||||||
SCS Holdings I, Inc., | 6.326 | (c) | 10/30/22 | 1,912 | 1,919,418 | |||||||||||
Seattle Escrow Borrower LLC, | 4.576 | (c) | 06/21/24 | 4,257 | 4,213,435 | |||||||||||
Severin Acquisition LLC, | 5.332 | (c) | 07/31/25 | 1,575 | 1,568,799 | |||||||||||
Solarwinds Holdings, Inc., | 5.076 | (c) | 02/05/24 | 2,304 | 2,308,852 | |||||||||||
Sonicwall US Holdings, Inc., | 5.822 | (c) | 05/17/25 | 1,475 | 1,472,234 | |||||||||||
Sound Inpatient Physicians, Inc., | ||||||||||||||||
First Lien Initial Term Loan, 1 Month LIBOR + 3.000% | 5.076 | (c) | 06/27/25 | 950 | 954,156 | |||||||||||
Second Lien Initial Loan, 1 Month LIBOR + 6.750% | 8.826 | (c) | 06/26/26 | 500 | 503,750 | |||||||||||
SS&C TECH, Inc., | ||||||||||||||||
Term B-3 Loan, 1 Month LIBOR + 2.250% | 4.326 | (c) | 04/16/25 | 1,563 | 1,563,784 | |||||||||||
Term B-4 Loan, 1 Month LIBOR + 2.250% | 4.326 | (c) | 04/16/25 | 608 | 608,312 | |||||||||||
SS&C Technologies, Inc., | — | (p) | 04/16/25 | 750 | 750,156 | |||||||||||
Strategic Partners Acquisition Corp., | 5.826 | (c) | 06/30/23 | 1,432 | 1,427,865 |
See Notes to Financial Statements.
42 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Software (cont’d.) | ||||||||||||||||
Tibco Software, Inc., | 5.580 | %(c) | 12/04/20 | 1,577 | $ | 1,582,156 | ||||||||||
Zekelman Industries, Inc., | 4.582 | (c) | 06/14/21 | 898 | 897,721 | |||||||||||
|
| |||||||||||||||
93,871,164 | ||||||||||||||||
Technology 2.2% | ||||||||||||||||
Almonde, Inc., | 9.326 | (c) | 06/13/25 | 1,000 | 980,500 | |||||||||||
Cologix Holdings, Inc., | 5.065 | (c) | 03/20/24 | 1,683 | 1,679,963 | |||||||||||
Dell International LLC, | 3.580 | (c) | 12/31/18 | 2,043 | 2,041,821 | |||||||||||
GlobalLogic Holdings, Inc., | — | (p) | 08/27/25 | 175 | 175,875 | |||||||||||
Kronos, Inc., | 10.593 | (c) | 11/01/24 | 400 | 409,500 | |||||||||||
Ma Financeco LLC (United Kingdom), | 4.326 | (c) | 11/19/21 | 1,455 | 1,439,360 | |||||||||||
Macom Technology Solutions Holdings, Inc., | 4.326 | (c) | 05/17/24 | 3,483 | 3,414,756 | |||||||||||
McAfee, LLC, | ||||||||||||||||
Closing Date USD Term Loan, 1 Month LIBOR + 4.500% | 6.573 | (c) | 09/30/24 | 3,527 | 3,552,832 | |||||||||||
Second Lien Initial Loan, 1 Month LIBOR + 8.500% | 10.573 | (c) | 09/29/25 | 900 | 915,750 | |||||||||||
Microchip Technology, Inc., | 4.080 | (c) | 05/29/25 | 3,025 | 3,018,699 | |||||||||||
MLN US Holdco LLC, | — | (p) | 07/13/25 | 2,125 | 2,134,962 | |||||||||||
Perspecta, Inc., | 4.326 | (c) | 05/30/25 | 2,000 | 2,002,500 | |||||||||||
Securus Technologies Holdings, Inc., | — | (p) | 11/01/24 | 440 | 439,450 | |||||||||||
Verscend Holding Corp., | — | (p) | 08/27/25 | 2,200 | 2,212,375 | |||||||||||
|
| |||||||||||||||
24,418,343 | ||||||||||||||||
Telecommunications 5.4% | ||||||||||||||||
American Tire Distributors, Inc., | 6.326 | (c) | 09/01/21 | 628 | 478,945 | |||||||||||
Avaya, Inc., | 6.313 | (c) | 12/15/24 | 2,340 | 2,355,111 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 43 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Telecommunications (cont’d.) | ||||||||||||||||
C1 Holdings Corp., | 5.826 | %(c) | 04/10/25 | 2,600 | $ | 2,602,166 | ||||||||||
Calpine Corp., | 4.840 | (c) | 01/15/23 | 731 | 732,164 | |||||||||||
Centurylink, Inc., | 4.826 | (c) | 01/31/25 | 6,122 | 6,047,775 | |||||||||||
Coral US Co-Borrower LLC, | 5.326 | (c) | 02/02/26 | 3,375 | 3,374,062 | |||||||||||
Digicel International Finance Ltd., | 5.570 | (c) | 05/27/24 | 4,302 | 4,065,502 | |||||||||||
Flight Bidco, Inc., | 5.840 | (c) | 07/23/25 | 900 | 896,488 | |||||||||||
Frontier Communications Corp., | 5.830 | (c) | 06/15/24 | 4,115 | 3,970,743 | |||||||||||
GTT Communications, Inc., | 4.830 | (c) | 05/31/25 | 5,450 | 5,336,912 | |||||||||||
Intelsat Jackson Holdings SA (Luxembourg), | 5.815 | (c) | 11/27/23 | 3,775 | 3,789,156 | |||||||||||
Numericable US LLC, | 6.067 | (c) | 01/31/26 | 2,500 | 2,430,470 | |||||||||||
SBA SR Finance II LLC, | 4.080 | (c) | 04/04/25 | 3,000 | 2,988,333 | |||||||||||
Securus Technologies Holdings, Inc., | ||||||||||||||||
Initial Loan (Second Lien), 1 Month LIBOR + 8.250% | 10.326 | (c) | 11/01/25 | 750 | 748,594 | |||||||||||
Initial Term Loan (First Lien), 1 Month LIBOR + 4.500% | 6.576 | (c) | 11/01/24 | 2,050 | 2,047,412 | |||||||||||
Speedcast International Ltd. (Australia), | 5.001 | (c) | 05/15/25 | 1,950 | 1,936,999 | |||||||||||
Sprint Communications, Inc., | 4.625 | (c) | 02/02/24 | 8,461 | 8,460,992 | |||||||||||
West Corp., | 5.576 | (c) | 10/10/24 | 2,250 | 2,232,187 | |||||||||||
Windstream Services LLC, | 5.310 | (c) | 02/17/24 | 689 | 599,887 | |||||||||||
Xplornet Communications, Inc. (Canada), | 6.334 | (c) | 09/09/21 | 3,907 | 3,920,993 | |||||||||||
|
| |||||||||||||||
59,014,891 | ||||||||||||||||
Transportation 1.5% | ||||||||||||||||
Chs/Community Health Systems, Inc., | 5.563 | (c) | 01/27/21 | 2,125 | 2,094,843 |
See Notes to Financial Statements.
44 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
BANK LOANS (Continued) | ||||||||||||||||
Transportation (cont’d.) | ||||||||||||||||
Daseke Companies, Inc., | 7.076 | %(c) | 02/27/24 | 1,341 | $ | 1,344,290 | ||||||||||
Pods LLC, | 4.821 | (c) | 12/06/24 | 3,134 | 3,139,601 | |||||||||||
Rep Wwex Acquisition Parent LLC, | 6.180 | (c) | 02/05/24 | 2,279 | 2,273,667 | |||||||||||
Savage Enterprises LLC, | 6.582 | (c) | 08/01/25 | 1,525 | 1,535,484 | |||||||||||
Transplace Holdings, Inc., | ||||||||||||||||
2018 Incremental Term Loan, 1 Month LIBOR + 3.750%^ | 5.814 | (c) | 10/07/24 | 1,170 | 1,169,943 | |||||||||||
Initial Loan (Second Lien), 1 Month LIBOR + 8.750%^ | 10.817 | (c) | 10/06/25 | 204 | 205,003 | |||||||||||
U.S. Renal Care, Inc., | 6.584 | (c) | 12/30/22 | 3,011 | 2,928,112 | |||||||||||
XPO Logistics, Inc., | 4.065 | (c) | 02/24/25 | 2,000 | 2,004,360 | |||||||||||
|
| |||||||||||||||
16,695,303 | ||||||||||||||||
Trucking & Leasing 0.6% | ||||||||||||||||
Avolon Tlb Borrower 1 (US) LLC (Ireland), | 4.077 | (c) | 01/15/25 | 4,445 | 4,438,432 | |||||||||||
Global Tel Link Corp., | 10.584 | (c) | 11/23/20 | 825 | 826,031 | |||||||||||
IBC Capital, Ltd. (Cayman Islands), | 6.085 | (c) | 09/11/23 | 1,097 | 1,102,279 | |||||||||||
|
| |||||||||||||||
6,366,742 | ||||||||||||||||
|
| |||||||||||||||
TOTAL BANK LOANS | 977,399,802 | |||||||||||||||
|
| |||||||||||||||
CORPORATE BONDS 2.5% | ||||||||||||||||
Aerospace & Defense 0.1% | ||||||||||||||||
Bombardier, Inc. (Canada), | ||||||||||||||||
Sr. Unsec’d. Notes, 144A | 7.500 | 12/01/24 | 500 | 525,625 | ||||||||||||
Sr. Unsec’d. Notes, 144A | 8.750 | 12/01/21 | 750 | 825,000 | ||||||||||||
|
| |||||||||||||||
1,350,625 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 45 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||||
Agriculture 0.1% | ||||||||||||||||
Vector Group Ltd., | 6.125 | % | 02/01/25 | 700 | $ | 670,250 | ||||||||||
Building Materials 0.1% | ||||||||||||||||
Griffon Corp., | 5.250 | 03/01/22 | 1,000 | 986,550 | ||||||||||||
Standard Industries, Inc., | 5.375 | 11/15/24 | 150 | 150,188 | ||||||||||||
|
| |||||||||||||||
1,136,738 | ||||||||||||||||
Chemicals 0.1% | ||||||||||||||||
A Schulman, Inc., | 6.875 | 06/01/23 | 750 | 789,675 | ||||||||||||
Computers 0.2% | ||||||||||||||||
Everi Payments, Inc., | 7.500 | 12/15/25 | 1,000 | 1,016,000 | ||||||||||||
Exela Intermediate LLC/Exela Finance, Inc., | 10.000 | 07/15/23 | 1,450 | 1,518,875 | ||||||||||||
|
| |||||||||||||||
2,534,875 | ||||||||||||||||
Distribution/Wholesale 0.1% | ||||||||||||||||
Global Partners LP/GLP Finance Corp., | 6.250 | 07/15/22 | 1,125 | 1,116,563 | ||||||||||||
Electric 0.1% | ||||||||||||||||
Calpine Corp., | 5.750 | 01/15/25 | 1,600 | 1,452,000 | ||||||||||||
Entertainment 0.2% | ||||||||||||||||
AMC Entertainment Holdings, Inc., | 5.875 | 11/15/26 | 1,000 | 975,000 | ||||||||||||
International Game Technology PLC, | 6.250 | 02/15/22 | 1,500 | 1,548,000 | ||||||||||||
|
| |||||||||||||||
2,523,000 |
See Notes to Financial Statements.
46 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||||
Foods 0.3% | ||||||||||||||||
JBS USA LUX SA/JBS USA Finance, Inc., | 5.750 | % | 06/15/25 | 2,650 | $ | 2,504,250 | ||||||||||
Pilgrim’s Pride Corp., | 5.750 | 03/15/25 | 915 | 885,262 | ||||||||||||
|
| |||||||||||||||
3,389,512 | ||||||||||||||||
Healthcare-Products 0.0% | ||||||||||||||||
Mallinckrodt International Finance SA, | 4.750 | 04/15/23 | 200 | 173,500 | ||||||||||||
Healthcare-Services 0.2% | ||||||||||||||||
CHS/Community Health Systems, Inc., | 6.250 | 03/31/23 | 1,050 | 997,500 | ||||||||||||
Tenet Healthcare Corp., | 8.125 | 04/01/22 | 700 | 739,375 | ||||||||||||
|
| |||||||||||||||
1,736,875 | ||||||||||||||||
Home Builders 0.1% | ||||||||||||||||
Mattamy Group Corp. (Canada), | 6.875 | 12/15/23 | 1,000 | 1,017,500 | ||||||||||||
Home Furnishings 0.1% | ||||||||||||||||
Tempur Sealy International, Inc., | 5.500 | 06/15/26 | 500 | 487,500 | ||||||||||||
Housewares 0.0% | ||||||||||||||||
Scotts Miracle-Gro Co. (The), | 5.250 | 12/15/26 | 500 | 475,000 | ||||||||||||
Lodging 0.1% | ||||||||||||||||
Boyd Gaming Corp., | 6.000 | 08/15/26 | 1,000 | 1,007,500 | ||||||||||||
Media 0.1% | ||||||||||||||||
Cequel Communications Holdings I LLC/Cequel Capital Corp., | 5.125 | 12/15/21 | 500 | 499,370 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 47 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value | ||||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||||
Media (cont’d.) | ||||||||||||||||
DISH DBS Corp., | 7.875 | % | 09/01/19 | 250 | $ | 258,438 | ||||||||||
Sinclair Television Group, Inc., | 5.875 | 03/15/26 | 250 | 246,875 | ||||||||||||
|
| |||||||||||||||
1,004,683 | ||||||||||||||||
Oil & Gas 0.4% | ||||||||||||||||
Alta Mesa Holdings LP/Alta Mesa Finance Services Corp., | 7.875 | 12/15/24 | 950 | 932,187 | ||||||||||||
Citgo Holding, Inc., | 10.750 | 02/15/20 | 2,150 | 2,295,125 | ||||||||||||
CNX Resources Corp., | 8.000 | 04/01/23 | 600 | 634,686 | ||||||||||||
|
| |||||||||||||||
3,861,998 | ||||||||||||||||
Pharmaceuticals 0.1% | ||||||||||||||||
NVA Holdings, Inc., | 6.875 | 04/01/26 | 700 | 695,625 | ||||||||||||
Real Estate 0.0% | ||||||||||||||||
WeWork Cos., Inc., | 7.875 | 05/01/25 | 350 | 339,115 | ||||||||||||
Real Estate Investment Trusts (REITs) 0.0% | ||||||||||||||||
MGM Growth Properties Operating Partnership LP/MGP Finance | 4.500 | 01/15/28 | 300 | 276,570 | ||||||||||||
Retail 0.0% | ||||||||||||||||
Rite Aid Corp., | 6.125 | 04/01/23 | 500 | 448,600 | ||||||||||||
Software 0.1% | ||||||||||||||||
First Data Corp., | 7.000 | 12/01/23 | 500 | 520,250 | ||||||||||||
|
| |||||||||||||||
TOTAL CORPORATE BONDS | 27,007,954 | |||||||||||||||
|
|
See Notes to Financial Statements.
48 |
Description | Shares | Value | ||||||
COMMON STOCKS 0.1% | ||||||||
Oil, Gas & Consumable Fuels 0.0% | ||||||||
Ascent Resources - Marcellus LLC (Class A Stock)*^ | 182,358 | $ | 556,192 | |||||
Software 0.1% | ||||||||
Avaya Holdings Corp.* | 32,696 | 763,778 | ||||||
|
| |||||||
TOTAL COMMON STOCKS | 1,319,970 | |||||||
|
| |||||||
Units | ||||||||
WARRANTS 0.0% | ||||||||
Oil, Gas & Consumable Fuels | ||||||||
Ascent Resources - Marcellus LLC, expiring 03/30/23^ | 46,500 | 1,395 | ||||||
Ascent Resources - Marcellus LLC, expiring 03/30/23^ | 18,026 | 2,163 | ||||||
Ascent Resources - Marcellus LLC, expiring 03/30/23^ | 14,021 | 1,122 | ||||||
|
| |||||||
TOTAL WARRANTS | 4,680 | |||||||
|
| |||||||
TOTAL LONG-TERM INVESTMENTS | 1,068,124,410 | |||||||
|
| |||||||
Shares | ||||||||
SHORT-TERM INVESTMENTS 8.6% | ||||||||
AFFILIATED MUTUAL FUNDS | ||||||||
PGIM Core Ultra Short Bond Fund(w) | 92,579,511 | 92,579,511 | ||||||
PGIM Institutional Money Market Fund (cost $1,391,217; includes $1,386,800 of cash collateral for securities on loan)(b)(w) | 1,391,109 | 1,391,248 | ||||||
|
| |||||||
TOTAL SHORT-TERM INVESTMENTS | 93,970,759 | |||||||
|
| |||||||
TOTAL INVESTMENTS 106.5% | 1,162,095,169 | |||||||
Liabilities in excess of other assets(z) (6.5)% | (71,354,380 | ) | ||||||
|
| |||||||
NET ASSETS 100.0% | $ | 1,090,740,789 | ||||||
|
|
The following abbreviations are used in the semiannual report:
Q—Quarterly payment frequency for swaps
S—Semiannual payment frequency for swaps
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 49 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
144A—Security was purchased pursuant to Rule 144A under the Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. Unless otherwise noted, 144A securities are deemed to be liquid.
CLO—Collateralized Loan Obligation
LIBOR—London Interbank Offered Rate
REITs—Real Estate Investment Trusts
* | Non-income producing security. |
# | Principal or notional amount is shown in U.S. dollars unless otherwise stated. |
^ | Indicates a Level 3 security. The aggregate value of Level 3 securities is $130,811,855 and 12.0% of net assets. |
(a) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $1,353,825; cash collateral of $1,386,800 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. |
(b) | Represents security purchased with cash collateral received for securities on loan and includes dividend reinvestment. |
(c) | Variable rate instrument. The interest rate shown reflects the rate in effect at August 31, 2018. |
(p) | Interest rate not available as of August 31, 2018. |
(w) | PGIM Investments LLC, the manager of the Fund, also serves as manager of the PGIM Core Ultra Short Bond Fund and PGIM Institutional Money Market Fund. |
(z) | Includes net unrealized appreciation (depreciation) on the following derivative contracts and unfunded loan commitment held at reporting period end: |
Unfunded loan commitments outstanding at August 31, 2018
Borrower | Principal Amount (000) | Current Value | Unrealized Appreciation | Unrealized Depreciation | ||||||||||||
Carlisle Foodservice Products, Inc., First Lien Delayed Draw Term Loan, 1.000%, Maturity Date 3/20/25 (cost $238,964)^ | 239 | $ | 236,871 | $ | — | $ | (2,093 | ) | ||||||||
Dentalcorp Perfect Smile ULC, Delayed Draw Term Loan, 1.880%, Maturity Date 6/6/25 (cost $263,088) | 263 | 263,746 | 658 | — | ||||||||||||
DuBois Chemicals, Inc., Delayed Draw Term Loan, 1.000%, Maturity Date 3/15/24 (cost $421,706) | 424 | 420,324 | — | (1,383 | ) | |||||||||||
Heartland Dental LLC, Delayed Draw Term Loan, 3.750%, Maturity Date 4/30/25 (cost $251,087) | 251 | 249,309 | — | (1,778 | ) | |||||||||||
Marvis Tire Express Services Corp., Delayed Draw Term Loan (First Lien), 3.250%, Maturity Date 3/20/25 (cost $104,312) | 104 | 103,660 | — | (652 | ) | |||||||||||
Pearl Intermediate Parent LLC, Delayed Draw Term Loan | 90 | 88,476 | — | (1,921 | ) | |||||||||||
Recess Holdings, Inc., First Lien Delayed Draw Term Loan, 3.750%, Maturity Date 9/18/24 (cost $76,416)^ | 77 | 76,799 | 383 | — | ||||||||||||
VT Topco, Inc., First Lien Delayed Draw Term Loan, 1.000%, Maturity Date 8/1/25 (cost $255,000) | 255 | 255,000 | — | — | ||||||||||||
|
|
|
|
|
| |||||||||||
$ | 1,694,185 | $ | 1,041 | $ | (7,827 | ) | ||||||||||
|
|
|
|
|
|
See Notes to Financial Statements.
50 |
Interest rate swap agreements outstanding at August 31, 2018:
Notional | Termination Date | Fixed Rate | Floating Rate | Value at Trade Date | Value at August 31, 2018 | Unrealized Appreciaton (Depreciation) | ||||||||||||||||||
Centrally Cleared Interest Rate Swap Agreements: | ||||||||||||||||||||||||
4,800 | 02/03/19 | 1.538%(S) | 3 Month LIBOR(1)(Q) | $ | (1,913 | ) | $ | 22,417 | $ | 24,330 | ||||||||||||||
9,350 | 02/02/22 | 1.994%(S) | 3 Month LIBOR(1)(Q) | (8,646 | ) | 271,192 | 279,838 | |||||||||||||||||
7,200 | 02/03/24 | 2.228%(S) | 3 Month LIBOR(1)(Q) | (53,105 | ) | 235,408 | 288,513 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||
$ | (63,664 | ) | $ | 529,017 | $ | 592,681 | ||||||||||||||||||
|
|
|
|
|
|
Cash of $595,000 has been segregated with Citigroup Global Markets to cover requirements for open centrally cleared swap contracts at August 31, 2018.
(1) | The Fund pays the fixed rate and receives the floating rate. |
(2) | The Fund pays the floating rate and receives the fixed rate. |
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 August 31, 2018 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Asset-Backed Securities | ||||||||||||
Collateralized Loan Obligations | $ | — | $ | 62,392,004 | $ | — | ||||||
Bank Loans | — | 847,147,109 | 130,252,693 | |||||||||
Corporate Bonds | — | 27,007,954 | — | |||||||||
Common Stocks | 763,778 | — | 556,192 | |||||||||
Warrants | — | — | 4,680 | |||||||||
Affiliated Mutual Funds | 93,970,759 | — | — | |||||||||
Other Financial Instruments* | ||||||||||||
Unfunded Loan Commitments | — | (5,076 | ) | (1,710 | ) | |||||||
Centrally Cleared Interest Rate Swap Agreements | — | 592,681 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 94,734,537 | $ | 937,134,672 | $ | 130,811,855 | ||||||
|
|
|
|
|
|
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 51 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
The following is a reconciliation of assets in which unobservable inputs (Level 3) were used in determining fair value:
Bank Loans | Common Stock | Warrants | Unfunded Loan Commitments | Credit Default Swap Agreements | ||||||||||||||||
Balance as of 02/28/18 | $ | 103,260,724 | $ | — | $ | — | — | $ | 12,894 | |||||||||||
Realized gain (loss) | 81,337 | — | — | — | 12,089 | |||||||||||||||
Change in unrealized appreciation (depreciation) | (500,641 | ) | — | (1,751 | ) | (1,710 | ) | (12,894 | ) | |||||||||||
Purchases/Exchanges/Issuances | 64,297,370 | 556,192 | 6,431 | — | — | |||||||||||||||
Sales/Paydowns | (22,915,642 | ) | — | — | — | (12,089 | ) | |||||||||||||
Accrued discount/premium | 28,253 | — | — | — | — | |||||||||||||||
Transfers into of Level 3 | 24,385,038 | — | — | — | — | |||||||||||||||
Transfers out of Level 3 | (38,383,746 | ) | — | — | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as of 08/31/18 | $ | 130,252,693 | $ | 556,192 | $ | 4,680 | $ | (1,710 | ) | $ | — | |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Change in unrealized appreciation (depreciation) relating to securities still held at reporting period end | $ | (348,861 | ) | $ | — | $ | (1,751 | ) | $ | (1,710 | ) | $ | — | |||||||
|
|
|
|
|
|
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Schedule of Investments, such as futures, forwards, centrally cleared swap contracts and unfunded loan commitments, which are recorded at the unrealized appreciation (depreciation) on the instrument, and OTC swap contracts which are recorded at fair value. |
Level 3 securities as presented in the table above are being fair valued using pricing methodologies approved by Board, which contain unobservable inputs as follows:
Level 3 | Fair Value as of August 31, 2018 | Valuation Methodology | Unobservable Inputs | Range (Weighted Average) | ||||||||||||
Bank Loans | $ | 130,252,693 | Market Approach | Single Broker Indicative Quote | $ | 85.00-$103.00 ($100.00) | ||||||||||
Common Stocks | 556,192 | Stale Pricing | Unadjusted Last Trade Price | $ | 3.05 | |||||||||||
Warrants | 4,680 | Stale Pricing | Unadjusted Last Trade Price | $ | 0.03 - $0.12 ($0.06) | |||||||||||
Unfunded Loan Commitments | (1,710 | ) | Market Approach | Single Broker Indicative Quote | $ | 99.00- $102.25 ($99.30) | ||||||||||
|
| |||||||||||||||
$ | 130,811,855 | |||||||||||||||
|
|
See Notes to Financial Statements.
52 |
It is the Fund’s policy to recognize transfers in and transfers out at the fair value as of the beginning of period. Securities transferred levels as follows:
Investments in Securities | Amount Transferred | Level Transfer | Logic | |||||||
Bank Loans | $ | 38,383,746 | L3 to L2 | Single Broker Indicative Quote to Multiple Broker Quotes | ||||||
Bank Loans | $ | 24,385,038 | L2 to L3 | Multiple Broker Quotes to Single Broker Indicative Quote |
Industry Classification:
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of August 31, 2018 were as follows:
Software | 8.8 | % | ||
Affiliated Mutual Funds (0.1% represents investments purchased with collateral from securities on loan) | 8.6 | |||
Retail | 6.7 | |||
Collateralized Loan Obligations | 5.7 | |||
Telecommunications | 5.4 | |||
Commercial Services | 4.9 | |||
Healthcare-Services | 4.8 | |||
Media | 4.5 | |||
Computers | 3.7 | |||
Chemicals | 2.8 | |||
Entertainment | 2.7 | |||
Diversified Financial Services | 2.7 | |||
Pharmaceuticals | 2.5 | |||
Foods | 2.4 | |||
Technology | 2.2 | |||
Machinery-Diversified | 2.2 | |||
Engineering & Construction | 1.9 | |||
Auto Parts & Equipment | 1.8 | |||
Transportation | 1.5 | |||
Packaging & Containers | 1.5 | |||
Healthcare-Products | 1.5 | |||
Building Materials | 1.4 | |||
Auto Manufacturers | 1.3 | |||
Real Estate | 1.2 | |||
Real Estate Investment Trusts (REITs) | 1.2 | |||
Environmental Control | 1.2 | |||
Oil & Gas | 1.2 | |||
Electric | 1.1 | |||
Leisure Time | 1.1 | |||
Distribution/Wholesale | 1.1 | |||
Insurance | 1.0 | |||
Aerospace & Defense | 0.9 | % | ||
Household Products/Wares | 0.9 | |||
Investment Companies | 0.9 | |||
Lodging | 0.9 | |||
Internet | 0.8 | |||
Electronics | 0.7 | |||
Pipelines | 0.7 | |||
Miscellaneous Manufacturing | 0.7 | |||
Other Industry | 0.7 | |||
Oil & Gas Services | 0.6 | |||
Trucking & Leasing | 0.6 | |||
Machinery-Construction & Mining | 0.6 | |||
Home Builders | 0.6 | |||
Coal | 0.5 | |||
Cable | 0.5 | |||
Semiconductors | 0.5 | |||
Advertising | 0.4 | |||
Metal Fabricate/Hardware | 0.4 | |||
Hand/Machine Tools | 0.4 | |||
Housewares | 0.3 | |||
Holding Companies-Diversified | 0.3 | |||
Electrical Components & Equipment | 0.3 | |||
Healthcare & Pharmaceuticals | 0.3 | |||
Iron/Steel | 0.3 | |||
Beverages | 0.3 | |||
Private Equity | 0.3 | |||
Home Furnishings | 0.3 | |||
Capital Goods | 0.2 | |||
Apparel | 0.2 | |||
Mining | 0.2 | |||
Consumer Services | 0.2 | |||
Cosmetics/Personal Care | 0.1 |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 53 |
Schedule of Investments (unaudited) (continued)
as of August 31, 2018
Industry Classification (cont’d.): | ||||
Oil, Gas & Coal | 0.1 | % | ||
Food Service | 0.1 | |||
Agriculture | 0.1 | |||
Oil, Gas & Consumable Fuels | 0.0 | * | ||
|
| |||
106.5 | ||||
Liabilities in excess of other assets | (6.5 | ) | ||
|
| |||
100.0 | % | |||
|
|
* | Less than +/- 0.05% |
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 types of risk associated with these derivative instruments are credit contracts risk, equity contracts risk and interest rate contracts risk. The effect of such derivative instruments on the Fund’s financial position and financial performance as reflected in the Statement of Assets and Liabilities and Statement of Operations is presented in the summary below.
Fair values of derivative instruments as of August 31, 2018 as presented in the Statement of Assets and Liabilities:
Derivatives not accounted for as hedging instruments, carried at fair value | Asset Derivatives | Liability Derivatives | ||||||||||
Statement of | Fair Value | Statement of | Fair Value | |||||||||
Equity contracts | Unaffiliated investments | $ | 4,680 | — | $ | — | �� | |||||
Interest rate contracts | Due from/to broker—variation margin swaps | 592,681 | * | — | — | |||||||
|
|
|
| |||||||||
$ | 597,361 | $ | — | |||||||||
|
|
|
|
* | Includes cumulative appreciation (depreciation) as reported in the schedule of open futures and centrally cleared swap contracts. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
The effects of derivative instruments on the Statement of Operations for the six months ended August 31, 2018 are as follows:
Amount of Realized Gain (Loss) on Derivatives Recognized in Income | ||||
Derivatives not accounted for as hedging instruments, carried at fair value | Swaps | |||
Credit contracts | $ | 12,940 | ||
Interest rate contracts | 14,368 | |||
|
| |||
Total | $ | 27,308 | ||
|
|
See Notes to Financial Statements.
54 |
Change in Unrealized Appreciation (Depreciation) on Derivatives Recognized in Income | ||||||||
Derivatives not accounted for as hedging instruments, carried at fair value | Warrants(1) | Swaps | ||||||
Credit contracts | $ | — | $ | (12,894 | ) | |||
Equity contracts | (1,751 | ) | — | |||||
Interest rate contracts | — | 29,331 | ||||||
|
|
|
| |||||
Total | $ | (1,751 | ) | $ | 16,437 | |||
|
|
|
|
(1) | Included in net realized gain (loss) on investment transactions in the Statement of Operations. |
For the six months ended August 31, 2018, the Fund’s average volume of derivative activities is as follows:
Interest Rate Swap Agreements(1) | ||||||||
$ | 21,350,000 |
Credit Default Swap Agreements— Sell Protection(1) | ||||||||
$ | 3,529,667 |
(1) | Notional Amount in USD. |
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 | Gross Market Value of Recognized Assets/ (Liabilities) | Collateral Pledged/ (Received)(1) | Net Amount | |||||||||
Securities on Loan | $ | 1,353,825 | $ | (1,353,825 | ) | $ | — | |||||
|
|
(1) | Collateral amount disclosed by the Fund is limited to the market value of financial instruments/transactions. |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 55 |
Statement of Assets & Liabilities (unaudited)
as of August 31, 2018
Assets | ||||
Investments at value, including securities on loan of $1,353,825: | ||||
Unaffiliated investments (cost $1,073,387,979) | $ | 1,068,124,410 | ||
Affiliated investments (cost $93,970,728) | 93,970,759 | |||
Cash | 1,124,428 | |||
Foreign currency, at value (cost $8,012) | 8,220 | |||
Receivable for investments sold | 15,864,822 | |||
Receivable for Fund shares sold | 5,787,029 | |||
Interest receivable | 3,524,254 | |||
Deposit with broker for centrally cleared swaps | 595,000 | |||
Unrealized appreciation on unfunded loan commitment | 1,041 | |||
|
| |||
Total Assets | 1,188,999,963 | |||
|
| |||
Liabilities | ||||
Payable for investments purchased | 91,278,354 | |||
Payable for Fund shares reacquired | 4,994,793 | |||
Payable to broker for collateral for securities on loan | 1,386,800 | |||
Management fee payable | 479,305 | |||
Distribution fee payable | 74,257 | |||
Affiliated transfer agent fee payable | 14,086 | |||
Due to broker—variation margin swaps | 12,682 | |||
Accrued expenses and other liabilities | 11,070 | |||
Unrealized depreciation on unfunded loan commitment | 7,827 | |||
Total Liabilities | 98,259,174 | |||
|
| |||
Net Assets | $ | 1,090,740,789 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 1,104,095 | ||
Paid-in capital in excess of par | 1,094,286,805 | |||
|
| |||
1,095,390,900 | ||||
Undistributed net investment income | 652,446 | |||
Accumulated net realized loss on investment transactions | (625,122 | ) | ||
Net unrealized depreciation on investments and foreign currencies | (4,677,435 | ) | ||
|
| |||
Net assets, August 31, 2018 | $ | 1,090,740,789 | ||
|
|
See Notes to Financial Statements.
56 |
Class A | ||||
Net asset value and redemption price per share, ($111,540,575 ÷ 11,298,618 shares of common stock issued and outstanding) | $ | 9.87 | ||
Maximum sales charge (3.25% of offering price) | 0.33 | |||
|
| |||
Maximum offering price to public | $ | 10.20 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share, | ||||
($61,591,098 ÷ 6,237,664 shares of common stock issued and outstanding) | $ | 9.87 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share, | ||||
($879,047,568 ÷ 88,969,491 shares of common stock issued and outstanding) | $ | 9.88 | ||
|
| |||
Class R6 | ||||
Net asset value, offering price and redemption price per share, | ||||
($38,561,548 ÷ 3,903,697 shares of common stock issued and outstanding) | $ | 9.88 | ||
|
|
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 57 |
Statement of Operations (unaudited)
Six Months Ended August 31, 2018
Net Investment Income (Loss) | ||||
Income | ||||
Interest income | $ | 21,737,062 | ||
Affiliated dividend income | 991,150 | |||
Income from securities lending, net (including affiliated income of $1,691) | 9,407 | |||
|
| |||
Total income | 22,737,619 | |||
|
| |||
Expenses | ||||
Management fee | 2,687,308 | |||
Distribution fee(a) | 411,105 | |||
Transfer agent’s fees and expenses (including affiliated expense of $34,335)(a) | 266,822 | |||
Custodian and accounting fees | 135,596 | |||
Registration fees(a) | 81,946 | |||
Audit fee | 30,483 | |||
Shareholders’ reports | 28,028 | |||
Directors’ fees | 11,535 | |||
Legal fees and expenses | 11,489 | |||
Miscellaneous | 9,817 | |||
|
| |||
Total expenses | 3,674,129 | |||
Less: Fee waiver and/or expense reimbursement(a) | (379,176 | ) | ||
|
| |||
Net expenses | 3,294,953 | |||
|
| |||
Net investment income (loss) | 19,442,666 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investment And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions (including affiliated of $149) | (270,522 | ) | ||
Swap agreement transactions | 27,308 | |||
|
| |||
(243,214 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (including affiliated of $31) | (5,288,647 | ) | ||
Swap agreements | 16,437 | |||
Foreign currencies | (420 | ) | ||
Unfunded loan commitment | (6,786 | ) | ||
|
| |||
(5,279,416 | ) | |||
|
| |||
Net gain (loss) on investment and foreign currency transactions | (5,522,630 | ) | ||
|
| |||
Net Increase (Decrease) In Net Assets Resulting From Operations | $ | 13,920,036 | ||
|
|
(a) | Class specific expenses and waivers were as follows: |
Class A | Class C | Class Z | Class R6 | |||||||||||||
Distribution fee | 119,244 | 291,861 | — | — | ||||||||||||
Transfer agent’s fees and expenses | 36,790 | 21,920 | 208,014 | 98 | ||||||||||||
Registration fees | 14,943 | 10,154 | 47,017 | 9,832 | ||||||||||||
Fee waiver and/or expense reimbursement | (54,738 | ) | (34,032 | ) | (269,101 | ) | (21,305 | ) |
See Notes to Financial Statements.
58 |
Statements of Changes in Net Assets (unaudited)
Six Months Ended August 31, 2018 | Year Ended February 28, 2018 | |||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 19,442,666 | $ | 24,973,236 | ||||
Net realized gain (loss) on investment transactions | (243,214 | ) | 642,431 | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (5,279,416 | ) | (683,027 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | 13,920,036 | 24,932,640 | ||||||
|
|
|
| |||||
Dividends and Distributions | ||||||||
Dividends from net investment income | ||||||||
Class A | (2,134,060 | ) | (3,435,488 | ) | ||||
Class C | (1,085,095 | ) | (2,058,814 | ) | ||||
Class Z | (14,977,924 | ) | (18,837,563 | ) | ||||
Class R6 | (970,927 | ) | (824,817 | ) | ||||
|
|
|
| |||||
(19,168,006 | ) | (25,156,682 | ) | |||||
|
|
|
| |||||
Distributions from net realized gains | ||||||||
Class A | — | (95,396 | ) | |||||
Class C | — | (70,175 | ) | |||||
Class Z | — | (517,292 | ) | |||||
Class R6 | — | (27,895 | ) | |||||
|
|
|
| |||||
— | (710,758 | ) | ||||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) | ||||||||
Net proceeds from shares sold | 655,144,570 | 332,160,936 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 18,416,627 | 24,558,527 | ||||||
Cost of shares reacquired | (136,590,280 | ) | (319,936,592 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Fund share transactions | 536,970,917 | 36,782,871 | ||||||
|
|
|
| |||||
Total increase (decrease) | 531,722,947 | 35,848,071 | ||||||
Net Assets: | ||||||||
Beginning of period | 559,017,842 | 523,169,771 | ||||||
|
|
|
| |||||
End of period(a) | $ | 1,090,740,789 | $ | 559,017,842 | ||||
|
|
|
| |||||
(a) Includes undistributed/(distributions in excess of) net investment income of: | $ | 652,446 | $ | 377,786 | ||||
|
|
|
|
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 59 |
Notes to Financial Statements (unaudited)
Prudential Investment Portfolios, Inc. 14 (the “Company”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as a diversified, open-end management investment company. The Company consists of two funds: PGIM Government Income Fund and PGIM Floating Rate Income Fund. These financial statements relate only to the PGIM Floating Rate Income Fund (the “Fund’). Effective June 11, 2018, the Funds’ names were changed by replacing “Prudential” with “PGIM” and Class Q shares were renamed Class R6 shares.
The primary investment objective of the Fund is to maximize current income. The secondary investment objective is to seek capital appreciation when consistent with the Fund’s primary investment objective.
1. Accounting Policies
The Fund follows investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 Financial Services—Investment Companies. The following accounting policies conform to U.S. generally accepted accounting principles. The Fund consistently follows such policies in the preparation of its financial statements.
Securities Valuation: The Fund holds securities and other assets and liabilities that are fair valued at the close of each day (generally, 4:00 PM Eastern time) the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Company’s Board of Directors (the “Board”) has adopted valuation procedures for security valuation under which fair valuation responsibilities have been delegated to PGIM Investments LLC (“PGIM Investments” or “the Manager”). Pursuant to the Board’s delegation, a Valuation Committee has been established as two persons, being one or more officers of the Company, including: the Company’s Treasurer (or the Treasurer’s direct reports); and the Company’s Chief or Deputy Chief Compliance Officer (or Vice-President-level direct reports of the Chief or Deputy Chief Compliance Officer). Under the current valuation procedures, the Valuation Committee of the Board is responsible for supervising the valuation of portfolio securities and other assets and liabilities. The valuation procedures permit the 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. A record of the Valuation Committee’s actions is subject to the Board’s review, approval, and ratification at its next regularly scheduled quarterly meeting.
For the fiscal reporting period-end, securities and other assets and liabilities were fair valued at the close of the last U.S. business day. Trading in certain foreign securities may occur
60 |
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 Fund’s foreign investments may change on days when investors cannot purchase or redeem Fund shares.
Various inputs determine how the Fund’s 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.
Derivative instruments, such as futures or options, that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy. In the event that no sale or official closing price on valuation date exists, these securities are generally valued at the mean between the last reported bid and ask prices, or at the last bid price in the absence of an ask price. These securities are classified as Level 2 in the fair value hierarchy.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the OTC market are generally classified as Level 2 in the fair value hierarchy. Such fixed income securities are typically valued using the market approach which generally involves obtaining data from an approved independent third-party vendor source. The Fund utilizes the market approach as the primary method to value securities when market prices of identical or comparable instruments are available. The third-party vendors’ valuation techniques used to derive the evaluated bid price are based on evaluating observable inputs, including but not limited to, yield curves, yield spreads, credit ratings, deal terms, tranche level attributes, default rates, cash flows, prepayment speeds, broker/dealer quotations and reported trades. Certain Level 3 securities are also valued using the market approach when obtaining a single broker quote or when utilizing transaction prices for identical securities that have been used in excess of five business days. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.
Bank loans are generally valued at prices provided by approved independent pricing vendors. The pricing vendors utilize broker/dealer quotations and provide prices based on the average of such quotations. Bank loans valued using such vendor prices are generally classified as Level 2 in the fair value hierarchy. Bank loans valued based on a single broker quote or at the original transaction price in excess of five business days are classified as Level 3 in the fair value hierarchy.
PGIM Floating Rate Income Fund | 61 |
Notes to Financial Statements (unaudited) (continued)
OTC derivative instruments are generally classified as Level 2 in the fair value hierarchy. Such derivative instruments are typically valued using the market approach and/or income approach which generally involves obtaining data from an approved independent third-party vendor source. The Fund utilizes the market approach when quoted prices in broker-dealer markets are available but also includes consideration of alternative valuation approaches, including the income approach. In the absence of reliable market quotations, the income approach is typically utilized for purposes of valuing OTC derivatives such as interest rate swaps based on a discounted cash flow analysis whereby the value of the instrument is equal to the present value of its future cash inflows or outflows. Such analysis includes projecting future cash flows and determining the discount rate (including the present value factors that affect the discount rate) used to discount the future cash flows. In addition, the third-party vendors’ valuation techniques used to derive the evaluated OTC derivative price is based on evaluating observable inputs, including but not limited to, underlying asset prices, indices, spreads, interest rates and exchange rates. Certain OTC derivatives may be classified as Level 3 when valued using the market approach by obtaining a single broker quote or when utilizing unobservable inputs in the income approach. During the reporting period, there were no changes to report with respect to the valuation approach and/or valuation techniques discussed above.
Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are generally valued at the daily settlement price determined by the respective exchange. These securities are classified as Level 2 in the fair value hierarchy, as the daily settlement price is not public.
Securities and other assets that cannot be priced according to the methods described above are valued based on pricing methodologies approved by the Board. In the event that unobservable inputs are used when determining such valuations, the securities will be classified as Level 3 in the fair value hierarchy.
When determining the fair value of securities, some of the factors influencing the valuation include: the nature of any restrictions on disposition of the securities; assessment of the general liquidity of the securities; the issuer’s financial condition and the markets in which it does business; the cost of the investment; the size of the holding and the capitalization of the issuer; the prices of any recent transactions or bids/offers for such securities or any comparable securities; any available analyst media or other reports or information deemed reliable by the Manager regarding the issuer or the markets or industry in which it operates. Using fair value to price securities may result in a value that is different from a security’s most recent closing price and from the price used by other unaffiliated mutual funds to calculate their net asset values.
62 |
Restricted and Illiquid Securities: Subject to guidelines adopted by the Board, the Fund may invest up to 15% of its net assets in illiquid securities, including those which are restricted as to disposition under securities law (“restricted securities”). Restricted securities are valued pursuant to the valuation procedures noted above. Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount at which the Fund has valued the investment. Therefore, the Fund may find it difficult to sell illiquid securities at the time considered most advantageous by its Subadviser and may incur transaction costs that would not be incurred in the sale of securities that were freely marketable. Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These Rule 144A securities, as well as commercial paper that is sold in private placements under Section 4(2) of the Securities Act, may be deemed liquid by the Fund’s Subadviser under the guidelines adopted by the Board of the Company. However, the liquidity of the Fund’s investments in Rule 144A securities could be impaired if trading does not develop or declines.
Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities—at the current rates of exchange;
(ii) purchases and sales of investment securities, income and expenses—at the rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, the Fund does not generally isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of long-term portfolio securities sold during the period. Accordingly, holding period realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions. Notwithstanding the above, the Fund does isolate the effect of fluctuations in foreign currency exchange rates when determining the gain (loss) upon the sale or maturity of foreign currency denominated debt obligations; such amounts are included in net realized gains (losses) on foreign currency transactions.
Additionally, net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the disposition of holdings of foreign currencies, currency gains (losses) realized between the trade and settlement dates on securities transactions, and the difference between the amounts of interest, dividends and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts
PGIM Floating Rate Income Fund | 63 |
Notes to Financial Statements (unaudited) (continued)
actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at period end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on foreign currencies.
Bank Loans: The Fund invests at least 80% of its investable assets in bank loans. Bank loans include fixed and floating rate loans that are privately negotiated between a corporate borrower and one or more financial institutions, including, but not limited to, term loans, revolvers, and other instruments issued in the bank loan market. Most bank loans are senior in rank (“senior loans”) in the event of bankruptcy to most other securities of the issuer, such as common stock or publicly-issued bonds. Bank loans are often secured by specific collateral of the issuer so that holders of the loans will have a priority claim on those assets in the event of default or bankruptcy of the issuer. The Fund may acquire interests in loans directly (by way of assignment from the selling institution) or indirectly (by way of the purchase of a participation interest from the selling institution). Under a bank loan assignment, the Fund generally will succeed to all the rights and obligations of an assigning lending institution and becomes a lender under the loan agreement with the relevant borrower in connection with that loan. Under a bank loan participation, the Fund generally will have a contractual relationship only with the lender, not with the relevant borrower. As a result, the Fund generally will have the right to receive payments of principal, interest, and any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the relevant borrower. The Fund may not directly benefit from the collateral supporting the debt obligation in which it has purchased the participation. As a result, the Fund will assume the credit risk of both the borrower and the institution selling the participation to the Fund. In addition, loans trade in an over-the counter market, and confirmation and settlement, which are effected through standardized procedures and documentation, may take significantly longer than seven days to complete. Extended trade settlement periods may, in unusual market conditions with a high volume of shareholder redemptions, present a risk to shareholders regarding the Fund’s ability to pay redemption proceeds within the allowable time periods.
Swap Agreements: The Fund may enter into credit default, interest rate and other types of swap agreements. A swap agreement is an agreement to exchange the return generated by one instrument for the return generated by another instrument. Swap agreements are negotiated in the OTC market and may be executed either directly with counterparty (“OTC-traded”) or through a central clearing facility, such as a registered exchange. Swap agreements are valued daily at current market value and any change in value is included in the net unrealized appreciation (depreciation) on swap agreements. Centrally cleared swaps pay or receive an amount known as “variation margin”, based on daily changes in the valuation of the swap contract. Any upfront premiums paid and received are shown as swap premiums paid and swap premiums received in the Statement of Assets and Liabilities. Risk
64 |
of loss may exceed amounts recognized on the Statement of Assets and Liabilities. Swap agreements outstanding at period end, if any, are listed on the Schedule of Investments.
Interest Rate Swaps: Interest rate swaps represent an agreement between counterparties to exchange cash flows based on the difference between two interest rates, applied to a notional principal amount for a specified period. The Fund is subject to interest rate risk exposure in the normal course of pursuing its investment objective. The Fund used interest rate swaps to maintain its ability to generate steady cash flow by receiving a stream of fixed-rate payments and to increase exposure to prevailing market rates by receiving floating rate payments. The Fund’s 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.
Credit Default Swaps (”CDS“): CDS involve one party (the protection buyer) making a stream of payments to another party (the protection seller) in exchange for the right to receive a specified payment in the event of a default or as a result of a default (collectively a “credit event”) for the referenced entity (typically corporate issues or sovereign issues of an emerging country) on its obligation; or in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the referenced entities comprising a credit index.
The Fund is subject to credit risk in the normal course of pursuing its investment objectives, and as such, has entered into CDS contracts to provide a measure of protection against defaults or to take an active long or short position with respect to the likelihood of a particular issuer’s default or the reference entity’s credit soundness. CDS contracts generally trade based on a spread which represents the cost a protection buyer has to pay the protection seller. The protection buyer is said to be short the credit as the value of the contract rises the more the credit deteriorates. The value of the CDS contract increases for the protection buyer if the spread increases. The Fund’s maximum risk of loss from counterparty credit risk for purchased CDS is the inability of the counterparty to honor the contract up to the notional value due to a credit event.
As a seller of protection on credit default swap agreements, the Fund generally receives an agreed upon payment from the buyer of protection throughout the term of the swap, provided no credit event occurs. As the seller, the Fund effectively increases its investment risk because, in addition to its total net assets, the Fund may be subject to investment exposure on the notional amount of the swap.
The maximum amount of the payment that the Fund, as a seller of protection, could be required to make under a credit default swap agreement would be equal to the notional amount of the underlying security or index contract as a result of a credit event. This potential amount will be partially offset by any recovery values of the respective referenced obligations, or net amounts received from the settlement of buy protection credit default swap agreements which the Fund entered into for the same referenced entity or index. As a buyer of protection, the Fund generally receives an amount up to the notional value of the swap if a credit event occurs.
PGIM Floating Rate Income Fund | 65 |
Notes to Financial Statements (unaudited) (continued)
Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements where the Fund is the seller of protection as of period end are disclosed in the footnotes to the Schedule of Investments, if applicable. These spreads serve as indicators of the current status of the payment/performance risk and represent the likelihood of default risk for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to enter into the agreement. Wider credit spreads and increased market value in absolute terms, when compared to the notional amount of the swap, represent a deterioration of the referenced entity’s credit soundness and a greater likelihood of risk of default or other credit event occurring as defined under the terms of the agreement.
Master Netting Arrangements: The Company, on behalf of the Fund, is subject to various Master Agreements, or netting arrangements, with select counterparties. These are agreements which a subadviser may have negotiated and entered into on behalf of the Fund. A master netting arrangement between the Fund and the counterparty permits the Fund to offset amounts payable by the Fund to the same counterparty against amounts to be received; and by the receipt of collateral from the counterparty by the Fund to cover the Fund’s exposure to the counterparty. However, there is no assurance that such mitigating factors are easily enforceable. In addition to master netting arrangements, the right to set-off exists when all the conditions are met such that each of the parties owes the other determinable amounts, the reporting party has the right to set-off the amount owed with the amount owed by the other party, the reporting party intends to set-off and the right of set-off is enforceable by law. During the reporting period, there was no intention to settle on a net basis and all amounts are presented on a gross basis on the Statement of Assets and Liabilities.
The Company, on behalf of the Fund, is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements with certain counterparties that govern OTC derivative and foreign exchange contracts entered into from time to time. The Master Agreements may contain provisions regarding, among other things, the parties’ general obligations, representations, agreements, collateral requirements, events of default and early termination. With respect to certain counterparties, in accordance with the terms of the Master Agreements, collateral posted to the Fund is held in a segregated account by the Fund’s custodian and with respect to those amounts which can be sold or re-pledged, is presented in the Schedule of Investments. Collateral pledged by the Fund is segregated by the Fund’s custodian and identified in the Schedule of Investments. Collateral can be in the form of cash or debt securities issued by the U.S. Government or related agencies or other securities as agreed to by the Fund and the applicable counterparty. Collateral requirements are determined based on the Fund’s net position with each counterparty. Termination events applicable to the Fund may occur upon a decline in the Fund’s net assets below a specified
66 |
threshold over a certain period of time. Termination events applicable to counterparties may occur upon a decline in the counterparty’s long-term and short-term credit ratings below a specified level. In each case, upon occurrence, the other party may elect to terminate early and cause settlement of all derivative and foreign exchange contracts outstanding, including the payment of any losses and costs resulting from such early termination, as reasonably determined by the terminating party. Any decision by one or more of the Fund’s counterparties to elect early termination could impact the Fund’s future derivative activity.
In addition to each instrument’s primary underlying risk exposure (e.g. interest rate, credit, equity or foreign exchange, etc.), swap agreements involve, to varying degrees, elements of credit, market and documentation risk. Such risks involve the possibility that no liquid market for these agreements will exist, the counterparty to the agreement may default on its obligation to perform or disagree on the contractual terms of the agreement, and changes in net interest rates will be unfavorable. In connection with these agreements, securities in the portfolio may be identified or received as collateral from the counterparty in accordance with the terms of the respective swap agreements to provide or receive assets of value and to serve as recourse in the event of default or bankruptcy/insolvency of either party. Such OTC derivative agreements include conditions which, when materialized, give the counterparty the right to cause an early termination of the transactions under those agreements. Any election by the counterparty for early termination of the contract(s) may impact the amounts reported on financial statements.
As of August 31, 2018, the Fund has not met conditions under such agreements which give the counterparty the right to call for an early termination.
Forward currency contracts, forward rate agreements, written options, short sales, swaps and financial futures contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Such risks may be mitigated by engaging in master netting arrangements.
Payment-In-Kind: The Fund may invest in the open market or receive pursuant to debt restructuring, securities that pay-in-kind (PIK) the interest due on such debt instruments. The PIK interest, computed at the contractual rate specified, is added to the existing principal balance of the debt when issued bonds have same terms as the bond or recorded as a separate bond when terms are different from the existing debt, and is recorded as interest income.
Securities Lending: The Fund may lend its portfolio securities to banks and broker-dealers. The loans are secured by collateral at least equal to the market value of the securities loaned. Collateral pledged by each borrower is invested in an affiliated money market fund and is marked to market daily, based on the previous day’s market value, such that the value of the collateral exceeds the value of the loaned securities. In the event of significant appreciation in value of securities on loan on the last business day of the reporting period, the financial statements may reflect a collateral value that is less than the market value of the loaned securities. Such shortfall is remedied as described above. Loans are subject to
PGIM Floating Rate Income Fund | 67 |
Notes to Financial Statements (unaudited) (continued)
termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities identical to the loaned securities. Should the borrower of the securities fail financially, the Fund has the right to repurchase the securities in the open market using the collateral.
The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities in the form of fees or interest on the investment of any cash received as collateral. The borrower receives all interest and dividends from the securities loaned and such payments are passed back to the lender in amounts equivalent thereto. The Fund also continues to recognize any unrealized gain (loss) in the market price of the securities loaned and on the change in the value of the collateral invested that may occur during the term of the loan. In addition, realized gain (loss) is recognized on changes in the value of the collateral invested upon liquidation of the collateral. Net earnings from securities lending are disclosed on the Statement of Operations as “Income from securities lending, net”.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) from investment and currency transactions are calculated on the specific identification method. Dividend income is recorded on the ex-date. Interest income, including amortization of premium and accretion of discount on debt securities, as required, is recorded on the accrual basis. Expenses are recorded on an accrual basis, which may require the use of certain estimates by management that may differ from actual. Net investment income or loss (other than class specific expenses and waivers, which are allocated as noted below) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of adjusted net assets of each class at the beginning of the day. Class specific expenses and waivers, where applicable, are charged to the respective share classes. Class specific expenses include distribution fees and distribution fee waivers, shareholder servicing fee, transfer agent’s fees and expenses, registration fees and fee waivers and/or expense reimbursements, as applicable.
Taxes: It is the 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 Fund expects to declare dividends of its net investment income daily and pay such dividends monthly. Distributions of net realized capital and currency gains, if any, are declared and paid at least annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and
68 |
which may differ from generally accepted accounting principles, are recorded on the ex-date. Permanent book/tax differences relating to income and gain(loss) are reclassified amongst undistributed net investment income, accumulated net realized gain (loss) and paid-in capital in excess of par, as appropriate.
Estimates: The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
2. Agreements
The Company, on behalf of the Fund, has a management agreement with PGIM Investments. Pursuant to this agreement, PGIM Investments has responsibility for all investment advisory services and supervises the Subadviser’s performance of such services. In addition, under the management agreement, PGIM Investments provides all of the administrative functions necessary for the organization, operation and management of the Fund. PGIM Investments administers the corporate affairs of the Fund and, in connection therewith, furnishes the Fund with office facilities, together with those ordinary clerical and bookkeeping services which are not being furnished by, the Fund’s custodian (the Custodian), and the Fund’s transfer agent. PGIM Investments is also responsible for the staffing and management of dedicated groups of legal, marketing, compliance and related personnel necessary for the operation of the Fund. The legal, marketing, compliance and related personnel are also responsible for the management and oversight of the various service providers to the Fund, including, but not limited to, the custodian, transfer agent, and accounting agent.
PGIM Investments has entered into a subadvisory agreement with PGIM, Inc., which provides subadvisory services to the Fund through its PGIM Fixed Income unit. The subadvisory agreement provides that PGIM, Inc. will furnish investment advisory services in connection with the management of the Fund. In connection therewith, PGIM, Inc. is obligated to keep certain books and records of the Fund. PGIM Investments pays for the services of PGIM, Inc., the cost of compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid to PGIM Investments is accrued daily and payable monthly, at an annual rate of 0.65% of the Fund’s average daily net assets up to $5 billion and 0.625% of the Fund’s average daily net assets in excess of $5 billion. The effective management fee rate before any waivers and/or expense reimbursements was 0.65% for the six months ended August 31, 2018.
PGIM Investments has contractually agreed, through June 30, 2019, to limit Total Annual Fund Operating Expenses after fee waivers and/or expense reimbursements to 0.95% of average daily net assets for Class A shares, 1.70% of average daily net assets for Class C shares, 0.70% of average daily net assets for Class Z shares, and 0.65% of average daily net
PGIM Floating Rate Income Fund | 69 |
Notes to Financial Statements (unaudited) (continued)
assets for Class R6 shares. This contractual waiver excludes interest, brokerage, taxes (such as income and foreign withholding taxes, stamp duty and deferred tax expenses), acquired fund fees and expenses, extraordinary expenses, and certain other Fund expenses such as dividend and interest expense and broker charges on short sales. Fees and/or expenses waived and/or reimbursed by PGIM Investments may be recouped by PGIM Investments within the same fiscal year during which such waiver and/or reimbursement is made if such recoupment can be realized without exceeding the expense limit in effect at the time of the recoupment for that fiscal year.
The Company, on behalf of the Fund, has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C, Class Z and Class R6 shares of the Fund. The Fund compensates PIMS for distributing and servicing the Fund’s Class A and Class C shares pursuant to plans of distribution (the “Class A and C Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z and Class R6 shares of the Fund.
Pursuant to the Class A and C Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to 0.25% and 1% of the average daily net assets of the Class A and C shares, respectively.
PIMS has advised the Fund that it received $157,674 in front-end sales charges resulting from sales of Class A shares during the six months ended August 31, 2018. From these fees, PIMS paid such sales charges to broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended August 31, 2018, it received $48 and $7,252 in contingent deferred sales charges imposed upon redemptions by certain Class A and Class C shareholders.
PGIM Investments, PGIM, Inc. and PIMS are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PGIM Investments and an indirect, wholly-owned subsidiary of Prudential, serves as the 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.
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The Fund 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, and/or common officers. Such transactions are subject to ratification by the Board. For the reporting period ended August 31, 2018, no such transactions were entered into by the Fund.
The Fund may invest its overnight sweep cash in the PGIM Core Ultra Short Bond Fund (the “Core Fund”), and its securities lending cash collateral in the PGIM Institutional Money Market Fund (the “Money Market Fund”), each a series of Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PGIM Investments. For the reporting period ended August 31, 2018, PGIM, Inc. was compensated $575 by PGIM Investments for managing the Fund’s securities lending cash collateral as subadviser to the Money Market Fund. Earnings from the Core Fund and Money Market Fund are disclosed on the Statement of Operations as “Affiliated dividend income” and “Income from securities lending, net”, respectively.
4. Portfolio Securities
The aggregate cost of purchases and proceeds from sales of portfolio securities (excluding short-term investments and U.S. Government securities) for the six months ended August 31, 2018, were $716,222,869 and $173,447,825, respectively.
A summary of the cost of purchases and proceeds from sales of shares of affiliated mutual funds for the six months ended August 31, 2018, is presented as follows:
Affiliated Mutual Funds* | Value, Beginning of Period | Cost of Purchases | Proceeds from Sales | Change in Unrealized Gain (Loss) | Realized Gain (Loss) | Value, End of Period | Shares, End of Period | Dividend Income | ||||||||||||||||||||||||
PGIM Core Ultra Short Bond Fund | $ | 31,815,753 | $ | 262,419,022 | $ | 201,655,264 | $ | — | $ | — | $ | 92,579,511 | 92,579,511 | $ | 991,150 | |||||||||||||||||
PGIM Institutional Money Market Fund | 406,298 | 7,078,756 | 6,093,986 | 31 | 149 | 1,391,248 | 1,391,109 | 1,691 | ** | |||||||||||||||||||||||
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$ | 32,222,051 | $ | 269,497,778 | $ | 207,749,250 | $ | 31 | $ | 149 | $ | 93,970,759 | $ | 992,841 | |||||||||||||||||||
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* | The Funds did not have any capital gain distributions during the reporting period. |
** | This amount is included in “Income from Securities Lending net” on the Statement of Operations. |
PGIM Floating Rate Income Fund | 71 |
Notes to Financial Statements (unaudited) (continued)
5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized depreciation as of August 31, 2018 were as follows:
Tax Basis | $ | 1,167,624,286 | ||
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Gross Unrealized Appreciation | 4,840,189 | |||
Gross Unrealized Depreciation | (9,783,681 | ) | ||
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Net Unrealized Depreciation | $ | (4,943,492 | ) | |
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The book basis may differ from tax basis due to certain tax-related adjustments.
The Fund utilized all of its capital loss carryforward to offset net taxable gains realized in the fiscal year ended February 28, 2018. The Fund elected to treat post-October capital losses of approximately $182,000 as having been incurred in the following fiscal year (February 28, 2019)
Management has analyzed the Fund’s 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 Fund’s financial statements for the current reporting period. The Fund’s federal, state and local income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state departments of revenue.
6. Capital and Ownership
The Fund offers Class A, Class C, Class Z and Class R6 shares. Class A shares are sold with a maximum front-end sales charge of 3.25%. Investors who purchase $1 million or more of Class A shares and sell these shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, although they are not subject to an initial sales charge. The Class A CDSC is waived for certain retirement and/or benefit plans. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class C shares are sold with a CDSC of 1%on sales made within 12 months of purchase. Class Z and Class R6 shares are not subject to any sales or redemption charge and are offered exclusively for sale to a limited group of investors.
Under certain circumstances, an exchange may be made from specified share classes of the Fund to one or more other share classes of the Fund as presented in the table of transactions in shares of common stock.
There are 900 million shares of common stock authorized, $0.01 par value per share, divided into five classes, designated Class A, Class C, Class R6, Class Z and Class T shares,
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each of which consists of 150 million, 200 million, 250 million, 250 million, and 50 million shares, respectively.
The Fund currently does not have any Class T shares outstanding.
As of August 31, 2018, Prudential, through its affiliate entities, including affiliated funds (if applicable), 570,644 Class R6 shares of the Fund. At reporting period end, eight shareholders of record held 84% of the Fund’s outstanding shares on behalf of multiple beneficial owners.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 4,170,948 | $ | 41,296,377 | |||||
Shares issued in reinvestment of dividends and distributions | 211,497 | 2,091,396 | ||||||
Shares reacquired | (1,110,137 | ) | (10,983,760 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 3,272,308 | 32,404,013 | ||||||
Shares issued upon conversion from other share class(es) | 264,858 | 2,616,467 | ||||||
Shares reacquired upon conversion into other share class(es) | (235,414 | ) | (2,326,313 | ) | ||||
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Net increase (decrease) in shares outstanding | 3,301,752 | $ | 32,694,167 | |||||
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Year ended February 28, 2018: | ||||||||
Shares sold | 4,084,871 | $ | 40,589,596 | |||||
Shares issued in reinvestment of dividends and distributions | 344,933 | 3,423,614 | ||||||
Shares reacquired | (3,405,846 | ) | (33,792,203 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 1,023,958 | 10,221,007 | ||||||
Shares issued upon conversion from other share class(es) | 204,305 | 2,029,308 | ||||||
Shares reacquired upon conversion into other share class(es) | (238,732 | ) | (2,369,830 | ) | ||||
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Net increase (decrease) in shares outstanding | 989,531 | $ | 9,880,485 | |||||
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Class C | ||||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 1,584,859 | $ | 15,699,762 | |||||
Shares issued in reinvestment of dividends and distributions | 108,513 | 1,073,291 | ||||||
Shares reacquired | (651,956 | ) | (6,452,529 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 1,041,416 | 10,320,524 | ||||||
Shares reacquired upon conversion into other share class(es) | (128,363 | ) | (1,272,334 | ) | ||||
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Net increase (decrease) in shares outstanding | 913,053 | $ | 9,048,190 | |||||
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Year ended February 28, 2018: | ||||||||
Shares sold | 1,357,816 | $ | 13,488,705 | |||||
Shares issued in reinvestment of dividends and distributions | 208,270 | 2,067,539 | ||||||
Shares reacquired | (1,448,026 | ) | (14,375,754 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 118,060 | 1,180,490 | ||||||
Shares reacquired upon conversion into other share class(es) | (227,760 | ) | (2,261,714 | ) | ||||
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Net increase (decrease) in shares outstanding | (109,700 | ) | $ | (1,081,224 | ) | |||
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PGIM Floating Rate Income Fund | 73 |
Notes to Financial Statements (unaudited) (continued)
Class Z | Shares | Amount | ||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 57,796,834 | $ | 572,682,419 | |||||
Shares issued in reinvestment of dividends and distributions | 1,451,267 | 14,359,149 | ||||||
Shares reacquired | (10,283,114 | ) | (101,829,278 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 48,964,987 | 485,212,290 | ||||||
Shares issued upon conversion from other share class(es) | 355,297 | 3,517,025 | ||||||
Shares reacquired upon conversion into other share class(es) | (593,078 | ) | (5,879,401 | ) | ||||
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Net increase (decrease) in shares outstanding | 48,727,206 | $ | 482,849,914 | |||||
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Year ended February 28, 2018: | ||||||||
Shares sold | 27,480,406 | $ | 273,115,497 | |||||
Shares issued in reinvestment of dividends and distributions | 1,835,157 | 18,225,757 | ||||||
Shares reacquired | (24,789,549 | ) | (246,252,627 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 4,526,014 | 45,088,627 | ||||||
Shares issued upon conversion from other share class(es) | 460,425 | 4,574,112 | ||||||
Shares reacquired upon conversion into other share class(es) | (1,619,869 | ) | (16,096,682 | ) | ||||
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Net increase (decrease) in shares outstanding | 3,366,570 | $ | 33,566,057 | |||||
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Class R6 | ||||||||
Six months ended August 31, 2018: | ||||||||
Shares sold | 2,568,835 | $ | 25,466,012 | |||||
Shares issued in reinvestment of dividends and distributions | 90,247 | 892,791 | ||||||
Shares reacquired | (1,753,515 | ) | (17,324,713 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 905,567 | 9,034,090 | ||||||
Shares issued upon conversion from other share class(es) | 337,072 | 3,344,556 | ||||||
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Net increase (decrease) in shares outstanding | 1,242,639 | $ | 12,378,646 | |||||
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Year ended February 28, 2018: | ||||||||
Shares sold | 499,647 | $ | 4,967,138 | |||||
Shares issued in reinvestment of dividends and distributions | 84,740 | 841,617 | ||||||
Shares reacquired | (2,565,595 | ) | (25,516,008 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | (1,981,208 | ) | (19,707,253 | ) | ||||
Shares issued upon conversion from other share class(es) | 1,422,892 | 14,124,806 | ||||||
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Net increase (decrease) in shares outstanding | (558,316 | ) | $ | (5,582,447 | ) | |||
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7. Borrowings
The Company, on behalf of the Fund, along with other affiliated registered investment companies (the “Funds”), is a party to a Syndicated Credit Agreement (“SCA”) with a group of banks. The purpose of the SCA is to provide an alternative source of temporary funding for capital share redemptions. The SCA provides for a commitment of $900 million for the period October 5, 2017 through October 4, 2018. The Funds pay an annualized commitment fee of 0.15% of the unused portion of the SCA. The Fund’s portion of the commitment fee for the unused amount, allocated based upon a method approved by the Board, is accrued daily and paid quarterly.
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Subsequent to the reporting period end, the SCA has been renewed effective October 4, 2018 and will continue to provide a commitment of $900 million through October 3, 2019. The commitment fee paid by the Funds will continue to be 0.15% of the unused portion of the SCA. The interest on borrowings under both SCAs is paid monthly and at a per annum interest rate based upon a contractual spread plus the higher of (1) the effective federal funds rate, (2) the 1-month LIBOR rate or (3) zero percent.
Other affiliated registered investment companies that are parties to the SCA include portfolios that are subject to a predetermined mathematical formula used to manage certain benefit guarantees offered under variable annuity contracts. The formula may result in large scale asset flows into and out of these portfolios. Consequently, these portfolios may be more likely to utilize the SCA for purposes of funding redemptions. It may be possible for those portfolios to fully exhaust the committed amount of the SCA, thereby requiring the Manager to allocate available funding per a Board-approved methodology designed to treat the Funds in the SCA equitably.
The Fund did not utilize the SCA during the six months ended August 31, 2018.
8. Other Risks
The Fund’s risks include, but are not limited to, some or all of the risks discussed below:
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 derivatives 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.
Interest Rate Risk: The value of an 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 securities. 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 face a heightened level of interest rate risk as a result of the US Federal Reserve Board’s policies. The Fund’s investments may lose value if short-term or long-term interest rates rise sharply or in a manner not anticipated by the subadviser.
PGIM Floating Rate Income Fund | 75 |
Notes to Financial Statements (unaudited) (continued)
Liquidity Risk: The Fund may invest in instruments that trade in lower volumes and are less liquid than other investments. Liquidity risk exists when particular investments made by the Fund are difficult to purchase or sell. Liquidity risk includes the risk that the Fund may make investments that may become less liquid in response to market developments or adverse investor perceptions. Investments that are illiquid or that trade in lower volumes may be more difficult to value. 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. The reduction in dealer market-making capacity in the fixed-income markets that has occurred in recent years also has the potential to reduce liquidity. 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.
Market and Credit 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. If the market prices of the securities owned by the Fund fall, the value of an investment in the Fund will decline. Additionally, the Fund may also be exposed to credit risk in the event that an issuer or guarantor fails to perform or that an institution or entity with which the Fund has unsettled or open transactions defaults.
Risks of Investments in Bank Loans: The Fund’s ability to receive payments of principal and interest and other amounts in connection with loans (whether through participations, assignments or otherwise) will depend primarily on the financial condition of the borrower. The failure by the Fund to receive scheduled interest or principal payments on a loan because of a default, bankruptcy or any other reason would adversely affect the income of the Fund and would likely reduce the value of its assets. Even with loans secured by collateral, there is the risk that the value of the collateral may decline, may be insufficient to meet the obligations of the borrower, or be difficult to liquidate. In the event of a default, the Fund may have difficulty collecting on any collateral and would not have the ability to collect on any collateral for an uncollateralized loan. Further, the Fund’s access to collateral, if any, may be limited by bankruptcy laws.
9. Recent Accounting Pronouncements and Reporting Updates
In August 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-13, which changes certain fair value measurement disclosure requirements. The new ASU, in addition to other modifications and additions, removes the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, and the policy for the timing of transfers between levels. For investment companies, the
76 |
amendments are effective for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Management has evaluated the implications of certain provisions of ASU No. 2018-13 and has determined to early adopt aspects related to the removal and modification of certain fair value measurement disclosures under the ASU effective immediately. At this time, management is evaluating the implications of certain provisions of the ASU related to new disclosure requirements and any impact on the financial statement disclosures has not yet been determined.
PGIM Floating Rate Income Fund | 77 |
Financial Highlights (unaudited)
Class A Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018(a) | 2018(a) | 2017(a) | 2016(a) | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.94 | $9.95 | $9.38 | $9.94 | $10.18 | $10.12 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.23 | 0.45 | 0.41 | 0.36 | 0.40 | 0.37 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.07 | ) | 0.01 | 0.56 | (0.57 | ) | (0.22 | ) | 0.08 | |||||||||||||||||||
Total from investment operations | 0.16 | 0.46 | 0.97 | (0.21 | ) | 0.18 | 0.45 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.23 | ) | (0.46 | ) | (0.40 | ) | (0.35 | ) | (0.39 | ) | (0.36 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.01 | ) | - | - | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Total dividends and distributions | (0.23 | ) | (0.47 | ) | (0.40 | ) | (0.35 | ) | (0.42 | ) | (0.39 | ) | ||||||||||||||||
Net asset value, end of period | $9.87 | $9.94 | $9.95 | $9.38 | $9.94 | $10.18 | ||||||||||||||||||||||
Total Return(b): | 1.59% | 4.70% | 10.46% | (2.24)% | 1.80% | 4.53% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $111,541 | $79,462 | $69,733 | $47,683 | $23,158 | $34,211 | ||||||||||||||||||||||
Average net assets (000) | $94,617 | $75,379 | $58,748 | $40,785 | $28,113 | $31,911 | ||||||||||||||||||||||
Ratios to average net assets(c)(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.95% | (e) | 0.95% | 1.00% | 1.05% | 1.10% | 1.20% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.06% | (e) | 1.09% | (f) | 1.14% | 1.34% | 1.60% | 1.60% | ||||||||||||||||||||
Net investment income (loss) | 4.54% | (e) | 4.53% | 4.16% | 3.65% | 3.89% | 3.65% | |||||||||||||||||||||
Portfolio turnover rate(g) | 21% | (h) | 94% | 67% | 55% | 64% | 82% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | The distributor of the Fund had contractually agreed to limit its distribution and service (12b-1) fees to 0.25% of the average daily net assets through March 8, 2015. Effective March 9, 2015, the contractual distribution and service (12b-1) fees were reduced from 0.30% to 0.25% of the average daily net assets. |
(e) | Annualized. |
(f) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(h) | Not annualized. |
See Notes to Financial Statements.
78 |
Class C Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018(a) | 2018(a) | 2017(a) | 2016(a) | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.94 | $9.95 | $9.38 | $9.95 | $10.19 | $10.13 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.19 | 0.38 | 0.33 | 0.28 | 0.32 | 0.29 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.07 | ) | - | (b) | 0.57 | (0.58 | ) | (0.22 | ) | 0.08 | ||||||||||||||||||
Total from investment operations | 0.12 | 0.38 | 0.90 | (0.30 | ) | 0.10 | 0.37 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.38 | ) | (0.33 | ) | (0.27 | ) | (0.31 | ) | (0.28 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.01 | ) | - | - | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Total dividends and distributions | (0.19 | ) | (0.39 | ) | (0.33 | ) | (0.27 | ) | (0.34 | ) | (0.31 | ) | ||||||||||||||||
Net asset value, end of period | $9.87 | $9.94 | $9.95 | $9.38 | $9.95 | $10.19 | ||||||||||||||||||||||
Total Return(c): | 1.20% | 3.92% | 9.64% | (3.07)% | 1.04% | 3.74% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $61,591 | $52,919 | $54,092 | $35,027 | $28,408 | $32,149 | ||||||||||||||||||||||
Average net assets (000) | $57,896 | $54,061 | $39,905 | $33,571 | $31,363 | $21,337 | ||||||||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.70% | (e) | 1.70% | 1.75% | 1.80% | 1.85% | 1.95% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.82% | (e) | 1.84% | (f) | 1.89% | 2.11% | 2.30% | 2.35% | ||||||||||||||||||||
Net investment income (loss) | 3.78% | (e) | 3.79% | 3.41% | 2.88% | 3.15% | 2.91% | |||||||||||||||||||||
Portfolio turnover rate(g) | 21% | (h) | 94% | 67% | 55% | 64% | 82% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Less than $0.005 per share. |
(c) | Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(d) | Does not include expenses of the underlying funds in which the Fund invests. |
(e) | Annualized. |
(f) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(g) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(h) | Not annualized. |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 79 |
Financial Highlights (unaudited) (continued)
Class Z Shares | ||||||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28/29, | |||||||||||||||||||||||||||
2018(a) | 2018(a) | 2017(a) | 2016(a) | 2015 | 2014 | |||||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.94 | $9.96 | $9.39 | $9.95 | $10.19 | $10.14 | ||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income (loss) | 0.24 | 0.48 | 0.43 | 0.38 | 0.42 | 0.40 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.06 | ) | (0.01 | ) | 0.57 | (0.57 | ) | (0.22 | ) | 0.06 | ||||||||||||||||||
Total from investment operations | 0.18 | 0.47 | 1.00 | (0.19 | ) | 0.20 | 0.46 | |||||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.24 | ) | (0.48 | ) | (0.43 | ) | (0.37 | ) | (0.41 | ) | (0.38 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.01 | ) | - | - | (0.03 | ) | (0.03 | ) | |||||||||||||||||||
Total dividends and distributions | (0.24 | ) | (0.49 | ) | (0.43 | ) | (0.37 | ) | (0.44 | ) | (0.41 | ) | ||||||||||||||||
Net asset value, end of period | $9.88 | $9.94 | $9.96 | $9.39 | $9.95 | $10.19 | ||||||||||||||||||||||
Total Return(b): | 1.82% | 4.86% | 10.76% | (1.98)% | 2.05% | 4.68% | ||||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||||
Net assets, end of period (000) | $879,048 | $400,179 | $367,286 | $135,575 | $57,729 | $47,082 | ||||||||||||||||||||||
Average net assets (000) | $627,231 | $390,617 | $224,436 | $115,125 | $52,159 | $44,076 | ||||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.70% | (d) | 0.70% | 0.75% | 0.80% | 0.85% | 0.95% | |||||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.79% | (d) | 0.84% | (e) | 0.89% | 1.09% | 1.30% | 1.31% | ||||||||||||||||||||
Net investment income (loss) | 4.80% | (d) | 4.79% | 4.42% | 3.88% | 4.16% | 3.85% | |||||||||||||||||||||
Portfolio turnover rate(f) | 21% | (g) | 94% | 67% | 55% | 64% | 82% |
(a) | Calculated based on average shares outstanding during the period. |
(b) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(c) | Does not include expenses of the underlying funds in which the Fund invests. |
(d) | Annualized. |
(e) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(f) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(g) | Not annualized. |
See Notes to Financial Statements.
80 |
Class R6 Shares | ||||||||||||||||||||||||
Six Months Ended August 31, | Year Ended February 28, | April 27, 2015(a) through February 29, | ||||||||||||||||||||||
2018 | 2018 | 2017 | 2016 | |||||||||||||||||||||
Per Share Operating Performance(b): | ||||||||||||||||||||||||
Net Asset Value, Beginning of Period | $9.94 | $9.96 | $9.39 | $10.03 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.24 | 0.48 | 0.45 | 0.32 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (0.06 | ) | - | (c) | 0.55 | (0.65 | ) | |||||||||||||||||
Total from investment operations | 0.18 | 0.48 | 1.00 | (0.33 | ) | |||||||||||||||||||
Less Dividends and Distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.24 | ) | (0.49 | ) | (0.43 | ) | (0.31 | ) | ||||||||||||||||
Distributions from net realized gains | - | (0.01 | ) | - | - | |||||||||||||||||||
Total dividends and distributions | (0.24 | ) | (0.50 | ) | (0.43 | ) | (0.31 | ) | ||||||||||||||||
Net asset value, end of period | $9.88 | $9.94 | $9.96 | $9.39 | ||||||||||||||||||||
Total Return(d): | 1.85% | 4.91% | 10.79% | (3.35)% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||
Net assets, end of period (000) | $38,562 | $26,457 | $32,058 | $10 | ||||||||||||||||||||
Average net assets (000) | $40,380 | $16,803 | $5,484 | $10 | ||||||||||||||||||||
Ratios to average net assets(e): | ||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 0.65% | (f) | 0.65% | 0.67% | 0.80% | (f) | ||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 0.75% | (f) | 0.75% | (g) | 0.82% | 0.99% | (f) | |||||||||||||||||
Net investment income (loss) | 4.84% | (f) | 4.83% | 4.60% | 3.87% | (f) | ||||||||||||||||||
Portfolio turnover rate(h) | 21% | (i) | 94% | 67% | 55% | (i) |
(a) | Commencement of operations. |
(b) | Calculated based on average shares outstanding during the period. |
(c) | Less than $0.005 per share. |
(d) | Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions, if any. Total returns may reflect adjustments to conform to generally accepted accounting principles. Total returns for periods less than one full year are not annualized. |
(e) | Does not include expenses of the underlying funds in which the Fund invests. |
(f) | Annualized. |
(g) | Effective January 1, 2018, class specific expenses include Transfer Agent Fees and expenses and Registration Fees, which are charged to their respective share class. |
(h) | The Fund’s portfolio turnover rate is calculated in accordance with regulatory requirements, without regard to transactions involving short term investments and certain derivatives. If such transactions were included, the Fund’s portfolio turnover rate may be higher. |
(i) | Not annualized. |
See Notes to Financial Statements.
PGIM Floating Rate Income Fund | 81 |
Approval of Advisory Agreements (unaudited)
The Fund’s Board of Directors
The Board of Directors (the “Board”) of PGIM Floating Rate Income Fund (the “Fund”)1 consists of twelve individuals, nine of whom are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the “1940 Act”) (the “Independent Directors”). The Board is responsible for the oversight of the Fund and its operations, and performs the various duties imposed on the directors of investment companies by the 1940 Act. The Independent Directors have retained independent legal counsel to assist them in connection with their duties. The Chair of the Board is an Independent Director. The Board has established four standing committees: the Audit Committee, the Nominating and Governance Committee, and two Investment Committees. Each committee is chaired by, and composed of, Independent Directors.
Annual Approval of the Fund’s Advisory Agreements
As required under the 1940 Act, the Board determines annually whether to renew the Fund’s management agreement with PGIM Investments LLC (“PGIM Investments”) and the Fund’s subadvisory agreement with PGIM, Inc. (“PGIM”), on behalf of its PGIM Fixed Income unit. In considering the renewal of the agreements, the Board, including all of the Independent Directors, met on June 7, 2018 and on June 19-21, 2018 and approved the renewal of the agreements through July 31, 2019, after concluding that the renewal of the agreements was in the best interests of the Fund and its shareholders.
In advance of the meetings, the Board requested and received materials relating to the agreements, and had the opportunity to ask questions and request further information in connection with its consideration. Among other things, the Board considered comparative fee information from PGIM Investments and PGIM. Also, the Board considered comparisons with other mutual funds in relevant Peer Universes and Peer Groups, as is further discussed below.
In approving the agreements, the Board, including the Independent Directors advised by independent legal counsel, considered the factors it deemed relevant, including the nature, quality and extent of services provided by PGIM Investments and the subadviser, the performance of the Fund, the profitability of PGIM Investments and its affiliates, expenses and fees, and the potential for economies of scale that may be shared with the Fund and its shareholders as the Fund’s assets grow. In their deliberations, the Directors did not identify any single factor which alone was responsible for the Board’s decision to approve the agreements with respect to the Fund. In connection with its deliberations, the Board considered information provided by PGIM Investments throughout the year at regular Board
1 | PGIM Floating Rate Income Fund is a series of Prudential Investment Portfolios, Inc. 14. |
PGIM Floating Rate Income Fund |
Approval of Advisory Agreements (continued)
meetings, presentations from portfolio managers and other information, as well as information furnished at or in advance of the meetings on June 7, 2018 and on June 19-21, 2018.
The Directors determined that the overall arrangements between the Fund and PGIM Investments, which serves as the Fund’s investment manager pursuant to a management agreement, and between PGIM Investments and PGIM, which, through its PGIM Fixed Income unit, serves as the Fund’s subadviser pursuant to the terms of a subadvisory agreement with PGIM Investments, are in the best interests of the Fund and its shareholders in light of the services performed, fees charged and such other matters as the Directors considered relevant in the exercise of their business judgment.
The material factors and conclusions that formed the basis for the Directors’ reaching their determinations to approve the continuance of the agreements are separately discussed below.
Nature, Quality and Extent of Services
The Board received and considered information regarding the nature, quality and extent of services provided to the Fund by PGIM Investments and PGIM Fixed Income. The Board considered the services provided by PGIM Investments, including but not limited to the oversight of the subadviser for the Fund, as well as the provision of fund recordkeeping, compliance, and other services to the Fund. With respect to PGIM Investments’ oversight of the subadviser, the Board noted that PGIM Investments’ Strategic Investment Research Group (“SIRG”), which is a business unit of PGIM Investments, is responsible for monitoring and reporting to PGIM Investments’ senior management on the performance and operations of the subadviser. The Board also considered that PGIM Investments pays the salaries of all of the officers and interested Directors of the Fund who are part of Fund management. The Board also considered the investment subadvisory services provided by PGIM Fixed Income, including investment research and security selection, as well as adherence to the Fund’s investment restrictions and compliance with applicable Fund policies and procedures. The Board considered PGIM Investments’ evaluation of the subadviser, as well as PGIM Investments’ recommendation, based on its review of the subadviser, to renew the subadvisory agreement.
The Board considered the qualifications, backgrounds and responsibilities of PGIM Investments’ senior management responsible for the oversight of the Fund and PGIM Fixed Income, and also considered the qualifications, backgrounds and responsibilities of PGIM Fixed Income’s portfolio managers who are responsible for the day-to-day management of the Fund’s portfolio. The Board was provided with information pertaining to PGIM Investments’ and PGIM Fixed Income’s organizational structure, senior management, investment operations, and other relevant information pertaining to both PGIM Investments and PGIM Fixed Income. The Board also noted that it received favorable compliance
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reports from the Fund’s Chief Compliance Officer (“CCO”) as to both PGIM Investments and PGIM Fixed Income. The Board noted that PGIM Fixed Income is affiliated with PGIM Investments.
The Board concluded that it was satisfied with the nature, extent and quality of the investment management services provided by PGIM Investments and the subadvisory services provided to the Fund by PGIM Fixed Income, and that there was a reasonable basis on which to conclude that the Fund benefits from the services provided by PGIM Investments and PGIM Fixed Income under the management and subadvisory agreements.
Costs of Services and Profits Realized by PGIM Investments
The Board was provided with information on the profitability of PGIM Investments and its affiliates in serving as the Fund’s investment manager. The Board discussed with PGIM Investments the methodology utilized in assembling the information regarding profitability and considered its reasonableness. The Board recognized that it is difficult to make comparisons of profitability from fund management contracts because comparative information is not generally publicly available and is affected by numerous factors, including the structure of the particular adviser, the types of funds it manages, its business mix, numerous assumptions regarding allocations and the adviser’s capital structure and cost of capital. Taking these factors into account, the Board concluded that the profitability of PGIM Investments and its affiliates in relation to the services rendered was not unreasonable.
Economies of Scale
The Board received and discussed information concerning economies of scale that PGIM Investments may realize as the Fund’s assets grow beyond current levels. The Board noted that the management fee schedule for the Fund includes breakpoints, which have the effect of decreasing the fee rate as assets increase. During the course of time, the Board has considered information regarding the launch date of the Fund, the management fees of the Fund compared to those of similarly managed funds and PGIM Investments’ investment in the Fund over time. The Board noted that economies of scale can be shared with the Fund in several ways, including low management fees from inception, additional technological and personnel investments to enhance shareholder services, and maintaining existing expense structures in the face of a rising cost environment. The Board also considered PGIM Investments’ assertion that it continually evaluates the management fee schedule of the Fund and the potential to share economies of scale through breakpoints or fee waivers as asset levels increase.
The Board recognized the inherent limitations of any analysis of economies of scale, stemming largely from the Board’s understanding that most of PGIM Investments’ costs are not specific to individual funds, but rather are incurred across a variety of products and services.
PGIM Floating Rate Income Fund |
Approval of Advisory Agreements (continued)
Other Benefits to PGIM Investments and PGIM Fixed Income
The Board considered potential ancillary benefits that might be received by PGIM Investments, PGIM Fixed Income and their affiliates as a result of their relationship with the Fund. The Board concluded that potential benefits to be derived by PGIM Investments included transfer agency fees received by the Fund’s transfer agent (which is affiliated with PGIM Investments), as well as benefits to its reputation or other intangible benefits resulting from PGIM Investments’ association with the Fund. The Board concluded that the potential benefits to be derived by PGIM Fixed Income included the ability to use soft dollar credits, as well as the potential benefits consistent with those generally resulting from an increase in assets under management, specifically, potential access to additional research resources and benefits to its reputation. The Board concluded that the benefits derived by PGIM Investments and PGIM Fixed Income were consistent with the types of benefits generally derived by investment managers and subadvisers to mutual funds.
Performance of the Fund / Fees and Expenses
The Board considered certain additional specific factors and made related conclusions relating to the historical performance of the Fund for the one-, three-, and five-year periods ended December 31, 2017.
The Board also considered the Fund’s actual management fee, as well as the Fund’s net total expense ratio, for the fiscal year ended February 28, 2017. The Board considered the management fee for the Fund as compared to the management fee charged by PGIM Investments to other funds and the fee charged by other advisers to comparable mutual funds in a Peer Group. The actual management fee represents the fee rate actually paid by Fund shareholders and includes any fee waivers or reimbursements. The net total expense ratio for the Fund represents the actual expense ratio incurred by Fund shareholders.
The mutual funds included in the Peer Universe, which was used to consider performance, and the Peer Group, which was used to consider expenses and fees, were objectively determined by Broadridge, an independent provider of mutual fund data. In certain circumstances, PGIM Investments may also have provided supplemental Peer Universe or Peer Group information, for reasons addressed with the Board. The comparisons placed the Fund in various quartiles, with the first quartile being the best 25% of the mutual funds (for performance, the best performing mutual funds and, for expenses, the lowest cost mutual funds).
The section below summarizes key factors considered by the Board and the Board’s conclusions regarding the Fund’s performance, fees and overall expenses. The table sets forth gross performance comparisons (which do not reflect the impact on performance of fund expenses, or any subsidies, expense caps or waivers that may be applicable) with the
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Peer Universe, actual management fees with the Peer Group (which reflect the impact of any subsidies or fee waivers), and net total expenses with the Peer Group, each of which were key factors considered by the Board.
Gross Performance | 1 Year | 3 Years | 5 Years | 10 Years | ||||
1st Quartile | 2nd Quartile | 2nd Quartile | N/A | |||||
Actual Management Fees: 1st Quartile | ||||||||
Net Total Expenses: 3rd Quartile |
• | The Board noted that the Fund outperformed its benchmark index over all periods. |
• | The Board and PGIM Investments agreed to retain the Fund’s existing contractual expense cap, which (exclusive of certain fees and expenses) caps the Fund’s annual operating expenses at 0.95% for Class A shares, 1.70% for Class C shares, 0.70% for Class Z shares, and 0.65% for Class R6 shares through June 30, 2019. |
• | The Board noted information provided by PGIM Investments indicating that if the Fund’s expense cap, which was implemented on October 1, 2016, had been in effect for the full fiscal year, the Fund’s net total expenses would have ranked in the first quartile of its Peer Group. |
• | The Board concluded that, in light of the above, it would be in the best interests of the Fund and its shareholders to renew the agreements. |
• | The Board concluded that the management fees (including subadvisory fees) and total expenses were reasonable in light of the services provided. |
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After full consideration of these factors, the Board concluded that the approval of the agreements was in the best interests of the Fund and its shareholders.
PGIM Floating Rate Income Fund |
∎ TELEPHONE | ∎ WEBSITE | |||
655 Broad Street Newark, NJ 07102 | (800) 225-1852 | www.pgiminvestments.com |
PROXY VOTING |
The Board of Directors of the Fund has delegated to the Fund’s investment subadviser the responsibility for voting any proxies and maintaining proxy recordkeeping with respect to the Fund. A description of these proxy voting policies and procedures is available without charge, upon request, by calling (800) 225-1852. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the Fund’s website and on the Securities and Exchange Commission’s website. |
DIRECTORS |
Ellen S. Alberding • Kevin J. Bannon • Scott E. Benjamin • Linda W. Bynoe • Barry H. Evans • Keith F. Hartstein • Laurie Simon Hodrick • Michael S. Hyland • Stuart S. Parker • Richard A. Redeker • Brian K. Reid • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • Brian D. Nee, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Dino Capasso, Vice President and Deputy Chief Compliance Officer • Charles H. Smith, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Andrew R. French, Assistant Secretary • Peter Parrella, Assistant Treasurer • Lana Lomuti, Assistant Treasurer • Linda McMullin, Assistant Treasurer • Kelly A. Coyne, Assistant Treasurer |
MANAGER | PGIM Investments LLC | 655 Broad Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | PGIM Fixed Income | 655 Broad Street Newark, NJ 07102 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | 655 Broad Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | 225 Liberty Street New York, NY 10286 | ||
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TRANSFER AGENT | Prudential Mutual Fund Services LLC | PO Box 9658 Providence, RI 02940 | ||
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | KPMG LLP | 345 Park Avenue New York, NY 10154 | ||
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FUND COUNSEL | Willkie Farr & Gallagher LLP | 787 Seventh Avenue New York, NY 10019 | ||
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An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. The prospectus and summary prospectus contain this and other information about the Fund. An investor may obtain a prospectus and summary prospectus by visiting our website at www.pgiminvestments.com or by calling (800) 225-1852. The prospectus and summary prospectus should be read carefully before investing. |
E-DELIVERY |
To receive your mutual fund documents online, go to www.pgiminvestments.com/edelivery and enroll. Instead of receiving printed documents by mail, you will receive notification via email when new materials are available. You can cancel your enrollment or change your email address at any time by visiting the website address above. |
SHAREHOLDER COMMUNICATIONS WITH DIRECTORS |
Shareholders can communicate directly with the Board of Directors by writing to the Chair of the Board, PGIM Floating Rate Income Fund, PGIM Investments, Attn: Board of Directors, 655 Broad Street, Newark, NJ 07102. Shareholders can communicate directly with an individual Director by writing to the same address. Communications are not screened before being delivered to the addressee. |
AVAILABILITY OF PORTFOLIO SCHEDULE |
The Fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Commission’s website at www.sec.gov. The Fund’s Forms N-Q may also be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation and location of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The Fund’s schedule of portfolio holdings is also available on the Fund’s website as of the end of each month no sooner than 15 days after the end of the month. |
Mutual Funds:
ARE NOT INSURED BY THE FDIC OR ANY FEDERAL GOVERNMENT AGENCY | MAY LOSE VALUE | ARE NOT A DEPOSIT OF OR GUARANTEED BY ANY BANK OR ANY BANK AFFILIATE |
PGIM FLOATING RATE INCOME FUND
SHARE CLASS | A | C | Z | R6* | ||||
NASDAQ | FRFAX | FRFCX | FRFZX | PFRIX | ||||
CUSIP | 74439V602 | 74439V701 | 74439V800 | 74439V883 |
* Formerly known as Class Q shares.
MF211E2
Item 2 – | Code of Ethics – Not required, as this is not an annual filing. |
Item 3 – | Audit Committee Financial Expert – Not required, as this is not an annual filing. |
Item 4 – | Principal Accountant Fees and Services – Not required, as this is not an annual filing. |
Item 5 – | Audit Committee of Listed Registrants – Not applicable. |
Item 6 – | Schedule of Investments – The schedule is included as part of the report to shareholders filed under Item 1 of this Form. |
Item 7 – | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies – Not applicable. |
Item 8 – | Portfolio Managers of Closed-End Management Investment Companies – Not applicable. |
Item 9 – | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers – Not applicable. |
Item 10 – | Submission of Matters to a Vote of Security Holders – Not applicable. |
Item 11 – | Controls and Procedures |
(a) | It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure. |
(b) | There has been no significant change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter of the period covered by this report that has materially affected, or is likely to materially affect, the registrant’s internal control over financial reporting. |
Item 12 – | Exhibits |
(a) | (1) Code of Ethics – Not required, as this is not an annual filing. |
(2) | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.CERT. |
(3) | Any written solicitation to purchase securities under Rule 23c-1. – Not applicable. |
(b) | Certifications pursuant to Section 906 of the Sarbanes-Oxley Act – Attached hereto as Exhibit EX-99.906CERT. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: | Prudential Investment Portfolios, Inc. 14 | |
By: | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary | ||
Date: | October 16, 2018 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Stuart S. Parker | |
Stuart S. Parker | ||
President and Principal Executive Officer | ||
Date: | October 16, 2018 | |
By: | /s/ Brian D. Nee | |
Brian D. Nee | ||
Treasurer and Principal Financial and Accounting Officer | ||
Date: | October 16, 2018 |