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: | 811-02896 | |
Exact name of registrant as specified in charter: | Prudential Investment Portfolios, Inc. 15 | |
Address of principal executive offices: | Gateway Center 3, | |
100 Mulberry Street, | ||
Newark, New Jersey 07102 | ||
Name and address of agent for service: | Deborah A. Docs | |
Gateway Center 3, | ||
100 Mulberry Street, | ||
Newark, New Jersey 07102 | ||
Registrant’s telephone number, including area code: | 800-225-1852 | |
Date of fiscal year end: | 8/31/2015 | |
Date of reporting period: | 2/28/2015 |
Item 1 – Reports to Stockholders
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL SHORT DURATION HIGH YIELD INCOME FUND
SEMIANNUAL REPORT · FEBRUARY 28, 2015
Objective
To provide a high level of current income
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2015, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS). Prudential Fixed Income is a unit of Prudential Investment Management, Inc. (PIM), a registered investment adviser. PIMS and PIM are Prudential Financial companies. © 2015 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, Prudential, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
April 15, 2015
Dear Shareholder:
We hope you find the semiannual report for the Prudential Short Duration High Yield Income Fund informative and useful. The report covers performance for the six-month period that ended February 28, 2015.
Since market conditions change over time, 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. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks. We offer the expertise of Prudential Financial’s affiliated asset managers that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential Short Duration High Yield Income Fund
Prudential Short Duration High Yield Income Fund | 1 |
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.prudentialfunds.com or by calling (800) 225-1852.
Cumulative Total Returns (Without Sales Charges) as of 2/28/15 |
| |||||||||||
Six Months | One Year | Since Inception | ||||||||||
Class A | 0.41 | % | 1.63 | % | 8.65% (10/26/12) | |||||||
Class C | 0.04 | 0.87 | 6.73 (10/26/12) | |||||||||
Class Q | N/A | N/A | 1.04 (10/27/14) | |||||||||
Class Z | 0.54 | 1.88 | 9.30 (10/26/12) | |||||||||
Barclays US High Yield Ba/B Rated 1–5 Yr | 0.47 | 2.36 | — | |||||||||
Lipper High Yield Funds Average | –1.12 | 1.25 | — | |||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/15 |
| |||||||||||
One Year | Since Inception | |||||||||||
Class A | –1.79 | % | 2.10% (10/26/12) | |||||||||
Class C | –0.20 | 2.72 (10/26/12) | ||||||||||
Class Q | N/A | N/A (10/27/14) | ||||||||||
Class Z | 1.87 | 3.81 (10/26/12) | ||||||||||
Barclays US High Yield Ba/B Rated 1–5 Yr | 1.84 | — | ||||||||||
Lipper High Yield Funds Average | 0.59 | — |
Source: Prudential Investments LLC and Lipper Inc.
2 | Visit our website at www.prudentialfunds.com |
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges which are described for each share class in the table below.
Class A | Class C | Class Q | Class Z | |||||
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% on sales of $1 million or more made within 12 months of purchase | 1% 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) | .25% | 1% | None | None |
Benchmark Definitions
Barclays US High Yield Ba/B Rated 1–5 Year 1% Capped Index
The Barclays US High Yield Ba/B 1–5 Year 1% Capped Index (Capped Index) represents the performance of US short duration, higher-rated high yield bonds. The cumulative total return for the Capped Index measured from the month-end closest to the inception date for Class A, C, and Z shares through 2/28/15 is 13.28% and 0.75% for Class Q shares. The average annual total return for the Capped Index measured from the month-end closest to the inception date for Class A, C, and Z shares through 3/31/15 is 5.18%. Class Q shares have been in existence for less than one year and have no average annual total return performance information available.
Lipper High Yield Funds Average
The Lipper High Yield Funds Average (Lipper Average) is based on the average return of all funds in the Lipper High Yield Funds category for the periods noted. Funds in the Lipper Average aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions, and tend to invest in lower-grade debt issues. The cumulative total return for the Lipper Average measured from the month-end closest to the inception date for Class A, C, and Z shares through 2/28/15 is 13.23% and 0.15% for Class Q shares. The average annual total return for the S&P 500 Index measured from the month-end closest to the inception date for Class A, C, and Z shares through 3/31/15 is 5.09%. Class Q shares have been in existence for less than one year and have no average annual total return performance information available.
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, but not sales charges or taxes. The Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Prudential Short Duration High Yield Income Fund | 3 |
Your Fund’s Performance (continued)
Five Largest Holdings expressed as a percentage of net assets as of 2/28/15 | ||||
First Data Corp., Gtd. Notes, 12.625%, 01/15/2021 | 2.2 | % | ||
Continental Airlines Pass-Through Trust, Pass-Through Certificates, Series 2012-3, Class C, 6.125%, 04/29/2018 | 1.5 | |||
CCO Holdings LLC/CCO Holdings Capital Corp., Gtd. Notes, 7.250%, 10/30/2017 | 1.4 | |||
Tops Holding Corp./Tops Markets LLC, Sr. Sec’d. Notes, 8.875%, 12/15/2017 | 1.4 | |||
HCA Holdings, Inc., Sr. Unsec’d. Notes, 7.750%, 05/15/2021 | 1.4 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 2/28/15 | ||||
Technology | 14.5 | % | ||
Healthcare & Pharmaceutical | 10.4 | |||
Gaming | 7.6 | |||
Telecommunications | 7.1 | |||
Cable & Satellite | 7.0 |
Industry weightings reflect only long-term investments and are subject to change.
Distributions and Yields as of 2/28/15 |
| |||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | 30-Day Unsubsidized SEC Yield | ||||||||||
Class A | $ | 0.31 | 4.05 | % | 4.01 | % | ||||||
Class C | 0.27 | 3.44 | 3.44 | |||||||||
Class Q | 0.22 | 4.55 | 4.55 | |||||||||
Class Z | 0.32 | 4.44 | 4.44 |
Credit Quality expressed as a percentage of total investments as of 2/28/15 |
| |||
BBB | 3.1 | % | ||
BB | 38.4 | |||
B | 51.8 | |||
CCC | 5.8 | |||
CC | 0.2 | |||
Not Rated | 0.3 | |||
Cash/Cash Equivalents | 0.4 | |||
Total Investments | 100.0 | % |
Source: PIM
Credit ratings reflect the highest rating assigned by Moody’s Investor Service, Inc. (Moody’s), Standard & Poor’s (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, Moody’s ratings are converted to the comparable S&P/Fitch rating tier nomenclature. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. The Not Rated category consists of securities that have not been rated by Moody’s, S&P, or Fitch. Credit ratings are subject to change.
4 | Visit our website at www.prudentialfunds.com |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on September 1, 2014, at the beginning of the period, and held through the six-month period ended February 28, 2015. 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
Prudential Short Duration High Yield Income Fund | 5 |
Fees and Expenses (continued)
Prudential Investments 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 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.
Prudential Short Duration High Yield Income Fund | Beginning Account Value September 1, 2014 | Ending Account Value February 28, 2015 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 1,004.10 | 1.10 | % | $ | 5.47 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.34 | 1.10 | % | $ | 5.51 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 1,000.40 | 1.85 | % | $ | 9.18 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,015.62 | 1.85 | % | $ | 9.25 | ||||||||||
Class Q** | Actual | $ | 1,000.00 | $ | 1,010.40 | 0.75 | % | $ | 2.56 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,021.08 | 0.75 | % | $ | 3.76 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 1,005.40 | 0.85 | % | $ | 4.23 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.58 | 0.85 | % | $ | 4.26 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended February 28, 2015, and divided by the 365 days in the Fund’s fiscal year ending August 31, 2015 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
**“Actual” expenses are calculated using the 125-day period ended February 28, 2015, measured from the Class’s inception date of October 27, 2014.
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The Fund’s annualized expense ratios for the six-month period ended February 28, 2015, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||||||
A | 1.15 | % | 1.10 | % | ||||
C | 1.85 | 1.85 | ||||||
Q | 0.75 | 0.75 | ||||||
Z | 0.85 | 0.85 |
Net operating expenses shown above reflect fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
Prudential Short Duration High Yield Income Fund | 7 |
Portfolio of Investments
as of February 28, 2015 (Unaudited)
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
LONG-TERM INVESTMENTS 97.6% |
| |||||||||||||
BANK LOANS(a) 2.1% |
| |||||||||||||
Building Materials & Construction 0.2% |
| |||||||||||||
Materis CHRYSO SA (France) | 4.788% | 08/13/21 | EUR | 3,000 | $ | 3,301,739 | ||||||||
Capital Goods 0.3% |
| |||||||||||||
CPM Acquisition Corp. | 6.250 | 08/29/17 | 3,776 | 3,761,778 | ||||||||||
Chemicals 0.3% |
| |||||||||||||
Axalta Coating Systems US Holdings | 3.750 | 02/03/20 | 2,372 | 2,353,475 | ||||||||||
Colouroz Investment 2 LLC | 4.750 | 09/07/21 | 2,000 | 1,986,432 | ||||||||||
|
| |||||||||||||
4,339,907 | ||||||||||||||
Foods 0.5% |
| |||||||||||||
Agrokor DD Spv2 (Croatia), PIK | 9.500 | 06/04/18 | EUR | 4,000 | 4,375,462 | |||||||||
Jacobs Douwe Egberts (Netherlands) | 4.250 | 07/23/21 | EUR | 1,900 | 2,129,838 | |||||||||
|
| |||||||||||||
6,505,300 | ||||||||||||||
Metals 0.5% |
| |||||||||||||
FMG Resources (August 2006) Pty. Ltd. (Australia) | 3.750 | 06/30/19 | 6,500 | 6,016,562 | ||||||||||
Technology 0.3% |
| |||||||||||||
Kronos, Inc. | 9.750 | 04/30/20 | 3,541 | 3,617,253 | ||||||||||
|
| |||||||||||||
TOTAL BANK LOANS | 27,542,539 | |||||||||||||
|
| |||||||||||||
CORPORATE BONDS 95.3% | ||||||||||||||
Aerospace & Defense 1.7% | ||||||||||||||
Bombardier, Inc. (Canada), | 4.750 | 04/15/19 | 6,650 | 6,483,750 | ||||||||||
Sr. Unsec’d. Notes, 144A | 7.500 | 03/15/18 | 4,025 | 4,286,625 | ||||||||||
Ducommun, Inc., Gtd. Notes | 9.750 | 07/15/18 | 8,563 | 9,162,410 | ||||||||||
Esterline Technologies Corp., Gtd. Notes | 7.000 | 08/01/20 | 2,727 | 2,863,350 | ||||||||||
|
| |||||||||||||
22,796,135 | ||||||||||||||
Airlines 1.5% |
| |||||||||||||
Continental Airlines Pass-Through Trust, Pass-Through Certificates, Series 2012-3, Class C | 6.125 | 04/29/18 | 18,400 | 19,504,000 |
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 9 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Automotive 2.1% |
| |||||||||||||
Allison Transmission, Inc., Gtd. Notes, 144A | 7.125% | 05/15/19 | 7,400 | $ | 7,723,750 | |||||||||
American Axle & Manufacturing, Inc., | 5.125 | 02/15/19 | 1,750 | 1,824,375 | ||||||||||
Gtd. Notes | 7.750 | 11/15/19 | 1,900 | 2,170,750 | ||||||||||
Chrysler Group LLC/CG Co-Issuer, Inc., | 8.000 | 06/15/19 | 3,450 | 3,644,649 | ||||||||||
Sec’d. Notes | 8.250 | 06/15/21 | 1,250 | 1,395,313 | ||||||||||
Jaguar Land Rover Automotive PLC (United Kingdom), Gtd. Notes, 144A(b) | 4.250 | 11/15/19 | 2,125 | 2,207,344 | ||||||||||
Schaeffler Holding Finance BV (Germany), | 6.250 | 11/15/19 | 2,350 | 2,491,000 | ||||||||||
Sr. Sec’d. Notes, PIK, 144A | 6.875 | 08/15/18 | 6,425 | 6,730,187 | ||||||||||
|
| |||||||||||||
28,187,368 | ||||||||||||||
Building Materials & Construction 5.8% |
| |||||||||||||
Beazer Homes USA, Inc., | 5.750 | 06/15/19 | 2,925 | 2,822,625 | ||||||||||
Sr. Sec’d. Notes | 6.625 | 04/15/18 | 12,171 | 12,657,840 | ||||||||||
Building Materials Corp. of America, Sr. Unsec’d. Notes, 144A (original cost $4,819,813; purchased 04/24/14 - 09/17/14)(c)(d) | 6.750 | 05/01/21 | 4,450 | 4,783,750 | ||||||||||
Cemex Espana Luxembourg (Mexico), Sr. Sec’d. Notes, 144A | 9.875 | 04/30/19 | 4,000 | 4,448,800 | ||||||||||
Cemex SAB de CV (Mexico), Sr. Sec’d. Notes, 144A | 9.500 | 06/15/18 | 2,500 | 2,781,250 | ||||||||||
D.R. Horton, Inc., | 3.625 | 02/15/18 | 2,018 | 2,056,342 | ||||||||||
Gtd. Notes | 5.625 | 01/15/16 | 250 | 258,125 | ||||||||||
Gtd. Notes | 6.500 | 04/15/16 | 100 | 104,750 | ||||||||||
HD Supply, Inc., Gtd. Notes | 11.500 | 07/15/20 | 3,500 | 4,025,000 | ||||||||||
KB Home, Gtd. Notes | 4.750 | 05/15/19 | 5,564 | 5,390,125 | ||||||||||
Lennar Corp., | 4.500 | 06/15/19 | 4,200 | 4,326,000 | ||||||||||
Gtd. Notes | 4.500 | 11/15/19 | 3,975 | 4,064,437 | ||||||||||
Standard Pacific Corp., Gtd. Notes | 8.375 | 05/15/18 | 8,647 | 9,900,815 | ||||||||||
Taylor Morrison Communities, Inc./Monarch Communities, Inc., Gtd. Notes, 144A (original cost $4,966,875; purchased | 7.750 | 04/15/20 | 4,500 | 4,770,000 |
See Notes to Financial Statements.
10 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Building Materials & Construction (cont’d.) |
| |||||||||||||
Toll Brothers Finance Corp., Gtd. Notes | 4.000% | 12/31/18 | 500 | $ | 513,750 | |||||||||
U.S. Concrete, Inc., Sr. Sec’d. Notes | 8.500 | 12/01/18 | 9,200 | 9,752,000 | ||||||||||
USG Corp., Sr. Unsec’d. Notes | 6.300 | 11/15/16 | 3,725 | 3,920,563 | ||||||||||
|
| |||||||||||||
76,576,172 | ||||||||||||||
Cable & Satellite 7.0% | ||||||||||||||
Cablevision Systems Corp., | 7.750 | 04/15/18 | 5,500 | 6,132,500 | ||||||||||
Sr. Unsec’d. Notes | 8.625 | 09/15/17 | 6,550 | 7,409,687 | ||||||||||
CCO Holdings LLC/CCO Holdings Capital Corp., | 7.000 | 01/15/19 | 4,890 | 5,085,600 | ||||||||||
Gtd. Notes | 7.250 | 10/30/17 | 17,898 | 18,636,292 | ||||||||||
Gtd. Notes | 8.125 | 04/30/20 | 8,300 | 8,704,625 | ||||||||||
CSC Holdings LLC, | 7.625 | 07/15/18 | 4,218 | 4,766,340 | ||||||||||
Sr. Unsec’d. Notes | 7.875 | 02/15/18 | 4,250 | 4,797,188 | ||||||||||
Sr. Unsec’d. Notes | 8.625 | 02/15/19 | 250 | 291,563 | ||||||||||
DISH DBS Corp., Gtd. Notes | 7.875 | 09/01/19 | 5,509 | 6,218,284 | ||||||||||
Intelsat Jackson Holdings SA (Luxembourg), | 7.250 | 04/01/19 | 11,592 | 11,997,720 | ||||||||||
Gtd. Notes | 7.250 | 10/15/20 | 2,815 | 2,927,600 | ||||||||||
Numericable Group SA (France), Sr. Sec’d. Notes, 144A | 4.875 | 05/15/19 | 4,675 | 4,675,000 | ||||||||||
Telesat Canada/Telesat LLC (Canada), Gtd. Notes, 144A | 6.000 | 05/15/17 | 10,850 | 11,107,687 | ||||||||||
UPCB Finance III Ltd. (Netherlands), Sr. Sec’d. Notes, 144A | 6.625 | 07/01/20 | 210 | 219,713 | ||||||||||
|
| |||||||||||||
92,969,799 | ||||||||||||||
Capital Goods 6.1% | ||||||||||||||
Anixter International, Inc., Gtd. Notes | 5.625 | 05/01/19 | 9,300 | 9,951,000 | ||||||||||
BlueLine Rental Finance Corp., Sec’d. Notes, 144A (original cost $1,603,250; purchased 01/16/14 - 02/12/14)(c)(d) | 7.000 | 02/01/19 | 1,575 | 1,634,062 | ||||||||||
Case New Holland Industrial, Inc., Gtd. Notes | 7.875 | 12/01/17 | 2,570 | 2,865,550 | ||||||||||
Cleaver-Brooks, Inc., Sr. Sec’d. Notes, 144A (original cost $5,997,500; purchased 12/18/13 - 03/21/14)(c)(d) | 8.750 | 12/15/19 | 5,500 | 5,623,750 |
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 11 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Capital Goods (cont’d.) | ||||||||||||||
CNH America LLC, Gtd. Notes | 7.250% | 01/15/16 | 1,000 | $ | 1,042,500 | |||||||||
CNH Capital LLC, | 3.625 | 04/15/18 | 375 | 376,875 | ||||||||||
Gtd. Notes | 3.875 | 11/01/15 | 250 | 251,563 | ||||||||||
Hertz Corp. (The), Gtd. Notes | 7.500 | 10/15/18 | 5,716 | 5,916,060 | ||||||||||
International Wire Group Holdings, Inc., Sec’d. Notes, 144A(b) | 8.500 | 10/15/17 | 3,150 | 3,291,750 | ||||||||||
Michael Baker International, Inc., Sr. Sec’d. Notes, 144A | 8.250 | 10/15/18 | 9,660 | 9,418,500 | ||||||||||
NCSG Crane & Heavy Haul Services (Canada), Sec’d. Notes, 144A | 9.500 | 08/15/19 | 4,375 | 2,734,375 | ||||||||||
Polymer Group, Inc., Sr. Sec’d. Notes | 7.750 | 02/01/19 | 3,336 | 3,469,440 | ||||||||||
Safway Group Holding LLC/Safway Finance Corp., Sec’d. Notes, 144A | 7.000 | 05/15/18 | 9,272 | 9,364,720 | ||||||||||
SPX Corp., Gtd. Notes(b) | 6.875 | 09/01/17 | 6,781 | 7,391,290 | ||||||||||
Terex Corp., Gtd. Notes | 6.500 | 04/01/20 | 2,900 | 3,045,000 | ||||||||||
Unifrax I LLC/Unifrax Holding Co., Gtd. Notes, 144A (original cost $6,917,735; purchased 01/31/13 - 06/30/14)(c)(d) | 7.500 | 02/15/19 | 6,583 | 6,648,830 | ||||||||||
United Rentals North America, Inc., Gtd. Notes | 8.250 | 02/01/21 | 4,950 | 5,370,750 | ||||||||||
WireCo WorldGroup, Inc., Gtd. Notes | 9.500 | 05/15/17 | 1,650 | 1,625,250 | ||||||||||
|
| |||||||||||||
80,021,265 | ||||||||||||||
Chemicals 2.0% | ||||||||||||||
Axalta Coating Systems U.S. Holdings, Inc./Axalta Coating Systems Dutch Holding B BV, Gtd. Notes, 144A(b) | 7.375 | 05/01/21 | 2,500 | 2,706,250 | ||||||||||
Hexion U.S. Finance Corp., Sr. Sec’d. Notes | 8.875 | 02/01/18 | 7,650 | 6,445,125 | ||||||||||
Koppers, Inc., Gtd. Notes(b) | 7.875 | 12/01/19 | 17,627 | 17,825,304 | ||||||||||
|
| |||||||||||||
26,976,679 | ||||||||||||||
Consumer 2.0% | ||||||||||||||
Galaxy Bidco Ltd. (United Kingdom), Sr. Sec’d. Notes, 144A | 5.563(a) | 11/15/19 | GBP | 1,050 | 1,608,888 | |||||||||
Gibson Brands, Inc., Sr. Sec’d. Notes, 144A (original cost $1,094,625; purchased 05/13/14)(c)(d) | 8.875 | 08/01/18 | 1,050 | 1,031,625 | ||||||||||
Laureate Education, Inc., Gtd. Notes, 144A(b) | 10.000 | 09/01/19 | 6,700 | 6,398,500 |
See Notes to Financial Statements.
12 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Consumer (cont’d.) | ||||||||||||||
Novalis SAS (France), Sr. Sec’d. Notes, 144A | 6.000% | 06/15/18 | EUR | 1,200 | $ | 1,401,534 | ||||||||
Scotts Miracle-Gro Co. (The), Gtd. Notes | 6.625 | 12/15/20 | 6,374 | 6,756,440 | ||||||||||
Service Corp. International, Sr. Unsec’d. Notes | 7.625 | 10/01/18 | 7,730 | 8,831,525 | ||||||||||
|
| |||||||||||||
26,028,512 | ||||||||||||||
Electric 2.6% | ||||||||||||||
AES Corp. (The), | 3.234(a) | 06/01/19 | 2,475 | 2,437,875 | ||||||||||
Sr. Unsec’d. Notes | 8.000 | 10/15/17 | 2,150 | 2,416,062 | ||||||||||
Sr. Unsec’d. Notes | 8.000 | 06/01/20 | 1,300 | 1,491,750 | ||||||||||
Sr. Unsec’d. Notes | 9.750 | 04/15/16 | 688 | 755,080 | ||||||||||
DPL, Inc., Sr. Unsec’d. Notes | 6.500 | 10/15/16 | 901 | 950,555 | ||||||||||
Dynegy Finance I, Inc./Dynegy Finance II, Inc., Sr. Sec’d. Notes, 144A | 6.750 | 11/01/19 | 7,050 | 7,376,062 | ||||||||||
Mirant Mid Atlantic LLC, Pass-Through Certificates, Series B | 9.125 | 06/30/17 | 776 | 806,530 | ||||||||||
NRG Energy, Inc., | 7.625 | 01/15/18 | 11,500 | 12,765,000 | ||||||||||
Gtd. Notes | 8.250 | 09/01/20 | 4,375 | 4,664,844 | ||||||||||
NRG REMA LLC, Pass-Through Certificates(c) | 9.237 | 07/02/17 | 359 | 374,314 | ||||||||||
|
| |||||||||||||
34,038,072 | ||||||||||||||
Energy—Integrated | ||||||||||||||
Pacific Rubiales Energy Corp. (Colombia), Gtd. Notes, 144A | 7.250 | 12/12/21 | 200 | 143,500 | ||||||||||
Energy—Other 1.4% | ||||||||||||||
Afren PLC (United Kingdom), | 10.250 | 04/08/19 | 1,000 | 394,000 | ||||||||||
Sr. Sec’d. Notes, 144A(b) | 10.250 | 04/08/19 | 5,500 | 2,167,000 | ||||||||||
California Resources Corp., Gtd. Notes, 144A(b) | 5.000 | 01/15/20 | 1,750 | 1,605,625 | ||||||||||
CGG SA (France), Gtd. Notes(b) | 7.750 | 05/15/17 | 288 | 270,720 | ||||||||||
EP Energy LLC/EP Energy Finance, Inc., Gtd. Notes(b) | 9.375 | 05/01/20 | 225 | 240,187 | ||||||||||
Hilcorp Energy I LP/Hilcorp Finance Co., Sr. Unsec’d. Notes, 144A (original cost $1,102,500; purchased 03/15/13 - 03/18/13)(c)(d) | 8.000 | 02/15/20 | 1,000 | 1,025,000 | ||||||||||
Kodiak Oil & Gas Corp., Gtd. Notes | 8.125 | 12/01/19 | 5,000 | 5,212,500 |
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 13 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Energy—Other (cont’d.) | ||||||||||||||
PHI, Inc., Gtd. Notes | 5.250% | 03/15/19 | 1,650 | $ | 1,501,500 | |||||||||
SESI LLC, Gtd. Notes | 6.375 | 05/01/19 | 6,000 | 6,030,000 | ||||||||||
|
| |||||||||||||
18,446,532 | ||||||||||||||
Food & Beverage 4.0% |
| |||||||||||||
Aramark Services, Inc., Gtd. Notes | 5.750 | 03/15/20 | 1,005 | 1,050,225 | ||||||||||
Bertin SA/Bertin Finance Ltd. (Brazil), Gtd. Notes, 144A | 10.250 | 10/05/16 | 1,600 | 1,744,424 | ||||||||||
Cott Beverages, Inc. (Canada), Gtd. | 6.750 | 01/01/20 | 5,375 | 5,375,000 | ||||||||||
Iceland Bondco PLC (United Kingdom), Sr. Sec’d. Notes, 144A | 4.810(a) | 07/15/20 | GBP | 3,354 | 3,796,467 | |||||||||
JBS SA (Brazil), Sr. Unsec’d. Notes, RegS | 10.500 | 08/04/16 | 1,500 | 1,650,000 | ||||||||||
JBS USA LLC/JBS USA Finance, Inc. (Brazil), Gtd. Notes, 144A (original cost $4,865,625; purchased 06/17/14)(c)(d) | 7.250 | 06/01/21 | 4,500 | 4,733,528 | ||||||||||
Landry’s, Inc., Sr. Unsec’d. Notes, 144A (original cost $6,382,375; purchased 05/27/14 - 08/01/14)(c)(d) | 9.375 | 05/01/20 | 5,875 | 6,337,656 | ||||||||||
Shearer’s Foods LLC/Chip Finance Corp., Sr. Sec’d. Notes, 144A | 9.000 | 11/01/19 | 675 | 739,969 | ||||||||||
Smithfield Foods, Inc., | 7.750 | 07/01/17 | 2,825 | 3,161,740 | ||||||||||
Sr. Unsec’d. Notes, 144A | 5.250 | 08/01/18 | 5,725 | 5,903,906 | ||||||||||
Tops Holding Corp./Tops Markets LLC, Sr. Sec’d. Notes (original cost $19,428,469; purchased 05/24/13 - 10/07/14)(c)(d) | 8.875 | 12/15/17 | 17,787 | 18,587,415 | ||||||||||
|
| |||||||||||||
53,080,330 | ||||||||||||||
Gaming 7.6% |
| |||||||||||||
Boyd Gaming Corp., Gtd. Notes(b) | 9.125 | 12/01/18 | 4,300 | 4,504,250 | ||||||||||
CCM Merger, Inc., Gtd. Notes, 144A (original cost $6,253,325; purchased 09/04/13 - 05/21/14)(c)(d) | 9.125 | 05/01/19 | 5,935 | 6,454,313 | ||||||||||
GLP Capital LP/GLP Financing II, Inc., Gtd. Notes(b) | 4.375 | 11/01/18 | 6,425 | 6,682,000 | ||||||||||
Golden Nugget Escrow, Inc., Sr. Unsec’d. Notes, 144A(b) | 8.500 | 12/01/21 | 2,235 | 2,335,575 | ||||||||||
Isle of Capri Casinos, Inc., Gtd. Notes | 7.750 | 03/15/19 | 11,003 | 11,415,613 |
See Notes to Financial Statements.
14 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Gaming (cont’d.) |
| |||||||||||||
MGM Resorts International, | 7.625% | 01/15/17 | 8,070 | $ | 8,715,600 | |||||||||
Gtd. Notes | 10.000 | 11/01/16 | 8,080 | 9,009,200 | ||||||||||
MTR Gaming Group, Inc., Sec’d. Notes(b) | 11.500 | 08/01/19 | 12,557 | 13,624,345 | ||||||||||
NCL Corp. Ltd., Sr. Unsec’d. Notes, 144A | 5.250 | 11/15/19 | 2,800 | 2,877,000 | ||||||||||
Peninsula Gaming LLC/Peninsula Gaming Corp., Gtd. Notes, 144A(b) | 8.375 | 02/15/18 | 13,021 | 13,769,707 | ||||||||||
Pinnacle Entertainment, Inc., | 7.500 | 04/15/21 | 9,015 | 9,544,631 | ||||||||||
Gtd. Notes(b) | 8.750 | 05/15/20 | 5,966 | 6,294,130 | ||||||||||
Station Casinos LLC, Gtd. Notes | 7.500 | 03/01/21 | 5,000 | 5,375,000 | ||||||||||
|
| |||||||||||||
100,601,364 | ||||||||||||||
Healthcare & Pharmaceutical 10.4% |
| |||||||||||||
Biomet, Inc., Gtd. Notes | 6.500 | 08/01/20 | 3,000 | 3,202,500 | ||||||||||
Capella Healthcare, Inc., Gtd. Notes | 9.250 | 07/01/17 | 4,900 | 5,096,000 | ||||||||||
Capsugel SA, Sr. Unsec’d. Notes, PIK, 144A | 7.000 | 05/15/19 | 6,525 | 6,647,344 | ||||||||||
CHS/Community Health Systems, Inc., Gtd. Notes | 8.000 | 11/15/19 | 16,674 | 17,841,180 | ||||||||||
ConvaTec Healthcare E SA (Luxembourg), Gtd. Notes, 144A | 10.500 | 12/15/18 | 10,784 | 11,377,120 | ||||||||||
Elli Finance UK PLC (United Kingdom), Sr. Sec’d. Notes, RegS | 8.750 | 06/15/19 | GBP | 1,950 | 3,056,039 | |||||||||
Emdeon, Inc., Gtd. Notes | 11.000 | 12/31/19 | 15,000 | 16,462,500 | ||||||||||
HCA Holdings, Inc., Sr. Unsec’d. Notes | 7.750 | 05/15/21 | 16,972 | 18,160,040 | ||||||||||
HCA, Inc., | 6.500 | 02/15/16 | 250 | 261,567 | ||||||||||
Gtd. Notes | 8.000 | 10/01/18 | 9,358 | 10,925,465 | ||||||||||
Sr. Sec’d. Notes | 4.250 | 10/15/19 | 4,600 | 4,761,000 | ||||||||||
IDH Finance PLC (United Kingdom), | 5.555(a) | 12/01/18 | GBP | 2,000 | 3,072,268 | |||||||||
Sr. Sec’d. Notes, 144A | 6.000 | 12/01/18 | GBP | 1,000 | 1,574,730 | |||||||||
Kindred Healthcare, Inc., Gtd. Notes, 144A | 8.000 | 01/15/20 | 1,000 | 1,085,000 | ||||||||||
MedAssets, Inc., Gtd. Notes(b) | 8.000 | 11/15/18 | 15,549 | 16,229,269 | ||||||||||
Priory Group No. 3 PLC (United Kingdom), Sr. Sec’d. Notes, RegS | 7.000 | 02/15/18 | GBP | 184 | 294,404 | |||||||||
Tenet Healthcare Corp., | 6.250 | 11/01/18 | 6,450 | 7,038,562 | ||||||||||
Sr. Unsec’d. Notes | 8.000 | 08/01/20 | 1,000 | 1,060,000 | ||||||||||
Sr. Unsec’d. Notes, 144A(b) | 5.000 | 03/01/19 | 4,000 | 4,020,000 |
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 15 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Healthcare & Pharmaceutical (cont’d.) |
| |||||||||||||
Valeant Pharmaceuticals International, Inc., | 6.750% | 08/15/18 | 3,000 | $ | 3,187,500 | |||||||||
Gtd. Notes, 144A | 7.500 | 07/15/21 | 1,900 | 2,061,500 | ||||||||||
|
| |||||||||||||
137,413,988 | ||||||||||||||
Lodging 0.2% |
| |||||||||||||
Royal Caribbean Cruises Ltd., Sr. Unsec’d. Notes(b) | 7.250 | 03/15/18 | 2,000 | 2,245,000 | ||||||||||
Media & Entertainment 4.3% |
| |||||||||||||
AMC Entertainment, Inc., Gtd. Notes | 9.750 | 12/01/20 | 9,250 | 10,175,000 | ||||||||||
AMC Networks, Inc., Gtd. Notes | 7.750 | 07/15/21 | 4,000 | 4,390,000 | ||||||||||
Carlson Travel Holdings, Inc., Sr. Unsec’d. Notes, PIK, 144A (original cost $4,679,875; purchased 06/26/14 - 08/04/14)(c)(d) | 7.500 | 08/15/19 | 4,650 | 4,708,125 | ||||||||||
Carmike Cinemas, Inc., Sec’d. Notes | 7.375 | 05/15/19 | 3,000 | 3,180,000 | ||||||||||
Cinemark USA, Inc., Gtd. Notes | 7.375 | 06/15/21 | 2,000 | 2,145,000 | ||||||||||
Clear Channel Worldwide Holdings, Inc., Gtd. Notes(b) | 7.625 | 03/15/20 | 525 | 549,938 | ||||||||||
Crown Media Holdings, Inc., Gtd. Notes | 10.500 | 07/15/19 | 1,000 | 1,080,000 | ||||||||||
Entercom Radio LLC, Gtd. Notes | 10.500 | 12/01/19 | 3,838 | 4,207,407 | ||||||||||
Gannett Co., Inc., | 6.375 | 09/01/15 | 560 | 573,300 | ||||||||||
Gtd. Notes | 7.125 | 09/01/18 | 1,000 | 1,037,500 | ||||||||||
NAI Entertainment Holdings/NAI Entertainment Holdings Finance Corp., Sr. Sec’d. Notes, 144A (original cost $5,183,988; purchased 07/30/13 - 07/09/14)(c)(d) | 5.000 | 08/01/18 | 5,068 | 5,239,045 | ||||||||||
National CineMedia LLC, Sr. Unsec’d. Notes | 7.875 | 07/15/21 | 4,750 | 5,046,875 | ||||||||||
Univision Communications, Inc., Sr. Sec’d. Notes, 144A (original cost $14,526,683; purchased 06/04/14 - 10/01/14)(c)(d) | 7.875 | 11/01/20 | 13,203 | 14,176,721 | ||||||||||
|
| |||||||||||||
56,508,911 | ||||||||||||||
Metals 6.0% |
| |||||||||||||
AK Steel Corp., Sr. Sec’d. Notes(b) | 8.750 | 12/01/18 | 15,075 | 16,205,625 | ||||||||||
Alcoa, Inc., Sr. Unsec’d. Notes | 6.750 | 07/15/18 | 4,000 | 4,529,464 |
See Notes to Financial Statements.
16 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Metals (cont’d.) |
| |||||||||||||
ArcelorMittal (Luxembourg), | 5.250% | 02/25/17 | 422 | $ | 442,889 | |||||||||
Sr. Unsec’d. Notes | 6.125 | 06/01/18 | 8,857 | 9,598,774 | ||||||||||
Sr. Unsec’d. Notes | 10.600 | 06/01/19 | 4,500 | 5,557,500 | ||||||||||
AuRico Gold, Inc. (Canada), Sec’d. Notes, 144A | 7.750 | 04/01/20 | 500 | 490,000 | ||||||||||
Calcipar SA (Luxembourg), Sr. Sec’d. Notes, 144A (original cost $7,727,500; purchased 04/07/14 - 06/30/14)(c)(d) | 6.875 | 05/01/18 | 7,250 | 7,431,250 | ||||||||||
FMG Resources (August 2006) Pty Ltd. (Australia), | 6.875 | 02/01/18 | 4,467 | 4,477,833 | ||||||||||
Gtd. Notes, 144A(b) | 8.250 | 11/01/19 | 3,200 | 3,024,000 | ||||||||||
JMC Steel Group, Inc., Sr. Unsec’d. Notes, 144A (original cost $4,205,440; purchased 10/07/14 - 10/28/14)(b)(c)(d) | 8.250 | 03/15/18 | 4,144 | 3,615,640 | ||||||||||
Lundin Mining Corp. (Canada), Sr. Sec’d. Notes, 144A | 7.500 | 11/01/20 | 6,900 | 7,089,750 | ||||||||||
New Gold, Inc. (Canada), Gtd. Notes, 144A | 7.000 | 04/15/20 | 1,650 | 1,707,750 | ||||||||||
Peabody Energy Corp., Gtd. Notes(b) | 6.000 | 11/15/18 | 4,580 | 4,167,800 | ||||||||||
Steel Dynamics, Inc., Gtd. Notes | 6.125 | 08/15/19 | 8,460 | 9,073,350 | ||||||||||
United States Steel Corp., Sr. Unsec’d. Notes | 7.000 | 02/01/18 | 1,926 | 2,058,413 | ||||||||||
|
| |||||||||||||
79,470,038 | ||||||||||||||
Non-Captive Finance 0.9% | ||||||||||||||
CIT Group, Inc., Sr. Unsec’d. Notes | 5.250 | 03/15/18 | 250 | 264,000 | ||||||||||
International Lease Finance Corp., | 5.875 | 04/01/19 | 1,000 | 1,100,000 | ||||||||||
Sr. Unsec’d. Notes(b) | 8.875 | 09/01/17 | 1,600 | 1,830,000 | ||||||||||
OneMain Financial Holdings, Inc., Gtd. Notes, 144A | 6.750 | 12/15/19 | 5,075 | 5,354,125 | ||||||||||
SLM Corp., | 8.000 | 03/25/20 | 150 | 174,562 | ||||||||||
Sr. Unsec’d. Notes, MTN | 8.450 | 06/15/18 | 3,150 | 3,598,875 | ||||||||||
|
| |||||||||||||
12,321,562 | ||||||||||||||
Packaging 2.7% | ||||||||||||||
AEP Industries, Inc., Sr. Unsec’d. Notes | 8.250 | 04/15/19 | 7,620 | 7,791,450 | ||||||||||
Ardagh Packaging Finance PLC (Ireland), Gtd. Notes, 144A | 9.125 | 10/15/20 | 1,000 | 1,072,500 |
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 17 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Packaging (cont’d.) | ||||||||||||||
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc. (Ireland), Gtd. Notes, 144A(b) | 6.250% | 01/31/19 | 400 | $ | 401,000 | |||||||||
Berry Plastics Corp., Sec’d. Notes | 9.750 | 01/15/21 | 3,859 | 4,297,961 | ||||||||||
Beverage Packaging Holdings Luxembourg II SA, Gtd. Notes, 144A | 6.000 | 06/15/17 | 1,625 | 1,641,250 | ||||||||||
Greif, Inc., | 6.750 | 02/01/17 | 4,262 | 4,592,305 | ||||||||||
Sr. Unsec’d. Notes | 7.750 | 08/01/19 | 869 | 990,660 | ||||||||||
Owens-Illinois, Inc., Gtd. Notes | 7.800 | 05/15/18 | 4,829 | 5,432,625 | ||||||||||
PaperWorks Industries, Inc., Sr. Sec’d. Notes, 144A | 9.500 | 08/15/19 | 3,850 | 3,907,750 | ||||||||||
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC, | 9.000 | 04/15/19 | 4,125 | 4,320,937 | ||||||||||
Gtd. Notes | 9.875 | 08/15/19 | 1,350 | 1,446,188 | ||||||||||
|
| |||||||||||||
35,894,626 | ||||||||||||||
Paper 0.7% | ||||||||||||||
Cascades, Inc. (Canada), Gtd. Notes(b) | 7.875 | 01/15/20 | 3,350 | 3,492,375 | ||||||||||
Smurfit Kappa Acquisitions (Ireland), Sr. Sec’d. Notes, 144A | 4.875 | 09/15/18 | 4,150 | 4,326,375 | ||||||||||
Tembec Industries, Inc. (Canada), Sr. Sec’d. Notes, 144A | 9.000 | 12/15/19 | 1,975 | 1,999,688 | ||||||||||
|
| |||||||||||||
9,818,438 | ||||||||||||||
Pipelines & Other 0.2% | ||||||||||||||
AmeriGas Partners LP/AmeriGas Eagle Finance Corp., Sr. Unsec’d. Notes | 6.500 | 05/20/21 | 1,425 | 1,496,250 | ||||||||||
Rockies Express Pipeline LLC, Sr. Unsec’d. Notes, 144A (original cost $617,438; purchased 01/10/13 - | 6.000 | 01/15/19 | 625 | 662,500 | ||||||||||
|
| |||||||||||||
2,158,750 | ||||||||||||||
Real Estate Investment Trusts 1.5% | ||||||||||||||
CTR Partnership LP/CareTrust Capital Corp., Gtd. Notes | 5.875 | 06/01/21 | 3,125 | 3,187,500 | ||||||||||
Felcor Lodging LP, Sr. Sec’d. Notes | 6.750 | 06/01/19 | 15,335 | 16,025,075 | ||||||||||
|
| |||||||||||||
19,212,575 |
See Notes to Financial Statements.
18 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Retailers 2.2% | ||||||||||||||
Academy Ltd./Academy Finance Corp., Gtd. Notes, 144A(b) | 9.250% | 08/01/19 | 8,400 | $ | 8,862,000 | |||||||||
Claire’s Stores, Inc., Sr. Sec’d. Notes, 144A | 9.000 | 03/15/19 | 8,630 | 8,101,412 | ||||||||||
Family Tree Escrow LLC, Sr. Unsec’d. Notes, 144A | 5.250 | 03/01/20 | 1,175 | 1,227,875 | ||||||||||
Hot Topic, Inc., Sr. Sec’d. Notes, 144A (original cost $1,915,813; purchased 12/10/13 - 01/03/14)(c)(d) | 9.250 | 06/15/21 | 1,825 | 1,993,813 | ||||||||||
THOM Europe SAS (France), Sr. Sec’d. Notes, 144A | 7.375 | 07/15/19 | EUR | 6,000 | 6,982,834 | |||||||||
Toys “R” Us Property Co. II LLC, Sr. Sec’d. Notes(b) | 8.500 | 12/01/17 | 2,000 | 2,000,000 | ||||||||||
|
| |||||||||||||
29,167,934 | ||||||||||||||
Technology 14.2% |
| |||||||||||||
Alcatel-Lucent USA, Inc. (France), Gtd. Notes, 144A | 4.625 | 07/01/17 | 9,800 | 10,118,500 | ||||||||||
Brightstar Corp., | 9.500 | 12/01/16 | 5,880 | 6,181,350 | ||||||||||
Sr. Unsec’d. Notes, 144A (original cost $6,013,728; purchased 07/26/13 -12/18/13)(c)(d) | 7.250 | 08/01/18 | 5,625 | 6,018,750 | ||||||||||
CDW LLC/CDW Finance Corp., Gtd. Notes | 8.500 | 04/01/19 | 12,565 | 13,170,633 | ||||||||||
CommScope Holding Co., Inc., Sr. Unsec’d. Notes, PIK, 144A | 6.625 | 06/01/20 | 9,540 | 9,635,400 | ||||||||||
CoreLogic, Inc., Gtd. Notes | 7.250 | 06/01/21 | 2,000 | 2,136,250 | ||||||||||
First Data Corp., | 12.625 | 01/15/21 | 24,240 | 28,966,800 | ||||||||||
Sr. Sec’d. Notes, 144A | 7.375 | 06/15/19 | 3,450 | 3,622,500 | ||||||||||
Sr. Sec’d. Notes, 144A | 8.875 | 08/15/20 | 3,304 | 3,543,540 | ||||||||||
Freescale Semiconductor, Inc., Gtd. Notes | 10.750 | 08/01/20 | 13,872 | 15,094,470 | ||||||||||
iGATE Corp., Gtd. Notes | 4.750 | 04/15/19 | 2,325 | 2,359,875 | ||||||||||
Igloo Holdings Corp., Sr. Unsec’d. Notes, PIK, 144A | 8.250 | 12/15/17 | 400 | 402,000 | ||||||||||
Infor US, Inc., | 9.375 | 04/01/19 | 13,644 | 14,650,245 | ||||||||||
Gtd. Notes (original cost $11,766,775; purchased 04/15/14 - 08/01/14)(c)(d) | 11.500 | 07/15/18 | 10,260 | 11,183,400 |
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 19 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Technology (cont’d.) |
| |||||||||||||
Interactive Data Corp., Gtd. Notes, 144A | 5.875 % | 04/15/19 | 11,170 | $ | 11,386,419 | |||||||||
Jabil Circuit, Inc., | 7.750 | 07/15/16 | 150 | 161,250 | ||||||||||
Sr. Unsec’d. Notes | 8.250 | 03/15/18 | 2,300 | 2,656,500 | ||||||||||
Sensata Technologies BV (Netherlands), Gtd. Notes, 144A | 6.500 | 05/15/19 | 2,140 | 2,225,600 | ||||||||||
SunGard Data Systems, Inc., | 6.625 | 11/01/19 | 1,287 | 1,338,480 | ||||||||||
Gtd. Notes | 7.375 | 11/15/18 | 14,812 | 15,422,995 | ||||||||||
Gtd. Notes | 7.625 | 11/15/20 | 3,000 | 3,206,250 | ||||||||||
TransUnion Holding Co., Inc., | 8.125 | 06/15/18 | 12,491 | 12,772,047 | ||||||||||
Sr. Unsec’d. Notes, PIK | 9.625 | 06/15/18 | 10,745 | 10,933,038 | ||||||||||
|
| |||||||||||||
187,186,292 | ||||||||||||||
Telecommunications 7.1% |
| |||||||||||||
CenturyLink, Inc., | 5.150 | 06/15/17 | 849 | 895,695 | ||||||||||
Sr. Unsec’d. Notes | 6.000 | 04/01/17 | 850 | 909,500 | ||||||||||
Sr. Unsec’d. Notes | 6.150 | 09/15/19 | 738 | 806,265 | ||||||||||
Clearwire Communications LLC/Clearwire Finance, Inc., Sr. Sec’d. Notes, 144A | 14.750 | 12/01/16 | 2,000 | 2,400,000 | ||||||||||
Digicel Group Ltd. (Jamaica), Sr. Unsec’d. Notes, 144A | 8.250 | 09/01/17 | 3,600 | 3,690,000 | ||||||||||
Eileme 2 AB (Poland), | 11.750 | 01/31/20 | EUR | 300 | 382,820 | |||||||||
Sr. Sec’d. Notes, 144A | 11.625 | 01/31/20 | 6,750 | 7,620,750 | ||||||||||
Frontier Communications Corp., Sr. Unsec’d. Notes | 8.125 | 10/01/18 | 1,150 | 1,308,125 | ||||||||||
Level 3 Communications, Inc., Sr. Unsec’d. Notes | 8.875 | 06/01/19 | 4,542 | 4,808,843 | ||||||||||
Level 3 Financing, Inc., | 3.826(a) | 01/15/18 | 1,585 | 1,604,813 | ||||||||||
Gtd. Notes | 8.125 | 07/01/19 | 8,885 | 9,406,994 | ||||||||||
Sprint Capital Corp., Gtd. Notes | 6.900 | 05/01/19 | 550 | 569,250 | ||||||||||
Sprint Communications, Inc., | 9.000 | 11/15/18 | 9,715 | 11,293,687 | ||||||||||
Sr. Unsec’d. Notes | 6.000 | 12/01/16 | 1,427 | 1,497,458 | ||||||||||
Sr. Unsec’d. Notes | 8.375 | 08/15/17 | 7,150 | 7,865,000 | ||||||||||
Sr. Unsec’d. Notes | 9.125 | 03/01/17 | 400 | 442,124 |
See Notes to Financial Statements.
20 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) |
| |||||||||||||
Telecommunications (cont’d.) |
| |||||||||||||
T-Mobile USA, Inc., | 6.464 % | 04/28/19 | 6,425 | $ | 6,665,937 | |||||||||
Gtd. Notes | 6.542 | 04/28/20 | 2,475 | 2,630,950 | ||||||||||
TBG Global Pte Ltd. (Indonesia), Gtd. Notes, RegS | 4.625 | 04/03/18 | 400 | 408,000 | ||||||||||
Telecom Italia Capital SA (Italy), Gtd. Notes | 6.999 | 06/04/18 | 5,000 | 5,612,500 | ||||||||||
Vimpel Communications Via VIP Finance Ireland Ltd. OJSC (Russia), Sr. Unsec’d. Notes, 144A | 9.125 | 04/30/18 | 1,000 | 1,005,440 | ||||||||||
Wind Acquisition Finance SA (Italy), Sr. Sec’d. Notes, 144A | 4.071(a) | 07/15/20 | EUR | 2,000 | 2,231,933 | |||||||||
Windstream Corp., Gtd. Notes | 7.750 | 10/15/20 | 3,000 | 3,104,100 | ||||||||||
Windstream Holdings, Inc., Gtd. Notes(b) | 7.875 | 11/01/17 | 5,422 | 5,869,315 | ||||||||||
Zayo Group LLC/Zayo Capital, Inc., | 10.125 | 07/01/20 | 846 | 955,980 | ||||||||||
Sr. Sec’d. Notes | 8.125 | 01/01/20 | 8,541 | 9,053,460 | ||||||||||
|
| |||||||||||||
93,038,939 | ||||||||||||||
Transportation 1.1% | ||||||||||||||
Kenan Advantage Group, Inc. (The), Sr. Unsec’d. Notes, 144A (original cost $12,783,188; purchased | 8.375 | 12/15/18 | 11,850 | 12,324,000 | ||||||||||
XPO Logistics, Inc., Sr. Unsec’d. Notes, 144A | 7.875 | 09/01/19 | 2,625 | 2,790,703 | ||||||||||
|
| |||||||||||||
15,114,703 | ||||||||||||||
|
| |||||||||||||
TOTAL CORPORATE BONDS |
| 1,258,921,484 | ||||||||||||
|
| |||||||||||||
FOREIGN AGENCIES 0.2% | ||||||||||||||
Petrobras Global Finance BV (Brazil), | 2.000 | 05/20/16 | 1,650 | 1,573,308 | ||||||||||
Gtd. Notes | 3.875 | 01/27/16 | 1,153 | 1,133,030 | ||||||||||
|
| |||||||||||||
TOTAL FOREIGN AGENCIES |
| 2,706,338 | ||||||||||||
|
| |||||||||||||
TOTAL LONG-TERM INVESTMENTS |
| 1,289,170,361 | ||||||||||||
|
|
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 21 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Shares | Value (Note 1) | ||||||||||
SHORT-TERM INVESTMENT 7.3% | ||||||||||||
AFFILIATED MONEY MARKET MUTUAL FUND | ||||||||||||
Prudential Investment Portfolios 2 - Prudential Core | 95,972,332 | $ | 95,972,332 | |||||||||
|
| |||||||||||
TOTAL INVESTMENTS 104.9% |
| 1,385,142,693 | ||||||||||
Liabilities in excess of other assets(g) (4.9)% | (64,997,723 | ) | ||||||||||
|
| |||||||||||
NET ASSETS 100.0% | $ | 1,320,144,970 | ||||||||||
|
| �� |
The following abbreviations are used in the portfolio descriptions:
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.
RegS—Regulation S. Security was purchased pursuant to Regulation S and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933.
MTN—Medium Term Note
PIK—Payment-in-Kind
EUR—Euro
GBP—British Pound
# | Principal amount shown in U.S. dollars unless otherwise stated. |
(a) | Variable rate instrument. The interest rate shown reflects the rate in effect at February 28, 2015. |
(b) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $67,402,368; cash collateral of $69,414,889 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. Securities on loan are subject to contractual netting arrangements. |
(c) | Indicates a security or securities that have been deemed illiquid. |
(d) | Indicates a restricted security; the aggregate original cost of the restricted securities is $154,375,343. The aggregate value of $149,814,768, is approximately 11.3% of net assets. |
(e) | Prudential Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund. |
(f) | Represents security, or a portion thereof, purchased with cash collateral received for securities on loan. |
See Notes to Financial Statements.
22 |
(g) | Includes net unrealized appreciation (depreciation) on the following derivative contracts held at reporting period end: |
Forward foreign currency exchange contracts outstanding at February 28, 2015:
Purchase Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Payable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
British Pound, | ||||||||||||||||||
Expiring 03/03/15 | Barclays Capital Group | GBP | 939 | $ | 1,409,784 | $ | 1,449,381 | $ | 39,597 | |||||||||
Expiring 03/03/15 | Goldman Sachs & Co. | GBP | 8,761 | 13,541,802 | 13,525,834 | (15,968 | ) | |||||||||||
Euro, | ||||||||||||||||||
Expiring 03/03/15 | Goldman Sachs & Co. | EUR | 19,275 | 21,853,294 | 21,570,700 | (282,594 | ) | |||||||||||
|
|
|
|
|
| |||||||||||||
$ | 36,804,880 | $ | 36,545,915 | $ | (258,965 | ) | ||||||||||||
|
|
|
|
|
|
Sale Contracts | Counterparty | Notional Amount (000) | Value at Settlement Date Receivable | Current Value | Unrealized Appreciation (Depreciation) | |||||||||||||
British Pound, | ||||||||||||||||||
Expiring 03/03/15 | Goldman Sachs & Co. | GBP | 9,700 | $ | 14,721,485 | $ | 14,975,215 | $ | (253,730 | ) | ||||||||
Expiring 04/02/15 | Goldman Sachs & Co. | GBP | 8,761 | 13,539,261 | 13,522,744 | 16,517 | ||||||||||||
Euro, | ||||||||||||||||||
Expiring 03/03/15 | Goldman Sachs & Co. | EUR | 19,275 | 21,866,980 | 21,570,700 | 296,280 | ||||||||||||
Expiring 04/02/15 | Goldman Sachs & Co. | EUR | 19,275 | 21,860,619 | 21,579,273 | 281,346 | ||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 71,988,345 | $ | 71,647,932 | $ | 340,413 | |||||||||||||
|
|
|
|
|
| |||||||||||||
$ | 81,448 | |||||||||||||||||
|
|
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—quoted prices generally in active markets for identical securities.
Level 2—quoted prices for similar securities, interest rates and yield curves, prepayment speeds, foreign currency exchange rates and other observable inputs.
Level 3—unobservable inputs for securities valued in accordance with Board approved fair valuation procedures.
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 23 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
The following is a summary of the inputs used as of February 28, 2015 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Bank Loans | $ | — | $ | 27,542,539 | $ | — | ||||||
Corporate Bonds | — | 1,238,610,954 | 20,310,530 | |||||||||
Foreign Agencies | — | 2,706,338 | — | |||||||||
Affiliated Money Market Mutual Fund | 95,972,332 | — | — | |||||||||
Other Financial Instruments* | ||||||||||||
Forward Foreign Currency Exchange Contracts | — | 81,448 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 95,972,332 | $ | 1,268,941,279 | $ | 20,310,530 | ||||||
|
|
|
|
|
|
The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:
Bank Loans | Corporate Bonds | |||||||
Balance as of 8/31/14 | $ | 175,966 | $ | 383,290 | ||||
Realized gain (loss) | — | — | ||||||
Change in unrealized appreciation (depreciation)** | (1,313 | ) | (36,603 | ) | ||||
Purchases | — | 19,516,375 | ||||||
Sales | (174,653 | ) | (180 | ) | ||||
Accrued discount/premium | — | — | ||||||
Transfers into Level 3 | — | 830,938 | ||||||
Transfers out of Level 3 | — | (383,290 | ) | |||||
|
|
|
| |||||
Balance as of 2/28/15 | $ | — | $ | 20,310,530 | ||||
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and exchange-traded swap contracts, which are recorded at the unrealized appreciation/depreciation on the instrument, and over-the-counter swap contracts which are recorded at fair value. |
** | Of which, ($37,917) was relating to securities held at the reporting period end. |
It is the Fund’s policy to recognize transfers in and transfers out at the fair value as of the beginning of period. At the reporting period end, there was one Corporate Bond transferred out of Level 3 as a result of being priced by a vendor and one Corporate Bond transferred into Level 3 as a result of being priced using a single broker quote.
See Notes to Financial Statements.
24 |
Level 3 securities as presented in the table above are being fair valued using pricing methodologies approved by the Board of Directors, which contain unobservable inputs. Such methodologies include, but are not limited to, using prices provided by a single broker/dealer, the cost of the investment, and broker quotes adjusted for changes in yields of comparable U.S. Government and other securities using fixed income securities valuation models.
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of February 28, 2015 was as follows:
Technology | 14.5 | % | ||
Healthcare & Pharmaceutical | 10.4 | |||
Gaming | 7.6 | |||
Affiliated Money Market Mutual Fund (including 5.3% of collateral for securities on loan) | 7.3 | |||
Telecommunications | 7.1 | |||
Cable & Satellite | 7.0 | |||
Metals | 6.5 | |||
Capital Goods | 6.4 | |||
Building Materials & Construction | 6.0 | |||
Media & Entertainment | 4.3 | |||
Food & Beverage | 4.0 | |||
Packaging | 2.7 | |||
Electric | 2.6 | |||
Chemicals | 2.3 | |||
Retailers | 2.2 | |||
Automotive | 2.1 | |||
Consumer | 2.0 | % | ||
Aerospace & Defense | 1.7 | |||
Airlines | 1.5 | |||
Real Estate Investment Trusts | 1.5 | |||
Energy—Other | 1.4 | |||
Transportation | 1.1 | |||
Non-Captive Finance | 0.9 | |||
Paper | 0.7 | |||
Foods | 0.5 | |||
Foreign Agencies | 0.2 | |||
Lodging | 0.2 | |||
Pipelines & Other | 0.2 | |||
|
| |||
104.9 | ||||
Liabilities in excess of other assets | (4.9 | ) | ||
|
| |||
100.0 | % | |||
|
|
The Fund invested in derivative instruments during the reporting period. The primary types of risk associated with these derivative instruments is foreign exchange 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.
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 25 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Fair values of derivative instruments as of February 28, 2015 as presented in the Statement of Assets and Liabilities:
Derivatives not accounted for | Asset Derivatives | Liability Derivatives | ||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | |||||||||
Foreign exchange contracts | Unrealized appreciation on forward foreign currency exchange contracts | $ | 633,740 | Unrealized depreciation on forward foreign currency exchange contracts | $ | 552,292 | ||||||
|
|
|
|
The effects of derivative instruments on the Statement of Operations for the six months ended February 28, 2015 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||
Derivatives not accounted for as hedging | Forward Currency Contracts(1) | Total | ||||||
Foreign exchange contracts | $ | 6,758,083 | $ | 6,758,083 | ||||
|
|
|
| |||||
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||
Derivatives not accounted for as hedging | Forward Currency Contracts(2) | Total | ||||||
Foreign exchange contracts | $ | (171,831 | ) | $ | (171,831 | ) | ||
|
|
|
|
(1) | Included in net realized gain (loss) on foreign currency transactions in the Statement of Operations. |
(2) | Included in net change in unrealized appreciation (depreciation) on foreign currencies in the Statement of Operations. |
For the six months ended February 28, 2015, the Fund's average value at settlement date payable for forward currency exchange contracts purchased was $34,302,945 and the average value at settlement date receivable for forward currency contracts sold was $82,586,105.
Offsetting of over-the-counter (OTC) derivative assets and liabilities:
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
See Notes to Financial Statements.
26 |
offsetting and related netting arrangements for OTC derivatives, where the legal right to set-off exists, is presented in the summary below.
Counterparty | Gross Amounts of Recognized Assets(1) | Gross Amounts Available for Offset | Collateral Received(3) | Net Amount | ||||||||||||
Barclays Capital Group | $ | 39,597 | $ | — | $ | — | $ | 39,597 | ||||||||
Goldman Sachs & Co. | 594,143 | (552,292 | ) | — | 41,851 | |||||||||||
|
| |||||||||||||||
$ | 633,740 | |||||||||||||||
|
| |||||||||||||||
Counterparty | Gross Amounts of Recognized Liabilities(2) | Gross Amounts Available for Offset | Collateral Pledged(3) | Net Amount | ||||||||||||
Barclays Capital Group | $ | — | $ | — | $ | — | $ | — | ||||||||
Goldman Sachs & Co. | (552,292 | ) | 552,292 | — | — | |||||||||||
|
| |||||||||||||||
$ | (552,292 | ) | ||||||||||||||
|
|
(1) | Includes unrealized appreciation on swaps and forwards, premiums paid on swap agreements and market value of purchased options. |
(2) | Includes unrealized depreciation on swaps and forwards, premiums received on swap agreements and market value of written options. |
(3) | Amounts shown reflect actual collateral received or pledged by the Fund. Such amounts are applied up to 100% of the Fund’s OTC derivative exposure by counterparty. |
Prudential Short Duration High Yield Income Fund | 27 |
Statement of Assets and Liabilities
as of February 28, 2015 (Unaudited)
Assets | ||||
Investments at value, including securities on loan of $67,402,368: | ||||
Unaffiliated Investments (cost $1,315,862,299) | $ | 1,289,170,361 | ||
Affiliated Investments (cost $95,972,332) | 95,972,332 | |||
Cash | 411,694 | |||
Foreign currency, at value (cost $1,705,522) | 1,702,555 | |||
Dividends and interest receivable | 23,945,772 | |||
Receivable for investments sold | 18,548,510 | |||
Receivable for Fund shares sold | 10,034,751 | |||
Unrealized appreciation on forward foreign currency exchange contracts | 633,740 | |||
Prepaid expenses | 35,382 | |||
|
| |||
Total assets | 1,440,455,097 | |||
|
| |||
Liabilities | ||||
Payable to broker for collateral for securities on loan (Note 3) | 69,414,889 | |||
Payable for investments purchased | 37,365,783 | |||
Payable for Fund shares reacquired | 10,653,644 | |||
Dividends payable | 1,135,896 | |||
Management fee payable | 697,194 | |||
Unrealized depreciation on forward foreign currency exchange contracts | 552,292 | |||
Distribution fee payable | 300,046 | |||
Accrued expenses and other liabilities | 173,648 | |||
Affiliated transfer agent fee payable | 16,735 | |||
|
| |||
Total liabilities | 120,310,127 | |||
|
| |||
Net Assets | $ | 1,320,144,970 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 1,395,515 | ||
Paid-in capital in excess of par | 1,385,203,283 | |||
|
| |||
1,386,598,798 | ||||
Distributions in excess of net investment income | (11,105,829 | ) | ||
Accumulated net realized loss on investment and foreign currency transactions | (29,287,530 | ) | ||
Net unrealized depreciation on investments and foreign currencies | (26,060,469 | ) | ||
|
| |||
Net assets, February 28, 2015 | $ | 1,320,144,970 | ||
|
|
See Notes to Financial Statements.
28 |
Class A | ||||
Net asset value and redemption price per share | $ | 9.46 | ||
Maximum sales charge (3.25% of offering price) | 0.32 | |||
|
| |||
Maximum offering price to public | $ | 9.78 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | ||||
($303,230,919 ÷ 32,062,024 shares of common stock issued and outstanding) | $ | 9.46 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share | ||||
($17,042,772 ÷ 1,800,944 shares of common stock issued and outstanding) | $ | 9.46 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | ||||
($628,696,459 ÷ 66,447,169 shares of common stock issued and outstanding) | $ | 9.46 | ||
|
|
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 29 |
Statement of Operations
Six Months Ended February 28, 2015 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest income | $ | 40,965,484 | ||
Affiliated income from securities loaned, net | 120,740 | |||
Affiliated dividend income | 6,483 | |||
|
| |||
Total income | 41,092,707 | |||
|
| |||
Expenses | ||||
Management fee | 4,849,926 | |||
Distribution fee—Class A | 577,012 | |||
Distribution fee—Class C | 1,495,210 | |||
Transfer agent’s fees and expenses (including affiliated expense of $46,500) | 707,000 | |||
Registration fees | 120,000 | |||
Custodian’s fees and expenses | 80,000 | |||
Shareholders’ reports | 56,000 | |||
Interest expense | 24,839 | |||
Audit fee | 17,000 | |||
Directors’ fees | 16,000 | |||
Legal fees and expenses | 15,000 | |||
Insurance expenses | 10,000 | |||
Miscellaneous | 15,399 | |||
|
| |||
Total expenses | 7,983,386 | |||
Less: Distribution fee waiver-Class A | (96,169 | ) | ||
|
| |||
Net expenses | 7,887,217 | |||
|
| |||
Net investment income | 33,205,490 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions | ||||
Net realized gain (loss) on: | ||||
Investment transactions | (18,063,570 | ) | ||
Foreign currency transactions | 6,095,008 | |||
|
| |||
(11,968,562 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (18,262,784 | ) | ||
Foreign currencies | 44,108 | |||
|
| |||
(18,218,676 | ) | |||
|
| |||
Net loss on investment and foreign currency transactions | (30,187,238 | ) | ||
|
| |||
Net Increase In Net Assets Resulting From Operations | $ | 3,018,252 | ||
|
|
See Notes to Financial Statements.
30 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended February 28, 2015 | Year Ended August 31, 2014 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 33,205,490 | $ | 48,729,239 | ||||
Net realized gain (loss) on investment and foreign currency transactions | (11,968,562 | ) | 17,825 | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (18,218,676 | ) | (4,145,701 | ) | ||||
|
|
|
| |||||
Net increase in net assets resulting from operations | 3,018,252 | 44,601,363 | ||||||
|
|
|
| |||||
Dividends from net investment income (Note 1) | ||||||||
Class A | (12,535,116 | ) | (21,391,956 | ) | ||||
Class C | (8,620,652 | ) | (10,216,790 | ) | ||||
Class Q | (308,115 | ) | — | |||||
Class Z | (23,461,595 | ) | (31,950,635 | ) | ||||
|
|
|
| |||||
(44,925,478 | ) | (63,559,381 | ) | |||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 355,359,533 | 1,447,219,625 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 36,192,257 | 50,216,652 | ||||||
Cost of shares reacquired | (540,914,245 | ) | (397,795,277 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in net assets from Fund share transactions | (149,362,455 | ) | 1,099,641,000 | |||||
|
|
|
| |||||
Total increase (decrease) | (191,269,681 | ) | 1,080,682,982 | |||||
Net Assets: | ||||||||
Beginning of period | 1,511,414,651 | 430,731,669 | ||||||
|
|
|
| |||||
End of period(a) | $ | 1,320,144,970 | $ | 1,511,414,651 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | — | $ | 614,159 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 31 |
Notes to Financial Statements
(Unaudited)
Prudential Investment Portfolios, Inc. 15 (the “Company”) is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”) as a diversified, open-end management investment company. The Company consists of two funds: Prudential High Yield Fund and Prudential Short Duration High Yield Income Fund (the “Fund”). These financial statements relate to Prudential Short Duration High Yield Income Fund. The Fund’s investment objective is to provide a high level of current income.
Note 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 that are fair valued at the close of each day the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. 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.
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 table following the Portfolio of Investments.
Common and preferred stocks, exchange-traded funds, and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the
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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, as the inputs are observable and considered to be significant to the valuation.
Common and preferred stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Such securities are valued using model prices to the extent that the valuation meets the established confidence level for each security. If the confidence level is not met or the vendor does not provide a model price, securities are valued in accordance with exchange-traded common and preferred stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after 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. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices, indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Prudential Short Duration High Yield Income Fund | 33 |
Notes to Financial Statements
(Unaudited) continued
Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are 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 significant 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 investment adviser 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 mutual funds to calculate their net asset values.
Restricted and Illiquid Securities: Subject to the 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 expenses 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
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under the guidelines adopted by the Directors of the Fund. 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 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 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 securities sold during the period. Accordingly, realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.
Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains or 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 actually received or paid. Net unrealized currency gains or 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.
Cross Currency Exchange Contracts: A cross currency contract is a forward contract where a specified amount of one foreign currency will be exchanged for a specified amount of another foreign currency.
Concentration of Risk: The ability of debt securities issuers (other than those issued or guaranteed by the U.S. Government) held by the Fund to meet its obligations may be affected by the economic or political developments in a specific industry, region or country. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. companies as a
Prudential Short Duration High Yield Income Fund | 35 |
Notes to Financial Statements
(Unaudited) continued
result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.
Forward Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate between two parties. The Fund enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or specific receivables and payables denominated in a foreign currency. The contracts are valued daily at current exchange rates and any unrealized gain or loss is included in net unrealized appreciation or depreciation on foreign currencies. Gain or loss is realized on the settlement date of the contract equal to the difference between the settlement value of the original and negotiated forward contracts. This gain or loss, if any, is included in net realized gain (loss) on foreign currency transactions. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. Forward currency contracts involve risks from currency exchange rate and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. The Fund’s maximum risk of loss from counterparty credit risk is the net value of the cash flows to be received from the counterparty at the end of the contract’s life.
Swap Agreements: The Fund entered into credit default, interest rate, total return and other forms 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 over-the-counter market and may be executed either directly with counterparty (“OTC-Traded”) or through a central clearing facility, such as a registered commodities exchange (“Exchange-Traded”). Swap agreements are valued daily at current market value and any change in value is included in the net unrealized appreciation or depreciation on investments. Exchange-traded swaps pay or receive an amount, known as “variation margin”, based on daily changes in the valuation of a swap contract. Payments received or paid by the Fund are recorded as realized gains or losses upon termination or maturity of the swap. Risk of loss may exceed amounts recognized on the statements of assets and liabilities. Swap agreements outstanding at period end, if any, are listed on the Portfolio of Investments.
Credit Default Swaps: Credit default swaps (“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
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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. The Fund entered into credit default swaps 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 credit default swaps 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 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.
Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues or sovereign issues of an emerging country as of period end are disclosed in the footnotes to the Portfolio of Investments, if applicable. These spreads serve as an indicator 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. For credit default swap agreements on asset-backed securities and credit indices, the quoted market prices and resulting values
Prudential Short Duration High Yield Income Fund | 37 |
Notes to Financial Statements
(Unaudited) continued
serve as indicators of the current status of the payment/performance risk. Wider credit spreads and increasing 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 Fund is subject to various Master Agreements, or netting arrangements, with select counterparties. 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. The right to set-off exists when all the conditions are met such that each of the parties owes the other a determinable amount, 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, no instances occurred where the right to set-off existed and management has not elected to offset.
The Fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements with certain counterparties that govern over-the-counter 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, are presented in the Portfolio of Investments. Collateral pledged by the Fund is segregated by the Fund’s custodian and identified in the Portfolio 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
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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 exchanged, 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 over-the-counter 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 February 28, 2015, the Fund has not met conditions under such agreements, which give the counterparty the right to call for an early termination.
Forward currency contracts, 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 Securities: Certain fixed income Portfolios may invest in 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. The interest rate on PIK debt is paid out over time.
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 a highly liquid short-term money market fund and is marked to market daily, based on the previous
Prudential Short Duration High Yield Income Fund | 39 |
Notes to Financial Statements
(Unaudited) continued
day’s market value, such that the value of the collateral exceeds the value of the loaned securities. Loans are subject to 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 using the collateral in the open market. The Fund recognizes income, net of any rebate and securities lending agent fees, for lending its securities, and any interest on the investment of cash received as collateral. The Fund also continues to receive interest and dividends or amounts equivalent thereto, on the securities loaned and recognizes any unrealized gain or loss in the market price of the securities loaned that may occur during the term of the loan.
Loan Participations: The Fund may invest in loan participations, another type of restricted security. When the Fund purchases a loan participation, the Fund typically enters into a contractual relationship with the lender or third party selling such participations (“Selling Participant”), but not the borrower. As a result, the Fund assumes the credit risk of the borrower, the Selling Participant and any other persons interpositioned between the Fund and the borrower. The Fund may not directly benefit from the collateral supporting the senior loan in which it has purchased the loan participation.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend 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 the accrual basis, which may require the use of certain estimates by management that may differ from actual.
Net investment income or loss (other than distribution fees which are charged directly to the respective class) and unrealized and realized gains or 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.
Dividends and Distributions: The Fund declares daily and pays dividends of net investment income monthly and makes distributions of net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may
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differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.
Taxes: For federal income tax purposes, 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 income and capital gains, if any, to its shareholders. Therefore, no federal income tax provision is required.
Estimates: The preparation of the 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.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM will furnish investment advisory services in connection with the management of the Fund. In connection therewith, PIM is obligated to keep certain books and records of the Fund. PI pays for the services of PIM, 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 PI is accrued daily and payable monthly at an annual rate of ..70% of the Fund’s average daily net assets.
PI has contractually agreed through December 31, 2015 to limit net annual Fund operating expenses (excluding distribution and service (12b-1) fees, extraordinary and certain other expenses, including taxes, interest and brokerage commissions) of each class of shares to .90% of the Fund’s average daily net assets.
The Fund has a distribution agreement with Prudential Investment Management Services LLC (“PIMS”), which acts as the distributor of the Class A, Class C and Class Z 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 “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Z shares of the Fund.
Prudential Short Duration High Yield Income Fund | 41 |
Notes to Financial Statements
(Unaudited) continued
Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to .30% and 1% of the average daily net assets of the Class A and C shares, respectively. PIMS has contractually agreed to limit such fees to .25% of the average daily net assets of the Class A shares through December 31, 2015.
PIMS has advised the Fund that it has received $325,100 in front-end sales charges resulting from sales of Class A shares, during the six months ended February 28, 2015. From these fees, PIMS paid such sales charges to affiliated 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 February 28, 2015, it received $7,192 and $64,644 in contingent deferred sales charges imposed upon redemptions by certain Class A and Class C shareholders, respectively.
PI, PIMS and PIM are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses on the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
Prudential Investment Management, Inc. (“PIM”), an indirect, wholly-owned subsidiary of Prudential, is the Fund’s security lending agent. For the six months ended February 28, 2015, PIM has been compensated approximately $36,456 for these services.
The Fund invests in the Prudential Core Taxable Money Market Fund (the “Core Funds”), a portfolio of the Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PI. Earnings from the Core Funds are disclosed on the Statement of Operations as affiliated dividend income.
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Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments, for the six months ended February 28, 2015, aggregated $231,717,426 and $376,846,494, respectively.
Note 5. Tax lnformation
The United States federal income tax basis of the Fund’s investments and the net unrealized depreciation as of February 28, 2015 were as follows:
Tax Basis | $ | 1,429,909,951 | ||
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| |||
Appreciation | 3,925,851 | |||
Depreciation | (48,693,109 | ) | ||
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Net Unrealized Depreciation | $ | (44,767,258 | ) | |
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The difference between book and tax basis is primarily attributable to deferred losses on wash sales and differences in the treatment of premium amortization for book and tax purposes. The other cost basis adjustments are primarily attributable to appreciation (depreciation) of foreign currencies and mark-to-market of receivables and payables.
For federal income tax purposes, the Fund had a capital loss carryforward as of August 31, 2014 of approximately $5,412,000 which can be carried forward for an unlimited period. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses.
Management has analyzed the 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.
Note 6. Capital
The Fund offers Class A, Class C and Class Z shares. Class A shares are sold with a front-end sales charge of up to 3.25%. Investors who purchase $1 million or more of Class A shares and redeem those shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, but are not subject to an initial
Prudential Short Duration High Yield Income Fund | 43 |
Notes to Financial Statements
(Unaudited) continued
sales charge. The Class A CDSC is waived for purchases by certain retirement or benefit plans. Class C shares sold within 12 months of purchase are subject to a CDSC of 1%. A special exchange privilege is also available for shareholders who qualified to purchase Class A shares at net asset value. Class Z shares are not subject to any sales or redemption charges and are available only to a limited group of investors.
The Fund is authorized to issue 1 billion shares of common stock, $.01 par value per share, divided into three classes, designated Class A, Class C and Class Z common stock. Of the authorized shares of common stock of the Fund, 300 million shares are designated for Class A common stock, 200 million shares are designated for Class C common stock and 500 million shares are designated for Class Z common stock.
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended February 28, 2015: | ||||||||
Shares sold | 9,746,583 | $ | 92,794,729 | |||||
Shares issued in reinvestment of dividends and distributions | 1,034,622 | 9,822,482 | ||||||
Shares reacquired | (12,799,730 | ) | (121,444,590 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (2,018,525 | ) | (18,827,379 | ) | ||||
Shares issued upon conversion from Class C and Class Z | 209,229 | 1,985,874 | ||||||
Shares reacquired upon conversion into Class Z | (1,509,914 | ) | (14,477,165 | ) | ||||
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Net increase (decrease) in shares outstanding | (3,319,210 | ) | $ | (31,318,670 | ) | |||
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Year ended August 31, 2014: | ||||||||
Shares sold | 44,909,690 | $ | 442,805,761 | |||||
Shares issued in reinvestment of dividends and distributions | 1,716,198 | 16,873,406 | ||||||
Shares reacquired | (12,187,878 | ) | (119,858,992 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 34,438,010 | 339,820,175 | ||||||
Shares issued upon conversion from Class C and Class Z | 137,202 | 1,349,818 | ||||||
Shares reacquired upon conversion into Class Z | (9,747,349 | ) | (95,374,816 | ) | ||||
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Net increase (decrease) in shares outstanding | 24,827,863 | $ | 245,795,177 | |||||
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Class C | Shares | Amount | ||||||
Six months ended February 28, 2015: | ||||||||
Shares sold | 5,959,410 | $ | 56,667,052 | |||||
Shares issued in reinvestment of dividends and distributions | 717,890 | 6,812,814 | ||||||
Shares reacquired | (5,784,388 | ) | (54,892,218 | ) | ||||
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Net increase (decrease) in shares outstanding before conversion | 892,912 | 8,587,648 | ||||||
Shares reacquired upon conversion into Class A and Class Z | (182,401 | ) | (1,728,469 | ) | ||||
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Net increase (decrease) in shares outstanding | 710,511 | $ | 6,859,179 | |||||
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Year ended August 31, 2014: | ||||||||
Shares sold | 26,159,905 | $ | 257,703,956 | |||||
Shares issued in reinvestment of dividends and distributions | 804,337 | 7,901,528 | ||||||
Shares reacquired | (3,265,955 | ) | (32,083,918 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 23,698,287 | 233,521,566 | ||||||
Shares reacquired upon conversion into Class A and Class Z | (63,069 | ) | (620,550 | ) | ||||
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Net increase (decrease) in shares outstanding | 23,635,218 | $ | 232,901,016 | |||||
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Class Q | ||||||||
Six months ended February 28, 2015: | ||||||||
Shares sold | 1,184,225 | $ | 11,230,087 | |||||
Shares issued in reinvestment of dividends and distributions | 35,344 | 334,081 | ||||||
Shares reacquired | (4,468 | ) | (42,000 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | 1,215,101 | 11,522,168 | ||||||
Shares issued upon conversion from Class Z | 585,843 | 5,618,230 | ||||||
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Net increase (decrease) in shares outstanding | 1,800,944 | $ | 17,140,398 | |||||
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Class Z | ||||||||
Six months ended February 28, 2015: | ||||||||
Shares sold | 20,501,657 | $ | 194,667,665 | |||||
Shares issued in reinvestment of dividends and distributions | 2,024,097 | 19,222,880 | ||||||
Shares reacquired | (38,442,968 | ) | (364,535,437 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding before conversion | (15,917,214 | ) | (150,644,892 | ) | ||||
Shares issued upon conversion from Class A and Class C | 1,685,933 | 16,151,782 | ||||||
Shares reacquired upon conversion into Class A and Class Q | (786,516 | ) | (7,550,252 | ) | ||||
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| |||||
Net increase (decrease) in shares outstanding | (15,017,797 | ) | $ | (142,043,362 | ) | |||
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Year ended August 31, 2014: | ||||||||
Shares sold | 75,768,728 | $ | 746,709,908 | |||||
Shares issued in reinvestment of dividends and distributions | 2,589,965 | 25,441,718 | ||||||
Shares reacquired | (25,106,458 | ) | (245,852,367 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 53,252,235 | 526,299,259 | ||||||
Shares issued upon conversion from Class A and Class C | 9,798,372 | 95,899,088 | ||||||
Shares reacquired upon conversion into Class A | (127,292 | ) | (1,253,540 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 62,923,315 | $ | 620,944,807 | |||||
|
|
|
|
Prudential Short Duration High Yield Income Fund | 45 |
Notes to Financial Statements
(Unaudited) continued
Note 7. Borrowings
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 9, 2014 through October 8, 2015. The Funds pay an annualized commitment fee of 0.075% on the unused portion of the SCA. Prior to October 9, 2014, the Funds had another SCA that provided a commitment of $900 million and the Funds paid an annualized commitment fee of .08% of the unused portion of the SCA. Interest on any borrowings under the SCA is paid at contracted market rates. The commitment fee for the unused amount is accrued daily and paid quarterly.
The Fund utilized the SCA during the six months ended February 28, 2015. The Fund had an average outstanding balance of $4,643,681 for 135 days at an average interest rate of 1.42%. The maximum amount of loan outstanding during the period was $27,242,000. At February 28, 2015, the Fund did not have an outstanding loan amount.
46 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||
Six Months Ended February 28, 2015 | Year Ended August 31, 2014(b) | October 26, 2012(a)(b) through August 31, 2013 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $9.73 | $9.79 | $10.00 | |||||||||||||
Income from investment operations: | ||||||||||||||||
Net investment income | .22 | .45 | .34 | |||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (.18 | ) | .09 | (.09 | ) | |||||||||||
Total from investment operations | .04 | .54 | .25 | |||||||||||||
Less Dividends: | ||||||||||||||||
Dividends from net investment income | (.31 | ) | (.60 | ) | (.46 | ) | ||||||||||
Net asset value, end of period | $9.46 | $9.73 | $9.79 | |||||||||||||
Total Return(c): | .41% | 5.55% | 2.50% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $371,175 | $413,957 | $173,606 | |||||||||||||
Average net assets (000) | $387,873 | $354,627 | $55,859 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.10% | (e) | 1.09% | 1.15% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | 1.15% | (e) | 1.14% | 1.25% | (e) | |||||||||||
Net investment income | 4.83% | (e) | 4.63% | 4.16% | (e) | |||||||||||
Portfolio turnover rate | 17% | (f) | 60% | 30% | (f) |
(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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 portfolio in which the Fund invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 47 |
Financial Highlights
(Unaudited) continued
Class C Shares | ||||||||||||||||
Six Months Ended February 28, 2015 | Year Ended August 31, 2014(b) | October 26, 2012(a)(b) through August 31, 2013 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $9.73 | $9.79 | $10.00 | |||||||||||||
Income from investment operations: | ||||||||||||||||
Net investment income | .19 | .38 | .28 | |||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (.19 | ) | .08 | (.10 | ) | |||||||||||
Total from investment operations | - | .46 | .18 | |||||||||||||
Less Dividends: | ||||||||||||||||
Dividends from net investment income | (.27 | ) | (.52 | ) | (.39 | ) | ||||||||||
Net asset value, end of period | $9.46 | $9.73 | $9.79 | |||||||||||||
Total Return(c): | .04% | 4.77% | 1.83% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $303,231 | $304,897 | $75,539 | |||||||||||||
Average net assets (000) | $301,526 | $194,085 | $25,240 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.85% | (e) | 1.83% | 1.90% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | 1.85% | (e) | 1.83% | 1.95% | (e) | |||||||||||
Net investment income | 4.08% | (e) | 3.86% | 3.38% | (e) | |||||||||||
Portfolio turnover rate | 17% | (f) | 60% | 30% | (f) |
(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return does not consider the effects of sales loads. Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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 portfolio in which the Fund invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
48 |
Class Q Shares | ||||
October 27, 2014(a) through February 28, 2015 | ||||
Per Share Operating Performance: | ||||
Net Asset Value, Beginning Of Period | $9.59 | |||
Income from investment operations: | ||||
Net investment income | .16 | |||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (.07 | ) | ||
Total from investment operations | .09 | |||
Less Dividends: | ||||
Dividends from net investment income | (.22 | ) | ||
Net asset value, end of period | $9.46 | |||
Total Return(b): | 1.04% | |||
Ratios/Supplemental Data: | ||||
Net assets, end of period (000) | $17,043 | |||
Average net assets (000) | $12,965 | |||
Ratios to average net assets(c): | ||||
Expenses after waivers and/or expense reimbursement | .75% | (d) | ||
Expenses before waivers and/or expense reimbursement | .75% | (d) | ||
Net investment income | 4.64% | (d) | ||
Portfolio turnover rate | 17% | (e) |
(a) Commencement of operations.
(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. 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 portfolio in which the Fund invests.
(d) Annualized.
(e) Not annualized.
See Notes to Financial Statements.
Prudential Short Duration High Yield Income Fund | 49 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||||||||||||||
Six Months Ended February 28, 2015 | Year Ended August 31, 2014(b) | October 26, 2012(a)(b) through August 31, 2013 | ||||||||||||||
Per Share Operating Performance: | ||||||||||||||||
Net Asset Value, Beginning Of Period | $9.73 | $9.79 | $10.00 | |||||||||||||
Income from investment operations: | ||||||||||||||||
Net investment income | .24 | .48 | .36 | |||||||||||||
Net realized and unrealized gain (loss) on investment and foreign currency transactions | (.19 | ) | .08 | (.09 | ) | |||||||||||
Total from investment operations | .05 | .56 | .27 | |||||||||||||
Less Dividends: | ||||||||||||||||
Dividends from net investment income | (.32 | ) | (.62 | ) | (.48 | ) | ||||||||||
Net asset value, end of period | $9.46 | $9.73 | $9.79 | |||||||||||||
Total Return(c): | .54% | 5.82% | 2.74% | |||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||
Net assets, end of period (000) | $628,696 | $792,560 | $181,587 | |||||||||||||
Average net assets (000) | $698,997 | $507,805 | $69,695 | |||||||||||||
Ratios to average net assets(d): | ||||||||||||||||
Expenses after waivers and/or expense reimbursement | .85% | (e) | .84% | .90% | (e) | |||||||||||
Expenses before waivers and/or expense reimbursement | .85% | (e) | .84% | 1.04% | (e) | |||||||||||
Net investment income | 5.08% | (e) | 4.89% | 4.29% | (e) | |||||||||||
Portfolio turnover rate | 17% | (f) | 60% | 30% | (f) |
(a) Commencement of operations.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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 portfolio in which the Fund invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
50 |
Results of Proxy Voting
(Unaudited)
At the special meeting of shareholders held on November 26, 2014, shareholders of the Prudential Investment Portfolios, Inc. 15 which is comprised of Prudential High Yield Fund and Prudential Short Duration High Yield Income Fund (collectively, the “Funds”), approved the following proposal. Shareholders of all Funds voted together on the proposal:
To elect twelve Directors:
SHARES VOTED | % OF VOTED | % OF TOTAL | ||||||||||
(a) Ellen S. Alberding; | ||||||||||||
FOR | 534,964,819.251 | 98.642 | % | 74.296 | % | |||||||
WITHHELD | 7,370,076.333 | 1.358 | % | 1.023 | % | |||||||
(b) Kevin J. Bannon; | ||||||||||||
FOR | 535,533,105.530 | 98.746 | % | 74.375 | % | |||||||
WITHHELD | 6,807,790.054 | 1.254 | % | 0.944 | % | |||||||
(c) Linda W. Bynoe; | ||||||||||||
FOR | 534,984,832.950 | 98.645 | % | 74.299 | % | |||||||
WITHHELD | 7,350,062.634 | 1.355 | % | 1.020 | % | |||||||
(d) Keith F. Hartstein; | ||||||||||||
FOR | 535,517,822.194 | 98.744 | % | 74.373 | % | |||||||
WITHHELD | 6,817,073.390 | 1.256 | % | 0.946 | % | |||||||
(e) Michael S. Hyland; | ||||||||||||
FOR | 535,407,104.783 | 98.723 | % | 74.357 | % | |||||||
WITHHELD | 6,927,790.801 | 1.277 | % | 0.962 | % | |||||||
(f) Stephen P. Munn; | ||||||||||||
FOR | 535,139,031.831 | 98.674 | % | 74.320 | % | |||||||
WITHHELD | 574,352.710 | 1.326 | % | 0.999 | % | |||||||
(g) James E. Quinn; | ||||||||||||
FOR | 535,241,487.863 | 98.693 | % | 74.334 | % | |||||||
WITHHELD | 7,093,407.721 | 1.307 | % | 0.985 | % | |||||||
(h) Richard A. Redeker; | ||||||||||||
FOR | 535,207,216.660 | 98.686 | % | 74.330 | % | |||||||
WITHHELD | 7,127,678.924 | 1.314 | % | 0.989 | % | |||||||
(i) Stephen G. Stoneburn; | ||||||||||||
FOR | 535,376,077.957 | 98.717 | % | 74.353 | % | |||||||
WITHHELD | 6,958,817.627 | 1.283 | % | 0.966 | % | |||||||
(j) Stuart S. Parker; | ||||||||||||
FOR | 535,425,197.727 | 98.726 | % | 74.360 | % | |||||||
WITHHELD | 6,909,697.857 | 1.274 | % | 0.959 | % |
Prudential Short Duration High Yield Income Fund | 51 |
Results of Proxy Voting
(Unaudited) continued
SHARES VOTED | % OF VOTED | % OF TOTAL | ||||||||||
(k) Scott E. Benjamin; and | ||||||||||||
FOR | 535,425,002.394 | 98.726 | % | 74.360 | % | |||||||
WITHHELD | 6,909,893.190 | 1.274 | % | 0.959 | % | |||||||
(l) Grace C. Torres. | ||||||||||||
FOR | 535,360,477.097 | 98.715 | % | 74.351 | % | |||||||
WITHHELD | 6,974,418.487 | 1.285 | % | 0.968 | % |
52 |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.prudentialfunds.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 • Keith F. Hartstein • Michael S. Hyland • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Theresa C. Thompson, Deputy Chief Compliance Officer • Richard W. Kinville, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Amanda S. Ryan, 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 | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street Newark, NJ 07102 | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | One Wall 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 |
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.prudentialfunds.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.prudentialfunds.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, Prudential Short Duration High Yield Income Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, 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. |
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 |
PRUDENTIAL SHORT DURATION HIGH YIELD INCOME FUND
SHARE CLASS | A | C | Q | Z | ||||
NASDAQ | HYSAX | HYSCX | HYSQX | HYSZX | ||||
CUSIP | 74442J109 | 74442J208 | 74442J406 | 74442J307 |
MF216E2 0275811-00001-00
PRUDENTIAL INVESTMENTS»MUTUAL FUNDS
PRUDENTIAL HIGH YIELD FUND
SEMIANNUAL REPORT · FEBRUARY 28, 2015
Objectives
Current income, and capital appreciation as a secondary objective
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
The views expressed in this report and information about the Fund’s portfolio holdings are for the period covered by this report and are subject to change thereafter.
The accompanying financial statements as of February 28, 2015, were not audited and, accordingly, no auditor’s opinion is expressed on them.
Mutual funds are distributed by Prudential Investment Management Services LLC (PIMS). Prudential Fixed Income is a unit of Prudential Investment Management, Inc. (PIM), a registered investment adviser. PIMS and PIM are Prudential Financial companies. © 2015 Prudential Financial, Inc. and its related entities. Prudential Investments LLC, Prudential, the Prudential logo, Bring Your Challenges, and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
April 15, 2015
Dear Shareholder:
We hope you find the semiannual report for the Prudential High Yield Fund informative and useful. The report covers performance for the six-month period that ended February 28, 2015.
Since market conditions change over time, 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. Keep in mind, however, that diversification and asset allocation strategies do not assure a profit or protect against loss in declining markets.
Prudential Investments® is dedicated to helping you solve your toughest investment challenges—whether it’s capital growth, reliable income, or protection from market volatility and other risks. We offer the expertise of Prudential Financial’s affiliated asset managers that strive to be leaders in a broad range of funds to help you stay on course to the future you envision. They also manage money for major corporations and pension funds around the world, which means you benefit from the same expertise, innovation, and attention to risk demanded by today’s most sophisticated investors.
Thank you for choosing the Prudential Investments family of funds.
Sincerely,
Stuart S. Parker, President
Prudential High Yield Fund
Prudential High Yield Fund | 1 |
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.prudentialfunds.com or by calling (800) 225-1852.
Cumulative Total Returns (Without Sales Charges) as of 2/28/15 |
| |||||||||||||||||||
Six Months | One Year | Five Years | Ten Years | Since Inception | ||||||||||||||||
Class A | –0.10 | % | 2.59 | % | 52.10 | % | 103.65 | % | — | |||||||||||
Class B | –0.53 | 2.08 | 48.18 | 93.87 | — | |||||||||||||||
Class C | –0.65 | 1.82 | 46.95 | 91.96 | — | |||||||||||||||
Class Q | –0.09 | 2.80 | N/A | N/A | 30.48% (10/31/11) | |||||||||||||||
Class R | –0.23 | 2.34 | 50.23 | N/A | 101.36 (6/6/05) | |||||||||||||||
Class Z | –0.14 | 2.86 | 54.18 | 109.26 | — | |||||||||||||||
Barclays US Corporate High Yield 1% Issuer Capped Index | –0.14 | 2.78 | 55.68 | 112.33 | — | |||||||||||||||
Lipper High Yield | –1.12 | 1.25 | 48.30 | 88.50 | — | |||||||||||||||
Average Annual Total Returns (With Sales Charges) as of 3/31/15 |
| |||||||||||||||||||
One Year | Five Years | Ten Years | Since Inception | |||||||||||||||||
Class A | –2.37 | % | 7.07 | % | 7.12 | % | — | |||||||||||||
Class B | –3.26 | 7.34 | 7.08 | — | ||||||||||||||||
Class C | 0.33 | 7.27 | 6.98 | — | ||||||||||||||||
Class Q | | 2.62 | | N/A | N/A | 8.10% (10/31/11) | ||||||||||||||
Class R | 1.98 | 7.79 | N/A | 7.36 (6/6/05) | ||||||||||||||||
Class Z | 2.33 | 8.35 | 7.90 | — | ||||||||||||||||
Barclays US Corporate High Yield 1% Issuer Capped Index | 1.96 | 8.51 | 8.08 | — | ||||||||||||||||
Lipper High Yield | 0.59 | 7.45 | 6.76 | — |
Source: Prudential Investments LLC and Lipper Inc.
Inception returns are provided for any share class with less than 10 calendar years of returns.
2 | Visit our website at www.prudentialfunds.com |
The returns in the tables do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or following the redemption of Fund shares. The average annual total returns take into account applicable sales charges, which are described for each share class in the table below.
Class A | Class B* | Class C | Class Q | Class R | Class Z | |||||||
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% on sales of $1 million or more made within 12 months of purchase | 5% (Yr. 1) 4% (Yr. 2) 3% (Yr. 3) 2% (Yr. 4) 1% (Yr. 5) 1% (Yr. 6) 0% (Yr. 7) | 1% 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) | .25% | .75% | 1% | None | .75% (.50% currently) | 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.
Benchmark Definitions
Barclays US Corporate High Yield 1% Issuer Capped Index
The Barclays US Corporate High Yield 1% Issuer Capped Index (the Index) is an unmanaged index which covers the universe of US dollar-denominated, non-convertible, fixed rate, non-investment-grade debt. Issuers are capped at 1% of the Index. Index holdings must have at least one year to final maturity, at least $150 million par amount outstanding, and be publicly issued with a rating of Ba1 or lower. The cumulative total returns for the Capped Index measured from the month-end closest to the inception date for Class Q shares through 2/28/15 are 31.67% and 116.83% for Class R shares. The average annual total returns for the Capped Index measured from the month-end closest to the inception date for Class Q shares through 3/31/15 are 8.21% and 8.13% for Class R shares.
Lipper High Yield Funds Average
The Lipper High Yield Funds Average (Lipper Average) is based on the average return of all funds in the Lipper High Yield Funds category for the periods noted. Funds in the Lipper Average aim at high (relative) current yield from fixed income securities, have no quality or maturity restrictions, and tend to invest in lower-grade debt issues. The cumulative total returns for the Lipper Average measured from the month-end closest to the inception date for Class Q shares through 2/28/15 are 27.57% and 92.67% for Class R shares. The average annual total returns for the Lipper Average measured from the month-end closest to the inception date for Class Q shares through 3/31/15 are 7.24% and 6.82% for Class R shares.
Prudential High Yield Fund | 3 |
Your Fund’s Performance (continued)
Investors cannot invest directly in an index or average. The returns for the Index would be lower if they included the effects of sales charges, operating expenses of a mutual fund, or taxes. Returns for the Lipper Average reflect the deduction of operating expenses, but not sales charges or taxes. The Since Inception returns for the Index and the Lipper Average are measured from the closest month-end to the inception date for the indicated share class.
Five Largest Holdings expressed as a percentage of net assets as of 2/28/15 | ||||
Dynegy Finance I, Inc./Dynegy Finance II, Inc., Sr. Sec’d. Notes, 144A, 7.375%, 11/01/2022 | 1.0 | % | ||
First Data Corp., Gtd. Notes, 11.750%, 08/15/2021 | 0.9 | |||
Neiman Marcus Group Ltd., Inc., Gtd. Notes, 144A, 8.000%, 10/15/2021 | 0.7 | |||
CIT Group, Inc., Sr. Unsec’d. Notes, 5.000%, 08/15/2022 | 0.7 | |||
CommScope Holding Co., Inc., Sr. Unsec’d. Notes, PIK 144A, 6.625%, 06/01/2020 | 0.7 |
Holdings reflect only long-term investments and are subject to change.
Five Largest Industries expressed as a percentage of net assets as of 2/28/15 |
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Technology | 11.1 | % | ||
Healthcare & Pharmaceutical | 8.5 | |||
Capital Goods | 7.5 | |||
Electric | 6.8 | |||
Gaming | 6.2 |
Industry weightings reflect only long-term investments and are subject to change.
Distributions and Yields as of 2/28/15 |
| |||||||||||
Total Distributions Paid for Six Months | 30-Day SEC Yield | 30-Day Unsubsidized SEC Yield | ||||||||||
Class A | $ | 0.17 | 5.21 | % | 5.16 | % | ||||||
Class B | 0.16 | 4.95 | 4.95 | |||||||||
Class C | 0.15 | 4.70 | 4.70 | |||||||||
Class Q | 0.18 | 5.81 | 5.81 | |||||||||
Class R | 0.16 | 5.20 | 4.95 | |||||||||
Class Z | 0.18 | 5.68 | 5.68 |
Credit Quality expressed as a percentage of total investments as of 2/28/15 |
| |||
BBB | 1.8 | % | ||
BB | 40.4 | |||
B | 40.3 | |||
CCC | 14.8 | |||
Not Rated | 0.5 | |||
Cash/Cash Equivalents | 2.2 | |||
Total Investments | 100.0 | % |
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Source: PIM
Credit ratings reflect the highest rating assigned by Moody’s Investor Service, Inc. (Moody’s), Standard & Poor’s (S&P), or Fitch, Inc. (Fitch). Credit ratings reflect the common nomenclature used by both S&P and Fitch. Where applicable, Moody’s ratings are converted to the comparable S&P/Fitch rating tier nomenclature. These rating agencies are independent, nationally recognized statistical rating organizations and are widely used. The Not Rated category consists of securities that have not been rated by Moody’s, S&P, or Fitch. Credit ratings are subject to change.
Prudential High Yield Fund | 5 |
Fees and Expenses (Unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemptions, as applicable, and (2) ongoing costs, including management fees, distribution and/or service (12b-1) fees, and other Fund expenses, as applicable. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested on September 1, 2014, at the beginning of the period, and held through the six-month period ended February 28, 2015. 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
6 | Visit our website at www.prudentialfunds.com |
Prudential Investments 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 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.
Prudential High Yield Fund | Beginning Account Value September 1, 2014 | Ending Account Value February 28, 2015 | Annualized Expense Ratio Based on the Six-Month Period | Expenses Paid During the Six-Month Period* | ||||||||||||||
Class A | Actual | $ | 1,000.00 | $ | 999.00 | 0.83 | % | $ | 4.11 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,020.68 | 0.83 | % | $ | 4.16 | ||||||||||
Class B | Actual | $ | 1,000.00 | $ | 994.70 | 1.33 | % | $ | 6.58 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,018.20 | 1.33 | % | $ | 6.66 | ||||||||||
Class C | Actual | $ | 1,000.00 | $ | 993.50 | 1.58 | % | $ | 7.81 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,016.96 | 1.58 | % | $ | 7.90 | ||||||||||
Class Q | Actual | $ | 1,000.00 | $ | 999.10 | 0.47 | % | $ | 2.33 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,022.46 | 0.47 | % | $ | 2.36 | ||||||||||
Class R | Actual | $ | 1,000.00 | $ | 997.70 | 1.08 | % | $ | 5.35 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,019.44 | 1.08 | % | $ | 5.41 | ||||||||||
Class Z | Actual | $ | 1,000.00 | $ | 998.60 | 0.58 | % | $ | 2.87 | |||||||||
Hypothetical | $ | 1,000.00 | $ | 1,021.92 | 0.58 | % | $ | 2.91 |
*Fund expenses (net of fee waivers or subsidies, if any) for each share class are equal to the annualized expense ratio for each share class (provided in the table), multiplied by the average account value over the period, multiplied by the 181 days in the six-month period ended February 28, 2015, and divided by the 365 days in the Fund’s fiscal year ending August 31, 2015 (to reflect the six-month period). Expenses presented in the table include the expenses of any underlying portfolios in which the Fund may invest.
Prudential High Yield Fund | 7 |
Fees and Expenses (continued)
The Fund’s annualized expense ratios for the six-month period ended February 28, 2015, are as follows:
Class | Gross Operating Expenses | Net Operating Expenses | ||
A | 0.88% | 0.83% | ||
B | 1.33 | 1.33 | ||
C | 1.58 | 1.58 | ||
Q | 0.47 | 0.47 | ||
R | 1.33 | 1.08 | ||
Z | 0.58 | 0.58 |
Net operating expenses shown above reflect fee waivers and/or expense reimbursements. Additional information on Fund expenses and any fee waivers and/or expense reimbursements can be found in the “Financial Highlights” tables in this report and in the Notes to the Financial Statements in this report.
8 | Visit our website at www.prudentialfunds.com |
Portfolio of Investments
as of February 28, 2015 (Unaudited)
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
LONG-TERM INVESTMENTS 96.0% | ||||||||||||||
ASSET-BACKED SECURITIES(a) 0.2% | ||||||||||||||
Collateralized Loan Obligations | ||||||||||||||
Baker Street CLO II Ltd. (Cayman Islands), Series 2006-1A, Class E, 144A | 4.203% | 10/15/19 | 2,851 | $ | 2,757,731 | |||||||||
Bridgeport CLO Ltd., Series 2007-2A, Class D, 144A(b) | 4.493 | 06/18/21 | 2,261 | 2,087,168 | ||||||||||
|
| |||||||||||||
TOTAL ASSET-BACKED SECURITIES | 4,844,899 | |||||||||||||
|
| |||||||||||||
BANK LOANS(a) 1.8% | ||||||||||||||
Capital Goods 0.3% | ||||||||||||||
CPM Acquisition Corp. | 10.250 | 03/01/18 | 7,250 | 7,213,750 | ||||||||||
Neff Rental LLC | 7.250 | 06/09/21 | 4,573 | 4,470,507 | ||||||||||
|
| |||||||||||||
11,684,257 | ||||||||||||||
Chemicals 0.2% | ||||||||||||||
Solenis International LP | 7.750 | 07/29/22 | 7,500 | 7,246,875 | ||||||||||
Energy - Integrated 0.1% | ||||||||||||||
Fieldwood Energy LLC | 8.380 | 09/30/20 | 3,000 | 2,298,750 | ||||||||||
Energy - Other 0.2% | ||||||||||||||
Amern Energy Marcellus LLC | 8.500 | 08/04/21 | 3,825 | 2,916,563 | ||||||||||
Newfield Exploration Co., Sr. Sub. Notes | 6.875 | 02/01/20 | 4,375 | 4,495,312 | ||||||||||
|
| |||||||||||||
7,411,875 | ||||||||||||||
Gaming 0.1% | ||||||||||||||
CCM Merger, Inc. | 4.500 | 08/06/21 | 3,322 | 3,328,341 | ||||||||||
Golden Nugget, Inc. | 5.500 | 11/21/19 | 1,486 | 1,487,784 | ||||||||||
|
| |||||||||||||
4,816,125 | ||||||||||||||
Healthcare & Pharmaceutical | ||||||||||||||
Radnet Mgmt., Inc. | 8.000 | 03/25/21 | 980 | 960,400 | ||||||||||
Lodging 0.1% | ||||||||||||||
Four Seasons Holdings, Inc. | 6.250 | 12/28/20 | 1,750 | 1,754,375 | ||||||||||
Technology 0.8% | ||||||||||||||
Evergreen Skills Lux Sarl | 9.250 | 04/28/22 | 16,500 | 15,345,000 |
See Notes to Financial Statements.
Prudential High Yield Fund | 9 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
BANK LOANS(a) (Continued) | ||||||||||||||
Technology (cont’d.) | ||||||||||||||
Kronos, Inc. | 9.750% | 04/30/20 | 9,934 | $ | 10,149,671 | |||||||||
|
| |||||||||||||
25,494,671 | ||||||||||||||
|
| |||||||||||||
TOTAL BANK LOANS | 61,667,328 | |||||||||||||
|
| |||||||||||||
CORPORATE BONDS 93.8% | ||||||||||||||
Aerospace & Defense 1.9% | ||||||||||||||
Alliant Techsystems, Inc., | ||||||||||||||
Gtd. Notes | 6.875 | 09/15/20 | 2,685 | 2,852,813 | ||||||||||
Gtd. Notes, 144A | 5.250 | 10/01/21 | 3,050 | 3,111,000 | ||||||||||
Bombardier, Inc. (Canada), | ||||||||||||||
Sr. Unsec’d. Notes, 144A(c) | 5.750 | 03/15/22 | 2,250 | 2,148,750 | ||||||||||
Sr. Unsec’d. Notes, 144A(c) | 6.000 | 10/15/22 | 3,525 | 3,375,188 | ||||||||||
Sr. Unsec’d. Notes, 144A(c) | 6.125 | 01/15/23 | 4,481 | 4,290,557 | ||||||||||
Sr. Unsec’d. Notes, 144A(c) | 7.500 | 03/15/18 | 2,000 | 2,130,000 | ||||||||||
Sr. Unsec’d. Notes, 144A | 7.500 | 03/15/25 | 5,875 | 5,875,000 | ||||||||||
Sr. Unsec’d. Notes, 144A(c) | 7.750 | 03/15/20 | 975 | 1,016,438 | ||||||||||
Esterline Technologies Corp., Gtd. Notes | 7.000 | 08/01/20 | 4,250 | 4,462,500 | ||||||||||
KLX, Inc., Gtd. Notes, 144A(c) | 5.875 | 12/01/22 | 4,600 | 4,697,750 | ||||||||||
LMI Aerospace, Inc., Sec’d. Notes, 144A | 7.375 | 07/15/19 | 4,375 | 4,385,937 | ||||||||||
Sequa Corp., Gtd. Notes, 144A | 7.000 | 12/15/17 | 8,000 | 6,960,000 | ||||||||||
TransDigm, Inc., | ||||||||||||||
Gtd. Notes | 6.000 | 07/15/22 | 6,325 | 6,404,062 | ||||||||||
Gtd. Notes | 6.500 | 07/15/24 | 6,325 | 6,467,312 | ||||||||||
Gtd. Notes | 7.500 | 07/15/21 | 5,200 | 5,544,500 | ||||||||||
|
| |||||||||||||
63,721,807 | ||||||||||||||
Automotive 2.8% | ||||||||||||||
Allison Transmission, Inc., Gtd. Notes, 144A | 7.125 | 05/15/19 | 4,550 | 4,749,062 | ||||||||||
American Axle & Manufacturing, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.250 | 03/15/21 | 5,225 | 5,590,750 | ||||||||||
Gtd. Notes | 6.625 | 10/15/22 | 5,225 | 5,688,719 | ||||||||||
Gtd. Notes | 7.750 | 11/15/19 | 700 | 799,750 | ||||||||||
American Tire Distributors, Inc., Sr Subordinated, 144A | 10.250 | 03/01/22 | 12,000 | 12,510,000 |
See Notes to Financial Statements.
10 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Automotive (cont’d.) | ||||||||||||||
Chrysler Group LLC, | ||||||||||||||
Sec’d. Notes | 8.000% | 06/15/19 | 2,525 | $ | 2,667,461 | |||||||||
Sec’d. Notes | 8.250 | 06/15/21 | 10,000 | 11,162,500 | ||||||||||
Dana Holding Corp., | ||||||||||||||
Sr. Unsec’d. Notes | 5.375 | 09/15/21 | 2,550 | 2,677,500 | ||||||||||
Sr. Unsec’d. Notes | 6.750 | 02/15/21 | 6,960 | 7,377,600 | ||||||||||
Gates Global LLC/Gates Global Co., Gtd. | 6.000 | 07/15/22 | 9,700 | 9,312,000 | ||||||||||
General Motors Co., Sr. Unsec’d. Notes | 4.875 | 10/02/23 | 2,225 | 2,423,839 | ||||||||||
Jaguar Land Rover Automotive PLC (United Kingdom), Gtd. Notes, 144A | 5.625 | 02/01/23 | 650 | 698,750 | ||||||||||
Lear Corp., | ||||||||||||||
Gtd. Notes | 4.750 | 01/15/23 | 775 | 784,688 | ||||||||||
Gtd. Notes | 5.250 | 01/15/25 | 11,650 | 11,853,875 | ||||||||||
Meritor, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.250 | 02/15/24 | 3,700 | 3,764,750 | ||||||||||
Gtd. Notes | 6.750 | 06/15/21 | 5,180 | 5,426,050 | ||||||||||
Schaeffler Holding Finance BV (Germany), Sr. Sec’d. Notes, PIK, 144A(c) | 6.750 | 11/15/22 | 1,800 | 1,971,000 | ||||||||||
Titan International, Inc., Sr. Sec’d. Notes | 6.875 | 10/01/20 | 5,500 | 5,005,000 | ||||||||||
|
| |||||||||||||
94,463,294 | ||||||||||||||
Banking 0.9% | ||||||||||||||
Ally Financial, Inc., Sr. Unsec’d. Notes | 3.750 | 11/18/19 | 8,825 | 8,847,062 | ||||||||||
Bank of America Corp., Jr. Sub. Notes(c) | 5.200(a) | 12/31/49 | 2,975 | 2,870,875 | ||||||||||
Citigroup, Inc., Jr. Sub. Notes(c) | 5.800(a) | 12/31/49 | 9,440 | 9,546,200 | ||||||||||
Morgan Stanley, Jr. Sub. Notes(c) | 5.450(a) | 12/31/49 | 5,025 | 5,141,831 | ||||||||||
Wells Fargo & Co., Jr. Sub. Notes(c) | 5.900(a) | 12/31/49 | 5,025 | 5,236,955 | ||||||||||
|
| |||||||||||||
31,642,923 | ||||||||||||||
Building Materials & Construction 3.6% | ||||||||||||||
Beazer Homes USA, Inc., | ||||||||||||||
Gtd. Notes(c) | 5.750 | 06/15/19 | 4,375 | 4,221,875 | ||||||||||
Gtd. Notes | 7.250 | 02/01/23 | 1,425 | 1,350,188 | ||||||||||
Gtd. Notes | 7.500 | 09/15/21 | 9,725 | 9,506,187 | ||||||||||
Gtd. Notes(c) | 9.125 | 05/15/19 | 4,250 | 4,377,500 | ||||||||||
Brookfield Residential Properties, Inc./Brookfield Residential US Corp. (Canada), Gtd. Notes, 144A | 6.125 | 07/01/22 | 6,623 | 6,854,805 |
See Notes to Financial Statements.
Prudential High Yield Fund | 11 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Building Materials & Construction (cont’d.) | ||||||||||||||
Building Materials Corp. of America, | ||||||||||||||
Sr. Unsec’d. Notes, 144A (original cost $6,245,000; purchased 10/27/2014)(b)(d) | 5.375% | 11/15/24 | 6,245 | $ | 6,432,350 | |||||||||
Sr. Unsec’d. Notes, 144A (original cost $2,215,000; purchased 04/19/2013)(b)(d) | 6.750 | 05/01/21 | 2,000 | 2,150,000 | ||||||||||
Cemex Finance LLC (Mexico), Sr. Sec’d. Notes, 144A | 9.375 | 10/12/22 | 7,400 | 8,440,440 | ||||||||||
Cemex SAB de CV (Mexico), Sr. Sec’d. Notes, 144A | 5.700 | 01/11/25 | 2,750 | 2,696,375 | ||||||||||
D.R. Horton, Inc., | ||||||||||||||
Gtd. Notes | 4.750 | 02/15/23 | 13,650 | 13,820,625 | ||||||||||
Gtd. Notes | 6.500 | 04/15/16 | 100 | 104,750 | ||||||||||
HD Supply, Inc., Sr. Sec’d. Notes, 144A(c) | 5.250 | 12/15/21 | 5,475 | 5,687,156 | ||||||||||
James Hardie International Finance Ltd. (Australia), Gtd. Notes, 144A | 5.875 | 02/15/23 | 3,300 | 3,370,125 | ||||||||||
KB Home, | ||||||||||||||
Gtd. Notes | 7.000 | 12/15/21 | 2,800 | 2,814,000 | ||||||||||
Gtd. Notes(c) | 7.500 | 09/15/22 | 5,420 | 5,447,100 | ||||||||||
Gtd. Notes | 7.625 | 05/15/23 | 5,825 | 5,868,687 | ||||||||||
Masco Corp., Sr. Unsec’d. Notes | 5.950 | 03/15/22 | 1,475 | 1,655,688 | ||||||||||
Standard Pacific Corp., | ||||||||||||||
Gtd. Notes(c) | 6.250 | 12/15/21 | 3,225 | 3,386,250 | ||||||||||
Gtd. Notes | 8.375 | 05/15/18 | 350 | 400,750 | ||||||||||
Gtd. Notes(c) | 8.375 | 01/15/21 | 2,700 | 3,118,500 | ||||||||||
Gtd. Notes | 10.750 | 09/15/16 | 2,725 | 3,052,000 | ||||||||||
Taylor Morrison Communities, Inc./Monarch Communities, Inc., | ||||||||||||||
Gtd. Notes, 144A(c) | 5.625 | 03/01/24 | 2,100 | 2,052,750 | ||||||||||
Gtd. Notes, 144A (original cost $5,229,214; purchased 03/30/2012 - 07/20/12)(b)(c)(d) | 7.750 | 04/15/20 | 5,118 | 5,425,080 | ||||||||||
Gtd. Notes, 144A (original cost $1,674,285; purchased 08/15/12)(b)(d) | 7.750 | 04/15/20 | 1,587 | 1,682,220 | ||||||||||
Toll Brothers Finance Corp., Gtd. Notes | 4.000 | 12/31/18 | 825 | 847,688 | ||||||||||
USG Corp., Gtd. Notes, 144A | 5.500 | 03/01/25 | 725 | 741,313 | ||||||||||
WCI Communities, Inc., Gtd. Notes | 6.875 | 08/15/21 | 9,375 | 9,562,500 | ||||||||||
William Lyon Homes, Inc., Gtd. Notes | 7.000 | 08/15/22 | 4,775 | 4,834,687 | ||||||||||
|
| |||||||||||||
119,901,589 |
See Notes to Financial Statements.
12 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Cable 3.3% | ||||||||||||||
Cablevision Systems Corp., | ||||||||||||||
Sr. Unsec’d. Notes(c) | 7.750% | 04/15/18 | 3,000 | $ | 3,345,000 | |||||||||
Sr. Unsec’d. Notes | 8.625 | 09/15/17 | 8,475 | 9,587,344 | ||||||||||
CCO Holdings LLC/CCO Holdings Capital Corp., | ||||||||||||||
Gtd. Notes | 5.250 | 03/15/21 | 620 | 638,600 | ||||||||||
Gtd. Notes(c) | 5.250 | 09/30/22 | 1,760 | 1,799,600 | ||||||||||
Gtd. Notes(c) | 5.750 | 09/01/23 | 8,675 | 9,000,312 | ||||||||||
Gtd. Notes(c) | 5.750 | 01/15/24 | 4,230 | 4,362,188 | ||||||||||
Gtd. Notes | 8.125 | 04/30/20 | 575 | 603,031 | ||||||||||
CCOH Safari LLC, | ||||||||||||||
Gtd. Notes(c) | 5.500 | 12/01/22 | 8,400 | 8,683,500 | ||||||||||
Gtd. Notes(c) | 5.750 | 12/01/24 | 4,600 | 4,761,000 | ||||||||||
Cequel Communications Holdings I LLC/Cequel Capital Corp., | ||||||||||||||
Sr. Unsec’d. Notes, 144A(c) | 5.125 | 12/15/21 | 8,175 | 8,164,781 | ||||||||||
Sr. Unsec’d. Notes, 144A | 5.125 | 12/15/21 | 6,100 | 6,092,375 | ||||||||||
Sr. Unsec’d. Notes, 144A | 6.375 | 09/15/20 | 6,025 | 6,386,500 | ||||||||||
CSC Holdings LLC, | ||||||||||||||
Sr. Unsec’d. Notes | 6.750 | 11/15/21 | 1,600 | 1,808,000 | ||||||||||
Sr. Unsec’d. Notes | 7.625 | 07/15/18 | 875 | 988,750 | ||||||||||
DISH DBS Corp., | ||||||||||||||
Gtd. Notes | 5.875 | 07/15/22 | 3,075 | 3,113,438 | ||||||||||
Gtd. Notes | 5.875 | 11/15/24 | 4,025 | 4,004,875 | ||||||||||
Inmarsat Finance PLC (United Kingdom), Gtd. Notes, 144A | 4.875 | 05/15/22 | 3,700 | 3,765,490 | ||||||||||
Intelsat Jackson Holdings SA (Luxembourg), | ||||||||||||||
Gtd. Notes(c) | 5.500 | 08/01/23 | 12,750 | 12,064,687 | ||||||||||
Gtd. Notes | 7.250 | 10/15/20 | 4,600 | 4,784,000 | ||||||||||
Quebecor Media, Inc. (Canada), Sr. Unsec’d. Notes | 5.750 | 01/15/23 | 8,683 | 9,073,735 | ||||||||||
Unitymedia KabelBW GmbH (Germany), Gtd. Notes, 144A | 6.125 | 01/15/25 | 2,875 | 3,051,094 | ||||||||||
Virgin Media Secured Finance PLC (United Kingdom), Sr. Sec’d. Notes, 144A | 5.375 | 04/15/21 | 4,275 | 4,520,812 | ||||||||||
|
| |||||||||||||
110,599,112 | ||||||||||||||
Capital Goods 7.2% | ||||||||||||||
ADS Waste Holdings, Inc., Gtd. Notes(c) | 8.250 | 10/01/20 | 5,025 | 5,226,000 | ||||||||||
AECOM Technology Corp., Gtd. Notes, 144A | 5.875 | 10/15/24 | 10,025 | 10,651,562 |
See Notes to Financial Statements.
Prudential High Yield Fund | 13 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Capital Goods (cont’d.) | ||||||||||||||
Apex Tool Group LLC, Gtd. Notes, 144A (original cost $1,880,000; purchased 09/17/2014)(b)(c)(d) | 7.000% | 02/01/21 | 2,000 | $ | 1,860,000 | |||||||||
Ashtead Capital, Inc. (United Kingdom), Sec’d. Notes, 144A | 6.500 | 07/15/22 | 8,700 | 9,461,250 | ||||||||||
Belden, Inc., Gtd. Notes, 144A | 5.500 | 09/01/22 | 3,800 | 3,895,000 | ||||||||||
BlueLine Rental Finance Corp., Sec’d. Notes, 144A (original cost $4,296,250; purchased 01/16/2014 - 07/01/2014)(b)(d) | 7.000 | 02/01/19 | 4,150 | 4,305,625 | ||||||||||
Brand Energy & Infrastructure Services, Inc., Gtd. Notes, 144A (original cost $4,650,000; purchased 11/22/2013)(b)(d) | 8.500 | 12/01/21 | 4,650 | 4,417,500 | ||||||||||
Case New Holland, Inc., Gtd. Notes | 7.875 | 12/01/17 | 4,335 | 4,833,525 | ||||||||||
CBRE Services, Inc., Gtd. Notes | 5.000 | 03/15/23 | 7,575 | 7,953,750 | ||||||||||
Clean Harbors, Inc., | ||||||||||||||
Gtd. Notes | 5.125 | 06/01/21 | 3,200 | 3,272,000 | ||||||||||
Gtd. Notes | 5.250 | 08/01/20 | 4,900 | 4,998,000 | ||||||||||
Cleaver-Brooks, Inc., Sr. Sec’d. Notes, 144A (original cost $4,857,500; purchased 04/08/2013 - 12/11/2014)(b)(d) | 8.750 | 12/15/19 | 4,500 | 4,601,250 | ||||||||||
CNH Industrial Capital LLC, Gtd. Notes(c) | 3.625 | 04/15/18 | 3,027 | 3,042,135 | ||||||||||
Dycom Investments, Inc., Gtd. Notes | 7.125 | 01/15/21 | 5,275 | 5,538,750 | ||||||||||
EnPro Industries, Inc., Gtd. Notes, 144A | 5.875 | 09/15/22 | 4,575 | 4,712,250 | ||||||||||
General Cable Corp., Gtd. Notes(c) | 5.750 | 10/01/22 | 5,487 | 4,773,690 | ||||||||||
Greystar Real Estate Partners LLC, Sr. Sec’d. Notes, 144A (original cost $6,000,000; purchased 11/10/2014)(b)(d) | 8.250 | 12/01/22 | 6,000 | 6,240,000 | ||||||||||
Griffon Corp., Gtd. Notes | 5.250 | 03/01/22 | 11,500 | 11,327,500 | ||||||||||
H&E Equipment Services, Inc., Gtd. Notes(c) | 7.000 | 09/01/22 | 12,100 | 12,432,750 | ||||||||||
International Wire Group Holdings, Inc., Sec’d. Notes, 144A | 8.500 | 10/15/17 | 5,925 | 6,191,625 | ||||||||||
Jurassic Holdings III, Inc., Sec’d. Notes, 144A (original cost $8,211,281; purchased 01/24/2014 - 07/24/2014)(b)(d) | 6.875 | 02/15/21 | 8,060 | 6,971,900 | ||||||||||
Laureate Education, Inc., Gtd. Notes, 144A(c) | 10.000 | 09/01/19 | 16,295 | 15,561,725 | ||||||||||
Manitowoc Co., Inc. (The), Gtd. Notes | 5.875 | 10/15/22 | 2,450 | 2,639,875 | ||||||||||
Modular Space Corp., Sec’d. Notes, 144A (original cost $2,550,000; purchased 02/19/2014)(b)(d) | 10.250 | 01/31/19 | 2,550 | 1,912,500 |
See Notes to Financial Statements.
14 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Capital Goods (cont’d.) | ||||||||||||||
NES Rentals Holdings, Inc., Sec’d. Notes, 144A (original cost $7,483,674; purchased 04/12/2013 - 11/10/2014)(b)(d) | 7.875% | 05/01/18 | 7,359 | $ | 7,450,988 | |||||||||
Rexel SA (France), Sr. Unsec’d. Notes, 144A(c) | 6.125 | 12/15/19 | 3,100 | 3,255,000 | ||||||||||
Signode Industrial Group Lux SA/Signode Industrial Group US, Inc., Sr. Unsec’d. Notes, 144A (original cost $12,981,063; purchased 04/07/2014 - 07/11/2014)(b)(c)(d) | 6.375 | 05/01/22 | 12,900 | 12,706,500 | ||||||||||
Terex Corp., | ||||||||||||||
Gtd. Notes | 6.000 | 05/15/21 | 6,175 | 6,337,094 | ||||||||||
Gtd. Notes | 6.500 | 04/01/20 | 4,225 | 4,436,250 | ||||||||||
Unifrax I LLC/Unifrax Holding Co., Gtd. Notes, 144A (original cost $5,471,120; purchased 10/10/2013 - 02/02/2015)(b)(d) | 7.500 | 02/15/19 | 5,404 | 5,458,040 | ||||||||||
United Rentals North America, Inc., | ||||||||||||||
Gtd. Notes | 5.750 | 11/15/24 | 4,775 | 5,037,625 | ||||||||||
Gtd. Notes | 6.125 | 06/15/23 | 2,700 | 2,895,750 | ||||||||||
Gtd. Notes | 7.375 | 05/15/20 | 2,400 | 2,604,000 | ||||||||||
Gtd. Notes | 7.625 | 04/15/22 | 15,930 | 17,695,203 | ||||||||||
Gtd. Notes | 8.250 | 02/01/21 | 6,921 | 7,509,285 | ||||||||||
Gtd. Notes(c) | 8.375 | 09/15/20 | 3,175 | 3,397,250 | ||||||||||
Vander Intermediate Holding II Corp., Sr. Unsec’d. Notes, PIK, 144A(c) | 9.750 | 02/01/19 | 8,100 | 8,181,000 | ||||||||||
WireCo WorldGroup, Inc., Gtd. Notes | 9.500 | 05/15/17 | 10,575 | 10,416,375 | ||||||||||
|
| |||||||||||||
244,200,522 | ||||||||||||||
Chemicals 3.6% | ||||||||||||||
Axalta Coating Systems U.S. Holdings, Inc./Axalta Coating Systems Dutch Holdings, Inc., Gtd. Notes, 144A | 7.375 | 05/01/21 | 13,000 | 14,072,500 | ||||||||||
Axiall Corp., Gtd. Notes(c) | 4.875 | 05/15/23 | 2,100 | 2,136,750 | ||||||||||
Chemtura Corp., Gtd. Notes(c) | 5.750 | 07/15/21 | 15,705 | 15,587,212 | ||||||||||
Eagle Spinco, Inc., Gtd. Notes | 4.625 | 02/15/21 | 2,675 | 2,708,438 | ||||||||||
Hexion U.S. Finance Corp., | ||||||||||||||
Sec’d. Notes(c) | 9.000 | 11/15/20 | 24,280 | 15,296,400 | ||||||||||
Sr. Sec’d. Notes | 6.625 | 04/15/20 | 11,475 | 10,958,625 | ||||||||||
Sr. Sec’d. Notes | 8.875 | 02/01/18 | 7,750 | 6,529,375 | ||||||||||
Huntsman International LLC, Gtd. Notes, 144A(c) | 5.125 | 11/15/22 | 4,875 | 5,009,062 | ||||||||||
Koppers, Inc., Gtd. Notes | 7.875 | 12/01/19 | 9,259 | 9,363,164 |
See Notes to Financial Statements.
Prudential High Yield Fund | 15 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Chemicals (cont’d.) | ||||||||||||||
PSPC Escrow Corp., Sr. Unsec’d. Notes, 144A | 6.500% | 02/01/22 | 6,925 | $ | 7,297,219 | |||||||||
Rentech Nitrogen Partners LP/Rentech Nitrogen Finance Corp., Sec’d. Notes, 144A | 6.500 | 04/15/21 | 7,700 | 7,623,000 | ||||||||||
TPC Group, Inc., Sr. Sec’d. Notes, 144A (original cost $15,970,188; purchased 12/11/2012 - 02/20/2015)(b)(d) | 8.750 | 12/15/20 | 15,750 | 14,450,625 | ||||||||||
Tronox Finance LLC, Gtd. Notes(c) | 6.375 | 08/15/20 | 8,580 | 8,547,825 | ||||||||||
|
| |||||||||||||
119,580,195 | ||||||||||||||
Consumer 1.7% | ||||||||||||||
Carlson Wagonlit BV (Netherlands), Sr. Sec’d. Notes, 144A (original cost $3,100,000; purchased 05/09/2012)(b)(d) | 6.875 | 06/15/19 | 3,100 | 3,282,125 | ||||||||||
First Quality Finance Co., Inc., Sr. Unsec’d. Notes, 144A | 4.625 | 05/15/21 | 5,970 | 5,581,950 | ||||||||||
Gibson Brands, Inc., Sr. Sec’d. Notes, 144A (original cost $2,788,688; purchased 05/13/2014)(b)(d) | 8.875 | 08/01/18 | 2,675 | 2,628,188 | ||||||||||
Hearthside Group Holdings LLC/Hearthside Finance Co., Gtd. Notes, 144A | 6.500 | 05/01/22 | 5,825 | 5,839,563 | ||||||||||
Service Corp. International, | ||||||||||||||
Sr. Unsec’d. Notes | 4.500 | 11/15/20 | 2,300 | 2,328,750 | ||||||||||
Sr. Unsec’d. Notes | 5.375 | 01/15/22 | 975 | 1,023,750 | ||||||||||
Sr. Unsec’d. Notes | 5.375 | 05/15/24 | 8,775 | 9,279,562 | ||||||||||
Sr. Unsec’d. Notes | 7.000 | 06/15/17 | 2,225 | 2,425,250 | ||||||||||
Spectrum Brands Escrow Corp., Gtd. Notes | 6.375 | 11/15/20 | 4,125 | 4,444,688 | ||||||||||
Springs Industries, Inc., Sr. Sec’d. Notes(c) | 6.250 | 06/01/21 | 14,541 | 14,213,827 | ||||||||||
Visant Corp., Gtd. Notes(c) | 10.000 | 10/01/17 | 1,370 | 1,236,425 | ||||||||||
West Corp., Gtd. Notes, 144A(c) | 5.375 | 07/15/22 | 6,025 | 5,859,312 | ||||||||||
|
| |||||||||||||
58,143,390 | ||||||||||||||
Electric 6.8% | ||||||||||||||
AES Corp. (The), | ||||||||||||||
Sr. Unsec’d. Notes | 4.875 | 05/15/23 | 2,375 | 2,327,500 | ||||||||||
Sr. Unsec’d. Notes | 5.500 | 03/15/24 | 2,375 | 2,410,625 | ||||||||||
Sr. Unsec’d. Notes(c) | 7.375 | 07/01/21 | 12,798 | 14,301,765 | ||||||||||
Sr. Unsec’d. Notes | 8.000 | 10/15/17 | 1,250 | 1,404,688 |
See Notes to Financial Statements.
16 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Electric (cont’d.) | ||||||||||||||
Calpine Corp., | ||||||||||||||
Sr. Sec’d. Notes, 144A(c) | 6.000% | 01/15/22 | 1,475 | $ | 1,608,488 | |||||||||
Sr. Sec’d. Notes, 144A | 7.875 | 01/15/23 | 6,770 | 7,599,325 | ||||||||||
Sr. Unsec’d. Notes(c) | 5.375 | 01/15/23 | 12,025 | 12,205,375 | ||||||||||
Sr. Unsec’d. Notes | 5.500 | 02/01/24 | 13,300 | 13,449,625 | ||||||||||
Sr. Unsec’d. Notes(c) | 5.750 | 01/15/25 | 7,375 | 7,522,500 | ||||||||||
Covanta Holding Corp., | ||||||||||||||
Sr. Unsec’d. Notes | 5.875 | 03/01/24 | 3,275 | 3,406,000 | ||||||||||
Sr. Unsec’d. Notes(c) | 6.375 | 10/01/22 | 3,500 | 3,771,250 | ||||||||||
Sr. Unsec’d. Notes | 7.250 | 12/01/20 | 2,850 | 3,049,500 | ||||||||||
DPL, Inc., | ||||||||||||||
Sr. Unsec’d. Notes | 6.500 | 10/15/16 | 787 | 830,285 | ||||||||||
Sr. Unsec’d. Notes, 144A | 6.750 | 10/01/19 | 4,275 | 4,467,375 | ||||||||||
Sr. Unsec’d. Notes(c) | 7.250 | 10/15/21 | 16,230 | 17,041,500 | ||||||||||
Dynegy Finance I, Inc./Dynegy Finance II, Inc., | ||||||||||||||
Sr. Sec’d. Notes, 144A | 7.375 | 11/01/22 | 30,275 | 32,053,656 | ||||||||||
Sr. Sec’d. Notes, 144A(c) | 7.625 | 11/01/24 | 15,685 | 16,645,706 | ||||||||||
Dynegy, Inc., Gtd. Notes | 5.875 | 06/01/23 | 7,925 | 7,806,125 | ||||||||||
GenOn Americas Generation LLC, Sr. Unsec’d. Notes | 8.500 | 10/01/21 | 1,000 | 930,000 | ||||||||||
GenOn Energy, Inc., | ||||||||||||||
Sr. Unsec’d. Notes(c) | 9.500 | 10/15/18 | 3,375 | 3,472,031 | ||||||||||
Sr. Unsec’d. Notes(c) | 9.875 | 10/15/20 | 10,825 | 10,987,375 | ||||||||||
InterGen NV (Netherlands), Sr. Sec’d. Notes, 144A (original cost $3,634,547; purchased 06/07/2013)(b)(d) | 7.000 | 06/30/23 | 3,700 | 3,552,000 | ||||||||||
Mirant Corp., Bonds(b)(e) | 7.400 | 07/15/49 | 2,675 | 2,675 | ||||||||||
Mirant Mid Atlantic LLC, Pass-Through Certificates, Series B | 9.125 | 06/30/17 | 5,194 | 5,402,030 | ||||||||||
NRG Energy, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.250 | 07/15/22 | 9,167 | 9,556,597 | ||||||||||
Gtd. Notes | 6.250 | 05/01/24 | 12,375 | 12,622,500 | ||||||||||
Gtd. Notes | 7.625 | 01/15/18 | 6,650 | 7,381,500 | ||||||||||
Gtd. Notes(c) | 7.875 | 05/15/21 | 6,100 | 6,630,700 | ||||||||||
Gtd. Notes | 8.250 | 09/01/20 | 4,125 | 4,398,281 | ||||||||||
NRG REMA LLC, | ||||||||||||||
Pass-Through Certificates, Series B(b) | 9.237 | 07/02/17 | 1,572 | 1,638,518 | ||||||||||
Pass-Through Certificates, Series C | 9.681 | 07/02/26 | 6,050 | 6,564,250 |
See Notes to Financial Statements.
Prudential High Yield Fund | 17 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Electric (cont’d.) | ||||||||||||||
RJS Power Holdings LLC, Gtd. Notes, 144A(c) | 5.125% | 07/15/19 | 5,875 | $ | 5,786,875 | |||||||||
|
| |||||||||||||
230,826,620 | ||||||||||||||
Energy - Integrated 0.1% | ||||||||||||||
Pacific Rubiales Energy Corp. (Colombia), Gtd. Notes, 144A | 5.375 | 01/26/19 | 5,000 | 3,687,500 | ||||||||||
Energy - Other 4.9% | ||||||||||||||
Antero Resources Corp., Gtd. Notes, 144A | 5.125 | 12/01/22 | 2,100 | 2,068,500 | ||||||||||
Bonanza Creek Energy, Inc., | ||||||||||||||
Gtd. Notes | 5.750 | 02/01/23 | 2,625 | 2,441,250 | ||||||||||
Gtd. Notes | 6.750 | 04/15/21 | 1,775 | 1,739,500 | ||||||||||
Bristow Group, Inc., Gtd. Notes | 6.250 | 10/15/22 | 4,300 | 4,214,000 | ||||||||||
California Resources Corp., | ||||||||||||||
Gtd. Notes, 144A(c) | 5.500 | 09/15/21 | 4,600 | 4,197,500 | ||||||||||
Gtd. Notes, 144A(c) | 6.000 | 11/15/24 | 17,025 | 15,173,531 | ||||||||||
CGG SA (France), | ||||||||||||||
Gtd. Notes(c) | 6.500 | 06/01/21 | 2,200 | 1,798,500 | ||||||||||
Gtd. Notes(c) | 6.875 | 01/15/22 | 1,465 | 1,190,313 | ||||||||||
Gtd. Notes(c) | 7.750 | 05/15/17 | 523 | 491,620 | ||||||||||
Citgo Holding, Inc., Sr. Sec’d. Notes, 144A(c) | 10.750 | 02/15/20 | 9,600 | 9,816,000 | ||||||||||
Compressco Partners LP/Compressco Finance, Inc., Gtd. Notes, 144A | 7.250 | 08/15/22 | 5,875 | 5,111,250 | ||||||||||
Concho Resources, Inc., | ||||||||||||||
Gtd. Notes | 5.500 | 04/01/23 | 4,535 | 4,693,725 | ||||||||||
Gtd. Notes | 6.500 | 01/15/22 | 500 | 531,250 | ||||||||||
Denbury Resources, Inc., Gtd. Notes(c) | 6.375 | 08/15/21 | 3,010 | 2,889,600 | ||||||||||
EP Energy LLC/EP Energy Finance, Inc., Gtd. Notes(c) | 9.375 | 05/01/20 | 3,040 | 3,245,200 | ||||||||||
EP Energy LLC/Everest Acquisition Finance, Inc., Sec’d. Notes | 6.875 | 05/01/19 | 1,725 | 1,768,125 | ||||||||||
Halcon Resources Corp., | ||||||||||||||
Gtd. Notes | 9.250 | 02/15/22 | 1,950 | 1,457,625 | ||||||||||
Gtd. Notes(c) | 9.750 | 07/15/20 | 4,025 | 3,099,250 | ||||||||||
Hercules Offshore, Inc., Gtd. Notes, 144A | 8.750 | 07/15/21 | 1,300 | 396,500 | ||||||||||
Hilcorp Energy I LP/Hilcorp Finance Co., | ||||||||||||||
Sr. Unsec’d. Notes, 144A (original cost $2,817,750; purchased 03/19/2013)(b)(d) | 7.625 | 04/15/21 | 2,550 | 2,658,375 | ||||||||||
Sr. Unsec’d. Notes, 144A (original cost $1,653,750; purchased 03/15/2013)(b)(d) | 8.000 | 02/15/20 | 1,500 | 1,537,500 |
See Notes to Financial Statements.
18 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Energy - Other (cont’d.) | ||||||||||||||
Hornbeck Offshore Services, Inc., Gtd. Notes | 5.875% | 04/01/20 | 3,175 | $ | 2,905,125 | |||||||||
Jupiter Resources, Inc. (Canada), Sr. Unsec’d. Notes, 144A | 8.500 | 10/01/22 | 6,350 | 5,143,500 | ||||||||||
MEG Energy Corp. (Canada), | ||||||||||||||
Gtd. Notes, 144A(c) | 6.500 | 03/15/21 | 7,925 | 7,667,437 | ||||||||||
Gtd. Notes, 144A(c) | 7.000 | 03/31/24 | 1,600 | 1,558,000 | ||||||||||
Memorial Resource Development Corp., Gtd. Notes, 144A | 5.875 | 07/01/22 | 5,200 | 4,992,000 | ||||||||||
Newfield Exploration Co., Sr. Unsec’d. Notes | 5.750 | 01/30/22 | 1,906 | 1,996,535 | ||||||||||
Parker Drilling Co., | ||||||||||||||
Gtd. Notes | 6.750 | 07/15/22 | 2,100 | 1,722,000 | ||||||||||
Gtd. Notes | 7.500 | 08/01/20 | 2,000 | 1,720,000 | ||||||||||
PHI, Inc., Gtd. Notes | 5.250 | 03/15/19 | 3,525 | 3,207,750 | ||||||||||
Pioneer Energy Services Corp., Gtd. Notes | 6.125 | 03/15/22 | 2,375 | 1,822,813 | ||||||||||
Precision Drilling Corp. (Canada), | ||||||||||||||
Gtd. Notes | 6.500 | 12/15/21 | 1,875 | 1,781,250 | ||||||||||
Gtd. Notes | 6.625 | 11/15/20 | 2,000 | 1,940,000 | ||||||||||
QEP Resources, Inc., | ||||||||||||||
Sr. Unsec’d. Notes(c) | 5.250 | 05/01/23 | 5,675 | 5,554,406 | ||||||||||
Sr. Unsec’d. Notes | 5.375 | 10/01/22 | 2,300 | 2,271,250 | ||||||||||
Range Resources Corp., Gtd. Notes(c) | 5.000 | 08/15/22 | 2,014 | 2,059,315 | ||||||||||
Samson Investment Co., Gtd. Notes | 9.750 | 02/15/20 | 12,805 | 4,353,700 | ||||||||||
Sanchez Energy Corp., | ||||||||||||||
Gtd. Notes(c) | 7.750 | 06/15/21 | 2,425 | 2,418,937 | ||||||||||
Gtd. Notes, 144A | 6.125 | 01/15/23 | 1,150 | 1,055,125 | ||||||||||
SESI LLC, Gtd. Notes | 6.375 | 05/01/19 | 3,050 | 3,065,250 | ||||||||||
Seventy Seven Energy, Inc., Sr. Unsec’d. Notes | 6.500 | 07/15/22 | 2,100 | 1,092,000 | ||||||||||
Triangle USA Petroleum Corp., Sr. Unsec’d. Notes, 144A | 6.750 | 07/15/22 | 3,870 | 3,173,400 | ||||||||||
Tullow Oil PLC (United Kingdom), Gtd. Notes, 144A | 6.000 | 11/01/20 | 7,150 | 6,417,125 | ||||||||||
Western Refining Logistics LP / WNRL Finance Corp., Gtd. Notes, 144A | 7.500 | 02/15/23 | 6,000 | 6,150,000 | ||||||||||
Western Refining, Inc., Gtd. Notes | 6.250 | 04/01/21 | 7,305 | 7,268,475 | ||||||||||
WPX Energy, Inc., Sr. Unsec’d. Notes(c) | 6.000 | 01/15/22 | 13,558 | 13,422,420 | ||||||||||
|
| |||||||||||||
165,276,927 |
See Notes to Financial Statements.
Prudential High Yield Fund | 19 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Foods 4.1% | ||||||||||||||
Acosta, Inc., Sr. Unsec’d. Notes, 144A(c) | 7.750% | 10/01/22 | 8,925 | $ | 9,192,750 | |||||||||
ARAMARK Services, Inc., Gtd. Notes | 5.750 | 03/15/20 | 2,800 | 2,926,000 | ||||||||||
B&G Foods, Inc., Gtd. Notes(c) | 4.625 | 06/01/21 | 4,200 | 4,200,000 | ||||||||||
Burger King Worldwide Funds (Canada), Sec’d. Notes, 144A(c) | 6.000 | 04/01/22 | 7,125 | 7,410,000 | ||||||||||
CEC Entertainment, Inc., Gtd. Notes(c) | 8.000 | 02/15/22 | 11,650 | 11,300,500 | ||||||||||
Cott Beverages, Inc. (Canada), Gtd. Notes, 144A | 6.750 | 01/01/20 | 5,275 | 5,275,000 | ||||||||||
Darling Ingredients, Inc., Gtd. Notes(c) | 5.375 | 01/15/22 | 4,950 | 4,999,500 | ||||||||||
DS Sevices of America, Inc. (Canada), Sec’d. Notes, 144A | 10.000 | 09/01/21 | 3,000 | 3,502,500 | ||||||||||
HJ Heinz Co., | ||||||||||||||
Sec’d. Notes, 144A(c) | 4.875 | 02/15/25 | 7,450 | 7,487,250 | ||||||||||
Sec’d. Notes(c) | 4.250 | 10/15/20 | 1,115 | 1,131,502 | ||||||||||
Ingles Markets, Inc., Sr. Unsec’d. Notes | 5.750 | 06/15/23 | 6,050 | 6,292,000 | ||||||||||
JBS USA LLC/JBS USA Finance, Inc. (Brazil), Sr. Unsec’d. Notes, 144A (original cost $6,448,688; purchased 06/11/2014 - 07/10/2014)(b)(d) | 5.875 | 07/15/24 | 6,450 | 6,441,937 | ||||||||||
JBS USA LLC/JBS USA Finance, Inc. (Brazil), | ||||||||||||||
Gtd. Notes, 144A (original cost $3,537,130; purchased 05/20/2011 - 11/16/2011)(b)(d) | 7.250 | 06/01/21 | 3,675 | 3,865,714 | ||||||||||
Gtd. Notes, 144A (original cost $7,892,375; purchased 09/13/2013 - 10/15/2013)(b)(d) | 7.250 | 06/01/21 | 7,900 | 8,309,970 | ||||||||||
Landry’s, Inc., Sr. Unsec’d. Notes, 144A (original cost $10,932,069; purchased 04/19/2012 - 02/10/2015)(b)(d) | 9.375 | 05/01/20 | 10,590 | 11,423,962 | ||||||||||
Post Holdings, Inc., | ||||||||||||||
Gtd. Notes(c) | 7.375 | 02/15/22 | 7,600 | 7,923,000 | ||||||||||
Gtd. Notes, 144A(c) | 6.000 | 12/15/22 | 325 | 319,719 | ||||||||||
Gtd. Notes, 144A(c) | 6.750 | 12/01/21 | 3,375 | 3,450,938 | ||||||||||
Roundy’s Supermarkets, Inc., Sec’d. Notes, 144A | 10.250 | 12/15/20 | 5,275 | 4,483,750 | ||||||||||
Smithfield Foods, Inc., | ||||||||||||||
Sr. Unsec’d. Notes | 6.625 | 08/15/22 | 4,450 | 4,839,375 | ||||||||||
Sr. Unsec’d. Notes, 144A | 5.250 | 08/01/18 | 1,450 | 1,495,313 | ||||||||||
Sr. Unsec’d. Notes, 144A | 5.875 | 08/01/21 | 4,234 | 4,461,577 | ||||||||||
SUPERVALU, Inc., Sr. Unsec’d. Notes(c) | 7.750 | 11/15/22 | 1,425 | 1,506,938 | ||||||||||
Tops Holding Corp./Tops Markets LLC, Sr. Sec’d. Notes (original cost $5,580,375; purchased 12/20/2012 - 09/03/2014)(b)(d) | 8.875 | 12/15/17 | 5,375 | 5,616,875 |
See Notes to Financial Statements.
20 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Foods (cont’d.) | ||||||||||||||
TreeHouse Foods, Inc., Gtd. Notes | 4.875% | 03/15/22 | 2,850 | $ | 2,935,500 | |||||||||
Wok Acquisition Corp., Gtd. Notes, 144A(c) | 10.250 | 06/30/20 | 8,671 | 8,757,710 | ||||||||||
|
| |||||||||||||
139,549,280 | ||||||||||||||
Gaming 6.1% | ||||||||||||||
Affinity Gaming LLC/Affinity Gaming Finance Corp., Gtd. Notes | 9.000 | 05/15/18 | 7,025 | 6,744,000 | ||||||||||
Boyd Gaming Corp., | ||||||||||||||
Gtd. Notes | 9.000 | 07/01/20 | 4,540 | 4,914,550 | ||||||||||
Gtd. Notes(c) | 9.125 | 12/01/18 | 8,850 | 9,270,375 | ||||||||||
Caesars Entertainment Resort Properties LLC, Sr. Sec’d. Notes, 144A | 8.000 | 10/01/20 | 6,883 | 6,934,622 | ||||||||||
CCM Merger, Inc., Gtd. Notes, 144A | 9.125 | 05/01/19 | 13,700 | 14,898,750 | ||||||||||
GLP Capital LP/GLP Financing II, Inc., Gtd. Notes(c) | 4.875 | 11/01/20 | 2,925 | 3,056,625 | ||||||||||
Golden Nugget Escrow, Inc., Sr. Unsec’d. Notes, 144A(c) | 8.500 | 12/01/21 | 12,725 | 13,297,625 | ||||||||||
Isle of Capri Casinos, Inc., | ||||||||||||||
Gtd. Notes(c) | 7.750 | 03/15/19 | 8,875 | 9,207,812 | ||||||||||
Gtd. Notes(c) | 8.875 | 06/15/20 | 4,675 | 5,002,250 | ||||||||||
MCE Finance Ltd. (Hong Kong), Gtd. Notes, 144A | 5.000 | 02/15/21 | 6,359 | 6,136,435 | ||||||||||
MGM Resorts International, | ||||||||||||||
Gtd. Notes(c) | 6.000 | 03/15/23 | 2,600 | 2,704,000 | ||||||||||
Gtd. Notes(c) | 6.625 | 12/15/21 | 13,725 | 14,891,625 | ||||||||||
Gtd. Notes(c) | 6.750 | 10/01/20 | 1,404 | 1,534,748 | ||||||||||
Gtd. Notes(c) | 7.625 | 01/15/17 | 6,208 | 6,704,640 | ||||||||||
Gtd. Notes | 8.625 | 02/01/19 | 5,850 | 6,727,500 | ||||||||||
MTR Gaming Group, Inc., Sec’d. Notes(c) | 11.500 | 08/01/19 | 9,181 | 9,961,300 | ||||||||||
Penn National Gaming, Inc., Sr. Unsec’d. Notes(c) | 5.875 | 11/01/21 | 13,620 | 13,517,850 | ||||||||||
Pinnacle Entertainment, Inc., | ||||||||||||||
Gtd. Notes | 6.375 | 08/01/21 | 3,903 | 4,146,938 | ||||||||||
Gtd. Notes | 7.500 | 04/15/21 | 3,750 | 3,970,313 | ||||||||||
Gtd. Notes(c) | 7.750 | 04/01/22 | 5,811 | 6,261,352 | ||||||||||
Scientific Games International, Inc., | ||||||||||||||
Gtd. Notes, 144A(c) | 10.000 | 12/01/22 | 11,025 | 10,804,500 |
See Notes to Financial Statements.
Prudential High Yield Fund | 21 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Gaming (cont’d.) | ||||||||||||||
Scientific Games International, Inc., (Continued) | ||||||||||||||
Gtd. Notes(c) | 6.250% | 09/01/20 | 5,750 | $ | 4,427,500 | |||||||||
Gtd. Notes, 144A(c) | 6.625 | 05/15/21 | 16,150 | 12,274,000 | ||||||||||
Sr. Sec’d. Notes, 144A(c) | 7.000 | 01/01/22 | 3,725 | 3,836,750 | ||||||||||
Station Casinos LLC, Gtd. Notes(c) | 7.500 | 03/01/21 | 8,840 | 9,503,000 | ||||||||||
Sugarhouse HSP Gaming Prop Mezz LP/Sugarhouse HSP Gaming Finance Corp., Sr. Sec’d. Notes, 144A (original cost $12,384,313; purchased 05/16/2013 - 07/31/2014)(b)(d) | 6.375 | 06/01/21 | 12,500 | 12,000,000 | ||||||||||
Wynn Macau Ltd. (Macau), Sr. Unsec’d. Notes, 144A | 5.250 | 10/15/21 | 4,250 | 4,175,625 | ||||||||||
|
| |||||||||||||
206,904,685 | ||||||||||||||
Healthcare & Pharmaceutical 8.5% | ||||||||||||||
Acadia Healthcare Co, Inc, Gtd. Notes, 144A(c) | 5.625 | 02/15/23 | 4,950 | 5,110,875 | ||||||||||
Acadia Healthcare Co., Inc., | ||||||||||||||
Gtd. Notes | 6.125 | 03/15/21 | 2,870 | 2,984,800 | ||||||||||
Gtd. Notes | 12.875 | 11/01/18 | 4,003 | 4,513,383 | ||||||||||
Amsurg Corp., Gtd. Notes | 5.625 | 07/15/22 | 3,525 | 3,736,500 | ||||||||||
Biomet, Inc., Gtd. Notes | 6.500 | 08/01/20 | 9,650 | 10,301,375 | ||||||||||
Capella Healthcare, Inc., Gtd. Notes | 9.250 | 07/01/17 | 8,500 | 8,840,000 | ||||||||||
Capsugel SA, Sr. Unsec’d. Notes, PIK, 144A | 7.000 | 05/15/19 | 6,475 | 6,596,406 | ||||||||||
Catamaran Corp., Gtd. Notes | 4.750 | 03/15/21 | 2,275 | 2,368,844 | ||||||||||
Centene Corp., Sr. Unsec’d. Notes | 4.750 | 05/15/22 | 6,075 | 6,272,437 | ||||||||||
CHS/Community Health Systems, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.875 | 02/01/22 | 9,900 | 10,586,812 | ||||||||||
Gtd. Notes(c) | 8.000 | 11/15/19 | 16,725 | 17,895,750 | ||||||||||
ConvaTec Finance International SA (Luxembourg), Sr. Unsec’d. Notes, PIK, 144A | 8.250 | 01/15/19 | 3,925 | 3,974,848 | ||||||||||
ConvaTec Healthcare E SA (Luxembourg), Gtd. Notes, 144A | 10.500 | 12/15/18 | 9,375 | 9,890,625 | ||||||||||
Emdeon, Inc., Gtd. Notes | 11.000 | 12/31/19 | 11,170 | 12,259,075 | ||||||||||
Endo Finance LLC, Gtd. Notes, 144A(c) | 5.750 | 01/15/22 | 2,525 | 2,660,719 | ||||||||||
Endo Finance LLC / Endo Ltd. / Endo Finco, Inc., Gtd. Notes, 144A(c) | 6.000 | 02/01/25 | 2,000 | 2,117,500 | ||||||||||
Grifols Worldwide Operations Ltd. (Spain), Sr. Unsec’d. Notes, 144A(c) | 5.250 | 04/01/22 | 4,450 | 4,561,250 |
See Notes to Financial Statements.
22 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Healthcare & Pharmaceutical (cont’d.) | ||||||||||||||
HCA Holdings, Inc., | ||||||||||||||
Sr. Unsec’d. Notes | 6.250% | 02/15/21 | 1,250 | $ | 1,365,625 | |||||||||
Sr. Unsec’d. Notes | 7.750 | 05/15/21 | 2,000 | 2,140,000 | ||||||||||
HCA, Inc., | ||||||||||||||
Gtd. Notes(c) | 5.375 | 02/01/25 | 7,075 | 7,499,500 | ||||||||||
Gtd. Notes(c) | 5.875 | 05/01/23 | 11,325 | 12,400,875 | ||||||||||
Gtd. Notes | 7.190 | 11/15/15 | 3,537 | 3,669,638 | ||||||||||
Gtd. Notes | 7.500 | 11/15/95 | 2,700 | 2,673,000 | ||||||||||
Gtd. Notes | 8.000 | 10/01/18 | 14,714 | 17,178,595 | ||||||||||
Sr. Sec’d. Notes(c) | 5.000 | 03/15/24 | 2,400 | 2,592,000 | ||||||||||
Healthsouth Corp., | ||||||||||||||
Gtd. Notes(c) | 5.750 | 11/01/24 | 2,375 | 2,481,875 | ||||||||||
Gtd. Notes | 7.750 | 09/15/22 | 1,153 | 1,227,945 | ||||||||||
Kindred Healthcare, Inc., | ||||||||||||||
Gtd. Notes | 6.375 | 04/15/22 | 3,550 | 3,550,000 | ||||||||||
Gtd. Notes, 144A | 8.000 | 01/15/20 | 4,725 | 5,126,625 | ||||||||||
Gtd. Notes, 144A(c) | 8.750 | 01/15/23 | 2,175 | 2,370,750 | ||||||||||
LifePoint Hospitals, Inc., Gtd. Notes(c) | 5.500 | 12/01/21 | 4,200 | 4,462,500 | ||||||||||
Mallinckrodt International Finance SA, Gtd. Notes(b) | 4.750 | 04/15/23 | 5,225 | 5,120,500 | ||||||||||
Mallinckrodt International Finance SA/Mallinckrodt CB LLC, Gtd. Notes, 144A | 5.750 | 08/01/22 | 125 | 132,188 | ||||||||||
MedAssets, Inc., Gtd. Notes | 8.000 | 11/15/18 | 5,850 | 6,105,937 | ||||||||||
Ortho Clinical Diagnostics, Inc., Sr. Unsec’d. Notes, 144A(c) | 6.625 | 05/15/22 | 23,225 | 21,541,187 | ||||||||||
Select Medical Corp., Gtd. Notes(c) | 6.375 | 06/01/21 | 13,550 | 13,617,750 | ||||||||||
STHI Holding Corp., Sec’d. Notes, 144A | 8.000 | 03/15/18 | 150 | 156,375 | ||||||||||
Tenet Healthcare Corp., | ||||||||||||||
Sr. Sec’d. Notes | 4.375 | 10/01/21 | 7,450 | 7,459,312 | ||||||||||
Sr. Sec’d. Notes(c) | 4.500 | 04/01/21 | 1,000 | 1,005,000 | ||||||||||
Sr. Sec’d. Notes | 4.750 | 06/01/20 | 3,425 | 3,527,750 | ||||||||||
Sr. Sec’d. Notes | 6.000 | 10/01/20 | 1,625 | 1,767,188 | ||||||||||
Sr. Unsec’d. Notes(c) | 6.750 | 02/01/20 | 4,175 | 4,477,688 | ||||||||||
Sr. Unsec’d. Notes(c) | 8.125 | 04/01/22 | 13,190 | 14,937,675 | ||||||||||
Sr. Unsec’d. Notes, 144A(c) | 5.000 | 03/01/19 | 4,900 | 4,924,500 | ||||||||||
Valeant Pharmaceuticals International, Inc., | ||||||||||||||
Gtd. Notes, 144A(c) | 5.500 | 03/01/23 | 3,850 | 3,888,500 |
See Notes to Financial Statements.
Prudential High Yield Fund | 23 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Healthcare & Pharmaceutical (cont’d.) | ||||||||||||||
Valeant Pharmaceuticals International, Inc., (Continued) | ||||||||||||||
Gtd. Notes, 144A(c) | 5.625% | 12/01/21 | 3,600 | $ | 3,663,000 | |||||||||
Gtd. Notes, 144A | 6.375 | 10/15/20 | 7,365 | 7,751,662 | ||||||||||
Gtd. Notes, 144A | 7.500 | 07/15/21 | 3,975 | 4,312,875 | ||||||||||
|
| |||||||||||||
287,799,214 | ||||||||||||||
Lodging 0.7% | ||||||||||||||
Hilton Worldwide Finance LLC/Hilton Worldwide Finance Corp, Gtd. Notes | 5.625 | 10/15/21 | 13,325 | 14,141,156 | ||||||||||
Royal Caribbean Cruises Ltd., Sr. Unsec’d. Notes | 7.250 | 03/15/18 | 3,025 | 3,395,563 | ||||||||||
Viking Cruises Ltd., Sr. Unsec’d. Notes, 144A | 8.500 | 10/15/22 | 6,150 | 6,872,625 | ||||||||||
|
| |||||||||||||
24,409,344 | ||||||||||||||
Media & Entertainment 3.1% | ||||||||||||||
AMC Entertainment, Inc., Gtd. Notes | 9.750 | 12/01/20 | 10,550 | 11,605,000 | ||||||||||
AMC Networks, Inc., Gtd. Notes | 7.750 | 07/15/21 | 2,808 | 3,081,780 | ||||||||||
Belo Corp., Sr. Unsec’d. Notes | 7.750 | 06/01/27 | 2,000 | 2,220,000 | ||||||||||
Carmike Cinemas, Inc., Sec’d. Notes(c) | 7.375 | 05/15/19 | 4,750 | 5,035,000 | ||||||||||
Cedar Fair LP/Canada’s Wonderland Co./Magnum Management Corp., | ||||||||||||||
Gtd. Notes | 5.250 | 03/15/21 | 2,825 | 2,899,015 | ||||||||||
Gtd. Notes, 144A | 5.375 | 06/01/24 | 2,225 | 2,269,500 | ||||||||||
Cinemark USA, Inc., | ||||||||||||||
Gtd. Notes | 4.875 | 06/01/23 | 3,450 | 3,432,750 | ||||||||||
Gtd. Notes(c) | 5.125 | 12/15/22 | 5,775 | 5,911,867 | ||||||||||
Clear Channel Worldwide Holdings, Inc., | ||||||||||||||
Gtd. Notes | 6.500 | 11/15/22 | 3,069 | 3,214,778 | ||||||||||
Gtd. Notes(c) | 6.500 | 11/15/22 | 3,074 | 3,243,070 | ||||||||||
Gtd. Notes(c) | 7.625 | 03/15/20 | 2,275 | 2,383,063 | ||||||||||
Entercom Radio LLC, Gtd. Notes | 10.500 | 12/01/19 | 3,425 | 3,754,656 | ||||||||||
Gannett Co., Inc., Gtd. Notes, 144A(c) | 5.500 | 09/15/24 | 2,250 | 2,340,000 | ||||||||||
Gray Television, Inc., Gtd. Notes(c) | 7.500 | 10/01/20 | 7,300 | 7,592,000 | ||||||||||
Liberty Interactive LLC, Sr. Unsec’d. Notes | 8.250 | 02/01/30 | 2,000 | 2,220,000 | ||||||||||
LIN Television Corp., Gtd. Notes | 6.375 | 01/15/21 | 1,900 | 1,961,750 | ||||||||||
Live Nation Entertainment, Inc., Gtd. Notes, 144A | 5.375 | 06/15/22 | 2,500 | 2,537,500 |
See Notes to Financial Statements.
24 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Media & Entertainment (cont’d.) | ||||||||||||||
McGraw-Hill Global Education Holdings LLC/McGraw-Hill Global Education Finance, Sr. Sec’d. Notes | 9.750% | 04/01/21 | 3,750 | $ | 4,218,750 | |||||||||
Mood Media Corp. (Canada), Gtd. Notes, 144A(c) | 9.250 | 10/15/20 | 3,825 | 3,232,125 | ||||||||||
NAI Entertainment Holdings/NAI Entertainment Holdings Finance, Sr. Sec’d. Notes, 144A | 5.000 | 08/01/18 | 2,400 | 2,481,000 | ||||||||||
National CineMedia LLC, Sr. Sec’d. Notes | 6.000 | 04/15/22 | 4,075 | 4,176,875 | ||||||||||
Netflix, Inc., Sr. Unsec’d. Notes, 144A(c) | 5.500 | 02/15/22 | 2,700 | 2,785,860 | ||||||||||
Nielsen Finance LLC/Nielsen Finance Co., Gtd. Notes, 144A | 5.000 | 04/15/22 | 2,925 | 2,990,813 | ||||||||||
Outfront Media Capital LLC / Outfront Media Capital Corp., Gtd. Notes | 5.625 | 02/15/24 | 3,275 | 3,491,969 | ||||||||||
RR Donnelley & Sons Co., | ||||||||||||||
Sr. Unsec’d. Notes(c) | 6.000 | 04/01/24 | 3,350 | 3,463,062 | ||||||||||
Sr. Unsec’d. Notes(c) | 6.500 | 11/15/23 | 2,650 | 2,815,625 | ||||||||||
Sinclair Television Group, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.125 | 10/01/22 | 3,775 | 3,973,187 | ||||||||||
Gtd. Notes(c) | 5.375 | 04/01/21 | 5,050 | 5,151,000 | ||||||||||
Starz LLC/Starz Finance Corp., Gtd. Notes | 5.000 | 09/15/19 | 980 | 1,009,400 | ||||||||||
|
| |||||||||||||
105,491,395 | ||||||||||||||
Metals 2.5% | ||||||||||||||
AK Steel Corp., | ||||||||||||||
Gtd. Notes(c) | 7.625 | 05/15/20 | 4,750 | 4,310,625 | ||||||||||
Gtd. Notes(c) | 7.625 | 10/01/21 | 5,100 | 4,462,500 | ||||||||||
Sr. Sec’d. Notes | 8.750 | 12/01/18 | 105 | 112,875 | ||||||||||
ArcelorMittal (Luxembourg), | ||||||||||||||
Sr. Unsec’d. Notes | 6.125 | 06/01/18 | 6,100 | 6,610,875 | ||||||||||
Sr. Unsec’d. Notes(c) | 6.250 | 03/01/21 | 6,700 | 7,303,000 | ||||||||||
Sr. Unsec’d. Notes(c) | 7.000 | 02/25/22 | 9,735 | 10,978,159 | ||||||||||
Arch Coal, Inc., | ||||||||||||||
Gtd. Notes | 7.250 | 10/01/20 | 1,155 | 401,363 | ||||||||||
Gtd. Notes(c) | 9.875 | 06/15/19 | 2,475 | 891,000 | ||||||||||
AuRico Gold, Inc. (Canada), Sec’d. Notes, 144A | 7.750 | 04/01/20 | 1,400 | 1,372,000 | ||||||||||
CONSOL Energy, Inc., Gtd. Notes | 5.875 | 04/15/22 | 5,750 | 5,520,000 | ||||||||||
Eldorado Gold Corp. (Canada), Sr. Unsec’d. Notes, 144A | 6.125 | 12/15/20 | 5,270 | 5,185,021 |
See Notes to Financial Statements.
Prudential High Yield Fund | 25 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Metals (cont’d.) | ||||||||||||||
First Quantum Minerals Ltd. (Canada), | ||||||||||||||
Gtd. Notes, 144A(c) | 6.750% | 02/15/20 | 3,152 | $ | 2,931,360 | |||||||||
Gtd. Notes, 144A(c) | 7.000 | 02/15/21 | 3,594 | 3,333,435 | ||||||||||
Gtd. Notes, 144A(c) | 7.250 | 05/15/22 | 1,625 | 1,501,094 | ||||||||||
FMG Resources (August 2006) Pty Ltd. (Australia), | ||||||||||||||
Gtd. Notes, 144A(c) | 6.000 | 04/01/17 | 4,750 | 4,785,625 | ||||||||||
Gtd. Notes, 144A(c) | 6.875 | 02/01/18 | 1,196 | 1,198,544 | ||||||||||
Graftech International Ltd., Gtd. Notes | 6.375 | 11/15/20 | 2,600 | 2,106,000 | ||||||||||
JMC Steel Group, Inc., Sr. Unsec’d. Notes, 144A (original cost $8,575,343; purchased 11/04/2014 - 01/29/2015)(b)(c)(d) | 8.250 | 03/15/18 | 9,039 | 7,886,527 | ||||||||||
New Gold, Inc. (Canada), | ||||||||||||||
Gtd. Notes, 144A | 7.000 | 04/15/20 | 4,445 | 4,600,575 | ||||||||||
Sr. Unsec’d. Notes, 144A(c) | 6.250 | 11/15/22 | 4,550 | 4,504,500 | ||||||||||
Peabody Energy Corp., | ||||||||||||||
Gtd. Notes(c) | 6.000 | 11/15/18 | 3,835 | 3,489,850 | ||||||||||
Gtd. Notes(c) | 6.250 | 11/15/21 | 1,275 | 1,061,438 | ||||||||||
|
| |||||||||||||
84,546,366 | ||||||||||||||
Non-Captive Finance 3.2% | ||||||||||||||
AerCap Ireland Capital Ltd./AerCap Global Aviation Trust (Netherlands), | ||||||||||||||
Gtd. Notes, 144A | 3.750 | 05/15/19 | 1,625 | 1,665,625 | ||||||||||
Gtd. Notes, 144A(c) | 4.500 | 05/15/21 | 3,882 | 4,105,215 | ||||||||||
Aston Escrow Corp., Sr. Sec’d. Notes, 144A (original cost $18,125,000; purchased 07/22/2014)(b)(d) | 9.500 | 08/15/21 | 18,125 | 13,412,500 | ||||||||||
CIT Group, Inc., | ||||||||||||||
Sr. Unsec’d. Notes | 5.000 | 05/15/17 | 700 | 728,000 | ||||||||||
Sr. Unsec’d. Notes(c) | 5.000 | 08/15/22 | 22,550 | 23,973,581 | ||||||||||
Sr. Unsec’d. Notes(c) | 5.250 | 03/15/18 | 725 | 765,600 | ||||||||||
Sr. Unsec’d. Notes(c) | 5.375 | 05/15/20 | 1,000 | 1,075,000 | ||||||||||
Sr. Unsec’d. Notes, 144A | 5.500 | 02/15/19 | 1,725 | 1,843,508 | ||||||||||
ILFC E-Capital Trust II Ltd., Gtd. Notes, 144A | 6.250(a) | 12/21/65 | 4,275 | 4,114,687 | ||||||||||
International Lease Finance Corp., | ||||||||||||||
Sr. Sec’d. Notes, 144A | 7.125 | 09/01/18 | 375 | 426,563 | ||||||||||
Sr. Unsec’d. Notes | 3.875 | 04/15/18 | 4,590 | 4,704,750 | ||||||||||
Sr. Unsec’d. Notes | 6.250 | 05/15/19 | 1,350 | 1,513,688 |
See Notes to Financial Statements.
26 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Non-Captive Finance (cont’d.) | ||||||||||||||
International Lease Finance Corp., (Continued) | ||||||||||||||
Sr. Unsec’d. Notes(c) | 8.250% | 12/15/20 | 1,150 | $ | 1,428,875 | |||||||||
Sr. Unsec’d. Notes(c) | 8.625 | 01/15/22 | 1,525 | 1,974,875 | ||||||||||
Sr. Unsec’d. Notes(c) | 8.875 | 09/01/17 | 3,600 | 4,117,500 | ||||||||||
Navient Corp., Sr. Unsec’d. Notes(c) | 5.000 | 10/26/20 | 1,500 | 1,518,750 | ||||||||||
OneMain Financial Holdings, Inc., | ||||||||||||||
Gtd. Notes, 144A | 6.750 | 12/15/19 | 5,825 | 6,145,375 | ||||||||||
Gtd. Notes, 144A | 7.250 | 12/15/21 | 9,200 | 9,729,000 | ||||||||||
Patriot Merger Corp., Sr. Unsec’d. Notes, 144A | 9.000 | 07/15/21 | 2,400 | 2,496,000 | ||||||||||
SLM Corp., Sr. Unsec’d. Notes, MTN | 8.000 | 03/25/20 | 9,825 | 11,433,844 | ||||||||||
Springleaf Finance Corp., | ||||||||||||||
Gtd. Notes | 6.000 | 06/01/20 | 9,825 | 10,095,187 | ||||||||||
Gtd. Notes | 8.250 | 10/01/23 | 1,150 | 1,311,000 | ||||||||||
|
| |||||||||||||
108,579,123 | ||||||||||||||
Packaging 3.6% | ||||||||||||||
AEP Industries, Inc., Sr. Unsec’d. Notes | 8.250 | 04/15/19 | 2,850 | 2,914,125 | ||||||||||
Ardagh Finance Holdings SA (Luxembourg), Sr. Unsec’d. Notes, PIK, 144A(c) | 8.625 | 06/15/19 | 8,507 | 8,847,619 | ||||||||||
Ardagh Packaging Finance PLC (Ireland), Gtd. Notes, 144A(c) | 9.125 | 10/15/20 | 6,950 | 7,453,875 | ||||||||||
Ardagh Packaging Finance PLC/Ardagh Holdings USA, Inc. (Ireland), | ||||||||||||||
Gtd. Notes, 144A(c) | 6.000 | 06/30/21 | 1,725 | 1,679,719 | ||||||||||
Gtd. Notes, 144A(c) | 6.250 | 01/31/19 | 6,175 | 6,190,437 | ||||||||||
Gtd. Notes, 144A(c) | 6.750 | 01/31/21 | 3,835 | 3,873,350 | ||||||||||
Gtd. Notes, 144A(c) | 9.125 | 10/15/20 | 1,365 | 1,457,138 | ||||||||||
Sr. Unsec’d. Notes, 144A | 7.000 | 11/15/20 | 993 | 985,202 | ||||||||||
Berry Plastics Corp., Sec’d. Notes | 9.750 | 01/15/21 | 4,975 | 5,540,906 | ||||||||||
Beverage Packaging Holdings Luxembourg II SA/Beverage Packaging Holdings II Issuer, Inc., Gtd. Notes, 144A | 6.000 | 06/15/17 | 5,310 | 5,363,100 | ||||||||||
Coveris Holdings SA, Gtd. Notes, 144A | 7.875 | 11/01/19 | 7,375 | 7,485,625 | ||||||||||
Greif, Inc., Sr. Unsec’d. Notes | 6.750 | 02/01/17 | 3,200 | 3,448,000 | ||||||||||
PaperWorks Industries, Inc., Sr. Sec’d. Notes, 144A | 9.500 | 08/15/19 | 4,330 | 4,394,950 | ||||||||||
Plastipak Holdings, Inc., Sr. Unsec’d. Notes, 144A (original cost $8,500,000; purchased 09/25/2013 - 01/22/2015)(b)(d) | 6.500 | 10/01/21 | 8,500 | 8,648,750 |
See Notes to Financial Statements.
Prudential High Yield Fund | 27 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Packaging (cont’d.) | ||||||||||||||
Reynolds Group Issuer, Inc., | ||||||||||||||
Gtd. Notes | 9.875% | 08/15/19 | 12,985 | $ | 13,910,181 | |||||||||
Sr. Sec’d. Notes | 5.750 | 10/15/20 | 6,800 | 7,063,500 | ||||||||||
Sr. Sec’d. Notes | 6.875 | 02/15/21 | 725 | 766,688 | ||||||||||
Sr. Sec’d. Notes | 7.875 | 08/15/19 | 6,500 | 6,896,500 | ||||||||||
Reynolds Group Issuer, Inc./Reynolds Group Issuer LLC, Gtd. Notes | 9.000 | 04/15/19 | 10,100 | 10,579,750 | ||||||||||
Sealed Air Corp., | ||||||||||||||
Gtd. Notes, 144A | 4.875 | 12/01/22 | 3,225 | 3,321,750 | ||||||||||
Gtd. Notes, 144A(c) | 5.250 | 04/01/23 | 3,575 | 3,767,156 | ||||||||||
Gtd. Notes, 144A(c) | 6.500 | 12/01/20 | 1,425 | 1,614,098 | ||||||||||
Gtd. Notes, 144A | 8.375 | 09/15/21 | 3,875 | 4,383,594 | ||||||||||
|
| |||||||||||||
120,586,013 | ||||||||||||||
Paper 0.3% | ||||||||||||||
Domtar Corp., Gtd. Notes | 10.750 | 06/01/17 | 800 | 941,424 | ||||||||||
Smurfit Kappa Acquisitions (Ireland), Sr. Sec’d. Notes, 144A | 4.875 | 09/15/18 | 4,900 | 5,108,250 | ||||||||||
Smurfit Kappa Treasury Funding Ltd. (Ireland), Sr. Sec’d. Notes | 7.500 | 11/20/25 | 100 | 120,000 | ||||||||||
Tembec Industries, Inc. (Canada), Sr. Sec’d. Notes, 144A(c) | 9.000 | 12/15/19 | 4,225 | 4,277,813 | ||||||||||
|
| |||||||||||||
10,447,487 | ||||||||||||||
Pipelines & Other 2.5% | ||||||||||||||
AmeriGas Finance LLC, Gtd. Notes(c) | 7.000 | 05/20/22 | 6,175 | 6,607,250 | ||||||||||
AmeriGas Partners LP/AmeriGas Eagle Finance Corp., Sr. Unsec’d. Notes | 6.500 | 05/20/21 | 1,147 | 1,204,350 | ||||||||||
Crestwood Midstream Partners LP/Crestwood Midstream Finance Corp, Gtd. Notes(c) | 6.000 | 12/15/20 | 2,750 | 2,756,875 | ||||||||||
El Paso Corp., | ||||||||||||||
Gtd. Notes, GMTN | 7.800 | 08/01/31 | 750 | 927,557 | ||||||||||
Gtd. Notes, GMTN | 8.050 | 10/15/30 | 110 | 135,210 | ||||||||||
Energy Transfer Equity LP, Sr. Sec’d. Notes | 7.500 | 10/15/20 | 3,650 | 4,179,250 | ||||||||||
Ferrellgas LP/Ferrellgas Finance Corp., | ||||||||||||||
Sr. Unsec’d. Notes | 6.500 | 05/01/21 | 4,275 | 4,285,687 | ||||||||||
Sr. Unsec’d. Notes | 6.750 | 01/15/22 | 6,064 | 6,124,640 | ||||||||||
Ferrellgas Partners LP/Ferrellgas Partners Finance Corp., Sr. Unsec’d. Notes | 8.625 | 06/15/20 | 3,430 | 3,541,475 |
See Notes to Financial Statements.
28 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Pipelines & Other (cont’d.) | ||||||||||||||
Global Partners LP/GLP Finance Corp., Gtd. Notes, 144A | 6.250% | 07/15/22 | 2,325 | $ | 2,301,750 | |||||||||
Kinder Morgan, Inc., | ||||||||||||||
Gtd. Notes, 144A(c) | 5.000 | 02/15/21 | 2,855 | 3,075,612 | ||||||||||
Gtd. Notes, 144A | 5.625 | 11/15/23 | 5,875 | 6,593,066 | ||||||||||
Markwest Energy Partners LP/Markwest Energy Finance Corp., Gtd. Notes | 4.875 | 12/01/24 | 3,625 | 3,724,687 | ||||||||||
Regency Energy Partners LP/Regency Energy Finance Corp., | ||||||||||||||
Gtd. Notes | 5.500 | 04/15/23 | 3,400 | 3,553,000 | ||||||||||
Gtd. Notes(c) | 5.750 | 09/01/20 | 4,125 | 4,485,937 | ||||||||||
Rockies Express Pipeline LLC, | ||||||||||||||
Sr. Unsec’d. Notes, 144A (original cost $1,691,750; purchased 02/25/2014)(b)(c)(d) | 3.900 | 04/15/15 | 1,675 | 1,675,000 | ||||||||||
Sr. Unsec’d. Notes, 144A (original cost $3,594,625; purchased 02/21/2014 - 02/25/2014)(b)(c)(d) | 5.625 | 04/15/20 | 3,725 | 3,901,937 | ||||||||||
Sr. Unsec’d. Notes, 144A (original cost $5,469,688; purchased 01/10/2013 - 06/13/2013)(b)(d) | 6.000 | 01/15/19 | 5,525 | 5,856,500 | ||||||||||
Southern Natural Gas Co., Gtd. Notes | 8.000 | 03/01/32 | 29 | 37,306 | ||||||||||
Suburban Propane Partners LP/Suburban Energy Finance Corp., | ||||||||||||||
Sr. Unsec’d. Notes(c) | 5.500 | 06/01/24 | 5,725 | 5,839,500 | ||||||||||
Sr. Unsec’d. Notes | 7.375 | 08/01/21 | 2,224 | 2,407,480 | ||||||||||
Targa Resources Partners LP, | ||||||||||||||
Gtd. Notes(c) | 4.250 | 11/15/23 | 2,375 | 2,351,250 | ||||||||||
Gtd. Notes | 6.875 | 02/01/21 | 1,293 | 1,373,813 | ||||||||||
Tesoro Logistics LP/Tesoro Logistics Finance Corp., | ||||||||||||||
Gtd. Notes | 5.875 | 10/01/20 | 2,650 | 2,775,875 | ||||||||||
Gtd. Notes | 6.125 | 10/15/21 | 3,050 | 3,233,000 | ||||||||||
Gtd. Notes, 144A(c) | 6.250 | 10/15/22 | 2,475 | 2,623,500 | ||||||||||
|
| |||||||||||||
85,571,507 | ||||||||||||||
Real Estate Investment Trusts (REITs) 1.5% | ||||||||||||||
Aviv Healthcare Properties LP/Aviv Healthcare Capital Corp., Gtd. Notes | 7.750 | 02/15/19 | 15,225 | 15,864,450 |
See Notes to Financial Statements.
Prudential High Yield Fund | 29 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Real Estate Investment Trusts (REITs) (cont’d.) | ||||||||||||||
CTR Partnership LP/Caretrust Capital Corp., Gtd. Notes | 5.875% | 06/01/21 | 2,225 | $ | 2,269,500 | |||||||||
CyrusOne LP/CyrusOne Finance Corp., Gtd. Notes | 6.375 | 11/15/22 | 3,000 | 3,180,000 | ||||||||||
DuPont Fabros Technology LP, Gtd. Notes | 5.875 | 09/15/21 | 3,450 | 3,605,250 | ||||||||||
Felcor Lodging LP, Sr. Sec’d. Notes(c) | 5.625 | 03/01/23 | 2,180 | 2,253,466 | ||||||||||
MPT Operating Partnership LP/MPT Finance Corp., Gtd. Notes | 5.500 | 05/01/24 | 3,275 | 3,487,875 | ||||||||||
Omega Healthcare Investors, Inc., Gtd. Notes | 6.750 | 10/15/22 | 800 | 844,000 | ||||||||||
RHP Hotel Properties LP/RHP Finance Corp., Gtd. Notes | 5.000 | 04/15/21 | 3,550 | 3,629,875 | ||||||||||
Sabra Health Care LP/Sabra Capital Corp., | ||||||||||||||
Gtd. Notes | 5.375 | 06/01/23 | 4,825 | 5,108,469 | ||||||||||
Gtd. Notes | 5.500 | 02/01/21 | 2,975 | 3,175,812 | ||||||||||
Senior Housing Properties Trust, Sr. Unsec’d. Notes | 6.750 | 12/15/21 | 5,475 | 6,341,244 | ||||||||||
|
| |||||||||||||
49,759,941 | ||||||||||||||
Retailers 3.7% | ||||||||||||||
Academy Ltd./Academy Finance Corp., Gtd. Notes, 144A | 9.250 | 08/01/19 | 6,475 | 6,831,125 | ||||||||||
Claire’s Stores, Inc., | ||||||||||||||
Gtd. Notes, 144A(c) | 7.750 | 06/01/20 | 2,350 | 1,034,000 | ||||||||||
Sr. Sec’d. Notes, 144A(c) | 6.125 | 03/15/20 | 3,675 | 3,197,250 | ||||||||||
Sr. Sec’d. Notes, 144A(c) | 9.000 | 03/15/19 | 8,225 | 7,721,219 | ||||||||||
CST Brands, Inc., Gtd. Notes | 5.000 | 05/01/23 | 2,150 | 2,219,875 | ||||||||||
Dufry Finance SCA (Switzerland), Gtd. Notes, 144A | 5.500 | 10/15/20 | 10,025 | 10,455,433 | ||||||||||
Family Tree Escrow LLC, Sr. Unsec’d. Notes, 144A(c) | 5.750 | 03/01/23 | 2,650 | 2,789,125 | ||||||||||
Hot Topic, Inc., | ||||||||||||||
Sr. Sec’d. Notes, 144A (original cost $9,216,335; purchased 06/06/2013 - 01/03/2014)(b)(c)(d) | 9.250 | 06/15/21 | 9,350 | 10,214,875 | ||||||||||
Sr. Unsec’d. Notes, PIK, 144A(c) | 12.000 | 05/15/19 | 1,075 | 1,101,875 | ||||||||||
L Brands, Inc., Gtd. Notes | 5.625 | 02/15/22 | 7,375 | 8,149,965 | ||||||||||
Men’s Wearhouse, Inc. (The), Gtd. Notes, 144A(c) | 7.000 | 07/01/22 | 7,325 | 7,709,563 | ||||||||||
Murphy Oil USA, Inc., Gtd. Notes | 6.000 | 08/15/23 | 1,975 | 2,105,844 | ||||||||||
Neiman Marcus Group Ltd., Inc., Gtd. Notes, 144A(c) | 8.000 | 10/15/21 | 22,898 | 24,071,522 |
See Notes to Financial Statements.
30 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Retailers (cont’d.) | ||||||||||||||
Pantry, Inc. (The), Gtd. Notes | 8.375% | 08/01/20 | 17,768 | $ | 19,544,800 | |||||||||
Petsmart, Inc., Sr. Unsec’d. Notes, 144A | 7.125 | 03/15/23 | 9,375 | 9,703,125 | ||||||||||
PVH Corp., Sr. Unsec’d. Notes(c) | 4.500 | 12/15/22 | 2,900 | 2,950,750 | ||||||||||
Toys “R” Us Property Co. II LLC, Sr. Sec’d. Notes(c) | 8.500 | 12/01/17 | 3,480 | 3,480,000 | ||||||||||
|
| |||||||||||||
123,280,346 | ||||||||||||||
Technology 10.3% | ||||||||||||||
Activision Blizzard, Inc., Gtd. Notes, 144A | 6.125 | 09/15/23 | 1,225 | 1,355,156 | ||||||||||
Alcatel-Lucent USA, Inc. (France), Gtd. Notes, 144A(c) | 6.750 | 11/15/20 | 1,955 | 2,091,850 | ||||||||||
Ancestry.com, Inc., | ||||||||||||||
Gtd. Notes | 11.000 | 12/15/20 | 4,125 | 4,547,813 | ||||||||||
Sr. Unsec’d. Notes, PIK, 144A | 9.625 | 10/15/18 | 5,420 | 5,284,500 | ||||||||||
Audatex North America, Inc., Gtd. Notes, 144A | 6.000 | 06/15/21 | 13,350 | 14,184,375 | ||||||||||
Avaya, Inc., | ||||||||||||||
Sec’d. Notes, 144A(c) | 10.500 | 03/01/21 | 18,340 | 16,001,650 | ||||||||||
Sr. Sec’d. Notes, 144A(c) | 7.000 | 04/01/19 | 2,160 | 2,181,600 | ||||||||||
BMC Software Finance, Inc., Sr. Unsec’d. Notes, 144A(c) | 8.125 | 07/15/21 | 20,768 | 19,392,120 | ||||||||||
BMC Software, Inc., Sr. Unsec’d. Notes, PIK, 144A(c) | 9.000 | 10/15/19 | 17,200 | 14,405,000 | ||||||||||
Brightstar Corp., | ||||||||||||||
Gtd. Notes, 144A (original cost $5,379,588; purchased 11/23/2010 - 06/13/2012)(b)(d) | 9.500 | 12/01/16 | 5,305 | 5,576,881 | ||||||||||
Sr. Unsec’d. Notes, 144A (original cost $9,581,693; purchased 07/26/2013 - 08/09/2013)(b)(d) | 7.250 | 08/01/18 | 9,675 | 10,352,250 | ||||||||||
CDW LLC/CDW Finance Corp., | ||||||||||||||
Gtd. Notes | 5.500 | 12/01/24 | 12,760 | 13,270,400 | ||||||||||
Gtd. Notes | 8.500 | 04/01/19 | 3,457 | 3,623,627 | ||||||||||
Ceridian HCM Holding, Inc., Sr. Unsec’d. Notes, 144A (original cost $2,525,000; purchased 03/21/2013)(b)(c)(d) | 11.000 | 03/15/21 | 2,525 | 2,626,000 | ||||||||||
CommScope Holding Co., Inc., Sr. Unsec’d. Notes, PIK, 144A | 6.625 | 06/01/20 | 21,940 | 22,159,400 | ||||||||||
CommScope, Inc., Gtd. Notes, 144A(c) | 5.500 | 06/15/24 | 3,925 | 3,974,063 | ||||||||||
CoreLogic, Inc., Gtd. Notes | 7.250 | 06/01/21 | 2,500 | 2,670,313 |
See Notes to Financial Statements.
Prudential High Yield Fund | 31 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Technology (cont’d.) | ||||||||||||||
First Data Corp., | ||||||||||||||
Gtd. Notes(c) | 10.625% | 06/15/21 | 8,932 | $ | 10,271,800 | |||||||||
Gtd. Notes | 11.250 | 01/15/21 | 6,787 | 7,754,147 | ||||||||||
Gtd. Notes | 11.750 | 08/15/21 | 27,109 | 31,581,985 | ||||||||||
Gtd. Notes | 12.625 | 01/15/21 | 13,967 | 16,690,565 | ||||||||||
Freescale Semiconductor, Inc., Sr. Sec’d. Notes, 144A | 6.000 | 01/15/22 | 5,115 | 5,511,413 | ||||||||||
Infor Software Parent LLC/Infor Software Parent, Inc., Gtd. Notes, PIK, 144A (original cost $2,095,000; purchased 04/03/2014)(b)(c)(d) | 7.125 | 05/01/21 | 2,095 | 2,108,094 | ||||||||||
Interactive Data Corp., | ||||||||||||||
Gtd. Notes, 144A | 5.875 | 04/15/19 | 1,250 | 1,274,219 | ||||||||||
Sr. Unsec’d. Notes, PIK, 144A | 8.250 | 12/15/17 | 8,830 | 8,874,150 | ||||||||||
Micron Technology, Inc., Sr. Unsec’d. Notes, 144A(c) | 5.250 | 08/01/23 | 11,900 | 12,182,625 | ||||||||||
NCR Corp., Gtd. Notes | 5.875 | 12/15/21 | 750 | 776,250 | ||||||||||
Nortel Networks Ltd. (Canada), | ||||||||||||||
Gtd. Notes(f) | 5.344 | 07/15/11 | 3,000 | 3,135,000 | ||||||||||
Gtd. Notes(f) | 10.125 | 07/15/13 | 5,600 | 6,258,000 | ||||||||||
Gtd. Notes(b)(e) | 10.750 | 07/15/16 | 7,790 | 8,802,700 | ||||||||||
Nuance Communications, Inc., Gtd. Notes, 144A | 5.375 | 08/15/20 | 11,480 | 11,767,000 | ||||||||||
NXP BV/NXP Funding LLC (Netherlands), Gtd. Notes, 144A | 5.750 | 02/15/21 | 5,335 | 5,655,100 | ||||||||||
Presidio Holdings, Inc., Sr. Unsec’d. Notes, 144A | 10.250 | 02/15/23 | 5,225 | 5,081,313 | ||||||||||
Riverbed Technology, Inc., Gtd. Notes, 144A | 8.875 | 03/01/23 | 8,235 | 8,379,112 | ||||||||||
Sensata Technologies BV (Netherlands), | ||||||||||||||
Gtd. Notes, 144A(c) | 4.875 | 10/15/23 | 6,075 | 6,333,795 | ||||||||||
Gtd. Notes, 144A(c) | 6.500 | 05/15/19 | 4,708 | 4,896,320 | ||||||||||
Sophia LP/Sophia Finance, Inc., Gtd. Notes, 144A | 9.750 | 01/15/19 | 10,115 | 10,797,762 | ||||||||||
SunGard Data Systems, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.625 | 11/01/19 | 7,365 | 7,659,600 | ||||||||||
Gtd. Notes | 7.625 | 11/15/20 | 900 | 961,875 | ||||||||||
Syniverse Holdings, Inc., Gtd. Notes | 9.125 | 01/15/19 | 5,770 | 6,000,800 | ||||||||||
TransUnion Holding Co., Inc., | ||||||||||||||
Sr. Unsec’d. Notes | 8.125 | 06/15/18 | 6,325 | 6,467,312 | ||||||||||
Sr. Unsec’d. Notes, PIK | 9.625 | 06/15/18 | 13,300 | 13,532,750 | ||||||||||
|
| |||||||||||||
346,450,685 |
See Notes to Financial Statements.
32 |
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Telecommunications 5.6% | ||||||||||||||
Altice Financing SA (Luxembourg), Sr. Sec’d. Notes, 144A | 6.625% | 02/15/23 | 6,300 | $ | 6,559,875 | |||||||||
Altice Finco SA (Luxembourg), Gtd. Notes, 144A(c) | 7.625 | 02/15/25 | 1,650 | 1,712,717 | ||||||||||
Altice SA (Luxembourg), Gtd. Notes, 144A(c) | 7.625 | 02/15/25 | 6,025 | 6,220,812 | ||||||||||
CenturyLink, Inc., | 5.625 | 04/01/20 | 700 | 749,000 | ||||||||||
Sr. Unsec’d. Notes(c) | 6.150 | 09/15/19 | 1,520 | 1,660,600 | ||||||||||
Sr. Unsec’d. Notes(c) | 6.750 | 12/01/23 | 1,309 | 1,478,352 | ||||||||||
Sr. Unsec’d. Notes | 6.875 | 01/15/28 | 4,700 | 4,888,000 | ||||||||||
Crown Castle International Corp., Sr. Unsec’d. Notes | 5.250 | 01/15/23 | 4,273 | 4,508,015 | ||||||||||
Digicel Group Ltd. (Jamaica), | ||||||||||||||
Sr. Unsec’d. Notes, 144A | 7.125 | 04/01/22 | 4,100 | 3,905,250 | ||||||||||
Sr. Unsec’d. Notes, 144A | 8.250 | 09/30/20 | 5,600 | 5,664,400 | ||||||||||
Digicel Ltd. (Jamaica), Gtd. Notes, 144A | 6.750 | 03/01/23 | 5,125 | 5,163,437 | ||||||||||
Eileme 2 AB (Poland), Sr. Sec’d. Notes, 144A | 11.625 | 01/31/20 | 6,640 | 7,496,560 | ||||||||||
Frontier Communications Corp., | ||||||||||||||
Sr. Unsec’d. Notes(c) | 6.250 | 09/15/21 | 1,475 | 1,515,563 | ||||||||||
Sr. Unsec’d. Notes | 7.125 | 01/15/23 | 1,981 | 2,067,669 | ||||||||||
Sr. Unsec’d. Notes(c) | 8.500 | 04/15/20 | 450 | 508,500 | ||||||||||
Sr. Unsec’d. Notes | 8.750 | 04/15/22 | 3,750 | 4,263,281 | ||||||||||
Level 3 Financing, Inc., | ||||||||||||||
Gtd. Notes(c) | 7.000 | 06/01/20 | 3,500 | 3,763,235 | ||||||||||
Gtd. Notes | 8.125 | 07/01/19 | 1,125 | 1,191,094 | ||||||||||
Gtd. Notes | 8.625 | 07/15/20 | 3,950 | 4,305,500 | ||||||||||
Sprint Capital Corp., | ||||||||||||||
Gtd. Notes | 6.875 | 11/15/28 | 17,010 | 15,989,400 | ||||||||||
Gtd. Notes | 6.900 | 05/01/19 | 12,060 | 12,482,100 | ||||||||||
Sprint Communications, Inc., | ||||||||||||||
Gtd. Notes, 144A(c) | 7.000 | 03/01/20 | 1,575 | 1,744,801 | ||||||||||
Gtd. Notes, 144A | 9.000 | 11/15/18 | 2,265 | 2,633,062 | ||||||||||
Sr. Unsec’d. Notes(c) | 6.000 | 11/15/22 | 3,525 | 3,414,844 | ||||||||||
Sr. Unsec’d. Notes | 7.000 | 08/15/20 | 2,325 | 2,385,311 | ||||||||||
Sprint Corp., | ||||||||||||||
Gtd. Notes(c) | 7.625 | 02/15/25 | 11,000 | 11,110,000 | ||||||||||
Gtd. Notes(c) | 7.125 | 06/15/24 | 7,990 | 7,950,050 | ||||||||||
Gtd. Notes | 7.875 | 09/15/23 | 9,595 | 9,906,837 |
See Notes to Financial Statements.
Prudential High Yield Fund | 33 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Interest Rate | Maturity Date | Principal Amount (000)# | Value (Note 1) | ||||||||||
CORPORATE BONDS (Continued) | ||||||||||||||
Telecommunications (cont’d.) | ||||||||||||||
T-Mobile USA, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.375% | 03/01/25 | 7,375 | $ | 7,706,875 | |||||||||
Gtd. Notes | 6.464 | 04/28/19 | 700 | 726,250 | ||||||||||
Gtd. Notes | 6.633 | 04/28/21 | 5,900 | 6,276,125 | ||||||||||
Telecom Italia SpA (Italy), Sr. Unsec’d. Notes, 144A(c) | 5.303 | 05/30/24 | 7,400 | 7,808,554 | ||||||||||
Wind Acquisition Finance SA (Italy), | ||||||||||||||
Sec’d. Notes, 144A | 7.375 | 04/23/21 | 13,800 | 14,386,500 | ||||||||||
Sr. Sec’d. Notes, 144A(c) | 6.500 | 04/30/20 | 3,300 | 3,498,000 | ||||||||||
Windstream Holdings, Inc., | ||||||||||||||
Gtd. Notes(c) | 6.375 | 08/01/23 | 6,725 | 6,187,000 | ||||||||||
Gtd. Notes(c) | 7.500 | 06/01/22 | 900 | 886,500 | ||||||||||
Gtd. Notes | 7.500 | 04/01/23 | 3,405 | 3,345,412 | ||||||||||
Gtd. Notes(c) | 7.750 | 10/15/20 | 1,325 | 1,370,978 | ||||||||||
|
| |||||||||||||
187,430,459 | ||||||||||||||
Tobacco 0.2% | ||||||||||||||
Vector Group Ltd., Gtd. Notes | 7.750 | 02/15/21 | 5,200 | 5,551,000 | ||||||||||
Transportation Services 1.1% | ||||||||||||||
Avis Budget Car Rental LLC/Avis Budget Finance, Inc., | ||||||||||||||
Gtd. Notes | 9.750 | 03/15/20 | 3,075 | 3,351,750 | ||||||||||
Gtd. Notes, 144A | 5.125 | 06/01/22 | 6,900 | 7,055,250 | ||||||||||
Hertz Corp. (The), | ||||||||||||||
Gtd. Notes | 5.875 | 10/15/20 | 1,275 | 1,316,438 | ||||||||||
Gtd. Notes | 6.750 | 04/15/19 | 3,740 | 3,866,225 | ||||||||||
Kenan Advantage Group, Inc. (The), Sr. Unsec’d. Notes, 144A (original cost $9,432,750; | 8.375 | 12/15/18 | 9,230 | 9,599,200 | ||||||||||
Navios Maritime Holdings, Inc./Navios Maritime Finance II US, Inc., Sr. Sec’d. Notes, 144A | 7.375 | 01/15/22 | 6,100 | 5,718,750 | ||||||||||
XPO Logistics, Inc., Sr. Unsec’d. Notes, 144A | 7.875 | 09/01/19 | 6,250 | 6,644,531 | ||||||||||
|
| |||||||||||||
37,552,144 | ||||||||||||||
|
| |||||||||||||
TOTAL CORPORATE BONDS | 3,165,952,868 | |||||||||||||
|
|
See Notes to Financial Statements.
34 |
Description | Shares | Value (Note 1) | ||||||||||
COMMON STOCKS | ||||||||||||
Adelphia Recovery Trust*(b) | 2,000,000 | $ | 2,000 | |||||||||
DEX Media, Inc.*(c) | 29,840 | 201,420 | ||||||||||
Newell Recovery LLC (original cost $23,194; purchased 08/22/2012)*(b)(d) | 100 | 250 | ||||||||||
Newell Recycling Southeast LLC (original cost $23,194; purchased 08/22/2012)*(b)(d) | 100 | 250 | ||||||||||
WKI Holding Co., Inc.*(b) | 6,031 | 234,365 | ||||||||||
|
| |||||||||||
TOTAL COMMON STOCKS | 438,285 | |||||||||||
|
| |||||||||||
PREFERRED STOCKS 0.2% | ||||||||||||
Banking 0.2% | ||||||||||||
Citigroup Capital XIII (Capital security, fixed to floating preferred), 7.875%(a) | 153,000 | 4,063,680 | ||||||||||
Goldman Sachs Group, Inc. (The) (fixed to floating preferred), 6.375%(a) | 87,000 | 2,285,490 | ||||||||||
|
| |||||||||||
6,349,170 | ||||||||||||
Building Materials & Construction | ||||||||||||
New Millennium Homes LLC (original cost $0; purchased 05/27/1998)*(b)(d) | 2,000 | 116,000 | ||||||||||
Cable | ||||||||||||
Adelphia Communications Corp. (Class A Stock)*(e) | 20,000 | 20 | ||||||||||
|
| |||||||||||
TOTAL PREFERRED STOCKS | 6,465,190 | |||||||||||
|
| |||||||||||
Units | ||||||||||||
WARRANTS* | ||||||||||||
Chemicals | ||||||||||||
Hercules, Inc., expiring 03/31/2029 | 230 | 10,133 | ||||||||||
Media & Entertainment | ||||||||||||
MediaNews Group, Inc., expiring 03/19/2017 (original cost $0; purchased 07/06/11)(b)(c) | 6,854 | 68 | ||||||||||
Telecommunications | ||||||||||||
Hawaiian Telcom Holdco, Inc., expiring 10/28/2015 | 6,958 | 85,653 | ||||||||||
|
| |||||||||||
TOTAL WARRANTS | 95,854 | |||||||||||
|
| |||||||||||
TOTAL LONG-TERM INVESTMENTS | 3,239,464,424 | |||||||||||
|
|
See Notes to Financial Statements.
Prudential High Yield Fund | 35 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
Description | Shares | Value (Note 1) | ||||||||||
SHORT-TERM INVESTMENTS 23.7% | ||||||||||||
AFFILIATED MUTUAL FUNDS | ||||||||||||
Prudential Investment Portfolios 2 - Prudential Core Short-Term Bond Fund (cost $457,701)(g) | 47,095 | $ | 439,398 | |||||||||
Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund (cost $800,936,083; includes $680,092,993 of cash collateral for securities on loan)(g)(h) | 800,936,083 | 800,936,083 | ||||||||||
|
| |||||||||||
TOTAL SHORT-TERM INVESTMENTS | 801,375,481 | |||||||||||
|
| |||||||||||
TOTAL INVESTMENTS 119.7% | 4,040,839,905 | |||||||||||
Liabilities in excess of other assets(i) (19.7)% | (664,697,418 | ) | ||||||||||
|
| |||||||||||
NET ASSETS 100.0% | $ | 3,376,142,487 | ||||||||||
|
|
The following abbreviations are used in the portfolio descriptions:
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.
CDS—Credit Default Swap
CDX—Credit Derivative Index
CLO—Collateralized Loan Obligation
GMTN—Global Medium Term Note
MTN—Medium Term Note
PIK—Payment-in-Kind
# | Principal amount is shown in U.S. dollars unless otherwise stated. |
* | Non-income producing security. |
(a) | Variable rate instrument. The interest rate shown reflects the rate in effect at February 28, 2015. |
(b) | Indicates a security or securities that have been deemed illiquid. |
(c) | All or a portion of security is on loan. The aggregate market value of such securities, including those sold and pending settlement, is $663,253,849; cash collateral of $680,092,993 (included in liabilities) was received with which the Fund purchased highly liquid short-term investments. Securities on loan are subject to contractual netting arrangements. |
(d) | Indicates a restricted security; the aggregate cost of the restricted securities is $277,479,458. The aggregate value, $265,078,688, is approximately 7.9% of net assets. |
(e) | Represents issuer in default on interest payments. Non-income producing security. |
(f) | Security is post-maturity; represents issuer in default on interest payments and/or principal repayments; non-income producing security. |
(g) | Prudential Investments LLC, the manager of the Fund, also serves as manager of the Prudential Investment Portfolios 2 - Prudential Core Taxable Money Market Fund and the Prudential Investment Portfolios 2 - Prudential Core Short-Term Bond Fund. |
See Notes to Financial Statements.
36 |
(h) | Represents security, or a portion thereof, purchased with cash collateral received for securities on loan. |
(i) | Includes net unrealized appreciation on the following derivative contracts held at reporting period end: |
Credit default swap agreements outstanding at February 28, 2015:
Reference Entity/ | Termination Date | Fixed Rate | Notional Amount (000)#(2) | Value at February 28, 2015(3) | Value at Trade Date | Unrealized Appreciation | ||||||||||||||||||
Exchange-traded credit default swaps on credit indices—Sell Protection(1): |
| |||||||||||||||||||||||
CDX.NA.HY.23 | 12/20/19 | 5.000% | 29,700 | $ | 2,257,018 | $ | 1,499,850 | $ | 757,168 | |||||||||||||||
|
|
|
|
|
|
Cash of $1,500,000 has been segregated with Citigroup Global Markets to cover requirements for open exchange-traded credit default swap agreements at February 28, 2015.
Reference | Termination Date | Fixed Rate | Notional Amount (000)#(2) | Implied Credit Spread at February 28, 2015(4) | Fair Value | Upfront Premiums Paid (Received) | Unrealized | Counterparty | ||||||||||||||||||||
Over-the-counter credit default swaps on corporate issues—Sell Protection(1): | ||||||||||||||||||||||||||||
NRG Energy, Inc. | 03/20/16 | 4.100% | 1,850 | 0.560 | % | $ | 88,957 | $ | — | $88,957 | Goldman Sachs & Co. | |||||||||||||||||
|
|
|
|
|
The Fund entered into credit default swaps (“CDS”) 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.
(1) | If the Fund is a seller of protection, it receives the fixed rate. When a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index. |
(2) | Notional amount represents the maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. |
(3) | The fair value of credit default swap agreements on asset-backed securities and credit indices serves as an indicator of the current status of the payment/performance risk and represents the likelihood of an expected liability (or profit) for the credit derivative should the notional amount of the swap agreement be closed/sold as of the reporting date. Increasing fair value in absolute terms, represents 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. |
See Notes to Financial Statements.
Prudential High Yield Fund | 37 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
(4) | Implied credit spreads, represented in absolute terms, utilized in determining the fair value of credit default swap agreements on corporate issues or sovereign issues of an emerging country as of reporting date serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include up-front payments required to be made to enter into the agreement. Wider credit spreads 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. |
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—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 February 28, 2015 in valuing such portfolio securities:
Level 1 | Level 2 | Level 3 | ||||||||||
Investments in Securities | ||||||||||||
Asset-Backed Securities | ||||||||||||
Collateralized Loan Obligations | $ | — | $ | 4,844,899 | $ | — | ||||||
Bank Loans | — | 51,738,803 | 9,928,525 | |||||||||
Corporate Bonds | — | 3,153,983,913 | 11,968,955 | |||||||||
Common Stocks | 201,420 | — | 236,865 | |||||||||
Preferred Stocks | 6,349,170 | — | 116,020 | |||||||||
Warrants | 85,653 | 10,133 | 68 | |||||||||
Affiliated Mutual Funds | 801,375,481 | — | — | |||||||||
Other Financial Instruments* | ||||||||||||
Exchange-traded credit default swaps | — | 757,168 | — | |||||||||
Over-the-counter credit default swaps | — | 88,957 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 808,011,724 | $ | 3,211,423,873 | $ | 22,250,433 | ||||||
|
|
|
|
|
|
* | Other financial instruments are derivative instruments not reflected in the Portfolio of Investments, such as futures, forwards and exchange-traded swap contracts, which are recorded at the unrealized appreciation/depreciation on the instrument, and over-the-counter swap contracts which are recorded at fair value. |
See Notes to Financial Statements.
38 |
The industry classification of investments and liabilities in excess of other assets shown as a percentage of net assets as of February 28, 2015 was as follows:
Affiliated Mutual Funds (including 20.1% of collateral for securities on loan) | 23.7 | % | ||
Technology | 11.1 | |||
Healthcare & Pharmaceutical | 8.5 | |||
Capital Goods | 7.5 | |||
Electric | 6.8 | |||
Gaming | 6.2 | |||
Telecommunications | 5.6 | |||
Energy - Other | 5.1 | |||
Foods | 4.1 | |||
Chemicals | 3.8 | |||
Retailers | 3.7 | |||
Packaging | 3.6 | |||
Building Materials & Construction | 3.6 | |||
Cable | 3.3 | |||
Non-Captive Finance | 3.2 | |||
Media & Entertainment | 3.1 | |||
Automotive | 2.8 | |||
Pipelines & Other | 2.5 | % | ||
Metals | 2.5 | |||
Aerospace & Defense | 1.9 | |||
Consumer | 1.7 | |||
Real Estate Investment Trusts (REITs) | 1.5 | |||
Banking | 1.1 | |||
Transportation Services | 1.1 | |||
Lodging | 0.8 | |||
Paper | 0.3 | |||
Energy - Integrated | 0.2 | |||
Tobacco | 0.2 | |||
Collateralized Loan Obligations | 0.2 | |||
|
| |||
119.7 | ||||
Liabilities in excess of other assets | (19.7 | ) | ||
|
| |||
100.0 | % | |||
|
|
The Fund invested in derivative instruments during the reporting period. The primary types of risk associated with these derivative instruments are equity risk and credit 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 February 28, 2015 as presented in the Statement of Assets and Liabilities:
Derivatives not accounted for | Asset Derivatives | Liability Derivatives | ||||||||||
Balance Sheet | Fair Value | Balance Sheet | Fair Value | |||||||||
Credit contracts | Due to/from broker—variation margin—swaps | $ | 757,168 | * | — | $ | — | |||||
Credit contracts | Unrealized appreciation on over-the-counter swap agreements | 88,957 | — | — | ||||||||
Equity contracts | Unaffiliated investments | 95,854 | — | — | ||||||||
|
|
|
| |||||||||
Total | $ | 941,979 | $ | — | ||||||||
|
|
|
|
* | Includes cumulative appreciation/depreciation as reported in schedule of exchange-traded swap contracts. Only unsettled variation margin receivable (payable) is reported within the Statement of Assets and Liabilities. |
See Notes to Financial Statements.
Prudential High Yield Fund | 39 |
Portfolio of Investments
as of February 28, 2015 (Unaudited) continued
The effects of derivative instruments on the Statement of Operations for the six months ended February 28, 2015 are as follows:
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||
Derivatives not accounted for as hedging | Swaps | |||||||
Credit contracts | $ | (1,979,220 | ) | |||||
|
|
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | ||||||||||||
Derivatives not accounted for as hedging | Warrants(1) | Swaps | Total | |||||||||
Credit contracts | $ | — | $ | (20,043 | ) | $ | (20,043 | ) | ||||
Equity contracts | (10,415 | ) | — | (10,415 | ) | |||||||
|
|
|
|
|
| |||||||
Total | $ | (10,415 | ) | $ | (20,043 | ) | $ | (30,458 | ) | |||
|
|
|
|
|
|
(1) | Included in net change in unrealized appreciation (depreciation) on investments in the Statement of Operations. |
For the six months ended February 28, 2015, the Fund’s average notional amount for credit default swaps as seller was $95,573,000.
Offsetting of over-the-counter (OTC) derivative assets and liabilities:
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.
Counterparty | Gross Amounts of Recognized Assets(1) | Gross Amounts Available for Offset | Collateral Received(3) | Net Amount | ||||||||||||
Goldman Sachs & Co. | $ | 88,957 | $ | — | $ | (150,000 | ) | $ | — | |||||||
See Notes to Financial Statements.
40 |
Counterparty | Gross Amounts of Recognized Liabilities(2) | Gross Amounts Available for Offset | Collateral Pledged(3) | Net Amount | ||||||||||||
Goldman Sachs & Co. | $ | — | $ | — | $ | — | $ | — |
(1) | Includes unrealized appreciation on swaps and forwards, premiums paid on swap agreements and market value of purchased options. |
(2) | Includes unrealized depreciation on swaps and forwards, premiums received on swap agreements and market value of written options. |
(3) | Amounts shown reflect actual collateral received or pledged by the Fund. Such amounts are applied up to 100% of the Fund’s OTC derivative exposure by counterparty. |
See Notes to Financial Statements.
Prudential High Yield Fund | 41 |
Statement of Assets & Liabilities
as of February 28, 2015 (Unaudited)
Assets | ||||
Investments at value, including securities on loan of $663,253,849: | ||||
Unaffiliated investments (cost $3,226,737,788) | $ | 3,239,464,424 | ||
Affiliated investments (cost $801,393,784) | 801,375,481 | |||
Cash | 2,162,879 | |||
Dividends and interest receivable | 56,632,181 | |||
Receivable for investments sold | 18,359,736 | |||
Receivable for Fund shares sold | 8,262,756 | |||
Unrealized appreciation on over-the-counter swap agreements | 88,957 | |||
Due from broker—variation margin swaps | 20,237 | |||
Prepaid expenses | 18,728 | |||
|
| |||
Total assets | 4,126,385,379 | |||
|
| |||
Liabilities | ||||
Payable to broker for collateral for securities on loan | 680,092,993 | |||
Payable for investments purchased | 57,355,095 | |||
Payable for Fund shares reacquired | 8,173,377 | |||
Dividends payable | 2,165,242 | |||
Management fee payable | 1,073,719 | |||
Accrued expenses and other liabilities | 599,467 | |||
Distribution fee payable | 596,847 | |||
Affiliated transfer agent fee payable | 161,687 | |||
Deferred directors’ fees | 24,465 | |||
|
| |||
Total liabilities | 750,242,892 | |||
|
| |||
Net Assets | $ | 3,376,142,487 | ||
|
| |||
Net assets were comprised of: | ||||
Common stock, at par | $ | 6,005,257 | ||
Paid-in capital in excess of par | 3,433,999,790 | |||
|
| |||
3,440,005,047 | ||||
Undistributed net investment income | 1,551,313 | |||
Accumulated net realized loss on investment and foreign currency transactions | (78,968,769 | ) | ||
Net unrealized appreciation on investments and foreign currencies | 13,554,896 | |||
|
| |||
Net assets, February 28, 2015 | $ | 3,376,142,487 | ||
|
|
See Notes to Financial Statements.
42 |
Class A | ||||
Net asset value and redemption price per share | $ | 5.62 | ||
Maximum sales charge (4.50% of offering price) | 0.26 | |||
|
| |||
Maximum offering price to public | $ | 5.88 | ||
|
| |||
Class B | ||||
Net asset value, offering price and redemption price per share | $ | 5.61 | ||
|
| |||
Class C | ||||
Net asset value, offering price and redemption price per share | $ | 5.61 | ||
|
| |||
Class Q | ||||
Net asset value, offering price and redemption price per share | $ | 5.62 | ||
|
| |||
Class R | ||||
Net asset value, offering price and redemption price per share | $ | 5.62 | ||
|
| |||
Class Z | ||||
Net asset value, offering price and redemption price per share | $ | 5.63 | ||
|
|
See Notes to Financial Statements.
Prudential High Yield Fund | 43 |
Statement of Operations
Six Months Ended February 28, 2015 (Unaudited)
Net Investment Income | ||||
Income | ||||
Interest income | $ | 105,553,323 | ||
Affiliated income from securities loaned, net | 692,879 | |||
Unaffiliated dividend income | 219,938 | |||
Affiliated dividend income | 88,068 | |||
|
| |||
Total income | 106,554,208 | |||
|
| |||
Expenses | ||||
Management fee | 6,796,458 | |||
Distribution fee—Class A | 1,933,711 | |||
Distribution fee—Class B | 904,025 | |||
Distribution fee—Class C | 1,286,165 | |||
Distribution fee—Class R | 204,673 | |||
Transfer agent’s fees and expenses (including affiliated expenses of $317,600) | 1,809,000 | |||
Custodian’s fees and expenses | 190,000 | |||
Shareholders’ reports | 170,000 | |||
Registration fees | 110,000 | |||
Directors’ fees | 42,000 | |||
Insurance expenses | 22,000 | |||
Legal fees and expenses | 20,000 | |||
Audit fee | 17,000 | |||
Miscellaneous | 12,240 | |||
|
| |||
Total expenses | 13,517,272 | |||
Less: Distribution fee waiver—Class A | (322,285 | ) | ||
Distribution fee waiver—Class R | (68,224 | ) | ||
|
| |||
Net expenses | 13,126,763 | |||
|
| |||
Net investment income | 93,427,445 | |||
|
| |||
Realized And Unrealized Gain (Loss) On Investments And Foreign Currency Transactions | ||||
Net realized loss on: | ||||
Investment transactions | (18,717,832 | ) | ||
Swap agreement transactions | (1,979,219 | ) | ||
Foreign currency transactions | (2,049 | ) | ||
|
| |||
(20,699,100 | ) | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (78,854,792 | ) | ||
Swap agreements | (20,043 | ) | ||
Foreign currencies | 525 | |||
|
| |||
(78,874,310 | ) | |||
|
| |||
Net loss on investment and foreign currency transactions | (99,573,410 | ) | ||
|
| |||
Net Decrease In Net Assets Resulting From Operations | $ | (6,145,965 | ) | |
|
|
See Notes to Financial Statements.
44 |
Statement of Changes in Net Assets
(Unaudited)
Six Months Ended February 28, 2015 | Year Ended August 31, 2014 | |||||||
Increase (Decrease) In Net Assets | ||||||||
Operations | ||||||||
Net investment income | $ | 93,427,445 | $ | 183,207,559 | ||||
Net realized gain (loss) on investment and foreign currency transactions | (20,699,100 | ) | 59,962,831 | |||||
Net change in unrealized appreciation (depreciation) on investments and foreign currencies | (78,874,310 | ) | 57,692,842 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets resulting from operations | (6,145,965 | ) | 300,863,232 | |||||
|
|
|
| |||||
Dividends from net investment income (Note 1) | ||||||||
Class A | (39,717,178 | ) | (83,503,654 | ) | ||||
Class B | (6,819,317 | ) | (13,538,701 | ) | ||||
Class C | (6,956,096 | ) | (13,997,820 | ) | ||||
Class Q | (1,139,175 | ) | (687,488 | ) | ||||
Class R | (1,612,145 | ) | (3,272,298 | ) | ||||
Class X | — | (1,226 | ) | |||||
Class Z | (41,648,766 | ) | (80,314,668 | ) | ||||
|
|
|
| |||||
(97,892,677 | ) | (195,315,855 | ) | |||||
|
|
|
| |||||
Fund share transactions (Net of share conversions) (Note 6) | ||||||||
Net proceeds from shares sold | 604,869,346 | 1,078,720,776 | ||||||
Net asset value of shares issued in reinvestment of dividends and distributions | 83,608,369 | 164,498,612 | ||||||
Cost of shares reacquired | (494,396,305 | ) | (921,234,679 | ) | ||||
|
|
|
| |||||
Net increase in net assets from Fund share transactions | 194,081,410 | 321,984,709 | ||||||
|
|
|
| |||||
Total increase | 90,042,768 | 427,532,086 | ||||||
Net Assets: | ||||||||
Beginning of period | 3,286,099,719 | 2,858,567,633 | ||||||
|
|
|
| |||||
End of period(a) | $ | 3,376,142,487 | $ | 3,286,099,719 | ||||
|
|
|
| |||||
(a) Includes undistributed net investment income of: | $ | 1,551,313 | $ | 6,016,545 | ||||
|
|
|
|
See Notes to Financial Statements.
Prudential High Yield Fund | 45 |
Notes to Financial Statements
(Unaudited)
Prudential Investment Portfolios, Inc. 15 (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: Prudential High Yield Fund (the “Fund”) and Prudential Short Duration High Yield Income Fund. These financial statements relate to Prudential High Yield Fund. The Fund’s investment objective is to maximize current income. As a secondary investment objective, the Fund seeks capital appreciation but only when consistent with the Fund’s primary objective of current income.
Note 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 that are fair valued at the close of each day the New York Stock Exchange (“NYSE”) is open for trading. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The Board of Directors (the “Board”) has adopted Valuation Procedures for security valuation under which fair valuation responsibilities have been delegated to Prudential Investments LLC (“PI” or “Manager”). Under the current Valuation Procedures, the established Valuation Committee is responsible for supervising the valuation of portfolio securities and other assets. 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.
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 table following the Portfolio of Investments.
46 |
Common and preferred stocks, exchange-traded funds, and derivative instruments such as futures or options that are traded on a national securities exchange are valued at the last sale price as of the close of trading on the applicable exchange where the security principally trades. Securities traded via NASDAQ are valued at the NASDAQ official closing price. To the extent these securities are valued at the last sale price or NASDAQ official closing price, they are classified as Level 1 in the fair value hierarchy except for exchange-traded and cleared swaps which are classified as Level 2 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 asked prices, or at the last bid price in the absence of an asked price. These securities are classified as Level 2 in the fair value hierarchy, as the inputs are observable and considered to be significant to the valuation.
Common and preferred stocks traded on foreign securities exchanges are valued using pricing vendor services that provide model prices derived using adjustment factors based on information such as local closing price, relevant general and sector indices, currency fluctuations, depositary receipts, and futures, as applicable. Securities valued using such model prices are classified as Level 2 in the fair value hierarchy, as the adjustment factors are observable and considered to be significant to the valuation. Such securities are valued using model prices to the extent that the valuation meets the established confidence level for each security. If the confidence level is not met or the vendor does not provide a model price, securities are valued in accordance with exchange-traded common and preferred stocks discussed above.
Investments in open-end, non-exchange-traded mutual funds are valued at their net asset values as of the close of the NYSE on the date of valuation. These securities are classified as Level 1 in the fair value hierarchy since they may be purchased or sold at their net asset values on the date of valuation.
Fixed income securities traded in the over-the-counter market are generally valued at prices provided by approved independent pricing vendors. The pricing vendors provide these prices after 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. Securities valued using such vendor prices are classified as Level 2 in the fair value hierarchy.
Over-the-counter derivative instruments are generally valued using pricing vendor services, which derive the valuation based on inputs such as underlying asset prices,
Prudential High Yield Fund | 47 |
Notes to Financial Statements
(Unaudited) continued
indices, spreads, interest rates, and exchange rates. These instruments are categorized as Level 2 in the fair value hierarchy.
Centrally cleared swaps listed or traded on a multilateral or trade facility platform, such as a registered exchange, are 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 significant 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 investment adviser 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 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 expenses 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
48 |
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 Directors of the Fund. 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 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, these realized foreign currency gains or losses are included in the reported net realized gains or losses on investment transactions.
Net realized gains or losses on foreign currency transactions represent net foreign exchange gains or losses from holdings of foreign currencies, forward currency contracts, disposition of foreign currencies, currency gains or 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 actually received or paid. Net unrealized currency gains or 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.
Concentration of Risk: The ability of debt securities issuers (other than those issued or guaranteed by the U.S. Government) held by the Fund to meet its obligations may be affected by the economic or political developments in a specific industry, region or country. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of U.S. companies as a
Prudential High Yield Fund | 49 |
Notes to Financial Statements
(Unaudited) continued
result of, among other factors, the possibility of political or economic instability or the level of governmental supervision and regulation of foreign securities markets.
Swap Agreements: The Fund may enter into credit default, interest rate, total return and other forms 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 over-the-counter market and may be executed either directly with the counterparty (“OTC-traded”) or through a central clearing facility, such as a registered commodities exchange (“Exchange-traded”). Swap agreements are valued daily at current market value and any change in value is included in the net unrealized appreciation or depreciation on investments. Upon entering into an Exchange-traded swap, the Fund pledges with the clearing broker an initial margin and thereafter, pays or receives an amount, known as “variation margin”, based on daily changes in the valuation of the swap contract.
Payments received or paid by the Fund are recorded as realized gains or losses upon termination or maturity of the swap. Risk of loss may exceed amounts recognized on the Statement of Assets and Liabilities. Swap agreements outstanding at reporting date, if any, are listed on the Portfolio of Investments.
Credit Default Swaps: Credit default swaps (“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. The Fund entered into credit default swaps 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 credit
50 |
default swaps 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.
Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate or sovereign issues of an emerging country as of period end are disclosed in the footnotes to the Portfolio 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. For credit default swap agreements on asset-backed securities and credit indices, the quoted market prices and resulting values serve as indicators of the current status of the payment/performance risk. 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 Fund is subject to various Master Agreements, or netting arrangements, with select counterparties. 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. 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
Prudential High Yield Fund | 51 |
Notes to Financial Statements
(Unaudited) continued
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 were no instances where the right of set-off existed and management has not elected to offset.
The Fund is a party to ISDA (International Swaps and Derivatives Association, Inc.) Master Agreements with certain counterparties that govern over-the-counter 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, are presented in the Portfolio of Investments. Collateral pledged by the Fund is segregated by the Fund’s custodian and identified in the Portfolio 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
52 |
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 over-the-counter 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 February 28, 2015, the Fund has not met conditions under such agreements which give the counterparty the right to call for an early termination.
Warrants and Rights: The Fund may hold warrants and rights acquired either through a direct purchase, including as part of private placement, or pursuant to corporate actions. Warrants and rights entitle the holder to buy a proportionate amount of common stock, or such other security that the issuer may specify, at a specific price and time through the expiration dates. Such warrants and rights are held as long positions by the Fund until exercised, sold or expired. Warrants and rights are valued at fair value in accordance with the Board of Directors’ approved fair valuation procedures.
Loan Participations: The Fund may invest in loan participations, another type of restricted security. When the Fund purchases a loan participation, the Fund typically enters into a contractual relationship with the lender or third party selling such participations (“Selling Participant”), but not the borrower. As a result, the Fund assumes the credit risk of the borrower, the Selling Participant and any other persons interpositioned between the Fund and the borrower. The Fund may not directly benefit from the collateral supporting the senior loan in which it has purchased the loan participation.
Payment In Kind Securities: The Fund may invest in 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. The interest rate on PIK debt is paid out over time.
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 a highly liquid short-term 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. Loans are subject to termination at the option of the borrower or the Fund. Upon termination of the loan, the borrower will return to the Fund securities
Prudential High Yield Fund | 53 |
Notes to Financial Statements
(Unaudited) continued
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, and any interest on the investment of cash received as collateral. The Fund also continues to receive interest and dividends or amounts equivalent thereto, on the securities loaned and recognizes any unrealized gain or loss in the market price of the securities loaned that may occur during the term of the loan.
Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains or losses from investment and currency transactions are calculated on the identified cost basis. Dividend income is recorded on the ex-dividend 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 distribution fees, which are charged directly to the respective class and transfer agency fees specific to Class Q shares which are charged to that share class) and unrealized and realized gains or 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.
Dividends and Distributions: The Fund declares daily and pays dividends of net investment income monthly and makes distributions of net realized capital and currency gains, if any, annually. Dividends and distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. Permanent book/tax differences relating to income and gains are reclassified amongst undistributed net investment income, accumulated net realized gain or loss and paid-in capital in excess of par, as appropriate.
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.
54 |
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.
Note 2. Agreements
The Fund has a management agreement with PI. Pursuant to this agreement, PI has responsibility for all investment advisory services and supervises the subadvisor’s performance of such services. PI has entered into a subadvisory agreement with Prudential Investment Management, Inc. (“PIM”). The subadvisory agreement provides that PIM will furnish investment advisory services in connection with the management of the Fund. In connection therewith, PIM is obligated to keep certain books and records of the Fund. PI pays for the services of PIM, 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 PI is accrued daily and payable monthly, at an annual rate of .50% of the Fund’s average daily net assets up to $250 million, .475% of the next $500 million, .45% of the next $750 million, .425% of the next $500 million, .40% of the next $500 million, .375% of the next $500 million and .35% of the Fund’s average daily net assets in excess of $3 billion. The effective management fee rate was .43% for the six months ended February 28, 2015.
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 Q, Class R and Class Z shares of the Fund. Formerly through April 11, 2014, the Fund had a distribution agreement with Prudential Annuities Distributors, Inc. (“PAD”), which, together with PIMS, served as co-distributor of Class X 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 plans of distribution (the “Distribution Plans”), regardless of expenses actually incurred by PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor of the Class Q and Class Z shares of the Fund. Pursuant to the Distribution Plans, the Fund compensates PIMS for distribution related activities at an annual rate of up to .30%, .75%, 1% and .75% of the average daily net assets of the Class A, B, C and R shares, respectively. For the six months ended February 28, 2015, PIMS contractually agreed to limit such fees to .25% and .50% of the average daily net assets of the Class A and Class R shares, respectively.
Prudential High Yield Fund | 55 |
Notes to Financial Statements
(Unaudited) continued
As of April 11, 2014, the last conversion of Class X shares to Class A shares was completed. There are no Class X shares outstanding and Class X shares are no longer being offered for sale.
PIMS has advised the Fund that it has received $743,855 in front-end sales charges resulting from sales of Class A shares, during the six months ended February 28, 2015. From these fees, PIMS paid such sales charges to affiliated 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 February 28, 2015, it received $1,552, $171,578 and $18,012 in contingent deferred sales charges imposed upon redemptions by certain Class A, Class B and Class C shareholders, respectively.
PI, PIMS, PIM and PAD are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. (“Prudential”).
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC (“PMFS”), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund’s transfer agent. Transfer agent’s fees and expenses on the Statement of Operations include certain out-of-pocket expenses paid to non-affiliates, where applicable.
Prudential Investment Management, Inc., (“PIM”), an indirect, wholly-owned subsidiary of Prudential, is the Fund’s securities lending agent. For the six months ended February 28, 2015, PIM has been compensated approximately $207,000 for these services.
The Fund invests in the Prudential Core Short-Term Bond Fund, pursuant to an exemptive order received from the Securities and Exchange Commission and in the Prudential Core Taxable Money Market Fund (the “Core Funds”), each a portfolio of the Prudential Investment Portfolios 2, registered under the 1940 Act and managed by PI. Earnings from the Core Funds are disclosed on the Statement of Operations as affiliated dividend income.
56 |
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments, for the six months ended February 28, 2015, aggregated $882,798,067 and $632,556,737, respectively.
Note 5. Tax Information
The United States federal income tax basis of the Fund’s investments and the net unrealized appreciation as of February 28, 2015 were as follows:
Tax Basis | $ | 4,038,538,249 | ||
|
| |||
Appreciation | 99,979,547 | |||
Depreciation | (97,677,891 | ) | ||
|
| |||
Net Unrealized Appreciation | $ | 2,301,656 | ||
|
|
The book basis may differ from tax basis due to certain tax related adjustments.
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), the Fund is permitted to carryforward capital losses realized on or after September 1, 2011 (“post-enactment losses”) for an unlimited period. Post-enactment losses are required to be utilized before the utilization of losses incurred prior to the effective date of the Act. As a result of this ordering rule, capital loss carryforwards related to taxable years ending before August 31, 2012 (“pre-enactment losses”) may have an increased likelihood to expire unused. The Fund utilized approximately $44,160,000 of its pre-enactment losses to offset net taxable gains realized in the fiscal year ended August 31, 2014. No capital gains distributions are expected to be paid to shareholders until net gains have been realized in excess of such losses. As of August 31, 2014, the pre and post-enactment losses were approximately:
Post-Enactment Losses: | $ | 0 | ||
|
| |||
Pre-Enactment Losses: | ||||
Expiring 2018 | $ | 49,857,000 | ||
|
|
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.
Prudential High Yield Fund | 57 |
Notes to Financial Statements
(Unaudited) continued
Note 6. Capital
The Fund offers Class A, Class B, Class C, Class Q, Class R and Class Z shares. Class A shares are sold with a front-end sales charge of up to 4.50%. Investors who purchase $1 million or more of Class A shares and redeem those shares within 12 months of purchase are subject to a contingent deferred sales charge (“CDSC”) of 1%, but are not subject to an initial sales charge. The Class A CDSC is waived for purchases by certain retirement or benefit plans. 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 will 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% during the first 12 months. As of April 11, 2014, the last conversion of Class X shares to Class A shares was completed. There are no Class X shares outstanding and Class X shares are no longer being offered for sale. Class Q, Class R and Class Z shares are not subject to any sales or redemption charges and are available only 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.
The Company is authorized to issue 3 billion shares of common stock, $.01 par value per share, divided into eight classes, designated Class A, Class B, Class C, Class M, Class Q, Class R, Class X and Class Z common stock. Of the authorized shares of common stock of the Fund, 625 million shares are designated for Class A common stock, 150 million shares are designated for each of Class B common stock and Class C common stock, 20 million shares are designated for Class M common stock, 310 million shares are designated for each of Class Q and Class R common stock, 25 million shares are designated for Class X common stock and 410 million shares are designated for Class Z common stock.
58 |
Transactions in shares of common stock were as follows:
Class A | Shares | Amount | ||||||
Six months ended February 28. 2015: | ||||||||
Shares sold | 22,992,962 | $ | 128,757,949 | |||||
Shares issued in reinvestment of dividends and distributions | 5,790,010 | 32,460,910 | ||||||
Shares reacquired | (27,193,372 | ) | (152,268,277 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 1,589,600 | 8,950,582 | ||||||
Shares issued upon conversion from Class B, Class C and Class Z | 977,550 | 5,471,705 | ||||||
Shares reacquired upon conversion into Class Z | (1,029,891 | ) | (5,828,684 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,537,259 | $ | 8,593,603 | |||||
|
|
|
| |||||
Year ended August 31, 2014: | ||||||||
Shares sold | 31,866,582 | $ | 183,587,307 | |||||
Shares issued in reinvestment of dividends and distributions | 11,714,551 | 67,531,261 | ||||||
Shares reacquired | (44,046,313 | ) | (253,449,540 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (465,180 | ) | (2,330,972 | ) | ||||
Shares issued upon conversion from Class B, Class X and Class Z | 1,186,158 | 6,849,047 | ||||||
Shares reacquired upon conversion into Class Z | (5,471,223 | ) | (31,636,684 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (4,750,245 | ) | $ | (27,118,609 | ) | |||
|
|
|
| |||||
Class B | ||||||||
Six months ended February 28. 2015: | ||||||||
Shares sold | 198,285 | $ | 1,099,882 | |||||
Shares issued in reinvestment of dividends and distributions | 983,378 | 5,505,343 | ||||||
Shares reacquired | (2,748,410 | ) | (15,348,211 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (1,566,747 | ) | (8,742,986 | ) | ||||
Shares reacquired upon conversion into Class A | (818,149 | ) | (4,574,886 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (2,384,896 | ) | $ | (13,317,872 | ) | |||
|
|
|
| |||||
Year ended August 31, 2014: | ||||||||
Shares sold | 10,579,556 | $ | 60,957,516 | |||||
Shares issued in reinvestment of dividends and distributions | 1,866,561 | 10,755,175 | ||||||
Shares reacquired | (4,821,903 | ) | (27,730,811 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 7,624,214 | 43,981,880 | ||||||
Shares reacquired upon conversion into Class A | (1,010,627 | ) | (5,833,252 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 6,613,587 | $ | 38,148,628 | |||||
|
|
|
|
Prudential High Yield Fund | 59 |
Notes to Financial Statements
(Unaudited) continued
Class C | Shares | Amount | ||||||
Six months ended February 28. 2015: | ||||||||
Shares sold | 4,573,406 | $ | 25,709,999 | |||||
Shares issued in reinvestment of dividends and distributions | 1,021,460 | 5,718,639 | ||||||
Shares reacquired | (6,734,815 | ) | (37,459,441 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (1,139,949 | ) | (6,030,803 | ) | ||||
Shares reacquired upon conversion into Class A and Class Z | (284,230 | ) | (1,598,605 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (1,424,179 | ) | $ | (7,629,408 | ) | |||
|
|
|
| |||||
Year ended August 31, 2014: | ||||||||
Shares sold | 11,287,152 | $ | 65,018,908 | |||||
Shares issued in reinvestment of dividends and distributions | 1,988,484 | 11,451,688 | ||||||
Shares reacquired | (10,487,457 | ) | (60,228,260 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 2,788,179 | 16,242,336 | ||||||
Shares reacquired upon conversion into Class Z | (508,136 | ) | (2,926,501 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 2,280,043 | $ | 13,315,835 | |||||
|
|
|
| |||||
Class Q | ||||||||
Six months ended February 28. 2015: | ||||||||
Shares sold | 5,731,454 | $ | 32,598,644 | |||||
Shares issued in reinvestment of dividends and distributions | 203,225 | 1,139,414 | ||||||
Shares reacquired | (377,780 | ) | (2,119,205 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 5,556,899 | $ | 31,618,853 | |||||
|
|
|
| |||||
Year ended August 31, 2014: | ||||||||
Shares sold | 1,499,160 | $ | 8,683,554 | |||||
Shares issued in reinvestment of dividends | 119,133 | 688,446 | ||||||
Shares reacquired | (560,310 | ) | (3,248,060 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 1,057,983 | ) | $ | 6,123,940 | ) | |||
|
|
|
| |||||
Class R | ||||||||
Six months ended February 28. 2015: | ||||||||
Shares sold | 1,225,748 | $ | 6,865,520 | |||||
Shares issued in reinvestment of dividends and distributions | 287,113 | 1,609,292 | ||||||
Shares reacquired | (1,945,592 | ) | (10,863,901 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (432,731 | ) | $ | (2,389,089 | ) | |||
|
|
|
| |||||
Year ended August 31, 2014: | ||||||||
Shares sold | 3,214,716 | $ | 18,497,113 | |||||
Shares issued in reinvestment of dividends and distributions | 567,409 | 3,270,947 | ||||||
Shares reacquired | (2,930,220 | ) | (16,890,913 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 851,905 | $ | 4,877,147 | |||||
|
|
|
|
60 |
Class X | Shares | Amount | ||||||
Period ended April 11, 2014*: | ||||||||
Shares issued in reinvestment of dividends and distributions | 204 | $ | 1,162 | |||||
Shares reacquired | (1,343 | ) | (7,565 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | (1,139 | ) | (6,403 | ) | ||||
Shares reacquired upon conversion into Class A | (11,948 | ) | (68,325 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | (13,087 | ) | $ | (74,728 | ) | |||
|
|
|
| |||||
Class Z | ||||||||
Six months ended February 28. 2015: | ||||||||
Shares sold | 73,221,049 | $ | 409,837,352 | |||||
Shares issued in reinvestment of dividends and distributions | 6,618,487 | 37,174,771 | ||||||
Shares reacquired | (49,047,482 | ) | (276,337,270 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 30,792,054 | 170,674,853 | ||||||
Shares issued upon conversion from Class A and Class C | 1,292,358 | 7,322,746 | ||||||
Shares reacquired upon conversion into Class A | (141,091 | ) | (792,276 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 31,943,321 | $ | 177,205,323 | |||||
|
|
|
| |||||
Year ended August 31, 2014: | ||||||||
Shares sold | 128,576,956 | $ | 741,976,378 | |||||
Shares issued in reinvestment of dividends and distributions | 12,240,948 | 70,799,933 | ||||||
Shares reacquired | (96,842,573 | ) | (559,679,530 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding before conversion | 43,975,331 | 253,096,781 | ||||||
Shares issued upon conversion from Class A and Class C | 5,957,029 | 34,505,900 | ||||||
Shares reacquired upon conversion into Class A | (154,203 | ) | (890,185 | ) | ||||
|
|
|
| |||||
Net increase (decrease) in shares outstanding | 49,778,157 | $ | 286,712,496 | |||||
|
|
|
|
* | As of April 11, 2014, the last conversion of Class X shares to Class A shares was completed. There are no Class X shares outstanding and Class X shares are no longer being offered for sale. |
Note 7. Borrowings
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 9, 2014 through October 8, 2015. The Funds pay an annualized commitment fee of .075% of the unused portion of the SCA. Prior to October 9, 2014, the Funds had another SCA that provided a commitment of $900 million and the Funds paid an annualized commitment fee of .08% of the unused portion of the SCA. Interest on any borrowings under the SCA is paid at contracted market rates. The commitment fee for the unused amount is accrued daily and paid quarterly.
The Fund did not utilize the SCA during the six months ended February 28, 2015.
Prudential High Yield Fund | 61 |
Financial Highlights
(Unaudited)
Class A Shares | ||||||||||||||||||||||||||
Six Months | Year Ended August 31, | |||||||||||||||||||||||||
2015(a) | 2014(a) | 2013(a) | 2012(a) | 2011(a) | 2010(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.80 | $5.60 | $5.59 | $5.34 | $5.32 | $4.84 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .16 | .33 | .34 | .37 | .40 | .45 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.17 | ) | .22 | .04 | .27 | .03 | .49 | |||||||||||||||||||
Total from investment operations | (.01 | ) | .55 | .38 | .64 | .43 | .94 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.17 | ) | (.35 | ) | (.37 | ) | (.39 | ) | (.41 | ) | (.46 | ) | ||||||||||||||
Capital Contributions(e): | - | - | - | - | - | (d) | - | (d) | ||||||||||||||||||
Net asset value, end of period | $5.62 | $5.80 | $5.60 | $5.59 | $5.34 | $5.32 | ||||||||||||||||||||
Total Return(b): | (0.10)% | 10.11% | 6.85% | 12.55% | 8.14% | 19.94% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $1,313,102 | $1,347,911 | $1,327,678 | $1,339,113 | $1,078,117 | $1,093,443 | ||||||||||||||||||||
Average net assets (000) | $1,299,824 | $1,355,610 | $1,385,567 | $1,187,666 | $1,147,761 | $1,078,033 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | .83% | (f) | .82% | .83% | .87% | .88% | .90% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | .88% | (f) | .87% | .88% | .92% | .93% | .95% | |||||||||||||||||||
Net investment income | 5.88% | (f) | 5.78% | 6.04% | 6.75% | 7.20% | 8.64% | |||||||||||||||||||
Portfolio turnover rate | 21% | (g) | 51% | 55% | 48% | 87% | 91% |
(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. 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 portfolios in which the Fund invests.
(d) Less than $.005 per share.
(e) The Fund received payments related to an unaffiliated-third party’s settlement of regulatory proceedings involving allegations of improper trading in Fund shares during the fiscal years ended August 31, 2011 and 2010. The Fund was not involved in the proceedings or in the calculation of the amount of settlement.
(f) Annualized.
(g) Not annualized.
See Notes to Financial Statements.
62 |
Class B Shares | ||||||||||||||||||||||||||
Six Months | Year Ended August 31, | |||||||||||||||||||||||||
2015(a) | 2014(a) | 2013(a) | 2012(a) | 2011(a) | 2010(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.80 | $5.60 | $5.59 | $5.34 | $5.31 | $4.83 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .15 | .30 | .32 | .34 | .37 | .42 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | .23 | .03 | .28 | .05 | .49 | |||||||||||||||||||
Total from investment operations | (.03 | ) | .53 | .35 | .62 | .42 | .91 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.16 | ) | (.33 | ) | (.34 | ) | (.37 | ) | (.39 | ) | (.43 | ) | ||||||||||||||
Capital Contributions(e): | - | - | - | - | - | (d) | - | (d) | ||||||||||||||||||
Net asset value, end of period | $5.61 | $5.80 | $5.60 | $5.59 | $5.34 | $5.31 | ||||||||||||||||||||
Total Return(b): | (0.53)% | 9.57% | 6.33% | 12.00% | 7.82% | 19.39% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $238,008 | $259,756 | $213,714 | $163,309 | $115,162 | $96,409 | ||||||||||||||||||||
Average net assets (000) | $243,071 | $239,412 | $194,916 | $131,650 | $108,578 | $92,174 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.33% | (f) | 1.32% | 1.33% | 1.37% | 1.38% | 1.40% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.33% | (f) | 1.32% | 1.33% | 1.37% | 1.38% | 1.40% | |||||||||||||||||||
Net investment income | 5.38% | (f) | 5.27% | 5.53% | 6.25% | 6.70% | 8.15% | |||||||||||||||||||
Portfolio turnover rate | 21% | (g) | 51% | 55% | 48% | 87% | 91% |
(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. 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 portfolios in which the Fund invests.
(d) Less than $.005 per share.
(e) The Fund received payments related to an unaffiliated-third party’s settlement of regulatory proceedings involving allegations of improper trading in Fund shares during the fiscal years ended August 31, 2011 and 2010. The Fund was not involved in the proceedings or in the calculation of the amount of settlement.
(f) Annualized.
(g) Not annualized.
See Notes to Financial Statements.
Prudential High Yield Fund | 63 |
Financial Highlights
(Unaudited) continued
Class C Shares | ||||||||||||||||||||||||||
Six Months | Year Ended August 31, | |||||||||||||||||||||||||
2015(a) | 2014(a) | 2013(a) | 2012(a) | 2011(a) | 2010(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.80 | $5.59 | $5.58 | $5.33 | $5.31 | $4.83 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .14 | .29 | .30 | .32 | .36 | .42 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | .23 | .04 | .28 | .04 | .49 | |||||||||||||||||||
Total from investment operations | (.04 | ) | .52 | .34 | .60 | .40 | .91 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.15 | ) | (.31 | ) | (.33 | ) | (.35 | ) | (.38 | ) | (.43 | ) | ||||||||||||||
Capital Contributions(f): | - | - | - | - | - | (e) | - | (e) | ||||||||||||||||||
Net asset value, end of period | $5.61 | $5.80 | $5.59 | $5.58 | $5.33 | $5.31 | ||||||||||||||||||||
Total Return(b): | (0.65)% | 9.49% | 6.07% | 11.74% | 7.45% | 19.40% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $253,453 | $270,142 | $247,992 | $229,715 | $136,177 | $112,212 | ||||||||||||||||||||
Average net assets (000) | $259,365 | $258,825 | $260,306 | $172,185 | $132,854 | $94,741 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement(d) | 1.58% | (g) | 1.57% | 1.58% | 1.62% | 1.55% | 1.40% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.58% | (g) | 1.57% | 1.58% | 1.62% | 1.63% | 1.65% | |||||||||||||||||||
Net investment income | 5.13% | (g) | 5.03% | 5.29% | 5.98% | 6.52% | 8.12% | |||||||||||||||||||
Portfolio turnover rate | 21% | (h) | 51% | 55% | 48% | 87% | 91% |
(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. 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 portfolios in which the Fund invests.
(d) The distributor of the Fund contractually agreed to limit its distribution and service (12b-1) fees to .75% of the average daily net assets of the Class C shares through December 31, 2010.
(e) Less than $.005 per share.
(f) The Fund received payments related to an unaffiliated-third party’s settlement of regulatory proceedings involving allegations of improper trading in Fund shares during the fiscal years ended August 31, 2011 and 2010. The Fund was not involved in the proceedings or in the calculation of the amount of settlement.
(g) Annualized.
(h) Not annualized.
See Notes to Financial Statements.
64 |
Class Q Shares | ||||||||||||||||||||
Six Months | Year Ended August 31, | October 31, 2011(a) through August 31, | ||||||||||||||||||
2015(b) | 2014(b) | 2013(b) | 2012(b) | |||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.81 | $5.61 | $5.61 | $5.41 | ||||||||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income | .17 | .35 | .37 | .35 | ||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | .23 | .02 | .19 | |||||||||||||||
Total from investment operations | (.01 | ) | .58 | .39 | .54 | |||||||||||||||
Less Dividends: | ||||||||||||||||||||
Dividends from net investment income | (.18 | ) | (.38 | ) | (.39 | ) | (.34 | ) | ||||||||||||
Net asset value, end of period | $5.62 | $5.81 | $5.61 | $5.61 | ||||||||||||||||
Total Return(c): | (0.09)% | 10.50% | 7.04% | 10.41% | ||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||
Net assets, end of period (000) | $45,118 | $14,336 | $7,901 | $63,914 | ||||||||||||||||
Average net assets (000) | $34,934 | $10,563 | $52,463 | $48,841 | ||||||||||||||||
Ratios to average net assets(d): | ||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | .47% | (e) | .46% | .47% | .50% | (e) | ||||||||||||||
Expenses before waivers and/or expense reimbursement | .47% | (e) | .46% | .47% | .50% | (e) | ||||||||||||||
Net investment income | 6.29% | (e) | 6.12% | 6.40% | 6.97% | (e) | ||||||||||||||
Portfolio turnover rate | 21% | (f) | 51% | 55% | 48% | (f) |
(a) Commencement of offering.
(b) Calculated based on average shares outstanding during the period.
(c) Total return is calculated assuming a purchase of a share on the first day and a sale on the last day of each period reported and includes reinvestment of dividends and distributions. 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 portfolios in which the Fund invests.
(e) Annualized.
(f) Not annualized.
See Notes to Financial Statements.
Prudential High Yield Fund | 65 |
Financial Highlights
(Unaudited) continued
Class R Shares | ||||||||||||||||||||||||||
Six Months | Year Ended August 31, | |||||||||||||||||||||||||
2015(a) | 2014(a) | 2013(a) | 2012(a) | 2011(a) | 2010(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.80 | $5.60 | $5.59 | $5.34 | $5.32 | $4.84 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .16 | .32 | .33 | .35 | .38 | .44 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | .22 | .04 | .28 | .04 | .49 | |||||||||||||||||||
Total from investment operations | (.02 | ) | .54 | .37 | .63 | .42 | .93 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.16 | ) | (.34 | ) | (.36 | ) | (.38 | ) | (.40 | ) | (.45 | ) | ||||||||||||||
Capital Contributions(e): | - | - | - | - | - | (d) | - | (d) | ||||||||||||||||||
Net asset value, end of period | $5.62 | $5.80 | $5.60 | $5.59 | $5.34 | $5.32 | ||||||||||||||||||||
Total Return(b): | (0.23)% | 9.84% | 6.59% | 12.26% | 7.88% | 19.66% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $53,219 | $57,502 | $50,732 | $36,886 | $20,630 | $10,441 | ||||||||||||||||||||
Average net assets (000) | $55,032 | $55,379 | $47,639 | $27,717 | $16,155 | $7,260 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.08% | (f) | 1.07% | 1.08% | 1.12% | 1.13% | 1.15% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.33% | (f) | 1.32% | 1.33% | 1.37% | 1.38% | 1.40% | |||||||||||||||||||
Net investment income | 5.63% | (f) | 5.53% | 5.78% | 6.47% | 6.93% | 8.32% | |||||||||||||||||||
Portfolio turnover rate | 21% | (g) | 51% | 55% | 48% | 87% | 91% |
(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. 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 portfolios in which the Fund invests.
(d) Less than $.005 per share.
(e) The Fund received payments related to an unaffiliated-third party’s settlement of regulatory proceedings involving allegations of improper trading in Fund shares during the fiscal years ended August 31, 2011 and 2010. The Fund was not involved in the proceedings or in the calculation of the amount of settlement.
(f) Annualized.
(g) Not annualized.
See Notes to Financial Statements.
66 |
Class X Shares | ||||||||||||||||||||||||||
Period Ended April 11, | Year Ended August 31, | |||||||||||||||||||||||||
2014(a)(h) | 2013(a) | 2012(a) | 2011(a) | 2010(a) | 2009 | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.60 | $5.59 | $5.34 | $5.31 | $4.83 | $5.19 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .17 | .30 | .33 | .36 | .41 | .38 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | .22 | .04 | .27 | .04 | .49 | (.33 | ) | |||||||||||||||||||
Total from investment operations | .39 | .34 | .60 | .40 | .90 | .05 | ||||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.19 | ) | (.33 | ) | (.35 | ) | (.37 | ) | (.42 | ) | (.41 | ) | ||||||||||||||
Capital Contributions(e): | - | - | - | - | (d) | - | (d) | - | ||||||||||||||||||
Net asset value, end of period | $5.80 | $5.60 | $5.59 | $5.34 | $5.31 | $4.83 | ||||||||||||||||||||
Total Return(b): | 7.09% | 6.06% | 11.69% | 7.54% | 19.07% | 2.32% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $2 | $73 | $249 | $459 | $966 | $1,878 | ||||||||||||||||||||
Average net assets (000) | $36 | $167 | $363 | $766 | $1,359 | $2,152 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | 1.56% | (f) | 1.58% | 1.62% | 1.63% | 1.65% | 1.66% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | 1.56% | (f) | 1.58% | 1.62% | 1.63% | 1.65% | 1.66% | |||||||||||||||||||
Net investment income | 4.90% | (f) | 5.30% | 6.06% | 6.48% | 7.97% | 9.19% | |||||||||||||||||||
Portfolio turnover rate | 51% | (g)(i) | 55% | 48% | 87% | 91% | 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. 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 portfolios in which the Fund invests.
(d) Less than $.005 per share.
(e) The Fund received payments related to an unaffiliated-third party’s settlement of regulatory proceedings involving allegations of improper trading in Fund shares during the fiscal years ended August 31, 2011 and 2010. The Fund was not involved in the proceedings or in the calculation of the amount of settlement.
(f) Annualized.
(g) Not annualized.
(h) As of April 11, 2014, the last conversion of Class X shares to Class A shares was completed. There are no Class X shares outstanding and Class X shares are no longer being offered for sale.
(i) Calculated as of August 31, 2014.
See Notes to Financial Statements.
Prudential High Yield Fund | 67 |
Financial Highlights
(Unaudited) continued
Class Z Shares | ||||||||||||||||||||||||||
Six Months Ended February 28, | Year Ended August 31, | |||||||||||||||||||||||||
2015(a) | 2014(a) | 2013(a) | 2012(a) | 2011(a) | 2010(a) | |||||||||||||||||||||
Per Share Operating Performance: | ||||||||||||||||||||||||||
Net Asset Value, Beginning Of Period | $5.82 | $5.62 | $5.61 | $5.35 | $5.33 | $4.85 | ||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||
Net investment income | .17 | .35 | .36 | .38 | .42 | .46 | ||||||||||||||||||||
Net realized and unrealized gain (loss) on investment transactions | (.18 | ) | .22 | .04 | .29 | .03 | .49 | |||||||||||||||||||
Total from investment operations | (.01 | ) | .57 | .40 | .67 | .45 | .95 | |||||||||||||||||||
Less Dividends: | ||||||||||||||||||||||||||
Dividends from net investment income | (.18 | ) | (.37 | ) | (.39 | ) | (.41 | ) | (.43 | ) | (.47 | ) | ||||||||||||||
Capital Contributions(e): | - | - | - | - | - | (d) | - | (d) | ||||||||||||||||||
Net asset value, end of period | $5.63 | $5.82 | $5.62 | $5.61 | $5.35 | $5.33 | ||||||||||||||||||||
Total Return(b): | (0.14)% | 10.38% | 7.13% | 13.07% | 8.47% | 20.23% | ||||||||||||||||||||
Ratios/Supplemental Data: | ||||||||||||||||||||||||||
Net assets, end of period (000) | $1,473,242 | $1,336,453 | $1,010,477 | $725,367 | $334,696 | $117,442 | ||||||||||||||||||||
Average net assets (000) | $1,309,364 | $1,254,191 | $911,701 | $479,766 | $304,551 | $94,871 | ||||||||||||||||||||
Ratios to average net assets(c): | ||||||||||||||||||||||||||
Expenses after waivers and/or expense reimbursement | .58% | (f) | .57% | .58% | .62% | .63% | .65% | |||||||||||||||||||
Expenses before waivers and/or expense reimbursement | .58% | (f) | .57% | .58% | .62% | .63% | .65% | |||||||||||||||||||
Net investment income | 6.13% | (f) | 6.02% | 6.29% | 6.97% | 7.43% | 8.86% | |||||||||||||||||||
Portfolio turnover rate | 21% | (g) | 51% | 55% | 48% | 87% | 91% |
(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. 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 portfolios in which the Fund invests.
(d) Less than $.005 per share.
(e) The Fund received payments related to an unaffiliated-third party’s settlement of regulatory proceedings involving allegations of improper trading in Fund shares during the fiscal years ended August 31, 2011 and 2010. The Fund was not involved in the proceedings or in the calculation of the amount of settlement.
(f) Annualized.
(g) Not annualized.
See Notes to Financial Statements.
68 |
Results of Proxy Voting
(Unaudited)
At the special meeting of shareholders held on November 26, 2014, shareholders of the Prudential Investment Portfolios, Inc. 15 which is comprised of Prudential High Yield Fund and Prudential Short Duration High Yield Income Fund (collectively, the “Funds”), approved the following proposal. Shareholders of all Funds voted together on the proposal:
To elect twelve Directors:
SHARES VOTED | % OF VOTED | % OF TOTAL | ||||||||||
(a) Ellen S. Alberding; | ||||||||||||
FOR | 534,964,819.251 | 98.642 | % | 74.296 | % | |||||||
WITHHELD | 7,370,076.333 | 1.358 | % | 1.023 | % | |||||||
(b) Kevin J. Bannon; | ||||||||||||
FOR | 535,533,105.530 | 98.746 | % | 74.375 | % | |||||||
WITHHELD | 6,807,790.054 | 1.254 | % | 0.944 | % | |||||||
(c) Linda W. Bynoe; | ||||||||||||
FOR | 534,984,832.950 | 98.645 | % | 74.299 | % | |||||||
WITHHELD | 7,350,062.634 | 1.355 | % | 1.020 | % | |||||||
(d) Keith F. Hartstein; | ||||||||||||
FOR | 535,517,822.194 | 98.744 | % | 74.373 | % | |||||||
WITHHELD | 6,817,073.390 | 1.256 | % | 0.946 | % | |||||||
(e) Michael S. Hyland; | ||||||||||||
FOR | 535,407,104.783 | 98.723 | % | 74.357 | % | |||||||
WITHHELD | 6,927,790.801 | 1.277 | % | 0.962 | % | |||||||
(f) Stephen P. Munn; | ||||||||||||
FOR | 535,139,031.831 | 98.674 | % | 74.320 | % | |||||||
WITHHELD | 574,352.710 | 1.326 | % | 0.999 | % | |||||||
(g) James E. Quinn; | ||||||||||||
FOR | 535,241,487.863 | 98.693 | % | 74.334 | % | |||||||
WITHHELD | 7,093,407.721 | 1.307 | % | 0.985 | % | |||||||
(h) Richard A. Redeker; | ||||||||||||
FOR | 535,207,216.660 | 98.686 | % | 74.330 | % | |||||||
WITHHELD | 7,127,678.924 | 1.314 | % | 0.989 | % | |||||||
(i) Stephen G. Stoneburn; | ||||||||||||
FOR | 535,376,077.957 | 98.717 | % | 74.353 | % | |||||||
WITHHELD | 6,958,817.627 | 1.283 | % | 0.966 | % | |||||||
(j) Stuart S. Parker; | ||||||||||||
FOR | 535,425,197.727 | 98.726 | % | 74.360 | % | |||||||
WITHHELD | 6,909,697.857 | 1.274 | % | 0.959 | % |
Prudential High Yield Fund | 69 |
Results of Proxy Voting
(Unaudited) continued
SHARES VOTED | % OF VOTED | % OF TOTAL | ||||||||||
(k) Scott E. Benjamin; and | ||||||||||||
FOR | 535,425,002.394 | 98.726 | % | 74.360 | % | |||||||
WITHHELD | 6,909,893.190 | 1.274 | % | 0.959 | % | |||||||
(l)Grace C. Torres. | ||||||||||||
FOR | 535,360,477.097 | 98.715 | % | 74.351 | % | |||||||
WITHHELD | 6,974,418.487 | 1.285 | % | 0.968 | % |
The special meeting of shareholders of the Prudential High Yield Fund (the “Fund”) held on November 26, 2014, was adjourned to December 3, 2014, and further adjourned to December 10, 2014, and January 9, 2015 to permit further solicitation of proxies on the proposals noted below.
An abstention or a broker non-vote is considered present for purposes of determining a quorum but has the effect of a vote against such matters. At the special meeting of shareholders held on January 9, 2015, insufficient votes were obtained to approve the following proposals:
Proposal 1: To permit PI to enter into or make material changes to the Fund’s subadvisory agreements with subadvisers that are wholly-owned subsidiaries of PI or a sister company of PI (wholly-owned subadvisers) without shareholder approval.
SHARES VOTED | % OF VOTED | % OF TOTAL | ||||||||||
FOR | 177,863,720.233 | 44.924 | % | 31.463 | % | |||||||
AGAINST | 12,447,792.226 | 3.144 | % | 2.202 | % | |||||||
ABSTAIN | 6,547,904.622 | 1.654 | % | 1.158 | % | |||||||
BROKER NON-VOTE | 199,064,715.941 | 50.278 | % | 35.214 | % | |||||||
TOTAL | 31,712,248.331 | 100.000 | % | 70.037 | % |
Proposal 2: To designate the Fund’s investment objective as a non-fundamental policy of the Fund, meaning that the Fund’s investment objective could be changed with the approval of the Fund’s Board of Directors, but without shareholder approval.
SHARES VOTED | % OF VOTED | % OF TOTAL | ||||||||||
FOR | 153,968,492.660 | 38.889 | % | 27.236 | % | |||||||
AGAINST | 35,251,268.279 | 8.904 | % | 6.236 | % | |||||||
ABSTAIN | 7,639,655.142 | 1.929 | % | 1.351 | % | |||||||
BROKER NON-VOTE | 199,064,715.941 | 50.278 | % | 35.214 | % | |||||||
TOTAL | 31,712,248.331 | 100.000 | % | 70.037 | % |
70 | Visit our website at www.prudentialfunds.com |
n MAIL | n TELEPHONE | n WEBSITE | ||
Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | (800) 225-1852 | www.prudentialfunds.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 • Keith F. Hartstein • Michael S. Hyland • Stephen P. Munn • Stuart S. Parker • James E. Quinn • Richard A. Redeker • Stephen G. Stoneburn • Grace C. Torres |
OFFICERS |
Stuart S. Parker, President • Scott E. Benjamin, Vice President • M. Sadiq Peshimam, Treasurer and Principal Financial and Accounting Officer • Raymond A. O’Hara, Chief Legal Officer • Deborah A. Docs, Secretary • Chad A. Earnst, Chief Compliance Officer • Theresa C. Thompson, Deputy Chief Compliance Officer • Richard W. Kinville, Anti-Money Laundering Compliance Officer • Jonathan D. Shain, Assistant Secretary • Claudia DiGiacomo, Assistant Secretary • Amanda S. Ryan, 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 | Prudential Investments LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
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INVESTMENT SUBADVISER | Prudential Investment Management, Inc. | Gateway Center Two 100 Mulberry Street | ||
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DISTRIBUTOR | Prudential Investment Management Services LLC | Gateway Center Three 100 Mulberry Street Newark, NJ 07102 | ||
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CUSTODIAN | The Bank of New York Mellon | One Wall 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 |
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.prudentialfunds.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.prudentialfunds.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, Prudential High Yield Fund, Prudential Investments, Attn: Board of Directors, 100 Mulberry Street, Gateway Center Three, 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. |
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 |
PRUDENTIAL HIGH YIELD FUND
SHARE CLASS | A | B | C | Q | R | Z | ||||||
NASDAQ | PBHAX | PBHYX | PRHCX | PHYQX | JDYRX | PHYZX | ||||||
CUSIP | 74440Y108 | 74440Y207 | 74440Y306 | 74440Y884 | 74440Y603 | 74440Y801 |
MF110E2 0275796-00001-00
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. 15
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By: | /s/ Deborah A. Docs | |
Deborah A. Docs | ||
Secretary
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Date: | April 20, 2015 |
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
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Date: | April 20, 2015
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By: | /s/ M. Sadiq Peshimam | |
M. Sadiq Peshimam | ||
Treasurer and Principal Financial and Accounting Officer
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Date: | April 20, 2015 |