(ICON)
Prudential
High Yield
Total Return
Fund, Inc.
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential High Yield Total Return Fund, Inc.
Performance At A Glance
During our fiscal year ended March 31, 1999, the high-yield
bond market was
volatile. High-yield bond prices tumbled in the summer of
1998 after a
financial crisis spread beyond Asia. Then most categories of
high-yield bonds
began to rally after the Federal Reserve cut a key short-
term interest rate
three times in the autumn of 1998 to stimulate U.S. economic
growth. Despite
the rate cuts, lower-quality high-yield bonds did not fully
recover their early
price declines, and their yields remained substantially
higher than the yields
on comparable Treasuries. The Prudential High Yield Total
Return Fund's
exposure to these bonds caused its returns to lag the
average comparable fund,
as measured by Lipper, Inc.
Cumulative Total Returns1 As
of 3/31/99
<TABLE>
<CAPTION>
Since Inception2
Since Inception2
(Without sales charge)
(With sales charge)
<S> <C>
<C>
Class A -2.97%
- -6.85%
Class B -3.45
- -8.45
Class C -3.45
- -5.42
Class Z -2.82
- -2.82
Lipper High Current Yield Fd. Avg.3 -2.21
***
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be worth
more or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc. Since the
Fund has been in existence less than one year, no average
annual total
returns are presented. The Fund charges a maximum front-
end sales load of 4%
for Class A shares. Class B shares are subject to a
declining contingent
deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and 1%
for six years.
Class B shares will automatically convert to Class A
shares, on a quarterly
basis, approximately seven years after purchase. Class C
shares are subject
to a front-end sales load of 1%, and a CDSC of 1% for 18
months. Class C
shares bought before November 2, 1998, have a 1% CDSC if
sold within one
year. Class Z shares are not subject to a sales charge or
distribution fee.
2 Inception dates: Class A, B, C, and Z, 5/5/98.
3 The Lipper Since Inception return is for all funds in each
share class in
the High Current Yield Fund category.
How Investments Compared.
(As of 3/31/99)
(GRAPH)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past
performance should never be used to predict future results.
The risks to each
of the investments listed above are different--we provide 12-
month total
returns for several Lipper mutual fund categories to show
you that reaching for
higher returns means tolerating more risk. The greater the
risk, the larger the
potential reward or loss. In addition, we've included
historical 20-year
average annual returns. These returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term
growth, but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth
out their total returns year by year. But their prices still
fluctuate
(sometimes significantly), and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state
agencies and/or municipalities. This investment provides
income that is usually
exempt from federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value; they don't
fluctuate much in price but, historically, their returns
have been generally
among the lowest of the major investment categories.
<PAGE>
Portfolio Managers' Report
- ------------------------------------------------------------
- -------------------
(PHOTO)
George Edwards & Paul Price
Fund Managers
Investment Goals and Style
The Fund seeks total return through high current income and
capital
appreciation. The Fund invests primarily in securities rated
BB and below by
independent rating agencies, unrated bonds, defaulted bonds,
and distressed
securities. All are below investment grade and are commonly
known as junk
bonds. As a result, the securities are subject to a greater
risk of loss of
principal and nonpayment of interest, including default
risk, than higher-rated
bonds. The Fund also invests primarily in equity securities
that were attached
to, or included in, a unit with fixed-income securities at
the time of the
purchase, convertible securities, and preferred stock. There
can be no
assurance that the Fund will achieve its investment
objective.
Performance Review
A solid beginning
When the Fund was launched in May 1998, the high-yield bond
market was
benefiting from favorable economic conditions in the United
States and what
appeared to be an improving financial situation in Asia.
The U.S. economic
expansion was well on its way to becoming the longest ever
seen in peacetime,
yet it had not ignited higher inflation, which erodes the
value of a bond's
fixed interest payments. Meanwhile, the financial crisis in
Asia had seemed to
ease in the spring, lessening concern that the instability
in that region would
spread to other areas.
In this benign economic environment, the Fund performed
nicely during the first
few months it was in operation. We emphasized bonds rated
single-B and below,
nonrated debt securities, and smaller-sized bond issues.
These bonds tend to be
more speculative investments. Therefore, they provide higher
interest rates and
the potential for capital appreciation to compensate
investors for the bonds'
greater credit risk. During this time, we were also able to
take advantage of
many buying opportunities because the large supply of newly
issued high-yield
bonds was priced attractively to appeal to investors. By the
end of June, the
Fund still held a considerable amount of cash (29%), most of
which was invested
by the close of July.
"Flight to quality" hurt the Fund
August was a difficult month for nearly all financial
markets. Global financial
turmoil spread beyond Asia to Russia and Latin America.
This deterioration in
world financial markets fueled a "flight to quality" in
which investors
purchased the safest securities, such as U.S. Treasuries and
sold riskier
assets, including high-yield bonds. Moreover, there was
talk that the U.S.
economy could sink into a recession and corporate earnings
slide if overseas
demand for American-made goods continued to decline. High-
yield bonds tumbled
in value, particularly single-B-rated, CCC-rated, and
nonrated bonds. Because
the bulk of our assets are in these very speculative debt
securities, the
Fund's net asset value fell sharply for the three-month
period ended September
1998.
High-yield bond prices rebounded
By the early autumn of 1998, market sentiment had become
very negative. This
prompted the Federal Reserve to cut the Federal funds rate
(the rate U.S.
banks charge each other for overnight loans) by a quarter
percentage point on
September 29,
<PAGE>
October 15 and November 17, leaving the key short-term rate
at 4.75%. Reducing
interest rates stimulates economic growth by lowering
borrowing costs. The rate
cuts, therefore, helped to restore faith in the U.S. economy
and calmed global
financial markets. Market sentiment improved, leading
investors to reverse the
"flight to quality" by selling Treasuries and purchasing
assets such as stocks
and high-yield bonds. The Investment Company Institute
reported that the
amount of money flowing into high-yield bond mutual funds
during November
1998 surpassed the previous all-time high by an impressive
51%. Of course, this
trend benefited the Fund.
Rally continued in new year
Demand for high-yield bonds continued to increase in 1999
amid strong U.S.
economic growth and climbing commodity prices. In the first
three months of
1999, among the best performing sectors of the high-yield
market was
telecommunications bonds, where prices were bolstered by
merger and acquisition
activity. Telecommunications bonds comprised roughly 16% of
the Fund's total
investments as of March 31, 1999--its largest position. We
also owned bonds of
some cyclical industries such as paper, energy and
chemicals, that rebounded in
the first quarter of 1999. For example, bonds of energy
companies were helped
by the dramatic increase in the price of crude oil, which
soared as demand for
crude picked up in Asia even as the Organization of
Petroleum Exporting
Countries (OPEC) planned to cut production.
Not every sector of the high-yield market performed well.
The healthcare sector
sold off sharply due to the uncertainty posed by newly
implemented federal
reimbursement programs. In addition, lower-rated bonds
(single-B and below) did
not perform as well as the rest of the high-yield universe.
Investors favored
larger, higher-quality debt securities as the high-yield
bond market was
recovering from the sharp price declines of 1998. Since the
Fund and the
Lipper average both contained lower-rated bonds, they posted
negative returns
for the fiscal year.
Looking Ahead
Yields still very attractive
High-yield bonds that are rated single-B and below, and
nonrated bonds, still
provide very attractive yields relative to comparable U.S.
Treasuries. If the
U.S. economic expansion continues and investors grow more
comfortable holding
riskier assets, we believe yields on these high-yield bonds
will continue to
fall (and their prices rise). Therefore, we plan to
maintain the Fund's
exposure to the lower-rated categories of the high-yield
market. We also plan
to maintain exposure to the stocks of companies that issue
high-yield bonds,
because these equity securities have good potential for
capital appreciation.
Credit Quality
Expressed as a percentage of total investments as of 3/31/99
BBB 0.3%
BB 6.2
B 52.5
CCC 14.2
Not Rated 16.9
Equity 6.4
Short-term/Cash 3.5
1
<PAGE>
A Message to Our Shareholders
May 19, 1999
- ------------------------------------------------------------
- -------------------
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a
handful of very large companies. These stocks were getting
more and more
expensive--out of proportion to their earnings expectations.
As a result,
there was a substantial disparity in value between large and
small companies,
and between growth and value stocks. In recent months,
however, that gap has
started to narrow amid news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value
stocks that typically fare better in a growing economy, and
have been selling
at a significant discount to the market.
Many sectors of the bond market have also begun to rebound
from last year's
global financial crisis. Furthermore, while bonds have not
generated higher
returns than stocks in recent years, they have demonstrated
that they hold up
better during market downturns. That's a thought to keep in
mind going forward.
Diversification is critical
History shows that the markets generally bring prices in
line with earnings
performance, sooner or later. It also shows that two
investment styles--value
and growth--typically alternate in periods of superior
performance.
What does this suggest? Instead of chasing popular market
winners, investors
should have a well-diversified asset allocation strategy in
place and keep to
it. It is also a good practice to rebalance your holdings,
when necessary, to
keep your asset allocation consistent with your long-term
objectives and risk
tolerance. A properly diversified portfolio of value- and
growth-oriented
equity funds, bond funds, and money market funds could help
you weather
inevitable market turbulence and receive more consistent
returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders
diversify. We have also designed several balanced and
diversified funds to
allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
LONG-TERM INVESTMENTS--94.3%
CORPORATE BONDS--86.9%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Aerospace--0.2%
BE Aerospace, Inc., Sr. Sub. Notes
B1 9.50% 11/01/08 $ 250 $
266,875
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Airlines--0.3%
Canadian Airlines Corp., Sr. Notes (Canada)
Caa2 12.25 8/01/06 1,150(f)
506,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Automotive--1.1%
Eagle-Picher Industries, Inc., Sr. Sub. Notes
B3 9.375 3/01/08 400
386,000
Hayes Wheels Int'l., Inc., Sr. Sub. Notes
B2 9.125 7/15/07 500
521,250
Paragon Corp. Holdings, Inc., Sr. Notes
B3 9.625 4/01/08 1,000
800,000
- ------------
1,707,250
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Broadcasting & Other Media--6.5%
Ackerly Group, Inc., Sr. Sub. Notes
B2 9.00 1/15/09 1,000
1,030,000
American Lawyer Media Holdings, Inc., Sr. Disc. Notes,
Zero Coupon (until 12/15/02)
B3 12.25 12/15/08 1,500
971,250
Capstar Broadcasting, Sr. Disc. Notes, Zero Coupon
(until 2/1/02)
B3 12.75 2/01/09 2,000
1,690,000
CD Radio, Inc., Sr. Disc. Notes, Zero Coupon (until
12/1/02)
Caa1 15.00 12/01/07 1,000
541,250
Chancellor Media Corp., Sr. Sub. Notes
Ba3 9.00 10/01/08 1,000
1,070,000
Coaxial Communications, Inc., Sr. Notes
B3 10.00 8/15/06 250
266,250
Grupo Televisa S.A., Sr. Disc. Notes, Zero Coupon
(until 5/15/01) (Mexico)
Ba2 13.25 5/15/08 1,000(f)
835,000
Jacor Communications Co., Sr. Sub. Notes
B2 8.75 6/15/07 1,000
1,067,500
Lin Holdings Corp., Sr. Disc. Notes, Zero Coupon (until
3/1/03)
B3 10.00 3/01/08 500
352,500
Radio Unica Corp., Sr. Disc. Notes, Zero Coupon (until
8/1/02)
NR 11.75 8/01/06 1,500
843,750
SFX Entertainment, Inc., Sr. Sub. Notes
B3 9.125 2/01/08 1,500
1,530,000
- ------------
10,197,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Building & Related Industries--2.4%
Formica Corp., Sr. Sub. Notes
B3 10.875 3/01/09 1,000
995,000
New Millenium Homes, Sr. Notes
(cost $1,945,519; purchased 5/27/98)
NR 12.00 9/03/00 2,000(b)
1,800,000
Presley Cos., Sr. Notes
Caa3 12.50 7/01/01 900
760,500
Webb (Del E.) Corp., Sr. Sub. Deb.
B2 9.375 5/01/09 250
242,500
- ------------
3,798,000
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Cable--6.2%
Adelphia Communications Corp.,
Sr. Notes
B1 10.50% 7/15/04 $ 500 $
550,000
Sr. Notes, PIK
B1 9.50 2/15/04 43
44,327
Avalon Cable Holdings LLC, Sr. Disc. Notes, Zero Coupon
(until 12/1/03)
Caa1 11.875 12/01/08 1,000
653,750
Avalon Cable of Michigan, Inc., Sr. Sub. Notes
B3 9.375 12/01/08 750
790,313
Charter Communications Holdings LLC,
Sr. Disc. Notes, Zero Coupon (until 4/1/04)
B2 9.92 4/01/11 1,000
643,750
Sr. Notes
B2 8.625 4/01/09 500
510,625
Classic Communications, Inc., Sr. Disc. Notes, Zero
Coupon
(until 8/1/03)
Caa1 13.25 8/01/09 1,000(d)
695,000
Diamond Cable Co., Sr. Disc. Notes, Zero Coupon (until
12/15/00)
(United Kingdom)
B3 11.75 12/15/05 2,000(f)
1,740,000
Falcon Holdings Group, L.P., Sr. Disc. Notes, Zero
Coupon
(until 4/15/03)
B2 9.285 4/15/10 1,000
695,000
International Cabletel, Inc., Sr. Disc. Notes, Zero
Coupon
(until 4/15/00)
B3 12.75 4/15/05 1,000
945,000
Mediacom LLC, Sr. Notes
B2 7.875 2/15/11 500
490,000
TVN Entertainment Corp., Sr. Notes
NR 14.00 8/01/08 1,000(d)
850,000
United Int'l. Holdings, Inc., Sr. Disc. Notes, Zero
Coupon
(until 2/15/03)
B3 10.75 2/15/08 1,500
1,020,000
- ------------
9,627,765
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Capital Goods--0.5%
Thermadyne Holdings Corp.,
Sr. Disc. Notes, Zero Coupon (until 6/1/03)
Caa1 12.50 6/01/08 500
250,000
Sr. Sub. Notes
B3 9.875 6/01/08 500
472,500
- ------------
722,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Chemicals--1.2%
Borden Chemical & Plastics L.P., Sr. Notes
B1 9.50 5/01/05 500
460,000
Equistar Chemicals L.P., Sr. Notes
Baa3 8.75 2/15/09 500
507,500
Sterling Chemical, Inc., Sr. Sub. Notes
B3 11.75 8/15/06 1,000
940,000
- ------------
1,907,500
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Consumer Products--1.2%
Corning Consumer Product Co., Sr. Sub. Notes
B3 9.625% 5/01/08 $ 1,080 $
901,800
Revlon Consumer Products Corp., Sr. Notes
B2 9.00 11/01/06 500
495,000
Windmere Durable Holdings, Inc., Sr. Notes
B3 10.00 7/31/08 500
457,500
- ------------
1,854,300
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Containers--1.2%
Ball Corp., Sr. Sub. Notes
B1 8.25 8/01/08 250
258,125
Graham Packaging Holdings Co., Sr. Disc. Notes, Zero
Coupon (until 1/15/03)
Caa1 10.75 1/15/09 2,000
1,380,000
Tekni Plex, Inc., Sr. Sub. Notes
B3 11.25 4/01/07 250
272,500
- ------------
1,910,625
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Drugs & Health Care--4.3%
Fresenius Medical Care Capital Trust, Gtd. Notes
Ba3 9.00 12/01/06 650
666,250
Harborside Healthcare Corp., Sr. Sub. Disc. Notes, Zero
Coupon (until 8/1/03)
B3 11.00 8/01/08 750
315,000
ICN Pharmaceuticals, Inc., Sr. Notes
Ba3 8.75 11/15/08 1,000
1,005,000
Magellan Health Services, Inc., Sr. Sub. Notes
Caa1 9.00 2/15/08 1,000
862,500
Mariner Post-Acute Network, Inc., Sr. Sub. Disc. Notes,
Zero Coupon (until 11/1/02)
B3 10.50 11/01/07 2,000
380,000
Medaphis Corp., Sr. Notes
Caa1 9.50 2/15/05 125
85,000
Mediq, Inc., Sr. Sub. Notes
B3 11.00 6/01/08 1,000
870,000
Sun Healthcare Group, Inc., Sr. Sub. Notes
Caa3 9.50 7/01/07 1,000
270,000
Team Health, Inc., Sr. Sub. Notes
B3 12.00 3/15/09 750
750,000
US Healthworks, Inc., Sr. Disc. Notes
NR Zero 10/15/04 1,500
1,575,000
- ------------
6,778,750
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Energy--6.1%
Anker Coal Group, Inc., Sr. Notes
Ca 9.75 10/01/07 1,000
530,000
Applied Power, Inc., Sr. Sub. Notes
B1 8.75 4/01/09 500
507,500
Bayard Drilling Technologies, Sr. Notes
B2 11.00 6/30/05 500
545,000
Calpine Corp., Sr. Notes
Ba2 7.75 4/15/09 500
500,000
Chesapeake Energy Corp., Sr. Notes
B3 9.625 5/01/05 1,250
1,037,500
Chiles Offshore LLC, Sr. Notes
B3 10.00 5/01/08 1,250
906,250
CMS Energy Corp., Sr. Notes
Ba3 7.50 1/15/09 125
126,250
DI Industries, Inc., Sr. Notes
B1 8.875 7/01/07 1,000
790,000
Gothic Production Corp., Sr. Sec'd Notes
B3 11.125 5/01/05 1,250
962,500
Grant Geophysical, Inc., Sr. Notes,
B3 9.75 2/15/08 1,000
570,000
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Energy (cont'd.)
Gulf Canada Resources Ltd.,
Sr. Sub. Deb. (Canada)
Ba2 9.625% 7/01/05 $ 625(f) $
639,062
Sr. Sub. Deb. (Canada)
Ba2 9.25 1/15/04 500(f)
509,310
Ocean Rig, Gtd. Sr. Sec'd. Notes (Norway)
B3 10.25 6/01/08 1,000(f)
700,000
P & L Coal Holdings Corp., Sr. Sub. Notes
B2 9.625 5/15/08 1,000
1,043,750
Pride Petroleum Services, Inc., Sr. Notes
Ba3 9.375 5/01/07 125
120,000
R & B Falcon Corp., Sr. Notes
(cost $132,124; purchased 3/25/99)
Ba3 12.25 3/15/06 130(b)
136,825
- ------------
9,623,947
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Financial Services--0.6%
Amresco, Inc., Sr. Sub. Notes
(cost $736,546; purchased 11/20/98)
Caa3 9.875 3/15/05 1,000(b)
740,000
Delta Financial Corp., Sr. Notes
B3 9.50 8/01/04 300
225,000
- ------------
965,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Food & Beverage--3.1%
Advantica Restaurant Group, Inc., Sr. Notes
B2 11.25 1/15/08 1,500
1,530,000
Envirodyne Industries, Inc., Sr. Notes
Caa1 10.25 12/01/01 340
261,800
Fresh Foods, Inc., Sr. Sub. Notes
B3 10.75 6/01/06 500
500,000
Grupo Azucarero Mexico S.A., Sr. Notes (Mexico)
Caa2 11.50 1/15/05 1,700(f)
578,000
Iowa Select Farms L.P., Sr. Sub. Notes
B3 10.75 12/01/05 1,125
900,000
Specialty Foods Corp., Sr. Sub. Notes
Caa3 11.25 8/15/03 1,500
1,125,000
- ------------
4,894,800
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Gaming--5.2%
Alliance Gaming Corp., Sr. Sub. Notes
B3 10.00 8/01/07 1,000
731,250
Aztar Corp., Sr. Sub. Notes
B2 13.75 10/01/04 500
550,625
Blue Chip, Sr. Sub. Notes
(cost $1,264,826; purchased 5/5/98)
NR 9.50 9/15/02 1,500(b)
1,260,000
Casino America Corp., Sr. Notes
B1 12.50 8/01/03 750
855,938
Fitzgeralds Gaming Corp., Sr. Notes
B3 12.25 12/15/04 625
281,250
Hollywood Park, Inc., Sr. Sub. Notes
B2 9.25 2/15/07 750
768,750
Isle Capri Black Hawk LLC, First Mtge. Notes
B3 13.00 8/31/04 1,000
1,085,000
Mohegan Tribal Gaming Auth., Sr. Sub. Notes
Ba3 8.75 1/01/09 250
261,250
Santa Fe Hotel, Inc., First Mtge. Notes
Caa2 11.00 12/15/00 1,000
980,000
Trump Atlantic City Assocs., First Mtge. Notes
B2 11.25 5/01/06 1,500
1,335,000
- ------------
8,109,063
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Industrials--3.1%
AMM Holdings, Inc., Sr. Disc. Notes, Zero Coupon (until
7/1/03)
Caa1 13.50% 7/01/09 $ 2,000 $
640,000
Continental Global Group, Inc., Sr. Notes
B2 11.00 4/01/07 1,500
1,320,000
Great Lakes Carbon Corp.,
Sr. Disc. Deb., Zero Coupon (until 5/15/03)
Caa1 13.125 5/15/09 1,000
557,500
Sr. Sub. Notes, PIK
B3 10.25 5/15/08 1,000
1,030,000
ICF Kaiser Int'l., Inc., Sr. Sub. Notes
Caa2 13.00 12/31/03 1,770
1,239,000
- ------------
4,786,500
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Leisure & Tourism--2.2%
AMC Entertainment, Inc., Sr. Sub. Notes
B3 9.50 2/01/11 375
356,719
Ballys Total Fitness Holdings, Inc., Sr. Sub. Notes
B3 9.875 10/15/07 1,000
990,000
Premier Cruise Ltd., Sr. Notes
(cost $973,646; purchased 5/19/98)
Caa2 11.00 3/15/08 1,000(b)(e)
280,000
Production Resource LLC, Sr. Sub. Notes
Caa2 11.50 1/15/08 1,000
990,000
Town Sports Int'l., Inc., Sr. Notes
B2 9.75 10/15/04 775
751,750
- ------------
3,368,469
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Miscellaneous Services--3.4%
Coinstar, Inc., Sr. Disc. Notes, Zero Coupon (until
10/1/01)
NR 13.00 10/01/06 1,550
1,480,250
Desa Int'l., Inc., Sr. Sub. Notes
Caa1 9.875 12/15/07 1,000
780,000
ICON Health & Fitness, Inc., Sr. Sub. Notes
(cost $1,369,767; purchased 7/21/98)
Caa2 13.00 7/15/02 1,500(b)
1,125,000
Interact Systems, Inc., Sr. Disc. Notes
NR Zero 8/01/03 1,500
630,000
Kindercare Learning Center, Inc., Sr. Sub. Notes
B3 9.50 2/15/09 750
753,750
La Petite Academy, Inc., Sr. Notes
B3 10.00 5/15/08 500
490,000
- ------------
5,259,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Paper & Forest Products--4.7%
Ainsworth Lumber Ltd., Sr. Notes, PIK
B3 12.50 7/15/07 2,000
2,110,000
Gaylord Container Corp., Sr. Notes
Caa1 9.75 6/15/07 1,500
1,447,500
Maxxam Group Holdings, Inc., Sr. Notes
B3 12.00 8/01/03 500
535,000
Millar Western Production Ltd., Sr. Notes
B3 9.875 5/15/08 500
445,000
Repap New Brunswick, Inc., Sr. Sec'd. Notes
Caa1 10.625 4/15/05 1,000
830,000
Stone Container Corp.,
Sr. Notes
B2 12.58 8/01/16 250
267,188
Sr. Sub. Deb.
B3 12.25 4/01/02 1,750
1,760,937
- ------------
7,395,625
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Publishing--1.3%
Garden State Newspapers, Sr. Sub. Notes
B1 8.625% 7/01/11 $ 250 $
251,875
Phoenix Color Corp., Sr. Sub. Notes
B3 10.375 2/01/09 1,000
1,015,000
World Color Press, Inc.,
Sr. Sub. Notes
B1 8.375 11/15/08 500
510,000
Sr. Sub. Notes
B1 7.75 2/15/09 250
245,000
- ------------
2,021,875
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Real Estate--0.5%
CB Richards Ellis Services, Inc., Sr. Sub. Notes
Ba3 8.875 6/01/06 800
800,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Retail--3.4%
Big 5 Holdings Corp., Sr. Disc. Notes, Zero Coupon
(until 11/30/02)
(cost $554,565; purchased 2/3/99)
NR 13.45 11/30/08 1,000(b)
550,000
Montgomery Ward Trade Claim
(cost $695,187; purchased 8/19/98)
NR Zero 12/31/00 1,986(b)
466,769
Musicland Group, Inc., Sr. Sub. Notes
B3 9.00 6/15/03 1,500
1,509,375
Pamida, Inc., Sr. Sub. Notes
Caa1 11.75 3/15/03 950
856,187
Phar-Mor, Inc., Sr. Notes
B3 11.72 9/11/02 1,805
1,859,150
- ------------
5,241,481
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Steel & Metals--2.7%
Doe Run Res. Corp., Sr. Notes
B3 11.25 3/15/05 1,000
850,000
Kaiser Aluminum & Chemical Corp., Sr. Sub. Notes
B2 12.75 2/01/03 1,000
967,500
National Steel Corp., First Mtge.
Ba3 9.875 3/01/09 250
256,875
UCAR Global Enterprises, Inc., Sr. Sub. Notes
B2 12.00 1/15/05 1,000
1,056,250
WHX Corp., Sr. Notes
B3 10.50 4/15/05 1,150
1,115,500
- ------------
4,246,125
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Supermarkets--1.9%
Homeland Stores, Inc., Sr. Notes
NR 10.00 8/01/03 350
299,250
Pantry, Inc., Sr. Sub. Notes
B3 10.25 10/15/07 1,500
1,575,000
Pathmark Stores, Inc., Sr. Sub. Notes
Caa1 9.625 5/01/03 1,000
1,027,500
- ------------
2,901,750
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Technology--1.9%
Ampex Corp., Sr. Notes
B+(a) 12.00% 3/15/03 $ 1,000 $
1,040,000
Anacomp, Inc., Sr. Sub. Notes
B3 10.875 4/01/04 1,000
1,040,000
DecisionOne Holdings Corp., Sr. Disc. Deb., Zero Coupon
(until 8/1/02)
C 11.50 8/01/08 1,100(d)
22,000
Viasystems, Inc., Sr. Sub. Notes
Caa1 9.75 6/01/07 1,000
941,250
- ------------
3,043,250
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Telecommunications--16.2%
Allegiance Telecom, Inc., Sr. Notes
NR 12.875 5/15/08 1,000
1,100,000
AMSC Acquisition Co., Inc., Sr. Notes
NR 12.25 4/01/08 500
253,750
Arch Communications Group, Inc., Sr. Notes
B3 12.75 7/01/07 500
445,000
Bestel S.A. De CV, Sr. Disc. Notes, Zero Coupon (until
5/15/01) (Mexico)
NR 12.75 5/15/05 1,500(f)
930,000
Birch Telecom, Inc., Sr. Notes
NR 14.00 6/15/08 1,000
915,000
Caprock Communications Corp., Sr. Notes
Caa1 12.00 7/15/08 500
508,750
Cencall Communications Corp., Sr. Disc. Notes, Zero
Coupon
(until 1/15/99)
B2 10.125 1/15/04 250
257,500
Covad Communications Group, Inc., Sr. Disc. Notes
B3 12.50 2/15/09 500
502,500
E. Spire Communications, Inc., Sr. Disc. Notes, Zero
Coupon
(until 7/1/03)
NR 10.625 7/01/08 900
432,000
Firstworld Communications, Inc., Sr. Disc. Notes, Zero
Coupon
(until 4/15/03)
NR 13.00 4/15/08 1,000
380,000
Focal Communications Corp., Sr. Disc. Notes, Zero
Coupon
(until 2/15/03)
NR 12.125 2/15/08 1,250
700,000
GST Network Funding, Inc., Sr. Disc. Notes, Zero Coupon
(until 5/1/03)
NR 10.50 5/01/08 1,375
735,625
GST USA, Inc., Sr. Disc. Notes, Zero Coupon (until
12/15/00)
NR 13.875 12/15/05 500
395,000
ICG Holdings, Inc., Sr. Disc. Notes, Zero Coupon (until
9/15/00)
NR 13.50 9/15/05 1,300
1,150,500
ICO Global Communications, Sr. Notes
B3 15.00 8/01/05 1,000(d)
550,000
Impsat Corp., Sr. Notes
B2 12.375 6/15/08 1,000
900,000
Iridium Capital Corp., Sr. Notes
B3 14.00 7/15/05 1,000
450,000
Jordan Telecommunication Products, Sr. Sub. Notes
B3 9.875 8/01/07 500
500,000
Level 3 Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 12/1/03)
B3 10.50 12/01/08 1,100
690,250
Sr. Notes
B3 9.125 5/01/08 250
250,625
McLeodusa, Inc., Sr. Notes
B2 8.125 2/15/09 1,000
1,000,000
Nextel Communications, Inc.,
Sr. Disc. Notes, Zero Coupon (until 2/15/03)
B2 9.95 2/15/08 600
420,000
Sr. Disc. Notes, Zero Coupon (until 2/15/99)
B2 9.75 8/15/04 350
362,250
Nextel International, Inc., Sr. Disc. Notes, Zero
Coupon
(until 4/15/03)
Caa1 12.125 4/15/08 500
220,000
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Telecommunications (cont'd.)
Nextel Partners, Inc., Sr. Disc. Notes, Zero Coupon
(until 2/1/04)
B3 14.00% 2/01/09 $ 1,000 $
570,000
Northeast Optic Network, Inc., Sr. Notes
NR 12.75 8/15/08 500
520,000
NTL, Inc., Sr. Disc. Notes, Zero Coupon (until 10/1/03)
B3 12.375 10/01/08 2,500
1,725,000
Omnipoint Corp., Sr. Notes
B3 11.625 8/15/06 2,000
1,750,000
RSL Communications Ltd.,
Sr. Notes
B2 12.25 11/15/06 250
273,125
Sr. Notes
B3 12.00 11/01/08 350
388,500
Splitrock Services, Inc., Sr. Notes
NR 11.75 7/15/08 750
716,250
Time Warner Telecom LLC, Sr. Notes
B2 9.75 7/15/08 650
695,500
U.S. Xchange LLC, Sr. Notes
NR 15.00 7/01/08 750
810,000
USA Mobil Communications, Inc., Sr. Notes
B3 9.50 2/01/04 500
430,000
Versatel Telecom BV, Sr. Notes (Netherlands)
NR 13.25 5/15/08 1,000(f)
1,052,500
Viatel, Inc., Sr. Notes
Caa1 11.25 4/15/08 1,000
1,025,000
Winstar Communications, Inc., Sr. Disc. Notes, Zero
Coupon
(until 10/15/00)
Caa1 14.00 10/15/05 500
356,250
Worldwide Fiber, Inc., Sr. Notes
B3 12.50 12/15/05 1,000
1,052,500
- ------------
25,413,375
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Textiles--1.5%
Cluett American Corp., Sr. Sub. Notes
B3 10.125 5/15/08 750
686,250
Simmons Co., Sr. Sub. Notes
B3 10.25 3/15/09 1,000
1,035,000
Steel Heddle Mfg. Co., Sr. Sub. Notes
B3 10.625 6/01/08 1,000
550,000
- ------------
2,271,250
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Transportation/Trucking/Shipping--1.1%
American Commercial Lines LLC, Sr. Notes
B1 10.25 6/30/08 1,000
1,030,000
Stena AB, Sr. Notes (Sweden)
B1 10.625 6/01/08 1,000(f)
760,000
- ------------
1,790,000
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Utilities--0.6%
York Power Funding Cayman Ctd., Sr. Sec'd. Notes
(Cayman Islands)
Ba3 12.00 10/30/07 1,000(f)
1,005,000
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount
Value
Description
(Unaudited) Rate Date (000)
(Note 1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Waste Management--2.3%
Allied Waste North America, Inc.,
Sr. Notes
Ba2 7.875% 1/01/09 $ 1,250 $
1,218,750
Sr. Notes
Ba2 7.625 1/01/06 500
487,500
Waste Systems Int'l., Inc., Sub. Notes
CCC+(a) 7.00 5/13/05 2,000
1,870,000
- ------------
3,576,250
- ------------
Total corporate bonds
(cost $147,843,118)
135,989,825
- ------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
CONVERTIBLE BONDS--1.1%
Einstein / Noah Bagel Corp., Sub. Deb.
7.25 6/01/04 1,500 885,000
Key Energy Group, Inc., Sr. Sub. Notes
5.00 9/15/04 1,500 765,000
- ------------
Total convertible bonds
(cost $1,979,318)
1,650,000
- ------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 11
<PAGE>
Portfolio of Investments as of
PRUDENTIAL HIGH YIELD
March 31, 1999
TOTAL RETURN FUND, INC.
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Value
Description Shares (Note
1)
<S> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
COMMON STOCKS--1.3%
Beverly Enterprises, Inc.(c) 40,000 $
205,000
Canadian Airlines Corp.(c) 4,400
5,046
Chesapeake Energy Corp. 25,000
35,938
Grand Union Co.(c) 100,772
1,133,685
Intermedia Communications, Inc.(c) 811
21,187
Musicland Stores Corp.(c) 25,000
220,312
Nevada Gold & Casinos, Inc.(c) 8,000
38,000
Northeast Optic Network, Inc.(c) 20,000
282,500
Omnipoint Corp.(c) 5,200
75,075
Paxson Communications Corp.(c) 9,400
80,488
Star Gas Partners L.P. 441
881
Total common stocks
expiring (cost $2,222,200)
2,098,112
PREFERRED STOCKS--4.9%
Adelphia Communications Corp.,
$13.00 8,750
1,006,250
Century Maintenance Supply, Inc.,
$13.25 10,636
1,095,508
Cluett American Corp., $12.50 7,961
708,525
Concentric Network Corp., $13.50 1
372
Geneva Steel Co., $14.00 1,000
500
Harborside Healthcare Corp., $13.50 535
374,160
Intermedia Communications, Inc.,
$7.00 20,000
415,000
IXC Communications, Inc., $12.50 750
813,750
Packaging Corp. America, $12.375 7,500
750,000
Paxson Communications Corp.,
$12.50 1,128
1,015,537
Rural Cellular Corp., $11.375 6
6,224
Supermarkets General Holdings
Corp., $3.52 10,000
365,000
Texas Utilities Co., $9.25 20,000
1,066,250
Viatel, Inc., $10.00 521
78,166
--------
- ----
Total preferred stocks
(cost $7,809,893)
7,695,242
<CAPTION>
Value
Description Warrants (Note
1)
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
<S> <C> <C>
WARRANTS(c)--0.1%
American Banknote Corp., expiring
12/1/07 @ $5.50 750 $
7
American Mobile Satellite Corp.,
expiring 4/1/08 @ $12.51 500
1,645
Bestel S.A. De CV, expiring
5/15/05 1,500
1,500
Birch Telecom, Inc., expiring
6/15/08 1,000
5,000
Classic Communications, Inc.,
expiring 8/1/09 3,000(d)
0
DecisionOne Holdings Corp.,
expiring 8/1/07 @ $23.00 1,000(d)
0
Firstworld Communications, Inc.,
expiring 4/15/08 1,000
10,000
ICO Global Communications,
8/1/05 @ $13.20 1,000(d)
0
Interact Systems, Inc.,
expiring 8/1/03 1,500
15
Splitrock Services, Inc., expiring
7/15/08 750
45,000
TVN Entertainment Corp., expiring
8/1/08 1,000(d)
0
Versatel Telecom BV, expiring
5/15/08 1,000
70,000
Total warrants
(cost $7,515)
133,167
Total long-term investments
(cost $159,862,044)
147,566,346
--------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
Portfolio of Investments as of PRUDENTIAL
HIGH YIELD
March 31, 1999 TOTAL
RETURN FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Interest Maturity Amount Value
Description
Rate Date (000) (Note 1)
<S>
<C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
SHORT-TERM INVESTMENTS--5.5%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
COMMERCIAL PAPER--4.4%
General Electric Capital Corp.
5.12% 4/01/99 $ 3,923 $ 3,923,000
Windmill Funding Corp.
4.88 4/19/99 3,000 2,992,680
- ------------
Total commercial paper
(cost $6,915,680)
6,915,680
- ------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
CORPORATE BONDS--1.1%
Aircraft Funding, Sr. Notes, PIK
(cost $1,995,149; purchased 7/1/98)
12.00 7/15/99 2,000(b) 1,640,000
- ------------
Total short-term investments
(cost $8,910,829)
8,555,680
- ------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Total Investments--99.8 %
(cost $168,772,873; Note 4)
156,122,026
Other assets in excess of liabilities--0.2%
251,588
- ------------
Net Assets--100%
$156,373,614
- ------------
- ------------
</TABLE>
- ---------------
(a) Standard & Poor's Rating.
(b) Indicates a restricted security; the aggregate cost of
such securities is
$9,667,329. The aggregate value $7,998,594 is
approximately 5.1% of net
assets.
(c) Non-income producing securities.
(d) Consists of more than one class of securities traded
together as a unit;
generally bonds with attached stock or warrants.
(e) Represents issuer in default on interest payments; non-
income producing
security.
(f) US$ denominated foreign bonds.
NR--Not rated by Moody's or Standard & Poor's.
PIK--Payment in kind securities.
L.P.--Limited Partnership.
LLC--Limited Liability Company.
The Fund's current Prospectus contains a description of
Moody's and Standard &
Poor's ratings.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 13
<PAGE>
PRUDENTIAL HIGH
YIELD
Statement of Assets and Liabilities TOTAL RETURN
FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
<S>
<C>
Investments, at value (cost
$168,772,873)...............................................
................... $156,122,026
Cash........................................................
...............................................
893
Interest
receivable..................................................
...................................... 3,452,596
Receivable for investments
sold........................................................
.................... 921,803
Receivable for Fund shares
sold........................................................
.................... 533,492
Prepaid expenses and other
assets......................................................
.................... 148,785
- --------------
Total
assets......................................................
...................................... 161,179,595
- --------------
Liabilities
Payable for investments
purchased...................................................
....................... 3,154,611
Payable for Fund shares
reacquired..................................................
....................... 1,015,068
Dividends
payable.....................................................
..................................... 324,774
Accrued
expenses....................................................
....................................... 184,097
Due to
Distributor.................................................
........................................ 81,391
Due to
Manager.....................................................
........................................ 46,040
- --------------
Total
liabilities.................................................
...................................... 4,805,981
- --------------
Net
Assets......................................................
...........................................
$156,373,614
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................... $ 1,756
Paid-in capital in excess of
par.........................................................
............... 172,971,331
- --------------
172,973,087
Accumulated net realized loss on
investments.................................................
........... (3,948,626)
Net unrealized depreciation on
investments.................................................
............. (12,650,847)
- --------------
Net assets, March 31,
1999........................................................
......................... $156,373,614
- --------------
- --------------
Class A:
Net asset value and redemption price per share
$8.91
($37,557,754 / 4,216,698 shares of common stock issued
and outstanding)..............................
Maximum sales charge (4% of offering
price)......................................................
....... .37
Maximum offering price to
public......................................................
.................. $9.28
Class B:
Net asset value, offering price and redemption price per
share
$8.91
($97,453,690 / 10,940,153 shares of common stock
issued and outstanding).............................
Class C:
Net asset value and redemption price per share
$8.91
($19,248,742 / 2,160,946 shares of common stock issued
and outstanding)..............................
Sales charge (1% of offering
price)......................................................
............... .09
Offering price to
public......................................................
.......................... $9.00
Class Z:
Net asset value, offering price and redemption price per
share
$8.91
($2,113,428 / 237,269 shares of common stock issued
and outstanding).................................
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 14
<PAGE>
PRUDENTIAL HIGH YIELD
TOTAL RETURN FUND, INC.
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
May 5,
1998(a)
Through
Net Investment Income March 31,
1999
<S> <C>
Income
Interest....................................
13,945,929
Dividends...................................
147,729
----------
- ----
14,093,658
----------
- ----
Expenses
Management fee..............................
864,173
Distribution fee--Class A...................
56,529
Distribution fee--Class B...................
623,305
Distribution fee--Class C...................
122,290
Custodian's fees and expenses...............
160,000
Registration fees...........................
140,000
Transfer agent's fees and expenses..........
120,000
Amortization of prepaid offering cost.......
110,000
Reports to shareholders.....................
90,000
Audit fee and expenses......................
30,000
Amortization of deferred organization
cost.....................................
26,000
Legal fees and expenses.....................
20,000
Directors' fees.............................
14,000
Insurance expense...........................
2,000
Miscellaneous...............................
816
----------
- ----
Total expenses...........................
2,379,113
Less: Management fee waiver (Note 2)........
(398,849)
----------
- ----
Net expenses.............................
1,980,264
----------
- ----
Net investment income..........................
12,113,394
----------
- ----
Realized and Unrealized
Loss on Investments
Net realized loss on investment transactions...
(3,948,626)
Net change in unrealized
appreciation/depreciation of investments....
(12,650,847)
----------
- ----
Net loss on investments........................
(16,599,473)
----------
- ----
Net Decrease in Net Assets
Resulting from Operations...................... $
(4,486,079)
----------
- ----
----------
- ----
- ---------------
(a) Commencement of investment operations.
</TABLE>
PRUDENTIAL HIGH YIELD
TOTAL RETURN FUND, INC.
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
May 5,
1998(a)
Increase in Through
Net Assets March 31,
1999
<S> <C>
Operations
Net investment income...................... $
12,113,394
Net realized loss on investment
transactions............................
(3,948,626)
Net change in unrealized
appreciation/depreciation of
investments.............................
(12,650,847)
------------
- --
Net decrease in net assets resulting from
operations..............................
(4,486,079)
------------
- --
Dividends and distributions (Note 1)
Dividends from net investment income
Class A.................................
(3,017,075)
Class B.................................
(7,451,879)
Class C.................................
(1,460,665)
Class Z.................................
(183,775)
------------
- --
(12,113,394)
------------
- --
Distributions in excess of net investment
income
Class A.................................
(50,574)
Class B.................................
(132,431)
Class C.................................
(25,580)
Class Z.................................
(3,622)
------------
- --
(212,207)
------------
- --
Fund share transactions (Net of share
conversions) (Note 5)
Net proceeds from shares sold..............
200,008,881
Net asset value of shares issued in
reinvestment of dividends and
distributions...........................
7,763,506
Cost of shares reacquired..................
(34,687,093)
------------
- --
Net increase in net assets from Fund share
transactions............................
173,085,294
------------
- --
Total increase................................
156,273,614
Net Assets
Beginning of period...........................
100,000
------------
- --
End of period.................................
$156,373,614
------------
- --
------------
- --
- ---------------
(a) Commencement of investment operations.
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 15
<PAGE>
PRUDENTIAL
HIGH YIELD
Notes to Financial Statements TOTAL RETURN
FUND, INC.
- ------------------------------------------------------------
- --------------------
Prudential High Yield Total Return Fund, Inc. (the 'Fund')
is registered under
the Investment Company Act of 1940 as a diversified, open-
end management
investment company. The Fund was incorporated in Maryland on
February 18, 1997.
The Fund issued 2,500 shares each of Class A, Class B, Class
C and Class Z
common stock for $100,000 on February 18, 1998 to Prudential
Investments Fund
Management LLC ('PIFM'). The Fund commenced investment
operations on May 5,
1998. The primary investment objective of the Fund is total
return through high
current income and capital appreciation. It seeks to achieve
this objective by
investing in high yield fixed income securities, equity
securities that were
attached to or included in a unit with fixed income
securities at the time of
purchase, convertible securities and preferred stocks.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Fund in the preparation of its financial statements.
Security Valuation: Portfolio securities that are actively
traded in the
over-the-counter market, including listed securities for
which the primary
market is believed to be over-the-counter, are valued at
prices provided by
principal market makers and pricing agents. Any security for
which the primary
market is on an exchange is valued at the last sales price
on such exchange on
the day of valuation or, if there was no sale on such day,
the last bid price
quoted on such day. Securities issued in private placements
are valued at the
bid price or the mean between the bid and asked prices, if
available, provided
by principal market makers. Any security for which a
reliable market quotation
is unavailable is valued at fair value as determined in good
faith by or under
the direction of the Fund's Board of Directors.
Short-term securities which mature in more than 60 days are
valued at current
market quotations. Short-term securities which mature in 60
days or less are
valued at amortized cost, which approximates market value.
Repurchase Agreements: In connection with transactions in
repurchase agreements,
it is the Fund's policy that its custodian or designated
subcustodians, under
triparty repurchase agreements as the case may be, take
possession of the
underlying collateral securities, the value of which exceeds
the principal
amount of the repurchase transaction, including accrued
interest and, to the
extent that any repurchase transaction exceeds one business
day, the value of
the collateral is marked-to-market on a daily basis to
ensure the adequacy of
the collateral. If the seller defaults and the value of the
collateral declines
or if bankruptcy proceedings are commenced with respect to
the seller of the
security, realization of the collateral by the Fund may be
delayed or limited.
All securities are valued as of 4:15 p.m., New York time.
The Fund may hold up to 15% of its net assets in illiquid
securities, including
those which are restricted as to disposition under
securities law ('restricted
securities'). Certain issues of restricted securities held
by the Fund at March
31, 1999 include registration rights under which the Fund
may demand
registration by the issuer, of which the Fund may bear the
cost of such
registration. Restricted securities, sometimes referred to
as private
placements, are valued pursuant to the valuation procedures
noted above.
Securities Transactions and Net Investment Income:
Securities transactions are
recorded on the trade date. Realized gains and losses on
sales of portfolio
securities are calculated on an identified cost basis.
Interest income is
recorded on an accrual basis and dividend income is recorded
on the ex-dividend
date. The Fund accretes discount and amortizes premium as
adjustments to
interest income. Income from payment-in-kind bonds is
recorded daily based on an
effective interest method. Expenses are recorded on the
accrual basis which may
require the use of certain estimates by management.
Net investment income (other than distribution fees) and
unrealized and realized
gains or losses are allocated daily to each class of shares
of the Fund based
upon the relative proportion of 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 at least
annually of any net
capital gains. Dividends and distributions are recorded on
the ex-dividend date.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
Taxes: It is the intent of the Fund to meet the requirements
of the Internal
Revenue Code applicable to regulated investment companies
and to distribute all
of its taxable income to its shareholders. Therefore, no
federal income tax
provision is required.
Offering and Organization Expenses: Approximately $283,300
were incurred in
connection with the organization of the Fund. Offering cost
of approximately
$110,400 and organization cost of approximately $172,900 are
being amortized
ratably over a period of twelve months and sixty months,
respectively, from the
date the Fund commenced investment operations.
Reclassification of Capital Accounts: The Fund accounts for
and reports
distributions to shareholders in accordance with the
American Institute
- ------------------------------------------------------------
- --------------------
16
<PAGE>
PRUDENTIAL
HIGH YIELD
Notes to Financial Statements TOTAL RETURN
FUND, INC.
- ------------------------------------------------------------
- --------------------
of Certified Public Accountants' Statement of Position 93-2:
Determination,
Disclosure and Financial Statement Presentation of Income,
Capital Gain, and
Return of Capital Distributions by Investment Companies. The
effect of applying
this statement was to decrease paid-in capital in excess of
par and decrease
accumulated net realized losses on investments by $212,207
for certain expenses
not deductible for tax purposes. Net investment income, net
realized gains and
net assets were not affected by this change.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential
Investments Fund Management
LLC ('PIFM'.) Pursuant to this agreement PIFM has
responsibility for all
investment advisory services and supervises the subadviser's
performance of such
services. PIFM has entered into a subadvisory agreement with
The Prudential
Investment Corporation ('PIC'); PIC furnishes investment
advisory services in
connection with the management of the Fund. PIFM pays for
the cost of the
subadviser's services, the 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 PIFM is computed daily and
payable monthly, at an
annual rate of .65% of the Fund's average daily net assets.
PIFM has agreed to
waive a portion (.30 of 1% of the Fund's average daily net
assets) of its
management fee which amounted to $398,849 ($.023 per share
for Class A, B, C and
Z shares) for the period ended March 31, 1999. The Fund is
not required to
reimburse PIFM for such waiver.
The Fund had a distribution agreement with Prudential
Securities Incorporated
('PSI'), which acted as the distributor of the Class A,
Class B, Class C and
Class Z shares of the Fund through May 31, 1998. Prudential
Investment
Management Services LLC ('PIMS') became the distributor of
the Fund effective
June 1, 1998 and is serving the Fund under the same terms
and conditions as
under the arrangement with PSI. The Fund compensated PSI and
PIMS for
distributing and servicing the Fund's Class A, Class B and
Class C shares
pursuant to plans of distribution (the 'Class A, B and C
Plans'), regardless of
expenses actually incurred by them. The distribution fees
are accrued daily and
payable monthly. No distribution or service fees are paid to
PSI or PIMS as
distributor of the Class Z shares of the Fund.
Pursuant to the Class A Plan, the Fund compensates PIMS for
its
distribution-related expenses with respect to Class A
shares, at an annual rate
of up to .30 of 1% of the average daily net assets of the
Class A shares. Such
expenses under the Class A Plan were .15 of 1% of the
average daily net assets
of the Class A shares for the period May 5, 1998 through
December 31, 1998.
Effective January 1, 1999, such expenses under the Class A
Plan were .25 of 1%
of the average daily net assets of the Class A shares.
Pursuant to the Class B and C Plans, the Fund compensates
PIMS with respect to
Class B and C shares, for distribution-related activities at
an annual rate of
up to 1% of the average daily net assets of Class B shares
and Class C shares.
Such expenses under the Plans were .75 of 1% of the average
daily net assets of
the Class B and C shares for the period ended March 31,
1999.
PSI and PIMS have advised the Fund that they received
approximately $1,089,800
and $27,200 in front-end sales charges resulting from sales
of Class A and Class
C shares, respectively, during the period May 5, 1998
through March 31, 1999.
From these fees, PSI paid such sales charges to affiliated
broker-dealers, which
in turn paid commissions to salespersons and incurred other
distribution costs.
PSI and PIMS have advised the Fund that for the period May
5, 1998 through March
31, 1999 they received approximately $283,900 and $27,100 in
contingent deferred
sales charges imposed upon certain redemptions by Class B
and Class C
shareholders, respectively.
PSI, PIFM, PIC and PIMS are indirect, wholly owned
subsidiaries of The
Prudential Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated
registered
investment companies (the 'Funds'), entered into a
syndicated credit agreement
(SCA) with an unaffiliated lender. The maximum commitment
under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of
.065 of 1% on the
unused portion of the credit facility which is accrued and
paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9,
2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was 0.055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the period ended March 31, 1999. The
purpose of the agreements
are to serve as an alternative source of funding for capital
share redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC, a wholly owned
subsidiary of PIFM, serves
as the Fund's transfer agent and during the period ended
March 31, 1999, the
Fund incurred fees of approximately $114,600 for the
services of PMFS. As of
March 31, 1999, $10,700 of such fees were due to
- ------------------------------------------------------------
- --------------------
17
<PAGE>
PRUDENTIAL
HIGH YIELD
Notes to Financial Statements TOTAL
RETURN FUND, INC.
- ------------------------------------------------------------
- --------------------
PMFS. Transfer agent fees and expenses in the Statement of
Operations include
certain out-of-pocket expenses paid to nonaffiliates.
For the period ended March 31, 1999, PSI earned $2,000 in
brokerage commissions
from portfolio transactions executed on behalf of the Fund.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the period ended March 31, 1999 were $289,578,788 and
$126,359,836,
respectively.
The federal income tax basis of the Fund's investments,
including short-term
investments, as of March 31, 1999 was $168,798,569;
accordingly, net unrealized
depreciation for federal income tax purposes was $12,676,543
(gross unrealized
appreciation--$3,306,615; gross unrealized depreciation--
$15,983,158).
For federal income tax purposes, the Fund had a capital loss
carryforward as of
March 31, 1999, of approximately $1,698,000 which expires in
2007. In addition,
the Fund will elect to treat net capital losses of
approximately $2,225,000
incurred in the two month period ended December 31, 1998 as
having been incurred
in the following fiscal year. Accordingly, no capital gains
distributions are
expected to be paid to shareholders until future net gains
have been realized in
excess of such carryforward.
- ------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B, Class C and Class Z
shares. Class A shares are
sold with a front-end sales charge of up to 4%. Class B
shares are sold with a
contingent deferred sales charge which declines from 5% to
zero depending on the
period of time the shares are held. Class C shares are sold
with a front-end
sales charge of 1% and a contingent deferred sales charge of
1% during the first
18 months. Prior to November 2, 1998, Class C shares were
sold with a contingent
deferred sales charge of 1% during the first year. Class B
shares will
automatically convert to Class A shares on a quarterly basis
approximately seven
years after purchase. A special exchange privilege is also
available for
shareholders who qualify to purchase Class A shares at net
asset value. Class Z
shares are not subject to any sales or redemption charge and
are offered
exclusively for sale to a limited group of investors.
The Fund has 2.5 billion shares of $0.0001 par value common
stock authorized; 1
billion shares for Class A and 500 million shares each for
Class B, Class C and
Class Z.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------------------------------ ------------ -----------
- ----
<S> <C> <C>
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 5,287,840 $
51,217,401
Shares issued in reinvestment
of dividends................ 223,342
2,028,273
Shares reacquired............. (1,316,676)
(11,925,521)
------------ -----------
- ----
Net increase in shares
outstanding before
conversions................. 4,194,506
41,320,153
Shares issued upon conversion
from Class B................ 19,692
174,213
------------ -----------
- ----
Net increase in shares
outstanding................. 4,214,198 $
41,494,366
------------ -----------
- ----
------------ -----------
- ----
<CAPTION>
Class B
- ------------------------------
<S> <C> <C>
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 12,231,118 $
119,622,135
Shares issued in reinvestment
of dividends................ 514,809
4,669,308
Shares reacquired............. (1,788,582)
(16,165,146)
------------ -----------
- ----
Net increase in shares
outstanding before
conversion.................. 10,957,345
108,126,297
Shares reacquired upon
conversion into Class A..... (19,692)
(174,213)
------------ -----------
- ----
Net increase in shares
outstanding................. 10,937,653 $
107,952,084
------------ -----------
- ----
------------ -----------
- ----
<CAPTION>
Class C
- ------------------------------
<S> <C> <C>
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 2,556,202 $
24,882,076
Shares issued in reinvestment
of
dividends................... 98,953
898,112
Shares reacquired............. (496,709)
(4,436,511)
------------ -----------
- ----
Net increase in shares
outstanding................. 2,158,446 $
21,343,677
------------ -----------
- ----
------------ -----------
- ----
<CAPTION>
Class Z
- ------------------------------
<S> <C> <C>
May 5, 1998(a) through
March 31, 1999:
Shares sold................... 452,123 $
4,287,269
Shares issued in reinvestment
of dividends................ 18,552
167,813
Shares reacquired............. (235,906)
(2,159,915)
------------ -----------
- ----
Net increase in shares
outstanding................. 234,769 $
2,295,167
------------ -----------
- ----
------------ -----------
- ----
</TABLE>
- ---------------
(a) Commencement of investment operations.
- ------------------------------------------------------------
- --------------------
18
<PAGE>
PRUDENTIAL HIGH
YIELD
Financial Highlights TOTAL RETURN
FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A Class B Class C
- -------------- -------------- --------------
May 5, 1998(a) May 5, 1998(a) May 5, 1998(a)
Through Through Through
March 31, March 31, March 31,
1999 1999 1999
- -------------- -------------- --------------
<S>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.00 $
10.00 $ 10.00
- ------ ------ ------
Income from investment operations
Net investment
income(d).....................................
0.79 0.74 0.74
Net realized and unrealized loss on
investments.............. (1.08) (1.08)
(1.08)
- ------ ------ ------
Total from investment
operations.......................... (0.29)
(0.34) (0.34)
- ------ ------ ------
Less distributions
Dividends from net investment
income......................... (0.79)
(0.74) (0.74)
Distributions in excess of net investment
income............. (0.01) (0.01)
(0.01)
- ------ ------ ------
Total
distributions....................................
(0.80) (0.75) (0.75)
- ------ ------ ------
Net asset value, end of
period............................... $ 8.91
$ 8.91 $ 8.91
- ------ ------ ------
- ------ ------ ------
TOTAL
RETURN(b)..............................................
(2.97)% (3.45)% (3.45)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $ 37,558
$ 97,454 $ 19,249
Average net assets
(000)..................................... $ 35,147
$ 92,201 $ 18,089
Ratios to average net assets:
Expenses, including distribution
fees(c)(d)............... 1.06% 1.64%
1.64%
Expenses, excluding distribution
fees(c)(d)............... 0.89% 0.89%
0.89%
Net investment
income(c)(d)............................... 9.52%
8.97% 8.96%
For Classes A, B, C and Z shares:
Portfolio turnover
rate................................... 97%
<CAPTION>
Class Z
- --------------
<S>
<C>
May 5, 1998(a)
Through
March 31,
1999
- --------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $10.00
- -----
Income from investment operations
Net investment
income(d)..................................... 0.80
Net realized and unrealized loss on
investments.............. (1.08)
- -----
Total from investment
operations.......................... (0.28)
- -----
Less distributions
Dividends from net investment
income......................... (0.80)
Distributions in excess of net investment
income............. (0.01)
- -----
Total
distributions....................................
(0.81)
- -----
Net asset value, end of
period............................... $ 8.91
- -----
- -----
TOTAL
RETURN(b)..............................................
(2.82)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).............................. $2,113
Average net assets
(000)..................................... $2,060
Ratios to average net assets:
Expenses, including distribution
fees(c)(d)............... 0.89%
Expenses, excluding distribution
fees(c)(d)............... 0.89%
Net investment
income(c)(d)............................... 9.90%
For Classes A, B, C and Z shares:
Portfolio turnover
rate...................................
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Total return does not consider the effects of sales
loads. Total return is
calculated assuming a purchase of shares on the first
day and a sale on the
last day of each period reported and includes
reinvestment of dividends and
distributions. Total returns for periods of less than a
full year are not
annualized.
(c) Annualized.
(d) Net of management fee waiver.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 19
<PAGE>
PRUDENTIAL
HIGH YIELD
Report of Independent Accountants TOTAL RETURN
FUND, INC.
- ------------------------------------------------------------
- --------------------
To the Shareholders and Board of Directors of
Prudential High Yield Total Return Fund, Inc.
In our opinion, the accompanying statement of assets and
liabilities, including
the portfolio of investments, and the related statements of
operations and of
changes in net assets and the financial highlights present
fairly, in all
material respects, the financial position of Prudential High
Yield Total Return
Fund, Inc. (the 'Fund') at March 31, 1999, and the results
of its operations,
the changes in its net assets and the financial highlights
for the period May 5,
1998 (commencement of operations) through March 31, 1999, in
conformity with
generally accepted accounting principles. These financial
statements and
financial highlights (hereafter referred to as 'financial
statements') are the
responsibility of the Fund's management; our responsibility
is to express an
opinion on these financial statements based on our audit. We
conducted our audit
of these financial statements in accordance with generally
accepted auditing
standards which require that we plan and perform the audit
to obtain reasonable
assurance about whether the financial statements are free of
material
misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements,
assessing the
accounting principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We
believe that our
audit, which included confirmation of securities at March
31, 1999 by
correspondence with the custodian and brokers, provides a
reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
May 20, 1999
PRUDENTIAL
HIGH YIELD
Federal Income Tax Information (Unaudited) TOTAL RETURN
FUND, INC.
- ------------------------------------------------------------
- --------------------
We are required by the Internal Revenue Code to advise you
within 60 days of the
Fund's fiscal period end (March 31, 1999) as to the federal
tax status of
dividends paid by the Fund during such fiscal period.
Accordingly, we are
advising you that in the fiscal period ended March 31, 1999,
dividends were paid
of $.80, $.75, $.75 and $.81 per share (representing net
investment income for
Class A, B, C and Z shares respectively, which are taxable
as ordinary income).
Further, we wish to advise you that 1.03% of the ordinary
income dividends paid
in the fiscal period ended March 31, 1999 qualified for the
corporate dividends
received deduction available to corporate taxpayers.
In January 1999, you were advised on IRS Form 1099 DIV or
substitute 1099 DIV as
to the federal tax status of the dividends received by you
in calendar year
1998.
- ------------------------------------------------------------
- --------------------
20
<PAGE>
Comparing A $10,000 Investment
- ------------------------------------------------
Prudential High Yield Total Return Fund, Inc. vs.
the Lehman Brothers High Yield Bond Index
Prudential High Yield
Total Return Fund, Inc.
Lehman Brothers High
Yield Bond Index
Class A
(GRAPH)
Class B
(GRAPH)
Class C
(GRAPH)
Class Z
(GRAPH)
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be worth
more or less than their original cost.
These graphs compare a $10,000 investment in the Prudential
High Yield Total
Return Fund, Inc. (Class A, B, C, and Z shares) with a
similar investment in
the Lehman Brothers High Yield Bond Index (the Index) by
portraying the account
values at the commencement of operations of Class A, B, C,
and Z shares, and at
the end of the fiscal year (March 31), as measured on a
quarterly basis
beginning in 1998 for Class A, B, C, and Z shares. For
purposes of the graphs,
and unless otherwise indicated, it has been assumed that (a)
the maximum
applicable front-end sales load was deducted from the
initial $10,000
investment in Class A and Class C shares; (b) the maximum
applicable contingent
deferred sales charges were deducted from the value of the
investment in Class
B and Class C shares, assuming full redemption on March 31,
1999; (c) all
recurring fees (including management fees) were deducted;
and (d) all dividends
and distributions were reinvested. Class B shares will
automatically convert to
Class A shares, on a quarterly basis, approximately seven
years after purchase.
This conversion feature is not reflected in the graphs.
Class Z shares are not
subject to a sales charge or distribution fee.
The Index is a weighted index that covers the universe of
fixed-rate,
noninvestment-grade debt. The bonds included in the Index
must be
dollar-denominated and nonconvertible, and have at least one
year remaining to
maturity and an outstanding par value of at least $100
million.The total
return includes the reinvestment of all dividends, but does
not reflect the
payment of transaction costs and advisory fees associated
with an investment in
the Fund. The Index is not the only index that may be used
to characterize
performance of bond funds. Other indexes may portray
different comparative
performance. Investors cannot invest directly in an index.
These graphs are furnished to you in accordance with SEC
regulations.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Thomas H. O'Brien
Nancy H. Teeters
Louis A. Weil, III
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Deborah A. Docs, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, NY 10022
The views expressed in this report and information about the
Series' portfolio
holdings are for the period covered by this report, and are
subject to change
thereafter.
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
74437D109 MF181E
74437D208
74437D307
74437D406
