A FULL RANGE OF SHAREHOLDER BENEFITS
Prudential Mutual Funds provides many useful services and benefits to help
you effectively manage your account:
Automatic Dividend Reinvestment. Reinvest your dividends and/or capital gains
automatically without a sales charge.
Automatic Savings Accumulation Plan (ASAP). Make monthly or quarterly purchases
for as little as $50 through an automatic debit from your bank account or your
Prudential Securities account (including a Command Account).
No Minimum Investment for Retirement Accounts
- -- Individual Retirement Accounts (IRAs). Save up to $2,000, or $2,250 if
married, per year.
- -- Rollover IRAs. Retain special tax-deferred advantages for certain
distributions from your company-sponsored retirement plan.
No Fee Custodial Accounts. Give money to a child and obtain tax benefits.
Invest for a child's education or other future needs.
Systematic Withdrawal Plan. Receive monthly or quarterly checks in any amount
with the proceeds withdrawn from your fund account.
Shareholder Reports and Regular Investment Updates. In addition to
comprehensive account activity statements, you will also receive annual and
semi-annual fund reports as well as any important updates, including tax
information, that may affect your fund.
24 Hour Toll Free
Telephone Number
For customer service, call 1-800-225-1852, 8 a.m. to 6 p.m. ET. For prompt
24-hour service regarding your account balance, fund yields and prices, call
1-800-222-7637.
-1-
<PAGE>
<PAGE>
LETTER TO SHAREHOLDERS
October 31, 1993
Dear Shareholder:
During the last six months, federal income tax hikes and declining interest
rates benefitted the municipal bond market and enhanced your Prudential
Municipal Bond Fund's returns. Despite the unusually heavy issuance of new
municipal bonds, the rise
of tax-free investment demand helped balance the market.
As of October 31, 1993, for an investor in the 31% tax bracket, the average
long-term municipal bond provided almost a third more income than the 30-year
Treasury bond on an after tax basis. Moreover, at the end of this period,
the after-tax yield advantage of long-term municipals over the 30-year
Treasury bond was the highest it had been in the last three years, as
measured by The Bond Buyer Revenue Bond Index.
Heavy issuance absorbed
For the first nine months of 1993, total municipal bond issuance exceeded the
entire new supply for all of 1992. We do not expect these levels to continue
indefinitely since two-thirds of new municipals were issued to refinance or
refund older, higher-coupon bonds at more advantageous rates. In fact, the
recent slight rise in long-term interest rates in October slowed the issuance
of refunding bonds, and if rates stop declining or even begin to rise, we
could see much less activity next year.
Refunded bonds sold
When municipal bonds in the three Series were refunded or refinanced, we sold
some of these issues before their call date to help protect principal value.
Since a bond's credit quality generally climbs when it is refunded, with many
bonds even officially re-rated AAA, its price also rises. But bonds with a
higher market value than call price must later decline in price as they
approach their call date--regardless of how interest rates move. Thus,
selling these premium-priced bonds after their initial price boost helped
support the value of your Fund's shares.
Where possible, the Series sought bonds that were not subject to calls or had
call provisions. Bonds with call protection gave us greater control over our
portfolios and helped minimize the chance of higher yielding issues being
redeemed, especially if they would be difficult to replace. The Series will
strive to avoid callable paper, where possible, to maintain your tax-free
income.
Call Provision
This gives the issuer of a municipal bond the added flexibility to call the
issue for redemption before the bonds stated maturity date if interest rates
fall significantly following issuance or if the dealer desires to eliminate
restrictions over an outstanding security. A redemption can adversely affect a
municipal bond funds' yield, however, since the municipals that are called are
usually the highest yielding.
-2-
<PAGE>
<PAGE>
HIGH YIELD SERIES
The High Yield Series seeks to maximize income by investing in higher yielding
municipal bonds that have medium or lower credit ratings. Even so, on October
31, 1993, more than 60% of the portfolio was comprised of investment grade
municipal bonds (those rated BBB or better). These higher quality bonds
enhanced the liquidity of the Series and allowed us to take advantage of
recent bond price increases that resulted from falling interest rates over
the last six months.
As of October 31, 1993, the Funds net asset value was $11.43 for Class A and
B shares, both up from $11.14 on April 30, 1993. Dividends of $0.37 for
Class A shares and $0.35 for Class B shares were also paid during the period.
The six-month total return was 6.02% for Class A shares and 5.81% for Class B
shares. On October 31, 1993, total net assets were $1.23 billion.
Investor demand grows
Investor demand for higher tax-free yields remains strong. Assets of the High
Yield Series grew by $150 million since April 30, 1993. We maintained our
holdings of higher yielding below investment grade bonds (rated BB or below)
at about 38% of the portfolio. The Series continued to concentrate purchases
in bonds of established projects or refinancings.
Our purchases included issues that financed a multifamily low income housing
project, a private university building new dormitories, several resource
recovery, recycling and composting facilities, and retirement homes. These
types of municipal bonds performed well this year due to their extra income
and relatively stable value.
Generally, higher yielding, lower credit quality bonds are more sensitive to
prevailing economic conditions and credit issues than to changes in interest
rates. Thus, as the economy improves, we expect that the Series' high-yield
bond holdings will provide high tax-free income, while helping to maintain
investment value.
INSURED SERIES
The Insured Series invests primarily in bonds rated AAA by S&P or Aaa by
Moody's whose timely coupon and principal payments, but not market value, are
guaranteed by a municipal bond insurance company (see Portfolio Q&A on page 7
for details). As of October 31, 1993, the Series' net asset value had
increased to $11.71 for Class A shares and $11.72 for Class B shares, both up
from $11.44 on April 30, 1993. Dividends of $0.30 for Class A shares and $0.28
for Class B shares were paid during the period. The six-month total return
was 6.02% for Class A shares and 5.90% for Class B shares. On October 31,
1993, total net assets were $872 million, up from $800 million on April 30,
1993.
-3-
<PAGE>
<PAGE>
As in the past few years, we took advantage of supply and demand
inefficiencies among bonds in "specialty" states. These states usually have
high state income tax rates and other fundamentals that favor municipal bond
investing. When these states experience unusually high supply, it temporarily
weakens the market and allows us to purchase "cheap" bonds before the market
returns to normal levels. The bonds are then sold when demand pushes prices
back up.
We continued to review the financial condition of the bond insurers, since the
value of our insured bonds depends on the insurers' guarantee. The Series
monitored the volume of new bonds insured by each company and diversified the
portfolio's holdings across several major well-capitalized insurers. We
currently favor Municipal Bond Insurance Association (MBIA), American
Municipal Bond Assurance Corp. (AMBAC), and Financial Guarantee Insurance Co.
(FGIC) because of their strong management, conservative underwriting
practices, and superior surveillance.
We minimized interest rate sensitivity
In the past six months as interest rates fell, the market value of the
Series' bonds, and your net asset value, rose. Since interest rates may
flatten or begin to rise, we have been favoring certain municipal bonds
with higher-than-average coupons, which should help cushion the bonds against
price changes.
MODIFIED TERM SERIES
The Modified Term Series seeks to balance higher yields and lower price
volatility by investing in bonds with effective maturities ranging between
five and 15 years. Bonds within this maturity range are usually less price
sensitive to interest rate movements than longer term bonds. While the
Series' net asset value will generally decline less than long-term funds in a
rising rate environment, it will not return as much when rates fall.
As of October 31, 1993, the Series net asset value increased to $11.37 for
Class A shares and $11.38 for Class B shares, up from $11.08 and $11.09 on
April 30, 1993. Dividends of $0.26 for Class A shares and $0.24 for Class B
shares were paid during the period. The six-month total return was 5.56% for
Class A shares and 5.35% for Class B shares. A capital gains distribution of
$0.05 was also paid for both share classes. In addition, on October 31, 1993,
total net assets were $66 million.
Supply and Demand
By applying a similar strategy employed in the Insured Series, we took
advantage of short-term supply and demand fluctuations among "specialty states."
This worked well over the period with Glendale, Arizona general obligation
bonds; a Maryland Solid Waste Authority issue; Cleveland, Ohio, Water District
bonds; and Puerto Rico Housing Finance Authority bonds.
-4-
<PAGE>
<PAGE>
Discount coupon added
As interest rates fell and municipal bond prices rose, the Series purchased
"discount" bonds. Since the market price of a discount bond is below its par
or face value, it tends to appreciate faster than a higher-coupon bond of
similar maturity when interest rates fall. Buying discount bonds diversified
the Series' holdings, from the premium-priced bonds that make up the majority
of the Series. The price appreciation of our discount municipal bonds also
helped raise your net asset value.
MUNICIPAL MARKET OUTLOOK
Our outlook for municipal bonds remains positive as 1993 heads to a close.
We see three major influences on tax-exempt bonds in the near term.
(1) Despite 1993's heavy supply, investor demand for tax-exempt bonds should
keep pace in the long run. Specifically, demand from top tax bracket
investors should absorb any increases in supply this year as well as in the
future. On the supply side, steady or rising interest rates could slow the
amount of refunding issues. Total new issuance may even decline next year.
(2) We expect moderate economic expansion and higher consumer spending to
increase state and local tax and fee receipts. This rise in revenue should
improve overall municipal bond credit quality and lead to possible bond
credit rating upgrades. The low inflationary environment should also benefit
municipals as real yields, or yields less inflation, will continue to be
attractive to investors.
(3) Historically, municipal bonds perform well at year-end as demand grows in
anticipation of the large January municipal bond coupon, call and maturity
payments. Cash proceeds from these disbursements are often reinvested into
the municipal market, further supporting municipal bond prices.
As always, it is a pleasure having you as a shareholder of the Prudential
Municipal Bond Fund and taking the opportunity to report our activities to you.
Lawrence C. McQuade Pat Dolan
President Portfolio Manager,
Insured Series
Liz Forsyth Marie Conti
Portfolio Manager, Portfolio Manager,
High Yield Series Modified Series
-5-
<PAGE>
<PAGE>
PORTFOLIO Q&A
Elizabeth Forsyth, portfolio manager of the High Yield Series, Pat Dolan,
portfolio manager of the Insured Series and Marie Conti, portfolio manager of
the Modified Term Series answer commonly asked questions about the Prudential
Municipal Bond Fund.
Q: What is "guaranteed" about the Insured Series?
Pat Dolan: For each insured bond we hold in the Series, we are guaranteed the
timely payment of coupon and principal. Independent bond insurance companies
guarantee payments. Since insured bonds carry the credit rating of the
insurance companies backing them, currently AAA, all our insured bond holdings
are also rated AAA. For example, the top insurer of municipal bonds by volume
in 1993 is Municipal Bond Insurance Association. MBIA insured 36% of all
insured municipal bonds issued this year, through October 31, 1993.
What is not guaranteed about the Insured Series is the market value of our
bonds and hence the value of your shares. Your share price fluctuates with
changes in interest rate movements or economic and political developments.
Because it has virtually no credit risk, an insured bond will react more to
interest rates than a similar non-insured bond. Therefore, during the last
two years as interest rates fell, our net asset value climbed.
Q: Can you compare a municipal and a corporate high yield bond?
Liz Forsyth: The most important difference is that the income of a municipal
non-investment grade bond is free from federal and often state taxes. Beyond
that, high yield municipal bonds are generally issued by a state or municipal
government or agency to build or refinance projects that serve a public purpose.
Many of the projects they fund have equity behind them as well as other security
like first mortgage property liens and established reserve funds.
On the other hand, corporate high yield bonds, issued by private companies may
be unsecured. They are generally issued in larger size deals than municipal
bonds, and tend to be more liquid. Both types, however, have
higher-than-investment grade yields to compensate for higher credit risk.
Thus, extensive research is paramount in high yield bond investing.
(Picture)
Elizabeth Forsyth
(Picture)
Pat Dolan
(Picture)
Marie Conti
-6-
<PAGE>
<PAGE>
Q: How will rising interest rates affect my Series' NAV?
Marie Conti: As with all fixed income securities, the value of a municipal bond
generally declines when interest rates rise. The longer the maturity of a bond
or fund the more sensitive it is to interest rate changes and the more its
price should change. One benefit of the Modified Term Series is that our
municipal bond holdings fall into an intermediate maturity range. Today, these
bonds have about two-thirds the price sensitivity of long-term bonds, but only
slightly lower yields.
With a duration at 5.7 years on October 31, 1993, the Modified-Term Series is
the least sensitive of the three Series to interest rate changes. With a
duration of 5.7 years, the Series' share value will decline by approximately
5.7% if interest rates rise by one percentage point. Intermediate term
investments have gained popularity recently as investors seek to shelter their
principal value from the possibility of rising interest rates.
-7-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
LONG-TERM INVESTMENTS--97.9%
Alabama--0.8%
Cullman Med. Clinic
Brd. Rev.,
Regl. Med. Ctr.,
Baa $ 5,000 6.50%, 2/15/23, Ser.
93A................. $ 5,150,650
Ft. Payne, Ind. Dev.
Brd. Rev.,
Gametime Expansion
Proj.,
NR 4,528 10.25%, 8/1/09........ 4,935,565
--------------
10,086,215
--------------
Alaska--0.2%
No. Slope Boro., Gen.
Oblig.,
Baa1 2,000 8.35%, 6/30/98, Ser.
C................... 2,326,480
--------------
Arizona--2.0%
Ft. Mojave Indian
Tribe,
Wtr. & Swr. Rev.,
NR 3,000 10.25%, 9/1/19++...... 2,010,000
Pima Cnty. Ind. Dev.
Auth.,
Multifamily Mtge.
Rev.,
Cntry. Club La
Cholla Proj.,
NR 10,000 10.50%, 7/1/20........ 10,000,000
Salt River Proj.
Agric. Impvt. & Pwr.
Dist.,
Aa 6,125 5.50%, 1/1/10, Ser.
C................... 6,364,671
Scottsdale Ind. Dev.
Auth. Rev.,
1st Mtge.,
Westminster Vlg.
Inc. Proj.,
NR 5,000 9.50%, 6/1/97......... 5,416,000
Tempe Ind. Dev. Auth.
Rev.,
Friendship Vlg. of
Tempe,
NR 1,400 8.75%, 9/1/16......... 1,466,332
--------------
25,257,003
--------------
Arkansas--0.3%
Independence Cnty.
Poll.
Ctrl. Rev., Ark.
Pwr.
& Lt. Co. Proj.,
Baa2 3,000 6.25%, 1/1/21......... 3,125,970
--------------
California--7.7%
Alameda Cmnty. Facs.
Dist.,
Spec. Tax Rev. No.
1,
NR 8,175 7.75%, 9/1/19......... 8,609,338
California Hsg. Fin.
Agcy. Rev.,
Aa $ 1,995 8.15%, 8/1/19, Ser.
G................... $ 2,156,116
Delano, Cert. of
Part.,
Regl. Med. Center,
NR 6,955 9.25%, 1/1/22, Ser.
92A................. 7,494,013
Fairfield Green Valley
Rd. Impvt. Bd.,
NR 2,700 7.375%, 9/2/18........ 2,783,241
Folsom Spec. Tax Dist.
No. 2,
NR 3,130 7.70%, 12/1/19........ 3,284,904
Fontana Cmnty. Spec.
Tax
Rev. Facs., Dist.
No. 2,
NR 3,500 8.50%, 9/1/17, Ser.
B................... 3,944,990
Long Beach Redev.
Agcy. Hsg.,
Pacific Court Apts.,
Multifamily Hsg.
Rev.,
NR 3,805 6.80%, 9/1/13......... 3,739,516
NR 6,195 6.95%, 9/1/23......... 6,109,819
Orange Cnty. Cmnty.
Facs. Dist. Spec.
Tax Rev.,
No. 87-4 Foothill
Ranch,
NR 7,500 7.375%, 8/15/18, Ser.
A................... 7,927,875
Richmond Redev. Agcy.
Rev.,
Multifamily Bridge
Affordable Hsg.,
NR 10,000 7.50%, 9/1/23......... 10,014,700
Sacramento Cnty. Spec.
Tax
Rev., Dist. No. 1,
Elliot Ranch,
NR 3,750 8.20%, 8/1/21......... 3,976,575
Dist. No. 1, Laguna
Creek Ranch,
NR 4,500 8.25%, 12/1/20........ 4,984,920
San Joaquin Hills
Trans.
Corridor Agcy., Toll
Road Rev.,
NR 12,900 Zero Coupon, 1/1/11... 3,242,286
NR 10,000 7.00%, 1/1/30......... 10,480,500
NR 5,000 5.00%, 1/1/33......... 4,120,300
</TABLE>
-8- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
California (cont'd.)
South San Francisco
Redev.
Agcy., Tax Alloc.,
Gateway Redev.
Proj.,
NR $ 2,375 7.60%, 9/1/18......... $ 2,602,216
Southern California
Home
Fin. Auth., Sngl.
Fam.
Mtge. Rev.,
G.N.M.A.,
AAA* 8,450 7.625%, 10/1/22, Ser.
89A................. 9,224,020
--------------
94,695,329
--------------
Colorado--5.2%
Colorado Hsg. Fin.
Auth.,
Sngl. Fam. Mtge.
Rev.,
AA* 2,295 7.65%, 8/1/22, Ser.
C3.................. 2,470,843
Denver City & Cnty.
Arpt. Rev.,
Baa1 7,500 8.875%, 11/15/12, Ser.
A................... 9,055,125
Baa1 10,625 7.25%, 11/15/23, Ser.
B................... 11,595,488
Baa1 5,000 8.75%, 11/15/23, Ser.
A................... 5,961,350
Baa1 6,000 7.25%, 11/15/25, Ser.
A................... 6,592,140
Denver City & Cnty.
Ind. Dev.
Rev., Univ. of
Denver,
BBB* 1,450 7.50%, 3/1/11......... 1,651,043
Eagle Cnty. Hsg.
Proj.,
Lake Creek
Affordable
Hsg. Corp.,
NR 11,610 8.00%, 12/1/23, Ser.
A................... 11,721,108
Miguel Cnty., Mtn.
Vlg.
Met. Dist. Colo.
San Miguel Co.,
AAA* 4,000 11.00%, 12/1/07##..... 5,325,240
NR 3,200 8.10%, 12/1/11........ 3,585,952
San Miguel Cnty. Hsg.
Auth.,
Multi Hsg. Ref. Rev.,
NR 1,100 6.30%, 7/1/13......... 1,109,229
NR 4,675 6.40%, 7/1/23......... 4,703,144
--------------
63,770,662
--------------
District Of Columbia--2.1%
Dist. of Columbia
Rev.,
America Geophysical,
Ser. 1993,
BBB-* 1,350 5.75%, 9/1/13......... 1,334,151
BBB-* 4,200 5.875%, 9/1/23........ 4,167,450
Dist. of Columbia,
Cert. of Part.
BBB* $ 9,500 7.30%, 1/1/13......... $ 10,672,015
National Public Radio,
NR 8,800 7.625%, 1/1/18........ 9,682,112
--------------
25,855,728
--------------
Florida--6.0%
Brevard Cnty. Tourist
Dev.
Tax Rev., 4th
Central
Florida Marlins,
Spring Training
Fac.,
NR 1,000 6.375%, 3/1/03........ 1,102,500
NR 2,000 6.875%, 3/1/13........ 2,145,660
Broward Cnty. Res.
Rec. Rev.,
A 3,880 7.95%, 12/1/08........ 4,449,739
Broward Waste Energy,
L.P. North,
A 2,780 7.95%, 12/1/08........ 3,188,215
Escambia Cnty. Hlth.
Facs. Auth. Rev.,
L.P. South,
Azalea Trace, Ref.,
NR 2,605 9.25%, 1/1/06......... 2,901,449
Baptist Hosp., Ref.,
BBB+* 4,385 8.60%, 10/1/02, Ser.
A................... 5,089,099
Florida Hsg. Fin.
Agcy., Palm
Aire Proj.,
Multifamily
Hsg. Rev.,
NR 9,922 10.00%, 1/1/20++...... 5,952,954
Florida St. Cmnty.
Svcs. Corp.,
Kissimmee
Suburb Utils. Rev.,
NR 1,000 8.625%, 10/1/03##..... 1,223,710
Walton Cnty. Utils.
Rev.,
NR 1,000 9.00%, 3/1/18##....... 1,225,220
Greater Orlando
Aviation Auth. Rev.,
Orlando Florida Arpt.
Facs.,
A1 2,250 8.00%, 10/1/18........ 2,616,278
Hillsborough Cnty.
Ind. Dev.
Auth. Rev., Ind.
Lvg.
Ctr., Tampa Proj.,
NR 5,460 11.00%, 3/1/19, Ser.
89++................ 4,477,200
</TABLE>
-9- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Florida (cont'd.)
Osceola Cnty. Ind. Dev. Auth. Rev.,
NR $ 9,000 7.75%, 7/1/17......... $ 9,313,110
Palm Beach Cnty. Hsg.
Auth.,
Hsg. Rev.,
NR 4,695 7.75%, 3/1/23, Ser.
A................... 4,875,851
Sarasota Hlth. Facs.,
Kobernick House
Meadow Park Proj.,
NR 7,000 10.00%, 7/1/22........ 7,542,500
Seminole Cnty. Ind.
Dev.
Auth. Rev., Ind.
Dev.
Fern Park,
NR 6,515 9.25%, 4/1/12......... 7,100,112
St. Petersburg Ind.
Dev. Rev.,
Harbour View Hotel
Proj.,
NR 7,915 9.75%, 11/1/06++...... 2,334,925
Tampa Rev.,
Florida Aquarium
Proj.,
NR 7,500 7.75%, 5/1/27......... 8,131,275
--------------
73,669,797
--------------
Georgia--1.4%
Atlanta Urban Res. Fin. Auth.,
Clark Atlanta Univ. Dorm. Proj.,
NR 5,155 9.25%, 6/1/10##....... 6,646,342
Effingham Cnty. Dev.
Auth.,
Ft. Howard Corp.,
B1 10,000 7.90%, 10/1/05........ 11,042,700
--------------
17,689,042
--------------
Hawaii--0.6%
Hawaii Cnty. Impvt.
Dist.
No. 17,
NR 7,345 9.50%, 8/1/11......... 7,198,100
--------------
Illinois--7.0%
Chicago O'Hare Int'l.
Arpt.,
Spec. Fac. Rev.,
M.B.I.A.,
Aaa 9,240 5.75%, 1/1/09, Ser.
C................... 9,748,015
Chicago O'Hare Int'l.
Arpt., Spec. Fac.
Rev.,
Amer. Airlines, Ser.
A,
Baa2 4,000 7.875%, 11/1/25....... 4,406,680
Chicago O'Hare Int'l.
Arpt.,
United Airlines, Ser.
B,
Baa1 $ 6,000 8.45%, 5/1/07......... $ 6,729,360
Baa1 6,500 8.50%, 5/1/18......... 7,312,825
Baa1 2,890 8.85%, 5/1/18......... 3,376,474
Baa1 2,470 8.95%, 5/1/18......... 2,876,513
Hennepin Ind. Dev.
Rev.,
Exolon Esk. Co. Proj.,
NR 8,000 8.875%, 1/1/18++...... 8,497,600
Methchem Corp. Proj.,
NR 4,420 10.25%, 1/1/05, Ser.
89++................ 1,105,000
Illinois Dev. Fin.
Auth. Rev.,
Multifamily Hsg.
Town & Garden Apts.,
BBB+* 9,460 7.20%, 9/1/08......... 10,032,141
Illinois Hlth. Facs. Auth. Rev.,
Adventist Living Ctr.,
NR 1,669 11.00%, 12/1/15++..... 300,475
Beacon Hill Proj.,
NR 7,500 9.00%, 8/15/19, Ser.
A................... 8,307,750
Friendship Vlg.
Schaumburg Proj.,
NR 2,900 9.00%, 12/1/08........ 3,211,634
Westlake Cmnty. Hosp.,
Baa1 7,000 7.875%, 1/1/13........ 7,802,900
Illinois Hsg. Dev.
Auth.,
A1 4,500 6.125%, 7/1/25........ 4,618,440
Kankakee Ind. Dev.
Rev.,
Kroger Co. Proj.,
Ba3 2,500 7.85%, 9/1/15......... 2,801,725
Winnebago Cnty. Hsg.
Fin.
Corp., Park Tower
Assoc. Sec. 8,
NR 4,641 8.125%, 1/1/11........ 5,098,164
--------------
86,225,696
--------------
Indiana--1.7%
Bluffton Econ. Dev.
Rev.,
Kroger Co. Proj.,
Ba3 7,500 7.85%, 8/1/15......... 8,378,700
East Chicago Poll.
Ctrl. Rev.,
Inland Steel Co. Proj.
No. 10,
BB-* 4,000 6.80%, 6/1/13, Ser.
1993................ 4,119,320
</TABLE>
-10- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Indiana (cont'd.)
Wabash Econ. Dev. Rev.
Bonds, Connell L.P.,
NR $ 7,250 8.50%, 11/24/17....... $ 8,047,500
--------------
20,545,520
--------------
Iowa--1.2%
Iowa Fin. Auth. Hosp.
Facs.
Rev., Trinity Regl.
Hosp. Proj.,
BBB+* 4,000 7.00%, 7/1/22......... 4,337,520
Iowa Fin. Auth., Hlth.
Care
Facs. Rev., Mercy
Hlth. Initiatives,
NR 10,000 9.95%, 7/1/19......... 10,596,700
--------------
14,934,220
--------------
Kentucky--0.3%
Trimble Cnty. Poll.
Ctrl. Rev.,
Louisville Gas & Elec.
Co.,
Aa2 3,130 7.625%, 11/1/20....... 3,640,816
--------------
Louisiana--4.7%
Hodge Util. Rev.,
IDB Stone Container
Corp.,
NR 10,000 9.00%, 3/1/10......... 9,723,600
New Orleans Home Mtge.
Auth. Rev., Sngl.
Fam. Mtge.,
G.N.M.A.,
Aaa 1,670 8.60%, 12/1/19, Ser.
A................... 1,798,790
Port of New Orleans
Ind. Dev. Rev.,
Continental Grain Co.
Proj.,
BB-* 5,000 7.50%, 7/1/13......... 5,311,350
St. Charles Parish, Poll. Ctrl. Rev.,
Louisiana Pwr. & Lt. Co.,
Baa3 10,000 8.25%, 6/1/14......... 11,795,100
Baa3 10,000 8.00%, 12/1/14,
Ser. 1989........... 11,721,600
West Feliciana Parish
Poll.
Ctrl. Rev., Gulf St.
Util. Co. Proj.,
BBB-* 3,000 7.70%, 12/1/14........ 3,457,380
BBB-* 7,000 7.50%, 5/1/15, Ser.
A................... 8,001,000
NR 5,250 9.00%, 5/1/15......... 6,373,920
--------------
58,182,740
--------------
Maine--0.5%
Maine Hlth. & Higher
Edl. Facs. Auth.,
Sebasticook Valley
Hosp.,
Aaa $ 4,550 10.10%, 7/1/21##...... $ 6,270,310
--------------
Maryland--3.0%
Anne Arundel Cnty.
First
Mtge. Rev., Pleasant
Living Conv.,
NR 3,565 8.50%, 7/1/13......... 3,922,070
Anne Arundel Cnty.
Rev.,
Annapolis Life Care
Inc., Ginger Cove,
NR 1,250 6.00%, 1/1/18......... 1,238,850
Maryland Hlth. &
Higher Edl. Facs.
Auth. Rev.,
Doctors Cmnty. Hosp.,
BBB-* 3,900 8.75%, 7/1/22##....... 4,940,052
Maryland St. Hlth. &
Higher
Edl. Facs., Univ. of
Md. Med. Ctr.,
Aaa 7,850 5.00%, 7/1/20,
F.G.I.C............. 7,504,365
Northeast Maryland
Waste
Disp. Auth.,
Baltimore
City Sludge
Compositing Fac.,
NR 4,790 7.25%, 7/1/07......... 4,806,957
Montgomery Cnty. Solid
Waste Rev.,
A 10,900 6.30%, 7/1/16......... 11,394,097
Sludge Compositing
Fac.,
NR 3,500 8.50%, 7/1/07......... 3,619,665
--------------
37,426,056
--------------
Massachusetts--7.0%
Mass. Gen. Oblig.,
A 8,500 7.875%, 6/1/97, Ser.
A................... 9,305,375
Mass. Mun. Wholesale
Elec.
Co. Pwr., Supply
Sys. Rev.,
Aaa 6,910 8.75%, 7/1/18, Ser.
A##................. 8,176,050
Mass. St. Cons. Ln.,
Aaa 5,000 7.625%, 6/1/08, Ser.
A##................. 6,080,850
</TABLE>
-11- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Massachusetts (cont'd.)
Mass. St. Hlth. & Edl.
Facs.
Auth. Rev.,
Cardinal Cushing
Gen. Hosp.,
NR $ 7,500 8.875%, 7/1/18........ $ 8,070,000
Cooley Dickinson
Hosp.,
NR 7,200 7.125%, 11/15/18...... 7,718,472
St. Josephs Hosp.,
NR 5,840 9.50%, 10/1/20, Ser.
C##................. 7,531,790
Valley Regl. Hlth.
Sys.,
Baa 3,950 8.00%, 7/1/18, Ser.
B................... 4,509,399
Mass. St. Hsg. Fin.
Agcy. Rev.,
Residential,
BBB+* 2,000 8.10%, 8/1/23, Ser.
B................... 2,117,380
Mass. St. Ind. Fin.
Agcy. & Hlth. Care
Fac. Rev.,
Hampden Nursing Home
Proj. A,
NR 3,855 9.75%, 10/1/17........ 4,180,285
Mass. St. Ind. Fin.
Agcy. Rev.,
Berkshire Retirement
Facs.,
NR 2,000 9.875%, 7/1/18........ 2,239,840
Continental Res.,
NR 3,850 9.50%, 2/1/00, Ser.
A................... 4,099,519
Merrimack College,
BBB-* 3,235 7.125%, 7/1/12........ 3,542,066
Mass. St. Wtr. Res.
Auth.,
Aaa 10,000 7.625%, 4/1/14, Ser.
A##................. 12,037,800
Randolph Hsg. Auth.,
Multifamily Hsg.,
Liberty
Place Proj.,
NR 6,075 9.00%, 12/1/21, Ser.
A................... 6,643,256
--------------
86,252,082
--------------
Michigan--4.0%
Gratiot Cnty. Econ.
Dev.
Corp. Ltd., Oblig.
Econ.
Dev. Rev., Danley
Die Proj. Connell
L.P.,
NR 3,200 7.625%, 4/1/07........ 3,396,608
Greater Detroit Res.
Rec. Auth. Rev.,
BBB-* 6,490 9.25%, 12/13/08, Ser.
C................... 7,202,927
BBB-* 8,500 9.25%, 12/13/08, Ser.
H................... 9,433,725
Holland Sch. Dist.,
Sch. Dist. Cap.
Apprec.,
Aaa $ 2,950 Zero Coupon, 5/1/17,
A.M.B.A.C........... $ 790,777
Lowell Area Sch.,
Aaa 5,000 Zero Coupon, 5/1/14,
F.G.I.C............. 1,591,900
Meridian Econ. Dev.
Corp.
Rev., Burcham Hills
Retirement Ctr.,
NR 2,910 9.625%, 7/1/19, Ser.
A................... 3,291,006
Michigan St. Hosp.
Fin.
Auth. Rev., Saratoga
Cmnty. Hosp.,
NR 7,300 8.75%, 6/1/10, Ser.
A................... 7,904,367
Monroe Cnty. Poll.
Ctrl. Rev.,
Detroit Edison Co.,
Baa1 8,000 7.75%, 12/1/19, Ser.
A................... 9,232,960
Wayne Cnty. Bldg.
Auth.,
Baa 3,500 8.00%, 3/1/17, Ser.
A................... 4,112,885
West Ottawa Pub. Sch.
Dist.,
F.G.I.C.,
Aaa 4,825 Zero Coupon, 5/1/15... 1,449,768
Aaa 4,975 Zero Coupon, 5/1/19... 1,189,324
--------------
49,596,247
--------------
Minnesota--0.7%
Duluth Econ. Dev.
Auth.,
Benedictine Hlth.,
St. Mary's
Med. Ctr.,
Baa 3,000 8.375%, 2/15/20##..... 3,702,180
Minneapolis St. Paul
Hsg.
Fin. Brd.,
Multifamily
Rev., Riverside
Plz.,
AAA* 4,000 8.25%, 12/20/30,
G.N.M.A............. 4,364,440
--------------
8,066,620
--------------
Mississippi--2.1%
Claiborne Cnty., Poll.
Ctrl.
Rev., Middle So.
Energy Sys.,
NR 10,350 9.50%, 12/1/13, Ser.
A................... 12,656,291
NR 6,100 9.875%, 12/1/14, Ser.
C................... 7,582,849
</TABLE>
-12- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Mississippi (cont'd.)
Mississippi Hosp.
Equip. & Facs. Auth.
Rev.,
Methodist Hosp. &
Rehab. Ctr.,
NR $ 5,000 9.375%, 5/1/12, Ser.
1##................. $ 6,221,050
--------------
26,460,190
--------------
Missouri--0.6%
St. Louis Cnty. Ind.
Dev.
Auth. Rev., Conv. &
Sports Complex,
NR 4,250 7.90%, 8/15/21, Ser.
C................... 4,814,060
Soemm Proj.,
NR 2,510 10.25%, 7/1/08........ 2,790,970
--------------
7,605,030
--------------
Montana--0.7%
Montana Brd. Inv. Res.
Rec.
Rev., Yellowstone
Energy L.P. Proj.,
NR 8,000 7.00%, 12/31/19....... 8,270,560
--------------
Nebraska--0.4%
Nebraska Invest. Fin.
Auth.,
G.N.M.A., Sngl. Fam.
Mtge. Rev.,
Aaa 4,230 8.125%, 8/15/38, Ser.
I, M.B.I.A.......... 4,503,427
--------------
Nevada--0.6%
Clark Cnty., Ind. Dev.
Rev.
Southwest Gas Corp.,
Ba1 6,500 7.50%, 9/1/32, Ser.
B................... 7,271,095
--------------
New Hampshire--2.9%
New Hampshire Higher
Edl. & Hlth. Facs.
Auth.,
Antioch College,
NR 5,530 7.875%, 12/1/22....... 5,954,538
Havenwood/Heritage Heights,
NR 7,905 9.75%, 12/1/19........ 8,846,327
New Hampshire St. Ind.
Dev.
Auth., Poll. Ctrl.
Rev.,
Baa3 4,125 8.00%, 12/1/14, Ser.
A................... 4,809,296
Baa3 2,750 7.50%, 5/1/21, Proj.
B................... 3,124,825
New Hampshire St. Ind.
Dev.
Auth.,
Baa3 $12,000 7.65%, 5/1/21, Proj.
A................... $ 13,617,720
--------------
36,352,706
--------------
New Jersey--2.0%
Camden Cnty. Poll.
Ctrl. Fin.
Auth., Solid Waste
Res. Rec. Rev.,
Baa1 2,500 7.50%, 12/1/09, Ser.
B................... 2,738,000
Howell Twnshp. Mun.
Utils. Auth. Rev.,
NR 1,750 8.60%, 1/1/14, 2nd
Ser................. 2,122,418
Hudson Cnty. Impvt.
Auth.,
Auth. Solid Waste
Sys.,
BBB-* 10,000 7.10%, 1/1/20......... 10,957,000
Mercer Cnty. Impvt.
Auth.,
Solid Waste Rev.,
Baa1 8,000 Zero Coupon, 4/1/14,
Ser. A.............. 2,101,600
New Jersey Econ. Dist.
Heating & Cooling,
Trigen Trenton
Proj.,
BBB* 1,820 6.20%, 12/1/10........ 1,905,085
New Jersey St. Hlth.
Care Facs. Fin.
Auth. Rev.,
Columbus Hosp.,
Ba1 4,400 7.50%, 7/1/21, Ser.
A................... 4,561,436
--------------
24,385,539
--------------
New Mexico--0.6%
Farmington New Mexico
Poll.
Ctrl. Rev., San Juan
Proj.,
Ba2 7,500 6.40%, 8/15/23, Ser.
A................... 7,667,325
--------------
New York--6.2%
Met. Trans. Auth.
Facs. Rev.,
F.G.I.C.,
Aaa 8,340 Zero Coupon, 7/1/13,
Ser. N.............. 2,968,373
Nassau Cnty. Ind. Dev.
Agcy.
Rev., S&S
Incinerator
Jt. Venture Proj.,
NR 8,000 9.00%, 1/1/07......... 7,920,000
New York City Ind.
Dev. Agcy.,
Amer. Airlines Inc.,
Baa2 3,320 8.00%, 7/1/20......... 3,685,134
Mesorah Publications
Ltd.,
NR 1,977 10.25%, 3/1/19........ 2,229,898
</TABLE>
-13- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
New York (cont'd.)
New York City, Gen.
Oblig.,
Baa1 $ 2,000 8.00%, 6/1/99, Ser.
B................... $ 2,345,740
Baa1 2,000 7.50%, 2/1/03, Ser.
B................... 2,383,160
Baa1 4,000 8.00%, 8/1/03, Ser.
D................... 4,859,160
Baa1 6,000 7.50%, 2/1/04, Ser.
B................... 7,019,280
Baa1 1,500 8.00%, 8/1/04, Ser.
D................... 1,812,390
Baa1 5,000 8.20%, 11/15/04, Ser.
F................... 6,137,000
New York Hosp. Rev.,
Newark Wayne Cmnty.
Hosp., Inc.,
NR 5,450 7.60%, 9/1/15, Ser.
A................... 5,718,413
New York St. Dorm.
Auth. Rev.,
City Univ.,
Baa1 7,000 5.75%, 7/1/13, Ser.
A................... 7,199,500
New York St. Energy
Resh. & Dev. Auth.,
Brooklyn Union Gas
Co., M.B.I.A.,
Aaa 2,000 8.049%, 7/8/26, Ser.
D@.................. 2,092,500
L.I.L.C.O.,
Baa3 5,000 7.15%, 2/1/22, Ser.
B................... 5,549,900
New York St. Env. Fac.
Corp.,
Occidental Pet. Corp.
Proj.,
BBB* 2,375 5.70%, 9/1/28......... 2,371,176
New York St. Mtge.
Agcy. Rev.,
Homeowner Mtge.,
Aa 3,990 8.125%, 4/1/20, Ser.
GG.................. 4,319,375
New York St. Pwr.
Auth. Rev., & Gen.
Pur.,
Aa 3,750 5.00%, 1/1/14, Ser.
C................... 3,642,938
Port Auth. of New York &
New Jersey Spec. Oblig.,
U.S. Air, LaGuardia Airport,
NR 4,000 9.125%, 12/1/15....... 4,724,760
--------------
76,978,697
--------------
Ohio--0.9%
Montgomery Cnty. Hlth.
Care Facs. Rev.,
Friendship
Vlg. Dayton Proj. B,
NR 4,500 9.25%, 2/1/16......... 5,169,960
Ohio Hsg. Fin. Agcy.,
Sngl. Fam. Mtge.
Rev., G.N.M.A.,
AAA* 1,880 8.25%, 12/15/19, Ser.
B................... 1,906,195
Ohio St. Wtr. Dev.
Auth., Poll.,
Ctrl. Facs. Rev., Ohio
Edison,
Baa3 $ 3,500 7.625%, 7/1/23........ $ 3,927,630
--------------
11,003,785
--------------
Oklahoma--1.1%
Tulsa Mun. Arpt. Trust
Rev.,
Amer. Airlines,
Inc.,
Baa2 13,000 7.375%, 12/1/20....... 13,978,770
--------------
Pennsylvania--7.2%
Allegheny Cnty. Hosp.
Dev. Auth. Rev.,
West Penn.
Hosp. Hlth. Ctr.
Proj.,
NR 2,800 8.50%, 1/1/20......... 3,232,040
Beaver Cnty. Ind. Dev.
Auth., Poll. Ctrl.
Rev.,
Ohio Edison Proj.,
Baa3 8,000 7.75%, 9/1/24, Ser.
A................... 9,073,360
Berks Cnty. Ind. Dev. Auth. Rev.,
Lutheran Home Proj.,
NR 3,500 6.875%, 1/1/23, Ser.
A................... 3,638,145
Berks Cnty. Mun. Auth.
Rev.,
Adventist Living Ctrs.
Proj.,
NR 279 11.00%, 12/1/15++..... 50,275
Alvernia College
Proj.,
NR 5,240 7.75%, 11/15/16....... 5,788,733
Bucks Cnty. Ind. Dev.
Auth. Rev., Mill Run
Care,
NR 4,000 10.00%, 7/1/19........ 3,160,000
Chartiers Valley Ind.
& Coml. Dev. Auth.
Rev.,
Friendship Village/
South Hills,
NR 3,750 9.50%, 8/15/18........ 4,277,588
Doylestown Hosp. Auth.
Rev.,
Pine Run,
NR 1,180 7.20%, 7/1/23, Ser.
A................... 1,252,641
Lancaster Cnty. Solid
Waste
Mgmt., Res. Rec.
Auth. Sys. Rev.,
A* 5,965 8.50%, 12/15/10, Ser.
A................... 6,691,358
</TABLE>
-14- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Pennsylvania (cont'd.)
Montgomery Cnty.
Redev.
Auth., Multifamily
Hsg.,
KBF Assoc. L.P.,
NR $10,000 6.50%, 7/1/25, Ser.
A................... $ 10,388,600
Northumberland Cnty.
Ind. Dev. Auth.
Rev.,
Roaring Creek Wtr.,
NR 6,000 6.375%, 10/15/23...... 5,956,080
Penn. Hsg. Fin. Agcy.,
Sngl. Fam. Mtge.
Rev.,
Aa 3,460 8.15%, 10/1/21, Ser.
27.................. 3,915,855
Aa 1,050 9.378%, 4/1/25, Ser.
27@................. 1,120,875
Penn. St. Hgr. Edl.
Facs. Auth. Rev.,
Med. Coll.
of Pennsylvania,
Baa1 5,200 8.375%, 3/1/11, Ser.
A................... 5,937,672
Philadelphia Gas Wks.
Rev.,
Aaa 4,800 7.70%, 6/15/21, Ser.
13##................ 5,888,976
Philadelphia Hosp. &
Hgr. Edl. Facs.
Auth. Rev.,
Temple Univ. Hosp.,
Baa1 5,250 6.625%, 11/15/23, Ser.
A................... 5,602,695
Philadelphia Mun.
Auth. Rev.,
Ba 2,470 6.40%, 11/15/16, Ser.
93B................. 2,543,063
Shenango Valley Hosp.
Auth.
Rev., Osteopathic
Hosp.
Med. Ctr.,
BBB+* 4,900 7.875%, 4/1/10........ 5,429,004
Wilkes Barre Gen. Mun.
Auth. Coll. Rev.,
Misericordia Coll.,
NR 2,760 7.75%, 12/1/12, Ser.
B................... 2,998,768
NR 1,245 7.75%, 12/1/12, Ser.
A................... 1,352,705
--------------
88,298,433
--------------
Puerto Rico--2.6%
Puerto Rico Aqueduct &
Swr. Auth. Rev.,
Baa 3,500 7.875%, 7/1/17, Ser.
A................... 4,055,940
Puerto Rico Hwy. &
Trans. Auth., Hwy.
Rev.,
Baa1 14,000 5.50%, 7/1/15, Ser.
W................... 14,221,200
Puerto Rico Tel. Auth.
Rev.,
M.B.I.A., Ser. I,
Aaa $ 6,500 7.55%, 1/25/07@....... $ 6,914,375
Aaa 6,150 8.03%, 1/16/15@....... 6,511,313
--------------
31,702,828
--------------
Rhode Island--1.1%
Rhode Island
Depositors Econ.
Protn. Corp.,
Sub. Gen. Oblig.,
NR 7,000 10.00%, 7/1/07, Ser.
B................... 7,665,000
Rhode Island Hsg. &
Mtge. Fin. Corp.,
Homeownership
Opportunity,
A1 6,000 8.20%, 10/1/17, Ser.
1A.................. 6,445,380
--------------
14,110,380
--------------
South Carolina--1.9%
Charleston Cnty. Hosp.
Facs. Rev., Baker
Hosp.,
AAA* 3,100 9.25%, 10/1/11##...... 3,657,690
Lee Cnty. Ind. Dev.
Rev.,
Mid American Waste
System,
NR 5,450 7.00%, 9/15/13........ 5,537,200
So. Carolina St. Hsg.
Fin. & Dev. Auth.,
Homeownership Mtge.,
Aa 4,345 7.75%, 7/1/22, Ser.
C................... 4,654,799
So. Carolina St. Pub.
Svc. Auth. Rev.,
A1 10,000 5.125%, 1/1/32, Ser.
C................... 9,373,100
--------------
23,222,789
--------------
South Dakota--0.5%
So. Dakota Econ. Dev.
Fin. Auth., Cons.
Beef
Inds. Proj.,
NR 5,210 10.25%, 1/1/19........ 4,897,400
Lomar Dev. Co. Proj.,
NR 1,300 10.25%, 8/1/08........ 1,396,083
--------------
6,293,483
--------------
</TABLE>
-15- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Tennessee--1.3%
Knox Cnty. Hlth., Edl.
& Hsg. Facs. Rev.,
Baptist
Hlth. Hosp.,
NR $ 8,000 8.50%, 4/15/04........ $ 8,857,840
Memphis Shelby Cnty.
Arpt. Auth., Spec.
Facs. & Proj. Rev.,
Federal Express,
Baa3 7,000 6.20%, 7/1/14......... 7,216,370
--------------
16,074,210
--------------
Texas--2.3%
Beaumont Hsg. Fin.
Corp.,
Sngl. Fam. Mtge.
Rev.,
A 2,695 9.20%, 3/1/12......... 2,985,710
Bell Cnty. Hlth. Facs.
Dev. Corp.,
Adventist
Living Tech., Inc.,
NR 5,540 10.50%, 6/15/18, Ser.
A................... 5,664,650
Port Corpus Christi
Ind. Dev.
Corp., Valero
Refining & Mfg. Co.,
Baa3 1,300 10.25%, 6/1/17, Ser.
A................... 1,567,826
San Antonio Elec. &
Gas Rev., F.G.I.C.,
Aa1 8,500 5.00%, 2/1/17......... 8,073,555
Southwest Travis
Cnty.,
Road Dist. No. 1,
NR 80,380 Zero Coupon, 9/1/19... 4,600,147
Tarrant Cnty. Hlth.
Facs. Dev.
Corp., 3927 Fndtn.
Proj.,
NR 5,000 10.25%, 9/1/19........ 5,511,800
--------------
28,403,688
--------------
U. S. Virgin Islands--0.6%
Virgin Islands Terr., Hugo Ins.
Claims Fund Proj.,
NR 2,305 7.75%, 10/1/06, Ser.
91.................. 2,678,940
Virgin Islands Wtr. &
Pwr. Auth., Wtr.
Sys. Rev.,
NR 4,800 8.50%, 1/1/10, Ser.
A................... 5,440,464
--------------
8,119,404
--------------
Utah--1.1%
Intermountain Pwr.
Agcy.,
Pwr. Sup. Rev.,
Aa $ 4,500 7.874%, 7/1/21, Ser.
A@.................. $ 4,595,625
Aa 10,000 5.00%, 7/1/23, Ser.
A................... 9,481,500
--------------
14,077,125
--------------
Virginia--0.7%
Roanoke Cnty. Wtr.
Sys. Rev., F.G.I.C.,
Aaa 4,500 5.00%, 7/1/26, Ser.
B................... 4,311,180
Roanoke Ind. Dev.
Auth. Hosp. Rev.,
M.B.I.A.,
Aaa 4,700 5.00%, 7/1/24, Ser.
A................... 4,486,996
--------------
8,798,176
--------------
Washington--2.0%
Washington St. Pub.
Pwr. Sup. Sys. Rev.,
Nuclear Proj. No. 1,
Aa 5,000 7.25%, 7/1/09, Ser.
B................... 6,056,650
Nuclear Proj. No. 3,
Aa 10,000 Zero Coupon, 7/1/16,
Ser. C.............. 2,705,500
Aa 5,000 7.125%, 7/1/16, Ser.
B##................. 6,127,050
Aa 5,000 Zero Coupon, 7/1/17,
Ser C............... 1,274,000
Washington St. Pub.
Pwr. Supply, Nuclear
Proj. No. 3,
Aa 7,500 7.25%, 7/1/15, Ser.
B##................. 8,776,650
--------------
24,939,850
--------------
West Virginia--2.1%
Kanawha Cnty. Bldg.
Comn.
Rev., St. Francis
Hosp.,
B+* 4,915 12.00%, 1/1/14........ 5,132,931
So. Charleston Ind.
Dev. Rev.,
Union Carbide Chem. &
Plastics Co.,
Baa2 2,450 8.00%, 8/1/20......... 2,822,474
Weirton Poll. Ctrl.
Rev.,
Weirton Steel Proj.,
B2 4,000 8.625%, 11/1/14....... 4,332,440
</TABLE>
-16- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
West Virginia (cont'd.)
West Virginia St. Hsg.
Dev. Auth., Fund
Hsg. Fin.,
Aa1 $ 9,440 7.95%, 5/1/17, Ser.
A................... $ 10,479,060
West Virginia St. Pkwys.
Econ. Dev. & Tourism Auth.,
Aaa 3,250 8.839%, 5/16/19,
F.G.I.C.@........... 3,497,802
--------------
26,264,707
--------------
Total long-term
investments
(cost
$1,126,005,601)..... 1,209,596,830
--------------
SHORT-TERM INVESTMENTS--0.4%
New York--0.1%
Babylon Ind. Dev.
Agcy.,
Waste Facs. Rev.,
F.R.D.D.,
VMIG1 1,300 3.25%, 11/1/93, Ser.
90.................. 1,300,000
--------------
North Carolina--0.3%
Cleveland Cnty., Ind.
Facs. Auth. Rev.,
Metals
America Proj.,
F.R.W.D.,
P1 4,165 3.25%, 11/3/93,
Ser.90.............. 4,165,000
--------------
Total short-term
investments
(cost $5,465,000)... 5,465,000
--------------
Total Investments; Note 4--98.3%
(cost
$1,131,470,601)..... 1,215,061,830
Other assets in excess
of
liabilities--1.7%... 20,639,977
--------------
Net Assets--100%...... $1,235,701,807
--------------
--------------
</TABLE>
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation
F.G.I.C.--Financial Guaranty Insurance Company
F.R.D.D.--Floating Rate (Daily) Demand Note**
F.R.W.D.--Floating Rate (Weekly) Demand Note**
G.N.M.A.--Government National Mortgage Association
M.B.I.A.--Municipal Bond Insurance Association
## Prerefunded issues are secured by escrowed cash and direct U.S. guaranteed
obligations.
++ Issuer in default; non-income producing security.
@ Inverse floating rate bond.
* Standard & Poor's Rating.
** For purposes of amortized cost valuation, the maturity date of Floating Rate
Demand Notes is considered to be the later of the next date on which the
security can be redeemed at par, or the next date on which the rate of
interest is adjusted.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
-17- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
HIGH YIELD SERIES
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets October 31, 1993
----------------
<S> <C>
Investments, at value (cost $1,131,470,601)............................................. $1,215,061,830
Cash.................................................................................... 112,375
Accrued interest receivable............................................................. 26,740,903
Receivable for investments sold......................................................... 18,464,279
Receivable for Fund shares sold......................................................... 7,618,035
Deferred expenses and other assets...................................................... 16,358
----------------
Total assets 1,268,013,780
----------------
Liabilities
Payable for investments purchased....................................................... 26,602,715
Payable for Fund shares reacquired...................................................... 2,248,944
Dividends payable....................................................................... 2,130,602
Due to Manager.......................................................................... 521,055
Due to Distributors..................................................................... 502,412
Accrued expenses........................................................................ 306,245
----------------
Total liabilities................................................................... 32,311,973
----------------
Net Assets.............................................................................. $1,235,701,807
----------------
----------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................. $ 1,080,944
Paid-in capital in excess of par...................................................... 1,152,401,018
----------------
1,153,481,962
Accumulated net realized loss......................................................... (1,371,384)
Net unrealized appreciation........................................................... 83,591,229
----------------
Net assets, October 31, 1993.......................................................... $1,235,701,807
----------------
----------------
Class A:
Net asset value and redemption price per share
($56,603,299 / 4,952,714 shares of beneficial interest issued and outstanding)...... $11.43
Maximum sales charge (4.5% of offering price)......................................... .54
----------------
Maximum offering price to public...................................................... $11.97
----------------
----------------
Class B:
Net asset value, offering price and redemption price per share
($1,179,098,508 / 103,141,695 shares of beneficial interest issued and
outstanding)........................................................................ $11.43
----------------
----------------
</TABLE>
See Notes to Financial Statements.
-18-
<PAGE>
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
HIGH YIELD SERIES
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Net Investment Income
Six Months
Ended
October 31,
1993
-----------
Income
<S> <C>
Interest and discount earned....... $41,932,119
-----------
Expenses
Management fee..................... 2,912,734
Distribution fee--Class A.......... 25,029
Distribution fee--Class B.......... 2,787,588
Transfer agent's fees and
expenses......................... 245,000
Custodian's fees and expenses...... 140,000
Registration fees.................. 60,000
Reports to shareholders............ 40,000
Insurance expense.................. 15,000
Legal fees......................... 12,500
Audit fee.......................... 8,500
Trustees' fees..................... 8,250
Miscellaneous...................... 8,591
-----------
Total expenses................... 6,263,192
-----------
Net investment income................ 35,668,927
-----------
Realized and Unrealized
Gain (loss) on Investments
Net realized loss on:
Investment transactions............ (1,978,264)
Net change in unrealized appreciation
of:
Investments........................ 31,861,264
-----------
Net gain on investments.............. 29,883,000
-----------
Net Increase in Net Assets
Resulting from Operations............ $65,551,927
-----------
-----------
</TABLE>
PRUDENTIAL MUNICIPAL BOND FUND
HIGH YIELD SERIES
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) October 31, April 30,
in Net Assets 1993 1993
-------------- --------------
<S> <C> <C>
Operations
Net investment
income............. $ 35,668,927 $ 61,700,645
Net realized gain
(loss) on
investment
transactions....... (1,978,264) 3,440,013
Net change in
unrealized
appreciation of
investments........ 31,861,264 34,000,369
-------------- --------------
Net increase in net
assets resulting
from operations.... 65,551,927 99,141,027
-------------- --------------
Dividends to
shareholders from net
investment income
(Note 1)
Class A.............. (1,628,520) (2,230,916)
Class B.............. (34,040,407) (59,469,729)
-------------- --------------
(35,668,927) (61,700,645)
-------------- --------------
Fund share transactions
(Note 5)
Net proceeds from
shares issued...... 195,197,438 307,450,090
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends.......... 15,763,020 26,753,882
Cost of shares
reacquired......... (77,151,141) (128,197,926)
-------------- --------------
Increase in net
assets from Fund
share
transactions....... 133,809,317 206,006,046
-------------- --------------
Total increase......... 163,692,317 243,446,428
Net Assets
Beginning of period.... 1,072,009,490 828,563,062
-------------- --------------
End of period.......... $1,235,701,807 $1,072,009,490
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-19-
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
LONG-TERM INVESTMENTS--96.1%
Alabama--1.1%
Huntsville Solid Waste Disp. Auth.,
Aaa $ 2,000 7.00%, 10/1/08,
F.G.I.C............... $ 2,281,520
Mobile Wtr. & Swr. Rev.,
Aaa 4,840 5.00%, 1/1/13,
A.M.B.A.C............. 4,671,762
Univ. Alabama Rev.,
Hosp. Birmingham,
Aaa 2,500 5.00%, 10/1/14,
M.B.I.A............... 2,396,575
------------
9,349,857
------------
Alaska--0.9%
Alaska St. Energy Auth. Pwr. Rev.,
Bradley Lake Hydro, A.M.B.A.C.,
Aaa 2,000 7.25%, 7/1/16, 1st
Ser................... 2,298,200
Anchorage Hosp. Rev.,
Sisters of Province,
Aaa 5,000 7.125%, 10/1/05,
A.M.B.A.C............. 5,841,650
------------
8,139,850
------------
Arizona--2.7%
Chandler, Gen. Oblig.,
Aaa 2,000 4.375%, 7/1/13,
F.G.I.C............... 1,789,020
Maricopa Cnty. Ind. Dev. Auth. Rev.,
Hosp. Fac., John C. Lincoln
Hosp., F.S.A.,
Aaa 2,740 7.00%, 12/1/00.......... 3,211,664
Aaa 2,250 7.50%, 12/1/13.......... 2,673,495
Pima Cnty. Ind. Dev.
Auth. Rev.,
Tucson Elec. Pwr. Co.,
Aaa 14,000 7.25%, 7/15/10,
F.S.A................. 16,142,000
------------
23,816,179
------------
California--4.3%
Contra Costa Wtr. Dist.,
Wtr. Rev., A.M.B.A.C.,
Aaa 1,455 6.25%, 10/1/12, Ser.
E..................... 1,635,624
Corona, Cert. of Part.,
Vista Hosp.,
Aaa 6,000 10.00%, 11/1/20, Ser.
B..................... 8,563,380
Los Angeles Cnty. Metro.
Trans. Auth.,
Sales Tax Rev.,
F.G.I.C.,
Aaa $ 5,000 5.00%, 7/1/21, Ser. A... $ 4,731,150
Los Angeles Cnty. Trans. Comm.,
Sales Tax Rev.,
Aaa 6,750 6.25%, 7/1/13,
M.B.I.A............... 7,335,562
Sacramento Mun. Util.
Dist., Elec. Rev.,
M.B.I.A.,
Aaa 5,000 6.375%, 8/15/22, Ser.
B..................... 5,469,950
San Diego Cnty. Wtr.
Auth. Wtr. Rev., Cert.
of Part.,
Aaa 5,800 8.12196%, 4/26/06,
F.G.I.C. @............ 6,568,500
Southern California Pub. Pwr. Auth.,
Pwr. Proj. Rev., M.B.I.A.,
Aaa 3,200 5.00%, 1/1/20, Ser. A... 3,030,016
------------
37,334,182
------------
Colorado--0.6%
Denver City & Cnty.,
Cert. of Part.,
Cap. Leasing Corp.,
Aaa 2,900 8.00%, 5/15/07,
B.I.G.#............... 3,332,158
Jefferson Cnty. Sngl.
Fam. Mtge. Rev.,
M.B.I.A.,
Aaa 1,650 8.875%, 10/1/13, Ser.
A..................... 1,834,915
------------
5,167,073
------------
Delaware--0.7%
Delaware Econ. Dev.
Auth. Rev.,
Delmarva Pwr. & Lt.,
M.B.I.A.,
Aaa 5,000 7.60%, 3/1/20, Ser. A... 5,852,200
------------
District Of Columbia--1.8%
Dist. of Columbia, Gen.
Oblig.,
Aaa 5,550 7.40%, 6/1/05, Ser. B,
F.S.A.#............... 6,629,308
Aaa 2,500 6.75%, 6/1/08, Ser. A,
M.B.I.A............... 2,776,050
Aaa 5,000 8.00%, 6/1/08, Ser. C,
A.M.B.A.C............. 5,927,900
------------
15,333,258
------------
</TABLE>
-20- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Florida--5.7%
Altamonte Springs Hlth.,
M.B.I.A.,
Aaa $ 1,500 5.00%, 11/15/14, Ser.
A..................... $ 1,434,120
Florida St. Dept. of
Trans.,
Tpke. Auth. Rev.,
F.G.I.C., Ser. A,
Aaa 6,000 5.00%, 7/1/13........... 5,824,020
Aaa 4,000 5.00%, 7/1/15........... 3,856,080
Aaa 6,950 5.00%, 7/1/19........... 6,668,177
Gulf Breeze Local Gov't.
Loan Proj., F.G.I.C.,
Aaa 1,500 8.00%, 12/1/15, Ser.
85B................... 1,761,855
Hillsborough Cnty. Hosp. Auth. Rev.,
Tampa Gen. Hosp. Proj.,
Aaa 8,000 6.375%, 10/1/13,
F.S.A................. 8,856,080
Orange Cnty. Solid Waste
Fac. Rev., F.G.I.C.,
Aaa 3,000 6.25%, 10/1/12.......... 3,277,320
Orlando & Orange Cnty.
Expwy. Auth. Rev.,
F.G.I.C.,
Aaa 5,000 6.50%, 7/1/10........... 5,797,750
Aaa 2,550 6.50%, 7/1/11........... 2,949,279
St. Petersburgh Excise
Tax,
Aaa 3,800 5.00%, 10/1/16,
F.G.I.C............... 3,678,970
Univ. Cmnty. Hosp. Inc.,
Hosp. Rev.,
Aaa 5,000 7.375%, 9/1/07,
F.S.A................. 5,885,800
------------
49,989,451
------------
Georgia--0.4%
De Kalb Cnty. Hsg.
Auth.,
Sngl. Fam. Mtge. Rev.,
AAA* 3,075 7.70%, 2/1/24,
G.N.M.A............... 3,349,567
------------
Guam--0.4%
Guam Gov't. Ltd. Oblig. Hwy. Rev.,
Aaa 3,000 6.30%, 5/1/12,
C.G.I.C............... 3,274,170
------------
Hawaii--2.2%
Hawaii Arpts. Sys. Rev.,
F.G.I.C., 2nd Ser. 90,
Aaa $ 7,750 7.50%, 7/1/20........... $ 9,008,910
Hawaii St. Dept. Budget
& Fin.
Elec. & Pub. Pwr.
Aaa 10,000 5.45%, 11/1/23,
M.B.I.A............... 9,850,000
------------
18,858,910
------------
Illinois--6.4%
Chicago Motor Fuel Tax
Rev.,
Aaa 6,700 7.05%, 1/1/07,
A.M.B.A.C.#........... 7,834,176
Chicago O'Hare Int'l.
Arpt.,
Spec. Fac. Rev.,
M.B.I.A.,
Aaa 8,750 5.75%, 1/1/09, Ser. C... 9,231,075
Chicago Pub. Bldg.
Comm.,
Chicago Brd. of Ed.,
Aaa 7,250 7.75%, 1/1/06,
F.G.I.C.#............. 8,622,715
Chicago Residential
Mtge. Rev., M.B.I.A.,
Aaa 9,000 Zero Coupon, 10/1/09,
Ser. B................ 3,146,400
Chicago Water Rev.,
Aaa 3,475 6.50%, 11/1/15,
F.G.I.C............... 4,017,899
City of Chicago,
Aaa 7,890 5.00%, 1/1/09,
A.M.B.A.C............. 7,786,168
Cook Cnty., Gen. Oblig.,
Aaa 2,600 6.25%, 11/1/21,
A.M.B.A.C............. 2,791,984
Met. Pier & Exposition
Auth.,
Ded. St. Tax Rev.,
F.G.I.C.,
Aaa 9,000 Zero Coupon, 6/15/10,
Ser. A................ 3,621,150
Onterie Ctr. Hsg. Fin.
Corp. Mtge. Rev.,
M.B.I.A.,
Aaa 1,575 7.00%, 7/1/12........... 1,716,892
Aaa 6,400 7.05%, 7/1/27........... 7,016,448
------------
55,784,907
------------
Indiana--2.6%
Indianapolis Arpt. Auth.
Rev.,
Aaa 2,450 9.00%, 7/1/15,
M.B.I.A............... 2,805,054
</TABLE>
-21- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Indiana (cont'd.)
Lake Cent. Multi Dist. Sch. Bldg.,
First Mtge.,
Aaa $ 3,000 6.50%, 1/15/14,
M.B.I.A............... $ 3,292,980
Marion Cnty. Hosp. Auth.
Facs. Rev.,
Aaa 8,500 8.625%, 10/1/12,
A.M.B.A.C............. 10,410,885
Rockport Poll. Ctrl.
Rev.,
Ind. & Mich. Elec.
Co., B.I.G.,
Aaa 6,000 9.25%, 8/1/14, Ser. A... 6,662,760
------------
23,171,679
------------
Kansas--0.4%
Sedgwick Cnty. Mtge.
Loan Rev., A.M.B.A.C.,
Aaa 3,035 7.80%, 6/1/22, Ser. B... 3,250,424
------------
Kentucky--0.6%
Kentucky Hsg. Corp.
Rev., F.H.A.,
Aaa 2,880 7.45%, 1/1/23, Ser. D... 3,142,137
Louisville & Jefferson
Cnty. Regl. Arpt.
Auth., M.B.I.A.,
Aaa 2,000 8.375%, 7/1/07, Ser A... 2,317,220
------------
5,459,357
------------
Louisiana--0.6%
Jefferson Parish Sales
Tax Dist., F.G.I.C.,
Aaa 5,000 6.75%, 12/1/06, Ser.
A..................... 5,707,250
------------
Maryland--2.0%
Baltimore Cert. of
Part.,
Pension Funding,
M.B.I.A.,
Aaa 2,000 7.25%, 4/1/16, Ser.
A#.................... 2,370,780
Maryland St. Hlth. & Higher Edl.
Facs., Auth. Rev., F.G.I.C.,
Aaa 4,000 5.00%, 7/1/19........... 3,826,920
Aaa 7,000 5.00%, 7/1/23........... 6,677,020
Univ. of Md. Med. Ctr.,
Aaa $ 5,000 5.00%, 7/1/20,
F.G.I.C............... $ 4,779,850
------------
17,654,570
------------
Massachusetts--3.0%
Boston Wtr. & Swr.
Auth., F.G.I.C.,
Aaa 3,500 7.10%, 11/1/19, Ser.
A#.................... 4,104,695
Mass. Bay Trans. Auth.,
Gen. Trans., M.B.I.A.,
Aaa 5,000 5.50%, 3/1/09, Ser. A... 5,205,200
Mass. Hsg. Fin. Agcy.,
Hsg. Rev., B.I.G.,
Aaa 3,550 7.75%, 12/1/19, Ser.
A..................... 3,815,114
Mass. St. Hlth. & Edl.
Facs. Auth. Rev.,
Fallon Hlthcare,
C.G.I.C.,
Aaa 3,000 6.875%, 6/1/11, Ser.
A..................... 3,402,960
Lahey Clinic Med. Ctr.,
M.B.I.A.,
Aaa 6,685 7.60%, 7/1/08, Ser. A... 7,818,174
Mass. Gen. Hosp,
A.M.B.A.C.,
Aaa 1,500 6.25%, 7/1/12, Ser. F... 1,688,550
------------
26,034,693
------------
Michigan--5.1%
Chippewa Valley Sch.
Dist.,
Aaa 6,670 5.00%, 5/1/21,
F.G.I.C............... 6,381,856
Holland Sch. Dist.,
Aaa 4,000 Zero Coupon, 5/1/12,
A.M.B.A.C............. 1,465,320
Huron Valley Sch. Dist.,
F.G.I.C.,
Aaa 5,600 Zero Coupon, 5/1/17..... 1,501,136
Aaa 6,370 Zero Coupon, 5/1/18..... 1,610,718
Aaa 5,845 Zero Coupon, 5/1/19..... 1,397,306
Michigan St. Bldg. Auth.
Rev., A.M.B.A.C.,
Aaa 8,735 6.00%, 10/1/09, Ser.
II.................... 9,143,186
</TABLE>
-22- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Michigan (cont'd.)
Michigan St. Hosp. Fin. Auth. Rev.,
Oakwood Hosp.,
Aaa $ 2,350 7.50%, 6/1/15,
M.B.I.A............... $ 2,766,937
Michigan St. Hsg. Dev.
Auth., F.G.I.C.,
Aaa 1,500 7.70%, 7/1/18, Ser. A... 1,615,605
Monroe Cnty. Poll. Ctrl.
Rev.,
Detroit Edison Co.
Proj., A.M.B.A.C.,
Aaa 3,250 7.30%, 9/1/19, Ser. I... 3,764,053
Detroit Edison Co. Proj.
1,
Aaa 8,000 7.65%, 9/1/20,
F.G.I.C............... 9,436,240
Romulus Michigan Cmnty.
Sch. Dist., F.G.I.C.,
Aaa 2,570 Zero Coupon, 5/1/19..... 614,384
Aaa 2,245 Zero Coupon, 5/1/20..... 507,415
Saginaw Hosp. Fin. Auth.
Hosp. Rev.,
St. Luke's Hosp.,
M.B.I.A.,
Aaa 4,000 6.50%, 7/1/11, Ser. C... 4,441,040
------------
44,645,196
------------
Minnesota--0.3%
St. Louis Park Hlth.
Care,
A.M.B.A.C.,
Aaa 2,500 5.20%, 7/1/16, Ser. C... 2,489,875
------------
Mississippi--0.9%
Harrison Cnty.
Wastewater Mgmt. Dist.
Rev.,
Aaa 2,400 6.50%, 2/1/06,
F.G.I.C............... 2,669,592
Mississippi Hosp. Equip.
& Facs. Auth. Rev.,
Baptist Med. Ctr.,
Aaa 2,000 7.40%, 5/1/07,
M.B.I.A............... 2,332,980
Mississippi Hsg. Fin. Corp.,
Sngl. Fam. Mtge. Rev., F.G.I.C.,
Aaa 3,035 7.80%, 10/15/16, Ser.
A..................... 3,214,308
------------
8,216,880
------------
Missouri--3.4%
Cape Girardeau Cnty.
Ind.
Dev. Auth., M.B.I.A.,
Hlth. Care Facs. Rev.,
Aaa $ 2,500 5.25%, 6/1/16........... $ 2,513,050
Missouri St. Hlth. &
Edl. Facs. Auth. Rev.,
M.B.I.A.,
Midwest Hlth. Ctr.,
Aaa 5,250 6.25%, 2/15/22, Ser.
B..................... 5,693,100
SSM Healthcare,
Aaa 4,250 6.25%, 6/1/16, Ser.
AA.................... 4,616,605
St. Lukes Hlth. Sys.,
Aaa 6,975 5.10%, 11/15/13......... 6,803,694
Sikeston Elec. Rev.,
M.B.I.A.,
Aaa 9,850 6.25%, 6/1/22, Ser.
92.................... 10,625,293
------------
30,251,742
------------
Montana--1.3%
Forsyth Poll. Ctrl.
Rev.,
Puget Sound Pwr. & Lt.
Co., A.M.B.A.C.,
Aaa 2,000 7.05%, 8/1/21, Ser. A... 2,293,600
Washington Wtr. Pwr.
Proj.,
Aaa 8,000 7.125%, 12/1/13,
M.B.I.A............... 9,229,520
------------
11,523,120
------------
Nebraska--1.0%
Nebraska Invest. Fin.
Auth., G.N.M.A.,
Sngl. Fam. Mtge. Rev.,
Aaa 1,980 8.00%, 7/15/17, Ser. B,
F.G.I.C............... 2,139,093
Aaa 6,115 8.125%, 8/15/38, Ser. I,
M.B.I.A............... 6,510,274
------------
8,649,367
------------
Nevada--0.6%
Clark Cnty. Arpt. Auth.,
Visitors Bldg.,
Aaa 4,230 6.90%, 6/1/07,
F.G.I.C.#............. 4,917,629
------------
</TABLE>
-23- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
New Jersey--7.3%
Essex Cnty. Impvt.
Auth.,
Aaa $ 3,500 5.50%, 12/1/20,
A.M.B.A.C............. $ 3,599,505
Garfield Brd. of Ed.,
Cert. of Part.,
Wtr. Impvt. Dist. No.
31,
Aaa 3,150 7.65%, 6/1/08, B.I.G.... 3,632,769
Jersey City Swr. Auth., A.M.B.A.C.,
Aaa 2,585 6.00%, 1/1/10........... 2,866,145
Aaa 4,255 6.25%, 1/1/14........... 4,860,827
Lacey Mun. Utils. Auth., Wtr. Rev.,
Aaa 2,325 6.00%, 12/1/19,
B.I.G.#............... 2,601,117
New Jersey Hlth. Care
Facs. Fin. Auth. Rev.,
Burdett Tonin New
Hosp., F.G.I.C., Ser.
D,
Aaa 1,200 6.50%, 7/1/12........... 1,341,312
Hackensack Med. Ctr.,
F.G.I.C.,
Aaa 2,000 6.625%, 7/1/11.......... 2,252,760
Aaa 5,000 6.625%, 7/1/17.......... 5,645,600
Irvington Gen. Hosp.,
Aaa 2,500 9.625%, 8/1/25,
M.B.I.A............... 2,791,925
St. Peters Med. Ctr.,
M.B.I.A.,
Aaa 10,000 5.00%, 7/1/16, Ser. E... 9,760,600
Aaa 4,430 5.00%, 7/1/21, Ser. F... 4,287,753
Underwood Mem. Hosp.,
A.M.B.A.C.,
Aaa 2,500 5.70%, 7/1/23, Ser. B... 2,605,900
New Jersey St. Hsg. &
Mtge. Fin. Agcy. Rev.,
M.B.I.A.,
Aaa 3,840 7.90%, 10/1/22, Ser.
B..................... 4,134,221
New Jersey St. Transit
Corp.,
Cert. of Part.,
Aaa 5,000 6.50%, 10/1/16,
F.S.A................. 5,662,950
No. Jersey Dist. Wtr. Supply Comm.,
Wanaque So. Proj., M.B.I.A.,
Aaa 7,250 6.00%, 7/1/21........... 7,877,995
------------
63,921,379
------------
New Mexico--0.7%
Socorro Hosp. Sys. Rev.,
Cmnty. Hlth. Svcs.,
M.B.I.A.,
Aaa $ 5,315 9.25%, 8/1/12, Ser. A... $ 5,902,095
------------
New York--2.9%
Erie Cnty. Wtr. Auth.
Rev., A.M.B.A.C.,
Aaa 2,785 Zero Coupon, 12/1/07.... 1,367,992
Aaa 6,925 Zero Coupon, 12/1/17.... 1,231,334
Met. Trans. Auth. Facs.
Rev., F.G.I.C.,
Aaa 1,500 6.375%, 7/1/10, Ser.
J..................... 1,648,620
Aaa 2,000 Zero Coupon, 7/1/12,
Ser. N................ 750,220
Aaa 9,000 Zero Coupon, 7/1/13,
Ser. N................ 3,203,280
Aaa 3,910 Zero Coupon, 7/1/14,
Ser. N................ 1,320,485
New York St. Energy Res.
&
Dev. Auth., Poll.
Ctrl. Rev.,
Aaa 4,000 7.375%, 10/1/14,
F.G.I.C............... 4,700,360
New York St. Hsg. Fin. Agcy. Rev.,
Multifamily Hsg., Ser. A,
Aaa 2,975 7.45%, 11/1/28,
A.M.B.A.C............. 3,325,931
New York St. Pwr. Auth., M.B.I.A.,
Aaa 7,155 7.875%, 1/1/13, Ser.
V..................... 8,248,069
------------
25,796,291
------------
North Carolina--2.5%
No. Carolina Mun. Pwr.
Agcy. Elec. Rev., Ser.
A,
No. 1 Catawba,
M.B.I.A.,
Aaa 7,500 6.00%, 1/1/11........... 8,211,225
Aaa 3,500 5.00%, 1/1/18........... 3,348,345
Aaa 10,000 5.75%, 1/1/20........... 10,278,700
------------
21,838,270
------------
Ohio--2.7%
Cleveland Arpt. Sys.
Rev., M.B.I.A.,
Aaa 1,500 7.40%, 1/1/20, Ser.
90A................... 1,722,000
</TABLE>
-24- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Ohio (cont'd.)
Cleveland Waterworks
Rev.,
Aaa $ 2,500 6.25%, 1/1/15........... $ 2,709,125
Franklin Cnty. Hosp.
Rev.,
Holy Cross Hlth.,
A.M.B.A.C.,
Aaa 2,000 7.65%, 6/1/10, Ser. B... 2,356,660
Hamilton Cnty. Wtr. Sys.
Rev.,
Aaa 7,500 5.00%, 12/1/14,
F.G.I.C............... 7,280,700
Hamilton Elec. Rev.,
F.G.I.C., Ser. A,
Aaa 5,085 6.00%, 10/15/12......... 5,465,511
Aaa 2,750 6.00%, 10/15/23......... 2,955,782
Montgomery Cnty. Hlth. Facs. Rev.,
Sisters of Charity Hlth. Care,
Aaa 1,500 6.25%, 5/15/14,
A.M.B.A.C............. 1,647,870
------------
24,137,648
------------
Oklahoma--1.8%
Oklahoma St. Tpke. Auth.
Rev., M.B.I.A.,
Aaa 14,250 6.25%, 1/1/22, Ser. C... 15,486,187
------------
Pennsylvania--4.4%
Allegheny Cnty. Arpt. Rev.,
Pittsburgh Int'l. Arpt., M.B.I.A.,
Aaa 4,800 8.25%, 1/1/16, Ser. C... 5,555,424
North Umberland Cnty.
Lease Auth. Rev.,
M.B.I.A.,
Correctional Facs.,
Aaa 7,500 Zero Coupon, 10/15/10... 3,098,625
Philadelphia Arpt. Sys.
Rev.,
Aaa 6,750 9.00%, 6/15/15,
A.M.B.A.C............. 7,489,665
Philadelphia Mun. Auth.
Rev.,
Criminal Justice Ctr.,
M.B.I.A.,
Aaa 3,000 6.90%, 11/15/03, Ser.
A..................... 3,507,750
Philadelphia Sch. Dist.,
M.B.I.A.,
Aaa 2,000 7.00%, 7/1/05, Ser.
B#.................... 2,328,420
Philadelphia Wtr. &
Waste Auth. Rev.,
M.B.I.A.,
Aaa $ 5,005 5.00%, 6/15/18.......... $ 4,766,412
Aaa 2,200 5.00%, 6/15/19.......... 2,093,102
Pittsburgh Gen. Oblig.,
F.G.I.C.,
Aaa 5,000 7.00%, 3/1/06, Ser. B... 5,545,400
Schuylkill Cnty. Redev.
Auth. Rev., F.G.I.C.,
Aaa 3,500 7.00%, 6/1/07, Ser.
A#.................... 4,144,350
------------
38,529,148
------------
Puerto Rico--1.0%
Puerto Rico Tel. Auth.
Rev.,
M.B.I.A., Ser. I@,
Aaa 4,100 7.55%, 1/25/07.......... 4,361,375
Aaa 3,800 8.03%, 1/16/15.......... 4,023,250
------------
8,384,625
------------
Rhode Island--2.6%
Conv. Ctr. Auth. Rev.,
M.B.I.A., Ser. B,
Aaa 12,000 5.25%, 5/15/15.......... 11,809,440
Aaa 3,750 5.00%, 5/15/20.......... 3,534,563
Rhode Island Hsg. &
Mtge. Fin. Corp.,
M.B.I.A.,
Aaa 6,500 7.875%, 10/1/22......... 7,075,770
------------
22,419,773
------------
South Carolina--0.8%
Berkeley Cnty. Wtr. &
Swr. Rev.,
Aaa 2,500 6.50%, 6/1/06,
M.B.I.A............... 2,788,875
Charleston Waterworks & Swr. Rev.,
Aaa 5,000 5.00%, 1/1/22,
M.B.I.A............... 4,767,350
------------
7,556,225
------------
Tennessee--2.1%
Anderson Cnty. Hlth. & Ed. Facs.,
Methodist Med. Ctr.,
Aaa 2,250 8.125%, 7/1/08,
B.I.G.#............... 2,642,400
</TABLE>
-25- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Tennessee (cont'd.)
Clarksville Wtr. Swr. &
Gas Rev.,
Aaa $ 1,500 6.25%, 2/1/18,
M.B.I.A............... $ 1,627,290
Knox Cnty. Hlth Edl.
Hosp. Facs. Rev.,
Aaa 5,090 5.75%, 1/1/14,
M.B.I.A............... 5,390,819
Tennessee Hsg. Dev.
Agcy.,
Aaa 7,950 7.65%, 7/1/20, B.I.G.... 8,674,086
------------
18,334,595
------------
Texas--9.5%
Austin Util. Sys. Rev.,
Aaa 3,250 7.25%, 11/15/03, Ser. B,
F.G.I.C............... 3,712,443
Aaa 5,750 Zero Coupon, 11/15/09,
Ser. B, A.M.B.A.C..... 2,434,148
Aaa 5,000 6.50%, 5/15/11, Ser. A,
A.M.B.A.C............. 5,488,950
Aaa 5,000 8.00%, 11/15/16, Ser. A,
B.I.G.#............... 6,123,500
Brazos River Auth. Rev.,
Houston Lt. & Pwr.,
Aaa 5,000 6.70%, 3/1/17, Ser. A,
A.M.B.A.C............. 5,599,600
Aaa 1,000 7.20%, 12/1/18, Ser. B,
F.G.I.C............... 1,155,910
Colorado River Mun. Wtr. Dist. Rev.,
Aaa 6,750 5.15%, 1/1/21,
A.M.B.A.C............. 6,533,730
Corpus Christi Hsg. Fin.
Corp.,
Sngl. Fam. Mtge.,
M.B.I.A.,
Aaa 2,880 7.70%, 7/1/11, Ser. A... 3,160,829
Harris Cnty. Toll Rd.,
F.G.I.C.,
Aaa 5,000 8.00%, 8/15/07, Ser.
A..................... 5,943,150
Houston Arpt. Sys. Rev.,
Aaa 3,900 7.20%, 7/1/13........... 4,875,546
Houston Wtr. & Swr. Sys.
Rev.,
Aaa $ 1,000 6.375%, 12/1/17, Ser. C,
A.M.B.A.C............. $ 1,092,030
Aaa 5,000 6.375%, 12/1/22, Ser. A,
M.B.I.A............... 5,512,500
Matagorda Cnty.
Navigation Poll,
Ctrl. Rev. Dist. No.
1,
Aaa 2,300 7.50%, 12/15/14,
A.M.B.A.C............. 2,712,965
Mun. Pwr. Agcy. Rev.,
Aaa 3,960 6.75%, 9/1/12,
A.M.B.A.C............. 4,455,634
Northwest Indpt. Sch.
Dist.,
Aaa 4,890 Zero Coupon, 8/15/12,
A.M.B.A.C............. 1,744,507
Tarrant Cnty. Wtr. Ctrl.
& Imp.,
Aaa 8,470 4.75%, 3/1/13,
A.M.B.A.C............. 7,958,751
Texas St. Pub. Fin.
Auth. Bldg. Rev.,
M.B.I.A.,
Aaa 6,900 Zero Coupon, 2/1/14..... 2,249,745
Travis Cnty., M.B.I.A.,
Aaa 6,000 5.80%, 3/1/09, Ser. A... 6,290,340
Willis Indpt. Sch.
Dist.,
Aaa 3,650 6.50%, 2/15/16.......... 3,960,980
Wtr. Res. Fin. Auth.
Rev.,
Aaa 2,000 7.50%, 8/15/13,
A.M.B.A.C............. 2,207,460
------------
83,212,718
------------
Utah--1.0%
Intermountain Pwr. Agcy.
Pwr. Supply Rev.,
M.B.I.A.,
Aaa 9,250 5.00%, 7/1/12, Ser. A... 8,922,735
------------
Virginia--1.8%
Loudoun Cnty. Sanitation
Auth. Wtr. & Swr.
Rev.,
Aaa 8,020 6.25%, 1/1/16,
F.G.I.C............... 8,758,401
Roanoke Ind. Dev. Auth.
Hosp. Rev., M.B.I.A.,
Aaa 4,000 5.00%, 7/1/24, Ser. A... 3,818,720
</TABLE>
-26- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (a) (Note 1)
<S> <C> <C> <C>
Virginia (cont'd.)
Southeastern Pub. Svc. Auth. Rev.,
Regl. Waste Sys.,
Aaa $ 3,000 7.00%, 7/1/13, B.I.G.... $ 3,475,470
------------
16,052,591
------------
Washington--4.8%
Seattle Met. Mun. Swr.
Rev., M.B.I.A.,
Aaa 10,000 6.30%, 1/1/33, Ser. W... 10,807,800
Tacoma Elec. Sys. Rev.,
Aaa 2,000 8.00%, 1/1/11,
A.M.B.A.C.#........... 2,351,900
Washington Hlth. Care Facs. Auth.,
Fred Hutchinson Cancer Ctr.,
Aaa 2,500 7.30%, 1/1/12........... 2,863,225
Tacoma Multicare Med.
Ctr.,
Aaa 5,000 7.875%, 8/15/11,
F.G.I.C............... 5,798,750
Washington St. Pub. Pwr.
Supply Sys. Nuclear,
Proj. No. 1,
Aaa 5,000 7.00%, 7/1/04, Ser. A,
B.I.G................. 5,678,250
Aaa 6,500 6.25%, 7/1/17,
M.B.I.A............... 7,008,820
Proj. No. 2,
Aaa 3,000 7.25%, 7/1/03, Ser. B,
F.G.I.C............... 3,483,300
Aaa 5,210 Zero Coupon, 7/1/11,
Ser. A,
M.B.I.A............... 1,949,634
Proj. No. 3, F.G.I.C.,
Aaa 2,000 7.00%, 7/1/05, Ser. B... 2,291,300
------------
42,232,979
------------
Wisconsin--1.2%
Wisconsin Pub. Pwr. Inc.
Sys. Rev., A.M.B.A.C.,
Aaa 5,000 7.50%, 7/1/10, Ser.
A#.................... 6,033,300
Wisconsin St. Hlth. &
Edl. Facs. Auth. Rev.,
Meritor Hosp., F.G.I.C.,
Aaa $ 4,450 6.30%, 12/1/09, Ser.
A..................... $ 4,838,752
------------
10,872,052
------------
Total Investments--96.1%
(cost $776,302,324; Note
4).................... 841,820,697
Other assets in excess
of
liabilities--3.9%..... 33,827,305
------------
Net Assets--100%........ $875,648,002
------------
------------
</TABLE>
- ------------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation
B.I.G.--Bond Investors Guaranty Insurance Company
C.G.I.C.--Capital Guaranty Insurance Corporation
F.G.I.C.--Financial Guaranty Insurance Company
F.H.A.--Federal Housing Administration
F.S.A.--Financial Security Assurance
G.N.M.A.--Government National Mortgage Association
M.B.I.A.--Municipal Bond Insurance Association
T.R.A.N.--Tax Revenue Anticipation Note
# Prerefunded issues are secured by escrowed cash and direct U.S. guaranteed
obligations.
* Standard & Poor's rating.
@ Inverse floating rate bond.
NR--Not rated by Moody's or Standard & Poor's.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
-27- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
INSURED SERIES
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets October 31, 1993
----------------
<S> <C>
Investments, at value (cost $776,302,324)............................................... $841,820,697
Receivable for investments sold......................................................... 64,490,519
Accrued interest receivable............................................................. 13,783,478
Receivable for Fund shares sold......................................................... 5,499,173
Deferred expenses and other assets...................................................... 13,728
----------------
Total assets.......................................................................... 925,607,595
----------------
Liabilities
Bank overdraft.......................................................................... 5,040,501
Payable for investments purchased....................................................... 41,234,961
Payable for Fund shares reacquired...................................................... 1,686,432
Dividends payable....................................................................... 1,213,697
Due to Manager.......................................................................... 377,664
Due to Distributors..................................................................... 357,077
Accrued expenses........................................................................ 49,261
----------------
Total liabilities..................................................................... 49,959,593
----------------
Net Assets.............................................................................. $875,648,002
----------------
----------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................. $ 747,164
Paid-in capital in excess of par...................................................... 795,622,101
----------------
796,369,265
Accumulated net realized capital gains................................................ 13,760,364
Net unrealized appreciation........................................................... 65,518,373
----------------
Net assets, October 31, 1993.......................................................... $875,648,002
----------------
----------------
Class A:
Net asset value and redemption price per share
($33,489,395 / 2,859,228 shares of beneficial interest issued and outstanding)...... $11.71
Maximum sales charge (4.5% of offering price)......................................... .55
----------------
Maximum offering price to public...................................................... $12.26
----------------
----------------
Class B:
Net asset value, offering price and redemption price per share
($842,158,607 / 71,857,185 shares of beneficial interest issued and outstanding).... $11.72
----------------
----------------
</TABLE>
See Notes to Financial Statements.
-28-
<PAGE>
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
INSURED SERIES
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
October 31,
Net Investment Income 1993
-----------
<S> <C>
Income
Interest and discount earned........ $24,770,212
-----------
Expenses
Management fee...................... 2,116,060
Distribution fee--Class A........... 15,955
Distribution fee--Class B........... 2,036,246
Transfer agent's fees and
expenses............................ 233,000
Custodian's fees and expenses....... 92,000
Registration fees................... 43,000
Reports to shareholders............. 28,000
Legal fees.......................... 10,000
Insurance expense................... 10,000
Trustees' fees...................... 8,500
Audit fee........................... 7,500
Miscellaneous....................... 7,923
-----------
Total expenses........................ 4,608,184
-----------
Net investment income................. 20,162,028
-----------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain (loss) on:
Investment transactions............. 14,874,415
Financial futures contracts......... (1,037,745)
-----------
13,836,670
-----------
Net change in unrealized appreciation
of:
Investments......................... 13,915,507
-----------
Net gain on investments............... 27,752,177
-----------
Net Increase in Net Assets
Resulting from Operations............. $47,914,205
-----------
-----------
</TABLE>
PRUDENTIAL MUNICIPAL BOND FUND
INSURED SERIES
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
Increase (Decrease) October 31, Year Ended
in Net Assets 1993 April 30,
------------- 1993
-------------
<S> <C> <C>
Operations
Net investment income.... $ 20,162,028 $ 37,048,952
Net realized gain on
investment
transactions........... 13,836,670 19,006,974
Net change in unrealized
appreciation of
investments............ 13,915,507 27,731,724
------------- -------------
Net increase in net
assets resulting from
operations............. 47,914,205 83,787,650
------------- -------------
Dividends and distributions
(Note 1)
Dividends to shareholders
from net investment
income
Class A................ (821,290) (1,342,046)
Class B................ (19,340,738) (35,706,906)
------------- -------------
(20,162,028) (37,048,952)
------------- -------------
Distributions to
shareholders from net
realized gains
Class A................ (299,420) (571,552)
Class B................ (7,689,337) (16,807,084)
------------- -------------
(7,988,757) (17,378,636)
------------- -------------
Fund share transactions
(Note 5)
Net proceeds from shares
issued................... 119,817,788 228,787,332
Net asset value of shares
issued to shareholders
in reinvestment of
dividends and
distributions.......... 16,062,965 30,164,592
Cost of shares
reacquired............... (80,154,097) (145,782,073)
------------- -------------
Increase in net assets
from Fund share
transactions........... 55,726,656 113,169,851
------------- -------------
Total increase............. 75,490,076 142,529,913
------------- -------------
Net Assets
Beginning of period........ 800,157,926 657,628,013
------------- -------------
End of period.............. $ 875,648,002 $ 800,157,926
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-29-
<PAGE>
<PAGE>
I. Prudential Municipal Bond Fund
Chart entitled Prudential Mutual Funds: Risk/Reward Spectrum.
The chart shows a graphic representation of the spectrum of risks
of various categories of Prudential Mutual Funds including stock
funds, tax-exempt bond funds, taxable bond funds and global taxable
bond funds. The chart rates the risk of individual Prudential
Mutual Funds relative to other Prudential Mutual Funds in each
category.
Under the category of stock funds, the chart lists from low risk to
high risk the following funds (beginning at the low end of the
spectrum):
FlexiFund (The Conservatively Managed Portfolio)
IncomeVertible Fund
FlexiFund (The Strategy Portfolio)
Equity Income Fund
Utility Fund
Global Utility Fund
Equity Fund
Growth Fund
Global Fund
Nicholas-Applegate Growth Equity Fund
Growth Opportunity Fund
Multi-Sector Fund
Global Natural Resources Fund
Global Genesis Fund
Pacific Growth Fund
Under the category of tax-exempt bond funds, the chart lists from
low risk to high risk the following funds (beginning at the low end
of the spectrum):
Municipal Bond Fund (Modified Term Series)
Municipal Bond Fund (Insured Series)
National Municipals Fund
Municipal Series Fund (State Series Fund)
California Municipal Fund (California Income Series)
Municipal Bond Fund (High Yield Series)
Under the category of taxable bond funds, the chart lists from low
risk to high risk the following funds (beginning at the low end of
the spectrum):
Adjustable Rate Securities Fund
The BlackRock Government Income Fund
Structured Maturity Fund (Income Portfolio)
Government Securities Trust (Intermediate Term Series)
GNMA Fund
Government Plus Fund
U.S. Government Fund
High Yield Fund
Under the category of global taxable bond funds, the chart lists
from low risk to high risk the following funds (beginning at the
low end of the spectrum):
Short-Term Global Income Fund (Global Assets Portfolio)
Short-Term Global Income Fund (Short-Term Global Income
Portfolio)
Intermediate Global Income Fund
