Prudential
Municipal
Bond Fund
High Yield Series
Insured Series
Intermediate Series
(Formerly Modified Term Series)
SEMI
ANNUAL
REPORT
Oct. 31, 1995
<PAGE>
Portfolio
Managers' Report
The past six months have been good to investors in the Prudential Municipal
Bond Fund. As economic growth slowed from its frantic pace of 1994, interest
rates declined, pushing net asset values of municipal bond funds higher.
Performance over the six months varied among the three Series. The Insured
Series performed best among the three, because it has a purer response to lower
interest rates than the other two. The High Yield Series performed better than
the Intermediate Series because it holds bonds with higher coupons and longer
maturities. Among its peers, High Yield trailed its competition in total return,
because its average maturity wasn't long enough. The Intermediate Series offers
shorter maturities, so it will generally trail the other two Series when
interest rates are falling. We should note that it did perform far better than
its competition over the last six months, largely because it held a longer
average maturity.
The Economy Slowed;
Interest Rates Declined.
Economic growth in 1995 slowed significantly from last year's torrid pace. As
a result, interest rates fell broadly, reflecting investors' declining worry
about inflation. The yield of the Bond Buyer's Revenue Bond Index fell to 6.0%
on October 26, down from 6.3% on April 27 (the index is calculated on
Thursdays).
Taxable bond yields fell even further - the 30-year U.S. Treasury yield
declined by nearly a full percentage point, to 6.4% from 7.3%, as economic
growth slowed sharply and inflation actually shrank. Tax free municipal bonds
currently provide yields that are about 95% of the yield of similar maturity
and quality taxable bonds. That's an unusually high percentage, far higher than
the typical range of 80 to 85%. That means that adjusted for taxes, municipals
can now yield much more to investors than comparable taxable bonds. Of course,
this may change. You may have noticed that prices of municipal bonds have not
appreciated as much as U.S. Treasurys. Why not? Talk of tax reform.
Proposals to simplify the federal income tax code and encourage savings created
uncertainty in the tax-free municipal bond market this year, because if the
highest tax rate is reduced or municipal bond interest should lose its tax
exempt status, the value of these bonds would decrease. As a result, municipal
bonds trailed U.S. government bonds; the total return of the Lehman Brothers
Municipal Bond Index was 6.8% while the Lehman Brothers Government Bond Index
returned 8.3% for the six months ending October 31.
We'll discuss each portfolio in detail on the following pages.
How Investments Compared.
(As of 10/31/95)
(CHART)
Source: Lipper Analytical Services. 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 yields means tolerating more risk. The greater the risk, the larger
the potential reward or loss. In addition, we've added historical 20-year
average annual returns to show that 1995's returns (so far) are higher than
normal. These returns assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Smaller capitalization stocks
offer greater potential for long term growth but may be more volatile than
larger capitalization stocks. Investors receive higher historical total
returns from stocks than from most other investments.
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 are historically lower than those of stock
funds.
General Muni 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.
Money Market Funds attempt to preserve a constant share value; they don't
fluctuate much in price but their returns are generally among the lowest of
the major investment categories.
*19 years for General Muni Debt Funds.
<PAGE>
Peter Allegrini, Fund Manager
Prudential Municipal Bond Fund:
High Yield Series
The High Yield Series seeks to maximize income by investing in non-investment
grade municipal bonds that are rated B or better by recognized outside rating
agencies such as Standard & Poor's Corp. (S&P) and Moody's Investors Service
Inc., or unrated bonds that our analysts believe to be of comparable quality.
On October 31, 1995, approximately 57% of the portfolio was comprised of
non-investment grade municipal bonds rated BB or below (or unrated bonds
of comparable quality), a slight decrease from 59% on April 30, 1995.
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of
10/31/95
Six One Five
Since
Months Year Years
Inception2
<S> <C> <C> <C> <C>
Class A 5.8% 12.8% 50.4%
55.2%
Class B 5.5 12.4 47.4
95.2
Class C 5.4 12.1 N/A
9.5
Lipper High Yld. Muni Avg3 5.8 12.7 47.9
96.0
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns1 As of 9/30/95
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 6.7% 7.6% 7.2%
Class B 4.6 7.7 8.5
Class C 8.3 N/A 6.9
</TABLE>
<TABLE>
<CAPTION>
Dividends and
Yields
As of 10/31/95
Taxable Equivalent
Yield
Total Dividends 30-Day At Tax Rates Of
Paid for Six Mos. SEC Yield 36% 39.6%
<S> <C> <C> <C> <C>
Class A $0.37 6.16% 9.63%
10.20%
Class B 0.35 5.95 9.30 9.85
Class C 0.33 5.70 8.91 9.44
</TABLE>
Past performance is not a guarantee 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.1Source: Prudential Mutual Fund Management
and Lipper Analytical Services. The cumulative total returns do not take into
account sales charges. The average annual returns do take into account
applicable sales charges. The Fund charges a maximum front-end sales load of
3% for Class A shares and a contingent deferred sales charge of 5%, 4%, 3%,
2%, 1% and 1% for six years, for Class B shares. Class C shares have a 1% CDSC
for one year. Class B shares automatically convert to Class A shares on a
quarterly basis, after approximately seven years.
2Inception dates: 1/22/90 for Class A; 9/17/87 for Class B; and 8/1/94 for
Class C.
3The Lipper fund average includes 40 funds for six months, 36 funds for one
year, 20 funds for five years and 18 funds since inception of the Class B
shares on 9/17/87.
Note: In the past, the Series were partially subsidized and management fees
were waived. These figures do include subsidies and fee waivers. Returns would
have been lower without such subsidies and fee waivers.
Top Five Holdings.*
2.2% Village of Robbins (IL)
Resource Recovery
2.0% Michigan Strategic Fund
Great Lakes Pulp & Fibre
1.6% New Jersey
Transportation Trust Fund
1.6% Los Angeles Reg. Airports
Continental Airlines
1.5% North Carolina Mun. Pwr.
Catawba Electric Revenue
* Expressed as a percentage of total net assets as of 10/31/95.
Portfolio holdings are subject to change.
Sector Breakdown.
Prudential Municipal Bond Fund
High Yield Series as of 10/31/95
(CHART)
<PAGE>
High Yield Series
What Went Well.
We Expected Rates
To Fall. They Did.
Anticipating that interest rates would fall, we did two things:
1) We lengthened our duration, a measure of the Series' sensitivity to interest
rate changes. (On October 31, the Series' duration was 8 years, up from 7.3
years on April 30). So as interest rates declined as we expected, the value of
our holdings rose.
2) At the same time, we also increased assets in non-callable bonds to 25%
from about 12% six months ago. A non-callable bond generally can not be paid
off by its issuer before its scheduled maturity, so it usually has a longer
maturity than a callable bond, which may be redeemed early. As a result,
non-callable bonds tend to appreciate faster than callable bonds when interest
rates fall.
We Looked For Quality.
As the economy slowed and the municipal bond market rallied, the price
difference between higher and lower quality bonds narrowed - demand for
higher-yielding securities rose faster (and so did prices) than that of
lower-yielding bonds, because those low yields had fallen so far that they
were much less attractive. As a result, the yields of higher-coupon bonds were
no longer high enough to compensate us for the difference in credit quality. So
we took advantage of this opportunity to upgrade the quality of the Series over
the past six months by buying insured bonds and selling BBB-rated bonds. Insured
bonds are now 17% of assets, up from 12%, and triple B-rated bonds are 9%, down
from 14%.
What We Like.
We have slightly increased our holdings in attractive-yielding nursing homes and
retirement communities, which have become attractive because talk of Medicare
and Medicaid reform has driven prices down to bargain levels.
We also have continued to purchase California municipal bonds, which have been
attractively priced as a result of Orange County's bankruptcy filing last
December. As a result of the controversy surrounding Orange County, bonds
issued in California are now priced cheaper than comparable bonds sold by
entities in other states. We expect that the bond prices will rise as Orange
County stabilizes financially.
And Not So Well.
We Wished We Hadn't Sold Denver Airport.
Late last year, when things looked bleak for Denver Airport, we sold the
issue to protect the quality of the Series. We acted because the bonds' credit
ratings were under attack and there was no certainty the often-delayed airport
would open. Now that the airport has finally opened, we wish we hadn't sold the
bonds, because some have now rebounded in price more than expected.
A Longer Duration Would Have Helped.
Duration measures the sensitivity of a bond's price to interest rate changes.
The longer the duration, the more the bond's price appreciates when interest
rates fall, and vice versa. Over the winter, as the rest of the market rallied,
our duration was shorter than that of some competing funds, because we
overestimated the strength of the national economy. As the slowdown became
apparent in the second quarter, we extended duration. Duration generally
ranged from 7.3 years to 8.0 years, and was 8.0 years on October 31.
Credit Quality.
Prudential Municipal Bond Fund
High Yield Series as of 10/31/95
(GRAPH)
1
<PAGE>
Pat Dolan, Fund Manager
Prudential Municipal Bond Fund:
Insured Series
The Insured Series invests in AAA-rated municipal obligations, most of which
are insured and whose timely coupon and principal payments, but not market
value, are guaranteed by a municipal bond insurance company rated AAA or Aaa
by S & P or Moody's.
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of
10/31/95
Six One Five
Since
Months Year Years
Inception2
<S> <C> <C> <C> <C>
Class A 6.0% 14.3% 49.3%
55.3%
Class B 5.8 13.8 46.3 90.1
Class C 5.6 13.5 N/A 9.9
Lipper Insured Muni Avg3 6.0 14.6 48.3 95.8
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns1 As of 9/30/95
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 7.2% 7.8% 7.2%
Class B 5.2 7.9 8.1
Class C 8.9 N/A 7.0
</TABLE>
<TABLE>
<CAPTION>
Dividends and
Yields
As of 10/31/95
Taxable Equivalent
Yield
Total Dividends 30-Day At Tax Rates Of
Paid for Six Mos. SEC Yield 36% 39.6%
<S> <C> <C> <C> <C>
Class A $0.29 4.57% 7.14% 7.57%
Class B $0.27 4.32 6.75 7.15
Class C $0.26 4.07 6.36 6.74
</TABLE>
Past performance is not a guarantee 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.
1Source: Prudential Mutual Fund Management and Lipper Analytical Services. The
cumulative total returns do not take into account sales charges. The average
annual returns do take into account applicable sales charges. The Fund charges
a maximum front-end sales load of 3% for Class A shares and a contingent
deferred sales charge of 5%, 4%, 3%, 2%, 1% and 1% for six years, for Class B
shares. Class C shares have a 1% CDSC for one year. Class B shares automatically
convert to Class A shares on a quarterly basis, after approximately seven years.
2Inception dates: 1/22/90 for Class A; 9/17/87 for Class B; and 8/1/94 for
Class C.
3The Lipper fund average includes 48 funds for six months, 45 funds for one
year, 22 funds for five years and 19 funds since inception of the Class B
shares on 9/17/87.Note: In the past, the Series were partially subsidized and
management fees were waived. These figures do not include subsidies and fee
waivers. Returns would have been lower without such subsidies and fee waivers.
Top Five Holdings.*
2.5% Pima County (AZ)
Tucson Electric Power
2.1% Burke County (GA)
Oglethorpe Power
2.1% NJ Turnpike Authority
Revenue
2.1% Harris County (TX)
Toll Road
2.0% Detroit Sewer
Revenue
* Expressed as a percentage of total net assets as of 10/31/95.
Portfolio holdings are subject to change.
Sector Breakdown.
Prudential Municipal Bond Fund
Insured Series as of 10/31/95
(CHART)
2
<PAGE>
Insured Series
What Went Well.
We Expected Rates To Fall. They Did.
Anticipating that interest rates would fall, we did two things:
1) We lengthened our duration, a measure of the Series' sensitivity to
interest rate changes. (On October 31, the Series' duration was 8 years, up
from 7.5 years on April 30.) So as rates did decline as we expected, the value
of our holdings rose.
2) At the same time, we also slightly increased assets in non-callable bonds
to 30%, and zero coupon bonds to 7%. Both types of bonds appreciate more than
callable bonds when interest rates fall. A non-callable bond generally can not
be redeemed by its issuer before its scheduled maturity, so it usually has a
longer maturity than a callable bond, which may be redeemed early. As a result,
non-callable bonds tend to appreciate faster than callable bonds when interest
rates fall.
These non-callable bonds do not always offer the highest yields. So to increase
income, we own callable bonds with more substantial coupons. The Series holds
about 45% of assets in callable bonds carrying coupons of 6.5% or higher.
The Market Moves
To Insured Bonds.
Insured bonds are in demand, particularly after Orange County, California,
filed for bankruptcy last year. More and more issuers are selecting insurance
to back the principal and interest payment on tax-free municipal securities,
because it makes the bonds easier to sell, which reduces the interest rate the
issuing government must pay. To date this year, nearly 42% of new municipal
bonds are insured, compared with 38% for all of last year.
Nowhere is this more apparent than in California, where almost half of all
new issues are now insured, compared with a mere 12% last year.
We Like California After Orange County.
California insured municipal bonds are cheaper than comparable bonds sold
by entities in other states as a result of the controversy surrounding Orange
County. We've been buying bonds issued in California because we find their
prices attractive and we expect that they will appreciate as Orange County
stabilizes financially.
As far as states are concerned. the largest percentage of our assets are
invested in California, followed by Texas, Pennsylvania, New Jersey and New
York.
And Not So Well.
For nine of the last ten years, there has been a surge in new municipal bond
issues late in the year, as many governments rush to meet year-end deadlines
to market securities. This flood of supply usually depresses prices temporarily,
so it's an excellent buying opportunity. To prepare for this year's fall sale,
we brought our cash level up to 10% so we were ready to buy. But we were
disappointed. When the supply washed in, prices did not fall because demand
remained high, led by property and casualty insurance companies. (These
insurers are buying tax-free municipals this year because their profits are up
dramatically.) This high cash position held back our performance somewhat. We
have now put our cash back to work and are once again fully invested.
Credit Quality.
Prudential Municipal Bond Fund
Insured Series as of 10/31/95
(CHART)
3
<PAGE>
Marie Conti, Fund Manager
Prudential Municipal Bond Fund:
Intermediate Series
The Intermediate Series seeks to provide a high level of income consistent
with preservation of capital. It invests primarily in investment grade
municipal obligations with three- to 15-year maturities, and will have a
dollar-weighted average portfolio maturity of more than three years and less
than 10 years. The Series is structured to be less price sensitive to interest
rate changes than if it held only longer-term bonds.
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of
10/31/95
Six One Five
Since
Months Year Years
Inception2
<S> <C> <C> <C> <C>
Class A 5.6% 10.6% 44.6%
50.7%
Class B 5.5 10.3 41.8 77.5
Class C 5.4 10.0 N/A 7.6
Lipper Inter. Muni Avg3 5.4 10.9 43.3 82.3
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns1 As of 9/30/95
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 5.1% 7.2% 6.7%
Class B 2.8 7.2 7.3
Class C 6.5 N/A 5.6
</TABLE>
<TABLE>
<CAPTION>
Dividends and
Yields
As of 10/31/95
Taxable Equivalent
Yield
Total Dividends 30-Day At Tax Rates Of
Paid for Six Mos. SEC Yield 36% 39.6%
<S> <C> <C> <C> <C>
Class A $0.24 3.90% 6.09% 6.46%
Class B $0.22 3.64 5.69 6.03
Class C $0.20 3.38 5.28 5.60
</TABLE>
Past performance is not a guarantee 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.
1Source: Prudential Mutual Fund Management and Lipper Analytical Services. The
cumulative total returns do not take into account sales charges. The average
annual returns do take into account applicable sales charges. The Fund charges
a maximum front-end sales load of 3% for Class A shares and a contingent
deferred sales charge of 5%, 4%, 3%, 2%, 1% and 1% for six years, for Class B
shares. Class C shares have a 1% CDSC for one year. Class B shares automatically
convert to Class A shares on a quarterly basis, after approximately seven years.
2Inception dates: 1/22/90 for Class A; 9/17/87 for Class B; and 8/1/94 for
Class C.
3The Lipper fund average includes 131 funds for six months, 115 funds for one
year, 32 funds for five years and 22 funds since inception of the Class B
shares on 9/17/87.
Note: In the past, the Series were partially subsidized and management fees
were waived. These figures do not include subsidies and fee waivers, without
which returns would have been lower.
Top Five Holdings.*
3.5% Oxnard Fin. Auth. (CA)
Leasing Revenues
3.3% New York City
General Obligation
3.3% Washington St. Pub. Pwr.
Nuclear Project #2
2.7% Maricopa County (AZ)
Community College
2.7% Colo. Student Obligation
Student Loan Revenue
* Expressed as a percentage of total net assets as of 10/31/95. Portfolio
holdings are subject to change.
Sector Breakdown.
Prudential Municipal Bond Fund
Intermediate Series as of 10/31/95
(CHART)
4
<PAGE>
Intermediate Series
What Went Well.
We Expected RatesTo Fall. They Did.
To provide the Series with an intermediate average maturity, we hold bonds with
both short and long maturities. The longer maturities are typically concentrated
in the 10-to 15-year range. Anticipating that interest rates would fall, we
lengthened maturities by selling our 10-year securities and buying 15-year
bonds. This worked nicely for us because the 10-year securities had become
relatively expensive, so we sold them profitably, and the 15-year was
inexpensive, so we believe we got a good price. (In addition, the 15-year
appreciated more than the 10-year in price as interest rates fell.)
As of October 31, our duration, a measure of the Series' sensitivity to
interest rate changes, was 6.4 years, up from 5.7 years on April 30. So as
interest rates did decline as we expected, the value of our holdings rose. At
the same time, we held assets in non-callable bonds steady at 46%. We like
non-callable bonds because they generally can not be redeemed by their issuers
before their scheduled maturity, so they usually have a longer maturity than a
callable bond, which may be redeemed early. As a result, non-callable bonds
tend to appreciate faster than callable bonds when interest rates fall
(because of their longer maturities).
We Bought More Insured Bonds.
Insured bonds have captured more and more of the tax-free municipal market
since Orange County, California filed for reorganization under the bankruptcy
code last December. In the last six months, we have increased our insured
holdings to 48% of assets from 40%. This benefited the Series because as
interest rates fell, insured bonds rose in price faster than uninsured bonds.
That is because insured bonds are rated Triple-A - the highest credit rating
and therefore their prices depend almost purely on interest rate movements.
When Denver Airport this year sold new bonds, the issuing authority purchased
insurance on them. Once an organization has one bond issue insured, it is
possible to purchase insurance in the secondary market on other, older bonds
issued by the same organization. Since we owned some older airport bonds, we
were able to purchase insurance on them, and as a result they are now worth
more than it cost us to insure them.
And Not So Well.
A longer duration would have helped. Duration measures the sensitivity of a
bond's price to interest rate changes. The longer the duration, the more the
bond's price appreciates when interest rates fall, and vice versa. Over the
winter, as the rest of the market rallied, our duration was shorter than that
of some competing funds, because we overestimated the strength of the national
economy. As the slowdown became apparent in the second quarter, we extended
duration. Duration generally ranged from 5.7 years to 6.4 years, and was 6.4
years on October 31.
The Outlook.
Municipal bonds are attractive right now. We're expecting an increase in supply
in the coming months, which should follow falling interest rates-new issues
would be welcomed in this supply- starved market. This will be a time to buy.
In the near term, we expect municipal bond prices to be sensitive to any
proposal designed to reduce the federal income tax paid by the nation's
wealthier individuals. Many of the plans now under discussion in Washington
would lower or eliminate taxes on investment income, reducing or eliminating
the historical tax-advantaged appeal of municipal bonds.
Municipal bond investors should be prepared to weather some volatility this
year as a consequence. While some tax law changes are inevitable, what type
of plan officials will adopt is far from clear. This uncertainty creates
opportunity. We believe that talk of tax reform has created an attractive
buying opportunity in today's municipal market.
Credit Quality.
Prudential Municipal Bond Fund
Intermediate Series as of 10/31/95
(CHART)
5
<PAGE>
President's Letter December 15, 1995
(PICTURE)
Dear Shareholder:
For many investors, 1995 was a profitable year - most stock and bond funds
enjoyed healthy returns from the U.S. markets. While climbing returns can
tempt even the most skittish investors to start buying again, it is important
to remember that the stock and bond markets go down just as they go up. At
times like these, remember the importance of working with your Financial
Advisor or Registered Representative to help you find investments that are
consistent with your risk tolerance and time horizon. Your Financial Advisor
or Registered Representative can help you maintain realistic expectations about
both the potential performance and risks associated with your investments.
American Dream Savings Account.
The U.S. Congress is now considering one of the most significant and positive
pieces of legislation to affect individual investors - the American Dream
Savings Account. This legislation may improve the traditional Individual
Retirement Account (IRA) by allowing higher non- working spouse contributions
as well as tax-free and penalty-free withdrawals from the account before age
59 1/2, for certain expenses. We will keep our Financial Advisors and Registered
Representatives updated on the progress of this legislation, so call him or her
to learn how you may benefit.
Shareholder Legislative Action Program.
From time to time we've be informing you about significant legislation before
Congress, such as the American Dream Savings Account, that may potentially
impact mutual fund investors. We want to make it easier for you to share your
views with your Congressional member. So, beginning in 1996, your shareholder
reports will contain postage-paid message cards that you simply drop in the
mail if you want to let your senator or representative know how you feel about
pending legislation.
Fund Profiles.
Over the past year, we've worked to make your shareholder reports more
interesting, informative and easy to read. This year, we'll be turning our
attention to "fund profiles." Some mutual fund companies now offer one to
shareholders along with a full prospectus. The purpose of a fund profile is
to provide a very brief, reader-friendly summary of a fund's objective,
investments, risks and expenses. Would you like to see fund profiles from us?
Please call your Financial Advisor or Registered Representative to share your
views.
As always, thank you for your confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
6
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
LONG-TERM INVESTMENTS--97.0%
- -----------------------------------------------------------------------------
- -------------------------------------------------
Alabama--0.4%
Ft. Payne Ind. Dev. Brd. Rev., Gametime Inc. NR
10.25% 8/01/09 $ 4,269 $ 4,666,444
- -----------------------------------------------------------------------------
- -------------------------------------------------
Arizona--1.0%
Ft. Mojave Indian Tribe Wtr. & Swr. Rev. NR
10.25 9/01/19 3,000 (c) 1,620,000
Pima Cnty. Ind. Dev. Auth., Multifam. Mtge. Rev., La Cholla
Proj. NR
8.50 7/01/20 10,000 8,500,000
--------------
10,120,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
California--12.2%
Alameda Cmnty. Facs. Dist. Spec. Tax Rev. No. 1, Harbor Bay NR
7.75 9/01/19 8,175 8,566,664
California Hsg. Fin. Agcy. Rev., Home Mtge., Ser. G Aa
8.15 8/01/19 1,060 1,121,840
California St. Var. Purp. A1
5.75 10/01/10 5,880 6,058,223
Delano Ctfs. of Part., Regl. Med. Ctr., Ser. 92A NR
9.25 1/01/22 6,865 7,865,368
Folsom Spec. Tax Dist. No. 2 NR
7.70 12/01/19 3,130 3,253,979
Foothill & Eastern Trans. Corr. Agcy.,
Cap. Apprec., Toll Rd., Ser A. Baa
Zero 1/01/20 4,250 817,275
Cap. Apprec., Ser. A Baa
Zero 1/01/21 5,245 942,054
Long Beach Redev. Agcy. Hsg.,
Multifam. Hsg. Rev., Pacific Court Apts. NR
6.80 9/01/13 3,805 3,448,053
Multifam. Hsg. Rev., Pacific Court Apts. NR
6.95 9/01/23 6,195 5,491,310
Los Angeles Regl. Arpts. Impvt. Corp., Cont. Air Sublease NR
9.25 8/01/24 15,345 16,983,846
Orange Cnty. Cmnty. Facs. Dist., Foothill Ranch, Ser. A NR
7.375 8/15/18 7,500 (h) 8,816,100
Orange Cnty. Cmnty. Loc. Trans. Auth., Reg. Linked Savrs. &
Ribs Aa
6.20 2/14/11 7,000 7,243,810
Richmond Redev. Agcy. Rev., Multifam. Bridge Affordable Hsg. NR
7.50 9/01/23 10,000 10,020,500
Roseville Joint Union H.S. Dist.,
Ser. B, F.G.I.C. Aaa
Zero 8/01/08 1,660 836,308
Ser. B, F.G.I.C. Aaa
Zero 8/01/09 1,740 821,871
Ser. B, F.G.I.C. Aaa
Zero 8/01/11 1,890 776,299
Ser. B, F.G.I.C. Aaa
Zero 8/01/14 2,220 739,460
Sacramento City Fin. Auth. Rev., Tax Alloc., M.B.I.A. Aaa
Zero 11/01/15 5,695 1,745,859
Sacramento Cnty. Spec. Tax Rev.,
Dist. No. 1, Elliot Ranch NR
8.20 8/01/21 3,750 3,977,288
Dist. No. 1, Laguna Creek Ranch NR
8.25 12/01/20 4,500 4,812,120
San Bernardino Cnty., Ctfs. of Part., Med. Ctr. Fin. Proj. Baa1
6.00 8/01/09 7,500 7,668,600
San Joaquin Hills Trans. Corr. Agcy.,
Toll Rd. Rev. NR
Zero 1/01/11 12,900 3,971,781
Toll Rd. Rev. NR
Zero 1/01/25 15,700 2,220,294
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
California (cont'd.)
Santa Margarita/Dana Point Auth., Impvt. Dist.
Ser. A, M.B.I.A. Aaa
7.25% 8/01/13 $ 1,990 $ 2,353,613
Ser. B, M.B.I.A. Aaa
7.25 8/01/12 3,000 3,569,490
So. California Pub. Pwr. Auth. Trans., Cap. Apprec. Aa
Zero 7/01/14 8,500 2,804,150
So. California Pub. Pwr. Auth., Pwr. Proj. Rev. A
6.75 7/01/10 6,000 6,645,240
So. San Francisco Redev., Agcy., Tax Alloc., Gateway Redev.
Proj. NR
7.60 9/01/18 2,375 2,484,868
Victor Valley Union H.S. Dist.,
Gen. Oblig., M.B.I.A. Aaa
Zero 9/01/12 3,605 1,370,225
Gen. Oblig., M.B.I.A. Aaa
Zero 9/01/14 4,740 1,571,120
Gen. Oblig., M.B.I.A. Aaa
Zero 9/01/16 3,990 1,163,883
--------------
130,161,491
- -----------------------------------------------------------------------------
- -------------------------------------------------
Colorado--2.7%
Eagle Cnty. Co., Lake Creek Affordable Hsg., Ser. A NR
8.00 12/01/23 11,610 11,813,407
San Miguel Cnty., Mountain. Vlge. Met. Dist., Gen. Oblig. NR
8.10 12/01/11 3,200 3,530,016
Superior Met. Dist. No. 1, Wtr. & Swr.,
Rev. NR
7.50 12/01/98 3,300 3,398,274
Rev. NR
8.50 12/01/13 8,900 9,680,797
--------------
28,422,494
- -----------------------------------------------------------------------------
- -------------------------------------------------
Connecticut--0.8%
Connecticut St. Dev. Auth. Swr. Netco Waterbury Ltd. NR
9.375 6/01/16 8,000 8,222,080
- -----------------------------------------------------------------------------
- -------------------------------------------------
District Of Columbia--1.5%
Dist. of Columbia Rev.,
America Geophysical Union, Ser. A, M.B.I.A. Aaa
6.50 6/01/10 6,000 6,602,400
Nat'l. Pub. Radio NR
7.625 1/01/18 8,800 9,052,472
--------------
15,654,872
- -----------------------------------------------------------------------------
- -------------------------------------------------
Florida--6.4%
Crossings at Fleming Island Cmnty. Dev. Dist., Clay City NR
8.25 5/01/16 8,000 8,356,320
Escambia Cnty. Hlth. Facs. Auth. Rev.,
Azalea Trace NR
9.25 1/01/06 2,605 2,852,345
Baptist Hosp. Ref., Ser. A BBB(d)
8.60 10/01/02 4,385 4,886,688
Florida Hsg. Fin. Agcy., Palm Aire Proj., Multifam. Mtge.
Rev. NR
Zero 1/01/20 9,448 (c) 6,519,461
No. Springs Impvt. Dist. Wtr. Mgt.,
Ser. A NR
8.20 5/01/24 2,000 2,217,640
Ser. A NR
8.30 5/01/24 1,755 1,948,752
</TABLE>
- --------------------------------------------------------------------------------
- ----- 8 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Florida (cont'd.)
Orlando Util. Comm., Wtr. & Elec. Rev., Ser. D Aa
6.75% 10/01/17 $ 2,000 $ 2,313,220
Osceola Cnty. Comm. Prov., Pooled Loan Proj. NR
7.75 7/01/17 9,000 9,512,370
Palm Beach Cnty. Hsg. Auth., Banyan Club Apts. NR
7.75 3/01/23 4,605 4,935,915
Sarasota Hlth. Facs., Kobernick Hsg. Meadow Park Proj. NR
10.00 7/01/22 6,950 7,708,106
Seminole Cnty. Ind. Dev. Auth. Rev., Fern Park NR
9.25 4/01/12 6,345 6,861,546
Tampa Rev., Aquarium Proj. NR
7.75 5/01/27 7,500 7,896,825
Tampa Sports Auth. Rev., Tampa Bay Arena Proj., M.B.I.A. Aaa
5.75 10/01/15 2,500 2,584,150
--------------
68,593,338
- -----------------------------------------------------------------------------
- -------------------------------------------------
Georgia--2.3%
Atlanta Urban Res. Fin. Auth., Clark Atlanta Univ. Dorm.
Proj. NR
9.25 6/01/10 4,810 (h) 5,821,543
Effingham Cnty. Dev. Auth., Ft. Howard Corp. B1
7.90 10/01/05 10,000 10,660,200
Fulton Cnty. Wtr. & Swr. Rev., F.G.I.C. Aaa
6.375 1/01/14 6,000 6,590,460
Mun. Elec. Auth., Spec. Oblig., Proj. 1 A
6.50 1/01/12 1,500 1,596,030
--------------
24,668,233
- -----------------------------------------------------------------------------
- -------------------------------------------------
Hawaii--0.7%
Hawaii Cnty. Impvt. Dist. No. 17 NR
9.50 8/01/11 6,995 7,302,500
- -----------------------------------------------------------------------------
- -------------------------------------------------
Illinois--9.3%
Chicago Brd. Edl., Lease Ctfs., Ser. A, M.B.I.A. Aaa
6.00 1/01/20 14,000 14,471,240
Chicago O'Hare Int'l. Arpt.,
Amer. Airlines, Ser. A Baa2
7.875 11/01/25 4,000 4,291,480
Amer. Airlines Proj., Ser. B Baa2
8.20 12/01/24 1,000 1,150,230
United Airlines, Ser. B Baa2
8.45 5/01/07 6,000 6,584,520
United Airlines, Ser. B Baa2
8.50 5/01/18 6,500 7,124,390
United Airlines, Ser. B Baa2
8.85 5/01/18 2,805 3,195,484
United Airlines, Ser. B Baa2
8.95 5/01/18 2,400 2,722,008
Hennepin Ind. Dev. Rev.,
Exolon Esk. Co. Proj. NR
8.875 1/01/18 8,000 8,418,000
Methchem. Corp. Proj., Ser. 89 NR
10.25 1/01/05 4,420 (c) 132,600
Illinois Hlth. Facs. Auth. Rev.,
Adventist Living Ctr. NR
11.00 12/01/15 2,245 (c) 538,693
Beacon Hill Proj., Ser. A NR
9.00 8/15/19 7,331 8,054,203
Midwest Physician Group Ltd. Proj. BBB-(d)
8.10 11/15/14 3,135 3,296,013
Midwest Physician Group Ltd. Proj. BBB-(d)
8.125 11/15/19 3,285 3,459,828
Kane & De Kalb Cntys. Sch.,
Dist. No. 301, Cap. Apprec., A.M.B.A.C. Aaa
Zero 12/01/11 3,360 1,362,849
Dist. No. 301, Cap. Apprec., A.M.B.A.C. Aaa
Zero 12/01/13 4,065 1,435,433
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Illinois (cont'd.)
Metro Pier & Exp. Auth. Rev., McCormick Place, F.G.I.C. Aaa
Zero 6/15/14 $15,000 $ 5,006,700
Vlge. of Robbins, Cook City, Robbins Res. Rec., LP Proj. NR
9.25% 10/15/14 22,000 23,713,580
Winnebago Cnty. Hsg. Auth., Park Tower Assoc., Sec. 8 NR
8.125 1/01/11 4,367 4,593,125
--------------
99,550,376
- -----------------------------------------------------------------------------
- -------------------------------------------------
Indiana--1.5%
Bluffton Econ. Dev. Rev., Kroger Co. Proj. Ba2
7.85 8/01/15 7,500 8,120,025
Wabash Econ. Dev. Rev. Bonds, Connell Ltd. NR
8.50 11/24/17 7,250 7,871,615
--------------
15,991,640
- -----------------------------------------------------------------------------
- -------------------------------------------------
Iowa--1.9%
City of Cedar Rapids Rev., 1st Mtge., Cottage Grove Place
Proj. NR
9.00 7/01/18 9,375 9,433,406
Iowa St. Fin. Auth., Hlth. Care Facs. Rev., Mercy Hlth.
Initiatives Proj. NR
9.95 7/01/19 10,000 10,690,400
--------------
20,123,806
- -----------------------------------------------------------------------------
- -------------------------------------------------
Kentucky--0.7%
Kentucky St. Tpke. Auth. Rev., F.G.I.C. Aaa
Zero 1/01/10 8,250 3,809,273
Owensboro Elec. Lt. & Pwr. Rev.,
Ser. B, A.M.B.A.C. Aaa
Zero 1/01/14 5,000 1,754,050
Ser. B, A.M.B.A.C. Aaa
Zero 1/01/16 6,650 2,058,507
--------------
7,621,830
- -----------------------------------------------------------------------------
- -------------------------------------------------
Louisiana--3.6%
Hodge Util. Rev., Stone Container Corp. NR
9.00 3/01/10 10,000 10,891,100
New Orleans Home Mtge. Auth. Rev., Sngl. Fam. Mtge., Ser. A,
G.N.M.A. Aaa
8.60 12/01/19 1,670 (b) 1,797,805
New Orleans Ind. Dev. Rev. BB(d)
8.75 10/01/19 3,600 4,057,920
New Orleans, Gen. Oblig., Cap. Apprec., A.M.B.A.C. Aaa
Zero 9/01/18 3,090 807,046
St. Charles Parish Poll. Ctrl. Rev.,
Pwr. & Lt. Co. NR
8.25 6/01/14 10,000 11,199,300
Pwr. & Lt. Co., Ser. 1989 Baa3
8.00 12/01/14 3,500 3,928,855
West Feliciana Parish Poll. Ctrl. Rev., Gulf St. Util. Co.
Proj. NR
9.00 5/01/15 5,250 5,901,683
--------------
38,583,709
- -----------------------------------------------------------------------------
- -------------------------------------------------
Maryland--1.1%
Anne Arundel Cnty. 1st Mtge. Rev., Pleasant Living Conv. NR
8.50 7/01/13 3,410 3,637,106
</TABLE>
- --------------------------------------------------------------------------------
- ----- 10 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Maryland (cont'd.)
NE Wste. Disp. Auth.,
Sludge Comp. Fac. NR
7.25% 7/01/07 $ 4,582 $ 4,740,217
Sludge Comp. Fac. NR
8.50 7/01/07 3,300 3,474,273
--------------
11,851,596
- -----------------------------------------------------------------------------
- -------------------------------------------------
Massachusetts--4.1%
Boston Ind. Dev. Fin. Auth. Ind. Rev., 1st Mtge. Springhouse
Proj. NR
9.25 7/01/15 8,000 8,187,280
Mass. Bay Trans. Auth., Gen. Trans. Sys., Ser. A, F.G.I.C. Aaa
7.00 3/01/21 7,500 8,922,900
Mass. St. Coll. Bldg. Proj. and Ref. Bonds A
7.50 5/01/14 1,750 2,126,583
Mass. St. Hlth. & Edl. Facs. Auth. Rev.,
Cardinal Cushing Gen. Hosp. NR
8.875 7/01/18 7,500 8,127,825
St. Josephs Hosp., Ser. C NR
9.50 10/01/20 5,735 (h) 6,634,076
Mass. St. Hsg. Fin. Agcy. Rev., Res. Hsg., Ser. B BBB(d)
8.10 8/01/23 335 351,820
Mass. St. Ind. Fin. Agcy. Rev., Cont. Res., Ser. A NR
9.50 2/01/00 2,750 2,894,815
Randolph Hsg. Auth., Multifam. Hsg., Liberty Place Proj. A,
Ser. A NR
9.00 12/01/21 6,045 6,294,840
--------------
43,540,139
- -----------------------------------------------------------------------------
- -------------------------------------------------
Michigan--5.6%
Detroit Wtr. Supp. Sys. Rev.
Ref., Ser. B, M.B.I.A. NR
5.55 7/01/12 1,000 1,003,160
Sec. Lien, Ser. A, M.B.I.A. NR
5.55 7/01/12 1,100 1,103,476
Grand Rapids Dev. Auth.
Cap. Apprec., M.B.I.A. Aaa
Zero 6/01/10 3,000 1,342,560
Cap. Apprec., M.B.I.A. Aaa
Zero 6/01/11 3,160 1,318,194
Cap. Apprec., M.B.I.A. Aaa
Zero 6/01/12 3,000 1,164,240
Gratiot Cnty. Econ. Dev. Corp., Danley Die Proj., Connell
L.P. NR
7.625 4/01/07 3,200 3,363,552
Holland Sch. Dist., Cap. Apprec., A.M.B.A.C. Aaa
Zero 5/01/17 2,950 834,024
Lowell Area Sch., F.G.I.C. Aaa
Zero 5/01/14 5,000 1,702,200
Meridian Econ. Dev. Corp. Rev., Burcham Hills Retirement
Facs. NR
9.625 7/01/19 2,850 3,066,799
Michigan St. Hosp. Fin. Auth. Rev., Saratoga Cmnty. Hosp. NR
8.75 6/01/10 6,900 7,459,590
Michigan Strategic Fund Ltd. Oblig. Rev.,
Great Lakes Pulp & Fibre Proj. NR
10.25 12/01/16 20,000 20,913,400
Michigan Strategic Fund, Solid Wste. Disp., Gennese Pwr.
Station NR
7.50 1/01/21 10,000 10,140,300
Wayne Cnty. Bldg. Auth., Ser. A Baa
8.00 3/01/17 3,500 (h) 4,182,430
West Ottawa Sch. Dist.,
F.G.I.C. Aaa
Zero 5/01/15 4,825 1,535,074
F.G.I.C. Aaa
Zero 5/01/18 3,215 856,508
--------------
59,985,507
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Minnesota--1.1%
Minneapolis St. Paul Hsg. Fin. Brd., Multifam. Mtge. Rev.,
Riverside Plaza., G.N.M.A. AAA(d)
8.25% 12/20/30 $ 4,000 $ 4,300,800
So. Minnesota Mun. Pwr. Agcy. Supply Sys.,
Ser. A, M.B.I.A. Aaa
Zero 1/01/19 25,875 6,797,621
Ser. A, M.B.I.A. Aaa
Zero 1/01/20 1,500 371,265
--------------
11,469,686
- -----------------------------------------------------------------------------
- -------------------------------------------------
Mississippi--1.8%
Claiborne Cnty. Poll. Ctrl. Rev.,
Mid. So. Engy. Sys. NR
9.875 12/01/14 6,100 6,992,308
Mid. So. Engy. Sys., Ser. A NR
9.50 12/01/13 10,350 11,828,705
--------------
18,821,013
- -----------------------------------------------------------------------------
- -------------------------------------------------
Missouri--0.7%
St. Louis Cnty. Ind. Dev. Auth. Rev.,
Soemm Proj. NR
10.25 7/01/08 2,350 2,406,659
St. Louis Cnty. Reg. Conv. & Sports Comp., Ser. C NR
7.90 8/15/21 4,250 4,698,715
--------------
7,105,374
- -----------------------------------------------------------------------------
- -------------------------------------------------
Nebraska--0.3%
Nebraska Invest. Fin. Auth., G.N.M.A., Sngl. Fam. Mtge.
Rev., Ser. I, M.B.I.A. Aaa
8.125 8/15/38 2,550 2,705,142
- -----------------------------------------------------------------------------
- -------------------------------------------------
New Hampshire--3.0%
New Hampshire Higher Edl. & Hlth. Facs. Auth. Rev.,
Antioch College NR
7.875 12/01/22 5,530 6,104,401
Havenwood/Heritage Heights NR
9.75 12/01/19 7,765 8,602,222
New Hampshire St. Ind. Dev. Auth., Poll. Ctrl. Rev.,
Proj. A, 1st. Mtge. Baa3
7.65 5/01/21 12,000 12,752,640
Ser. A, 1st. Mtge. Baa3
8.00 12/01/14 4,125 4,373,160
--------------
31,832,423
- -----------------------------------------------------------------------------
- -------------------------------------------------
New Jersey--4.3%
New Jersey St. Econ. Dev. Auth. Rev., 1st Mtge.
Fellowship Vill., Proj. NR
9.25 1/01/25 11,500 12,317,650
Keswick Pines Proj. NR
7.75 1/01/01 10,845 11,067,214
</TABLE>
- --------------------------------------------------------------------------------
- ----- 12 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
New Jersey (cont'd.)
New Jersey St. Trans. Trust Fund Auth. Trans. Sys.
M.B.I.A. Aaa
5.00% 6/15/15 $ 5,000 $ 4,701,900
M.B.I.A. Aaa
6.50 6/15/11 15,500 17,335,045
--------------
45,421,809
- -----------------------------------------------------------------------------
- -------------------------------------------------
New York--3.3%
Met. Trans. Auth. Facs. Rev., Ser. N, F.G.I.C. Aaa
Zero 7/01/13 8,340 3,095,224
New York City Ind. Dev. Agcy.,
Mesorah Pub. Ltd. NR
10.25 3/01/19 1,950 2,216,097
Amer. Airlines Inc. Baa2
8.00 7/01/20 3,320 3,555,620
New York City, Ser. B Baa1
7.25 8/15/07 3,500 3,918,425
New York Hosp. Rev., Newark Wayne Cmnty. Hosp. Inc., Ser. A NR
7.60 9/01/15 3,305 3,380,189
New York St. Engy. Res. & Dev. Auth. Rev., Brooklyn Union
Gas Co. Ser. D, M.B.I.A. Aaa
7.133 7/08/26 2,000 (g) 1,855,000
New York St. Mtge. Agcy. Rev., Homeowner Mtge. Ser. GG Aa
8.125 4/01/20 2,250 2,332,328
Port Auth. of New York & New Jersey, USAir LaGuardia Arpt. B2
9.125 12/01/15 4,000 4,516,920
Triborough Brdg. & Tunnel Auth. Rev.,
Genl. Purpose, Ser. A Aa
6.00 1/01/10 5,000 5,293,950
Genl. Purpose, Ser. Y Aa
5.50 1/01/17 5,170 5,049,591
--------------
35,213,344
- -----------------------------------------------------------------------------
- -------------------------------------------------
North Carolina--1.5%
North Carolina Municipal Pwr. Agcy. Number 1 Catawba, Elec.
Rev. A
4.10 1/01/05 17,530 15,670,418
- -----------------------------------------------------------------------------
- -------------------------------------------------
North Dakota--1.1%
Mercer Cnty., Antelope Valley Station, A.M.B.A.C. Aaa
7.20 6/30/13 10,000 11,804,100
- -----------------------------------------------------------------------------
- -------------------------------------------------
Ohio--2.8%
Cleveland Pub. Pwr. Sys. Rev.,
1st Mtge., Ser. A, M.B.I.A. Aaa
Zero 11/15/09 3,000 1,414,260
1st Mtge., M.B.I.A. Aaa
Zero 11/15/12 1,000 387,570
1st Mtge., M.B.I.A. Aaa
Zero 11/15/13 1,500 545,190
Mahoning Valley San. Dist. Wtr. Rev. NR
7.75 5/15/19 8,000 8,668,400
Montgomery Cnty. Hlthcare. Facs. Rev., Friendship Vlge.
Dayton,
Proj. B NR
9.25 2/01/16 4,500 4,730,940
Ohio St. Wtr. Dev. Auth. Poll. Ctrl. Facs., 1st Mtge.,
Cleveland Elec. Ba2
8.00 10/01/23 3,000 3,167,430
Toledo Edison Ba2
8.00 10/01/23 7,000 7,390,670
Ohio St. Wtr. Dev. Auth. Rev., Mid. Amer. Wste. Sys. Inc. NR
7.75 9/01/07 3,255 3,304,248
--------------
29,608,708
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Oklahoma--0.7%
Grand River Dam Auth. Rev., A.M.B.A.C. Aaa
6.25% 6/01/11 $ 6,500 $ 7,134,530
- -----------------------------------------------------------------------------
- -------------------------------------------------
Pennsylvania--5.5%
Allegheny Cnty. Hosp. Rev., West Penn. Hosp. Hlth. Ctr. NR
8.50 1/01/20 2,800 3,107,888
Berks Cnty. Mun. Auth. Rev.,
Adventist Living Ctrs. Proj. NR
11.00 12/01/15 367 (c) 88,191
Alvernia Coll. Proj. NR
7.75 11/15/16 5,240 5,813,204
Chartiers Valley Ind. & Coml. Dev. Auth. Rev., Friendship
Vlge./So. Hills NR
9.50 8/15/18 3,750 3,954,900
Dauphin Cnty. Gen. Auth. Hosp. Rev., NW Med. Ctr. Proj. NR
8.625 10/15/13 6,640 6,955,201
Lancaster Cnty. Solid Wste. Mgmt., Res. Rec. Auth. Sys.
Rev., Ser. A A
8.50 12/15/10 5,965 6,443,035
Penn. Hsg. Fin. Agcy., Sngl. Fam. Mtge. Rev. Aa
8.111 4/01/25 1,050 (g) 1,038,187
Penn. St. Higher Edl. Facs. Auth. Rev., Med. Coll. of
Pennsylvania, Ser. A Baa
8.375 3/01/11 5,200 5,674,292
Pennsylvania Econ. Dev. Fin. Auth. Recyc. Rev. NR
9.25 1/01/22 7,000 7,169,610
Philadelphia Auth., Ind. Dev. Rev. NR
7.75 12/01/17 5,000 (f) 5,087,600
Philadelphia Wtr. & Wstewtr. Auth. Rev.,
M.B.I.A. Aaa
6.25 8/01/08 3,250 3,580,850
M.B.I.A. Aaa
6.25 8/01/10 2,500 2,724,600
M.B.I.A. Aaa
6.25 8/01/12 3,000 3,247,350
Wilkes Barre Gen. Mun. Auth. Coll. Rev.,
Misericordia Coll., Ser. A NR
7.75 12/01/12 1,245 1,374,119
Misericordia Coll., Ser. B NR
7.75 12/01/12 2,545 2,808,942
--------------
59,067,969
- -----------------------------------------------------------------------------
- -------------------------------------------------
Puerto Rico--1.9%
Puerto Rico Elec. Pwr. Auth., Ref. Bonds, Ser. S Baa1
6.125 7/01/09 7,375 7,827,751
Puerto Rico Tel. Auth. Rev.,
Ser. I, M.B.I.A. Aaa
6.373 1/25/07 6,500 (g) 6,686,875
Ser. I, M.B.I.A. Aaa
6.834 1/16/15 6,150 (g) 6,011,625
--------------
20,526,251
- -----------------------------------------------------------------------------
- -------------------------------------------------
Rhode Island--1.7%
Providence Redev. Agcy., Ctfs. of Part, Ser. A NR
8.00 9/01/24 10,835 11,604,068
Rhode Island Hsg. & Mtge. Fin. Corp., Homeownership Opport.,
Ser. 1A A1
8.20 10/01/17 6,000 6,415,620
--------------
18,019,688
</TABLE>
- --------------------------------------------------------------------------------
- ----- 14 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
South Carolina--0.7%
Lee Cnty. Ind. Dev. Rev., Mid. Amer. Wste. Sys. NR
7.00% 9/15/13 $ 3,450 $ 3,236,238
So. Carolina St. Hsg. Fin. & Dev. Auth., Homeownership Mtge. Aa
7.75 7/01/22 4,345 4,601,094
--------------
7,837,332
- -----------------------------------------------------------------------------
- -------------------------------------------------
South Dakota--0.5%
So. Dakota Econ. Dev. Fin. Auth.,
Dakota Park NR
10.25 1/01/19 5,115 4,347,750
Lomar Dev. Co. Proj. NR
10.25 8/01/08 1,300 1,348,412
--------------
5,696,162
- -----------------------------------------------------------------------------
- -------------------------------------------------
Tennessee--1.5%
Knox Cnty. Hlth. & Edl. Facs. Rev., Baptist Hlth. Hosp. NR
8.50 4/15/04 7,055 7,705,894
Rutherford Cnty. Hlth. & Edl. Facs., Brd. 1st Mtge. Rev. NR
9.50 12/01/19 7,300 7,751,724
--------------
15,457,618
- -----------------------------------------------------------------------------
- -------------------------------------------------
Texas--3.9%
Beaumont Hsg. Fin. Corp., Sngl. Fam. Mtge. Rev., A
9.20 3/01/12 1,910 2,126,766
Bell Cnty. Hlth. Facs. Dev. Corp.,
Adventist Living Tech. Proj., Ser. A NR
10.50 6/15/18 2,390 2,055,400
Adventist Living Tech. Proj., Ser. A NR
10.50 6/15/18 2,905 2,498,300
Brownsville Util. Sys. Rev. Ref., A.M.B.A.C. Aaa
6.25 9/01/10 4,085 4,453,426
Harris Cnty. Cultural Edl. Facs. Space Ctr., Houston Proj. NR
9.25 8/15/15 6,600 1,650,000
Houston Wtr. & Swr. Sys. Rev., Ser. C, A.M.B.A.C. Aaa
Zero 12/01/10 5,000 2,176,800
New Braunfels Ind. Sch. Dist.
Cap. Apprec. Aaa
Zero 2/01/08 2,365 1,229,800
Cap. Apprec. Aaa
Zero 2/01/09 2,365 1,153,907
Cap. Apprec. Aaa
Zero 2/01/12 2,365 935,452
Cap. Apprec. Aaa
Zero 2/01/13 1,365 505,692
Port Corpus Christi Ind. Dev. Corp., Valero Ref. & Mfg. Co.,
Ser. A Baa3
10.25 6/01/17 1,300 1,438,827
Retama Dev. Corp., Spec. Fac., Retama Park Racetrack NR
8.75 12/15/18 7,500 3,750,000
Round Rock Ind. Sch. Dist., M.B.I.A. Aaa
Zero 8/15/11 4,385 1,808,242
San Antonio Elec. & Gas Rev.,
Ser. B, F.G.I.C. Aaa
Zero 2/01/12 7,500 2,966,550
F.G.I.C. Aaa
Zero 2/01/09 5,000 2,439,550
Tarrant Cnty. Hlth. Facs. Dev. Corp. Rev., Foundation Proj. NR
10.25 9/01/19 5,000 5,503,050
Texas Mun. Pwr. Agcy. Rev., M.B.I.A. Aaa
Zero 9/01/15 15,000 4,679,850
--------------
41,371,612
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Virginia--1.5%
Pittsylvania Cnty. Ind. Dev. Auth. Rev. Multitrade NR
7.45% 1/01/09 $ 3,500 $ 3,723,440
Pittsylvania Cnty. Ind. Dev. Auth. Rev. Multitrade NR
7.55 1/01/19 12,000 12,713,880
--------------
16,437,320
- -----------------------------------------------------------------------------
- -------------------------------------------------
Washington--1.6%
Bellevue Conv. Ctr. Auth.
King City, Oblig. Rev., M.B.I.A. Aaa
Zero 2/01/10 870 392,736
King City, Oblig. Rev., M.B.I.A. Aaa
Zero 2/01/11 1,200 504,768
King City, Oblig. Rev., M.B.I.A. Aaa
Zero 2/01/12 1,300 508,547
King City, Oblig. Rev., M.B.I.A. Aaa
Zero 2/01/14 1,385 472,534
Washington St. Pub. Pwr. Sup. Sys. Rev.,
Nuclear Proj. No. 1, Ser. B Aa
7.25 7/01/09 5,000 5,651,850
Nuclear Proj. No. 3 Aa
Zero 7/01/16 10,000 2,746,800
Nuclear Proj. No. 3, Ser. B Aa
7.125 7/01/16 5,000 5,641,400
Nuclear Proj. No. 3 Aa
Zero 7/01/17 5,000 1,289,350
--------------
17,207,985
- -----------------------------------------------------------------------------
- -------------------------------------------------
West Virginia--1.8%
So. Charleston Ind. Dev. Rev., Union Carbide Chem. &
Plastics Co. Baa2
8.00 8/01/20 2,450 2,646,441
Weirton Poll. Ctrl. Rev., Weirton Steel Proj. B2
8.625 11/01/14 4,000 4,231,120
West Virginia St. Hsg. Dev. Fund Hsg. Fin., Ser. A Aa1
7.95 5/01/17 8,030 8,590,815
West Virginia St. Pkwys. Econ. Dev. & Tourism Auth.,
F.G.I.C. Aaa
7.452 5/16/19 3,250 (g) 3,217,500
--------------
18,685,876
--------------
Total long-term investments (cost $990,614,670)
1,032,154,415
--------------
SHORT-TERM INVESTMENTS--0.4%
- -----------------------------------------------------------------------------
- -------------------------------------------------
Alabama--0.1%
Decatur Ind. Dev. Brd. Solid Wste. Disp. Rev., Amoco Corp.,
Ser. 95, F.R.D.D. P-1
4.05 11/01/95 1,000 1,000,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Arizona--0.1%
Coconino Cnty., Az. Public Svc., Ser. 94A, F.R.D.D. P-1
4.10 11/01/95 1,000 1,000,000
</TABLE>
- --------------------------------------------------------------------------------
- ----- 16 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Louisiana--0.1%
Calcasieu Parish Ind. Dev. Brd., Citgo Corp.
Ser. 94, F.R.D.D. VMIG1
4.10% 11/01/95 $ 100 $ 100,000
Ser. 95, F.R.D.D. VMIG1
4.10 11/01/95 1,100 1,100,000
--------------
1,200,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Texas--0.1%
Gulf Coast Ind. Dev. Auth., Citgo Corp., Ser. 95, F.R.D.D. VMIG1
4.10 11/01/95 1,200 1,200,000
--------------
Total short-term investments (cost $4,400,000)
4,400,000
--------------
OUTSTANDING CALL OPTION PURCHASED--0.1%
U.S. Treasury Bond, Aug. '96 @$126.00 (cost $1,138,980) NR
- -- 8/21/96 1,500,000 1,453,125
--------------
- -----------------------------------------------------------------------------
- -------------------------------------------------
Total Investments--97.5%
(cost $ 996,153,650; Note 4)
1,038,007,540
Other assets in excess of liabilities--2.5%
26,575,400
--------------
Net Assets--100%
$1,064,582,940
--------------
--------------
</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(e)
G.N.M.A.--Government National Mortgage Association
M.B.I.A.--Municipal Bond Insurance Association
(b) Portion of or entire principal amount pledged as initial margin
on financial futures contracts.
(c) Issuer in default, non-income producing security.
(d) Standard & Poor's Rating.
(e) 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.
(f) Indicates a when-issued security.
(g) Inverse floating rate bond. The coupon is inversely indexed to a
floating interest rate. The rate shown is the rate at period end.
(h) Prerefunded issues are secured by escrowed cash and direct U.S.
guaranteed obligations.
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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 17 -----
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Statement of Assets and Liabilities (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S>
<C>
Assets
October 31, 1995
Investments, at value (cost
$996,153,650).................................................................
$ 1,038,007,540
Cash.........................................................................
............................. 13,504
Interest
receivable...................................................................
.................... 21,452,233
Receivable for investments
sold...........................................................................
14,419,005
Receivable for Fund shares
sold...........................................................................
1,403,805
Due from broker-variation
margin..........................................................................
167,000
Deferred expenses and other
assets........................................................................
16,958
----------------
Total
assets.......................................................................
.................... 1,075,480,045
----------------
Liabilities
Payable for investments
purchased....................................................................
..... 7,099,680
Dividends
payable......................................................................
................... 1,649,556
Payable for Fund shares
reacquired...................................................................
..... 1,264,142
Distribution fee
payable......................................................................
............ 403,009
Management fee
payable......................................................................
.............. 402,637
Accrued
expenses.....................................................................
..................... 78,081
----------------
Total
liabilities..................................................................
.................... 10,897,105
----------------
Net
Assets.......................................................................
......................... $ 1,064,582,940
----------------
----------------
Net assets were comprised of:
Shares of beneficial interest, at
par.................................................................. $
971,202
Paid-in capital in excess of
par.......................................................................
1,038,590,598
----------------
1,039,561,800
Accumulated net realized loss on
investments...........................................................
(16,943,063 )
Net unrealized appreciation of
investments.............................................................
41,964,203
----------------
Net assets, October 31,
1995.........................................................................
..... $ 1,064,582,940
----------------
----------------
Class A:
Net asset value and redemption price per share
($143,612,441 / 13,099,963 shares of beneficial interest issued and
outstanding).................... $10.96
Maximum sales charge (3% of offering
price)............................................................
.34
----------------
Maximum offering price to
public.......................................................................
$11.30
----------------
----------------
Class B:
Net asset value, offering price and redemption price per share
($915,162,729 / 83,490,391 shares of beneficial interest issued and
outstanding).................... $10.96
----------------
----------------
Class C:
Net asset value, offering price and redemption price per share
($5,807,770 / 529,860 shares of beneficial interest issued and
outstanding)......................... $10.96
----------------
----------------
</TABLE>
- --------------------------------------------------------------------------------
- ----- 18 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
HIGH YIELD SERIES
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income October 31, 1995
<S> <C>
Income
Interest................................ $ 39,143,675
----------------
Expenses
Management fee, net of waiver of
$267,408............................. 2,393,371
Distribution fee--Class A............... 67,441
Distribution fee--Class B............... 2,325,405
Distribution fee--Class C............... 17,203
Transfer agent's fees and expenses...... 252,000
Custodian's fees and expenses........... 83,000
Reports to shareholders................. 57,000
Registration fees....................... 40,000
Insurance expense....................... 16,000
Audit fees and expenses................. 8,200
Trustees' fees and expenses............. 8,200
Legal fees and expenses................. 8,000
Miscellaneous........................... 2,939
----------------
Total expenses....................... 5,278,759
Less: custodian fee credit.............. (12,542)
----------------
Net expenses......................... 5,266,217
----------------
Net investment income...................... 33,877,458
----------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain on:
Investment transactions................. 3,888,284
Financial futures contract
transactions......................... 1,001,050
----------------
4,889,334
----------------
Net change in unrealized
appreciation/depreciation of:
Investments............................. 18,775,229
Financial futures contracts............. (26,312)
----------------
18,748,917
----------------
Net gain on investments.................... 23,638,251
----------------
Net Increase in Net Assets
Resulting from Operations.................. $ 57,515,709
----------------
----------------
</TABLE>
PRUDENTIAL MUNICIPAL BOND FUND
HIGH YIELD SERIES
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Increase (Decrease) Ended Year Ended
in Net Assets October 31, 1995 April 30, 1995
<S> <C> <C>
Operations
Net investment income....... $ 33,877,458 $ 69,751,519
Net realized gain (loss) on
investment
transactions............. 4,889,334 (15,484,052)
Net change in unrealized
appreciation of
investments.............. 18,748,917 10,858,413
-------------- --------------
Net increase in net assets
resulting from
operations............... 57,515,709 65,125,880
-------------- --------------
Dividends and distributions (Note 1):
Dividends from net
investment income
Class A.................. (4,512,494) (4,456,405)
Class B.................. (29,226,073) (65,229,614)
Class C.................. (138,891) (65,500)
-------------- --------------
(33,877,458) (69,751,519)
-------------- --------------
Distributions in excess of
net investment income
Class A.................. -- (2,229)
Class B.................. -- (47,585)
Class C.................. -- (60)
-------------- --------------
-- (49,874)
-------------- --------------
Series share transactions (net of
share conversions) (Note 5):
Net proceeds from shares
sold..................... 65,521,661 135,404,221
Net asset value of shares
issued in reinvestment of
dividends and
distributions............ 15,280,975 31,059,195
Cost of shares reacquired... (93,291,671) (262,484,590)
-------------- --------------
Net decrease in net assets
from Series share
transactions............. (12,489,035) (96,021,174)
-------------- --------------
Total increase (decrease)...... 11,149,216 (100,696,687)
Net Assets
Beginning of period............ 1,053,433,724 1,154,130,411
-------------- --------------
End of period.................. $1,064,582,940 $1,053,433,724
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 19 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
LONG-TERM INVESTMENTS--93.3%
- -----------------------------------------------------------------------------
- -------------------------------------------------
Alabama--1.8%
Birmingham Baptist Med. Ctr. Spec. Care Facs. Fin. Auth. Rev.,
M.B.I.A. Aaa
5.50% 8/15/13 $ 2,250 $ 2,222,415
Huntsville Solid Wste. Disp. Auth., F.G.I.C. Aaa
7.00 10/01/08 2,000 2,219,460
Mobile Wtr. & Swr. Rev., A.M.B.A.C. Aaa
5.00 1/01/13 4,840 4,511,896
Univ. Alabama Rev., Birmingham Hosp., M.B.I.A. Aaa
5.00 10/01/14 2,500 2,301,600
------------
11,255,371
- -----------------------------------------------------------------------------
- -------------------------------------------------
Alaska--3.0%
Alaska St. Engy. Auth. Pwr. Rev., Bradley Lake Hydro, 1st
Ser., A.M.B.A.C. Aaa
7.25 7/01/16 2,000 2,219,960
Alaska St. Hsg. Fin. Corp., Ser. A, M.B.I.A. Aaa
5.875 12/01/30 11,450 11,110,508
Anchorage Hosp. Rev., Sisters of Providence, A.M.B.A.C. Aaa
7.125 10/01/05 5,000 5,690,100
------------
19,020,568
- -----------------------------------------------------------------------------
- -------------------------------------------------
Arizona--4.7%
Maricopa Cnty. Ind. Dev. Auth. Rev.,
Hosp. Fac., John C. Lincoln Hosp., F.S.A. Aaa
7.00 12/01/00 2,740 3,028,385
Hosp. Fac., John C. Lincoln Hosp., F.S.A. Aaa
7.50 12/01/13 2,250 2,568,442
Maricopa Cnty. Unified Sch. Dist. No.69, Paradise Valley, Ser.
E, F.G.I.C. Aaa
6.80 7/01/12 3,700 4,302,582
Pima Cnty. Ind. Dev. Auth. Rev., Tucson Elec. Pwr. Co., F.S.A. Aaa
7.25 7/15/10 14,000 15,658,440
Tucson, Gen. Oblig., Ser. 1984, F.G.I.C. Aaa
7.625 7/01/14 3,140 3,933,918
------------
29,491,767
- -----------------------------------------------------------------------------
- -------------------------------------------------
California--10.5%
California St. Gen. Oblig.,
M.B.I.A. Aaa
6.30 9/01/08 6,000 6,611,880
F.G.I.C. Aaa
6.60 2/01/11 8,510 9,495,117
California St. Hlth. Facs. Fin. Auth. Rev., Catholic Hlth.
Facs., A.M.B.A.C. Aaa
5.00 7/01/14 5,000 4,557,800
Contra Costa Wtr. Dist. Wtr. Rev., Ser. E, A.M.B.A.C. Aaa
6.25 10/01/12 1,455 1,582,487
Roseville Joint Union H.S. Dist.,
Ser. B, F.G.I.C. Aaa
Zero 8/01/13 2,015 720,342
Ser. B, F.G.I.C. Aaa
Zero 6/01/20 5,500 1,282,490
San Diego Cnty. Wtr. Auth. Wtr. Rev., Ctfs. of Part., F.G.I.C. Aaa
7.037 4/26/06 5,800 (b) 6,213,250
</TABLE>
- --------------------------------------------------------------------------------
- ----- 20 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
California (cont'd.)
San Jose Redev.,
Tax Alloc., M.B.I.A. Aaa
6.00% 8/01/07 $ 3,050 $ 3,304,157
Tax Alloc., M.B.I.A. Aaa
6.00 8/01/08 4,340 4,681,298
Tax Alloc., M.B.I.A. Aaa
6.00 8/01/09 4,250 4,554,682
Santa Margarita/Dana Point Auth.,
Impvt. Dist., M.B.I.A. Aaa
7.25 8/01/10 2,180 2,583,801
Impvt. Dist., M.B.I.A. Aaa
7.25 8/01/11 1,750 2,075,850
So. Orange Cnty. Pub. Fin. Auth.,
Foothill Area Proj., F.G.I.C. Aaa
8.00 8/15/08 2,500 3,134,250
Foothill Area Proj., F.G.I.C. Aaa
6.50 8/15/10 2,725 3,012,678
Victor Valley Element. Sch. Dist.,
Cap. Apprec., Ser. A, M.B.I.A. Aaa
Zero 6/01/17 3,550 990,415
Cap. Apprec., Ser. A, M.B.I.A. Aaa
Zero 6/01/18 4,050 1,064,299
Cap. Apprec., Ser. A, M.B.I.A. Aaa
Zero 6/01/19 4,620 1,143,820
Victor Valley Union H.S. Dist.,
Gen. Oblig., 1994 Elec., M.B.I.A. Aaa
Zero 9/01/10 2,635 1,156,396
Gen. Oblig., 1994 Elec., M.B.I.A. Aaa
Zero 9/01/11 3,780 1,545,302
Gen. Oblig., 1994 Elec., M.B.I.A. Aaa
Zero 9/01/13 4,450 1,583,177
Gen. Oblig., 1994 Elec., M.B.I.A. Aaa
Zero 9/01/18 4,240 1,097,651
West & Central Basin Fin. Auth. Rev., Central Basin Proj.,
F.G.I.C. Aaa
5.00 8/01/13 3,840 3,574,426
------------
65,965,568
- -----------------------------------------------------------------------------
- -------------------------------------------------
Colorado--0.1%
Jefferson Cnty. Sngl. Fam. Mtge. Rev., Ser. A, M.B.I.A. Aaa
8.875 10/01/13 860 939,954
- -----------------------------------------------------------------------------
- -------------------------------------------------
Delaware--0.9%
Delaware St. Econ. Dev. Auth. Rev., Delmarva Pwr. & Lt., 1st
Mtge.,
Ser. A, M.B.I.A. Aaa
7.60 3/01/20 5,000 5,616,550
- -----------------------------------------------------------------------------
- -------------------------------------------------
District Of Columbia--2.5%
Dist. of Columbia Met. Area Transit Auth.,
Gross Rev., F.G.I.C. Aaa
6.00 7/01/09 2,400 2,571,360
Gross Rev., F.G.I.C. Aaa
6.00 7/01/10 1,500 1,596,525
Gross Rev., F.G.I.C. Aaa
5.25 7/01/14 5,000 4,787,400
Dist. of Columbia Rev., Ser. A, M.B.I.A. Aaa
6.50 6/01/10 6,000 6,602,400
------------
15,557,685
- -----------------------------------------------------------------------------
- -------------------------------------------------
Florida--1.0%
Gulf Breeze Local Gov't. Loan Prog., Ser. 85B, F.G.I.C. Aaa
8.00 12/01/15 1,500 1,681,185
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 21 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Florida (cont'd.)
Jacksonville Sales Tax Rev., Rvr. Cty. Renaissance Proj.,
F.G.I.C. Aaa
5.375% 10/01/18 $ 4,455 $ 4,298,407
------------
5,979,592
- -----------------------------------------------------------------------------
- -------------------------------------------------
Georgia--3.6%
Atlanta Arpt. Facs. Rev., A.M.B.A.C. Aaa
6.50 1/01/10 2,000 2,224,120
Burke Cnty. Dev. Auth., Oglethorpe Pwr. Corp., 1st Mtge.,
M.B.I.A. Aaa
8.00 1/01/22 11,000 13,294,600
De Kalb Cnty. Hsg. Auth., Sngl. Fam. Mtge. Rev., G.N.M.A. AAA(c)
7.70 2/01/24 3,075 3,290,035
Georgia Mun. Elec. Auth. Pwr. Rev., M.B.I.A. Aaa
6.20 1/01/10 3,495 3,759,676
------------
22,568,431
- -----------------------------------------------------------------------------
- -------------------------------------------------
Illinois--2.7%
Chicago Res. Mtge. Rev., Ser. B, M.B.I.A. Aaa
Zero 10/01/09 8,525 3,228,588
City of Chicago, Cook Cnty., Gen. Oblig., F.G.I.C. Aaa
5.375 1/01/13 3,400 3,286,950
Kane And De Kalb Cntys. Cnty. Sch.,
Dist. No. 301, A.M.B.A.C. Aaa
Zero 12/01/07 2,265 1,193,950
Dist. No. 301, A.M.B.A.C. Aaa
Zero 12/01/09 1,740 811,501
Onterie Ctr. Hsg. Fin. Corp. Mtge. Rev.,
Ser. A, M.B.I.A. Aaa
7.00 7/01/12 1,575 1,673,516
Ser. A, M.B.I.A. Aaa
7.05 7/01/27 6,400 6,785,024
------------
16,979,529
- -----------------------------------------------------------------------------
- -------------------------------------------------
Indiana--4.0%
Indianapolis Arpt. Auth. Rev., M.B.I.A. Aaa
9.00 7/01/15 2,450 2,576,102
Marion Cnty. Hosp. Auth. Facs. Rev., A.M.B.A.C. Aaa
8.625 10/01/12 8,500 9,881,845
Muncie Sch. Bldg. Corp.,
1st Mtge., M.B.I.A. Aaa
5.75 7/15/12 6,000 6,102,060
1st Mtge., M.B.I.A. Aaa
5.75 7/15/14 6,725 6,774,092
------------
25,334,099
- -----------------------------------------------------------------------------
- -------------------------------------------------
Kansas--0.4%
Sedgwick Cnty. Mtge. Loan Rev., Ser. B, A.M.B.A.C. Aaa
7.80 6/01/22 2,385 2,560,345
- -----------------------------------------------------------------------------
- -------------------------------------------------
Kentucky--0.3%
Louisville & Jefferson Cnty. Regl. Arpt. Auth., Ser A,
M.B.I.A. Aaa
8.375 7/01/07 2,000 2,159,380
- -----------------------------------------------------------------------------
- -------------------------------------------------
Louisiana--2.6%
Jefferson Parish Sales Tax Dist., Ser. A, F.G.I.C. Aaa
6.75 12/01/06 5,000 5,579,350
</TABLE>
- --------------------------------------------------------------------------------
- ----- 22 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Louisiana (cont'd.)
Louisiana Hsg. Fin. Agncy., Sngl. Fam. Mtge., Ser. A-2,
G.N.M.A. Aaa
7.80% 12/01/26 $ 8,000 $ 8,955,440
New Orleans, Gen. Oblig., Cap. Apprec., A.M.B.A.C. Aaa
Zero 9/01/09 4,000 1,890,960
------------
16,425,750
- -----------------------------------------------------------------------------
- -------------------------------------------------
Maryland--0.3%
Maryland St. Hlth. & Edl. Facs. Auth. Rev., Francis Scott Key
Med. Ctr., F.G.I.C. Aaa
5.00 7/01/18 2,020 1,829,251
- -----------------------------------------------------------------------------
- -------------------------------------------------
Massachusetts--1.0%
Mass. Hlth. & Edl. Facs. Auth. Rev.,
Fallon Hlthcare, Ser. A, C.G.I.C. Aaa
6.875 6/01/11 3,000 3,256,740
Mass. Gen. Hosp., Ser. F, A.M.B.A.C. Aaa
6.25 7/01/12 1,500 1,618,185
Mass. Hsg. Fin. Agcy., Hsg. Rev., Ser. A, B.I.G. Aaa
7.75 12/01/19 1,500 1,554,195
------------
6,429,120
- -----------------------------------------------------------------------------
- -------------------------------------------------
Michigan--6.0%
Detroit Swr. Disp. Rev., F.G.I.C. Aaa
5.70 7/01/23 13,000 12,733,110
Michigan St. Bldg. Auth. Rev., A.M.B.A.C. Aaa
5.20 10/01/09 4,000 3,956,920
Michigan St. Hosp. Fin. Auth. Rev., Mid. Michigan Oblig.,
M.B.I.A. Aaa
7.50 6/01/15 2,350 2,644,925
Michigan St. Hsg. Dev. Auth., Multifam. Mtge. Rev., Ser. A,
F.G.I.C. Aaa
7.70 7/01/18 1,500 1,581,375
Monroe Cnty. Poll. Ctrl. Rev.,
Detroit Edison Co., Proj. 1, F.G.I.C. Aaa
7.65 9/01/20 8,000 9,029,200
Detroit Edison Co., Proj. 1, Ser. I, A.M.B.A.C. Aaa
7.30 9/01/19 3,250 3,622,125
Saginaw Hosp. Fin. Auth. Hosp. Rev., St. Luke's Hosp., Ser. C,
M.B.I.A. Aaa
6.50 7/01/11 4,000 4,283,280
------------
37,850,935
- -----------------------------------------------------------------------------
- -------------------------------------------------
Minnesota--1.5%
St. Louis Park Hlthcare. Facs., Hlthsys. Oblig. Grp., Ser. C,
A.M.B.A.C. Aaa
5.20 7/01/16 10,000 9,373,500
- -----------------------------------------------------------------------------
- -------------------------------------------------
Mississippi--1.1%
Harrison Cnty. Wste. Wtr. Mgmt. Dist. Rev., Wstewtr. Treatmt.
Facs. Auth., F.G.I.C. Aaa
6.50 2/01/06 2,400 2,616,360
Mississippi Hosp. Equip. & Facs. Auth. Rev., Baptist Med.
Ctr., M.B.I.A. Aaa
7.40 5/01/07 2,000 (d) 2,277,200
Mississippi Hsg. Fin. Corp., Sngl. Fam. Mtge. Rev., Ser. A,
F.G.I.C. Aaa
7.80 10/15/16 2,065 2,179,959
------------
7,073,519
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 23 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Missouri--0.8%
Missouri St. Hlth. & Edl. Facs. Auth. Rev., SSM Hlthcare.,
Ser. AA, M.B.I.A. Aaa
6.25% 6/01/16 $ 1,500 $ 1,551,180
Missouri St. Hsg. Dev. Comm. Mtge. Rev., Sngl. Fam. Mtge.,
Ser. C AAA(c)
7.25 9/01/26 3,000 3,270,120
------------
4,821,300
- -----------------------------------------------------------------------------
- -------------------------------------------------
Montana--1.8%
Forsyth Poll. Ctrl. Rev.,
Puget Sound Pwr. & Lt. Co., 1st Mtge., Ser. A, A.M.B.A.C. Aaa
7.05 8/01/21 2,000 2,242,220
Washington Wtr. Pwr. Proj., 1st Mtge., M.B.I.A. Aaa
7.125 12/01/13 8,000 8,917,920
------------
11,160,140
- -----------------------------------------------------------------------------
- -------------------------------------------------
Nebraska--1.0%
Nebraska Invest. Fin. Auth.
Sngl. Fam. Mtge. Rev., Ser. B, F.G.I.C. Aaa
8.00 7/15/17 1,980 2,115,095
Sngl. Fam. Mtge. Rev., Ser. I, M.B.I.A. Aaa
8.125 8/15/38 3,695 3,919,804
------------
6,034,899
- -----------------------------------------------------------------------------
- -------------------------------------------------
New Jersey--6.2%
Garfield Sch. Dist., Ctfs. of Part., Wtr. Impvt. Dist. No. 31,
B.I.G. Aaa
7.65 6/01/08 3,150 3,454,353
Jersey City Swr. Auth.,
A.M.B.A.C. Aaa
6.00 1/01/10 2,585 2,755,481
A.M.B.A.C. Aaa
6.25 1/01/14 4,255 4,613,186
New Jersey Hlthcare. Facs. Fin. Auth. Rev.,
Allegany Hlth., Our Lady of Lourdes, M.B.I.A. Aaa
5.125 7/01/13 1,500 1,419,795
Hackensack Med. Ctr., F.G.I.C. Aaa
6.625 7/01/17 5,000 5,399,650
New Jersey St. Hsg. & Mtge. Fin. Agcy. Rev., Ser. B, M.B.I.A. Aaa
7.90 10/01/22 3,230 3,447,250
New Jersey St. Tpke. Auth. Rev.,
Ser. C, M.B.I.A. Aaa
6.50 1/01/16 4,000 4,504,400
Ser. C, F.S.A. Aaa
6.50 1/01/16 11,730 13,178,303
------------
38,772,418
- -----------------------------------------------------------------------------
- -------------------------------------------------
New York--4.8%
Erie Cnty. Wtr. Auth. Rev., A.M.B.A.C. Aaa
Zero 12/01/17 770 158,197
Islip Res. Rec., Ser. B, A.M.B.A.C. Aaa
7.20 7/01/10 1,750 2,038,907
New York City, Ser. D, M.B.I.A. Aaa
6.20 2/01/07 8,520 9,352,319
New York St. Dorm. Auth. Rev., City Univ., M.B.I.A. Aaa
6.25 7/01/19 3,000 3,115,470
</TABLE>
- --------------------------------------------------------------------------------
- ----- 24 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
New York (cont'd.)
New York St. Engy Res. & Dev. Auth., Poll. Ctrl. Rev.,
F.G.I.C. Aaa
7.375% 10/01/14 $ 4,000 $ 4,514,000
Suffolk Cnty. Ind. Dev. Agcy., SW Swr. Sys. Rev., F.G.I.C. Aaa
6.00 2/01/08 5,000 5,358,600
Suffolk Cnty. Wtr. Auth. Wtrwks. Rev., M.B.I.A. Aaa
6.00 6/01/14 5,165 5,450,573
------------
29,988,066
- -----------------------------------------------------------------------------
- -------------------------------------------------
North Carolina--1.3%
North Carolina Mun. Pwr. Agcy. Elec. Rev., No. 1 Catawba,
M.B.I.A. Aaa
6.00 1/01/11 7,500 7,945,275
- -----------------------------------------------------------------------------
- -------------------------------------------------
North Dakota--0.9%
Mercer Cnty., Antelope Valley Station, A.M.B.A.C. Aaa
7.20 6/30/13 5,000 5,902,050
- -----------------------------------------------------------------------------
- -------------------------------------------------
Oklahoma--0.7%
Grand Rvr. Dam Auth., A.M.B.A.C. Aaa
6.25% 6/01/11 4,000 4,390,480
- -----------------------------------------------------------------------------
- -------------------------------------------------
Pennsylvania--4.3%
Allegheny Cnty. Arpt. Rev., Pittsburgh Int'l. Arpt., Ser. C,
M.B.I.A. Aaa
8.25 1/01/16 4,800 5,247,024
North Umberland Cnty. Lease Auth. Rev., Correctional Facs.,
M.B.I.A. Aaa
Zero 10/15/10 7,500 3,317,100
Pennsylvania St. Ctfs. of Part., Ser. A, A.M.B.A.C. Aaa
5.00 7/01/15 8,740 8,031,011
Philadelphia Arpt. Sys. Rev., A.M.B.A.C. Aaa
9.00 6/15/15 6,750 6,980,378
Philadelphia Mun. Auth. Rev., Criminal Justice Ctr., Ser. A,
M.B.I.A. Aaa
6.90 11/15/03 3,000 3,398,940
------------
26,974,453
- -----------------------------------------------------------------------------
- -------------------------------------------------
Puerto Rico--2.9%
Puerto Rico Elec. Pwr. Auth. Rev., M.B.I.A. Aaa
Zero 7/01/04 10,000 6,601,300
Puerto Rico Gen. Oblig., A.M.B.A.C. Aaa
5.00 7/01/21 4,000 3,674,960
Puerto Rico Tel. Auth. Rev.,
Ser. I, M.B.I.A. Aaa
6.373 1/25/07 4,100 (b) 4,217,875
Ser. I, M.B.I.A. Aaa
6.834 1/16/15 3,800 (b) 3,714,500
------------
18,208,635
- -----------------------------------------------------------------------------
- -------------------------------------------------
Rhode Island--1.1%
Rhode Island Hsg. & Mtge. Fin. Corp., M.B.I.A. Aaa
7.875 10/01/22 6,500 6,926,270
- -----------------------------------------------------------------------------
- -------------------------------------------------
South Carolina--1.0%
Berkeley Cnty. Wtr. & Swr. Rev., M.B.I.A. Aaa
6.50 6/01/06 2,500 2,739,075
Piedmont Mun. Pwr. Agcy. Elec. Rev., F.G.I.C. Aaa
5.00 1/01/22 3,800 3,411,792
------------
6,150,867
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 25 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Tennessee--2.1%
Knox Cnty. Hlth. Edl. Hosp. Facs. Rev., Ser. A, M.B.I.A. Aaa
5.75% 1/01/14 $ 4,840 $ 4,927,217
Tennessee Hsg. Dev. Agcy., B.I.G. Aaa
7.65 7/01/20 7,950 8,520,730
------------
13,447,947
- -----------------------------------------------------------------------------
- -------------------------------------------------
Texas--10.9%
Austin Util. Sys. Rev.,
A.M.B.A.C. Aaa
6.50 5/15/11 5,000 5,386,950
Ser. B, F.G.I.C. Aaa
7.25 11/15/03 3,250 3,570,580
Brazos River Auth. Rev.,
Houston Lt. & Pwr., Ser. A, 1st Mtge., A.M.B.A.C. Aaa
6.70 3/01/17 5,000 5,460,750
Houston Lt. & Pwr., Ser. B, 1st Mtge., F.G.I.C. Aaa
7.20 12/01/18 1,000 1,117,510
Corpus Christi Hsg. Fin. Corp., Sngl. Fam. Mtge., Ser. A,
M.B.I.A. Aaa
7.70 7/01/11 2,195 2,385,921
Harris Cnty. Toll Rd.,
F.G.I.C. Aaa
5.00 8/15/16 6,930 6,398,469
M.B.I.A. Aaa
8.00 8/15/11 10,290 13,081,471
Houston Arpt. Sys. Rev. Aaa
7.20 7/01/13 3,900 4,598,724
Matagorda Cnty. Nav. Poll. Ctrl. Rev., Dist. No. 1, 1st Mtge.,
A.M.B.A.C. Aaa
7.50 12/15/14 2,300 2,617,055
New Braunfels Ind. Sch. Dist. Gen. Oblig. Aaa
Zero 2/01/07 2,000 1,110,340
Round Rock Ind. Sch. Dist. Gen. Oblig., M.B.I.A. Aaa
Zero 8/15/11 4,300 1,773,191
Texas St. Mun. Pwr. Agcy. Rev.,
A.M.B.A.C. Aaa
6.75 9/01/12 3,960 4,353,228
M.B.I.A. Aaa
Zero 9/01/13 12,300 4,406,352
M.B.I.A. Aaa
Zero 9/01/14 10,000 3,339,000
F.G.I.C. Aaa
5.00 9/01/14 5,000 4,636,750
Texas St. Pub. Fin. Auth. Bldg. Rev., M.B.I.A. Aaa
Zero 2/01/14 6,900 2,383,536
Texas Wtr. Res. Fin. Auth. Rev., A.M.B.A.C. Aaa
7.50 8/15/13 2,000 2,163,980
------------
68,783,807
- -----------------------------------------------------------------------------
- -------------------------------------------------
Utah--1.4%
Intermountain Pwr. Agcy. Pwr. Supply Rev., Ser. A, M.B.I.A. Aaa
5.00 7/01/12 9,250 8,700,735
- -----------------------------------------------------------------------------
- -------------------------------------------------
Virginia--0.8%
Arlington Cnty., Gen Oblig. Aaa
6.00 6/01/11 2,000 2,153,760
Virginia Beach Auth. Hosp. Facs. Rev.,
1st Mtge., A.M.B.A.C. Aaa
6.00 2/15/10 1,220 1,292,127
1st Mtge., A.M.B.A.C. Aaa
6.00 2/15/13 1,455 1,527,037
------------
4,972,924
</TABLE>
- --------------------------------------------------------------------------------
- ----- 26 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Washington--3.3%
Washington Hlth. Care Facs. Auth., Tacoma Multicare Med. Ctr.,
F.G.I.C. Aaa
7.875% 8/15/11 $ 5,000 $ 5,536,650
Washington St. Pub. Pwr. Supply Sys.,
Nuclear Proj. No. 1, Ser. A, B.I.G. Aaa
7.00 7/01/04 5,000 5,508,100
Nuclear Proj. No. 2, Ser. A, M.B.I.A. Aaa
Zero 7/01/11 5,210 2,114,374
Nuclear Proj. No. 2, Ser. B, F.G.I.C. Aaa
7.25 7/01/03 3,000 3,382,800
Nuclear Proj. No. 3, Ser. B, F.G.I.C. Aaa
7.00 7/01/05 2,000 2,205,020
Nuclear Proj. No. 3, F.G.I.C. Aaa
Zero 7/01/08 4,500 2,246,625
------------
20,993,569
------------
Total long-term investments (cost $547,844,435)
586,584,749
------------
SHORT-TERM INVESTMENTS--7.9%
- -----------------------------------------------------------------------------
- -------------------------------------------------
District Of Columbia--0.6%
Dist. of Columbia Gen. Oblig., Ser. 92A-5, F.R.D.D. VMIG1
4.10 11/01/95 3,800 3,800,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Florida--0.3%
St Lucie Cnty., Fl. Pwr. & Lt., Ser. 93, F.R.D.D. VMIG1
4.00 11/01/95 1,800 1,800,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Illinois--0.3%
SW Ill. Dev. Auth., Shell Oil Co., Ser. 91, F.R.D.D. VMIG1
4.05 11/01/95 2,150 2,150,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Kentucky--0.4%
Davies Cnty., Scott Paper Co., Ser. 93B, F.R.D.D. VMIG1
4.10 11/01/95 2,800 2,800,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Louisiana--0.6%
St. Charles Parish, Shell Oil Co., Ser. 93, F.R.D.D. VMIC1
4.05 11/01/95 3,500 3,500,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Mississippi--0.1%
Jackson Cnty. Ind. Swr. Facs. Rev., Chevron USA, Ser. 94,
F.R.D.D. P-1
4.05 11/01/95 200 200,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Texas--5.6%
Brazos River Auth., Tx. Utils. Elec. Co.,
Ser. 95A, F.R.D.D. VMIG1
4.05 11/01/95 3,000 3,000,000
Ser. 95C, F.R.D.D. VMIG1
4.05 11/01/95 8,900 8,900,000
Brazos Rvr. Harb. Nav., Dow Chem. Co. Proj., Ser. 93, F.R.D.D. P-1
4.10 11/01/95 3,300 3,300,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 27 -----
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Texas (cont'd.)
Gulf Coast Ind. Dev. Auth., PCR Citgo Petroleum,
Ser. 94, F.R.D.D. VMIG1
4.10% 11/01/95 $ 9,200 $ 9,200,000
Ser. 95, F.R.D.D. VMIG1
4.10 11/01/95 4,800 4,800,000
Gulf Coast Wste. Dis. Auth., Wste. Disp. Rev., Amoco Corp.,
Ser. 94, F.R.D.D. VMIG1
4.05 11/01/95 1,500 1,500,000
Ser. 95, F.R.D.D. VMIG1
4.05 11/01/95 2,100 2,100,000
Harris Cnty. Ind. Dev. Corp., Exxon Corp., Ser. 87, F.R.D.D. VMIG1
4.05 11/01/95 2,300 2,300,000
------------
35,100,000
------------
Total short-term investments (cost $49,350,000)
49,350,000
------------
- -----------------------------------------------------------------------------
- -------------------------------------------------
Total Investments--101.2%
(cost $597,194,435; Note 4)
635,934,749
Liabilities in excess of other assets--(1.2)%
(7,428,607)
------------
Net Assets--100%
$628,506,142
------------
------------
</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.R.D.D.--Floating Rate (Daily) Demand Note(e)
F.S.A.--Financial Security Assurance
G.N.M.A.--Government National Mortgage Association
M.B.I.A.--Municipal Bond Insurance Association
(b) Inverse floating rate bond. The coupon is inversely indexed to a
floating interest rate. The rate shown is the rate at period end.
(c) Standard & Poor's rating.
(d) Prerefunded issues are secured by escrowed cash and direct U.S.
guaranteed obligations.
(e) 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.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
- --------------------------------------------------------------------------------
- ----- 28 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Statement of Assets and Liabilities (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
October 31, 1995
Investments, at value (cost
$597,194,435).................................................................
$ 635,934,749
Cash.........................................................................
............................. 857,899
Interest
receivable...................................................................
.................... 9,523,819
Receivable for Fund shares
sold...........................................................................
433,680
Receivable for investments
sold...........................................................................
30,222
Deferred expenses and other
assets........................................................................
12,525
----------------
Total
assets.......................................................................
.................... 646,792,894
----------------
Liabilities
Payable for investments
purchased....................................................................
..... 16,096,096
Payable for Fund shares
reacquired...................................................................
..... 772,555
Dividends
payable......................................................................
................... 730,771
Management fee
payable......................................................................
.............. 239,609
Distribution fee
payable......................................................................
............ 235,147
Accrued
expenses.....................................................................
..................... 212,574
----------------
Total
liabilities..................................................................
.................... 18,286,752
----------------
Net
Assets.......................................................................
......................... $ 628,506,142
----------------
----------------
Net assets were comprised of:
Shares of beneficial interest, at
par.................................................................. $
561,578
Paid-in capital in excess of
par.......................................................................
598,604,304
----------------
599,165,882
Accumulated net realized loss on
investments...........................................................
(9,400,054)
Net unrealized appreciation of
investments.............................................................
38,740,314
----------------
Net assets, October 31,
1995...........................................................................
$ 628,506,142
----------------
----------------
Class A:
Net asset value and redemption price per share
($91,703,100 / 8,200,370 shares of beneficial interest issued and
outstanding)...................... $11.18
Maximum sales charge (3.0% of offering
price)..........................................................
.35
----------------
Maximum offering price to
public.......................................................................
$11.53
----------------
----------------
Class B:
Net asset value, offering price and redemption price per share
($535,936,001 / 47,879,988 shares of beneficial interest issued and
outstanding).................... $11.19
----------------
----------------
Class C:
Net asset value, offering price and redemption price per share
($867,041 / 77,458 shares of beneficial interest issued and
outstanding)............................ $11.19
----------------
----------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 29 -----
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND PRUDENTIAL MUNICIPAL BOND FUND
INSURED SERIES INSURED SERIES
Statement of Operations (Unaudited) Statement of Changes in Net
Assets (Unaudited)
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
<S> <C>
Ended
Net Investment Income October 31, 1995
Income
Interest................................ $ 18,896,966
----------------
Expenses
Management fee, net of waiver of
$160,079............................. 1,440,709
Distribution fee--Class A............... 44,164
Distribution fee--Class B............... 1,378,241
Distribution fee--Class C............... 2,588
Transfer agent's fees and expenses...... 212,000
Custodian's fees and expenses........... 82,000
Reports to shareholders................. 57,000
Registration fees....................... 26,000
Legal fees and expenses................. 15,000
Insurance expense....................... 10,000
Trustees' fees and expenses............. 7,500
Audit fees and expenses................. 5,000
Miscellaneous........................... 4,259
----------------
Total expenses....................... 3,284,461
Less: custodian fee credit.............. (25,661)
----------------
Net expenses......................... 3,258,800
----------------
Net investment income...................... 15,638,166
----------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain (loss) on:
Investment transactions................. 6,012,633
Financial futures contract
transactions......................... (347,625)
----------------
5,665,008
----------------
Net change in unrealized
appreciation/depreciation of:
Investments............................. 15,132,261
Financial futures contracts............. (121,156)
----------------
15,011,105
----------------
Net gain on investments.................... 20,676,113
----------------
Net Increase in Net Assets
Resulting from Operations.................. $ 36,314,279
----------------
----------------
</TABLE>
PRUDENTIAL MUNICIPAL BOND FUND
INSURED SERIES
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Increase (Decrease) Ended Year Ended
in Net Assets October 31, 1995 April 30, 1995
<S> <C> <C>
Operations
Net investment income......... $ 15,638,166 $ 35,097,294
Net realized gain (loss) on
investment transactions.... 5,665,008 (10,107,133)
Net change in unrealized
appreciation of
investments................ 15,011,105 14,364,251
------------ -------------
Net increase in net assets
resulting from
operations................. 36,314,279 39,354,412
------------ -------------
Dividends and distributions (Note 1):
Dividends from net investment
income
Class A.................... (2,310,879) (2,149,982)
Class B.................... (13,311,458) (32,939,088)
Class C.................... (15,829) (8,224)
------------ -------------
(15,638,166) (35,097,294)
------------ -------------
Distributions in excess of net
investment income
Class A.................... -- (2,529)
Class B.................... -- (60,060)
Class C.................... -- (20)
------------ -------------
-- (62,609)
------------ -------------
Series share transactions (net of
share conversions) (Note 5):
Net proceeds from shares
subscribed................. 29,661,299 46,070,613
Net asset value of shares
issued in reinvestment of
dividends.................. 8,745,408 19,337,321
Cost of shares reacquired..... (74,549,674) (196,745,726)
------------ -------------
Net decrease in net assets
from Series share
transactions............... (36,142,967) (131,337,792)
------------ -------------
Total decrease................... (15,466,854) (127,143,283)
Net Assets
Beginning of period.............. 643,972,996 771,116,279
------------ -------------
End of period.................... $628,506,142 $ 643,972,996
------------ -------------
------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
- ----- 30 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INTERMEDIATE SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
LONG-TERM INVESTMENTS--97.7%
- -----------------------------------------------------------------------------
- -------------------------------------------------
Alabama--2.4%
Univ. So. Alabama Hosp. & Aux. Rev., A.M.B.A.C. Aaa
7.00% 5/15/04 $ 1,250 (b) $ 1,383,450
- -----------------------------------------------------------------------------
- -------------------------------------------------
Alaska--5.3%
Alaska Ind. Dev. & Expt. Auth., Revolving Loan Fund A
5.40 4/01/01 1,005 1,018,447
Alaska St. Hsg. Fin. Corp. Collat. Mtge. Oblig. Aaa
5.70 12/01/11 1,000 993,710
No. Slope Boro., Gen. Oblig., Ser. C Baa1
8.35 6/30/98 1,000 1,087,760
------------
3,099,917
- -----------------------------------------------------------------------------
- -------------------------------------------------
Arizona--5.3%
Maricopa Cnty., Cmnty. Coll. Aa
6.00 7/01/06 1,500 1,607,610
Univ. Arizona Rev. A1
4.60 6/01/05 1,515 1,472,610
------------
3,080,220
- -----------------------------------------------------------------------------
- -------------------------------------------------
California--9.4%
Oxnard Fin. Auth. Lease Rev., F.S.A. Aaa
5.375 6/01/08 2,000 2,023,040
San Jose Redev.,
Tax Alloc., M.B.I.A. Aaa
6.00 8/01/06 500 543,320
Tax Alloc., M.B.I.A. Aaa
6.00 8/01/08 500 539,320
Statewide Cmntys. Dev. Corp.,
Cedars Sinai Med. Ctr. A1
4.80 11/01/04 1,000 975,750
J. Paul Getty Trust Aaa
4.80 10/01/08 1,500 1,425,720
------------
5,507,580
- -----------------------------------------------------------------------------
- -------------------------------------------------
Colorado--6.8%
Colorado Student Oblig. Bond Auth., Student Loan Rev., Ser. A3 A
7.25 9/01/05 1,480 1,573,003
Denver City & Cnty. Arprt. Rev., Ser. A, M.B.I.A. Aaa
7.30 11/15/03 1,250 1,433,913
Jefferson Cnty. Sch. Dist. R-001 Baa1
4.50 12/15/03 1,000 982,610
------------
3,989,526
- -----------------------------------------------------------------------------
- -------------------------------------------------
Connecticut--1.9%
Connecticut Spec. Tax Oblig. Rev., Ser. A A1
7.00 6/01/03 1,000 (b) 1,124,700
- -----------------------------------------------------------------------------
- -------------------------------------------------
District Of Columbia--1.2%
Dist. Columbia Rev., America Geophysical Union, Ser. 199 BBB-(c)
5.50 9/01/03 700 683,858
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 31 -----
<PAGE>
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INTERMEDIATE SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Florida--1.6%
Dade Cnty. Pub. Facs. Rev., Jackson Mem. Hosp., Ser. A,
M.B.I.A. Aaa
4.75% 6/01/08 $ 1,000 $ 947,890
- -----------------------------------------------------------------------------
- -------------------------------------------------
Georgia--1.9%
Burke Cnty. Dev. Auth. Poll. Ref., Oglethorpe Pwr. Co.,
M.B.I.A. Aaa
7.50 1/01/03 1,000 1,126,050
- -----------------------------------------------------------------------------
- -------------------------------------------------
Guam--1.7%
Guam Pwr. Auth. Rev., Ser. A BBB(c)
5.25 10/01/05 1,000 1,003,020
- -----------------------------------------------------------------------------
- -------------------------------------------------
Hawaii--1.9%
Hawaii Cnty., Gen. Oblig., Ser. A, F.G.I.C. Aaa
7.20 6/01/05 1,000 (b) 1,124,100
- -----------------------------------------------------------------------------
- -------------------------------------------------
Illinois--0.8%
Illinois Hlth. Facs. Auth. Rev., Edward Hosp., Ser. A A
5.75 2/15/09 450 442,985
- -----------------------------------------------------------------------------
- -------------------------------------------------
Indiana--2.7%
Indiana Univ., Student Fee, Ser. G Aaa
6.90 8/01/03 500 (b) 561,600
Indianapolis Gas Util. Rev., Ser. B, F.G.I.C. Aaa
5.00 6/01/06 1,000 (b) 1,000,770
------------
1,562,370
- -----------------------------------------------------------------------------
- -------------------------------------------------
Maryland--5.4%
Maryland St. Stadium Auth. Lease Rev., Conv. Ctr. Expansion,
A.M.B.A.C. Aaa
5.375 12/15/00 1,000 1,038,650
NE Maryland Wste. Disp. Auth., Mont. Co. Res. Rec. A
5.90 7/01/05 1,250 1,291,725
Ocean City Maryland, M.B.I.A. Aaa
5.10 10/01/08 825 815,744
------------
3,146,119
- -----------------------------------------------------------------------------
- -------------------------------------------------
Massachusetts--1.9%
Mass. Gen. Oblig., Ser. C Aaa
6.75 8/01/06 1,000 (b) 1,131,000
- -----------------------------------------------------------------------------
- -------------------------------------------------
Michigan--4.3%
Battle Creek Wtr. Supply Sys. Rev., Ref., A.M.B.A.C. Aaa
4.75 9/01/10 1,000 914,100
Greenville Pub. Sch., M.B.I.A. Aaa
5.75 5/01/09 1,000 1,031,820
Michigan Mun. Bond Auth. Rev., Wayne Cnty. Proj., M.B.I.A. Aaa
7.40 12/01/02 500 564,455
------------
2,510,375
- -----------------------------------------------------------------------------
- -------------------------------------------------
Minnesota--1.9%
Minneapolis & St. Paul Hsg. Redev. Auth., Healthcare Sys.
Rev.,
Ser. A, M.B.I.A. Aaa
7.20 8/15/00 1,000 1,110,970
</TABLE>
- --------------------------------------------------------------------------------
- ----- 32 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INTERMEDIATE SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Missouri--0.9%
New Madrid Elec. Pwr. Ctr. Pwr. Plant, A.M.B.A.C. Aaa
5.35% 12/01/00 $ 500 $ 520,250
- -----------------------------------------------------------------------------
- -------------------------------------------------
New Jersey--6.1%
New Jersey Econ. Dev. Auth.,
Mkt. Trans. Fac. Rev., M.B.I.A. Aaa
5.75 7/01/06 950 1,006,667
Mkt. Trans. Fac. Rev., M.B.I.A. Aaa
5.80 7/01/07 1,000 1,056,960
New Jersey St. Trans. Trust Fund Auth., Ser. A., M.B.I.A. Aaa
5.50 6/15/11 1,500 1,498,335
------------
3,561,962
- -----------------------------------------------------------------------------
- -------------------------------------------------
New York--7.1%
Met.Trans. Auth. Facs. Rev., M.B.I.A. Aaa
4.30 7/01/01 1,150 1,138,718
Nassau Cnty. Swr. Gen. Oblig., Ser. B, F.G.I.C. Aaa
4.75 5/01/06 1,075 1,057,209
New York City., Gen. Oblig. Ser. B Baa1
6.75 8/15/03 1,800 1,934,892
------------
4,130,819
- -----------------------------------------------------------------------------
- -------------------------------------------------
Ohio--0.9%
Ohio St. Bldg. Auth., Admin. Bldg. Fund Proj., M.B.I.A. Aaa
5.60 10/01/06 500 527,565
- -----------------------------------------------------------------------------
- -------------------------------------------------
Oregon--3.2%
Multnomah Cnty. Sch. Dist. No. 3, Park Rose, F.G.I.C. Aaa
5.60 12/01/07 1,000 1,043,800
Oregon St., Dept. Trans. Rev., Reg. Lt. Rail Westside Proj.,
M.B.I.A. Aaa
7.00 6/01/03 750 861,000
------------
1,904,800
- -----------------------------------------------------------------------------
- -------------------------------------------------
Pennsylvania--6.0%
Allegheny Cnty. Ind. Dev. Rev., USX Proj. Baa3
5.30 12/01/96 1,000 996,730
Montgomery Cnty. Redev. Auth., Multifam. Hsg. Rev., Ser. A NR
5.75 7/01/99 780 774,353
Pennsylvania St. Ctfs. of Part., Ser. A, F.S.A. Aaa
6.25 11/01/06 600 647,712
Philadelphia Hosp. Auth. & Higher Edl. Auth., Childrens
Seashore
House, Ser. A A-(c)
7.00 8/15/03 1,000 1,082,690
------------
3,501,485
- -----------------------------------------------------------------------------
- -------------------------------------------------
Puerto Rico--5.6%
Puerto Rico Gen. Oblig., Ser. A, M.B.I.A. Aaa
6.25 7/01/10 750 801,810
Puerto Rico Hwy. Auth. Rev.,
Ser. Q Baa1
7.50 7/01/01 330 372,263
Ser. Q Baa1
7.60 7/01/02 975 1,101,711
Puerto Rico Ind. Med. & Environ. Fac. Fin. Auth. Rev. A2
4.00 9/01/13 1,000 989,400
------------
3,265,184
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 33 -----
<PAGE>
<PAGE>
Portfolio of Investments as of PRUDENTIAL MUNICIPAL BOND FUND
October 31, 1995 (Unaudited) INTERMEDIATE SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's
Interest Maturity Amount Value
Description (a) Rating
Rate Date (000) (Note 1)
<S> <C> <C>
<C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
Texas--4.5%
Harris Cnty.,
Toll Rd. Aa
7.20% 8/01/98 $ 500 $ 538,800
Toll Rd., A.M.B.A.C. Aaa
5.125 8/15/08 1,500 1,491,405
San Antonio Elec. & Gas Rev., Ser. A, F.G.I.C. Aaa
Zero 2/01/05 1,000 628,740
------------
2,658,945
- -----------------------------------------------------------------------------
- -------------------------------------------------
Utah--1.9%
Utah St. Brd. of Regents, Student Loan Rev., Ser. F,
A.M.B.A.C. Aaa
7.00 11/01/01 1,000 1,102,580
- -----------------------------------------------------------------------------
- -------------------------------------------------
Washington--5.1%
Washington St. Pub. Pwr. Supp. Sys.,
Nuclear Proj. No.2, Ser. A Aa
4.90 7/01/05 2,000 1,929,400
Nuclear Proj. No.3, Ser. B Aa
7.00 7/01/99 1,000 1,075,160
------------
3,004,560
------------
Total long-term investments (cost $54,713,461)
57,152,280
------------
SHORT-TERM INVESTMENTS--0.5%
- -----------------------------------------------------------------------------
- -------------------------------------------------
Wyoming--0.5%
Platte Cnty. Poll. Ctrl. Rev., Tri-State Gas & Elec., Ser.
84A, F.R.D.D.
(cost $300,000) P-1
4.10 11/01/95 300 300,000
------------
OUTSTANDING PUT OPTION PURCHASED
U.S. Treasury Bond, Nov. '95 @$112.00 (cost $25,124) NR
-- 11/18/95 30,000 937
------------
- -----------------------------------------------------------------------------
- -------------------------------------------------
Total Investments--98.2%
(cost $55,038,585; Note 4)
57,453,217
Other assets in excess of liabilities--1.8%
1,041,755
------------
Net Assets--100%
$ 58,494,972
------------
------------
</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(d)
F.S.A.--Financial Security Assurance
M.B.I.A.--Municipal Bond Insurance Association
(b) Prerefunded issues are secured by escrowed cash and direct U.S.
guaranteed obligations.
(c) Standard & Poor's Rating.
(d) 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.
- --------------------------------------------------------------------------------
- ----- 34 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Statement of Assets and Liabilities (Unaudited) INTERMEDIATE SERIES
- --------------------------------------------------------------------------------
<TABLE>
<S>
<C>
Assets
October 31, 1995
Investments, at value (cost
$55,038,585)..................................................................
$ 57,453,217
Cash.........................................................................
............................. 65,374
Interest
receivable...................................................................
.................... 1,103,014
Receivable for Fund shares
sold...........................................................................
41,192
Deferred expenses and other
assets........................................................................
1,076
----------------
Total
assets.......................................................................
.................... 58,663,873
----------------
Liabilities
Dividends
payable......................................................................
................... 52,737
Accrued
expenses.....................................................................
..................... 41,842
Payable for Fund shares
reacquired...................................................................
..... 31,068
Management fee
payable......................................................................
.............. 22,484
Distribution fee
payable......................................................................
............ 20,770
----------------
Total
liabilities..................................................................
.................... 168,901
----------------
Net
Assets.......................................................................
......................... $ 58,494,972
----------------
----------------
Net assets were comprised of:
Shares of beneficial interest, at
par.................................................................. $
54,176
Paid-in capital in excess of
par.......................................................................
56,845,432
----------------
56,899,608
Accumulated net realized loss on
investments...........................................................
(819,268)
Net unrealized appreciation on
investments.............................................................
2,414,632
----------------
Net assets, October 31,
1995.........................................................................
..... $ 58,494,972
----------------
----------------
Class A:
Net asset value and redemption price per share
($12,354,658 / 1,144,534 shares of beneficial interest issued and
outstanding)...................... $10.79
Maximum sales charge (3% of offering
price)............................................................
.33
----------------
Maximum offering price to
public.......................................................................
$11.12
----------------
----------------
Class B:
Net asset value, offering price and redemption price per share
($45,951,810 / 4,255,616 shares of beneficial interest issued and
outstanding)...................... $10.80
----------------
----------------
Class C:
Net asset value, offering price and redemption price per share
($188,504 / 17,457 shares of beneficial interest issued and
outstanding)............................ $10.80
----------------
----------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 35 -----
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
INTERMEDIATE SERIES
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income October 31, 1995
<S> <C>
Income
Interest and discount earned............ $1,685,958
----------------
Expenses
Management fee, net of waiver of
$15,192.............................. 136,726
Distribution fee--Class A............... 6,007
Distribution fee--Class B............... 121,452
Distribution fee--Class C............... 649
Reports to shareholders................. 50,000
Custodian's fees and expenses........... 45,000
Registration Fees....................... 33,000
Transfer agent's fees and expenses...... 27,000
Trustees' fees and expenses............. 7,500
Legal fees and expenses................. 5,000
Audit fees and expenses................. 5,000
Miscellaneous........................... 3,691
----------------
Total expenses.......................... 441,025
----------------
Net investment income...................... 1,244,933
----------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain (loss) on:
Investment transactions................. 408,289
Financial futures contracts............. (297,775)
----------------
110,514
----------------
Net change in unrealized appreciation of:
Investments............................. 1,839,128
Financial futures contracts............. 40,845
----------------
1,879,973
----------------
Net gain on investments.................... 1,990,487
----------------
Net Increase in Net Assets
Resulting from Operations.................. $3,235,420
----------------
----------------
</TABLE>
PRUDENTIAL MUNICIPAL BOND FUND
INTERMEDIATE SERIES
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Increase (Decrease) Ended Year Ended
in Net Assets October 31, 1995 April 30, 1995
<S> <C> <C>
Operations
Net investment income............ $ 1,244,933 $ 2,979,505
Net realized gain (loss) on
investment transactions....... 110,514 (658,871)
Net change in unrealized
appreciation of investments... 1,879,973 28,699
----------- -----------
Net increase in net assets
resulting from operations..... 3,235,420 2,349,333
----------- -----------
Dividends and distributions (Note 1):
Dividends from net investment
income
Class A....................... (265,285) (368,417)
Class B....................... (976,384) (2,610,175)
Class C....................... (3,264) (913)
----------- -----------
(1,244,933) (2,979,505)
----------- -----------
Distributions in excess of
net investment income
Class A....................... -- (4,934)
Class B....................... -- (34,699)
Class C....................... -- (9)
----------- -----------
-- (39,642)
----------- -----------
Distributions from net realized
gains
Class A....................... -- (102,830)
Class B....................... -- (1,139,663)
Class C....................... -- --
----------- -----------
-- (1,242,493)
----------- -----------
Series share transactions (net of
share conversions) (Note 5):
Net proceeds from shares
issued........................ 2,694,285 13,939,416
Net asset value of shares issued
to shareholders in
reinvestment of dividends and
distributions................. 775,715 2,761,015
Cost of shares reacquired........ (8,678,992) (24,099,780)
----------- -----------
Net decrease in net assets from
Series share transactions..... (5,208,992) (7,399,349)
----------- -----------
Total decrease...................... (3,218,505) (9,311,656)
Net Assets
Beginning of period................. 61,713,477 71,025,133
----------- -----------
End of period....................... $58,494,972 $61,713,477
----------- -----------
----------- -----------
</TABLE>
- --------------------------------------------------------------------------------
- ----- 36 See Notes to Financial Statements.
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
Prudential Municipal Bond Fund (the ``Fund'') is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Fund was organized as an unincorporated business trust in Massachusetts on
November 3, 1986 and consists of three series: the High Yield Series, the
Insured Series and the Intermediate Series (formerly, the Modified Term Series).
Investment operations for Class A, Class B and Class C shares of each series
commenced on January 22, 1990, September 17, 1987 and August 1, 1994,
respectively.
The investment objectives of the series are as follows: (i) the objective of the
High Yield Series is to provide the maximum amount of income that is eligible
for exclusion from federal income taxes, (ii) the objective of the Insured and
Intermediate Series is to provide the maximum amount of income that is eligible
for exclusion from federal income taxes consistent with the preservation of
capital. The ability of issuers of debt securities held by the Fund to meet
their obligations may be affected by economic and political developments in a
specific state, region or industry.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
- ------------------------------------------------------------
Note 1. Accounting Policies
Securities Valuation: Municipal securities (including commitments to purchase
such securities on a ``when-issued'' basis) are valued on the basis of prices
provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. If market quotations are not readily available from such
pricing service, a security is valued at its fair value as determined under
procedures established by the Trustees.
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.
Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of debt securities at a set
price for delivery on a future date. Upon entering into a financial futures
contract, the Fund is required to pledge to the broker an amount of cash and/or
other assets equal to a certain percentage of the contract amount. This amount
is known as the ``initial margin''. Subsequent payments, known as ``variation
margin'', are made or received by the Fund each day, depending on the daily
fluctuations in the value of the underlying security. Such variation margin is
recorded for financial statement purposes on a daily basis as unrealized gain
or
loss.
The Fund invests in financial futures contracts solely for the purpose of
hedging its existing portfolio securities or securities the Fund intends to
purchase against fluctuations in value caused by changes in prevailing market
interest rates. Should interest rates move unexpectedly the Fund may not achieve
the anticipated benefits of the financial futures contracts and may realize a
loss. The use of futures transactions involves the risk of imperfect correlation
in movements in the price of futures contracts, interest rates and the
underlying hedged assets.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis. Premiums paid on purchases of portfolio securities are amortized
as adjustments to interest income. Net investment income, other than
distribution fees, and realized and unrealized gains or losses are allocated
daily to each class of shares based upon the relative proportion of net assets
of each class at the beginning of the day.
Federal Income Taxes: For federal income tax purposes, each series in the Fund
is treated as a separate tax paying entity. It is the intent of each series to
continue to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all net income to shareholders.
For this reason and because substantially all of the Fund's gross income
consists of tax-exempt interest, no federal income tax provision is required.
Dividends and Distributions: Dividends from net investment income are declared
daily and paid monthly. The Fund will distribute at least annually 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.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential Mutual Fund Management, Inc.
(``PMF''). Pursuant to this agreement, PMF has responsibility for all investment
advisory services and supervises the subadviser's performance of such services.
PMF 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. PMF 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.
- --------------------------------------------------------------------------------
37 -----
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
The management fee paid PMF is computed daily and payable monthly at an annual
rate of .50 of 1% of the average daily net assets of each series up to $1
billion and .45 of 1% of the average daily net asets of each series in excess
of
$1 billion. PMF has agreed to voluntarily waive a portion of each Series'
management fee, which amounted to $267,408, $160,079, and $15,192 for the High
Yield Series, Insured Series, and Intermediate Series, respectively for the six
months ended October 31, 1995. Such amounts represented .05 of 1% of average
daily net assets, as annualized, for each Series or $.003 per share.
The Fund has distribution agreements with Prudential Mutual Fund Distributors,
Inc. (``PMFD''), which acts as the distributor of the Class A shares of the
Fund, and with Prudential Securities Incorporated (``PSI''), which acts as the
distributor of the Class B and Class C shares of the Fund (collectively the
``Distributors''). The Fund compensates the Distributors 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.
Pursuant to the Class A, B and C Plans, the Fund compensates the Distributors
for distribution-related activities at an annual rate of up to .30 of 1%, .50
of
1% and 1%, of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .10 of 1%, .50 of 1% and .75
of
1% of the average daily net assets of the Class A, B and C shares, respectively,
for the six months ended October 31, 1995.
PMFD has advised the Fund that it received approximately $290,500 ($219,700-High
Yield Series; $64,800-Insured Series; $6,000-Intermediate Series) in front-end
sales charges resulting from sales of Class A shares during the six months ended
October 31, 1995. From these fees, PMFD paid such sales charges to dealers which
in turn paid commissions to salespersons and incurred other distribution costs.
PSI has advised the Fund that for the six months ended October 31, 1995, it
received approximately $1,493,800 ($881,100-High Yield Series; $536,100-Insured
Series; $76,600-Intermediate Series) in contingent deferred sales charges
imposed upon certain redemptions by Class B and C shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PIC and PMF are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During the six months ended October
31, 1995, the Fund incurred fees of approximately $356,000 ($195,000--High Yield
Series; $144,000--Insured Series; $17,000--Intermediate Series) for the services
of PMFS. As of October 31, 1995, approximately $57,000 ($31,000--High Yield
Series; $23,000--Insured Series; $3,000--Intermediate Series) of such fees were
due to PMFS. Transfer agent fees and expenses in the Statement of Operations
also include certain out of pocket expenses paid to non-affiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments,
for the six months ended October 31, 1995, were as follows:
<TABLE>
<CAPTION>
Series Purchases Sales
- -------------------------------- ------------ ------------
<S> <C> <C>
High Yield...................... $189,698,795 $213,173,697
Insured......................... 157,811,801 209,348,201
Intermediate.................... 7,708,232 12,197,764
</TABLE>
At October 31, 1995, the High Yield Series sold 400 financial futures contracts
on the Municipal Bond Index expiring in December, 1995. The value at disposition
of such contracts is $46,825,000. The value of such contracts on October 31,
1995 was $46,714,687, thereby resulting in an unrealized gain of $110,313.
The federal income tax basis of the Fund's investments, at October 31, 1995 was
$996,153,650-High Yield Series; $597,206,611-Insured Series; and
$55,038,585-Intermediate Series and, accordingly, net unrealized appreciation
of
investments for federal income tax purposes was as follows:
<TABLE>
<CAPTION>
Net unrealized Gross Gross
appreciation unrealized unrealized
Series (depreciation) appreciation depreciation
- -------------------- -------------- ----------- -----------
<S> <C> <C> <C>
High Yield.......... $ 41,853,890 $65,498,601 $23,644,711
Insured............. 38,728,138 39,835,265 1,107,127
Intermediate........ 2,414,632 2,644,435 229,803
</TABLE>
The High Yield Series has a net capital loss carryforward as of April 30, 1995
of approximately $7,385,000, of which $2,024,000 expires in 2002 and $5,361,000
expires in 2003. The Insured Series has a net capital loss carryforward of
$11,614,000, which expires in 2003. In addition, the High Yield Series, Insured
Series and Intermediate Series elected to treat net realized capital losses of
approximately $13,718,000, $3,357,000, and
- --------------------------------------------------------------------------------
- ----- 38
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
$971, 000, respectively incurred in the six month period ended April 30, 1995,
as having been incurred in the following fiscal year.
- ------------------------------------------------------------
Note 5. Capital
Each series offers Class A, Class B and Class C shares. Class A shares are sold
with a front-end sales charge of up to 3.0%. 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 contingent
deferred sales charge of 1% during the first year. Class B shares 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
qualified to purchase Class A shares at net asset value. Classes of shares have
equal rights as to earnings, assets and voting privileges except that each class
bears different distribution expenses and has exclusive voting rights with
respect to its distribution plan.
- ------------------------------------------------------------
Note 6. Dividends
On December 14, 1995, the Fund declared dividends from taxable ordinary income
to Class A, B and C shareholders of $0.0013 per share and $0.0034 per share for
the High Yield Series and Insured Series, respectively, payable on December 20,
1995 to shareholders of record on December 18, 1995.
The Fund has authorized an unlimited number of shares of beneficial interest of
each class at $.01 par value per share. Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
High Yield Series
Insured Series Intermediate Series
Class A
Class A Class A
Six Months Ended October 31, ----------------------------
- ---------------------------- --------------------------
1995 Shares Amount Shares
Amount Shares Amount
- -------------------------------- ----------- ------------- -----------
------------- ---------- ------------
<S> <C> <C> <C>
<C> <C> <C>
Shares issued................... 1,397,857 $ 15,165,750 1,342,025
$ 14,855,773 86,001 $ 909,845
Shares issued in reinvestment of
dividends.................... 205,980 2,238,024 120,885
1,331,886 15,462 164,900
Shares reacquired............... (1,414,204) (15,377,437)
(1,931,138) (21,380,454) (220,384) (2,344,167)
----------- ------------- -----------
------------- ---------- ------------
Net increase (decrease) in
shares outstanding before
conversion................... 189,633 2,026,337
(468,228) (5,192,795) (118,921) (1,269,422)
Shares issued upon conversion
from Class B................. 2,139,410 23,059,225 1,667,936
18,196,688 257,737 2,721,161
----------- ------------- -----------
------------- ---------- ------------
Net increase in shares
outstanding.................. 2,329,043 $ 25,085,562 1,199,708
$ 13,003,893 138,816 $ 1,451,739
----------- ------------- -----------
------------- ---------- ------------
----------- ------------- -----------
------------- ---------- ------------
<CAPTION>
Year Ended April 30, 1995
- --------------------------------
<S> <C> <C> <C>
<C> <C> <C>
Shares issued................... 1,722,172 $ 18,074,186 578,436
$ 6,194,773 386,371 $ 4,053,460
Shares issued in reinvestment of
dividends and
distributions................ 191,061 2,032,345 117,327
1,252,497 28,292 294,023
Shares reacquired............... (2,449,412) (25,729,145)
(1,161,102) (12,310,078) (528,916) (5,396,007)
----------- ------------- -----------
------------- ---------- ------------
Net decrease in shares
outstanding before
conversion................... (536,179) (5,622,614)
(465,339) (4,862,808) (114,253) (1,048,524)
Shares issued upon conversion
from Class B................. 6,231,397 65,928,185 4,601,490
49,190,670 575,671 5,946,716
----------- ------------- -----------
------------- ---------- ------------
Net increase in shares
outstanding.................. 5,695,218 $ 60,305,571 4,136,151
$ 44,327,862 461,418 $ 4,898,192
----------- ------------- -----------
------------- ---------- ------------
----------- ------------- -----------
------------- ---------- ------------
<CAPTION>
Class B
Class B Class B
Six Months Ended October 31, ----------------------------
- ---------------------------- --------------------------
1995 Shares Amount Shares
Amount Shares Amount
- -------------------------------- ----------- ------------- -----------
------------- ---------- ------------
<S> <C> <C> <C>
<C> <C> <C>
Shares issued................... 4,384,945 $ 47,744,101 1,308,317
$ 14,474,073 165,018 $ 1,764,440
Shares issued in reinvestment of
dividends.................... 1,192,195 12,948,944 671,249
7,400,291 56,980 607,514
Shares reacquired............... (7,143,154) (77,707,513)
(4,814,855) (53,143,929) (592,564) (6,327,355)
----------- ------------- -----------
------------- ---------- ------------
Net decrease in shares
outstanding before
conversion................... (1,566,014) (17,014,468)
(2,835,289) (31,269,565) (370,566) (3,955,401)
Shares reacquired upon
conversion into Class A...... (2,139,410) (23,059,225)
(1,666,408) (18,196,688) (257,596) (2,721,161)
----------- ------------- -----------
------------- ---------- ------------
Net decrease in shares
outstanding.................. (3,705,424) $ (40,073,693)
(4,501,697) $ (49,466,253) (628,162) $ (6,676,562)
----------- ------------- -----------
------------- ---------- ------------
----------- ------------- -----------
------------- ---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
39 -----
<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
Class B Class B
----------------------------
- ---------------------------- --------------------------
Year Ended April 30, 1995 Shares Amount Shares
Amount Shares Amount
- -------------------------------- ----------- ------------- -----------
------------- ---------- ------------
<S> <C> <C> <C>
<C> <C> <C>
Shares issued................... 10,730,386 $ 113,885,074 3,705,037
$ 39,356,337 933,582 $ 9,719,753
Shares issued in reinvestment of
dividends and
distributions................ 2,736,532 28,982,453 1,703,306
18,078,117 236,331 2,466,290
Shares reacquired............... (22,442,732) (236,469,222)
(17,535,273) (184,427,038) (1,817,018) (18,703,768)
----------- ------------- -----------
------------- ---------- ------------
Net decrease in shares
outstanding before
conversion................... (8,975,814) (93,601,695)
(12,126,930) (126,992,584) (647,105) (6,517,725)
Shares reacquired upon
conversion into Class A...... (6,231,397) (65,928,185)
(4,597,262) (49,190,670) (575,671) (5,946,716)
----------- ------------- -----------
------------- ---------- ------------
Net decrease in shares
outstanding.................. (15,207,211) $(159,529,880)
(16,724,192) $(176,183,254) (1,222,776) $(12,464,441)
----------- ------------- -----------
------------- ---------- ------------
----------- ------------- -----------
------------- ---------- ------------
<CAPTION>
Class C
Class C Class C
Six Months Ended October 31, ----------------------------
- ---------------------------- --------------------------
1995 Shares Amount Shares
Amount Shares Amount
- -------------------------------- ----------- ------------- -----------
------------- ---------- ------------
<S> <C> <C> <C>
<C> <C> <C>
Shares issued................... 241,021 $ 2,611,810 30,078
$ 331,453 1,850 $ 20,000
Shares issued in reinvestment of
dividends.................... 8,651 94,007 1,199
13,231 310 3,301
Shares reacquired............... (19,020) (206,721)
(2,302) (25,291) (692) (7,470)
----------- ------------- -----------
------------- ---------- ------------
Net increase in shares
outstanding.................. 230,652 $ 2,499,096 28,975
$ 319,393 1,468 $ 15,831
----------- ------------- -----------
------------- ---------- ------------
----------- ------------- -----------
------------- ---------- ------------
<CAPTION>
August 1, 1994* through April
30, 1995
- --------------------------------
<S> <C> <C> <C>
<C> <C> <C>
Shares issued................... 322,757 $ 3,444,961 48,655
$ 519,503 15,922 $ 166,203
Shares issued in reinvestment of
dividends and
distributions................ 4,207 44,397 631
6,707 67 702
Shares reacquired............... (27,756) (286,223)
(803) (8,610) -- (5)
----------- ------------- -----------
------------- ---------- ------------
Net increase in shares
outstanding.................. 299,208 $ 3,203,135 48,483
$ 517,600 15,989 $ 166,900
----------- ------------- -----------
------------- ---------- ------------
----------- ------------- -----------
------------- ---------- ------------
- ---------------
* Commencement of offering of
Class C shares.
</TABLE>
- --------------------------------------------------------------------------------
- ----- 40
<PAGE>
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Financial Highlights (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
<C> <C>
Six Months
Ended Years Ended
April 30,
October 31,
- --------------------------------------------------------
1995 1995 1994
1993 1992 1991
----------- -------- -------
- ------- ------- -------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.72 $ 10.74 $ 11.14 $
10.68 $ 10.45 $ 10.33
----------- -------- -------
- ------- ------- -------
Income from investment operations
Net investment income............. .37(c) .72(c) .72
.77 .77(c) .79(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .24 (.02) (.39)
.46 .23 .12
----------- -------- -------
- ------- ------- -------
Total from investment
operations.................. .61 .70 .33
1.23 1.00 .91
----------- -------- -------
- ------- ------- -------
Less distributions
Dividends from net investment
income......................... (.37) (.72) (.72)
(.77) (.77) (.79)
Distributions from capital
gains.......................... -- -- (.01)
-- -- --
----------- -------- -------
- ------- ------- -------
Total distributions............ (.37) (.72) (.73)
(.77) (.77) (.79)
----------- -------- -------
- ------- ------- -------
Net asset value, end of period.... $ 10.96 $ 10.72 $ 10.74 $
11.14 $ 10.68 $ 10.45
----------- -------- -------
- ------- ------- -------
----------- -------- -------
- ------- ------- -------
TOTAL RETURN(b):.................. 5.76% 6.90% 2.88%
11.90% 9.82% 9.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $143,612 $115,501 $54,491
$43,529 $24,725 $15,089
Average net assets (000).......... $134,149 $65,207 $52,982
$31,658 $19,702 $11,594
Ratios to average net assets:
Expenses, including
distribution fees........... 0.63%(a)(c) 0.69%(c) 0.69%
0.74% 0.65%(c) 0.60%(c)
Expenses, excluding
distribution fees........... 0.53%(a)(c) 0.59%(c) 0.59%
0.64% 0.55%(c) 0.50%(c)
Net investment income.......... 6.69%(a)(c) 6.83%(c) 6.42%
7.04% 7.25%(c) 7.62%(c)
Portfolio turnover rate........... 18% 39% 36%
27% 34% 29%
</TABLE>
- ---------------
(a) Annualized.
(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 reinvestment
of dividends and distributions. Total returns for periods of less
than a full year are not annualized.
(c) Net of expense subsidy, fee waivers and distribution fee deferrals.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 41 -----
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Financial Highlights (Unaudited) HIGH YIELD SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class
B
- -----------------------------------------------------------------------------
- -----
<S> <C> <C> <C>
<C> <C> <C>
Six Months
Ended Years
Ended April 30,
October 31,
- ------------------------------------------------------------------
1995 1995 1994
1993 1992 1991
----------- ---------- ----------
---------- -------- --------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.72 $ 10.74 $ 11.14
$ 10.68 $ 10.45 $ 10.34
----------- ---------- ----------
---------- -------- --------
Income from investment operations
Net investment income............. .35(c) .68(c) .68
.73 .73(c) .75(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .24 (.02) (.39)
.46 .23 .11
----------- ---------- ----------
---------- -------- --------
Total from investment
operations.................. .59 .66 .29
1.19 .96 .86
----------- ---------- ----------
---------- -------- --------
Less distributions
Dividends from net investment
income......................... (.35) (.68) (.68)
(.73) (.73) (.75)
Distributions from capital
gains.......................... -- -- (.01)
-- -- --
----------- ---------- ----------
---------- -------- --------
Total distributions............ (.35) (.68) (.69)
(.73) (.73) (.75)
----------- ---------- ----------
---------- -------- --------
Net asset value, end of period.... $ 10.96 $ 10.72 $ 10.74
$ 11.14 $ 10.68 $ 10.45
----------- ---------- ----------
---------- -------- --------
----------- ---------- ----------
---------- -------- --------
TOTAL RETURN(b):.................. 5.54% 6.37% 2.46%
11.47% 9.40% 8.59%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $915,163 $934,725 $1,099,640
$1,028,480 $803,838 $701,483
Average net assets (000).......... $925,107 $1,024,132 $1,132,653
$893,203 $759,779 $667,751
Ratios to average net assets:
Expenses, including
distribution fees........... 1.03%(a)(c) 1.09%(c) 1.09%
1.14% 1.05%(c) 1.00%(c)
Expenses, excluding
distribution fees........... 0.53%(a)(c) 0.59%(c) 0.58%
0.64% 0.55%(c) 0.50%(c)
Net investment income.......... 6.28%(a)(c) 6.37%(c) 6.02%
6.66% 6.85%(c) 7.22%(c)
Portfolio turnover rate........... 18% 39% 36%
27% 34% 29%
<CAPTION>
Class C
--------------------------
<S> <C> <C>
August 1,
Six Months 1994(d)
Ended Through
October 31, April 30,
1995 1995
----------- ----------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.72 $10.79
----------- -----
Income from investment operations
Net investment income............. .33(c) .49(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .24 (.07)
----------- -----
Total from investment
operations.................. .57 .42
----------- -----
Less distributions
Dividends from net investment
income......................... (.33) (.49)
Distributions from capital
gains.......................... -- --
----------- -----
Total distributions............ (.33) (.49)
----------- -----
Net asset value, end of period.... $ 10.96 $10.72
----------- -----
----------- -----
TOTAL RETURN(b):.................. 5.41% 3.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $5,808 $3,208
Average net assets (000).......... $4,562 $1,385
Ratios to average net assets:
Expenses, including
distribution fees........... 1.28%(a)(c) 1.34%(a)(c)
Expenses, excluding
distribution fees........... 0.53%(a)(c) 0.59%(a)(c)
Net investment income.......... 6.06%(a)(c) 6.34%(a)(c)
Portfolio turnover rate........... 18% 39%
</TABLE>
- ---------------
(a) Annualized.
(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 reinvestment
of dividends and distributions. Total returns for periods of less
than a full year are not annualized.
(c) Net of expense subsidy, fee waivers and distribution fee deferrals.
(d) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
- ----- 42 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Financial Highlights (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
<C> <C>
Six Months
Ended Years Ended
April 30,
October 31,
- -------------------------------------------------------
1995 1995 1994 1993
1992 1991
----------- ------- -------
- ------- ------- -------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.83 $ 10.71 $ 11.44 $
10.98 $ 10.76 $ 10.25
----------- ------- -------
- ------- ------- -------
Income from investment operations
Net investment income............. .29(c) .58(c) .58
.61 .66(c) .67(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .35 .12 (.43)
.73 .24 .54
----------- ------- -------
- ------- ------- -------
Total from investment
operations.................. .64 .70 .15
1.34 .90 1.21
----------- ------- -------
- ------- ------- -------
Less distributions
Dividends from net investment
income......................... (.29) (.58) (.58)
(.61) (.66) (.67)
Distributions from capital
gains.......................... -- -- (.30)
(.27) (.02) (.03)
----------- ------- -------
- ------- ------- -------
Total distributions............ (.29) (.58) (.88)
(.88) (.68) (.70)
----------- ------- -------
- ------- ------- -------
Net asset value, end of period.... $ 11.18 $ 10.83 $ 10.71 $
11.44 $ 10.98 $ 10.76
----------- ------- -------
- ------- ------- -------
----------- ------- -------
- ------- ------- -------
TOTAL RETURN(b):.................. 6.00% 6.73% 1.04%
12.68% 8.59% 11.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $91,703 $75,800 $30,669
$30,098 $19,177 $ 7,630
Average net assets (000).......... $87,849 $39,471 $32,309
$24,589 $12,731 $ 5,164
Ratios to average net assets:
Expenses, including
distribution fees........... 0.67%(a)(c) 0.74%(c) 0.71%
0.72% 0.62%(c) 0.61%(c)
Expenses, excluding
distribution fees........... 0.57%(a)(c) 0.64%(c) 0.61%
0.62% 0.52%(c) 0.51%(c)
Net investment income.......... 5.23%(a)(c) 5.45%(c) 5.09%
5.46% 6.06%(c) 6.38%(c)
Portfolio turnover rate........... 27% 64% 105%
85% 56% 51%
</TABLE>
- ---------------
(a) Annualized.
(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) Net of expense subsidy, fee waivers and distribution fee deferrals.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 43 -----
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Financial Highlights (Unaudited) INSURED SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
Class C
- ----------------------------------------------------------------------------
-----------
<S> <C> <C> <C> <C>
<C> <C> <C>
Six Months
Six Months
Ended Years
Ended April 30, Ended
October 31,
- ------------------------------------------------------------ October 31,
1995 1995 1994
1993 1992 1991 1995
----------- -------- --------
- -------- -------- -------- -----------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.84 $ 10.71 $ 11.44 $
10.99 $ 10.76 $ 10.25 $ 10.84
----------- -------- --------
- -------- -------- -------- -------
Income from investment operations
Net investment income............. .27(c) .54(c) .54
.56 .62(c) .63(c) .26(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .35 .13 (.43)
.72 .25 .54 .35
----------- -------- --------
- -------- -------- -------- -------
Total from investment
operations.................. .62 .67 .11
1.28 .87 1.17 .61
----------- -------- --------
- -------- -------- -------- -------
Less distributions
Dividends from net investment
income......................... (.27) (.54) (.54)
(.56) (.62) (.63) (.26)
Distributions from capital
gains.......................... -- -- (.30)
(.27) (.02) (.03) --
----------- -------- --------
- -------- -------- -------- -------
Total distributions............ (.27) (.54) (.84)
(.83) (.64) (.66) (.26)
----------- -------- --------
- -------- -------- -------- -------
Net asset value, end of period.... $ 11.19 $ 10.84 $ 10.71 $
11.44 $ 10.99 $ 10.76 $ 11.19
----------- -------- --------
- -------- -------- -------- -------
----------- -------- --------
- -------- -------- -------- -------
TOTAL RETURN(b):.................. 5.79% 6.40% 0.63%
12.14% 8.24% 11.43% 5.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $ 535,936 $567,648 $740,447
$770,060 $638,451 $578,412 $ 867
Average net assets (000).......... $ 548,300 $660,237 $807,794
$705,846 $609,516 $537,275 $ 686
Ratios to average net assets:
Expenses, including
distribution fees........... 1.07%(a)(c) 1.14%(c) 1.11%
1.12% 1.02%(c) 1.01%(c) 1.32%(a)(c)
Expenses, excluding
distribution fees........... 0.57%(a)(c) 0.64%(c) 0.61%
0.62% 0.52%(c) 0.51%(c) 0.57%(a)(c)
Net investment income.......... 4.83%(a)(c) 4.99%(c) 4.69%
5.06% 5.66%(c) 5.98%(c) 4.59%(a)(c)
Portfolio turnover rate........... 27% 64% 105%
85% 56% 51% 27%
<CAPTION>
<S> <C>
August 1,
1994(d)
Through
April 30,
1995
----------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $10.79
-----
Income from investment operations
Net investment income............. .39(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .05
-----
Total from investment
operations.................. .44
-----
Less distributions
Dividends from net investment
income......................... (.39)
Distributions from capital
gains.......................... --
-----
Total distributions............ (.39)
-----
Net asset value, end of period.... $10.84
-----
-----
TOTAL RETURN(b):.................. 4.03%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $ 525
Average net assets (000).......... $ 224
Ratios to average net assets:
Expenses, including
distribution fees........... 1.39%(a)(c)
Expenses, excluding
distribution fees........... 0.64%(a)(c)
Net investment income.......... 4.92%(a)(c)
Portfolio turnover rate........... 64%
</TABLE>
- ---------------
(a) Annualized.
(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) Net of expense subsidy, fee waivers and distribution fee deferrals.
(d) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
- ----- 44 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Financial Highlights (Unaudited) INTERMEDIATE SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
<C> <C>
Six Months
Ended Years Ended
April 30,
October 31,
- ---------------------------------------------------
1995 1995 1994 1993
1992 1991
----------- ------- ------ ------
------ ------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.45 $ 10.67 $11.08 $10.59
$10.48 $ 9.98
----------- ------- ------ ------
------ ------
Income from investment operations
Net investment income............. .24(c) .51(c) .53
.54(c) .57(c) .59(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .34 (.03) (.19) .60
.26 .50
----------- ------- ------ ------
------ ------
Total from investment
operations.................. .58 .48 .34 1.14
.83 1.09
----------- ------- ------ ------
------ ------
Less distributions
Dividends from net investment
income......................... (.24) (.51) (.53)
(.54) (.57) (.59)
Distributions in excess of net
investment income.............. -- (.01) --
- -- -- --
Distributions from capital
gains.......................... -- (.18) (.22)
(.11) (.15) --
----------- ------- ------ ------
------ ------
Total distributions............ (.24) (.70) (.75)
(.65) (.72) (.59)
----------- ------- ------ ------
------ ------
Net asset value, end of period.... $ 10.79 $ 10.45 $10.67 $11.08
$10.59 $10.48
----------- ------- ------ ------
------ ------
----------- ------- ------ ------
------ ------
TOTAL RETURN(b):.................. 5.60% 4.52% 2.83%
11.13% 8.14% 11.20%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $12,355 $10,507 $5,810 $3,594
$1,424 $ 397
Average net assets (000).......... $11,948 $ 7,742 $4,981 $1,883
$ 599 $ 305
Ratios to average net assets:
Expenses, including
distribution fees........... 1.13%(a)(c) 1.05%(c) 1.00%
1.06%(c) 1.06%(c) 0.92%(c)
Expenses, excluding
distribution fees........... 1.03%(a)(c) 0.95%(c) 0.90%
0.96%(c) 0.96%(c) 0.82%(c)
Net investment income.......... 4.42%(a)(c) 4.75%(c) 4.63%
5.09%(c) 5.41%(c) 5.92%(c)
Portfolio turnover rate........... 13% 30% 55%
22% 78% 128%
</TABLE>
- ---------------
(a) Annualized.
(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 reinvestment of
dividends and distributions. Total returns for periods of less than
a full year are not annualized.
(c) Net of expense subsidy, fee waivers and distribution fee deferrals.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 45 -----
<PAGE>
PRUDENTIAL MUNICIPAL BOND FUND
Financial Highlights (Unaudited) INTERMEDIATE SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
Class C
- -----------------------------------------------------------------------
- -----------
<S> <C> <C> <C> <C>
<C> <C> <C>
Six Months
Six Months
Ended Years Ended
April 30, Ended
October 31,
- ------------------------------------------------------- October 31,
1995 1995 1994 1993
1992 1991 1995
----------- ------- -------
- ------- ------- ------- -----------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.45 $ 10.68 $ 11.09 $
10.60 $ 10.48 $ 9.98 $ 10.45
----------- ------- -------
- ------- ------- ------- -------
Income from investment operations
Net investment income............. .22(c) .45(c) .48
.50(c) .53(c) .56(c) .20(c)
Net realized and unrealized gain
(loss) on investment
transactions................... .35 (.04) (.19)
.60 .27 .50 .35
----------- ------- -------
- ------- ------- ------- -------
Total from investment
operations.................. .57 .41 .29
1.10 .80 1.06 .55
----------- ------- -------
- ------- ------- ------- -------
Less distributions
Dividends from net investment
income......................... (.22) (.45) (.48)
(.50) (.53) (.56) (.20)
Distributions in excess of net
investment income.............. -- (.01) --
-- -- -- --
Distributions from capital
gains.......................... -- (.18) (.22)
(.11) (.15) -- --
----------- ------- -------
- ------- ------- ------- -------
Total distributions............ (.22) (.64) (.70)
(.61) (.68) (.56) (.20)
----------- ------- -------
- ------- ------- ------- -------
Net asset value, end of period.... $10.80 $10.45 $10.68
$11.09 $10.60 $10.48 $10.80
----------- ------- -------
- ------- ------- ------- -------
----------- ------- -------
- ------- ------- ------- -------
TOTAL RETURN(b):.................. 5.49% 3.99% 2.43%
10.62% 7.68% 10.82% 5.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $45,952 $51,039 $65,215
$57,049 $45,440 $45,401 $ 189
Average net assets (000).......... $48,317 $60,174 $59,811
$50,154 $44,439 $46,521 $ 172
Ratios to average net assets:
Expenses, including
distribution fees........... 1.53(a)(c) 1.45%(c) 1.40%
1.46%(c) 1.46%(c) 1.32%(c) 1.78(a)(c)
Expenses, excluding
distribution fees........... 1.03(a)(c) 0.95%(c) 0.90%
0.96%(c) 0.96%(c) 0.82%(c) 1.03(a)(c)
Net investment income.......... 4.02(a)(c) 4.35%(c) 4.23%
4.69%(c) 5.01%(c) 5.52%(c) 3.77(a)(c)
Portfolio turnover rate........... 13% 30% 55%
22% 78% 128% 13%
<CAPTION>
<S> <C>
August 1,
1994(d)
Through
April 30,
1995
----------
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period......................... $10.54
-----
Income from investment operations
Net investment income............. .35(c)
Net realized and unrealized gain
(loss) on investment
transactions................... (.08)
-----
Total from investment
operations.................. .27
-----
Less distributions
Dividends from net investment
income......................... (.35)
Distributions in excess of net
investment income.............. (.01)
Distributions from capital
gains.......................... --
-----
Total distributions............ (.36)
-----
Net asset value, end of period.... $10.45
-----
-----
TOTAL RETURN(b):.................. 2.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $ 167
Average net assets (000).......... $ 28
Ratios to average net assets:
Expenses, including
distribution fees........... 1.81%(a)(c)
Expenses, excluding
distribution fees........... 1.06%(a)(c)
Net investment income.......... 4.34%(a)(c)
Portfolio turnover rate........... 30%
</TABLE>
- ---------------
(a) Annualized.
(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 reinvestment
of dividends and distributions. Total returns for periods of less
than a full year are not annualized.
(c) Net of expense subsidy, fee waivers and distribution fee deferrals.
(d) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
- ----- 46 See Notes to Financial Statements.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
Change Your Mind.
You can exchange your shares in most Prudential Mutual Funds
for shares in most other Prudential Mutual Funds, without charges. This may be
most helpful if your investment needs change.
Reinvest Dividends Free Of Charge.
Reinvest your dividends and/or capital gains distributions automatically -
without charge.
Invest For Retirement.
There is no minimum investment for an IRA. Plus, you
defer taxes on your investment earnings by investing in an IRA.
If you'd like, you can contribute up to $2,000 a year in an IRA. If you are
married, you and your spouse (if not working outside the home) can contribute
up to $2,250 a year. (Withdrawals are taxed as ordinary income and may be
subject to a 10% penalty prior to age 59 1/2.)
Change Your Job.
You can take your pension with you. Use a rollover IRA to
manage your company-sponsored retirement plan while retaining the special
tax-deferred advantages.
Invest In Your Children.
There's no fee to open a custodial account for a child's education or other
needs.
Take Income.
Would you like to receive monthly or quarterly checks in any amount
from your fund account? Just let us know. We'll take care of it. Of course,
there are minimum amounts. And shares redeemed may be subject to tax, and
Class B and C shares may be subject to contingent deferred sales charges.
We'll gladly answer your questions.
Keep Informed.
We want to keep you up-to-date. Of course, you receive account activity
statements every quarter. But you also receive annual and semi-annual fund
reports, as well as other important updates on events that affect your
investments, including tax information.
This material is only authorized for distribution when preceded or accompanied
by a current prospectus. Read the prospectus carefully before you invest or
send money.
<PAGE>
Getting The Most From Your
Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive financial advice
through a Prudential Securities financial advisor or Prudential/Pruco Securities
registered representative. Your advisor or representative can provide you with
the following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help you match the
reward you seek with the risk you can tolerate. And risk can be difficult to
gauge -sometimes even the simplest investments bear surprising risks. The
educated investor knows that markets seldom move in just one direction -
there are times when a market sector or asset class will lose value or provide
little in the way of total return. Managing your own expectations is easier with
help from someone who understands the markets and who knows you!
Keeping Up With The Joneses.
A financial advisor or registered representative can help you wade through the
numerous mutual funds available to find the ones that fit your own individual
investment profile and risk tolerance. While the newspapers and popular
magazines are full of advice about investing, they are aimed at generic groups
of people or representative individuals, not at you personally. Your financial
advisor or registered representative will review your investment objectives with
you. This means you can make financial decisions based on the assets and
liabilities in your current portfolio and your risk tolerance - not just based
on the current investment fad.
Buy Low, Sell High.
Buying at the top of a market cycle and selling at the bottom are among the
most common investor mistakes. But sometimes it's difficult to hold on to an
investment when it's losing value every month. Your financial advisor or
registered representative can answer questions when you're confused or worried
about your investment, and remind you that you're investing for the long haul.
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852
Internet Address:
http:\\www.prudential.com
Directors
Edward D. Beach
Donald D. Lennox
Douglas H. McCorkindale
Thomas T. Mooney
Richard A. Redeker
Louis A. Weil, III
Officers
Richard A. Redeker, President
Robert F. Gunia, Vice President
Susan C. Cote', Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The accompanying financial statements as of October 31, 1995 were not
audited and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds BULK RATE
One Seaport Plaza U.S. POSTAGE
New York, NY 10292 PAID
Toll Free (800) 225-1852 Permit 6807
New York, NY
74435L103 74435L301 74435L509 MF133E2
74435L202 74435L400 74435L608 Cat. #44416FI
74435L707 74435L806 74435L889
