<PAGE>
ANNUAL REPORT APRIL 30, 2000
Prudential
Municipal Bond Fund/High Income
Series & Insured Series
Fund Type Municipal Bond
Objective High Income Series: Maximum amount of
income that is eligible for exclusion from federal
income taxes
Insured Series: Maximum amount of income that
is eligible for exclusion from federal income taxes
consistent with the preservation of capital
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded
or accompanied by a current prospectus.
The views expressed in this report and information
about the Fund's portfolio holdings
are for the period covered by this report and
are subject to change thereafter.
(LOGO)
<PAGE>
Investment Goals and Style
The Prudential Municipal Bond Fund--High Income
Series seeks the maximum amount of income that is
eligible for exclusion from federal income taxes by
investing primarily in noninvestment-grade
municipal bonds rated single-B or better by
recognized credit-rating agencies such as Standard
& Poor's Ratings Services (S&P) or Moody's
Investors Service (Moody's). We also invest in
unrated bonds that our analysts believe are of
comparable quality. There can be no assurance that
the Series will achieve its investment objective.
Portfolio Composition
Expressed as a percentage of total investments
as of 4/30/00
70.8% Revenue Bonds
13.5 General Obligation Bonds
11.2 Prerefunded
4.5 Miscellaneous
Credit Quality
Expressed as a percentage of total investments
as of 4/30/00
4.1% AAA
4.1 AA
3.1 A
12.2 BBB
6.0 BB
1.5 B
0.3 CCC
15.2 Insured
53.5 Not Rated
Ten Largest Issuers
Expressed as a percentage of
net assets as of 4/30/00
2.4% Memphis Center City
Revenue Fin. Corp.
1.7 Minnesota Agricultural
& Economic Development
1.4 New Jersey Economic
Development Authority Revenue
1.3 Harris County,
Texas
1.3 Martin County Ind. Dev.
Authority Revenue
1.2 Valdez Alaska Marine
Terminal Revenue
1.2 Iowa St. Fin. Authority
Healthcare Facs. Revenue
1.2 Lake Creek Affordable
Housing Corp. Multifamily
1.1 Mercer County,
North Dakota
1.1 Los Angeles Regional
Apartments Improvement Corp.
<PAGE>
Build on the Rock
Prudential Municipal Bond Fund High Income Series
Performance at a Glance
Cumulative Total Returns1 As of 4/30/00
One Five Ten Since
Year Years Years Inception2
Class A -3.31% 29.43% (29.18) 90.92% (90.10) 90.09% (89.16)
Class B -3.55 27.25 (27.00) 83.61 (82.89) 135.32 (132.79)
Class C -3.79 25.68 (25.43) N/A 30.60 (30.33)
Class Z -3.07 N/A N/A 17.93 (17.69)
Lipper High
Yield Muni
Debt Fund Avg.3 -4.47 26.98 85.09 ***
Average Annual Total Returns1 As of 4/30/00
One Five Ten Since
Year Years Years Inception2
Class A -6.21% 4.66% (4.61) 6.36% (6.31) 6.14% (6.09)
Class B -8.55 4.77 (4.73) 6.27 (6.22) 7.02 (6.93)
Class C -5.75 4.47 (4.43) N/A 4.57 (4.53)
Class Z -3.07 N/A N/A 4.66 (4.60)
<TABLE>
Distributions and Yields As of 4/30/00
<CAPTION>
Total Distributions 30-Day Taxable Equivalent Yield4 at tax rates of
Paid for 12 Months SEC Yield 36% 39.6%
<S> <C> <C> <C> <C>
Class A $0.63 5.56% 8.69% 9.21%
Class B $0.60 5.48 8.56 9.07
Class C $0.57 5.18 8.09 8.58
Class Z $0.65 5.99 9.36 9.92
</TABLE>
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost.
1 Source: Prudential Investments Fund Management
LLC and Lipper Inc. The cumulative total returns do
not take into account sales charges. The average
annual total returns do take into account
applicable sales charges. The Series charges a
maximum front-end sales charge of 3% for Class A
shares. Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%,
3%, 2%, 1%, and 1% for six years. Class B shares
will automatically convert to Class A shares, on a
quarterly basis, approximately seven years after
purchase. Class C shares are subject to a front-end
sales charge of 1% and a CDSC of 1% for 18 months.
Class Z shares are not subject to a sales charge or
distribution and service (12b-1) fees. Without
waiver of management fees and/or expense
subsidization, the Series' cumulative and average
annual total returns would have been lower, as
indicated in parentheses ( ).
2 Inception dates: Class A, 1/22/90; Class B,
9/17/87; Class C, 8/1/94; Class Z, 9/16/96.
3 Lipper average returns are for all funds in each
share class for the one-, five-, and ten-year
periods in the High Yield Municipal Debt Fund
category. The Lipper average is unmanaged. High
Yield Municipal Debt funds invest at least 50% of
their assets in lower-rated municipal debt issues.
4 Some investors may be subject to the federal
alternative minimum tax and/or state and local
taxes.
Taxable equivalent yields reflect federal taxes
only.
*** Lipper Since Inception returns are 85.29% for
Class A, 137.06% for Class B, 32.04% for Class C,
and 14.89% for Class Z, based on all funds in each
share class.
1
<PAGE>
(LOGO) June 15, 2000
Dear Shareholder,
Prudential Municipal Bond Fund offers two
investment choices emphasizing opposite ends of the
credit-quality spectrum in the tax-exempt
securities market. The Insured Series invests in
highly rated debt securities, while the High Income
Series focuses mainly on riskier bonds that provide
sizable yields. However, both Series had negative
returns for their fiscal year that ended on April
30, 2000, as did their respective benchmark Lipper
Averages. Municipal bond prices declined generally
because investors required higher yields as the
Federal Reserve repeatedly increased short-term
interest rates.
Staying the course amid market ups and downs
Many investors consider selling a poorly performing
asset class in favor of investments that are
gaining in value. That may not be the best move.
Generally, changes in asset allocation should
reflect basic shifts in an investor's time horizon
and tolerance for risk--not recent fluctuations in
the performance of financial markets. One strategy
may be to own a diversified portfolio of mutual
funds that invests in stocks, bonds, and money
market instruments because this approach may help
to reduce risk. However, deciding on the correct
level of diversification is not easy. In these
volatile times, we recommend consulting your
financial advisor to develop your asset allocation
goals.
The following report examines recent developments
in the municipal securities market and explains how
the Series were positioned.
Sincerely,
John R. Strangfeld, President
Prudential Municipal Bond Fund/High Income Series
Prudential Municipal Bond Fund/Insured Series
2
<PAGE>
Prudential Municipal Bond Fund High Income Series
Annual Report April 30, 2000
Investment Adviser's Report
Municipal bonds (munis) remained mired in a slump
for most of our fiscal year that ended on April 30,
2000. Changes in U.S. monetary policy by the
Federal Reserve and sales of munis by investors who
wanted to realize tax losses weighed on prices of
tax-exempt bonds. However, prices of municipal debt
securities partially regained lost ground in 2000
as they rallied in sympathy with U.S. Treasuries.
Maintaining a relatively short duration helped the Series
Given the bearish trend that persisted for many
months, we initially kept the Series' duration
shorter than the average of its competitive
universe. (Duration measures how much a portfolio's
bonds will change in price for a given change in
interest rates. It is expressed in years.) Adopting
this strategy made our bond portfolio less
sensitive to the rising-interest-rate
environment than many of its peers. As a result of
its shorter duration, without considering sales
charges, the Series' share classes outperformed
their benchmark Lipper Average, which does not take
sales charges into account.
Investors required higher yields (and lower prices)
on fixed-income securities, including municipal
bonds, as the Fed raised short-term interest rates
in June, August, and November 1999 to slow U.S.
economic growth and fend off
higher inflation. More selling pressure emerged in
late December 1999. As interest rates climbed and
the prices of bonds dropped, investors realized
capital losses by selling bonds or bond funds. Many
investors reinvest in other bonds or bond funds
with a lower cost basis for tax purposes (due to
the higher level of yields). This strategy is called
"tax loss swapping." In the municipal bond market,
the capital losses often reduce taxes, while the
higher yields on the other bonds or bond funds are
generally tax exempt.
3
<PAGE>
Prudential Municipal Bond Fund High Income Series
Annual Report April 30, 2000
A light exposure to hospital bonds, but a sizable
position in investment-grade bonds
As the tax-exempt market sold off, lower-quality
munis were among the hardest hit, which was a
reversal of an earlier trend. Demand for these
securities faded because there was no longer any
need to sacrifice credit quality in order to obtain
an attractive yield. Many better-quality munis with
long-term maturities were offering 6% yields, which
are highly sought after because investors in the
top tax bracket would have to earn 10% on a taxable
bond to match this return.
Many hospital bonds were sold as the healthcare
sector continued to adjust to relatively new
Medicare and HMO legislation. Additionally,
increased competition is forcing restructuring in
healthcare and hospital systems. For 11 months of
our fiscal year, hospital bonds accounted for less
than 6% of the Series' total investments.
Maintaining a light position in hospital bonds and
a considerable exposure to investment-grade debt
securities helped the Series' share classes,
without considering sales charges, outperform their
benchmark Lipper Average, which does not take sales
charges into account.
Sell-off in munis created good buying opportunities
Prices of hospital bonds declined so sharply that
we believed certain of these securities offered
good value. Therefore, we selectively bought
investment-grade bonds of hospitals such as
Hackensack Medical Center in New Jersey, University
of Maryland Medical Center, and Fairview Hospital
in Minnesota. We believe these medical
establishments are favorably positioned to thrive
in the current competitive environment. Our
purchases increased hospital bonds to 7% of the
Series' total investments as of April 30, 2000 from
4% a month earlier, and helped to lengthen the
Series' duration to 7.5 years from 7.1 years.
Employing this strategy enhanced performance in
2000, because it boosted the Series' yield, and the
longer duration enabled the Series' net asset value
to rise as bond yields fell and bond prices
climbed.
4
<PAGE>
www.prudential.com (800) 225-1852
Improvement in the prices of munis was sparked by a
powerful rally in the Treasury market, which
occurred because of two key developments. First,
the U.S. Treasury Department announced it would
issue fewer longer-term securities because of the
growing federal budget surplus and thus, a reduced
need to sell new debt. Second, it also started a
program to buy back $30
billion of older, mostly longer-term Treasuries by
the end of 2000. The buyback amount is a small
portion of the more than $3.3 trillion in publicly
traded U.S. government debt. Nevertheless, the
prospect of a declining
supply of longer-term Treasuries set off a stampede
to buy them. Treasuries (and consequently munis)
rallied even though the Fed hiked short-term rates
in February and March 2000. The potential
supply/demand imbalances and the belief that the
Fed's repeated rate hikes would keep inflation in
check were viewed as positive for bonds.
Looking Ahead
Shortly after our fiscal year ended, the Fed
engineered another short-term rate hike in May
2000. The Fed's efforts to tighten monetary policy
have already begun to slow U.S. economic growth in
2000 from its 7.3% annual pace in the fourth
quarter of 1999. Meanwhile, the still powerful U.S.
economic expansion has improved the credit quality
of many state and local governments and reduced
their borrowing needs, allowing them to issue fewer
bonds. With the declining supply, and if investor
demand remains strong, the tax-exempt bond market
should perform better, on an after-tax basis, than
other U.S. fixed-income markets in 2000.
On the other hand, if U.S. economic growth slowed
dramatically, the credit quality of some lower-
rated municipal bonds could suffer. Therefore, we
plan to selectively increase the Series' exposure
to sectors that we believe offer both good value
and solid quality, such as housing and waste-to-
energy bonds. Housing bonds are attractively priced
relative to certain sectors of the municipal
securities market. Waste-to-energy bonds remain
comparatively cheap even though industry
fundamentals have improved.
5
<PAGE>
Prudential Municipal Bond Fund Insured Series
Performance at a Glance
Investment Goals and Style
The Prudential Municipal Bond Fund--Insured Series
seeks the maximum amount of income that is eligible
for exclusion from federal income taxes consistent
with the preservation of capital. The Insured
Series invests primarily in AAA-rated municipal
obligations or in municipal obligations whose
timely coupon and principal payments (but not
market value) are insured by a municipal bond
insurance company rated AAA/Aaa by Standard &
Poor's Ratings Services (S&P), Moody's Investors
Service (Moody's), or other nationally recognized
credit-rating agencies. The Series may also invest
in U.S. government-backed municipal obligations,
and up to 5% of the Series' total assets can be
held in municipal obligations rated A/A or Aa/AA by
Moody's or S&P. There can be no assurance that the
Series will achieve its investment objective.
Our bonds are primarily insured by MBIA Insurance
Corp., AMBAC Indemnity Corp., Financial Guaranty
Insurance Co., and Financial Security Assurance
Inc.
Portfolio Composition
Expressed as a percentage of total investments
as of 4/30/00
65.9% Revenue Bonds
21.9 General Obligation Bonds
8.7 Prerefunded
2.2 Miscellaneous
1.3 Cash Equivalents
Credit Quality
Expressed as a percentage of total investments
as of 4/30/00
8.8% AAA
1.6 AA
88.4 Insured
1.2 Cash Equivalents
Ten Largest Issuers
Expressed as a percentage of
net assets as of 4/30/00
2.7% Houston Water & Sewer
Systems Revenue
2.4 Hawaii St. Dept.
Bdg. & Fin. Spec. Purpose
2.4 Port Auth. New York
& New Jersey
2.2 Jefferson County
Swr. Rev. Wste.
2.1 Washington St. Public
Power Supply Systems
1.9 District of Columbia Ref.
1.8 San Diego County Water
Authority Water Revenue
1.8 Brevard Health Facilities
Authority Revenue
1.8 New Jersey Economic
Development Authority
1.7 South Dakota Housing
Development Authority
6
<PAGE>
www.prudential.com (800) 225-1852
Annual Report April 30, 2000
Cumulative Total Returns1 As of 4/30/00
One Five Ten Since
Year Years Years Inception2
Class A -2.38% 27.65% (27.40) 82.76% (87.48) 87.04% (85.60)
Class B -2.62 25.37 (25.13) 81.54 (80.66) 125.33 (118.62)
Class C -2.86 23.82 (23.58) N/A 28.81 (28.56)
Class Z -2.13 N/A N/A 17.11 (17.00)
Lipper Insured
Muni Debt
Fund Avg.3 -3.12 25.59 84.98 ***
Average Annual Total Returns1 As of 4/30/00
One Five Ten Since
Year Years Years Inception2
Class A -5.31% 4.37% (4.33) 6.23% (6.16) 5.97% (5.89)
Class B -7.62 4.46 (4.42) 6.14 (6.09) 6.65 (6.39)
Class C -4.83 4.16 (4.12) N/A 4.32 (4.29)
Class Z -2.13 N/A N/A 4.46 (4.43)
<TABLE>
Distributions and Yields As of 4/30/00
<CAPTION>
Total Distributions 30-Day Taxable Equivalent Yield4 at tax rates of
Paid for 12 Months SEC Yield 36% 39.6%
<S> <C> <C> <C>
Class A $0.51 4.32% 6.75% 7.15%
Class B $0.48 4.25 6.64 7.04
Class C $0.46 3.95 6.17 6.54
Class Z $0.54 4.75 7.42 7.86
</TABLE>
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost.
1 Source: Prudential Investments Fund Management
LLC and Lipper Inc. The cumulative total returns do
not take into account sales charges. The average
annual total returns do take into account
applicable sales charges. The Series charges a
maximum front-end sales charge of 3% for Class A
shares.
Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%,
3%, 2%, 1%, and 1% for six years. Class B shares
will automatically convert to Class A shares, on a
quarterly basis, approximately seven years after
purchase. Class C shares are subject to a front-end
sales charge of 1% and a CDSC of 1% for 18 months.
Class Z shares are not subject to a sales charge or
distribution and service (12b-1) fees. Without
waiver of management fees and/or expense
subsidization, the Series' cumulative and average
annual total returns would have been lower, as
indicated in parentheses ( ).
2 Inception dates: Class A, 1/22/90; Class B,
9/17/87; Class C, 8/1/94; Class Z, 9/16/96.
3 Lipper average returns are for all funds in each
share class for the one-, five-, and ten-year
periods in the Insured Municipal Debt Fund
category. The Lipper average is unmanaged. Insured
Municipal Debt funds invest at least 65% of their
assets in municipal debt issues insured as to
timely payment.
4 Some investors may be subject to the federal
alternative minimum tax and/or state and local
taxes. Taxable equivalent yields reflect federal
taxes only.
*** Lipper Since Inception returns are 84.89% for
Class A, 136.33% for Class B, 31.05% for Class C,
and 13.88% for Class Z, based on all funds in each
share class.
7
<PAGE>
Prudential Municipal Bond Fund Insured Series
Annual Report April 30, 2000
Investment Adviser's Report
Municipal bonds (munis) that are insured and rated
AAA offer investors safety of principal and
interest payments, but these high-quality munis can
still lose value when rising interest rates drive
bond prices lower. That is what happened for most
of our fiscal year that ended on April 30, 2000.
Prices of municipal securities declined as the
Federal Reserve repeatedly increased short-term
rates, and some investors sold munis in order to
realize tax losses. However, prices of munis staged
a partial recovery in 2000, pulled higher by a
rally in U.S. Treasury securities.
We lessened the impact of "market-discount
taxation"
Under these challenging market conditions, we sold
some of the Series' long-term munis before they
became subject to ordinary income taxes for
investors who might want to purchase them. Here is
how it works: When yields climb beyond a certain
point for every municipal bond, the market discount
on that bond may become subject to ordinary income
taxes for new buyers. This lowers the value of the
bond because new buyers would want to purchase the
bond cheaply enough to compensate for the greater
tax liability.
Because we sold long-term munis and bought
securities maturing in 10 to 15 years, the Series'
duration remained shorter than the average of its
competitive universe for most of our fiscal year.
(Duration measures how much a portfolio's bonds
will change in price for a given change in interest
rates. It is expressed in years.) Utilizing this
defensive approach lessened our bond portfolio's
sensitivity to the higher-interest-rate
environment. As a result, the Series' share
classes, without considering sales charges,
outperformed their benchmark Lipper Average, which
does not take sales charges into account.
Investors pushed yields on municipal securities
higher (and their prices lower) as the Fed raised
short-term interest rates in June, August, and
November 1999 to slow U.S. economic growth and
avoid higher inflation.
8
<PAGE>
www.prudential.com (800) 225-1852
More selling pressure emerged in late December
1999. As interest rates climbed, investors realized
capital losses by selling bonds or bond funds. Many
investors reinvest in other bonds or bond funds
with a lower cost basis for tax purposes (due to
the higher level of yields). This strategy is
called "tax loss swapping." In the municipal bond
market, the capital losses often reduce taxes,
while the higher yields on the other bonds or bond
funds are generally tax exempt.
Our strategy shifted as prices of munis improved
After the sharp sell-off in 1999, prices of munis
began to rebound during 2000 in conjunction with
the rally in Treasuries. The federal government's
growing budget surplus has cut the government's
need to borrow money. Therefore, it announced it
would issue fewer Treasuries and buy back up to $30
billion of older, mostly longer-term Treasuries.
The buyback amount is a small portion of the more
than $3.3 trillion in publicly traded U.S.
government debt. Nevertheless, the prospect of a
declining supply of longer-term Treasuries set off
a stampede to buy them. Treasuries (and
consequently munis) rallied even though the Fed
hiked short-term rates in February and March 2000.
The potential supply/demand imbalances and the
belief that the Fed's repeated rate hikes would
keep inflation in check were viewed as positive for
bonds.
Realizing that conditions in the municipal
securities market were improving in 2000, we began
to buy longer-term munis and sell bonds maturing in
10 to 15 years. This change in our investment
strategy made sense because prices of longer-term
munis stood to gain the most in 2000 since they had
suffered the sharpest declines. Concern that these
municipal securities would fall prey to "market-
discount taxation" lessened as bond yields fell
(and their prices rose). Meanwhile, we were able to
sell some of our 10- to 15-year munis at attractive
levels because these intermediate maturities are
frequently bought by high-net-worth individuals
whose demand for them increased amid the high level
of interest rates. Our shift toward longer-term
municipal securities lengthened the Series'
duration.
9
<PAGE>
Prudential Municipal Bond Fund Insured Series
Annual Report April 30, 2000
Looking Ahead
Shortly after our fiscal year ended, the Fed
engineered another short-term rate hike in May
2000. The Fed's efforts to tighten monetary policy
have already begun to slow U.S. economic growth in
2000 from its 7.30% annual pace in the fourth
quarter of 1999. Meanwhile, the still powerful U.S.
economic expansion has improved the credit quality
of many state and local governments and reduced
their borrowing needs, allowing them to issue fewer
bonds. With the declining supply, if investor
demand remains strong, the tax-exempt bond market
should perform better, on an after-tax basis, than
other U.S. fixed-income markets in 2000.
We plan on continuing to increase the Series'
exposure to long-term municipal bonds while cutting
back on munis maturing in 10 years. Long-term
municipal bonds continue to offer attractive yields
relative to shorter-term munis. However, we expect
that their yields will continue to fall (and their
prices rise) in sympathy with a similar trend in
long-term Treasuries.
Prudential Municipal Bond Fund Management Team
10
<PAGE>
Prudential Municipal Bond Fund
Financial
Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 98.7%
----------------------------------------------------------------------------------------
Alaska 1.2%
Valdez Alaska Marine Terminal
Rev. Aa2 5.85% 8/01/25 $ 12,500 $ 11,959,250
----------------------------------------------------------------------------------------
Arizona 2.2%
Coconino Cnty. Pol. Ctrl. Corp.
Rev.
Tucson Elec. Pwr., Navajo A,
A.M.T. Ba3 7.125 10/01/32 5,000 4,903,000
Tucson Elec. Pwr., Navajo B Ba3 7.00 10/01/32 1,700 1,676,302
Pima Cnty. Ind. Dev. Auth.,
Multifam. Mtge. Rev., La Cholla
Proj., A.M.T. NR 8.50 7/01/20 9,450 10,152,513
Tuscon Elec. Pwr. Co., Ser. A,
A.M.T. Ba3 6.10 9/01/25 2,000 1,745,100
Tuscon Elec. Pwr. Co., Ser. B,
A.M.T. Ba3 6.00 9/01/29 4,250 3,723,042
--------------
22,199,957
----------------------------------------------------------------------------------------
Arkansas 1.1%
Northwest Arkansas Reg'l. Arpt.
Auth.
Rev., A.M.T. NR 7.00 2/01/10 3,000 3,001,650
Rev., A.M.T. NR 7.625 2/01/27 8,400 8,486,184
--------------
11,487,834
----------------------------------------------------------------------------------------
California 9.0%
Abag Fin. Auth. For Nonprofit
Corps. Ref. Amer. Baptist
Homes., Ser. A BBB(b) 6.20 10/01/27 3,200 2,824,384
Corona Ctfs. of Part., Vista
Hosp. Sys. Inc., Ser. C NR 6.45 7/01/11 10,000 9,043,400
Delano Ctfs. of Part., Reg'l.
Med. Ctr., Ser. A AAA(b) 9.25 1/01/22 6,530(c) 7,357,678
Foothill / Eastern Transp.
Corridor Agcy, Toll Rd. Rev. Baa3 Zero 1/15/28 11,700 5,985,252
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lincoln Impvt. Bond Act 1915,
Pub. Fin.Auth.,Twelve Bridges NR 6.20% 9/02/25 $ 3,975 $ 3,757,766
Long Beach Redev. Agcy. Hsg.,
Multifam. Hsg. Rev., Pacific
Court Apts. NR Zero 9/01/23 6,195(e) 3,840,900
Multifam. Hsg. Rev., Pacific
Court Apts., Issue B NR Zero 9/01/13 3,805(e) 2,359,100
Los Angeles Reg'l. Arpts. Impvt.
Corp., Cont. Air Sublease,
A.M.T. NR 9.25 8/01/24 10,095 11,261,275
Orange Cnty. Cmnty. Loc. Trans.
Auth., Reg. Linked Savrs. & Ribs Aa3 6.20 2/14/11 7,000 7,583,520
Richmond Redev. Agcy. Rev.,
Multifam. Bridge Affordable Hsg. NR 7.50 6/01/23 10,000 10,088,600
Roseville Joint Union H.S. Dist.,
Ser. B, F.G.I.C. Aaa Zero 8/01/11 1,440 789,509
Ser. B, F.G.I.C. Aaa Zero 8/01/14 2,220 1,001,686
Sacramento City Fin. Auth. Rev.,
Tax Alloc., M.B.I.A. Aaa Zero 11/01/15 5,695 2,364,222
San Joaquin Hills Trans. Corr.
Agcy.,
Toll Rd. Rev. Aaa Zero 1/01/14 8,420 3,945,865
Toll Rd. Rev. Aaa Zero 1/01/25 10,000 2,292,100
San Luis Obispo Ctfs. of Part.,
Vista Hosp. Sys., Inc. NR 6.45 7/01/29 4,000 3,451,800
Santa Margarita/Dana Point Auth.,
Impvt. Dist.
Rites Pennsylvania 644F NR 13.071 8/01/13 660(c) 1,050,271
Rites Pennsylvania 664E NR 13.071 8/01/12 1,000(c) 1,562,500
Vallejo Ctfs. of Part., Touro
Univ. Ba2 7.375 6/01/29 3,500 3,446,940
Victor Valley Union H.S. Dist.,
Gen. Oblig., M.B.I.A. Aaa Zero 9/01/12 3,605 1,858,738
Gen. Oblig., M.B.I.A. Aaa Zero 9/01/14 4,740 2,146,699
Gen. Oblig., M.B.I.A. Aaa Zero 9/01/16 3,990 1,587,501
--------------
89,599,706
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Colorado 4.2%
Black Hawk Co. Bus. Impvt. Dist. NR 7.75% 12/01/19 $ 5,285 $ 5,420,560
Denver Urban Ren. Auth. Tax,
Inc. Rev. NR 7.50 9/01/04 2,840 2,967,346
Inc. Rev. NR 7.75 9/01/16 4,000 4,231,200
Denver Co. Hlth. & Hosp. Rev.,
Ser. A Baa2 5.375 12/01/28 5,000 3,887,650
Lake Creek Affordable Hsg. Corp.
Multifam. Rev.,
Ser. A NR 6.25 12/01/23 12,995 11,890,295
Ser. B NR 7.00 12/01/23 1,035 956,630
San Migual Cnty., Mountain Vlge.
Met. Dist. NR 8.10 12/01/11 2,160(c) 2,342,369
San Migual Cnty., Mountain Vlge.
Met. Dist. NR 8.10 12/01/11 1,040 1,110,980
Superior Met. Dist. No. 1, Wtr. &
Swr. Rev. NR 8.50 12/01/13 8,195 9,358,034
--------------
42,165,064
----------------------------------------------------------------------------------------
Connecticut 1.8%
Connecticut St. Dev. Auth.,
Mystic Marinelife Aquarium Proj.
Rev. NR 7.00 12/01/27 2,000 1,968,400
Connecticut St. Dev. Auth. Poll.
Ctl. Rev., Ref. Connecticut
Light & Pwr., A.M.T. Ba1 5.95 9/01/28 9,000 8,053,380
Connecticut St. Dev. Auth. Swr.,
Netco Waterbury Ltd. NR 9.375 6/01/16 7,300 8,136,069
--------------
18,157,849
----------------------------------------------------------------------------------------
District Of Columbia 1.1%
Dist. of Columbia Ref., Ser. B.,
M.B.I.A. Aaa 6.00 6/01/20 2,000 2,049,360
Dist. of Columbia Rev., Nat'l.
Public Radio NR 7.625 1/01/18 8,800 9,048,248
--------------
11,097,608
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Florida 6.2%
Bayside Impt. Cmnty. Dev. Dist.,
Ser. B NR 6.375% 5/01/18 $ 1,370 $ 1,267,305
Crossings at Fleming Island
Cmnty. Dev. Dist., Clay City NR 8.25 5/01/16 7,375 7,976,947
Florida Hsg. Fin. Agcy., Palm
Aire Proj., Multifam. Mtge.
Rev., A.M.T. NR Zero 1/01/20 8,561(e) 8,561,450
Florida Hsg. Fin. Corp. Rev.,
Cypress Trace Apts., Ser. G,
A.M.T. NR 6.60 7/01/38 4,750 4,467,185
Westchase Apts., Ser. B, A.M.T. NR 6.61 7/01/38 4,000 3,766,720
Martin Cnty. Ind. Dev. Auth.
Rev., Indiantown Cogen. Proj.,
Ser. A, A.M.T. Baa3 7.875 12/15/25 13,000 13,041,860
No. Springs Impvt. Dist. Wtr.
Mgt.,
Ser. A NR 8.20 5/01/24 1,885(c) 2,068,882
Ser. A NR 8.30 5/01/24 1,660 1,759,484
Northern Palm Beach Cnty. Impvt.
Ref., Wtr. Ctl. & Impvt. Unit
Dev. NR 6.00 8/01/10 2,815 2,710,479
Orlando & Orange Cntys. Exprswy.
Auth. Rev. Aaa 5.00 7/01/28 2,000 1,732,680
Orlando Util. Comm., Wtr. & Elec.
Rev., Ser. D Aa2 6.75 10/01/17 2,000 2,255,940
Palm Beach Cnty. Hsg. Auth.,
Banyan Club Apts. NR 7.75 3/01/23 4,345 4,551,301
Sarasota Hlth. Facs., Kobernick
Hsg. Meadow Park Proj. Aaa 10.00 7/01/22 6,705(c) 7,476,544
--------------
61,636,777
----------------------------------------------------------------------------------------
Georgia 3.6%
Atlanta Arpt. Facs. Rev.,
M.B.I.A., A.M.T. Aaa Zero 1/01/10 2,000 1,117,960
Augusta Georgia Hsg. Auth.,
Emerald Coast Hsg., Ser. A NR 7.50 8/01/34 8,400 7,993,608
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Effingham Cnty. Dev. Auth., Ft.
Howard Corp. Baa2 7.90% 10/01/05 $ 10,000 $ 10,249,700
Henry Cnty. Wtr. & Swr. Auth.
Rev., A.M.B.A.C. Aaa 6.15 2/01/20 3,000 3,169,500
Private Colls. & Univs. Auth.
Georgia Rev., Emory Univ. Proj.,
Ser. A Aa1 5.50 11/01/31 5,000 4,746,700
Rockdale Cnty. Dev. Auth., Solid
Wste. Disp. Rev. NR 7.50 1/01/26 8,100 8,247,987
--------------
35,525,455
----------------------------------------------------------------------------------------
Illinois 6.5%
Chicago Brd. of Edl., Cap.
Apprec. Schl. Ref., Ser. A,
F.G.I.C. Aaa Zero 12/01/20 5,745 1,640,542
Chicago O'Hare Int'l. Arpt.,
Amer. Airlines Proj., Ser. B Baa1 8.20 12/01/24 1,000 1,089,690
United Airlines, Ser. B, A.M.T. Baa3 8.45 5/01/07 6,000 6,129,780
United Airlines, Ser. B Baa2 8.85 5/01/18 2,520 2,624,883
United Airlines, Ser. B, A.M.T. Baa3 8.50 5/01/18 6,500 6,639,425
United Airlines, Ser. B, A.M.T. Baa2 8.95 5/01/18 2,175 2,265,480
Chicago Pub. Bldg. Comm. Rev.,
Ser. A, M.B.I.A. Aaa 7.00 1/01/20 6,530 7,462,288
Hennepin Ind. Dev. Rev.,
Exolon-Esk Co. Proj. NR 8.875 1/01/18 7,800 8,323,692
Illinois Dev. Fin. Auth. Solid
Wste Disp. Rev., Ba1 5.05 1/01/10 4,000 3,341,120
Illinois St. Hlth. Facs. Auth.
Rev.,
Midwest Physician Group Ltd.
Proj. BBB-(b) 8.10 11/15/14 2,935(c) 3,298,060
Midwest Physician Group Ltd.
Proj. BBB-(b) 8.125 11/15/19 3,285(c) 3,719,868
Kane & De Kalb Cntys. Sch.,
Dist. No. 301, Cap. Apprec.,
A.M.B.A.C. Aaa Zero 12/01/11 3,360 1,761,379
Dist. No. 301, Cap. Apprec.,
A.M.B.A.C. Aaa Zero 12/01/13 4,065 1,876,242
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Metropolitan Pier & Exposition
Auth. Dedicated St. Tax Rev.,
F.G.I.C. Aaa Zero 6/15/29 $ 22,575 $ 3,790,568
Robbins Illinois Res. Rec. Rev.,
Restructuring Project Series C NR 7.25% 10/15/09 781 753,831
Restructuring Project Series D NR 7.00 10/15/09 788 370,771
Restructuring Project Series A NR 8.375 10/15/16 5,031 2,245,195
Restructuring Project Series B NR 8.375 10/15/16 1,969 878,555
Restructuring Project Series C NR 7.25 10/15/24 3,376 3,173,978
Winnebago Cnty. Hsg. Auth., Park
Tower Assoc., Sec. 8 NR 8.125 1/01/11 3,569 3,622,022
--------------
65,007,369
----------------------------------------------------------------------------------------
Indiana 1.6%
Bluffton Econ. Dev. Rev., Kroger
Co. Proj. Baa3 7.85 8/01/15 7,500 7,949,850
Wabash Econ. Dev. Rev. Bonds,
Connell Ltd., A.M.T. NR 8.50 11/24/17 7,250 7,610,832
--------------
15,560,682
----------------------------------------------------------------------------------------
Iowa 2.8%
City of Cedar Rapids Rev.,
1st Mtge., Cottage Grove Place
Proj. Aaa(b) 9.00 7/01/18 9,375(c) 11,134,687
1st Mtge., Cottage Grove Place
Proj. Aaa(b) 9.00 7/01/25 4,435(c) 5,267,450
Iowa St. Fin. Auth., Hlthcare.
Facs. Rev., Mercy Hlth.
Initiatives Proj. NR 9.25 7/01/25 10,000 11,940,000
--------------
28,342,137
----------------------------------------------------------------------------------------
Kentucky 0.7%
Louisville & Jefferson Cntys.
Met. Swr. & Drain. Sys. Rev. Aaa 5.00 5/15/30 2,000 1,713,180
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Owensboro Elec. Lt. & Pwr. Rev.,
Ser. B, A.M.B.A.C. Aaa Zero 1/01/14 $ 5,000 $ 2,299,950
Ser. B, A.M.B.A.C. Aaa Zero 1/01/16 6,650 2,672,901
--------------
6,686,031
----------------------------------------------------------------------------------------
Louisiana 1.9%
Hodge Util. Rev., Stone Container
Corp., A.M.T. NR 9.00% 3/01/10 7,000 7,149,100
New Orleans Home Mtge. Auth.
Rev., Sngl. Fam. Mtge., Ser. A,
G.N.M.A., A.M.T. Aaa 8.60 12/01/19 1,670(f) 1,691,326
New Orleans Ind. Dev. Rev. BBB+(b) 8.75 10/01/19 3,600 3,988,980
New Orleans, Gen Oblig., Cap.
Apprec., A.M.B.A.C. Aaa Zero 9/01/18 3,090 1,042,968
West Feliciana Parish Poll. Ctrl.
Rev., Gulf St. Util. Co. Proj. NR 9.00 5/01/15 5,250 5,475,382
--------------
19,347,756
----------------------------------------------------------------------------------------
Maine 0.4%
Maine Health & Higher Edl. Facs.
Auth. Rev.,
Piper Shores, Ser. A NR 7.50 1/01/19 1,000 969,160
Piper Shores, Ser. A NR 7.55 1/01/29 3,000 2,891,520
--------------
3,860,680
----------------------------------------------------------------------------------------
Maryland 1.5%
Anne Arundel Cnty. Spec. Oblig.,
Arundel Mills Proj. NR 7.10 7/01/29 3,000 2,964,990
Maryland St. Health & Higher Edl.
Facs. Auth. Rev. Baa1 6.75 7/01/30 5,000 5,011,000
Northeast Wste. Disp. Auth.,
Sludge Comp. Facs. NR 7.25 7/01/07 3,457 3,569,491
Sludge Comp. Facs., A.M.T. NR 8.50 7/01/07 2,880 3,045,571
--------------
14,591,052
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Massachusetts 4.5%
Boston Ind. Dev. Fin. Auth. Rev.,
First Mtge. Springhouse Proj. Aaa 9.25% 7/01/15 $ 7,795(c) $ 9,130,985
First Mtge. Springhouse Proj. NR 6.00 7/01/28 4,500 3,681,180
Mass. Bay Trans. Auth., Gen.
Trans. Sys., Ser. A, F.G.I.C. Aaa 7.00 3/01/21 7,500 8,579,625
Mass. St. Coll. Bldg. Proj. &
Ref. Bonds Aa2 7.50 5/01/14 1,750 2,087,400
Mass. St. Hlth. & Ed. Facs. Auth.
Rev., Cardinal Cushing Gen.
Hosp. NR 8.875 7/01/18 7,500 7,674,225
Mass. St. Tpke. Auth., Met. Hgwy.
Sys. Rev., A.M.B.A.C. Aaa 5.00 1/01/39 10,000 8,359,600
Randolph Hsg. Auth., Multifam.
Hsg., Liberty Place Proj. A,
Ser. A NR 9.00 12/01/21 5,730 5,712,925
--------------
45,225,940
----------------------------------------------------------------------------------------
Michigan 4.3%
Grand Rapids Dev. Auth.,
Cap. Apprec., M.B.I.A. Aaa Zero 6/01/10 3,000 1,724,910
Cap. Apprec., M.B.I.A. Aaa Zero 6/01/11 3,160 1,708,833
Cap. Apprec., M.B.I.A. Aaa Zero 6/01/12 3,000 1,522,260
Gratiot Cnty. Econ. Dev. Corp.,
Danley Die Proj. Connell L.P. NR 7.625 4/01/07 3,200 3,299,360
Holland Sch. Dist., Cap. Apprec.,
A.M.B.A.C. Aaa Zero 5/01/17 2,950 1,084,656
Lowell Area Sch., F.G.I.C. Aaa Zero 5/01/14 5,000 2,247,600
Michigan St. Hosp. Fin. Auth.
Rev., Saratoga Cmnty. Hosp. NR 8.75 6/01/10 5,760(c) 6,197,415
Michigan St. Strategic Fd. Res.
Recovery Ltd. Oblig. Rev.,
Central Wayne Energy Rec. A NR 7.00 7/01/27 6,500 6,067,555
Central Wayne Energy Rec. A,
A.M.T. NR 6.90 7/01/19 1,500 1,423,890
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michigan Strategic Fund, Great
Lakes Pulp & Fiber Proj. NR 8.00% 12/01/27 $ 14,297 $ 3,145,440
Michigan Strategic Fund, Solid
Wste. Disp., Gennese Pwr.
Station, A.M.T. NR 7.50 1/01/21 10,000 10,250,100
Wayne Cnty. Bldg. Auth., Ser. A,
A.M.T. A3 8.00 3/01/17 3,500(c) 3,753,190
West Ottawa Sch. Dist., F.G.I.C. Aaa Zero 5/01/18 3,000 1,030,980
--------------
43,456,189
----------------------------------------------------------------------------------------
Minnesota 1.7%
Minnesota Agricultural & Econ.
Dev. Rev.,
Fairview Hlthcare. Sys, Ser. A A2 6.375 11/15/22 15,000 14,563,500
Fairview Hlthcare. Sys., Ser. A A2 6.375 11/15/29 3,000 2,876,970
--------------
17,440,470
----------------------------------------------------------------------------------------
Missouri 1.5%
Bridgeton Ind. Dev. Auth. Sr.
Hsg. Rev., Sarah Cmnty. Proj. NR 5.90 5/01/28 4,000 3,241,360
St. Louis Cnty. Ind. Dev. Auth.
Rev.,
Soemm Proj., A.M.T. NR 10.25 7/01/08 1,385 1,387,382
Soemm Proj., A.M.T. NR 10.25 7/01/08 525 525,903
St. Louis Cnty. Reg. Conv. &
Sports Comp., Ser. C Aaa 7.90 8/15/21 8,820(c) 9,599,953
--------------
14,754,598
----------------------------------------------------------------------------------------
Nebraska 0.2%
Kearney Ind. Dev. Rev., Cap.
Apprec., Great Platte Rvr. Rd. NR Zero 1/01/17 4,000 2,008,600
----------------------------------------------------------------------------------------
Nevada 0.5%
Clark Cnty. Impvt. Dist., No. 121
Southern Highlands Area NR 7.50 12/01/19 5,000 4,953,950
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New Hampshire 1.0%
New Hampshire Higher Edl. & Hlth.
Facs. Auth. Rev., Antioch
College NR 7.875% 12/01/22 $ 5,180 $ 5,554,359
New Hampshire St. Bus. Poll.
Ref., Pub. Svc. Co., A.M.T. Ba3 6.00 5/01/21 5,000 4,509,750
--------------
10,064,109
----------------------------------------------------------------------------------------
New Jersey 5.8%
New Jersey Econ. Dev. Auth. Rev.,
Continental Airlines, Inc. Proj. Ba2 6.25 9/15/29 12,000 10,911,000
Development Rev. NR Zero 4/01/12 1,115 496,822
Fellowship Vlge., Proj. A Aaa 9.25 1/01/25 11,500(c) 13,569,425
Kaplowski Rd., Ser. A NR 6.375 4/01/31 7,000 6,608,770
Ref. Newark Arpt. Marriot Hotel NR 7.00 10/01/14 3,800 3,835,302
New Jersey Hlthcare. Facs., Fin.
Auth.
Rev. NR 8.00 7/01/27 5,000 4,704,950
Rev. A3 6.00 1/01/34 5,000 4,711,300
New Jersey St. Edl. Facs. Auth.
Rev., Felician College Of Lodi,
Ser. D NR 7.375 11/01/22 4,000 4,135,920
New Jersey St. Tpke. Auth. Rev.,
Ser. C, M.B.I.A. Aaa 6.50 1/01/16 8,000 8,796,240
--------------
57,769,729
----------------------------------------------------------------------------------------
New York 3.6%
Met. Trans. Auth. Facs. Rev.,
Ser. N, F.G.I.C. Aaa Zero 7/01/13 2,785 1,329,837
New York City Ind. Dev. Agcy.,
Bklyn. Navy Yard Cogen Partners,
A.M.T. Baa3 6.20 10/01/22 9,175 8,794,513
Visy Paper Inc. Proj., A.M.T. NR 7.95 1/01/28 4,000 4,202,000
New York City Ind. Dev. Agcy.,
Civic Touro College Proj., Ser.
A Ba2 6.35 6/01/29 5,600 5,149,816
New York City Ind. Dev. Agcy.
Rev., Ref. Laguardia Assoc. L.P.
Proj. NR 6.00 11/01/28 4,000 3,402,960
</TABLE>
See Notes to Financial Statements 21
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New York St. Dorm. Auth. Rev.,
Cmnty. College, Ser. A A 5.00% 7/01/28 $ 4,275 $ 3,547,609
Port Auth. of New York & New
Jersey, USAir LaGuardia Arpt.,
A.M.T. Ba2 9.125 12/01/15 4,000 4,154,400
Rockland Cnty. Ind. Dev. Agcy.
Rev.,
Dominican Coll. Proj. NR 5.90 5/01/10 2,090 1,997,580
Dominican Coll. Proj. NR 6.25 5/01/28 3,000 2,725,350
Suffolk Cnty N.Y. Ind. Dev. Agcy,
Continuing Care Ret. Cmnty Rev.,
First Mtge., Jefferson Ferry,
Ser. A NR 7.25 11/01/28 1,000 956,630
--------------
36,260,695
----------------------------------------------------------------------------------------
North Dakota 1.2%
Mercer Cnty., Antelope Valley
Station, A.M.B.A.C Aaa 7.20 6/30/13 10,000 11,525,100
----------------------------------------------------------------------------------------
Ohio 4.2%
Cleveland Pub. Pwr. Sys. Rev.,
First Mtge., M.B.I.A. Aaa Zero 11/15/12 1,000 497,640
First Mtge., M.B.I.A. Aaa Zero 11/15/13 1,500 701,445
Franklin Cnty. Hosp. Rev., Senior
Doctors Hlth. Corp. Baa3 5.60 12/01/28 10,000 7,189,100
Mahoning Valley San. Dist. Wtr.
Rev. NR 7.75 5/15/19 8,000(c) 8,874,880
Ohio St. Air Quality Dev. Auth.
Ref., Amt. Coll. Poll. Ctrl.,
Ser. A Ba1 6.10 8/01/20 3,000 2,721,630
Ohio St. Solid Wste. Rev.,
Cscltd. Proj., A.M.T. NR 8.50 8/01/22 7,000 5,827,710
Rep. Eng. Steels, Inc., A.M.T. NR 9.00 6/01/21 2,250 714,420
Ohio St. Wtr. Dev. Auth. Poll.
Ctrl. Facs.,
1st Mtge., Toledo Edison, A.M.T. Ba1 8.00 10/01/23 5,500 5,846,225
Ohio St. Air Quality Dev. Auth.
Ref., Amt. Coll. Poll. Ctrl.,
Ser. A Ba1 6.10 8/01/20 3,000 2,721,630
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stark Cnty. Hlthcare. Facs. Rev.,
Rose Lane, Inc. Proj. NR 9.00% 12/01/23 $ 6,135(c) $ 6,874,881
--------------
41,969,561
----------------------------------------------------------------------------------------
Oklahoma 0.3%
Tulsa Ind. Dev. Auth., Univ.
Tulsa, Ser. A, M.B.I.A. Aaa 6.00 10/01/16 3,250(f) 3,409,705
----------------------------------------------------------------------------------------
Oregon 0.7%
Klamath Falls Elec. Rev. Ref.,
Sr. Lien NR 6.00 1/01/25 8,250 7,186,492
----------------------------------------------------------------------------------------
Pennsylvania 4.4%
Allegheny Cnty. Hosp. Rev., West
Penn. Hosp. Hlth. Ctr. NR 8.50 1/01/20 2,800 2,891,000
Berks Cnty. Mun. Auth. Rev.,
Alvernia Coll. Proj. NR 7.75 11/15/16 5,240 5,558,225
Dauphin Cnty. Gen. Auth. Hosp.
Rev., NW Med. Ctr. Proj. BBB-(b) 8.625 10/15/13 6,145 6,730,312
Delaware Cnty. Ind. Dev. Auth.
Rev., Refund. Res. Rec. Facs.,
Ser A B2 6.00 1/01/09 6,500 5,963,100
Philadelphia Auth. Ind. Dev. Rev. NR 7.75 12/01/17 5,000 5,236,400
Philadelphia Hosps. & Higher Edl.
Facs. Auth. Rev.,
Grad. Hlth. Sys. Ca 7.00 7/01/05 2,500(e) 887,500
Grad. Hlth. Sys. Ca 7.25 7/01/18 3,435(e) 1,219,425
Grad. Hlth. Sys., Ser. A Ca 6.25 7/01/13 3,050(e) 1,082,750
Philadelphia Wtr. & Wstewtr.
Auth. Rev., M.B.I.A. Aaa 6.25 8/01/12 3,000 3,242,970
Somerset Cnty. Hosp. Auth. Rev.,
Hlthcare. First Mtge. NR 8.40 6/01/09 2,055 2,162,291
Hlthcare. First Mtge. NR 8.50 6/01/24 8,805 9,274,571
--------------
44,248,544
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rhode Island 1.1%
Rhode Island Redev. Agcy., Ser. A NR 8.00% 9/01/24 $ 10,305 $ 10,732,657
----------------------------------------------------------------------------------------
South Carolina 1.0%
So. Carolina Jobs Econ. Dev.,
First Mtge. Lutheran Homes NR 6.625 5/01/28 5,000 4,624,750
Solid Wste. Recycling Facs. Rev. NR 9.00 12/01/11 2,000 1,971,820
So. Carolina St. Hsg. Fin. & Dev.
Auth., Homeownership Mtge.
A.M.T. Aa2 7.75 7/01/22 2,960 3,023,818
--------------
9,620,388
----------------------------------------------------------------------------------------
South Dakota 0.8%
Education Lns., Inc. Student Ln.
Rev., A.M.T. A2 5.60 6/01/20 3,300 3,049,167
So. Dakota Econ. Dev. Fin. Auth.,
Dakota Park, A.M.T. NR 10.25 1/01/19 4,775 4,895,091
--------------
7,944,258
----------------------------------------------------------------------------------------
Tennessee 3.1%
Memphis Center City Rev. Fin.
Corp., Ser. B NR 6.50 9/01/28 26,000 23,707,840
Rutherford Cnty. Hlth. & Edl.
Facs. Brd., First Mtge. Rev. NR 9.50 12/01/19 6,300 6,827,562
--------------
30,535,402
----------------------------------------------------------------------------------------
Texas 6.6%
Austin Hsg. Fin. Corp., Multifam.
Hsg. Rev., Stony Creek, Ser. A NR 7.75 11/01/29 9,390 9,208,679
Beaumont Hsg. Fin. Corp., Sngl.
Fam. Mtge. Rev. A1 9.20 3/01/12 960 1,084,771
Dallas-Fort Worth Int'l Arpt.
Facs. Impvt. Corp. Rev.,
American Airlines, Inc. Baa1 7.25 11/01/30 7,000 7,136,780
Harris Cnty., Ref. Toll Road Sub.
Lien Aaa 6.00 8/01/14 13,075 13,490,916
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Houston Arpt. Sys. Rev.,
Spec. Facs. Continental
Airlines, Ser. C Ba1 6.125% 7/15/27 $ 5,800 $ 5,059,572
Sub. Lien, Ser. C, F.G.I.C. Aaa 5.00 7/01/28 2,950 2,513,901
Katy Texas Dev. Auth. Rev., Tax
Increment Contract, Ser. B NR 6.00 6/01/18 4,000 3,716,560
Keller Ind. Sch. Dist., Cap.
Apprec. Ref., Ser. A, P.S.F.G. Aaa Zero 8/15/17 4,075 1,465,655
Meadow Parc Dev. Inc. Multifam.
Rev. Hsg. Meadow Proj. NR 6.50 12/01/30 5,000 4,546,550
New Braunfels Ind. Sch. Dist.,
Cap. Apprec., P.S.F.G. Aaa Zero 2/01/08 2,365 1,551,275
Cap. Apprec., P.S.F.G. Aaa Zero 2/01/09 2,365 1,464,195
Cap. Apprec., P.S.F.G. Aaa Zero 2/01/12 2,365 1,218,519
Round Rock Ind. Sch. Dist., Gen.
Oblig., M.B.I.A. Aaa Zero 8/15/11 4,385 2,336,723
San Antonio Elec. & Gas Rev.,
F.G.I.C., Ser. B Aaa Zero 2/01/12 7,500 3,886,425
Texas Mun. Pwr. Agcy. Rev.,
M.B.I.A. Aaa Zero 9/01/15 17,300 7,100,266
--------------
65,780,787
----------------------------------------------------------------------------------------
Utah 0.1%
Carbon Cnty. Solid Wste. Disp.
Rev. Ref., Laidlaw
Environmental, Ser. A, A.M.T. NR 7.45 7/01/17 1,000 899,230
Tooele Cnty. Poll. Ctrl. Rev.
Ref., Laidlaw Environmental,
Ser. A, A.M.T. NR 7.55 7/01/27 4,000 599,920
--------------
1,499,150
----------------------------------------------------------------------------------------
Virginia 2.0%
Loudoun Cnty. Ind. Dev. Auth.
Rev. NR 7.125 9/01/15 2,000 2,050,580
Norfolk Redev. & Hsg. Auth.,
Multifam. Rental Hsg. Facs.
Rev., A.M.T. NR 8.00 9/01/26 6,000 5,801,940
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pittsylvania Cnty. Ind. Dev.
Auth. Rev. Multitrade, A.M.T. NR 7.55% 1/01/19 $ 9,000 $ 9,177,570
Pocahontas Pkwy. Assoc. Toll Rd.
Rev.,
Cap. Apprec., Ser. B Baa3 Zero 8/15/16 7,000 2,220,750
Cap. Apprec., Ser. C Ba1 Zero 8/15/16 3,300 983,136
--------------
20,233,976
----------------------------------------------------------------------------------------
Washington 2.5%
Bellevue Conv. Ctr. Auth.,
King City, Oblig. Rev., M.B.I.A. Aaa Zero 2/01/10 870 506,079
King City, Oblig. Rev., M.B.I.A. Aaa Zero 2/01/11 1,200 658,956
King City, Oblig. Rev., M.B.I.A. Aaa Zero 2/01/12 1,300 669,799
King City, Oblig. Rev., M.B.I.A. Aaa Zero 2/01/14 1,385 629,011
Thurston Cnty. Sch. Dist. 333,
F.G.I.C. Aaa Zero 12/01/12 6,830 3,357,492
F.G.I.C., Ser. B Aaa Zero 12/01/11 6,415 3,362,871
Washington St. Ref., Ser R-97A Aa1 Zero 7/01/16 7,000 2,715,860
Washington St. Pub. Pwr. Supply
Sys. Rev.,
Nuclear Proj. No. 1, Ser. B Aa1 7.25 7/01/09 5,000 5,527,550
Nuclear Proj. No. 3, M.B.I.A. Aaa Zero 7/01/17 5,000 1,799,350
Nuclear Proj. No. 3, Ser. B,
M.B.I.A. Aaa 7.125 7/01/16 5,000 5,744,100
--------------
24,971,068
----------------------------------------------------------------------------------------
West Virginia 0.8%
So. Charleston Ind. Dev. Rev.,
Union Carbide Chem. & Plastics
Co., A.M.T. Baa2 8.00 8/01/20 2,450 2,510,711
Weirton Poll. Ctrl. Rev., Weirton
Steel Proj. B2 8.625 11/01/14 2,700 2,662,740
West Virginia St. Pkwys. Econ.
Dev. & Tourism Auth., F.G.I.C. Aaa 7.129 5/16/19 3,250(b) 3,095,625
--------------
8,269,076
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Wisconsin 1.0%
Oconto Falls Cmnty. Dev. Auth.
Dev. Rev., NR 8.125% 12/01/22 $ 1,500 $ 1,476,225
Oconto Falls Cmnty. Dev. Auth.
Dev. Rev., Oconto Falls Tissue
Inc. Proj., A.M.T. NR 7.75 12/01/22 8,800 8,535,032
--------------
10,011,257
--------------
Total long-term investments (cost
$1,008,745,342) 987,096,908
--------------
SHORT-TERM INVESTMENTS 2.1%
----------------------------------------------------------------------------------------
California 0.1%
Newport Beach Rev., Var. Hoag
Mem. Hosp., F.R.D.D., Ser. A VMIG1 6.00 5/01/00 1,200 1,200,000
----------------------------------------------------------------------------------------
Florida 0.5%
Jacksonville Electric Auth. Rev.,
Merlots, F.R.W.D., Ser. F VMIG1 4.90 5/03/00 4,705 4,705,000
----------------------------------------------------------------------------------------
Illinois 0.1%
Madison Cnty. Enviromental Impvt.
Rev., Shell Wood Rvr. Proj.,
A.M.T., F.R.D.D., Ser. A VMIG1 6.20 5/01/00 500 500,000
----------------------------------------------------------------------------------------
Louisiana 0.1%
St. Charles Parish Poll. Ctrl.
Rev., Shell Oil Co. Proj.,
F.R.D.D., A.M.T., Ser. A VMIG1 6.20 5/01/00 900 900,000
West Baton Rouge Parish Ind.
Dist. No. 3 Rev., Dow Chemical
Co. Proj., F.R.D.D., A.M.T.,
Ser. 93 P1 6.25 5/01/00 400 400,000
--------------
1,300,000
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nevada
Washoe Cnty. Wtr. Facs. Rev.,
Sierra Pac. Pwr. Co. Proj.,
A.M.T., F.R.D.D., Ser. 90 P1 6.25% 5/01/00 $ 400 $ 400,000
----------------------------------------------------------------------------------------
South Carolina 0.2%
Florence Cnty. South Carolina
Solid Wste. Disp. & Wstewtr.
Treatment Facs. Rev., A.M.T.,
F.R.D.D. A1(b) 6.25 5/01/00 1,500 1,500,000
----------------------------------------------------------------------------------------
Texas 0.6%
Brazos River Auth. Poll. Ctrl.
Rev., A.M.T., F.R.D.D, Ser. 96C VMIG1 6.25 5/01/00 800 800,000
Brazos River Harbor Nav. Dist.
Rev., Dow Chemical Co., Ser.
92A, F.R.D.D., A.M.T. P1 6.25 5/01/00 300 300,000
Gulf Coast Ind. Dev. Auth., Texas
Env. Facs. Rev., F.R.D.D. VMIG1 6.25 5/01/00 200 200,000
Gulf Coast Wste. Disp. Auth.
Facs. Rev. Ser. 97, F.R.D.D.,
A.M.T. P1 6.25 5/01/00 600 600,000
Gulf Coast Wste. Disp. Auth.,
Texas Environmental Facs. Rev. A1(b) 6.20 5/01/00 800 800,000
Texas Environmental Facs. Rev.,
A.M.T., F.R.D.D. VMIG1 6.20 5/01/00 200 200,000
Midlothian Ind. Dev. Corp. Exempt
Facs. Rev., A.M.T., F.R.D.D. A-1+(b) 6.25 5/01/00 1,700 1,700,000
Port Corpus Christi Ind. Citgo
Petroleum Corp. Proj., A.M.T.,
F.R.D.D. VMIG1 6.25 5/01/00 100 100,000
West Side Calhoun Cnty. Nav.
Dist., Swr. & Solid Wste. Disp.
Rev. Proj., A.M.T., F.R.D.D.,
Ser. 96 P-1 6.20 5/01/00 1,600 1,600,000
--------------
6,300,000
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Virginia 0.5%
Virginia St. Hsg. Dev. Auth.
Commwlth. Mtge., Merlots,
F.R.W.D., A.M.T., Ser. C VMIG1 5.23% 5/03/00 $ 5,000 $ 5,000,000
--------------
Total short-term investments
(cost $20,905,000) 20,905,000
--------------
Total Investments 100.8%
(cost $1,029,650,342; Note 4) 1,008,001,908
Liabilities in excess of other
assets (0.8)% (8,423,949)
--------------
Net Assets 100% $ 999,577,959
--------------
--------------
</TABLE>
------------------------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation
A.M.T.--Alternative Minimum Tax
F.G.I.C.--Financial Guaranty Insurance Company
F.R.D.D.--Floating Rate (Daily) Demand Note (d)
F.R.W.D.--Floating Rate (Weekly) Demand Note (d)
G.N.M.A.--Government National Mortgage Association
M.B.I.A.--Municipal Bond Insurance Association
P.S.F.G.--Public School Fund Guaranty
R.I.B.S.--Residual Interest Bearing Securities
(b) Standard & Poor's Rating.
(c) Prerefunded issues are secured by escrowed cash and direct U.S. guaranteed
obligations.
(d) The maturity date shown is 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.
(e) Issuer in default of interest payment. Non-income producing security.
(f) All or partial principal amount segregated as initial margin on financial
futures contracts.
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 29
<PAGE>
Prudential Municipal Bond Fund High Income Series
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
April 30, 2000
<S> <C> <C>
--------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $1,029,650,342) $1,008,001,908
Interest receivable 20,351,584
Receivable for investments sold 18,417,589
Receivable for Series shares sold 765,689
Deferred expenses and other assets 18,296
--------------
Total assets 1,047,555,066
--------------
LIABILITIES
Bank overdraft 66,243
Payable for investments purchased 43,844,420
Payable for Series shares reacquired 1,638,576
Dividends payable 1,522,316
Management fee payable 413,858
Distribution fee payable 312,628
Due to broker - variation margin 85,562
Accrued expenses 93,504
--------------
Total liabilities 47,977,107
--------------
NET ASSETS $ 999,577,959
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 978,381
Paid-in capital in excess of par 1,057,696,707
--------------
1,058,675,088
Undistributed net investment income 36,989
Accumulated net realized loss on investments (37,273,075)
Net unrealized depreciation of investments (21,861,043)
--------------
Net assets, April 30, 2000 $ 999,577,959
--------------
--------------
</TABLE>
30 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Statement of Assets and Liabilities Con't.
<TABLE>
<CAPTION>
April 30, 2000
<S> <C> <C>
--------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share ($503,873,795
/ 49,316,443 shares of beneficial interest issued and
outstanding) $10.22
Maximum sales charge (3% of offering price) .32
--------------
Maximum offering price to public $10.54
--------------
--------------
Class B:
Net asset value, offering price and redemption price per
share ($457,840,842 / 44,814,840 shares of beneficial
interest issued and outstanding) $10.22
--------------
--------------
Class C:
Net asset value and redemption price per share ($30,060,824
/ 2,942,485 shares of beneficial interest issued and
outstanding) $10.22
Sales charge (1% of offering price) .10
--------------
Offering price to public $10.32
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per
share ($7,802,498 / 764,357 shares of beneficial interest
issued and outstanding) $10.21
--------------
--------------
</TABLE>
See Notes to Financial Statements 31
<PAGE>
Prudential Municipal Bond Fund High Income Series
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
April 30, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 73,960,296
--------------
Expenses
Management fee 5,495,099
Distribution fee--Class A 1,267,219
Distribution fee--Class B 2,799,395
Distribution fee--Class C 245,716
Transfer agent's fees and expenses 409,000
Custodian's fees and expenses 146,000
Reports to shareholders 73,000
Registration fees 65,000
Trustees' fees and expenses 26,000
Legal fees and expenses 20,000
Insurance expense 17,000
Audit fees and expenses 15,000
Miscellaneous 14,799
--------------
Total expenses 10,593,228
Less: Management fee waiver (50,963)
Custodial fee credit (7,345)
--------------
Net expenses 10,534,920
--------------
Net investment income 63,425,376
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Investment transactions (13,602,468)
Financial futures contract transactions 822,156
Written and purchased options (143,900)
--------------
(12,924,212)
--------------
Net change in unrealized depreciation of:
Investments (91,235,563)
Financial futures contracts (396,984)
--------------
(91,632,547)
--------------
Net loss on investments (104,556,759)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (41,131,383)
--------------
--------------
</TABLE>
32 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Year
Ended Ended
April 30, 2000 April 30, 1999
<S> <C> <C> <C>
---------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 63,425,376 $ 65,281,521
Net realized gain (loss) on investment
transactions (12,924,212) 626,227
Net change in unrealized depreciation of
investments (91,632,547) (12,001,065)
-------------- --------------
Net increase (decrease) in net assets
resulting from operations (41,131,383) 53,906,683
-------------- --------------
Dividends from net investment income (Note 1)
Class A (29,722,571) (27,230,164)
Class B (31,310,165) (35,903,105)
Class C (1,755,953) (1,344,435)
Class Z (636,687) (803,817)
-------------- --------------
(63,425,376) (65,281,521)
-------------- --------------
Series share transactions (net of share
conversions) (Note 5):
Net proceeds from shares sold 195,654,738 271,203,411
Net asset value of shares issued in
reinvestment of dividends 29,467,610 30,134,516
Cost of shares reacquired (332,423,850) (199,757,462)
-------------- --------------
Net increase (decrease) in net assets from
Series share transactions (107,301,502) 101,580,465
-------------- --------------
Total increase (decrease) (211,858,261) 90,205,627
NET ASSETS
Beginning of year 1,211,436,220 1,121,230,593
-------------- --------------
End of year(a) $ 999,577,959 $1,211,436,220
-------------- --------------
-------------- --------------
---------------
(a) Includes undistributed net investment
income of $ 36,989 $ --
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Financial Statements 33
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 97.7%
----------------------------------------------------------------------------------------
Alabama 2.8%
Huntsville Solid Wste. Disp.
Auth., F.G.I.C., A.M.T. Aaa 7.00% 10/01/08 $ 2,000 $ 2,057,840
Jefferson Cnty. Swr. Rev. Wste.,
Ser. A, F.G.I.C. Aaa 5.375 2/01/27 8,000 7,386,080
--------------
9,443,920
----------------------------------------------------------------------------------------
Alaska 2.6%
Anchorage Hosp. Rev., Sisters of
Providence, A.M.B.A.C. Aaa 7.125 10/01/05 5,000 5,249,700
No. Slope Boro., Cap. Apprec.,
Ser. A, M.B.I.A. Aaa Zero 6/30/06 5,000 3,572,800
--------------
8,822,500
----------------------------------------------------------------------------------------
Arizona 3.0%
Maricopa Cnty. Ind. Dev. Auth.
Rev.,
Hosp. Facs., John C. Lincoln
Hosp., F.S.A. Aaa 7.00 12/01/00 625 634,450
Hosp. Facs., John C. Lincoln
Hosp., F.S.A. Aaa 7.50 12/01/13 1,045(c) 1,084,396
Hosp. Facs., John C. Lincoln
Hosp., F.S.A. Aaa 7.50 12/01/13 1,205 1,247,380
Maricopa Cnty. Unified Sch. Dist.
No. 69, Paradise Valley, Ser. E,
F.G.I.C. Aaa 6.80 7/01/12 3,700 4,205,753
Tucson Arizona Street & Highway
User Rev., Jr. Lien, Ser. E,
F.G.I.C. Aaa 5.00 7/01/17 3,000 2,815,410
--------------
9,987,389
----------------------------------------------------------------------------------------
California 6.4%
Castaic Lake Wtr. Agcy. Rev.
Ctfs. Part.,
A.M.B.A.C. Aaa Zero 8/01/21 10,445 2,935,881
A.M.B.A.C. Aaa Zero 8/01/23 10,445 2,582,004
</TABLE>
34 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Contra Costa Wtr. Dist. Wtr.
Rev., Ser. E, A.M.B.A.C. Aaa 6.25% 10/01/12 $ 1,455 $ 1,608,939
Inland Empire Solid Wste. Fin.
Auth., Landfill Impvt. Fin.,
Proj. B, F.S.A. Aaa 6.00 8/01/16 2,000 2,145,600
Roseville Joint Union H.S. Dist.,
Ser. B, F.G.I.C. Aaa Zero 8/01/13 2,015 970,102
San Diego Cnty. Wtr. Auth. Wtr.
Rev., Ctfs. of Part., F.G.I.C. Aaa 7.087 4/26/06 5,800 6,140,750
So. Orange Cnty. Pub. Fin. Auth.,
Foothill Area Proj., F.G.I.C. Aaa 8.00 8/15/08 2,000 2,395,660
Victor Valley Element. Sch.
Dist.,
Cap. Apprec., Ser. A, M.B.I.A. Aaa Zero 6/01/17 3,550 1,325,037
Cap. Apprec., Ser. A, M.B.I.A. Aaa Zero 6/01/18 3,700 1,289,968
--------------
21,393,941
----------------------------------------------------------------------------------------
Colorado 2.2%
Denver City & Cnty. Arpt. Rev.,
Ser. C, M.B.I.A. Aaa 5.60 11/15/11 5,000 5,020,050
E-470 Public Highway Auth.
Colorado Rev., Cap. Apprec.,
Ser. B, M.B.I.A. Aaa Zero 9/01/20 7,000 2,045,680
Jefferson Cnty. Sngl. Fam. Mtge.
Rev., Ser. A, M.B.I.A. Aaa 8.875 10/01/13 190 196,992
--------------
7,262,722
----------------------------------------------------------------------------------------
District Of Columbia 7.7%
Dist. of Columbia Hosp. Rev.
Medlantic Hlthcare Grp.,
M.B.I.A. Aaa 5.875 8/15/19 3,500 3,507,595
M.B.I.A. Aaa 5.75 8/15/26 3,000 2,920,440
Dist. of Columbia Met. Area
Trans. Auth.,
Gross Rev., F.G.I.C. Aaa 6.00 7/01/09 2,400 2,529,528
Gross Rev., F.G.I.C. Aaa 6.00 7/01/10 1,500 1,582,845
</TABLE>
See Notes to Financial Statements 35
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dist. of Columbia Ref.,
Ser. A, M.B.I.A. Aaa 6.50% 6/01/10 $ 6,000 $ 6,505,740
Ser. B, F.S.A. Aaa 5.50 6/01/10 4,565 4,585,817
Dist. of Columbia, Assoc.
American Med. Colleges,
A.M.B.A.C. Aaa 5.375 2/15/27 4,500 4,126,410
--------------
25,758,375
----------------------------------------------------------------------------------------
Florida 4.2%
Brevard Hlth. Facs. Auth. Rev.,
Holmes Reg'l. Med. Ctr.,
M.B.I.A. Aaa 5.60 10/01/10 6,000 6,112,740
Dade Cnty. Edl. Facs. Auth. Rev.
Ref., Univ. Miami, Ser. A,
M.B.I.A. Aaa 5.625 4/01/06 2,000 2,056,120
Orange Cnty. Hlth. Facs. Auth.
Rev. Hosp., Preref., Ser. A Aaa 6.25 10/01/07 2,235(c) 2,387,851
Orange Cnty. Hlth. Facs. Auth.
Rev., Unref., Ser. A, M.B.I.A. Aaa 6.25 10/01/07 925 983,562
Palm Beach Cnty. Solid Wste.
Auth. Rev. Ref.,
Ser. A, A.M.B.A.C. Aaa 6.00 10/01/09 295 313,072
Ser. A, A.M.B.A.C. Aaa 6.00 10/01/09 2,205 2,331,655
--------------
14,185,000
----------------------------------------------------------------------------------------
Georgia 1.8%
Atlanta Arpt. Facs. Rev.,
A.M.B.A.C. Aaa 6.50 1/01/10 2,000 2,181,240
Georgia Mun. Elec. Auth., Pwr.
Rev., M.B.I.A. Aaa 6.20 1/01/10 3,495 3,733,114
--------------
5,914,354
----------------------------------------------------------------------------------------
Hawaii 2.8%
Hawaii St. Dept. Bdg. & Fin.
Special Purpose Rev., Hawaiian
Electric Co. Inc. Pjs., Ser. C. Aaa 6.20 11/01/29 8,000 8,051,440
</TABLE>
36 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Honolulu Hawaii City & Cnty.
Wstewtr. Sys.,
Rev. Cap. Apprec., F.G.I.C. Aaa Zero 7/01/18 $ 1,465 $ 492,386
Rev. Cap. Apprec., F.G.I.C. Aaa Zero 7/01/19 2,305 725,545
--------------
9,269,371
----------------------------------------------------------------------------------------
Illinois 6.7%
Arlington Hts. Park Dist., Cap.
Apprec., Ser. E, A.M.B.A.C. Aaa Zero 12/01/13 4,175 1,927,013
Chicago Illinois Ser. A, F.G.I.C. Aaa 6.75% 1/01/35 2,000 2,156,160
Chicago Midway Arpt. Rev., Ser.
B, M.B.I.A., A.M.T. Aaa 5.75 1/01/22 5,000 4,819,700
Chicago O' Hare Int'l. Arpt.
Rev., Pass. Facs. Chrg., Ser. A,
A.M.B.A.C. Aaa 5.625 1/01/15 2,000 1,987,000
Chicago Skyway Toll Brdg. Rev.,
M.B.I.A. Aaa 5.50 1/01/23 650 612,248
Chicago Wstewtr. Trans. Rev.,
Cap. Apprec. Ref., Ser. A,
M.B.I.A. Aaa Zero 1/01/21 8,655 2,444,259
Chicago Wtr. Rev., Cap. Apprec.,
F.G.I.C. Aaa Zero 11/01/16 3,055 1,151,246
Onterie Ctr. Hsg. Fin. Corp.
Mtge. Rev.,
Ser. A, M.B.I.A. Aaa 7.00 7/01/12 1,575 1,634,188
Ser. A, M.B.I.A. Aaa 7.05 7/01/27 5,400 5,610,600
--------------
22,342,414
----------------------------------------------------------------------------------------
Indiana 1.6%
Trans. Fin. Auth. Hwy., Ser. A Aa2 5.50 12/01/22 5,500 5,286,710
----------------------------------------------------------------------------------------
Louisiana 0.7%
New Orleans, Gen. Oblig., Cap.
Apprec., A.M.B.A.C. Aaa Zero 9/01/09 4,000 2,407,360
</TABLE>
See Notes to Financial Statements 37
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Maine 0.7%
Maine Str. Turnpike Auth. Rev.,
F.G.I.C. Aaa 5.50% 7/01/30 $ 2,500 $ 2,362,950
----------------------------------------------------------------------------------------
Massachusetts 0.6%
Massachusetts St. Hlth. & Edl.
Facs. Auth. Rev., F.G.I.C. Aaa 5.875 10/01/29 2,000 1,979,180
----------------------------------------------------------------------------------------
Michigan 4.5%
Detroit Dwntwn. Dev., Ser. A,
A.M.B.A.C. Aaa 5.75 7/15/15 1,820 1,834,051
Detroit Michigan Sewage Disposal
Rev.,
Non-prerefunded Aaa 6.857 7/01/23 1,500(d) 1,365,000
Prerefunded Aaa 6.857 7/01/23 5,000(c)(d) 5,256,250
Michigan St. Hosp. Fin. Auth.
Rev., Mid. Michigan Oblig.,
M.B.I.A. Aaa 7.50 6/01/15 2,350(c) 2,403,298
Saginaw Hosp. Fin. Auth., St.
Luke's Hosp., Ser. C, M.B.I.A. Aaa 6.50 7/01/11 4,000 4,142,760
--------------
15,001,359
----------------------------------------------------------------------------------------
Mississipi 0.7%
Harrison Cnty. Wste. Wtr. Mgmt.
Dist. Rev., Wstewtr. Treatmt.,
Facs. Auth., F.G.I.C. Aaa 6.50 2/01/06 2,400 2,482,128
----------------------------------------------------------------------------------------
Missouri 0.5%
Missouri St. Hlth. & Edl. Facs.
Rev.,
SSM Hlthcare, Ref., Ser. AA Aaa 6.25 6/01/16 285(c) 298,084
SSM Hlthcare, Unref., Ser. AA,
M.B.I.A. Aaa 6.25 6/01/16 1,215 1,237,672
--------------
1,535,756
----------------------------------------------------------------------------------------
Montana 0.6%
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 2,083,300
</TABLE>
38 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New Jersey 6.9%
East Orange Bd. Edl. Ctfs. Part.,
Cap. Apprec., F.S.A. Aaa Zero 2/01/15 $ 785 $ 331,843
Cap. Apprec., F.S.A. Aaa Zero 2/01/16 650 256,834
Cap. Apprec., F.S.A. Aaa Zero 2/01/18 2,645 913,054
Cap. Apprec., F.S.A. Aaa Zero 8/01/18 425 142,384
Jersey City Swr. Auth.,
A.M.B.A.C. Aaa 6.00% 1/01/10 2,585 2,738,420
A.M.B.A.C. Aaa 6.25 1/01/14 4,255 4,614,037
New Jersey Econ. Dev. Auth. Rev.,
Natural Gas Facs. Rev.,
M.B.I.A., A.M.T. Aaa 5.70 6/01/32 5,000 4,784,450
New Jersey Econ. Dev. Auth.,
Mkt. Trans. Facs. Rev., M.B.I.A. Aaa 5.875 7/01/11 5,900 6,069,920
Mkt. Trans. Facs. Rev., Sr.
Lien, M.B.I.A. Aaa 5.80 7/01/09 3,340 3,440,868
--------------
23,291,810
----------------------------------------------------------------------------------------
New York 13.5%
Islip Res. Rec., Ser. B,
A.M.B.A.C. Aaa 7.20 7/01/10 1,750 1,977,815
Long Island Pwr. Auth. New York
Elec. Sys. Rev.,
Cap. Apprec., F.S.A. Aaa Zero 6/01/25 5,000 1,112,500
Cap. Apprec., F.S.A. Aaa Zero 6/01/26 7,500 1,571,700
Cap. Apprec., F.S.A. Aaa Zero 6/01/28 4,735 876,922
Met. Trans. Auth. N.Y. Trans.
Facs. Rev., F.S.A. Aaa 5.75 7/01/11 5,000 5,123,950
Metropolitan Trans. Auth. New
York Dedicated Tax Fund F.G.I.C. Aaa 6.00 4/01/30 3,000 3,019,890
New York City,
Ser. G, M.B.I.A. Aaa 5.75 2/01/14 3,000 3,037,110
Cap. Apprec., Ser. G, M.B.I.A. Aaa Zero 8/01/07 3,290 2,237,924
New York St. Dorm. Auth. Rev.,
Montefiore Med. Ctr., A.M.B.A.C. Aaa 6.00 8/01/08 3,400 3,564,152
</TABLE>
See Notes to Financial Statements 39
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New York St. Envir. Facs. Corp.,
Poll. Ctrl. Rev. Aaa 5.70% 7/15/12 $ 2,375 $ 2,424,661
Poll. Ctrl. Rev. Aaa 5.75 7/15/13 1,060 1,081,720
Poll. Ctrl. Rev. Aaa 5.80 7/15/14 3,755 3,829,424
New York St. Local Govt.
Assistance Corp., Ref. Ser. E,
M.B.I.A. Aaa 5.00 4/01/21 5,000 4,479,550
Port Auth. New York & New Jersey
Cons., Ser. 99, F.G.I.C. Aaa 5.90 11/01/11 7,665 7,882,609
Suffolk Cnty. Judicial Facs.
Agcy. Serv. Agreement Rev.,
A.M.B.A.C. Aaa 5.75 10/15/12 3,000 3,083,640
--------------
45,303,567
----------------------------------------------------------------------------------------
Ohio 0.3%
Lebanon Wtrwks. Sys. Rev. Ref.
Impvt., 1st Mtg. Aaa 5.30 12/01/24 1,000 918,460
----------------------------------------------------------------------------------------
Oklahoma 2.4%
Norman Reg'l. Hosp. Auth., Rev.
Ref., Ser. A, M.B.I.A. Aaa 5.50 9/01/11 4,110 4,115,097
Oklahoma City Arpt. Trust, Jr.
Lien, Ser. 24, A.M.B.A.C.,A.M.T. Aaa 5.75 2/01/18 2,620 2,565,556
Oklahoma Hsg. Fin. Agcy. Single
Family Rev., Amt. Mtg. Homeown.
Loan Pg. Series A 2, G.N.M.A.,
F.N.M.A. Aaa 6.35 9/01/27 1,430 1,439,538
--------------
8,120,191
----------------------------------------------------------------------------------------
Pennsylvania 0.9%
Philadelphia Mun. Auth. Rev.,
Criminal Justice Ctr., Ser. A,
M.B.I.A. Aaa 6.90 11/15/03 3,000 3,145,680
----------------------------------------------------------------------------------------
Puerto Rico 3.0%
Puerto Rico Pub. Bldgs. Auth.
Rev., Gov't. Facs., Ser. A,
A.M.B.A.C. Aaa 6.25 7/01/13 1,700 1,860,055
</TABLE>
40 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Puerto Rico Tel. Auth. Rev.,
Ser. I, M.B.I.A., R.I.B.S. Aaa 6.639% 1/25/07 $ 4,100(c) $ 4,228,125
Ser. I, M.B.I.A., R.I.B.S. Aaa 6.56 1/16/15 3,800(c) 4,004,250
--------------
10,092,430
----------------------------------------------------------------------------------------
South Dakota 1.7%
So. Dakota Hsg. Dev. Auth.,
Homeownership Mtge., Ser. F,
A.M.T. Aa1 5.80 5/01/28 5,975 5,681,986
----------------------------------------------------------------------------------------
Tennessee 1.6%
Met. Gov't. Nashville & Davidson
Cnty. Wtr. & Swr. Rev.,
A.M.B.A.C., R.I.B.S Aaa 7.628 1/01/22 5,000(c) 5,356,250
----------------------------------------------------------------------------------------
Texas 9.6%
Austin Util. Sys. Rev. Comb.,
Ser. A, M.B.I.A. Aaa 4.875 11/15/10 5,300 5,013,058
Austin Util. Sys. Rev.,
Preref. Cap. Apprec., Ser. A Aaa 5.40 5/15/03 725(c) 619,462
Unref. Bal. Cap. Apprec., Ser. A Aaa 5.40 5/15/03 3,275 2,791,610
Harris Cnty. Texas, Ref. Toll
Road Sub. Lien, F.G.I.C. Aaa 6.00 8/01/13 1,795 1,860,033
Houston Arpt. Sys. Rev., Aaa 7.20 7/01/13 3,900 4,325,295
Houston Arpt. Sys. Rev., Spec.
Facs. People Mover, Ser. A,
F.S.A. Aaa 6.00 7/15/05 3,255 3,364,791
Houston Wtr. & Swr. Sys. Rev.,
Jr. Lien, Ser. C, F.G.I.C. Aaa 5.375 12/01/27 10,000 9,137,800
Ref. Jr. Lien, Ser. D Aaa 6.125 12/01/25 3,000 3,005,130
Keller Ind. Sch. Dist., P.S.F.G. Aaa Zero 8/15/15 4,945 2,034,768
--------------
32,151,947
----------------------------------------------------------------------------------------
Virginia 2.3%
Richmond Met. Auth. Expwy. Rev.
Ref., F.G.I.C. Aaa 5.25 7/15/22 5,265 4,862,228
Virginia Beach Hosp. Facs. Rev.,
1st Mtge., A.M.B.A.C. Aaa 6.00 2/15/10 1,220 1,274,070
1st Mtge., A.M.B.A.C. Aaa 6.00 2/15/13 1,455 1,525,175
--------------
7,661,473
</TABLE>
See Notes to Financial Statements 41
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Washington 5.4%
Washington St. Hlthcare Facs.
Auth. Rev., Yakima Valley
Memorial Hosp. Assoc. AAA(b) 5.25% 12/01/20 $ 2,500 $ 2,247,175
Washington St. Pub. Pwr. Supply
Sys.,
Nuclear Proj. No. 1, Ser. A,
M.B.I.A. Aaa 5.75 7/01/10 7,000 7,141,050
Nuclear Proj. No. 2, Ser. A,
M.B.I.A. Aaa Zero 7/01/11 5,210 2,819,756
Nuclear Proj. No. 2, Ser. B,
F.G.I.C. Aaa 7.25 7/01/03 3,000(c) 3,074,070
Nuclear Proj. No. 3, Ser. B,
F.G.I.C. Aaa Zero 7/01/08 4,500 2,876,400
--------------
18,158,451
Total long-term investments (cost
$323,644,778) 327,400,974
--------------
SHORT-TERM INVESTMENTS 2.2%
----------------------------------------------------------------------------------------
Illinois 0.2%
Madison Cnty. Env. Improv. Rev.,
Adj., F.R.D.D., A.M.T., Ser. A A1+(b) 6.20 5/01/00 500 500,000
----------------------------------------------------------------------------------------
Louisiana 0.2%
Plaquemines Parish Env. Rev.,
Adj. Ref. Bp. Exploration & Oil,
F.R.D.D., A.M.T. P1 6.20 5/01/00 600 600,000
----------------------------------------------------------------------------------------
New Mexico 0.7%
Farmington Poll. Ctrl. Rev.,
Merlots, F.R.W.D., Ser. DD NR 4.90 5/03/00 2,500 2,500,000
</TABLE>
42 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Portfolio of Investments as of April 30, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Texas 1.1%
Brazos Rvr. Auth. Poll. Ctrl.
Rev.,
A.M.T., F.R.D.D., Ser. C VMIG1 6.25% 5/01/00 $ 1,200 $ 1,200,000
Texas Util. Elec. Co., F.R.D.D.,
A.M.T., A.M.B.A.C. VMIG1 6.25 5/01/00 100 100,000
Gulf Coast Wste. Disp. Auth.,
Env. Fac. Rev., A.M.T., Ser. 98 A1+(b) 6.20 5/01/00 1,100 1,100,000
Env. Fac. Rev., A.M.T., Ser. 97 P1 6.25 5/01/00 1,200 1,200,000
--------------
3,600,000
Total short-term investments
(cost $7,200,000) 7,200,000
--------------
Total Investments 99.9% (cost
$330,844,778; Note 4) 334,600,974
Other assets in excess of
liabilities 0.1% 454,962
--------------
Net Assets 100% $ 335,055,936
--------------
--------------
</TABLE>
------------------------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation
A.M.T.--Alternative Minimum Tax
F.G.I.C.--Financial Guaranty Insurance Company
F.N.M.A.--Federal National Mortgage Association
F.R.D.D.--Floating Rate (Daily) Demand Note (e)
F.R.W.D.--Floating Rate (Weekly) 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
P.S.F.G.--Public School Fund Guaranty
R.I.B.S.--Residual Interest Bearing Securities
(b) Standard & Poor's rating.
(c) Prerefunded issues are secured by escrowed cash or direct U.S. guaranteed
obligations.
(d) Inverse floating rate bond. The coupon is inversely indexed to a floating
interest rate. The rate shown is the rate at year end.
(e) The maturity date shown is 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.
See Notes to Financial Statements 43
<PAGE>
Prudential Municipal Bond Fund Insured Series
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
April 30, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $330,844,778) $ 334,600,974
Cash 81,453
Interest receivable 4,837,102
Receivable for investments sold 2,067,660
Receivable for Series shares sold 165,947
Deferred expenses and other assets 9,174
--------------
Total assets 341,762,310
--------------
LIABILITIES
Payable for investments purchased 5,552,479
Payable for Series shares reacquired 474,865
Dividends payable 318,188
Management fee payable 139,977
Accrued expenses 130,691
Distribution fee payable 90,174
--------------
Total liabilities 6,706,374
--------------
NET ASSETS $ 335,055,936
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 322,128
Paid-in capital in excess of par 335,518,190
--------------
335,840,318
Undistributed net investment income 162,490
Accumulated net realized loss on investments (4,703,068)
Net unrealized appreciation on investments 3,756,196
--------------
Net assets, April 30, 2000 $ 335,055,936
--------------
--------------
</TABLE>
44 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Statement of Assets and Liabilities Con't.
<TABLE>
<CAPTION>
April 30, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share ($238,689,736 /
22,954,663 shares of beneficial interest issued and
outstanding) $10.40
Maximum sales charge (3% of offering price) .32
--------------
Maximum offering price to public $10.72
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($91,988,842 / 8,837,394 shares of beneficial interest
issued and outstanding) $10.41
--------------
--------------
Class C:
Net asset value and redemption price per share ($2,948,547 /
283,270 shares of beneficial interest issued and
outstanding) $10.41
Sales charge (1% of offering price) .11
--------------
Offering price to public $10.52
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per share
($1,428,811 / 137,442 shares of beneficial interest issued
and outstanding) $10.40
--------------
--------------
</TABLE>
See Notes to Financial Statements 45
<PAGE>
Prudential Municipal Bond Fund Insured Series
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
April 30, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 21,489,711
--------------
Expenses
Management fee 1,898,781
Distribution fee--Class A 609,390
Distribution fee--Class B 655,259
Distribution fee--Class C 22,410
Transfer agent's fees and expenses 227,000
Custodian's fees and expenses 115,000
Registration fees 55,000
Reports to shareholders 50,000
Legal fees and expenses 25,000
Audit fees and expenses 15,000
Trustees' fees and expenses 15,000
Insurance expense 5,000
Miscellaneous 4,795
--------------
Total expenses 3,697,635
Less: Custodian fee credit (1,630)
--------------
Net expenses 3,696,005
--------------
Net investment income 17,793,706
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Investment transactions (4,988,005)
Financial futures contract transactions 922,280
--------------
(4,065,725)
--------------
Net change in unrealized depreciation on:
Investments (25,355,553)
Financial futures contracts (33,038)
--------------
(25,388,591)
--------------
Net loss on investments (29,454,316)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (11,660,610)
--------------
--------------
</TABLE>
46 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Year
Ended Ended
April 30, 2000 April 30, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 17,793,706 $ 20,209,415
Net realized gain (loss) on investment
transactions (4,065,725) 1,085,264
Net change in unrealized appreciation
(depreciation) of investments (25,388,591) 8,633,133
-------------- --------------
Net increase (decrease) in net assets
resulting from operations (11,660,610) 29,927,812
-------------- --------------
Dividends and distributions (Note 1)
Dividends from net investment income
Class A (11,662,405) (11,087,816)
Class B (5,906,384) (8,878,895)
Class C (128,146) (74,699)
Class Z (96,771) (168,005)
-------------- --------------
(17,793,706) (20,209,415)
-------------- --------------
Dividends in excess of net investment income
Class A -- (165,620)
Class B -- (128,222)
Class C -- (1,348)
Class Z -- (2,596)
-------------- --------------
-- (297,786)
-------------- --------------
Dividends from net capital gains
Class A -- (2,053,682)
Class B -- (1,589,957)
Class C -- (16,718)
Class Z -- (32,185)
-------------- --------------
-- (3,692,542)
-------------- --------------
Series share transactions (net of share
conversions)
(Note 5):
Net proceeds from shares sold 57,490,106 56,402,154
Net asset value of shares issued in
reinvestment of dividends and
distributions 10,004,943 13,991,834
Cost of shares reacquired (136,825,105) (104,987,356)
-------------- --------------
Net decrease in net assets from Series share
transactions (69,330,056) (34,593,368)
-------------- --------------
Total decrease (98,784,372) (28,865,299)
NET ASSETS
Beginning of year 433,840,308 462,705,607
-------------- --------------
End of year(a) $ 335,055,936 $ 433,840,308
-------------- --------------
-------------- --------------
---------------
(a) Includes undistributed net investment income
of $ 162,490 $ --
-------------- --------------
-------------- --------------
</TABLE>
See Notes to Financial Statements 47
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements
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 two series: the High Income
Series and the Insured Series. Investment operations for Class A, Class B, Class
C and Class Z shares of each series commenced on January 22, 1990, September 17,
1987, August 1, 1994 and September 16, 1996, respectively.
The investment objectives of the series are as follows: (i) the objective
of the High Income Series is to provide the maximum amount of income that is
eligible for exclusion from federal income taxes, (ii) the objective of the
Insured 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.
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. When the contract expires or is closed, the gain or
48
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
loss is realized and is presented in the statement of operations as net realized
gain (loss) on financial futures contracts.
The Fund invests in financial futures contracts in order to hedge its
existing portfolio securities, or securities the Fund intends to purchase,
against fluctuations in value caused by changes in prevailing interest rates.
Should interest rates move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the underlying
hedged assets.
Options: The Fund may either purchase or write options in order to
hedge against adverse market movements or fluctuations in value caused by
changes in prevailing interest rates with respect to securities which the Fund
currently owns or intends to purchase. When the Fund purchases an option, it
pays a premium and an amount equal to that premium is recorded as an investment.
When the Fund writes an option, it receives a premium and an amount equal to
that premium is recorded as a liability. The investment or liability is adjusted
daily to reflect the current market value of the option. If an option expires
unexercised, the Fund realizes a gain or loss to the extent of the premium
received or paid. If an option is exercised, the premium received or paid is an
adjustment to the proceeds from the sale or the cost basis of the purchase in
determining whether the Fund has realized a gain or loss. The difference between
the premium and the amount received or paid on effecting a closing purchase or
sale transaction is also treated as a realized gain or loss. Gain or loss on
purchased options is included in net realized gain (loss) on investment
transactions.
The Fund, as writer of an option, has no control over whether the
underlying securities may be sold (called) or purchased (put). As a result, the
Fund bears the market risk of an unfavorable change in the price of the security
underlying the written option. The Fund, as purchaser of an option, bears the
risk of the potential inability of the counterparties to meet the terms of their
contracts.
Securities Transactions and Net 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. The Fund amortizes premiums and accretes original
issue discount on portfolio securities 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.
Expenses are recorded on the accrual basis which may require the use of certain
estimates by management.
49
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
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 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.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with Statement of Position 93-2:
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. For
the fiscal year ended April 30, 2000, the effect of applying this statement was
to increase undistributed net investment income and decrease accumulated net
realized loss by $36,989 and $162,490 due to the sale of securities purchased
with market discount for the High Income and Insured Series, respectively.
Custody Fee Credits: The Fund has an arrangement with its custodian
bank, whereby uninvested monies earn credits which reduce the fees charged by
the custodian.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'), doing business as Prudential Investments ('PI,'
the Subadviser or the investment adviser); PIC furnishes investment advisory
services in connection with the management of the Fund. PIFM pays for the
subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PIFM 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 assets of each series in excess
of $1 billion. PIFM has agreed to voluntarily waive a portion of the High Income
Series management fee, which amounted to $50,963 for the year ended April 30,
2000. Such amount represents .05 of 1% of average daily net assets, or $.005 per
share for the year
50
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
ended April 30, 2000. The Series is not required to reimburse PIFM for such
waiver. Effective June 1, 1999, PIFM eliminated its voluntary waiver of a
portion of its management fee.
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'). The Fund compensates PIMS for distributing and
servicing the Fund's Class A, Class B and Class C shares, pursuant to plans of
distribution (the 'Class A, B and C Plans'), regardless of expenses actually
incurred by it. The distribution fees are accrued daily and payable monthly. No
distribution or service fees were paid to PIMS as distributor of the Class Z
shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS 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. For the year ended April 30, 2000, such expenses for the Fund were
.25 of 1%, .50 of 1% and .75 of 1% of the average daily net assets of the Class
A, B and C shares, respectively.
PIMS has advised the High Income Series and Insured Series that it
received approximately $267,400 ($167,500-Class A; $99,900-Class C) and $30,200
($27,500-Class A; $2,700-Class C), respectively, in front-end sales charges
during the year ended April 30, 2000. From these fees, PIMS paid such sales
charges to affiliated broker-dealers which in turn paid commissions to
salespersons and incurred other distribution costs.
PIMS has advised the High Income Series and Insured Series that for the
year ended April 30, 2000, it received approximately $1,254,000
($1,214,600-Class B; $39,400-Class C) and $184,200 ($182,200-Class B;
$2,000-Class C), respectively, in contingent deferred sales charges imposed upon
certain redemptions by Class B and C shareholders.
PIC, PIMS and PIFM are wholly owned subsidiaries of The Prudential
Insurance Company of America.
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The Funds pay a
commitment fee of .080 of 1% of the unused portion of the credit facility. The
commitment fee is accrued and paid quarterly on a pro rata basis by the Funds.
The expiration date of the SCA is March 9, 2001. Prior to March 9, 2000, the
commitment fee was .065 of 1% of the unused portion of the credit facility. The
Fund did not borrow any amounts pursuant to the SCA
51
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
during the year ended April 30, 2000. The purpose of the agreement is to serve
as an alternative source of funding for capital share redemptions.
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended April 30, 2000, the
Fund incurred fees of approximately $530,200 ($352,100-High Income Series;
$178,100-Insured Series) for the services of PMFS. As of April 30, 2000,
approximately $42,200 ($28,200-High Income Series; $14,000-Insured 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 nonaffiliates.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments,
for the year ended April 30, 2000, were as follows:
<TABLE>
<CAPTION>
Series Purchases Sales
------------------------------------------------------- ------------ ------------
<S> <C> <C>
High Income $293,848,358 $375,320,040
Insured 97,151,939 166,486,956
</TABLE>
At April 30, 2000, the High Income Series sold 176 U.S. Treasury bond
futures expiring in June 2000. The values of these financial futures contracts
at April 30, 2000 were as follows:
<TABLE>
<CAPTION>
High Income
Series
-----------
<S> <C>
Value at disposition $16,782,391
Value at April 30, 2000 16,995,000
-----------
Unrealized loss $ (212,609)
-----------
-----------
</TABLE>
Transactions in options written during the year ended April 30, 2000 for
the High Income Series were as follows:
<TABLE>
<CAPTION>
Number of Premiums
Contracts Received
--------- --------
<S> <C> <C>
Options outstanding at April 30, 1999 -- --
Options written 400 $425,375
Options expired 400 425,375
--------- --------
Options outstanding at April 30, 2000 -- $ --
</TABLE>
52
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
The federal income tax basis of the Fund's investments, at April 30, 2000
was $1,008,001,908 for High Income Series and $334,600,974 for Insured Series
and, accordingly, net unrealized appreciation (depreciation) 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 Income $ (23,104,186) $35,366,075 $58,470,261
Insured 3,756,196 8,819,696 5,063,500
</TABLE>
The High Income Series has a net capital loss carryforward as of April 30,
2000 of approximately $26,590,000, of which $2,024,000 expires in 2002,
$5,361,000 expires in 2003, $6,383,000 expires in 2004, $3,225,000 expires in
2005, $554,000 expires in 2006, $3,137,000 expires in 2007 and $5,906,000
expires in 2008. No capital gains distribution is expected to be paid to
shareholders until net gains have been realized in excess of the aggregate of
such amounts.
The Insured Series has a capital loss carryforward as of April 30, 2000 of
approximately $2,919,000, which expires in 2008. No capital gains distribution
is expected to be paid to shareholders until net gains have been realized in
excess of this amount.
In addition, the High Income Series and Insured Series elected to treat
net realized capital losses of approximately $9,439,586 and $1,784,353,
respectively incurred in the year ended April 30, 2000 as having been incurred
in the following fiscal year.
Note 5. Capital
The High Income Series and Insured Series offers Class A, Class B, Class C and
Class Z shares. Class A shares are sold with a front-end sales charge of up to
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 front-end sales charge of 1% and a contingent
deferred sales charge of 1% during the first 18 months. 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 qualify to purchase Class A shares at net asset value. Class Z
shares are not subject to any sales or redemption charge and are offered
exclusively for sale to a limited group of investors.
53
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
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 Income Series Insured Series
Class A Class A
----------------------------- ---------------------------
Year Ended April 30, 2000 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares issued 11,155,788 $ 118,089,368 4,272,410 $ 45,211,746
Shares issued in
reinvestment of
dividends and
distributions 1,400,233 14,812,765 614,176 6,469,154
Shares reacquired (15,491,720) (163,745,706) (6,006,710) (63,240,650)
----------- ------------- ---------- ------------
Net increase (decrease) in
shares outstanding
before conversion (2,935,699) (30,843,573) (1,120,124) (11,559,750)
Shares issued upon
conversion from Class B 6,311,283 66,835,489 1,592,700 16,791,582
----------- ------------- ---------- ------------
Net increase (decrease) in
shares outstanding 3,375,584 $ 35,991,916 472,576 $ 5,231,832
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
<CAPTION>
High Income Series Insured Series
Class A Class A
----------------------------- ---------------------------
Year Ended April 30, 1999 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares issued 9,922,785 $ 112,624,489 3,150,940 $ 35,684,005
Shares issued in
reinvestment of
dividends and
distributions 1,173,562 13,319,273 669,267 7,562,399
Shares reacquired (7,359,450) (83,429,491) (3,182,291) (35,899,590)
----------- ------------- ---------- ------------
Net increase in shares
outstanding before
conversion 3,736,897 42,514,271 637,916 7,346,814
Shares issued upon
conversion from Class B 4,930,525 56,076,061 1,531,912 17,371,217
----------- ------------- ---------- ------------
Net increase in shares
outstanding 8,667,422 $ 98,590,332 2,169,828 $ 24,718,031
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
</TABLE>
54
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
<TABLE>
<CAPTION>
High Income Series Insured Series
Class B Class B
----------------------------- ---------------------------
Year Ended April 30, 2000 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
Shares issued 5,702,990 $ 60,755,141 876,277 $ 9,261,018
<S> <C> <C> <C> <C>
Shares issued in
reinvestment of
dividends and
distributions 1,237,118 13,119,382 319,614 3,379,000
Shares reacquired (13,781,073) (145,504,647) (6,454,293) (68,181,046)
----------- ------------- ---------- ------------
Net decrease in shares
outstanding before
conversion (6,840,965) (71,630,124) (5,258,402) (55,541,028)
Shares reacquired upon
conversion to Class A (6,312,429) (66,835,489) (1,590,681) (16,791,582)
----------- ------------- ---------- ------------
Net decrease in shares
outstanding (13,153,394) $(138,465,613) (6,849,083) $(72,332,610)
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
<CAPTION>
High Income Series Insured Series
Class B Class B
----------------------------- ---------------------------
Year Ended April 30, 1999 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares issued 11,345,964 $ 128,924,744 1,204,352 $ 13,614,748
Shares issued in
reinvestment of
dividends and
distributions 1,343,215 15,249,705 547,328 6,190,618
Shares reacquired (8,975,019) (101,906,384) (5,908,598) (66,872,772)
----------- ------------- ---------- ------------
Net increase (decrease) in
shares outstanding
before conversion 3,714,160 42,268,065 (4,156,918) (47,067,406)
Shares reaquired upon
conversion to Class A (4,931,462) (56,076,061) (1,530,249) (17,371,217)
----------- ------------- ---------- ------------
Net decrease in shares
outstanding (1,217,302) $ (13,807,996) (5,687,167) $(64,438,623)
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
<CAPTION>
High Income Series Insured Series
Class C Class C
----------------------------- ---------------------------
Year Ended April 30, 2000 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares issued 1,049,114 $ 11,208,188 99,569 $ 1,066,589
Shares issued in
reinvestment of
dividends and
distributions 101,234 1,072,623 7,094 74,764
Shares reacquired (1,146,727) (12,092,217) (65,397) (684,934)
----------- ------------- ---------- ------------
Net increase in shares
outstanding 3,621 $ 188,594 41,266 $ 456,419
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
</TABLE>
55
<PAGE>
Prudential Municipal Bond Fund
Notes to Financial Statements Cont'd.
<TABLE>
<CAPTION>
High Income Series Insured Series
Class C Class C
----------------------------- ---------------------------
Year Ended April 30, 1999 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
Shares issued 1,518,505 $ 17,214,668 125,361 $ 1,422,776
<S> <C> <C> <C> <C>
Shares issued in
reinvestment of
dividends and
distributions 76,753 870,798 4,553 51,493
Shares reacquired (474,223) (5,378,215) (24,331) (273,385)
----------- ------------- ---------- ------------
Net increase in shares
outstanding 1,121,035 $ 12,707,251 105,583 $ 1,200,884
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
<CAPTION>
High Income Series Insured Series
Class Z Class Z
----------------------------- ---------------------------
Year Ended April 30, 2000 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares issued 528,208 $ 5,602,041 186,798 $ 1,950,753
Shares issued in
reinvestment of
dividends and
distributions 43,432 462,840 7,710 82,025
Shares reacquired (1,042,909) (11,081,280) (442,855) (4,718,475)
----------- ------------- ---------- ------------
Net decrease in shares
outstanding (471,269) $ (5,016,399) (248,347) $ (2,685,697)
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
<CAPTION>
High Income Series Insured Series
Class Z Class Z
----------------------------- ---------------------------
Year Ended April 30, 1999 Shares Amount Shares Amount
--------------------------- ----------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Shares issued 1,096,115 $ 12,439,510 503,141 $ 5,680,625
Shares issued in
reinvestment of
dividends and
distributions 61,271 694,740 16,560 187,324
Shares reacquired (799,663) (9,043,372) (171,745) (1,941,609)
----------- ------------- ---------- ------------
Net increase (decrease) in
shares outstanding 357,723 $ 4,090,878 347,956 $ (3,926,340)
----------- ------------- ---------- ------------
----------- ------------- ---------- ------------
</TABLE>
56
<PAGE>
Prudential Municipal Bond Fund
Portfolio of Investments as of April 30, 2000 Cont'd.
Financial
Highlights
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
<PAGE>
Prudential Municipal Bond Fund High Income Series
Financial Highlights
<TABLE>
<CAPTION>
Class A
--------------
Year Ended
April 30, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.21
--------------
Income from investment operations
Net investment income 0.63
Net realized and unrealized gain (loss) on investment
transactions (0.99)
--------------
Total from investment operations (0.36)
--------------
Less distributions
Dividends from net investment income (0.63)
--------------
Net asset value, end of year $ 10.22
--------------
--------------
TOTAL RETURN(a): (3.31)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $503,874
Average net assets (000) $506,888
Ratios to average net assets:
Expenses, including distribution fees .82%
Expenses, excluding distribution fees .57%
Net investment income 5.86%
For Class A, B, C and Z shares:
Portfolio turnover rate 27%
</TABLE>
------------------------------
(a) 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 year reported and includes reinvestment of dividends and
distributions.
(b) Net of management fee waiver.
58 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.31 $ 10.84 $ 10.70 $ 10.72
---------------- ---------------- ---------------- ----------------
.63(b) .67(b) .70(b) .72(b)
(.10) .47 .14 (.02)
---------------- ---------------- ---------------- ----------------
.53 1.14 .84 .70
---------------- ---------------- ---------------- ----------------
(.63) (.67) (.70) (.72)
---------------- ---------------- ---------------- ----------------
$ 11.21 $ 11.31 $ 10.84 $ 10.70
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
4.96% 10.80% 8.03% 6.55%
$514,952 $421,504 $334,062 $223,073
$474,901 $381,735 $294,940 $162,329
.66%(b) .62%(b) 0.64%(b) 0.64%(b)
.51%(b) .52%(b) 0.54%(b) 0.54%(b)
5.73%(b) 6.03%(b) 6.44%(b) 6.58%(b)
16% 13% 26% 35%
</TABLE>
See Notes to Financial Statements 59
<PAGE>
Prudential Municipal Bond Fund High Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
--------------
Year Ended
April 30, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.21
--------------
Income from investment operations
Net investment income 0.60
Net realized and unrealized gain (loss) on investment
transactions (0.99)
--------------
Total from investment operations (0.39)
--------------
Less distributions
Dividends from net investment income (0.60)
--------------
Net asset value, end of year $ 10.22
--------------
--------------
TOTAL RETURN(a): (3.55)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $457,841
Average net assets (000) $559,879
Ratios to average net assets:
Expenses, including distribution fees 1.07%
Expenses, excluding distribution fees .57%
Net investment income 5.59%
</TABLE>
------------------------------
(a) 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 year reported and includes reinvestment of dividends and
distributions.
(b) Net of management fee waiver.
60 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.31 $ 10.84 $ 10.69 $ 10.72
---------------- ---------------- ---------------- ----------------
.59(b) .63(b) .66(b) .68(b)
(.10) .47 .15 (.03)
---------------- ---------------- ---------------- ----------------
.49 1.10 .81 .65
---------------- ---------------- ---------------- ----------------
(.59) (.63) (.66) (.68)
---------------- ---------------- ---------------- ----------------
$ 11.21 $ 11.31 $ 10.84 $ 10.69
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
4.59% 10.36% 7.71% 6.12%
$649,706 $669,223 $665,525 $799,048
$666,885 $669,132 $725,305 $900,115
1.01%(b) 1.02%(b) 1.04%(b) 1.04%(b)
.51%(b) .52%(b) 0.54%(b) 0.54%(b)
5.38%(b) 5.63%(b) 6.05%(b) 6.19%(b)
</TABLE>
See Notes to Financial Statements 61
<PAGE>
Prudential Municipal Bond Fund High Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
--------------
Year Ended
April 30, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.21
--------------
Income from investment operations
Net investment income 0.57
Net realized and unrealized gain (loss) on investment
transactions (0.99)
--------------
Total from investment operations (0.42)
--------------
Less distributions
Dividends from net investment income (0.57)
--------------
Net asset value, end of year $ 10.22
--------------
--------------
TOTAL RETURN(a): (3.79)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 30,061
Average net assets (000) $ 32,762
Ratios to average net assets:
Expenses, including distribution fees 1.32%
Expenses, excluding distribution fees .57%
Net investment income 5.36%
</TABLE>
------------------------------
(a) 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 year reported and includes reinvestment of dividends and
distributions.
(b) Net of management fee waiver.
62 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund High Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.31 $ 10.84 $10.69 $10.72
-------- -------- ------- -------
.57(b) .61(b) .63(b) .65(b)
(.10) .47 .15 (.03)
-------- -------- ------- -------
.47 1.08 .78 .62
-------- -------- ------- -------
(.57) (.61) (.63) (.65)
-------- -------- ------- -------
$ 11.21 $ 11.31 $10.84 $10.69
-------- -------- ------- -------
-------- -------- ------- -------
4.33% 10.09% 7.44% 5.86%
$ 32,939 $ 20,554 $9,563 $6,471
$ 26,114 $ 14,932 $8,060 $5,608
1.26%(b) 1.27%(b) 1.29%(b) 1.29%(b)
.51%(b) .52%(b) 0.54%(b) 0.54%(b)
5.15%(b) 5.39%(b) 5.80%(b) 5.93%(b)
</TABLE>
See Notes to Financial Statements 63
<PAGE>
Prudential Municipal Bond Fund High Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class Z
---------------------------------------------------
September 16,
Year Year Ended 1996(c)
Ended April 30, Through
April 30, ------------------ April 30,
2000 1999 1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 11.20 $ 11.30 $10.83 $ 10.79
---------- ------- ------ -------------
Income from investment
operations
Net investment income .65 .65(b) .68(b) .45(b)
Net realized and unrealized gain
(loss) on investment
transactions (.99) (.10) .47 .04
---------- ------- ------ -------------
Total from investment
operations (.34) .55 1.15 .49
---------- ------- ------ -------------
Less distributions
Dividends from net investment
income (.65) (.65) (.68) (.45)
---------- ------- ------ -------------
Net asset value, end of period $ 10.21 $ 11.20 $11.30 $ 10.83
---------- ------- ------ -------------
---------- ------- ------ -------------
TOTAL RETURN(a): (3.07)% 5.11% 10.91% 4.36%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 7,802 $13,839 $9,919 $ 2,719
Average net assets (000) $ 10,493 $13,648 $6,064 $ 704
Ratios to average net assets:
Expenses, including
distribution fees .57% .51%(b) .52%(b) 0.54%(b)(d)
Expenses, excluding
distribution fees .57% .51%(b) .52%(b) 0.54%(b)(d)
Net investment income 6.07% 5.89%(b) 6.14%(b) 6.55%(b)(d)
</TABLE>
------------------------------
(a) 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.
(b) Net of management fee waiver.
(c) Commencement of offering of Class Z shares.
(d) Annualized.
64 See Notes to Financial Statements
<PAGE>
This page intentionally left blank
<PAGE>
Prudential Municipal Bond Fund Insured Series
Financial Highlights
<TABLE>
<CAPTION>
Class A
--------------
Year Ended
April 30, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.18
--------------
Income from investment operations
Net investment income .51
Net realized and unrealized gain (loss) on investment
transactions (.78)
--------------
Total from investment operations (.27)
--------------
Less distributions
Dividends from net investment income (.51)
Distributions in excess of net investment income --
Distributions from capital gains --
--------------
Total distributions (.51)
--------------
Net asset value, end of year $ 10.40
--------------
--------------
TOTAL RETURN(a): (2.38)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $238,690
Average net assets (000) $243,756
Ratios to average net assets:
Expenses, including distribution fees .88%
Expenses, excluding distribution fees .63%
Net investment income 4.78%
For Class A, B, C and Z shares:
Portfolio turnover rate 26%
</TABLE>
------------------------------
(a) 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 year reported and includes reinvestment of dividends and
distributions.
(b) Net of management fee waiver.
(c) Less than $.005 per share.
66 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.05 $ 10.90 $ 10.94 $ 10.83
---------------- ---------------- ---------------- ----------------
.53 .53(b) .55(b) .58(b)
.23 .40 .08 .11
---------------- ---------------- ---------------- ----------------
.76 .93 .63 .69
---------------- ---------------- ---------------- ----------------
(.53) (.53) (.55) (.58)
(.01) --(c) (.01) --
(.09) (.25) (.11) --
---------------- ---------------- ---------------- ----------------
(.63) (.78) (.67) (.58)
---------------- ---------------- ---------------- ----------------
$ 11.18 $ 11.05 $ 10.90 $ 10.94
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
6.88% 8.67% 5.74% 6.47%
$251,300 $224,409 $208,411 $139,548
$240,652 $222,115 $187,371 $102,456
0.75% 0.69%(b) 0.68%(b) 0.68%(b)
0.60% 0.59%(b) 0.58%(b) 0.58%(b)
4.61% 4.75%(b) 4.95%(b) 5.20%(b)
15% 85% 110% 68%
</TABLE>
See Notes to Financial Statements 67
<PAGE>
Prudential Municipal Bond Fund Insured Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
--------------
Year Ended
April 30, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.19
--------------
Income from investment operations
Net investment income .48
Net realized and unrealized gain (loss) on investment
transactions (.78)
--------------
Total from investment operations (.30)
--------------
Less distributions
Dividends from net investment income (.48)
Distributions in excess of net investment income --
Distributions from capital gains --
--------------
Total distributions (.48)
--------------
Net asset value, end of year $ 10.41
--------------
--------------
TOTAL RETURN(a): (2.62)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 91,989
Average net assets (000) $131,052
Ratios to average net assets:
Expenses, including distribution fees 1.13%
Expenses, excluding distribution fees .63%
Net investment income 4.51%
</TABLE>
------------------------------
(a) 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 year reported and includes reinvestment of dividends and
distributions.
(b) Net of management fee waiver.
(c) Less than $.005 per share.
68 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.06 $ 10.91 $ 10.95 $ 10.84
---------------- ---------------- ---------------- ----------------
.48 .49(b) .50(b) .54(b)
.23 .40 .08 .11
---------------- ---------------- ---------------- ----------------
.71 .89 .58 .65
---------------- ---------------- ---------------- ----------------
(.48) (.49) (.50) (.54)
(.01) --(c) (.01) --
(.09) (.25) (.11) --
---------------- ---------------- ---------------- ----------------
(.58) (.74) (.62) (.54)
---------------- ---------------- ---------------- ----------------
$ 11.19 $ 11.06 $ 10.91 $ 10.95
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
6.50% 8.23% 5.32% 6.04%
$175,520 $236,370 $298,005 $443,391
$208,775 $270,553 $365,891 $524,452
1.10% 1.09%(b) 1.08%(b) 1.08%(b)
0.60% 0.59%(b) 0.58%(b) 0.58%(b)
4.25% 4.35%(b) 4.54%(b) 4.80%(b)
</TABLE>
See Notes to Financial Statements 69
<PAGE>
Prudential Municipal Bond Fund Insured Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
--------------
Year Ended
April 30, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $11.19
-------
Income from investment operations
Net investment income .46
Net realized and unrealized gain (loss) on investment
transactions (.78)
-------
Total from investment operations (.32)
-------
Less distributions
Dividends from net investment income (.46)
Distributions in excess of net investment income --
Distributions from capital gains --
-------
Total distributions (.46)
-------
Net asset value, end of year $10.41
-------
-------
TOTAL RETURN(a): (2.86)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $2,949
Average net assets (000) $2,988
Ratios to average net assets:
Expenses, including distribution fees 1.38%
Expenses, excluding distribution fees .63%
Net investment income 4.29%
</TABLE>
------------------------------
(a) 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 year reported and includes reinvestment of dividends and
distributions.
(b) Net of management fee waiver.
(c) Less than $.005 per share.
70 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund Insured Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------------------------
Year Ended April 30,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.06 $ 10.91 $10.95 $10.84
-------- -------- ------- -------
.45 .46(b) .48(b) .51(b)
.23 .40 .08 .11
-------- -------- ------- -------
.68 .86 .56 .62
-------- -------- ------- -------
(.45) (.46) (.48) (.51)
(.01) --(c) (.01) --
(.09) (.25) (.11) --
-------- -------- ------- -------
(.55) (.71) (.60) (.51)
-------- -------- ------- -------
$ 11.19 $ 11.06 $10.91 $10.95
-------- -------- ------- -------
-------- -------- ------- -------
6.24% 7.96% 5.06% 5.78%
$ 2,708 $ 1,509 $ 888 $1,137
$ 1,856 $ 1,142 $ 973 $ 827
1.35% 1.34%(b) 1.33%(b) 1.33%(b)
0.60% 0.59%(b) 0.58%(b) 0.58%(b)
4.03% 4.11%(b) 4.29%(b) 4.56%(b)
</TABLE>
See Notes to Financial Statements 71
<PAGE>
Prudential Municipal Bond Fund Insured Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class Z
--------------------------------------------------
September 16,
Year Year Ended 1996(c)
Ended April 30, Through
April 30, ----------------- April 30,
2000 1999 1998 1997
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $11.18 $11.05 $10.91 $ 11.05
---------- ------ ------ -------------
Income from investment
operations
Net investment income .54 .54 .54(b) .36(b)
Net realized and unrealized gain
(loss) on investment
transactions (.78) .23 .39 (.02)
---------- ------ ------ -------------
Total from investment
operations (.24) .77 .93 .34
---------- ------ ------ -------------
Less distributions
Dividends from net investment
income (.54) (.54) (.54) (.36)
Distributions in excess of net
investment income -- (.01) --(e) (.01)
Distributions from capital gains -- (.09) (.25) (.11)
---------- ------ ------ -------------
Total distributions (.54) (.64) (.79) (.48)
---------- ------ ------ -------------
Net asset value, end of period $10.40 $11.18 $11.05 $ 10.91
---------- ------ ------ -------------
---------- ------ ------ -------------
TOTAL RETURN(a): (2.13)% 7.04% 8.68% 2.86%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $1,429 $4,312 $ 418 $ 15
Average net assets (000) $1,960 $3,523 $ 173 $ 10
Ratios to average net assets:
Expenses, including
distribution fees .63% 0.60% 0.60%(b) 0.58%(b)(d)
Expenses, excluding
distribution fees .63% 0.60% 0.60%(b) 0.58%(b)(d)
Net investment income 4.94% 4.77% 4.92%(b) 4.18%(b)(d)
</TABLE>
------------------------------
(a) 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.
(b) Net of management fee waiver.
(c) Commencement of offering of Class Z shares.
(d) Annualized.
(e) Less than $.005 per share.
72 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund
Report of Independent Accountants
To the Shareholders and Trustees of
Prudential Municipal Bond Fund
In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of High Income Series and Insured
Series (constituting Prudential Municipal Bond Fund, hereafter referred to as
the 'Fund') at April 30, 2000, the results of each of their operations for the
year then ended, the changes in each of their net assets for each of the two
years in the period then ended and the financial highlights for each of the four
years in the period then ended, in conformity with accounting principles
generally accepted in the United States. These financial statements and
financial highlights (hereafter referred to as 'financial statements') are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at April 30,
2000 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above. The accompanying financial highlights for
the year ended April 30, 1996 were audited by other independent accountants,
whose opinion dated June 13, 1996 was unqualified.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
June 21, 2000
See Notes to Financial Statements 73
<PAGE>
Prudential Municipal Bond Fund
Tax Information (Unaudited)
As required by the Internal Revenue Code, we wish to advise you as to the
federal tax status of dividends and distributions paid by the Fund during its
fiscal year ended April 30, 2000.
During its fiscal year ended April 30, 2000, the Fund paid aggregate dividends
from net investment income, all of which were federally tax-exempt interest
dividends, as follows:
<TABLE>
<CAPTION>
Dividends per Share
----------------------------------------------
Series Class A Class B Class C Class Z
------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
High Income Series $ .63 $ .60 $ .57 $ .65
Insured Series $ .51 $ .48 $ .46 $ .54
</TABLE>
Shortly after the close of the calendar year ending December 31, 2000, you will
be advised again as to the federal tax status of the dividends and distributions
received in calendar 2000. In addition, you will be advised at that time as to
the portion of your dividends which may be subject to the Alternative Minimum
Tax (AMT) as well as information with respect to state taxability.
74 See Notes to Financial Statements
<PAGE>
Prudential Municipal Bond Fund
Getting the Most from Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds,
you receive financial advice from a Prudential
Securities Financial Advisor or 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. 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 available
mutual funds to find the ones that fit your
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
should remind you that you're investing for the
long haul.
<PAGE>
Prudential Municipal Bond Fund
Prudential Mutual Fund Family
Prudential offers a broad range of mutual funds
designed to meet your individual needs. For
information about these funds, contact your
financial adviser or call us at (800) 225-1852.
Read the prospectus carefully before you invest or
send money.
STOCK FUNDS
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential 20/20 Focus Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
Asset Allocation/Balanced Funds
Prudential Balanced Fund
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
GLOBAL FUNDS
Global Stock Funds
Prudential Developing Markets Fund
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Global Utility Fund, Inc.
Target Funds
International Equity Fund
Global Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
<PAGE>
www.prudential.com (800) 225-1852
BOND FUNDS
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Target Funds
Total Return Bond Fund
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Prudential Municipal Bond Fund High Income Series
Class A Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -6.21% 4.66% (4.61) 6.36% (6.31) 6.14% (6.09)
Without Sales Charge -3.31% 5.30% (5.25) 6.68% (6.63) 6.45% (6.40)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return for
the past ten years. The graph compares a $10,000
investment in the Prudential Municipal Bond Fund,
Inc./High Income Series (Class A shares) with a
similar investment in the Lehman Brothers Municipal
Bond Index (the Index) by
portraying the initial account value at the
beginning of the ten-year period for Class A
shares, and at the end of the current fiscal year
(April 30), as measured on a quarterly basis,
beginning in 1990 for Class A shares. For purposes
of the graph, and unless otherwise indicated, it
has been assumed that (a) the maximum
applicable front-end sales charge was deducted from
the initial $10,000 investment in Class A shares;
(b) all recurring fees (including management fees)
were deducted; and (c) all dividends and
distributions were reinvested. Without waiver of
management fees and/or expense subsidization, the
Series' average annual total returns would have
been lower, as indicated in parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
www.prudential.com (800) 225-1852
Class B Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -8.55% 4.77% (4.73) 6.27% (6.22) 7.02% (6.93)
Without Sales Charge -3.55% 4.94% (4.90) 6.27% (6.22) 7.02% (6.93)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information within the graph is designed to
give you an idea of how much the Series' returns
can fluctuate from year to year by measuring the
best and worst calendar years in terms of total
annual return for the past ten years. The graph
compares a $10,000 investment in the Prudential
Municipal Bond Fund, Inc./High Income Series (Class
B shares) with a similar investment in the Lehman
Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
beginning of the ten-year period for Class B
shares, and at the end of the current fiscal year
(April 30), as measured on a quarterly basis,
beginning in 1990 for Class B shares. For purposes
of the graph, and unless otherwise indicated, it
has been assumed that (a) the maximum applicable
contingent deferred sales charge was deducted from
the value of the investment in Class B shares,
assuming full redemption on April 30, 2000; (b) all
recurring fees (including management fees) were
deducted; and (c) all dividends and distributions
were reinvested. Class B shares will automatically
convert to Class A shares, on a quarterly basis,
beginning approximately seven years after purchase.
This conversion feature is not reflected in the
graph. Without waiver of management fees and/or
expense subsidization, the Series' average annual
total returns would have been lower, as indicated
in parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
Prudential Municipal Bond Fund High Income Series
Class C Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -5.75% 4.47% (4.43) N/A 4.57% (4.53)
Without Sales Charge -3.79% 4.68% (4.64) N/A 4.75% (4.72)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return for
the past ten years. The graph compares a $10,000
investment in the Prudential Municipal Bond Fund,
Inc./High Income Series (Class C shares) with a
similar investment in the Lehman Brothers Municipal
Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class C shares, and
at the end of the current fiscal year (April 30),
as measured on a quarterly basis, beginning in 1994
for Class C shares. For purposes of the graph, and
unless otherwise indicated, it has been assumed
that (a) the maximum applicable front-end sales
charge was deducted from the initial $10,000
investment in Class C shares;
(b) the maximum applicable contingent deferred
sales charge was deducted from the value of the
investment in Class C shares, assuming full
redemption on April 30, 2000; (c) all recurring
fees (including
management fees) were deducted; and (d) all
dividends and distributions were reinvested.
Without waiver of management fees and/or expense
subsidization, the Series' average annual total
returns would have been lower, as indicated in
parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
www.prudential.com (800) 225-1852
Class Z Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -3.07% N/A N/A 4.66% (4.60)
Without Sales Charge -3.07% N/A N/A 4.66% (4.60)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return for
the past ten years. The graph compares a $10,000
investment in the Prudential Municipal Bond Fund,
Inc./High Income Series (Class Z shares) with a
similar investment in the Lehman Brothers Municipal
Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class Z shares, and
at the end of the current fiscal year (April 30),
as measured on a quarterly basis, beginning in 1996
for Class Z shares. For purposes of the graph, and
unless otherwise indicated, it has been assumed
that (a) all recurring fees (including management
fees) were deducted, and (b) all dividends and
distributions were reinvested. Class Z shares are
not subject to a sales charge or distribution and
service (12b-1) fees. Without waiver of
management fees and/or expense subsidization, the
Series' average annual total returns would have
been lower, as indicated in parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
Prudential Municipal Bond Fund Insured Series
Class A Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -5.31% 4.37% (4.33) 6.22% (6.16) 5.97% (5.89)
Without Sales Charge -2.38% 5.00% (4.96) 6.54% (6.49) 6.29% (6.21)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return for
the past ten years. The graph compares a $10,000
investment in the Prudential Municipal Bond Fund,
Inc./Insured Series (Class A shares) with a
similar investment in the Lehman Brothers Municipal
Bond Index (the Index) by portraying the initial
account value at the beginning of the ten-year
period for Class A shares, and at the end of the
current fiscal year (April 30), as measured on a
quarterly basis, beginning in 1990 for Class A
shares.
For purposes of the graph, and unless otherwise
indicated, it has been assumed that (a) the maximum
applicable front-end sales charge was deducted from
the initial $10,000 investment in Class A shares;
(b) all recurring fees (including management fees)
were deducted; and (c) all dividends and
distributions were reinvested. Without waiver of
management fees and/or expense subsidization, the
Series' average annual total returns would have
been lower, as indicated in parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
www.prudential.com (800) 225-1852
Class B Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -7.62% 4.46% (4.42) 6.14% (6.09) 6.65% (6.39)
Without Sales Charge -2.62% 4.62% (4.59) 6.14% (6.09) 6.65% (6.39)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information within the graph is designed to
give you an idea of how much the Series' returns
can fluctuate from year to year by measuring the
best and worst calendar years in terms of total
annual return for the past ten years.
The graph compares a $10,000 investment in the
Prudential Municipal Bond Fund, Inc./Insured Series
(Class B shares) with a similar investment in the
Lehman Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
beginning of the ten-year period for Class B
shares, and at the end of the current fiscal year
(April 30), as measured on a quarterly basis,
beginning in 1990 for Class B shares. For purposes
of the graph, and unless otherwise indicated, it
has been assumed that (a) the maximum applicable
contingent deferred sales charge was deducted from
the value of the investment in Class B shares,
assuming full redemption on April 30, 2000; (b) all
recurring fees (including management fees) were
deducted; and (c) all dividends and distributions
were reinvested. Class B shares will automatically
convert to Class A shares, on a quarterly basis,
beginning approximately seven years after purchase.
This conversion feature is not reflected in the
graph. Without waiver of management fees and/or
expense subsidization, the Series' average annual
total returns would have been lower, as indicated
in parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
Prudential Municipal Bond Fund Insured Series
Class C Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -4.83% 4.16% (4.12) N/A 4.32% (4.29)
Without Sales Charge -2.86% 4.37% (4.33) N/A 4.50% (4.47)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information within the graph is designed to
give you an idea of how much the Series' returns
can fluctuate from year to year by measuring the
best and worst calendar years in terms of total
annual return for the past ten years. The graph
compares a $10,000 investment in the Prudential
Municipal Bond Fund, Inc./Insured Series (Class C
shares) with a similar investment in the Lehman
Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class C shares, and
at the end of the current fiscal year (April 30),
as measured on a quarterly basis, beginning in 1994
for Class C shares. For purposes of the graph, and
unless otherwise indicated, it has been assumed
that (a) the maximum applicable front-end sales charge
was deducted from the initial $10,000 investment in
Class C shares; (b) the maximum applicable
contingent deferred sales charge was deducted from
the value of the investment in Class C shares,
assuming full redemption on April 30, 2000; (c) all
recurring fees (including management fees) were
deducted; and (d) all dividends and distributions
were reinvested. Without waiver of management fees
and/or expense subsidization, the Series' average
annual total returns would have been lower, as
indicated in parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
www.prudential.com (800) 225-1852
Class Z Growth of a $10,000 Investment
(GRAPH)
Average Annual Total Returns as of 4/30/00
One Year Five Years Ten Years Since Inception
With Sales Charge -2.13% N/A N/A 4.46% (4.43)
Without Sales Charge -2.13% N/A N/A 4.46% (4.43)
Past performance is not indicative of future
results. Principal and investment return will
fluctuate so an investor's shares, when redeemed,
may be worth more or less than their original cost.
The information within the graph is designed to
give you an idea of how much the Series' returns
can fluctuate from year to year by measuring the
best and worst calendar years in terms of total
annual return for the past ten years. The graph
compares a $10,000 investment in the Prudential
Municipal Bond Fund, Inc./Insured Series (Class Z
shares) with a similar investment in the Lehman
Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class Z shares, and
at the end of the current fiscal year (April 30),
as measured on a quarterly basis, beginning in 1996
for Class Z shares. For purposes of the graph, and
unless otherwise indicated, it has been assumed
that (a) all recurring fees (including management
fees) were deducted, and (b) all dividends and
distributions were reinvested. Class Z shares are
not subject to a sales charge or distribution and
service (12b-1) fees. Without waiver of management
fees and/or expense subsidization, the Series'
average annual total returns would have been lower,
as indicated in parentheses ( ).
The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series' portfolio. The
Index is not the only one that may be used to
characterize performance of municipal bond funds.
Other indexes may portray different comparative
performance. Investors cannot invest directly in an
index.
This graph is furnished to you in accordance with
SEC regulations.
<PAGE>
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Visit Prudential's web site at:
http://www.prudential.com
Trustees
Eugene C. Dorsey
Delayne D. Gold
Robert F. Gunia
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Deborah A. Docs, Secretary
William V. Healey, Assistant Secretary
Manager
Prudential Investments
Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment
Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
194 Wood Avenue South
Iselin, NJ 08830
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Fund Symbols NASDAQ CUSIP NASDAQ CUSIP
Class A PRHAX 74435L103 PMIAX 74435L301
Class B PMHYX 74435L202 PMINX 74435L400
Class C PHICX 74435L707 PMICX 74435L806
Class Z PHIZX 74435L871 PMIZX 74435L863
MF133E
(LOGO) Printed on Recycled Paper
