<PAGE>
As filed with the Securities and Exchange Commission on December 9, 1996
Securities Act Registration No. 33-22363
Investment Company Act Registration No. 811-5594
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 14 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]
AMENDMENT NO. 16 [X]
(Check appropriate box or boxes)
-----------
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
(Exact name of registrant as specified in charter)
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 367-7530
S. JANE ROSE, ESQ.
GATEWAY CENTER THREE
NEWARK, NEW JERSEY 07102
(NAME AND ADDRESS OF AGENT FOR SERVICE)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
DATE OF THE REGISTRATION STATEMENT.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE
(CHECK APPROPRIATE BOX):
[_] immediately upon filing pursuant to paragraph (b)
[X] on December 16, 1996 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of rule
485.
If appropriate, check the following box:
[_] this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has previously registered an indefinite number of shares of its Common
Stock, par value $.01 per share. The Registrant filed a notice for its
fiscal year ended December 31, 1995 on February 26, 1996.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- ------------- --------
<S> <C>
PART A
Item 1. Cover Page.................... Cover Page
Item 2. Synopsis...................... Fund Expenses; Fund Highlights
Item 3. Condensed Financial Informa- Fund Expenses; Financial Highlights;
tion................................... How the Fund Calculates Performance
Item 4. General Description of Regis- Cover Page; Fund Highlights; How the
trant.................................. Fund Invests; General Information
Item 5. Management of the Fund........ Financial Highlights; How the Fund is
Managed
Item 5A. Management's Discus-
sion of Fund Performance............... Financial Highlights
Item 6. Capital Stock and Other Secu- Taxes, Dividends and Distributions;
rities................................. General Information
Item 7. Purchase of Securities Being Shareholder Guide; How the Fund Values
Offered................................ its Shares
Item 8. Redemption or Repurchase...... Shareholder Guide; How the Fund Values
its Shares
Item 9. Pending Legal Proceedings..... Not Applicable
PART B
Item 10. Cover Page.................... Cover Page
Item 11. Table of Contents............. Table of Contents
Item 12. General Information and Histo-
ry..................................... General Information
Item 13. Investment Objectives and Pol- Investment Objective and Policies;
icies.................................. Investment Restrictions
Item 14. Management of the Fund........ Directors and Officers; Manager;
Distributor
Item 15. Control Persons and Principal
Holders of Securities.................. Not Applicable
Item 16. Investment Advisory and Other
Services............................... Manager; Distributor; Custodian,
Transfer and Dividend Disbursing Agent
and Independent Accountants
Item 17. Brokerage Allocation and Other
Practices.............................. Portfolio Transactions
Item 18. Capital Stock and Other Secu-
rities................................. Not Applicable
Item 19. Purchase, Redemption and Pric- Purchase and Redemption of Fund
ing of Securities Being Offered........ Shares; Shareholder Investment
Account; Net Asset Value
Item 20. Tax Status.................... Taxes
Item 21. Underwriters.................. Distributor
Item 22. Calculation of Performance Da-
ta..................................... Performance Information
Item 23. Financial Statements.......... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment
to the Registration Statement.
<PAGE>
The Prospectus of the Income Portfolio of Prudential Structured Maturity
Fund, Inc. dated March 1, 1996 is incorporated by reference in its entirety to
Post-Effective Amendment No. 13 to the Registration Statement on Form N-1A
(File No. 33-22363) filed on February 28, 1996. The Statement of Additional
Information of Prudential Structured Maturity Fund, Inc. dated March 1, 1996
is incorporated by reference in its entirety to Post-Effective Amendment No.
13 to the Registration Statement on Form N-1A (File No. 33-22363) filed on
February 28, 1996.
This Post-Effective Amendment to the Registration Statement is not intended
to amend the Prospectus or Statement of Additional Information referred to
above, except as noted, each of which shall remain in full force and effect.
<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC. (INCOME PORTFOLIO)
(CLASS Z SHARES)
- -------------------------------------------------------------------------------
PROSPECTUS DATED DECEMBER 16, 1996
- -------------------------------------------------------------------------------
Prudential Structured Maturity Fund, Inc. (the Fund), Income Portfolio (the
Portfolio), is one of two separate portfolios of an open-end, management
investment company, or mutual fund. The Portfolio's investment objective is
high current income consistent with the preservation of principal. The
Portfolio seeks to achieve its objective primarily through structuring its
portfolio by utilizing a "laddered" maturity strategy. The Portfolio invests
primarily in investment grade corporate debt securities and in obligations of
the U.S. Government, its agencies and instrumentalities with maturities of six
years or less. These securities are allocated by maturity among six annual
maturity categories ranging from one year or less to between five and six
years with each category representing approximately one-sixth of the
Portfolio's assets. As the securities in each annual category mature or as new
investments are made in the Portfolio, the proceeds will be invested to
maintain the balance of investments among the six annual maturity categories.
The Portfolio may also engage in various hedging and return enhancement
strategies, including derivative transactions. There can be no assurance that
the Portfolio's investment objective will be achieved. See "How the Fund
Invests--Investment Objective and Policies." The Fund's address is Gateway
Center Three, Newark, New Jersey 07102, and its telephone number is (800) 225-
1852.
- -------------------------------------------------------------------------------
Class Z shares are offered exclusively for sale to a limited group of
investors. Only Class Z shares are offered through this Prospectus. The
Portfolio also offers Class A, Class B and Class C shares through the attached
Prospectus dated March 1, 1996 (the Retail Class Prospectus), which is a part
hereof.
- -------------------------------------------------------------------------------
This Prospectus sets forth concisely the information about the Fund and the
Income Portfolio that a prospective investor should know before investing.
Additional information about the Fund and the Portfolio has been filed with
the Securities and Exchange Commission in a Statement of Additional
Information, dated March 1, 1996, which information is incorporated herein by
reference (is legally considered a part of this Prospectus) and is available
without charge upon request to the Fund, at the address or telephone number
noted above.
- -------------------------------------------------------------------------------
Investors are advised to read this Prospectus and retain it for future
reference.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
FUND EXPENSES
(INCOME PORTFOLIO)
<TABLE>
<CAPTION>
CLASS Z SHARES
--------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases.................. None
Maximum Deferred Sales Load ............................. None
Maximum Sales Load Imposed on Reinvested Dividends....... None
Redemption Fees.......................................... None
Exchange Fee............................................. None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets) CLASS Z SHARES
----------------
Management Fees.......................................... .40%
12b-1 Fees............................................... None
Other Expenses........................................... .32%
---
Total Fund Operating Expenses............................ .72%
===
</TABLE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual re-
turn and (2) redemption at the end of each
time period:
Class Z..................................... $7 $23 $40 $89
</TABLE>
The above example is based on expenses expected to have been incurred if Class
Z shares had been in existence throughout the fiscal year ended December 31,
1995. The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
The purpose of this table is to assist investors in understanding the various
costs and expenses that an investor in Class Z shares of the Portfolio will
bear, whether directly or indirectly. For more complete descriptions of the
various costs and expenses, see "How the Fund is Managed." "Other Expenses"
includes operating expenses of the Portfolio, such as Directors' and
professional fees, registration fees, reports to shareholders and transfer
agency and custodian fees.
2
<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND IS MANAGED--DISTRIBUTOR"
IN THE RETAIL CLASS PROSPECTUS:
Prudential Securities Incorporated (Prudential Securities) serves as the
Distributor of Class Z shares and incurs the expenses of distributing the
Portfolio's Class Z shares under a Distribution Agreement with the Fund, none
of which is reimbursed by or paid for by the Portfolio.
THE FOLLOWING INFORMATION SUPPLEMENTS "TAXES, DIVIDENDS AND DISTRIBUTIONS--
TAXATION OF SHAREHOLDERS" IN THE RETAIL CLASS PROSPECTUS:
The Fund has obtained opinions of counsel to the effect that neither (i) the
conversion of Class B shares into Class A shares nor (ii) the exchange of any
class of the Fund's shares for any other class of its shares constitutes a
taxable event for federal income tax purposes. However, such opinions are not
binding on the Internal Revenue Service.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO BUY SHARES
OF THE FUND" AND "SHAREHOLDER GUIDE--HOW TO SELL YOUR SHARES" IN THE RETAIL
CLASS PROSPECTUS:
Class Z shares of the Fund are available for purchase by the following
categories of investors:
(i) pension, profit-sharing or other employee benefit plans qualified under
Section 401 of the Internal Revenue Code, deferred compensation and annuity
plans under Sections 457 and 403(b)(7) of the Internal Revenue Code, and non-
qualified plans for which the Fund is an available option (collectively,
Benefit Plans), provided such Benefit Plans (in combination with other plans
sponsored by the same employer or group of related employers) have at least
$50 million in defined contribution assets; (ii) participants in any fee-based
program sponsored by Prudential Securities or its affiliates which includes
mutual funds as investment options and for which the Fund is an available
option; and (iii) investors who were, or executed a letter of intent to
become, shareholders of any series of Prudential Dryden Fund (formerly The
Prudential Institutional Fund (Dryden Fund)) on or before one or more series
of Dryden Fund reorganized or who on that date had investments in certain
products for which Dryden Fund provided exchangeability. After a Benefit Plan
qualifies to purchase Class Z shares, all subsequent purchases will be for
Class Z shares.
In connection with the sale of Class Z shares, the Manager, the Distributor
or one of their affiliates may pay dealers, financial advisers and other
persons which distribute shares a finders' fee based on a percentage of the
net asset value of shares sold by such persons.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO EXCHANGE
YOUR SHARES" IN THE RETAIL CLASS PROSPECTUS:
Class Z shareholders of the Portfolio may exchange their Class Z shares for
Class Z shares of other Prudential Mutual Funds on the basis of relative net
asset value. Shareholders who qualify to purchase Class Z shares (other than
participants in any fee-based program) will have their Class B and Class C
shares which are not subject to contingent deferred sales charges and their
Class A shares exchanged for Class Z shares on a quarterly basis. Participants
in any fee-based program for which the Fund is an available option will have
their Class A shares, if any, exchanged for Class Z shares when they elect to
have those assets become a part of the fee-based program. Upon leaving the
program (whether voluntarily or not), such Class Z shares (and, to the extent
provided for in the program, Class Z shares acquired through participation in
the program) will be exchanged for Class A shares at net asset value. See
"Shareholder Guide--How to Exchange Your Shares--Special Exchange Privilege."
THE INFORMATION ABOVE ALSO SUPPLEMENTS THE INFORMATION UNDER "FUND
HIGHLIGHTS" IN THE RETAIL CLASS PROSPECTUS AS APPROPRIATE.
3
<PAGE>
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations, other than those con-
tained in this Prospectus, in connection with the offer contained herein, and,
if given or made, such other information or representations must not be relied
upon as having been authorized by the Fund or the Distributor. This Prospectus
does not constitute an offer by the Fund or by the Distributor to sell or a
solicitation of any offer to buy any of the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer in such
jurisdiction.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND HIGHLIGHTS............................................................ 2
Risk Factors and Special Characteristics.................................. 2
FUND EXPENSES.............................................................. 4
FINANCIAL HIGHLIGHTS....................................................... 5
HOW THE FUND INVESTS....................................................... 8
Investment Objective and Policies......................................... 8
Hedging and Return Enhancement Strategies................................. 13
Other Investments and Policies............................................ 14
Investment Restrictions................................................... 16
HOW THE FUND IS MANAGED.................................................... 17
Manager................................................................... 17
Distributor............................................................... 17
Portfolio Transactions.................................................... 19
Custodian and Transfer and Dividend Disbursing Agent...................... 19
HOW THE FUND VALUES ITS SHARES............................................. 20
HOW THE FUND CALCULATES PERFORMANCE........................................ 20
TAXES, DIVIDENDS AND DISTRIBUTIONS......................................... 21
GENERAL INFORMATION........................................................ 22
Description of Common Stock............................................... 22
Additional Information.................................................... 23
SHAREHOLDER GUIDE.......................................................... 23
How to Buy Shares of the Fund............................................. 23
Alternative Purchase Plan................................................. 24
How to Sell Your Shares................................................... 27
Conversion Feature--Class B Shares........................................ 30
How to Exchange Your Shares............................................... 30
Shareholder Services...................................................... 32
DESCRIPTION OF SECURITY RATINGS............................................ A-1
THE PRUDENTIAL MUTUAL FUND FAMILY.......................................... B-1
</TABLE>
- -------------------------------------------------------------------------------
MF 140Z 444131D
CUSIP No.: Class Z: 743924-
Prudential Structured
Maturity Fund, Inc.
(Income Portfolio)
(Class Z Shares)
Prudential Mutual Funds
Building Your Future [LOGO]
On Our Strength/(SM)/
PROSPECTUS
DECEMBER 16, 1996
<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
(INCOME PORTFOLIO)
Supplement dated December 16, 1996 to
Prospectus dated March 1, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS "FINANCIAL HIGHLIGHTS" IN THE
PROSPECTUS:
FINANCIAL HIGHLIGHTS
(for a share outstanding throughout the period indicated)
(Class A, Class B and Class C shares)
The following financial highlights for Class A, Class B and Class C shares
are unaudited. This information should be read in conjunction with the
financial statements and the notes thereto, which appear in the Statement of
Additional Information. The financial highlights contain selected data for a
Class A, Class B and Class C share of common stock, respectively, outstanding,
total return, ratios to average net assets and other supplemental data for the
period indicated. The information has been determined based on data contained
in the financial statements. No Class Z shares were outstanding during the
indicated period.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
(UNAUDITED)
--------------------------------
CLASS A CLASS B CLASS C
------- -------- -------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period...... $ 11.63 $ 11.63 $11.63
------- -------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income..................... .36 .33 .33
Net realized and unrealized gain (loss) on
investment transactions.................. (.36) (.36) (.36)
------- -------- ------
Total from investment operations......... -- (.03) (.03)
------- -------- ------
LESS DISTRIBUTIONS:
Dividends from net investment income...... (.36) (.33) (.33)
Distributions in excess of net investment
income................................... -- -- --
Distributions from net realized gains..... -- -- --
Total distributions...................... (.36) (.33) (.33)
------- -------- ------
Net asset value, end of period............ $ 11.27 $ 11.27 $11.27
======= ======== ======
TOTAL RETURN(a): ......................... (0.07)% (0.38)% (0.38)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........... $80,731 $103,566 $1,238
Average net assets (000).................. $84,898 $112,357 $1,180
Ratios to average net assets:
Expenses, including distribution fees.... .86%(b) 1.51%(b) 1.51%(b)
Expenses, excluding distribution fees.... .76%(b) .76%(b) .76%(b)
Net investment income.................... 6.42%(b) 5.77%(b) 5.77%(b)
Portfolio turnover........................ 77% 77% 77%
</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. Total returns for periods of less than one full year
are not annualized.
(b) Annualized.
1
<PAGE>
THE FOLLOWING INFORMATION SUPPLEMENTS "GENERAL INFORMATION--DESCRIPTION OF
COMMON STOCK" IN THE PROSPECTUS:
The Fund is authorized to offer 500 million shares of common stock, $.01 par
value per share, divided into four classes for each Portfolio, designated
Class A, Class B, Class C and Class Z shares, each of which consists of
62,500,000 authorized shares. Each class represents an interest in the same
assets of the Portfolio and is identical in all respects except that (i) each
class is subject to different sales charges and distribution and/or service
fees (except for Class Z shares which are not subject to any sales charges and
distribution and/or service fees), which may affect performance, (ii) each
class has exclusive voting rights on any matter submitted to shareholders that
relates solely to its arrangement and has separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class, (iii) each class has a different exchange
privilege, (iv) only Class B shares have a conversion feature and (v) Class Z
shares are offered exclusively for sale to a limited group of investors. For
more information about Class Z shares, contact your Prudential Securities
financial adviser or Prusec representative or telephone the Fund at (800) 225-
1852. Participants in programs sponsored by Prudential Retirement Services
should contact their client representative for more information about Class Z
shares. Since Class B and Class C shares generally bear higher distribution
expenses than Class A shares, the liquidation proceeds to shareholders of
those classes are likely to be lower than to Class A shareholders and to Class
Z shareholders, whose shares are not subject to any distribution and/or
service fee. In accordance with the Fund's Articles of Incorporation, the
Board of Directors may authorize the creation of additional series and classes
of shares within such series, with such preferences, privileges, limitations
and voting and dividend rights as the Board of Directors may determine.
Currently, the Portfolio is offering four classes designated Class A, Class B,
Class C and Class Z shares.
THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND CALCULATES PERFORMANCE"
IN THE PROSPECTUS:
The Fund may include comparative performance information in advertising or
marketing the Portfolio's shares. The Fund may include performance information
about each of the Portfolio's classes and is no longer required to include
performance data for all classes of shares in any advertisement or other
information including performance data of the Portfolio. See "How the Fund
Calculates Performance."
MF 140C-1(12/16/96)
2
<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Supplement dated December 16, 1996 to
Statement of Additional Information dated
March 1, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS "DIRECTORS AND OFFICERS" IN THE
STATEMENT OF ADDITIONAL INFORMATION:
As of December 16, 1996, Prudential Mutual Fund Management LLC, located at
Gateway Center Three, Newark, NJ 07102, owned all of the Fund's outstanding
Class Z shares and therefore controlled the Fund's Class Z shares.
THE FOLLOWING INFORMATION SUPPLEMENTS "DISTRIBUTOR" IN THE STATEMENT OF
ADDITIONAL INFORMATION:
Prudential Securities Incorporated serves as the Distributor of Class Z
shares and incurs the expenses of distributing the Fund's Class Z shares under
a Distribution Agreement with the Fund, none of which are reimbursed by or
paid for by the Fund.
THE FOLLOWING INFORMATION SUPPLEMENTS "PURCHASE AND REDEMPTION OF FUND
SHARES" IN THE STATEMENT OF ADDITIONAL INFORMATION:
Shares of the Fund may be purchased at a price equal to the next determined
net asset value per share plus a sales charge which, at the election of the
investor, may be imposed either (i) at the time of purchase (Class A shares)
or (ii) on a deferred basis (Class B or Class C shares). Class Z shares of the
Fund are offered to a limited group of investors at net asset value without
any sales charges. See "Shareholder Guide--How to Buy Shares of the Fund" in
the Prospectus of the Income Portfolio.
Each class represents an interest in the same assets of the Portfolio and is
identical in all respects except that (i) each class is subject to different
sales charges and distribution and/or service fees (except for Class Z shares
which are not subject to any sales charges and distribution and/or service
fees), which may affect performance, (ii) each class has exclusive voting
rights on any matter submitted to shareholders that relates solely to its
arrangement and has separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests of
any other class, (iii) each class has a different exchange privilege, (iv)
only Class B shares have a conversion feature and (v) Class Z shares are
offered exclusively for sale to a limited group of investors. See
"Distributor" and "Shareholder Investment Account--Exchange Privilege."
SPECIMEN PRICE MAKE-UP
Under the current distribution arrangements between the Fund and the
Distributor, Class A shares are sold with a maximum sales charge of 3.25% and
Class B*, Class C* and Class Z** shares are sold at net asset value. Using the
net asset value at June 30, 1996, the maximum offering price of the shares of
the Income Portfolio is as follows:
<TABLE>
<CAPTION>
CLASS A
<S> <C>
Net asset value and redemption price per Class A share.................. $11.27
Maximum sales charge (5% of offering price)............................. .38
------
Offering price to public................................................ $11.65
======
CLASS B
Net asset value, offering price and redemption price per Class B share*. $11.27
======
CLASS C
Net asset value, offering price and redemption price per Class C share*. $11.27
======
CLASS Z
Net asset value, offering price and redemption price per Class Z
share**................................................................ $11.27
======
</TABLE>
- -------
* Class B and Class C shares are subject to a contingent deferred sales
charge on certain redemptions. See "Shareholder Guide--How to Sell Your
Shares--Contingent Deferred Sales Charges" in the Prospectus.
**Class Z shares did not exist at June 30, 1996.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER INVESTMENT ACCOUNT--
EXCHANGE PRIVILEGE" IN THE STATEMENT OF ADDITIONAL INFORMATION:
CLASS Z. Class Z shares may be exchanged for Class Z shares of other
Prudential Mutual Funds.
MF140C-2(12/16/96)
<PAGE>
COMMENTARY ON PRESENTATION OF PORTFOLIO OF INVESTMENTS:
The Portfolio of Investments, following hereto, is presented in a "laddered"
maturity structure. The Income Portfolio invests in investment grade corporate
debt securities and in obligations of the U.S. Government, its agencies and
instrumentalities with maturities of six years or less. These securities are
categorized within six annual maturity categories.
- --------------------------------------------------------------------------------
Portfolio of Investments as of
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
- ---------------------------------------------------------------------
<C> <C> <S> <C>
5-6 YEARS--17.5%
Ba1 $ 7,250 Tele Communications, Inc.,
(Media)
7.35%, 8/27/01 $ 7,233,470
23,800 United States Treasury
Note,
7.875%, 8/15/01 25,213,006
-------------
32,446,476
- ---------------------------------------------------------------------
4-5 YEARS--15.2%
B1 500 Republic of Argentina,
(Foreign Government)
9.25%, 2/23/01 479,375
Aa3 5,000 Associates Corporation of
North America,
(Financial Services)
6.625%, 5/15/01 4,942,000
Ba1 5,000 Federated Department
Stores,
Inc.,
(Retail)
10.00%, 2/15/01 5,262,500
Ba2 10,000 Paramount Communications,
Inc.,
(Media)
5.875%, 7/15/00 9,510,800
United States Treasury
Notes,
2,000 6.25%, 4/30/01 1,980,940
6,000 6.50%, 5/31/01 6,002,820
-------------
28,178,435
- ---------------------------------------------------------------------
3-4 YEARS--16.0%
NR 2,000 Banco de Comercio,
(Banking) (Colombia)
8.625%, 6/2/00 2,035,000
Baa3 7,500 News America Holdings,
Inc.,
(Media)
7.45%, 6/1/00 7,607,775
Baa3 3,000 Republic of Colombia,
(Foreign Government)
8.75%, 10/6/99 3,063,750
<CAPTION>
PRUDENTIAL STRUCTURED MATURITY FUND
INCOME PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
- ---------------------------------------------------------------------
<C> <C> <S> <C>
Ba1 $ 10,000 Time Warner, Inc.,
(Media)
7.95%, 2/1/00 $ 10,215,000
6,500 United States Treasury
Note,
7.75%, 12/31/99 6,772,155
-------------
29,693,680
- ---------------------------------------------------------------------
2-3 YEARS--17.9%
Baa3 5,500 Capital One Bank,
(Banking)
6.90%, 4/15/99 5,500,000
Baa2 3,000 Crane Co.,
(Industrial Services)
7.25%, 6/15/99 3,006,540
Baa2 1,000 Federal Express Corp.,
(Consumer Services)
10.05%, 6/15/99 1,073,420
A3 6,500 Kansallis-Osake-Pankki
Bank,
(Banking) (Finland)
9.75%, 12/15/98 6,939,920
NR 3,000 National Bank of Romania,
(Banking) (Romania)
9.75%, 6/25/99 3,030,000
Baa1 9,600 Salomon, Inc.,
(Financial Services)
7.00%, 5/15/99 9,604,896
A2 4,000 Sears Roebuck Acceptance
Corporation,
(Financial Services)
6.38%, 2/16/99 3,982,200
-------------
33,136,976
- ---------------------------------------------------------------------
1-2 YEARS--16.9%
NR 3,000 Banco Ganadero S.A.,
(Banking) (Colombia)
9.75%, 8/26/97 3,116,250
A2 2,000 Bank One Credit Card
Trust,
(Asset Backed)
(Average Life 1.3 years)
7.75%, 12/15/99 2,036,240
</TABLE>
- ---------------------------------------------------------------------
4 See Notes to Financial Statements.
<PAGE>
Portfolio of Investments as of
June 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
- ---------------------------------------------------------------------
<C> <C> <S> <C>
1-2 YEARS (cont'd.)
Baa2 $ 5,000 Comdisco, Inc.,
(Leasing)
7.25%, 4/15/98 $ 5,060,250
Baa3 6,500 Enterprise Rent A Car
Finance Co.,
(Financial Services)
7.875%, 3/15/98 6,660,290
Baa2 2,100 Finova Financial Corp.,
(Industrial Finance)
9.67%, 7/1/97 2,162,181
A3 2,000 General Motors Acceptance
Corp.,
(Financial Services)
7.50%, 11/4/97 2,034,480
Baa2 4,200 Transco Energy Co.,
(Utilities)
9.125%, 5/1/98 4,364,598
6,000 United States Treasury
Note,
6.00%, 5/31/98 5,986,860
-------------
31,421,149
- ---------------------------------------------------------------------
WITHIN 1 YEAR--15.0%
Baa2 10,000 Advanta Corp.,
(Consumer Finance)
6.24%, 2/7/97 10,000,300
Baa3 2,500 Capital One Bank,
(Banking)
8.625%, 1/15/97 2,531,825
A3 1,600 Chrysler Financial Corp.,
(Financial Services)
5.39%, 8/27/96 1,599,040
Baa2 1,500 Comdisco, Inc.,
(Leasing)
9.75%, 1/15/97 1,528,425
A2 2,195 Grand Metropolitan
Investment Corp.,
(Industrial Finance)
8.125%, 8/15/96 2,199,939
A3 3,500 Potomac Capital Investment
Corp.,
(Financial Services)
6.19%, 4/28/97 3,491,740
<CAPTION>
PRUDENTIAL STRUCTURED MATURITY FUND
INCOME PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
- ---------------------------------------------------------------------
<C> <C> <S> <C>
A2 $ 2,000 TransAmerica Finance
Corp.,
(Financial Services)
5.85%, 7/15/96 $ 1,999,960
4,576 Joint Repurchase Agreement
Account,
5.46%, 7/1/96 4,576,000
-------------
27,927,229
- ---------------------------------------------------------------------
Total Investments--98.5%
(cost $184,358,138; Note
4) 182,803,945
Other assets in excess of
liabilities--1.5% 2,731,464
-------------
Net Assets--100% $ 185,535,409
-------------
-------------
</TABLE>
- ------------------
NR-Not Rated.
The industry classification of portfolio holdings and other net
assets shown as a percentage of net assets as of June 30, 1996 were
as follows:
U.S. Treasury Notes................................... 24.7%
Financial Services.................................... 18.5
Media................................................. 18.6
Banking............................................... 12.5
Consumer Finance...................................... 5.4
Leasing............................................... 3.6
Retail................................................ 2.8
Industrial Finance.................................... 2.4
Utilities............................................. 2.4
Repurchase Agreement.................................. 2.4
Foreign Government.................................... 1.9
Industrial Services................................... 1.6
Asset Backed.......................................... 1.1
Consumer Services..................................... .6
Other assets in excess of liabilities................. 1.5
-----
100.0%
-----
-----
- ---------------------------------------------------------------------
See Notes to Financial Statements. 5
<PAGE>
<TABLE>
<CAPTION>
PRUDENTIAL STRUCTURED MATURITY FUND
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED) INCOME PORTFOLIO
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS JUNE 30, 1996
-------------
<S> <C>
Investments, at value (cost $184,358,138)................................................................... $182,803,945
Cash........................................................................................................ 1,128
Interest receivable......................................................................................... 4,127,582
Receivable for Fund shares sold............................................................................. 91,148
Deferred expenses and other assets.......................................................................... 6,765
-------------
Total assets............................................................................................. 187,030,568
-------------
LIABILITIES
Payable for Fund shares reacquired.......................................................................... 912,490
Dividends payable........................................................................................... 306,519
Accrued expenses............................................................................................ 142,134
Distribution fee payable.................................................................................... 72,385
Management fee payable...................................................................................... 61,631
-------------
Total liabilities........................................................................................ 1,495,159
-------------
NET ASSETS.................................................................................................. $185,535,409
=============
Net assets were comprised of:
Common stock, at par..................................................................................... $ 164,620
Paid-in capital in excess of par......................................................................... 196,052,013
-------------
196,216,633
Accumulated net realized loss on investments............................................................. (9,127,031)
Net unrealized depreciation on investments............................................................... (1,554,193)
-------------
Net assets at June 30, 1996................................................................................. $185,535,409
=============
Class A:
Net asset value and redemption price per share
($80,731,093 / 7,161,376 shares of common stock issued and outstanding)............................... $11.27
Maximum sales charge (3.25% of offering price)........................................................... .38
------
Maximum offering price to public......................................................................... $11.65
======
Class B:
Net asset value, offering price and redemption price per share
($103,565,873 / 9,190,694 shares of common stock issued and outstanding).............................. $11.27
======
Class C:
Net asset value, offering price and redemption price per share
($1,238,443 / 109,903 shares of common stock issued and outstanding).................................. $11.27
======
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6 See Notes to Financial Statements.
<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND
INCOME PORTFOLIO
STATEMENT OF OPERATIONS (UNAUDITED)
- ---------------------------------------------------------------
- ---------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
NET INVESTMENT INCOME JUNE 30, 1996
-------------
<S> <C>
Income
Interest.................................... $ 7,189,906
-------------
Expenses
Distribution fee--Class A................... 42,217
Distribution fee--Class B................... 419,036
Distribution fee--Class C................... 4,399
Management fee.............................. 394,699
Transfer agent's fees and expenses.......... 142,000
Reports to shareholders..................... 82,000
Registration fees........................... 42,000
Custodian's fees and expenses............... 38,000
Audit fee................................... 19,000
Legal fees.................................. 15,000
Directors' fees............................. 15,000
Miscellaneous............................... 4,991
-------------
Total expenses........................... 1,218,342
-------------
Net investment income.......................... 5,971,564
-------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS
Net realized loss on investment transactions... (2,158,940)
Net change in unrealized appreciation of
investments................................. (4,169,420)
-------------
Net loss on investments........................ (6,328,360)
-------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS...................... $ (356,796)
-------------
-------------
<CAPTION>
PRUDENTIAL STRUCTURED MATURITY FUND
INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
- ---------------------------------------------------------------
- ---------------------------------------------------------------
SIX MONTHS YEAR ENDED
INCREASE (DECREASE) ENDED DECEMBER 31,
IN NET ASSETS JUNE 30, 1996 1995
------------- ------------
<S> <C> <C>
Operations
Net investment income.......... $ 5,971,564 $ 13,324,650
Net realized gain (loss) on
investment transactions..... (2,158,940) 1,914,240
Net change in unrealized
appreciation on
investments................. (4,169,420) 10,735,269
------------- ------------
Net increase (decrease) in net
assets resulting from
operations.................. (356,796) 25,974,159
------------- ------------
Dividends (Note 1)
Dividends to shareholders from
net investment income
Class A..................... (2,712,382) (5,877,430)
Class B..................... (3,225,156) (7,407,642)
Class C..................... (34,026) (39,578)
------------- ------------
(5,971,564) (13,324,650)
------------- ------------
Fund share transactions
(Net of share conversions) (Note 6)
Net proceeds from shares
subscribed.................. 17,011,601 30,676,035
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions .......... 3,789,229 8,591,299
Cost of shares reacquired...... (39,157,613) (64,005,192)
------------- ------------
Net decrease in net assets from
Fund share transactions..... (18,356,783) (24,737,858)
------------- ------------
Total decrease.................... (24,685,143) (12,088,349)
NET ASSETS
Beginning of period............... 210,220,552 222,308,901
------------- ------------
End of period..................... $ 185,535,409 $210,220,552
============= ============
</TABLE>
- -----------------------------------------------------------------
See Notes to Financial Statements. 7
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prudential Structured Maturity Fund (the "Fund"), is registered under the
Investment Company Act of 1940, as a diversified, open-end management investment
company. The Fund consists of two portfolios--the Income Portfolio (the
"Portfolio") and the Municipal Income Portfolio. The Municipal Income
Portfolio has not yet begun operations. The Fund was incorporated in Maryland on
June 8, 1988 and had no operations until July 1989 when 8,613 shares of the
Portfolio's common stock were sold for $100,000 to Prudential Mutual Fund
Management, Inc. ("PMF"). Investment operations commenced on September 1,
1989. The Portfolio's investment objective is high current income consistent
with the preservation of principal. The ability of issuers of debt securities
held by the Portfolio to meet their obligations may be affected by economic
developments in a specific industry or region.
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Portfolio in the preparation of its financial statements.
Securities Valuation: The Board of Directors has authorized the use of an
independent pricing service to determine valuations of U.S. Government and
corporate obligations. The pricing service considers such factors as security
prices, yields, maturities, call features, ratings and developments relating to
specific securities in arriving at securities valuations. When market quotations
are not readily available, a security is valued by appraisal at its fair value
as determined in good faith under procedures established under the general
supervision and responsibility of the Board of Directors.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements, the Portfolio's
custodian or designated subcustodians, as the case may be under triparty
repurchase agreements, takes possession of the underlying collateral securities,
the value of which at least equals the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. If
the seller defaults and the value of the collateral declines or if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Portfolio may be delayed or limited.
PRUDENTIAL STRUCTURED MATURITY FUND
INCOME PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. Expenses are recorded on the accrual basis which may require the
use of certain estimates by management.
Net investment income (other than distribution fees) and unrealized and realized
gains or losses are allocated daily to each class of shares based upon the
relative proportion of net assets of each class at the beginning of the day.
Federal Income Taxes: It is the Portfolio's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income and capital gains, if
any, to its shareholders. Therefore, no federal income tax provision is
required.
Dividends and Distributions: The Portfolio declares daily and pays monthly
dividends from net investment income. Distributions from net capital gains, if
any, are made at least annually. Dividends and distributions are recorded on the
ex-dividend date.
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
- --------------------------------------------------------------------------------
NOTE 2. AGREEMENTS
The Fund has a management agreement with PMF. Pursuant to this agreement, PMF
has responsibility for all investment advisory services and supervises the
subadviser's performance of such services. PMF has entered into a subadvisory
agreement with The Prudential Investment Corporation ("PIC"); PIC furnishes
investment advisory services in connection with the management of the Fund. PMF
pays for the cost of the subadviser's services, the compensation of officers and
employees 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 PMF is computed daily and payable monthly, at an annual
rate of .40 of 1% of the average daily net assets of the Portfolio.
The Fund had a distribution agreement with Prudential Mutual Fund Distributors,
Inc. ("PMFD"), which acted as the distributor of the Class A shares of the
Fund through January 1, 1996. Effective January 2, 1996, Prudential Securities
Incorporated (PSI) became the distributor of the
- --------------------------------------------------------------------------------
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class A shares of the Fund and is serving the Fund under the same terms and
conditions as under the arrangement with PMFD. PSI is also distributor of the
Class B and Class C shares of the Fund. The Fund compensates PSI for
distributing and servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of distribution (the "Class A, B and C Plans"), regardless
of expenses actually incurred by them. The distribution fees are accrued daily
and payable monthly.
Pursuant to the Class A, B and C Plans, the Fund compensates PSI for the six
months ended June 30, 1996 for distribution-related activities at an annual rate
of up to .30 of 1%, 1% and 1%, of the average daily net assets of the Class A, B
and C shares, respectively. Such expenses under the Plans were .10 of 1%, .75 of
1% and .75 of 1% of the average daily net assets of the Class A, B and C shares,
respectively for the six months ended June 30, 1996.
PSI has advised the Portfolio that it has received approximately $49,000 in
front-end sales charges resulting from sales of Class A shares during the six
months ended June 30, 1996. From these fees, PSI paid such sales charges to
Pruco Securities Corporation, an affiliated broker-dealer, which in turn paid
commissions to salespersons.
PSI advised the Portfolio that for the six months ended June 30, 1996, it
received approximately $106,000 in contingent deferred sales charges imposed
upon certain redemptions by Class B and Class C shareholders.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
- --------------------------------------------------------------------------------
NOTE 3. OTHER TRANSACTIONS WITH AFFILIATES
Prudential Mutual Fund Services, Inc. ("PMFS"), a wholly-owned subsidiary of
PMF, serves as the Portfolio's transfer agent. During the six months ended June
30, 1996, the Portfolio incurred fees of approximately $125,000 for the services
of PMFS. As of June 30, 1996, approximately $21,000 of such fees were due to
PMFS. Transfer agent fees and expenses in the Statement of Operations also
include certain out-of-pocket expenses paid to non-affiliates.
- --------------------------------------------------------------------------------
NOTE 4. PORTFOLIO SECURITIES
Purchases and sales of portfolio securities, excluding short-term investments,
for the six months ended June 30, 1996 were $148,973,997 and $170,423,210,
respectively.
PRUDENTIAL STRUCTURED MATURITY FUND
INCOME PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The federal income tax basis of the Portfolio's investments at June 30, 1996 was
$184,362,357 and accordingly, net unrealized depreciation for federal income tax
purposes was $1,558,412 (gross unrealized appreciation--$780,898; gross
unrealized depreciation--$2,339,310).
For federal income tax purposes, the Portfolio had a capital loss carryforward
as of December 31, 1995 of approximately $7,180,600 which expires in 2002.
Accordingly, no capital gain distributions are expected to be paid to
shareholders until net gains have been realized in excess of such carryforward.
- --------------------------------------------------------------------------------
NOTE 5. JOINT REPURCHASE AGREEMENT ACCOUNT
The Portfolio, along with other affiliated registered investment companies,
transfers uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. As of June 30,
1996, the Portfolio had a 0.41% undivided interest in the repurchase agreements
in the joint account. The undivided interest for the Portfolio represented
$4,576,000 in principal amount. As of such date, each repurchase agreement in
the joint account and the collateral therefor was as follows:
Bear, Stearns & Co., 5.40%, in the principal amount of $369,000,000, repurchase
price $369,055,350, due 7/1/96. The value of the collateral including accrued
interest was $377,194,429.
Goldman, Sachs & Co. Inc., 5.47%, in the principal amount of $369,000,000,
repurchase price $369,056,068, due 7/1/96. The value of the collateral including
accrued interest was $376,380,556.
Smith Barney, Inc., 5.50%, in the principal amount of $369,000,000, repurchase
price $369,056,375, due 7/1/96. The value of the collateral including accrued
interest was $376,380,118.
- --------------------------------------------------------------------------------
NOTE 6. CAPITAL
The Portfolio offers Class A, Class B and Class C shares. Class A shares are
sold with a front-end sales charge of up to 3.25%. Class B shares are sold with
a contingent deferred sales charge which declines from 3% to zero depending on
the period of time the shares are held. Class C shares are sold with a
contingent deferred sale charge of 1% during the first year. Class B shares
automatically convert to Class A shares on a quarterly basis approximately five
years after purchase. A special exchange privilege is
- --------------------------------------------------------------------------------
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
also available for shareholders who qualified to purchase Class A shares at net
asset value.
There are 250 million authorized shares of $.01 par value common stock, divided
into three classes, designated Class A, Class B and Class C common stock, each
of which consists of 83,333,333 1/3 authorized shares. Transactions in shares of
common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ------- ---------- ------------
<S> <C> <C>
Six months ended June 30, 1996:
Shares sold........................... 808,744 $ 9,315,552
Shares issued in reinvestment of
dividends........................... 148,440 1,689,579
Shares reacquired..................... (1,582,835) (18,131,687)
---------- ------------
Net decrease in shares outstanding
before conversion................... (625,651) (7,126,556)
Shares issued upon conversion from
Class B............................. 138,698 1,564,028
---------- ------------
Net decrease in shares outstanding.... (486,953) $ (5,562,528)
========== ============
Year ended December 31, 1995:
Shares sold........................... 812,745 $ 9,281,283
Shares issued in reinvestment of
dividends........................... 325,730 3,698,766
Shares reacquired..................... (2,387,143) (26,982,383)
---------- ------------
Net decrease in shares outstanding
before conversion................... (1,248,668) (14,002,334)
Shares issued upon conversion from
Class B............................. 540,088 6,039,105
---------- ------------
Net decrease in shares outstanding.... (708,580) $ (7,963,229)
========== ============
<CAPTION>
PRUDENTIAL STRUCTURED MATURITY FUND
INCOME PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class B Shares Amount
- ------- ---------- ------------
<S> <C> <C>
Six months ended June 30, 1996:
Shares sold........................... 630,177 $ 7,198,442
Shares issued in reinvestment of
dividends........................... 182,085 2,072,963
Shares reacquired..................... (1,817,296) (20,728,989)
---------- ------------
Net decrease in shares outstanding
before conversion................... (1,005,034) (11,457,584)
Shares reacquired upon conversion into
Class A............................. (138,698) (1,564,028)
---------- ------------
Net decrease in shares outstanding.... (1,143,732) $(13,021,612)
========== ============
Year ended December 31, 1995:
Shares sold........................... 1,817,442 $ 20,499,580
Shares issued in reinvestment of
dividends........................... 428,576 4,863,912
Shares reacquired..................... (3,249,167) (36,739,116)
---------- ------------
Net decrease in shares outstanding
before conversion................... (1,003,149) (11,375,624)
Shares reacquired upon conversion into
Class A............................. (540,088) (6,039,105)
---------- ------------
Net decrease in shares outstanding.... (1,543,237) $(17,414,729)
========== ============
Class C
- -------
Six months ended June 30, 1996:
Shares sold........................... 43,496 $ 497,607
Shares issued in reinvestment of
dividends........................... 2,347 26,687
Shares reacquired..................... (26,261) (296,937)
---------- ------------
Net increase in shares outstanding.... 19,582 $ 227,357
========== ============
Year ended December 31, 1995:
Shares sold........................... 78,793 $ 895,172
Shares issued in reinvestment of
dividends........................... 2,515 28,621
Shares reacquired..................... (24,796) (283,693)
---------- ------------
Net increase in shares outstanding.... 56,512 $ 640,100
========== ============
</TABLE>
These financial statements are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the results for the interim period
presented.
- --------------------------------------------------------------------------------
10
<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------
Six Months
Ended Year ended December 31,
June 30, -----------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................ $ 11.63 $ 10.97 $ 11.78 $ 11.79 $ 12.13 $ 11.67
--------- ------- -------- -------- -------- --------
Income from investment
operations:
Net investment income............ .36 .73 .65 .71 .86(c) .93(c)
Net realized and unrealized gain
(loss) on investment
transactions.................. (.36) .66 (.80) .12 (.08) .56
--------- ------- -------- -------- -------- --------
Total from investment
operations................. -- 1.39 (.15) .83 .78 1.49
--------- ------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income........................ (.36) (.73) (.65) (.71) (.86) (.93)
Distributions in excess of net
investment income............. -- -- (.01) -- -- --
Distributions from net realized
gains......................... -- -- -- (.13) (.26) (.10)
--------- ------- -------- -------- -------- --------
Total distributions........... (.36) (.73) (.66) (.84) (1.12) (1.03)
--------- ------- -------- -------- -------- --------
Net asset value, end of period... $ 11.27 $ 11.63 $ 10.97 $ 11.78 $ 11.79 $ 12.13
========= ======= ======== ======== ======== ========
TOTAL RETURN(a):................. (0.07)% 13.12% (1.16)% 7.19% 6.67% 13.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)......................... $ 80,731 $88,982 $ 91,680 $119,449 $109,828 $109,997
Average net assets (000)......... $ 84,898 $89,500 $106,737 $114,728 $107,937 $113,010
Ratios to average net assets:
Expenses, including
distribution fees.......... .86%(b) .82% .94% .80% .70%(c) .37(c)
Expenses, excluding
distribution fees.......... .76%(b) .72% .84% .70% .60%(c) .27(c)
Net investment income......... 6.42%(b) 6.57% 5.88% 5.92% 7.15%(c) 7.89(c)
For Class A, B and C shares:
Portfolio turnover............ 77% 160% 123% 137% 91% 117%
</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. Total returns for periods of less than one full year are not
annualized.
(b) Annualized.
(c) Net of expense subsidy and/or fee waiver.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11
<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------------
DECEMBER 9,
SIX MONTHS 1992(C)
ENDED YEAR ENDED DECEMBER 31, THROUGH
JUNE 30, ---------------------------------- DECEMBER 31,
1996 1995 1994 1993 1992
---------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 11.63 $ 10.97 $ 11.78 $ 11.79 $ 11.79
--------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................ .33 .66 .58 .62 .04
Net realized and unrealized gain
(loss) on investment
transactions...................... (.36) .66 (.80) .12 --
--------- -------- -------- -------- --------
Total from investment
operations..................... (.03) 1.32 (.22) .74 .04
--------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income............................ (.33) (.66) (.58) (.62) (.04)
Distributions in excess of net
investment income................. -- -- (.01) -- --
Distributions from net realized
gains............................. -- -- -- (.13) --
--------- -------- -------- -------- --------
Total distributions............... (.33) (.66) (.59) (.75) (.04)
--------- -------- -------- -------- --------
Net asset value, end of period....... $ 11.27 $ 11.63 $ 10.97 $ 11.78 $ 11.79
========= ======== ======== ======== ========
TOTAL RETURN(a):..................... (0.38)% 12.40% (1.83)% 6.38% .32%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)...... $103,566 $120,188 $130,258 $123,306 $11,981
Average net assets (000)............. $112,357 $125,230 $134,985 $69,314 $5,474
Ratios to average net assets:
Expenses, including distribution
fees........................... 1.51%(b) 1.47% 1.66% 1.55% 1.67%(b)
Expenses, excluding distribution
fees........................... .76%(b) .72% .84% .70% .82%(b)
Net investment income............. 5.77%(b) 5.92% 5.17% 5.08% 6.31%(b)
<CAPTION>
CLASS C
-----------------------------------------
SIX AUGUST 1,
MONTHS YEAR 1994(D)
ENDED ENDED THROUGH
JUNE 30, DECEMBER 31, DECEMBER 31,
1996 1995 1994
-------- ------------ ------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 11.63 $ 10.97 $ 11.30
-------- ----------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income................ .33 .66 .23
Net realized and unrealized gain
(loss) on investment
transactions...................... (.36) .66 (.32)
-------- ----------- ---------
Total from investment
operations..................... (.03) 1.32 (.09)
-------- ----------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income............................ (.33) (.66) (.23)
Distributions in excess of net
investment income................. -- -- (.01)
Distributions from net realized
gains............................. -- -- --
-------- ----------- ---------
Total distributions............... (.33) (.66) (.24)
-------- ----------- ---------
Net asset value, end of period....... $ 11.27 $ 11.63 $ 10.97
======== =========== =========
TOTAL RETURN(a):..................... (0.38)% 12.40% (0.68)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)...... $1,238 $1,050 $371
Average net assets (000)............. $1,180 $667 $192
Ratios to average net assets:
Expenses, including distribution
fees........................... 1.51%(b) 1.47% 1.90%(b)
Expenses, excluding distribution
fees........................... .76%(b) .72% 1.15%(b)
Net investment income............. 5.77%(b) 5.92% 5.30%(b)
</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 one full year are not
annualized.
(b) Annualized.
(c) Commencement of offering of Class B shares.
(d) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
12 See Notes to Financial Statements.
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(A)FINANCIAL STATEMENTS:
(1) Financial Statements for the Income Portfolio included in the
Prospectus constituting Part A of this Registration Statement:
Financial Highlights
(2) Financial Statements for the Income Portfolio included in the
Statement of Additional Information constituting Part B of this
Registration Statement:
Portfolio of Investments at December 31, 1995 (audited) and June 30,
1996 (unaudited)
Statement of Assets and Liabilities at December 31, 1995 (audited) and
June 30, 1996 (unaudited)
Statement of Operations for the Year ended December 31, 1995 (audited)
and June 30, 1996 (unaudited)
Statement of Changes in Net Assets for the Years Ended December 31,
1995 and 1994 (audited) and for the six months ended June 30, 1996
(unaudited)
Financial Highlights
Notes to Financial Statements
Independent Auditors' Report
(B)EXHIBITS:
1. (a) Articles of Restatement of the Registrant, incorporated by
reference to Exhibit No. 1 to Post-Effective Amendment No. 12 to the
Registration Statement on Form N-1A filed via EDGAR on February 28,
1995 (File No. 33-22363).
(b) Articles Supplementary.*
2. By-Laws of the Registrant, incorporated by reference to Exhibit No. 2
to Post-Effective Amendment No. 12 to the Registration Statement on
Form N-1A filed via EDGAR on February 28, 1995 (File No. 33-22363).
3. Not Applicable.
4. (a) Specimen certificate for shares of common stock, $.01 par value
per share, of the Registrant, incorporated by reference to Exhibit
No. 4 to Pre-Effective Amendment No. 2 to the Registration Statement
on Form N-1A filed on July 24, 1989 (File No. 33-22363).
(b) Specimen certificate for Class B shares of common stock filed
October 5, 1992, incorporated by reference to Exhibit No. 4(b) to
Post-Effective Amendment No. 5 to the Registration Statement on Form
N-1A filed on October 5, 1992 (File No. 33-22363).
(c) Specimen certificate for Class A shares of common stock, $.01 par
value per share, of the Registrant, for the Municipal Income
Portfolio, incorporated by reference to Exhibit No. 4(c) to Post-
Effective Amendment No. 7 to Registration Statement on Form N-1A filed
on July 16, 1993 (File No. 33-22363).
(d) Specimen certificate for Class B shares of common stock, $.01 par
value per share, of the Registrant, for the Municipal Income
Portfolio, incorporated by reference to Exhibit No. 4(d) to Post-
Effective Amendment No. 7 to Registration Statement on Form N-1A filed
on July 16, 1993 (File No. 33-22363).
(e) Instruments defining rights of shareholders, incorporated by
reference to Exhibit No. 4(e) to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A filed via EDGAR on February 28,
1994 (File No. 33-22363).
5. (a) Management Agreement between the Registrant and Prudential Mutual
Fund Management, Inc., incorporated by reference to Exhibit No. 5(a)
to Post-Effective Amendment No. 1 to the Registration Statement on
Form N-1A filed on January 25, 1990 (File No. 33-22363).
(b) Subadvisory Agreement between Prudential Mutual Fund Management,
Inc. and The Prudential Investment Corporation, incorporated by
reference to Exhibit No. 5(b) to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A filed on January 25, 1990 (File
No. 33-22363).
C-1
<PAGE>
6. Restated Distribution Agreement.*
7. Not Applicable.
8. Custodian Contract between the Registrant and State Street Bank and
Trust Company, incorporated by reference to Exhibit No. 8 to Post-
Effective Amendment No. 3 to the Registration Statement on Form N-1A
filed on April 30, 1991 (File No. 33-22363).
9. Transfer Agency and Service Agreement between the Registrant and
Prudential Mutual Fund Services, Inc., incorporated by reference to
Exhibit No. 9 to Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A filed on January 25, 1990 (File No. 33-
22363).
10. (a) Opinion of Counsel, incorporated by reference to Exhibit No. 10
to Pre-Effective Amendment No. 2 to the Registration Statement on
Form N-1A filed on July 24, 1989 (File No. 33-22363).
11. Consent of Independent Auditors.*
12. Not Applicable.
13. Purchase Agreement, incorporated by reference to Exhibit No. 13 to
Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-1A filed on July 24, 1989 (File No. 33-22363).
14. Not Applicable.
15. (a) Form of Distribution and Service Plan pursuant to Rule 12b-1
under the Investment Company Act of 1940 (Class A Shares) (Municipal
Income Portfolio), incorporated by reference to Exhibit No. 15(d) to
Post-Effective Amendment No. 10 to the Registration Statement on
Form N-1A filed via EDGAR on May 12, 1994 (File No. 33-22363).
(b) Form of Distribution and Service Plan pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (Class B Shares) (Municipal Income
Portfolio), incorporated by reference to Exhibit No. 15(e) to Post-
Effective Amendment No. 10 to the Registration Statement on Form N-1A
filed via EDGAR on May 12, 1994 (File No. 33-22363).
(c) Distribution and Service Plan for Class A shares (Income
Portfolio), incorporated by reference to Exhibit No. 15(c) to Post-
Effective Amendment No. 12 to the Registration Statement on Form N-1A
filed via EDGAR on February 28, 1995 (File No. 33-22363).
(d) Distribution and Service Plan for Class B shares (Income
Portfolio), incorporated by reference to Exhibit No. 15(d) to Post-
Effective Amendment No. 12 to the Registration Statement on Form N-1A
filed via EDGAR on February 28, 1995 (File No. 33-22363).
(e) Form of Distribution and Service Plan for Class C shares
(Municipal Income Portfolio), incorporated by reference to Exhibit No.
15(h) to Post-Effective Amendment No. 10 to the Registration Statement
on Form N-1A filed via EDGAR on May 12, 1994 (File No. 33-22363).
(f) Distribution and Service Plan for Class C shares (Income
Portfolio), incorporated by reference to Exhibit No. 15(f) to Post-
Effective Amendment No. 12 to the Registration Statement on Form N-1A
filed via EDGAR on February 28, 1995 (File No. 33-22363).
16. (a) Schedule of Computation of Performance Quotations relating to
Average Annual Total Return, incorporated by reference to Exhibit
No. 16 to Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A filed on January 25, 1990 (File No. 33-
22363).
(b) Schedule of Computation of Performance Quotations relating to
Aggregate Total Return for Class A and Class B shares, incorporated by
reference to Exhibit No. 16(b) to Post-Effective No. 8 to Registration
Statement on Form N-1A filed on September 14, 1993 (File No. 33-
22363).
17. Financial Data Schedules.*
18. Rule 18f-3 Plan.*
C-2
<PAGE>
Other Exhibits
Copies of Powers of Attorney for:
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Executed copies filed under Other Exhibits to Pre-Effective Amendment No. 2
to the Registration Statement on Form N-1A filed on July 24, 1989 (File No.
33-22363).
- ------------
* Filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of December 2, 1996, there were 6,880, 7,501 and 322 record holders of
Class A, Class B and Class C shares of common stock, $.01 par value per share,
of the Income Portfolio. As of December 2, 1996, the Municipal Income
Portfolio did not have any record holders of shares of common stock.
ITEM 27. INDEMNIFICATION.
As permitted by Sections 17(h) and (i) of the Investment Company Act of 1940
(the 1940 Act) and pursuant to Article VI of the Fund's By-Laws (Exhibit 2 to
the Registration Statement), officers, directors, employees and agents of the
Registrant will not be liable to the Registrant, any stockholder, officer,
director, employee, agent or other person for any action or failure to act,
except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interests of the Registrant. As permitted by Section 17(i) of the
1940 Act, pursuant to Section 10 of the Distribution Agreement (Exhibit 6 to
the Registration Statement), the Distributor of the Registrant may be
indemnified against liabilities which it may incur, except liabilities arising
from bad faith, gross negligence, willful misfeasance or reckless disregard of
duties.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (Securities Act) may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 1940 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in connection with the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the 1940 Act and will be governed
by the final adjudication of such issue.
The Registrant has purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of
indemnification payments to officers and directors under certain
circumstances.
Section 9 of the Management Agreement (Exhibit 5(a) to the Registration
Statement) and Section 4 of the Subadvisory Agreement (Exhibit 5(b) to the
Registration Statement) limit the liability of Prudential Mutual Fund
Management LLC (PMF) and The Prudential Investment Corporation (PIC),
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from
reckless disregard by them of their respective obligations and duties under
the agreements.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and each Distribution Agreement in a manner
consistent with Release No. 11330 of the Securities and Exchange Commission
under the 1940 Act so long as the interpretation of Sections 17(h) and 17(i)
of such Act remain in effect and are consistently applied.
C-3
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Prudential Mutual Fund Management LLC
See "How the Fund is Managed--Manager" in the Prospectus constituting Part A
of this Registration Statement and "Manager" in the Statement of Additional
Information constituting Part B of this Registration Statement.
The business and other connections of the officers of PMF are listed in
Schedules A and D of Form ADV of PMF as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104).
The business and other connections of PMF's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is Gateway Center Three, Newark, NJ 07102.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ---------------- ------------------ ---------------------
<S> <C> <C>
Brian M. Storms President and President and Chief Executive Officer, PMF
Chief Executive
Officer
</TABLE>
(b) The Prudential Investment Corporation (PIC)
See "How the Fund is Managed--Manager" in the Prospectus constituting Part A
of this Registration Statement and "Manager" in the Statement of Additional
Information constituting Part B of this Registration Statement.
The business and other connections of PIC's directors and executive officers
are as set forth below. Except as otherwise indicated, the address of each
person is Prudential Plaza, Newark, NJ 07101.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ---------------- ------------------ ---------------------
<S> <C> <C>
E. Michael Caulfield Chairman of the Chief Executive Officer, Prudential Investments of
Board, President, Prudential; Chairman of the Board, President, Chief
Chief Executive Executive Officer and Director, PIC
Officer and
Director
Jonathan M. Greene Senior Vice President--Investment Management, Prudential
President and Investments of Prudential; Senior Vice President and
Director Director, PIC
John R. Strangfeld Vice President and President of Private Asset Management Group of
Director Prudential; Vice President and Director, PlC
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Prudential Securities Incorporated
Prudential Securities is distributor for The BlackRock Government Income
Trust, Command Government Fund, Command Money Fund, Command Tax-Free Fund, The
Global Government Plus Fund, Inc., The Global Total Return Fund, Inc., Global
Utility Fund, Inc., Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth
Equity Fund), Prudential Allocation Fund, Prudential California Municipal
Fund, Prudential Distressed Securities Fund, Inc., Prudential Diversified Bond
Fund, Inc., Prudential Dryden Fund, Prudential Emerging Growth Fund, Inc.,
Prudential Equity Fund, Inc., Prudential Equity Income Fund, Prudential Europe
Growth Fund, Inc., Prudential Global Genesis Fund, Inc., Prudential Global
Limited Maturity Fund, Inc., Prudential Government Income Fund, Inc.,
Prudential Government Securities Trust, Prudential High Yield Fund, Inc.,
Prudential Intermediate Global Income Fund, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential Jennison Series Fund, Inc., Prudential
MoneyMart Assets, Inc., Prudential Mortgage Income Fund, Inc., Prudential
Multi-Sector Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal
Series Fund, Prudential National Municipals Fund, Inc., Prudential Natural
Resources Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential Small
Companies Fund, Inc., Prudential Special Money Market Fund, Inc., Prudential
Structured Maturity Fund, Inc., Prudential Tax-Free Money Fund, Inc.,
Prudential Utility Fund, Inc., Prudential World Fund, Inc. and The Target
Portfolio Trust. Prudential Securities is also a depositor for the following
unit investment trusts:
Corporate Investment Trust Fund
Prudential Equity Trust Shares
National Equity Trust
Prudential Unit Trusts
Government Securities Equity Trust
National Municipal Trust
C-4
<PAGE>
(b) Information concerning the officers and directors of Prudential
Securities Incorporated is set forth below:
<TABLE>
<CAPTION>
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME(/1/) UNDERWRITER REGISTRANT
- --------- ------------- -------------
<S> <C> <C>
Robert Golden.............. Executive Vice President and Director None
One New York Plaza,
New York, NY 10292
Alan D. Hogan.............. Executive Vice President, Chief None
Administrative Officer and Director
George A. Murray........... Executive Vice President and Director None
Leland B. Paton............ Executive Vice President and Director None
One New York Plaza,
New York, NY 10292
Martin Pfinsgraff.......... Executive Vice President, Chief None
Financial Officer and Director
Vincent T. Pica II......... Executive Vice President and Director None
One New York Plaza,
New York, NY 10292
Hardwick Simmons........... Chief Executive Officer, President None
and Director
Lee B. Spencer, Jr. ....... Executive Vice President, Secretary, None
General Counsel and Director
</TABLE>
- -----------
(/1/)The address of each person named is One Seaport Plaza, New York, NY 10292
unless otherwise indicated.
(c) Registrant has no principal underwriter who is not an affiliated person
of the Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules thereunder are maintained at the offices
of State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts 02171; The Prudential Investment Corporation, Prudential Plaza,
745 Broad Street, Newark, New Jersey 07102; the Registrant, Gateway Center
Three, Newark, New Jersey 07102; and Prudential Mutual Fund Services, Inc.,
Raritan Plaza One, Edison, New Jersey 08837. Documents required by Rules 31a-
1(b)(5), (6), (7), (9), (10) and (11) and 31a-1(f) will be kept at Two Gateway
Center, Newark, New Jersey 07102, documents required by Rules 31a-1(b)(4) and
(11) and 31a-1(d) at Gateway Center Three and the remaining accounts, books
and other documents required by such other pertinent provisions of Section
31(a) and the Rules promulgated thereunder will be kept by State Street Bank
and Trust Company and Prudential Mutual Fund Services, Inc.
ITEM 31. MANAGEMENT SERVICES
Other than as set forth under the captions "How the Fund is Managed--
Manager" and "How the Fund is Managed--Distributor" in the Prospectus and the
captions "Manager" and "Distributor" in the Statement of Additional
Information, constituting Parts A and B, respectively, of this Registration
Statement, Registrant is not a party to any management-related service
contract.
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes to furnish each person to whom a Prospectus
is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 9th day of
December, 1996.
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
/s/ Richard A. Redeker
----------------------------------
Richard A. Redeker, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Eugene S. Stark Treasurer and Principal December 9, 1996
- ------------------------------ Financial and Accounting
Eugene S. Stark Officer
/s/ Edward D. Beach Director December 9, 1996
- ------------------------------
Edward D. Beach
/s/ Eugene C. Dorsey Director December 9, 1996
- ------------------------------
Eugene C. Dorsey
/s/ Delayne Dedrick Gold Director December 9, 1996
- ------------------------------
Delayne Dedrick Gold
/s/ Robert F. Gunia Director December 9, 1996
- ------------------------------
Robert F. Gunia
/s/ Harry A. Jacobs, Jr. Director December 9, 1996
- ------------------------------
Harry A. Jacobs, Jr.
Director December 9, 1996
/s/ Donald D. Lennox
- ------------------------------
Donald D. Lennox
/s/ Mendel A. Melzer Director December 9, 1996
- ------------------------------
Mendel A. Melzer
/s/ Thomas T. Mooney Director December 9, 1996
- ------------------------------
Thomas T. Mooney
/s/ Thomas O'Brien Director December 9, 1996
- ------------------------------
Thomas O'Brien
/s/ Richard A. Redeker President and Director December 9, 1996
- ------------------------------
Richard A. Redeker
/s/ Nancy H. Teeters Director December 9, 1996
- ------------------------------
Nancy H. Teeters
/s/ Louis A. Weil, III Director December 9, 1996
- ------------------------------
Louis A. Weil, III
</TABLE>
C-6
<PAGE>
EXHIBIT 99.B1(b)
ARTICLES SUPPLEMENTARY
OF
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
* * *
Pursuant to Section 2-208.1
of the Maryland General Corporation Law
* * *
Prudential Structured Maturity Fund, Inc., a Maryland corporation having
its principal offices in Baltimore, Maryland and Newark, New Jersey (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland, that:
FIRST: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
SECOND: The total number of shares of all classes of stock which the
Corporation has authority to issue is 500,000,000 shares of common stock, par
value of $.01 each, having an aggregate par value of $5,000,000, divided
initially into two series, the Income Portfolio and the Municipal Income
Portfolio, with each such series authorized to issue 250,000,000 of such shares
having an aggregate par value of $2,500,000, and the total number of shares of
common stock that the Corporation has authority to issue is not being increased
or decreased.
THIRD: Heretofore, the number of authorized shares of which each series of
the Corporation has authority to issue was divided into three classes of shares,
consisting of 83,333,333 1/3 Class A shares, 83,333,333 1/3 Class B shares and
83,333,333 1/3 Class C shares of each series.
FOURTH: In accordance with Section 2-105(c) of the Maryland General
Corporation Law and pursuant to a resolution duly adopted by the Board of
Directors of the Corporation at a meeting held on April 10, 1996, the number of
authorized shares of which each series has authority to issue is hereby divided
into four classes of shares, consisting of 62,500,000 Class A shares, 62,500,000
Class B shares, 62,500,000 Class C shares and 62,500,000 Class Z shares of each
series.
FIFTH: The Class Z shares of a series shall represent the same interest in
the series and have identical voting, dividend, liquidation and other rights as
the Class A, Class B and Class C shares except that (i) Expenses related to the
distribution of each class of shares shall be borne solely by such class; (ii)
The bearing of such expenses solely by shares of each class shall be
appropriately reflected (in the manner determined by the Board of Directors) in
the net asset value, dividends, distribution and liquidation rights of the
shares of such class; (iii) The Class A Common Stock shall be subject to a
front-end sales load and a Rule 12b-1 distribution fee as determined by the
Board of Directors from time to time; (iv) The Class B Common Stock shall be
subject to a contingent deferred sales charge and a Rule 12b-1 distribution fee
as determined by the Board of Directors from time to time; (v) The Class C
Common Stock shall be subject to a contingent deferred sales charge and a Rule
12b-1 distribution fee as determined by the Board of
<PAGE>
Directors from time to time and (vi) The Class Z Common Stock shall not be
subject to a front-end sales load, a contingent deferred sales charge nor a 12b-
1 distribution fee. All shares of each particular class shall represent an equal
proportionate interest in that class, and each share of any particular class
shall be equal to each other share of that class.
IN WITNESS WHEREOF, PRUDENTIAL STRUCTURED MATURITY FUND, INC., has caused
these presents to be signed in its name and on its behalf by its President and
attested by its Assistant Secretary on November 20, 1996.
PRUDENTIAL STRUCTURED MATURITY
FUND, INC.
By /s/ Richard A. Redeker
-------------------------------
Richard A. Redeker
President
Attest: /s/ Marguerite E.H. Morrison
------------------------------
Marguerite E. H. Morrison
Assistant Secretary
THE UNDERSIGNED, President of Prudential Structured Maturity Fund,
Inc., who executed on behalf of the Corporation the foregoing Articles
Supplementary of which this certificate is made a part, hereby acknowledges in
the name and on behalf of said Corporation the foregoing Articles Supplementary
to be the corporate act of said Corporation and hereby certifies that to the bet
of his knowledge, information and belief the matters and facts set forth therein
with respect to the authorization and approval thereof are true in all material
respects under the penalties of perjury.
/s/ Richard A. Redeker
-------------------------------
Richard A. Redeker
President
2
<PAGE>
EXHIBIT 99.B6
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Distribution Agreement
Agreement made as of May 8, 1996 between Prudential Structured Maturity
Fund, Inc., a Maryland corporation (the Fund), and Prudential Securities
Incorporated, a Delaware corporation (the Distributor).
WITNESSETH
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the Investment Company Act), as a diversified, open-end, management
investment company and it is in the interest of the Fund to offer its shares for
sale continuously;
WHEREAS, the shares of the Fund may be divided into classes and/or series
(all such shares being referred to herein as Shares) and the Fund currently is
authorized to offer Class A, Class B, Class C and Class Z Shares;
WHEREAS, the Distributor is a broker-dealer registered under the Securities
Exchange Act of 1934, as amended, and is engaged in the business of selling
shares of registered investment companies either directly or through other
broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other, with respect to the continuous offering of the Fund's Shares from
and after the date hereof in order to promote the growth of the Fund and
facilitate the distribution of its Shares; and
WHEREAS, upon approval by the holders of the respective classes and/or
series of Shares of the Fund it is contemplated that the Fund will adopt a plan
(or plans) of distribution pursuant to Rule 12b-1 under the Investment Company
Act with respect to certain of its classes and/or series of Shares (the Plans)
authorizing payments by the Fund to the Distributor with respect to the
<PAGE>
distribution of such classes and/or series of Shares and the maintenance of
related shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor
The Fund hereby appoints the Distributor as the principal underwriter and
distributor of the Shares of the Fund to sell Shares to the public on behalf of
the Fund and the Distributor hereby accepts such appointment and agrees to act
hereunder. The Fund hereby agrees during the term of this Agreement to sell
Shares of the Fund through the Distributor on the terms and conditions set forth
below.
Section 2. Exclusive Nature of Duties
The Distributor shall be the exclusive representative of the Fund to act as
principal underwriter and distributor of the Fund's Shares, except that:
2.1 The exclusive rights granted to the Distributor to sell Shares of the
Fund shall not apply to Shares of the Fund issued in connection with the merger
or consolidation of any other investment company or personal holding company
with the Fund or the acquisition by purchase or otherwise of all (or
substantially all) the assets or the outstanding shares of any such company by
the Fund.
2.2 Such exclusive rights shall not apply to Shares issued by the Fund
pursuant to reinvestment of dividends or capital gains distributions or through
the exercise of any conversion feature or exchange privilege.
2.3 Such exclusive rights shall not apply to Shares issued by the Fund
pursuant to the reinstatement privilege afforded redeeming shareholders.
2.4 Such exclusive rights shall not apply to purchases made through the
Fund's transfer and dividend disbursing agent in the manner set forth in the
currently effective Prospectus of the Fund. The term "Prospectus" shall mean the
Prospectus and Statement of Additional Information included as part of the
Fund's
2
<PAGE>
Registration Statement, as such Prospectus and Statement of Additional
Information may be amended or supplemented from time to time, and the term
"Registration Statement" shall mean the Registration Statement filed by the Fund
with the Securities and Exchange Commission and effective under the Securities
Act of 1933, as amended (Securities Act), and the Investment Company Act, as
such Registration Statement is amended from time to time.
Section 3. Purchase of Shares from the Fund
3.1 The Distributor shall have the right to buy from the Fund on behalf of
investors the Shares needed, but not more than the Shares needed (except for
clerical errors in transmission) to fill unconditional orders for Shares placed
with the Distributor by investors or registered and qualified securities dealers
and other financial institutions (selected dealers).
3.2 The Shares shall be sold by the Distributor on behalf of the Fund and
delivered by the Distributor or selected dealers, as described in Section 6.4
hereof, to investors at the offering price as set forth in the Prospectus.
3.3 The Fund shall have the right to suspend the sale of any or all classes
and/or series of its Shares at times when redemption is suspended pursuant to
the conditions in Section 4.3 hereof or at such other times as may be determined
by the Board of Directors. The Fund shall also have the right to suspend the
sale of any or all classes and/or series of its Shares if a banking moratorium
shall have been declared by federal or New York authorities.
3.4 The Fund, or any agent of the Fund designated in writing by the Fund,
shall be promptly advised of all purchase orders for Shares received by the
Distributor. Any order may be rejected by the Fund; provided, however, that the
Fund will not arbitrarily or without reasonable cause refuse to accept or
confirm orders for the purchase of Shares. The Fund (or its agent) will confirm
orders upon their receipt, will make appropriate book entries and upon receipt
by the Fund (or its agent) of payment therefor, will deliver deposit receipts
for such Shares pursuant to the instructions of the Distributor. Payment shall
be made to the Fund in New York Clearing House funds or federal funds. The
3
<PAGE>
Distributor agrees to cause such payment and such instructions to be delivered
promptly to the Fund (or its agent).
Section 4. Repurchase or Redemption of Shares by the Fund
4.1 Any of the outstanding Shares may be tendered for redemption at any
time, and the Fund agrees to repurchase or redeem the Shares so tendered in
accordance with its Articles of Incorporation as amended from time to time, and
in accordance with the applicable provisions of the Prospectus. The price to be
paid to redeem or repurchase the Shares shall be equal to the net asset value
determined as set forth in the Prospectus. All payments by the Fund hereunder
shall be made in the manner set forth in Section 4.2 below.
4.2 The Fund shall pay the total amount of the redemption price as defined
in the above paragraph pursuant to the instructions of the Distributor on or
before the seventh day subsequent to its having received the notice of
redemption in proper form. The proceeds of any redemption of Shares shall be
paid by the Fund as follows: (i) in the case of Shares subject to a contingent
deferred sales charge, any applicable contingent deferred sales charge shall be
paid to the Distributor, and the balance shall be paid to or for the account of
the redeeming shareholder, in each case in accordance with applicable provisions
of the Prospectus; and (ii) in the case of all other Shares, proceeds shall be
paid to or for the account of the redeeming shareholder, in each case in
accordance with applicable provisions of the Prospectus.
4.3 Redemption of any class and/or series of Shares or payment may be
suspended at times when the New York Stock Exchange is closed for other than
customary weekends and holidays, when trading on said Exchange is restricted,
when an emergency exists as a result of which disposal by the Fund of securities
owned by it is not reasonably practicable or it is not reasonably practicable
for the Fund fairly to determine the value of its net assets, or during any
other period when the Securities and Exchange Commission, by order, so permits.
Section 5. Duties of the Fund
4
<PAGE>
5.1 Subject to the possible suspension of the sale of Shares as provided
herein, the Fund agrees to sell its Shares so long as it has Shares of the
respective class and/or series available.
5.2 The Fund shall furnish the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, and this shall
include one certified copy, upon request by the Distributor, of all financial
statements prepared for the Fund by independent public accountants. The Fund
shall make available to the Distributor such number of copies of its Prospectus
and annual and interim reports as the Distributor shall reasonably request.
5.3 The Fund shall take, from time to time, but subject to the necessary
approval of the Board of Directors and the shareholders, all necessary action to
fix the number of authorized Shares and such steps as may be necessary to
register the same under the Securities Act, to the end that there will be
available for sale such number of Shares as the Distributor reasonably may
expect to sell. The Fund agrees to file from time to time such amendments,
reports and other documents as may be necessary in order that there will be no
untrue statement of a material fact in the Registration Statement, or necessary
in order that there will be no omission to state a material fact in the
Registration Statement which omission would make the statements therein
misleading.
5.4 The Fund shall use its best efforts to qualify and maintain the
qualification of any appropriate number of its Shares for sales under the
securities laws of such states as the Distributor and the Fund may approve;
provided that the Fund shall not be required to amend its Articles of
Incorporation or By-Laws to comply with the laws of any state, to maintain an
office in any state, to change the terms of the offering of its Shares in any
state from the terms set forth in its Registration Statement, to qualify as a
foreign corporation in any state or to consent to service of process in any
state other than with respect to claims arising out of the offering of its
Shares. Any such qualification may be withheld, terminated or withdrawn by the
Fund at any time in its discretion. As provided in Section 9 hereof, the expense
of qualification and maintenance of
5
<PAGE>
qualification shall be borne by the Fund. The Distributor shall furnish such
information and other material relating to its affairs and activities as may be
required by the Fund in connection with such qualifications.
Section 6. Duties of the Distributor
6.1 The Distributor shall devote reasonable time and effort to effect sales
of Shares, but shall not be obligated to sell any specific number of Shares.
Sales of the Shares shall be on the terms described in the Prospectus. The
Distributor may enter into like arrangements with other investment companies.
The Distributor shall compensate the selected dealers as set forth in the
Prospectus.
6.2 In selling the Shares, the Distributor shall use its best efforts in
all respects duly to conform with the requirements of all federal and state laws
relating to the sale of such securities. Neither the Distributor nor any
selected dealer nor any other person is authorized by the Fund to give any
information or to make any representations, other than those contained in the
Registration Statement or Prospectus and any sales literature approved by
appropriate officers of the Fund.
6.3 The Distributor shall adopt and follow procedures for the confirmation
of sales to investors and selected dealers, the collection of amounts payable by
investors and selected dealers on such sales and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the
National Association of Securities Dealers, Inc. (NASD).
6.4 The Distributor shall have the right to enter into selected dealer
agreements with registered and qualified securities dealers and other financial
institutions of its choice for the sale of Shares, provided that the Fund shall
approve the forms of such agreements. Within the United States, the Distributor
shall offer and sell Shares only to such selected dealers as are members in good
standing of the NASD. Shares sold to selected dealers shall be for resale by
such dealers only at the offering price determined as set forth in the
Prospectus.
Section 7. Payments to the Distributor
6
<PAGE>
7.1 With respect to classes and/or series of Shares which impose a
front-end sales charge, the Distributor shall receive and may retain any portion
of any front-end sales charge which is imposed on such sales and not reallocated
to selected dealers as set forth in the Prospectus, subject to the limitations
of Article III, Section 26 of the NASD Rules of Fair Practice. Payment of these
amounts to the Distributor is not contingent upon the adoption or continuation
of any applicable Plans.
7.2 With respect to classes and/or series of Shares which impose a
contingent deferred sales charge, the Distributor shall receive and may retain
any contingent deferred sales charge which is imposed on such sales as set forth
in the Prospectus, subject to the limitations of Article III, Section 26 of the
NASD Rules of Fair Practice. Payment of these amounts to the Distributor is not
contingent upon the adoption or continuation of any Plan.
Section 8. Payment of the Distributor under the Plan
8.1 The Fund shall pay to the Distributor as compensation for services
under any Plans adopted by the Fund and this Agreement a distribution and
service fee with respect to the Fund's classes and/or series of Shares as
described in each of the Fund's respective Plans and this Agreement.
8.2 So long as a Plan or any amendment thereto is in effect, the
Distributor shall inform the Board of Directors of the commissions and account
servicing fees with respect to the relevant class and/or series of Shares to be
paid by the Distributor to account executives of the Distributor and to
broker-dealers and financial institutions which have dealer agreements with the
Distributor. So long as a Plan (or any amendment thereto) is in effect, at the
request of the Board of Directors or any agent or representative of the Fund,
the Distributor shall provide such additional information as may reasonably be
requested concerning the activities of the Distributor hereunder and the costs
incurred in performing such activities with respect to the relevant class and/or
series of Shares.
Section 9. Allocation of Expenses
7
<PAGE>
The Fund shall bear all costs and expenses of the continuous offering of
its Shares (except for those costs and expenses borne by the Distributor
pursuant to a Plan and subject to the requirements of Rule 12b-1 under the
Investment Company Act), including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of any required
Registration Statements and/or Prospectuses under the Investment Company Act or
the Securities Act, and all amendments and supplements thereto, and preparing
and mailing annual and periodic reports and proxy materials to shareholders
(including but not limited to the expense of setting in type any such
Registration Statements, Prospectuses, annual or periodic reports or proxy
materials). The Fund shall also bear the cost of expenses of qualification of
the Shares for sale, and, if necessary or advisable in connection therewith, of
qualifying the Fund as a broker or dealer, in such states of the United States
or other jurisdictions as shall be selected by the Fund and the Distributor
pursuant to Section 5.4 hereof and the cost and expense payable to each such
state for continuing qualification therein until the Fund decides to discontinue
such qualification pursuant to Section 5.4 hereof. As set forth in Section 8
above, the Fund shall also bear the expenses it assumes pursuant to any Plan, so
long as such Plan is in effect.
Section 10. Indemnification
10.1 The Fund agrees to indemnify, defend and hold the Distributor, its
officers and directors and any person who controls the Distributor within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Distributor,
its officers, directors or any such controlling person may incur under the
Securities Act, or under common law or otherwise, arising out of or based upon
any untrue statement of a material fact contained in the Registration Statement
or Prospectus or arising out of or based upon any alleged omission to state a
material fact required to be stated in either thereof or necessary to make the
statements in either thereof not misleading, except insofar as such claims,
demands, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in
8
<PAGE>
conformity with information furnished in writing by the Distributor to the Fund
for use in the Registration Statement or Prospectus; provided, however, that
this indemnity agreement shall not inure to the benefit of any such officer,
director, trustee or controlling person unless a court of competent jurisdiction
shall determine in a final decision on the merits, that the person to be
indemnified was not liable by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations under this Agreement (disabling conduct), or, in
the absence of such a decision, a reasonable determination, based upon a review
of the facts, that the indemnified person was not liable by reason of disabling
conduct, by (a) a vote of a majority of a quorum of directors or trustees who
are neither "interested persons" of the Fund as defined in Section 2(a)(19) of
the Investment Company Act nor parties to the proceeding, or (b) an independent
legal counsel in a written opinion. The Fund's agreement to indemnify the
Distributor, its officers and directors or trustees and any such controlling
person as aforesaid is expressly conditioned upon the Fund's being promptly
notified of any action brought against the Distributor, its officers or
directors or trustees, or any such controlling person, such notification to be
given by letter or telegram addressed to the Fund at its principal business
office. The Fund agrees promptly to notify the Distributor of the commencement
of any litigation or proceedings against it or any of its officers or directors
in connection with the issue and sale of any Shares.
10.2 The Distributor agrees to indemnify, defend and hold the Fund, its
officers and Directors and any person who controls the Fund, if any, within the
meaning of Section 15 of the Securities Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending against such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Fund, its
officers and Directors or any such controlling person may incur under the
Securities Act or under common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its Directors or officers or
such controlling person resulting from such claims or demands shall arise out of
or be based upon any alleged untrue statement of a material fact contained in
information furnished in writing by the Distributor to the Fund for use in the
Registration
9
<PAGE>
Statement or Prospectus or shall arise out of or be based upon any alleged
omission to state a material fact in connection with such information required
to be stated in the Registration Statement or Prospectus or necessary to make
such information not misleading. The Distributor's agreement to indemnify the
Fund, its officers and Directors and any such controlling person as aforesaid,
is expressly conditioned upon the Distributor's being promptly notified of any
action brought against the Fund, its officers and Directors or any such
controlling person, such notification being given to the Distributor at its
principal business office.
Section 11. Duration and Termination of this Agreement
11.1 This Agreement shall become effective as of the date first above
written and shall remain in force for two years from the date hereof and
thereafter, but only so long as such continuance is specifically approved at
least annually by (a) the Board of Directors of the Fund, or by the
vote of a majority of the outstanding voting securities of the applicable class
and/or series of the Fund, and (b) by the vote of a majority of those
Directors who are not parties to this Agreement or interested persons
of any such parties and who have no direct or indirect financial interest in
this Agreement or in the operation of any of the Fund's Plans or in any
agreement related thereto (Independent Directors), cast in person at a meeting
called for the purpose of voting upon such approval.
11.2 This Agreement may be terminated at any time, without the payment of
any penalty, by a majority of the Independent Directors or by vote of a majority
of the outstanding voting securities of the applicable class and/or series of
the Fund, or by the Distributor, on sixty (60) days' written notice to the other
party. This Agreement shall automatically terminate in the event of its
assignment.
11.3 The terms "affiliated person," "assignment," "interested person" and
"vote of a majority of the outstanding voting securities", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
10
<PAGE>
Section 12. Amendments to this Agreement
This Agreement may be amended by the parties only if such amendment is
specifically approved by (a) the Board of Directors of the Fund, or
by the vote of a majority of the outstanding voting securities of the applicable
class and/or series of the Fund, and (b) by the vote of a majority of the
Independent Directors cast in person at a meeting called for the
purpose of voting on such amendment.
Section 13. Separate Agreement as to Classes and/or Series
The amendment or termination of this Agreement with respect to any class
and/or series shall not result in the amendment or termination of this Agreement
with respect to any other class and/or series unless explicitly so provided.
Section 14. Governing Law
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the Investment Company Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the Investment Company Act, the
latter shall control.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year above written.
Prudential Securities Incorporated
By: /s/ROBERT F. GUNIA
------------------------------
Robert F. Gunia
Senior Vice President
Prudential Structured Maturity Fund, Inc.
By: /s/RICHARD A. REDEKER
------------------------------
Richard A. Redeker
President
12
<PAGE>
EXHIBIT 99.B11
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 14 to Registration
Statement No. 33-22363 of Prudential Structured Maturity Fund, Inc. of our
report dated February 9, 1996, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
references to us under the headings "Financial Highlights" in the Prospectus,
which are a part of such Registration Statement, and "Custodian, Transfer and
Dividend Disbursing Agent and Independent Accountants" in the Statement of
Additional Information.
Deloitte & Touche LLP
New York, New York
December 6, 1996
<PAGE>
EXHIBIT 99.B18
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
(the Fund)
PLAN PURSUANT TO RULE 18F-3
The Fund hereby adopts this plan pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the 1940 Act), setting forth the separate
arrangement and expense allocation of each class of shares. Any material
amendment to this plan is subject to prior approval of the Board of
Directors, including a majority of the independent Directors.
CLASS CHARACTERISTICS
CLASS A SHARES: Class A shares are subject to a high initial
sales charge and a distribution and/or service
fee pursuant to Rule 12b-1 under the 1940 Act
(Rule 12b-1 fee) not to exceed .30 of 1% per
annum of the average daily net assets of the
class. The initial sales charge is waived or
reduced for certain eligible investors.
CLASS B SHARES: Class B shares are not subject to an initial
sales charge but are subject to a high
contingent deferred sales charge (declining by
1% each year) which will be imposed on certain
redemptions and a Rule 12b-1 fee of not to
exceed 1% per annum of the average daily
net assets of the class. The contingent
deferred sales charge is waived for certain
eligible investors. Class B shares
automatically convert to Class A shares
approximately five years after purchase.
CLASS C SHARES: Class C shares are not subject to an initial
sales charge but are subject to a low
contingent deferred sales charge (declining by
1% each year) which will be imposed on certain
redemptions and a Rule 12b-1 fee not to exceed
1% per annum of the average daily net assets
of the class.
<PAGE>
Class Z SHARES: Class Z shares are not subject to either an
initial or contingent deferred sales charge
nor are they subject to any Rule 12b-1 fee.
INCOME AND EXPENSE ALLOCATIONS
Income and expenses not allocated to a particular class, will be allocated
to each class on the basis of relative net assets (settled shares). "Relative
net assets (settled shares)" are net assets valued in accordance with generally
accepted accounting principles but excluding the value of subscriptions
receivable in relation to the net assets of the Fund. Any realized and
unrealized capital gains and losses will be allocated to each class on the basis
of the net asset value of that class in relation to the net asset value of the
Fund.
DIVIDENDS AND DISTRIBUTIONS
Dividends and other distributions paid by the Fund to each class of shares,
to the extent paid, will be paid on the same day and at the same time, and will
be determined in the same manner and will be in the same amount, except that the
amount of the dividends and other distributions declared and paid by a
particular class may be different from that paid by another class because of
Rule 12b-1 fees and other expenses borne exclusively by that class.
EXCHANGE PRIVILEGE
Each class of shares is generally exchangeable for the same class of shares
(or the class of shares with similar characteristics), if any, of the other
Prudential Mutual Funds (subject to certain minimum investment requirements) at
relative net asset value without the imposition of any sales charge.
Class B and Class C shares (which are not subject to a contingent deferred
sales charge) of shareholders who qualify to purchase Class A shares at net
asset value will be automatically exchanged for Class A shares on a quarterly
basis, unless the shareholder elects otherwise.
CONVERSION FEATURES
Class B shares will automatically convert to Class A shares on a quarterly
basis approximately five years after purchase. Conversions will be effected at
relative net asset value without the imposition of any additional sales charge.
<PAGE>
GENERAL
A. Each class of shares shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its arrangement and shall
have separate voting rights on any matter submitted to shareholders in
which the interests of one class differ from the interests of any other
class.
B. On an ongoing basis, the Directors, pursuant to their fiduciary
responsibilities under the 1940 Act and otherwise, will monitor the Fund
for the existence of any material conflicts among the interests of its
several classes. The Directors, including a majority of the independent
Directors, shall take such action as is reasonably necessary to eliminate
any such conflicts that may develop. Prudential Mutual Fund Management,
Inc., the Fund's Manager, will be responsible for reporting any potential
or existing conflicts to the Directors.
C. For purposes of expressing an opinion on the financial statements of the
Fund, the methodology and procedures for calculating the net asset value
and dividends/distributions of the Fund's several classes and the proper
allocation of income and expenses among such classes will be examined
annually by the Fund's independent auditors who, in performing such
examination, shall consider the factors set forth in the relevant auditing
standards adopted, from time to time, by the American Institute of
Certified Public Accountants.
Dated: April 10, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 001
<NAME> PRUDENTIAL STRUCTURED MATURITY FUND (CLASS A)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 184,358,138
<INVESTMENTS-AT-VALUE> 182,803,945
<RECEIVABLES> 4,218,730
<ASSETS-OTHER> 7,893
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 187,030,568
<PAYABLE-FOR-SECURITIES> 912,490
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,669
<TOTAL-LIABILITIES> 1,495,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 196,216,633
<SHARES-COMMON-STOCK> 16,461,973
<SHARES-COMMON-PRIOR> 18,073,076
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,127,031)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,554,193)
<NET-ASSETS> 185,535,409
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,189,906
<OTHER-INCOME> 0
<EXPENSES-NET> 1,218,342
<NET-INVESTMENT-INCOME> 5,971,564
<REALIZED-GAINS-CURRENT> (2,158,940)
<APPREC-INCREASE-CURRENT> (4,169,420)
<NET-CHANGE-FROM-OPS> (356,796)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (5,971,564)
<NUMBER-OF-SHARES-SOLD> 17,011,601
<NUMBER-OF-SHARES-REDEEMED> (39,157,613)
<SHARES-REINVESTED> 3,789,229
<NET-CHANGE-IN-ASSETS> (24,685,143)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,968,091
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 394,699
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,218,342
<AVERAGE-NET-ASSETS> 84,898,000
<PER-SHARE-NAV-BEGIN> 11.63
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.36)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.27
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 002
<NAME> PRUDENTIAL STRUCTURED MATURITY FUND (CLASS B)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 184,358,138
<INVESTMENTS-AT-VALUE> 182,803,945
<RECEIVABLES> 4,218,730
<ASSETS-OTHER> 7,893
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 187,030,568
<PAYABLE-FOR-SECURITIES> 912,490
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,669
<TOTAL-LIABILITIES> 1,495,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 196,216,633
<SHARES-COMMON-STOCK> 16,461,973
<SHARES-COMMON-PRIOR> 18,073,076
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,127,031)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,554,193)
<NET-ASSETS> 185,535,409
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,189,906
<OTHER-INCOME> 0
<EXPENSES-NET> 1,218,342
<NET-INVESTMENT-INCOME> 5,971,564
<REALIZED-GAINS-CURRENT> (2,158,940)
<APPREC-INCREASE-CURRENT> (4,169,420)
<NET-CHANGE-FROM-OPS> (356,796)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (5,971,564)
<NUMBER-OF-SHARES-SOLD> 17,011,601
<NUMBER-OF-SHARES-REDEEMED> (39,157,613)
<SHARES-REINVESTED> 3,789,229
<NET-CHANGE-IN-ASSETS> (24,685,143)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 6,968,091
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 394,699
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,218,342
<AVERAGE-NET-ASSETS> 112,357,000
<PER-SHARE-NAV-BEGIN> 11.63
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (0.33)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.27
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 003
<NAME> PRUDENTIAL STRUCTURED MATURITY FUND (CLASS C)
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 184,358,138
<INVESTMENTS-AT-VALUE> 182,803,945
<RECEIVABLES> 4,218,730
<ASSETS-OTHER> 7,893
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 187,030,568
<PAYABLE-FOR-SECURITIES> 912,490
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 582,669
<TOTAL-LIABILITIES> 1,495,159
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 196,216,633
<SHARES-COMMON-STOCK> 16,461,973
<SHARES-COMMON-PRIOR> 18,073,076
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (9,127,031)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,554,193)
<NET-ASSETS> 185,535,409
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,189,906
<OTHER-INCOME> 0
<EXPENSES-NET> 1,218,342
<NET-INVESTMENT-INCOME> 5,971,564
<REALIZED-GAINS-CURRENT> (2,158,940)
<APPREC-INCREASE-CURRENT> (4,169,420)
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<PER-SHARE-NII> (0.03)
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</TABLE>
