PRUDENTIAL STRUCTURED MATURITY FUND INC, N-30D, 1999-09-08

PRUDENTIAL STRUCTURED MATURITY FUND INC
N-30D, 1999-09-08

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<PAGE>

(ICON)

Prudential
Structured
Maturity
Fund, Inc.
- --------------------
Income Portfolio

SEMI
ANNUAL
REPORT
June 30, 1999

(LOGO)

<PAGE>

A Message from the Fund's President August 20, 1999
(PHOTO)

Dear Shareholder,
Prudential Structured Maturity Fund generated positive returns for
the six-month period that ended on June 30, 1999, outperforming its
benchmark, which posted a slightly negative return.

During the first half of 1999, the strength of the U.S. economy and
the prospects of recovering international economies stoked inflation
fears. Since rising inflation erodes the value of bonds' fixed
interest payments, investors demanded higher yields on most debt
securities. As a result, prices of these securities, which move
in the opposite direction of their yields, fell modestly. The
following report takes a closer look at bond market events that
occurred during the six-month reporting period, and explains
how Prudential Structured Maturity Fund posted a positive
return despite adverse market conditions.

Our integrated and expanded team
I would like to take this opportunity to tell you about some
changes we've made to our Fixed Income Group. Earlier in the
year, we combined our fixed-income areas into one integrated
group that will manage money for Prudential's retail and
institutional investors, as well as its policyholders. This
integrated group now manages approximately $145 billion in
assets, making it one of the three largest fixed-income money
managers in the country. The expanded depth, breadth, and scale of
our investment team also allow us to tap the best talent and
share investment ideas, proprietary research, and analytical
tools. The group is co-headed by Senior Managing Directors Jim
Sullivan, who is responsible for portfolio management and credit
research, and Jack Gaston, who is in charge of risk management
and quantitative research.

To utilize these integrated resources more effectively, Mr.
Sullivan recently organized the group into teams, each
specializing in a different sector of the fixed-income
market. The Corporate Sector team will now be responsible
for the day-to-day management of your Prudential Structured
Maturity Fund. Many of the investment professionals who
supported the management of the Fund in the past are part
of this new team that will work together to share their
knowledge and strive to enhance performance.

Thank you for your continued confidence in Prudential
mutual funds. I firmly believe that the group's combined
resources and our new team approach will make us a powerhouse
in the world of fixed-income investing across all sectors.

Sincerely,

John R. Strangfeld
President and Chief Investment Officer
Prudential Structured Maturity Fund, Inc.

<PAGE>

Performance Review

<TABLE>
Cumulative Total Returns1 As of 6/30/99
<CAPTION>
Six One Five Since
Months Year Years Inception2
<S> <C> <C> <C> <C>
Class A 0.30% 3.52% 35.92% 95.48% (90.92)
Class B 0.06 2.92 31.70 37.46
Class C 0.06 2.92 N/A 30.27
Class Z 0.50 3.79 N/A 15.67
Lipper Short/Int.
Inv. Grade Fund Avg.3 -0.13 3.38 34.52 ***
</TABLE>

<TABLE>
Average Annual Total Returns1 As of 6/30/99
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 0.16% 5.63% 6.70% (6.44)
Class B -0.08 5.66 4.97
Class C 0.89 N/A 5.32
Class Z 3.79 N/A 5.91
</TABLE>

<TABLE>
Distributions and Yields As of 6/30/99
<CAPTION>
Total Distributions 30-Day
Paid for Six Mos. SEC Yield
<S> <C> <C>
Class A $0.31 5.77%
Class B $0.28 5.45
Class C $0.28 5.41
Class Z $0.33 6.22
</TABLE>

Past performance is not indicative of future results. Principal
and investment return will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their
original cost.

1 Source: Prudential Investments Fund Management LLC and
Lipper, Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns do
take into account applicable sales charges. The Fund charges
a maximum front-end sales charge of 3.25% for Class A shares.
Class B shares are subject to a declining contingent deferred
sales charge (CDSC) of 3%, 2%, 1%, and 1% for four years. Class
B shares will automatically convert to Class A shares, on a quarterly
basis, approximately five years after purchase. Class C shares
are subject to a front-end sales charge of 1% and a CDSC of 1%
for 18 months. Class C shares bought before November 2, 1998,
have a 1% CDSC if sold within one year. Without waiver of
management fees and/or expense subsidization, the Fund's
cumulative and average annual total returns would have been
lower, as indicated in parentheses ( ).

2 Inception dates: Class A, 9/1/89; Class B, 12/9/92; Class C,
8/1/94; and Class Z, 12/16/96.

3 Lipper average returns are for all funds in each share
class for the six-month, one-, and five-year periods in
the Short/Intermediate Investment Grade Fund category.

***Lipper Since Inception returns are 92.97% for Class A,
43.58% for Class B, 33.17% for Class C, and 13.76% for
Class Z, based on all funds in each share class.

Inflation fears roiled bond markets
Many major bond markets sold off during the first half of
1999 as investors worried that a strong U.S. economy, a
nascent global economic recovery, and rising oil prices
might rekindle higher inflation. Mounting inflationary
pressures erode the value of bonds' fixed interest
payments. To compensate for this risk, investors began
to push some bond yields higher and their prices lower.
When bond markets sell off, prices of short- and
intermediate-term bonds, such as those held by the Fund,
typically decline less than prices of long-term bonds.

In the spring, the sell-off in debt markets accelerated. It
became clear that the Federal Reserve would boost the Federal
funds rate (the rate U.S. banks charge each other for overnight
loans) to slow the powerful U.S. economy and head off rising
inflation. On June 30, 1999, the Federal funds rate was increased
by a quarter of a percentage point to 5.00%.

But the Fund still provided positive returns
Despite this markedly bearish trend, the Fund provided slightly
positive six-month returns that beat the negative return of its
benchmark Lipper Average. Some corporate debt securities held
by the Fund sold off less than comparable bonds because
they benefited from developments such as an upgrade in their
credit rating or plans to participate in a merger. For example,
the Fund owned bonds of Niagara Mohawk Power, whose senior
unsecured debt rating was raised from BB-plus to BBB-minus by
Standard & Poor's. The Fund also held fixed-income securities
of BankBoston, which announced plans to merge with Fleet
Financial Group later in the year.

Bought U.S. corporate bonds and sold U.S. Treasuries
During the first six months of 1999, we made major shifts in
the Fund's asset allocation. U.S. corporate bonds rose from
71% of the Fund's total investments as

<PAGE>

of December 31, 1998 to 79% as of June 30, 1999, while
Treasuries fell from 23% to 13%. We primarily bought
short- and intermediate-term bonds of companies in the
financial industry, and sold short-term Treasuries.

We favored corporate bonds because of strong fundamentals
such as good corporate credit quality, solid cash flows,
and earnings growth. In addition, the spread or difference
between the yields of corporate bonds and Treasuries increased. This
continues to occur as many companies rush to issue bonds
before the end of 1999 to avoid any complications that
might arise because of potential computer problems
associated with the year 2000. Investors demanded
higher yields on this large supply
of new corporate debt securities. Corporate bonds
therefore cheapened relative to Treasuries, which
provided several attractive buying opportunities,
particularly among the bonds of financial companies.

Maintained minimal exposure to emerging market bonds
We continued to have minimal exposure to emerging market bonds
even though, on the whole, they performed better than debt
securities of other fixed-income markets during the first
half of 1999, based on Lehman Brothers indexes. Demand for
emerging market bonds began to increase after Brazil appeared
to weather a financial crisis far better than expected. In
addition, investor sentiment improved toward emerging market
bonds of Southeast Asian countries as economic sta-bility
returned to that region. But despite the progress made in
some areas, many countries that issue emerging market
bonds--particularly certain Latin American nations--still
face daunting challenges. After weighing the pros and cons
of adding exposure to emerging market bonds, we decided that
their potential credit-quality risks outweighed the benefit
to be gained from their higher yields at this time.

Looking Ahead
Fed may move again in 1999
We believe the Federal Reserve could raise the Federal funds
rate a second time in the summer or in early autumn if the U.S.
economy continues to grow at a brisk pace or if signs of mounting
inflationary pressures appear. The likelihood of another
rate increase should decline later in the year because of the
U.S. central bank's concerns about difficulties that may arise
due to potential computer problems at the beginning of the year
2000.

Five Largest Holdings
Expressed as a percentage of net assets as of 6/30/99
U.S. Treasury Notes--7.50%, 2/15/05 13.0%
Advanta Corp.--Consumer Finance 6.0
Camden Property Trust--REIT 4.3
First Industrial L.P.-- REIT 4.2
ERP Operating L.P.--REIT 3.8

Portfolio Composition
Expressed as a percentage of total investments as of 6/30/99
U.S. Corporate Bonds 79.3%
U.S. Treasuries 13.1
Asset Backed 4.2
Cash Equivalents 3.4

Investment Goals and Style
The Prudential Structured Maturity Fund--Income Portfolio features
a fixed or laddered maturity format where assets are allocated
evenly among six maturity ranges or rungs of from one to six
years. Within this structure, your Fund seeks high current
income consistent with the preservation of principal primarily
by investing in investment-grade corporate bonds and government
bonds. There can be no assurance that the Fund will achieve its
investment objective.

<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 maturityD categories.
- --------------------------------------------------------------------------------

Portfolio of Investments as of PRUDENTIAL STRUCTURED MATURITY FUND, INC.
June 30, 1999 (Unaudited) INCOME PORTFOLIO
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating* (000) Description Value (Note 1)
- ------------------------------------------------------------
<C> <C> <S> <C>
5-6 YEARS--16.2%
Ba1 $ 1,500 Lear Corp.,
7.96%, 5/15/05 $ 1,451,250
Aaa 2,500 PECO Energy Transiton
Trust,
(Average life 5.09 years)D
5.80%, 3/1/07 2,407,425
Aaa 14,150 United States Treasury
Notes,
7.50%, 2/15/05 15,233,324
-------------
19,091,999
- ------------------------------------------------------------
4-5 YEARS--19.5%
A1 3,000 AT&T Corp.,
5.625%, 3/15/04 2,902,890
Aaa 2,500 Comed Transitional Funding
Trust,
(Average life 4.97 years)D
5.44%, 3/25/07 2,389,050
Baa3 1,000 Delta Air Lines, Inc.,
6.65%, 3/15/04 984,600
Baa1 2,000 Finova Capital Corp.,
6.125%, 3/15/04 1,940,000
A3 2,500 Heller Financial, Inc.,
6.00%, 3/19/04 2,420,025
A1 2,500 IBM Corp.,
5.37%, 9/22/03 2,413,900
Ba1 1,000 ITT Corp.,
6.75%, 11/15/03 937,880
Baa1 1,500 Lehman Brothers Holdings,
Inc.,
6.625%, 4/1/04 1,461,210
A2 3,000 Mellon Financial Co.,
5.75%, 11/15/03 2,899,410
Baa3 2,000 Niagara Mohawk Power
Corp.,
7.375%, 8/1/03 2,048,940
Baa1 2,500 PaineWebber Group, Inc.,
Medium Term Note,
7.015%, 2/10/04 2,485,900
-------------
22,883,805
3-4 YEARS--14.7%
Baa2 $ 270 Duke Realty L.P.,
7.30%, 6/30/03 $ 271,944
A2 2,500 General Motors Acceptance
Corp.,
5.95%, 3/14/03 2,441,225
A1 3,500 Goldman Sachs Group L.P.,
7.80%, 7/15/02 3,618,965
A2 3,000 Household Finance Corp.,
Medium Term Note,
6.125%, 7/15/02 2,974,140
A1 2,000 International Lease
Finance Corp., Medium Term
Note,
5.90%, 3/12/03 1,954,120
Aa3 3,000 Morgan Stanley Dean
Witter,
6.875%, 3/1/03 3,040,500
A2 3,000 Sears Roebuck Acceptance
Corp., Medium Term Note,
6.38%, 10/7/02 2,983,800
-------------
17,284,694
- ------------------------------------------------------------
2-3 YEARS--15.9%
A2 500 BankBoston Corp., Medium
Term Note,
6.125%, 3/15/02 495,625
Baa2 2,500 Capital One Bank,
7.08%, 10/30/01 2,521,975
A1 2,500 Chrysler Financial Corp.,
Medium Term Note,
5.25%, 10/22/01 2,443,900
Aa3 4,000 CIT Group, Inc., Medium
Term Note,
5.80%, 3/26/02 3,938,680
Ba3 500 CMS Energy Corp.,
8.00%, 7/1/01 498,750
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 2

<PAGE>

<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------

$ 4,478 Joint Repurchase Agreement
Account (Note 5)
4.78%, 7/1/99 $ 4,478,000
-------------
17,012,030
- ------------------------------------------------------------
Total Investments--99.0%
(cost $118,258,144; Note
4) 116,426,790
Other assets in excess of
liabilities--1.0% 1,174,823
-------------
Net Assets--100% $ 117,601,613
-------------
-------------
</TABLE>
- ---------------
* The Fund's current Prospectus contains a description of Moody's rating.
D Average life is defined as the weighted average time to the return of a
dollar of principal and is commonly used as the measure of investment life
for pass-through securities such as asset-backed and mortgage-backed
securities.
DD Mandatory put/call in March 2001.
L.P. Limited Partnership.
The industry classification of portfolio holdings and other net assets shown as
a percentage of net assets as of June 30, 1999 were as follows:

REIT.................................................. 15.8%
Consumer Finance...................................... 15.2
U.S. Government Securities............................ 13.0
Financial Services.................................... 11.2
Investment Banking.................................... 9.0
Telecommunications.................................... 7.5
Asset Backed.......................................... 4.1
Repurchase Agreement.................................. 3.8
Banking............................................... 2.6
Cable................................................. 2.6
Media................................................. 2.4
Utilities............................................. 2.2
Computers............................................. 2.1
Trucking.............................................. 2.1
Aerospace/Defense..................................... 1.3
Auto/Truck Parts...................................... 1.2
Airlines.............................................. 0.8
Lodging............................................... 0.8
Medical Products...................................... 0.8
Retail................................................ 0.5
Other assets in excess of liabilities................. 1.0
-----
100.0%
-----
-----
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>

Statement of Assets and Liabilities PRUDENTIAL STRUCTURED MATURITY FUND, INC.
(Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets June 30, 1999
<S> <C>
Investments, at value (cost $118,258,144)................................................................... $116,426,790
Cash........................................................................................................ 2,699
Interest receivable......................................................................................... 2,205,503
Receivable for Fund shares sold............................................................................. 31,824
Other assets................................................................................................ 2,400
-------------
Total assets............................................................................................. 118,669,216
-------------
Liabilities
Payable for Fund shares reacquired.......................................................................... 567,035
Accrued expenses............................................................................................ 251,960
Dividends payable........................................................................................... 173,359
Management fee payable...................................................................................... 38,948
Distribution fee payable.................................................................................... 36,301
-------------
Total liabilities........................................................................................ 1,067,603
-------------
Net Assets.................................................................................................. $117,601,613
-------------
-------------
Net assets were comprised of:
Common stock, at par..................................................................................... $ 105,412
Paid-in capital in excess of par......................................................................... 128,911,713
-------------
129,017,125
Accumulated net realized loss on investments............................................................. (9,584,157 )
Net unrealized depreciation on investments............................................................... (1,831,355 )
-------------
Net assets at June 30, 1999................................................................................. $117,601,613
-------------
-------------
Class A:
Net asset value and redemption price per share
($87,351,949 / 7,829,384 shares of common stock issued and outstanding)............................... $11.16
Maximum sales charge (3.25% of offering price)........................................................... .37
Maximum offering price to public......................................................................... $11.53
Class B:
Net asset value, offering price and redemption price per share
($26,832,173 / 2,405,729 shares of common stock issued and outstanding)............................... $11.15
Class C:
Net asset value and redemption price per share
($1,288,965 / 115,574 shares of common stock issued and outstanding).................................. $11.15
Sales charge (1% of offering price)...................................................................... .11
Offering price to public................................................................................. $11.26
Class Z:
Net asset value, offering price and redemption price per share
($2,128,526 / 190,507 shares of common stock issued and outstanding).................................. $11.17
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
INCOME PORTFOLIO
Statement of Operations (Unaudited)
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income June 30, 1999
<S> <C>
Income
Interest................................... $ 4,047,485
-------------
Expenses
Management fee............................. 247,160
Distribution fee--Class A.................. 106,046
Distribution fee--Class B.................. 128,877
Distribution fee--Class C.................. 5,244
Transfer agent's fees and expenses......... 99,000
Custodian's fees and expenses.............. 45,000
Registration fees.......................... 39,000
Reports to shareholders.................... 30,000
Audit fee and expenses..................... 12,000
Legal fees and expenses.................... 10,000
Directors' fees and expenses............... 7,000
Miscellaneous.............................. 2,659
-------------
Total expenses.......................... 731,986
-------------
Net investment income......................... 3,315,499
-------------
Realized and Unrealized Loss
on Investments
Net realized loss on investment
transactions............................... (1,372,159)
Net change in unrealized depreciation of
investments................................ (1,454,847)
-------------
Net loss on investments....................... (2,827,006)
-------------
Net Increase in Net Assets
Resulting from Operations..................... $ 488,493
-------------
-------------
</TABLE>

<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) June 30, December 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income.......... $ 3,315,499 $ 7,618,062
Net realized gain (loss) on
investment transactions..... (1,372,159) 353,315
Net change in unrealized
appreciation (depreciation)
on investments.............. (1,454,847) 411,669
------------ ------------
Net increase in net assets
resulting from operations... 488,493 8,383,046
------------ ------------
Dividends from net investment
income (Note 1)
Class A..................... (2,337,244) (4,389,692)
Class B..................... (857,098) (3,050,724)
Class C..................... (34,965) (72,180)
Class Z..................... (86,192) (105,466)
------------ ------------
(3,315,499) (7,618,062)
------------ ------------
Fund share transactions
(Net of share conversions) (Note 6)
Net proceeds from shares
subscribed.................. 41,378,778 39,833,378
Net asset value of shares
issued to shareholders in
reinvestment of dividends... 2,168,686 5,214,748
Cost of shares reacquired...... (54,147,029) (53,344,205)
------------ ------------
Net decrease in net assets from
Fund share transactions..... (10,599,565) (8,296,079)
------------ ------------
Total decrease.................... (13,426,571) (7,531,095)
Net Assets
Beginning of period............... 131,028,184 138,559,279
------------ ------------
End of period..................... $117,601,613 $131,028,184
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>

Notes to Financial Statements PRUDENTIAL STRUCTURED MATURITY FUND, INC.
(Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Prudential Structured Maturity Fund, Inc. (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 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.

Repurchase Agreements: 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.

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 Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the cost of the
subadviser's services, the compensation of officers 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 PIFM 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 has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'), which acts as the distributor of the Fund. The Fund
compensates PIMS for distributing and servicing the Fund's Class A, Class B and
Class C shares, pursuant to plans of distribution, (the 'Class A, B and C
Plans'), regardless of expenses actually incurred by it. The distribution fees
are accrued daily and payable monthly. No distribution or service fees are paid
to PIMS as distributor of the Class Z shares of the Fund.
- --------------------------------------------------------------------------------
6

<PAGE>

Notes to Financial Statements PRUDENTIAL STRUCTURED MATURITY FUND, INC.
(Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%,
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Plans were .25 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, 1999.

PIMS has advised the Portfolio that it received approximately $25,200 and $2,000
in front-end sales charges resulting from sales of Class A and Class C shares,
respectively, for the six months ended June 30, 1999. From these fees, PIMS paid
such sales charges to affiliated broker-dealers, which in turn paid commissions
to salespersons and incurred other distribution costs.

PIMS has advised the Portfolio that for the six months ended June 30, 1999, it
received approximately $35,500 and $100 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.

PIFM, PIMS and PIC are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America.

As of March 11, 1999, the Portfolio, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated agreement ('SCA')
with an unaffiliated lender. The maximum commitment under the SCA is $1 billion.
The Funds pay a commitment fee at an annual rate of .065 of 1% on the unused
portion of the credit facility, which is accrued and paid quarterly on a pro
rata basis by the Funds. The SCA expires on March 10, 2000. Prior to March 11,
1999, the Funds had a credit agreement with a maximum commitment of
$200,000,000. The commitment fee was .055 of 1% on the unused portion of the
credit facility. The Portfolio did not borrow any amounts pursuant to either
agreement during the six months ended June 30, 1999. The purpose of the
agreements is to serve as an alternative source of funding for capital share
redemptions.

- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates

Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Portfolio's transfer agent. During the six months ended June 30,
1999, the Portfolio incurred fees of approximately $86,000 for the services of
PMFS. As of June 30, 1999, approximately $14,200 of such fees were due to PMFS.
Transfer agent fees and expenses in the Statement of Operations also include
certain out-of-pocket expenses paid to nonaffiliates.

Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments,
for the six months ended June 30, 1999 were $140,122,930 and $147,104,881,
respectively.

The cost of investments for federal income tax purposes at June 30, 1999 was
$118,268,832 and accordingly, net unrealized depreciation for federal income tax
purposes was $1,842,042 (gross unrealized appreciation--$16,057; gross
unrealized depreciation--$1,858,099).

For federal income tax purposes, the Portfolio had a capital loss carryforward
as of December 31, 1998 of approximately $8,231,000, of which $5,082,000 expires
in 2002 and $3,149,000 expires in 2004. 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,
1999, the Portfolio has a .575% undivided interest in the joint account. The
undivided interest for the Portfolio represents $4,478,000 in the principal
amount. As of such date, each repurchase agreement in the joint account and the
collateral therefor were as follows:

Deutsche Bank Securities Inc., 4.75%, in the principal amount of $150,000,000,
repurchase price $150,019,792, due 7/1/99. The value of the collateral including
accrued interest was $153,000,548.

Goldman Sachs & Co., 4.85%, in the principal amount of $200,000,000, repurchase
price $200,026,944, due 7/1/99. The value of the collateral including accrued
interest was $204,001,378.

Morgan Stanley Dean Witter, 4.70%, in the principal amount of $178,944,000,
repurchase price $178,967,362, due 7/1/99. The value of the collateral including
accrued interest was $182,666,733.

Morgan Stanley Dean Witter, 4.72%, in the principal amount of $50,000,000,
repurchase price $50,006,556, due 7/1/99. The value of the collateral including
accrued interest was $51,021,154.
- --------------------------------------------------------------------------------
7

<PAGE>

Notes to Financial Statements PRUDENTIAL STRUCTURED MATURITY FUND, INC.
(Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Warburg Dillon Read LLC, 4.81%, in the principal amount of $200,000,000,
repurchase price $200,026,722, due 7/1/99. The value of the collateral including
accrued interest was $204,001,326.

- ------------------------------------------------------------
Note 6. Capital

The Portfolio offers Class A, Class B, Class C and Class Z shares. Class A
shares are sold with a front-end sales charge of up to 3.25%. 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 front-end sales charge of 1% and a contingent deferred sales charge of 1%
during the first 18 months. Class B shares automatically convert to Class A
shares on a quarterly basis approximately five years after purchase. A special
exchange privilege is also available for shareholders who qualified to purchase
Class A shares at net asset value. Class Z shares are not subject to any sales
or redemption charge and are offered exclusively for sale to a limited group of
investors.

There are 250 million authorized shares of $.01 par value common stock, divided
into four classes, designated Class A, Class B, Class C and Class Z common
stock, each of which consists of 62,500,000 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, 1999:
Shares sold........................... 701,911 $ 7,899,378
Shares issued in reinvestment of
dividends........................... 137,047 1,547,468
Shares reacquired..................... (924,259) (10,443,778)
---------- ------------
Net decrease in shares outstanding
before conversion................... (85,301) (996,932)
Shares issued upon conversion from
Class B............................. 451,182 5,066,937
---------- ------------
Net increase in shares outstanding.... 365,881 $ 4,070,005
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold........................... 1,187,754 $ 13,587,731
Shares issued in reinvestment of
dividends........................... 268,042 3,061,266
Shares reacquired..................... (1,573,390) (17,967,851)
---------- ------------
Net decrease in shares outstanding
before conversion................... (117,594) (1,318,854)
Shares issued upon conversion from
Class B............................. 1,817,276 20,807,459
---------- ------------
Net increase in shares outstanding.... 1,699,682 $ 19,488,605
---------- ------------
---------- ------------
<CAPTION>
Class B Shares Amount
- -------------------------------------- ---------- ------------
<S> <C> <C>
Six months ended June 30, 1999:
Shares sold........................... 306,478 $ 3,467,578
Shares issued in reinvestment of
dividends........................... 47,108 532,086
Shares reacquired..................... (974,473) (10,986,252)
---------- ------------
Net decrease in shares outstanding
before conversion................... (620,887) (6,986,588)
Shares reacquired upon conversion into
Class A............................. (451,182) (5,066,937)
---------- ------------
Net decrease in shares outstanding.... (1,072,069) $(12,053,525)
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold........................... 866,989 $ 9,909,284
Shares issued in reinvestment of
dividends........................... 174,565 1,992,901
Shares reacquired..................... (2,005,389) (22,904,458)
---------- ------------
Net decrease in shares outstanding
before conversion................... (963,835) (11,002,273)
Shares reacquired upon conversion into
Class A............................. (1,818,128) (20,807,459)
---------- ------------
Net decrease in shares outstanding.... (2,781,963) $(31,809,732)
---------- ------------
---------- ------------
Class C
- --------------------------------------
Six months ended June 30, 1999:
Shares sold........................... 23,956 $ 271,309
Shares issued in reinvestment of
dividends........................... 2,643 29,849
Shares reacquired..................... (43,053) (487,410)
---------- ------------
Net decrease in shares outstanding.... (16,454) $ (186,252)
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold........................... 55,465 $ 633,410
Shares issued in reinvestment of
dividends........................... 5,916 67,555
Shares reacquired..................... (45,186) (515,505)
---------- ------------
Net increase in shares outstanding.... 16,195 $ 185,460
---------- ------------
---------- ------------
Class Z
- --------------------------------------
Six months ended June 30, 1999:
Shares sold........................... 2,622,380 $ 29,740,513
Shares issued in reinvestment of
dividends........................... 5,245 59,282
Shares reacquired..................... (2,841,260) (32,229,589)
---------- ------------
Net decrease in shares outstanding.... (213,635) $ (2,429,794)
---------- ------------
---------- ------------
Year ended December 31, 1998:
Shares sold........................... 1,369,668 $ 15,702,953
Shares issued in reinvestment of
dividends........................... 8,140 93,026
Shares reacquired..................... (1,042,730) (11,956,391)
---------- ------------
Net increase in shares outstanding.... 335,078 $ 3,839,588
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Financial Highlights (Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, -------------------------------------------
1999 1998 1997 1996 1995
------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 11.42 $ 11.35 $ 11.36 $ 11.63 $ 10.97
------ ------- ------- ------- -------
Income from investment operations:
Net investment income.................................. .31 .68 .74 .73 .73
Net realized and unrealized gain (loss) on investment
transactions........................................ (.26) .07 .01 (.25) .66
------ ------- ------- ------- -------
Total from investment operations.................... .05 .75 .75 .48 1.39
------ ------- ------- ------- -------
Less distributions:
Dividends from net investment income................... (.31) (.68) (.74) (.73) (.73)
Dividends in excess of net investment income........... -- -- (.02) (.02) --
------ ------- ------- ------- -------
Total distributions................................. (.31) (.68) (.76) (.75) (.73)
------ ------- ------- ------- -------
Net asset value, end of period......................... $ 11.16 $ 11.42 $ 11.35 $ 11.36 $ 11.63
------ ------- ------- ------- -------
------ ------- ------- ------- -------
TOTAL RETURN(a):....................................... .30% 6.81% 6.81% 4.32% 13.12%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $87,352 $85,213 $65,431 $77,031 $88,982
Average net assets (000)............................... $85,540 $73,382 $70,899 $81,745 $89,500
Ratios to average net assets:
Expenses, including distribution fees............... 1.05%(b) .81% .94% .86% .82%
Expenses, excluding distribution fees............... .80%(b) .71% .84% .76% .72%
Net investment income............................... 5.51%(b) 5.98% 6.51% 6.38% 6.57%
For Class A, B, C and Z shares:
Portfolio turnover.................................. 118% 301% 180% 170% 160%

<CAPTION>
1994
--------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 11.78
--------
Income from investment operations:
Net investment income.................................. .65
Net realized and unrealized gain (loss) on investment
transactions........................................ (.80)
--------
Total from investment operations.................... (.15)
--------
Less distributions:
Dividends from net investment income................... (.65)
Dividends in excess of net investment income........... (.01)
--------
Total distributions................................. (.66)
--------
Net asset value, end of period......................... $ 10.97
--------
--------
TOTAL RETURN(a):....................................... (1.16)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 91,680
Average net assets (000)............................... $106,737
Ratios to average net assets:
Expenses, including distribution fees............... .94%
Expenses, excluding distribution fees............... .84%
Net investment income............................... 5.88%
For Class A, B, C and Z shares:
Portfolio turnover.................................. 123%
</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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9

<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Financial Highlights (Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, ---------------------------------------------
1999 1998 1997 1996 1995
------------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 11.41 $ 11.35 $ 11.36 $ 11.63 $ 10.97
------ ------- ------- -------- --------
Income from investment operations:
Net investment income.................................. .28 .61 .67 .65 .66
Net realized and unrealized gain (loss) on investment
transactions........................................ (.26) .06 .01 (.25) .66
------ ------- ------- -------- --------
Total from investment operations.................... .02 .67 .68 .40 1.32
------ ------- ------- -------- --------
Less distributions:
Dividends from net investment income................... (.28) (.61) (.67) (.65) (.66)
Dividends in excess of net investment income........... -- -- (.02) (.02) --
------ ------- ------- -------- --------
Total distributions................................. (.28) (.61) (.69) (.67) (.66)
------ ------- ------- -------- --------
Net asset value, end of period......................... $ 11.15 $ 11.41 $ 11.35 $ 11.36 $ 11.63
------ ------- ------- -------- --------
------ ------- ------- -------- --------
TOTAL RETURN(a):....................................... .06% 6.03% 6.13% 3.64% 12.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $26,832 $39,694 $71,030 $ 94,490 $120,188
Average net assets (000)............................... $34,652 $56,913 $81,673 $106,224 $125,230
Ratios to average net assets:
Expenses, including distribution fees............... 1.55%(b) 1.46% 1.59% 1.51% 1.47%
Expenses, excluding distribution fees............... .80%(b) .71% .84% .76% .72%
Net investment income............................... 4.99%(b) 5.36% 5.87% 5.73% 5.92%

- ---------------
(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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10

<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Financial Highlights (Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------
Six Months
Ended Year Ended December 31,
June 30, ---------------------------------------
1999 1998 1997 1996 1995
------------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 11.41 $11.35 $11.36 $11.63 $10.97
----- ------ ------ ------ ------
Income from investment operations:
Net investment income.................................. .28 .61 .67 .65 .66
Net realized and unrealized gain (loss) on investment
transactions........................................ (.26) .06 .01 (.25) .66
----- ------ ------ ------ ------
Total from investment operations.................... .02 .67 .68 .40 1.32
----- ------ ------ ------ ------
Less distributions:
Dividends from net investment income................... (.28) (.61) (.67) (.65) (.66)
Dividends in excess of net investment income........... -- -- (.02) (.02) --
----- ------ ------ ------ ------
Total distributions................................. (.28) (.61) (.69) (.67) (.66)
----- ------ ------ ------ ------
Net asset value, end of period......................... $ 11.15 $11.41 $11.35 $11.36 $11.63
----- ------ ------ ------ ------
----- ------ ------ ------ ------
TOTAL RETURN(a):....................................... .06% 6.03% 6.13% 3.64% 12.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 1,289 $1,507 $1,314 $1,396 $1,050
Average net assets (000)............................... $ 1,410 $1,351 $1,329 $1,270 $ 667
Ratios to average net assets:
Expenses, including distribution fees............... 1.55%(b) 1.46% 1.59% 1.51% 1.47%
Expenses, excluding distribution fees............... .80%(b) .71% .84% .76% .72%
Net investment income............................... 5.00%(b) 5.36% 5.87% 5.73% 5.92%

<CAPTION>
August 1,
1994(c)
Through
December 31,
1994
------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $11.30
-----
Income from investment operations:
Net investment income.................................. .23
Net realized and unrealized gain (loss) on investment
transactions........................................ (.32)
-----
Total from investment operations.................... (.09)
-----
Less distributions:
Dividends from net investment income................... (.23)
Dividends in excess of net investment income........... (.01)
-----
Total distributions................................. (.24)
-----
Net asset value, end of period......................... $10.97
-----
-----
TOTAL RETURN(a):....................................... (0.68)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 371
Average net assets (000)............................... $ 192
Ratios to average net assets:
Expenses, including distribution fees............... 1.90%(b)
Expenses, excluding distribution fees............... 1.15%(b)
Net investment income............................... 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 C shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11

<PAGE>
PRUDENTIAL STRUCTURED MATURITY FUND, INC.
Financial Highlights (Unaudited) INCOME PORTFOLIO
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class Z
----------------------------------------------------
December 16,
Six Months Year Ended 1996(c)
Ended December 31, Through
June 30, ----------------- December 31,
1999 1998 1997 1996
------------- ------ ------ ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 11.42 $11.35 $11.37 $11.41
----- ------ ------ -----
Income from investment operations:
Net investment income.................................. .33 .69 .77 .09
Net realized and unrealized gain (loss) on investment
transactions........................................ (.25) .07 .02 (.02)
----- ------ ------ -----
Total from investment operations.................... .08 .76 .79 .07
----- ------ ------ -----
Less distributions:
Dividends from net investment income................... (.33) (.69) (.77) (.09)
Dividends in excess of net investment income........... -- -- (.04) (.02)
----- ------ ------ -----
Total distributions................................. (.33) (.69) (.81) (.11)
----- ------ ------ -----
Net asset value, end of period......................... $ 11.17 $11.42 $11.35 $11.37
----- ------ ------ -----
----- ------ ------ -----
TOTAL RETURN(a):....................................... .50% 6.92% 7.01% .59%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)........................ $ 2,129 $4,614 $ 784 $ 200(d)
Average net assets (000)............................... $ 3,002 $1,748 $ 313 $ 200(d)
Ratios to average net assets:
Expenses, including distribution fees............... .80%(b) .71% .84% .76%(b)
Expenses, excluding distribution fees............... .80%(b) .71% .84% .76%(b)
Net investment income............................... 5.79%(b) 6.03% 6.71% 6.48%(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 Z shares.
(d) Figures are actual and are not rounded to the nearest thousand.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12

<PAGE>

Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

(800) 225-1852
http://www.prudential.com

Directors
Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Thomas H. O'Brien
Richard A. Redeker
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Deborah A. Docs, Secretary
David F. Connor, Assistant Secretary

Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777

Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036

Legal Counsel
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, NY 10022

The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report and are subject to change thereafter.

The accompanying financial statements as of June 30, 1999,
were not audited and, accordingly, no opinion is expressed
on them.

This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current prospectus.

<PAGE>
(LOGO)

Prudential Mutual Funds BULK RATE
Gateway Center Three U.S. POSTAGE
100 Mulberry Street PAID
Newark, NJ 07102-4077 Permit 6807
(800) 225-1852 New York, NY

743924102 MF140E2
743924201
743924300
743924706