<PAGE>
SEMIANNUAL REPORT JUNE 30, 2000
Prudential
Short-Term Corporate Bond Fund, Inc./
Income Portfolio
Fund Type Debt
Objective High current income consistent with the preservation of principal
(GRAPHIC)
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.
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
The Prudential Short-Term Corporate Bond Fund,
Inc./Income Portfolio seeks high current income
consistent with the preservation of principal. The Fund
invests primarily in investment-grade corporate debt
obligations and debt obligations issued by the U.S.
government and government-related entities that mature
in six years or less. There can be no assurance that the
Fund will achieve its investment objective.
Portfolio Composition
Expressed as a percentage of total investments as of 6/30/00
83.6% U.S. Corporate Bonds
7.6 U.S. Treasuries
4.7 Asset Backed
4.1 Cash & Equivalents
Credit Quality
Expressed as a percentage of total investments as of 6/30/00
7.9% U.S. Government & Agency
4.9 AAA
2.1 AA
31.1 A
52.2 BBB
1.5 BB
0.3 Repurchase Agreement
Ten Largest Issuers
Expressed as a percentage of net assets as of 6/30/00
7.6% U.S. Treasury Obligations
4.9 Camden Property Trust
4.8 First Industrial L.P.
4.4 ERP Operating L.P.
3.9 Gables Realty L.P.
3.4 Goldman Sachs Group L.P.
2.9 Sears Roebuck Acceptance Corp.
2.9 Household Finance Corp.
2.5 Viacom Inc.
2.4 Capital One Bank
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 6/30/00
Six One Five Ten Since
Months Year Years Years Inception2
Class A 2.62% 4.08% 30.54% 90.45% (87.33) 103.45% (98.26)
Class B 2.47 3.65 26.66 N/A 42.47
Class C 2.47 3.65 26.67 N/A 35.03
Class Z 2.74 4.34 N/A N/A 20.69
Lipper Short/Intermediate
Investment Grade Debt Fund
Avg.3 2.81 3.90 28.96 88.20 ***
Average Annual Total Returns1 As of 6/30/00
One Five Ten Since
Year Years Years Inception2
Class A 0.69% 4.78% 6.30% (6.13) 6.45% (6.20)
Class B 0.65 4.84 N/A 4.80
Class C 1.62 4.63 N/A 5.03
Class Z 4.34 N/A N/A 5.46
Distributions and Yields As of 6/30/00
Total Distributions 30-Day
Paid for Six Months SEC Yield
Class A $0.31 6.62%
Class B $0.28 6.34
Class C $0.28 6.28
Class Z $0.32 7.10
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 Z shares are not subject to a
sales charge or distribution and
service (12b-1) fees. Without waiver of management fees
and/or expense subsidization, the Fund's cumulative and
average annual total returns and yields 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-, five-, and ten-year
periods in the Short/Intermediate Investment Grade Debt
Fund category. The Lipper average is
unmanaged. Short/Intermediate Investment Grade Debt funds
invest at least 65% of their assets in investment-grade
debt issues (rated in top four grades) with dollar-
weighted average maturities of one to five years.
***Lipper Since Inception returns are 99.77% for Class A,
49.20% for Class B, 38.62% for Class C, and 18.30% for
Class Z, based on all funds in each share class.
1
<PAGE>
(LOGO) August 14, 2000
Dear Shareholder,
The first half of the year was a challenging period for
the fixed-income markets. During the reporting period
that covers the six months ended June 30, 2000, the
Prudential Short-Term Corporate Bond Fund's Class A
shares returned 2.62%, -0.72% for those paying the one-
time initial sales charge. This return was in line with
the 2.81% return for the Lipper Short/Intermediate
Investment Grade Bond Fund Average.
These results are fairly indicative of the overall fixed-
income environment. In the United States, returns
continued to be adversely affected by rising interest
rates. On several occasions during the reporting period,
the U.S. Federal Reserve Board (the "Fed") raised short-
term interest rates in an attempt to slow the pace of
economic growth. This caused bond prices to fall in most
sectors of the fixed-income market.
A New Name and Greater Flexibility
In May, the name of your fund changed from Structured
Maturity Fund to Short-Term Corporate Bond Fund. The Fund
will continue to invest primarily in shorter-term corporate
bonds (bonds maturing in six years or less). However, in the
past, the fund management team was required to allocate
holdings based on strict, predetermined maturity ranges. These
restrictions have been lifted, and the team now has the
flexibility to pursue a greater number of fixed-income investment
opportunities. We believe this change will enable us to
better serve your investment needs.
A further discussion of the developments in the bond markets and
a detailed review of your Fund's investments follow. As always,
thank you for your continued confidence.
Sincerely,
John R. Strangfeld, President
Prudential Short-Term Corporate Bond Fund, Inc./Income Portfolio
2
<PAGE>
Prudential Short-Term Corporate Bond Fund, Inc. Income Portfolio
Semiannual Report June 30, 2000
Investment Adviser's Report
A difficult bond market Over the review period, the
Fed raised the federal funds rate (the rate U.S. banks
charge each other for overnight loans) three times
in an effort to combat strong economic growth. These
rate increases have led to falling prices
in many sectors of the fixed-income market.
One notable exception is the performance of long-term
Treasury securities. Investors aggressively purchased 30-
year securities as the U.S. Treasury department moved to
limit its supply through a buy-back program. The Treasury
is seeking to lower the government's borrowing costs by
repurchasing the 30-year bonds with higher relative
yields. This supply/demand trend helped long-term
Treasury prices rally sharply, creating an inverted yield
curve (an anomaly that occurs when interest rates for
short-term securities are higher than their longer-term
counterparts). Given the lack of investor interest and
the Fed's monetary stance, shorter-term issues, such as
those held by the Fund, underperformed.
Focusing on BBB-rated bonds
The Fund has maintained its focus on BBB-rated corporate
bonds. Early in the reporting period, this emphasis
generated mixed results. Given the environment of strong
economic growth, we believed that the incremental yield
offered by these securities would more than compensate
for the additional risk. However, as interest rates rose,
corporate bonds with higher credit ratings produced
better relative results. Once the corporate bond
market stabilizes, as we believe it will, investors
will probably turn to lower-rated issues as
their higher yields become more compelling.
3
<PAGE>
Prudential Short-Term Corporate Bond Fund, Inc. Income Portfolio
Semiannual Report June 30, 2000
New issues offer higher yields
As a result of the rising interest rate environment,
companies offering new issues in the marketplace have had
to increase the yield spread relative to Treasuries in
order to attract investors. We are now in the midst of a
large new-issue calendar, and we are taking advantage of
this trend by selling Treasuries in order to increase our
exposure to corporate bonds. Not only will this strategy
help us lock in incremental yields, it could also lead to
capital appreciation potential if a bond is upgraded or
if there is a contraction of the yield spread between
corporates and Treasuries.
Selectively investing to reduce volatility
At this stage of the economic cycle, many financial
professionals are calling for slower growth. While this
would be good for interest rates, it could place pressure
on some corporate bond issuers: a slowing economy may
make it more difficult for some firms to meet their debt
obligations. We believe our approach of selectively
investing in corporate bonds should work well in this
environment.
Looking ahead
As we look forward, it's not clear what direction the
U.S. economy will ultimately take. At this point, there
are three possible scenarios. First, economic growth
could again accelerate, necessitating further interest
rate hikes by the Fed. Second, the economy could fall
into a recession. Third, we could experience a "soft
landing," whereby growth falls to a more moderate and
acceptable level.
Many experts currently believe a soft landing is the most
likely scenario. We believe this would be good for
corporate bonds, as they would continue to offer
incremental yields without a substantial increase in
risk. As such, we are confident that our strategy of
focusing on BBB-rated securities and carefully
identifying investment opportunities will help the Fund
generate solid long-term results.
Prudential Short-Term Corporate Bond Fund Management Team
4
<PAGE>
Prudential Short-Term Corporate Bond Fund
Portfolio of Investments as of June 30, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating* (000) Description Value (Note 1)
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 80.6%
Corporate Bonds 68.3%
Aon Corp.,
A3 $ 1,000 8.65%, 5/15/05 $ 1,025,000
BankBoston Corp., Medium Term Note,
A2 500 6.125%, 3/15/02 488,015
Bombardier Capital, Inc., Medium Term
Note,
A3 1,000 7.30%, 12/15/02 991,000
Capital One Bank,
Baa2 2,500 7.08%, 10/30/01 2,462,325
Cendant Corp.,
Baa1 2,000 7.75%, 12/1/03 1,922,600
CMS Energy Corp.,
Ba3 500 8.00%, 7/1/11 490,800
Coca-Cola Enterprises, Inc.,
A2 1,200 6.625%, 8/1/04 1,163,172
Cox Enterprises, Inc.,
Baa1 300 6.625%, 6/14/02 295,005
CSX Corp., Medium Term Note,
Baa2 2,000 5.85%, 9/17/01 1,963,460
Delta Air Lines, Inc.,
Baa3 1,000 6.65%, 3/15/04 945,000
Deutsche Telekom International
Finance,
Aa2 1,000 7.75%, 6/15/05 1,005,000
Disney (Walt) Co.,
A2 950 7.30%, 2/8/05 957,248
Duke Realty L.P.,
Baa1 270 7.30%, 6/30/03 265,005
Entergy Louisiana Inc.,
Baa2 1,000 8.50%, 6/1/03 1,008,800
Finova Capital Corp.,
Baa2 2,000 6.125%, 3/15/04 1,720,000
First Industrial L.P.,
Baa2 5,000D 6.50%, 4/5/11 4,923,100
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Prudential Short-Term Corporate Bond Fund
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating* (000) Description Value (Note 1)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ford Motor Credit Co.,
A2 $ 2,000 6.625%, 6/30/03 $ 1,948,960
Fort James Corp.,
Baa2 1,500 6.70%, 11/15/03 1,458,600
Fortune Brands, Inc.,
A2 600 7.125%, 11/1/04 582,420
General Motors Acceptance Corp.,
A2 2,500 5.95%, 3/14/03 2,404,375
Goldman Sachs Group L.P.,
A1 1,000 6.25%, 2/1/03 967,370
A1 2,500 7.80%, 7/15/02 2,509,975
Hartford Financial Services Group
Inc.,
Senior Note
A2 1,000 7.75%, 6/15/05 1,010,000
Heller Financial, Inc.,
A3 2,500 6.00%, 3/19/04 2,339,600
Household Finance Corp., Medium Term
Note,
A2 3,000 6.125%, 7/15/12 2,908,410
International Paper Co.,
Baa1 2,000 8.00%, 7/8/03 2,010,460
ITT Corp.,
Ba1 1,000 6.75%, 11/15/03 938,410
Lehman Brothers Holdings, Inc.,
A3 1,500 6.625%, 4/1/04 1,431,585
Limestone Electron Trust, Senior Note,
Baa3 2,000 8.625%, 3/15/03 2,019,360
Litton Industries, Inc.,
Baa2 2,000 6.05%, 4/15/03 1,911,160
Mallinckrodt, Inc.,
Baa2 1,000D 6.30%, 3/15/11 985,000
Morgan Stanley Dean Witter,
Aa3 1,000 7.75%, 6/15/05 999,900
Niagara Mohawk Power Corp.,
Baa2 2,000 7.375%, 8/1/03 1,972,060
Northrop Grumman Corp.,
Baa3 2,000 8.625%, 10/15/04 2,060,680
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Prudential Short-Term Corporate Bond Fund
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating* (000) Description Value (Note 1)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Osprey Trust,
Baa2 $ 1,500 8.31%, 1/15/03 $ 1,505,100
PaineWebber Group, Inc., Medium Term
Note,
Baa1 2,500 7.015%, 2/10/04 2,406,625
Phillips Petroleum Co.,
Baa2 1,000 8.50%, 5/25/05 1,033,080
Qwest Capital Funding, Inc.,
Baa1 1,060 6.875%, 8/15/01 1,054,488
Sears Roebuck Acceptance Corp., Medium
Term Note,
A3 3,000 6.38%, 10/7/02 2,928,930
South Carolina Electric & Gas Co.,
A1 1,000 7.50%, 6/15/05 1,001,840
Telecomunicaiones de Puerto Rico,
Baa2 1,500 6.15%, 5/15/02 1,455,000
Tenneco Packaging, Inc.,
Baa3 1,000 7.20%, 12/15/05 927,630
Union Pacific Corp.,
Baa3 1,000 7.60%, 5/1/05 994,660
Utilicorp United, Inc.,
Baa3 300 7.00%, 7/15/04 286,539
Viacom, Inc.,
Baa1 2,500 7.50%, 1/15/02 2,491,825
Vodafone Airtouch Plc,
A2 1,300 7.625%, 2/15/05 1,300,000
--------------
Total corporate bonds (cost
$71,055,948) 69,469,572
-------------------------------------------------------------------------------------
Asset-Backed Securities 4.7%
Comed Transitional Funding Trust,
Aaa 2,500 5.44%, 3/25/07 2,385,000
PECO Energy Transiton Trust,
5.80%, 3/1/07
(cost $4,951,784) 2,362,500
Aaa 2,500
--------------
4,747,500
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Short-Term Corporate Bond Fund
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating* (000) Description Value (Note 1)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government Securities 7.6%
United States Treasury Bond,
$ 7,900 5.625%, 2/15/06 $ 7,664,264
85 6.75%, 5/15/05 86,979
--------------
Total U.S. government securities
(cost $7,546,532) 7,751,243
--------------
Total long-term investments
(cost $83,554,264) 81,968,315
SHORT-TERM INVESTMENTS 15.6%
-----------------------------------------------------------------------------------
Corporate Bond 15.3%
Camden Property Trust,
Baa2 5,000 7.23%, 10/30/00 4,991,000
ERP Operating L.P.,
A3 4,500 6.15%, 9/15/00 4,488,750
Gables Reality L.P.,
Baa2 4,000 6.55%, 10/1/00 3,987,920
Kroger Co.,
Baa3 600 6.34%, 6/1/01 589,500
Raytheon Co.,
Baa2 1,500 5.95%, 3/15/01 1,482,495
--------------
Total corporate bonds
(cost $15,604,119) 15,539,665
-----------------------------------------------------------------------------------
Repurchase Agreement 0.3%
Joint Repurchase Agreement Account,
6.556%, 7/3/00
267 (cost $267,000; Note 5) 267,000
--------------
Total short-term investments
(cost $15,871,119) 15,806,665
--------------
Total Investments 96.2%
(cost $99,425,383; Note 4) 97,774,980
Other assets in excess of
liabilities 3.8% 3,914,501
--------------
Net Assets 100% $ 101,689,481
--------------
--------------
</TABLE>
--------------------------------------------------------------------------------
* The Fund's current Prospectus contains a description of Moody's rating.
D Rate shown reflects current rate on variable rate instrument.
L.P. Limited Partnership.
8 See Notes to Financial Statements
<PAGE>
Prudential Short-Term Corporate Bond Fund
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
<TABLE>
<S> <C>
The industry classification of portfolio holdings and other assets shown as a
percentage of net assets as of June 30, 2000 was as follows:
Financial Services..................................................... 17.9%
Real Estate-Development................................................ 9.5
Real Estate Investment Trust........................................... 8.8
U.S. Government & Agency Obligations................................... 7.6
Aerospace/Defense...................................................... 5.4
Finance................................................................ 4.8
Collateral Mortgage Obligation......................................... 4.7
Paper.................................................................. 3.4
Entertainment.......................................................... 3.4
Electrical Utilities................................................... 3.2
Transportation-Road & Rail............................................. 2.9
Retail/Dept./Disc./Drug................................................ 2.9
Commercial Services.................................................... 2.2
Telephones............................................................. 2.0
Gas Distribution....................................................... 2.0
Miscellaneous.......................................................... 1.5
Telecommunication Services............................................. 1.4
Cellular Communications................................................ 1.3
Beverages.............................................................. 1.1
Oil & Gas.............................................................. 1.0
Medical Products & Services............................................ 1.0
Life Insurance......................................................... 1.0
Insurance.............................................................. 1.0
Electrical Power....................................................... 1.0
Hotel/Motel............................................................ 0.9
Containers & Packaging................................................. 0.9
Airlines............................................................... 0.9
Food/Drug/Retail....................................................... 0.6
Consumer Products...................................................... 0.6
Electrical Services.................................................... 0.5
Banks.................................................................. 0.5
Repurchase Agreement................................................... 0.3
-----
96.2
Other assets in excess of liabilities.................................. 3.8
-----
100.0%
-----
-----
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Short-Term Corporate Bond Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
June 30, 2000
<S> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $99,425,383) $ 97,774,980
Cash 10,460
Receivable for Fund shares sold 3,114,078
Interest receivable 1,763,858
Receivable for investments sold 1,028,288
Due from broker - variation margin 3,828
Other assets 2,590
-------------
Total assets 103,698,082
-------------
LIABILITIES
Payable for Fund shares reacquired 607,635
Payable for investments purchased 998,260
Accrued expenses 187,244
Dividends payable 154,928
Management fee payable 32,819
Distribution fee payable 27,715
-------------
Total liabilities 2,008,601
-------------
NET ASSETS $ 101,689,481
-------------
-------------
Net assets were comprised of:
Common stock, at par $ 92,610
Paid-in capital in excess of par 114,884,759
-------------
114,977,369
Accumulated net realized loss on investments (11,654,985)
Net unrealized depreciation on investments (1,632,903)
-------------
Net assets at June 30, 2000 $ 101,689,481
-------------
-------------
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Short-Term Corporate Bond Fund
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
June 30, 2000
<S> <C>
---------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share ($78,817,916 /
7,177,821 shares of common stock issued and outstanding) $10.98
Maximum sales charge (3.25% of offering price) .37
-------------
Maximum offering price to public $11.35
-------------
-------------
Class B:
Net asset value, offering price and redemption price per share
($16,933,833 / 1,542,770 shares of common stock issued and
outstanding) $10.98
-------------
-------------
Class C:
Net asset value and redemption price per share ($2,043,174 /
186,144 shares of common stock issued and outstanding) $10.98
Sales charge (1% of offering price) .11
-------------
Offering price to public $11.09
-------------
-------------
Class Z:
Net asset value, offering price and redemption price per share
($3,894,558 / 354,227 shares of common stock issued and
outstanding) $10.99
-------------
-------------
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Short-Term Corporate Bond Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 2000
<S> <C>
---------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 3,520,642
-------------
Expenses
Management fee 209,274
Distribution fee--Class A 98,741
Distribution fee--Class B 73,081
Distribution fee--Class C 7,635
Transfer agent's fees and expenses 96,000
Custodian's fees and expenses 42,000
Reports to shareholders 24,000
Registration fees 20,000
Legal fees and expenses 14,000
Audit fee 12,000
Directors' fees and expenses 12,000
Miscellaneous 249
-------------
Total expenses 608,980
-------------
Net investment income 2,911,662
-------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss on investment transactions (1,571,615)
Net change in unrealized appreciation on:
Investments 1,431,005
Financial futures contracts 17,500
-------------
1,448,505
-------------
Net loss on investments (123,110)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,788,552
-------------
-------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Short-Term Corporate Bond Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months Year Ended
Ended December 31,
June 30, 2000 1999
<S> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 2,911,662 $ 6,537,082
Net realized loss on investment
transactions (1,571,615) (1,871,916)
Net change in unrealized appreciation
(depreciation) on investments 1,448,505 (2,704,900)
------------- -----------------
Net increase in net assets resulting from
operations 2,788,552 1,960,266
------------- -----------------
Dividends from net investment income (Note 1)
Class A (2,234,887) (4,779,259)
Class B (502,354) (1,502,384)
Class C (52,513) (90,019)
Class Z (121,908) (165,420)
------------- -----------------
(2,911,662) (6,537,082)
------------- -----------------
Fund share transactions (Net of share
conversions) (Note 6)
Net proceeds from shares subscribed 12,410,338 63,059,266
Net asset value of shares issued to
shareholders in reinvestment of
dividends 1,986,174 4,539,763
Cost of shares reacquired (26,439,369) (80,194,949)
------------- -----------------
Net decrease in net assets from Fund share
transactions (12,042,857) (12,595,920)
------------- -----------------
Total decrease (12,165,967) (17,172,736)
NET ASSETS
Beginning of period 113,855,448 131,028,184
------------- -----------------
End of period $ 101,689,481 $ 113,855,448
------------- -----------------
------------- -----------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Short-Term Corporate Bond Fund
Notes to Financial Statements (Unaudited)
Prudential Short-Term Corporate Bond Fund (the 'Fund'), formerly known as
Prudential Structured Maturity Fund, Inc., 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
14
<PAGE>
Prudential Short-Term Corporate Bond Fund
Notes to Financial Statements (Unaudited) Cont'd.
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.
Financial Futures Contracts: A financial futures contract is an
agreement to purchase (long) or sell (short) an agreed amount of securities at a
set price for delivery on a future date. Upon entering into a financial futures
contract, the Fund is required to pledge to the broker an amount of cash and/or
other assets equal to a certain percentage of the contract amount. This amount
is known as the 'initial margin.' Subsequent payments, known as 'variation
margin,' are made or received by the Fund each day, depending on the daily
fluctuations in the value of the underlying security. Such variation margin is
recorded for financial statement purposes on a daily basis as unrealized gain or
loss. When the contract expires or is closed, the gain or loss is realized and
is presented in the statement of operations as net realized gain (loss) on
financial futures contracts.
The Portfolio invests in financial futures contracts in order to hedge
existing portfolio securities, or securities the Portfolio intends to purchase,
against fluctuations in value. Under a variety of circumstances, the Portfolio
may not achieve the anticipated benefits of the financial futures contracts and
may realize a loss. The use of futures transactions involves the risk of
imperfect correlation in movements in the price of futures contracts and the
underlying assets.
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 the Subadvisory Agreement with The Prudential
15
<PAGE>
Prudential Short-Term Corporate Bond Fund
Notes to Financial Statements (Unaudited) Cont'd.
Investment Corporation ('PIC'). The Subadvisory Agreement provides that the
Subadviser will furnish investment advisory services in connection with the
management of the Fund. In connection therewith, the Subadviser is obligated to
keep certain books and records of the Fund. PIFM continues to have
responsibility for all investment advisory services pursuant to the Management
Agreement and supervises the Subadviser's performance of such services. PIFM
pays for the services of PIC, 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.
Effective January 1, 2000, the subadvisory fee paid to PIC by PIFM is
computed daily and payable monthly at an annual rate of .200 of 1% of the
average daily net assets of the Fund. Prior to January 1, 2000, PIC was
reimbursed by PIFM for reasonable costs and expenses incurred in furnishing
investment advisory services.
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.
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, 2000.
PIMS has advised the Portfolio that it received approximately $17,800 and
$800 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, for the six months ended June 30, 2000. From these fees,
PIMS paid such sales charges to affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PIMS has advised the Portfolio that for the six months ended June 30,
2000, it received approximately $12,200 and $3,600 in contingent deferred sales
charges imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
16
<PAGE>
Prudential Short-Term Corporate Bond Fund
Notes to Financial Statements (Unaudited) Cont'd.
PIFM, PIC and PIMS are wholly owned subsidiaries of The Prudential
Insurance Company of America ('The Prudential').
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee at an annual rate of .080 of 1% of
the unused portion of the credit facility. The commitment fee is accrued and
paid quarterly on a pro rata basis by the Funds. The expiration date of the SCA
is March 9, 2001. Prior to March 9, 2000, the commitment fee was .065 of 1% of
the unused portion of the credit facility. The Fund did not borrow any amounts
pursuant to the SCA during the six months ended June 30, 2000.
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,
2000, the Portfolio incurred fees of approximately $90,000 for the services of
PMFS. As of June 30, 2000, approximately $16,100 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, 2000 were $66,473,469 and $81,404,447,
respectively.
The cost of investments for federal income tax purposes at June 30, 2000
was substantially the same as for financial reporting purposes and accordingly,
net unrealized depreciation for federal income tax purposes was $1,650,403
(gross unrealized appreciation--$408,115; gross unrealized
depreciation--$2,058,518).
For federal income tax purposes, the Portfolio had a capital loss
carryforward as of December 31, 1999 of approximately $9,768,000, of which
$5,082,000 expires in 2002 and $3,149,000 expires in 2004 and $1,537,000 expires
in 2007. In addition, the Fund will elect to treat net capital losses of
approximately $329,000 incurred in the two month period ended December 31, 1999
as having been incurred in the following fiscal year. Accordingly, no capital
gain distributions are expected to be paid to shareholders until net gains have
been realized in excess of such carryforward.
17
<PAGE>
Prudential Short-Term Corporate Bond Fund
Notes to Financial Statements (Unaudited) Cont'd.
During the six months ended June 30, 2000, the Fund entered into financial
futures contracts. Details of open contracts at June 30, 2000 are as follows:
<TABLE>
<CAPTION>
Value at Value at Unrealized
Number of Expiration June 30, Trade Appreciation/
Contracts Type Date 2000 Date (Depreciation)
--------- ---------------- ----------- ---------- ---------- ---------------
<C> <C> <S> <C> <C> <C>
Long Position:
35 5-yr. T-Note Sept. '00 $3,465,547 $3,448,047 $17,500
---------------
---------------
</TABLE>
Note 5. Joint Repurchase Agreement Account
The Fund, 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, 2000, the Fund
had a .053% undivided interest in the joint account. The undivided interest for
the Fund represents $267,000 in the principal amount. As of such date, each
repurchase agreement in the joint account and the collateral therefor were as
follows:
ABN AMRO Incorporated, 6.60%, in the principal amount of $100,000,000,
repurchase price $100,055,000, due 7/3/00. The value of the collateral including
accrued interest was $102,000,279.
Bear, Stearns & Co. Inc., 6.55%, in the principal amount of $125,000,000,
repurchase price $125,068,229, due 7/3/00. The value of the collateral including
accrued interest was $128,815,250.
Credit Suisse First Boston Corp., 6.65%, in the principal amount of
$125,000,000, repurchase price $125,069,270, due 7/3/00. The value of the
collateral including accrued interest was $129,282,822.
UBS Warburg, 6.30%, in the principal amount of $58,110,000, repurchase
price $58,140,508, due 7/3/00. The value of the collateral including accrued
interest was $59,275,285.
UBS Warburg, 6.55%, in the principal amount of $100,000,000, repurchase
price $100,054,583, due 7/3/00. The value of the collateral including accrued
interest was $102,000,550.
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
18
<PAGE>
Prudential Short-Term Corporate Bond Fund
Notes to Financial Statements (Unaudited) Cont'd.
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, 2000:
Shares sold 658,753 $ 7,220,532
Shares issued in reinvestment of dividends 137,577 1,505,851
Shares reacquired (1,658,056) (18,146,826)
---------- ------------
Net decrease in shares outstanding before conversion (861,726) (9,420,443)
Shares issued upon conversion from Class B 271,380 2,969,192
---------- ------------
Net decrease in shares outstanding (590,346) $ (6,451,251)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 1,885,912 $ 21,004,322
Shares issued in reinvestment of dividends 299,319 3,345,005
Shares reacquired (2,532,550) (28,250,642)
---------- ------------
Net decrease in shares outstanding before conversion (347,319) (3,901,315)
Shares issued upon conversion from Class B 651,983 7,293,535
---------- ------------
Net increase in shares outstanding 304,664 $ 3,392,220
---------- ------------
---------- ------------
<CAPTION>
Class B
----------------------------------------------------------
<S> <C> <C>
Six months ended June 30, 2000:
Shares sold 156,131 $ 1,704,146
Shares issued in reinvestment of dividends 29,596 323,771
Shares reacquired (399,968) (4,378,641)
---------- ------------
Net decrease in shares outstanding before conversion (214,241) (2,350,724)
Shares reacquired upon conversion into Class A (271,491) (2,969,192)
---------- ------------
Net decrease in shares outstanding (485,732) $ (5,319,916)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 650,438 $ 7,273,867
Shares issued in reinvestment of dividends 87,478 979,270
Shares reacquired (1,535,229) (17,199,140)
---------- ------------
Net decrease in shares outstanding before conversion (797,313) (8,946,003)
Shares reacquired upon conversion into Class A (651,983) (7,293,535)
---------- ------------
Net decrease in shares outstanding (1,449,296) $(16,239,538)
---------- ------------
---------- ------------
</TABLE>
19
<PAGE>
Prudential Short-Term Corporate Bond Fund
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C Shares Amount
---------------------------------------------------------- ---------- ------------
Six months ended June 30, 2000:
<S> <C> <C>
Shares sold 23,887 $ 261,442
Shares issued in reinvestment of dividends 3,929 42,991
Shares reacquired (40,567) (443,900)
---------- ------------
Net decrease in shares outstanding (12,751) $ (139,467)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 187,639 $ 2,081,082
Shares issued in reinvestment of dividends 7,007 78,120
Shares reacquired (127,779) (1,422,858)
---------- ------------
Net increase in shares outstanding 66,867 $ 736,344
---------- ------------
---------- ------------
Class Z
----------------------------------------------------------
Six months ended June 30, 2000:
Shares sold 294,827 $ 3,224,218
Shares issued in reinvestment of dividends 10,361 113,561
Shares reacquired (317,209) (3,470,002)
---------- ------------
Net decrease in shares outstanding (12,021) $ (132,223)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 2,889,588 $ 32,699,995
Shares issued in reinvestment of dividends 12,290 137,368
Shares reacquired (2,939,772) (33,322,309)
---------- ------------
Net decrease in shares outstanding (37,894) $ (484,946)
---------- ------------
---------- ------------
</TABLE>
20
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial
Highlights
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
<CAPTION>
Six Months Ended
June 30, 2000
----------------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.99
--------
Income from investment operations:
Net investment income 0.31
Net realized and unrealized gain (loss) on investment
transactions (0.01)
--------
Total from investment operations 0.30
--------
Less distributions:
Dividends from net investment income (0.31)
Dividends in excess of net investment income --
--------
Total distributions (0.31)
--------
Net asset value, end of period $ 10.98
--------
--------
TOTAL RETURN(a): 2.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 78,818
Average net assets (000) $ 79,427
Ratios to average net assets:
Expenses, including distribution fees 1.07%(b)
Expenses, excluding distribution fees .82%(b)
Net investment income 5.66%(b)
For Class A, B, C and Z shares:
Portfolio turnover 67%
</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.
22 See Notes to Financial Statements
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.42 $ 11.35 $ 11.36 $ 11.63 $ 10.97
-------- -------- -------- -------- --------
.62 .68 .74 .73 .73
(.43) 07 .01 (.25) .66
-------- -------- -------- -------- --------
.19 .75 .75 .48 1.39
-------- -------- -------- -------- --------
(.62) (.68) (.74) (.73) (.73)
-- -- (.02) (.02) --
-------- -------- -------- -------- --------
(.62) (.68) (.76) (.75) (.73)
-------- -------- -------- -------- --------
$ 10.99 $ 11.42 $ 11.35 $ 11.36 $ 11.63
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
1.72% 6.81% 6.81% 4.32% 13.12%
$ 85,360 $ 85,213 $ 65,431 $ 77,031 $ 88,982
$ 86,025 $ 73,382 $ 70,899 $ 81,745 $ 89,500
1.02% .81% .94% .86% .82%
.77% .71% .84% .76% .72%
5.56% 5.98% 6.51% 6.38% 6.57%
168% 301% 180% 170% 160%
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
----------------
Six Months Ended
June 30, 2000
----------------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.98
--------
Income from investment operations:
Net investment income 0.28
Net realized and unrealized gain (loss) on investment
transactions --
--------
Total from investment operations 0.28
--------
Less distributions:
Dividends from net investment income (0.28)
Dividends in excess of net investment income --
--------
Total distributions (0.28)
--------
Net asset value, end of period $ 10.98
--------
--------
TOTAL RETURN(a): 2.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 16,934
Average net assets (000) $ 19,595
Ratios to average net assets:
Expenses, including distribution fees 1.57%(b)
Expenses, excluding distribution fees .82%(b)
Net investment income 5.16%(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.
24 See Notes to Financial Statements
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.41 $ 11.35 $ 11.36 $ 11.63 $ 10.97
---------------- ---------------- ---------------- ---------------- ----------------
.56 .61 .67 .65 .66
(.43) .06 .01 (.25) .66
---------------- ---------------- ---------------- ---------------- ----------------
.13 .67 .68 .40 1.32
---------------- ---------------- ---------------- ---------------- ----------------
(.56) (.61) (.67) (.65) (.66)
(.56) -- (.02) (.02) --
---------------- ---------------- ---------------- ---------------- ----------------
(.56) (.61) (.69) (.67) (.66)
---------------- ---------------- ---------------- ---------------- ----------------
$ 10.98 $ 11.41 $ 11.35 $ 11.36 $ 11.63
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
1.21% 6.03% 6.13% 3.64% 12.40%
$ 22,281 $ 39,694 $ 71,030 $ 94,490 $120,188
$ 29,870 $ 56,913 $ 81,673 $106,224 $125,230
1.52% 1.46% 1.59% 1.51% 1.47%
.77% .71% .84% .76% .72%
5.03% 5.36% 5.87% 5.73% 5.92%
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
----------------
Six Months Ended
June 30, 2000
----------------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $10.98
-------
Income from investment operations:
Net investment income 0.28
Net realized and unrealized gain (loss) on investment
transactions --
-------
Total from investment operations 0.28
-------
Less distributions:
Dividends from net investment income (0.28)
Dividends in excess of net investment income --
-------
Total distributions (0.28)
-------
Net asset value, end of period $10.98
-------
-------
TOTAL RETURN(a): 2.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $2,043
Average net assets (000) $2,047
Ratios to average net assets:
Expenses, including distribution fees 1.57%(b)
Expenses, excluding distribution fees .82%(b)
Net investment income 5.16%(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.
26 See Notes to Financial Statements
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------------------------------------------
Year Ended December 31,
---------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$11.41 $11.35 $11.36 $11.63 $10.97
------- ------- ------- ------- -------
.57 .61 .67 .65 .66
(.43) .06 .01 (.25) .66
------- ------- ------- ------- -------
.14 .67 .68 .40 1.32
------- ------- ------- ------- -------
(.57) (.61) (.67) (.65) (.66)
-- -- (.02) (.02) --
------- ------- ------- ------- -------
(.57) (.69) (.67) (.66) (.24)
------- ------- ------- ------- -------
$10.98 $11.41 $11.35 $11.36 $11.63
------- ------- ------- ------- -------
------- ------- ------- ------- -------
1.21% 6.03% 6.13% 3.64% 12.40%
$2,185 $1,507 $1,314 $1,396 $1,050
$1,767 $1,351 $1,329 $1,270 $ 667
1.52% 1.46% 1.59% 1.51% 1.47%
.77% .71% .84% .76% .72%
5.10% 5.36% 5.87% 5.73% 5.92%
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Prudential Short-Term Corporate Bond Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------------
December 16,
Six Months 1996(c)
Ended Through
April 30, December 31,
2000(d) 1999 1998 1997 1996
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period $11.00 $11.42 $11.35 $11.37 $11.41
---------- ------ ------ ------ ------------
Income from investment
operations:
Net investment income .32 .65 .69 .77 .09
Net realized and unrealized
gain (loss) on investment
transactions (.01) (.42) .07 .02 (.02)
---------- ------ ------ ------ ------------
Total from investment
operations .31 .23 .76 .79 .07
---------- ------ ------ ------ ------------
Less distributions:
Dividends from net investment
income (.32) (.65) (.69) (.77) (.09)
Dividends in excess of net
investment income -- -- -- (.04) (.02)
---------- ------ ------ ------ ------------
Total distributions (.32) (.65) (.69) (.81) (.11)
---------- ------ ------ ------ ------------
Net asset value, end of
period $10.99 $11.00 $11.42 $11.35 $11.37
---------- ------ ------ ------ ------------
---------- ------ ------ ------ ------------
TOTAL RETURN(a): 2.74% 2.07% 6.92% 7.01% .59%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000) $3,895 $4,029 $4,614 $ 784 $ 200(d)
Average net assets (000) $4,143 $2,833 $1,748 $ 313 $ 200(d)
Ratios to average net assets:
Expenses, including
distribution fees .82%(b) .77% .71% .84% .76%(b)
Expenses, excluding
distribution fees .82%(b) .77% .71% .84% .76%(b)
Net investment income 5.92%(b) 5.84% 6.03% 6.71% 6.48%(b)
</TABLE>
------------------------------
(a) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total returns for periods of less than 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.
28 See Notes to Financial Statements
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Directors
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Deborah A. Docs, Secretary
William V. Healey, Assistant Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
194 Wood Avenue South
Iselin, NJ 08830
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Fund Symbols NASDAQ CUSIP
Class A PBSMX 74437L101
Class B PSMBX 74437L200
Class C PIFCX 74437L309
Class Z PIFZX 74437L408
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, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF140E2 74437L101 74437L200 74437L309 74437L408
(LOGO) Printed on Recycled Paper
