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SIGNATURE EUGENE S. STARK
TITLE TREASURER
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 172,176,818
<INVESTMENTS-AT-VALUE> 175,295,646
<RECEIVABLES> 7,826,590
<ASSETS-OTHER> 472,346
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 183,594,582
<PAYABLE-FOR-SECURITIES> 7,367,179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,766,144
<TOTAL-LIABILITIES> 12,133,323
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167,824,253
<SHARES-COMMON-STOCK> 12,630,064
<SHARES-COMMON-PRIOR> 7,425,218
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 466,859
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,170,147
<NET-ASSETS> 171,461,259
<DIVIDEND-INCOME> 138,669
<INTEREST-INCOME> 10,868,355
<OTHER-INCOME> 0
<EXPENSES-NET> 1,807,997
<NET-INVESTMENT-INCOME> 9,199,027
<REALIZED-GAINS-CURRENT> 544,282
<APPREC-INCREASE-CURRENT> (621,998)
<NET-CHANGE-FROM-OPS> 9,121,311
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,199,027)
<DISTRIBUTIONS-OF-GAINS> (324,542)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96,732,342
<NUMBER-OF-SHARES-REDEEMED> (34,213,705)
<SHARES-REINVESTED> 6,941,778
<NET-CHANGE-IN-ASSETS> 69,058,157
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 247,119
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 699,988
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,248,007
<AVERAGE-NET-ASSETS> 3,534,000
<PER-SHARE-NAV-BEGIN> 13.79
<PER-SHARE-NII> 0.85
<PER-SHARE-GAIN-APPREC> (0.18)
<PER-SHARE-DIVIDEND> (0.85)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.58
<EXPENSE-RATIO> 1.39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000929523
<NAME> PRUDENTIAL DIVERSIFIED BOND FUND, INC.
<SERIES>
<NUMBER> 004
<NAME> PRUDENTIAL DIVERSIFIED BOND FUND, INC. (CLASS Z)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 172,176,818
<INVESTMENTS-AT-VALUE> 175,295,646
<RECEIVABLES> 7,826,590
<ASSETS-OTHER> 472,346
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 183,594,582
<PAYABLE-FOR-SECURITIES> 7,367,179
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,766,144
<TOTAL-LIABILITIES> 12,133,323
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 167,824,253
<SHARES-COMMON-STOCK> 12,630,064
<SHARES-COMMON-PRIOR> 7,425,218
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 466,859
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,170,147
<NET-ASSETS> 171,461,259
<DIVIDEND-INCOME> 138,669
<INTEREST-INCOME> 10,868,355
<OTHER-INCOME> 0
<EXPENSES-NET> 1,807,997
<NET-INVESTMENT-INCOME> 9,199,027
<REALIZED-GAINS-CURRENT> 544,282
<APPREC-INCREASE-CURRENT> (621,998)
<NET-CHANGE-FROM-OPS> 9,121,311
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,199,027)
<DISTRIBUTIONS-OF-GAINS> (324,542)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 96,732,342
<NUMBER-OF-SHARES-REDEEMED> (34,213,705)
<SHARES-REINVESTED> 6,941,778
<NET-CHANGE-IN-ASSETS> 69,058,157
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 247,119
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 699,988
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,248,007
<AVERAGE-NET-ASSETS> 125,000
<PER-SHARE-NAV-BEGIN> 13.20
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.40
<PER-SHARE-DIVIDEND> (0.28)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 13.57
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
For the fiscal year ended (a) December 31, 1996
File number: 811-7215
SUB-ITEM 77C
Submission of Matters to a Vote of Security Holders
A Special Meeting of Shareholders was held on
October 30, 1996. At such meeting the
shareholders approved the following proposals:
a) Approval of the election of Edward D.
Beach, Eugene C. Dorsey, Delayne D.
Gold, Robert F. Gunia, Harry A. Jacobs,
Jr., Donald D. Lennox, Mendal A. Melzer,
Thomas T. Mooney, Thomas H. O'Brien,
Richard A. Redeker, Nancy H. Teeters,
and Louis A. Weil as Directors of the
Fund each to hold office until the
earlier to occur of (i) the next meeting
of Shareholders at which Directors are
elected and until his or her successor
shall have been duly elected and shall
have qualified or (ii) their terms
expire in accordance with the Fund's
retirement policy.
b) Approval of an amendment of the Fund's
fundamental investment restriction
regarding unseasoned issuers which would
prohibit the Fund from purchasing any
security if as a result the Fund would
have more than 5% of its total assets
invested in securities of companies less
than three years old.
Affirmative Negative
votes cast votes cast
Abstain
4,164,368 210,614
307,741
c) Approval of the selection of independent
accountants for the Fund conditioned
upon the right by vote of a majority of
such Fund's outstanding voting shares at
any meeting called for the purpose to
terminate such employment forthwith
without penalties.
Affirmative Negative
votes cast votes cast
Abstain
5,377,779 87,624
216,118
For the period ended (a) 12/31/96
File number (c) 811-7215
SUB-ITEM 77 D
Policies with Respect to Security
Investments
On October 30, 1996, shareholders of the Fund
approved an amendment of the Fund's fundamental
investment restriction regarding unseasoned
issuers which would prohibit the Fund from
purchasing any security if as a result the Fund
would have more than 5% of its total assets
invested in securities of companies less than
three years old.
For the fiscal year ended (a) 12/31/96
File number (c) 811-7215
SUB-ITEM 77 I
Terms of New or Amended Securities
On April 9, 1996, the Board of Directors
authorized the issuance of a fourth class of
shares designated Class Z. Class Z shares are not
subject to either an initial or contingent
deferred sales charge nor are they subject to any
Rule 12b-1 fees. Class Z shares will be offered to
a limited group of eligible investors.
PRINT ON COMPAQ
The Board of Directors of
Prudential Diversified Bond Fund, Inc.:
In planning and performing our audit of the
financial statements of Prudential Diversified
Bond Fund, Inc., ("Fund") for the year ended
December 31, 1996, we considered its internal
control structure, including procedures for
safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing
our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to
provide assurance on the internal control
structure.
The management of the Fund is responsible for
establishing and maintaining an internal control
structure. In fulfilling this responsibility,
estimates and judgments by management are required
to assess the expected benefits and related costs
of internal control structure policies and
procedures. Two of the objectives of an internal
control structure are to provide management with
reasonable, but not absolute, assurance that
assets are safeguarded against loss from
unauthorized use or disposition and that
transactions are executed in accordance with
management's authorization and recorded properly
to permit preparation of financial statements in
conformity with generally accepted accounting
principles.
Because of inherent limitations in any internal
control structure, errors or irregularities may
occur and not be detected. Also, projection of
any evaluation of the structure to future periods
is subject to the risk that it may become
inadequate because of changes in conditions or
that the effectiveness of the design and operation
may deteriorate.
Our consideration of the internal control
structure would not necessarily disclose all
matters in the internal control structure that
might be material weaknesses under standards
established by the American Institute of Certified
Public Accountants. A material weakness is a
condition in which the design or operation of the
specific internal control structure elements does
not reduce to a relatively low level the risk that
errors or irregularities in amounts that would be
material in relation to the financial statements
being audited may occur and not be detected within
a timely period by employees in the normal course
of performing their assigned functions. However,
we noted no matters involving the internal control
structure, including procedures for safeguarding
securities, that we consider to be material
weaknesses as defined above as of December 31,
1996.
This report is intended solely for the information
and use of the Board of Directors, management and
the Securities and Exchange Commission.
Deloitte & Touche LLP
New York, New York
February 12, 1997
