<PAGE>
SEMIANNUAL REPORT JUNE 30, 2000
Prudential
Total Return Bond Fund, Inc.
Fund Type Bond
Objective Total Return
(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 Total Return Bond Fund, Inc. (formerly the
Prudential Diversified Bond Fund, Inc.) seeks total
return through a mix of current income and capital
appreciation as determined by the Fund's investment
adviser. This means we allocate assets primarily among
debt securities, including U.S. government securities,
mortgage-related securities, corporate debt securities,
and foreign securities. The Fund may invest up to 50% of
its total assets in noninvestment-grade securities having
a rating not lower than CCC-also known as high-yield or
"junk" bonds. There can be no assurance that the Fund
will achieve its investment objective.
Geographic/Currency Concentration
Expressed as a percentage of total investments as of 6/30/00
71.7% U.S. Corporate Bonds
9.7 Foreign Gov't Securities
7.9 Foreign Corporate Bonds
4.5 U.S. Gov't Securities
3.3 Asset-Backed Securities
2.9 Cash Equivalents
Credit Quality
Expressed as a percentage of total investments as of 6/30/00
4.8% U.S. Government & Agency
4.1 AAA
4.1 AA
16.2 A
49.0 BBB
12.9 BB
7.4 B
1.5 Cash & Equivalents
Ten Largest Issuers
Expressed as a percentage of net assets as of 6/30/00
4.5% Republic of Germany
2.5 United States Treasury Bonds
2.4 ERP Operating L.P.
2.3 United Mexican States
2.2 Niagara Mohawk Power Corp.
2.1 News America, Inc.
2.0 HSBC Capital Funding, Inc.
2.0 LCI International, Inc.
2.0 United States Treasury Notes
1.9 United Airlines, Inc.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 6/30/00
Six One Five Since
Months Year Years Inception2
Class A 2.17% 3.58% (3.49) 31.80% (30.65) 46.92% (45.34)
Class B 1.92 3.06 (2.97) 28.11 (26.94) 42.35 (40.83)
Class C 1.92 3.06 (2.97) 28.11 (26.92) 42.36 (40.80)
Class Z 2.28 3.84 (3.74) N/A 22.64 (21.80)
Lipper General Bond
Fund Avg.3 2.25 3.72 37.21 ***
Average Annual Total Returns1 As of 6/30/00
One Five Since
Year Years Inception2
Class A -0.57% (-0.65) 4.82% (4.63) 6.45% (6.28)
Class B -1.95 (-2.03) 4.91 (4.72) 6.50 (6.32)
Class C 1.02 (0.94) 4.86 (4.67) 6.44 (6.26)
Class Z 3.83 (3.74) N/A 5.53 (5.35)
Distributions and Yields As of 6/30/00
Total Distributions 30-Day
Paid for Six Months SEC Yield
Class A $0.40 6.92%
Class B $0.37 6.71
Class C $0.37 6.64
Class Z $0.42 7.46
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. Foreign investing is
subject to certain risks such as currency
fluctuation and social and political changes.
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 4% for Class
A shares. Class B shares are subject to a declining contingent
deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and
1% for six years. Class B shares will automatically
convert to Class A shares, on a quarterly basis,
approximately seven years after purchase. Class C shares
are subject to a front-end sales charge of 1% and a CDSC
of 1% for 18 months. Class Z shares are not subject to a
sales charge or distribution and service (12b-1) fees.
Without waiver of management fees and/or expense
subsidization, the Fund's cumulative and average annual
total returns would have been lower, as indicated in
parentheses ( ).
2 Inception dates: Class A, B, and C, 1/10/95; Class Z,
9/16/96.
3 Lipper average returns are for all funds in each share
class for the six-month, one-, and five-year
periods in the General Bond Fund category. The Lipper
average is unmanaged. General Bond funds do not have any
quality or maturity restrictions, and they intend to keep
the bulk of their assets in corporate and government debt
issues.
***Lipper Since Inception returns are 53.84% for Class A,
B, and C, and 25.35% for Class Z, based on all funds in
each share class.
1
<PAGE>
(LOGO) August 14, 2000
Dear Shareholder,
Earlier in the year, shareholders voted to change the
name of the Prudential Diversified Bond Fund to the
Prudential Total Return Bond Fund. In addition, the
Fund's investment objective became total return (instead
of only high current income) consistent with an
appropriate balance between risk and reward. This change
is intended to allow the Fund to take advantage of
capital appreciation opportunities.
Two adjustments were also made to the Fund's investment
parameters: (1) the Fund may now invest up to 50% of its
total assets in "junk" bonds, up from 35% previously, and
(2) the Fund may now invest up to 35% of its total assets
in asset-backed securities, up from 25% previously. While
these changes subject the Fund to greater risks, the
increased flexibility should help the Fund achieve its
total return objective.
The Fund provided modest positive returns for the six
months ended June 30, 2000, as did its benchmark Lipper
Average. The returns largely reflect a mixed performance
by the corporate bond market, which sold off for much of
the period then rallied solidly in June. Prices of
corporate bonds improved in June as many investors hoped
the Federal Reserve was almost finished increasing short-
term interest rates to rein in U.S. economic growth.
Sincerely,
John R. Strangfeld, President
Prudential Total Return Bond Fund, Inc.
2
<PAGE>
Prudential Total Return Bond Fund, Inc.
Semiannual Report June 30, 2000
Investment Adviser's Report
The first half of 2000 proved to be a challenging period
for U.S. fixed-income markets. The Federal Reserve raised
short-term interest rates a quarter of a percentage point
in February and in March, and half a percentage point-its
largest increase in more than five years-in May.
Tightening monetary policy also drove up rates on loans
to consumers and businesses, which the Fed hoped would
curb economic activity and help check inflationary
pressures.
As the Fed repeatedly increased short-term rates,
investors required higher yields on nongovernment bonds,
which forced their prices lower. Bond prices did not
begin to rally in earnest until June 2000, when data
indicating that the U.S. economy was headed for a "soft
landing" fueled hope that the Fed might be nearly
finished with its current round of tightening.
Solid performance by longer-term
U.S. Treasury securities
While the Fed was implementing its changes in monetary
policy, the U.S. Treasury Department began to buy back up
to $30 billion of mostly longer-term Treasury securities
and to reduce issuance of its securities. Growing federal
budget surpluses have lowered the government's borrowing
needs and allowed it to pay off some of its publicly held
debt. The prospect of a decreasing supply of longer-term
Treasuries sent investors rushing to buy these
securities. As a result, their prices generally rallied
(and yields fell) during the six months, despite the
three Fed rate hikes.
Under these market conditions, the Treasury market
outperformed all other U.S. fixed-income markets for the
first half of 2000, including investment-grade and high-
yield corporate bonds. This trend hurt the Fund's
performance because U.S. corporate bonds accounted for
the bulk of the Fund's total investments throughout the
first half of the year.
3
<PAGE>
Prudential Total Return Bond Fund, Inc.
Semiannual Report June 30, 2000
We adopted a more defensive investment strategy
Within our corporate bond holdings, we adopted a more
defensive strategy that helped the Fund weather the
bearish market environment. We sold some of the Fund's
longer-term corporate bonds and purchased shorter-term
corporate bonds in order to maintain yield while reducing
price risk and volatility. We also sold some of the
Fund's high-yield bonds and reallocated the cash to
Treasuries and German government bonds whose currency was
hedged into U.S. dollars.
The Fund benefited from taking profits on emerging market
bonds, which fell to 8% of its total investments as of
June 30, 2000, from roughly 13% earlier in the year.
Emerging market bonds posted the strongest return of all
fixed-income markets for the first half of 2000, based on
Lehman Brothers indexes. The rising prices of oil, gas,
and other natural resources strengthened the economies of
some developing nations that export these commodities.
Moody's Investors Service recognized Mexico's improving
economy when it upgraded that nation's foreign debt
rating to investment grade for the first time in March
2000. In addition, investors drove prices of Mexican
bonds higher as they anticipated the favorable outcome of
Mexico's presidential election. We own Mexican bonds that
gained in value amid these positive developments.
The benefit derived from emerging market bonds was offset
by losses the Fund suffered on some of its bonds,
including those of Conseco. News of credit problems at
Conseco's finance subsidiary hurt that company's
fixed-income securities.
Looking Ahead
We believe U.S. corporate bonds, both investment grade
and high yield, are attractively priced. High-yield bonds
provide adequate compensation for the risk entailed in
owning these below-investment-grade debt securities.
Therefore, we may selectively increase the Fund's
holdings of high-yield bonds in the BB* ratings category.
(*Bonds in the BB ratings category by Standard & Poor's
or the equivalent Ba ratings category by Moody's
Investors Service.)
4
<PAGE>
www.prudential.com (800) 225-1852
Although corporate cashflows and credit quality generally
remain strong, thorough credit analysis is more important
than ever as many U.S. corporations are rapidly taking on
new debt. For example, some investment-grade companies
have issued bonds whose proceeds were used to buy back
their stock or finance an acquisition of another company.
Prudential's Corporate Sector team continues to
scrutinize trends in credit quality to identify potential
problems that may arise, particularly if the U.S.
economic expansion begins to lose steam.
As for fixed-income markets outside the United States,
emerging market bonds have performed well over the last
18 months as economic fundamentals in many countries
continue to improve. Despite this strong performance,
there are still attractive investment opportunities to
justify our neutral stance toward this market.
Meanwhile, the European Central Bank (ECB) is expected to
continue increasing short-term interest rates in the
autumn of 2000, which could cause prices of European
bonds to decline (and their yields to rise). We believe,
however, that the ECB may not have to hike rates as much
as anticipated to prevent the region's economy from
overheating. If we are right, prices of European bonds
could head higher later in the year, which is why we have
already established a small position in German bonds.
Prudential Total Return Bond Fund Management Team
Prudential Total Return Bond Fund, Inc.
5
<PAGE>
Prudential Total Return Bond Fund, Inc.
Semiannual Report June 30, 2000
Financial
Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
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 86.0%
-------------------------------------------------------------------------------------
Asset Backed Securities 3.3%
Citibank Credit Card, Master Trust I,
Ser. 1999-5, Class A,
Aaa $5,000 6.10%, 5/15/08 $ 4,681,250
MBNA Master Credit Card Trust,
Ser. 1999 B, Class A,
Aaa 4,700 5.90%, 8/15/11 4,254,055
--------------
Total asset backed securities
(cost $9,679,922) 8,935,305
--------------
-------------------------------------------------------------------------------------
Domestic Corporate Bonds 60.6%
Abitibi-Consolidated, Inc.,
Deb.,
Baa3 900 8.50%, 8/1/29 840,537
Adelphia Communications Corp.,
Sr. Notes,
B1 1,165 10.50%, 7/15/04 1,165,000
AES Corp., Sr. Notes,
Ba1 1,360 9.50%, 6/1/09 1,332,800
All State Corp., Sr. Notes,
A1 200 7.20%, 12/1/09 191,184
Allied Waste North America, Inc., Sr. Notes,
Ba3 675 7.875%, 1/1/09 573,750
Amerada Hess Corp., Notes,
Baa1 400 7.875%, 10/1/29 391,124
Archer-Daniels-Midland, Debs.,
Aa3 1,400 6.625%, 5/1/29 1,173,130
Avecia Group Plc, Sr. Notes,
B2 1,250 11.00%, 7/1/09 1,225,000
BJ Services Co., Sr. Notes,
Baa2 2,000 7.00%, 2/1/06 1,918,380
Calair Capital Corp., Sr. Notes,
Ba2 1,380 8.125%, 4/1/08 1,186,800
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Calenergy Co., Inc., Sr. Notes,
Baa3 $2,000 6.96%, 9/15/03 $ 1,950,660
Baa3 2,000 7.23%, 9/15/05 1,944,900
Calpine Corp., Sr. Notes,
Ba1 2,345 10.50%, 5/15/06 2,450,525
Capital One Financial,
Medium Term Notes,
Baa2 3,000 7.08%, 10/30/01 2,954,790
Notes,
Baa3 800 7.25%, 5/1/06 732,000
Century Communications Corp., Sr.
Notes,
B1 1,050 Zero Coupon, 3/15/03 777,000
Charter Communications Holdings Ltd.,
Sr. Notes,
B2 665 10.00%, 4/1/09 646,713
CMS Energy Corp., Sr. Notes,
Ba3 1,200 8.00%, 7/1/01 1,177,920
Cogentrix Energy, Inc., Sr. Notes,
Ba1 3,200 8.75%, 10/15/08 3,088,000
Columbia / HCA Healthcare Corp.,
Notes,
Ba2 650 6.91%, 6/15/05 589,875
Commonwealth Edison Co., Notes,
Baa3 3,500 7.625%, 1/15/07 3,414,985
Connecticut Light & Power Co., Ser. C,
Baa3 4,000 7.75%, 6/1/02 4,012,720
Conseco Financing Trust III, Bonds,
Caa 900 8.796%, 4/1/27 391,500
Continental Airlines, Inc.,
Pass-Through Trust, Series 1997 1A,
Aa3 1,299 7.461%, 4/1/15 1,243,882
Cox Enterprises, Inc., Notes,
Baa1 900 6.625%, 6/14/02 885,015
CSC Holdings, Inc., Sr. Notes,
Ba2 900 7.25%, 7/15/08 832,005
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Dresdner Funding Trust I, Notes,
A1 $3,300 8.151%, 6/30/31 $ 2,880,900
Duke Realty L.P., Sr. Notes,
Baa1 800 7.30%, 6/30/03 785,200
Edison Mission Energy, Sr. Notes,
A3 800 7.73%, 6/15/09 780,128
El Paso Electric Co.,
First Mtge. Bonds,
Ba2 1,500 9.40%, 5/1/11 1,591,710
Sr. Notes,
Baa2 1,000 6.625%, 7/15/01 991,220
Electric Lightwave, Inc., Notes,
A2 800 6.05%, 5/15/04 745,000
Eott Energy Partners L.P., Sr. Notes,
Ba2 1,140 11.00%, 10/1/09 1,157,100
ERP Operating L.P.,
Bonds,
A3 1,200 6.63%, 4/13/05 1,128,072
Notes,
A3 375 7.10%, 6/23/04 363,660
Ford Motor Co., Notes,
A1 600 7.45%, 7/16/31 567,438
Ford Motor Credit Co.,
A1 200 7.375%, 10/28/09 193,454
Gatx Capital Corp., Notes,
Baa2 1,200 7.75%, 12/1/06 1,122,000
General Motors Acceptance Corp.,
Notes,
A2 3,000 5.95%, 3/14/03 2,885,250
Global Crossing Holdings Ltd., Sr.
Notes,
Ba2 2,490 9.125%, 11/15/06 2,396,625
GS Escrow Corp., Sr. Notes,
Ba1 835 6.75%, 8/1/01 806,819
Hanvit Bank, Sub., Notes,
B1 3,000 12.75%, 3/1/10 2,970,000
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Harrahs Operating, Inc.,
Sr. Sub. Notes,
Ba2 $ 160 7.875%, 12/15/05 $ 150,400
Heller Financial, Inc., Notes,
A3 800 6.00%, 3/19/04 748,672
Hollywood Park, Inc., Sr. Sub. Notes,
Ser. B,
B2 770 9.50%, 8/1/07 766,150
HSBC Capital Funding, L.P., Gtd.
Notes,
A1 5,000 10.176%, 12/31/49 5,375,000
Huntsman Polymers Corp., Sr. Notes,
B1 955 11.75%, 12/1/04 969,325
HVB Funding Trust,
Silent Partnership Certificate,
Aa3 300 8.741%, 6/30/31 276,870
HVB Funding Trust III,
Dated Silent Participation
Certificate,
Aa3 200 9.00%, 10/22/31 189,820
International Lease Finance Corp.,
Medium Term Notes, Ser. MTNJ,
A1 4,000 5.90%, 3/12/03 3,840,000
International Paper Co., Notes,
Baa1 5,000 8.00%, 7/8/03 5,026,150
ITT Corp., Notes,
Ba1 2,000 6.75%, 11/15/03 1,876,820
LCI International, Inc., Sr. Notes,
Ba1 5,550 7.25%, 6/15/07 5,254,906
Lear Seating Corp., Sub. Notes,
Ba3 440 8.25%, 2/1/02 431,380
Lehman Brothers, Inc., Notes,
A3 120 6.375%, 5/7/02 117,178
A3 3,605 6.625%, 4/1/04 3,440,576
A3 1,175 6.625%, 2/5/06 1,097,908
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Limestone Electron Trust, Sr. Sec'd.
Notes,
Baa3 $3,000 8.625%, 3/15/03 $ 3,029,040
Lin Holdings Corp., Sr. Disc. Notes,
B3 1,250 Zero Coupon, 3/1/08 821,875
Mallinckrodt, Inc., Bonds,
Baa2 2,000 6.30%, 3/15/11 1,970,000
Metromedia Fiber Network, Inc., Sr.
Notes,
B2 1,085 10.00%, 12/15/09 1,074,150
Meyer Fred, Inc., Notes,
Baa3 500 7.15%, 3/1/03 489,505
Monsanto Co., Debs.,
A2 230 6.50%, 12/1/18 202,750
A1 550 6.75%, 12/15/27 493,388
Nationwide Life Insurance Co., Debs.,
A1 1,000 9.875%, 2/15/25 998,000
Navistar Financial Corp.,
Sr. Sub. Notes, Ser. B,
Ba2 1,410 9.00%, 6/1/02 1,402,950
Navistar International Corp., Sr.
Notes,
Baa3 1,000 7.00%, 2/1/03 955,000
News America, Inc., Gtd. Notes,
Baa3 6,000 6.703%, 5/21/34 5,709,480
Nextlink Communication, Inc., Sr.
Notes,
B2 1,110 10.50%, 12/1/09 1,087,800
Niagara Mohawk Power Corp.,
First Mtge. Bonds,
Baa2 2,000 6.875%, 4/1/03 1,954,540
Baa2 2,000 7.375%, 8/1/03 1,972,060
Baa2 2,000 8.00%, 6/1/04 2,010,140
Northrop Grumman Corp., Debs.,
Baa3 900 7.875%, 3/1/26 853,101
Orion Power Holdings, Inc., Sr. Notes,
Ba3 1,245 12.00%, 5/1/10 1,282,350
Osprey Trust, Sr. Notes,
Baa3 3,000 8.31%, 1/15/03 3,010,200
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Owens Illinois., Inc., Sr. Notes,
Ba1 $1,820 7.85%, 5/15/04 $ 1,742,341
Pactiv Corp., Debs.,
Baa3 1,159 8.125%, 6/15/17 1,045,209
Baa3 500 7.95%, 12/15/25 448,515
Paramount Communications, Inc.,
Sr. Notes,
Baa3 500 7.50%, 1/15/02 498,365
Park Place Entertainment Corp.,
Sr. Sub. Notes,
Ba2 1,310 7.875%, 12/15/05 1,231,400
Parker & Parsley Petroleum Co., Sr.
Notes,
Ba1 540 8.875%, 4/15/05 526,775
Phillips Petroleum Co., Notes,
Baa2 850 8.50%, 5/25/05 878,118
Plains Resources, Inc., Sr. Sub.
Notes,
B2 725 10.25%, 3/15/06 719,563
PSEG Energy Holdings, Inc., Notes,
Ba1 1,340 10.00%, 10/1/09 1,356,750
Qwest Communications Int'l., Inc.,
Sr. Notes,
Ba1 1,870 7.50%, 11/1/08 1,804,550
Raytheon Co., Notes,
Baa1 1,300 6.50%, 7/15/05 1,234,051
RBF Finance Co., Sr. Sec'd. Notes,
Ba3 1,000 11.375%, 3/15/09 1,080,000
Rockwell International Corp., Debs.,
A1 1,500 5.20%, 1/15/98 939,690
Scotia Pacific Co. LLC, Ser. B, Class
A3,
Baa2 3,700 7.71%, 1/20/14 2,534,500
Seagull Energy Corp., Sr. Notes,
Ba3 1,010 7.875%, 8/1/03 979,700
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Sonat, Inc., Notes,
Baa2 $1,200 7.625%, 7/15/11 $ 1,172,100
Sovereign Bancorp, Inc., Sr. Notes,
Ba3 765 10.25%, 5/15/04 754,359
Ba3 565 10.50%, 11/15/06 565,000
Sprint Capital Corp., Notes,
Baa1 2,000 6.875%, 11/15/28 1,738,540
Stone Container Corp.,
Sr. Sub. Debs.,
B3 925 12.25%, 4/1/02 931,938
Swift Energy Co., Sr. Sub. Notes,
B2 705 10.25%, 8/1/09 712,050
Tele-Communications, Inc., Debs.,
A2 1,000 6.34%, 2/1/02 983,900
A2 1,500 10.125%, 4/15/22 1,811,535
Telecom de Puerto Rico, Inc., Sr.
Notes,
Baa2 1,800 6.65%, 5/15/06 1,671,750
Baa2 1,500 6.80%, 5/15/09 1,370,625
Tenet Healthcare Corp., Sr. Notes,
Ba1 1,075 7.875%, 1/15/03 1,045,438
Time Warner, Inc., Debs.,
Baa3 1,000 8.11%, 8/15/06 1,018,160
Union Pacific Resources Group, Inc.,
Debs.,
Baa3 1,000 7.95%, 4/15/29 991,760
United Airlines, Inc., Debs.,
Baa3 3,000 10.67%, 5/1/04 3,051,570
Baa3 2,000 11.21%, 5/1/14 2,061,760
USX Marathon Group, Debs.,
Baa1 1,500 9.375%, 5/15/22 1,675,965
VoiceStream Wireless Corp., Sr. Notes,
B2 1,090 10.375%, 11/15/09 1,139,050
Waste Management, Inc., Notes,
Ba1 2,000 6.125%, 7/15/01 1,931,440
Williams Communications Corp., Sr.
Notes,
B2 1,175 10.70%, 10/1/07 1,169,125
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
World Color Press, Inc., Sr. Sub.
Notes,
Baa3 $2,000 7.75%, 2/15/09 $ 1,825,000
--------------
Total domestic corporate bonds
(cost $165,289,438) 161,972,847
--------------
-------------------------------------------------------------------------------------
Foreign Corporate Bonds 7.9%
Bank Tokyo Mitsubishi Ltd.,
Sr. Sub. Notes,
A3 3,000 8.40%, 4/15/10 3,030,900
British Sky Broadcasting Group
(United Kingdom), Bonds,
Baa2 500 6.875%, 2/23/09 439,255
Chohung Bank, Sub. Notes,
B3 1,500 11.875%, 4/1/10 1,443,750
B3 1,500 11.50%, 4/1/10 1,443,750
Comunidad Autonoma De Andaluc
(Spain), Notes,
Aa3 120 7.25%, 10/1/29 115,344
Deutsche Telekom International Finance
(Netherlands), Gtd. Notes,
Aa2 3,750 8.25%, 6/15/30 3,787,875
Gulf Canada Resources Ltd.
(Canada), Sr. Sub. Debs.,
Ba2 1,000 9.25%, 1/15/04 1,004,190
Kansallis-Osake-Pankki, N.Y.
(Finland), Sub. Notes,
A2 1,000 10.00%, 5/1/02 1,041,130
National Australia Bank Ltd.
(Australia),
Sub. Notes,
A1 1,200 6.40%, 12/10/07 1,183,500
Nuevo Grupo Iusacell S.A. de C.V.
(Mexico), Sr. Notes,
B1 1,000 14.25%, 12/1/06 1,040,000
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Rogers Cablesystems, Inc.
(Canada), Sr. Sec'd. Notes,
Ba3 $2,000 10.00%, 3/15/05 $ 2,045,000
Sakura Cap. Funding (Cayman),
Gtd. Note, F.R.N.,
Ba1 1,750 7.04%, 9/29/49 1,697,500
Sanwa Finance Aruba AEC
(Aruba), Gtd. Notes,
Baa1 1,060 8.35%, 7/15/09 1,055,294
Tyco Int'l. Group S.A. (Luxumbourg),
Baa1 600 6.875%, 1/15/29 506,862
United News & Media Plc
(United Kingdom), Notes,
Baa2 560 7.25%, 7/1/04 540,736
United Pan-Europe Commerce
(Netherlands),
B2 790 11.25%, 2/1/10 711,000
--------------
Total foreign corporate bonds
(cost $24,604,267) 21,086,086
--------------
-------------------------------------------------------------------------------------
Foreign Government Securities 9.7%
Quebec Hydro (Canada), Notes,
A2 125 7.50%, 4/1/16 124,420
A2 1,175 9.40%, 2/1/21 1,386,394
Quebec Province (Canada), Debs.,
A2 780 5.75%, 2/15/09 698,451
A2 800 7.125%, 2/9/24 755,664
Republic of Germany, Bonds,
Aaa 7,000 6.50%, 10/14/05 7,112,945
Aaa 5,000 5.25%, 7/4/10 4,809,545
Republic of Panama, Notes,
Ba1 4,000 7.875%, 2/13/02 3,930,000
Republic of Philippines, Bonds,
Ba1 700 8.875%, 4/15/08 630,000
Saskatchewan Province (Canada), Debs.,
NR 400 9.125%, 2/15/21 462,412
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
United Mexican States,
Notes, F.R.N.,
9.875%, 2/1/10,
Ser. A, F.R.N., $ 2,587,500
Baa3 $2,500
Baa3 600 6.933%, 12/31/19 588,000
Ser. B, F.R.N.,
Baa3 1,200 6.942%, 12/31/19 1,176,000
Ser. C, F.R.N.,
Baa3 1,700 6.836%, 12/31/19 1,666,000
--------------
Total foreign government securities
(cost $25,388,959) 25,927,331
--------------
-------------------------------------------------------------------------------------
U.S. Government Securities 4.5%
United States Treasury Bonds,
800(b) 8.125%, 8/15/21 977,376
5,655 6.125%, 8/15/29 5,711,550
United States Treasury Notes,
785 6.75%, 5/15/05 803,275
4,288 6.50%, 2/15/10 4,434,735
--------------
Total U.S. government securities
(cost $11,748,563) 11,926,936
--------------
RIGHTS(a)
-----------------------------------------------------------------------------------
Rights
United Mexican States,
expiring 12/31/19
5,384 (cost $0) 0
--------------
Total long-term investments
(cost $236,711,149) 229,848,505
--------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
SHORT-TERM INVESTMENTS 12.6%
Domestic Corporate Bonds 11.1%
Camden Property Trust, Notes,
Baa2 $3,000 7.23%, 10/30/00 $ 2,994,600
Comdisco, Inc.,
Medium Term Notes,
Baa1 2,000 6.32%, 11/27/00 1,990,880
ERP Operating L.P., Notes,
A3 5,000 6.15%, 9/15/00 4,987,500
First Industial L.P., Notes,
Baa2 5,000 6.50%, 3/15/01 4,923,100
Fort James Corp., Notes,
Baa2 2,000 6.234%, 3/15/01 1,981,860
Gables Reality L. P., Sr. Notes,
Baa2 3,500 6.55%, 10/1/00 3,489,430
ITT Corp., Notes,
Ba1 1,200 6.25%, 11/15/00 1,188,972
JPS Automotive LLC., Sr. Notes,
B1 560 11.125%, 6/15/01 564,200
K N Energy, Inc., Notes,
Baa2 4,000 6.30%, 3/1/01 3,969,040
Kroger Co., Sr. Notes,
Baa3 1,700 6.34%, 6/1/01 1,670,250
Salomon, Inc., Sr. Notes,
Aa3 1,500 6.59%, 2/21/01 1,493,294
Seagram (Joseph) & Sons, Inc.,
Baa3 300 5.79%, 4/15/01 295,920
--------------
Total domestic corporate bonds
(cost $29,721,968) 29,549,046
--------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Total Return Bond Fund, Inc.
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>
Repurchase Agreement 1.5%
Joint Repurchase Agreement Account,
5.96%, 7/3/00
$3,972 (cost $3,972,000; Note 6) $ 3,972,000
--------------
Total short-term investments
(cost $33,693,968) 33,521,046
--------------
Total Investments 98.6%
(cost $270,405,117) 263,369,551
Other assets in excess of
liabilities 1.4% 3,691,676
--------------
Net Assets 100% $ 267,061,227
--------------
--------------
</TABLE>
--------------------------------------------------------------------------------
F.R.N.--Floating Rate Note.
LLC--Limited Liability Company.
L.P.--Limited Partnership.
NR--Not Rated by Moody's or Standard & Poor's.
Plc--Public Limited Company (British Corporation).
S.A.--Sociedad Anonima (Spanish Corporation or Societe Anonyme or French
Corporation).
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
(a) Non-income producing security.
(b) Pledged as initial margin on financial futures contracts.
18 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
Portfolio of Investments as of June 30, 2000 (Unaudited) Cont'd.
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..................................................... 15.8%
Utilities.............................................................. 9.8
Foreign Government Securities.......................................... 9.7
Real Estate Investment Trust........................................... 7.7
Telecommunications..................................................... 7.3
Foreign Corporate Bonds................................................ 6.8
Energy................................................................. 5.6
U.S. Government Securities............................................. 4.5
Banking................................................................ 3.9
Containers............................................................. 3.9
Aerospace & Airlines................................................... 3.5
Media.................................................................. 3.3
Cable.................................................................. 2.7
Oil & Gas.............................................................. 2.0
Medical................................................................ 1.6
Hotels................................................................. 1.2
Forest Products........................................................ 1.0
Automotive............................................................. 0.9
Waste Management....................................................... 0.9
Chemicals.............................................................. 0.8
Entertainment.......................................................... 0.8
Retail................................................................. 0.8
Building Materials..................................................... 0.7
Metal.................................................................. 0.6
Food & Beverage........................................................ 0.5
Equipment.............................................................. 0.4
Insurance.............................................................. 0.4
Other assets in excess of liabilities
(including Joint Repurchase Agreement)............................... 2.9
-----
100.0%
-----
-----
[/TABLE]
See Notes to Financial Statements 19
<PAGE>
Prudential Total Return Bond Fund, Inc.
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
June 30, 2000
<S> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $270,405,117) $ 263,369,551
Cash 11,570
Interest receivable 5,231,033
Receivable for investments sold 3,078,714
Receivable for Fund shares sold 678,317
Unrealized appreciation on forward currency contracts 15,542
Other assets 3,032
-------------
Total assets 272,387,759
-------------
LIABILITIES
Payable for investments purchased 3,747,413
Payable for Fund shares reacquired 749,066
Dividends payable 402,406
Accrued expenses 127,575
Distribution fee payable 112,114
Management fee payable 109,015
Unrealized depreciation on forward currency contracts 63,161
Due to broker-variation margin 15,782
-------------
Total liabilities 5,326,532
-------------
NET ASSETS $ 267,061,227
-------------
-------------
Net assets were comprised of:
Common stock, at par $ 21,882
Paid-in capital in excess of par 295,316,595
-------------
295,338,477
Undistributed net investment income 266,785
Accumulated net realized loss on investments (21,466,698)
Net unrealized depreciation on investments, financial
futures and
foreign currencies (7,077,337)
-------------
Net assets, June 30, 2000 $ 267,061,227
-------------
-------------
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
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 ($55,975,003 /
4,585,600 shares of common stock issued and outstanding) $12.21
Maximum sales charge (4.0% of offering price) .51
-------------
Maximum offering price to public $12.72
-------------
-------------
Class B:
Net asset value, offering price and redemption price per share
($155,339,072 / 12,725,674 shares of common stock issued
and outstanding) $12.21
-------------
-------------
Class C:
Net asset value and redemption price per share ($8,670,348 /
710,298 shares of common stock issued and outstanding) $12.21
Sales charge (1% of offering price) .12
-------------
Offering price to public $12.33
-------------
-------------
Class Z:
Net asset value, offering price and redemption price per share
($47,076,804 / 3,860,197 shares of common stock issued and
outstanding) $12.20
-------------
-------------
</TABLE>
See Notes to Financial Statements 21
<PAGE>
Prudential Total Return Bond Fund, Inc.
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
June 30, 2000
<S> <C>
---------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Interest $ 11,185,826
-------------
Expenses
Management fee 689,228
Distribution fee--Class A 73,942
Distribution fee--Class B 600,978
Distribution fee--Class C 32,372
Transfer agent's fees and expenses 380,000
Custodian's fees and expenses 88,000
Reports to shareholders 67,000
Legal fees and expenses 31,000
Registration fees 28,000
Audit fee and expenses 14,000
Directors' fees and expenses 10,000
Miscellaneous 1,306
Amortization of deferred organization expenses 998
-------------
Total expenses 2,016,824
-------------
Net investment income 9,169,002
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCIES
Net realized gain (loss) on:
Investment transactions (6,157,614)
Financial futures transactions 170,423
Foreign currency transactions (267,380)
-------------
(6,254,571)
-------------
Net change in unrealized appreciation (depreciation) on:
Investments 2,562,198
Financial futures 471,867
Foreign currencies (78,305)
-------------
2,955,760
-------------
Net loss on investments (3,298,811)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,870,191
-------------
-------------
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 2000 December 31, 1999
<S> <C> <C>
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 9,169,002 $ 18,810,365
Net realized loss on investment and
foreign currency transactions (6,254,571) (9,866,884)
Net change in unrealized appreciation
(depreciation) of investments and
foreign currencies 2,955,760 (10,674,058)
------------- -----------------
Net increase (decrease) in net assets
resulting from operations 5,870,191 (1,730,577)
------------- -----------------
Dividends and distributions (Note 1)
Dividends from net investment income
Class A (2,058,798) (3,952,554)
Class B (5,130,528) (10,835,380)
Class C (276,430) (573,175)
Class Z (1,703,246) (3,449,256)
------------- -----------------
(9,169,002) (18,810,365)
------------- -----------------
Distributions in excess of net investment
income
Class A -- (153,112)
Class B -- (414,306)
Class C -- (23,401)
Class Z -- (121,185)
------------- -----------------
-- (712,004)
------------- -----------------
Fund share transactions (net of share
conversions) (Note 7)
Net proceeds from shares sold 32,740,386 91,189,671
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 7,288,552 15,963,051
Cost of shares reacquired (62,508,033) (101,066,803)
------------- -----------------
Net increase (decrease) in net assets from
Fund share transactions (22,479,095) 6,085,919
------------- -----------------
Total increase (decrease) (25,777,906) (15,167,027)
NET ASSETS
Beginning of period 292,839,133 308,006,160
------------- -----------------
End of period(a) $ 267,061,227 $ 292,839,133
------------- -----------------
------------- -----------------
------------------------------
(a) Includes undistributed net investment
income of................................ $ 266,785 $ 534,165
------------- -----------------
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited)
Prudential Total Return Bond Fund, Inc. (the 'Fund'), formerly known as
Prudential Diversified Bond Fund, Inc., which was incorporated in Maryland on
September 1, 1994, is registered under the Investment Company Act of 1940 as a
diversified, open-end management investment company. The Fund had no significant
operations other than the issuance of 2,667 shares each of Class A and Class B
common stock and 2,666 shares of Class C common stock for $100,000 on October 5,
1994 to Prudential Investments Fund Management LLC ('PIFM'). Investment
operations commenced on January 10, 1995.
The Fund's investment objective is total return. The Fund will seek to
achieve its objective through a mix of current income and capital appreciation
as determined by the Fund's investment adviser. This means we allocate assets
primarily among debt securities, including U.S. Government securities,
mortgage-related securities, corporate securities and foreign securities. The
ability of issuers of debt securities held by the Fund 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
Fund in the preparation of its financial statements.
Security Valuation: Securities listed on a securities exchange are
valued at the last sales price on the day of valuation, or, if there was no sale
on such day, at the average of readily available closing bid and asked prices on
such day as provided by a pricing service. Corporate bonds and U.S. Government
securities that are actively traded in the over-the-counter market, including
listed securities for which the primary market is believed to be
over-the-counter, are valued by an independent pricing service. Convertible debt
securities that are actively traded in the over-the-counter market, including
listed securities for which the primary market is believed to be
over-the-counter, are valued at the average of the most recently quoted bid and
asked prices provided by a principal market maker or dealer. Options on
securities and indices traded on an exchange are valued at the average of the
most recently quoted bid and asked prices provided by the respective exchange
and futures contracts and options thereon are valued at the last sales price as
of the close of business of the exchange. Securities for which market quotations
are not readily available are valued at fair value as determined in good faith
by or under the direction of the Board of Directors of the Fund.
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.
24
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Repurchase Agreement: In connection with repurchase agreement
transactions, the Fund's custodian, or designated subcustodians as the case may
be under tri-party repurchase agreements, takes possession of the underlying
collateral securities, the value of which exceeds the principal amount of the
repurchase transaction, including accrued interest. 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
Fund may be delayed or limited.
Foreign Currency Translation: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and
liabilities--at the closing daily rate of exchange;
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rates and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities held at the end of the period. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of portfolio securities sold during
the period.
Net realized gains and losses on foreign currency transactions represent
net foreign exchange gains and losses from sales and maturities of short-term
securities, disposition of foreign currency, gains or losses realized between
the trade and settlement dates of security transactions, and the difference
between amounts of dividends, interest and foreign withholding taxes recorded on
the Fund's books and the U.S. dollar equivalent amounts actually received or
paid. Net currency gains and losses from valuing foreign currency denominated
assets, except portfolio securities, and liabilities at period end exchange
rates are reflected as a component of unrealized appreciation or depreciation on
foreign currencies.
Foreign security and currency transactions may involve certain
considerations and risks not typically associated with those of domestic origin
as a result of, among other factors, the possibility of political and economic
instability and the level of governmental supervision and regulation of foreign
securities markets.
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
25
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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 Fund invests in financial futures contracts in order to hedge its
existing portfolio securities, or securities the Fund intends to purchase,
against fluctuations in value caused by changes in prevailing interest rates.
Should interest rates move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the underlying
hedged assets.
Securities Transactions and Net Investment Income: Securities
transactions are recorded on the trade date. Realized gains or losses on sales
of securities are calculated on the identified cost basis. Interest income is
recorded on the accrual basis. The Fund amortizes premiums and discounts on
purchases of portfolio securities as adjustments to interest income. 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 realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative proportion of net assets of each class at the beginning of the
day.
Dividends and Distributions: The Fund declares daily and pays monthly
dividends from net investment income. The Fund will distribute at least annually
any net capital gains in excess of loss carryforwards. Dividends and
distributions are recorded on the ex-dividend date.
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
Federal Income Taxes: It is the Fund's policy to meet the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable net income to its shareholders. Therefore, no
federal income tax provision is required.
Deferred Organization Expenses: Approximately $210,000 of expenses were
incurred in connection with the organization of the Fund. These costs have been
26
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
deferred and are being amortized ratably over a period of sixty months from the
date the Fund commenced investment operations.
Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with 'Statement of Position 93-2:
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies.' The
effect of applying this statement was to decrease undistributed net investment
income and decrease accumulated net realized loss by $267,380, due to net
foreign currency losses. Net investment income, net realized losses and net
assets were not affected by this change.
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'), a wholly owned subsidiary of Prudential. 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. The Subadviser is reimbursed by PIFM for the reasonable costs
and expenses incurred by the Subadviser in furnishing those services. PIFM pays
for the services of PIC, the cost of compensation of officers of the Fund,
occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears
all other costs and expenses.
The management fee paid PIFM is computed daily and payable monthly, at an
annual rate of .50 of 1% of the average daily net assets of the Fund.
Effective January 1, 2000, the subadvisory fee paid to PIC by PIFM is
computed daily and payable monthly at an annual rate of .250 of 1% of the
average daily net assets of the Fund.
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'), which acts as the distributor of the Class A,
Class B, Class C and Class Z shares 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 them. The distribution fees are accrued daily and
payable monthly. No distribution or
27
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
service fees are paid to PIMS as distributor for 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% of the average daily net assets of
Class A shares and .75% of the average daily net assets of both the Class B and
Class C shares for the six months ended June 30, 2000.
PIMS has advised the Fund that it has received approximately $44,800 and
$9,000 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the period ended June 30, 2000. From these fees,
PIMS paid such sales charges to Pruco Securities Corporation and affiliated
broker-dealers, which in turn paid commissions to salespersons and incurred
other distribution costs.
PIMS has advised the Fund that for the six months ended June 30, 2000, it
received approximately $257,400 and $6,200 in contingent deferred sales charges
imposed upon redemptions by certain Class B and Class C shareholders,
respectively.
PIFM, PIMS and PIC are wholly owned subsidiaries of The Prudential
Insurance Company of America ('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 borrowings will be at market rates. The purpose of the agreement
is to serve as an alternative source of funding for capital share redemption.
The Funds pay a commitment fee of .080 of 1% on 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
period 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 Fund's transfer agent. During the six months ended June 30, 2000,
the Fund incurred fees of approximately $334,000 for the services of PMFS. As of
June 30, 2000, approximately $52,600 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.
28
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six month period ended June 30, 2000 were $218,048,544 and $242,464,872,
respectively.
The federal income tax cost basis of the Fund's investments at December
31, 1999 was $270,475,674 and, accordingly, net unrealized depreciation for
federal income tax purposes was $7,106,123 (gross unrealized
appreciation--$2,169,630; gross unrealized depreciation--$9,275,753).
For federal income tax purposes, the Fund has a capital loss carryforward
as of December 31, 1999 of approximately $13,738,000 of which $5,204,000 expires
in 2006 and $8,534,000 expires in 2007. Accordingly, no capital gains
distribution is expected to be paid to shareholders until net gains have been
realized in excess of such carryforward. The Fund will elect, for United States
federal income tax purposes, to treat net short-term capital losses of
$1,706,696 incurred in the two months ended December 31, 1999 as being incurred
in the current fiscal year.
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
Number of Expiration June 30, Trade Unrealized
Contracts Type Date 2000 Date Depreciation
--------- ---------------- ----------- ---------- ---------- --------------
<C> <C> <S> <C> <C> <C>
Long Positions:
101 20 yr. Bond Sept. 2000 $9,834,875 $9,831,719 $ (3,156)
--------------
--------------
</TABLE>
At June 30, 2000, the Fund had outstanding forward currency contracts to
sell foreign currency as follows:
<TABLE>
<CAPTION>
Value at Unrealized
Foreign Currency Settlement Date Current Appreciation/
Sale Contracts Payable Value Depreciation
----------------------------------- ---------------- ----------- --------------
<S> <C> <C> <C>
Euros,
expiring 7/20/00 $ 7,408,832 $ 7,393,290 $ 15,542
expiring 7/20/00 4,819,926 4,883,087 (63,161)
---------------- ----------- --------------
$ 12,228,758 $12,276,377 $(47,619)
--------------
--------------
</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
29
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
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 0.8%
undivided interest in the joint account. The undivided interest for the Fund
represents $3,972,000 in principal amount. As of such date, each repurchase
agreement in the joint account and the collateral therefore were as follows:
ABN AMRO, Inc., 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, 6.55%, 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.
UBS Warburg, 6.30%, in the principal amount of $58,110,000, repurchase
price $58,140,507, due 7/3/00. The value of the collateral including accrued
interest was $59,275,285.
Note 6. Capital
The Fund 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 4%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Class C shares are sold with a front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Class B shares automatically convert to Class A shares on a quarterly
basis approximately seven years after purchase. A special exchange privilege is
also available for shareholders who 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 2 billion shares of common stock authorized, $.001 par value per
share, divided into four classes, designated Class A, B, C and Class Z, each of
which consists of 500 million, 500 million, 500 million and 500 million
authorized shares, respectively.
30
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
---------------------------------------------------------- ---------- ------------
<S> <C> <C>
Period ended June 30, 2000:
Shares sold 940,850 $ 11,573,351
Shares issued in reinvestment of dividends 130,855 1,599,029
Shares reacquired (1,760,353) (21,553,698)
---------- ------------
Net decrease in shares outstanding before conversion (688,648) (8,381,318)
Shares issued upon conversion from Class B 199,234 2,436,330
---------- ------------
Net decrease in shares outstanding (489,414) $ (5,944,988)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 2,119,919 $ 27,017,033
Shares issued in reinvestment of dividends 260,271 3,299,392
Shares reacquired (2,068,769) (26,249,289)
---------- ------------
Net increase in shares outstanding before conversion 311,421 4,067,136
Shares issued upon conversion from Class B 289,783 3,651,848
---------- ------------
Net increase in shares outstanding 601,204 $ 7,718,984
---------- ------------
---------- ------------
<CAPTION>
Class B
----------------------------------------------------------
<S> <C> <C>
Period ended June 30, 2000:
Shares sold 1,109,184 $ 13,588,994
Shares issued in reinvestment of dividends 319,139 3,900,219
Shares reacquired (2,328,383) (28,539,648)
---------- ------------
Net decrease in shares outstanding before conversion (900,060) (11,050,435)
Shares reacquired upon conversion into Class A (199,234) (2,436,330)
---------- ------------
Net decrease in shares outstanding (1,099,294) $(13,486,765)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 3,456,631 $ 44,310,059
Shares issued in reinvestment of dividends 689,639 8,755,340
Shares reacquired (4,140,053) (52,609,385)
---------- ------------
Net increase in shares outstanding before conversion 6,217 456,014
Shares reacquired upon conversion into Class A (289,783) (3,651,848)
---------- ------------
Net decrease in shares outstanding (283,566) $ (3,195,834)
---------- ------------
---------- ------------
<CAPTION>
Class C
----------------------------------------------------------
<S> <C> <C>
Period ended June 30, 2000:
Shares sold 155,996 $ 1,960,980
Shares issued in reinvestment of dividends 16,646 203,433
Shares reacquired (212,076) (2,647,331)
---------- ------------
Net decrease in shares outstanding (39,434) $ (482,918)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 390,480 $ 5,023,340
Shares issued in reinvestment of dividends 36,684 465,063
Shares reacquired (378,966) (4,818,053)
---------- ------------
Net increase in shares outstanding 48,198 $ 670,350
---------- ------------
---------- ------------
</TABLE>
31
<PAGE>
Prudential Total Return Bond Fund, Inc.
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z Shares Amount
---------------------------------------------------------- ---------- ------------
Period ended June 30, 2000:
<S> <C> <C>
Shares sold 452,846 $ 5,617,061
Shares issued in reinvestment of dividends 129,876 1,585,871
Shares reacquired (791,766) (9,767,356)
---------- ------------
Net decrease in shares outstanding (209,044) $ (2,564,424)
---------- ------------
---------- ------------
Year ended December 31, 1999:
Shares sold 1,158,621 $ 14,839,239
Shares issued in reinvestment of dividends 271,352 3,443,256
Shares reacquired (1,360,238) (17,390,076)
---------- ------------
Net increase in shares outstanding 69,735 $ 892,419
---------- ------------
---------- ------------
</TABLE>
32
<PAGE>
Prudential Total Return Bond Fund, Inc.
Financial
Highlights
<PAGE>
Prudential Total Return Bond Fund, Inc.
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
June 30, 2000
----------------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.35
----------------
Income from investment operations
Net investment income 0.40
Net realized and unrealized gain (loss) on investment
transactions (0.14)
----------------
Total from investment operations 0.26
----------------
Less distributions
Dividends from net investment income (0.40)
Distributions in excess of net investment income --
Distributions from net realized gains --
----------------
Total distributions (0.40)
----------------
Net asset value, end of period $ 12.21
----------------
----------------
TOTAL RETURN(d) 2.17%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 55,975
Average net assets (000) $ 59,478
Ratios to average net assets(b):
Expenses, including distribution fees 1.20%(c)
Expenses, excluding distribution fees .95%(c)
Net investment income 6.96%(c)
For Class A, B, C and Z shares:
Portfolio turnover rate 81%
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Net of expense subsidy and/or fee waiver.
(c) Annualized.
(d) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(e) Less than $.005 per share.
34 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A January 10, 1995(a)
-------------------------------------------------------------------------------
Year Ended December 31, through
-------------------------------------------------------------------------------
1999 1998 1997 1996 December 31, 1995
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 13.23 $ 13.41 $ 13.57 $ 13.79 $ 12.50
---------------- ---------------- ---------------- ---------------- --------------------
.83(b) .85(b) .98(b) .93(b) .90(b)
(.86) (.18) .07 (.19) 1.51
---------------- ---------------- ---------------- ---------------- --------------------
(.03) .67 1.05 .74 2.41
---------------- ---------------- ---------------- ---------------- --------------------
(.82) (.85) (.98) (.93) (.90)
(.03) --(e) (.02) -- --
-- -- (.21) (.03) (.22)
---------------- ---------------- ---------------- ---------------- --------------------
(.85) (.85) (1.21) (.96) (1.12)
---------------- ---------------- ---------------- ---------------- --------------------
$ 12.35 $ 13.23 $ 13.41 $ 13.57 $ 13.79
---------------- ---------------- ---------------- ---------------- --------------------
---------------- ---------------- ---------------- ---------------- --------------------
(.23)% 5.14% 7.96% 5.80% 19.80%
$ 62,660 $ 59,186 $ 41,051 $ 30,657 $ 14,276
$ 61,661 $ 51,915 $ 34,994 $ 21,867 $ 7,428
1.00% .90% .82% .79% .87%(c)
.75% .75% .67% .64% .72%(c)
6.41% 6.36% 7.14% 7.08% 6.92%(c)
236% 304% 334% 362% 260%
</TABLE>
See Notes to Financial Statements 35
<PAGE>
Prudential Total Return Bond Fund, Inc.
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 $ 12.35
----------------
Income from investment operations
Net investment income 0.37
Net realized and unrealized gain (loss) on investment
transactions (0.14)
----------------
Total from investment operations 0.23
----------------
Less distributions
Dividends from net investment income (0.37)
Distributions in excess of net investment income --
Distributions from net realized gains --
----------------
Total distributions (0.37)
----------------
Net asset value, end of period $ 12.21
----------------
----------------
TOTAL RETURN(d) 1.92%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $155,339
Average net assets (000) $161,141
Ratios to average net assets(b):
Expenses, including distribution fees 1.70%(c)
Expenses, excluding distribution fees 0.95%(c)
Net investment income 6.40%(c)
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Net of expense subsidy and/or fee waiver.
(c) Annualized.
(d) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(e) Less than $.005 per share.
36 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B January 10, 1995(a)
-------------------------------------------------------------------------------
Year Ended December 31, through
-------------------------------------------------------------------------------
1999 1998 1997 1996 December 31, 1995
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 13.23 $ 13.41 $ 13.58 $ 13.79 $ 12.50
---------------- ---------------- ---------------- ---------------- --------------------
.77(b) .77(b) .89(b) .85(b) .82(b)
(.86) (.18) .06 (.18) 1.51
---------------- ---------------- ---------------- ---------------- --------------------
(.09) .59 .95 .67 2.33
---------------- ---------------- ---------------- ---------------- --------------------
(.76) (.77) (.89) (.85) (.82)
(.03) --(e) (.02) -- --
-- -- (.21) (.03) (.22)
---------------- ---------------- ---------------- ---------------- --------------------
(.79) (.77) (1.21) (.88) (1.04)
---------------- ---------------- ---------------- ---------------- --------------------
$ 12.35 $ 13.23 $ 13.41 $ 13.58 $ 13.79
---------------- ---------------- ---------------- ---------------- --------------------
---------------- ---------------- ---------------- ---------------- --------------------
(.72)% 4.51% 7.24% 5.19% 19.11%
$170,706 $186,659 $157,501 $136,054 $ 85,472
$183,188 $172,326 $144,620 $114,560 $ 43,574
1.50% 1.50% 1.42% 1.39% 1.47%(c)
.75% .75% .67% .64% .72%(c)
5.91% 5.76% 6.54% 6.48% 6.32%(c)
</TABLE>
See Notes to Financial Statements 37
<PAGE>
Prudential Total Return Bond Fund, Inc.
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 $12.35
----------------
Income from investment operations
Net investment income 0.37
Net realized and unrealized gain (loss) on investment
transactions (0.14)
----------------
Total from investment operations 0.23
----------------
Less distributions
Dividends from net investment income (0.37)
Distributions in excess of net investment income --
Distributions from net realized gains --
----------------
Total distributions (0.37)
----------------
Net asset value, end of period $12.21
----------------
----------------
TOTAL RETURN(d) 1.92%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $8,670
Average net assets (000) $8,680
Ratios to average net assets(b):
Expenses, including distribution fees 1.70%(c)
Expenses, excluding distribution fees 0.95%(c)
Net investment income 6.40%(c)
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Net of expense subsidy and fee waiver.
(c) Annualized.
(d) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(e) Less than $.005 per share.
38 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C January 10, 1995(a)
-------------------------------------------------------------------------------
Year Ended December 31, through
-------------------------------------------------------------------------------
1999 1998 1997 1996 December 31, 1995
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$13.23 $13.41 $13.58 $13.79 $ 12.50
---------------- ---------------- ---------------- ---------------- --------------------
.77(b) .77(b) .89(b) .85(b) .82(b)
(.86) (.18) .06 (.18) 1.51
---------------- ---------------- ---------------- ---------------- --------------------
(.09) .59 .95 .67 2.33
---------------- ---------------- ---------------- ---------------- --------------------
(.76) (.77) (.89) (.85) (.82)
(.03) --(e) (.02) -- --
-- -- (.21) (.03) (.22)
---------------- ---------------- ---------------- ---------------- --------------------
(.79) (.77) (1.12) (.88) (1.04)
---------------- ---------------- ---------------- ---------------- --------------------
$12.35 $13.23 $13.41 $13.58 $ 13.79
---------------- ---------------- ---------------- ---------------- --------------------
---------------- ---------------- ---------------- ---------------- --------------------
(.72)% 4.51% 7.24% 5.19% 19.11%
$9,257 $9,282 $6,005 $4,143 $ 2,655
$9,696 $7,390 $4,747 $3,534 $ 1,307
1.50% 1.50% 1.42% 1.39% 1.47%(c)
.75% .75% .67% .64% .72%(c)
5.91% 5.76% 6.54% 6.48% 6.32%(c)
</TABLE>
See Notes to Financial Statements 39
<PAGE>
Prudential Total Return Bond Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
----------------
Six Months Ended
June 30, 2000
----------------------------------------------------------------------------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 12.34
----------------
Income from investment operations
Net investment income 0.42
Net realized and unrealized gain (loss) on investment
transactions (0.14)
----------------
Total from investment operations 0.28
----------------
Less distributions
Dividends from net investment income (0.42)
Distributions in excess of net investment income --
Distributions from net realized gains --
----------------
Total distributions (0.42)
----------------
Net asset value, end of period $ 12.20
----------------
----------------
TOTAL RETURN(d) 2.28%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 47,077
Average net assets (000) $ 47,906
Ratios to average net assets(b):
Expenses, including distribution fees 0.95%(c)
Expenses, excluding distribution fees 0.95%(c)
Net investment income 7.15%(c)
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Net of expense subsidy and fee waiver.
(c) Annualized.
(d) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total returns for periods of less than a
full year are not annualized.
(e) Less than $.005 per share.
40 See Notes to Financial Statements
<PAGE>
Prudential Total Return Bond Fund, Inc.
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z September 16, 1996(a)
----------------------------------------------------------------
Year Ended December 31, through
----------------------------------------------------------------
1999 1998 1997 December 31, 1996
------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 13.22 $ 13.40 $ 13.57 $ 13.20
---------------------- ---------------- ---------------- ---------------------
.86(b) .87(b) 1.00(b) .28(b)
(.86) (.18) .06 .40
---------------------- ---------------- ---------------- ---------------------
-- .69 1.06 .68
---------------------- ---------------- ---------------- ---------------------
(.85) (.87) (1.00) (.28)
(.03) --(e) (.02) --
-- -- (.21) (.03)
---------------------- ---------------- ---------------- ---------------------
(.88) (.87) (1.23) (.31)
---------------------- ---------------- ---------------- ---------------------
$ 12.34 $ 13.22 $ 13.40 $ 13.57
---------------------- ---------------- ---------------- ---------------------
---------------------- ---------------- ---------------- ---------------------
.01% 5.30% 8.05% 5.35%
$ 50,215 $ 52,879 $ 47,519 $ 608
$ 51,729 $ 48,988 $ 36,750 $ 125
.75% .75% .67% .64%(c)
.75% .75% .67% .64%(c)
6.67% 6.51% 7.29% 7.23%(c)
</TABLE>
See Notes to Financial Statements 41
<PAGE>
PrudentialTotal Return Bond Fund, Inc.
Prudential Mutual Funds
Prudential offers a broad range of mutual funds designed
to meet your individual needs. For information about
these funds, contact your financial adviser or call us at
(800) 225-1852. Read the prospectus carefully before you
invest or send money.
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Prudential Total Return Bond Fund, Inc.
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Prudential Tax-Free Money Fund, Inc.
Other Money Market Funds
COMMAND Government Fund
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COMMAND Tax-Free Fund
<PAGE>
Prudential Total Return Bond Fund, Inc.
Getting the Most from Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you
receive financial advice from a Prudential Securities
Financial Advisor or Pruco Securities registered
representative. Your advisor or representative can
provide you with the following services:
There's No Reward Without Risk; but Is This Risk Worth
It?
Your financial advisor or registered representative can
help you match the reward you seek with the risk you can
tolerate. Risk can be difficult to gauge-sometimes even
the simplest investments bear surprising risks. The
educated investor knows that markets seldom move in just
one direction. There are times when a market sector or
asset class will lose value or provide little in the way
of total return. Managing your own expectations is easier
with help from someone who understands the markets and
who knows you!
Keeping Up With the Joneses
A financial advisor or registered representative can help
you wade through the numerous available mutual funds to
find the ones that fit your individual investment profile
and risk tolerance. While the newspapers and popular
magazines are full of advice about investing, they are
aimed at generic groups of people or representative
individuals-not at you personally. Your financial advisor
or registered representative will review your investment
objectives with you. This means you can make financial
decisions based on the assets and liabilities in your
current portfolio and your risk tolerance-not just based
on the current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are among the most common investor mistakes. But
sometimes it's difficult to hold on to an investment when
it's losing value every month. Your financial advisor or
registered representative can answer questions when
you're confused or worried about your investment, and
should remind you that you're investing for the long
haul.
<PAGE>
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
405 Lexington Avenue
New York, NY 10174
Fund Symbols NASDAQ CUSIP
Class A PDBAX 74438M108
Class B PRDBX 74438M207
Class C PDBCX 74438M306
Class Z PDBZX 74438M405
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
MF166E2 74438M108 74438M207 74438M306 74438M405
(LOGO) Printed on Recycled Paper
