As filed with the Securities and Exchange Commission on August 9, 1996
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [_]
POST-EFFECTIVE AMENDMENT NO. 3 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 6 [X]
(Check appropriate box or boxes)
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PRUDENTIAL DIVERSIFIED BOND FUND, INC.
(Exact name of registrant as specified in charter)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 214-1250
S. JANE ROSE, ESQ.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
(NAME AND ADDRESS OF AGENT FOR SERVICE)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
DATE OF THE REGISTRATION STATEMENT.
[_] immediately upon filing pursuant to paragraph (b)
[X] on (September 3, 1996) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[_] This post-effective amendment designates a new
effective datefor previously filed post-effective
amendment.
PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, REGISTRANT HAS PREVIOUSLY REGISTERED AN INDEFINITE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE. THE REGISTRANT HAS FILED A NOTICE UNDER SUCH RULE FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1995 WITHIN 60 DAYS OF SUCH DATE.
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
N-1A ITEM NO. LOCATION
- ------------- --------
PART A
Item 1. Cover Page............................. Cover Page
Item 2. Synopsis............................... Fund Expenses; Fund Highlights
Item 3. Condensed Financial Information........ Fund Expenses; Financial
Highlights; How the Fund
Calculates Performance
Item 4. General Description of Registrant...... Cover Page; Fund Highlights;
How the Fund Invests; General
Information
Item 5. Management of the Fund................. Financial Highlights; How the
Fund is Managed
Item 5A. Management's Discussion of Fund
Performance.................................... Not Applicable
Item 6. Capital Stock and Other Securities..... Taxes, Dividends and
Distributions; General
Information
Item 7. Purchase of Securities Being Offered... Shareholder Guide; How the
Fund Values its Shares
Item 8. Redemption or Repurchase............... Shareholder Guide; How the
Fund Values its Shares
Item 9. Pending Legal Proceedings.............. Not Applicable
PART B
Item 10. Cover Page............................. Cover Page
Item 11. Table of Contents...................... Table of Contents
Item 12. General Information and History........ General Information
Item 13. Investment Objectives and Policies..... Investment Objective and
Policies; Investment
Restrictions
Item 14. Management of the Fund................. Directors and Officers;
Manager; Distributor
Item 15. Control Persons and Principal Holders
of Securities.................................. Not Applicable
Item 16. Investment Advisory and Other Services. Manager; Distributor;
Custodian, Transfer and
Dividend Disbursing Agent and
Independent Accountants
Item 17. Brokerage Allocation and Other
Practices...................................... Portfolio Transactions and
Brokerage
Item 18. Capital Stock and Other Securities..... Not Applicable
Item 19. Purchase, Redemption and Pricing of
Securities Being Offered....................... Purchase and Redemption of
Fund Shares; Shareholder
Investment Account; Net Asset
Value
Item 20. Tax Status............................. Taxes
Item 21. Underwriters........................... Distributor
Item 22. Calculation of Performance Data........ Performance Information
Item 23. Financial Statements................... Financial Statements
PART C
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Information required to be included in Part C is set forth under the appropriate Item, so numbered, in Part C to this Post-Effective Amendment to the Registration Statement.
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
(CLASS Z SHARES)
PROSPECTUS DATED SEPTEMBER 3, 1996
Prudential Diversified Bond Fund, Inc. (the Fund) is an open-end, diversified management investment company whose investment objective is high current income consistent with an appropriate balance between risk and reward as determined by the investment adviser. The Fund seeks to achieve this objective by allocating its assets among sectors of the fixed-income securities markets, primarily U.S. Government securities, mortgage-backed securities, corporate debt securities and foreign securities (mainly government), based upon the investment adviser's evaluation of current market and economic conditions. The Fund has the flexibility to allocate its investments across different sectors of the fixed-income securities markets in order to seek to reduce some of the risks from negative market movements and interest rate changes in any one sector. The Fund is not obligated to invest in all of these sectors at a given time and, at times, may invest all of its assets in only one sector, subject to the limitations described herein. Under normal circumstances, the Fund will maintain at least 65% of its total assets in investment grade debt securities (as defined herein). The Fund may also purchase preferred stock and engage in various derivative securities transactions, including the purchase and sale of put and call options on securities and financial indices and futures transactions on securities, financial indices and currencies and the purchase and sale of foreign currency exchange contracts, to hedge its portfolio and to attempt to enhance returns. The Fund may engage in short-selling and use leverage, including reverse repurchase agreements, dollar rolls and bank borrowings, which entail additional risks to the Fund. There can be no assurance that the Fund's investment objective will be achieved. See "How the Fund Invests--Investment Objective and Policies." The Fund's address is One Seaport Plaza, New York, New York 10292, and its telephone number is (800) 225-1852.
THE FUND MAY INVEST UP TO 35% OF ITS NET ASSETS IN LOWER-RATED AND UNRATED
BONDS, COMMONLY KNOWN AS "JUNK" BONDS. INVESTMENTS OF THIS TYPE ARE SUBJECT TO
A GREATER RISK OF LOSS OF PRINCIPAL AND INTEREST, INCLUDING DEFAULT RISK, THAN
HIGHER RATED BONDS. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED
WITH AN INVESTMENT IN THIS FUND. See "How the Fund Invests--Investment
Objective and Policies--Risk Factors Relating to Investing in Debt Securities
Rated Below Investment Grade (Junk Bonds)."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
FUND EXPENSES
CLASS Z SHARES
--------------
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)............................................... None
Maximum Sales Load or Deferred Sales Load Imposed on Reinvested
Dividends..................................................... None
Deferred Sales Load (as a percentage of original purchase price
or redemption proceeds, whichever is lower)................... None
Redemption Fees................................................ None
Exchange Fee................................................... None
CLASS Z SHARES
ANNUAL FUND OPERATING EXPENSES* --------------
(as a percentage of average net assets)
Management Fees (After Reduction)**............................ .10%
12b-1 Fees..................................................... None
Other Expenses................................................. .62%
---
Total Fund Operating Expenses** (After Reduction).............. .72%
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
EXAMPLE ------ ------- ------- --------
You would pay the following expenses on a
$1,000 investment, assuming (1) 5% annual
return and (2) redemption at the end of
each time period:........................ $ 7 $23 $40 $89
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The above example is based on expenses expected to have been incurred if Class Z shares had been in existence throughout the fiscal year ended December 31, 1995. The example should not be considered a representation of past or future expenses. Actual expenses may be greater or less than those shown.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO BUY SHARES OF THE FUND" AND "SHAREHOLDER GUIDE--HOW TO SELL YOUR SHARES" IN THE RETAIL CLASS PROSPECTUS:
Class Z shares of the Fund are available for purchase by the following categories of investors: (i) pension profit sharing or other employee benefit plans qualified under Section 401 of the Internal Revenue Code, deferred compensation and annuity plans under Sections 457 and 403(b)(7) of the Internal Revenue Code, and non-qualified plans for which the Fund is an available option (Benefit Plans), provided such plans (in combination with other plans sponsored by the same employer or group of related employers) have at least $50 million in defined contribution assets; (ii) participants (other than Benefit Plans and individual retirement accounts) in any fee based program sponsored by Prudential Securities or its affiliates which includes mutual funds as investment options and for which the Fund is an available option; and (iii) investors who are, or have executed a letter of intent to become, stockholders of any series of The Prudential Institutional Fund (Institutional Fund) on or before one or more series of the Institutional Fund reorganize or who on that date have investments in certain products for which Institutional Fund provides exchangeability. After a Benefit Plan qualifies to purchase Class Z shares, all subsequent purchases will be for Class Z shares.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO EXCHANGE
YOUR SHARES" IN THE RETAIL CLASS PROSPECTUS:
Class Z shareholders of the Fund may exchange their Class Z for Class Z shares of other Prudential Mutual Funds on the basis of relative net asset value. Shareholders who qualify to purchase Class Z shares (other than participants in any fee-based program) will have their Class B and Class C shares which are not subject to contingent deferred sales charges and their Class A shares exchanged for Class Z shares on a quarterly basis. Participants (other than Benefit Plans and individual retirement accounts) in any fee-based program for which the Fund is an available option will have their Class A shares, if any, exchanged for Class Z shares when they elect to have those assets become a part of the fee-based program. Upon leaving the program (whether voluntarily or not), such Class Z shares (and, to the extent provided for in the program, Class Z shares acquired through participation in the program) will be exchanged for Class A shares at net asset value. See "Shareholder Guide--How to Exchange Your Shares--Special Exchange Privilege."
THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND IS MANAGED--DISTRIBUTOR"
IN THE RETAIL CLASS PROSPECTUS:
Prudential Securities serves as the Distributor of Class Z shares and incurs the expenses of distributing the Fund's Class Z shares under a Distribution Agreement with the Fund, none of which are reimbursed by or paid for by the Fund.
THE FOLLOWING INFORMATION SUPPLEMENTS "HOW THE FUND VALUES ITS SHARES" IN THE
RETAIL CLASS PROSPECTUS:
The NAV of Class Z shares will generally be higher than the NAV of Class A, Class B or Class C shares as a result of the fact that Class Z shares are not subject to any distribution and/or service fee. It is expected, however, that the NAV of the four classes will tend to converge immediately after the recording of dividends, which will differ by approximately the amount of the distribution-related expense accrual differential among the classes.
THE FOLLOWING INFORMATION SUPPLEMENTS "TAXES, DIVIDENDS AND DISTRIBUTIONS" IN
THE RETAIL CLASS PROSPECTUS:
The Fund has obtained opinions of counsel to the effect that neither (i) the conversion of Class B shares into Class A shares nor (ii) the exchange of any class of the Fund's shares for any other class of its shares constitutes a taxable event for federal income tax purposes. However, such opinions are not binding on the Internal Revenue Service.
THE INFORMATION ABOVE ALSO SUPPLEMENTS THE INFORMATION UNDER "FUND
HIGHLIGHTS" IN THE RETAIL CLASS PROSPECTUS AS APPROPRIATE.
TABLE OF CONTENTS
PAGE
----
FUND HIGHLIGHTS........................................................... 2
Risk Factors and Special Characteristics................................. 2
FUND EXPENSES............................................................. 4
FINANCIAL HIGHLIGHTS...................................................... 5
HOW THE FUND INVESTS...................................................... 6
Investment Objective and Policies........................................ 6
Risk Factors and Special Considerations of Investing in Foreign
Securities.............................................................. 11
Risk Factors Relating to Investing in Debt Securities Rated Below
Investment Grade (Junk Bonds)........................................... 12
Hedging and Return Enhancement Strategies................................ 13
Other Investments and Policies........................................... 16
Investment Restrictions.................................................. 20
HOW THE FUND IS MANAGED................................................... 20
Manager.................................................................. 20
Distributor.............................................................. 21
Fee Waivers and Subsidy.................................................. 23
Portfolio Transactions................................................... 23
Custodian and Transfer and Dividend Disbursing Agent..................... 23
HOW THE FUND VALUES ITS SHARES............................................ 23
HOW THE FUND CALCULATES PERFORMANCE....................................... 24
TAXES, DIVIDENDS AND DISTRIBUTIONS........................................ 24
GENERAL INFORMATION....................................................... 26
Description of Common Stock.............................................. 26
Additional Information................................................... 27
SHAREHOLDER GUIDE......................................................... 27
How to Buy Shares of the Fund............................................ 27
Alternative Purchase Plan................................................ 28
How to Sell Your Shares.................................................. 30
Conversion Feature--Class B Shares....................................... 33
How to Exchange Your Shares.............................................. 34
Shareholder Services..................................................... 35
APPENDIX.................................................................. A-1
Description of Security Ratings.......................................... A-1
THE PRUDENTIAL MUTUAL FUND FAMILY........................................ B-1
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CUSIP No.: Class Z: 74431J-40-9
PRUDENTIAL
DIVERSIFIED BOND
FUND, INC.
(CLASS Z SHARES)
PROSPECTUS
September 3, 1996
[LOGO OF PRUDENTIAL MUTUAL FUNDS]
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
Supplement dated September 3, 1996 to Prospectus dated April 26, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS "FINANCIAL HIGHLIGHTS" IN THE PROSPECTUS:
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED)
(CLASS A, CLASS B AND CLASS C SHARES)
The following financial highlights for Class A, Class B and Class C shares are unaudited. This information should be read in conjunction with the financial statements and the notes thereto, which appear in the Statement of Additional Information. The following financial highlights contain selected data for a Class A, Class B and Class C share of common stock, respectively, outstanding, total return, ratios to average net assets and other supplemental data for the period indicated. The information has been determined based on data contained in the financial statements. No Class Z shares were outstanding during the period.
SIX MONTHS ENDED JUNE
30, 1996
----------------------------
CLASS A CLASS B CLASS C
------- -------- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........... $ 13.79 $ 13.79 $13.79
------- -------- ------
INCOME FROM INVESTMENT OPTIONS
Net investment income(a)....................... .46 .42 .42
Net realized and unrealized gain on investment
transactions.................................. (.66) (.66) (.66)
------- -------- ------
Total from investment operations.............. (.20) (.24) (.24)
------- -------- ------
LESS DISTRIBUTIONS
Dividends from net investment income........... (.46) (.42) (.42)
------- -------- ------
Net asset value, end of period................. $ 13.13 $ 13.13 $13.13
======= ======== ======
TOTAL RETURN (C)............................... (1.60)% (1.80)% (1.80)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................ $21,239 $116,245 $3,523
Average net assets (000)....................... $17,317 $100,917 $3,134
Ratios to average net assets(a)/(b):
Expenses, including distribution fees......... .75 % 1.35 % 1.35 %
Expenses, excluding distribution fees......... .60 % .60 % .60 %
Net investment income......................... 6.98 % 6.38 % 6.38 %
Portfolio turnover rate........................ 149 % 149 % 149 %
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THE FOLLOWING INFORMATION SUPPLEMENTS "GENERAL INFORMATION--DESCRIPTION OF COMMON STOCK" IN THE PROSPECTUS:
THE FUND IS AUTHORIZED TO ISSUE 2 BILLION SHARES OF COMMON STOCK, $.001 PAR
VALUE PER SHARE, DIVIDED INTO FOUR CLASSES, DESIGNATED CLASS A, CLASS B, CLASS C AND CLASS Z COMMON STOCK, EACH CONSISTING OF 500 MILLION AUTHORIZED SHARES. Each class represents an interest in the same assets of the Fund and is identical in all respects except that (i) each class is subject to different sales charges and distribution and/or service fees (except for Class Z shares which are not subject to any sales charges and distribution and/or service fees), which may affect performance, (ii) each class has exclusive voting rights on any matter submitted to shareholders that relates solely to its distribution arrangements and has separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, (iii) each class has a different exchange privilege, (iv) only Class B shares have a conversion feature and (v) Class Z shares are offered exclusively for sale to a limited group of investors. For more information about Class Z shares, contact your Prudential Securities financial adviser or Prusec representative or telephone the Fund at (800) 225- 1852. Participants in programs sponsored by Prudential Retirement Services should contact their client representative for more information about Class Z shares. Since Class B and Class C shares generally bear higher distribution expenses thant Class A shares, the liquidation proceeds to shareholders of those classes are likely to be lower that to Class A shareholders and to Class Z shareholders whose shares are not subject to any distribution and/or service fee. In accordance with the Fund's Articles of Incorporation, the Board of Directors may authorized the creation of additional series and classes within such series, with such preferences, privileges, limitations and voting and dividend rights as the Board of Directors may determine.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER GUIDE--HOW TO BUY SHARES OF THE FUND" IN THE PROSPECTUS:
REDUCTION AND WAIVER OF INITIAL SALES CHARGES. Reduced sales charges are available through Rights of Accumulation and Letters of Intent. Shares of the Fund and shares of other Prudential Mutual Funds (excluding money market funds other than those acquired pursuant to the exchange privilege) may be aggregated to determine the applicable reduction. See "Purchase and Redemption of Fund Shares--Reduction and Waiver of Initial Sales Charges--Class A Shares" in the Statement of Additional Information.
BENEFIT PLANS. Class A shares may be purchased at NAV, without payment of an initial sales charge, by pension, profit sharing or other employee benefit plans qualified under Section 401 of the Internal Revenue Code and deferred compensation and annuity plans under Sections 457 and 403(b)(7) of the Internal Revenue Code (Benefit Plans), provided that the plan has existing assets of at least $1 million invested in shares of Prudential Mutual Funds (excluding money market funds other than those acquired pursuant to the exchange privilege) or 250 eligible employees or participants. In the case of Benefit Plans whose accounts are held directly with the Transfer Agent or Prudential Securities and for which the Transfer Agent or Prudential Securities does individual account record keeping (Direct Account Benefit Plans) and Benefit Plans sponsored by PSI or its subsidiaries (PSI or Subsidiary Prototype Benefit Plans), Class A shares may be purchased at NAV by participants who are repaying loans made from such plans to the participant.
PRUARRAY AND SMARTPATH PLANS. Class A shares may be purchased at NAV by certain savings, retirement and deferred compensation plans, qualified or non- qualified under the Internal Revenue Code, including pension, profit-sharing, stock-bonus or other employee benefit plans under Section 401 of the Internal Revenue Code and deferred compensation and annuity plans under Sections 457 and 403(b)(7) of the Code that participate in Prudential's PruArray or SmartPath Programs (benefit plan record keeping services) (hereafter referred to as a PruArray or SmartPath Plan); provided that the plan has at least $1 million in existing assets or 250 eligible employees or participants. The term "existing assets" for this purpose includes stock issued by a PruArray or SmartPath Plan sponsor and shares of non-money market Prudential Mutual Funds and shares of certain unaffiliated non-money market mutual funds that participate in the PruArray or SmartPath Program (Participating Funds). "Existing assets" also include shares of money market funds acquired by exchange from a Participating Fund.
SPECIAL RULES APPLICABLE TO RETIREMENT PLANS. After a Benefit Plan or PruArray or SmartPath Plan qualifies to purchase Class A shares at NAV, all subsequent purchases will be made at NAV.
OTHER WAIVERS. In addition, Class A shares may be purchased at NAV, through Prudential Securities or the Transfer Agent, by the following persons: (a) officers and current and former Directors/Trustees of the Prudential Mutual Funds (including the Fund), (b) employees of Prudential Securities and PMF and their subsidiaries and members of the families of such persons who maintain an "employee related" account at Prudential Securities or the Transfer Agent, (c) employees and special agents of Prudential and its subsidiaries and all persons who have retired directly from active service with Prudential or one of its subsidiaries, (d) registered representatives and employees of dealers who have entered into a selected dealer agreement with Prudential Securities provided that purchases at NAV are permitted by such person's employer and (e) investors who have a business relationship with a financial adviser who joined Prudential Securities from another investment firm, provided that (i) the purchase is made within 180 days of the commencement of the financial adviser's employment at Prudential Securities, or within one year in the case of Benefit Plans, (ii) the purchase is made with proceeds of a redemption of shares of any open-end fund sponsored by the financial adviser's previous employer (other than a money market fund or other no-load fund which imposes a distribution or service fee of .25 of 1% or less) and (iii) the financial adviser served as the client's broker on the previous purchases.
You must notify the Fund's Transfer Agent either directly or through Prudential Securities or Prusec that you are entitled to the reduction or waiver of the sales charge. The reduction or waiver will be granted subject to confirmation of your entitlement. No initial sales charges are imposed upon Class A shares acquired upon the reinvestment of dividends and distributions. See "Purchase and Redemption of Fund Shares--Reduction and Waiver of Initial Sales Charges--Class A Shares" in the Statement of Additional Information.
MF166C-2
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
Supplement dated September 3, 1996 to
Statement of Additional Information dated
April 26, 1996
THE FOLLOWING INFORMATION SUPPLEMENTS "DISTRIBUTOR" IN THE STATEMENT OF ADDITIONAL INFORMATION:
Prudential Securities serves as the Distributor of Class Z shares and incurs the expenses of distributing the Fund's Class Z shares under a Distribution Agreement with the Fund, none of which are reimbursed by or paid for by the Fund.
THE FOLLOWING INFORMATION SUPPLEMENTS "PURCHASE AND REDEMPTION OF FUND SHARES" IN THE STATEMENT OF ADDITIONAL INFORMATION:
Shares of the Fund may be purchased at a price equal to the next determined net asset value per share plus a sales charge which, at the election of the investor, may be imposed either (i) at the time of purchase (Class A shares) or (ii) on a deferred basis (Class B or Class C shares). Class Z shares of the Fund are offered to a limited group of investors at net asset value without any sales charges. See "Shareholder Guide--How to Buy Shares of the Fund" in the Prospectus.
Each class represents an interest in the same assets of the Fund and is identical in all respects except that (i) each class (with the exception of Class Z shares) is subject to different sales charges and distribution and/or service expenses, which may affect performance, (ii) each class has exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangement and has separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class, (iii) each class has a different exchange privilege, (iv) only Class B shares have a conversion feature and (v) Class Z shares are offered exclusively for sale to a limited group of investors. See "Distributor" and "Shareholder Investment Account--Exchange Privilege."
SPECIMEN PRICE MAKE-UP SHEET
Under the current distribution arrangements between the Fund and the Distributor. Class A shares are sold with a maximum sales charge of 4% and Class B*, Class C* and Class Z** shares are sold at net asset value. Using the Fund's net asset value at June 30, 1996, the maximum offering price of the Fund's shares is as follows:
CLASS A
Net asset value and redemption price per Class A share.................. $13.13
Maximum sales charge (4% of offering price)............................. .55
------
Offering price to public................................................ $13.68
======
CLASS B
Net asset value, offering price and redemption price per Class B share*. $13.13
======
CLASS C
Net asset value, offering price and redemption price per Class C share*. $13.13
======
CLASS Z
Net asset value, offering price and redemption price per Class Z
share**................................................................ $13.13
======
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* Class B and Class C shares are subject to a contingent deferred sales charge on certain redemptions. See "Shareholder Guide--How to Sell Your Shares--Contingent Deferred Sales Charges" in the Prospectus.
** Class Z shares did not exist at June 30, 1996.
THE FOLLOWING INFORMATION SUPPLEMENTS "SHAREHOLDER INVESTMENT ACCOUNT-- EXCHANGE PRIVILEGE" IN THE STATEMENT OF ADDITIONAL INFORMATION:
CLASS Z. Class Z shares may be exchanged for Class Z shares of other Prudential Mutual Funds.
THE FOLLOWING INFORMATION SUPPLEMENTS "PERFORMANCE INFORMATION" IN THE STATEMENT OF ADDITIONAL INFORMATION:
YIELD. The yield for the 30-day period ended June 30, 1996 for the Fund's Class A, Class B and Class C shares was 6.57%, 6.25% and 6.25%, respectively. Class Z shares did not exist at June 30, 1996.
AVERAGE ANNUAL TOTAL RETURN. The average annual total return for the period from January 10, 1995 (commencement of operations) to June 30, 1996 and for the one year period ended June 30, 1996 for the Fund's Class A shares was 8.8% and 1.7%, respectively; Class B shares was 8.6% and .4%, respectively; and Class C shares was 11.2% and 4.4%, respectively. Class Z shares did not exist at June 30, 1996.
AGGREGATE TOTAL RETURN. The aggregate total return for the period from January 10, 1995 (commencement of operations) to June 30, 1996 and for the one year period ended June 30, 1996 for the Fund's Class A shares was 17.9% and 6.0%, respectively; Class B shares was 17.0% and 5.4%, respectively; and Class C shares was 17.0% and 5.4%, respectively. Class Z shares did not exist at June 30, 1996.
THE FOLLOWING INFORMATION SUPPLEMENTS "DIRECTORS AND OFFICERS" IN THE STATEMENT OF ADDITIONAL INFORMATION:
As of July 19, 1996, the directors and officers of the Fund, as a group, owned less than 1% of the outstanding common stock of the Fund.
As of July 19, 1996, the only beneficial owners, directly or indirectly of more than 5% of any class of shares of the outstanding common stock of the Fund were: Prudential Securities Inc., FA Nicanor G Pasion-Deceased, P.O. Box 180, Wall Street, New York, New York owned 648,580 Class A shares (approximately 37% of the outstanding Class A shares) and Prudential Securities Inc., FA Sandra M. DunWoody, 1209 S Heincke Rd, Miamisburg, Ohio owned 181,928 Class C shares (approximately 64% of the outstanding Class C shares).
As of July 19, 1996, Prudential Securities was the record holder for other beneficial owners of 936,896 Class A shares (or approximately 53% of the outstanding Class A shares), 4,556,659 Class B shares (or approximately 50% of the outstanding Class B shares) and 190,875 Class C shares (or approximately 68% of the outstanding Class C shares) of the Fund. In the event of any meetings of shareholders, Prudential Securities will forward, or cause the forwarding of, proxy materials to the beneficial owners for which it is the record holder.
The following financial statements are unaudited and are based upon the results of operations for the interim period ended June 30, 1996. Included therein are all adjustments, if any, which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented.
Portfolio of Investments as of PRUDENTIAL DIVERSIFIED
June 30, 1996 (Unaudited) BOND FUND, INC.
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
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Baa3 $ 2,000 Advanta National Bank,
Cert. of Deposit,
6.26%, 9/1/97
(Banking) $ 1,997,000
Ba3 2,000 Agco Corp.,
Sr. Sub. Notes,
8.50%, 3/15/06
(Agricultural Equipment) 1,960,000
Ba3 1,000 American Standard, Inc.,
Sr. Deb.,
11.375%, 5/15/04
(Consumer Goods & Services) 1,080,000
A3 2,500 Auburn Hills Trust,
Gtd. Cert.,
12.00%, 5/1/20
(Automotive) 3,611,000
B1 2,000 Bally's Grand, Inc.,
10.375%, 12/15/03
(Casinos) 2,195,000
NR 2,400 BankAmerica Corp.,
Sub. Notes, F.R.N.,
5.9844% (a), 5/17/99
(Banking) 2,419,680
Ba2 2,000 BJ Services Co.,
Sr. Notes,
7.00%, 2/1/06 1,846,720
(Oil & Gas Equipment &
Services)
B2 1,000 Cablevision Systems Corp.,
Sr. Sub. Notes,
9.25%, 11/1/05 930,000
(Cable & Pay Television
Systems)
B2 1,000 Centennial Cellular Corp.,
Sr. Notes,
10.125%, 5/15/05
(Telecommunications) 960,000
Baa3 2,500 Columbia Gas Systems, Inc.,
7.62%, 11/28/25
(Oil & Gas) 2,350,425
Baa3 $ 1,000 Delta Air Lines, Inc.,
Sr. Notes,
9.875%, 5/15/00
(Transportation) $ 1,092,590
Digital Equipment Corp.,
Ba1 1,000 7.125%, 10/15/02 970,100
Ba1 4,000 7.75%, 4/1/23
(Computers) 3,616,320
Ba3 1,500 El Paso Electric Co.,
9.40%, 5/1/11
(Utilities) 1,485,000
Enterprise Rent-A-Car U.S.A.
Finance Co.,
Baa3 1,000 7.875%, 3/15/98 1,024,660
Baa3 2,500 7.00%, 6/15/00
(Financial Services) 2,497,656
Federated Dept. Stores, Inc.,
Sr. Notes,
Ba1 2,000 10.00%, 2/15/01 2,105,000
Ba1 1,000 8.125%, 10/15/02 980,000
Ba1 3,000 8.50%, 6/15/03
(Retail) 2,970,000
A2 2,500 First Union Corp.,
8.00%, 11/15/02
(Banking) 2,612,525
A3 500 General Motors Acceptance
Corp.,
8.625%, 6/15/99
(Financial Services) 525,480
Baa1 3,000 Lumbermens Mutual Casualty
Co., Sub. Notes,
9.15%, 7/1/26
(Insurance) 3,103,125
B1 3,000 MFS Communications, Inc.,
Zero Coupon, 1/15/06
(Telecommunications) 1,815,000
A2 2,500 NationsBank Corp.,
Sr. Notes,
7.00%, 5/15/03
(Banking) 2,486,175
|
Portfolio of Investments as of PRUDENTIAL DIVERSIFIED
June 30, 1996 (Unaudited) BOND FUND, INC.
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
- -------------------------------------------------------------------
Domestic Corporate Bonds (cont'd.)
A1 $ 1,000 Nationwide Life Insurance
Co.,
9.875%, 2/15/25
(Insurance) $ 1,088,000
News America Hldgs., Inc.,
Sr. Notes,
Baa3 1,000 9.125%, 10/15/99 1,064,310
Baa3 4,000 7.75%, 12/1/45
(Media) 3,579,040
Ba2 1,500 Noble Drilling Corp.,
Sr. Notes,
9.125%, 7/1/06 1,503,750
(Oil & Gas Equipment &
Services)
Baa3 3,000 NorAm Energy Corp.,
7.50%, 8/1/00
(Oil & Gas) 3,040,440
Occidental Petroleum Corp.,
Baa3 1,000 10.125%, 11/15/01 1,136,440
Baa3 1,000 11.125%, 8/1/10
(Oil & Gas) 1,282,980
Paramount Communications,
Inc., Sr. Notes,
Ba2 1,857 5.875%, 7/15/00 1,766,156
Ba2 500 7.50%, 1/15/02
(Media) 493,220
Ba2 1,250 Parker & Parsley Petroleum
Co.,
8.25%, 8/15/07
(Oil & Gas) 1,303,600
Ba2 1,000 RHG Finance Corp.,
Gtd. Notes,
8.875%, 10/1/05
(Financial Services) 1,032,500
Baa2 1,000 RJR Nabisco, Inc.,
6.70%, 6/15/02
(Consumer Goods & Services) 975,410
Ba2 1,000 Royal Caribbean Cruises Ltd.,
Sr. Sub. Notes,
11.375%, 5/15/02
(Entertainment) 1,075,000
Ba1 1,000 Ryerson Tull, Inc.,
8.50%, 7/15/01
(Metals Processing) 1,001,250
Salomon Inc.,
Sr. Notes,
Baa1 $ 2,000 5.98%, 2/2/98 $ 1,978,080
Baa1 3,800 7.00%, 5/15/99 3,801,938
Baa1 500 7.25%, 5/1/01
(Financial Services) 498,760
A2 1,000 Sears Roebuck Acceptance
Corp.,
6.34%, 10/12/00
(Financial Services) 981,710
Tenet Healthcare Corp.,
Sr. Notes,
Ba1 2,000 9.625%, 9/1/02 2,125,000
Ba1 3,500 8.625%, 12/1/03
(Health Care) 3,548,125
Baa3 1,000 Time Warner Entertainment,
Co., L.P., Sr. Deb.,
8.375%, 3/15/23
(Entertainment) 973,620
Time Warner, Inc.,
Ba1 2,500 7.75%, 6/15/05 2,440,550
Ba1 2,000 6.85%, 1/15/26
(Media) 1,915,740
Transco Energy Co.,
Baa2 500 9.125%, 5/1/98 519,595
Baa2 500 9.375%, 8/15/01
(Oil & Gas) 549,495
B2 295 UCAR Global Enterprises,
Inc.,
Sr. Sub. Notes,
12.00%, 1/15/05
(Steel) 334,825
Baa3 1,000 USX Corp.,
9.80%, 7/1/01
(Steel) 1,097,200
Ba2 3,000 Viacom Inc.,
Sr. Notes,
7.75%, 6/1/05
(Media) 2,925,060
Baa1 2,000 Weatherford Enterra, Inc., 1,970,000
7.25%, 5/15/06 -----------
(Oil & Gas Equipment &
Services)
Total Domestic Corporate
Bonds
(cost $93,162,942) 92,635,250
|
Portfolio of Investments as of PRUDENTIAL DIVERSIFIED
June 30, 1996 (Unaudited) BOND FUND, INC.
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
- -------------------------------------------------------------------
Foreign Government Securities--10.9%
A2 $ 2,000 Hydro-Quebec,
(Canada),
8.05%, 7/7/24 $ 2,120,080
A2 2,500 Quebec Province,
(Canada),
6.50%, 1/17/06 2,343,325
B1 600 Republic of Argentina,
9.25%, 2/23/01 575,250
Republic of Colombia,
Baa3 1,000 8.75%, 10/6/99 1,021,250
Baa3 2,000 8.00%, 6/14/01 1,981,660
Baa3 2,000 7.25%, 2/15/03 1,886,580
A1 3,600 Republic of Italy,
6.875%, 9/27/23 3,246,192
Ba1 2,000 Trinidad & Tobago,
(Trinidad),
11.50%, 11/20/97 2,100,000
Total Foreign Government -------------
Securities
(cost $15,681,787) 15,274,337
- -------------------------------------------------------------------
Foreign Corporate Bonds--10.9%
Aa1 1,000 African Development Bank,
6.875%, 10/15/15
(Banking-Supranational) 939,950
Ba1 1,000 Banco de Comercio Exterior de
Colombia,
8.625%, 6/2/00
(Financial Services) 1,017,500
A3 1,000 Kansallis-Osake-Pankki,
(Finland), Sub. Notes,
10.00%, 5/1/02
(Banking-Yankee) 1,128,070
NR 3,000 National Bank of Romania,
9.75%, 6/25/99
(Banking) 3,030,000
Ba3 $ 4,000 Polysindo Int'l. Finance Co.
BV,
(Indonesia),
11.375%, 6/15/06
(Financial Services-Yankee) $ 4,070,000
Aa3 2,000 Rodamco NV,
(Netherlands),
7.30%, 5/15/05
(Financial Services) 1,991,000
Ba3 2,000 Rogers Cablesystems, Inc.,
(Canada), Sr. Notes,
10.00%, 3/15/05 1,970,000
(Cable & Pay Television
Systems-Yankee)
A1 1,250 Santander Financial
Issuances,
(Spain),
Gtd. Sub. Notes,
7.25%, 5/30/06
(Financial Services) 1,230,862
Total Foreign Corporate Bonds -------------
(cost $15,409,893) 15,377,382
- -------------------------------------------------------------------
U. S. Government Securities--1.0%
Aaa 1,200 United States Treasury Bond,
6.875%, 8/15/25 1,187,808
Aaa 250 United States Treasury Note,
6.875%, 5/15/06 252,773
-------------
Total U. S. Government
Securities
(cost $1,412,086) 1,440,581
- -------------------------------------------------------------------
Preferred Stock--1.4%
Ba3 2,000 Time Warner, Inc., 1,960,000
(Media) -------------
(cost $2,000,000)
Total Long-Term Investments
(cost $127,666,708) 126,687,550
-------------
|
Portfolio of Investments as of PRUDENTIAL DIVERSIFIED
June 30, 1996 (Unaudited) BOND FUND, INC.
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
- -------------------------------------------------------------------
|
Baa1 $ 1,000 Marine Midland Bank,
Sub. Notes,
5.6875%, 9/27/96
(Banking)
(cost $998,700) $ 997,500
-------------
- -------------------------------------------------------------------
Repurchase Agreement--8.6%
12,128 Joint Repurchase Agreement
Account,
5.46%, 7/01/96, (Note 6)
(cost $12,128,000) 12,128,000
-------------
Total Short-Term Investments
(cost $13,126,700) 13,125,500
-------------
- -------------------------------------------------------------------
Total Investments--99.2%
(cost $140,793,408; Note 5) 139,813,050
Other assets in excess of
liabilities--0.8% 1,194,221
-------------
Net Assets--100% $ 141,007,271
=============
|
F.R.N.--Floating Rate Note
NR--Not Rated by Moody's or Standard & Poor's.
(a) Rate shown reflects current rate of variable rate instruments.
The Fund's current Prospectus contains a description of Moody's and Standard &
Poor's ratings.
The industry classification of portfolio holdings and other net assets shown as
a percentage of net assets as of June 30, 1996 was as follows:
Financial Services.................................... 14.6%
Media................................................. 11.4
Banking............................................... 11.1
Foreign Government Securities......................... 10.9
U.S. Government & Agency Securities................... 9.6
Oil & Gas............................................. 7.2
Retail................................................ 4.3
Health Care........................................... 4.0
Oil & Gas Equipment & Services........................ 3.8
Computers............................................. 3.3
Insurance............................................. 3.0
Automotive............................................ 2.6
Cable & Pay Television Systems........................ 2.1
Telecommunications.................................... 2.0
Casinos............................................... 1.6
Agricultural Equipment................................ 1.4
Consumer Goods & Services............................. 1.4
Entertainment......................................... 1.4
Steel................................................. 1.0
Utilities............................................. 1.0
Transportation........................................ .8
Metals Processing..................................... .7
Other assets in excess of liabilities................. .8
-----
100.0%
=====
- -------------------------------------------------------------------
6 See Notes to Financial Statements.
|
Statement of Assets and Liabilities (Unaudited) PRUDENTIAL DIVERSIFIED BOND
FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------
Assets June 30, 1996
------------
Investments, at value (cost $140,793,408)................................................................... $139,813,050
Cash........................................................................................................ 41,926
Receivable for investments sold............................................................................. 8,274,799
Interest receivable......................................................................................... 2,091,500
Receivable for Fund shares sold............................................................................. 1,304,895
Deferred expenses and other assets.......................................................................... 145,968
Dividends receivable........................................................................................ 44,565
------------
Total assets............................................................................................. 151,716,703
------------
Liabilities
Payable for investments purchased........................................................................... 9,501,946
Payable for Fund shares reacquired.......................................................................... 712,444
Dividends payable........................................................................................... 293,659
Accrued expenses and other liabilities...................................................................... 116,857
Distribution fee payable.................................................................................... 73,442
Management fee payable...................................................................................... 11,084
------------
Total liabilities........................................................................................ 10,709,432
------------
Net Assets.................................................................................................. $141,007,271
============
Net assets were comprised of:
Common stock, at par..................................................................................... $ 10,736
Paid-in capital in excess of par......................................................................... 142,695,555
------------
142,706,291
Accumulated net realized loss on investments............................................................. (718,662)
Net unrealized depreciation on investments............................................................... (980,358)
------------
Net assets, June 30, 1996................................................................................... $141,007,271
============
Class A:
Net asset value and redemption price per share
($21,238,725/1,617,125 shares of common stock issued and outstanding)................................. $13.13
Maximum sales charge (4.0% of offering price)............................................................ 0.55
------
Maximum offering price to public......................................................................... $13.68
======
Class B:
Net asset value, offering price and redemption price per share
($116,244,956/8,850,209 shares of common stock issued and outstanding)................................ $13.13
======
Class C:
Net asset value, offering price and redemption price per share
($3,523,590/268,267 shares of common stock issued and outstanding).................................... $13.13
======
- -------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements. 7
|
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
DIVERSIFIED BOND FUND, INC.
Statement of Operations (Unaudited)
- --------------------------------------------------------------
Six Months
Ended
June 30,
Net Investment Income 1996
-----------
Income
Interest..................................... $ 4,622,289
Dividends.................................... 44,565
-----------
Total income............................... 4,666,854
-----------
Expenses
Distribution fee--Class A.................... 12,917
Distribution fee--Class B.................... 376,372
Distribution fee--Class C.................... 11,688
Management fee............................... 301,762
Transfer agent's fees and expenses........... 98,000
Custodian's fees and expenses................ 63,000
Registration fees............................ 50,000
Reports to shareholders...................... 40,000
Amortization of deferred organization
expenses.................................. 21,735
Audit fee and expenses....................... 12,000
Directors' fees.............................. 11,000
Legal fees and expenses...................... 7,000
Miscellaneous................................ 1,495
-----------
Total expenses............................ 1,006,969
Less: Management fee waiver (Note 2)......... (241,410)
-----------
Net expenses.............................. 765,559
-----------
Net investment income........................... 3,901,294
-----------
Realized and Unrealized
Loss on Investments
Net realized loss on investment transactions.... (965,781)
Net change in unrealized depreciation on
investments.................................. (4,772,503)
-----------
Net loss on investments......................... (5,738,284)
-----------
Net Decrease in Net Assets
Resulting from Operations....................... $(1,836,990)
===========
|
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
DIVERSIFIED BOND FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- --------------------------------------------------------------
January 10,
Six Months 1995(a)
Ended Through
Increase (Decrease) June 30, December 31,
in Net Assets 1996 1995
---------- ------------
Operations
Net investment income........... $ 3,901,294 $ 3,242,014
Net realized gain (loss) on
investment transactions...... (965,781) 1,773,712
Net unrealized appreciation
(depreciation) on
investments.................. (4,772,503) 3,792,145
------------ ------------
Net increase (decrease) in net
assets resulting from
operations................... (1,836,990) 8,807,871
------------ ------------
Dividends and distributions (Note
1)
Dividends to shareholders from
net investment income
Class A...................... (601,652) (499,866)
Class B...................... (3,200,448) (2,663,152)
Class C...................... (99,194) (78,996)
------------ ------------
(3,901,294) (3,242,014)
------------ ------------
Distributions to shareholders
from net realized gains
Class A...................... -- (209,652)
Class B...................... -- (1,276,511)
Class C...................... -- (40,430)
------------ ------------
-- (1,526,593)
------------ ------------
Fund share transactions (net of
share conversions) (Note 7)
Net proceeds from shares sold... 58,500,069 108,185,016
Net asset value of shares issued
to shareholders in
reinvestment of dividends and
distributions................ 2,602,913 3,228,879
Cost of shares reacquired....... (16,760,529) (13,150,057)
------------ -----------
Net increase in net assets from
Fund share transactions...... 44,342,453 98,263,838
------------ -----------
Total increase..................... 38,604,169 102,303,102
Net Assets
Beginning of period................ 102,403,102 100,000
------------ -----------
End of period...................... $141,007,271 $102,403,102
============ =============
|
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 (other than
options on securities and indices) 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 (other than convertible debt securities) 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.
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. 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 Fund may be delayed or limited.
Options: The Fund may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates or foreign currency exchange rates with respect to securities or currencies which the Fund currently owns or intends to purchase. When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an investment. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The investment or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Fund realizes a gain or loss to the extent of the premium received or paid. If an option is exercised, the premium received or paid is an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Fund has realized a gain or loss. The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain or loss. Gain or loss on purchased options is included in net realized gain (loss) on investment transactions. Gain or loss on written options is presented separately as net realized gain (loss) on written option transactions.
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 paid 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.
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.
The Fund has a management agreement with PMF. Pursuant to this agreement, PMF has responsibility for all investment advisory services and supervises the subadviser's performance of such services. PMF has entered into a subadvisory agreement with The Prudential Investment Corporation (``PIC''); PIC furnishes investment advisory services in connection with the management of the Fund. PMF pays for the cost of the subadviser's services, the compensation of officers of the Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly, at an annual rate of .50 of 1% of the average daily net assets of the Fund. For the six months ended June 30, 1996, PMF waived 80% of its management fee. The amount of fees waived for the six months ended June 30, 1996 amounted to $241,410 ($.02 per share for Class A, B and C shares; .40 of 1% of average daily net assets, annualized). The Fund is not required to reimburse PMF for such waiver. The Fund had a distribution agreement with Prudential Mutual Fund Distributors, Inc. ("PMFD"), which acted as the distributor of the Class A shares of the Fund through January 1, 1996. Effective January 2, 1996, Prudential Securities Incorporated (``PSI'') became the distributor of the Class A shares of the Fund and is serving the Fund under the same terms and conditions as under the arrangement with PMFD. PSI is also distributor of the Class B and Class C shares of the Fund. The Fund compensated PMFD and PSI for distributing and servicing the Fund's Class A, Class B and Class C shares, pursuant to plans of distribution (the "Class A, B and C Plans"), regardless of expenses actually incurred by them. The distribution fees are accrued daily and payable monthly.
Pursuant to the Class A, B and C Plans, the Fund compensates PSI and PMFD 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 Class A, Class B and Class C Plans were .15%, .75% and .75%, respectively, of the average daily net assets of Class A, Class B and Class C shares for the six months ended June 30, 1996.
PSI has advised the Fund that it has received approximately $79,000 in front-end sales charges resulting from sales of Class A shares during the six months ended June 30, 1996. From these fees, PSI paid such sales charges to Pruco Securities Corporation and affiliated broker-dealers, which in turn paid commissions to salespersons and incurred other distribution costs.
PSI has advised the Fund that for the six months ended June 30, 1996, it received approximately $125,000 and $1,600 in contingent deferred sales charges imposed upon redemptions by certain Class B and Class C shareholders, respectively.
Purchases and sales of investment securities, other than short-term investments, for the six months ended June 30, 1996 were $209,629,130 and $172,723,814, respectively.
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, 1996, the Fund had a 1.1% undivided interest in the repurchase agreements in the joint account. The undivided interest for the Fund represents $12,128,000 in principal amount. As of such date, each repurchase agreement in the joint account and the value of the collateral therefor were as follows:
Bear, Stearns & Co., Inc., 5.40%, in the principal amount of $369,000,000, repurchase price $369,055,350, due 7/1/96. The value of the collateral including accrued interest was $377,194,429.
Goldman, Sachs & Co., 5.47%, in the principal amount of $369,000,000, repurchase price $369,056,068 7/1/96. The value of the collateral including accrued interest was $376,380,556.
Class A Shares Amount
- ------- --------- -----------
Six months ended June 30, 1996:
Shares sold........................... 718,103 $ 9,596,855
Shares issued in reinvestment of
dividends........................... 32,331 430,621
Shares reacquired..................... (252,605) (3,361,031)
--------- -----------
Net increase in shares outstanding
before conversion................... 497,829 6,666,445
Shares issued upon conversion from
Class B............................. 84,075 1,100,474
--------- -----------
Net increase in shares outstanding.... 581,904 $ 7,766,919
========= ===========
January 10, 1995 (a) through
December 31, 1995:
Shares sold........................... 1,149,425 $15,161,009
Shares issued in reinvestment of
dividends and distributions......... 39,135 528,573
Shares reacquired..................... (242,566) (3,231,169)
--------- -----------
Net increase in shares outstanding
before conversion................... 945,994 12,458,413
Shares issued upon conversion from
Class B............................. 86,560 1,185,549
--------- -----------
Net increase in shares outstanding.... 1,032,554 $13,643,962
========= ===========
Class B
- -------
Six months ended June 30, 1996:
Shares sold........................... 3,550,255 $47,510,958
Shares issued in reinvestment of
dividends........................... 157,986 2,104,091
Shares reacquired..................... (971,412) (12,959,921)
--------- -----------
Net increase in shares outstanding
before conversion................... 2,736,829 36,655,128
Shares reacquired upon conversion
into Class A........................ (84,075) (1,100,474)
--------- -----------
Net increase in shares outstanding.... 2,652,754 $35,554,654
========= ===========
January 10, 1995 (a) through
December 31, 1995:
Shares sold........................... 6,807,170 $90,362,412
Shares issued in reinvestment of
dividends and distributions......... 193,355 2,618,478
Shares reacquired..................... (719,177) (9,697,206)
--------- -----------
Net increase in shares
outstanding before conversion....... 6,281,348 83,283,684
Shares reacquired upon conversion into
Class A............................. (86,560) (1,185,549)
--------- -----------
Net increase in shares outstanding.... 6,194,788 $82,098,135
========= ===========
Class C Shares Amount
- ------- --------- -----------
Six months ended June 30, 1996:
Shares sold........................... 103,776 $ 1,392,256
Shares issued in reinvestment of
dividends........................... 5,121 68,201
Shares reacquired..................... (33,172) (439,577)
--------- -----------
Net increase in shares outstanding.... 75,725 $ 1,020,880
========= ===========
January 10, 1995 (a) through
December 31, 1995:
Shares sold........................... 200,032 $ 2,661,595
Shares issued in reinvestment of
dividends and distributions......... 6,043 81,828
Shares reacquired..................... (16,199) (221,682)
--------- -----------
Net increase in shares outstanding.... 189,876 $ 2,521,741
========= ===========
- ---------------
|
Financial Highlights (Unaudited) PRUDENTIAL DIVERSIFIED BOND FUND, INC.
- ------------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
---------------------------- ---------------------------- ----------
January 10, January 10,
Six Months 1995(a) Six Months 1995(a) Six Months
Ended Through Ended Through Ended
June 30, December 31, June 30, December 31, June 30,
1996 1995 1996 1995 1996
---------- ------------- ---------- ------------- ----------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $ 13.79 $ 12.50 $ 13.79 $ 12.50 $ 13.79
---------- ------ ---------- ------ ----------
Income from investment operations
Net investment income(b)...................... .46 .90 .42 .82 .42
Net realized and unrealized gain on investment
transactions................................ (.66) 1.51 (.66) 1.51 (.66)
---------- ------ ---------- ------ ----------
Total from investment operations........... (.20) 2.41 (.24) 2.33 (.24)
---------- ------ ---------- ------ ----------
Less distributions
Dividends from net investment income.......... (.46) (.90) (.42) (.82) (.42)
Distributions from net realized gains......... -- (.22) -- (.22) --
---------- ------ ---------- ------ ----------
Total distributions........................ (.46) (1.12) (.42) (1.04) (.42)
---------- ------ ---------- ------ ---------
Net asset value, end of period................ $ 13.13 $ 13.79 $ 13.13 $ 13.79 $ 13.13
========== ====== =========- ======= =========
TOTAL RETURN(d)............................... (1.60)% 19.80% (1.80)% 19.11% (1.80)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $ 21,239 $14,276 $116,245 $85,472 $ 3,523
Average net assets (000)...................... $ 17,317 $ 7,428 $100,917 $43,574 $ 3,134
Ratios to average net assets(b)/(c):
Expenses, including distribution fees...... .75% .87% 1.35% 1.47% 1.35%
Expenses, excluding distribution fees...... .60% .72% .60% .72% .60%
Net investment income...................... 6.98% 6.92% 6.38% 6.32% 6.38%
Portfolio turnover rate....................... 149% 260% 149% 260% 149%
|
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $ 12.50
-----
Income from investment operations
Net investment income(b)...................... .82
Net realized and unrealized gain on investment
transactions................................ 1.51
-----
Total from investment operations........... 2.33
-----
Less distributions
Dividends from net investment income.......... (.82)
Distributions from net realized gains......... (.22)
-----
Total distributions........................ (1.04)
-----
Net asset value, end of period................ $ 13.79
=====
TOTAL RETURN(d)............................... 19.11%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $ 2,655
Average net assets (000)...................... $ 1,307
Ratios to average net assets(b)/(c):
Expenses, including distribution fees...... 1.47%
Expenses, excluding distribution fees...... .72%
Net investment income...................... 6.32%
Portfolio turnover rate....................... 260%
- ---------------
(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.
MF166C-3
The Prospectus and Statement of Additional Information dated April 26, 1996, as suplemented, are incorporated herein by reference in their entirety from Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A (File No. 33-55441) filed on April 26, 1996.
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS:
(1) Financial statements included in the Prospectus constituting Part A of this Registration Statement:
Financial Highlights
Financial Highlights (unaudited)
(2) Financial Statements included in the Statement of Additional Information constituting Part B of this Registration Statement:
Portfolio of Investments at December 31, 1995.
Portfolio of Investments as of June 30, 1996 (unaudited).
Statement of Assets and Liabilities at December 31, 1995 (audited).
Statement of Assets and Liabilities at June 30, 1996 (unaudited).
Statement of Operations for the period ended December 31, 1995 (audited).
Statement of Operations for the six months ended June 30, 1996 (unaudited).
Statement of Changes in Net Assets for the period ended December 31, 1995 (audited).
Statement of Changes in Net Assets for the six months ended June 30, 1996 (unaudited).
Notes to Financial Statements (audited).
Notes to Financial Statements (unaudited).
Financial Highlights (audited).
Financial Highlights (unaudited).
Independent Auditor's Report.
(b) EXHIBITS:
1. (a) Articles of Incorporation incorporated by reference to Exhibit 1 to the Registration Statement on Form N-1A (File No. 33-55441) filed on September 12, 1994.
(b) Articles Supplementary.*
2. By-Laws incorporated by reference to Exhibit 2 to the Registration Statement on Form N-1A (File No. 33-55441) filed on September 12, 1994.
3. Not Applicable.
4. Instruments defining rights of shareholders incorporated by reference to Exhibit 4 to the Registration Statement on Form N-1A (File No. 33- 55441) filed on September 12, 1994.
5. (a) Management Agreement between the Registrant and Prudential Mutual Fund Management, Inc. incorporated by reference to Exhibit No. 5(a) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
(b) Subadvisory Agreement between Prudential Mutual Fund Management, Inc. and The Prudential Investment Corporation incorporated by reference to Exhibit No. 5(b) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
6. (a) Distribution Agreement between the Registrant and Prudential Securities Incorporated.
(b) Form of Selected Dealer Agreement incorporated by reference to Exhibit No. 6(d) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
7. Not Applicable.
8. Custodian Contract between the Registrant and State Street Bank and Trust Company incorporated by reference to Exhibit No. 8 to Post- Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
9. Transfer Agency and Service Agreement between the Registrant and Prudential Mutual Fund Services, Inc. incorporated by reference to Exhibit No. 9 to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
10. Opinion of Shereff, Friedman, Hoffman & Goodman, LLP, incorporated by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 33-55441) filed on October 18, 1994.
11. Consent of Independent Auditors.*
12. Not Applicable.
14. Not Applicable.
15. (a) Distribution and Service Plan for Class A Shares incorporated by reference to Exhibit No. 15(a) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
(b) Distribution and Service Plan for Class B Shares incorporated by reference to Exhibit No. 15(b) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
(c) Distribution and Service Plan for Class C Shares incorporated by reference to Exhibit No. 15(c) to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
16. Schedule of Computation of Performance Quotations incorporated by reference to Exhibit No. 16 to Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
17. Financial Data Schedule for Class A, Class B and Class C shares filed as Exhibit 27 for electronic purposes.*
18. Rule 18f-3 Plan.*
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of July 19, 1996, there were 2,418, 13,408, 512 and 0 record holders of Class A, Class B, Class C, Class Z shares of Common Stock, respectively, $.001 par value per share, of the Registrant.
ITEM 27. INDEMNIFICATION.
As permitted by Section 17(h) and (i) of the Investment Company Act of 1940
(the 1940 Act) and pursuant to Article VI of the Fund's By-Laws (Exhibit 2 to
the Registration Statement), officers, directors, employees and agents of the
Registrant will not be liable to the Registrant, any shareholder, officer,
director, employee, agent or other person for any action or failure to act,
except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of the Maryland General Corporation Law permits indemnification
of directors who acted in good faith and reasonably believed that the conduct
was in the best interests of the Registrant. As permitted by Section 17(i) of
the 1940 Act, pursuant to Section 10 of each Distribution Agreement (Exhibit 6
to the Registration Statement), each Distributor of the Registrant may be
indemnified against liabilities which it may incur, except liabilities arising
from bad faith, gross negligence, willful misfeasance or reckless disregard of
duties.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (Securities Act) may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the 1940 Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in connection with the successful defense of any action, suit or proceeding) is asserted against the Registrant by such director, officer or controlling person in connection with the shares being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the 1940 Act and will be governed by the final adjudication of such issue.
The Registrant has purchased an insurance policy insuring its officers and directors against liabilities, and certain costs of defending claims against such officers and directors, to the extent such officers and directors are not found to have committed conduct constituting willful misfeasance, bad faith, gross negligence or reckless disregard in the performance of their duties. The insurance policy also insures the Registrant against the cost of indemnification payments to officers and directors under certain circumstances.
Section 9 of the Management Agreement (Exhibit 5(a) to the Registration Statement) and Section 4 of the Subadvisory Agreement (Exhibit 5(b) to the Registration Statement) limit the liability of Prudential Mutual Fund Management, Inc. (PMF) and The Prudential Investment Corporation (PIC), respectively, to liabilities arising from willful misfeasance, bad faith or gross negligence in the performance of their respective duties or from reckless disregard by them of their respective obligations and duties under the agreements.
The Registrant hereby undertakes that it will apply the indemnification provisions of its By-Laws and each Distribution Agreement in a manner consistent with Release No. 11330 of the Securities and Exchange Commission under the 1940 Act so long as the interpretation of Section 17(h) and 17(i) of such Act remain in effect and are consistently applied.
Under Section 17(h) of the 1940 Act, it is the position of the staff of the Securities and Exchange Commission that if there is neither a court determination on the merits that the defendant is not liable nor a court determination that the defendant was not guilty of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of one's office, no indemnification will be permitted unless an independent legal counsel (not including a counsel who does work for either the Registrant, its investment adviser, its principal underwriter or persons affiliated with these persons) determines, based upon a review of the facts, that the person in question was not guilty of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office.
Under its Articles of Incorporation, the Registrant may advance funds to provide for indemnification. Pursuant to the Securities and Exchange Commission staff's position on Section 17(h) advances will be limited in the following respect:
(1) Any advances must be limited to amounts used, or to be used, for the preparation and/or presentation of a defense to the action (including cost connected with preparation of a settlement);
(2) Any advances must be accompanied by a written promise by, or on behalf of, the recipient to repay that amount of the advance which exceeds the amount to which it is ultimately determined that he is entitled to receive from the Registrant by reason of indemnification;
(3) Such promise must be secured by a surety bond or other suitable insurance; and
(4) Such surety bond or other insurance must be paid for by the recipient of such advance.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Prudential Mutual Fund Management, Inc.
See "Management of the Fund--Manager" in the Prospectus constituting Part A of this Registration Statement and "Manager" in the Statement of Additional Information constituting Part B of this Registration Statement.
The business and other connections of the officers of PMF are listed in Schedules A and D of Form ADV of PMF as currently on file with the Securities and Exchange Commission, the text of which is hereby incorporated by reference (File No. 801-31104).
The business and other connections of PMF's directors and principal executive officers are set forth below. Except as otherwise indicated, the address of each person is One Seaport Plaza, New York, NY 10292.
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
---------------- ----------------- ---------------------
Stephen P. Fisher Senior Vice Senior Vice President, PMF; Senior
President Vice President, Prudential
Securities; Vice President, PMFD
Frank W. Giordano Executive Vice Executive Vice President, General
President, General Counsel, Secretary and Director, PMF
Counsel, Secretary and PMFD; Senior Vice President,
and Director Prudential Securities; Director,
Prudential Mutual Fund Services,
Inc. (PMFS)
Robert F. Gunia Executive Vice Executive Vice President, Chief
President, Chief Financial and Administrative
Financial and Officer, Treasurer and Director,
Administrative PMF; Senior Vice President,
Officer, Treasurer Prudential Securities; Executive
and Director Vice President, Chief Financial
Officer, Treasurer and Director,
PMFD; Director, PMFS
Theresa A. Hamacher Director Director, PMF, Vice President,
Prudential; Vice President,
Prudential Investment Corporation
(PIC)
Timothy J. O'Brien Director President, Chief Executive Officer,
Chief Operating Officer and
Director, PMFD; Chief Executive
Officer and Director, PMFS;
Director, PMF
Richard A. Redeker President, Chief President, Chief Executive Officer
Executive Officer and Director, PMF; Executive Vice
and Director President, Director and Member of
the Operating Committee, Prudential
Securities; Director, Prudential
Securities Group, Inc. (PSG);
Executive Vice President, PIC;
Director, PMFD; Director, PMFS
S. Jane Rose Senior Vice Senior Vice President, Senior Counsel
President, Senior and Assistant Secretary, PMF; Senior
Counsel and Vice President and Senior Counsel,
Assistant Secretary Prudential Securities
Donald Webber Executive Vice Executive Vice President and
President and Director of Sales, PMF
Director of Sales
|
(b) The Prudential Investment Corporation (PIC)
See "Management of the Fund--Subadviser" in the Prospectus constituting Part A of this Registration Statement and "Subadviser" in the Statement of Additional Information constituting Part B of this Registration Statement.
The business and other connections of PIC's directors and executive officers are as set forth below. Except as otherwise indicated, the address of each person is Prudential Plaza, Newark, NJ 07101.
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
---------------- ----------------- ---------------------
William M. Bethke Senior Vice Senior Vice President,
Two Gateway Center President Prudential; Senior Vice
Newark, NJ 07102 President, PIC
Barry M. Gillman Director Director, PIC
Theresa A. Hamacher Vice President Vice President, Prudential; Vice
President, PIC; Director, PMF
Richard A. Redeker Executive Vice President, Chief Executive
One Seaport Plaza President Officer and Director, PMF;
New York, NY 10292 Executive Vice President,
Director and Member of
Operating Committee, Prudential
Securities; Director, PSG;
Executive Vice President, PIC;
Director, PMFD; Director, PMFS
John L. Reeve Senior Vice Managing Director, Prudential
Four Gateway Center President Asset Management Group
Newark, NJ 07102
Eric A. Simonson Vice President and Executive Vice President,
Director Prudential; Vice President and
Director, PIC
|
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Prudential Securities Incorporated
Prudential Securities is distributor for Command Government Fund, Command Money Fund, Command Tax-Free Fund, Prudential Government Securities Trust (Intermediate Term Series, Money Market Series and U.S. Treasury Money Market Series), Prudential MoneyMart Assets, Inc., Prudential Institutional Liquidity Portfolio, Inc., Prudential Special Money Market Fund, Inc., Prudential Tax- Free Money Fund, Inc., Prudential Jennison Fund, Inc., The Target Portfolio Trust, Prudential Allocation Fund, Prudential California Municipal Fund, Prudential Diversified Bond Fund, Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund, Prudential Europe Growth Fund, Inc., Prudential Global Fund, Inc., Prudential Global Genesis Fund, Inc., Prudential Global Limited Maturity Fund, Inc., Prudential Global Natural Resources Fund, Inc., Prudential Government Income Fund, Inc., Prudential Growth Opportunity Fund, Inc., Prudential High Yield Fund, Inc., Prudential Intermediate Global Income Fund, Inc., Prudential Mortgage Income Fund, Inc., Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond Fund, Prudential Municipal Series Fund, Prudential National Municipals Fund, Inc., Prudential Pacific Growth Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential Utility Fund, Inc., The Global Government Plus Fund Inc., The Global Total Return Fund, Inc., Global Utility Fund, Inc., Nicholas-Applegate Fund, Inc., (Nicholas- Applegate Growth Equity Fund) and The BlackRock Government Income Trust. Prudential Securities is also a depositor for the following unit investment trusts:
The Corporate Income Fund Prudential Equity Trust Shares National Equity Trust Prudential Unit Trusts Government Securities Equity Trust National Municipal Trust
(b) Information concerning the directors and officers of Prudential Securities Incorporated is set forth below:
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME(/1/) UNDERWRITER REGISTRANT
- --------- ------------- -------------
Robert Golden........... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Alan D. Hogan........... Executive Vice President, Chief None
Administrative Officer
and Director
George A. Murray........ Executive Vice President and Director None
Leland B. Paton......... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Martin Pfinsgraff....... Executive Vice President, Chief Financial None
Officer and Director
Vincent T. Pica, II..... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Richard A. Redeker...... Executive Vice President and Director President and Director
Hardwick Simmons........ Chief Executive Officer, President and None
Director
Lee B. Spencer, Jr...... General Counsel, Executive Vice President and None
Director
|
(c) Registrant has no principal underwriter who is not an affiliated person of the Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules thereunder are maintained at the offices
of State Street Bank and Trust Company, One Heritage Drive, North Quincy,
Massachusetts, 02171. The Prudential Investment Corporation, Prudential Plaza,
751 Broad Street, Newark, New Jersey, 07102 the Registrant, One Seaport Plaza,
New York, New York, 10292, and Prudential Mutual Fund Services, Inc., Raritan
Plaza One, Edison, New Jersey, 08837. Documents required by Rules 31a-1(b)(5),
(6), (7), (9), (10) and (11) and 31a-1(f) will be kept at Two Gateway Center,
documents required by Rules 31a-1(b)(4) and (11) and 31a-1(d) at One Seaport
Plaza and the remaining accounts, books and other documents required by such
other pertinent provisions of Section 31(a) and the Rules promulgated
thereunder will be kept by State Street Bank and Trust Company and Prudential
Mutual Fund Services, Inc.
ITEM 31. MANAGEMENT SERVICES
Other than as set forth under the captions "Management of the Fund--Manager" and "Management of the Fund-Distributor" in the Prospectus and the captions "Manager" and "Distributor" in the Statement of Additional Information, constituting Parts A and B, respectively, of this Registration Statement, Registrant is not a party to any management-related service contract.
ITEM 32. UNDERTAKINGS
Registrant makes the following undertaking:
To furnish each person to whom a prospectus is delivered with a copy of the Fund's latest annual report upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment ot the Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, and the State of New York, on the 9th day of August, 1996.
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
By: /s/ Richard A. Redeker ---------------------------------- RICHARD A. REDEKER, PRESIDENT |
Pursuant to the requirements of the Securities Act of 1933, this Post- Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Eugene C. Dorsey Director August 9, 1996
- -------------------------------------
EUGENE C. DORSEY
/s/ Richard A. Redeker President and Director August 9, 1996
- -------------------------------------
RICHARD A. REDEKER
/s/ Robin B. Smith Director August 9, 1996
- -------------------------------------
ROBIN B. SMITH
/s/ Eugene S. Stark Treasurer and Principal Financial
- ---------------------------------- and Accounting Officer
EUGENE S. STARK August 9, 1996
|
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------- ----
1. (a) Articles of Incorporation incorporated by reference to
Exhibit 1 to the Registration Statement on Form N-1A (File
No. 33-55441) filed on September 12, 1994.
(b) Articles Supplementary.*
2. By-Laws incorporated by reference to Exhibit 2 to the
Registration Statement on Form N-1A (File No. 33-55441) filed
on September 12, 1994.
3. Not Applicable.
4. Instruments defining rights of shareholders incorporated by
reference to Exhibit 4 to the Registration Statement on Form N-
1A (File No. 33-55441) filed on September 12, 1994.
5.(a) Management Agreement between the Registrant and Prudential
Mutual Fund Management, Inc. incorporated by reference to
Exhibit No. 5(a) to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A (File No. 2-89725) filed
via EDGAR on June 20, 1995.
(b) Subadvisory Agreement between Prudential Mutual Fund
Management, Inc. and The Prudential Investment Corporation
incorporated by reference to Exhibit No. 5(b) to Post-Effective
Amendment No. 1 to the Registration Statement on Form N-1A
(File No. 2-89725) filed via EDGAR on June 20, 1995.
6.(a) Distribution Agreement between the Registrant and Prudential
Securities Incorporated.*
(b) Form of Selected Dealer Agreement incorporated by reference to
Exhibit No. 6(d) to Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A (File No. 2-89725) filed
via EDGAR on June 20, 1995.
7. Not Applicable.
8. Custodian Contract between the Registrant and State Street Bank
and Trust Company incorporated by reference to Exhibit No. 8 to
Post-Effective Amendment No. 1 to the Registration Statement on
Form N-1A (File No. 2-89725) filed via EDGAR on June 20, 1995.
9. Transfer Agency and Service Agreement between the Registrant
and Prudential Mutual Fund Services, Inc. incorporated by
reference to Exhibit No. 9 to Post-Effective Amendment No. 1 to
the Registration Statement on Form N-1A (File No. 2-89725)
filed via EDGAR on June 20, 1995.
10. Opinion of Shereff, Friedman, Hoffman & Goodman, LLP,
incorporated by reference to Pre-Effective Amendment No. 1 to
the Registration Statement on Form N-1A (File No. 33-55441)
filed on October 18, 1994.
11. Consent of Independent Auditors.*
12. Not Applicable.
14. Not Applicable.
15. (a) Distribution and Service Plan for Class A Shares incorporated
by reference to Exhibit No. 15(a) to Post-Effective Amendment
No. 1 to the Registration Statement on Form N-1A (File No. 2-
89725) filed via EDGAR on June 20, 1995.
(b) Distribution and Service Plan for Class B Shares incorporated
by reference to Exhibit No. 15(b) to Post-Effective Amendment
No. 1 to the Registration Statement on Form N-1A (File No. 2-
89725) filed via EDGAR on June 20, 1995.
(c) Distribution and Service Plan for Class C Shares incorporated
by reference to Exhibit No. 15(c) to Post-Effective Amendment
No. 1 to the Registration Statement on Form N-1A (File No. 2-
89725) filed via EDGAR on June 20, 1995.
16. Schedule of Computation of Performance Quotations incorporated
by reference to Exhibit No. 16 to Post-Effective Amendment No.
1 to the Registration Statement on Form N-1A (File No. 2-89725)
filed via EDGAR on June 20, 1995.
17.(a) Financial Data Schedule for Class A, Class B and Class C shares
filed as Exhibit 27 for electronic purposes.*
18. Rule 18f-3 Plan.*
|
*Filed herewith.
EXHIBIT 1(b)
ARTICLES SUPPLEMENTARY
OF
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
* * * * * * *
Pursuant to Section 2-208.1
of the Maryland General Corporation Law
* * * * * * *
Prudential Diversified Bond Fund, Inc., a Maryland corporation having its principal offices in Baltimore, Maryland and New York, New York (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland, that:
FIRST: The Corporation is registered as an open-end company under the Investment Company Act of 1940.
SECOND: The total number of shares of all classes of stock which the Corporation has authority to issue is 2,000,000,000 shares of common stock, par value of $.001 each, having an aggregate par value of $2,000,000, and the total number of shares of common stock that the Corporation has authority to issue is not being increased or decreased.
THIRD: Heretofore, the number of authorized shares which the Corporation has authority to issue was divided into three classes of shares, consisting of 1,000,000,000 Class A shares, 500,000,000 Class B shares and 500,000,000 Class C shares.
FOURTH: In accordance with Section 2-105(c) of the Maryland General Corporation Law and pursuant to a resolution duly adopted by the Board of Directors of the Corporation at a meeting held on April 9, 1996, the number of authorized shares which the Corporation has authority to issue is hereby divided into four classes of shares, consisting of 500 million Class A shares, 500 million Class B shares, 500 million Class C shares and 500 million Class Z shares.
FIFTH: The Class Z shares shall represent the same interest in the Corporation and have identical voting, dividend, liquidation and other rights as the Class A, Class B and Class C shares except that (i) Expenses related to the distribution of each class of shares shall be borne solely by such class; (ii) The bearing of such expenses solely by shares of each class shall be appropriately reflected (in the manner determined by the Board of Directors) in the net asset value, dividends, distribution and liquidation rights of the shares of such class; (iii) The Class A Common Stock shall be subject to a front-end sales load and a Rule 12b-1 distribution fee as determined by the Board of Directors from time to time; (iv) The Class B Common Stock shall be subject to a contingent deferred sales charge and a Rule 12b-1 distribution fee as determined by the
Board of Directors from time to time; (v) The Class C Common Stock shall be subject to a contingent deferred sales charge and a Rule 12b-1 distribution fee as determined by the Board of Directors from time to time and (vi) The Class Z Common Stock shall not be subject to a front-end sales load, a contingent deferred sales charge nor a 12b-1 distribution fee. All shares of each particular class shall represent an equal proportionate interest in that class, and each share of any particular class shall be equal to each other share of that class.
IN WITNESS WHEREOF, PRUDENTIAL DIVERSIFIED BOND FUND, INC., has caused these presents to be signed in its name and on its behalf by its Vice President and attested by its Assistant Secretary on July 25, 1996.
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
By /s/ Robert F. Gunia
------------------------------
Robert F. Gunia
Vice President
Attest: /s/ Ellyn C. Vogin
------------------------------
Ellyn C. Vogin
Assistant Secretary
|
THE UNDERSIGNED, Vice President of Prudential Diversified Bond Fund, Inc., who executed on behalf of the Corporation the foregoing Articles Supplementary of which this certificate is made a part, hereby acknowledges in the name and on behalf of said Corporation the foregoing Articles Supplementary to be the corporate act of said Corporation and hereby certifies that to the best of his knowledge, information and belief the matters and facts set forth therein with respect to the authorization and approval thereof are true in all material respects under the penalties of perjury.
/s/ Robert F. Gunia ------------------------------ Robert F. Gunia Vice President |
EXHIBIT 99.6(a)
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
Agreement made as of April 9, 1996 between Prudential Diversified Bond Fund, Inc., a Maryland corporation (the Fund), and Prudential Securities Incorporated, a Delaware corporation (the Distributor).
WITNESSETH
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as amended (the Investment Company Act), as a diversified, open-end, management investment company and it is in the interest of the Fund to offer its shares for sale continuously;
WHEREAS, the shares of the Fund may be divided into classes and/or series (all such shares being referred to herein as Shares) and the Fund currently is authorized to offer Class A, Class B, Class C and Class Z Shares;
WHEREAS, the Distributor is a broker-dealer registered under the Securities Exchange Act of 1934, as amended, and is engaged in the business of selling shares of registered investment companies either directly or through other broker-dealers;
WHEREAS, the Fund and the Distributor wish to enter into an agreement with each other, with respect to the continuous offering of the Fund's Shares from and after the date hereof in order to promote the growth of the Fund and facilitate the distribution of its Shares; and
WHEREAS, upon approval by the holders of the respective classes and/or series of Shares of the Fund it is contemplated that the Fund will adopt a plan (or plans) of distribution pursuant to Rule 12b-1 under the Investment Company Act with respect to certain of its classes and/or series of Shares (the Plans) authorizing payments by the Fund to the Distributor with respect to the distribution of such classes and/or series of Shares and the maintenance of related shareholder accounts.
NOW, THEREFORE, the parties agree as follows:
The Fund hereby appoints the Distributor as the principal underwriter and distributor of the Shares of the Fund to sell Shares to the public on behalf of the Fund and the Distributor hereby accepts such appointment and agrees to act hereunder. The
Fund hereby agrees during the term of this Agreement to sell Shares of the Fund through the Distributor on the terms and conditions set forth below.
The Distributor shall be the exclusive representative of the Fund to act as principal underwriter and distributor of the Fund's Shares, except that:
2.1 The exclusive rights granted to the Distributor to sell Shares of the Fund shall not apply to Shares of the Fund issued in connection with the merger or consolidation of any other investment company or personal holding company with the Fund or the acquisition by purchase or otherwise of all (or substantially all) the assets or the outstanding shares of any such company by the Fund.
2.2 Such exclusive rights shall not apply to Shares issued by the Fund pursuant to reinvestment of dividends or capital gains distributions or through the exercise of any conversion feature or exchange privilege.
2.3 Such exclusive rights shall not apply to Shares issued by the Fund pursuant to the reinstatement privilege afforded redeeming shareholders.
2.4 Such exclusive rights shall not apply to purchases made through the Fund's transfer and dividend disbursing agent in the manner set forth in the currently effective Prospectus of the Fund. The term "Prospectus" shall mean the Prospectus and Statement of Additional Information included as part of the Fund's Registration Statement, as such Prospectus and Statement of Additional Information may be amended or supplemented from time to time, and the term "Registration Statement" shall mean the Registration Statement filed by the Fund with the Securities and Exchange Commission and effective under the Securities Act of 1933, as amended (Securities Act), and the Investment Company Act, as such Registration Statement is amended from time to time.
3.1 The Distributor shall have the right to buy from the Fund on behalf of investors the Shares needed, but not more than the Shares needed (except for clerical errors in transmission) to fill unconditional orders for Shares placed with the Distributor by investors or registered and qualified securities dealers and other financial institutions (selected dealers).
3.2 The Shares shall be sold by the Distributor on behalf of the Fund and delivered by the Distributor or selected
dealers, as described in Section 6.4 hereof, to investors at the offering price as set forth in the Prospectus.
3.3 The Fund shall have the right to suspend the sale of any or all classes and/or series of its Shares at times when redemption is suspended pursuant to the conditions in Section 4.3 hereof or at such other times as may be determined by the Board of Directors. The Fund shall also have the right to suspend the sale of any or all classes and/or series of its Shares if a banking moratorium shall have been declared by federal or New York authorities.
3.4 The Fund, or any agent of the Fund designated in writing by the Fund, shall be promptly advised of all purchase orders for Shares received by the Distributor. Any order may be rejected by the Fund; provided, however, that the Fund will not arbitrarily or without reasonable cause refuse to accept or confirm orders for the purchase of Shares. The Fund (or its agent) will confirm orders upon their receipt, will make appropriate book entries and upon receipt by the Fund (or its agent) of payment therefor, will deliver deposit receipts for such Shares pursuant to the instructions of the Distributor. Payment shall be made to the Fund in New York Clearing House funds or federal funds. The Distributor agrees to cause such payment and such instructions to be delivered promptly to the Fund (or its agent).
4.1 Any of the outstanding Shares may be tendered for redemption at any time, and the Fund agrees to repurchase or redeem the Shares so tendered in accordance with its Articles of Incorporation as amended from time to time, and in accordance with the applicable provisions of the Prospectus. The price to be paid to redeem or repurchase the Shares shall be equal to the net asset value determined as set forth in the Prospectus. All payments by the Fund hereunder shall be made in the manner set forth in Section 4.2 below.
4.2 The Fund shall pay the total amount of the redemption price as defined in the above paragraph pursuant to the instructions of the Distributor on or before the seventh day subsequent to its having received the notice of redemption in proper form. The proceeds of any redemption of Shares shall be paid by the Fund as follows: (i) in the case of Shares subject to a contingent deferred sales charge, any applicable contingent deferred sales charge shall be paid to the Distributor, and the balance shall be paid to or for the account of the redeeming shareholder, in each case in accordance with applicable provisions of the Prospectus; and (ii) in the case of all other Shares, proceeds shall be paid to or for the account of the redeeming shareholder, in each case in accordance with applicable provisions of the Prospectus.
4.3 Redemption of any class and/or series of Shares or payment may be suspended at times when the New York Stock Exchange is closed for other than customary weekends and holidays, when trading on said Exchange is restricted, when an emergency exists as a result of which disposal by the Fund of securities owned by it is not reasonably practicable or it is not reasonably practicable for the Fund fairly to determine the value of its net assets, or during any other period when the Securities and Exchange Commission, by order, so permits.
5.1 Subject to the possible suspension of the sale of Shares as provided herein, the Fund agrees to sell its Shares so long as it has Shares of the respective class and/or series available.
5.2 The Fund shall furnish the Distributor copies of all information, financial statements and other papers which the Distributor may reasonably request for use in connection with the distribution of Shares, and this shall include one certified copy, upon request by the Distributor, of all financial statements prepared for the Fund by independent public accountants. The Fund shall make available to the Distributor such number of copies of its Prospectus and annual and interim reports as the Distributor shall reasonably request.
5.3 The Fund shall take, from time to time, but subject to the necessary approval of the Board of Directors and the shareholders, all necessary action to fix the number of authorized Shares and such steps as may be necessary to register the same under the Securities Act, to the end that there will be available for sale such number of Shares as the Distributor reasonably may expect to sell. The Fund agrees to file from time to time such amendments, reports and other documents as may be necessary in order that there will be no untrue statement of a material fact in the Registration Statement, or necessary in order that there will be no omission to state a material fact in the Registration Statement which omission would make the statements therein misleading.
5.4 The Fund shall use its best efforts to qualify and maintain the qualification of any appropriate number of its Shares for sales under the securities laws of such states as the Distributor and the Fund may approve; provided that the Fund shall not be required to amend its Articles of Incorporation or By-Laws to comply with the laws of any state, to maintain an office in any state, to change the terms of the offering of its Shares in any state from the terms set forth in its Registration Statement, to qualify as a foreign corporation in any state or to consent to service of process in any state other than with respect to claims arising out of the offering of its Shares. Any such qualification
may be withheld, terminated or withdrawn by the Fund at any time in its discretion. As provided in Section 9 hereof, the expense of qualification and maintenance of qualification shall be borne by the Fund. The Distributor shall furnish such information and other material relating to its affairs and activities as may be required by the Fund in connection with such qualifications.
6.1 The Distributor shall devote reasonable time and effort to effect sales of Shares, but shall not be obligated to sell any specific number of Shares. Sales of the Shares shall be on the terms described in the Prospectus. The Distributor may enter into like arrangements with other investment companies. The Distributor shall compensate the selected dealers as set forth in the Prospectus.
6.2 In selling the Shares, the Distributor shall use its best efforts in all respects duly to conform with the requirements of all federal and state laws relating to the sale of such securities. Neither the Distributor nor any selected dealer nor any other person is authorized by the Fund to give any information or to make any representations, other than those contained in the Registration Statement or Prospectus and any sales literature approved by appropriate officers of the Fund.
6.3 The Distributor shall adopt and follow procedures for the confirmation of sales to investors and selected dealers, the collection of amounts payable by investors and selected dealers on such sales and the cancellation of unsettled transactions, as may be necessary to comply with the requirements of the National Association of Securities Dealers, Inc. (NASD).
6.4 The Distributor shall have the right to enter into selected dealer agreements with registered and qualified securities dealers and other financial institutions of its choice for the sale of Shares, provided that the Fund shall approve the forms of such agreements. Within the United States, the Distributor shall offer and sell Shares only to such selected dealers as are members in good standing of the NASD. Shares sold to selected dealers shall be for resale by such dealers only at the offering price determined as set forth in the Prospectus.
7.1 With respect to classes and/or series of Shares which impose a front- end sales charge, the Distributor shall receive and may retain any portion of any front-end sales charge which is imposed on such sales and not reallocated to selected dealers as set forth in the Prospectus, subject to the limitations of Article III, Section 26 of the NASD Rules of Fair Practice.
Payment of these amounts to the Distributor is not contingent upon the adoption or continuation of any applicable Plans.
7.2 With respect to classes and/or series of Shares which impose a contingent deferred sales charge, the Distributor shall receive and may retain any contingent deferred sales charge which is imposed on such sales as set forth in the Prospectus, subject to the limitations of Article III, Section 26 of the NASD Rules of Fair Practice. Payment of these amounts to the Distributor is not contingent upon the adoption or continuation of any Plan.
8.1 The Fund shall pay to the Distributor as compensation for services under any Plans adopted by the Fund and this Agreement a distribution and service fee with respect to the Fund's classes and/or series of Shares as described in each of the Fund's respective Plans and this Agreement.
8.2 So long as a Plan or any amendment thereto is in effect, the Distributor shall inform the Board of Directors of the commissions and account servicing fees with respect to the relevant class and/or series of Shares to be paid by the Distributor to account executives of the Distributor and to broker- dealers and financial institutions which have dealer agreements with the Distributor. So long as a Plan (or any amendment thereto) is in effect, at the request of the Board of Directors or any agent or representative of the Fund, the Distributor shall provide such additional information as may reasonably be requested concerning the activities of the Distributor hereunder and the costs incurred in performing such activities with respect to the relevant class and/or series of Shares.
The Fund shall bear all costs and expenses of the continuous offering of its Shares (except for those costs and expenses borne by the Distributor pursuant to a Plan and subject to the requirements of Rule 12b-1 under the Investment Company Act), including fees and disbursements of its counsel and auditors, in connection with the preparation and filing of any required Registration Statements and/or Prospectuses under the Investment Company Act or the Securities Act, and all amendments and supplements thereto, and preparing and mailing annual and periodic reports and proxy materials to shareholders (including but not limited to the expense of setting in type any such Registration Statements, Prospectuses, annual or periodic reports or proxy materials). The Fund shall also bear the cost of expenses of qualification of the Shares for sale, and, if necessary or advisable in connection therewith, of qualifying the Fund as a broker or dealer, in such states of the United States or other
jurisdictions as shall be selected by the Fund and the Distributor pursuant to
Section 5.4 hereof and the cost and expense payable to each such state for
continuing qualification therein until the Fund decides to discontinue such
qualification pursuant to Section 5.4 hereof. As set forth in Section 8 above,
the Fund shall also bear the expenses it assumes pursuant to any Plan, so long
as such Plan is in effect.
10.1 The Fund agrees to indemnify, defend and hold the Distributor, its officers and directors and any person who controls the Distributor within the meaning of Section 15 of the Securities Act, free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any reasonable counsel fees incurred in connection therewith) which the Distributor, its officers, directors or any such controlling person may incur under the Securities Act, or under common law or otherwise, arising out of or based upon any untrue statement of a material fact contained in the Registration Statement or Prospectus or arising out of or based upon any alleged omission to state a material fact required to be stated in either thereof or necessary to make the statements in either thereof not misleading, except insofar as such claims, demands, liabilities or expenses arise out of or are based upon any such untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information furnished in writing by the Distributor to the Fund for use in the Registration Statement or Prospectus; provided, however, that this indemnity agreement shall not inure to the benefit of any such officer, director, trustee or controlling person unless a court of competent jurisdiction shall determine in a final decision on the merits, that the person to be indemnified was not liable by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of its reckless disregard of its obligations under this Agreement (disabling conduct), or, in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the indemnified person was not liable by reason of disabling conduct, by (a) a vote of a majority of a quorum of directors or trustees who are neither "interested persons" of the Fund as defined in Section 2(a)(19) of the Investment Company Act nor parties to the proceeding, or (b) an independent legal counsel in a written opinion. The Fund's agreement to indemnify the Distributor, its officers and directors or trustees and any such controlling person as aforesaid is expressly conditioned upon the Fund's being promptly notified of any action brought against the Distributor, its officers or directors or trustees, or any such controlling person, such notification to be given by letter or telegram addressed to the Fund at its principal business office. The Fund agrees promptly to notify the Distributor of the commencement of any litigation or proceedings against it or any of
its officers or directors in connection with the issue and sale of any Shares.
10.2 The Distributor agrees to indemnify, defend and hold the Fund, its officers and Directors and any person who controls the Fund, if any, within the meaning of Section 15 of the Securities Act, free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending against such claims, demands or liabilities and any reasonable counsel fees incurred in connection therewith) which the Fund, its officers and Directors or any such controlling person may incur under the Securities Act or under common law or otherwise, but only to the extent that such liability or expense incurred by the Fund, its Directors or officers or such controlling person resulting from such claims or demands shall arise out of or be based upon any alleged untrue statement of a material fact contained in information furnished in writing by the Distributor to the Fund for use in the Registration Statement or Prospectus or shall arise out of or be based upon any alleged omission to state a material fact in connection with such information required to be stated in the Registration Statement or Prospectus or necessary to make such information not misleading. The Distributor's agreement to indemnify the Fund, its officers and Directors and any such controlling person as aforesaid, is expressly conditioned upon the Distributor's being promptly notified of any action brought against the Fund, its officers and Directors or any such controlling person, such notification being given to the Distributor at its principal business office.
11.1 This Agreement shall become effective as of the date first above written and shall remain in force for two years from the date hereof and thereafter, but only so long as such continuance is specifically approved at least annually by (a) the Board of Directors of the Fund, or by the vote of a majority of the outstanding voting securities of the applicable class and/or series of the Fund, and (b) by the vote of a majority of those Directors who are not parties to this Agreement or interested persons of any such parties and who have no direct or indirect financial interest in this Agreement or in the operation of any of the Fund's Plans or in any agreement related thereto (Independent Directors), cast in person at a meeting called for the purpose of voting upon such approval.
11.2 This Agreement may be terminated at any time, without the payment of any penalty, by a majority of the Independent Directors or by vote of a majority of the outstanding voting securities of the applicable class and/or series of the Fund, or by the Distributor, on sixty (60) days' written notice to the other party. This Agreement shall automatically terminate in the event of its assignment.
11.3 The terms "affiliated person," "assignment," "interested person" and "vote of a majority of the outstanding voting securities", when used in this Agreement, shall have the respective meanings specified in the Investment Company Act.
This Agreement may be amended by the parties only if such amendment is specifically approved by (a) the Board of Directors of the Fund, or by the vote of a majority of the outstanding voting securities of the applicable class and/or series of the Fund, and (b) by the vote of a majority of the Independent Directors cast in person at a meeting called for the purpose of voting on such amendment.
The amendment or termination of this Agreement with respect to any class and/or series shall not result in the amendment or termination of this Agreement with respect to any other class and/or series unless explicitly so provided.
The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect and the applicable provisions of the Investment Company Act. To the extent that the applicable law of the State of New York, or any of the provisions herein, conflict with the applicable provisions of the Investment Company Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year above written.
Prudential Securities Incorporated
By: /s/ Robert F. Gunia
-------------------
Robert F. Gunia
Senior Vice President
|
Prudential Diversified Bond Fund, Inc.
By: /s/ Richard A. Redeker
----------------------
Richard A. Redeker
President
|
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 3 to Registration Statement No. 33-55441 of Prudential Diversified Bond Fund, Inc. of our report dated February 9, 1996, appearing in the Statement of Additional Information, which is incorporated by reference in such Registration Statement, and to the references to us under the headings "Financial Highlights" in the Prospectus, which is incorporated by reference in such Registration Statement, and "Custodian, Transfer and Dividend Disbursing Agent and Independent Accountants" in the Statement of Additional Information.
/s/ Deloitte & Touche LLP Deloitte & Touche LLP New York, New York August 7, 1996 |
EXHIBIT 18
PRUDENTIAL DIVERSIFIED BOND FUND, INC.
(the Fund)
PLAN PURSUANT TO RULE 18F-3
The Fund hereby adopts this plan pursuant to Rule 18f-3 under the Investment Company Act of 1940 (the 1940 Act), setting forth the separate arrangement and expense allocation of each class of shares. Any material amendment to this plan is subject to prior approval of the Board of Directors, including a majority of the independent Directors.
CLASS CHARACTERISTICS
CLASS A SHARES: Class A shares are subject to a high initial sales charge
- --------------
and a distribution and/or service fee pursuant to Rule 12b-1
under the 1940 Act (Rule 12b-1 fee) not to exceed .30 of 1%
per annum of the average daily net assets of the class. The
initial sales charge is waived or reduced for certain
eligible investors.
CLASS B SHARES: Class B shares are not subject to an initial sales charge
- --------------
but are subject to a high contingent deferred sales charge
(declining by 1% each year) which will be imposed on certain
redemptions and a Rule 12b-1 fee of not to exceed 1% per
annum of the average daily net assets of the class. The
contingent deferred sales charge is waived for certain
eligible investors. Class B shares automatically convert to
Class A shares approximately seven years after purchase.
CLASS C SHARES: Class C shares are not subject to an initial sales charge
- --------------
but are subject to a low contingent deferred sales charge
(declining by 1% each year) which will be imposed on certain
redemptions and a Rule 12b-1 fee not to exceed 1% per annum
of the average daily net assets of the class.
CLASS Z SHARES: Class Z shares are not subject to either an initial or
- --------------
contingent deferred sales charge nor are they subject to any
Rule 12b-1 fee.
|
INCOME AND EXPENSE ALLOCATIONS
Income, any realized and unrealized capital gains and losses, and expenses not allocated to a particular class, will be allocated to each class on the basis of the net asset value of that class in relation to the net asset value of the Fund.
DIVIDENDS AND DISTRIBUTIONS
Dividends and other distributions paid by the Fund to each class of shares, to the extent paid, will be paid on the same day and at the same time, and will be determined in the same manner and will be in the same amount, except that the amount of the dividends and other distributions declared and paid by a particular class may be different from that paid by another class because of Rule 12b-1 fees and other expenses borne exclusively by that class.
EXCHANGE PRIVILEGE
Each class of shares is generally exchangeable for the same class of shares (or the class of shares with similar characteristics), if any, of the other Prudential Mutual Funds (subject to certain minimum investment requirements) at relative net asset value without the imposition of any sales charge.
Class B and Class C shares (which are not subject to a contingent deferred sales charge) of shareholders who qualify to purchase Class A shares at net asset value will be automatically exchanged for Class A shares on a quarterly basis, unless the shareholder elects otherwise.
CONVERSION FEATURES
Class B shares will automatically convert to Class A shares on a quarterly basis approximately seven years after purchase. Conversions will be effected at relative net asset value without the imposition of any additional sales charge.
GENERAL
A. Each class of shares shall have exclusive voting rights on any matter submitted to shareholders that relates solely to its arrangement and shall have separate voting rights on any matter submitted to shareholders in which the interests of one class differ from the interests of any other class.
B. On an ongoing basis, the Directors, pursuant to their fiduciary responsibilities under the 1940 Act and otherwise, will monitor the Fund for the existence of any material conflicts among the interests of its several classes. The Directors, including a majority of the independent Directors, shall take such action as is reasonably necessary to eliminate any such conflicts that may develop. Prudential Mutual Fund Management, Inc., the Fund's Manager, will be responsible for reporting any potential or existing conflicts to the Directors.
C. For purposes of expressing an opinion on the financial statements of the Fund, the methodology and procedures for calculating the net asset value and dividends/distributions of the Fund's several classes and the proper allocation of income and expenses among such classes will be examined annually by the Fund's independent auditors who, in performing such examination, shall consider the factors set forth in the relevant auditing standards adopted, from time to time, by the American Institute of Certified Public Accountants.
Dated: April 9, 1996
| ARTICLE 6 |
| SERIES: |
| NUMBER: 001 |
| NAME: PRUDENTIAL DIVERSIFIED BOND FUND (CLASS A) |
| PERIOD TYPE | 6 MOS | |
| FISCAL YEAR END | DEC 31 1995 | |
| PERIOD END | JUN 30 1996 | |
| INVESTMENTS AT COST | 140,793,408 | |
| INVESTMENTS AT VALUE | 139,813,050 | |
| RECEIVABLES | 11,715,759 | |
| ASSETS OTHER | 187,894 | |
| OTHER ITEMS ASSETS | 0 | |
| TOTAL ASSETS | 151,716,703 | |
| PAYABLE FOR SECURITIES | 9,501,946 | |
| SENIOR LONG TERM DEBT | 0 | |
| OTHER ITEMS LIABILITIES | 1,207,486 | |
| TOTAL LIABILITIES | 10,709,432 | |
| SENIOR EQUITY | 0 | |
| PAID IN CAPITAL COMMON | 142,706,291 | |
| SHARES COMMON STOCK | 10,735,601 | |
| SHARES COMMON PRIOR | 7,425,218 | |
| ACCUMULATED NII CURRENT | 0 | |
| OVERDISTRIBUTION NII | 0 | |
| ACCUMULATED NET GAINS | (718,662) | |
| OVERDISTRIBUTION GAINS | 0 | |
| ACCUM APPREC OR DEPREC | (980,358) | |
| NET ASSETS | 141,007,271 | |
| DIVIDEND INCOME | 44,565 | |
| INTEREST INCOME | 4,622,288 | |
| OTHER INCOME | 0 | |
| EXPENSES NET | 765,559 | |
| NET INVESTMENT INCOME | 3,901,294 | |
| REALIZED GAINS CURRENT | (965,781) | |
| APPREC INCREASE CURRENT | (4,772,503) | |
| NET CHANGE FROM OPS | (1,836,990) | |
| EQUALIZATION | 0 | |
| DISTRIBUTIONS OF INCOME | 0 | |
| DISTRIBUTIONS OF GAINS | 0 | |
| DISTRIBUTIONS OTHER | (3,901,294) | |
| NUMBER OF SHARES SOLD | 58,500,069 | |
| NUMBER OF SHARES REDEEMED | (16,760,529) | |
| SHARES REINVESTED | 2,602,913 | |
| NET CHANGE IN ASSETS | 38,604,169 | |
| ACCUMULATED NII PRIOR | 0 | |
| ACCUMULATED GAINS PRIOR | 247,119 | |
| OVERDISTRIB NII PRIOR | 0 | |
| OVERDIST NET GAINS PRIOR | 0 | |
| GROSS ADVISORY FEES | 301,762 | |
| INTEREST EXPENSE | 0 | |
| GROSS EXPENSE | 524,149 | |
| AVERAGE NET ASSETS | 17,317,000 | |
| PER SHARE NAV BEGIN | 13.79 | |
| PER SHARE NII | (0.20) | |
| PER SHARE GAIN APPREC | 0.00 | |
| PER SHARE DIVIDEND | 0.00 | |
| PER SHARE DISTRIBUTIONS | (0.46) | |
| RETURNS OF CAPITAL | 0.00 | |
| PER SHARE NAV END | 13.13 | |
| EXPENSE RATIO | 0.75 | |
| AVG DEBT OUTSTANDING | 0 | |
| AVG DEBT PER SHARE | 0.00 |
| ARTICLE 6 |
| SERIES: |
| NUMBER: 002 |
| NAME: PRUDENTIAL DIVERSIFIED BOND FUND (CLASS B) |
| PERIOD TYPE | 6 MOS | |
| FISCAL YEAR END | DEC 31 1995 | |
| PERIOD END | JUN 30 1996 | |
| INVESTMENTS AT COST | 140,793,408 | |
| INVESTMENTS AT VALUE | 139,813,050 | |
| RECEIVABLES | 11,715,759 | |
| ASSETS OTHER | 187,894 | |
| OTHER ITEMS ASSETS | 0 | |
| TOTAL ASSETS | 151,716,703 | |
| PAYABLE FOR SECURITIES | 9,501,946 | |
| SENIOR LONG TERM DEBT | 0 | |
| OTHER ITEMS LIABILITIES | 1,207,486 | |
| TOTAL LIABILITIES | 10,709,432 | |
| SENIOR EQUITY | 0 | |
| PAID IN CAPITAL COMMON | 142,706,291 | |
| SHARES COMMON STOCK | 10,735,601 | |
| SHARES COMMON PRIOR | 7,425,218 | |
| ACCUMULATED NII CURRENT | 0 | |
| OVERDISTRIBUTION NII | 0 | |
| ACCUMULATED NET GAINS | (718,662) | |
| OVERDISTRIBUTION GAINS | 0 | |
| ACCUM APPREC OR DEPREC | (980,358) | |
| NET ASSETS | 141,007,271 | |
| DIVIDEND INCOME | 44,565 | |
| INTEREST INCOME | 4,622,288 | |
| OTHER INCOME | 0 | |
| EXPENSES NET | 765,559 | |
| NET INVESTMENT INCOME | 3,901,294 | |
| REALIZED GAINS CURRENT | (965,781) | |
| APPREC INCREASE CURRENT | (4,772,503) | |
| NET CHANGE FROM OPS | (1,836,990) | |
| EQUALIZATION | 0 | |
| DISTRIBUTIONS OF INCOME | 0 | |
| DISTRIBUTIONS OF GAINS | 0 | |
| DISTRIBUTIONS OTHER | (3,901,294) | |
| NUMBER OF SHARES SOLD | 58,500,069 | |
| NUMBER OF SHARES REDEEMED | (16,760,529) | |
| SHARES REINVESTED | 2,602,913 | |
| NET CHANGE IN ASSETS | 38,604,169 | |
| ACCUMULATED NII PRIOR | 0 | |
| ACCUMULATED GAINS PRIOR | 247,119 | |
| OVERDISTRIB NII PRIOR | 0 | |
| OVERDIST NET GAINS PRIOR | 0 | |
| GROSS ADVISORY FEES | 301,762 | |
| INTEREST EXPENSE | 0 | |
| GROSS EXPENSE | 524,149 | |
| AVERAGE NET ASSETS | 100,917,000 | |
| PER SHARE NAV BEGIN | 13.79 | |
| PER SHARE NII | (0.24) | |
| PER SHARE GAIN APPREC | 0.00 | |
| PER SHARE DIVIDEND | 0.00 | |
| PER SHARE DISTRIBUTIONS | (0.42) | |
| RETURNS OF CAPITAL | 0.00 | |
| PER SHARE NAV END | 13.13 | |
| EXPENSE RATIO | 1.35 | |
| AVG DEBT OUTSTANDING | 0 | |
| AVG DEBT PER SHARE | 0.00 |
| ARTICLE 6 |
| SERIES: |
| NUMBER: 003 |
| NAME: PRUDENTIAL DIVERSIFIED BOND FUND (CLASS C) |
| PERIOD TYPE | 6 MOS | |
| FISCAL YEAR END | DEC 31 1995 | |
| PERIOD END | JUN 30 1996 | |
| INVESTMENTS AT COST | 140,793,408 | |
| INVESTMENTS AT VALUE | 139,813,050 | |
| RECEIVABLES | 11,715,759 | |
| ASSETS OTHER | 187,894 | |
| OTHER ITEMS ASSETS | 0 | |
| TOTAL ASSETS | 151,716,703 | |
| PAYABLE FOR SECURITIES | 9,501,946 | |
| SENIOR LONG TERM DEBT | 0 | |
| OTHER ITEMS LIABILITIES | 1,207,486 | |
| TOTAL LIABILITIES | 10,709,432 | |
| SENIOR EQUITY | 0 | |
| PAID IN CAPITAL COMMON | 142,706,291 | |
| SHARES COMMON STOCK | 10,735,601 | |
| SHARES COMMON PRIOR | 7,425,218 | |
| ACCUMULATED NII CURRENT | 0 | |
| OVERDISTRIBUTION NII | 0 | |
| ACCUMULATED NET GAINS | (718,662) | |
| OVERDISTRIBUTION GAINS | 0 | |
| ACCUM APPREC OR DEPREC | (980,358) | |
| NET ASSETS | 141,007,271 | |
| DIVIDEND INCOME | 44,565 | |
| INTEREST INCOME | 4,622,288 | |
| OTHER INCOME | 0 | |
| EXPENSES NET | 765,559 | |
| NET INVESTMENT INCOME | 3,901,294 | |
| REALIZED GAINS CURRENT | (965,781) | |
| APPREC INCREASE CURRENT | (4,772,503) | |
| NET CHANGE FROM OPS | (1,836,990) | |
| EQUALIZATION | 0 | |
| DISTRIBUTIONS OF INCOME | 0 | |
| DISTRIBUTIONS OF GAINS | 0 | |
| DISTRIBUTIONS OTHER | (3,901,294) | |
| NUMBER OF SHARES SOLD | 58,500,069 | |
| NUMBER OF SHARES REDEEMED | (16,760,529) | |
| SHARES REINVESTED | 2,602,913 | |
| NET CHANGE IN ASSETS | 38,604,169 | |
| ACCUMULATED NII PRIOR | 0 | |
| ACCUMULATED GAINS PRIOR | 247,119 | |
| OVERDISTRIB NII PRIOR | 0 | |
| OVERDIST NET GAINS PRIOR | 0 | |
| GROSS ADVISORY FEES | 301,762 | |
| INTEREST EXPENSE | 0 | |
| GROSS EXPENSE | 524,149 | |
| AVERAGE NET ASSETS | 3,134,000 | |
| PER SHARE NAV BEGIN | 13.79 | |
| PER SHARE NII | (0.24) | |
| PER SHARE GAIN APPREC | 0.00 | |
| PER SHARE DIVIDEND | 0.00 | |
| PER SHARE DISTRIBUTIONS | (0.42) | |
| RETURNS OF CAPITAL | 0.00 | |
| PER SHARE NAV END | 13.13 | |
| EXPENSE RATIO | 1.35 | |
| AVG DEBT OUTSTANDING | 0 | |
| AVG DEBT PER SHARE | 0.00 |