Notes to Financial Statements PRUDENTIAL MUNICIPAL BOND FUND
The Fund, along with other affiliated registered investment companies (the 'Funds'), entered into a credit
agreement (the 'Agreement') on December 31, 1996 with an unaffiliated lender. The maximum commitment under
the Agreement is $200,000,000. The Agreement expires on December 30, 1997. Interest on any such
borrowings outstanding will be at market rates. The purpose of the Agreement is to serve as an alternative source
of funding for capital share redemptions. The Fund has not borrowed any amounts pursuant to the Agreement as
of April 30, 1997. The Funds pay a commitment fee at an annual rate of .055 of 1% on the unused portion of the
credit facility. The commitment fee is accrued and paid quarterly on a pro-rata basis by the Funds.
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly-owned subsidiary of PIFM, serves as the Fund's
transfer agent. During the year ended April 30, 1997, the Fund incurred fees of approximately $653,000
($370,500-High Yield Series; $252,100-Insured Series; $30,400-Intermediate Series) for the services of
PMFS. As of April 30, 1997, approximately $53,200 ($30,700-High Yield Series; $20,100-Insured Series;
$2,400-Intermediate Series) of such fees were due to PMFS. Transfer agent fees and expenses in the Statement
of Operations also include certain out of pocket expenses paid to non-affiliates.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term investments, for the year ended April 30, 1997,
were as follows:
At April 30, 1997, the Insured Series and the Intermediate Series sold 517,000 and 47,000 financial futures
contracts, respectively of U.S. Treasury Bonds expiring in June 97.
The values of these financial futures contracts at April 30, 1997 were as follows:
The federal income tax basis of the Fund's investments, at April 30, 1997 was $949,808,490-High Yield Series;
$491,614,379-Insured Series; and $43