(LOGO)
Prudential
National
Municipals
Fund, Inc.
ANNUAL
REPORT
Dec. 31, 1995
(LOGO)
<PAGE>
Prudential National Municipals Fund, Inc.
Performance At A Glance.
Bond investors had much to cheer about in 1995. Slower economic growth prompted
interest rates to fall and bond prices to rise. Municipal bonds, in which the
Prudential National Municipals Fund invests, did well and the Fund benefitted
from the year's economic events. According to Lipper Analytical Services, your
Fund performed in-line with the average municipal bond fund.
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of 12/31/95
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 16.9% 52.1% N/A 62.6%
Class B 16.5 49.2 115.8% 295.7
Class C 16.2 N/A N/A 13.2
Lipper General Muni Avg3 16.8 50.3 128.5 317.0
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns1 As of 12/31/95
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 13.4% 8.1% N/A 8.0%
Class B 11.5 8.2 8.0% 9.2
Class C 15.2 N/A N/A 9.2
</TABLE>
<TABLE>
<CAPTION>
Dividends
& Yields Taxable Equivalent
Yield
As of Total Dividends 30-Day At Tax Rates Of
12/31/95 Paid for 12 Mos. SEC Yield 36% 39.6%
<S> <C> <C> <C> <C>
Class A $0.82% 4.45% 6.95% 7.37%
Class B $0.77 4.19 6.55 6.94
Class C $0.73 3.94 6.16 6.52
</TABLE>
Past performance in not indicative of future results. Principal and investment
return will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.
1 Source: Prudential Mutual Fund Management and Lipper Analytical Services. The
cumulative total returns do not take into account sales charges. The average
annual returns do take into account applicable sales charges. The Fund charges
a maximum front-end sales load of 3% for Class A shares and a six-year
contingent deferred sales charge of 5%, 4% 3%, 2%, 1% and 1% for Class B
shares. Class C shares have a 1% CDSC for one year. Class B shares will
automatically convert to Class A shares on a quarterly basis approximately
seven years after purchase.
2 Inception dates: 1/22/90 Class A shares; 4/25/80 Class B shares; 8/1/94
Class C shares.
3 Lipper average return are for the 225 funds in the general municipal debt
fund category for one year, 98 for five years, 56 for ten years and 31 since
inception, according to Lipper Analytical Services, Inc.
How Investments Compared.
(As of 12/31/95)
(CHART)
Source: Lipper Analytical Services. Financial markets change, so a mutual
fund's past performance should never be used to predict future results. The
risks to each of the investments listed above are different -- we provide
12-month total return averages for several Lipper mutual fund categories to
show you that reaching for higher yields means tolerating more risk. The
greater the risk, the larger the potential reward or loss. In addition, we've
added historical 20-year average annual returns. These returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate, sometimes substantially. Smaller
capitalization stocks offer greater potential for long-term growth but may be
more volatile than larger capitalization stocks. Investors have received higher
historical total returns from stocks than from most other investments.
General Bond Funds provide more income than stock funds, which can help smooth
out their total returns year by year. But their prices still fluctuate
(sometimes a good deal) and their returns have been historically lower than
those of stock funds. Unlike bond funds, bonds, if held to maturity, generally
offer a fixed rate of return and fixed principal value.
General Municipal Debt Funds invest in bonds issued by state governments, state
agencies and/or municipalities. This investment provides income that is usually
exempt from federal and state income taxes.
Money Market Funds attempt to preserve a constant share value; they don't
fluctuate much in price but, historically their returns have been generally
among the lowest of the major investment categories.
* 19 years for General Muni Debt Funds.
<PAGE>
Patricia Dolan, Fund Manager
(PHOTO)
Portfolio
Manager's Report
The Prudential National Municipals Fund invests in carefully selected, medium
quality, long-term municipal bonds that offer a high level of current income
exempt from federal income taxes. These bonds are varied among the states,
sectors and maturities.
Strategy Session.
Economic growth slowed in 1995 and interest rates fell. As they fell, we
pursued several different strategies. Thinking that interest rates could fall
even further, we first purchased bonds with longer maturities, simultaneously
locking in higher yields while increasing the Fund's potential for price
appreciation. We lengthened the Fund's duration over the year from 7.6 years on
December 31, 1994 to 8.4 years on December 31, 1995.
Sector Breakdown.
Prudential National Municipals Fund, Inc.
as of 12/31/95. Holdings subject to change.
(CHART)
Second, we increased our "non-callable" and zero coupon bond holdings. Unlike
callable bonds, non-callable bonds cannot be called by their issuers before
their maturity dates -- something issuers like to do when rates fall so that
they can "borrow" at lower cost. Non-callable bonds tend to perform well when
interest rates fall. We bought zero-coupon bonds mostly for price appreciation
potential. While they pay no interest, their prices are discounted and
appreciate as they approach maturity.
We also bought BBB-rated, tax-exempt bonds, now 31% of total net assets from
17% on June 30, 1995. Our holdings in these lower quality BBB-rated bonds is
counterbalanced by the Fund's 42% position in very high quality (AAA-rated)
insured bonds. Insured bonds, which represent a large part of today's municipal
market, have high credit quality because their insurers guarantee their coupon
payments and principal. The Fund's average credit quality was "A" on December
31, 1995.
While we remained well-diversified geographically, we continued to favor
"specialty" state/territory bonds. These bonds are called "specialty" because
they are in strong demand by in-state residents but are occasionally limited in
supply. We held 17% of assets in New York bonds, 7 % in California bonds and 7%
in Puerto Rico bonds. New York bonds were plentiful and inexpensive, so we
bought more of them. Insured California bonds were a bargain earlier in the
year, but were fully valued by year end. Some of the Puerto Rico bonds we
bought in June rose in price as we'd hoped, but further appreciation was not
likely, so we sold them at gains and reinvested the proceeds.
What Is Duration?
Duration is a statistical measure of a fund's potential price movement in
response to changing interest rates. The longer a fund's duration, the more
likely it is to perform well when interest rates fall. When rates are rising,
it often pays to keep duration short to help protect the value of fund shares.
<PAGE>
What Went Well.
Lengthening Duration.
We correctly anticipated that interest rates would fall further in the fourth
quarter and lengthened the Fund's duration. This was the correct move; having
a
long duration as interest rates fell helped provide for some price appreciation
and yield preservation. On December 31, 1995, the Fund's duration was 8.4
years, up from 8.1 years on June 30, 1995 and 7.6 years on December 31, 1994.
We Liked California.
In the wake of the controversy surrounding the Orange County bankruptcy, its
bonds were cheap, even its insured ones. As Orange County stabilized
financially, the prices of its insured bonds rose, providing the Fund with some
price appreciation.
Non-Callable & Zero
Coupon Bond Strategy.
Our strategy to buy zero coupon and non-callable bonds for price appreciation
worked well as interest rates found new lows. The prices of these types of
bonds tend to rise when interest rates fall. The non-callable bonds helped
provide income as well and represented 29% of assets on December 31, 1995; zero
coupon bonds were 10% of assets.
And Not So Well.
A Day Late,
But Not a Dollar Short.
Traditionally, in the fourth quarter, municipal bond prices fall because many
municipalities issue new bonds. In anticipation, we raised our short-term
holdings to 10% by the end of October and waited to pick up some bargains.
However, in 1995's fourth quarter, municipal bond prices didn't drop as
expected. In fact, they surged and we needed to invest to participate in the
rally. While we had money to spend, we were forced to purchase bonds at higher
prices than we would have preferred.
AMT Wasn't Repealed.
Throughout the year, we gradually increased our holdings of bonds subject to
the federal alternative minimum tax (AMT) to 20% at year end from 9% at the
same point last year. AMT bonds finance limited-use facilities, such as sports
arenas, and their income may be taxable for certain investors. We believed that
congressional talk of repealing AMT tax legislation might push their prices
upward. However, federal budget negotiations absorbed congressional attention,
making a reversal of AMT legislation unlikely for the near future.
Five Largest
Holdings.*
3.1% New York City Municipal
Water Fin. Auth. (FGIC)
2.7% Tulsa Municipal Airport
Auth. American Airlines
2.7% Indianapolis Airport Auth.
United Airlines
2.2% Ohio St. Water Dev. Auth.
Buckeye Power (AMBAC)
2.1% Long Beach (CA)
Aquarium of the Pacific
*Expressed as a percentage of total net assets as of 12/31/95. Holdings subject
to change.
Looking Ahead.
Our 1996 outlook for bonds is positive. We think interest rates will continue
to fall, inflation will stay at low levels and economic growth, while slow,
will remain positive. There is no guarantee that interest rates will continue
to fall, but if they do, we'll expect municipalities to issue more bonds, and
new issues would be welcome in this thirsty market.
Still, we expect U.S. Treasury bonds to outperform municipal bonds again in
1996, as they did in 1995. We think municipal bonds will remain attractive, but
investors should be prepared to weather some volatility. 1996 is an election
year and municipal bond prices could be sensitive to any political proposals to
reduce the federal income tax paid by wealthy individuals.
This uncertainty creates opportunity for municipal bond investors.
- -------------------------------------------------------------------------------
1
President's Letter February 6, 1996
(PHOTO)
Dear Shareholder:
For many investors, 1995 was a profitable year -- most stock and bond funds
enjoyed healthy returns from the U.S. markets. While climbing returns can tempt
even the most skittish investors to start buying again, it is important to
remember that the stock and bond markets go down just as they go up. At times
like these, remember the importance of working with your Financial Advisor or
Registered Representative to help you find investments that are consistent with
your risk tolerance and time horizon. Your Financial Advisor or Registered
Representative can help you maintain realistic expectations about both the
potential performance and risks associated with your investments.
Shareholder Legislative Action Program.
From time to time we've been informing you about significant legislation before
Congress, such as the American Dream Savings Account, that may potentially
impact mutual fund investors. We want to make it easier for you to share your
views with your Congressional member. So, beginning in 1996, whenever Congress
is considering legislation that would affect you, we'll send you postage-paid
message cards that you simply drop in the mail if you want to let your senator
or representative know how you want him or her to vote.
Fund Profiles.
Over the past year, we've worked to make your shareholder reports more
interesting, informative and easy to read. This year, we'll be considering
"fund profiles." Some mutual fund companies now offer one to shareholders along
with a full prospectus. The purpose of a fund profile is to provide a very
brief, reader-friendly summary of a fund's objective, investments, risks and
expenses. Would you like to see fund profiles from us? Please call your
Financial Advisor or Registered Representative to share your views.
As always, thank you for your confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
- -------------------------------------------------------------------------------
2
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------------------
- --------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
LONG-TERM INVESTMENTS--98.3%
- -----------------------------------------------------------------------------
- -------------------------------------------------
Alabama--1.8%
Courtland Ind. Dev. Brd. Rev., Champion Int'l. Corp.,
Ser. A Baa1
7.20% 12/01/13 $ 6,000 $ 6,604,080
Solid Waste Disp. Rev. Baa1
5.90 2/01/17 2,000 2,005,900
Solid Waste Disp. Rev., A.M.T. Baa1
6.50 9/01/25 5,000 5,215,700
------------
13,825,680
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Arizona--5.2%
Arizona St. Mun. Fin. Proj., Cert. of Part., Ser. 25,
A.M.B.A.C. Aaa
7.875 8/01/14 2,250 3,007,148
Chandler, Cap. Apprec. Ref., F.G.I.C. Aaa
Zero 7/01/02 2,000 1,493,460
Maricopa Cnty. Ind. Dev. Auth. Hosp. Fac. Rev.,
Samaritan Hlth. Svcs. Aaa
12.00 1/01/08 280 (c) 311,192
Maricopa Cnty. Sch. Dist.,
No. 40 Glendale Elem. Sch., A.M.B.A.C. Aaa
Zero 7/01/04 2,810 1,877,136
No. 41 Gilbert Proj., F.G.I.C. Aaa
Zero 7/01/07 1,500 843,165
No. 92 Pendergast Elem. Sch., F.G.I.C. Aaa
Zero 7/01/04 1,140 761,543
No. 11 Peoria Unified Sch. Dist., M.B.I.A. Aaa
Zero 7/01/04 1,500 1,002,030
No. 3 Tempe Elem. Sch., A.M.B.A.C. Aaa
Zero 7/01/09 1,500 750,855
No. 3 Tempe Elem. Sch., A.M.B.A.C. Aaa
Zero 7/01/14 1,500 562,605
Maricopa Cnty. Unified Sch. Dist.,
No. 80 Chandler, F.G.I.C. Aaa
Zero 7/01/09 1,330 665,758
No. 80 Chandler, M.B.I.A. Aaa
Zero 7/01/10 1,050 492,345
No. 80 Chandler, M.B.I.A. Aaa
Zero 7/01/11 1,200 530,028
No. 80 Chandler, F.G.I.C. Aaa
6.25 7/01/11 1,000 1,132,590
Phoenix St. & Hwy. User Rev., F.G.I.C. Aaa
Zero 7/01/12 3,000 1,257,060
Pima Cnty. Ind. Dev. Auth. Rev., Tucson Elec. Pwr. Co.,
F.S.A. Aaa
7.25 7/15/10 2,700 3,065,958
Pima Cnty. Unified Sch. Dist.,
No. 1, Tuscon, F.G.I.C. Aaa
7.50 7/01/10 3,000 3,785,430
No. 16, Catalina Foothills, F.G.I.C. Aaa
Zero 7/01/09 3,455 1,729,469
Salt River Proj. Agric. Imp. & Pwr. Dist., Elec. Sys.
Rev., Ser. D Aa
5.00 1/01/30 1,000 935,080
Santa Cruz Cnty., Unified Sch. Dist.,
No.1 Nogales, Cruz Cnty., A.M.B.A.C. Aaa
Zero 7/01/06 700 417,851
No.1 Nogales, Cruz Cnty., A.M.B.A.C. Aaa
Zero 1/01/06 770 476,337
Scottsdale Ind. Dev. Auth. Rev., Mem. Hosp., Ser A,
A.M.B.A.C. Aaa
8.50 9/01/07 2,100 2,285,850
Scottsdale,
Gen. Oblig. Aa1
5.50 7/01/09 500 525,340
Gen. Oblig., Ser. D Aa1
4.00 7/01/13 1,000 865,260
Tempe Union High Sch. Dist. No. 213, Ref., F.G.I.C. Aaa
7.00 7/01/08 1,000 1,186,350
- -----------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements. 3 -----
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------------------
- --------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- --------------------------------------------------
Arizona (cont'd.)
Tucson Gen. Oblig.,
Ser. A A1
7.375% 7/01/11 $ 1,000 $ 1,251,640
Ser. A A1
7.375 7/01/12 1,100 1,381,237
Ser. A A1
7.375 7/01/13 4,500 5,682,105
Tucson Wtr. Rev. A1
5.50 7/01/09 1,000 1,042,670
------------
39,317,492
- -----------------------------------------------------------------------------
- ----------------------------------------------------
California--6.9%
Foothill/Eastern Trans. Corr. Agcy., Toll Rd.,
Cap. Apprec. Baa
Zero 1/01/15 5,000 1,543,800
Cap. Apprec. Baa
Zero 1/01/17 5,000 1,350,400
Long Beach Aquarium Of The Pacific, Rev. BBB(e)
6.125 7/01/23 16,000 16,032,640
Los Angeles Metro. Trans. Auth., Sales Tax Rev., F.G.I.C.,
Ser. A Aaa
5.00 7/01/21 5,000 4,791,500
San Francisco City & Cnty. Red. Fin. Auth., Tax Alloc.
Rev., M.B.I.A. Aaa
5.00 8/01/15 2,000 1,948,720
San Francisco City Swr. Rev. Cap. Apprec., Ser. B,
F.G.I.C. Aaa
Zero 10/01/09 2,960 1,443,355
San Jose Redev. Proj., Tax Alloc., M.B.I.A. Aaa
6.00 8/01/11 5,000 5,485,300
Santa Margarita/Dana Point Auth., M.B.I.A.,
Impvt. Dists. 3-3A-4 & 4A Aaa
7.25 8/01/09 2,000 2,433,160
Impvt. Dists. 3-3A-4 & 4A Aaa
7.25 8/01/10 2,450 2,999,853
Impvt. Dists. 3-3A-4 & 4A Aaa
7.25 8/01/14 2,000 2,501,260
So. California Pub. Pwr. Auth., Pwr. Proj. Rev., F.G.I.C. Aaa
6.485(d) 7/01/17 3,000 2,906,250
So. Orange Cnty. Pub. Fin. Auth., F.G.I.C.,
Foothill Area Proj. Aaa
8.00 8/15/09 3,650 4,709,705
Foothill Area Proj. Aaa
6.50 8/15/10 2,000 2,296,120
West Contra Costa Sch. Dist., Cert. of Part. Ba1
7.125 1/01/24 1,600 1,724,544
------------
52,166,607
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Colorado--5.3%
Arapahoe Cnty. Cap. Impvt. Trust Fund Hwy.,
Pub. Hwy. Rev. Baa
Zero 8/31/06 10,000 5,196,700
Pub. Hwy. Rev. Baa
Zero 8/31/08 8,000 3,632,240
Pub. Hwy. Rev. Baa
7.00 8/31/26 3,000 3,249,330
Colorado Hsg. Fin. Auth., A.M.T.,
Sngl. Fam. Proj., Ser. A Aa
8.00 6/01/25 4,970 5,719,128
Sngl. Fam. Proj., Ser. A Aa
7.65 12/01/25 6,000 6,754,320
Sngl. Fam. Proj., Ser. B Aa
7.90 12/01/25 2,990 3,418,258
Colorado Springs Arpt. Rev., A.M.T.,
Ser. A. BBB+(e)
6.90 1/01/12 3,700 3,998,960
Ser. A. BBB+(e)
7.00 1/01/22 7,960 8,648,540
------------
40,617,476
- -----------------------------------------------------------------------------
- -----------------------------------------------------
</TABLE>
- ----- 4 See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------------------
- --------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- --------------------------------------------------
Florida--2.4%
Broward Cnty. Res. Rec. Rev., Broward Waste Energy, L.P.
South A
7.95% 12/01/08 $ 8,995 $ 10,178,922
Florida St. Brd. Ed.,
Cap. Outlay Aa
9.125 6/01/14 1,260 1,828,071
Cap. Outlay, E.T.M. Aa
9.125 6/01/14 195 286,933
Hillsborough Cnty. Ind. Dev. Auth., Poll. Ctrl. Rev.,
Tampa Elec. Proj. Aa3
8.00 5/01/22 5,000 6,003,650
------------
18,297,576
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Georgia--4.1%
Atlanta Urban Res. Fin. Auth., Clark Atlanta Univ. Dorm.
Proj. NR
9.25 6/01/10 5,590 (c) 6,819,465
Atlanta Wtr. & Swr. Rev. Aa
6.00 1/01/11 4,410 4,861,760
Burke Cnty. Dev. Auth.,
Georgia Pwr. Co., M.B.I.A. Aaa
6.625 10/01/24 500 533,280
Oglethorpe Pwr. Co., 1st Mtg., M.B.I.A. Aaa
8.00 1/01/22 5,000 6,137,750
Clarke Cnty. Sch. Dist., F.G.I.C. Aaa
5.50 7/01/08 425 445,387
Cobb Cnty. Kennestone Hosp., Auth. Rev., Ser. A, M.B.I.A. Aaa
5.00 4/01/24 750 700,537
DeKalb Cnty. Wtr. & Swr. Rev. Aa
5.25 10/01/23 250 243,565
DeKalb Private Hosp. Auth. Rev., Wesley Svcs. Inc. Proj. Aa3
8.25 9/01/15 500 521,495
Forsyth Cnty. Sch. Dist. Dev. Rev., Ser. A A1
6.75 7/01/16 500 591,390
Fulton Cnty. Bldg. Auth. Rev., Judicial Ctr. Proj. Aa
Zero 1/01/11 1,325 602,637
Fulton Cnty. Sch. Dist. Rev., Lindbrook Square Fndtn. Aa
6.375 5/01/17 750 865,920
Georgia Metro. Atl. Rapid Trans. Auth. Rev., Ser. A,
M.B.I.A. Aaa
6.90 7/01/20 500 572,110
Georgia Mun. Elec. Auth. Pwr. Rev. Ref., Ser. B A
6.25 1/01/17 475 524,082
Georgia St. Res. Fin. Auth., Sngl. Fam. Insured Mtg.,
Ser.C-C1 Aa
8.00 12/01/16 6,550 7,004,963
Green Cnty. Dev. Auth., Ind. Park Rev. NR
6.875 2/01/04 635 707,574
------------
31,131,915
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Illinois--1.9%
Chicago Illinois, Gen. Oblig., Ser. K, A.M.B.A.C. Aaa
6.25 1/01/13 6,800 (b) 7,434,440
Chicago O'Hare Int'l. Arpt., Spec. Fac. Rev., Ref. Ser. C,
M.B.I.A. Aaa
5.00 1/01/18 5,215 4,987,052
Kane & DeKalb Cntys. Cmnty. Unit Sch., A.M.B.A.C.,
Dist. No 301 Aaa
Zero 12/01/10 3,055 1,391,492
Dist. No 301 Aaa
Zero 12/01/14 1,600 576,288
------------
14,389,272
- -----------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements. 5 -----
<PAGE>
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------------------
- --------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- --------------------------------------------------
Indiana--4.2%
Indianapolis Int'l. Arpt. Auth. Rev., A.M.T.,
Federal Express Corp. Proj. Baa2
7.10% 1/15/17 $ 10,600 $ 11,475,136
United Air Lines Proj., Ser. A Baa2
6.50 11/15/31 19,850 20,293,251
------------
31,768,387
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Kentucky--2.3%
Henderson Cnty. Solid Waste Disp. Rev., MacMillan Bloedel
Proj., A.M.T. Baa2
7.00 3/01/25 11,000 11,737,110
Jefferson Cnty. Poll. Ctrl. Rev., Louisville Gas & Elec.,
Ser. A, 1st Mtg., A.M.T. Aa2
7.75 2/01/19 5,700 6,130,977
------------
17,868,087
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Louisiana--4.1%
St. Charles Parish, Louisiana Pwr. & Lt. Co., 1st Mtg.,
A.M.T. Baa2
6.875 7/01/24 5,000 5,377,650
New Orleans, Louisiana Cap. Apprec., A.M.B.A.C. Aaa
Zero 9/01/09 13,500 6,646,995
New Orleans, Louisiana Cap. Apprec., A.M.B.A.C. Aaa
Zero 9/01/16 3,785 1,233,229
Orleans Parish, Sch. Brd., E.T.M., M.B.I.A. Aaa
8.90 2/01/07 5,780 7,775,082
St. Charles Parish, Poll. Ctrl. Rev.,
Louisiana Pwr. & Lt. Co. NR
8.25 6/01/14 4,000 4,497,240
Louisiana Pwr. & Lt. Co., Ser. 1989 Baa3
8.00 12/01/14 5,000 5,647,700
------------
31,177,896
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Maryland--1.0%
Maryland St. Hlth. & Higher Edl. Facs., Auth. Rev.,
Doctor's Comnty. Hosp. Baa
5.50 7/01/24 4,000 3,535,600
Northeast Waste Disp. Auth., Baltimore City Sludge Proj. NR
7.25 7/01/07 4,096 4,320,461
------------
7,856,061
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Massachusetts--1.0%
Massachusetts St. Wtr. Res. Auth., Ser. B, M.B.I.A. Aaa
6.25 12/01/11 6,720(b ) 7,586,813
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Michigan--3.0%
Detroit Wtr. & Swr. Rev., Ser. A 1993, F.G.I.C. Aaa
7.116(d) 7/01/23 8,000 8,240,000
Holland Sch. Dist., A.M.B.A.C. Aaa
Zero 5/01/12 4,000 1,677,480
Michigan St. Hsg. Dev. Auth. Rev.,
Rental Hsg., Ser. B A(e)
7.55 4/01/23 1,000 1,079,280
Sngl. Fam. Mtg., Ser. A. AA(e)
7.50 6/01/15 5,185 5,548,054
Sngl. Fam. Mtg., Ser. D., A.M.T. AA(e)
7.75 12/01/19 3,130 3,298,269
- -----------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
- ----- 6 See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------------------
- --------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- --------------------------------------------------
Michigan (cont'd.)
Okemos Pub. Sch. Dist., M.B.I.A.,
Cnty. of Ingham Aaa
Zero 5/01/12 $ 1,100 $ 461,307
Cnty. of Ingham Aaa
Zero 5/01/13 1,700 680,918
West Ottawa Pub. Sch. Dist., Cap. Apprec., F.G.I.C. Aaa
Zero 5/01/20 6,000 1,601,880
------------
22,587,188
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Minnesota--1.8%
Anoka Hennepin Indpt. Sch. Dist., No. 11, Ser. C, C.G.I.C. Aaa
Zero 2/01/12 1,575 679,8172
Dakota Cnty. Hsg. & Redev. Auth., Burnsville & Inner
Grove,
Sngl. Fam. Mtg., F.G.I.C. Aaa
9.375% 5/01/18 10 10,735
Metropolitan Council of Minneapolis,
Hubert H. Humphrey Metrodome A
6.00 10/01/09 500 526,365
St. Paul Met. Area, Ref., Ser. A Aaa
6.25 12/01/06 750 808,650
St. Paul Met. Area, Ser. D Aaa
6.75 9/01/10 500 548,655
Minneapolis Cmnty. Dev. Agcy.,
St. Paul Hsg. & Redev. Auth. Rev. Aa
9.875 12/01/15 10 10,264
Tax Increment Rev., M.B.I.A. Aaa
Zero 9/01/01 750 581,820
Tax Increment Rev., M.B.I.A. Aaa
Zero 3/01/06 1,000 613,450
Tax Increment Rev., M.B.I.A. Aaa
Zero 9/01/07 1,000 557,440
Minneapolis Hosp. Rev.,
Lifespan Inc., Ser. B Aaa
8.70 12/01/02 820 (c) 909,019
Lifespan Inc., Ser. B Aaa
8.125 8/01/17 800 (c) 893,112
Minneapolis-St. Paul Hsg. Fin. Brd. Rev., Sngl. Fam. Mtg.,
G.N.M.A., A.M.T. AAA(e)
7.30 8/01/31 910 968,104
Minneapolis-St. Paul Met. Arpts., Ser. 7, A.M.T. Aaa
7.80 1/01/14 1,000 1,116,110
Minnesota Pub. Facs. Auth., Wtr. Poll. Ctrl. Rev. Aa+
7.00 3/01/09 650 717,945
Rochester Hlth. Care Facs. Rev., Mayo Med. Ctr., Ser. A NR
8.30 11/15/07 500 (c) 573,775
Southern Mun. Pwr. Agcy.,
Pwr. Supply Sys. Rev., Ser. A, M.B.I.A. Aaa
Zero 1/01/20 3,250 910,585
Pwr. Supply Sys. Rev., Ser. B, A.M.B.A.C., E.T.M. Aaa
5.50 1/01/15 195 203,693
St. Paul Port Auth., Energy Park Tax Increment Rev. Baa
8.00 12/01/07 780 (c) 879,559
St. Paul Science Museum, Cert. of Part., E.T.M. AAA(e)
7.50 12/15/01 1,077 1,182,995
Univ. of Minnesota Ref., Ser. A, E.T.M. A1a
6.00 2/01/11 1,000 1,006,060
------------
13,698,153
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Nevada--1.3%
Clark Cnty. Southwest Gas Corp., Ser. A, A.M.T. Baa3
6.50 12/01/33 10,000 10,160,000
- -----------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements. 7 -----
<PAGE>
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- --------------------------------------------------------------------------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- --------------------------------------------------
New Jersey--5.2%
Bergen Cnty. Util. Auth., Wtr. Poll. Ctrl. Rev., F.G.I.C.,
Ser. B, Aaa
Zero 12/15/07 $ 7,640 $ 4,311,863
Ser. B, Aaa
Zero 12/15/09 4,695 2,336,983
Hudson Cnty. Impvt. Auth., Solid Waste Sys. BBB-(e)
7.10% 1/01/20 4,500 4,608,000
New Jersey St. Hsg. & Mtg. Fin. Agcy., A.M.T., M.B.I.A. Aaa
7.70 10/01/29 3,375 3,545,269
New Jersey St. Tpke. Auth. Rev.,
Ser. C, M.B.I.A. Aaa
6.50 1/01/16 10,000 11,659,700
Ser. C, F.S.A. Aaa
6.50 1/01/16 2,500 2,914,925
Union Cnty. Utils. Auth., Solid Waste Rev., Ser. A, A.M.T. A-(e)
7.10 6/15/06 9,500 10,198,155
------------
39,574,895
- -----------------------------------------------------------------------------
- ----------------------------------------------------
New York--16.8%
New York City, Gen. Oblig.,
Ser. F Baa1
8.25 11/15/02 5,000 5,791,300
Ser. D Baa1
8.00 8/01/03 3,500 4,000,045
Ser. D Baa1
8.00 8/01/04 1,500 1,714,305
Ser. B Baa1
6.00 8/15/04 7,015 7,214,016
Ser. A Baa1
7.75 8/15/04 2,000 2,263,140
Ser. B Baa1
8.25 6/01/06 1,500 1,852,140
Ser. D Baa1
7.65 2/01/07 5,000 5,670,050
Ser. B Baa1
7.25 8/15/07 3,500 3,984,470
New York City, Mun. Wtr. Fin. Auth., Wtr. & Swr. Sys.
Rev., F.G.I.C. Aaa
6.75 6/15/16 21,250 23,784,912
New York St. Dorm. Auth. Rev.,
City Univ., Ser. A Baa1
5.70 7/01/05 5,000 5,110,350
City Univ., Ser. A Baa1
5.75 7/01/18 6,500 6,632,210
City Univ. Sys. Cons., Ser. A Baa1
5.625 7/01/16 13,300 13,388,711
St. Univ. Edl. Facs., Ser. B Baa1
7.50 5/15/11 4,660 5,667,632
St. Univ. Edl. Facs., Ser. A Baa1
5.50 5/15/13 5,725 5,692,940
St. Univ. Edl. Facs., Ser. C Baa1
5.40 5/15/23 5,000 4,779,650
New York St. Energy Resh. & Dev. Auth. Rev., Brooklyn
Union Gas Co., Ser. D, M.B.I.A., A.M.T. Aaa
6.951(d) 7/08/26 3,000 3,041,250
New York St. Local Gov't. Assist. Corp., Ser. O A
6.00 4/01/14 5,500 5,973,330
New York St. Urban Dev. Corp. Rev., F.S.A.,
Corr. Facs. Aaa
6.50 1/01/09 3,000 3,417,240
Corr. Facs. Aaa
5.50 1/01/14 3,000 3,111,510
Triborough Bridge & Tunl. Auth., M.B.I.A.,
Ser. X Aaa
6.625 1/01/12 8,500 9,926,895
Ser. A Aaa
5.00 1/01/15 5,000 4,839,150
------------
127,855,246
- --------------------------------------------------------------------------------
</TABLE>
- ----- 8 See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------------------
- --------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- -------------------------------------------------
North Carolina--0.7%
Charlotte, Cert. of Part., Ref. Conv. Fac. Proj., Ser. C,
A.M.B.A.C. Aaa
5.00% 12/01/21 $ 6,000 $ 5,715,180
- -----------------------------------------------------------------------------
- ----------------------------------------------------
North Dakota--0.8%
Mercer Cnty., Antelope Valley Station, A.M.B.A.C. Aaa
7.20 6/30/13 5,000 6,212,750
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Ohio--2.4%
Cleveland Pub. Pwr. Sys. Rev., First Mtg., Ser. A,
M.B.I.A. Aaa
Zero 11/15/10 2,685 1,256,419
Ohio St. Wtr. Dev. Auth., Poll. Ctrl. Fac. Rev., Buckeye
Pwr. Inc. Proj., A.M.B.A.C. Aaa
7.80 11/01/14 13,500 16,676,415
------------
17,932,834
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Oklahoma--3.7%
McGee Creek Auth. Wtr. Rev., M.B.I.A. Aaa
6.00 1/01/23 7,000 7,818,650
Tulsa Mun. Arpt. Trust Rev., American Airlines, Inc.,
A.M.T. Baa2
7.375 12/01/20 19,000 20,407,330
------------
28,225,980
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Pennsylvania--1.6%
Philadelphia Wtr. & Waste Auth. Rev.,
M.B.I.A. Aaa
6.25 8/01/07 4,840 5,421,381
M.B.I.A. Aaa
6.25 8/01/09 3,400 3,804,600
M.B.I.A. Aaa
6.25 8/01/11 2,500 2,809,350
------------
12,035,331
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Puerto Rico--6.9%
Puerto Rico Comnwlth.,
M.B.I.A. Aaa
7.534(d) 7/01/08 1,000 1,111,250
F.S.A. Aaa
7.468(d) 7/01/20 450 474,188
Puerto Rico Elec. Pwr. Auth.,
Pwr. Rev., Ser. S Baa1
7.00 7/01/07 2,500 2,974,575
Pwr. Rev., Ser. S Baa1
6.125 7/01/08 1,050 1,169,206
Puerto Rico Elec. Pwr. Auth. Rev., M.B.I.A. Aaa
Zero 7/01/04 11,895 8,139,867
Puerto Rico Hwy. & Trans. Auth. Rev.,
Ser. T Baa1
6.625 7/01/12 4,460 4,865,236
Ser. V Baa1
6.625 7/01/12 4,000 4,363,440
Ser. W, Ref. Baa1
5.50 7/01/15 2,500 2,523,900
Ser. W Baa1
5.25 7/01/20 4,000 3,835,120
Ser. X, Ref., F.S.A. Aaa
5.00 7/01/22 1,400 1,361,920
- -----------------------------------------------------------------------------
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements. 9 -----
<PAGE>
<TABLE>
Portfolio of Investments as of December 31, 1995 PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------------------
- --------------
<CAPTION>
Moody's
Principal
Rating
Interest Maturity Amount Value
Description(a) (Unaudited)
Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------------------
- --------------------------------------------------
Puerto Rico (cont'd.)
Puerto Rico Public Bldgs. Auth. Rev.,
Ref., Ser. L Baa1
5.60% 7/01/08 $ 5,000 $ 5,329,200
Ref., Ser. L, F.S.A. Aaa
5.75 7/01/10 5,065 5,459,006
Puerto Rico Tel. Auth. Rev., M.B.I.A.,
Ser. I Aaa
6.161(d) 1/25/07 4,100 4,330,625
Ser. I Aaa
6.434(d) 1/16/15 3,800 3,809,500
Univ. of Puerto Rico Sys. Rev., Cap. Apprec., Ser. N,
M.B.I.A. Aaa
Zero 6/01/11 6,865 3,031,859
------------
52,778,892
- -----------------------------------------------------------------------------
- ----------------------------------------------------
South Carolina--1.3%
Charleston Waterworks & Swr. Rev., E.T.M. Aaa
10.375 1/01/10 7,415 10,148,317
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Tennessee--1.5%
Bristol Tenn. Hlth. & Edl. Fac. Brd. Rev., Bristol
Memorial Hosp., F.G.I.C. Aaa
6.75 9/01/10 5,000 5,876,950
McMinn Cnty. Ind. Dev. Rev., Bowater Inc., A.M.T. Baa1
7.40 12/01/22 5,000 5,472,750
------------
11,349,700
- -----------------------------------------------------------------------------
- ----------------------------------------------------
Texas--3.9%
Alliance Arpt. Auth. Inc., Spec. Facs. Rev., American
Airlines Proj., A.M.T. Baa2
7.50 12/01/29 1,500 1,614,330
Dallas Ft. Worth, Regl. Arpt. Rev., F.G.I.C.,
Ser. A Aaa
7.375 11/01/08 3,500 4,125,660
Ser. A Aaa
7.375 11/01/09 3,500 4,125,660
Harris Cnty. Hlth. Facs. Dev. Corp., Spec. Facs. Rev.,
Texas Med. Ctr. Hosp., M.B.I.A. Aaa
7.25 5/15/07 4,100 4,614,181
Harris Cnty., Toll Rd., F.G.I.C. Aaa
5.00 8/15/16 3,000 2,924,460
New Braunfels Indpt. Sch. Dist., Gen. Oblig.,
Cap. Apprec. Aaa
Zero 2/01/10 2,335 1,105,225
Cap. Apprec.
</TABLE>
