(ICON)
Prudential
National
Municipals
Fund, Inc.
SEMI
ANNUAL
REPORT
June 30, 1996
(LOGO)
<PAGE>
Prudential National Municipals Fund, Inc.
Performance At A Glance.
Interest rates rose in the first half of 1996, and after a stellar
1995, many
bond funds posted negative total returns. Although municipal bonds
were hurt
less by the interest rate rise than taxable bonds, they were hurt
by additional
concerns over tax reform that might change their tax-exempt status.
Those fears
have diminished somewhat, but municipal bond prices have not yet
fully
recovered. For the six-month period ended June 30, 1996, your Fund
finished
behind the average municipal bond mutual fund.
<TABLE>
<CAPTION>
Cumulative Total Returns1
As of 6/30/96
Six One Five Ten
Since
Months Year Years Years
Inception2
<S> <C> <C> <C> <C>
<C>
Class A -2.1% 5.4% 43.0% N/A
59.1%
Class B -2.4 5.0 40.2 94.8%
286.3
Class C -2.5 4.8 N/A N/A
10.4
Lipper General Muni Avg3 -1.4 5.7 42.5 108.3
313.4
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns1 As
of 6/30/96
One Five Ten
Since
Year Years Years
Inception2
<S> <C> <C> <C>
<C>
Class A 2.3% 6.8% N/A
7.0%
Class B 0.0 6.8 6.9%
8.7
Class C 3.8 N/A N/A
5.3
</TABLE>
<TABLE>
<CAPTION>
Dividends
& Yields Taxable
Equivalent Yield
As of Total Dividends 30-Day At Tax
Rates Of
6/30/96 Paid for 12 Mos. SEC Yield 36%
39.6%
<S> <C> <C> <C>
<C>
Class A $0.41% 5.03% 7.86%
8.33%
Class B $0.38 4.79 7.48
7.93
Class C $0.36 4.54 7.09
7.52
</TABLE>
Past performance is not indicative of future results. Principal and
investment
return will fluctuate so that an investor's shares, when redeemed,
may be worth
more or less than their original cost.
1Source: 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
declining, six-
year contingent deferred sales charge (CDSC) 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
automatically convert to Class A shares on a quarterly basis, after
approximately seven years.
2Inception dates: 1/22/90 Class A; 4/25/80 Class B; 8/1/94 Class C.
3The Lipper General Municipal Bond fund average includes 239 funds
for six
months, 229 funds for one year, 101 funds for five years, 60 funds
for 10
years and 31 funds since inception of the Class B shares on
4/25/80.
4Taxable equivalent yields reflect federal tax rates. Some
investors may be
subject to the federal alternative minimum tax.
How Investments Compared.
(As of 6/30/96)
(GRAPH)
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 returns 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
included historical
20-year average annual returns. These returns assume the
reinvestment of
dividends.
U.S. Growth Funds will fluctuate a great deal. Investors have
received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term growth
but may be
more volatile than larger capitalization stocks.
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 significantly) and their returns have been historically
lower than
those of stock funds.
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.
<PAGE>
Peter J. Allegrini and Olga B. Emanuel, Fund Managers
(PHOTOS)
Portfolio
Managers' 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,
maturities and types of municipal projects. There can be no
assurance that the
Fund will achieve its investment objective.
New Team.
In April, a new team began managing the Prudential National
Municipals Fund,
Peter J. Allegrini and Olga B. Emanuel. Allegrini oversees the
municipal bond
team at Prudential Mutual Funds, and manages the Prudential
Municipal Bond
Fund/High Yield Series and several other municipal bond mutual
funds. Emanuel
has managed large corporate and institutional tax- exempt accounts
at
Prudential for nine years. As co-managers, they share
responsibility for the
day-to-day bond selection and management of the Fund.
Strategy Session.
A combination of forces led to rising interest rates in early 1996.
At the end
of 1995, it seemed likely that a historic agreement on a balanced
federal
budget would be reached. When it failed to materialize, investors
retreated
and began to sell their bonds, causing interest rates to edge up
and bond
prices to fall. Just as this happened, some economic reports began
to suggest
that the U.S. economy was gaining strength, sparking fears of
rising inflation.
Inflation is bad news for bonds because it lessens the value of the
interest
that they pay.
When interest rates rise and bond prices begin to fall, bonds with
shorter
maturities are easier to sell and tend to retain their value better
than bonds
with longer maturities. The shorter the combined maturities of a
portfolio of
bonds, the shorter the duration. We entered 1996 with a longer
duration than
we would have liked, given the movement in interest rates. But by
June 30, 1996
we were able to slightly reduce duration which we believe better
positioned us
for potential continued market volatility.
When we last wrote to you, we were emphasizing BBB-rated bonds,
which provided
attractive yields. We had increased our investment to 31% of total
net assets
by year-end 1995, and on June 30, 1996 we still maintained a
healthy 22%
position. Higher yields from these lower rated bonds contributed to
the Fund's
performance. As always, we counterbalanced this investment in lower
rated bonds
with a large position in insured, AAA-rated and pre-refunded bonds.
Your Fund invests in municipal bonds from around the country. While
we are
enthusiastic about further diversifying the national scope of the
Fund's
investments, we are not planning a major portfolio restructuring.
Revenue Bonds Dominate.
Expressed as a percentage of
total net assets as of 6/30/96.
(GRAPH)
<PAGE>
What Went Well.
While the overall performance of municipal bonds during the past
six months was
disappointing, there were a couple of bright spots:
New Supply Remained Low.
During the past 18 months, fewer and fewer municipal bonds were
issued. Cities
and counties are not as interested in issuing new bonds when they
must pay
their new bondholders at higher interest rates. This limited supply
helped
support existing municipal bond prices during the past six months.
The low
supply should also help support municipal bond prices when these
bonds rebound.
48% Insured.
Among newly issued municipal bonds, the trend toward insured bonds
continued.
Just less than half of new municipal bonds issued were insured,
which means
coupon and principal payments are guaranteed by the insurer (but
not the income
nor value of this Fund's shares). Your Fund's overall quality was
enhanced by
its large position in insured municipal bonds, 48% of total net
assets on
June 30, 1996.
And Not So Well.
Trimming Duration Was Difficult.
At year-end 1995, we expected interest rates to continue to fall.
So, we
entered 1996 with a duration of 8.4 years. With this
longer-than-average
duration, we hoped to capture some of the higher yields paid by
bonds with
longer maturities. However, interest rates rose in 1996 earlier and
faster
than we expected, causing the Fund's duration to lengthen even
further. As
interest rates rise, few investors want to own longer-term bonds.
The higher
yields of longer term bonds are worth less when interest rates are
rising. So
it was difficult to trim duration by selling our longer maturity
bonds to buy
bonds with shorter maturities. On June 30, 1996, the Fund's
duration was 8
years.
Five Largest Issuers.
3.3% New York City Municipal
Water Finance Authority
2.9% Tulsa, OK Municpal
Airport Revenue
2.3% Ohio State Water
Development Pollution
Control Facility
2.2% Colorado Housing
Finance Authority
2.1% Long Beach, CA
Aquarium of the Pacific
Expressed as a percentage of total net assets as of 6/30/96.
Looking Ahead.
We think today's higher interest rates may eventually act as a
brake on
economic growth. This, in turn, should help the bond market turn
around. We
believe that bond yields will continue to rise until inflation
fears recede.
Once this happens, interest rates could begin to fall by year-end.
In this presidential election year, municipal bonds may struggle
until tax
reform issues are resolved. Investors should remember that a
hypothetical 5%
yield* on a tax-exempt fund in a low inflation environment is still
a
competitive income, particularly on a diversified selection of
investments
that are issued by local government entities all over the United
States.
*The hypothetical yield noted above should not be misconstrued as
the Fund's
actual yield. It is provided for illustrative purposed only.
- -----------------------------------------------------------------
- --------------
1
<PAGE>
President's Letter
August 1, 1996
(PHOTO)
Dear Shareholder:
Last year, U.S. stocks and bonds generally posted extraordinary
returns.
Investors celebrated this performance by putting record amounts of
new money
into mutual funds in the first few months of 1996. According to
figures
released by the Investment Company Institute, a mutual fund
industry trade
group, new investments in mutual funds reached an all-time monthly
high of $33
billion in January of 1996. An additional $66 billion was invested
in the
following three months, although this rapid inflow subsided
somewhat in late
spring.
While we are pleased that mutual funds are attracting new
investors, we're
concerned that some of them may be "buying last year's returns."
Few expect
1995's virtual non-stop returns from the stock and bond markets. In
fact,
1996's markets have been volatile so far (stock and bond prices go
down just
as they go up). There's no better time than now to be talking with
your
Financial Advisor or Registered Representative. She or he can help
you
determine reasonable expectations about both the potential
performance and
risks associated with your investments.
Board of Directors Election.
In addition to this report, we are including a notice about a
special
shareholder meeting to elect new Prudential mutual fund boards of
directors.
Your Board of Directors has approved a proposal to place a common
board of
experienced directors across many of Prudential's mutual funds to
improve
business efficiency. The enclosed material contains more complete
information
about this proposal.
Changes at Prudential.
Finally, there have been some important changes recently at
Prudential that
were made with you in mind. Prudential Mutual Funds has moved under
the
umbrella of Prudential's newly created "Money Management Group."
This group
manages and administers nearly $190 billion in client assets and
provides
mutual funds, annuities, defined benefit and defined contribution
plans to our
individual and institutional investors. We plan to improve the
range and
quality of investment products and services that we can provide you
by better
leveraging Prudential's strengths. There will, however, be no
change in the
service you receive from your Financial Advisor, Registered
Representative or
our Customer Service unit.
We're excited about our future and hope that you are, too. Thank
you for your
continued support and confidence in Prudential Mutual Funds.
Sincerely,
Richard A. Redeker
President
- -----------------------------------------------------------------
- --------------
2
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
LONG-TERM INVESTMENTS--93.7%
- -----------------------------------------------------------------
- -------------------------------------------------------------
Alabama--0.5%
Jasper Wtrwks. & Swr. Brd., Wtr. & Swr. Rev., A.M.B.A.C. Aaa
6.00% 6/01/18 $ 3,350 $ 3,378,207
- -----------------------------------------------------------------
- -------------------------------------------------------------
Alaska--2.1%
Anchorage Alaska, Gen. Oblig., A.M.B.A.C. Aaa
6.25 6/01/23 4,000 4,018,800
Anchorage Alaska Elec. Utility Rev.,
M.B.I.A. Aaa
6.50 12/01/12 3,400 3,721,810
M.B.I.A. Aaa
6.50 12/01/13 2,500 2,736,425
M.B.I.A. Aaa
6.50 12/01/14 3,455 3,771,720
------------
14,248,755
- -----------------------------------------------------------------
- -------------------------------------------------------------
Arizona--5.0%
Arizona St. Mun. Fin. Prog., Cert. of Part., Ser. 25,
B.I.G. Aaa
7.875 8/01/14 2,250 2,834,505
Chandler, Cap. Apprec. Ref., F.G.I.C. Aaa
Zero 7/01/02 2,000 1,481,280
Maricopa Cnty. Sch. Dist.,
No. 40 Glendale, A.M.B.A.C. Aaa
Zero 7/01/04 2,810 1,846,872
No. 11 Peoria Univ., M.B.I.A. Aaa
Zero 7/01/04 1,500 985,875
No. 92 Pendergast Elem., F.G.I.C. Aaa
Zero 7/01/04 1,140 749,265
No. 3 Tempe Elem., A.M.B.A.C. Aaa
Zero 7/01/09 1,500 712,095
No. 3 Tempe Elem., A.M.B.A.C. Aaa
Zero 7/01/14 1,500 511,890
Maricopa Cnty. Unified Sch. Dist.,
No. 80 Chandler, F.G.I.C. Aaa
Zero 7/01/09 1,330 631,391
No. 80 Chandler, M.B.I.A. Aaa
Zero 7/01/10 1,050 464,352
No. 80 Chandler, M.B.I.A. Aaa
Zero 7/01/11 1,200 497,028
No. 80 Chandler, F.G.I.C. Aaa
6.25 7/01/11 1,000 1,077,020
No. 41 Gilbert, F.G.I.C. Aaa
Zero 7/01/07 1,500 815,790
Phoenix St. & Hwy. User Rev., Ser. A, F.G.I.C. Aaa
Zero 7/01/12 3,000 1,162,620
Pima Cnty. Ind. Dev. Auth. Rev., F.S.A. Aaa
7.25 7/15/10 2,255 2,458,514
Pima Cnty. Unified Sch. Dist., Gen. Oblig., F.G.I.C.,
No. 1 Tuscan Aaa
7.50 7/01/10 3,000 3,592,170
No. 16 Catalina Foothills Aaa
Zero 7/01/09 3,455 1,640,192
Santa Cruz Cnty., Unified Sch. Dist., A.M.B.A.C.,
No. 1, Nogales Aaa
Zero 1/01/06 770 463,509
No. 1, Nogales Aaa
Zero 7/01/06 700 406,294
Scottsdale Ind. Dev. Auth. Rev., Mem. Hosp., Ser. A,
A.M.B.A.C. Aaa
8.50 9/01/07 2,100 2,253,615
Scottsdale, Gen. Oblig. Aa1
5.50 7/01/09 500 503,230
</TABLE>
- -----------------------------------------------------------------
- ---------------
See Notes to Financial Statements.
3 -----
<PAGE>
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
Arizona (cont'd.)
Tucson Gen. Oblig.,
Ser. A Aa
7.375% 7/01/11 $ 1,000 $ 1,189,900
Ser. A Aa
7.375 7/01/12 1,100 1,311,123
Ser. A Aa
7.375 7/01/13 4,500 5,368,770
Tucson Wtr. Rev. A1
5.50 7/01/09 1,000 1,001,840
------------
33,959,140
- -----------------------------------------------------------------
- -------------------------------------------------------------
California--8.1
California St. Univ. & Hsg. Rev., F.G.I.C. Aaa
5.75 11/01/15 7,485 7,441,138
Foothill/Eastern Trans. Corr. Agcy., Toll Rd.,
Cap. Apprec., Ser. A Baa
Zero 1/01/15 5,000 1,476,550
Cap. Apprec., Ser. A Baa
Zero 1/01/17 5,000 1,283,950
Kern California High Sch. Dist., Ser. A, M.B.I.A. Aaa
6.30 2/01/10 2,490 2,686,212
Long Beach Aquarium of the Pacific Rev., Ser. A, A.M.T.
BBB(d) 6.125 7/01/23 16,000 14,802,240
San Francisco City Swr. Rev. Cap Apprec., Ser. B, F.G.I.C Aaa
Zero 10/01/09 2,960 1,414,081
San Jose Redev. Proj., Agcy. Tax Alloc., M.B.I.A. Aaa
6.00 8/01/11 5,000 5,248,550
Santa Margarita/Dana Point Auth. Rev., M.B.I.A.,
Impvt. Dists., 3-3A-484A Aaa
7.25 8/01/09 2,000 2,330,200
Impvt. Dists., 3-3A-484A Aaa
7.25 8/01/10 2,450 2,861,967
Impvt. Dists., 3-3A-484A Aaa
7.25 8/01/14 2,000 2,344,960
So. California Pub. Pwr. Auth. Rev., F.G.I.C. Aaa
5.31 7/01/17 6,000 5,581,920
So. Orange Cnty. Pub. Fin. Auth. Rev., F.G.I.C.,
Foothill Area. Proj. Aaa
8.00 8/15/09 3,650 4,498,881
Foothill Area. Proj. Aaa
6.50 8/15/10 2,000 2,192,480
West Contra Costa Sch. Dist., Cert. of Part. Ba1
7.125 1/01/24 1,600 1,657,248
------------
55,820,377
- -----------------------------------------------------------------
- -------------------------------------------------------------
Colorado--5.6
Arapahoe Cnty. Cap. Imprvmt. Trust Fund Hwy.,
Pub. Hwy. Rev., Ser. E-470 Baa
Zero 8/31/15 29,800 7,697,638
Pub. Hwy. Rev., Ser. E-470 Baa
7.00 8/31/26 3,000 3,134,730
Colorado Hsg. Fin. Auth., A.M.T.,
Singl. Fam. Proj. Aa
8.00 6/01/25 4,880 5,458,085
Singl. Fam. Proj., Ser. B-1 Aa
7.90 12/01/25 2,985 3,312,902
Singl. Fam. Proj., Ser. C-1, M.B.I.A. Aaa
7.65 12/01/25 5,980 6,626,079
Colorado Springs Arpt. Rev., A.M.T.,
Ser. A.
BBB+(d) 6.90 1/01/12 3,700 3,866,759
Ser. A.
BBB+(d) 7.00 1/01/22 7,960 8,343,991
------------
38,440,184
</TABLE>
- -----------------------------------------------------------------
- ---------------
- ----- 4 See Notes to
Financial Statements.
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
Florida--2.6%
Broward Cnty. Res. Rec. Rev., Broward Co. L.P. South
Proj., A
7.95% 12/01/08 $ 8,995 $ 9,930,750
Florida St. Brd. of Ed.,
Admin. Cap. Outlay Aa
9.125 6/01/14 1,260 1,731,744
Admin. Cap. Outlay, E.T.M. Aaa
9.125 6/01/14 195 (b) 268,606
Hillsborough Cnty. Ind. Dev. Auth. Poll. Ctrl. Rev., Tampa
Elec. Proj., Ser. 9 Aa3
8.00 5/01/22 5,000 5,804,550
------------
17,735,650
- -----------------------------------------------------------------
- -------------------------------------------------------------
Georgia--3.3%
Atlanta Urban Res. Fin. Auth., Clark Atlanta Univ. Dorm
Fac. Rev. NR
9.25 6/01/10 5,375 (b) 6,312,293
Atlanta Wtr. & Swr. Rev. A1
6.00 1/01/11 4,410 4,565,849
Burke Cnty. Dev. Auth., M.B.I.A.,
Georgia Pwr. Plant Co., Vogtle Proj., Ser. 7 Aaa
6.625 10/01/24 500 525,510
Oglethorpe Pwr. Corp. Aaa
8.00 1/01/22 5,000 5,924,100
Clarke Cnty. Sch. Dist., F.G.I.C. Aaa
5.50 7/01/08 425 430,593
Cobb Cnty. Kennestone Hosp. Auth. Rev., Ser. A, M.B.I.A. Aaa
5.00 4/01/24 750 655,538
DeKalb Cnty. Wtr. & Swr. Rev. Aa
5.25 10/01/23 250 229,025
DeKalb Private Hosp. Auth. Rev., Wesley Svcs. Inc. Proj. Aa3
8.25 9/01/15 500 521,320
Forsyth Cnty. Sch. Dist. Dev. Rev., Ser. A Aa
6.75 7/01/16 500 558,980
Fulton Cnty. Bldg. Auth. Rev., Judicial Ctr. Proj. Aa
Zero 1/01/11 1,325 573,990
Fulton Cnty. Sch. Dist. Rev., Lindbrook Square Fndtn. Aa
6.375 5/01/17 750 811,215
Georgia Mun. Elec. Auth. Pwr. Rev. Ref., Ser. B A
6.25 1/01/17 475 492,323
Green Cnty. Dev. Auth. Indl. Park Rev. NR
6.875 2/01/04 585 628,705
Metropolitan Atlanta Rapid Trans. Auth. Rev., Sales Tax
Rev.,
Ser. A, M.B.I.A. Aaa
6.90 7/01/20 500 545,200
------------
22,774,641
- -----------------------------------------------------------------
- -------------------------------------------------------------
Illinois--2.2%
Kane & De Kalb Cntys. Cmnty. United Sch. Dist., No. 301,
A.M.B.A.C. Aaa
Zero 12/01/10 3,055 1,305,799
Metropolitan Pier & Expo. Auth. Hosp. Fac. Rev., McCormick
Place Convention
BBB-(d) 7.00 7/01/26 12,910 13,751,990
------------
15,057,789
</TABLE>
- -----------------------------------------------------------------
- ---------------
See Notes to Financial Statements.
5 -----
<PAGE>
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
Indiana--2.4%
Concord Ind. Community Schs. Bldg. Corp., Ser. A.,
A.M.B.A.C. Aaa
5.90% 7/01/13 $ 3,915 $ 3,932,578
Indianapolis Int'l. Arpt. Auth. Rev., United Air Lines
Proj., Ser. A, A.M.T.
Baa2 6.50 11/15/31 9,850 9,717,518
Mill Creek Indl. Cmnty., East Elem. Sch. Bldg., F.S.A. Aaa
5.80 7/15/15 3,235 3,205,464
------------
16,855,560
- -----------------------------------------------------------------
- -------------------------------------------------------------
Kentucky--1.8%
Henderson Cnty. Solid Waste Disp. Rev., Macmillan Bloedel
Proj., A.M.T.
Baa2 7.00 3/01/25 6,000 6,209,880
Jefferson Cnty. Poll. Ctrl. Rev., Louisville Gas & Elec.,
Ser. A, A.M.T. Aa2
7.75 2/01/19 5,700 6,032,025
------------
12,241,905
- -----------------------------------------------------------------
- -------------------------------------------------------------
Louisiana--4.2%
New Orleans, Gen. Oblig., A.M.B.A.C. Aaa
Zero 9/01/09 13,500 6,347,970
Orleans Parish Sch. Brd., E.T.M., M.B.I.A. Aaa
8.90 2/01/07 5,780 (b) 7,471,459
St. Charles Parish, Environ. Impt. Rev. Louisiana Pwr. &
Lt. Co., Ser. A, A.M.T.
Baa2 6.875 7/01/24 5,000 5,222,350
St. Charles Parish, Louisiana Poll. Ctrl. Rev.,
Louisiana Pwr. & Lt. Co.
Baa3 8.25 6/01/14 4,000 4,371,400
Louisiana Pwr. & Lt. Co., Ser. 1989
Baa3 8.00 12/01/14 5,000 5,481,900
------------
28,895,079
- -----------------------------------------------------------------
- -------------------------------------------------------------
Maryland--1.1%
Maryland St. Hlth. & Higher Ed. Facs. Auth. Rev., Doctor's
Cmnty. Hosp. Proj. Baa
5.50 7/01/24 4,000 3,392,240
Northeast Waste Disp. Auth. Rev., Baltimore City Sludge
Corp. A2
7.25 7/01/07 3,871 3,956,549
------------
7,348,789
- -----------------------------------------------------------------
- -------------------------------------------------------------
Massachusetts--3.2%
Mass. St., Gen. Oblig., Ser. C, M.B.I.A. Aaa
5.625 8/01/13 5,000 4,959,100
Mass. St. Special Obligation Rev., Ser. A A1
5.80 6/01/14 4,850 4,864,259
Mass. St. Wtr. Poll. Abatement, New Bedford Project Aa
5.70 2/01/15 5,000 4,915,350
Mass. St. Wtr. Res. Auth., Ser. B, M.B.I.A. Aaa
6.25 12/01/11 6,720 7,231,930
------------
21,970,639
</TABLE>
- -----------------------------------------------------------------
- ---------------
- ----- 6 See Notes to
Financial Statements.
<PAGE>
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
Michigan--1.7%
Holland Sch. Dist., A.M.B.A.C. Aaa
Zero 5/01/12 $ 4,000 $ 1,577,640
Michigan St. Hsg. Dev. Auth. Rev.,
Rental Hsg. Rev., Ser. B
A+(d) 7.55% 4/01/23 1,000 1,061,630
Sngl. Fam. Mtge., Ser. A.
AA+(d) 7.50 6/01/15 5,185 5,457,005
Sngl. Fam. Mtge., Ser. D, A.M.T.
AA+(d) 7.75 12/01/19 2,535 2,643,371
Okemos Pub. Sch. Dist., M.B.I.A.,
Cnty. of Ingham Aaa
Zero 5/01/12 1,100 433,851
Cnty. of Ingham Aaa
Zero 5/01/13 1,700 627,096
------------
11,800,593
- -----------------------------------------------------------------
- -------------------------------------------------------------
Minnesota--1.6%
Anoka Hennepin Indpt. Sch. Dist., No. 11, Ser. C, F.S.A. Aaa
Zero 2/01/12 1,575 636,127
Metropolitan Council, St. Paul Area Sports Fac. Rev.,
Hubert H. Humphrey Metrodome A
6.00 10/01/09 500 512,365
Minneapolis Dev. Agcy. Tax Increment Rev.,
M.B.I.A. Aaa
Zero 9/01/01 750 583,177
M.B.I.A. Aaa
Zero 3/01/06 1,000 597,020
M.B.I.A. Aaa
Zero 9/01/07 1,000 541,800
Minneapolis Hosp. Rev.,
Lifespan Inc., Ser. B Aaa
8.70 12/01/02 820 (b) 889,528
Lifespan Inc., Ser. B Aaa
8.125 8/01/17 800 (b) 875,448
Minnesota Pub. Facs. Auth. Wtr. Poll. Ctrl. Rev., Ser. A Aa1
7.00 3/01/09 650 (b) 703,385
Minneapolis St. Paul Hsg. Fin. Brd. Rev., Sngl. Fam.
Mtge., G.N.M.A., A.M.T.
AAA(d) 7.30 8/01/31 890 928,332
Minneapolis St. Paul Met. Arpts. Comm., Ser. 7, A.M.T. Aaa
7.80 1/01/14 1,000 1,094,830
Rochester Hlth. Care Facs. Rev., Mayo Med. Ctr., Ser. A NR
8.30 11/15/07 500 (b) 558,100
So. Minn. Mun. Pwr. Agcy., Pwr. Supply Sys., Ser. A,
M.B.I.A. Aaa
Zero 1/01/20 3,250 791,602
St. Paul Science Museum, Cert. of Part., E.T.M. NR
7.50 12/15/01 1,004 (b) 1,061,646
Univ. of Minnesota, Ser. A, E.T.M. Aa
6.00 2/01/11 1,000 (b) 1,040,070
------------
10,813,430
- -----------------------------------------------------------------
- -------------------------------------------------------------
Missouri--1.3%
Missouri St. Hsg. Dev. Comm. Mtge. Rev., Single Family
Loan Ser. A, G.N.M.A., A.M.T.
AAA(d) 7.20 9/01/26 5,000 5,381,550
Sikeston Missouri Elec. Rev., M.B.I.A. Aaa
6.00 6/01/16 3,175 3,310,573
------------
8,692,123
- -----------------------------------------------------------------
- -------------------------------------------------------------
Nebraska--0.6%
Nebraska Edl. Fin. Auth. Rev., Creighton Univ. Proj.,
A.M.B.A.C. Aaa
5.80 1/01/10 4,500 4,532,355
</TABLE>
- -----------------------------------------------------------------
- ---------------
See Notes to Financial Statements.
7 -----
<PAGE>
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
Nevada--1.5%
Clark Cnty. Indl. Dev. Rev., Southwest Gas Corp., Ser. A,
A.M.T.
Baa3 6.50% 12/01/33 $ 5,000 $ 4,766,000
Clark Cnty. Passenger Fac. Charge Rev., Las Vegas Mccarran
Int'l. Airport, A.M.B.A.C. Aaa
6.00 7/01/22 6,000 5,968,680
------------
10,734,680
- -----------------------------------------------------------------
- -------------------------------------------------------------
New Hampshire--0.6%
New Hampshire Municipal Bond Bank, Ser. C, M.B.I.A. Aaa
5.75 8/15/16 4,260 4,234,568
- -----------------------------------------------------------------
- -------------------------------------------------------------
New Jersey--2.9%
New Jersey St. Hsg. & Mtge. Fin. Agcy., Ser. D, A.M.T.,
M.B.I.A. Aaa
7.70 10/01/29 2,785 2,894,311
New Jersey St. Hwy. Auth. Garden St. Pkwy. Gen. Rev. A1
6.25 1/01/14 5,900 6,128,743
New Jersey St. Tpke. Auth. Rev., Ser. C, M.B.I.A. Aaa
6.50 1/01/16 10,000 11,034,700
------------
20,057,754
- -----------------------------------------------------------------
- -------------------------------------------------------------
New York--13.2%
Metropolitan Trans. Auth. Trans. Facs.,
Ser. O
Baa1 5.75 7/01/13 5,820 5,594,300
Ser. A, F.S.A. Aaa
6.00 7/01/16 2,500 2,527,700
New York City Ind. Dev. Agcy., Spec. Fac. Rev., A.M.T.,
Terminal One Group Assoc. Proj. A
6.00 1/01/19 4,500 4,343,985
Terminal One Group Assoc. Proj. A
6.125 1/01/24 5,715 5,555,952
New York City Mun. Wtr. Fin. Auth., Wtr. & Swr. Sys. Rev.,
Ser. A, F.G.I.C. Aaa
6.75 6/15/16 21,250 22,533,075
New York St. Local Gov't. Assist. Corp., Ser. E A
6.00 4/01/14 10,000 10,286,100
New York St. Urban Dev. Corp. Rev., F.S.A.,
Correctional Facs. Aaa
6.50 1/01/09 3,000 3,280,110
Correctional Facs., Ser. A Aaa
5.50 1/01/14 3,000 2,924,340
New York, Gen. Oblig.,
Ser. F
Baa1 8.25 11/15/02 5,000 5,609,000
Ser. D
Baa1 8.00 8/01/03 3,500 3,903,760
Ser. D
Baa1 8.00 8/01/04 1,500 1,666,695
Ser. A
Baa1 7.75 8/15/04 2,000 2,201,520
Ser. B
Baa1 8.25 6/01/06 1,500 1,788,045
Ser. D
Baa1 7.65 2/01/07 5,000 5,584,400
Ser. B
Baa1 7.25 8/15/07 3,500 3,811,955
Triborough Bridge & Tunl. Auth., Ser. X, M.B.I.A. Aaa
6.625 1/01/12 8,500 9,432,535
------------
91,043,472
</TABLE>
- -----------------------------------------------------------------
- ---------------
- ----- 8 See Notes to
Financial Statements.
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
North Dakota--1.5%
Mercer Cnty. Poll. Ctrl. Rev., Antelope Valley Station,
A.M.B.A.C Aaa
7.20% 6/30/13 $ 9,000 $ 10,505,160
- -----------------------------------------------------------------
- -------------------------------------------------------------
Ohio--2.6%
Ohio St. Wtr. Dev. Auth. Poll. Ctrl. Facs. Rev., Buckeye
Pwr. Inc. Proj., A.M.B.A.C. Aaa
7.80 11/01/14 13,500 15,794,730
Springboro Comnty. City Sch. Dist., A.M.B.A.C. Aaa
6.00 12/01/11 2,000 2,105,120
------------
17,899,850
- -----------------------------------------------------------------
- -------------------------------------------------------------
Oklahoma--3.9%
McGee Creek Auth. Wtr. Rev., M.B.I.A. Aaa
6.00 1/01/23 7,000 7,250,180
Tulsa Mun. Arpt. Trust Rev., American Airlines, Inc.,
A.M.T.
Baa2 7.375 12/01/20 19,000 19,984,580
------------
27,234,760
- -----------------------------------------------------------------
- -------------------------------------------------------------
Pennsylvania--1.5%
Penn. St. Higher Edl. Facs. Auth., College & Univ. Rev.,
Ser. B Aa
5.90 9/01/15 4,205 4,221,736
Philadelphia Wtr. & Waste Auth. Rev.,
M.B.I.A. Aaa
6.25 8/01/09 3,400 3,648,710
M.B.I.A. Aaa
6.25 8/01/11 2,500 2,674,475
------------
10,544,921
- -----------------------------------------------------------------
- -------------------------------------------------------------
Puerto Rico--4.8%
Puerto Rico Comnwlth., Gen. Oblig.,
M.B.I.A. Aaa
7.784(c) 7/01/08 1,000 1,045,000
M.B.I.A.
Baa1 6.50 7/01/13 3,000 3,269,460
F.S.A. Aaa
7.892(c) 7/01/20 450 434,812
Puerto Rico Comnwlth., Hwy. & Trans. Auth., Hwy. Rev.,
Ser. V
Baa1 6.625 7/01/12 4,000 4,237,160
Ser. W
Baa1 5.50 7/01/13 3,000 2,922,450
Ser. W
Baa1 5.50 7/01/15 2,500 2,417,075
Puerto Rico Elec. Pwr. Auth., Pwr. Rev., Ser. S
Baa1 6.125 7/01/08 1,050 1,117,578
Puerto Rico Public Bldgs. Auth. Rev.,
Ser. L
Baa1 5.60 7/01/08 5,000 5,087,500
Ser. L, F.S.A. Aaa
5.75 7/01/10 5,065 5,212,493
Puerto Rico Tel. Auth. Rev., M.B.I.A.
Ser. I Aaa
6.914(c) 1/25/07 4,100 4,007,750
Ser. I Aaa
6.965(c) 1/16/15 3,800 3,429,500
------------
33,180,778
</TABLE>
- -----------------------------------------------------------------
- ---------------
See Notes to Financial Statements.
9 -----
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
South Carolina--1.4%
Charleston Wtrwks. & Swr. Rev., E.T.M. Aaa
10.375% 1/01/10 $ 7,415(b) $ 9,657,148
- -----------------------------------------------------------------
- -------------------------------------------------------------
Tennessee--1.6%
Bristol Hlth. & Edl. Fac. Rev., Bristol Memorial Hosp.,
F.G.I.C. Aaa
6.75 9/01/10 5,000 5,609,200
Mcminn Cnty. Ind. Dev. Brd. Solid Waste Rev., Calhoun
Nwsprnt. Recycling Fac., A.M.T.
Baa1 7.40 12/01/22 5,000 5,328,750
------------
10,937,950
- -----------------------------------------------------------------
- -------------------------------------------------------------
Texas--4.3%
Dallas Ft. Worth, Regl. Arpt. Rev., F.G.I.C.
Ser. A Aaa
7.375 11/01/08 3,500 3,982,895
Ser. A Aaa
7.375 11/01/09 3,500 3,982,895
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 4,469,369
Houston Texas Wtr. & Swr. Sys. Rev., Ser. C, M.B.I.A. Aaa
5.75 12/01/15 3,315 3,288,049
New Braunfels Indpt. Sch. Dist.,
Cap. Apprec. Aaa
Zero 2/01/10 2,335 1,048,275
Cap. Apprec. Aaa
Zero 2/01/11 2,365 993,915
Port Corpus Christi Auth. Rev. A2
7.50 8/01/12 2,000 2,211,780
San Antonio Texas Elec. & Gas Rev., Ser. B, F.G.I.C. Aaa
Zero 2/01/09 5,000 2,425,000
So. Texas Community College District Texas, A.M.B.A.C. Aaa
5.75 8/15/15 4,310 4,275,132
Univ. Texas Univ. Rev., Fin. Sys.,
Ser. B Aa1
6.75 8/15/13 965 (b) 1,066,132
Ser. B Aa1
6.75 8/15/13 2,035 2,196,050
------------
29,939,492
- -----------------------------------------------------------------
- -------------------------------------------------------------
Vermont--0.5%
Vermont Edl. & Hlth. Bldgs. Fin. Agcy. Rev., Middlebury
College Proj.
AA(d) 5.50 11/01/16 4,000 3,839,000
- -----------------------------------------------------------------
- -------------------------------------------------------------
Virginia--2.3%
Henrico Cnty. Ind. Dev. Auth. Rev., St. Mary's Hosp.
Proj., Ser. B A1
7.50 9/01/07 9,700 10,582,021
Prince William Cnty. Va. Park Auth. Rev. A
7.50 7/15/20 4,570 (b) 5,099,663
------------
15,681,684
</TABLE>
- -----------------------------------------------------------------
- ---------------
- ----- 10 See Notes to
Financial Statements.
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
Washington--3.8%
Washington St. Pub. Pwr. Supply Sys. Rev.,
Nuclear Proj. No. 2, Ser. A, M.B.I.A. Aaa
Zero 7/01/06 $ 6,000 $ 3,415,380
Nuclear Proj. No. 3, Ser. B, F.G.I.C. Aaa
Zero 7/01/06 5,000 2,846,150
Nuclear Proj. No. 1, Ser. A, F.S.A. Aaa
7.00% 7/01/08 4,000 4,466,200
Nuclear Proj. No. 1, Ser. B, F.S.A. Aaa
7.25 7/01/09 5,000 5,631,350
Nuclear Proj. No. 2 Aa
5.40 7/01/12 10,400 9,623,016
------------
25,982,096
------------
Total long-term investments (cost $626,760,350)
646,038,529
------------
SHORT-TERM INVESTMENTS--5.3%
- -----------------------------------------------------------------
- -------------------------------------------------------------
Arizona--0.6%
La Paz Cnty. Unified Sch. Dist., No. 27 Parker Baa
9.40 7/01/96 450 450,203
- -----------------------------------------------------------------
- -------------------------------------------------------------
District Of Columbia--0.8%
Dist. of Columbia, F.R.D.D.,
Gen. Oblig., Ser. 92A-1
VMIG1 3.75 7/01/96 600 600,000
Gen. Oblig., Ser. 92A-2
VMIG1 3.75 7/01/96 3,300 3,300,000
Gen. Oblig., Ser. 92A-4
VMIG1 3.75 7/01/96 1,700 1,700,000
------------
5,600,000
- -----------------------------------------------------------------
- -------------------------------------------------------------
Illinois--0.6%
Southwestern Illinois Dev. Auth., Shell Oil Co., Wood
River Proj., Ser. 95, F.R.D.D.
VMIG1 3.80 7/01/96 4,000 4,000,000
- -----------------------------------------------------------------
- -------------------------------------------------------------
Kansas--0.6%
Butler Cnty. Solid Waste Disp. Rev., Texaco Refining &
Mkg. Proj., Ser. B, F.R.D.D. P-1
3.85 7/01/96 4,200 4,200,000
- -----------------------------------------------------------------
- -------------------------------------------------------------
South Carolina--0.3%
So. Carolina Jobs Economic Dev. Auth. Rev., Wellman Inc.
Proj., Ser. 92, F.R.D.D. Aa2
3.80 7/01/96 1,700 1,700,000
- -----------------------------------------------------------------
- -------------------------------------------------------------
Texas--3.0%
Brazos River Auth. Poll. Ctrl. Rev., F.R.D.D.
Texas Util. Elec. Co., Ser. 95A
VMIG1 3.80 7/01/96 1,000 1,000,000
Texas Util. Elec. Co., Ser. 95C
VMIG1 3.80 7/01/96 1,200 1,200,000
</TABLE>
- -----------------------------------------------------------------
- ---------------
See Notes to Financial Statements.
11 -----
<PAGE>
<PAGE>
Portfolio of Investments as
of June 30, 1996 (Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description(a)
Rating Rate Date (000) (Note 1)
<S> <C>
<C> <C> <C> <C>
- -----------------------------------------------------------------
- -------------------------------------------------------------
Texas (cont'd.)
Gulf Coast Indl. Dev. Auth. Solid Waste Disp. Rev., CITGO
Petroleum Corp. Proj., Ser. 95, F.R.D.D.
VMIG1 3.80% 7/01/96 $ 11,900 $ 11,900,000
Gulf Coast Solid Waste Disp. Auth. Rev., Amoco Corp.
Proj.,
Ser. 94, F.R.D.D.
VMIG1 3.80 7/01/96 4,500 4,500,000
Trinity River Auth. Poll. Collateral Util., Texas Elec.
Util. Co. A, Ser. 96A, F.R.D.D., A.M.B.A.C.
VMIG1 3.80 7/01/96 2,400 2,400,000
------------
21,000,000
------------
Total short-term investments (cost $36,946,625)
36,950,203
------------
Total Investments--99.0%
(cost $663,706,975; Note 4)
682,988,732
Other assets in excess of liabilities--1.0%
6,608,972
------------
Net Assets--100%
$689,597,704
------------
------------
</TABLE>
- ---------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation
A.M.T.--Alternative Minimum Tax
B.I.G.--Bond Investors Guaranty Insurance Company
E.T.M.--Escrowed to Maturity
F.G.I.C.--Financial Guaranty Insurance Company
F.R.D.D.--Floating Rate Daily Demand Note(e)
F.S.A.--Financial Security Assurance
G.N.M.A.--Government National Mortgage Association
M.B.I.A.--Municipal Bond Insurance Association
(b) Prerefunded issues are secured by escrowed cash and direct
U.S.
guaranteed obligations.
(c) Inverse floating rate bond. The coupon is inversely indexed to
a floating interest rate. The rate shown is the rate at
period end.
(d) Standard and Poor's Rating.
(e) For purposes of amortized cost valuation, the maturity date of
Floating Rate Demand Notes is considered to be the later of
the next date on which the security can be redeemed at par
or the next date on which the rate of interest is adjusted.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Statement of Additional Information contains a
description of
Moody's and Standard & Poor's ratings.
- -----------------------------------------------------------------
- ---------------
- ----- 12 See Notes to
Financial Statements.
<PAGE>
Statement of Assets and Liabilities
(Unaudited) PRUDENTIAL NATIONAL
MUNICIPALS FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<S>
<C>
Assets
June 30, 1996
Investments, at value (cost
$663,706,975)....................................................
............... $682,988,732
Cash.............................................................
........................................... 30,998
Interest
receivable.......................................................
.................................. 12,040,372
Receivable for investments
sold.............................................................
................ 5,618,363
Receivable for Fund shares
sold.............................................................
................ 36,991
Deferred expenses and other
assets...........................................................
............... 24,690
-------------
Total
assets...........................................................
.................................. 700,740,146
-------------
Liabilities
Payable for investments
purchased........................................................
................... 9,023,811
Payable for Fund shares
reacquired.......................................................
................... 954,953
Dividends
payable..........................................................
................................. 494,241
Accrued
expenses.........................................................
................................... 308,809
Management fee
payable..........................................................
............................ 240,914
Distribution fee
payable..........................................................
.......................... 119,714
-------------
Total
liabilities......................................................
.................................. 11,142,442
-------------
Net
Assets...........................................................
....................................... $689,597,704
-------------
-------------
Net assets were comprised of:
Common stock, at
par..............................................................
....................... $ 452,611
Paid-in capital in excess of
par..............................................................
........... 674,794,437
-------------
675,247,048
Accumulated net realized loss on
investments......................................................
....... (4,931,101 )
Net unrealized appreciation on
investments......................................................
......... 19,281,757
-------------
Net assets, June 30,
1996.............................................................
...................... $689,597,704
-------------
-------------
Class A:
Net asset value and redemption price per share
($501,481,891 / 32,935,115 shares of common stock issued and
outstanding)............................. $15.23
Maximum sales charge (3.0% of offering
price)............................................................
.47
-------------
Maximum offering price to
public...........................................................
.............. $15.70
-------------
-------------
Class B:
Net asset value, offering price and redemption price per share
($187,446,048 / 12,282,066 shares of common stock issued and
outstanding)............................. $15.26
-------------
-------------
Class C:
Net asset value, offering price and redemption price per share
($669,765 / 43,885 shares of common stock issued and
outstanding)..................................... $15.26
-------------
-------------
</TABLE>
- -----------------------------------------------------------------
- ---------------
See Notes to Financial Statements.
13 -----
<PAGE>
PRUDENTIAL NATIONAL MUNICIPALS FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Six Months
Ended
Net Investment Income June 30, 1996
Income
Interest................................... $ 21,678,545
-------------
Expenses
Management fee............................. 1,708,908
Distribution fee--Class A.................. 255,928
Distribution fee--Class B.................. 513,960
Distribution fee--Class C.................. 2,379
Transfer agent's fees and expenses......... 287,000
Custodian's fees and expenses.............. 90,000
Reports to shareholders.................... 70,000
Audit fees and expenses.................... 34,000
Registration fees.......................... 33,000
Legal fees and expenses.................... 25,000
Directors' fees and expenses............... 15,000
Insurance expense.......................... 5,000
Miscellaneous.............................. 2,383
-------------
Total expenses.......................... 3,042,558
Less: Management fee waiver................ (179,519)
Custodian fee credit.................... (4,280)
-------------
Net expenses............................ 2,858,759
-------------
Net investment income......................... 18,819,786
-------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain on:
Investment transactions.................... 3,954,062
Financial futures contracts................ 28,900
-------------
3,982,962
Net change in unrealized depreciation of
investments................................ (39,289,099)
-------------
Net loss on investments....................... (35,306,137)
-------------
Net Decrease in Net Assets
Resulting from Operations..................... $ (16,486,351)
-------------
-------------
</TABLE>
PRUDENTIAL NATIONAL MUNICIPALS FUND, INC.
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
<S> <C> <C>
Ended Year Ended
<CAPTION>
Increase (Decrease) June 30, December 31,
in Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment income........ $ 18,819,786 $ 36,359,209
Net realized gain on
investment transactions... 3,982,962 15,052,304
Net change in unrealized
appreciation
(depreciation) of
investments............... (39,289,099) 63,875,111
------------- -------------
Net increase (decrease) in
net assets resulting from
operations................ (16,486,351) 115,286,624
------------- -------------
Dividends and distributions (Note 1)
Dividends from net investment
income
Class A................... (13,712,336) (23,828,407)
Class B................... (5,092,451) (12,519,283)
Class C................... (14,999) (11,519)
------------- -------------
(18,819,786) (36,359,209)
------------- -------------
Distributions in excess of
net investment income
Class A................... -- (202,311)
Class B................... -- (83,632)
Class C................... -- (148)
------------- -------------
-- (286,091)
------------- -------------
Fund share transactions (net of
share conversions) (Note 5)
Net proceeds from shares
sold...................... 68,106,784 179,852,628
Net asset value of shares
issued
in reinvestment of
dividends
and distributions......... 11,539,990 22,078,855
Cost of shares reacquired.... (116,155,783) (204,293,852)
------------- -------------
Decrease in net assets from
Fund share transactions... (36,509,009) (2,362,369)
------------- -------------
Total increase (decrease)....... (71,815,146) 76,278,955
Net Assets
Beginning of period............. 761,412,850 685,133,895
------------- -------------
End of period................... $ 689,597,704 $ 761,412,850
------------- -------------
------------- -------------
</TABLE>
- -----------------------------------------------------------------
- ---------------
- ----- 14 See Notes to
Financial Statements.
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
Prudential National Municipals Fund, Inc. (the ``Fund'') is
registered under the
Investment Company Act of 1940 as a diversified, open-end
management investment
company. The investment objective of the Fund is to seek a high
level of current
income exempt from federal income taxes by investing substantially
all of its
total assets in carefully selected long-term municipal bonds of
medium quality.
The ability of the issuers of debt securities held by the Fund to
meet their
obligations may be affected by economic or political developments
in a specific
state, industry or region.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting policies
followed by the
Fund in the preparation of its financial statements.
Securities Valuations: The Fund values municipal securities
(including
commitments to purchase such securities on a ``when-issued'' basis)
on the basis
of prices provided by a pricing service which uses information with
respect to
transactions in bonds, quotations from bond dealers, market
transactions in
comparable securities and various relationships between securities
in
determining values. If market quotations are not readily available
from such
pricing service, a security is valued at its fair value as
determined under
procedures established by the Directors.
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 which approximates market value.
Financial Futures Contracts: A financial futures contract is an
agreement to
purchase (long) or sell (short) an agreed amount of securities at
a set price
for delivery on a future date. Upon entering into a financial
futures contract,
the Fund is required to pledge to the broker an amount of cash
and/or other
assets equal to a certain percentage of the contract amount. This
amount is
known as the ``initial margin''. Subsequent payments, known as
``variation
margin'', are made or received by the Fund each day, depending on
the daily
fluctuations in the value of the underlying security. Such
variation margin is
recorded for financial statement purposes on a daily basis as
unrealized gain or
loss. When the contract expires or is closed, the gain or loss is
realized and
is presented in the statement of operations as net realized
gain(loss) on
financial futures contracts.
The Fund invests in financial futures contracts in order to hedge
its existing
portfolio securities, or securities the Fund intends to purchase,
against
fluctuations in value caused by changes in prevailing interest
rates. Should
interest rates move unexpectedly, the Fund may not achieve the
anticipated
benefits of the financial futures contracts and may realize a loss.
The use of
futures transactions involves the risk of imperfect correlation in
movements in
the price of futures contracts, interest rates and the underlying
hedged assets.
Securities Transactions and Net Investment Income: Securities
transactions are
recorded on the trade date. Realized gains and losses on sales of
portfolio
securities are calculated on an identified cost basis. Interest
income is
recorded on an accrual basis. The Fund amortizes premiums and
accretes original
issue discount on portfolio securities as adjustments to interest
income.
Expenses are recorded on the accrual basis which may require the
use of certain
estimates by management.
Net investment income (other than distribution fees) and unrealized
and realized
gains or losses are allocated daily to each class of shares based
upon the
relative proportion of net assets of each class at the beginning of
the day.
Federal Income Taxes: It is the intent of the Fund to continue to
meet the
requirements of the Internal Revenue Code applicable to regulated
investment
companies and to distribute all of its net income to its
shareholders. For this
reason, no federal income tax provision is required.
Dividends and Distributions: Dividends from net investment income
are declared
daily and paid monthly. The Fund will distribute at least annually
any net
capital gains. Dividends and distributions are recorded on the
ex-dividend date.
Income distributions and capital gain distributions are determined
in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
Custody Fee Credits: The Fund has an arrangement with its custodian
bank,
whereby uninvested monies earn credits which reduce the fees
charged by the
custodian.
- -----------------------------------------------------------------
- ---------------
15 -----
<PAGE>
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
Note 2. Agreements
The Fund has a management agreement with Prudential Mutual Fund
Management, Inc.
(``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 the Fund's average daily net assets up to and
including $250
million, .475% of the next $250 million, .45% of the next $500
million, .425% of
the next $250 million, .40% of the next $250 million and .375% of
the Fund's
average daily net assets in excess of $1.5 billion. PMF has agreed
to waive a
portion (.05 of 1% of the Fund's average daily net assets) of its
management fee
which amounted to $179,519 ($0.7 per share for Class A, B and C
shares). The
Fund is not required to reimburse PMF for such waiver.
The Fund has a distribution agreement with Prudential Securities
Incorporated
(``PSI''), which acts as the distributor of the Class A, Class B
and Class C
shares of the Fund. The Fund compensates 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
with respect to
Class A, B and C shares, for distribution-related activities at an
annual rate
of up to .30 of 1%, .50 of 1% and 1%, of the average daily net
assets of the
Class A, B and C shares, respectively. Such expenses under the
Plans were .10 of
1%, .50 of 1% and .75 of 1% of the average daily net assets of the
Class A, B
and C shares, respectively, for the six months ended June 30, 1996.
PSI has advised the Fund that it received approximately $16,900 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, an affiliated broker-dealer, 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 $206,300 and $900 in contingent deferred
sales charges
imposed upon certain redemptions by Class B and Class C
shareholders,
respectively.
PSI, PMF and PIC are indirect, wholly-owned subsidiaries of The
Prudential
Insurance Company of America.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services, Inc. (``PMFS''), a wholly-owned
subsidiary of
PMF, serves as the Fund's transfer agent and during the six months
ended June
30, 1996, the Fund incurred fees of approximately $238,700 for the
services of
PMFS. As of June 30, 1996, $39,200 of such fees were due to PMFS.
Transfer agent
fees and expenses in the Statement of Operations include certain
out-of-pocket
expenses paid to non-affiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term
investments,
for the six months ended June 30, 1996, were $226,937,427 and
$294,947,883,
respectively.
The federal income tax basis of the Portfolio's investments at June
30, 1996 was
$663,707,889 and, accordingly, net unrealized appreciation for
federal income
tax purposes was $19,280,843 (gross unrealized
appreciation--$26,014,016 gross
unrealized depreciation--$6,733,173).
For federal income tax purposes, the Fund has a capital loss
carryforward as of
December 31, 1995 of approximately $9,376,900 which expires in
2002.
Accordingly, no capital gains distribution is expected to be paid
until net
gains have been realized in excess of the carryforward.
- ------------------------------------------------------------
Note 5. Capital
The Fund offers Class A, Class B and Class C shares. Class A shares
are sold
with a front-end sales charge of up to 3.0%. Class B shares are
sold with a
contingent deferred sales charge which declines from 5% to zero
depending on the
period of time the shares are held. Class C shares are
sold with a contingent deferred sales charge of 1% during the first
year. Class
B shares will automatically convert to Class A shares on a
quarterly basis
approximately seven years after purchase. A special exchange
privilege is also
available for shareholders who qualify to purchase Class A shares
at net asset
value.
- -----------------------------------------------------------------
- ---------------
- ----- 16
<PAGE>
<PAGE>
Notes to Financial Statements
(Unaudited) PRUDENTIAL NATIONAL MUNICIPALS
FUND, INC.
- -----------------------------------------------------------------
- ---------------
There are 750 million shares of common stock, $.01 par value, per
share, divided
into three classes, designated Class A, Class B and Class C common
stock, each
of which consists of 250 million authorized shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- --------------------------------- ----------- -------------
<S> <C> <C>
Six months ended June 30, 1996:
Shares sold...................... 3,960,338 $ 60,824,237
Shares issued in reinvestment of
dividends...................... 545,208 8,434,087
Shares reacquired................ (6,426,808) (98,975,535)
----------- -------------
Net decrease in shares
outstanding before
conversion..................... (1,921,262) (29,717,211)
Shares issued upon conversion
from Class B................... 1,178,297 17,931,734
----------- -------------
Net decrease in shares
outstanding.................... (742,965) $ (11,785,477)
----------- -------------
----------- -------------
Year ended December 31, 1995:
Shares sold...................... 5,840,738 $ 88,549,457
Shares issued*................... 2,456,167 38,217,954
Shares issued in reinvestment of
dividends...................... 946,405 14,567,998
Shares reacquired................ (9,950,451) (152,370,817)
----------- -------------
Net decrease in shares
outstanding before
conversion..................... (707,141) (11,035,408)
Shares issued upon conversion
from Class B................... 33,503,346 499,611,384
----------- -------------
Net increase in shares
outstanding.................... 32,796,205 $ 488,575,976
----------- -------------
----------- -------------
<CAPTION>
Class B
- ---------------------------------
<S> <C> <C>
Six months ended June 30, 1996:
Shares sold...................... 441,832 $ 6,849,460
Shares issued in reinvestment of
dividends...................... 199,520 3,094,687
Shares reacquired................ (1,098,542) (17,036,884)
----------- -------------
Net decrease in shares
outstanding before
conversion..................... (457,190) (7,092,737)
Shares reacquired upon conversion
into Class A................... (1,175,558) (17,931,734)
----------- -------------
Net decrease in shares
outstanding.................... (1,632,748) $ (25,024,471)
----------- -------------
----------- -------------
<CAPTION>
Class B Shares Amount
- --------------------------------- ----------- -------------
<S> <C> <C>
Year ended December 31, 1995:
Shares sold...................... 1,092,500 $ 11,070,341
Shares issued*................... 2,674,096 41,715,890
Shares issued in reinvestment of
dividends...................... 493,046 7,503,598
Shares reacquired................ (3,427,668) (51,852,878)
----------- -------------
Net increase in shares
outstanding before
conversion..................... 831,974 8,436,951
Shares reacquired upon conversion
into Class A................... (33,457,015) (499,611,384)
----------- -------------
Net decrease in shares
outstanding.................... (32,625,041) $(491,174,433)
----------- -------------
----------- -------------
<CAPTION>
Class C
- ---------------------------------
<S> <C> <C>
Six months ended June 30, 1996:
Shares sold...................... 27,366 $ 433,087
Shares issued in reinvestment of
dividends...................... 725 11,216
Shares reacquired................ (9,348) (143,364)
----------- -------------
Net increase in shares
outstanding.................... 18,743 $ 300,939
----------- -------------
----------- -------------
Year ended December 31, 1995:
Shares sold...................... 18,625 $ 287,124
Shares issued*................... 760 11,862
Shares issued in reinvestment of
dividends...................... 469 7,259
Shares reacquired................ (4,510) (70,157)
----------- -------------
Net increase in shares
outstanding.................... 15,344 $ 236,088
----------- -------------
----------- -------------
</TABLE>
- ---------------
* Represents amounts issued in connection with the acquisition of
the Prudential
Municipal Series Fund--Arizona Series, Georgia Series, and
Minnesota Series.
- -----------------------------------------------------------------
- ---------------
17 -----
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL NATIONAL
MUNICIPALS FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Class A
- -----------------------------------------------------------------
- ----
Six Months
Ended
Year Ended December 31,
June 30,
- ------------------------------------------------------
1996 1995
1994 1993 1992 1991
---------- --------
- ------- ------- ------ ------
<S> <C> <C>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................... $ 15.98 $ 14.42
$ 16.30 $ 15.94 $16.00 $15.09
---------- --------
- ------- ------- ------
Income from investment operations
Net investment income............... .41(c) .81(c)
.81 .90 .94 .97
Net realized and unrealized gain
(loss) on investment
transactions..................... (.75) 1.57
(1.78) 1.05 .43 .91
---------- --------
- ------- ------- ------ ------
Total from investment
operations.................... (.34) 2.38
(.97) 1.95 1.37 1.88
---------- --------
- ------- ------- ------ ------
Less distributions
Dividends from net investment
income........................... (.41) (.81)
(.81) (.90) (.94) (.97)
Distributions in excess of net
investment income................ -- (.01)
-- -- -- --
Distributions from net realized
gains............................ -- --
(.10) (.69) (.49) --
---------- --------
- ------- ------- ------ ------
Total distributions.............. (.41) (.82)
(.91) (1.59) (1.43) (.97)
---------- --------
- ------- ------- ------ ------
Net asset value, end of period...... $ 15.23 $ 15.98
$ 14.42 $ 16.30 $15.94 $16.00
---------- --------
- ------- ------- ------ ------
---------- --------
- ------- ------- ------ ------
TOTAL RETURN(a):.................... (2.12)% 16.91%
(6.04)% 12.60% 8.88% 12.94%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..... $501,482 $538,145
$12,721 $14,167 $7,700 $3,819
Average net assets (000)............ $514,670 $446,350
$14,116 $11,786 $5,401 $2,697
Ratios to average net assets:
Expenses, including distribution
fees.......................... .68%(b)(c)
.75%(c) .77% .69% .72% .75%
Expenses, excluding distribution
fees.......................... .58%(b)(c)
.65%(c) .67% .59% .62% .65%
Net investment income............ 5.36%(b)(c)
5.34%(c) 5.38% 5.49% 5.79% 6.27%
For Class A, B and C shares:
Portfolio turnover rate.......... 32% 98%
120% 82% 114% 59%
</TABLE>
- ---------------
(a) 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.
(b) Annualized.
(c) Net of management fee waiver.
- -----------------------------------------------------------------
- ---------------
- ----- 18 See Notes to
Financial Statements.
<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL NATIONAL
MUNICIPALS FUND, INC.
- -----------------------------------------------------------------
- ---------------
<TABLE>
<CAPTION>
Class B Class C
- -----------------------------------------------------------------
- -------------- ----------
Six Months
Six Months
Ended
Year Ended December 31, Ended
June 30,
- --------------------------------------------------------------
June 30,
1996 1995
1994 1993 1992 1991 1996
---------- --------
-------- -------- -------- -------- ----------
<S> <C> <C>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................... $ 16.02 $ 14.45
$ 16.33 $ 15.97 $ 16.02 $ 15.11 $ 16.02
---------- --------
-------- -------- -------- -------- ----------
Income from investment operations
Net investment income............... .38(c) .76(c)
.75 .84 .88 .91 .36(c)
Net realized and unrealized gain
(loss) on investment
transactions..................... (.76) 1.58
(1.78) 1.05 .44 .91 (.76)
---------- --------
-------- -------- -------- -------- ----------
Total from investment
operations.................... (.38) 2.34
(1.03) 1.89 1.32 1.82 (.40)
---------- --------
-------- -------- -------- -------- ----------
Less distributions
Dividends from net investment
income........................... (.38) (.76)
(.75) (.84) (.88) (.91) (.36)
Distributions in excess of net
investment income................ -- (.01)
-- -- -- -- --
Distributions from net realized
gains............................ -- --
(.10) (.69) (.49) -- --
---------- --------
-------- -------- -------- -------- ----------
Total distributions.............. (.38) (.77)
(.85) (1.53) (1.37) (.91) (.36)
---------- --------
-------- -------- -------- -------- ----------
Net asset value, end of period...... $ 15.26 $ 16.02
$ 14.45 $ 16.33 $ 15.97 $ 16.02 $ 15.26
---------- --------
-------- -------- -------- -------- ----------
---------- --------
-------- -------- -------- -------- ----------
TOTAL RETURN(a):.................... (2.36)% 16.49%
(6.39)% 12.15% 8.50% 12.42% (2.48)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..... $187,446 $222,865
$672,272 $848,299 $828,702 $874,338 $670
Average net assets (000)............ $206,714 $252,313
$751,623 $854,919 $829,830 $862,249 $638
Ratios to average net assets:
Expenses, including distribution
fees.......................... 1.08%(b)(c) 1.15%(c)
1.17% 1.09% 1.12% 1.15%(c)
1.33%(b)(c)
Expenses, excluding distribution
fees.......................... .58%(b)(c) .65%(c)
.67% .59% .62% .65%(c)
.58%(b)(c)
Net investment income............ 4.94%(b)(c) 4.96%(c)
4.96% 5.09% 5.39% 5.87%(c)
4.74%(b)(c)
<CAPTION>
August 1,
Year 1994(d)
Ended through
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period........................... $14.44 $15.13
----- -----
Income from investment operations
Net investment income............... .72(c) .29
Net realized and unrealized gain
(loss) on investment
transactions..................... 1.59 (.69)
----- -----
Total from investment
operations.................... 2.31 (.40)
----- -----
Less distributions
Dividends from net investment
income........................... (.72) (.29)
Distributions in excess of net
investment income................ (.01) --
Distributions from net realized
gains............................ -- --
----- -----
Total distributions.............. (.73) (.29)
----- -----
Net asset value, end of period...... $16.02 $14.44
----- -----
----- -----
TOTAL RETURN(a):.................... 16.22% (2.63)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..... $403 $141
Average net assets (000)............ $247 $103
Ratios to average net assets:
Expenses, including distribution
fees.......................... 1.40%(c)
1.51%(b)
Expenses, excluding distribution
fees.......................... .65%(c)
.76%(b)
Net investment income............ 4.66%(c)
4.84%(b)
</TABLE>
- ---------------
(a)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.
(b) Annualized.
(c) Net of management fee waiver.
(d) Commencement of offering of Class C shares.
- -----------------------------------------------------------------
- ---------------
See Notes to Financial Statements.
19 -----
<PAGE>
How Does Your State Stack Up?
Economic conditions vary from state to state. While one region may
be
experiencing strong fiscal management and prosperity, another may
languish
under the weight of declining industry or chronic state budget
problems.
State economic conditions, fiscal management and interest rates
play dominant
roles in the performance of individual municipal bonds. A strong
economy
generally leads to higher tax revenues and other income sources for
the state,
enabling it to more easily repay its debts. Additionally, sound
state financial
management often results in high ratings from bond rating agencies.
High
ratings are attractive to investors and can help bonds retain value
in the
market.
California
- - World's 8th largest economy.
- - Entertainment jobs growing.
- - Recovery continues, growth is exceeding the national average.
- - Increasing tax revenues may not cover soaring Medicaid costs.
- - General obligation debt upgraded by Standard & Poor's.
Hawaii
- - Tourism provides 60% of jobs.
- - Strong financial management.
- - Slow recovery from early-1990s U.S. and Japanese recessions,
which bit into
tourism and real estate.
- - Government eliminated 1,100 state jobs.
Ohio
- - Shift from manufacturing to service trades.
- - Economic and personal income growth ahead of national averages.
- - Debt is low.
Pennsylvania
- - Slowly rebuilding economy, but needs new engine of growth.
- - Modest debt rapidly amortized.
- - Sound financial management.
Michigan
- - Economic growth is 3.5%, higher than national average.
- - Once car capital of the world, now more diversified.
- - Strengthening fiscal management.
Massachusetts
- - Painful cuts in defense and health care eliminated jobs.
- - Slowly rebuilding economy.
- - Personal income is high.
New York
- - High taxes restrain growth.
- - Personal income remains high.
- - Debt level is high.
Maryland
- - One of wealthiest states.
- - Personal income 115% ofnational average, but income growth has
stabilized.
- - Good financial controls.
Florida
- - Economy and personal income growing much faster than national
rate.
- - Unemployment and debt are low.
- - Ended 1995 with a budget surplus for the third year in a row.
Connecticut
- - Nation's wealthiest citizens.
- - Economically weak from defense cuts.
- - Slow growth -- recovery may take years.
- - Attempts at "quick fixes" won't provide permanent relief.
New Jersey
- - Broad-based economy and high personal wealth.
- - Economic growth slowing.
- - "Pro-business" tactics siphoned revenue, but may spur more
growth.
North Carolina
- - Robust, model economy.
- - Personal income quickly growing.
- - Unemployment well below national average.
- - New jobs from financial services, research and high technology.
- - Strong financial management.
Source: Prudential Investment Corporation. Selected states are
those for
which Prudential Mutual Fund Management manages a state-specific
municipal
bond mutual fund
Revised:
August, 1996
<PAGE>
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
(800) 225-1852
http:\\www.prudential.com
Directors
Delayne Dedrick Gold
Arthur Hauspurg
Harry A. Jacobs, Jr.
Stephen P. Munn
Richard A. Redeker
Louis A. Weil, III
Officers
Richard A. Redeker, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Price Waterhouse LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
The views expressed in this report and information about the Fund's
portfolio
holdings are for the period covered by this report and are subject
to change
thereafter.
The accompanying financial statements as of June 30, 1996 were not
audited and,
accordingly, no opinion is expressed on them.]
This report is not authorized for distribution to prospective
investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
(800) 225-1852
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