PRUDENTIAL EQUITY INCOME FUND, N-30D, 1999-07-07

PRUDENTIAL EQUITY INCOME FUND
N-30D, 1999-07-07

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<PAGE>
(ICON)

Prudential
Equity
Income
Fund

SEMI
ANNUAL
REPORT
April 30, 1999

(LOGO)

<PAGE>

Prudential Equity Income Fund

Performance At A Glance

During our reporting period, investors overcame their
fear that a large-scale recession was threatening and
then turned toward the very inexpensive industrial
stocks. The Prudential Equity Income Fund moved almost
six percentage points ahead of the Lipper Average primarily
in the last month of the period. Our industrials and financials
made particularly strong contributions.

<TABLE>
Cumulative Total Returns1 As of 4/30/99
<CAPTION>
Six One Five Ten Since
Months Year Years Years Inception2
<S> <C> <C> <C> <C> <C>
Class A 20.08% 2.63% 136.21% N/A 289.84%
Class B 19.64 1.91 127.46 278.69% 346.34
Class C 19.64 1.91 N/A N/A 117.63
Class Z 20.25 2.89 N/A N/A 82.98
Lipper Equity
Income Fund Avg.3 14.25 7.60 135.28 274.55 ***
</TABLE>

<TABLE>
Average Annual Total Returns1 As of 3/31/99
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A -14.31% 14.52% N/A 13.64%
Class B -15.46 14.72 13.23% 11.82
Class C -12.36 N/A N/A 14.55
Class Z -9.52 N/A N/A 16.46
</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.

1 Source: Prudential Investments Fund Management and Lipper, Inc.
The cumulative total returns do not take into account sales
charges. The average annual total returns do take into account
applicable sales charges. The Fund charges a maximum front-end
sales charge of 5% for Class A shares. Class B shares are
subject to a declining contingent deferred sales charge
(CDSC) of 5%, 4%, 3%, 2%, 1% and 1% for six years.
Class B shares will automatically convert to Class A
shares, on a quarterly basis, approximately seven years
after purchase. Class C shares are subject to a front-end
sales charge of 1% and a CDSC of 1% for 18 months. Class C
shares bought before November 2, 1998, have a 1% CDSC if
sold within one year. Class Z shares are not subject to a
sales charge or distribution fee.

2 Inception dates: Class A, 1/22/90; Class B, 1/2/87; Class
C, 8/1/94; Class Z, 3/1/96.

3 Lipper average returns are for all funds in each share class
for the six-month, one-, five-, and ten-year periods in the
Equity Income Fund category.

*** Lipper Since Inception returns are 256.56% for Class A,
328.39% for Class B, 131.12% for Class C, and 74.86% for Class Z
based on all funds in each share class.

How Investments Compared
(As of 4/30/99)
(GRAPH)

Source: Lipper, Inc. 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 returns 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.

U.S. Taxable Money 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>

Portfolio Manager's Report

(PHOTO)
Warren Spitz
Fund Manager

Investment Goals and Style

The Prudential Equity Income Fund seeks current income
and capital appreciation. We invest primarily in stocks
of U.S. companies, as well as convertible securities,
that provide investment income returns above those of
the Standard & Poor's 500 Stock Index or the NYSE Composite
Index. We emphasize stocks that are considered undervalued,
given their earnings, cash flow, or asset values. There can
be no assurance that the Fund will achieve its investment
objective.

Performance Review
The market changed
We believe that share price volatility over the past few years
demonstrates the importance of a long time horizon for stock
investing. In that period, the ranking of our portfolio's
return in our Lipper peer group ranged from No.1 to the
bottom quartile, and in April we had climbed back to No.4.
All the while we kept to a steady course as the markets swung
around us. Our four largest holdings accounted for a full fifth
of our net assets on April 30, and their six-month returns
ranged from 40% to 59%. What were they? Alcoa and Dow Chemicals--two
industrials, Hanson--a consumer cyclical, and Lehman
Brothers--a financial stock. All four were in our portfolio
two years ago when the Asian crisis first hit. We have taken
some of our profits on Alcoa and Lehman Brothers to keep them
from becoming too large a part of our portfolio, but they remain
among our largest holdings.

It appears that we are emerging from a very unusual market where
there was a real threat of global financial breakdown and skittish
investors overreacted to all bad news. Value investing performed
poorly in this period. But when Brazil revalued its currency in
January, investors took the news much more calmly. We think this
bodes well for the attractive values in our portfolio.

Industrials recovered
Industrials make up about a third of our assets. Stock markets
generally move in anticipation of future earnings. When investors
feared a meltdown, industrials languished and we bought at very
low prices. Now investors expect global demand to rise, and
industrials have climbed steeply. In addition to Alcoa and Dow,
paper companies contributed to our performance. Georgia Pacific
did particularly well, with a 79% gain for the six-month period.
Our steel companies also helped our return.

Many of the basic materials companies became proficient cost-cutters
when they were in a difficult environment and are now poised to
benefit fully from an improving environment. Their large Asian
and Latin American markets are in stabilizing economies that
should increase demand before long. Since many materials
companies beat analysts' earnings estimates in the first
quarter of 1999, even before commodities prices rose, we
expect strong performance from their stocks.

Financials bounced back
Financial stocks had suffered particularly in the 1998 market
plunge because investors feared they might be exposed to the
emerging markets. Securities brokers also were vulnerable to
a slowdown in U.S. stock market activity, which has

<PAGE>

been a major source of revenue. When U.S. markets resumed their
climb, the beaten-down brokerages recovered. In addition
to Lehman Brothers, we had significant investments in Paine
Webber Group and Bear Stearns. Our holdings in these averaged
a 40% gain over the six months. We expect the industry to
continue to consolidate, adding merger or acquisition interest
to the demand for their shares.

Consumers are making
optional purchases

We own a variety of consumer cyclical stocks (which sell products
that consumers are more likely to buy in a growing economy),
including General Motors (up 43%) and Limited (up 72%). We
took our profits and sold our last shares of Daimler-Chrysler,
which had moved up dramatically. Although this sector wasn't
as beaten down as the industrials and financials, it hadn't
kept up with the market leaders during the period when
investors had a very narrow focus. However, it made a
strong contribution to our performance
over our reporting period.

Portfolio Composition
Expressed as a percentage of net assets as of 4/30/99

Industrial 33%
Finance 24
Consumer Cyclical 17
Energy 10
Consumer Growth & Stable 10
Utility 4
Technology 1
Cash & Equivalents 1

Some of our stocks are still out of favor

Some of our holdings are still "in the doghouse." Companies
associated with tobacco, such as RJR Nabisco and Philip
Morris, lost even more ground. These stocks are so
inexpensive because the market is, in effect, paying
an investor to take the tobacco business along with
the stronger food businesses. RJR Nabisco is separating
its tobacco and food businesses, with the goal of releasing
the value of Nabisco foods. Although a few lost court cases
hurt the tobacco industry during our reporting period,
tobacco shares began to move up in May.

Among energy stocks, we own Pioneer Natural Resources, an
exploration and production company, which saw the prices on
assets it was selling plunge when energy prices fell. It
began to recover early in March when energy prices started
to rise. We also own Pennzoil Quaker State, a service and
retail business, which suffered from the steep rise in oil
prices.

Five Largest Holdings
Expressed as a percentage of net assets as of 4/30/99

Alcoa, Inc. 6.5%
Aluminum

Dow Chemical Co. 5.2
Chemicals

Hanson PLC, S.A. ADR 4.4
Miscellaneous Industrial

Lehman Brothers Hldgs., Inc. 3.9
Financial Services

McDermott Intl., Inc. 3.9
Energy Systems

Looking Ahead
A climate change
In April, we saw signs that a five-year pro-growth environment
may be coming to an end. Over the five years ended March 31,
1999, growth stocks returned an average of 9.4 percentage
points more a year than value stocks (according to the S&P/Barra
Growth and Value Indexes). That was a very hostile environment
for a value manager. In the month of April, value stocks returned
8.4 percentage points more than growth. Moreover, the small and
mid-sized companies that make up a sizable part of our portfolio
beneath the top holdings also reversed a similar tilt. Although
we've had some very strong returns in the past five years, we
achieved them while fighting a headwind. Should the wind be at our
back now, it would be a welcome change.

1
<PAGE>

A Message to Our Shareholders June 18, 1999

(PHOTO) Dear Shareholder:

In the last couple of years, the recurring possibility
of a global economic crisis caused investors to focus on
securities they perceived to be safe. In the equity market,
they focused on the stocks of a handful of very large companies
that were perceived to be well-buffeted from an economic slowdown.
These stocks became very expensive--out of proportion to their
earnings expectations. As a result, there was a substantial
disparity in value between large and small companies and
between growth and value stocks.

Since earlier this year, however, that gap has narrowed
significantly amid news of strong U.S. economic growth and
faster-than-expected global stability. While the long-term
prospects of U.S. growth stocks are still very good, many
of the smaller and economically sensitive companies favored by
our value managers now are posting very attractive returns.

In the bond market, U.S. Treasuries and select European
government bonds were the major beneficiaries of the
flight to quality that occurred in recent years. When
this trend reversed itself toward the end of 1998, other
sectors of the bond market rebounded. However, with a
strong U.S. economy comes the threat of higher inflation,
which erodes the value of bonds' fixed interest payments.
The recent inflation concerns jolted the bond market and
helped send long-term interest rates to a 19-month high.

The winds of change in the equity market and the recent
turbulence in the bond market not only highlight the value
of professional portfolio management, but they illustrate
why investors should have a well-diversified asset allocation
strategy. It is also a good practice to rebalance your
holdings, when necessary, to keep your asset allocation
consistent with your long-term objectives and risk tolerance.
A properly diversified portfolio of value- and growth-oriented
equity funds, international bond funds, and money market
funds could help you weather inevitable market turbulence
and achieve more consistent returns over time. Prudential
offers a wide range of mutual funds to help our shareholders
diversify, as well as several balanced and diversified funds
to allow one-decision diversification.

Thank you for your continued confidence in Prudential mutual funds.

Sincerely,

John R. Strangfeld
President
Prudential Equity Income Fund

2
<PAGE>
Portfolio of Investments as of
April 30, 1999 (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>

Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--98.5%
COMMON STOCKS--93.3%
- ------------------------------------------------------------
Airlines--3.6%
956,300 AMR Corp.(a) $ 66,761,694
224,100 US Airways Group, Inc.(a) 12,199,444
---------------
78,961,138
- ------------------------------------------------------------
Aluminum--3.1%
1,076,384 Reynolds Metals Co. 67,139,452
- ------------------------------------------------------------
Apparel--0.7%
567,000 Kellwood Co. 14,600,250
- ------------------------------------------------------------
Automobiles & Trucks--4.0%
447,700 Ford Motor Co. 28,624,819
637,000 General Motors Corp. 56,653,187
---------------
85,278,006
- ------------------------------------------------------------
Building & Construction--1.6%
680,600 Kaufman & Broad Home Corp. 16,547,087
725,100 Ryland Group, Inc. 19,033,875
---------------
35,580,962
- ------------------------------------------------------------
Chemicals--6.2%
860,500 Dow Chemical Co. 112,886,844
848,028 Millennium Chemicals, Inc. 22,896,756
---------------
135,783,600
- ------------------------------------------------------------
Diversfied Consumer Products--0.8%
217,000 Eastman Kodak Co. 16,193,625
- ------------------------------------------------------------
Diversified Industries--2.1%
1,010,455 CBS Corp. 46,038,856
Electrical Equipment--0.7%
596,000 Esterline Technologies Corp.(a) $ 8,418,500
153,300 Instron Corp. 2,606,100
360,800 Newport Corp. 4,510,000
---------------
15,534,600
- ------------------------------------------------------------
Energy Systems--4.0%
2,955,100 McDermott International, Inc. 85,697,900
- ------------------------------------------------------------
Financial Services--9.4%
997,455 Bear Stearns Cos., Inc. 46,506,339
322,500 Edwards (A.G.), Inc. 11,287,500
1,545,900 Lehman Brothers Holdings, Inc. 85,894,069
1,311,300 PaineWebber Group, Inc. 61,549,144
---------------
205,237,052
- ------------------------------------------------------------
Forest & Paper--3.9%
388,500 Georgia-Pacific Corp. 35,936,250
1,283,400 Louisiana-Pacific Corp. 26,710,763
204,700 Potlatch Corp. 8,482,256
198,000 Weyerhaeuser Co. 13,290,750
---------------
84,420,019
- ------------------------------------------------------------
Gas Pipelines--0.6%
942,360 TransCanada Pipelines Ltd.(b) 13,075,245
- ------------------------------------------------------------
Health Care Services--1.6%
1,017,300 Columbia/HCA Healthcare Corp. 25,114,594
1,980,000 PhyCor, Inc.(a) 9,900,000
1,300 Tenet Healthcare Corp.(a) 30,712
---------------
35,045,306
- ------------------------------------------------------------
Hotels--0.7%
1,031,800 Hilton Hotels Corp. 16,121,875
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>
Portfolio of Investments as
of April 30, 1999 (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>

Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Insurance--2.3%
375,800 Marsh & McLennan Cos., Inc. $ 28,772,188
389,500 Ohio Casualty Corp.(b) 14,472,359
353,200 Selective Insurance Group, Inc. 6,843,250
---------------
50,087,797
- ------------------------------------------------------------
Integrated Producers--2.4%
669,200 Elf Aquitaine, S.A. ADR (France) 52,281,250
- ------------------------------------------------------------
Machinery--0.1%
3,500 Cascade Corp. 46,813
66,600 Graco, Inc. 2,097,900
---------------
2,144,713
- ------------------------------------------------------------
Metals--6.5%
2,273,000 Alcoa Inc. 141,494,250
- ------------------------------------------------------------
Mining--0.3%
697,958 Ashanti Goldfields Co. Ltd., GDR
(Africa) 6,281,622
- ------------------------------------------------------------
Miscellaneous Industrial--4.4%
1,967,200 Hanson PLC, S.A. ADR (United
Kingdom) 96,269,850
- ------------------------------------------------------------
Oil & Gas Exploration/Production--4.3%
703,200 Noble Affiliates, Inc. 22,546,350
990,000 Occidental Petroleum Corp. 19,985,625
1,218,300 Pennzoil Quaker Str Company 15,761,756
1,877,527 Pioneer Natural Resources Co. 21,943,597
481,200 Stillwater Mining Co.(a) 13,623,975
---------------
93,861,303
- ------------------------------------------------------------
Paper & Packaging--1.0%
752,300 Gibson Greetings Inc. 4,748,894
1,332,100 Longview Fibre Co. 17,317,300
---------------
22,066,194
Real Estate Investment Trust--12.5%
584,100 Capital Automotive REIT $ 7,593,300
2,270,400 Crescent Real Estate Equities,
Inc. 50,800,200
1,142,900 Crown American Realty Trust 8,286,025
553,826 Equity Office Properties Trust 15,264,829
1,589,000 Equity Residential Properties
Trust 73,491,250
538,500 Gables Residential Trust 12,823,031
525,000 Glimcher Realty Trust 8,892,188
406,200 Manufactured Home Communities,
Inc. 10,281,937
663,600 Starwood Hotels and Resorts 24,345,825
164,900 TriNet Corporate Realty Trust,
Inc. 4,524,444
1,243,300 Vornado Realty Trust 48,488,700
351,400 Walden Residential Properties,
Inc. 6,720,525
---------------
271,512,254
- ------------------------------------------------------------
Retail--4.6%
1,494,200 Limited, Inc. (The) 65,371,250
1,382,200 Heilig-Meyers Co. 8,120,425
581,400 Penney (J.C.) Co., Inc.(b) 26,526,375
---------------
100,018,050
- ------------------------------------------------------------
Steel--3.9%
954,300 AK Steel Holding Corp. 24,811,800
1,188,000 Bethlehem Steel Corp.(a) 10,840,500
665,800 LTV Corp. 4,244,475
1,497,400 USX Corp.-U.S. Steel Group 45,296,350
---------------
85,193,125
- ------------------------------------------------------------
Telecommunication Services--1.6%
354,700 Telebras ADR (Brazil)(b) 27,711
465,500 Telefonos de Mexico, SA de CV,
ADR (Mexico)(b) 35,261,625
---------------
35,289,336
- ------------------------------------------------------------
Tobacco--4.3%
841,500 Philip Morris Companies, Inc. 29,505,094
2,462,520 RJR Nabisco Holdings Corp. 63,409,890
---------------
92,914,984
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
Portfolio of Investments as
of April 30, 1999 (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>

Shares Description Value (Note 1)
<C> <S> <C>
- -------------------------------------------------------
Trucking & Shipping--0.5%
584,600 Yellow Corp.(a) $ 10,376,650
- -------------------------------------------------------
Waste Management--0.8%
311,317 Waste Management, Inc. 17,589,411
- -------------------------------------------------------
Word Processing--0.8%
392,700 Rayonier Inc. 17,916,937
---------------
Total common stocks
(cost $1,514,581,013) 2,030,005,612
---------------
- ------------------------------------------------------------
PREFERRED STOCKS--4.7%
- -------------------------------------------------------
Manufacturing--0.1%
262,500 Worthington Industries
Inc.
Conv. 7.25% 2,821,875
- -------------------------------------------------------
Mining--0.1%
Hecla Mining Co.,
57,800 Conv. 7.00%, Ser. B 2,044,675
- -------------------------------------------------------
Retail--1.7%
675,800 K-Mart Financing I,
Conv. 7.75% 37,971,512
- -------------------------------------------------------
Steel--0.7%
248,300 Bethlehem Steel Corp.,
Conv. $3.50 9,807,850
118,900 USX Capital Trust I
Conv., 6.75% 5,580,869
---------------
15,388,719
- -------------------------------------------------------
Telecommunication Services--1.5%
354,700 Telebras ADR S.A.
(Brazil)(a)(b) 32,344,206
- -------------------------------------------------------
Transportation-Road & Rail--0.6%
241,500 Union Pacific Capital
Trust 13,041,000
---------------
Total preferred stocks
(cost $110,645,998) 103,611,987
---------------
</TABLE>

<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000) Description Value (Note 1)
<C> <C> <S> <C>
- ------------------------------------------------------------
CONVERTIBLE BONDS--0.5%
- ------------------------------------------------------------
Real Estate Investment Trust--0.2%
Malan Realty Investors,
Inc.,
B3 $ 3,761 Sub. Deb., 9.50%, 7/15/04 $ 3,761,000
- ------------------------------------------------------------
Retail--0.3%
Charming Shoppes Inc.
B2 7,921 7.50%, 7/15/06 7,128,662
---------------
Total convertible bonds
(cost $11,819,331) 10,889,662
---------------
Total long-term investments
(cost $1,637,046,342) 2,144,507,261
---------------
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS--4.1%
- ------------------------------------------------------------
Commercial Paper--3.5%
10,000 Conagra Inc.(c)
5.10%, 5/3/99 10,000,000
21,000 Dayton Hudson Corp.(c)
5.00%, 5/3/99 21,000,000
10,000 MCI Worldcom Inc.(c)
5.03%, 5/4/99 10,000,000
15,000 PHH Corp.(c)
5.12%, 5/3/99 15,000,000
19,000 Raytheon Co.(c)
5.02%, 5/10/99 19,000,000
---------------
Total commercial paper
(cost $75,000,000) 75,000,000
---------------
- ------------------------------------------------------------
Time Deposit--0.3%
6,837 Suntrust(c)
5.00%, 5/3/99
(cost $6,837,000) 6,837,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>
Portfolio of Investments as
of April 30, 1999 (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount Description Value (Note 1)
(Unaudited) (000)
<C> <C> <S> <C>
- ------------------------------------------------------------
REPURCHASE AGREEMENT--0.3%
$6,311 Joint Repurchase
Agreement Account,
4.90%, 5/3/99
(cost $6,311,000;
Note 5) $ 6,311,000
--------------
Total short-term
investments
(cost $88,148,000) 88,148,000
--------------
- ------------------------------------------------------------
Total Investments--102.6%
(cost $1,725,194,342;
Note 4) 2,232,655,261
Liabilities in excess
of
other assets--(2.6)% (56,456,255)
--------------
Net Assets--100% $2,176,199,006
--------------
--------------
</TABLE>
- ---------------
(a) Non-income producing security.
(b) Portion of securities on loan, see Note 4.
(c) Represents security, or portion thereof, purchased with cash collateral
received for securities on loan.
ADR--American Depository Receipt.
GDR--Global Depository Receipt.
NR--Not rated by Moody's or Standard & Poor's.
PLC--Public Limited Company.
The Fund's current Statement of Additional Information contains a description of
Moody's ratings.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>
Statement of Assets and Liabilities (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets April 30, 1999
<S> <C>
Investments, at value (cost $1,725,194,342)................................................................. $2,232,655,261
Cash........................................................................................................ 253,166
Receivable for investments sold............................................................................. 27,860,990
Dividends and interest receivable........................................................................... 5,003,203
Receivable for Fund shares sold............................................................................. 4,227,561
Receivable for securities lending........................................................................... 543,410
Deferred expenses........................................................................................... 20,897
--------------
Total assets............................................................................................. 2,270,564,488
--------------
Liabilities
Payable to broker for collateral for securities on loan..................................................... 81,837,000
Payable for Fund shares reacquired.......................................................................... 8,926,968
Distribution fee payable.................................................................................... 1,161,787
Management fee payable...................................................................................... 851,318
Payable for investments purchased........................................................................... 655,720
Securities lending rebate payable........................................................................... 483,838
Foreign withholding tax payable............................................................................. 227,155
Accrued expenses............................................................................................ 221,696
--------------
Total liabilities........................................................................................ 94,365,482
--------------
Net Assets.................................................................................................. $2,176,199,006
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par.................................................................... $ 1,043,236
Paid-in capital in excess of par......................................................................... 1,544,692,048
--------------
1,545,735,284
Accumulated net investment loss.......................................................................... (2,472,255)
Accumulated net realized gains........................................................................... 125,469,708
Net unrealized appreciation on investments and foreign currencies........................................ 507,466,269
--------------
Net assets, April 30, 1999.................................................................................. $2,176,199,006
--------------
--------------
Class A:
Net asset value and redemption price per share
($696,781,124 / 33,334,767 shares of beneficial interest issued and outstanding)...................... $20.90
Maximum sales charge (5% of offering price).............................................................. 1.10
--------------
Maximum offering price to public......................................................................... $22.00
--------------
--------------
Class B:
Net asset value, offering price and redemption price per share
($1,281,474,386 / 61,519,715 shares of beneficial interest issued and outstanding).................... $20.83
--------------
--------------
Class C:
Net asset value and redemption price per share
($39,185,882 / 1,881,145 shares of beneficial interest issued and outstanding)........................ $20.83
Maximum sales charge (1% of offering price).............................................................. .21
--------------
Offering price to public................................................................................. $21.04
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per share
($158,757,614 / 7,588,009 shares of beneficial interest issued and outstanding)....................... $20.92
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
PRUDENTIAL EQUITY INCOME FUND
Statement of Operations (Unaudited)
- --------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income April 30, 1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $560,128)..................... $ 27,178,333
Interest.................................. 1,232,090
Income from securities loaned, net........ 203,957
--------------
Total income........................... 28,614,380
--------------
Expenses
Management fee............................ 5,167,486
Distribution fee--Class A................. 801,340
Distribution fee--Class B................. 6,162,929
Distribution fee--Class C................. 184,343
Transfer agent's fees and expenses........ 2,430,000
Reports to shareholders................... 114,000
Registration fees......................... 109,000
Custodian's fees and expenses............. 90,000
Insurance................................. 29,000
Trustees' fees and expenses............... 16,000
Audit fee and expenses.................... 15,000
Legal fees and expenses................... 13,000
Miscellaneous............................. 4,476
--------------
Total expenses......................... 15,136,574
--------------
Net investment income........................ 13,477,806
--------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain (loss) on:
Investment transactions................... 130,913,497
Foreign currency transactions............. (45,701 )
--------------
130,867,796
--------------
Net change in unrealized appreciation
(depreciation) on:
Investments............................... 225,376,370
Foreign currency transactions............. 8,290
--------------
225,384,660
--------------
Net gain on investments and foreign currency
transactions.............................. 356,252,456
--------------
Net Increase in Net Assets
Resulting from Operations.................... $ 369,730,262
--------------
--------------
</TABLE>

PRUDENTIAL EQUITY INCOME FUND
Statement of Changes in Net Assets (Unaudited)
- --------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) April 30, October 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income....... $ 13,477,806 $ 37,410,326
Net realized gain on
investments and foreign
currency transactions.... 130,867,796 138,053,262
Net change in unrealized
appreciation
(depreciation) of
investments and foreign
currencies............... 225,384,660 (224,412,031)
-------------- --------------
Net increase (decrease) in
net assets resulting from
operations............... 369,730,262 (48,948,443)
-------------- --------------
Dividends and distributions (Note 1)
Dividends from net
investment income
Class A.................. (6,536,529) (14,084,914)
Class B.................. (8,064,627) (19,144,502)
Class C.................. (240,689) (438,559)
Class Z.................. (1,562,524) (2,479,859)
-------------- --------------
(16,404,369) (36,147,834)
-------------- --------------
Distributions from net
realized gains
Class A.................. (36,735,180) (54,361,373)
Class B.................. (73,406,073) (114,880,805)
Class C.................. (2,177,750) (1,798,135)
Class Z.................. (7,944,744) (8,584,415)
-------------- --------------
(120,263,747) (179,624,728)
-------------- --------------
Fund share transactions (net of
share conversions) (Note 6)
Proceeds from shares sold... 253,613,790 1,012,745,142
Net asset value of shares
issued in reinvestment of
dividends and
distributions............ 126,300,133 198,544,772
Cost of shares reacquired... (556,191,733) (740,383,287)
-------------- --------------
Net increase (decrease) in
net assets from Fund
share transactions....... (176,277,810) 470,906,627
-------------- --------------
Total increase................. 56,784,336 206,185,622
Net Assets
Beginning of period............ 2,119,414,670 1,913,229,048
-------------- --------------
End of period(a)............... $2,176,199,006 $2,119,414,670
-------------- --------------
-------------- --------------
(a)Includes undistributed net
investment income of........ $ -- $ 500,009
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8

<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- --------------------------------------------------------------------------------
Prudential Equity Income Fund (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 both current income and capital
appreciation. It seeks to achieve this objective by investing primarily in
common stocks and convertible securities that provide investment income returns
above those of the Standard & Poor's 500 Stock Index or the NYSE Composite
Index. The ability of the issuers of the debt securities held by the Fund to
meet their obligations may be affected by economic developments in a specific
industry or country.
- ------------------------------------------------------------
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 Valuation: Investments in securities traded on a national securities
exchange (or reported on the Nasdaq national market) are valued at the last sale
price on such exchange on the day of valuation or, if there was no sale on such
day, the mean between the last bid and asked prices quoted on such day or at the
bid price in the absence of an asked price. Securities that are actively traded
in the over-the-counter market, including listed securities for which the
primary market is believed to be over-the-counter, are valued by an independent
pricing agent or principal market maker. Securities for which reliable market
quotations are not available or for which the pricing agent or principal market
maker does not provide a valuation or methodology or provides a valuation or
methodology that does not represent fair value, are valued in accordance with
procedures adopted by the Fund's Board of Trustees.
Short-term securities which mature in more than 60 days are valued based upon
current market quotations. Short-term securities which mature in 60 days or less
are valued at amortized cost which approximates market value.
In connection with transactions in repurchase agreements, it is the Fund's
policy that its custodian or designated subcustodians under triparty repurchase
agreements, as the case may be, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. If the seller defaults and the value of
the collateral declines or if bankruptcy proceedings are commenced with respect
to the seller of the security, realization of the collateral by the Fund may be
delayed or limited.
Foreign Currency Translation: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and liabilities--at the
current rates of exchange;
(ii) purchases and sales of investment securities, income and expenses--at the
rates of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange rates
and market values at the close of the period, the Fund does not isolate that
portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of the securities held at period end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term debt securities sold
during the period. Accordingly, such realized foreign currency gains and losses
are included in the reported net realized gains/losses on investment
transactions.
Net realized losses on foreign currency transactions of $45,701 represents net
foreign exchange gains and losses from sales and maturities of short-term
securities and forward currency contracts, holding of foreign currencies,
currency gains or losses realized between the trade and settlement dates on
securities transactions, and the difference between the amounts of interest and
foreign taxes recorded on the Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net currency gains and losses from valuing
foreign currency denominated assets (excluding investments) and liabilities at
period end exchange rates are reflected as a component of net unrealized
appreciation/depreciation on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. companies as a result of,
among other factors, the possibility of political or economic instability and
the level of governmental supervision and regulation of foreign securities
markets.
Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date; interest income is recorded on the accrual basis. 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 of the Fund based
upon the relative proportion of net assets of each class at the beginning of the
day.
- --------------------------------------------------------------------------------
9

<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- --------------------------------------------------------------------------------
Federal Income Taxes: It is the Fund's policy to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income to its shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends have been provided for in accordance with
the Fund's understanding of the applicable country's tax rates.
Dividends and Distributions: The Fund expects to pay dividends out of net
investment income quarterly and make distributions at least annually of 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. These differences are primarily due to differing treatment of
distributions from Real Estate Investment Trusts.
Securities Lending: The Fund may lend securities to broker-dealers. The loans
are secured by collateral at least equal at all times to the market value of the
securities loaned. Loans are subject to termination at the option of the
borrower or the Fund. Upon termination of the loan, the borrower will return to
the lender securities identical to the loaned securities. The Fund may bear the
risk of delay in recovery of, or even loss of rights in, the securities loaned
should the borrower of the securities fail financially. The Fund receives
compensation, net of any rebate, for lending its securities in the form of fees
or it retains a portion of interest on the investment of any cash received as
collateral. The Fund also continues to receive interest on the securities loaned
and any gain or loss in the market price of the securities loaned that may occur
during the term of the loan will be for the account of the Fund. Prudential
Securities Incorporated ('PSI') is the securities lending agent for the Fund.
For the six months ended April 30, 1999, PSI has been compensated approximately
$11,517.
Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with American Institute of Certified
Public Accountants (AICPA) Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to decrease accumulated net realized gains on investments by
$19,798,524, increase undistributed net investment loss by $45,701 and increase
paid-in capital by $19,844,225 for realized foreign currency losses and for
redemptions utilized as distibutions for federal income tax purposes. Net
investment income, net realized gains and net assets were not affected by these
changes.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. Pursuant to a subadvisory agreement between PIFM and The Prudential
Investment Corporation ('PIC'), PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM 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 PIFM is computed daily and payable monthly at an annual
rate of .60 of 1% of the Fund's average daily net assets up to $500 million, .50
of 1% of the next $500 million, .475 of 1% of the next $500 million and .45 of
1% of the average daily net assets in excess of $1.5 billion.
The Fund has a distribution agreement with Prudential Investment Management
Services LLC ('PIMS'), which acts as the distributor of the Class A, Class B,
Class C and Class Z shares. The Fund compensates PIMS for distributing and
servicing the Fund's Class A, Class B and Class C shares, pursuant to plans of
distribution (the 'Class A, B and C Plans'), regardless of expenses actually
incurred. The distribution fees are accrued daily and payable monthly. No
distribution or service fees were paid to PIMS as distributor of the Class Z
shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%,
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Plans were .25 of 1% of the average daily net assets of
Class A shares and 1% of the average daily net assets of both the Class B and C
shares for the six months ended April 30, 1999.
PIMS has advised the Fund that they have received approximately $221,100 and
$22,900 in front-end sales charges resulting from sales of Class A shares and
Class C shares, respectively, during the six months ended April 30, 1999. From
these fees, PIMS paid such sales charges to affiliated broker-dealers, which in
turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Fund that for the six months ended April 30, 1999, they
received approximately $1,519,200 and $20,700 in contingent deferred sales
charges imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
- --------------------------------------------------------------------------------
10

<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PIFM, PIC and PIMS are indirect, wholly owned subsidiaries of The Prudential
Insurance Company of America.
As of March 11, 1999, the Fund along with other affiliated registered investment
companies (the 'Funds'), entered into a syndicated credit agreement ('SCA') with
an unaffiliated lender. The maximum commitment under the SCA is $1 billion. The
Funds pay a commitment fee at an annual rate of .065 of 1% on the unused portion
of the credit facility, which is accrued and paid quarterly on a pro rata basis
by the Funds. The SCA expires on March 9, 2000. Prior to March 11, 1999, the
Funds had a credit agreement wit h a maximum commitment of $200,000.000. The
commitment fee was .055 of 1% on the unused portion of the credit facility. The
Fund did not borrow any amounts pursuant to either agreement during the six
months ended April 30, 1999. The purpose of the agreements are to serve as an
alternative source of funding for capital share redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months ended April 30, 1999,
the Fund incurred fees of approximately $1,901,700 for the services of PMFS. As
of April 30, 1999, approximately $372,600 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 nonaffiliates.
For the six months ended April 30, 1999, PSI earned approximately $997,100 in
brokerage commissions from portfolio transactions executed on behalf of the
Fund.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the period ended April 30, 1999 were $163,462,620 and $460,551,731,
respectively.
The cost basis of investments for federal income tax purposes at April 30, 1999
was $1,639,473,921 and, accordingly, net unrealized appreciation for federal
income tax purposes was $503,577,499 (gross unrealized
appreciation--$626,639,285; gross unrealized depreciation--$123,061,786).
As of April 30, 1999, the Fund has securities on loan with an aggregate market
value of $80,107,437. The Fund received $81,837,000 in cash as collateral for
securities on loan with which it purchased highly liquid short-term investments
in accordance with the Fund's securities lending procedures.
Note 5. Joint Repurchase Agreement Account
The Fund, along with other affiliated registered investment companies, transfers
uninvested cash balances into a single joint account, the daily aggregate
balance of which is invested in one or more repurchase agreements collateralized
by U.S. Treasury or Federal agency obligations. As of April 30, 1999, the Fund
had a 1.1% undivided interest in repurchase agreements in the joint account. The
undivided interest for the Fund represented $6,311,000 in principal amount. As
of such date, each repurchase agreement in the joint account and the value of
the collateral therefor were as follows:
Bear, Stearns & Co. Inc., 4.90%, in the principal amount of $150,000,000,
repurchase price $150,061,250, due 5/3/99. The value of the collateral including
accrued interest was $153,641,618.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 4.90%, in the principal amount of
$121,448,000, repurchase price $121,497,591, due 5/3/99. The value of the
collateral including accrued interest was $123,877,485.
Salomon Smith Barney Inc., 4.90%, in the principal amount of $150,000,000,
repurchase price $150,061,250, due 5/3/99. The value of the collateral including
accrued interest was $153,037,359.
Warburg Dillon Read LLC, 4.90%, in the principal amount of $150,000,000,
repurchase price $150,061,250, due 5/3/99. The value of the collateral including
accrued interest was $153,001,025.
- ------------------------------------------------------------
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z shares. Class A shares are
sold with a front-end sales charge of up to 5%. 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. Prior to November 2, 1998 Class C shares
were sold with a contingent deferred sales charge of 1% during the first year.
Effective November 2, 1998, Class C shares are sold with a front-end sales
charge of 1% and a contingent deferred sales charge of 1% during the first 18
months. Class B shares 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 or Class Z shares. Class Z shares are not subject to
any sales or redemption charge and are offered exclusively for sale to a limited
group of investors.
- --------------------------------------------------------------------------------
11

<PAGE>
Notes to Financial Statements (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- --------------------------------------------------------------------------------
The Fund has authorized an unlimited number of shares of beneficial interest at
$.01 par value divided into four classes, designated Class A, Class B, Class C
and Class Z.
Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
Class A Shares Amount
- --------------------------------- ----------- -------------
<S> <C> <C>
Six Months ended April 30, 1999:
Shares sold...................... 8,322,641 $ 154,165,773
Shares issued in reinvestment of
dividends and distributions.... 2,192,798 39,102,509
Shares reacquired................ (12,876,825) (235,819,788)
----------- -------------
Net decrease in shares
outstanding before
conversion..................... (2,361,386) (42,551,506)
Shares issued upon conversion
from Class B................... 1,426,076 25,454,541
----------- -------------
Net decrease in shares
outstanding.................... (953,310) $ (17,096,965)
----------- -------------
----------- -------------
Year ended October 31, 1998:
Shares sold...................... 18,187,422 $ 372,808,932
Shares issued in reinvestment of
dividends and distributions.... 3,225,575 63,494,283
Shares reacquired................ (16,281,521) (328,591,719)
----------- -------------
Net increase in shares
outstanding before
conversion..................... 5,131,476 107,711,496
Shares issued upon conversion
and/or exchanged from Class
B.............................. 1,987,257 39,239,381
----------- -------------
Net increase in shares
outstanding.................... 7,118,733 $ 146,950,877
----------- -------------
----------- -------------
<CAPTION>
Class B
- ---------------------------------
<S> <C> <C>
Six Months ended April 30, 1999:
Shares sold...................... 3,461,577 $ 63,940,026
Shares issued in reinvestment of
dividends and distributions.... 4,243,941 75,399,724
Shares reacquired................ (14,754,222) (269,157,276)
----------- -------------
Net decrease in shares
outstanding before
conversion..................... (7,048,704) (129,817,526)
Shares issued upon conversion
from Class B................... (1,430,666) (25,454,541)
----------- -------------
Net decrease in shares
outstanding.................... (8,479,370) $(155,272,067)
----------- -------------
----------- -------------
<CAPTION>
Class B Shares Amount
- --------------------------------- ----------- -------------
<S> <C> <C>
Year ended October 31, 1998:
Shares sold...................... 21,354,121 $ 438,253,055
Shares issued in reinvestment of
dividends and distributions.... 6,214,814 121,857,308
Shares reacquired................ (15,295,489) (302,422,093)
----------- -------------
Net increase in shares
outstanding before
conversion..................... 12,273,446 257,688,270
Shares reacquired upon conversion
and/or exchanged into Class
B.............................. (1,995,029) (39,239,381)
----------- -------------
Net increase in shares
outstanding.................... 10,278,417 $ 218,448,889
----------- -------------
----------- -------------
<CAPTION>
Class C
- ---------------------------------
<S> <C> <C>
Six Months ended April 30, 1999:
Shares sold...................... 376,827 $ 7,000,760
Shares issued in reinvestment of
dividends and distributions.... 130,539 2,319,273
Shares reacquired................ (671,750) (12,240,033)
----------- -------------
Net decrease in shares
outstanding.................... (164,384) $ (2,920,000)
----------- -------------
----------- -------------
Year ended October 31, 1998:
Shares sold...................... 1,490,743 $ 30,682,873
Shares issued in reinvestment of
dividends and distributions.... 109,439 2,144,607
Shares reacquired................ (410,298) (8,131,504)
----------- -------------
Net increase in shares
outstanding.................... 1,189,884 $ 24,695,976
----------- -------------
----------- -------------
<CAPTION>
Class Z
- ---------------------------------
<S> <C> <C>
Six Months ended April 30, 1999:
Shares sold...................... 1,509,187 $ 28,507,231
Shares issued in reinvestment of
dividends and distributions.... 531,160 9,478,627
Shares reacquired................ (2,118,149) (38,974,636)
----------- -------------
Net decrease in shares
outstanding.................... (77,802) $ (988,778)
----------- -------------
----------- -------------
Year ended October 31, 1998:
Shares sold...................... 8,469,492 $ 171,000,282
Shares issued in reinvestment of
dividends and distributions.... 563,480 11,048,574
Shares reacquired................ (4,936,214) (101,237,971)
----------- -------------
Net increase in shares
outstanding.................... 4,096,758 $ 80,810,885
----------- -------------
----------- -------------
</TABLE>
- ------------------------------------------------------------
Note 7. Dividends
On June 28, 1999 the Board of Trustees of the Fund declared the following
dividends per share, payable on June 30, 1999 to shareholders of record on June
29, 1999.
<TABLE>
<CAPTION>
Class Class B Class
A and C Z
--------- --------- ------
<S> <C> <C> <C>
Ordinary Income................... $ .08 $ .04 $.0925
</TABLE>
- --------------------------------------------------------------------------------
12

<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------------------------
Six Months
Ended Year Ended October 31,
April 30, ------------------------------------------------------------
1999 1998 1997 1996 1995 1994
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 18.63 $ 21.00 $ 15.43 $ 14.40 $ 14.03 $ 14.38
----------- -------- -------- -------- -------- --------
Income from investment operations
Net investment income............................... .16 .45 .45 .47 .48 .41
Net realized and unrealized gain (loss) on
investment transactions.......................... 3.36 (.49) 6.29 1.75 .95 .06
----------- -------- -------- -------- -------- --------
Total from investment operations................. 3.52 (.04) 6.74 2.22 1.43 .47
----------- -------- -------- -------- -------- --------
Less distributions
Dividends from net investment income................ (.19) (.44) (.43) (.49) (.54) (.29)
Distributions from net realized gains............... (1.06) (1.89) (.74) (.70) (.52) (.53)
----------- -------- -------- -------- -------- --------
Total distributions.............................. (1.25) (2.33) (1.17) (1.19) (1.06) (.82)
----------- -------- -------- -------- -------- --------
Net asset value, end of period...................... $ 20.90 $ 18.63 $ 21.00 $ 15.43 $ 14.40 $ 14.03
----------- -------- -------- -------- -------- --------
----------- -------- -------- -------- -------- --------
TOTAL RETURN(a):.................................... 20.08% (.65)% 45.68% 15.97% 11.15% 3.48%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..................... $ 696,781 $638,547 $570,146 $341,717 $276,990 $150,502
Average net assets (000)............................ $ 646,384 $655,776 $454,892 $310,335 $236,688 $131,398
Ratios to average net assets:
Expenses, including distribution fees............ 1.03%(b) .91% .94% .98% 1.03% 1.09%
Expenses, excluding distribution fees............ .78%(b) .66% .69% .73% .78% .85%
Net investment income............................ 1.76%(b) 2.19% 2.32% 3.26% 3.36% 2.97%
For Class A, B, C and Z shares:
Portfolio turnover rate............................. 8% 22% 36% 36% 74% 70%
</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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13

<PAGE>
Financial Highlights (Unaudited) PRUDENTIAL EQUITY INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------------
Six Months
Ended Year Ended October 31,
April 30, -----------------------------------------------------
1999 1998 1997 1996 1995
----------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 18.57 $ 20.93 $ 15.39 $ 14.36 $ 14.00
----------- ---------- ---------- ---------- --------
Income from investment operations
Net investment income............................... .09 .29 .29 .39 .37
Net realized and unrealized gain (loss) on
investment transactions.......................... 3.35 (.48) 6.29 1.71 .95
----------- ---------- ---------- ---------- --------
Total from investment operations................. 3.44 (.19) 6.58 2.10 1.32
----------- ---------- ---------- ---------- --------
Less distributions
Dividends from net investment income................ (.12 ) (.28) (.30) (.37) (.44)
Distributions from net realized gains............... (1.06 ) (1.89) (.74) (.70) (.52)
----------- ---------- ---------- ---------- --------
Total distributions.............................. (1.18 ) (2.17) (1.04) (1.07) (.96)
----------- ---------- ---------- ---------- --------
Net asset value, end of period...................... $ 20.83 $ 18.57 $ 20.93 $ 15.39 $ 14.36
----------- ---------- ---------- ---------- --------
----------- ---------- ---------- ---------- --------
TOTAL RETURN(a):.................................... 19.64 % (1.35)% 44.60% 15.12% 10.29%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..................... $1,281,474 $1,299,962 $1,250,216 $ 929,948 $906,793
Average net assets (000)............................ $1,242,801 $1,391,826 $1,072,118 $ 951,220 $911,856
Ratios to average net assets:
Expenses, including distribution fees............ 1.78%(b) 1.66% 1.69% 1.73% 1.78%
Expenses, excluding distribution fees............ .78%(b) .66% .69% .73% .78%
Net investment income............................ 1.02%(b) 1.44% 1.60% 2.51% 2.66%
<CAPTION>
1994
--------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 14.35
--------
Income from investment operations
Net investment income............................... .31
Net realized and unrealized gain (loss) on
investment transactions.......................... .06
--------
Total from investment operations................. .37
--------
Less distributions
Dividends from net investment income................ (.19)
Distributions from net realized gains............... (.53)
--------
Total distributions.............................. (.72)
--------
Net asset value, end of period...................... $ 14.00
--------
--------
TOTAL RETURN(a):.................................... 2.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..................... $954,951
Average net assets (000)............................ $784,063
Ratios to average net assets:
Expenses, including distribution fees............ 1.85%
Expenses, excluding distribution fees............ .85%
Net investment income............................ 2.21%
</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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14

- ---------------
(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) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15

- ---------------
(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) Commencement of offering of Class Z shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 16

Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

(800) 225-1852
http://www.prudential.com

Trustees

Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Caren Cunningham, Assistant Secretary

Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777

Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036

Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795

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 April 30, 1999,
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>

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