Prudential
FlexiFund
Conservatively Managed
Portfolio
Strategy Portfolio
- ---------------------------------------------------
Prudential Mutual Funds
BUILDING YOUR FUTURE
(LOGO)
ON OUR STRENGTH
<PAGE>
<PAGE>
LETTER TO SHAREHOLDERS
March 14, 1994
The Prudential FlexiFund is comprised of the Conservatively Managed
Portfolio and the Strategy Portfolio. Each Portfolio invests in a
combination of stocks and bonds as well as cash and money market instruments
and allocates assets according to prevailing market conditions. Both
portfolios seek a high total return but with different degrees of risk.
<TABLE>
<CAPTION>
FlexiFund Total Returns
Historical (as of 1/31/94)(1) Average Annual (as of12/31/93)(2)
6-Mo. 1-Yr. 5-Yr. Since Incep.* 1-Yr. 5-Yr. Since Incep.*
<S> <C> <C> <C> <C> <C> <C> <C>
Cons. Man.
Class A 5.88% 14.2% N/A 63.4% 8.7% N/A 11.3%
Class B 5.41% 13.3% 72.8% 75.3% 8.8% 11.7% 9.1%
Strategy
Class A 8.50% 14.1% N/A 61.2% 7.2% N/A 10.8%
Class B 8.09% 13.3% 77.0% 79.9% 7.2% 11.8% 9.4%
</TABLE>
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
(1)Source: Lipper Analytical Services, Inc. These figures do not take into
account sales charges. The Fund charges a maximum front-end sales load of
5.25% (Class A). Class B shares are subject to a declining contingent
deferred sales charge of 5%, 4%, 3%, 2%, 1% and 1% for the first 6 years.
(2)Source: Prudential Mutual Fund Management, Inc. These averages take
into account applicable sales charges.
Inception: 1/22/90 Class A; 9/15/87 Class B.
Understanding Performance
Historical Investment Results represent the cumulative total returns for a
specified period. These returns assume the reinvestment of dividends and
distributions but do not take into account applicable sales charges.
Average Annual Total Returns are not actual yearly results but even out
performance so that investors can compare different funds on an equal basis.
These returns take into account sales charges and would produce the same
results as the historic total returns for the same period if performance had
been constant.
THE MARKETS
In the second half of 1993, stocks rose in many world markets and long-term
interest rates in the U.S. remained at their lowest levels since the 1960s.
Despite a strengthening economy, U.S. corporations continued to restructure
and downsize. American consumers also became more budget conscious as
computer manufacturers, tobacco companies and restaurants found they had to
compete on price rather than just brand names. Japan remained in an economic
slump as government pledges to revive the economy rang hollow. Finally, oil
prices hit their ten year lows.
-1-
<PAGE>
The 1993 bond rally lost momentum in the fourth quarter when it was clear
the economy was strengthening, causing concern that the Federal Reserve would
be forced to raise interest rates. For the year, corporate bonds performed
especially well, and mortgage-backed securities trailed the pack after a tidal
wave of refinancings.
THE CONSERVATIVELY MANAGED PORTFOLIO
The Conservatively Managed Portfolio seeks a high total return consistent
with moderate risk. The weighted average maturity of the Portfolio's debt
securities is generally shorter than that of the Strategy Portfolio. In
addition, the equity and debt securities are generally those of larger more
mature companies and are subject to less price volatility than those held in
the Strategy Portfolio.
(CHART)
At the end of January 1994, the Portfolio's net asset value was $11.69 per
Class A and $11.65 per Class B share. During the six months ended January
31, 1994, the Portfolio paid dividends and distributions totaling $.73 and
$.69, respectively.
Portfolio Strategy
For the second half of 1993, we sold bonds on interest rate rallies and
overweighted in stocks, while our cash position remained low. The declining
interest rates also made stocks more attractive. However, as interest rates
began rising, we reduced our equity position to 46.6%, increased our bond
holdings to 38.3% and raised our cash position to 15.1% as of January
31, 1994.
Going forward in 1994, we favor stocks over bonds and short term securities.
Even though we do not expect stocks to repeat their 1993 performance, we still
think they should outperform bonds. Although inflation is low, the upturn in
business activity should preclude a repeat of 1993's bond gains.
THE STRATEGY PORTFOLIO
The Strategy Portfolio seeks high total return with relatively higher risk
than the Conservatively Managed Portfolio. This Portfolio invests in equity
securities of major established corporations and smaller, faster growing
companies, and a combination of investment grade, high yield and foreign
securities. Please note there are also special risks associated with foreign
investing such as economic, political and social developments and currency
fluctuations. Greg A. Smith, Prudential Securities Incorporated's Chief
Investment Strategist, provides sector allocation advice and furnishes
economic commentary on the equity and fixed income markets to The Prudential
Investment Corporation, your Portfolio's Investment Adviser pursuant to a
consulting agreement.
-2-
<PAGE>
At the end of January 1994, the Portfolio's net asset value was $12.37 per
Class A and $12.31 per Class B share. During the six months ended January
31, 1994, the Portfolio paid dividends and distributions totaling $.44 and
$.42, respectively.
Worldwide Recovery
Anticipating a global economic recovery driven by declining interest rates,
the Portfolio's stock allocation was increased from 59 % on July 31, 1993, to
68% on January 31, 1994. As Greg Smith's outlook became increasingly
bullish, the Investment Adviser increased the Portfolio's cash position to
11% at January 31, 1994 and increased its equity allocation to as high as
75% at the end of December 1993. The Adviser also sold some
interest-sensitive stock holdings, adding economically sensitive sectors and
consumer cyclical issues to position the Portfolio for strengthening
markets. When it became apparent the U.S. was leading the worldwide
economic recovery, the Portfolio's foreign holdings were sold during the
third calendar quarter of 1993 in favor of high-yield U.S. corporate bonds.
Going Forward
Based on signs of recovery in the U.S. and abroad, Greg Smith expects
relatively stable interest rates and strong equity markets throughout the
year. Accordingly, the Fund Adviser has added to positions in economically
sensitive areas such as industry, technology and finance. We believe these
moves help to position the Strategy Portfolio aggressively for a strong
1994.
As always, it is a pleasure to have you as a Prudential FlexiFund
shareholder and to take the opportunity to report our activities
to you.
Sincerely,
Lawrence C. McQuade
President<PAGE>
-3-
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND Portfolio of Investments
CONSERVATIVELY MANAGED PORTFOLIO January 31, 1994 (Unaudited)
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--84.8%
COMMON STOCKS--46.6%
Aerospace/Defense--2.0%
61,300 Aviall, Inc.*................ $ 1,072,750
203,200 Banner Aerospace, Inc.*...... 1,143,000
20,000 Furon Co..................... 335,000
56,500 Gencorp, Inc................. 826,312
52,500 General Motors Corp., Class
H.......................... 2,060,625
70,000 Martin Marietta Corp......... 3,141,250
------------
8,578,937
------------
Automotive--1.6%
27,100 Coltec Inds., Inc.*.......... 575,875
27,500 Danaher Corp................. 1,034,687
26,000 Ford Motor Co................ 1,742,000
25,000 General Motors Corp.......... 1,534,375
64,300 General Motors Corp. Class
E.......................... 1,941,000
------------
6,827,937
------------
Chemicals--3.6%
18,400 Cytec Inds., Inc.*........... 296,705
35,000 Dexter Corp.................. 835,625
41,450 Eastman Chemical Co.*........ 1,813,437
70,000 Ferro Corp................... 2,450,000
19,200 FMC Corp.*................... 926,400
35,000 Grace (W.R.) & Co............ 1,596,875
60,000 Hanna (M. A.) Co............. 2,250,000
79,700 Imperial Chemical Ind.
(ADR)...................... 3,885,375
46,600 Vigoro Corp.................. 1,467,900
------------
15,522,317
------------
Computer and Related Equipment--2.4%
44,000 Ceridian Corp.*.............. 1,001,000
56,900 Diebold, Inc................. 3,243,300
29,100 Digital Equipment Corp.*..... $ 880,275
32,200 First Data Corp.............. 1,473,150
40,200 Motorola, Inc................ 3,959,700
------------
10,557,425
------------
Consumer Products--1.1%
65,000 Eastman Kodak Co............. 2,868,125
43,900 Newell Co.................... 1,838,313
------------
4,706,438
------------
Containers & Packaging--0.6%
64,200 Ball Corp.................... 1,693,275
85,000 Owens-Illinois Holdings
Corp.*..................... 988,125
------------
2,681,400
------------
Data Processing & Reproduction--0.4%
26,100 First Financial Management
Corp....................... 1,543,163
------------
Drugs & Health Care--4.8%
40,000 American Cyanamid Co......... 2,015,000
87,400 HCA Hospital Corp.
America*................... 3,397,675
90,900 Healthtrust, Inc.*........... 2,556,563
179,300 National Medical Enterprises,
Inc........................ 2,846,387
52,700 Schering Plough Corp......... 3,320,100
36,200 Warner Lambert Co............ 2,357,525
117,766 Zeneca Group PLC............. 4,254,297
------------
20,747,547
------------
Electronics--1.6%
43,700 Belden, Inc.*................ 846,687
70,000 Loral Corp................... 2,791,250
80,000 Mark IV Industries, Inc...... 1,650,000
41,600 Perkin Elmer Corp............ 1,627,600
------------
6,915,537
------------
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Financial Services--5.1%
55,600 American Express Co.......... $ 1,820,900
100,000 Dean Witter Discover & Co.... 3,837,500
83,200 First Bank System, Inc....... 2,610,400
16,700 First Interstate Bank
Corp....................... 1,171,087
25,000 ITT Corp..................... 2,459,375
110,000 KeyCorp...................... 4,070,000
148,000 Norwest Corp................. 3,903,500
100,000 Washington Mutual Savings
Bank....................... 2,462,500
------------
22,335,262
------------
Food & Beverage--1.0%
47,600 Karcher Carl Enterprises,
Inc........................ 636,650
70,000 Morrison Restaurants, Inc.... 1,750,000
47,000 Sbarro, Inc.................. 1,903,500
------------
4,290,150
------------
Freight Transportation--1.1%
50,000 Illinois Central Corp........ 1,875,000
70,000 Ryder System, Inc............ 1,881,250
15,300 Union Pacific Corp........... 1,000,238
------------
4,756,488
------------
Home Improvements--0.7%
70,000 Owens Corning Fiberglass*.... 3,158,750
------------
Hotels & Leisure--0.5%
75,000 Marriott International,
Inc........................ 2,203,125
------------
Insurance--3.3%
33,600 Berkley (W. R.) Corp......... 1,201,200
64,000 Equitable of Iowa Cos........ 1,864,000
71,000 Life Re...................... 1,579,750
40,000 NAC Re Corp.................. 1,260,000
60,800 National Re Corp............. 1,763,200
74,700 Reinsurance Group America,
Inc........................ 1,960,875
124,700 Tig Holdings, Inc............ 2,696,637
51,200 Trenwick Group, Inc.......... 1,881,600
------------
14,207,262
------------
Machinery & Equipment--1.8%
49,600 Donaldson Co., Inc........... $ 2,337,400
45,000 IDEX Corp.*.................. 1,710,000
38,000 Kaydon Corp.................. 774,250
85,800 Regal Beloit Corp............ 2,273,700
37,000 Trimas Corp.................. 883,375
------------
7,978,725
------------
Media--3.7%
50,000 Houghton Mifflin Co.......... 2,250,000
75,000 Media General, Inc........... 2,034,375
60,000 Multimedia, Inc.*............ 2,100,000
6,100 Scholastic Corp.*............ 257,725
135,000 Tele-Communications, Inc.*... 3,678,750
105,400 Time Warner, Inc............. 4,216,000
42,300 Viacom, Inc.*................ 1,469,925
------------
16,006,775
------------
Miscellaneous--0.6%
64,400 BWIP Holding, Inc............ 1,288,000
34,300 York International Corp...... 1,294,825
------------
2,582,825
------------
Mining--0.5%
150,000 INDRESCO, Inc.*.............. 2,100,000
------------
Oil & Gas Exploration/
Production--3.5%
23,600 Anadarko Petroleum Corp...... 1,121,000
99,800 Basin Exploration, Inc.*..... 1,272,450
40,000 British Petroleum PLC
(ADR)...................... 2,730,000
70,000 Cabot Oil & Gas Corp......... 1,548,750
26,100 Enron Oil & Gas Co........... 1,151,662
35,000 Murphy Oil Corp.............. 1,448,125
164,700 Oryx Energy Co............... 2,964,600
37,400 Seagull Energy Corp.*........ 995,775
55,500 Societe Nationale Elf
Aquitaine.................. 1,998,000
7,100 USX-Delhi Group.............. 123,363
------------
15,353,725
------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Paper & Forest Products--1.7%
90,000 Mead Corp.................... $ 4,263,750
65,650 Pentair, Inc................. 2,371,606
34,800 Riverwood International
Corp....................... 661,200
------------
7,296,556
------------
Petroleum Services--0.2%
35,000 Enterra Corp.*............... 721,875
------------
Retail--1.4%
55,100 AnnTaylor Stores Corp.*...... 1,177,763
60,000 Caldor Corp.*................ 1,590,000
60,000 Federated Department Stores,
Inc.*...................... 1,312,500
33,000 Sears Roebuck & Co........... 1,810,875
------------
5,891,138
------------
Steel & Metals--0.4%
17,000 Material Sciences Corp.*..... 446,250
63,100 Wolverine Tube, Inc.......... 1,443,413
------------
1,889,663
------------
Telecommunications--2.1%
58,000 Century Telephone Enterprises
Inc........................ 1,580,500
100,000 MCI Communications Corp...... 2,762,500
37,400 Northern Telecom Ltd......... 1,215,500
40,000 Pacific Telesis Group........ 2,305,000
12,000 Pactel Corp.*................ 303,000
24,900 Rochester Telephone Corp..... 1,083,150
------------
9,249,650
------------
Textiles--0.9%
80,000 Jones Apparel Group, Inc.*... 2,390,000
32,000 VF Corp...................... 1,484,000
------------
3,874,000
------------
Total Common Stocks
(cost $168,839,838).......... 201,976,670
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
DEBT OBLIGATIONS(a)--38.2%
Corporate Bonds--18.9%
Airlines--1.0%
AMR Corp.,
Baa3 $ 1,000 7.75%, 12/1/97......... $ 1,037,250
Delta Air Lines, Inc.,
Ba1 1,300 7.71%, 5/14/97......... 1,345,500
Ba1 500 7.79%, 12/1/98......... 511,935
Ba1 800 8.63%, 12/12/05........ 854,488
Ba1 500 9.75%, 5/15/21......... 558,100
Southwest Airlines Co.,
Baa1 100 9.40%, 7/1/01.......... 118,705
------------
4,425,978
------------
Cement--0.6%
Cemex S.A.,
NR 750 6.25%, 10/25/95........ 765,000
Ba2 750 8.875%, 6/10/98........ 806,250
Ba2 500 8.75%, 6/10/98......... 537,500
TOLMEX S.A. de C.V.,
Ba2 500 8.375%, 11/1/03........ 528,750
------------
2,637,500
------------
Chemicals--0.4%
Eastman Chemical Co.,
Baa1 1,500 6.375%, 1/15/04........ 1,498,635
------------
Computer and Related
Equipment--0.7%
Comdisco, Inc.,
Baa2 3,000 8.95%, 5/15/95......... 3,160,740
------------
Electronics--0.7%
Westinghouse Electric Corp.,
Ba1 1,100 7.75%, 4/15/96......... 1,151,095
Ba1 450 8.70%, 6/20/96......... 478,215
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
Electronics--(cont'd)
Westinghouse Electric Corp.,
Ba1 $ 800 8.875%, 6/1/01......... $ 881,832
Baa3 600 8.375%, 6/15/02........ 635,400
------------
3,146,542
------------
Financial Services--6.4%
ANZ Banking
A2 1,100 6.25%, 2/1/04.......... 1,096,755
Associates Corp. of
North America,
A1 750 6.875%, 1/15/97........ 790,770
A1 200 8.375%, 1/15/98........ 222,322
Bancomer S.A.,
NR 1,000 8.00%, 7/7/98.......... 1,047,500
Chrysler Financial Corp.,
Baa2 1,100 5.39%, 8/27/96......... 1,112,650
Baa2 3,300 3.8125%, 11/15/96...... 3,298,053
Baa2 1,000 9.50%, 12/15/99........ 1,174,590
Citicorp,
Baa1 1,000 7.80%, 3/24/95......... 1,040,170
First Union Corp.,
A3 1,000 9.45%, 6/15/99......... 1,156,540
Ford Motor Credit Co.,
A2 1,000 6.25%, 2/26/98......... 1,034,570
General Motors
Acceptance Corp.,
Baa1 1,750 7.80%, 11/7/96......... 1,866,655
Baa1 2,000 7.50%, 11/4/97......... 2,130,880
Baa1 1,100 8.40%, 10/15/99........ 1,220,582
Goldman Sachs Group,
A1 2,000 6.10%, 4/15/98......... 2,059,560
Kansallis-Osake-
Pankki Bank,
A3 1,000 6.125%, 5/15/98........ 1,026,370
Potomac Capital
Investment Corp.,
A3 1,000 6.19%, 4/28/97......... 1,016,290
Shawmut National Corp.,
Baa2 $ 2,100 8.625%, 12/15/99....... $ 2,333,037
Shearson Lehman
Holdings, Inc.,
A3 1,000 5.75%, 2/15/98......... 1,007,420
Union Bank Finland,
A3 2,600 5.25%, 6/15/96......... 2,607,722
Westinghouse Credit
Corp.,
Ba1 400 8.75%, 6/3/96.......... 425,152
------------
27,667,588
------------
Food & Beverage--1.2%
Borden, Inc.,
Baa2 1,000 7.875%, 2/15/23........ 984,410
Coca Cola Enterprises,
Inc.
A3 500 6.50%, 11/15/97........ 521,585
Fomento Economico
Mexicano S.A.,
NR 850 9.50%, 7/22/97......... 926,500
Philip Morris Cos, Inc.,
A2 700 8.75%, 6/15/97......... 777,714
Procter & Gamble Co.,
Aa2 1,700 9.36%, 1/1/21.......... 2,162,825
------------
5,373,034
------------
Insurance--0.2%
Zurich Reinsurance
Centre Holdings, Inc.,
A1 1,000 7.125%, 10/15/23....... 963,810
------------
Media--2.2%
Grupo Televisa, Sa De
Euro, M.T.N.,
Ba2 1,500 10.00%, 11/9/97........ 1,661,250
News America
Holdings, Inc.,
Ba1 300 7.50%, 3/1/00.......... 314,055
Ba1 1,000 7.45%, 6/1/00.......... 1,046,890
Ba1 1,600 8.25%, 8/10/18......... 1,665,040
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
Media--(cont'd)
Time Warner, Inc.,
Ba1 $ 1,000 6.05%, 7/1/95.......... $ 1,015,720
Ba1 600 7.45%, 2/1/98.......... 632,430
Baa3 2,000 7.25%, 9/1/08.......... 2,036,100
Tele-Communications,
Inc.,
Baa3 1,000 10.125%, 4/15/22....... 1,327,540
------------
9,699,025
------------
Miscellaneous--0.3%
Federal Express Corp.,
Baa3 500 10.05%, 6/15/99........ 590,915
Laidlaw, Inc.,
Baa2 700 8.25%, 5/15/23......... 719,740
------------
1,310,655
------------
Oil & Gas--0.8%
Arkla, Inc.,
Ba2 1,200 9.875%, 4/15/97........ 1,329,000
Ba1 1,000 9.30%, 1/15/98......... 1,083,050
Mitchell Energy &
Development Corp.,
Baa3 1,000 5.10%, 2/15/97......... 999,820
------------
3,411,870
------------
Paper & Forest
Products--0.6%
Boise Cascade Corp.,
Baa3 1,500 6.82%, 2/1/99.......... 1,500,000
Baa3 363 9.875%, 2/15/01........ 404,066
Georgia Pacific Corp.,
Baa3 500 9.625%, 3/15/22........ 599,800
------------
2,503,866
------------
Retail--0.8%
Dayton Hudson Corp.,
A3 1,150 9.00%, 10/1/21......... 1,361,393
Sears Roebuck & Co.,
Baa1 $ 2,000 9.25%, 8/1/97.......... $ 2,252,880
------------
3,614,273
------------
Shipping--0.4%
Compania SudAmericana
De Vapores,
NR 1,750 7.375%, 12/8/03........ 1,736,875
------------
Telecommunications--0.3%
American Telephone &
Telegraph Co.,
Aa3 1,000 8.625%, 12/1/31........ 1,142,910
------------
Utilities--1.0%
Commonwealth Edison Co.,
Baa1 2,000 9.05%, 10/15/99........ 2,295,720
Hydro Quebec Corp.,
A1 500 3.375%, 9/30/49........ 435,000
Pennsylvania Power &
Light Co.,
A2 450 9.375%, 7/1/21......... 527,274
Philadelphia Electric Co.,
Baa1 1,000 7.125%, 9/1/02......... 1,034,080
------------
4,292,074
------------
Sovereign Bonds--1.3%
Banco Nacional De Comercio,
Ba2 1,000 7.50%, 7/1/00.......... 1,030,000
Grupo Condumex
S.A. de C.V., M.T.N.,
NR 700 6.25%, 7/27/96......... 692,125
Quebec Province Canada,
A1 700 7.125%, 2/9/24......... 696,395
Republic of Italy
Global Bond,
A1 1,250 6.875%, 9/27/23........ 1,197,625
United Mexican States,
Ba2 1,650 8.50%, 9/15/02......... 1,788,188
------------
5,404,333
------------
</TABLE>
-8- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
Total Corporate Bonds
(cost $80,472,489)... $ 81,989,708
------------
Asset Backed Securities--1.5%
Bank of New York Master
Credit Card Trust,
Aaa $ 1,200 7.95%, 4/15/96......... 1,218,000
Standard Credit Card Trust,
A2 1,000 9.375%, 5/10/95........ 1,058,750
Aaa 4,000 8.00%, 8/7/96.......... 4,302,480
------------
Total Asset Backed
Securities
(cost $6,594,859).... 6,579,230
------------
U. S. Government and Agency
Securities--17.8%
United States Treasury Bonds,
17,900 11.25%, 2/15/15........ 28,150,614
1,250 8.875%, 8/15/17........ 1,625,975
United States Treasury Bonds,
3,800 12.00%, 8/15/13........ 5,978,464
4,700 7.50%, 11/15/16........ 5,321,998
United States Treasury Notes,
11,600 6.00%, 11/30/97........ 12,111,096
1,600 7.875%, 8/15/01........ 1,841,504
United States Treasury Notes,
1,600 4.25%, 7/31/95......... 1,608,992
1,700 7.625%, 4/30/96........ 1,822,723
800 6.50%, 11/30/96........ 843,496
1,800 6.875%, 3/31/97........ 1,922,904
3,700 9.00%, 5/15/98......... 4,286,783
United States Treasury Notes,
$ 1,200 8.75%, 8/15/00......... $ 1,429,872
7,850 7.50%, 11/15/01........ 8,856,998
United States Treasury Strips,
4,500 Zero Coupon, 2/15/11... 1,484,775
------------
Total U. S. Government
and Agency Securities
(cost $76,050,629)... 77,286,194
------------
Total Debt Obligations
(cost
$163,117,977)........ 165,855,132
------------
Total long-term
investments
(cost
$331,957,815)........ 367,831,802
SHORT-TERM INVESTMENTS(a)--13.9%
Corporate Notes--2.5%
Nordiska Investeringsbanke,
Aaa 3,000 9.50%, 12/15/94........ 3,137,190
Phillip Morris Co., Inc.,
A2 250 8.70%, 8/1/94.......... 255,977
Texas Utilities
Electric Co.,
Baa2 800 9.625%, 9/30/94........ 828,432
Bancomer S.A., Euro
C.D.,
NR 3,400 Zero Coupon, 3/17/94... 3,382,296
NR 3,000 Zero Coupon, 4/5/94.... 2,972,793
------------
Total Corporate Notes
(cost $10,552,920)... 10,576,688
------------
</TABLE>
-9- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<S> <C> <C> <C>
Repurchase Agreement--11.4%
$49,474 Joint Repurchase
Agreement Account,
3.14%, 2/1/94 (Note
5)................... $ 49,474,000
------------
Total short-term
investments
(cost $60,026,920)... 60,050,688
------------
Total Investments--98.7%
(cost $391,984,735;
Note 4).............. 427,882,490
Other assets in excess
of
liabilities--1.3%.... 5,409,291
------------
Net Assets--100%....... $433,291,781
------------
------------
-----
* Non-income producing security.
(a) Par value U.S. dollar denominated.
ADR--American Depository Receipt.
C.D.--Certificate of Deposit.
M.T.N.--Medium Term Note.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Prospectus contains a description of
Moody's ratings.
</TABLE>
-10- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
January 31,
Assets 1994
------------
<S> <C>
Investments, at value (cost $391,984,735)................................................. $427,882,490
Cash...................................................................................... 1,173,298
Receivable for investments sold........................................................... 15,954,820
Dividends and interest receivable......................................................... 3,716,881
Receivable for Fund shares sold........................................................... 3,416,179
Deferred expenses and other assets........................................................ 5,358
------------
Total assets.......................................................................... 452,149,026
------------
Liabilities
Payable for investments purchased......................................................... 16,941,286
Payable for Fund shares reacquired........................................................ 1,278,053
Distribution fee payable.................................................................. 337,034
Management fee payable.................................................................... 231,379
Withholding taxes payable................................................................. 19,172
Accrued expenses.......................................................................... 50,321
------------
Total liabilities..................................................................... 18,857,245
------------
Net Assets................................................................................ $433,291,781
------------
------------
Net assets were comprised of:
Common stock, at par.................................................................... $ 371,808
Paid-in capital in excess of par........................................................ 389,997,986
------------
390,348,662
Undistributed net investment income..................................................... 2,947,168
Accumulated net realized gains on investsments.......................................... 4,098,196
Net unrealized appreciation on investments.............................................. 35,897,755
------------
Net Assets, January 31, 1994.............................................................. $433,291,781
------------
------------
Class A:
Net asset value and redemption price per share
($30,949,634 (Divided By) 2,647,468 shares of common stock issued and outstanding).... $11.69
Maximum sales charge (5.25% of offering price).......................................... 0.65
------------
Maximum offering price to public........................................................ $12.34
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($402,342,147 (Divided By) 34,533,379 shares of shares of common stock issued and
outstanding).......................................................................... $11.65
------------
------------
</TABLE>
See Notes to Financial Statements.
-11-
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
January 31,
Net Investment Income 1994
-----------
<S> <C>
Income
Interest (net of foreign withholding taxes of $17,247).................................... $ 6,067,093
Dividends (net of foreign withholding taxes of $22,689)................................... 1,614,313
-----------
Total income............................................................................ 7,681,406
-----------
Expenses
Distribution fee--Class A................................................................. 27,543
Distribution fee--Class B................................................................. 1,801,013
Management fee............................................................................ 1,256,070
Transfer agent's fees and expenses........................................................ 256,000
Custodian's fees and expenses............................................................. 96,000
Reports to shareholders................................................................... 33,000
Registration fees......................................................................... 30,000
Directors' fees........................................................................... 13,000
Audit fee................................................................................. 8,000
Legal fees................................................................................ 5,000
Miscellaneous............................................................................. 883
-----------
Total expenses.......................................................................... 3,526,509
-----------
Net investment income....................................................................... 4,154,897
-----------
Realized and Unrealized Gain on Investments
Net realized gain on investment transactions................................................ 10,623,243
Net change in unrealized appreciation/depreciation on Investments........................... 5,385,802
-----------
Net gain on investments..................................................................... 16,009,045
-----------
Net Increase in Net Assets Resulting from Operations........................................ $20,163,942
-----------
-----------
</TABLE>
See Notes to Financial Statements.
-12-
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND
CONSERVATIVELY MANAGED PORTFOLIO
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets 1994 1993
------------ ------------
<S> <C> <C>
Operations
Net investment income....................................................... $ 4,154,897 $ 8,734,542
Net realized gain on investments............................................ 10,623,243 13,033,133
Net change in unrealized appreciation of investments........................ 5,385,802 16,803,076
------------ ------------
Net increase in net assets resulting from operations........................ 20,163,942 38,570,751
------------ ------------
Net equalization credits...................................................... 620,253 325,868
------------ ------------
Dividends and distributions (Note 1)
Dividends to shareholders from net investment income
Class A................................................................... (361,478) (490,533)
Class B................................................................... (3,793,419) (6,742,292)
------------ ------------
(4,154,897) (7,232,825)
------------ ------------
Dividends to shareholders in excess of net investment income
Class A................................................................... (51,840) --
Class B................................................................... (544,013) --
------------ ------------
(595,853) --
------------ ------------
Distributions to shareholders from net realized gains on investment
transactions
Class A................................................................... (733,654) (577,629)
Class B................................................................... (9,889,589) (10,528,236)
------------ ------------
(10,623,243) (11,085,865)
------------ ------------
Distributions to shareholders in excess of net realized gains
Class A................................................................... (513,520) --
Class B................................................................... (6,922,153) --
------------ ------------
(7,435,673) --
------------ ------------
Fund share transactions (Note 6)
Net proceeds from shares subscribed......................................... 101,823,684.. 115,375,179
Net asset value of shares issued to shareholders in reinvestment of
dividends and distributions............................................... 21,087,882.. 16,869,402
Cost of shares reacquired................................................... (32,030,664) (45,324,359)
------------ ------------
Net increase in net assets from Fund share transactions..................... 90,880,902.. 86,920,222
------------ ------------
Total increase................................................................ 88,855,431.. 107,498,151
Net Assets
Beginning of period........................................................... 344,436,350.. 236,938,199
------------ ------------
End of period................................................................. $433,291,781.. $344,436,350
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements.
-13-
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND Portfolio of Investments
STRATEGY PORTFOLIO January 31, 1994 (Unaudited)
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
LONG-TERM INVESTMENTS--89.2%
COMMON STOCKS--67.7%
Advertising--0.5%
43,225 ADVO, Inc.................... $ 783,453
71,000 American Business
Information*............... 1,242,500
------------
2,025,953
------------
Aerospace/Defense--1.3%
21,000 General Dynamics Corp........ 1,934,625
73,200 Martin Marietta Corp......... 3,284,850
------------
5,219,475
------------
Automotive--3.6%
101,800 Agency Rent-A-Car, Inc.*..... 1,323,400
114,000 Ford Motor Co................ 7,638,000
9,700 General Motors Corp.......... 291,000
93,600 Goodyear Tire & Rubber Co.... 4,527,900
40,000 Modine Manufacturing Co...... 1,180,000
------------
14,960,300
------------
Building & Related Industries--1.0%
50,000 ABT Building Products
Corp.*..................... 1,362,500
28,625 Clayton Homes, Inc.*......... 726,359
38,500 TJ International, Inc........ 1,097,250
45,700 Toll Brothers, Inc.*......... 874,013
------------
4,060,122
------------
Chemicals--2.5%
81,500 Air Products & Chemicals,
Inc........................ 4,044,437
14,150 Eastman Chemical Co.*........ 619,063
32,900 IMC Fertlizer Group, Inc..... 1,435,262
30,000 Imperial Chemical Ind.
(ADR)...................... 1,462,500
75,600 Praxair, Inc................. 1,417,500
35,700 Valspar Corp................. 1,445,850
------------
10,424,612
------------
Commercial Services--0.5%
80,100 ServiceMaster L. P........... 2,202,750
------------
Computer and Related Equipment--5.0%
42,000 American Management Systems,
Inc.*...................... $ 845,250
73,800 Automatic Data Processing,
Inc........................ 3,865,275
124,600 First Data Corp.............. 5,700,450
49,200 Fiserv, Inc.*................ 947,100
52,000 International Business
Machines Corp.............. 2,951,000
40,700 LEGENT Corp.*................ 1,210,825
17,000 Microsoft Corp.*............. 1,447,125
10,300 Motorola, Inc................ 1,014,550
37,500 National Data Corp........... 778,125
22,100 Policy Management Systems
Corp.*..................... 729,300
21,400 SPS Transaction Services,
Inc.*...................... 1,241,200
------------
20,730,200
------------
Consumer Products--2.3%
56,600 Eastman Kodak Co............. 2,497,475
39,200 Industrie Natuzzi Spa
(ADR)*..................... 1,038,800
92,418 Newell Co.................... 3,870,004
7,900 Premark International,
Inc........................ 680,387
30,900 Scholastic Corp.*............ 1,305,525
------------
9,392,191
------------
Drugs & Health Care--4.2%
63,600 Caremark Int'l., Inc.*....... 1,224,300
115,010 Columbia Healthcare Corp..... 4,356,004
82,500 HCA Hospital Corp.
America*................... 3,207,187
50,000 Health Care & Retirement
Corp.*..................... 1,281,250
50,000 Healthtrust, Inc.*........... 1,406,250
30,000 Kendall International,
Inc.*...................... 1,500,000
65,000 Schering Plough Corp......... 4,095,000
------------
17,069,991
------------
</TABLE>
-14- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
STRATEGY PORTFOLIO
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Electronics--3.9%
120,000 ADT, Ltd.*................... $ 1,200,000
27,000 Anthem Electronics, Inc.*.... 884,250
58,800 Baldor Electric Co........... 1,543,500
60,000 Belden, Inc.*................ 1,162,500
73,000 Emerson Electric Co.......... 4,471,250
46,800 General Electric Co.......... 5,042,700
40,000 Loral Corp................... 1,595,000
------------
15,899,200
------------
Entertainment--2.0%
104,500 Carnival Cruise Lines,
Inc........................ 5,172,750
35,000 Disney (Walt) Co............. 1,653,750
53,400 TCA Cable TV, Inc............ 1,381,725
------------
8,208,225
------------
Environmental Services--1.2%
61,350 Thermo Electron Corp.*....... 2,630,381
47,450 Thermo Instrument System,
Inc.*...................... 1,583,644
45,450 Thermotrex Corp.*............ 630,619
------------
4,844,644
------------
Financial Services--7.5%
35,500 American Express Co.......... 1,162,625
75,000 Bank of New York, Inc........ 4,228,125
54,600 Block (H&R), Inc............. 2,395,575
18,600 Cash America International,
Inc........................ 165,075
124,400 Dean Witter Discover & Co.... 4,773,850
59,300 First Financial Management
Corp....................... 3,506,112
37,200 John Nuveen Co............... 930,000
63,100 Kansas City Southern
Industries, Inc............ 2,910,487
110,100 Norwest Corp................. 2,903,887
49,500 State Street Boston Corp..... 1,881,000
41,200 T. Rowe Price & Associates,
Inc........................ 1,339,000
37,300 Union Planters Corp.......... 918,513
25,300 United Asset Management
Corp....................... 1,002,513
53,400 Washington Mutual Savings
Bank....................... 1,314,975
9,300 Wells Fargo & Co............. 1,275,263
------------
30,707,000
------------
Food & Beverage--2.0%
96,000 Archer-Daniels-Midland Co.... $ 2,544,000
55,000 Dr Pepper/Seven Up Cos.,
Inc.*...................... 1,313,125
108,000 PepsiCo, Inc................. 4,360,500
------------
8,217,625
------------
Freight Transportation--0.5%
32,500 Expeditors Int'l. Washington,
Inc.*...................... 524,063
40,000 Illinois Central Corp........ 1,500,000
------------
2,024,063
------------
Hotels & Leisure--0.4%
39,200 Host Marriott Corp........... 485,100
39,200 Marriott International,
Inc........................ 1,151,500
------------
1,636,600
------------
Insurance--2.9%
55,400 American General Corp........ 1,585,825
38,700 CCP Insurance, Inc........... 914,287
32,500 Chubb Corp................... 2,701,562
85,200 Equitable Companies, Inc..... 2,481,450
30,800 General Reinsurance Corp..... 3,515,050
12,800 Mid Ocean, Ltd.*............. 329,600
31,100 Penncorp Financial Group,
Inc........................ 540,363
------------
12,068,137
------------
Machinery & Equipment--2.0%
30,000 AES Corp..................... 1,068,750
30,000 Donaldson Co., Inc........... 1,413,750
10,300 Fisher Scientific
International, Inc......... 391,400
87,800 Illinois Tool Works, Inc..... 3,731,500
30,000 Lindsay Manufacturing Co.*... 952,500
8,800 Nordson Corp................. 499,400
4,500 Tuscarora, Inc............... 85,500
------------
8,142,800
------------
Media--3.6%
4,000 Capital Cities ABC, Inc...... 2,620,000
49,000 Enquirer Star Group, Inc..... 918,750
18,600 Grupo Televisa S.A.*......... 1,320,600
</TABLE>
-15- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
STRATEGY PORTFOLIO
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
Media--(cont'd)
59,100 Liberty Media Corp.*......... $ 1,536,600
90,000 Rogers Communications,
Inc.*...................... 1,526,805
41,000 Shaw Communications.......... 776,691
400,000 Television Broadcasts,
Ltd........................ 1,683,175
41,400 Time Warner, Inc............. 1,656,000
30,400 Times Mirror Co.............. 1,102,000
21,100 Tribune Co................... 1,268,637
6,400 Viacom, Inc.*................ 222,400
------------
14,631,658
------------
Mining--0.6%
96,000 Placer Dome, Inc............. 2,436,000
------------
Paper & Forest Products--1.9%
16,100 Longview Fibre Co.
Washington................. 348,163
68,700 Thermo Fibertek, Inc......... 1,107,787
107,800 Willamette Industries,
Inc........................ 6,198,500
------------
7,654,450
------------
Petroleum Services--5.9%
44,000 Amoco Corp................... 2,365,000
67,000 Coastal Corp................. 2,068,625
60,600 Cross Timbers Oil Co......... 886,275
99,300 Exxon Corp................... 6,603,450
66,500 Royal Dutch Petroleum Co..... 7,315,000
50,300 Schlumberger, Ltd............ 2,986,562
69,800 Seagull Energy Corp.*........ 1,858,425
------------
24,083,337
------------
Realty Investment Trust--1.3%
33,700 Duke Reality Investments,
Inc........................ 775,100
38,300 Federal Reality Investment
Trust...................... 923,988
38,500 Manufactured Home Community,
Inc........................ 1,665,125
58,600 Property Trust America....... 1,113,400
21,100 Weingarten Realty
Investors.................. 785,975
------------
5,263,588
------------
Retail--0.8%
37,000 Edison Brothers Stores,
Inc........................ 1,114,625
30,000 Penney (J.C.), Inc........... $ 1,571,250
28,000 Tiffany & Co................. 819,000
------------
3,504,875
------------
Steel & Metals--1.8%
25,300 Aluminum Co. of America...... 2,001,863
39,400 Inland Steel Industries,
Inc.*...................... 1,383,925
17,300 USX Corp..................... 761,200
160,200 Worthington Industries,
Inc........................ 3,163,950
------------
7,310,938
------------
Telecommunications--6.9%
14,200 American Telephone &
Telegraph Co............... 805,850
18,400 Bell Atlantic Corp........... 1,044,200
32,600 ITT Corp..................... 3,207,025
49,800 LDDS Communications, Inc.*... 1,369,500
137,500 MCI Communications Corp...... 3,798,437
34,200 Rochester Telephone Corp..... 1,487,700
70,500 Southwestern Bell Corp....... 2,952,188
179,100 Tele-Communications, Inc.*... 4,880,475
100,600 Telefonos de Mexico, Series A
(ADR)...................... 7,431,825
23,200 Telephone & Data System,
Inc........................ 1,145,500
------------
28,122,700
------------
Textiles--0.3%
32,800 Kellwood Co.................. 1,217,700
------------
Trucking & Shipping--1.3%
72,200 Consolidated Rail Corp....... 4,693,000
36,800 Southern Pacific Rail
Corp.*..................... 777,400
------------
5,470,400
------------
Total Common Stocks
(cost $238,349,102).......... 277,529,534
------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) DEBT OBLIGATIONS--21.5%
- ------- ---------
<S> <C> <C> <C>
Corporate Bonds--21.2%
Aerospace/Defense--1.3%
BE Aerospace, Inc.,
Ba3 $ 3,000 9.75%, 3/1/03.......... 3,120,000
</TABLE>
-16- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
STRATEGY PORTFOLIO
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
Aerospace/Defense--(cont'd)
Colt Industries, Inc.,
Ba2 $ 2,010 11.25%, 12/1/15........ $ 2,170,800
------------
5,290,800
------------
Airlines--1.0%
Delta Air Lines, Inc.,
Ba1 1,000 10.375%, 12/15/22...... 1,174,780
USAir, Inc.,
Ba3 3,000 10.00%, 7/1/03......... 3,009,030
------------
4,183,810
------------
Automotive--0.6%
Lear Seating Corp.,
B2 750 8.25%, 2/1/02.......... 750,000
Motor Wheel Corp.,
B2 1,500 11.50%, 3/1/00......... 1,642,500
------------
2,392,500
------------
Building & Related
Industries--3.8%
American Standard,
Inc.,
B1 3,000 9.875%, 6/1/01......... 3,165,000
Intermediate City
Products Corp.,
Ba3 2,000 9.75%, 3/1/00.......... 2,005,000
Kaufman & Broad Home Corp.,
Ba3 2,500 9.375%, 5/1/03......... 2,612,500
Ryland Group, Inc.,
Ba3 2,000 9.625%, 6/1/04......... 2,040,000
Standard Pacific Corp.,
Ba2 2,500 10.50%, 3/1/00......... 2,625,000
USG Corp.,
B2 3,000 10.25%, 12/15/02....... 3,105,000
------------
15,552,500
------------
Chemicals--0.7%
Georgia Gulf Corp.,
B1 2,500 15.00%, 4/15/00........ 2,775,000
------------
Computer and Related Equipment-- 0.9%
Unisys Corp.,
Ba3 $ 3,000 15.00%, 7/1/97......... $ 3,480,000
------------
Containers & Packaging--1.9%
Container Corp.,
B2 5,000 13.50%, 12/1/99........ 5,550,000
Riverwood International Corp.,
B1 2,000 11.25%, 6/15/02........ 2,200,000
------------
7,750,000
------------
Drugs & Health Care--1.7%
Healthtrust, Inc.,
B1 3,000 10.75%, 5/1/02......... 3,337,500
Hospital Corp. of
America,
Ba2 3,500 11.25%, 12/1/15........ 3,745,000
------------
7,082,500
------------
Financial Services--0.2%
Auburn Hills Trust,
Inc.,
Baa2 625 15.375%, 5/1/20........ 969,275
------------
Food & Beverage--1.7%
Fresh Del Monte Produce, N.V.,
B3 3,000 10.00%, 5/1/03......... 2,910,000
RJR Nabisco, Inc.,
Baa3 2,000 8.75%, 4/15/04......... 2,082,020
Rykoff Sexton, Inc.,
Ba2 2,000 8.875%, 11/1/03........ 2,085,000
------------
7,077,020
------------
Hotels & Leisure--0.5%
Host Marriott Hospitality, Inc.,
B1 2,000 11.00%, 5/1/07......... 2,050,000
------------
Insurance--0.3%
Reliance Group Holdings, Inc.,
B1 1,000 9.75%, 11/15/03........ 1,052,500
------------
</TABLE>
-17- See Notes to Financial Statements.
<PAGE>
<PAGE>
<TABLE>
PRUDENTIAL FLEXIFUND
STRATEGY PORTFOLIO
<CAPTION>
Principal
Moody's Amount Value
Rating (000) Description (Note 1)
<S> <C> <C> <C>
Media--1.7%
Cablevision Industries Corp.,
Ba3 $ 2,000 10.75%, 1/30/02........ $ 2,165,000
Continental Cablevision, Inc.,
Ba2 2,000 9.50%, 8/1/13.......... 2,210,000
News America Holdings, Inc.,
Ba1 2,000 12.00%, 12/15/01....... 2,422,560
------------
6,797,560
------------
Mining--0.5%
Magma Copper Co.,
Ba3 2,000 11.50%, 1/15/02........ 2,220,000
------------
Oil & Gas--0.6%
Triton Energy Corp.,
B1 3,000 Zero Coupon,
12/15/00............. 2,295,000
------------
Paper & Forest Products--1.0%
Canadian Pacific Forest
Products Ltd.,
Ba1 1,000 9.25%, 6/15/02......... 980,150
Fort Howard Paper
Corp.,
B2 3,000 12.625%, 11/1/00....... 3,172,500
------------
4,152,650
------------
Petroleum Services--0.5%
Clark Oil & Refining
Corp.,
Ba2 2,000 9.50%, 9/15/04......... 2,125,000
------------
Steel & Metals--0.5%
Wheeling Pittsburgh
Corp.,
B1 2,000 9.375%, 11/15/03....... 2,105,000
------------
Textiles--0.5%
Westpoint Stevens,
Inc.,
B3 2,000 9.375%, 12/15/05....... 2,080,000
------------
Trucking & Shipping--0.5%
Southern Pacific
Transportation Co.,
Ba1 2,000 10.50%, 7/1/99......... 2,220,000
------------
Miscellaneous--0.8%
Flagstar Corp.,
B1 $ 3,000 10.875%, 12/1/02....... $ 3,180,000
------------
Total Corporate Bonds
(cost $84,580,981)... 86,831,115
------------
Collateralized Mortgage
Obligations--0.3%
Federal National
Mortgage
Association, REMIC,
Aaa 1,000 9.00%, 3/25/20
(cost $977,861)...... 1,079,370
------------
Total Debt Obligations
(cost $85,558,842)... 87,910,485
------------
Total long-term
investments
(cost
$323,907,944)........ 365,440,019
------------
SHORT-TERM INVESTMENTS--8.4%
Repurchase Agreement--8.4%
34,301 Joint Repurchase
Agreement Account,
3.14%, 2/1/94 (Note
5)................... 34,301,000
------------
Total Investments--97.6%
(cost $358,208,944;
Note 4).............. 399,741,019
Other assets in excess
of
liabilities--2.4%.... 9,993,866
------------
Net Assets--100%....... $409,734,885
------------
------------
</TABLE>
- ------------------
* Non-income producing security.
ADR--American Depository Receipt.
REMIC--Real Estate Mortgage Investment Conduit.
L.P.--Limited Partnership.
-18- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND
STRATEGY PORTFOLIO
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
January 31,
Assets 1994
------------
<S> <C>
Investments, at value (cost $358,208,944)................................................. $399,741,019
Foreign currency, at value (cost $1,745,723).............................................. 1,746,524
Cash...................................................................................... 195,940
Receivable for investments sold........................................................... 12,539,234
Interest and dividends receivable......................................................... 2,398,463
Receivable for Fund shares sold........................................................... 1,206,413
Deferred expenses and other assets........................................................ 17,409
------------
Total assets.......................................................................... 417,845,002
------------
Liabilities
Payable for investments purchased......................................................... 6,280,203
Payable for Fund shares reacquired........................................................ 1,042,312
Distribution fee payable.................................................................. 325,842
Management fee payable.................................................................... 233,724
Withholding taxes payable................................................................. 1,889
Accrued expenses.......................................................................... 226,147
------------
Total liabilities..................................................................... 8,110,117
------------
Net Assets................................................................................ $409,734,885
------------
------------
Net assets were comprised of:
Shares of beneficial interest, at par................................................... $ 332,774
Paid-in capital in excess of par........................................................ 358,602,003
------------
358,928,008
Undistributed net investment income..................................................... 4,561,660
Accumulated net realized gain on investments............................................ 4,711,875
Net unrealized appreciation on investments.............................................. 41,533,342
------------
Net Assets, January 31,1994............................................................... $409,734,885
------------
------------
Class A:
Net asset value and redemption price per share
($31,620,546 (Divided By) 2,555,336 shares of beneficial interest issued and
outstanding).......................................................................... $12.37
Maximum sales charge (5.25% of offering price).......................................... 0.69
------------
Maximum offering price to public........................................................ $13.06
------------
------------
Class B:
Net asset value, offering price and redemption price per share
($378,114,339 (Divided By) 30,722,019 shares of beneficial interest issued and
outstanding).......................................................................... $12.31
------------
------------
</TABLE>
See Notes to Financial Statements.
-19-
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND
STRATEGY PORTFOLIO
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
January 31,
Net Investment Income 1994
-----------
<S> <C>
Income
Interest (net of foreign withholding taxes of $1,889)..................................... $ 5,299,098
Dividends (net of foreign withholding taxes of $22,215)................................... 2,853,578
-----------
Total income............................................................................ 8,152,676
-----------
Expenses
Distribution fee--Class A................................................................. 31,398
Distribution fee--Class B................................................................. 1,845,495
Management fee............................................................................ 1,297,363
Transfer agent's fees and expenses........................................................ 394,000
Custodian's fees and expenses............................................................. 151,000
Reports to shareholders................................................................... 49,000
Registration fees......................................................................... 37,000
Directors' fees........................................................................... 13,000
Audit fee................................................................................. 8,000
Legal fees................................................................................ 5,000
Miscellaneous............................................................................. 9,508
-----------
Total expenses.......................................................................... 3,840,764
-----------
Net investment income....................................................................... 4,311,912
-----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain (loss) on:
Investment transactions................................................................... 12,082,523
Financial futures contracts............................................................... 124,955
Foreign currency transactions............................................................. (28,540)
-----------
12,178,938
-----------
Net change in unrealized appreciation/depreciation
Investments............................................................................... 14,545,990
Foreign currencies........................................................................ 657
-----------
14,546,647
-----------
Net gain on investments..................................................................... 26,725,585
-----------
Net Increase in Net Assets Resulting from Operations........................................ $31,037,497
-----------
-----------
</TABLE>
See Notes to Financial Statements.
-20-
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND
STRATEGY PORTFOLIO
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
January 31, July 31,
Increase (Decrease) in Net Assets 1994 1993
---------------- ------------
<S> <C> <C>
Operations
Net investment income....................................................... $ 4,311,912 $ 10,348,326
Net realized gain on investments............................................ 12,178,938 10,954,676
Net change in unrealized appreciation of investments........................ 14,546,647 11,275,901
---------------- ------------
Net increase in net assets resulting from operations........................ 31,037,497 32,578,903
---------------- ------------
Net equalization credits...................................................... 57,433 57,175
---------------- ------------
Dividends and distributions (Note 1)
Dividends to shareholders from net investment income
Class A................................................................... (242,713) (762,246)
Class B................................................................... (2,396,308) (8,432,955)
---------------- ------------
(2,639,021) (9,195,201)
---------------- ------------
Distributions to shareholders from net realized gains on investments and
foreign curencies
Class A................................................................... (815,737) (1,779,498)
Class B................................................................... (10,080,523) (26,359,313)
---------------- ------------
(10,896,260) (28,138,811)
---------------- ------------
Fund share transactions (Note 5)
Proceeds from shares sold................................................... 36,830,260 95,403,980
Net asset value of shares issued in reinvestment of dividends and
distributions............................................................. 12,946,740 35,885,867
Cost of shares reacquired................................................... (43,530,320) (75,812,344)
---------------- ------------
Net increase in net assets from Fund share transactions..................... 6,246,680 55,477,503
---------------- ------------
Total increase................................................................ 23,806,329 50,779,569
Net Assets
Beginning of period........................................................... 385,928,556 335,148,987
---------------- ------------
End of period................................................................. $ 409,734,885 $385,928,556
---------------- ------------
---------------- ------------
</TABLE>
See Notes to Financial Statements.
-21-
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND
Notes to Financial Statements
(Unaudited)
Prudential FlexiFund, (the ``Fund''), is registered under the Investment
Company Act of 1940, as a diversified, open-end management investment company.
The Fund was organized as an unincorporated business trust in Massachusetts on
February 23, 1987 and consists of two series, the Conservatively Managed
Portfolio and the Strategy Portfolio. The investment objective of the
Conservatively Managed Portfolio is to achieve a high total investment return
consistent with moderate risk by investing in a diversified portfolio of money
market instruments, debt obligations and equity securities. The investment
objective of the Strategy Portfolio is to achieve a high total investment return
consistent with relatively higher risk than the Conservatively Managed Portfolio
through varying the proportions of investments in debt and equity securities,
the quality and maturity of debt securities purchased and the price volatility
and the type of issuer of equity securities purchased. The ability of issuers of
debt securities held by the Fund to meet their obligations may be affected by
economic developments in a specific country, industry or region.
Note 1. Accounting The following is a summary
Policies of significant accounting poli
cies followed by the Fund in the preparation of
its financial statements.
Securities Valuation: Any security for which the primary market is on an
exchange (including NASDAQ National Market System equity securities) is 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. Corporate bonds (other than convertible debt securities) and U.S.
Government and agency 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 on the basis of valuations
provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, agency ratings, market
transactions in comparable securities and various relationships between
securities in determining value. Convertible debt securities that are actively
traded in the over-the-counter market, including listed securities for which the
primary market is believed to be over-the-counter, are valued at the mean
between the most recently quoted bid and asked prices provided by principal
market makers. Forward currency exchange contracts are valued at the current
cost of offsetting the contract on the day of valuation. Other securities
(including options and futures contracts) are valued at the mean between the
most recently quoted bid and asked prices.
Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements with U.S. financial
institutions, it is the Fund's policy that its custodian take possession of the
underlying collateral securities, the value of which exceeds the principal
amount of the repurchase transaction, including accrued interest. To the extent
that any repurchase transaction exceeds one business day, the value of the
collateral is marked-to-market on a daily basis to ensure the adequacy of the
collateral. If the seller defaults and the value of the collateral declines or
if bankruptcy proceedings are commenced with respect to the seller of the
security, realization of the collateral by the Fund may be delayed or limited.
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 closing daily rate of exchange.
(ii) purchases and sales of investment securities, income and expenses--at
the rate 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 fiscal 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 long-term securities held at the end of the fiscal period.
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 portfolio securities sold during the fiscal period. Accordingly,
realized foreign currency gains (losses) are included in the reported net
realized gains on investment transactions.
-22-
<PAGE>
<PAGE>
Net realized gains on foreign currency transactions represent net foreign
exchange gains from the 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 dividends, interest and foreign taxes
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability or
the level of governmental supervision and regulation of foreign securities
markets.
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 until the contracts expire or are closed, at which time the gain or loss is
reclassified to realized gain or loss. The Fund invests in financial futures
contracts solely for the purpose of hedging its existing portfolio securities or
securities the Fund intends to purchase against fluctuations in value caused by
changes in prevailing market 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 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. Net
investment income (other than distribution fees) and unrealized and realized
gains or losses are allocated daily to each class of shares of each series based
upon the relative proportion of net assets at the beginning of the day of each
class.
Equalization: The Fund follows the accounting practice known as equalization by
which a portion of the proceeds from sales and costs of reacquisitions of Fund
shares, equivalent on a per share basis to the amount of distributable net
investment income on the date of the transaction, is credited or charged to
undistributed net investment income. As a result, undistributed net investment
income per share is unaffected by sales or reacquisitions of the Fund's shares.
Federal Income Taxes: For federal income tax purposes, each series in the Fund
is treated as a separate taxpaying entity. It is the intent of each series 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 interest and 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 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.
Reclassification of Capital Accounts: Effective August 1, 1993, the Fund began
accounting and reporting for distributions to shareholders in accordance with
Statement of Position 93-2: Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. As a result of this statement, the Fund changed the
classification of distributions to shareholders to better disclose the
differences between financial statement amounts and distributions determined in
accordance with income tax regulations. The effect caused by adopting this
statement was to decrease paid-in capital for the Conservatively Managed
Portfolio and the Strategy Portfolio by $21,132 and $6,769, respectively,
increase (decrease) undistributed net investment income for the Conservatively
Managed Portfolio and the Strategy Portfolio by $214,969 and $(329,527),
respectively, and increase (decrease) accumulated net realized gains on
investments for the Conservatively Managed Portfolio and the Strategy Portfolio
by $(193,837) and $336,296, respectively, as compared to amounts previously
reported through July 31, 1993. Net investment income, net realized gains and
net assets were not affected by this change.
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
-23-
<PAGE>
<PAGE>
management of the Fund. PMF pays for the services of PIC, 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 .65 of 1% of the average daily net assets of each of the series.
PMF has agreed that, in any fiscal year, it will reimburse the Fund for each
of the series' expenses (including the fees of PMF but excluding interest,
taxes, brokerage commissions, distribution fees, litigation and indemnification
expenses and other extraordinary expenses) in excess of the most restrictive
expense limitation imposed by state securities commissions. The most restrictive
expense limitation is presently believed to be 2.5% of the series' average daily
net assets up to $30 million, 2.0% of the next $70 million of average daily net
assets and 1.5% of the series' average daily net assets in excess of $100
million. Such expense reimbursement, if any, will be estimated and accrued daily
and payable monthly. No reimbursement was required for the six months ended
January 31, 1994.
The Fund has distribution agreements with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), who acts as the distributor of the Class A shares
of the Fund, and PSI, who acts as distributor of the Class B shares of the Fund
(collectively the ``Distributors''). To reimburse the Distributors for their
expenses incurred in distributing and servicing the Fund's Class A and B shares,
the Fund, pursuant to plans of distribution, pays the Distributors a
reimbursement, accrued daily and payable monthly.
Pursuant to the Class A Plan, the Fund reimburses PMFD for its
distribution-related expenses with respect to Class A shares at an annual rate
of up to .30 of 1% of the average daily net assets of the Class A shares. Such
expenses under the Class A Plan were .20 of 1% of the average daily net assets
of the Class A shares for the five months ended December 31, 1993. Effective
January 1, 1994, PMF increased the Class A Plan distribution expenses to .25 of
1% of the average daily net assets. PMFD pays various broker-dealers, including
PSI and Pruco Securities Corporation (``Prusec''), affiliated broker-dealers,
for account servicing fees and other expenses incurred by such broker-dealers.
Pursuant to the Class B Plan, the Fund reimburses PSI for its
distribution-related expenses with respect to the Class B shares at an annual
rate of up to 1% of the average daily net assets of the Class B shares. Unlike
the Class A Plan, there are carryforward amounts under the Class B Plan, and
interest expenses are incurred under the Class B Plan.
The Class B distribution expenses include commission credits for payments of
commissions and account servicing fees to financial advisers and an allocation
for overhead and other distribution-related expenses, interest and/or carrying
charges, the cost of printing and mailing prospectuses to potential investors
and of advertising incurred in connection with the distribution of shares.
The Distributors recover the distribution expenses and service fees incurred
through the receipt of reimbursement payments from the Fund under the plans and
the receipt of initial sales charges (Class A only) and contingent deferred
sales charges (Class B only) from shareholders.
PMFD has advised the Fund that it has received approximately $376,000
($278,000--Conservatively Managed Portfolio and $98,000--Strategy Portfolio) in
front-end sales charges resulting from sales of Class A shares during the six
months ended January 31, 1994. From these fees, PMFD paid such sales charges to
dealers (PSI and Prusec) which in turn paid commissions to salespersons and
incurred other distribution costs.
With respect to the Class B Plan, at any given time the amount of expenses
incurred by PSI in distributing the Fund's shares and not recovered through the
imposition of contingent deferred sales charges in connection with certain
redemptions of shares may exceed the total reimbursement made by the Fund
pursuant to the Class B Plan. PSI advised the Fund that for the six months ended
January 31, 1994, it received approximately $535,000 ($242,000--Conservatively
Managed Portfolio and $293,000--Strategy Portfolio) in contingent deferred sales
charges imposed upon certain redemptions by investors. PSI, as distributor, has
also advised the Fund that at January 31, 1994, the amount of distribution
expenses incurred by PSI and not yet reimbursed by the Fund or recovered through
contingent deferred sales charges approximated $19,830,500
($11,846,000--Conservatively Managed Portfolio and $7,984,500--Strategy
Portfolio). This amount may be recovered through future payments under the Class
B Plan or contingent deferred sales charges.
In the event of termination or noncontinuation of the Class B Plan, the Fund
would not be contractually obligated to pay PSI, as distributor, for any
expenses not previously reimbursed or recovered through contingent deferred
sales charges.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
-24-
<PAGE>
<PAGE>
Note 3. Other Prudential Mutual Fund Ser
Transactions vices, Inc. (``PMFS''), a
With Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During
the six months ended January 31, 1994, the Fund incurred fees of approximately
$554,000 ($220,000--Conservatively Managed Portfolio and $334,000--Strategy
Portfolio) for the services of PMFS. As of January 31, 1994, approximately
$105,000 ($49,000-- Conservatively Managed Portfolio and $56,000--Strategy
Portfolio) of such fees were due to PMFS. Transfer agent fees and expenses in
the Statement of Operations also include certain out of pocket expenses paid to
non-affiliates.
For the six months ended January 31, 1994, PSI received approximately $30,500
($4,000--Conservatively Managed Portfolio and $26,500--Strategy Portfolio) in
brokerage commissions from portfolio transactions executed on behalf of the
Fund.
Note 4. Portfolio Purchases and sales of invest
ment securities, other than Securities
short-term investments, for the six months ended
January 31, 1994, were as follows:
<TABLE>
<CAPTION>
Portfolio Purchases Sales
- ----------------------------- ------------- -------------
<S> <C> <C>
Conservatively Managed
Portfolio $ 178,529,049 $ 131,752,019
Strategy Portfolio........... $ 155,263,976 $ 147,796,278
</TABLE>
The cost basis of investments for federal income tax purposes as of January
31, 1994 was $392,013,569 and $358,490,526 for the Conservatively Managed
Portfolio and the Strategy Portfolio, respectively, and net and gross unrealized
appreciation of investments for federal income tax purposes was as follows:
<TABLE>
<CAPTION>
Conservatively
Managed Strategy
Portfolio Portfolio
-------------- -----------
<S> <C> <C>
Gross unrealized
appreciation................ $ 41,469,237 $44,674,578
Gross unrealized
depreciation................ 5,600,316 3,424,085
-------------- -----------
Net unrealized appreciation... $ 35,868,921 $41,250,493
-------------- -----------
-------------- -----------
</TABLE>
Note 5. Joint The Fund, along with other
Repurchase affiliated registered invest
Agreement ment companies, transfers
Account 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. Government or federal agency obligations. As of January 31, 1994, the
Fund had a 6.9% (Conservatively Managed Portfolio--2.8% and Strategy
Portfolio--4.1%) undivided interest in the repurchase agreements in the joint
account. The undivided interest for the Fund represented $83,775,000,
(Conservatively Managed Portfolio--$49,474,000 and Strategy
Portfolio--$34,301,000) in the principal amount. As of such date, each
repurchase agreement in the joint account and the collateral therefor was as
follows:
BT Securities Corp., 3.18%, dated 1/31/94, in the principal amount of
$175,000,000, repurchase price $175,015,458, due 2/1/94; collateralized by
$31,590,000 U.S. Treasury Notes, 7.50%, 11/15/01, $50,000,000 U.S. Treasury
Notes, 6.375%, 1/15/00, $27,100,000 U.S. Treasury Notes, 6.375%, 7/15/99,
$20,000,000 U.S. Treasury Notes, 7.00%, 4/15/99, and $33,500,000 U.S. Treasury
Notes, 8.25%, 7/15/98; value including accrued interest--$178,679,927.
Goldman Sachs & Co., Inc., 3.125%, dated 1/31/94, in the principal amount of
$395,000,000, repurchase price $395,034,288, due 2/1/94; collateralized by
$351,115,000 U.S. Treasury Bonds, 7.50%, 11/15/16; value including accrued
interest--$404,665,486.
J.P. Morgan Securities, Inc., 3.125%, dated 1/31/94, in the principal amount
of $137,000,000, repurchase price $137,011,892, due 2/1/94; collateralized by
$52,575,000 U.S. Treasury Bonds, 7.125%, 2/15/23, and $50,000,000 U.S. Treasury
Bonds, 11.75%, 11/15/14; value including accrued interest--$139,894,253.
Kidder, Peabody & Co., Inc., 3.15%, dated 1/31/94, in the principal amount of
$301,000,000, repurchase price $301,026,337, due 2/1/94; collateralized by
$89,455,000 U.S. Treasury Notes, 7.50%, 5/15/02, $13,230,000 U.S. Treasury
Notes, 7.875%, 11/15/99, $43,195,000 U.S. Treasury Notes, 6.00%, 11/30/97,
$99,730,000 U.S. Treasury Notes, 6.875%, 3/31/97, and $34,010,000 U.S. Treasury
Notes, 4.625%, 12/31/94; value including accrued interest--$307,201,387.
Smith Barney Shearson, Inc., 3.15%, dated 1/31/94 in the principal amount of
$200,000,000 repurchase price $200,017,500, due 2/1/94; collateralized by
$11,700,000 U.S. Treasury Bonds, 7.25%, 8/15/22, $15,000,000, U.S Treasury
Bonds, 8.00%, 11/15/21, $50,000,000 U.S Treasury Notes, 6.00%, 10/15/99,
$13,000,000 U.S. Treasury Notes, 6.875%, 4/30/97, $11,600,000 U.S. Treasury
Notes 4.625%, 8/15/95, $60,000,00 U.S. Treasury Notes, 11.625%, 11/15/94,
$9,880,000 U.S. Treasury Notes 12.625%, 8/15/94, and $16,600,000 U.S. Treasury
Notes, 5.375%, 4/30/94; value including accrued interest--$204,251,368.
Note 6. Capital Class A shares are sold with a
front-end sales charge of up to 5.25%. Class B
shares are sold with a contingent deferred
-25-
<PAGE>
<PAGE>
sales charge which declines from 5% to zero depending on the period of time the
shares are held. Both classes of shares have equal rights as to earnings, assets
and voting privileges except that each class bears different distribution
expenses and has exclusive voting rights with respect to its distribution plan.
The Fund has authorized an unlimited number of shares of beneficial interest
of each class at $.01 par value per share, divided into two classes, designated
Class A and Class B.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Conservatively Managed Portfolio:
Class A Class B
------------------------- ---------------------------
Shares Amount Shares Amount
---------- ----------- ----------- ------------
Six months ended January 31, 1994:
<S> <C> <C> <C> <C>
Shares sold.................................................... 785,164 $ 9,274,961 7,862,928 $ 92,548,723
Shares issued in reinvestment of dividends
and distributions............................................ 138,677 1,579,156 1,720,969 19,508,726
Shares reacquired.............................................. (199,696) (2,361,012) (2,515,602) (29,669,652)
---------- ----------- ----------- ------------
Increase in shares outstanding................................. 724,145 $ 8,493,105 7,068,295 $ 82,387,797
---------- ----------- ----------- ------------
---------- ----------- ----------- ------------
<CAPTION>
Class A Class B
------------------------- ---------------------------
Shares Amount Shares Amount
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Year ended July 31, 1993:
Shares sold.................................................... 1,111,058 $12,515,640 9,197,549 $102,859,539
Shares issued in reinvestment of dividends
and distributions............................................ 90,896 994,506 1,459,840 15,874,896
Shares reacquired.............................................. (273,750) (3,079,784) (3,783,156) (42,244,575)
---------- ----------- ----------- ------------
Increase in shares outstanding................................. 928,204 $10,430,362 6,874,233 $ 76,489,860
---------- ----------- ----------- ------------
---------- ----------- ----------- ------------
Strategy Portfolio:
<CAPTION>
Class A Class B
------------------------- ---------------------------
Shares Amount Shares Amount
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Six months ended January 31, 1994:
Shares sold.................................................... 359,901 $ 4,339,213 2,707,213 $ 32,491,047
Shares issued in reinvestment of dividends
and distributions............................................ 87,258 1,029,925 1,015,842 11,916,815
Shares reacquired.............................................. (314,775) (3,807,535) (3,315,312) (39,722,785)
---------- ----------- ----------- ------------
Increase in shares outstanding................................. 132,384 $ 1,561,603 407,743 $ 4,685,077
---------- ----------- ----------- ------------
---------- ----------- ----------- ------------
<CAPTION>
Class A Class B
------------------------- ---------------------------
Shares Amount Shares Amount
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Year ended July 31, 1993:
Shares sold.................................................... 948,490 $11,062,181 7,245,790 $ 84,341,799
Shares issued in reinvestment of dividends
and distributions............................................ 219,562 2,486,431 2,958,707 33,399,436
Shares reacquired.............................................. (439,023) (5,122,055) (6,093,273) (70,690,289)
---------- ----------- ----------- ------------
Increase in shares outstanding................................. 729,029 $ 8,426,557 4,111,224 $ 47,050,946
---------- ----------- ----------- ------------
---------- ----------- ----------- ------------
</TABLE>
Note 7. Dividends On March 2, 1994, the
Board of Trustees of the Fund delcared a dividend
from undistributed net investment income to Class A shareholders of $.105 per
share and to Class B shareholders of $.08 per share for the Conserva-
tively Managed Portfolio and a dividend from undistributed net investment income
to Class A shareholders of $.07 per share and to Class B shareholders of $.05
per share for the Strategy Portfolio. All dividends are payable on March 31,
1994 to shareholders of record on March 24, 1994.
-26-
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND CONSERVATIVELY MANAGED PORTFOLIO
Financial Highlights
(Unaudited)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated:
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------------------- ------------------------------------------------------------------
January 22,
PER Six months 1990@ Six months
SHARE ended Year Ended July 31, through ended Year Ended July 31,
OPERATING January 31, --------------------------- July 31, January 31, ----------------------------------------------
PERFORMANCE: 1994 1993 1992 1991 1990 1994 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------- ------- ------- ------- ------------ ----------- -------- -------- -------- -------- ---
Net asset
value,
beginning of
period... $ 11.75 $ 11.00 $10.73 $ 10.23 $9.83 $11.72 $10.98 $10.71 $10.22 $10.21 $9.43
------- ------- ------ ------- ----- ------ ------ ------ ------ ------ -----
Income
from
investment
operations
Net
investment
income... .17 .43 .44 .44 .26 .13 .34 .35 .36 .45 .52
Net realized
and unrealized
gain on invest
ment
trans
actions.. .50 1.16 .81 .73 .38 .49 1.16 .82 .73 .18 .73
------- ------- ------ ------- ----- ------ ------ ------ --- --- ---
Total
from
investment
opera
tions... .67 1.59 1.25 1.17 .64 .62 1.50 1.17 1.09 .63 1.25
------- -------- ---- ------ ------ ------ ---- ------ ---- --- ----
Less
distributions
Dividends
from
net
investment
income... (.17) (.37) (.44) (.44) (.24) (.13) (.29) (.36) (.37) (.52) (.47)
Dividends
in
excess
of net
investment
income... (.02) -- -- -- -- (.02) -- -- -- -- --
Distributions
paid to
shareholders
from net
realized
gains on
investment
transa
ctions.. (.32) (.47) (.54) (.23) -- (.32) (.47) (.54) (.23) (.10) --
Distributions
in excess
of
net
realized
gains... (.22) -- -- -- -- (.22) -- -- -- -- --
----- ------- ------- ------- ------ ------ -------- -------- ------- ------- -----
Total
distri
butions.. (.73) (.84) (.98) (.67) (.24) (.69) (.76) (.90) (.60) (.62) (.47)
-------- ------- ------- ------- ------ ----- ------ ------ ------ ----- ----
Net
asset
value,
end
of
period... $11.69 $11.75 $11.00 $10.73 $10.23 $11.65 $11.72 $10.98 $10.71 $10.22 $10.21
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
TOTAL
RETURN#:.. 5.88% 15.15% 12.29% 11.99% 6.59% 5.41% 14.27% 11.48% 11.13% 6.44% 13.73%
RATIOS/SUPPLEMENTAL
DATA:
Net
assets,
end
of
period
000)... $30,950 $22,605 $10,944 $4,408 $1,944 $402,342 $321,831 $225,995 $162,281 $154,917 $132,631
Average
net
assets
(000).. $26,066 $15,392 $7,103 $2,747 $1,047 $357,266 $267,340 $189,358 $149,907 $143,241 $139,009
Ratios
to
average
net
assets:
Expenses,
including
distribution
fees... 1.10%* 1.17% 1.29% 1.38% 1.29%* 1.90%* 1.97% 2.09% 2.16% 2.07% 2.09%
Expenses,
excluding
distribution
fees.... .90%* .97% 1.09% 1.18% 1.09%* .90%* .97% 1.09% 1.16% 1.08% 1.08%
Net
investment
income.. 2.89%* 3.88% 3.97% 4.44% 5.04%* 2.10%* 3.04% 3.25% 3.55% 4.42% 5.47%
Portfolio
turnover
rate... 38% 83% 105% 137% 106% 38% 83% 105% 137% 106% 137%
<CAPTION>
- ---------------
</TABLE>
<TABLE>
<C> <S>
@ Commencement of offering of Class A shares.
* Annualized.
# Total return does not consider the effects of sales loads. Total returns for periods of less than a full
year are not annualized.
</TABLE>
See Notes to Financial Statements.
-27-
<PAGE>
<PAGE>
PRUDENTIAL FLEXIFUND STRATEGY PORTFOLIO
Financial Highlights
(Unaudited)
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated:
<TABLE>
<CAPTION>
Class A Class B
--------------------------------------------------------- ---------------------------------------------
January 22,
Six months 1990@ Six months
ended Year Ended July 31, through ended Year Ended July 31,
PER SHARE OPERATING January 31, --------------------------- July 31, January 31, ------------------------------
PERFORMANCE: 1994 1993 1992 1991 1990 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------ ------- ------- ------- ------------ ------------ -------- -------- -------
Net asset value,
beginning of
period............... $ 11.82 $ 12.03 $ 11.45 $ 10.50 $10.16 $ 11.79 $12.01 $11.43 $10.49
-------- ------- ------- ------- ------ ------- ------ ------ ------
Income from investment
operations
Net investment
income............. .18 .42 .35 .38 .25 .13 .34 .26 .30
Net realized and
unrealized gain on
investment and
foreign currency
transactions......... .81 .70 1.02 .98 .33 .81 .70 1.02 .97
----------- ------- ------- ------- --- ----------- -------- -------- --------
Total from investment
operations......... .99 1.12 1.37 1.36 .58 .94 1.04 1.28 1.27
----------- ------- ------- ------- --- ----------- -------- -------- -------
Less distributions
Dividends from net
investment income.... (.10) (.37) (.37) (.35) (.24) (.08) (.30) (.28) (.27)
Distributions paid to
shareholders from net
realized gains on
investment and
foreign currency
transactions......... (.34) (.96) (.42) (.06) -- (.34) (.96) (.42) (.06)
----------- ------- ------- ------- ------ ----- -------- -------- --------
Total
distributions........ (.44) (1.33) (.79) (.41) (.24) (.42) (1.26) (.70) (.33)
----------- ------- ------- ------- ------ ------ -------- -------- --------
Net asset value, end of
period............... $ 12.37 $ 11.82 $ 12.03 $ 11.45 $10.50 $ 12.31 $ 11.79 $ 12.01 $ 11.43
----------- ------- ------- ------- ------ ------- -------- -------- --------
----------- ------- ------- ------- ------ ------- -------- -------- --------
TOTAL RETURN#:......... 8.50% 10.02% 12.36% 13.42% 5.83% 8.09% 9.21% 11.53% 12.49%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000)......... $ 31,621 $28,641 $20,378 $10,765 $5,073 $378,114 $357,287 $314,771 $219,983
Average net assets
(000)................ $ 29,844 $24,216 $15,705 $ 6,694 $2,928 $366,090 $339,225 $267,525 $190,913
Ratios to average net
assets:
Expenses, including
distribution
fees............... 1.18%* 1.21% 1.26% 1.33% 1.51%* 1.98%* 2.01% 2.06% 2.11%
Expenses, excluding
distribution
fees............... .98%* 1.01% 1.06% 1.13% 1.26%* .98%* 1.01% 1.06% 1.11%
Net investment
income............. 2.21%* 3.61% 3.05% 3.89% 4.58%* 2.16%* 2.79% 2.27% 2.95%
Portfolio turnover
rate................. 39% 145% 241% 189% 159% 39% 145% 241% 189%
<CAPTION>
- ---------------
PER SHARE OPERATING
PERFORMANCE: 1990 1989
<S> <C> <C>
-------- --------
Net asset value,
beginning of
period............... $ 10.85 $ 9.52
-------- --------
Income from investment
operations
Net investment
income............... .37 .42
Net realized and
unrealized gain on
investment and
foreign currency
transactions......... .03 1.30
-------- --------
Total from investment
operations......... .40 1.72
-------- --------
Less distributions
Dividends from net
investment income.... (.40) (.39)
Distributions paid to
shareholders from net
realized gains on
investment and
foreign currency
transactions......... (.36) --
-------- --------
Total
distributions........ (.76) (.39)
-------- --------
Net asset value, end of
period............... $ 10.49 $ 10.85
-------- --------
-------- --------
TOTAL RETURN#:......... 3.59% 18.53%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000)......... $176,078 $ 62,651
Average net assets
(000)................ $127,360 $ 57,326
Ratios to average net
assets:
Expenses, including
distribution
fees............... 2.10% 2.33%+
Expenses, excluding
distribution
fees............... 1.14% 1.34%+
Net investment
income............. 3.61% 4.26%+
Portfolio turnover
rate................. 159% 132%
- ---------------
</TABLE>
<TABLE>
<C> <S>
+ Net of expense subsidy or reimbursement.
* Annualized.
@ Commencement of offering of Class A shares.
# Total return does not consider the effects of sales loads. Total returns for periods of less than a full
year are not annualized.
</TABLE>
See Notes to Financial Statements.
-28-
<PAGE>
<PAGE>
Trustees
Edward D. Beach
Donald D. Lennox
Douglas H. McCorkindale
Lawrence C. McQuade
Thomas T. Mooney
Louis A. Weil, III
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Marguerite E. H. Morrison, Assistant 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
Distributors
Prudential Mutual Fund Distributors, Inc.
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
Deloitte & Touche
1633 Broadway
New York, NY 10019
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
One Seaport Plaza
New York, NY 10292
Toll free (800) 225-1852
Collect (908)417-7555
The accompanying financial statements
as of Janaury 31, 1994were not audited and,
accordingly, no opinion is expressedon them.
This report is not authorized for distribution
to prospective investors unless preceded or
accompanied by a current prospectus.
744326109 MF134E2
744326208 642031F
744326307
744326406
