(ICON)
Prudential
Natural
Resources
Fund, Inc.
SEMI
ANNUAL
REPORT
Nov. 30, 1996
(LOGO)
<PAGE>
Prudential Natural Resources Fund, Inc.
Performance At A Glance.
It was a mixed six months for natural resources stocks. On
the positive side,
rising global demand for oil caused energy stocks to soar.
On the negative
side, precious metals stocks delivered disappointing
results. Unfortunately,
your Fund didn't benefit fully from either situation: we had
cut back on our
energy holdings in midsummer, before the rally -- and we had
significant
holdings invested in precious metals. As a result, your
Fund trailed the
average natural resources fund over the past six months as
measured by Lipper
Analytical Services.
Cumulative Total Returns1 As of 11/30/96
<TABLE>
<CAPTION>
Six One Five
Since
Months Year Years
Inception2
<S> <C> <C> <C>
<C>
Class A 5.4% 35.3% 116.3%
87.8%
Class B 5.0 34.3 108.1
101.8
Class C 5.0 34.3 N/A
48.9
Class Z N/A N/A N/A
7.0
Lipper Nat. Resources Avg.3 10.7 39.2 98.0
88.2
</TABLE>
Average Annual Total Returns1 As of
12/31/96
<TABLE>
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 21.7% 14.7% 8.6%
Class B 22.1 14.9 7.8
Class C 26.1 N/A 17.6
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be worth
more or less than their original cost.
1Source: Prudential Mutual Fund Management and Lipper
Analytical Services. The
cumulative total returns do not take into account sales
charges. The average
annual total returns do take into account applicable sales
charges. The Fund
charges a maximum front-end sales load of 5% for Class A
shares and a declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%, 2%,
1% and 1% for six
years, for Class B shares. Class C shares have a 1% CDSC for
one year. Class B
shares will automatically convert to Class A shares on a
quarterly basis,
approximately seven years after purchase. Class Z shares are
not subject to a
sales charge or a distribution fee. Class Z shares have been
in existence for
less than one year and average annual returns are not
available.
2Inception dates: 1/22/90 Class A; 9/28/87 Class B; 8/1/94
Class C; 9/16/96
Class Z.
3Lipper average returns are for 40 funds for six months, 39
funds for one year,
17 funds for five years and 16 funds since inception of the
Class A shares on
1/22/90.
How Investments Compared.
(As of 11/30/96)
(CHART)
Source: Lipper Analytical Services. Financial markets
change, so a mutual
fund's past performance should never be used to predict
future results. The
risks to each of the investments listed above are different
- -- we provide
12-month total returns for several Lipper mutual fund
categories to show you
that reaching for higher yields means tolerating more risk.
The greater the
risk, the larger the potential reward or loss. In addition,
we've included
historical 20-year average annual returns. These returns
assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term
growth but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth
out their total returns year by year. But their prices still
fluctuate
(sometimes significantly) and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state
agencies and/or municipalities. This investment provides
income that is usually
exempt from federal and state income taxes.
Money Market Funds attempt to preserve a constant share
value; they don't
fluctuate much in price but, historically, their returns
have been generally
among the lowest of the major investment categories.
<PAGE>
Leigh R. Goehring, Fund Manager (PICTURE)
Portfolio
Manager's ReportThe Prudential Natural Resources Fund seeks
long-term growth of
capital by investing in foreign and domestic companies that
own, explore, mine,
process or develop natural resources, or provide goods and
services for those
industries. These resources include precious metals; ferrous
and non-ferrous
metals; strategic metals; hydrocarbons, such as oil, gas and
coal; and timber
land. The Fund may be affected to a greater extent by any
single economic,
political or regulatory development than a mutual fund that
does not focus its
investments on specific economic sectors. There can be no
assurance that the
Fund will achieve its investment objective.
Inflation Indicators.
Commodities prices have traditionally been seen as
predicting inflationary
trends. That's because just about every good and service
produced in an economy
relies on such raw materials as oil, metal or wood -- either
as a component or
in the manufacturing process. For this reason, investing in
natural
resources -- or stocks in the commodities business -- has
long been used to
hedge against inflation.
Strategy Session.
- ------------------------------------------------------------
- -----
Historically, natural resources prices have moved in boom or
bust cycles,
meaning they go up and down in wide swings. The past six
months were no
exception. Oil prices surged to five-year highs, amid fears
that growing world
demand would outstrip low inventories. Metals prices,
meanwhile, plunged this
summer when cash-strapped Russian companies sold large
amounts of nickel,
aluminum, platinum and palladium. In the U.S., grain prices
for future delivery
sank to their lowest prices in 17 months on reports in
November of bumper
crops.
Over the past six months -- in fact, over the past year --
we saw good
prospects in energy. That's where we had almost half of our
assets -- 46% as
of November 30, up from 40% six months earlier. Oil prices
had been moving up
strongly since late in 1995 and we expected this trend to
continue. We would
have held even more assets in energy, had our confidence not
waned in
midsummer. That's when we thought that the United Nations
would soon allow
Iraq to resume oil production. As a result, we significantly
reduced our
energy holdings.
We put the proceeds from the sales of our energy stocks
into precious metals
stocks, increasing our holdings to 25% of assets on November
30, up from 13%
on May 31. We thought these stocks were poised to rise,
because of increasing
demand -- especially for gold -- from the emerging economies
of Latin America
and Asia, where demand for jewelry, for instance, has been
surging. At the same
time, production wasn't keeping pace. Precious metal stocks,
meanwhile, had
been stable since 1993, so we were able to find good
companies at attractive
prices.
Portfolio Breakdown.
Expressed as a percentage of
total investments as of 11/30/96.
(CHART)
<PAGE>
What Went Well.
- ---------------------------------------------------
Right On Energy.
It was a good move to have invested almost half of the
Fund's assets in energy
stocks. Our energy holdings returned 28% over the six
months, fueled by rising
oil and gas prices. Prices initially climbed because of
soaring demand for
heating oil during the severe winter of 1995-96 in the U.S.
Oil companies,
however, were slow to rebuild inventories, because they
thought Iraq would be
allowed to increase oil production by the first quarter of
1996, keeping oil
prices down. But when this additional supply didn't
materialize, oil prices
kept rising.
Drilling For Profits.
Our oil service stocks -- such as drilling companies and
other companies that
"service" oil producers -- delivered a healthy 31.2% return
to the Fund over
the six months, even though we didn't hold them for the
entire period. When
energy prices rise significantly, oil service stocks usually
appreciate more
than oil producer stocks. That's because big oil producers
generally boost
exploration and production to meet increased demand, which
generates immediate
revenues -- and earnings -- for oil service companies.
Five Largest
Issuers.
4.2% Noble Affiliates
Exploration & Production
3.3 Western Gas Resource
Energy Sources
3.3 Stillwater Mining
Precious Metals
3.2 Crestar Energy
Oil & Natural
Gas Production
2.8 Champion International
Forest Products & Paper
Expressed as a percentage of total net assets as of
11/30/96.
And Not So Well.
- ---------------------------------------------------------
Too Early On Oil.
We trimmed our energy holdings in midsummer, which was too
early. We didn't
share in their continued price appreciation. (Our energy
holdings as a
percentage of assets increased to 46% from 40% over the
period, even though we
reduced our holdings during that time -- that's because what
we continued to
hold went up so much.) After watching these stocks quickly
run up in the first
half of 1996, we reduced our holdings, because we thought
the prospect of
increased oil supplies from Iraq would cause these stocks to
take a breather.
Instead, it took longer than expected for the U.N. to allow
Iraq to ship oil,
and oil service stocks kept rising well into November.
Precious Metal
Don't Always Shine.
Our investment in precious metals stocks -- especially gold
mining
companies -- was premature. These stocks declined 17.5%
over the past six
months. We had correctly foreseen that world demand for
gold would outstrip
current production. In fact, this caused gold prices to
break $400 a ounce in
January, its highest level since July 1993. But we weren't
prepared for gold
prices to decline since then.
Looking Ahead.
- ----------------------------------------------------
Natural resource prices have moved up nicely over the past
six months. We
believe this is a harbinger of a long-term boom, as a finite
supply of
resources will be unable to meet a surging worldwide demand.
In fact, as we
reported to you last time, we think the 15-year-old bear
market in commodities
is nearing an end, fueled by the emerging economies of Asia
and Latin America.
Over the shorter term, we think investors will find rising
commodities prices
an attractive alternative if soaring stock prices,
especially in the U.S.,
begin to moderate.
1
<PAGE>
President's Letter
January 1, 1997
- ------------------------------------------------------------
- ----------
(PICTURE)
Dear Shareholder:
For many investors, 1996 may well be the second year of back-
to-back,
double-digit stock market returns. In late November, the
Dow Jones Industrial
Average passed 6500 -- only weeks after breaking the 6000
mark in mid-October.
America's economic expansion is entering its sixth year and
there seems little
evidence of an end to the continued modest growth and low
inflation we've
enjoyed for the last several years.
This is good news. For most investors it's meant an increase
in their share
values for college funds, retirement nest eggs or other long-
term financial
goals. However, as you read your year-end account statements
and make plans for
1997, it's important to remember that there never is a "sure
thing" when it
comes to investment returns. Stock and bond markets go down
just as they go up.
(Did you notice the brief period of decline this past
summer?) No one likes to
see the value of their investments fall but such periods
remind us we must keep
our expectations realistic.
Regardless of the market's direction, a wise investor plans
for tomorrow's
needs today. Your Financial Advisor or Registered
Representative can help you:
- - Review your portfolio and suggest strategies for 1997,
such as diversifying
across different types of investments. Financial markets
seldom move in
lockstep.By investing in a mix of stock and bond funds
(foreign & domestic)
and money market funds you may be in a better position to
achieve your
long-term goals and to weather periods of uncertainty.
- - See why annuities have become popular retirement planning
tools. The choices
are broader than ever. Our new Discovery SelectSM Variable
Annuity offers you
many of the keys to successful retirement planning,
including a personalized
asset allocation program and a choice of 21 variable- or
fixed-rate
investment options offering a broad array of investment
objectives and
styles.
- - Explain new retirement savings developments. For example,
Congress has
expanded the contribution limit on spousal IRAs. And don't
forget, it's not
too late for you to make a contribution to your IRA or
open one for 1996. The
IRS deadline is April 15, 1997, but it's best to act
sooner.
hy not contact your Financial Advisor or Registered
Representative today? If
you are interested in Discovery SelectSM call for a
prospectus, which contains
more complete information. Read it carefully before you
invest.
Sincerely,
Richard A. Redeker
President
P.S. Your 1997 Prudential IRA contribution may qualify you
for a waiver of the
annual custodial fee. Ask your financial representative for
details.
2
<PAGE>
Portfolio of Investments as of November 30, 1996
PRUDENTIAL NATURAL
(Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Description Value
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--98.5%
COMMON STOCKS--94.4%
- ------------------------------------------------------------
Australia--4.8%
652,600 Acacia Resources(a) (Precious
Metals) $
1,321,614
444,465 Capral Aluminium Ltd.
(Metals-Non Ferrous)
1,342,904
173,300 Comalco Ltd. (Metals-Non Ferrous)
934,003
71,900 CRA Ltd. (Metals-Non Ferrous)
1,204,205
201,300 Delta Gold NL(a) (Precious Metals)
386,294
153,200 Plutonic Resources Ltd. (Precious
Metals)
685,559
464,700 QNI Ltd. (Metals-Non Ferrous)
906,935
113,864 Western Mining Corp. Hldgs. Ltd.
(Metals-Non Ferrous)
725,248
---------
- ---
7,506,762
- ------------------------------------------------------------
Canada--40.3%
137,100 Agnico-Eagle Mines Ltd.
(Precious Metals)
1,902,898
152,200 Alberta Energy Co. Ltd. (Oil &
Natural Gas Production &
Refining)
3,503,901
156,900 Anderson Exploration Ltd.(a) (Oil &
Natural Gas Production)
2,020,919
260,000 Arakis Energy Corp.(a) (Oil &
Natural Gas Production)
1,543,750
251,700 Archer Resources Ltd.(a) (Oil &
Natural Gas Production)
1,304,242
155,000 Arizona Star Resoure Ltd.(a)
(Precious Metals)
883,485
42,500 Barrick Gold Corp. (Precious Metals)
1,274,151
364,200 Barrington Petroleum Ltd.(a)
(Exploration & Production)
1,644,548
616,700 Beau Canada Exploration Ltd.(a) (Oil
& Natural Gas Production)
1,091,060
175,500 Blue Range Resource Corp.(a) (Oil &
Natural Gas Production) $
1,182,212
66,000 Cabre Exploration Ltd.(a) (Oil &
Natural Gas Production)
1,091,939
234,700 Cambior Inc. (Precious Metals)
3,500,781
63,400 Cameco Corp. (Misc. Materials &
Commodities)
2,719,691
55,600 Canadian Natural Resources Ltd.(a)
(Oil & Natural Gas Production)
1,522,837
224,100 Crestar Energy Inc.(a) (Oil &
Natural Gas Production)
4,960,093
112,600 ELAN Energy Inc.(a) (Oil & Natural
Gas Production)
916,870
74,300 Grad & Walker Energy Corp.(a) (Oil &
Natural Gas Production)
561,004
100,000 Greenstone Resources Ltd.(a)
(Precious Metals)
1,332,445
280,936 HCO Energy Ltd.(a) (Oil & Natural
Gas Production)
307,784
114,600 International Pursuit Corp.(a)
(Precious Metals)
385,987
72,500 Jordan Petroleum Ltd.(a) (Oil &
Natural Gas Production)
407,876
300,000 Kap Resources Ltd.(a) (Chemicals)
766,156
148,000 MacMillan Bloedel Ltd.(a)
(Forest Products & Paper)
2,108,964
42,000 Meridian Gold Inc.(a) (Precious
Metals)
174,106
171,000 Institutional Receipt(a)
708,861
206,700 Northrock Resources Ltd.(a) (Oil &
Natural Gas Production)
1,958,517
149,300 Northstar Energy Corp.(a)
(Exploration & Production)
1,878,822
225,000 Pacific Forest Products Ltd.(a)
(Forest Products & Paper)
2,956,362
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
3 -----
<PAGE>
Portfolio of Investments as of November 30, 1996
PRUDENTIAL NATURAL
(Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Canada (cont'd.)
57,700 Placer Dome Inc. (Precious Metals) $
1,366,792
50,000 Potash Corp. (Chemicals)
3,768,750
123,300 Repadre Capital Corp.(a)
(Precious Metals)
739,307
73,700 Rigel Energy Corp.(a) (Oil & Natural
Gas Production)
796,521
332,500 Rio Alto Exploration Ltd.(a)
(Exploration & Production)
2,424,402
95,100 Timberwest Forest Ltd. (Forest
Products & Paper)
1,407,950
406,400 Tiomin Resources Inc.(a) (Metals-Non
Ferrous)
1,040,894
192,900 Triton Mining Corp.(a) (Precious
Metals)
713,968
216,200 TVX Gold, Inc.(a) (Precious Metals)
1,528,396
128,100 Viridian Inc.(a) (Chemicals)
1,640,484
245,414 Westaim Corp.(a) (Misc. Materials &
Commodities)
763,002
400,000 Westmin Resources Ltd.(a)
(Metals-Non Ferrous)
2,043,082
---------
- ---
62,843,809
- ------------------------------------------------------------
France--1.1%
21,217 Total France Petroleum Ltd.
(Integrated Producers)
1,695,169
- ------------------------------------------------------------
Japan--0.1%
22,000 Okato Shoji Co. Ltd.(a) (Financial
Services)
197,102
- ------------------------------------------------------------
New Zealand--1.7%
1,142,412 Fletcher Challenge Ltd. (Forest
Products & Paper)
1,885,597
1,004,560 Tasman Agriculture (Miscellaneous
Industrial)
821,887
---------
- ---
2,707,484
South Africa--3.3%
50,000 Durban Roodepoort Deep Ltd.(a)
(Precious Metals) $
428,184
82,600 Kloof Gold Mining Co. Ltd. ADR
(Precious Metals)
681,450
129,500 Harmony Gold Mining Co. Ltd.(a)
(Precious Metals)
1,010,732
206,000 Randgold & Exploration Co.(a)
(Precious Metals)
1,476,054
10,700 Vaal Reefs Exploration & Mining Co.
Ltd.
(Precious Metals)
744,651
24,300 Western Deep Levels Ltd.
(Precious Metals)
742,829
---------
- ---
5,083,900
- ------------------------------------------------------------
United States--43.1%
202,700 Abacan Resources Corp.(a) (Oil &
Natural Gas Production)
1,735,619
54,100 Aluminum Company of America
(Metals-Non Ferrous)
3,442,112
23,500 Anadarko Petroleum Corp.
(Oil & Natural Gas Production)
1,571,563
113,600 Asia Pacific Resource International
Holdings Ltd.(a) (Forest Products
& Paper)
568,000
137,500 Brush Wellman Inc.
(Metals-Non Ferrous)
2,303,125
100,000 Champion International Corp.
(Forest Products & Paper)
4,300,000
103,037 Coflexip ADR(a) (Energy Equipment &
Services)
2,769,119
47,700 Cross Timbers Oil Co. (Oil & Natural
Gas Production)
1,144,800
84,500 Dawson Production Services Inc.(a)
(Oil Services)
1,045,688
26,800 Freeport-McMoran Copper & Gold Inc.
(Metals-Non Ferrous)
800,650
60,000 FX Energy Inc.(a) (Oil & Natural Gas
Production)
540,000
58,511 Getchell Gold Corp.(a) (Precious
Metals)
2,289,243
</TABLE>
- ------------------------------------------------------------
- --------------------
- ----- 4 See Notes to
Financial Statements.
<PAGE>
Portfolio of Investments as of November 30, 1996
PRUDENTIAL NATURAL
(Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United States (cont'd.)
80,000 Golden Star Resources Ltd.(a)
(Precious Metals) $
1,210,000
171,500 Harcor Energy Inc.(a) (Oil & Natural
Gas Production & Refining)
846,781
50,900 J. Ray McDermott, S.A.(a) (Energy
Equipment & Services)
1,259,775
74,500 Louisiana-Pacific Corp. (Forest
Products & Paper)
1,685,563
555,700 Mesa, Inc.(a) (Oil & Natural Gas
Production & Refining)
2,847,962
41,600 Newfield Exploration Co.(a)
(Exploration & Production)
2,085,200
37,658 Newmont Mining Corp. (Precious
Metals)
1,802,877
186,822 NGC Corp. (Energy Sources)
4,063,378
138,500 Noble Affiliates, Inc. (Exploration
& Production)
6,526,812
185,900 Nord Resources Corp.(a)
(Metals-Non Ferrous)
790,075
40,800 Pegasus Gold Inc.(a) (Precious
Metals)
382,500
21,300 Precision Drilling Corp.(a)
(Energy Equipment)
676,275
43,600 Rayonier Inc. (Forest Products)
1,689,500
143,900 Santa Fe Pacific Gold Corp.
(Precious Metals)
1,654,850
293,500 Stillwater Mining Co.(a) (Precious
Metals)
5,136,250
60,500 Stolt Comex Seaway(a) (Energy
Equipment & Services)
1,134,375
42,500 TJ International Inc. (Forest
Products)
924,375
131,760 Veritas DGC Inc.(a) (Oil Services)
2,816,370
68,107 Weatherford Enterra Inc.(a) (Energy
Equipment & Services)
2,077,264
273,000 Western Gas Resources, Inc. (Energy
Sources)
5,152,875
---------
- ---
67,272,976
---------
- ---
Total common stocks
(cost US$120,038,642)
147,307,202
---------
- ---
PREFERRED STOCKS--2.7%
- ------------------------------------------------------------
United States--2.7%
19,400 Freeport-McMoran Copper & Gold Inc.,
$0.025 (Metals-Non Ferrous) $
344,350
16,400 Hecla Mining Co.,
7.00%, Convertible, Ser. B
(Precious Metals)
746,200
532,765 Mesa Inc.,
8.00%, Convertible, Ser. A(a)
(Oil & Natural Gas Production)
3,196,590
---------
- ---
Total preferred stocks
(cost US$2,567,423)
4,287,140
---------
- ---
WARRANTS(a)--0.1%
- ------------------------------------------------------------
Canada--0.1%
150,000 Kap Resources Ltd.,
Expiring 8/3/00 @ CAD$2
(Chemicals)
(cost US$101,374)
141,572
---------
- ---
Principal
Amount
(000)
CONVERTIBLE BONDS--1.3%
- ------------------------------------------------------------
Canada--0.5%
CAD 600 Golden Shamrock Mines Ltd.,
Sr. Sub. Deb.,
7.50%, 5/9/00
(Precious Metals)
691,260
---------
- ---
- ------------------------------------------------------------
South Africa--0.2%
ZAR 300 Randgold Finance BVI Ltd.,
Sec'd. Gtd.,
7.00%, 10/3/01, (Gold Mines)
313,500
---------
- ---
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
5 -----
<PAGE>
PRUDENTIAL NATURAL
RESOURCES FUND, INC.
Portfolio of Investments as of November 30, 1996
(Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United States--0.6%
US$ 1,051 Coeur D Alene Mines Corp.,
Sr. Sub. Deb., (Precious Metals)
6.375%, 1/31/04 $
950,498
---------
- ---
Total convertible bonds
(cost US$1,913,429)
1,955,258
---------
- ---
Total long-term investments
(cost US$124,620,868)
153,691,172
---------
- ---
SHORT-TERM INVESTMENTS--1.3%
- ------------------------------------------------------------
Repurchase Agreement--1.3%
United States--1.3%
1,979 Joint Repurchase Agreement Account,
5.68%, 11/1/96,
(cost US$1,979,000; Note 5)
1,979,000
---------
- ---
- ------------------------------------------------------------
Total Investments--99.8%
(cost US$126,599,868; Note 4)
155,670,172
Other assets in excess of
liabilities--0.2%
299,665
---------
- ---
Net Assets--100%
$155,969,837
---------
- ---
---------
- ---
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depositary Receipt.
- ------------------------------------------------------------
- --------------------
- ----- 6 See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL NATURAL
Statement of Assets and Liabilities (Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<S>
<C>
Assets
November 30, 1996
Investments, at value (cost
$126,599,868)...............................................
................ $ 155,670,172
Foreign currency, at value (cost
$536,278)...................................................
........... 529,672
Cash........................................................
............................................
26,078
Receivable for Fund shares
sold........................................................
................. 429,379
Receivable for investments
sold........................................................
................. 218,703
Dividends and interest
receivable..................................................
..................... 139,063
Other
assets......................................................
...................................... 3,058
- -----------------
Total
assets......................................................
................................... 157,016,125
- -----------------
Liabilities
Payable for Fund shares
reacquired..................................................
.................... 652,326
Payable for investments
purchased...................................................
.................... 138,304
Distribution fee
payable.....................................................
........................... 100,567
Management fee
payable.....................................................
............................. 94,785
Accrued expenses and other
liabilities.................................................
................. 54,440
Withholding taxes
payable.....................................................
.......................... 5,866
- -----------------
Total
liabilities.................................................
................................... 1,046,288
- -----------------
Net
Assets......................................................
........................................ $
155,969,837
- -----------------
- -----------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................ $ 87,992
Paid-in capital in excess of
par.........................................................
............ 107,463,636
- -----------------
107,551,628
Accumulated net investment
loss........................................................
.............. (745,362)
Accumulated net realized gains on investments and foreign
currency transactions......................
20,099,093
Net unrealized appreciation on investments and foreign
currency transactions.........................
29,064,478
- -----------------
Net assets, November 30,
1996........................................................
................... $ 155,969,837
- -----------------
- -----------------
Class A:
Net asset value and redemption price per share
($41,757,829 / 2,285,249 shares of common stock issued
and outstanding)...........................
$18.27
Maximum sales charge (5% of offering
price)......................................................
.... .96
- -----------------
Maximum offering price to
public......................................................
............... $19.23
- -----------------
- -----------------
Class B:
Net asset value, offering price and redemption price per
share
($111,913,042 / 6,383,503 shares of common stock
issued and outstanding)..........................
$17.53
- -----------------
- -----------------
Class C:
Net asset value, offering price and redemption price per
share
($1,998,918 / 114,017 shares of common stock issued
and outstanding)..............................
$17.53
- -----------------
- -----------------
Class Z:
Net asset value, offering price and redemption price per
share
($300,048 / 16,409 shares of common stock issued and
outstanding).................................
$18.29
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
7 -----
<PAGE>
PRUDENTIAL NATURAL
RESOURCES FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income (Loss) November 30,
1996
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $54,320).................. $ 700,165
Interest (net of foreign withholding
taxes of $511)..................... 126,158
----------------
- -
Total income....................... 826,323
----------------
- -
Expenses
Management fee........................ 528,080
Distribution fee--Class A............. 45,409
Distribution fee--Class B............. 513,798
Distribution fee--Class C............. 8,505
Transfer agent's fees and expenses.... 101,000
Custodian's fees and expenses......... 75,000
Reports to shareholders............... 43,000
Registration fees..................... 30,000
Audit fee and expenses................ 19,000
Directors' fees and expenses.......... 19,000
Legal fees and expenses............... 6,000
Miscellaneous......................... 10,539
----------------
- -
Total expenses..................... 1,399,331
----------------
- -
Net investment loss...................... (573,008)
----------------
- -
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized gain (loss) on:
Investment transactions............... 14,193,095
Foreign currency transactions......... (26,281)
----------------
- -
14,166,814
----------------
- -
Net change in unrealized appreciation/depreciation on:
Investment transactions............... (6,291,161)
Foreign currency transactions......... (1,843)
----------------
- -
(6,293,004)
----------------
- -
Net gain on investments and foreign
currencies............................ 7,873,810
----------------
- -
Net Increase in Net Assets
Resulting from Operations................ $ 7,300,802
----------------
- -
----------------
- -
</TABLE>
PRUDENTIAL NATURAL
RESOURCES FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase in November 30, May
30,
Net Assets 1996 1995
<S> <C> <C>
Operations
Net investment loss............ $ (573,008) $
(727,538)
Net realized gain on investment
and foreign currency
transactions................ 14,166,814
9,504,064
Net change in unrealized
appreciation/depreciation on
investments and foreign
currencies.................. (6,293,004)
22,743,837
------------ --------
- ----
Net increase in net assets
resulting from operations... 7,300,802
31,520,363
------------ --------
- ----
Net equalization credits.......... --
90,374
------------ --------
- ----
Distributions from net realized
gains on investment and written
option transactions (Note 1)
Class A........................ --
(1,303,488)
Class B........................ --
(4,284,054)
Class C........................ --
(33,008)
------------ --------
- ----
--
(5,620,550)
------------ --------
- ----
Fund share transactions (net of
share conversions) (Note 6)
Proceeds from shares sold...... 73,727,259
122,535,276
Net asset value of shares
issued in reinvestment of
distributions............... --
5,017,619
Cost of shares reacquired...... (72,306,577)
(107,356,234)
------------ --------
- ----
Net increase in net assets from
Fund share transactions..... 1,420,682
20,196,661
------------ --------
- ----
Total increase.................... 8,721,484
46,186,848
Net Assets
Beginning of period............... 147,248,353
101,061,505
------------ --------
- ----
End of period..................... $155,969,837
$147,248,353
------------ --------
- ----
------------ --------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
- ----- 8 See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL
NATURAL
Notes to Financial Statements (Unaudited) RESOURCES
FUND, INC.
- ------------------------------------------------------------
- --------------------
Prudential Natural Resources Fund, Inc., (the ``Fund''), is
registered under the
Investment Company Act of 1940 as a diversified, open-end
management investment
company. The Fund's investment objective is long-term growth
of capital which it
seeks to achieve by investing primarily in equity securities
of foreign and
domestic natural resource companies.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Fund in the preparation of its financial statements.
Security Valuation: Securities traded on an exchange are
valued at the last
reported sales price on the primary exchange on which they
are traded.
Securities traded in the over-the-counter market (including
securities listed on
exchanges for which a last sales price is not available) are
valued at the
average of the last reported bid and asked prices.
Securities for which market
quotations are not available, other than private placements,
shall each be
valued at a price supplied by an independent pricing agent,
which is, in the
opinion of such pricing agent, representative of the market
value of such
securities as of the time of determination of net asset
value. Securities for
which market quotations are not readily available, and for
which the pricing
agent or principal market maker does not provide a
valuation, including
restricted securities, will be valued at fair value as
determined in good faith
according to a pricing procedure developed by the Investment
Adviser under
procedures established by and under the general supervision
of the Fund's Board
of Directors. Options listed on exchanges are valued at
their closing price on
the applicable exchange.
Short-term securities which mature in more than 60 days are
valued at current
market quotations. Short-term securities which mature in 60
days or less are
valued at amortized cost which approximates market value.
In connection with transactions in repurchase agreements
with U.S. financial
institutions, it is the Fund's policy that its custodian or
designated
subcustodians, as the case may be under triparty repurchase
agreements, 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
daily closing rates 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 using the
foreign exchange
rates and market values at the close of the fiscal year, 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 securities held at the fiscal year 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 portfolio
securities sold during the fiscal year.
Net realized losses on foreign currency transactions of
$26,281 represents net
foreign exchange gains or losses from disposition of foreign
currencies,
currency gains or losses realized between the trade and
settlement dates on
security 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. Net unrealized
currency gains and
losses from valuing foreign currency denominated assets and
liabilities (other
than investments) at fiscal year end exchange rates are
reflected as a component
of net unrealized depreciation on foreign currencies.
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 and
the level of governmental supervision and the regulation of
foreign securities
markets.
Securities Transactions and Investment Income: Securities
transactions are
recorded on the trade date. Realized gains and losses from
investment and
currency transactions are calculated on the identified cost
basis. Dividend
income is recorded on the ex-dividend date and interest
income is recorded on an
accrual basis. Expenses are recorded on the accrual basis
which may require the
use of certain estimates by management.
- ------------------------------------------------------------
- --------------------
9 -----
<PAGE>
PRUDENTIAL NATURAL
Notes to Financial Statements (Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- --------------------
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.
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 income to shareholders.
Therefore, no federal
income tax provision is required.
Withholding taxes on foreign interest, dividends and
(realized and unrealized)
capital gains have been provided for in accordance with the
Fund's understanding
of the applicable country's tax rules and rates. In
addition, certain countries
impose taxes on capital gains realized on the sale of
portfolio securities, and
as such, taxes have been accrued where applicable on the
unrealized gains of
such securities.
Dividends and Distributions: The Fund expects to pay
dividends out of net
investment income and make distributions of any net capital
gains, at least
annually, if any. 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
treatments of wash
sales, foreign currencies and passive investment companies'
transactions.
Equalization: Effective June 1, 1996, the Fund discontinued
the accounting
practice of equalization. Equalization is a practice whereby
a portion of the
proceeds from sales and costs of repurchases of capital
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. The balance of $39,777 of undistributed net
investment income at May 31,
1996, resulting from equalization was transferred to paid-in
capital in excess
of par. Such reclassification has no effect on net assets,
results of
operations, or net asset value per share.
Reclassification of Capital Accounts: The Fund accounts and
reports for
distributions to shareholders in accordance with the
American Institute of
Certified Public Accountants' 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 undistributed net investment
income by $26,281
and increase accumulated net realized gain on investments
and foreign currency
transactions by $26,281 for the six months ended November
30, 1996. 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 LLC
(``PMF''). Pursuant to this agreement, PMF has
responsibility for all investment
advisory services and supervises the subadviser's
performance of such services.
PMF has entered into a subadvisory agreement with The
Prudential Investment
Corporation (``PIC''); PIC furnishes investment advisory
services in connection
with the management of the Fund. PMF pays for the services
of PIC, the cost of
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 .75 of 1% of the average net assets of the Fund.
The Fund has a distribution agreement with Prudential
Securities Incorporated
(``PSI''), which acts as the distributor of the Class A,
Class B, Class C and
Class Z shares of the Fund. The Fund compensates PSI for
distributing and
servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of
distribution, (the ``Class A, B and C Plans'') regardless of
expenses actually
incurred by them. The distribution fees are accrued daily
and payable monthly.
No distribution or service fees are paid to PSI as
distributor of the Class Z
shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates
PSI for its
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 Class
C shares,
respectively. Such expenses under the Plans were .25 of 1%,
1% and 1% of the
average daily net assets of the Class A, B and C shares,
respectively, for the
six months ended November 30, 1996.
PSI has advised the Fund that it has received approximately
$39,000 in front-end
sales charges resulting from sales of Class A shares during
the six months ended
November 30, 1996. From these fees, PSI paid such sales
charges to dealers which
in turn paid commissions to salespersons and incurred other
distribution costs.
PSI has advised the Fund that for the six months ended
November 30, 1996, it
received approximately $112,800 and $1,700 in contingent
- ------------------------------------------------------------
- --------------------
- ----- 10
<PAGE>
PRUDENTIAL NATURAL
Notes to Financial Statements (Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- --------------------
deferred sales charges imposed upon redemptions by certain
Class B and Class C
shareholders, respectively.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC (``PMFS''), a wholly-
owned subsidiary of
PMF, serves as the Fund's transfer agent and during the six
months ended
November 30, 1996, the Fund incurred fees of approximately
$90,300 for the
services of PMFS. As of November 30, 1996, approximately
$16,400 of such fees
were due to PMFS. Transfer agent fees and expenses in the
Statement of
Operations include certain-out-of pocket expenses paid to
non-affiliates.
For the six months ended November 30, 1996, PSI and/or its
foreign affiliates
earned approximately $4,200 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 six months ended November 30, 1996 aggregated
$46,801,640 and
$43,634,570, respectively.
The federal income tax basis of the Fund's investments at
November 30, 1996 was
$126,743,542 and accordingly, net unrealized appreciation
for federal income tax
purposes was $28,926,630 (gross unrealized appreciation--
$34,115,006 gross
unrealized depreciation--$5,188,376).
The Fund will elect to treat net currency losses of
approximately $21,000
incurred in the seven month ended May 31, 1996 as having
been incurred in the
current fiscal year.
- ------------------------------------------------------------
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. At November
30, 1996, the Fund
had a .2% undivided interest in the repurchase agreements in
the joint account.
The undivided interest for the Fund represented $1,979,000
in principal amount.
As of such date, each repurchase agreement in the joint
account and the value of
the collateral therefor was as follows:
Bear, Stearns & Co., 5.68%, in the principal amount of
$280,000,000, repurchase
price $280,132,533, due 12/2/96. The value of the collateral
including accrued
interest is $285,853,687.
CS First Boston Corp., 5.68%, in the principal amount of
$280,000,000,
repurchase price $280,132,533, due 12/2/96. The value of the
collateral
including accrued interest is $290,562,888.
J.P. Morgan Securities, 5.65%, in the principal amount of
$34,809,000,
repurchase price $34,825,389, due 12/2/96. The value of the
collateral including
accrued interest is $35,526,121.
Smith Barney, Inc., 5.68%, in the principal amount of
$280,000,000, repurchase
price $280,132,533, due 12/2/96. The value of the collateral
including accrued
interest is $286,599,817.
- ------------------------------------------------------------
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. Class C shares are sold
with a contingent
deferred sales charge of 1% during the first year. Class B
shares will
automatically convert to Class A shares on a quarterly basis
approximately seven
years after purchase. Effective September 13, 1996 the Fund
commenced offering
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.
The Fund has authorized 500 million shares of common stock
$.01 par value per
share equally divided into four classes, designated Class A,
Class B, Class C
and Class Z common stock.
- ------------------------------------------------------------
- --------------------
11 -----
<PAGE>
PRUDENTIAL NATURAL
Notes to Financial Statements (Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- --------------------
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- ----------------------------------- ---------- --------
- ----
<S> <C> <C>
Six months ended November 30, 1996:
Shares sold........................ 2,430,480 $
41,488,292
Shares reacquired.................. (2,233,534)
(38,278,955)
---------- --------
- ----
Net increase in shares outstanding
before conversion................ 196,946
3,209,337
Shares issued upon conversion from
Class B.......................... 208,153
3,483,278
---------- --------
- ----
Net increase in shares
outstanding...................... 405,099 $
6,692,615
---------- --------
- ----
---------- --------
- ----
Year ended May 31, 1996:
Shares sold........................ 2,539,693 $
38,555,696
Shares issued in reinvestment of
distributions.................... 79,485
1,097,686
Shares reacquired.................. (2,375,614)
(35,670,241)
---------- --------
- ----
Net increase in shares outstanding
before conversion................ 243,564
3,983,141
Shares issued upon conversion from
Class B.......................... 203,473
3,015,272
---------- --------
- ----
Net increase in shares
outstanding...................... 447,037 $
6,998,413
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class B
- -----------------------------------
<S> <C> <C>
Six months ended November 30, 1996:
Shares sold........................ 1,804,687 $
29,794,807
Shares reacquired.................. (1,975,420)
(32,230,659)
---------- --------
- ----
Net decrease in shares outstanding
before conversion................ (170,733)
(2,435,852)
Shares reacquired upon conversion
into Class A..................... (216,379)
(3,483,278)
---------- --------
- ----
Net decrease in shares
outstanding...................... (387,112) $
(5,919,130)
---------- --------
- ----
---------- --------
- ----
Year ended May 31, 1996:
Shares sold........................ 5,634,740 $
82,831,397
Shares issued in reinvestment of
distributions.................... 287,532
3,890,312
Shares reacquired.................. (4,990,847)
(71,288,757)
---------- --------
- ----
Net increase in shares outstanding
before conversion................ 931,425
15,432,952
Shares reacquired upon conversion
into Class A..................... (210,326)
(3,015,272)
---------- --------
- ----
Net increase in shares
outstanding...................... 721,099 $
12,417,680
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class C Shares
Amount
- ----------------------------------- ---------- --------
- ----
<S> <C> <C>
Six months ended November 30, 1996:
Shares sold........................ 122,049 $
2,029,505
Shares reacquired.................. (100,893)
(1,676,703)
---------- --------
- ----
Net increase in shares
outstanding...................... 21,156 $
352,802
---------- --------
- ----
---------- --------
- ----
Year ended May 31, 1996:
Shares sold........................ 73,169 $
1,148,183
Shares issued in reinvestment of
distributions.................... 2,191
29,621
Shares reacquired.................. (27,858)
(397,236)
---------- --------
- ----
Net increase in shares
outstanding...................... 47,502 $
780,568
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class Z
- -----------------------------------
<S> <C> <C>
September 16, 1996* through
November 30, 1996:
Shares sold........................ 23,172 $
414,655
Shares reacquired.................. (6,763)
(120,260)
---------- --------
- ----
Net increase in shares
outstanding...................... 16,409 $
294,395
---------- --------
- ----
---------- --------
- ----
</TABLE>
- ---------------
* Commencement of offering of Class Z shares.
- ------------------------------------------------------------
Note 7. Distributions
On December 10, 1996, the Board of Directors of the Fund
declared a short-term
capital gain distribution of $.38 per share and a long-term
capital gain
distribution of $1.56 per share for Class A, B, C and Z
shares, respectively,
payable on December 19, 1996 to shareholders of record on
December 16, 1996.
- ------------------------------------------------------------
- --------------------
- ----- 12
<PAGE>
PRUDENTIAL NATURAL
Financial Highlights (Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A
--
- ------------------------------------------------------------
- ----------
Six Months
Ended Year Ended May 31,
November 30, -------------------------------------------
- ------------
1996 1996(d) 1995(a) 1994(a) 1993(a)
1992(a)
--
- ---------- ------- ------- ------- -------
- -------
<S>
<C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................
$ 17.34 $ 13.73 $ 12.55 $11.84 $10.02
$ 9.73
- ------ ------- ------- ------- -------
- -------
Income from investment operations
Net investment income (loss)..........................
(.07) (.01) (.03) .01 .02
.01
Net realized and unrealized gain on investment and
foreign currency transactions......................
1.00 4.42 1.21 .70 1.80
.38
- ------ ------- ------- ------- -------
- -------
Total from investment operations...................
.93 4.41 1.18 .71 1.82
.39
- ------ ------- ------- ------- -------
- -------
Less distributions
Dividends from net investment income..................
- -- -- -- -- --
(.09)
Distributions from net realized gains on investment
and foreign currency transactions..................
- -- (.80) -- -- --
(.01)
- ------ ------- ------- ------- -------
- -------
Total distributions................................
- -- (.80) -- -- --
(.10)
- ------ ------- ------- ------- -------
- -------
Net asset value, end of period........................
$ 18.27 $ 17.34 $ 13.73 $12.55 $11.84
$10.02
- ------ ------- ------- ------- -------
- -------
- ------ ------- ------- ------- -------
- -------
TOTAL RETURN(b):......................................
5.36% 33.51% 9.40% 6.00% 18.16%
4.04%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).......................
$ 41,757 $32,608 $19,682 $6,505 $1,898
$590
Average net assets (000)..............................
$ 36,228 $23,106 $10,791 $4,106 $ 758
$647
Ratios to average net assets:
Expenses, including distribution fees..............
1.43%(c) 1.57% 1.73% 1.89% 2.38%
2.59%
Expenses, excluding distribution fees..............
1.18%(c) 1.32% 1.48% 1.65% 2.18%
2.39%
Net investment income (loss)..........................
(.28)%(c) (.09)% (.25)% .11% .13%
.44%
For Class A, B and C shares:
Portfolio turnover....................................
32% 41% 36% 19% 50%
36%
Average commission rate per share.....................
$ .0392 $ .0290 N/A N/A N/A
N/A
</TABLE>
- ---------------
(a) Calculated based upon average shares outstanding by
class.
(b) 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.
(c) Annualized.
(d) Calculated prior to Statement of Position 93-2
adjustments (See Note 1).
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
13 -----
<PAGE>
PRUDENTIAL
NATURAL
Financial Highlights (Unaudited) RESOURCES
FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class B
--
- ------------------------------------------------------------
- ----------
Six Months
Ended Year Ended May 31,
November 30, -------------------------------------------
- ------------
1996 1996(d) 1995(a) 1994(a) 1993(a)
1992(a)
--
- ---------- -------- ------- ------- -------
- ------
<S>
<C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................
$ 16.70 $ 13.35 $ 12.29 $ 11.69 $ 9.97
$ 9.72
--
- ---------- -------- ------- ------- -------
- ------
Income from investment operations
Net investment loss...................................
(.09) (.10) (.13) (.08) (.07)
(.08)
Net realized and unrealized gain on investment and
foreign currency transactions......................
.92 4.25 1.19 .68 1.79
.39
--
- ---------- -------- ------- ------- -------
- ------
Total from investment operations...................
.83 4.15 1.06 .60 1.72
.31
--
- ---------- -------- ------- ------- -------
- ------
Less distributions
Dividends from net investment income..................
- -- -- -- -- --
(.05)
Distributions from net realized gains on investment
and foreign currency transactions..................
- -- (.80) -- -- --
(.01)
--
- ---------- -------- ------- ------- -------
- ------
Total distributions................................
- -- (.80) -- -- --
(.06)
--
- ---------- -------- ------- ------- -------
- ------
Net asset value, end of period........................
$ 17.53 $ 16.70 $ 13.35 $ 12.29 $ 11.69
$ 9.97
--
- ---------- -------- ------- ------- -------
- ------
--
- ---------- -------- ------- ------- -------
- ------
TOTAL RETURN(b):......................................
4.97% 32.49% 8.62% 5.13% 17.25%
3.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).......................
$111,913 $113,090 $80,774 $64,235 $36,150
$23,228
Average net assets (000)..............................
$102,479 $ 84,396 $74,681 $48,772 $23,464
$26,877
Ratios to average net assets:
Expenses, including distribution fees..............
2.18%(c) 2.32% 2.48% 2.65% 3.18%
3.39%
Expenses, excluding distribution fees..............
1.18%(c) 1.32% 1.48% 1.65% 2.18%
2.39%
Net investment loss...................................
(1.03)%(c) (.84)% (1.05)% (.67)% (.67)%
(.36)%
</TABLE>
- ---------------
(a) Calculated based upon average shares by class.
(b) 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.
(c) Annualized.
(d) Calculated prior to Statement of Position 93-2
adjustments (See Note 1).
- ------------------------------------------------------------
- --------------------
- ----- 14 See Notes to
Financial Statements.
<PAGE>
PRUDENTIAL NATURAL
Financial Highlights (Unaudited)
RESOURCES FUND, INC.
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class C Class Z
--
- ------------------------------------- -------------
August 1, September 13,
Six Months 1994(d) 1996(f)
Ended through through
November 30, May 31, November 30,
1996 1996(e) 1995(a) 1996
--
- ---------- ------- ---------- -------------
<S>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................
$16.70 $13.35 $12.47 $ 17.08
- ----- ------- ----- -----
Income from investment operations
Net investment loss...................................
(.08) (.10 ) (.13) (.01)
Net realized and unrealized gain on investment and
foreign currency transactions......................
.91 4.25 1.01 1.22
- ----- ------- ----- -----
Total from investment operations...................
.83 4.15 .88 1.21
- ----- ------- ----- -----
Less distributions
Dividends from net investment income..................
- -- -- -- --
Distributions from net realized gains on investment
and foreign currency transactions..................
- -- (.80 ) -- --
- ----- ------- ----- -----
Total distributions................................
- -- (.80 ) -- --
- ----- ------- ----- -----
Net asset value, end of period........................
$17.53 $16.70 $13.35 $ 18.29
- ----- ------- ----- -----
- ----- ------- ----- -----
TOTAL RETURN(b):......................................
4.97% 32.49 % 7.06% 7.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).......................
$1,999 $1,551 $606 $300
Average net assets (000)..............................
$1,696 $734 $294 $83
Ratios to average net assets:
Expenses, including distribution fees..............
2.18%(c) 2.32 % 2.56%(c) 1.18%(c)
Expenses, excluding distribution fees..............
1.18%(c) 1.32 % 1.56%(c) 1.18%(c)
Net investment loss...................................
(1.03)%(c) (.84 )% (1.08)%(c) (.03)%(c)
</TABLE>
- ---------------
(a) Calculated based upon average shares by class.
(b) 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.
(c) Annualized.
(d) Commencement of offering Class C shares.
(e) Calculated prior to Statement of Position 93-2
adjustments (See Note 1).
(f) Commencement of offering of Class Z shares.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements.
15 -----
<PAGE>
PRUDENTIAL NATURAL
Supplemental Proxy Information RESOURCES
FUND, INC.
- ------------------------------------------------------------
- --------------------
The Annual Meeting of Shareholders of the Prudential
Natural Resources Fund,
Inc. (the ``Fund'') was held on Wednesday, October 30, 1996
at the offices of
Prudential Securities Incorporated, One Seaport Plaza, New
York, New York. The
meeting was held for the following purposes:
(1) To elect Directors as follows: Edward D. Beach, Stephen
C. Eyre, Delayne
Dedrick Gold, Robert F. Gunia, Don G. Hoff, Robert E.
LaBlanc, Mendel A.
Melzer, Richard A. Redeker, Robin B. Smith, Stephen
Stoneburn and Nancy H.
Teeters.
(2) To amend the Fund's fundamental investment restriction
relating to
securities lending.
(3) To ratify the selection of Price Waterhouse LLP as
independent accountants
for the fiscal year ending May 31, 1997.
The results of the proxy solicitation on the above
matters were as follows:
<TABLE>
<CAPTION>
Director/Matter
Votes for Votes against
Abstentions
--
- -------------- ------------- ---
- --------
<S>
<C> <C>
<C>
(1) Edward D. Beach
3,892,431 --
143,274
Stephen C. Eyre
3,902,327 --
133,378
Delayne Dedrick Gold
3,902,151 --
133,554
Robert F. Gunia
3,909,052 --
126,653
Don G. Hoff
3,909,819 --
125,886
Robert E. LaBlanc
3,909,883 --
125,822
Mendel A. Melzer
3,906,748 --
128,957
Richard A. Redeker
3,905,038 --
130,667
Robin B. Smith
3,906,345 --
129,360
Stephen Stoneburn
3,909,396 --
126,309
Nancy H. Teeters
3,897,030 --
138,675
(2) Investment Restrictions-securities lending
2,728,055 159,102
191,356
(3) Independent Auditors
3,863,164 38,241
134,300
</TABLE>
- ------------------------------------------------------------
- --------------------
- ----- 16
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Stephen C. Eyre
Delayne Dedrick Gold
Robert F. Gunia
Don G. Hoff
Robert E. LaBlanc
Mendel A. Melzer
Richard A. Redeker
Robin B. Smith
Stephen Stoneburn
Nancy H. Teeters
Officers
Richard A. Redeker, President
David W. Drasnin, Vice President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
Stephen M. Ungerman, Assistant Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Manager
Prudential Mutual Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributor
Prudential Securities Incorporated
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Auditors
Price Waterhouse 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 November 30,
1996 were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
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