PRUDENTIAL NATURAL RESOURCES FUND INC, N-30D, 2000-02-08

PRUDENTIAL NATURAL RESOURCES FUND INC
N-30D, 2000-02-08

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<PAGE>

(ICON)

Prudential
Natural
Resources
Fund, Inc.

SEMI
ANNUAL
REPORT

Nov. 30, 1999

(LOGO)

<PAGE>

A Message from the Fund's President January 7, 2000
- -------------------------------------------------------------------------------
(PHOTO)

Dear Shareholder,
The Prudential Natural Resources Fund's Class A shares rose 9.62% over the
six-month reporting period ended November 30, 1999. The Fund significantly
outperformed the 0.78% return for the Lipper Natural Resources Fund Average.

Throughout the period, the global economic recovery that began almost a year
ago continued, particularly in Japan and Asia. These economic recoveries have
helped commodity prices rally sharply, which benefited many base metal and
energy stocks, helping the Fund outpace its competitive benchmark. Some
holdings in the Prudential Natural Resources Fund that benefited from the
favorable commodity market were our selection of oil stocks and our platinum
and palladium stocks. These natural resources sectors also experienced
broad-based price increases.

Sector investing may enhance the performance of a diversified portfolio, but it
should be part of a broader asset allocation strategy. Prudential recommends
that shareholders consult with their financial advisors periodically to review
their allocations.

In the following report, Portfolio Manager Leigh Goehring explains why the
Prudential Natural Resources Fund performed so well, why the prospects for its
future are bright, and why it may be an important part of an investor's
portfolio. Thank you for your continued confidence in Prudential mutual funds.

Sincerely,

John R. Strangfeld
President
Prudential Natural Resources Fund, Inc.

<PAGE>

Performance Review
- -------------------------------------------------------------------------------
(PHOTO)

Leigh R. Goehring
Fund Manager

Investment Goals and Style
Prudential Natural Resources Fund seeks long-term growth of capital by
investing primarily 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 nonferrous
metals, strategic metals, hydrocarbons such as oil, gas and coal, and
timberland. 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.

Precious metals
The Fund is heavily invested in the precious metal sector of the natural
resources market, which performed exceptionally well over our six-month
reporting period. Specifically, the Fund benefited greatly from our investment
in stocks of companies in the world platinum market. Two of the three largest
holdings in the Fund--Impala Platinum and Anglo American Platinum--are in this
market. Each company posted healthy returns, and was a main contributor to the
Fund's substantial outperformance over the Lipper Natural Resources Fund
Average.

Prices of the stocks we held in palladium--another precious metal--also rose
during our reporting period. Both platinum and palladium stocks benefited from
the commodity price rally and the continued world economic recovery that took
place during most of 1999.

Gold is back in favor
Global demand for gold remained high throughout our reporting period and, in
fact, its consumption now exceeds its current production. There was a
substantial rally in the price of gold in September 1999 that benefited the
gold stocks the Fund held at that time. Moreover, we have concentrated the
Fund's gold holdings on unhedged gold producers, which were the best-performing
gold stocks in the big rally at the end of September. The price of this
precious metal has finally started to show some renewed strength and promise
after years of suffering, and we feel this could be the beginning of a
prolonged growth cycle in gold stocks.

Energy's strong performance
We have turned more positive on the energy sector of the market since our last
report. We rightly believed that significant increases in the price of oil
would take place during the past six months. The Fund's energy holdings are
concentrated in oil service companies and exploration and production stocks
that performed very well in the rising oil price environment that, in fact, we
had for most of our reporting period. Furthermore, the Fund benefited from the
takeover of one of the largest positions in its portfolio--KN Energy--during
the third quarter of 1999.

<PAGE>

Forest products also helped
The stocks of companies we held in the forest products sector also bolstered
the Fund's return. Specifically, we were invested in the Canadian company
Macmillan Bloedel Ltd.--a fairly substantial holding for the Fund--which
performed extremely well, especially at the beginning of our reporting period.

Looking Ahead
The start of something good
We think that many stocks that have begun to perform well in recent months,
such as our platinum, palladium, gold, and energy stocks, are positioned for
further healthy gains. We especially like, and are bullish on, energy, and now
have more than a 40% weighting in the energy sectors of the market. We are
expecting energy prices to remain strong in the year 2000 as world energy
demands continue to recover from the Asian crisis of 1998. The Fund's energy
holdings are concentrated in oil service and exploration and production stocks.
These stocks should do well in the rising oil and gas price environment we
foresee over the next six months.

Performance at a Glance

Cumulative Total Returns1 As of 11/30/99
<TABLE>
<CAPTION>
Six One Five Ten Since
Months Year Years Years Inception2
<S> <C> <C> <C> <C> <C>
Class A 9.62% 29.16% 56.61% N/A 80.43%
Class B 9.18 28.23 50.89 71.21% 89.58
Class C 9.18 28.23 50.89 N/A 39.88
Class Z 9.81 29.33 N/A N/A 3.65
Lipper Natural Resources Fd. Avg.3 0.84 17.24 37.43 85.16 ***
</TABLE>

Average Annual Total Returns1 As of 12/31/99
<TABLE>
<CAPTION>
One Five Ten Since
Year Years Years Inception2
<S> <C> <C> <C> <C>
Class A 22.71% 8.27% N/A 5.62%
Class B 23.23 8.43 5.53% 5.40
Class C 25.95 8.36 N/A 6.30
Class Z 29.33 N/A N/A 1.12
</TABLE>

Past performance is not indicative of future results. Principal and investment
return will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost.

1 Source: Prudential Investments Fund Management LLC and Lipper Inc. The
cumulative total returns do not take into account sales charges. The average
annual total returns do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 5% for Class A shares. Class B
shares are subject to a declining contingent deferred sales charge (CDSC) of
5%, 4%, 3%, 2%, 1%, and 1% for six years. Class B shares will automatically
convert to Class A shares, on a quarterly basis, approximately seven years
after purchase. Class C shares are subject to a front-end sales charge of 1%
and a CDSC of 1% for 18 months. Class Z shares are not subject to a sales
charge or distribution and service (12b-1) fees.

2 Inception dates: Class A, 1/22/90; Class B, 9/28/87; Class C, 8/1/94; and
Class Z, 9/16/96.

3 Lipper average returns are for all funds in each share class for the
six-month, one-, five-, and ten-year periods in the Natural Resources Fund
category subset, which excludes all funds with a greater than 75% energy
weighting. The Lipper average is unmanaged. Natural Resources funds invest more
than 65% of their assets in natural resources stocks.

***Lipper Since Inception returns are 90.82% for Class A; 100.88% for Class B;
41.73% for Class C; and 0.69% for Class Z, based on all funds in each share
class.
1

<PAGE>

Review Cont'd.
- -------------------------------------------------------------------------------
We are also bullish on, and feel very positive about gold, and look for gold
prices to trade at significantly higher levels over the next six months than
they have done in the recent past. We plan to maintain our present weighting in
gold stocks, and are concentrating on companies that are minimally hedged so
that the Fund fully participates in any further rise in the price of gold. In
addition, we remain extremely upbeat on platinum group metals, and we plan to
maintain our positions in those holdings. Not only are the supply/demand trends
for all platinum group metals extremely positive, but the stocks are still
relatively cheap and offer tremendous upside capital gain potential.

(CHART)

Major trends
- - Prices rising to late 1990
- - USSR collapse: Prices fall to 1993
- - Supply absorbed: Price recovery to 1997
- - Asian economic contraction: Prices fall to 1999
- - Signs of another bottom: January 1999
- - Not yet at pre-1997 levels

The Journal of Commerce Price Index: Metals is an index comprising the
following subcomponents--scrap steel, copper scrap, aluminum, zinc, lead, and
tin.

The chart does not reflect any performance of the Prudential Natural Resources
Fund. Past performance is not indicative of future results. Investors cannot
invest directly in an index.

Source: Prudential Investments and Haver Analytics Research

Five Largest Holdings
Expressed as a percentage of net assets as of 11/30/99
Impala Platinum Hldgs. Ltd. 8.8%
Precious Metals

Stillwater Mining Co. 7.4
Precious Metals

Rustenburg Platinum Hldgs. 5.6
Precious Metals

Newmont Mining Corp. 4.8
Precious Metals

Newfield Exploration 3.4
Oil Services

Portfolio Composition
Expressed as a percentage of net assets as of 11/30/99

Oil & Gas Exploration/Production 23.9%
Platinum 14.4
Gold 14.1
Metals--Nonferrous 13.3
Oil & Gas Services 12.1
Forest Products & Paper 5.6
Investment Companies 4.7
Miscellaneous 11.6
Cash & Equivalents 0.3

2
<PAGE>

Portfolio of Investments as of PRUDENTIAL NATURAL
November 30, 1999 (Unaudited) RESOURCES FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--99.7%
COMMON STOCKS--99.4%
- ------------------------------------------------------------
Australia--2.9%
333,600 Acacia Resources Ltd. $ 601,714
322,700 Anaconda Nickel Ltd.(a) 523,725
251,301 Capral Aluminium Ltd. 319,881
88,550 Comalco Ltd. 450,862
102,800 Delta Gold NL 171,419
20,980 Zimbabwe Platinum Mines Ltd.(a) 9,347
-----------
2,076,948
- ------------------------------------------------------------
Canada--21.1%
70,000 Agnico-Eagle Mines Ltd. 520,014
82,000 Alberta Energy Co., Ltd. 2,392,130
72,400 Anderson Exploration Ltd.(a) 805,536
106,700 Arizona Star Resource Ltd.(a) 70,216
84,100 Atna Resources Ltd.(a) 32,522
315,100 Beau Canada Exploration Ltd.(a) 344,173
155,400 Big Bear Exploration Ltd.(a) 13,705
109,900 Black Hawk Mining, Inc.(a) 4,846
35,400 Cabre Exploration Ltd.(a) 268,982
106,000 Cambior, Inc. 118,657
44,500 Cameco Corp. 671,727
41,700 Canadian Natural Resources Ltd.(a) 943,484
98,700 Crestar Energy, Inc.(a) 1,252,164
21,300 Francisco Gold Corp.(a) 97,541
96,100 Greenstone Resources Ltd.(a) 7,172
178,800 Iamgold - International African
Mining Gold Corp.(a) 406,364
43,400 Inco Ltd. 797,475
62,900 International Pursuit Corp.(a) 8,535
264,100 Kinross Gold Corp.(a) 546,476
105,200 Meridian Gold, Inc.(a) 653,039
89,800 Northrock Resources Ltd.(a) 496,520
73,300 Placer Dome, Inc. 832,954
112,981 Ranger Oil Ltd.(a) $ 375,581
365,575 Repadre Capital Corp.(a) 483,630
139,500 Rio Alto Exploration Ltd.(a) 1,788,704
32,860 Talisman Energy, Inc. 839,360
36,600 Timberwest Forest Ltd.(a) 233,405
207,800 Tiomin Resources, Inc.(a) 77,537
110,500 TVX Gold, Inc. 95,957
-----------
15,178,406
- ------------------------------------------------------------
France--1.3%
23,200 Bouygues S.A. 899,297
- ------------------------------------------------------------
Japan--4.0%
50,000 Globaly Corp. 898,336
47,000 Kobayashi Yoko Co., Ltd. 641,402
128,000 Nihon Unicom Corp. 1,344,656
-----------
2,884,394
- ------------------------------------------------------------
New Zealand--0.3%
595,588 Fletcher Challenge Ltd. 218,593
- ------------------------------------------------------------
South Africa--17.9%
19,776 Anglogold Ltd. 1,008,326
400,500 Avgold Ltd.(a) 262,549
29,000 Durban Roodepoort Deep Ltd.(a) 52,574
34,076 Gold Fields Ltd. (ADR)(a) 151,212
83,600 Harmony Gold Mining Co., Ltd.(a) 541,275
38,200 Harmony Gold Mining Co., Ltd. (ADR) 248,300
173,500 Impala Platinum Holdings Ltd. 6,318,792
119,100 Randgold & Exploration Co., Ltd.(a) 123,380
134,700 Rustenburg Platinum Holdings(a) 4,033,587
57,300 Western Areas Gold Mining Co., Ltd 146,543
-----------
12,886,538
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>

Portfolio of Investments as of PRUDENTIAL NATURAL
November 30, 1999 (Unaudited) RESOURCES FUND, INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United States--51.9%
189,400 Apex Silver Mines Ltd.(a) $ 2,249,125
65,500 BJ Services Co.(a) 2,284,312
50,700 Boise Cascade Corp. 1,755,488
21,300 Brigham Exploration Co.(a) 22,631
22,650 Burlington Resources, Inc. 761,606
32,700 Champion International Corp. 1,812,806
47,350 Cross Timbers Oil Co. 482,378
35,100 Devon Energy Corp. 1,237,275
89,822 Dynegy, Inc. 2,020,995
104,700 Freeport-McMoRan Copper & Gold Inc.,
Class A(a) 1,419,994
22,400 FX Energy, Inc.(a) 121,800
63,000 Golden Star Resources Ltd.(a) 63,000
183,100 Kaiser Aluminum Corp. 1,213,038
102,100 Kinder Morgan, Inc. 2,073,906
32,300 Marine Drilling Co., Inc.(a) 545,063
69,600 Maverick Tube Corp. 1,496,400
29,900 Miller Exploration Co.(a) 37,375
94,100 Newfield Exploration Co.(a) 2,428,956
147,211 Newmont Mining Corp. 3,487,061
31,600 Noble Affiliates, Inc. 695,200
47,100 Nuevo Energy Co.(a) 727,106
22,200 Pennaco Energy, Inc. 213,675
76,086 Pioneer Natural Resources Co. 632,465
57,000 Smith International, Inc.(a) 2,272,875
218,600 Stillwater Mining Co.(a) 5,301,050
8,500 Stolt Comex Seaway S.A.(a) 99,875
32,200 Swift Energy Co.(a) 358,225
67,200 Transcoastal Marine Services, Inc.(a) 220,500
123,500 Western Gas Resources, Inc. 1,397,094
-----------
37,431,274
-----------
Total common stocks
(cost US$68,176,284) 71,575,450
-----------
- ------------------------------------------------------------
WARRANTS
- ------------------------------------------------------------
Canada
120,800 Kap Resources Ltd.,
Expiring 8/3/00 @ CAD $2 $ 820
South Africa
19,342 Durban Roodepoort Deep Ltd.
Expiring 6/30/02 @ ZAR $6,000 $ 9,236
9,998 Randfontein Estates Ltd.
Expiring 7/1/02 @ ZAR $2,500 2,508
-----------
11,744
- ------------------------------------------------------------
United States
75,000 Apex Silver Mines Ltd.
Expiring 1/4/02 0
-----------
Total warrants
(cost US$81,640) 12,564
-----------
Principal Amount
(000)
CONVERTIBLE BONDS--0.3%
- ------------------------------------------------------------
United States
$ 300 Randgold Finance BVI Ltd.,
Sec'd. Gtd.,
7.50%, 9/30/01
(cost US$300,350) 217,500
-----------
Total long-term investments
(cost US$68,558,274) 71,805,514
-----------
Total Investments--99.7%
(cost US$68,558,274; Note 4) $71,805,514
Other assets in excess of
liabilities--0.3% 215,016
-----------
Net Assets--100% $72,020,530
-----------
-----------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
PRUDENTIAL NATURAL
RESOURCES FUND, INC.
Portfolio of Investments as of November 30, 1999
(Unaudited)
- ------------------------------------------------------------

The industry classification of portfolio holdings shown as a percentage of net
assets as of November 30, 1999 was as follows:

<TABLE>
<CAPTION>
<S> <C>
Oil & Gas Exploration/Production...................... 23.9%
Platinum.............................................. 14.4
Gold.................................................. 14.1
Metals - Non Ferrous.................................. 13.3
Oil & Gas Services.................................... 12.1
Forest Products & Paper............................... 5.6
Investment Companies.................................. 4.7
Pipelines............................................. 4.0
Silver................................................ 3.1
Aluminum.............................................. 1.7
Engineering & Construction............................ 1.6
Oil & Gas Drilling.................................... 0.8
Precious Metals....................................... 0.3
Mineral Resources..................................... 0.1
-----
99.7
Other assets in excess of liabilities 0.3
-----
100.0%
-----
-----
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>

Statement of Assets and Liabilities PRUDENTIAL NATURAL
(Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets November 30, 1999
<S> <C>
Investments, at value (cost $68,558,274)................................................................ $71,805,514
Foreign currency, at value (cost $634,638).............................................................. 629,745
Cash.................................................................................................... 31,304
Receivable for Fund shares sold......................................................................... 24,849
Dividends and interest receivable....................................................................... 17,245
Receivable for investments sold......................................................................... 14,487
Prepaid expenses and other assets....................................................................... 2,486
-----------------
Total assets......................................................................................... 72,525,630
-----------------
Liabilities
Payable for Fund shares reacquired...................................................................... 213,895
Accrued expenses........................................................................................ 179,842
Management fee payable.................................................................................. 46,490
Distribution fee payable................................................................................ 44,248
Payable for investments purchased....................................................................... 20,625
-----------------
Total liabilities.................................................................................... 505,100
-----------------
Net Assets.............................................................................................. $72,020,530
-----------------
-----------------
Net assets were comprised of:
Common stock, at par................................................................................. $ 61,169
Paid-in capital in excess of par..................................................................... 78,925,077
-----------------
78,986,246
Accumulated net investment loss...................................................................... (253,061)
Accumulated net realized loss on investments......................................................... (9,954,446)
Net unrealized depreciation on investments and foreign currencies.................................... 3,241,791
-----------------
Net assets, November 30, 1999........................................................................... $72,020,530
-----------------
-----------------
Class A:
Net asset value and redemption price per share
($24,332,225 / 1,959,387 shares of common stock issued and outstanding)........................... $12.42
Maximum sales charge (5% of offering price).......................................................... .65
Maximum offering price to public..................................................................... $13.07
Class B:
Net asset value, offering price and redemption price per share
($43,694,631 / 3,825,466 shares of common stock issued and outstanding)........................... $11.42
Class C:
Net asset value and redemption price per share
($1,734,755 / 151,879 shares of common stock issued and outstanding).............................. $11.42
Sales charge (1% of offering price).................................................................. .12
Offering price to public............................................................................. $11.54
Class Z:
Net asset value, offering price and redemption price per share
($2,258,919 / 180,180 shares of common stock issued and outstanding).............................. $12.54
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>

PRUDENTIAL NATURAL
RESOURCES FUND, INC.
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
November 30,
Net Investment Income Loss 1999
<S> <C>
Income
Dividends (net of foreign withholding taxes
of $13,489)............................... $ 515,631
Interest..................................... 13,865
------------
Total income.............................. 529,496
------------
Expenses
Management fee............................... 290,693
Distribution fee--Class A.................... 32,987
Distribution fee--Class B.................... 234,699
Distribution fee--Class C.................... 9,161
Custodian's fees and expenses................ 74,000
Transfer agent's fees and expenses........... 70,000
Reports to shareholders...................... 18,000
Audit fee and expenses....................... 16,000
Directors' fees.............................. 12,000
Legal fees and expenses...................... 4,000
Miscellaneous................................ 68
------------
Total expenses............................ 761,608
------------
Net investment loss............................. (232,112)
------------
Realized and Unrealized Gain (Loss)
on Investments and Foreign
Currency Transactions
Net realized loss on:
Investment transactions...................... (1,805,304)
Foreign currency transactions................ (19,942)
------------
(1,825,246)
------------
Net change in unrealized appreciation on:
Investments.................................. 8,702,873
Foreign currencies........................... 2,003
------------
8,704,876
------------
Net gain on investments and foreign
currencies................................... 6,879,630
------------
Net Increase in Net Assets
Resulting from Operations....................... $ 6,647,518
------------
------------
</TABLE>

PRUDENTIAL NATURAL
RESOURCES FUND, INC.
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------

<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) in November 30, May 31,
Net Assets 1999 1999
<S> <C> <C>
Operations
Net investment loss.......... $ (232,112) $ (765,385)
Net realized loss on
investment and foreign
currency transactions..... (1,825,246) (7,659,139)
Net change in unrealized
appreciation on
investments and foreign
currencies................ 8,704,876 6,024,270
----------------- ------------
Net increase (decrease) in
net assets resulting from
operations................ 6,647,518 (2,400,254)
----------------- ------------
Distributions in excess of net
realized gains (Note 1)
Class A...................... -- (1,117,960)
Class B...................... -- (2,576,494)
Class C...................... -- (80,678)
Class Z...................... -- (59,197)
----------------- ------------
-- (3,834,329)
----------------- ------------
Fund share transactions (net of
share conversions) (Note 5)
Proceeds from shares sold.... 12,051,398 24,126,685
Net asset value of shares
issued in reinvestment of
distributions............. -- 3,391,302
Cost of shares reacquired.... (18,339,302) (48,747,757)
----------------- ------------
Net decrease in net assets
from Fund share
transactions.............. (6,287,904) (21,229,770)
----------------- ------------
Total increase (decrease)....... 359,614 (27,464,353)
Net Assets
Beginning of period............. 71,660,916 99,125,269
----------------- ------------
End of period................... $ 72,020,530 $ 71,660,916
----------------- ------------
----------------- ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>

Notes to Financial Statements PRUDENTIAL NATURAL
(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 securities of foreign and domestic
companies that own, explore, mine, process or otherwise develop, or provide
goods and services with respect to, natural resources and in securities the
terms of which are related to the market value of a natural resource.

- ------------------------------------------------------------
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 and NASDAQ National Market
System are valued at the last sale price on such exchange system or, if there
was no sale on such day, at the mean between the last bid and asked prices, or
at the bid price in the absence of an asked price. Corporate bonds (other than
convertible) and U.S. government securities are valued on the basis of
valuations provided by an independent pricing agent or principal market maker.
Convertible debt securities are valued at the mean between the last reported bid
and asked prices provided by principal market makers. Options are valued at the
mean between the most recently quoted bid and asked prices on the exchange on
which they are traded. Futures contracts and options thereon are valued at their
last sale prices as of the close of trading on the applicable commodities
exchange. Securities for which reliable market quotations are not readily
available are valued by the Valuation Committee or Board of Directors in
consultation with the manager or subadvisor.

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.

Repurchase Agreements: 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 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 securities held at the period-end. Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from the fluctuations
arising from changes in the market prices of long-term portfolio securities sold
during the period. Accordingly, these realized foreign currency gains (losses)
are included in the reported net realized gain (loss) on investment
transactions.

Net realized gain (loss) on foreign currency transactions 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 period-end exchange rates are reflected as a component of net
unrealized depreciation on investments and 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
foreign 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.
- --------------------------------------------------------------------------------
8

<PAGE>

Notes to Financial Statements PRUDENTIAL NATURAL
(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, capital gains and dividends have been
provided for in accordance with the Fund's understanding of the applicable
country's tax rules and rates.

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. 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 foreign investment companies'
transactions.

Reclassification of Capital Accounts: The Fund accounts for and reports
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 increase accumulated net investment loss and decrease
accumulated net realized loss on investments by $19,942 for realized foreign
currency losses during the six months ended November 30, 1999. 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 Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM 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. PIFM 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 PIFM is computed daily and payable monthly, at an annual
rate of .75 of 1% of the Fund's average daily net assets.

The Fund has a distribution agreement with Prudential Investment Services LLC
('PIMS'), which acts as the distributor of the Class A, Class B, Class C and
Class Z shares of the Fund. The Fund compensates PIMS for distributing and
servicing the Fund's Class A, Class B and Class C shares, pursuant to plans of
distribution, (the 'Class A, B and C Plans') regardless of expenses actually
incurred by them. The distribution fees are accrued daily and payable monthly.
No distribution or service fees are paid to PIMS as distributor of the Class Z
shares of the Fund.

Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for 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, 1999.

PIMS has advised the Fund that it has received approximately $11,300 and $900 in
front-end sales charges resulting from sales of Class A and Class C shares,
respectively, during the six months ended November 30, 1999. From these fees,
PIMS paid such sales charges to dealers which in turn paid commissions to
salespersons and incurred other distribution costs.

PIMS has advised the Fund that for the six months ended November 30, 1999, it
received approximately $61,100 and $400 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.

PIFM, PIC and PIMS are wholly owned subsidiaries of The Prudential Insurance
Company of America.

As of March 11, 1999, the Fund, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. Interest on any borrowings will be at market rates. The Funds pay a
commitment fee at an annual rate of .065 of 1% on the unused portion of the
credit facility, which is accrued and paid quarterly on a pro rata basis by the
Funds. The SCA expires on March 9, 2000. The Fund did not borrow any amounts
pursuant to the agreement during the six months ended November 30, 1999. The
purpose
- --------------------------------------------------------------------------------
9

<PAGE>

- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent and during the six months ended November 30,
1999, the Fund incurred fees of approximately $69,300 for the services of PMFS.
As of November 30, 1999, approximately $11,400 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 nonaffiliates.

- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended November 30, 1999 aggregated $9,999,954 and
$16,828,021, respectively.

The federal income tax basis of the Fund's investments at November 30, 1999 was
$68,571,039 and accordingly, net unrealized depreciation for federal income tax
purposes was $3,234,475 (gross unrealized appreciation--$21,068,419 gross
unrealized depreciation--$17,833,944).

For federal income tax purposes, the Fund had a capital loss carryforward as of
May 31, 1999 of approximately $7,114,200 which expires in 2007. Accordingly, no
capital gain distribution is expected to be paid to shareholders until net gains
have been realized in excess of this amount. In addition, the Fund elected to
treat net capital losses of approximately $4,705,600 incurred in the seven month
period ended May 31, 1999 as having occurred in the current fiscal year.

- ------------------------------------------------------------
Note 5. 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 front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. A special exchange
privilege is also available for shareholders who qualify to purchase Class A
shares at net asset value. 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.

Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Six months ended November 30, 1999:
Shares sold........................ 453,185 $ 5,861,403
Shares reacquired.................. (702,369) (8,841,298)
---------- ------------
Net decrease in shares outstanding
before conversion................ (249,184) (2,979,895)
Shares issued upon conversion from
Class B.......................... 96,020 1,212,562
---------- ------------
Net decrease in shares
outstanding...................... (153,164) $ (1,767,333)
---------- ------------
---------- ------------
Year ended May 31, 1999:
Shares sold........................ 595,520 $ 6,039,951
Shares issued in reinvestment of
distributions.................... 117,039 1,054,518
Shares reacquired.................. (1,206,598) (12,234,768)
---------- ------------
Net decrease in shares outstanding
before conversion................ (494,039) (5,140,299)
Shares issued upon conversion from
Class B.......................... 169,618 1,677,347
---------- ------------
Net decrease in shares
outstanding...................... (324,421) $ (3,462,952)
---------- ------------
---------- ------------
<CAPTION>
Class B
- -----------------------------------
<S> <C> <C>
Six months ended November 30, 1999:
Shares sold........................ 345,576 $ 4,067,846
Shares reacquired.................. (674,737) (7,871,003)
---------- ------------
Net decrease in shares outstanding
before conversion................ (329,161) (3,803,157)
Shares reacquired upon conversion
into Class A..................... (104,141) (1,212,562)
---------- ------------
Net decrease in shares
outstanding...................... (433,302) $ (5,015,719)
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
10

<PAGE>

Notes to Financial Statements PRUDENTIAL NATURAL
(Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Year ended May 31, 1999:
Shares sold........................ 649,331 $ 6,053,519
Shares issued in reinvestment of
distributions.................... 264,592 2,209,341
Shares reacquired.................. (2,613,295) (24,183,084)
---------- ------------
Net decrease in shares outstanding
before conversion................ (1,699,372) (15,920,224)
Shares reacquired upon conversion
into Class A..................... (182,448) (1,677,347)
---------- ------------
Net decrease in shares
outstanding...................... (1,881,820) $(17,597,571)
---------- ------------
---------- ------------
<CAPTION>
Class C
- -----------------------------------
<S> <C> <C>
Six months ended November 30, 1999:
Shares sold........................ 24,490 $ 283,713
Shares reacquired.................. (22,582) (264,790)
---------- ------------
Net increase in shares
outstanding...................... 1,908 $ 18,923
---------- ------------
---------- ------------
Year ended May 31, 1999:
Shares sold........................ 52,891 $ 495,995
Shares issued in reinvestment of
distributions.................... 8,206 68,521
Shares reacquired.................. (80,079) (735,284)
---------- ------------
Net decrease in shares
outstanding...................... (18,982) $ (170,768)
---------- ------------
---------- ------------
<CAPTION>
Class Z
- -----------------------------------
<S> <C> <C>
Six months ended November 30, 1999:
Shares sold........................ 144,217 $ 1,838,436
Shares reacquired.................. (106,726) (1,362,211)
---------- ------------
Net increase in shares
outstanding...................... 37,491 $ 476,225
---------- ------------
---------- ------------
Year ended May 31, 1999:
Shares sold........................ 992,042 $ 11,537,220
Shares issued in reinvestment of
distributions.................... 6,482 58,922
Shares reacquired.................. (1,005,635) (11,594,621)
---------- ------------
Net decrease in shares
outstanding...................... (7,111) $ 1,521
---------- ------------
---------- ------------
</TABLE>
- --------------------------------------------------------------------------------
11

<PAGE>

Financial Highlights (Unaudited) PRUDENTIAL NATURAL
(Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------
Six months
ended Year Ended May 31,
November 30, -------------------------------------------------------
1999(a) 1999(a) 1998(a) 1997(a) 1996 1995(a)
------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 11.33 $ 11.69 $ 16.27 $ 17.34 $ 13.73 $ 12.55
------ ------- ------- ------- ------- -------
Income from investment operations
Net investment loss..................... (.01) (.05) (.08) (.07) (.01) (.03)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... 1.10 .20 (2.33) .94 4.42 1.21
------ ------- ------- ------- ------- -------
Total from investment operations..... 1.09 .15 (2.41) .87 4.41 1.18
------ ------- ------- ------- ------- -------
Less distributions
Distributions from net realized gains on
investment and foreign currency
transactions......................... -- -- (2.17) (1.94) (.80) --
Distributions in excess of net realized
gains on investment and foreign
currency transactions................ -- (.51) -- -- -- --
------ ------- ------- ------- ------- -------
Total distributions..................... -- (.51) (2.17) (1.94) (.80) --
------ ------- ------- ------- ------- -------
Net asset value, end of period.......... $ 12.42 $ 11.33 $ 11.69 $ 16.27 $ 17.34 $ 13.73
------ ------- ------- ------- ------- -------
------ ------- ------- ------- ------- -------
TOTAL RETURN(b):........................ 9.62% 2.41% (14.41)% 5.37% 33.51% 9.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $ 24,332 $23,930 $28,491 $47,054 $32,608 $19,682
Average net assets (000)................ $ 26,389 $22,683 $37,933 $40,393 $23,106 $10,791
Ratios to average net assets:
Expenses, including distribution
fees.............................. 1.50%(c) 1.79% 1.55% 1.48% 1.57% 1.73%
Expenses, excluding distribution
fees.............................. 1.25%(c) 1.54% 1.30% 1.23% 1.32% 1.48%
Net investment loss..................... (.12)%(c) (.53)% (.54)% (.43)% (.09)% (.25)%
For Class A, B, C and Z shares:
Portfolio turnover...................... 13% 16% 25% 53% 41% 36%
</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 year reported and includes reinvestment of distributions.
Total returns for periods of less than a full year are not annualized.
(c) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12

<PAGE>

Financial Highlights PRUDENTIAL NATURAL
(Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B
--------------------------------------------------------------------------
Six months
ended Year Ended May 31,
November 30, ---------------------------------------------------------
1999(a) 1999(a) 1998(a) 1997(a) 1996 1995(a)
------------ ------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 10.46 $ 10.92 $ 15.46 $ 16.70 $ 13.35 $ 12.29
------ ------- ------- -------- -------- -------
Income from investment operations
Net investment loss..................... (.05) (.12) (.17) (.19) (.10) (.13)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... 1.01 .17 (2.20) .89 4.25 1.19
------ ------- ------- -------- -------- -------
Total from investment operations..... .96 .05 (2.37) .70 4.15 1.06
------ ------- ------- -------- -------- -------
Less distributions
Distributions from net realized gains on
investment and foreign currency
transactions......................... -- -- (2.17) (1.94) (.80) --
Distributions in excess of net realized
gains on investment and foreign
currency transactions................ -- (.51) -- -- -- --
------ ------- ------- -------- -------- -------
Total distributions..................... -- (.51) (2.17) (1.94) (.80) --
------ ------- ------- -------- -------- -------
Net asset value, end of period.......... $ 11.42 $ 10.46 $ 10.92 $ 15.46 $ 16.70 $ 13.35
------ ------- ------- -------- -------- -------
------ ------- ------- -------- -------- -------
TOTAL RETURN(b):........................ 9.18% 1.64% (14.96)% 4.51% 32.49% 8.62%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $ 43,695 $44,533 $67,029 $111,464 $113,090 $80,774
Average net assets (000)................ $ 46,940 $48,644 $86,864 $107,361 $ 84,396 $74,681
Ratios to average net assets:
Expenses, including distribution
fees.............................. 2.25%(c) 2.54% 2.30% 2.23% 2.32% 2.48%
Expenses, excluding distribution
fees.............................. 1.25%(c) 1.54% 1.30% 1.23% 1.32% 1.48%
Net investment loss..................... (.89)%(c) (1.28)% (1.28)% (1.18)% (.84)% (1.05)%
</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 year reported and includes reinvestment of distributions.
Total returns for periods of less than a full year are not annualized.
(c) Annualized.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13

<PAGE>

Financial Highlights PRUDENTIAL NATURAL
(Unaudited) RESOURCES FUND, INC.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C
--------------------------------------------------------------------------
August 1,
Six months 1994(d)
ended Year Ended May 31, Through
November 30, ------------------------------------------ May 31,
1999(a) 1999(a) 1998(a) 1997(a) 1996 1995(a)
------------ ------- ------- ------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $10.46 $10.92 $15.46 $16.70 $13.35 $12.47
----- ------- ------- ------- ------ -----
Income from investment operations
Net investment loss..................... (.05) (.12 ) (.18 ) (.19 ) (.10) (.13)
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions......................... 1.01 .17 (2.19 ) .89 4.25 1.01
----- ------- ------- ------- ------ -----
Total from investment operations..... .96 .05 (2.37 ) .70 4.15 .88
----- ------- ------- ------- ------ -----
Less distributions
Distributions from net realized gains on
investment and foreign currency
transactions......................... -- -- (2.17 ) (1.94 ) (.80) --
Distributions in excess of net realized
gains on investment and foreign
currency transactions................ -- (.51 ) -- -- -- --
----- ------- ------- ------- ------ -----
Total distributions..................... -- (.51 ) (2.17 ) (1.94 ) (.80) --
----- ------- ------- ------- ------ -----
Net asset value, end of period.......... $11.42 $10.46 $10.92 $15.46 $16.70 $13.35
----- ------- ------- ------- ------ -----
TOTAL RETURN(b):........................ 9.18% 1.64 % (14.96 )% 4.51 % 32.49% 7.06%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)......... $1,735 $1,568 $1,844 $2,542 $1,551 $606
Average net assets (000)................ $1,832 $1,490 $2,060 $2,041 $734 $294
Ratios to average net assets:
Expenses, including distribution
fees.............................. 2.25%(c) 2.54 % 2.30 % 2.23 % 2.32% 2.56%(c)
Expenses, excluding distribution
fees.............................. 1.25%(c) 1.54 % 1.30 % 1.23 % 1.32% 1.56%(c)
Net investment loss..................... (.88)%(c) (1.28 )% (1.35 )% (1.18 )% (.84)% (1.08)%(c)
</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 distributions.
Total returns for periods of less than a full year are not annualized.
(c) Annualized.
(d) Commencement of offering Class C shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14

<PAGE>

- ---------------
(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 distributions.
Total returns for periods of less than a full year are not annualized.
(c) Annualized.
(d) Commencement of offering of Class Z shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 15

<PAGE>

Getting the Most from Your Prudential Mutual Fund
How many times have you read these reports--or other financial materials--and
stumbled across a word that you don't understand?

Many shareholders have run into the same problem. We'd like to help. So we'll
use this space from time to time to explain some of the words you might have
read, but not understood. And if you have a favorite word that no one can
explain to your satisfaction, please write to us.

Basis Point: 1/100th of 1%. For example, one-half of one percent is 50 basis
points.

Collateralized Mortgage Obligations (CMOs): Mortgage-backed bonds that separate
mortgage pools into different maturity classes, called tranches. These
instruments are sensitive to changes in interest rates and homeowner
refinancing activity. They are subject to prepayment and maturity extension
risk.

Derivatives: Securities that derive their value from other securities. The rate
of return of these financial instruments rises and falls--sometimes very
suddenly--in response to changes in some specific interest rate, currency,
stock, or other variable.

Discount Rate: The interest rate charged by the Federal Reserve on loans to
member banks.

Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.

Futures Contract: An agreement to purchase or sell a specific amount of a
commodity or financial instrument at a set price at a specified date in the
future.

Leverage: The use of borrowed assets to enhance return. The expectation is that
the interest rate charged on borrowed funds will be lower than the return on
the investment. While leverage can increase profits, it can also magnify
losses.

Liquidity: The ease with which a financial instrument (or product) can be
bought or sold (converted into cash) in the financial markets.

Price/Earnings Ratio: The price of a share of stock divided by the earnings
per share for a 12-month period.

Option: An agreement to purchase or sell something, such as shares of stock,
by a certain time for a specified price. An option need not be exercised.

Spread: The difference between two values; often used to describe the
difference between "bid" and "asked" prices of a security, or between the
yields of two similar maturity bonds.

Yankee Bond: A bond sold by a foreign company or government in the U.S. market
and denominated in U.S. dollars.

<PAGE>

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

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

Directors
Delayne Dedrick Gold
Robert F. Gunia
Robert E. LaBlanc
David R. Odenath, Jr.
Robin B. Smith
Stephen Stoneburn
John R. Strangfeld
Nancy H. Teeters
Clay T. Whitehead

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Robert C. Rosselot, Secretary
Stephen M. Ungerman, Assistant Treasurer

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

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

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

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

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

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

Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004

Prudential Investments is a unit of The Prudential Insurance Company of
America, 751 Broad Street, Newark, NJ 07102.

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, 1999, were not audited
and, accordingly, no opinion is expressed on them.

This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.

<PAGE>

(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852

BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY

Class NASDAQ Cusip
A PGNAX 743970105
B PRGNX 743970204
C -- 743970303
Z -- 743970402 MF135E2