-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EvHd81Lz5mcZDV9b/X1DFU5r3+aGMqcZuHGi0ajRguc0FoRHakLpqRqWs68VQxca cGFdBZjnCthiWphWUisDug== 0000898733-02-000601.txt : 20020930 0000898733-02-000601.hdr.sgml : 20020930 20020930120613 ACCESSION NUMBER: 0000898733-02-000601 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020731 FILED AS OF DATE: 20020930 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STRATEGIC PARTNERS ASSET ALLOCATION FUNDS CENTRAL INDEX KEY: 0001067442 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-08915 FILM NUMBER: 02775904 BUSINESS ADDRESS: STREET 1: GATEWAY CENTER THREE STREET 2: 100 MULBERRY STREET CITY: NEWARK STATE: NJ ZIP: 07102 BUSINESS PHONE: 9733671495 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL DIVERSIFIED SERIES DATE OF NAME CHANGE: 19980803 FORMER COMPANY: FORMER CONFORMED NAME: PRUDENTIAL DIVERSIFIED FUNDS DATE OF NAME CHANGE: 19980930 N-30D 1 mf15679.txt ASSET ALLOCATION FUNDS -- 9/30/02 ANNUAL REPORT JULY 31, 2002 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS STRATEGIC PARTNERS CONSERVATIVE GROWTH FUND Objective: Seeks Current Income and a Reasonable Level of Capital Appreciation This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. 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. Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Performance at a Glance INVESTMENT GOALS AND STYLE The Strategic Partners Conservative Growth Fund's investment objective is current income and a reasonable level of capital appreciation. The Fund is designed for investors who want investment professionals to make their asset allocation decisions, that is, it invests in a diversified portfolio of fixed income securities and stocks. The Fund is periodically rebalanced in accordance with its asset allocation strategy. There can be no assurance that the Fund will achieve its investment objective. ABSOLUTE AND RELATIVE PERFORMANCE We evaluate an investment's performance in two ways. The first considers how much more (or less) an investment is worth at the end of a reporting period. This is known as absolute performance. The second compares whether you did better (or worse) than the market average (the benchmark index) or the average return of comparable funds (the Lipper Average) regardless of your gain or loss. This is called relative performance. Three factors determine the absolute return of an asset allocation fund: the asset allocation, the benchmark return for each asset class, and the relative performance of the fund's holdings in each asset class compared to its benchmark index for that class. If, for example, your fund has a substantial allocation to small-cap stocks, its absolute return will depend on how well small-cap stocks perform in general. It will also depend on the relative performance of the investment advisers for the different asset classes. The fund's return is higher when the advisers outperform their benchmarks than when they underperform them. This "adviser contribution" has a greater impact in the asset classes with larger allocations. This is why, in the discussion of the performance of your Strategic Partners Asset Allocation Fund, we may say, for example, that the Fund's large allocation to a low-performing asset class hurt its return, even though the advisers' relative performance had a positive impact. www.strategicpartners.com (800) 225-1852 Annual Report July 31, 2002 Cumulative Total Returns1 As of 7/31/02 One Year Since Inception2 Class A -9.10% 8.05% Class B -9.81 5.14 Class C -9.81 5.14 Class Z -8.87 9.00 Lipper Balanced Funds Avg.3 -12.82 -1.77 S&P 500 Index4 -23.62 -17.89 Average Annual Total Returns1 As of 6/30/02 One Year Since Inception2 Class A -8.73% 2.13% Class B -9.33 2.33 Class C -6.56 2.52 Class Z -3.69 3.82 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 Investments 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. Without the distribution and service (12b-1) fee waiver for Class A shares, the returns would have been lower. 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 the first six years respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares, on a quarterly basis. Class C shares are subject to a front- end sales charge of 1% and a CDSC of 1% for shares redeemed within 18 months of purchase. Class Z shares are not subject to a sales charge or distribution and service (12b-1) fees. The cumulative and average annual total returns in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. 2Inception date: Class A, B, C, and Z, 11/18/98. 3The Lipper Average is unmanaged, and is based on the average return for all funds in each share class for the one-year and since inception periods in the Lipper Balanced Funds category. Funds in the Lipper Balanced Funds Average conserve principal by maintaining at all times a balanced portfolio of both stocks and bonds. Typically, the stock/bond ratio ranges around 60%/40%. 4The Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. Investors cannot invest directly in an index. The returns for the Lipper Average and S&P 500 Index would be lower if they included the effect of sales charges, operating expenses, or taxes. 1 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS September 16, 2002 DEAR SHAREHOLDER, The events of the past 12 months--economic recession, accounting and corporate governance scandals, terrorist attacks, turbulence in the Middle East, and fear that economic recovery will be slow--have shaken the confidence of many investors. In times like these, we believe the Strategic Partners Asset Allocation Funds are particularly appealing. Markets can move very quickly, and investors who have tried to time shifts from one asset class to another have generally not helped their long-term returns. The preferred conservative approach is to have an asset allocation target that suits your personal investment goals, time horizon, and tolerance for volatility, and then to avoid being pressured to change it by current events. When the various asset classes perform in dramatically different ways, as they have been doing over the past several years, your Strategic Partners Conservative Growth Fund's rebalancing discipline will not only maintain your target allocation, but it may also enhance your return somewhat as it maneuvers to stay on course. With Strategic Partners mutual funds, you have the added comfort of knowing that our Strategic Investment Research Group regularly monitors the funds' investment advisers for consistent adherence to their style objectives, as well as for changes in practices or personnel that might affect their performance. During this reporting period, for example, we changed the adviser for the funds' small/mid-cap value stocks. In the following pages, we explain the Strategic Partners Conservative Growth Fund's loss and its outperformance of its benchmark over this reporting period. We appreciate your confidence in Strategic Partners mutual funds through these difficult times. Sincerely, David R. Odenath, Jr., President Strategic Partners Asset Allocation Funds 2 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Annual Report July 31, 2002 INVESTMENT ADVISERS' REPORT AN EVENTFUL FISCAL YEAR The 12 months ended July 31, 2002, included a series of unexpected events of historical importance. The reporting period began in the middle of a very steep stock market decline as investors digested the signs that the U.S. economy was contracting. Expectations and share prices had previously been raised by the longest period of continuous economic growth in U.S. history. Not long into the reporting period, investors' expectations were jarred again by the first external attack on the United States since World War II. In response to both the economic slowdown and the terrorist shock, the Federal Reserve began to drive down interest rates very aggressively, pushing short-term rates to their lowest level in 40 years. The European and United Kingdom Central Banks also reduced interest rates. Investors expected the low interest rates to trigger an economic recovery, which it did, pushing share prices higher in the fourth quarter of 2001. During that brief wave of optimism, growth stocks responded most vigorously. Then the record for the largest bankruptcy in U.S. history was broken twice in short order by Enron and WorldCom. A leading accounting firm and several large, respected companies were involved in a string of accounting scandals and restatements of financial reports. Many investors lost confidence in the accuracy of audited financial reports and once again turned away from equity investments and toward bonds, cash, real estate, and gold. In addition, during the first half of 2002, the U.S. dollar began a long- predicted correction of its overvaluation against other currencies. The string of confidence-rattling issues did not go unaddressed. Accounting firms, Congress, the Securities and Exchange Commission (SEC), the New York Stock Exchange, and several corporations took steps to restore the credibility of financial reporting. These steps included measures to remove even the appearance of conflicts of interest by auditors and securities 3 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Annual Report July 31, 2002 analysts, tighter standards for the independence of corporate directors from management, more detailed financial reports, and a requirement that corporate CEOs and CFOs take personal legal responsibility for the accuracy of their firms' financial statements. In the United States, the only sectors to show rising net share prices over the period were large-cap consumer staples, buoyed by the continuing strength of consumer spending, and small-cap financial services, driven by continued consumer borrowing for houses, autos, and other goods. Since the issues that affected equity investing concerned the pace of economic and earnings growth and the reliability of future earnings estimates, growth stocks fared worse. Both large-cap and small-cap growth stocks had a dismal 12 months. The depressed level of spending on technology upgrades kept both large-cap and small-cap technology stocks at or near the bottom of the market with sector average stock declines greater than 40%. Enron's bankruptcy caused a retreat from industries that were very dependent upon debt financing, including energy utilities, and cable systems. Investors also moved away from large companies whose financial statements were complicated because they had grown through many acquisitions. Even such respected firms as General Electric (GE) and American International Group (AIG) saw their share prices drop sharply. Losses were more moderate in the large- and small-cap materials and processing sectors. The materials industries have gone through a period of consolidation and cost cutting, and were expected to benefit from an economic recovery. Gold mining companies also benefited from the political and economic uncertainty and the dollar's decline, all of which increased demand for gold. Small-cap value stocks were the best-performing equity class, although even they fell over the period. The profits of small companies usually respond more emphatically to changes in economic activity. In fact, in the last quarter of 2001 and the first half of 2002, the earnings of small-cap companies 4 www.strategicpartners.com (800) 225-1852 Annual Report July 31, 2002 Asset Class Index Returns As of 7/31/02 (GRAPH) Source: Prudential Investments LLC and Lipper Inc. The performance cited does not represent the performance of any of the Strategic Partners Asset Allocation Funds. Past performance is not indicative of future results. Investors cannot invest directly in an index. The Russell 1000 Value Index comprises those securities in the Russell 1000 Index with a less-than-average growth orientation. Companies in this index generally have low price-to-book and price/earnings ratios, higher dividend yields, and lower forecasted growth values. The Russell 1000 Growth Index comprises those securities in the Russell 1000 Index with a greater-than-average growth orientation. Companies in this index tend to exhibit higher price-to-book and price/earnings ratios, lower dividend yields, and higher forecasted growth rates. The Russell 2000 Value Index is an unmanaged, weighted index that measures the performance of those Russell 2000 companies with lower price- to-book ratios. The Russell 2000 Growth Index is an unmanaged, weighted index that measures the performance of those Russell 2000 companies with higher price- to-book ratios. The Lehman Brothers Aggregate Bond Index is an unmanaged index of investment-grade securities issued by the U.S. government and its agencies, and by corporations with between 1 and 10 years remaining to maturity. The Lehman Brothers Aggregate Bond Index gives a broad look at how short- and intermediate-term bonds have performed. The Lehman Brothers U.S. Corporate High Yield Index is an unmanaged index of fixed-rate, noninvestment-grade debt securities with at least one year remaining to maturity. The Lehman Brothers U.S. Corporate High Yield Index gives a broad look at how high yield ("junk") bonds have performed. 5 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Annual Report July 31, 2002 declined less initially, and then grew more than those of large caps. Bread-and-butter small companies were expected to benefit most from the improving economy. By "bread and butter," we mean, for example, companies whose products have an established demand, and whose profitability is not dependent upon the rapid growth of a new market: healthcare, food, and consumer services firms. In addition, small-cap value stocks continued their recovery from an extremely undervalued period at the onset of this bear market. Such corrections often overshoot, and may have done so during this reporting period. This was a good period for bonds because prices of existing bonds rise when interest rates fall. This boost was tempered by rising concern about credit risk. Many companies have been carrying high levels of debt in order to boost their earnings per share (a high degree of leverage). As the economy slowed, investors became more concerned about these firms' ability to service their debt. The massive bankruptcies of Enron and WorldCom heightened such concerns, as did the struggle of many other energy and telecommunications firms to cover their debt payments. This increased the premium that corporate borrowers had to pay over the interest rates on government securities (the credit spread). The combination of bankruptcies and rising credit spreads provided challenges for fixed income investors. YOUR FUND'S PERFORMANCE The Strategic Partners Conservative Growth Fund performed considerably better than the Lipper Balanced Funds Average and the S&P 500 Index largely because of its conservative 60% allocation to bonds and the strong return on core bonds due to falling interest rates. Core bonds had an excellent 12-month return even though the Fund's holdings in the sector underperformed their benchmark, largely because of credit concerns. Although the portfolio was helped by its underweight in corporate bonds, a move into telecommunications and energy company bonds in the second quarter of 2002 hurt its return as corporate governance scandals pushed investors away from those industries. Return was also hurt by the portfolio's high yield and 6 www.strategicpartners.com (800) 225-1852 emerging market holdings. The Fund's portfolio benefited from an above-average duration (exposure to interest-rate changes) because the prices of its bonds rose as current interest rates fell. The strongly positive return on core bonds was a welcome balance to the decline in other asset classes. Although the Fund's high yield ("junk") bonds fell in value as investors moved away from risk exposures, their impact was relatively small, in part because their substantial outperformance of their benchmark mitigated the impact. Among stocks, large caps had a much larger allocation and so had the greatest impact. Large-cap growth stocks were hit substantially harder than large-cap value. The largest detractions in the growth portfolio came from technology, media, and specialty retail stocks, and from financial firms that were exposed to the poor capital market environment or to consumer borrowing. Citigroup, the largest detractor, fit both of the latter criteria. The Fund had positive contributions from the defense contractor Northrop Grumman, from Pharmacia (a drug company that during this period agreed to be acquired by Pfizer), and from several consumer stocks, including Kohl's, Gillette, and Procter & Gamble. The Fund's large-cap value stocks underperformed their poor market. The Fund's telecommunication services companies, such as the wireless firms Western Wireless and Sprint PCS, detracted heavily. The Fund had some exposure to Enron and Adelphia-- two companies where accounting irregularities have been alleged. Although these were not large positions, the stocks fell substantially. Williams Companies was also a large detractor, in part as a by-product of the attention to Enron, because it is in the same energy trading business. On the positive side, return was supported by tobacco and health service companies, and by good stock selection among the drug companies. Wyeth was the largest contributor. 7 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Annual Report July 31, 2002 Small-cap growth stocks had the largest decline of the Fund's asset classes. Fortunately, the Fund had a small allocation and a slight outperformance to mitigate the loss. This was due primarily to an emphasis on energy stocks and certain groups of technology stocks at times when they performed relatively well, e.g., software and semiconductor equipment manufacturers during the latter half of the reporting period. Some of these positions were sold or trimmed to take profits. Small-cap value stocks as an asset class held up fairly well. With the Fund's small allocation, this meant their negative impact was inconsequential. We changed subadvisers for the Fund's small-cap value stocks during this reporting period. Early in the period, the portfolio's performance was helped by a strong selection of technology and consumer discretionary stocks. Under its new subadviser, in the poorer markets later in the period, the portfolio's overweight of technology stocks and underweight of financial services stocks detracted from its performance. Its return was helped by housing stocks and by several energy holdings. 8 Strategic Partners Conservative Growth Fund Management Team www.strategicpartners.com (800) 225-1852 (This page intentionally left blank.) 9 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Annual Report July 31, 2002 WHAT IS AN ASSET ALLOCATION FUND? Diversification--spreading your investments over many different securities--is a basic principle of investing. It helps to reduce the overall risk of your portfolio. Mutual funds not only provide professional money management, but they also allow a relatively small investment to be spread over many different securities. When you own a large number of different securities, the impact of any one security on your return is reduced. In addition, if you diversify your investments among asset classes and investment styles--between stocks and bonds, value and growth stocks, and investment-grade and high yield bonds--it is less likely that all the securities you own will move in the same direction at one time. Strategic Partners Asset Allocation Funds provide more of this buffer than funds investing in only one asset class. We believe this will result in more consistent returns over time. REBALANCING The Strategic Partners Conservative Growth Fund has a target allocation for each asset class. As some asset classes perform better than others, the portfolio will drift from this original target: asset classes with the best performance will become a larger proportion of the invested assets. We direct new investments to the asset classes that have fallen below their target ratio and, when necessary, sell certain securities in appreciated asset classes to maintain the balance. This not only keeps your risk exposure from changing too much, but it may reduce the average cost of our investments and increase our average selling price over time. Although an individual investor can diversify and rebalance, it would require a large investment to own the range of asset classes represented in the Strategic Partners Conservative Growth Fund. Moreover, calculating the amounts to allocate to each kind of security in a rebalancing would be difficult. Strategic Partners Asset Allocation Funds do it all for you. 10 www.strategicpartners.com (800) 225-1852 Glossary of Terms Asset classes are classifications of investments. The most basic classification of securities is among stocks, bonds, and money market investments. Stocks are shares of ownership in a firm. Owners share in the profits after debts are paid, and share in the firm's appreciation in value. Generally, the prices of stocks vary with investors' estimates of a firm's earnings prospects, including the impact of broader economic conditions. Bonds are loans to a company, government, or agency. They carry a fixed interest rate, or one that varies according to the terms specified in the bond. They have a maturity date at which they must be repaid. Generally, bond prices fluctuate with current interest rates and with events that affect the debtor's prospects of repaying the loan. Money market instruments are short-term loans that mature in 13 months or less. Bonds and money market instruments are called fixed income securities. High yield bonds are also known as "junk bonds." They are subject to greater risk of loss of principal and interest, including default risk, than higher-rated bonds. Strategic Partners Conservative Growth Fund Diversification Target (GRAPH) 11 ANNUAL REPORT JULY 31, 2002 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ LONG-TERM INVESTMENTS 97.7% COMMON STOCKS 38.3% - ------------------------------------------------------------------------------------- Aerospace/Defense 0.8% 2,200 General Dynamics Corp. $ 178,024 3,000 Lockheed Martin Corp. 192,330 4,300 Northrop Grumman Corp. 476,010 2,300 The Boeing Co. 95,496 ---------------- 941,860 - ------------------------------------------------------------------------------------- Air Freight & Couriers 0.1% 3,700 Airborne, Inc. 50,024 5,500 Forward Air Corp.(a) 119,405 ---------------- 169,429 - ------------------------------------------------------------------------------------- Airlines 0.2% 3,500 Atlantic Coast Airlines Holdings, Inc.(a) 54,775 7,500 Continental Airlines, Inc. (Class B Stock)(a) 80,400 7,100 Delta Airlines, Inc. 110,618 ---------------- 245,793 - ------------------------------------------------------------------------------------- Auto Components 0.2% 5,200 Federal Signal Corp. 108,784 3,800 Gentex Corp.(a) 110,922 1,200 Superior Industries International, Inc. 52,644 ---------------- 272,350 - ------------------------------------------------------------------------------------- Automobiles & Motorcycles 0.2% 5,500 Harley-Davidson, Inc. 260,480 - ------------------------------------------------------------------------------------- Banks 0.9% 3,300 Astoria Financial Corp. 111,045 4,200 Bank of America Corp. 279,300 7,100 Bank One Corp. 276,261 11,600 Bankunited Financial Corp.(a) 197,200 1,700 Commerce Bancorp, Inc. 78,574 1,700 Hibernia Corp. (Class A Stock) 35,326 1,000 Investors Financial Services Corp. 30,770
See Notes to Financial Statements 13 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 300 Silicon Valley Bancshares(a) $ 6,489 700 Umpqua Holdings Corp. 10,787 ---------------- 1,025,752 - ------------------------------------------------------------------------------------- Beverages 0.7% 8,700 PepsiCo, Inc. 373,578 8,900 The Coca-Cola Co. 444,466 ---------------- 818,044 - ------------------------------------------------------------------------------------- Biotechnology 0.7% 8,100 Amgen, Inc.(a) 369,684 8,500 Genentech, Inc.(a) 295,375 3,800 MedImmune, Inc.(a) 113,012 1,400 Ortec International, Inc.(a) 1,400 ---------------- 779,471 - ------------------------------------------------------------------------------------- Building Products 0.1% 2,400 Crane Co. 55,152 4,700 Watsco, Inc. 66,740 ---------------- 121,892 - ------------------------------------------------------------------------------------- Chemicals 0.6% 1,400 Cabot Corp. 34,608 1,600 FMC Corp.(a) 39,424 16,800 IMC Global, Inc. 182,280 7,700 Lyondell Chemical Co. 101,640 2,100 Minerals Technologies, Inc. 78,435 2,200 Scotts Co. (Class A Stock)(a) 100,100 5,900 Solutia, Inc. 36,934 2,000 Valspar Corp. 81,280 ---------------- 654,701 - ------------------------------------------------------------------------------------- Commercial Services & Supplies 0.9% 5,300 Administaff, Inc.(a) 39,750 8,300 Allied Waste Industries, Inc.(a) 54,780 1,600 CDI Corp.(a) 45,344 3,800 Concord EFS, Inc.(a) 74,100 300 CoStar Group, Inc.(a) 6,300
14 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 5,600 Global Payments, Inc.(a) $ 145,600 1,100 Headwaters, Inc.(a) 15,477 2,400 Heidrick & Struggles International, Inc.(a) 37,320 300 John H. Harland Co.(a) 7,287 3,100 Kelly Services, Inc. (Class A Stock) 77,314 1,900 NCO Group, Inc.(a) 27,740 4,700 NDCHealth Corp. 101,473 1,700 Pegasus Solutions, Inc.(a) 27,098 3,500 Probusiness Services, Inc.(a) 34,300 4,500 Republic Services, Inc.(a) 79,200 2,900 Resources Connection, Inc.(a) 53,418 4,400 US Liquids, Inc.(a) 8,360 7,800 Waste Management, Inc. 184,626 ---------------- 1,019,487 - ------------------------------------------------------------------------------------- Communications Equipment 0.7% 46,600 3Com Corp.(a) 210,166 3,200 Adaptec, Inc.(a) 18,880 6,100 Advanced Fibre Communications(a) 105,103 4,200 Anaren Microwave, Inc.(a) 32,760 4,500 Avocent Corp.(a) 67,635 27,400 Cisco Systems, Inc.(a) 361,406 2,700 Ixia(a) 14,688 800 Nokia Corp., ADR (Finland) 9,920 3,900 Powerwave Technologies, Inc.(a) 23,946 2,600 Sierra Wireless, Inc.(a) 6,630 ---------------- 851,134 - ------------------------------------------------------------------------------------- Computers & Peripherals 1.0% 2,600 Advanced Digital Information(a) 13,520 11,100 Dell Computer Corp.(a) 276,723 35,100 EMC Corp.(a) 263,250 44,134 Hewlett-Packard Co. 624,496 ---------------- 1,177,989 - ------------------------------------------------------------------------------------- Construction & Engineering 0.3% 7,600 Hovnanian Enterprises, Inc. (Class A Stock)(a) 216,904 13,200 McDermott International, Inc.(a) 61,908 ---------------- 278,812
See Notes to Financial Statements 15 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Containers & Packaging 0.3% 2,600 Pactiv Corp.(a) $ 47,242 5,800 Temple-Inland, Inc. 311,460 ---------------- 358,702 - ------------------------------------------------------------------------------------- Diversified Financials 3.6% 15,700 American Express Co. 553,582 6,200 AmeriCredit Corp.(a) 121,210 940 BlackRock, Inc. (Class A Stock)(a) 39,433 26,766 Citigroup, Inc. 897,732 1,100 Doral Financial Corp. 42,174 4,700 Eaton Vance Corp. 125,772 5,000 Edwards (A.G.), Inc. 172,000 4,300 Federal Home Loan Mortgage Corp. 266,385 3,200 Jeffries Group, Inc. 127,680 2,700 Knight Trading Group, Inc.(a) 11,043 8,800 Lehman Brothers Holdings, Inc. 499,048 5,700 MBNA Corp. 110,523 5,800 Merrill Lynch & Co., Inc. 206,770 2,000 Morgan Stanley Dean Witter 80,700 6,100 Principal Financial Group(a) 175,131 4,400 Raymond James Financial, Inc. 119,680 9,000 The Goldman Sachs Group, Inc. 658,350 ---------------- 4,207,213 - ------------------------------------------------------------------------------------- Diversified Telecommunication Services 0.7% 2,100 ALLTEL Corp. 85,092 16,000 AT&T Corp. 162,880 11,600 BellSouth Corp. 311,460 6,300 SBC Communications, Inc. 174,258 4,000 Verizon Communications, Inc. 132,000 ---------------- 865,690 - ------------------------------------------------------------------------------------- Electric Utilities 0.1% 4,400 PG&E Corp.(a) 61,160 4,100 PNM Resources, Inc. 81,795 ---------------- 142,955
16 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Electrical Equipment 0.2% 2,600 C&D Technologies, Inc. $ 39,962 4,500 Harris Corp. 144,495 4,400 Power-One, Inc.(a) 20,064 ---------------- 204,521 - ------------------------------------------------------------------------------------- Electronic Equipment & Instruments 1.0% 8,200 Arrow Electronics, Inc.(a) 139,974 2,500 Cognex Corp.(a) 38,425 7,300 DDI Corp.(a) 4,672 4,200 Electro Scientific Industries, Inc.(a) 75,432 3,100 FLIR Systems, Inc.(a) 126,790 19,600 Ingram Micro, Inc. (Class A Stock)(a) 215,600 2,400 Merix Corp.(a) 15,000 2,400 Mettler-Toledo International, Inc.(a) 68,280 1,400 Park Electrochemical Corp. 28,000 3,200 Plexus Corp.(a) 44,480 700 Roper Industries, Inc. 20,825 1,700 Sirenza Microdevices, Inc.(a) 2,533 40,100 Solectron Corp.(a) 160,400 2,900 Technitrol, Inc. 54,375 2,900 Trimble Navigation Ltd.(a) 37,961 3,700 Varian, Inc.(a) 117,845 ---------------- 1,150,592 - ------------------------------------------------------------------------------------- Energy Equipment & Services 1.2% 3,200 Cal Dive International, Inc.(a) 61,376 12,300 ENSCO International, Inc. 317,955 6,047 FMC Technologies, Inc.(a) 111,869 9,400 GlobalSantaFe Corp. 211,876 3,800 Patterson-UTI Energy, Inc.(a) 90,858 10,200 Schlumberger Ltd. 437,784 3,200 Superior Energy Services, Inc.(a) 26,112 4,400 Weatherford International Ltd.(a) 178,464 ---------------- 1,436,294
See Notes to Financial Statements 17 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Food Products 0.4% 2,500 Bunge Ltd. $ 51,125 10,800 ConAgra Foods, Inc. 271,188 10,400 Sara Lee Corp. 194,896 ---------------- 517,209 - ------------------------------------------------------------------------------------- Gas Utilities 0.6% 12,000 El Paso Corp. 173,400 2,900 Energen Corp. 71,630 5,700 Nisource, Inc. 112,860 4,700 Nova Chemicals Corp. 96,538 5,600 Oneok, Inc. 103,600 7,200 Sempra Energy 152,640 ---------------- 710,668 - ------------------------------------------------------------------------------------- Health Care Equipment & Supplies 0.7% 7,700 Baxter International, Inc. 307,307 2,800 Cooper Companies, Inc. 122,920 4,500 Diagnostic Products Corp. 161,550 2,900 Varian Medical Systems, Inc. 121,220 2,800 Wilson Greatbatch Technologies, Inc.(a) 65,380 ---------------- 778,377 - ------------------------------------------------------------------------------------- Health Care Providers & Services 1.4% 1,500 AmerisourceBergen Corp. 100,485 2,900 Anthem, Inc.(a) 196,852 9,000 Covance, Inc.(a) 152,460 11,500 HCA, Inc. 540,500 4,300 Lincare Holdings, Inc.(a) 134,934 2,100 MAXIMUS, Inc.(a) 49,812 4,000 Orthodontic Centers of America, Inc.(a) 56,200 4,100 Pediatrix Medical Group, Inc.(a) 122,180 7,600 Pharmaceutical Product Development, Inc.(a) 175,165 4,500 Quintiles Transnational, Corp.(a) 44,685 1,700 Service Corp. International(a) 3,825 1,600 Stewart Enterprises, Inc. (Class A Stock)(a) 8,544 ---------------- 1,585,642
18 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Hotels Restaurants & Leisure 0.9% 4,600 Brinker International, Inc.(a) $ 149,960 3,100 CEC Entertainment, Inc.(a) 116,870 600 Four Seasons Hotels, Inc. 22,920 1,000 Jack In The Box, Inc.(a) 27,700 7,400 Marriott International, Inc. (Class A Stock) 247,900 7,200 McDonald's Corp. 178,200 2,600 Outback Steakhouse, Inc.(a) 83,044 8,000 Starbucks Corp.(a) 157,040 4,200 Station Casinos, Inc.(a) 55,440 5,200 WMS Industries, Inc.(a) 54,860 ---------------- 1,093,934 - ------------------------------------------------------------------------------------- Household Durables 0.3% 8,200 D.R. Horton, Inc. 182,040 400 Furniture Brands International, Inc.(a) 10,160 3,200 Harman International Industries, Inc. 137,920 1,600 Snap-On, Inc. 43,472 ---------------- 373,592 - ------------------------------------------------------------------------------------- Household Products 0.3% 3,600 The Procter & Gamble Co. 320,364 - ------------------------------------------------------------------------------------- Industrial Conglomerates 0.3% 2,800 3M Co. 352,324 - ------------------------------------------------------------------------------------- Insurance 2.5% 6,700 Allstate Corp. 254,667 7,962 American International Group, Inc. 508,931 2,100 Amerus Group Co. 66,948 3,600 Commerce Group, Inc. 133,560 700 IPC Holdings Ltd. ADR (Bermuda) 22,148 5,100 Lincoln National Corp. 187,119 4,300 Loews Corp. 203,992 4,400 Philadelphia Consolidated Holding Corp.(a) 177,012
See Notes to Financial Statements 19 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 2,500 Protective Life Corp. $ 80,000 2,900 Reinsurance Group of America, Inc. 86,130 11,800 The Hartford Financial Services Group, Inc. 597,080 8,200 XL Capital Ltd. (Class A Stock) 607,620 ---------------- 2,925,207 - ------------------------------------------------------------------------------------- Internet & Catalog Retail 0.1% 6,500 USA Interactive(a) 143,319 - ------------------------------------------------------------------------------------- Internet Software & Services 1,500 Matrixone, Inc.(a) 10,050 1,200 SkillSoft Corp.(a) 9,876 800 SmartForce PLC, ADR (United Kingdom)(a) 2,728 3,000 Webmethods, Inc.(a) 26,370 ---------------- 49,024 - ------------------------------------------------------------------------------------- IT Consulting & Services 2,200 Inforte Corp.(a) 17,600 4,200 Keane, Inc.(a) 34,650 ---------------- 52,250 - ------------------------------------------------------------------------------------- Machinery 0.3% 9,100 CNH Global NV (Netherlands) 25,662 900 Cuno, Inc.(a) 29,394 7,100 Navistar International Corp.(a) 183,109 800 Oshkosh Truck Corp. 43,960 1,800 Pentair, Inc. 73,206 1,700 Reliance Steel & Aluminum Co. 42,160 ---------------- 397,491 - ------------------------------------------------------------------------------------- Media 2.5% 3,800 Acme Communications, Inc.(a) 33,440 2,600 AOL Time Warner, Inc.(a) 29,900 6,300 Entravision Communications Corp. (Class A Stock)(a) 63,000 3,100 Knight-Ridder, Inc. 187,705 9,600 Lamar Advertising Co.(a) 303,168 35,200 Liberty Media Corp. (Class A Stock)(a) 276,672
20 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 12,000 New York Times Co. (Class A Stock) $ 543,000 23,200 Sinclair Broadcast Group, Inc. (Class A Stock)(a) 272,600 14,300 The News Corp. Ltd., ADR (Australia) 243,100 9,300 Univision Communications, Inc. (Class A Stock)(a) 265,887 18,240 Viacom, Inc. (Class B Stock)(a) 710,083 ---------------- 2,928,555 - ------------------------------------------------------------------------------------- Metals & Mining 0.3% 3,800 Alcoa, Inc. 102,790 1,500 Cleveland-Cliffs, Inc. 36,600 12,200 Freeport-McMoRan Copper & Gold, Inc. (Class A Stock)(a) 186,294 3,100 Stillwater Mining Co.(a) 29,450 ---------------- 355,134 - ------------------------------------------------------------------------------------- Multiline Retail 1.6% 6,800 Costco Wholesale Corp.(a) 237,116 9,500 Federated Department Stores, Inc.(a) 357,295 7,050 Fred's, Inc. 207,622 8,800 Kohl's Corp.(a) 580,800 1,600 Tuesday Morning Corp.(a) 24,288 9,800 Wal-Mart Stores, Inc. 481,964 ---------------- 1,889,085 - ------------------------------------------------------------------------------------- Office Electronics 0.3% 51,000 Xerox Corp. 354,450 - ------------------------------------------------------------------------------------- Oil & Gas 1.6% 3,600 Chesapeake Energy Corp.(a) 19,260 11,200 Exxon Mobil Corp. 411,712 7,300 Occidental Petroleum Corp. 197,757 4,600 PetroQuest Energy, Inc.(a) 17,664 8,300 Pioneer Natural Resources Co.(a) 200,943 1,100 Premcor, Inc.(a) 23,980 1,800 Spinnaker Exploration Co.(a) 50,652 4,000 Stone Energy Corp.(a) 135,920
See Notes to Financial Statements 21 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 7,800 Swift Energy Co.(a) $ 103,428 8,800 Talisman Energy, Inc. 358,072 3,344 Total Fina SA, ADR (France) 242,607 8,100 XTO Energy, Inc. 145,395 ---------------- 1,907,390 - ------------------------------------------------------------------------------------- Paper & Forest Products 0.9% 5,200 Boise Cascade Corp. 150,748 13,600 International Paper Co. 541,552 6,600 Weyerhaeuser Co. 387,750 ---------------- 1,080,050 - ------------------------------------------------------------------------------------- Personal Products 0.3% 9,600 The Gillette Co. 315,648 - ------------------------------------------------------------------------------------- Pharmaceuticals 2.3% 9,800 Abbott Laboratories 405,818 3,900 Alpharma, Inc. 43,524 2,600 Barr Laboratories, Inc.(a) 158,600 7,300 Johnson & Johnson 386,900 5,600 K V Pharmaceutical Co.(a) 117,600 1,400 Medicis Pharmaceutical Corp.(a) 58,688 7,950 Pfizer, Inc. 257,183 12,775 Pharmacia Corp. 571,553 3,800 Sepracor, Inc.(a) 25,650 15,100 Wyeth 602,490 ---------------- 2,628,006 - ------------------------------------------------------------------------------------- Real Estate Investment Trusts 0.3% 1,300 Alexandria Real Estate Equities, Inc. 56,095 3,500 Boston Properties, Inc. 130,550 900 Colonial Properties Trust 32,355 2,500 Jones Lang LaSalle, Inc.(a) 50,350 1,600 SL Green Realty Corp. 51,600 ---------------- 320,950
22 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Road & Rail 0.1% 2,100 Knight Transportation, Inc.(a) $ 37,170 700 Landstar Systems, Inc.(a) 69,867 ---------------- 107,037 - ------------------------------------------------------------------------------------- Semiconductor Equipment & Products 1.8% 4,200 Advanced Energy Industries, Inc.(a) 62,034 8,400 Agere Systems, Inc. (Class A Stock)(a) 15,960 90,100 Agere Systems, Inc. (Class B Stock)(a) 175,695 2,400 Analog Devices, Inc.(a) 57,840 7,500 Applied Materials, Inc.(a) 111,525 3,700 Credence Systems Corp.(a) 50,690 2,700 Cymer, Inc.(a) 75,573 2,200 Emcore Corp.(a) 7,260 2,600 Exar Corp.(a) 43,342 6,800 Integrated Circuit Systems, Inc.(a) 119,476 1,100 Integrated Device Technology, Inc.(a) 14,080 10,700 Intel Corp. 201,053 1,100 Intersil Holding Corp. (Class A Stock)(a) 23,969 1,600 KLA-Tencor Corp.(a) 63,024 2,700 Maxim Integrated Products, Inc.(a) 94,986 2,800 Micrel, Inc.(a) 32,116 4,300 National Semiconductor Corp.(a) 77,873 2,200 Oak Technology, Inc.(a) 8,470 1,600 Pericom Semiconductor Corp.(a) 15,024 3,900 Rudolph Technologies, Inc.(a) 59,210 3,700 Semtech Corp.(a) 72,742 5,500 STMicroelectronics NV, ADR (Netherlands) 117,095 13,100 Taiwan Semiconductor Manufacturing Co., Ltd., ADR (Taiwan)(a) 119,472 13,400 Texas Instruments, Inc. 310,210 900 TTM Technologies, Inc.(a) 2,844 6,700 Varian Semiconductor Equipment Associates, Inc. 176,076 ---------------- 2,107,639 - ------------------------------------------------------------------------------------- Software 1.6% 4,200 Adobe Systems, Inc. 100,632
See Notes to Financial Statements 23 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 4,500 Ascential Software Corp.(a) $ 11,025 2,600 Aspen Technology, Inc.(a) 11,050 1,700 Bindview Development Corp.(a) 1,700 13,600 BMC Software, Inc.(a) 182,920 4,100 Borland Software Corp.(a) 35,506 2,200 Brio Software, Inc.(a) 2,354 3,700 Catapult Communications Corp.(a) 46,361 3,300 Cerner Corp.(a) 143,220 5,600 Entrust, Inc.(a) 15,344 4,200 Henry (Jack) & Associates, Inc. 59,934 2,600 HNC Software, Inc.(a) 47,034 5,300 Informatica Corp.(a) 36,888 2,600 Lawson Software, Inc.(a) 12,480 3,100 Micromuse, Inc.(a) 9,579 12,900 Microsoft Corp.(a) 618,942 4,200 National Instruments Corp.(a) 113,946 1,800 Precise Software Solutions Ltd.(a) 22,608 7,900 Synopsys, Inc.(a) 337,883 8,100 Verity, Inc.(a) 90,720 ---------------- 1,900,126 - ------------------------------------------------------------------------------------- Specialty Retail 1.4% 9,900 Bed Bath & Beyond, Inc.(a) 306,900 4,200 Charming Shoppes, Inc.(a) 30,576 12,100 Circuit City Stores-Circuit City Group 206,305 1,500 Cost Plus, Inc.(a) 36,585 700 Linens N' Things, Inc.(a) 17,045 11,700 Lowe's Companies, Inc. 442,845 3,300 Movie Gallery, Inc.(a) 54,615 600 Regis Corp. 15,228 10,200 Tiffany & Co. 251,328 18,600 Toys 'R' Us, Inc.(a) 250,728 ---------------- 1,612,155 - ------------------------------------------------------------------------------------- Telecommunications 0.1% 10,000 General Motors Corp. (Class H Stock)(a) 99,000
24 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Tobacco 0.5% 6,700 Loews Corp. - Carolina Group $ 165,490 8,300 Philip Morris Companies, Inc. 382,215 ---------------- 547,705 - ------------------------------------------------------------------------------------- Transportation 0.1% 2,500 Teekay Shipping Corp. 85,700 - ------------------------------------------------------------------------------------- Wireless Telecommunication Services 0.1% 25,900 American Tower Corp. (Class A Stock)(a) 58,016 - ------------------------------------------------------------------------------------- Mutual Fund 0.2% 15,100 Technology Select Sector SPDR Fund 216,232 ---------------- Total common stocks 44,795,440 ---------------- PREFERRED STOCKS 0.2% - ------------------------------------------------------------------------------------- Cable 0.2% 3,130 CSC Holdings, Inc. 11.75% 156,500 - ------------------------------------------------------------------------------------- Merchandising 350 McLeodUSA, Inc. 2.50% 1,278 - ------------------------------------------------------------------------------------- Publishing 1,000 Primedia, Inc. 10.00% 32,000 ---------------- Total preferred stocks 189,778 ---------------- WARRANTS 776 McLeodUSA, Inc. expiring 4/16/07 132 300,000 United Mexican States, expiring 6/1/04 300 300,000 United Mexican States, expiring 6/1/05 90 300,000 United Mexican States, expiring 6/1/07 30 300,000 United Mexican States, expiring 6/30/06 90 ---------------- Total warrants 642 ----------------
See Notes to Financial Statements 25 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- CORPORATE BONDS 24.9% - ------------------------------------------------------------------------------------- Aerospace/Defense B2 $ 20 Alliant Techsystems, Inc., Sr. Sub. Notes, 8.50%, 5/15/11 $ 20,900 Ba3 35 Sequa Corp., Sr. Sub Notes, 9.00%, 8/01/09 34,212 ---------------- 55,112 - ------------------------------------------------------------------------------------- Airlines 0.5% AMR Corp., MTN, B1 5 10.00%, 4/15/21 3,966 B1 100 10.40%, 3/10/11 74,000 Notes, B1 150 10.55%, 3/12/21 118,458 Delta Air Lines, Inc., Notes, Ba3 200 6.65%, 3/15/04 180,740 Ba3 50 7.70%, 12/15/05 43,870 Ba3 50 8.30%, 12/15/29 35,771 Northwest Airlines, Inc., Notes, B2 75 7.625%, 3/15/05 57,000 B2 100 8.70%, 3/15/07 83,000 ---------------- 596,805 - ------------------------------------------------------------------------------------- Aluminum 0.2% Ba3 235 Century Aluminum Co., Sr. Sec'd. Notes, 11.75%, 4/15/08 242,050 Caa1 25 United States Can Co., Sr. Sub. Notes, 12.375%, 10/01/10 20,187 ---------------- 262,237 - ------------------------------------------------------------------------------------- Automotive Parts 1.0% Ba3 75 American Axle & Manufacturing, Inc., Sr. Sub. Notes, 9.75%, 3/01/09 79,875 Baa3 150 ArvinMeritor, Inc., Notes, 8.75%, 3/01/12 161,884
26 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Ba2 $ 15 AutoNation, Inc., Sr. Notes, 9.00%, 8/01/08 $ 15,488 Caa1 50 Eagle Picher Industries, Inc., Sr. Sub. Notes, 9.375%, 3/01/08 38,750 Caa1 100 Motors & Gears, Inc., 10.75%, 11/15/06 94,000 Ba1 200 Navistar International Corp., Sr. Notes, 7.00%, 2/01/03 199,500 Baa2 500 TRW, Inc., Notes, 8.75%, 5/15/06 561,930 ---------------- 1,151,427 - ------------------------------------------------------------------------------------- Banks 0.2% Ba2 150 Sovereign Bancorp, Inc., Sr. Notes, 10.25%, 5/15/04 157,500 B1 30 Western Financial Bank, FSB, Sub. Cap. Debs., 8.875%, 8/01/07 28,951 ---------------- 186,451 - ------------------------------------------------------------------------------------- Building & Construction 0.4% Ba2 30 Beazer Homes USA, Inc., Sr. Notes, 8.375%, 4/15/12 29,550 Ba1 250 D.R. Horton., Inc., Sr. Notes, 7.875%, 8/15/11 239,375 Ba3 65 KB Home, Sr. Sub. Notes, 8.625%, 12/15/08 63,700 B3 100 Nortek, Inc., Sr. Sub. Notes, Ser. B, 9.875%, 6/15/11 99,500 ---------------- 432,125 - ------------------------------------------------------------------------------------- Cable 1.0% B3 50 Callahan Nordrhein Westfalen, Sr. Disc. Notes, Zero Coupon (until 7/15/05), 16.00%, 7/15/10 1,250
See Notes to Financial Statements 27 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Charter Communications Holdings Sr. Disc. Notes, B2 $ 420 Zero Coupon (until 5/15/06), 11.75%, 5/15/11 $ 136,500 Sr. Notes, B2 370 10.00%, 5/15/11 229,400 B2 25 10.75%, 10/01/09 16,000 B3 75 Coaxial Communications, Inc., Sr. Notes, 10.00%, 8/15/06 65,250 B2 200 CSC Holdings, Inc., Sr. Sub. Debs., 10.50%, 5/15/16 134,000 Caa1 500 Insight Communications, Inc., Sr. Disc. Notes, Zero Coupon (until 2/15/06), 12.25%, 2/15/11 175,000 Caa1 100 International Wire Group, Inc., Sr. Sub. Notes, 11.75%, 6/01/05 87,000 Lin Holdings Corp., Sr. Disc. Notes, Caa1 115 Zero Coupon (until 3/1/03), 10.00%, 3/01/08 106,950 Caa1 20 Zero Coupon (until 3/10/03), 10.00%, 3/10/08 18,600 B3 125 Paxson Communications Corp., Sr. Sub. Notes, 10.75%, 7/15/08 111,406 B3 75 Star Choice Communications, Sr. Sec'd. Notes, 13.00%, 12/15/05 78,094 ---------------- 1,159,450 - ------------------------------------------------------------------------------------- Chemicals 0.8% B3 75 Avecia Group PLC, Sr. Notes, 11.00%, 7/01/09 71,250 Baa3 125 Ferro Corp., Sr. Notes, 9.125%, 1/01/09 134,308 Huntsman International LLC, B3 65 9.875%, 3/01/09 65,163
28 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Gtd. Notes, Caa1 $ 125 10.125%, 7/01/09 $ 110,000 IMC Global, Inc., Notes, Ba2 35 6.50%, 8/01/03 33,998 Sr. Notes, Ser. B, Ba1 20 10.875%, 6/01/08 21,225 Ba1 40 11.25%, 6/01/11 42,400 B2 120 ISP Chemco, Inc., Sr. Sub. Notes, 10.25%, 7/01/11 117,000 B2 220 Lyondell Chemical Co., Sr. Sub. Notes, 10.875%, 5/01/09 180,400 B3 175 OM Group, Inc., Sr. Sub. Notes, 9.25%, 12/15/11 170,625 ---------------- 946,369 - ------------------------------------------------------------------------------------- Commercial Services B2 50 Iron Mountain, Inc., Gtd. Notes, 8.625%, 4/01/13 49,125 - ------------------------------------------------------------------------------------- Computer Services 0.3% Amkor Tech, Inc., Sr. Notes, B1 85 9.25%, 5/01/06 70,125 B1 50 9.25%, 2/15/08 40,750 B1 100 Echostar Broadband Corp., Sr. Notes, 10.375%, 10/01/07 95,250 Unisys Corp., Sr. Notes, Ba1 150 7.25%, 1/15/05 144,750 Ba1 50 8.125%, 6/01/06 48,875 ---------------- 399,750 - ------------------------------------------------------------------------------------- Containers 0.4% B3 100 Berry Plastics Corp., Sr. Sub. Notes, 10.75%, 7/15/12 100,750 B2 100 Greif Brothers Corp., Sr. Sub. Notes, 8.875%, 8/01/12 99,000 B2 85 Radnor Holdings, Inc., Sr. Notes, 10.00%, 12/01/03 76,500
See Notes to Financial Statements 29 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- B3 $ 25 Riverwood International Corp., Sr. Notes, 10.625%, 8/01/07 $ 25,937 B2 150 Stone Container Corp., Sr. Notes, 8.375%, 7/01/12 151,500 ---------------- 453,687 - ------------------------------------------------------------------------------------- Electronics 0.3% Ba2 215 Flextronics International Ltd., 9.875%, 7/01/10 217,150 Ca 75 Gentek, Inc., Gtd. Notes, 11.00%, 8/01/09(b) 6,000 Ba3 100 L-3 Communications Corp., Sr. Sub. Notes, 7.625%, 6/15/12 101,000 Ba3 75 TNP Enterprises, Inc., Sr. Sub. Notes, 10.25%, 4/01/10 73,500 ---------------- 397,650 - ------------------------------------------------------------------------------------- Energy 0.7% Calpine Corp., Notes, B1 670 8.50%, 2/15/11 341,700 Sr. Notes, B1 50 8.75%, 7/15/07 25,000 Baa3 100 Cogentrix Energy, Inc., Sr. Notes, 8.75%, 10/15/08 101,667 Mirant Americas Generation LLC, Sr. Notes, Ba1 20 7.20%, 10/01/08 10,600 Ba1 100 7.625%, 5/01/06 55,000 Ba1 200 8.30%, 5/01/11 107,000 B2 140 Stone Energy Corp., Sr. Sub. Notes, 8.25%, 12/15/11 140,350 ---------------- 781,317 - ------------------------------------------------------------------------------------- Financial Services 3.8% B3 10 Actuant Finance Corp., Sr. Sub. Notes, 13.00%, 5/01/09 11,400
30 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- A2 $ 200 CIT Group, Inc., Sr. Notes, FRN, MTN, 2.31%, 4/07/03 $ 199,560 Ford Motor Credit Corp., A3 200 2.69%, 3/08/04 196,414 A3 600 7.50%, 3/15/05 621,018 General Motors Acceptance Corp., FRN, MTN, A2 700 2.11%, 4/05/04 682,855 Notes, A2 1,000 6.875%, 9/15/11 988,278 Midland Funding Corp., Debs., Ba3 75 13.25%, 7/23/06 72,406 Sr. Sec'd. Notes, Ser. A, Ba3 250 11.75%, 7/23/05 240,172 A2 500 National Rural Utilities Cooperative Finance Corp., Notes, MTN, 8.00%, 3/01/32 523,315 Ba3 100 Orion Power Holdings, Inc., Sr. Notes, 12.00%, 5/01/10 71,000 Sprint Capital Corp., Gtd. Notes, Baa3 150 5.70%, 11/15/03 134,781 Notes, Baa3 600 8.375%, 3/15/12 465,221 B2 145 Stone Container Finance Co., Sr. Notes, 11.50%, 8/15/06 153,700 B2 75 UCAR Finance, Inc., Gtd. Notes, 10.25%, 2/15/12 75,000 ---------------- 4,435,120 - ------------------------------------------------------------------------------------- Food & Beverage 0.1% B3 40 Agrilink Foods, Inc., Sr. Sub. Notes, 11.875%, 11/01/08 41,600 B2 60 Great Atlantic & Pacific Tea, Inc., Notes, 7.75%, 4/15/07 53,400 Ba2 50 Smithfield Foods, Inc., Sr. Notes, 8.00%, 10/15/09 50,250 ---------------- 145,250
See Notes to Financial Statements 31 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Gaming 1.2% B2 $ 20 Argosy Gaming Co., Sr. Sub. Notes, 9.00%, 9/01/11 $ 20,425 B1 50 Boyd Gaming Corp., Sr. Sub. Notes, 8.75%, 4/15/12 50,750 Circus Circus Enterprises, Inc., Debs., Ba2 100 6.70%, 11/15/96 101,091 Notes, Ba2 100 6.45%, 2/01/06 94,500 BPound 75 Coast Hotels & Casinos, Inc., Sr. Sub. Notes, 9.50%, 4/01/09 78,000 B3 40 Hollywood Casino Corp., Sr. Sec'd. Notes, 11.25%, 5/01/07 43,000 Caa1 70 Hollywood Park, Inc., Sr. Sub. Notes, 9.25%, 2/15/07 62,300 B2 30 Horseshoe Gaming Holding Corp., Sr. Sub. Notes, 8.625%, 5/15/09 30,450 MGM Mirage, Inc., Gtd. Notes, Ba2 395 9.75%, 6/01/07 414,750 Sr. Notes, Ba1 10 8.50%, 9/15/10 10,132 Sr. Sub. Notes, Ba2 10 8.375%, 2/01/11 10,075 Ba3 25 Mohegan Tribal Gaming Authority, Sr. Sub. Notes, 8.00%, 4/01/12 24,750 Park Place Entertainment Corp., Sr. Notes, Ba1 200 7.50%, 9/01/09 195,615 Sr. Sub. Notes, Ba2 20 9.375%, 2/15/07 20,725 B2 50 Premier Parks, Inc., Sr. Notes, 9.75%, 6/15/07 50,125
32 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- B2 $ 100 Station Casinos, Inc., Sr. Sub. Notes, 9.875%, 7/01/10 $ 105,500 Caa1 125 Venetian Casino Resort LLC, 2nd Mtge., 11.00%, 6/15/10 124,688 ---------------- 1,436,876 - ------------------------------------------------------------------------------------- Health Care 1.5% B2 75 Alaris Medical Systems, Inc., Sr. Sec'd. Notes, 11.625%, 12/01/06 81,375 B2 35 Alaris Medical, Inc., Sr. Disc. Notes, Zero Coupon, (until 8/1/03), 11.125%, 8/1/08 28,700 Ba3 150 Coventry Healthcare, Inc., Sr. Notes, 8.125%, 2/15/12 150,188 Hanger Orthopedic Group, Gtd. Notes, B2 125 10.375%, 2/15/09 126,250 Sr. Sub. Notes, B3 10 11.25%, 6/15/09 9,900 HCA, Inc., Notes, FRN, Ba1 200 7.125%, 6/01/06 208,865 Notes, MTN, Ba1 300 6.73%, 7/15/45 304,750 Ba1 60 9.00%, 12/15/14 69,303 Ba2 375 HealthSouth Corp., Sr. Sub. Notes, 10.75%, 10/01/08 384,375 Caa1 125 Magellan Health Services, Inc., Sr. Sub Notes, 9.00%, 2/15/08 51,250 B2 10 Matria Healthcare, Inc., Sr. Notes, 11.00%, 5/01/08 8,700 B2 50 Rotech Healthcare, Inc., Sr. Sub. Notes, 9.50%, 4/01/12 48,500 B3 100 Select Medical Corp., Sr. Sub. Notes, 9.50%, 6/15/09 100,750
See Notes to Financial Statements 33 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- B2 $ 125 Sybron Dental Specialties, Inc., Sr. Sub. Notes, 8.125%, 6/15/12 $ 121,875 B2 50 Triad Hospitals, Sr. Sub. Notes, 11.00%, 5/15/09 54,625 ---------------- 1,749,406 - ------------------------------------------------------------------------------------- Industrials 0.5% Ba1 50 AES Drax Holdings Ltd., Sr. Sec'd. Notes, 10.41%, 12/31/20 37,500 B2 275 Johnsondiversey, Inc., Sr. Sub. Notes, 9.625%, 5/15/12 284,625 B2 250 United Rentals, Inc., Gtd. Notes, 9.50%, 6/01/08 226,875 ---------------- 549,000 - ------------------------------------------------------------------------------------- Insurance Caa2 85 Conseco, Inc., Sr. Notes, 10.75%, 6/15/08 24,650 - ------------------------------------------------------------------------------------- Lodging 0.3% B2 65 Extended Stay America, Inc., Sr. Sub. Notes, 9.875%, 6/15/11 64,675 ITT Corp., Debs., Ba1 115 7.375%, 11/15/15 101,589 Notes, Ba1 100 6.75%, 11/15/05 95,894 Ba1 100 Starwood Hotels & Resorts Worldwide, Inc., Notes, 7.375%, 5/01/07 95,500 ---------------- 357,658 - ------------------------------------------------------------------------------------- Manufacturing 0.6% B2 65 Applied Extrusion Technologies, Sr. Notes, 10.75%, 7/01/11 56,550
34 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Baa1 $ 250 Ford Motor Co., Notes, 7.45%, 7/16/31 $ 224,295 Ba2 75 JLG Industies, Inc., Sr. Sub. Notes, 8.375%, 6/15/12 72,375 B2 150 Joy Global, Inc., Sr. Sub. Notes, 8.75%, 3/15/12 149,250 B3 125 TriMas Corp., Sr. Sub. Notes, 9.875%, 6/15/12 122,500 Ba2 100 Tyco International Group SA, Gtd. Notes, 4.95%, 8/01/03 90,500 ---------------- 715,470 - ------------------------------------------------------------------------------------- Media 1.5% B1 125 Alliance Atlantis Communications, Inc., Sr. Sub. Notes, 13.00%, 12/15/09 133,906 B2 30 American Media Operations, Inc., Gtd. Notes, Ser. B, 10.25%, 5/01/09 31,125 Baa1 250 AOL Time Warner, Inc., 7.625%, 4/15/31 188,618 B2 100 Canwest Media, Inc., Sr. Sub. Notes, 10.625%, 5/15/11 100,750 Baa1 300 Cox Enterprises, Inc., FRN, 2.8125%, 5/01/03 296,335 Ba3 125 Entercom Radio, Gtd. Notes, 7.625%, 3/01/14 125,313 Fox Family Worldwide, Inc., Sr. Disc. Notes, Baa1 226 10.25%, 11/01/07 238,659 Sr. Notes, Baa1 15 9.25%, 11/01/07 15,712 B3 50 Gray Communications Systems, Inc., Sr. Sub. Notes, 9.25%, 12/15/11 50,250 B2 250 Mediacom Broadband LLC, Sr. Notes, 11.00%, 7/15/13 201,250
See Notes to Financial Statements 35 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- B3 $ 50 Nextmedia, Inc., Sr. Sub. Notes, 10.75%, 7/01/11 $ 48,750 B3 50 Primedia, Inc., Sr. Notes, 8.875%, 5/15/11 36,000 Quebecor Media, Inc., Sr. Disc. Notes, B2 100 Zero Coupon (until 7/15/06), 13.75%, 7/15/11 51,250 Sr. Notes, B2 100 11.125%, 7/15/11 88,000 B2 125 Sinclair Broadcast Group, Inc., Gtd. Notes, 8.00%, 3/15/12 122,188 ---------------- 1,728,106 - ------------------------------------------------------------------------------------- Mining 0.3% B3 185 Compass Minerals Group, Inc., Gtd. Sr. Sub. Notes, 10.00%, 8/15/11 189,625 Ba2 150 Newmont Yandal Operations Ltd. (Australia), Sr. Notes, 8.875%, 4/01/08 152,250 Terex Corp., Sr. Sub. Notes, B2 30 9.25%, 7/15/11 30,000 B2 30 10.375%, 4/01/11 30,600 ---------------- 402,475 - ------------------------------------------------------------------------------------- Miscellaneous Services 0.7% Ba2 300 Calair Capital Corp., Gtd. Sr. Notes, 8.125%, 4/01/08 210,000 B3 75 Concentra Operating Corp., Sr. Sub. Notes, Ser. B, 13.00%, 8/15/09 84,000 Ba2 200 Fresenius Med. Care Cap Trust, Gtd. Notes, 7.875%, 2/01/08 164,000 Service Corp. International, Inc., Notes, B1 175 6.50%, 3/15/08 145,250
36 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Sr. Notes, B1 $ 50 6.00%, 12/15/05 $ 42,750 Ba3 150 Stena AB (Sweden), Sr. Notes, 8.75%, 6/15/07 141,750 B2 20 Sun World International, Inc., First Mtge. Notes, Ser. B, 11.25%, 4/15/04 13,000 ---------------- 800,750 - ------------------------------------------------------------------------------------- Networking Ba3 40 Nortel Networks Ltd., Notes, 6.125%, 2/15/06 18,600 - ------------------------------------------------------------------------------------- Office Equipment & Supplies 0.1% B1 65 Xerox Capital Europe PLC, Gtd. Notes, 5.875%, 5/15/04 49,400 B1 100 Xerox Corp., Sr. Notes, 9.75%, 1/15/09 79,000 ---------------- 128,400 - ------------------------------------------------------------------------------------- Oil & Gas 1.1% Baa2 EUR 90 El Paso Corp., 7.125%, 5/06/09 61,766 Baa2 $ 150 El Paso Energy Corp., MTN, Sr. Notes, 7.75%, 1/15/32 109,500 Caa2 40 Eott Energy Partners LP, Sr. Notes, 11.00%, 10/01/09 23,200 Hanover Equipment, Sr. Sec'd. Notes, B1 200 8.50%, 9/01/08 168,000 B1 40 8.75%, 9/01/11 33,200 B2 15 Houston Exploration Co., Sr. Sub. Notes, 8.625%, 1/01/08 15,225 B1 25 Leviathan Gas Pipeline LP, Sr. Sub Notes, 10.375%, 6/01/09 24,500 Ba1 150 Parker & Parsley Petroleum Co., Sr. Notes, 8.25%, 8/15/07 156,624
See Notes to Financial Statements 37 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- B1 $ 35 Parker Drilling Co., Sr. Notes, Ser. D, 9.75%, 11/15/06 $ 35,525 B3 40 Swift Energy Co., Sr. Sub. Notes, 10.25%, 8/01/09 39,600 B2 5 Tesoro Petroleum Corp., Ser. B, 9.00%, 7/01/08 3,725 The Williams Companies, Inc., B1 500 7.125%, 9/01/11 230,000 B1 250 7.50%, 1/15/31 108,750 Ba2 55 Transcontinental Gas Pipe Line, Notes, 8.875%, 9/15/02 52,991 B1 155 Vintage Petroleum, Inc., Sr. Sub. Notes, 9.75%, 6/30/09 150,350 Ba2 55 Western Oil Sands, Inc., Sec'd. Notes, 8.375%, 5/01/12 53,625 ---------------- 1,266,581 - ------------------------------------------------------------------------------------- Paper & Packaging 0.4% Ba2 45 Caraustar Industries, Inc., Sr. Sub. Notes, 9.875%, 4/01/11 44,775 Ca 20 Doman Industries Ltd. (Canada), Sr. Notes, Ser. B, 9.25%, 11/15/07 4,000 Ba1 105 Georgia-Pacific Corp., Notes, 8.125%, 5/15/11 91,393 Ba2 50 Norske Skog Canada Ltd. (Canada), Sr. Notes, 8.625%, 6/15/11 50,375 B1 190 Silgan Holdings, Inc., Sr. Sub. Debs., 9.00%, 6/01/09 192,850 Ba1 45 Tembec Industries, Inc., Gtd. Notes, 7.75%, 3/15/12 42,862 ---------------- 426,255
38 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Pharmaceuticals 0.1% B2 $ 50 Bio Rad Labs, Inc., Sr. Sub. Notes, 11.625%, 2/15/07 $ 55,000 B2 75 Biovail Corp., Sr. Sub. Notes, 7.875%, 4/01/10 72,375 ---------------- 127,375 - ------------------------------------------------------------------------------------- Real Estate Investment Trusts 1.0% B3 25 CB Richard Ellis Services, Inc., Sr. Sub. Notes, 11.25%, 6/15/11 20,250 Ba3 350 Felcor Suites LP, Gtd. Sr. Notes, 7.375%, 10/01/04 344,750 Ba3 185 HMH Properties, Inc., Sr. Notes, 7.875%, 8/01/08 174,362 Ba3 150 Host Marriott LP, Sr. Notes, Ser. H, 9.50%, 1/15/07 150,563 B1 100 Intrawest Corp., Sr. Notes, 10.50%, 2/01/10 103,375 B1 50 Prime Hospitality Corp., Sr. Sub. Notes, 8.375%, 5/01/12 48,250 Ba2 300 Senior Housing Properties Trust, Sr. Notes, 8.625%, 1/15/12 298,500 Ventas Realty LP, Gtd. Notes, Ba3 40 8.75%, 5/01/09 40,300 Sr. Notes, Ba3 35 9.00%, 5/01/12 35,700 ---------------- 1,216,050 - ------------------------------------------------------------------------------------- Recreation 0.3% B3 150 Regal Cinemas Corp., Sr. Sub. Notes, 9.375%, 2/01/12 153,000 Ba2 30 Royal Caribbean Cruises Ltd., Notes, 8.125%, 7/28/04 28,050
See Notes to Financial Statements 39 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- B2 $ 165 Sun International Hotels Ltd., Sr. Sub. Notes, 8.875%, 8/15/11 $ 166,650 ---------------- 347,700 - ------------------------------------------------------------------------------------- Restaurants 0.4% B3 60 Carrols Corp., Sr. Sub. Notes, 9.50%, 12/01/08 58,200 Ba1 350 Tricon Global Restaurants, Inc., Sr. Notes, 8.875%, 4/15/11 369,250 ---------------- 427,450 - ------------------------------------------------------------------------------------- Retail 0.5% Dillards, Inc., Notes, Ba3 50 6.125%, 11/01/03 49,122 Ba3 75 6.43%, 8/01/04 73,323 Ba3 75 Dimon, Inc., Sr. Notes, 9.625%, 10/15/11 77,625 Ba3 100 JC Penney Co., Inc., Debs., 7.40%, 4/01/37 94,250 B2 45 Resources-Care, Inc., Sr. Notes, 10.625%, 11/15/08 40,275 Rite Aid Corp., Debs., Caa3 50 6.00%, 12/15/05 32,750 Caa3 25 6.875%, 8/15/13 14,250 Caa3 25 7.70%, 2/15/27 13,000 B1 150 Saks, Inc., Notes, 7.375%, 2/15/19 109,500 Ba2 95 Winn Dixie Stores, Inc., Sr. Notes, 8.875%, 4/01/08 95,594 ---------------- 599,689 - ------------------------------------------------------------------------------------- Schools 0.1% B3 80 Kindercare Learning Center, Inc., Sr. Sub Notes, 9.50%, 2/15/09 76,000
40 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Semiconductors 0.1% B2 $ 45 Fairchild Semiconductor Corp., Sr. Sub. Notes, 10.50%, 2/01/09 $ 47,925 B3 40 ON Semiconductor Corp., Gtd. Notes, 12.00%, 5/15/08 32,600 ---------------- 80,525 - ------------------------------------------------------------------------------------- Steel 0.3% B1 125 AK Steel Corp., Sr. Notes, 7.75%, 6/15/12 125,000 B1 165 Oregon Steel Mills, Inc., First Mtge., 10.00%, 7/15/09 167,475 B2 40 Steel Dynamics, Inc., Sr. Notes, 9.50%, 3/15/09 41,000 Ba3 25 United States Steel LLC, Sr. Notes, 10.75%, 8/01/08 26,000 ---------------- 359,475 - ------------------------------------------------------------------------------------- Telecommunications 2.9% Caa1 35 American Tower Corp., Sr. Notes, 9.375%, 2/01/09 18,550 AT&T Corp., Notes, Baa2 45 7.75%, 3/01/07 41,533 Sr. Notes, Baa2 500 8.00%, 11/15/31 410,000 Baa2 250 AT&T Wireless Services, Inc., Sr. Notes, 7.875%, 3/01/11 188,750 B3 115 Crown Castle International Corp., Sr. Notes, 10.75%, 8/01/11 77,625 Baa1 500 Deutsche Telekom Inernational Finance BV (Netherlands), 9.25%, 6/01/32 515,355 B3 10 Dobson Communications Corp., Sr. Notes, 10.875%, 7/01/10 6,425
See Notes to Financial Statements 41 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- B1 $ 300 Echostar DBS Corp., Sr. Notes, 9.125%, 1/15/09 $ 276,000 B3 40 Fairpoint Communications, Inc., Sr. Sub. Notes, 12.50%, 5/01/10 35,600 Baa3 500 France Telecom SA, (France), Notes, 9.00%, 3/01/31 497,310 Caa3 20 Level 3 Communications, Inc., Sr. Disc. Notes, Zero Coupon (until 12/1/03), 10.50%, 12/01/08 8,300 Ca 58 Netia Holdings BV, (Poland), Gtd. Sr. Disc. Notes, 11.25%, 11/01/07(b) 9,280 Nextel Communications, Inc., Sr. Disc. Notes, B3 520 Zero Coupon (until 9/15/02), 10.65%, 9/15/07 356,850 Sr. Notes, B3 15 9.375%, 11/15/09 9,825 Ca 50 NTL Communications Corp., Sr. Notes, Zero Coupon (until 10/1/03), 12.375%, 10/01/08 6,500 Ba3 85 Panamsat Corp., Notes, 8.50%, 2/01/12 77,775 Qwest Capital Funding, Inc., Gtd. Notes, B2 300 7.00%, 8/03/09 117,000 B2 695 7.90%, 8/15/10 271,050 Notes, B2 160 7.25%, 2/15/11 62,400 Qwest Corp., Notes, Ba3 40 7.20%, 11/01/04 32,400 Ba3 250 8.875%, 3/15/12 197,500 Ba3 35 Rogers Wireless, Inc., Sr. Sec'd. Notes, 9.625%, 5/01/11 22,050
42 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Tritel PCS, Inc., Sr. Sub. Disc. Notes, Zero Coupon (until 5/15/04), Baa2 $ 33 10.375%, 1/15/11 $ 27,885 Baa2 36 12.75%, 5/15/09 26,280 Baa2 78 Voicestream Wireless Corp., Sr. Disc. Notes, Zero Coupon (until 11/15/04), 11.875%, 11/15/09 56,160 ---------------- 3,348,403 - ------------------------------------------------------------------------------------- Utilities 0.9% Ba3 140 AES Corp., Sr. Notes, 9.375%, 9/15/10 54,600 A3 400 Commonwealth Edison Co., First Mtge., 7.375%, 9/15/02 402,056 B1 15 El Paso Energy Partners LP, Sr. Sub. Notes, 8.50%, 6/01/11 13,950 Baa3 400 Limestone Electron Trust, Notes, 8.625%, 3/15/03 320,000 Baa2 100 Reliant Energy Mid Atlantic, Ser. C, 9.681%, 7/02/26 89,278 Western Resources, Inc., Notes, Ba2 30 6.25%, 8/15/03 28,454 Ba1 130 7.875%, 5/01/07 122,259 ---------------- 1,030,597 - ------------------------------------------------------------------------------------- Waste Management 0.4% Allied Waste of North America, Inc., Sr. Notes, Ba3 50 7.375%, 1/01/04 48,250 Ba3 150 7.875%, 1/01/09 134,250 Ba3 295 8.50%, 12/01/08 269,925 ---------------- 452,425 ---------------- Total corporate bonds 29,121,791 ----------------
See Notes to Financial Statements 43 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- CONVERTIBLE BONDS 0.4% - ------------------------------------------------------------------------------------- Electronic Equipment & Instruments Ba3 $ 40 Solectron Corp., Zero Coupon, 5/08/20 $ 23,300 - ------------------------------------------------------------------------------------- Financial Services 0.4% A2 EUR 500 Hellenic Finance Corp., 2.00%, 7/15/03 498,788 - ------------------------------------------------------------------------------------- Telecommunications Ba3 $ 10 Nortel Networks Corp., Gtd. Sr. Notes, 4.25%, 9/01/08 3,863 ---------------- Total convertible bonds 525,951 ---------------- MORTGAGE-RELATED SECURITIES 4.0% Aaa 565 Bear Stearns Mortgage Securities, Inc., Ser. 1997-7, Class A-9, 7.00%, 2/25/28 598,080 A3 201 Korea Asset Funding Ltd., Ser. 2000-1A, Class 1, 4.01%, 2/10/09 206,136 AAAPound 465 Mellon Residental Funding Corp., Ser. 1999, Class A-3, 6.58%, 7/25/29 466,457 Aaa 500 Nationslink Funding Corp., Ser. 1999-SI, Class A-3, 6.297%, 11/10/30 514,279 PNC Mortgage Securities Corp., Ser. 1995-2, Class A-4, Aa1 106 6.75%, 6/25/16 107,249 Ser. 1999-8, Class I A-5, AAAPound 494 7.25%, 10/25/29 516,148 AAAPound 707 Residential Funding Mortgage, Inc., Ser. 1997 S-19, Class A-3, 6.50%, 12/25/12 728,801
44 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - -------------------------------------------------------------------------------------------- Aaa $ 852 Vendee Mortgage Trust, Ser. 2000-1, Class 1A, 6.83336%, 1/15/30 $ 905,512 AAAPound 438 Washington Mutual, Ser. 1999-WM1, Class M1, 6.5779%, 10/19/39 458,822 Aaa 133 Washington Mutual Mortgage Security, Ser. 2001-3, Class 2A-1, 6.75%, 5/25/31 134,526 ---------------- Total mortgage-related securities 4,636,010 ----------------
FOREIGN GOVERNMENT SECURITIES 11.5%
Principal Amount (000) Description Value (Note 1) - ----------------------------------------------------------------------------------------- Government of Germany, EUR 603 4.25%, 3/14/03 594,267 3,116 4.75%, 12/13/02 3,068,733 1,700 5.25%, 7/04/10 1,730,881 5,000 5.25%, 1/04/11 5,071,218 1,400 5.375%, 1/04/10 1,437,098 Government of Panama, $ 400 9.625%, 2/08/11 382,000 Republic of Brazil, 750 11.00%, 1/11/12 337,500 308 Ser. C, 8.00%, 4/15/14 158,944 400 Republic of Peru, 9.125%, 2/21/12 323,000 300 United Mexican States, 6.25%, 12/31/19 279,000 ---------------- Total foreign government securities 13,382,641 ----------------
See Notes to Financial Statements 45 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Principal Amount (000) Description Value (Note 1) - ----------------------------------------------------------------------------------------- MUNICIPAL BONDS 1.7% $ 400 Chicago G.O., Ser. 2001-A, 5.00%, 1/01/41 $ 385,772 200 Georgia St., Rd. & Twy. Auth. Rev., 5.00%, 3/01/21 203,420 500 Long Island College Hosp., Rev., FHA Mtge., Ser. B, 8.90%, 8/15/30 538,300 400 San Antonio Water Rev., 5.00%, 5/15/25 393,820 400 South Carolina St. Hwy., Ser. B, 5.00%, 4/01/17 419,512 ---------------- Total municipal bonds 1,940,824 ---------------- SOVEREIGN BONDS 0.2% 200 State of Qatar, 9.75%, 6/15/30 246,500 U.S. GOVERNMENT AGENCY AND SECURITIES 16.5% Federal Home Loan Mortgage Corp., 59 4.849%, 8/01/23 60,375 866 10.00%, 5/15/20 913,326 Federal National Mortgage Association, 315 4.49%, 5/01/36 319,767 505 5.00%, 4/01/14 508,215 214 6.50%, 9/01/05 220,539 2,000 6.50%, 8/31/13 TBA 2,081,880 764 7.50%, 1/01/32 804,857 220 8.00%, 8/25/22 238,821 Government National Mortgage Association, 2,500 6.00%, 11/30/29 TBA 2,518,750 4,500 6.50%, 6/30/29 TBA 4,635,000 44 6.75%, 9/20/22 45,172 1,000 7.00%, 3/31/28 TBA 1,044,380 171 7.50%, 8/15/31 180,742 996 8.50%, 2/20/30 - 6/15/30 1,064,505 United States Treasury Bonds, 100 7.50%, 11/15/16 123,613 20 8.125%, 8/15/19 26,284 400 12.00%, 8/15/13 571,184
46 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Principal Amount (000) Description Value (Note 1) - ----------------------------------------------------------------------------------------- United States Treasury Notes, $ 2,400 5.75%, 11/15/05 $ 2,610,552 500 6.625%, 5/15/07 568,905 200 6.75%, 5/15/05 221,600 1,000 United States Treasury Strips, Zero Coupon, 2/15/15 513,920 ---------------- Total U.S. government agency and securities 19,272,387 ---------------- Total long-term investments (cost $121,966,683) 114,111,964 ---------------- SHORT-TERM INVESTMENTS 17.6% U.S. GOVERNMENT AGENCY AND SECURITIES 0.8% 800 Federal Home Loan Bank, 1.68%, 10/22/02 796,939 United States Treasury Bills, 45 1.58%, 11/29/02(c) 44,750 15 1.63%, 8/15/02(c) 14,990 10 1.7335%, 8/15/02(c) 9,994 70 1.74%, 8/15/02 69,956 ---------------- Total U.S. government agency and securities 936,629 ---------------- COMMERCIAL PAPER 0.8% 700 ABN-Amro Bank NA, 1.77%, 9/16/02 698,417 200 Danske Corp., 1.77%, 8/14/02 199,872 ---------------- Total commercial paper 898,289 ---------------- REPURCHASE AGREEMENTS 13.1% 15,108 Joint Repurchase Agreement Account, 1.85%, 8/1/02; Note 6 15,108,000
See Notes to Financial Statements 47 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Principal Amount (000) Description Value (Note 1) - ----------------------------------------------------------------------------------------- $ 139 State Street Bank & Trust Co., 0.25%, dated 7/31/02, due 8/1/02 in the amount of $139,001 (cost $139,000; collateralized by $90,000 US Treasury Bill, 10.625% due 8/15/15, approximate value of collateral including accrued interest $142,254) $ 139,000 ---------------- Total repurchase agreements 15,247,000 ---------------- Shares - ----------------------------------------------------------------------------------- Mutual Fund 2.9% 3,417,133 Prudential Core Investment Fund--Taxable Money Market Series; Note 3 3,417,133 ---------------- Total short-term investments (cost $20,499,049) 20,499,051 ---------------- Total investments, before outstanding options written 115.3% (cost $142,465,732; Note 5) 134,611,015 ---------------- OUTSTANDING CALL OPTIONS WRITTEN (0.1%) Contracts - ----------------------------------------------------------------------------------- (1,300) MedImmune, Inc., expiring 8/25/02 @ $25 (5,200) (22,000) United States Treasury Notes, expiring 8/25/02 @ $108 (61,532) ---------------- Total outstanding options written (premiums received $27,494) (66,732) ---------------- Total investments, net of outstanding options written 115.2% (cost $142,438,238) 134,544,283 Liabilities in excess of other assets (15.2%) (17,799,684) ---------------- Net Assets 100% $ 116,744,599 ---------------- ----------------
48 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd. (a) Non-income producing security. (b) Represents issuer in default on interest payments, non income producing security. (c) Pledged as initial margin on financial futures contracts. Pound S&P rating. AB--Aktiebolag (Swedish Stock Company). ADR--American Depository Receipt. BV--Besloten Vennootschap (Belgian or Dutch Limited Liability Company). FHA--Federal Housing Administration. FRN--Floating Rate Note. LLC--Limited Liability Company. LP--Limited Partnership. MTN--Medium-Term Note. NV--Naamloze Vennootschap (Belgian or Dutch Company). PLC--Public Limited Company. SA--Sociedad Anonima (Spanish Corporation) or Societe Anonyme (French Corporation). TBA--To Be Announced. The Fund's current Prospectus contains a description of Moody's and Standard & Poor's ratings. See Notes to Financial Statements 49 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Statement of Assets and Liabilities
July 31, 2002 - --------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $142,465,732) $ 134,611,015 Foreign currency, at value (cost $26,850) 26,517 Cash 146,881 Receivable for investments sold 10,507,264 Interest and dividends receivable 1,275,203 Receivable for Fund shares sold 647,991 Unrealized appreciation on forward foreign currency contracts 88,219 Due from broker--variation margin 16,425 ------------- Total assets 147,319,515 ------------- LIABILITIES Payable for investments purchased 29,866,090 Payable for Fund shares reacquired 368,096 Accrued expenses and other liabilities 109,526 Distribution fee payable 83,867 Management fee payable 73,820 Outstanding options written (premium received $27,494) 66,732 Deferred trustees' fees payable 6,721 Foreign withholding tax payable 64 ------------- Total liabilities 30,574,916 ------------- NET ASSETS $ 116,744,599 ------------- ------------- Net assets were comprised of: Shares of beneficial interest, at par $ 13,278 Paid-in capital in excess of par 131,180,491 ------------- 131,193,769 Overdistribution of net investment income (161,730) Accumulated net realized loss on investments (6,460,732) Net unrealized depreciation on investments and foreign currency (7,826,708) ------------- Net assets, July 31, 2002 $ 116,744,599 ------------- -------------
50 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Statement of Assets and Liabilities Cont'd.
July 31, 2002 - --------------------------------------------------------------------------------------- Class A: Net asset value and redemption price per share ($20,233,784 / 2,297,157 shares of beneficial interest issued and outstanding) $8.81 Maximum sales charge (5% of offering price) .46 ------------- Maximum offering price to public $9.27 ------------- ------------- Class B: Net asset value, offering price and redemption price per share ($68,841,487 / 7,832,999 shares of beneficial interest issued and outstanding) $8.79 ------------- ------------- Class C: Net asset value and redemption price per share ($25,419,282 / 2,892,328 shares of beneficial interest issued and outstanding) $8.79 Sales charge (1% of offering price) .09 ------------- Offering price to public $8.88 ------------- ------------- Class Z: Net asset value, offering price and redemption price per share ($2,250,046 / 255,470 shares of beneficial interest issued and outstanding) $8.81 ------------- -------------
See Notes to Financial Statements 51 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Statement of Operations
Year Ended July 31, 2002 - --------------------------------------------------------------------------------------- NET INVESTMENT INCOME Income Interest $ 4,193,641 Dividends (net of foreign withholding taxes of $2,250) 419,409 ------------- Total income 4,613,050 ------------- Expenses Management fee 797,055 Distribution fee--Class A 46,035 Distribution fee--Class B 677,361 Distribution fee--Class C 183,505 Custodian's fees and expenses 355,000 Transfer agent's fees and expenses 113,000 Registration fees 73,000 Reports to shareholders 70,000 Audit fee 27,000 Trustees' fees and expenses 15,000 Legal fees 8,000 Miscellaneous 2,825 ------------- Total expenses 2,367,781 ------------- Net investment income 2,245,269 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions (5,555,195) Financial futures transactions 164,551 Foreign currency transactions (323,888) ------------- (5,714,532) ------------- Net change in unrealized appreciation (depreciation) on: Investments (8,745,432) Financial futures contracts 158,163 Foreign currencies 14,088 Options written (39,238) ------------- (8,612,419) ------------- Net gain (loss) on investments (14,326,951) ------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (12,081,682) ------------- -------------
52 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Statement of Changes in Net Assets
Year Ended July 31, --------------------------- 2002 2001` - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations Net investment income $ 2,245,269 $ 2,463,855 Net realized loss on investment and foreign currency transactions (5,714,532) (767,154) Net change in unrealized appreciation/(depreciation) of investments and foreign currencies (8,612,419) (1,250,568) ------------ ----------- Net increase (decrease) in net assets resulting from operations (12,081,682) 446,133 ------------ ----------- Dividends and distributions (Note 1) Dividends from net investment income Class A (487,140) (576,487) Class B (1,273,463) (1,619,314) Class C (365,244) (390,857) Class Z (50,160) (42,134) ------------ ----------- (2,176,007) (2,628,792) ------------ ----------- Distributions from net realized gains on investment transactions Class A -- (1,148,585) Class B -- (3,624,125) Class C -- (860,929) Class Z -- (57,520) ------------ ----------- -- (5,691,159) ------------ ----------- Fund share transactions (net of share conversions) (Note 7) Net proceeds from shares sold 57,975,450 41,841,390 Net asset value of shares issued in reinvestment of dividends and distributions 2,056,625 7,966,952 Cost of shares reacquired (24,025,014) (17,063,782) ------------ ----------- Net increase in net assets from Fund share transactions 36,007,061 32,744,560 ------------ ----------- Total increase 21,749,372 24,870,742 NET ASSETS Beginning of year 94,995,227 70,124,485 ------------ ----------- End of year $116,744,599 $94,995,227 ------------ ----------- ------------ -----------
See Notes to Financial Statements 53 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Strategic Partners Asset Allocation Funds (the 'Trust'), is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company presently consisting of three portfolios: Strategic Partners Conservative Growth Fund (the 'Fund'), Strategic Partners Moderate Growth Fund and Strategic Partners High Growth Fund. These financial statements relate only to Strategic Partners Conservative Growth Fund. The financial statements of the other portfolios are not presented herein. The Trust was organized as a business trust in Delaware on July 29, 1998. Jennison Associates LLC ('Jennison'), Prudential Investment Management, Inc. ('PIM'), Pacific Investment Management Company, Franklin Advisers, Inc. and EARNEST Partners LLC are the Fund's 'Advisers'. The investment objective of the Fund is to provide current income and a reasonable level of capital appreciation. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of debt obligations and equity securities. The ability of the issuers of the debt securities held by the Fund to meet their obligations may be affected by economic developments in a specific industry or country. Note 1. Accounting Policies The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Securities Valuation: Securities for which the primary market is on an exchange and NASDAQ National Market Securities are valued at the last sale price on such exchange on the day of valuation, or, if there was no sale on such day, at the mean between the last bid and asked prices on such day or at the bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC ('PI' or the 'Manager'), in consultation with the Adviser, to be over-the-counter, are valued by an independent pricing agent or principal market maker. U.S. government securities for which market quotations are available shall be valued at a price provided by an independent pricing agent or broker-dealer. Privately placed securities including equity securities for which market prices may be obtained from primary dealers shall be valued at the bid prices provided by such primary dealers. Securities for which market quotations are not readily available may be valued using the last available market quotation for a period not to exceed five days, provided the Manager and Adviser feel this is representative of market value; after that period, such securities are valued in good faith under procedures adopted by the Trustees. 54 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. 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. Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities--at the closing daily 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 at the foreign exchange rates and market values at the close of the fiscal period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of portfolio securities sold during the fiscal period. Accordingly, realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions. Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the holdings of foreign currencies, currency gains (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 (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at year end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on investments and foreign currencies. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability and the level of governmental supervision and regulation of foreign securities markets. 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 securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. To the 55 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to ensure the adequacy on the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the 'initial margin.' Subsequent payments known as 'variation margin,' are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain (loss). When the contract expires or is closed, the gain (loss) is realized and is presented in the Statement of Operations as net realized gain (loss) on financial futures contracts. The Fund invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates or market conditions. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. Forward Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The Fund enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or on specific receivables and payables denominated in a foreign currency. The contracts are valued daily at current exchange rates and any unrealized gain (loss) is included in the Statement of Assets and Liabilities. Gain (loss) is realized on the settlement date of the contract equal to the difference between the settlement value of the original and renegotiated forward contracts. This gain (loss), if any, is included in net realized gain (loss) on foreign currency transactions. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) on sales of investment and currency transactions are calculated on the identified cost basis. Dividend income is 56 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. recorded on the ex-dividend date and interest income is recorded on the accrual basis. The Fund amortizes premiums and discounts on portfolio securities as adjustments to interest income. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. As required, effective August 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premiums on debt securities. Prior to August 1, 2001, the Fund did not amortize premiums on debt securities. Upon initial adoption, the Fund was required to adjust the cost of its fixed-income securities by the cumulative amounts that would have been recognized had the amortization been in effect from the purchase date of each holding. Adopting this accounting principle does not affect the Fund's net asset value, but changes the classification of certain amounts between interest income and realized and unrealized gain (loss) in the Statement of Operations. The current adjustments for the year ended July 31, 2002 resulted in a decrease to net investment income of $4,301, a decrease of realized capital losses of $5,661 and an increase of unrealized depreciation of $1,360. The cumulative adjustment upon adoption through July 31, 2001 resulted in a decrease in accumulated net investment income of $3,311 and a decrease to net unrealized depreciation on investments of $3,311. Net investment income (loss) (other than distribution fees) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day. Dividends and Distributions: The Fund expects to pay dividends of net investment income quarterly, and distributions of net realized capital and currency gains, if any, annually. Dividends and distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. Options: The Fund may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates or foreign currency exchange rates with respect to securities or currencies which the Fund currently owns or intends to purchase. The Fund's principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. The asset or liability is adjusted daily to reflect the current market value of the option. 57 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. If an option expires unexercised, the Fund realizes a gain (loss) to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost basis of the purchase in determining whether the Fund has realized a gain (loss). The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain (loss). Gain (loss) on purchased options is included in net realized gain (loss) on investment transactions. Gain (loss) on written options is presented separately as net realized gain (loss) on written option transactions. The Fund, as writer of an option, has no control over whether the underlying securities or currencies may be sold (called) or purchased (put). As a result, the Fund bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. The Fund, as purchaser of an option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts. Written options, future contracts and forward foreign currency exchange contracts involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Taxes: For federal income tax purposes, each Fund in the Trust is treated as a separate taxpaying entity. It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends have been provided for in accordance with the Fund's understanding of the applicable country's tax rules and rates. Note 2. Agreements The Fund has a management agreement with PI. Pursuant to this agreement, PI manages the investment operations of the Fund, administers the Fund's affairs and supervises the Advisers' performance of all investment advisory services. PI pays for the costs pursuant to the advisory agreements, the cost of compensation of officers of the Fund, occupancy and certain clerical and accounting costs of the Fund. The Fund bears all other costs and expenses. The management fee paid to PI is computed daily and payable monthly at an annual rate of .75% of the average daily net assets of the Fund. PI, in turn, pays the Advisers' fees, based on the average daily net assets of the Fund segments they manage. The Fund has a distribution agreement with Prudential Investment Management Services LLC ('PIMS') which acts as the distributor of the Class A, Class B, Class C 58 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. 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 PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor for Class Z shares of the Fund. Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively. Such expenses under the Plans were .25 of 1%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively, for the year ended July 31, 2002. PIMS has advised the Fund that it has received approximately $190,400 and $77,000 in front-end sales charges resulting from sales of Class A and Class C shares, respectively, during the year ended July 31, 2002. PIMS has advised the Fund that for the year ended July 31, 2002, it has received approximately $166,400 and $11,000 in contingent deferred sales charges imposed upon certain redemptions by Class B and Class C shareholders, respectively. Jennison, PIMS, PIM and PI are indirect, wholly owned subsidiaries of Prudential Financial, Inc. ('Prudential'). The Fund, along with other affiliated registered investment companies (the 'Funds'), is a party to a syndicated credit agreement ('SCA') with a group of banks. For the year ended July 31, 2002 the amounts of the commitment were as follows: $500 million from August 1, 2001 through September 13, 2001, $930 million from September 14, 2001 through December 31, 2001 and $500 million from January 1, 2002 through May 3, 2002. On May 3, 2002, the Funds renewed and amended the SCA, which effectively increased the commitment to $800 million and allows the Funds to increase the commitment to $1 billion, if necessary. Interest on any borrowings under the SCA will be incurred at market rates. The Funds pay a commitment fee of .08 of 1% of the unused portion of the SCA. The commitment fee is accrued and paid quarterly on a pro rata basis by the Funds. The purpose of the SCA is to serve as an alternative source of funding for capital share redemptions. The expiration date of the SCA is May 2, 2003. The Fund did not borrow any amounts pursuant to the SCA during the year ended July 31, 2002. Note 3. Other Transactions with Affiliates Prudential Mutual Fund Services LLC ('PMFS'), an affiliate of PI and an indirect, wholly owned subsidiary of Prudential, serves as the Fund's transfer agent. During the year ended July 31, 2002, the Fund incurred fees of approximately $91,000 for the 59 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. services of PMFS. As of July 31, 2002 approximately $9,000 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. The Fund paid networking fees to Prudential Securities, Inc. ('PSI'), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national mutual fund clearing system. The total amount paid to PSI during the year ended July 31, 2002 was $7,600 and is incurred in transfer agent's fees and expenses in the Statement of Operations. The Fund invests in the Taxable Money Market Series (the 'Series'), a portfolio of Prudential Core Investment Fund, pursuant to an exemptive order received from the Securities and Exchange Commission. The Series is a money market mutual fund registered under the Investment Company Act of 1940, as amended, and managed by PI. During the year ended July 31, 2002, the Fund earned $4,400 from the Series by investing its excess cash. Note 4. Portfolio Securities Purchases and sales of portfolio securities, other than short-term investments, for the year ended July 31, 2002 aggregated $382,888,055 and $359,472,674, respectively. At July 31, 2002 the Fund had outstanding forward currency contracts to sell foreign currencies, as follows: Value at Value at Foreign Currency July 31, Settlement Date Sale Contract 2002 Receivable Appreciation - ---------------------------- ---------- --------------- -------------- EUR 5,084,000, expiring 8/14/02 $4,981,260 $ 5,069,479 $ 88,219 ---------- --------------- -------------- ---------- --------------- -------------- During the year ended July 31, 2002, the Fund entered into financial futures contracts. Details of open contracts at July 31, 2002 are as follows:
Value at Value at Unrealized Number of Expiration July 31, Trade Appreciation/ Contracts Type Date 2002 Date (Depreciation) - --------- --------------------------- ---------- ---------- ---------- --------------- Long Positions: 11 Eurodollars Mar. 03 $2,693,075 $2,628,725 $ 64,350 5 Eurodollars Jun. 03 1,219,313 1,193,688 25,625 20 5 yr U.S. Treasury Notes Sept. 02 2,206,563 2,116,875 89,688
60 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd.
Value at Value at Unrealized Number of Expiration July 31, Trade Appreciation/ Contracts Type Date 2002 Date (Depreciation) - --------- --------------------------- ---------- ---------- ---------- --------------- Short Position: 4 U.S. Treasury Bond Sept. 02 $ 423,750 $ 403,313 $ (20,437) 2 10 yr U.S. Treasury Notes Sept. 02 221,219 220,156 (1,063) --------------- $ 158,163 --------------- ---------------
Transactions in options written during the year ended July 31, 2002 were as follows: Number of Premiums Contracts Received ---------- --------- Options outstanding as of July 31, 2001 -- -- Options written 35 $27,494 Options expired -- -- ---------- --------- Options outstanding as of July 31, 2002 35 $27,494 ---------- --------- ---------- --------- Note 5. Distributions and Tax Information Distributions to shareholders, which are determined in accordance with federal income tax regulations and which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. In order to present undistributed net investment income (loss) and accumulated net realized gains (losses) on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in-capital in excess of par, undistributed net investment income (loss) and accumulated net realized gains (loss) on investments. For the year ended July 31, 2002, the adjustments were to decrease undistributed net investment income and accumulated net realized loss by $142,505, due to the federal income tax treatment of net foreign exchange losses and certain other differences between financial and tax reporting. Net investment income, net realized losses and net assets were not affected by this change. For the year ended July 31, 2002, the tax character of total dividends paid of $2,176,007 was ordinary income. The United States federal income tax basis of the Fund's investments and the net unrealized depreciation as of July 31, 2002 were as follows: 61 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. Other Cost Total Net Basis Unrealized Tax Basis Appreciation Depreciation Adjustments Depreciation --------- ------------ ------------ ------------ ------------ $143,447,795 $ 2,991,624 $ 11,828,404 $ (181,855) $ 9,018,635 The difference between book basis and tax basis were primarily attributable to deferred losses on wash sales and differences in the treatment of premium amortization for book and tax purposes. The other cost basis adjustments are primarily attributable to appreciation (depreciation) of foreign currency and mark to market of receivables, payables and swaps. As of July 31, 2002, the accumulated undistributed earnings on a tax basis were $105,012. This differs from the amount shown on the statement of assets and liabilities primarily due to the deferral for federal tax purposes of post-October currency losses of approximately $178,500 and other cumulative timing differences. For federal income tax purposes, the Fund has a capital loss carryforward as of July 31, 2002 of approximately $77,000 of which $17,600 expires in 2009 and $59,400 expires in 2010. In addition, as of July 31, 2002, the Fund will elect to treat net capital losses of approximately $5,280,000 and net foreign currency losses of $178,500 incurred in the nine month period ended July 31, 2002 as having been incurred in the next fiscal year. Accordingly, no capital gains distribution is expected to be paid to shareholders until net gains have been realized in excess of such amounts. Note 6. Joint Repurchase Agreement Account The Fund, along with other affiliated registered investment companies, transfers uninvested cash balances into a single joint account, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. As of July 31, 2002, the Fund had a 3.74% undivided interest in the joint account. The undivided interest for the Fund represents $15,108,000 in principal amount. As of such date, each repurchase agreement in the joint account and the collateral therefore were as follows: Greenwich Capital Markets, Inc., 1.85%, in the principal amount of $90,000,000, repurchase price $90,004,625, due 8/1/02. The value of the collateral including accrued interest was $91,800,242. UBS Warburg, 1.85%, in the principal amount of $100,000,000, repurchase price $100,005,138, due 8/1/02. The value of the collateral including accrued interest was $102,001,222. 62 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd. Bank of America Securities, LLC, 1.85%, in the principal amount of $123,884,000, repurchase price $123,890,366, due 8/1/02. The value of the collateral including accrued interest was $126,400,393. J.P. Morgan Chase, 1.85%, in the principal amount of $90,000,000, repurchase price $90,004,625, due 8/1/02. The value of the collateral including accrued interest was $91,802,009. Note 7. 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 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 qualified 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 an unlimited number of shares of beneficial interest at $.001 par value per share. Transactions in shares of beneficial interest were as follows:
Class A Shares Amount - ---------------------------------------------------------- ---------- ------------ Year ended July 31, 2002: Shares sold 1,113,546 $ 10,751,835 Shares issued in reinvestment of dividends and distributions 48,420 461,205 Shares reacquired (619,791) (5,938,289) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 542,175 5,274,751 Shares issued upon conversion from Class B 71,086 675,623 ---------- ------------ Net increase (decrease) in shares outstanding 613,261 $ 5,950,374 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 526,047 $ 5,460,468 Shares issued in reinvestment of dividends and distributions 167,430 1,659,110 Shares reacquired (459,254) (4,715,631) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 234,223 2,403,947 Shares issued upon conversion from Class B 136,971 1,400,032 ---------- ------------ Net increase (decrease) in shares outstanding 371,194 $ 3,803,979 ---------- ------------ ---------- ------------
63 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Notes to Financial Statements Cont'd.
Class B Shares Amount - ---------------------------------------------------------- ---------- ------------ Year ended July 31, 2002: Shares sold 2,835,534 $ 27,361,791 Shares issued in reinvestment of dividends and distributions 127,911 1,217,083 Shares reacquired (1,321,979) (12,590,473) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 1,641,466 15,988,401 Shares issued upon conversion into Class A (70,832) (675,623) ---------- ------------ Net increase (decrease) in shares outstanding 1,570,634 $ 15,312,778 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 2,768,777 $ 28,390,731 Shares issued in reinvestment of dividends and distributions 510,312 5,039,906 Shares reacquired (845,336) (8,664,381) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 2,433,753 24,766,256 Shares issued upon conversion into Class A (137,334) (1,400,032) ---------- ------------ Net increase (decrease) in shares outstanding 2,296,419 $ 23,366,224 ---------- ------------ ---------- ------------ Class C - ---------------------------------------------------------- Year ended July 31, 2002: Shares sold 1,848,621 $ 17,765,124 Shares issued in reinvestment of dividends and distributions 34,760 329,476 Shares reacquired (464,216) (4,430,701) ---------- ------------ Net increase (decrease) in shares outstanding 1,419,165 $ 13,663,899 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 669,736 $ 6,832,248 Shares issued in reinvestment of dividends and distributions 118,345 1,169,251 Shares reacquired (337,274) (3,462,746) ---------- ------------ Net increase (decrease) in shares outstanding 450,807 $ 4,538,753 ---------- ------------ ---------- ------------ Class Z - ---------------------------------------------------------- Year ended July 31, 2002: Shares sold 217,692 $ 2,096,700 Shares issued in reinvestment of dividends and distributions 5,141 48,861 Shares reacquired (111,230) (1,065,551) ---------- ------------ Net increase (decrease) in shares outstanding 111,603 $ 1,080,010 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 113,224 $ 1,157,943 Shares issued in reinvestment of dividends and distributions 9,991 98,685 Shares reacquired (22,001) (221,024) ---------- ------------ Net increase (decrease) in shares outstanding 101,214 $ 1,035,604 ---------- ------------ ---------- ------------
64 ANNUAL REPORT JULY 31, 2002 PRUDENTIAL CONSERVATIVE GROWTH FUND - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights
Class A ------------------ Year Ended July 31, 2002* - ---------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE(d): Net asset value, beginning of period $ 9.95 ---------- Income from investment operations Net investment income .26 Net realized and unrealized gain (loss) on investments and foreign currencies (1.15) ---------- Total from investment operations (.89) ---------- Less distributions Dividends from net investment income (.25) Distributions from net realized capital gains -- ---------- Total dividends and distributions (.25) ---------- Net asset value, end of period $ 8.81 ---------- ---------- TOTAL RETURN(b) (9.10)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 20,234 Average net assets (000) $ 18,414 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 1.62% Expenses, excluding distribution and service (12b-1) fees 1.37% Net investment income 2.71% For Class A, B, C and Z shares: Portfolio turnover rate 338%
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total return for periods of less than a full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. * Effective August 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and accreting market discount on debt securities. The effect of this change for the year ended July 31, 2002 was to decrease net investment income and increase net realized and unrealized gain (loss) per share by less than $.005 and decrease the ratio of net investment income from 2.72% to 2.71%. Per share amounts and ratios for the years ended prior to July 31, 2002 have not been restated to reflect this change in presentation. 66 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights Cont'd.
Class A - -------------------------------------------------------------------------- Year Ended July 31, - ------------------------------------- November 18, 1998(a) 2001 2000 Through July 31, 1999 - -------------------------------------------------------------------------- $ 11.06 $ 10.36 $ 10.00 -------- -------- -------- .37 .37 .19 (.30) .82 .35 -------- -------- -------- .07 1.19 .54 -------- -------- -------- (.36) (.37) (.18) (.82) (.12) -- -------- -------- -------- (1.18) (.49) (.18) -------- -------- -------- $ 9.95 $ 11.06 $ 10.36 -------- -------- -------- -------- -------- -------- 1.00% 11.73% 5.34% $ 16,760 $ 14,514 $ 9,097 $ 15,985 $ 12,535 $ 6,157 1.72% 1.73% 1.92%(c) 1.47% 1.48% 1.67%(c) 3.61% 3.46% 2.69%(c) 334% 244% 180%
See Notes to Financial Statements 67 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights Cont'd.
Class B ------------------ Year Ended July 31, 2002* - ---------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE(d): Net asset value, beginning of period $ 9.93 ---------- Income from investment operations Net investment income .19 Net realized and unrealized gain (loss) on investments and foreign currencies (1.15) ---------- Total from investment operations (.96) ---------- Less distributions Dividends from net investment income (.18) Distributions from net realized capital gains -- ---------- Total dividends and distributions (.18) ---------- Net asset value, end of period $ 8.79 ---------- ---------- TOTAL RETURN(b) (9.81)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 68,841 Average net assets (000) $ 67,736 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 2.37% Expenses, excluding distribution and service (12b-1) fees 1.37% Net investment income 1.97%
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total return for periods of less than a full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. * Effective August 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and accreting market discount on debt securities. The effect of this change for the year ended July 31, 2002 was to decrease net investment income and increase net realized and unrealized gain (loss) per share by less than $.005 and no effect on the ratio of net investment income. Per share amounts and ratios for the years ended prior to July 31, 2002 have not been restated to reflect this change in presentation. 68 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights Cont'd.
Class B - -------------------------------------------------------------------------- Year Ended July 31, - ------------------------------------- November 18, 1998(a) 2001 2000 Through July 31, 1999 - -------------------------------------------------------------------------- $ 11.05 $ 10.35 $ 10.00 -------- -------- -------- .29 .29 .14 (.29) .82 .34 -------- -------- -------- -- 1.11 .48 -------- -------- -------- (.30) (.29) (.13) (.82) (.12) -- -------- -------- -------- (1.12) (.41) (.13) -------- -------- -------- $ 9.93 $ 11.05 $ 10.35 -------- -------- -------- -------- -------- -------- 34% 10.89% 4.77% $ 62,177 $ 43,838 $ 30,235 $ 52,433 $ 36,574 $ 19,308 2.47% 2.48% 2.67%(c) 1.47% 1.48% 1.67%(c) 2.84% 2.70% 1.94%(c)
See Notes to Financial Statements 69 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights Cont'd.
Class C ------------------ Year Ended July 31, 2002* - ---------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE(d): Net asset value, beginning of period $ 9.93 ---------- --- Income from investment operations Net investment income .19 Net realized and unrealized gain (loss) on investments and foreign currencies (1.15) ---------- Total from investment operations (.96) ---------- Less distributions Dividends from net investment income (.18) Distributions from net realized capital gains -- ---------- Total dividends and distributions (.18) ---------- Net asset value, end of period $ 8.79 ---------- ---------- TOTAL RETURN(b) (9.81)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 25,419 Average net assets (000) $ 18,350 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 2.37% Expenses, excluding distribution and service (12b-1) fees 1.37% Net investment income 1.97%
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total return for periods of less than a full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. * Effective August 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and accreting market discount on debt securities. The effect of this change for the year ended July 31, 2002 was to decrease net investment income and increase net realized and unrealized gain (loss) per share by less than $.005 and no effect on the ratio of net investment income. Per share amounts and ratios for the years ended prior to July 31, 2002 have not been restated to reflect this change in presentation. 70 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights Cont'd.
Class C - -------------------------------------------------------------------------- Year Ended July 31, - ------------------------------------- November 18, 1998(a) 2001 2000 Through July 31, 1999 - -------------------------------------------------------------------------- $ 11.05 $ 10.35 $ 10.00 -------- -------- -------- .29 .28 .14 (.29) .83 .34 -------- -------- -------- -- 1.11 .48 -------- -------- -------- (.30) (.29) (.13) (.82) (.12) -- -------- -------- -------- (1.12) (.41) (.13) -------- -------- -------- $ 9.93 $ 11.05 $ 10.35 -------- -------- -------- -------- -------- -------- .34% 10.89% 4.77% $ 14,626 $ 11,301 $ 14,035 $ 12,763 $ 12,954 $ 12,039 2.47% 2.48% 2.67%(c) 1.47% 1.48% 1.67%(c) 2.84% 2.63% 1.91%(c)
See Notes to Financial Statements 71 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights Cont'd.
Class Z ------------------ Year Ended July 31, 2002* - ---------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE(d): Net asset value, beginning of period $ 9.95 ---------- Income from investment operations Net investment income .28 Net realized and unrealized gain (loss) on investments and foreign currencies (1.14) ---------- Total from investment operations (.86) ---------- Less distributions Dividends from net investment income (.28) Distributions from net realized capital gains -- ---------- Total dividends and distributions (.28) ---------- Net asset value, end of period $ 8.81 ---------- ---------- TOTAL RETURN(b) (8.87)% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 2,250 Average net assets (000) $ 1,773 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 1.37% Expenses, excluding distribution and service (12b-1) fees 1.37% Net investment income 2.96%
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total return for periods of less than a full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. * Effective August 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premium and accreting market discount on debt securities. The effect of this change for the year ended July 31, 2002 was to decrease net investment income and increase net realized and unrealized gains per share by $.005 and no effect on the ratio of net investment income. Per share amounts and ratios for the years ended prior to July 31, 2002 have not been restated to reflect this change in presentation. 72 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Financial Highlights Cont'd.
Class Z - -------------------------------------------------------------------------- Year Ended July 31, - ------------------------------------- November 18, 1998(a) 2001 2000 Through July 31, 1999 - -------------------------------------------------------------------------- $ 11.05 $ 10.37 $ 10.00 -------- -------- -------- .38 .35 .21 (.28) .85 .35 -------- -------- -------- .10 1.20 .56 -------- -------- -------- (.38) (.40) (.19) (.82) (.12) -- -------- -------- -------- (1.20) (.52) (.19) -------- -------- -------- $ 9.95 $ 11.05 $ 10.37 -------- -------- -------- -------- -------- -------- 1.30% 11.84% 5.58% $ 1,432 $ 471 $ 20,843 $ 949 $ 12,354 $ 38,460 1.47% 1.48% 1.67%(c) 1.47% 1.48% 1.67%(c) 3.78% 3.30% 2.89%(c)
See Notes to Financial Statements 73 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Report of Independent Accountants To the Shareholders and Board of Trustees of Strategic Partners Asset Allocation Funds-- Strategic Partners Conservative Growth Fund In our opinion, the accompanying Statement of Assets and Liabilities, including the portfolio of investments, and the related Statements Of Operations and of Changes in Net Assets and the financial highlights present fairly, in all material respects, the financial position of Strategic Partners Asset Allocation Funds--Strategic Partners Conservative Growth Fund (the 'Fund') at July 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as 'financial statements') are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at July 31, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York September 25, 2002 74 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Federal Income Tax Information We are required by the Internal Revenue Code to advise you within 60 days of the Fund's fiscal year end (July 31, 2002) as to the federal income tax status of dividends paid by the Fund during such fiscal period. Accordingly, we are advising you that during its fiscal period ended July 31, 2002, the Fund paid dividends for Class A, Class B, Class C and Class Z shares totaling $.25, $.18, $.18 and $.28 per share, of ordinary income, which is taxable as such, respectively. Further, we wish to advise you that 16.84% of the ordinary income dividends paid in the fiscal year ended July 31, 2002 qualified for the corporate dividend received deduction available to corporate taxpayers. In January 2003, you will be advised on IRS Form 1099 DIV or substitute 1099 DIV as to the federal tax status of the distributions received by you in calendar year 2002. IMPORTANT NOTICE FOR CERTAIN SHAREHOLDERS We are required by Massachusetts, Missouri and Oregon to inform you that dividends which have been derived from interest on federal obligations are not taxable to shareholders providing the mutual fund meets certain requirements mandated by the respective state's taxing authorities. We are pleased to report that 9.06% of the dividends paid by Strategic Partners Conservative Growth Fund qualify for such deduction. For more detailed information regarding your state and local taxes, you should contact your tax advisor or the state/local taxing authorities. 75 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Information pertaining to the Trustees of the Fund is set forth below. Trustees who are not deemed to be 'interested persons' of the Trust defined in the 1940 Act are referred to as 'Independent Trustees.' Trustees who are deemed to be 'interested persons' of the Trust are referred to as 'Interested Trustees.' 'Fund Complex' consists of the Trust and any other investment companies managed by PI. Independent Trustees
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Eugene C. Dorsey (75) Trustee Since 1998 Saul K. Fenster, Ph.D. (69) Trustee Since 2000 Number of Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Eugene C. Dorsey (75) Retired President, Chief Executive 78 Officer and Trustee of the Gannett Foundation (now Freedom Forum) (since December 1989); formerly Publisher of four Gannett newspapers and Vice President of Gannett Co., Inc.; Chairman of Independent Sector, Washington, D.C. (largest national coalition of philanthropic organizations); Chairman of the American Council for the Arts; Director of the Advisory Board of Chase Manhattan Bank of Rochester. Saul K. Fenster, Ph.D. (69) Currently President Emeritus of New 79 Jersey Institute of Technology; formerly President (1978-2002) of New Jersey Institute of Technology; Commissioner (1998-2002) of the Middle States Association Commission on Higher Education; Commissioner (1985-2002) of the New Jersey Commission on Science and Technology; Director (since 1998) Society of Manufacturing Engineering Education Foundation, formerly a director or trustee of Liberty Science Center, Research and Development Council of New Jersey, New Jersey State Chamber of Commerce, and National Action Council for Minorities in Engineering. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Eugene C. Dorsey (75) Director (since 1996) of First Financial Fund, Inc. (First Financial) and Director (since 1996) of The High Yield Plus Fund, Inc. (High Yield Plus). Saul K. Fenster, Ph.D. (69) Member (since 2000), Board of Directors of IDT Corporation.
76 77 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd.
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Robert E. La Blanc (68) Trustee Since 1999 Douglas H. McCorkindale (63) Trustee Since 1998 W. Scott McDonald, Jr. (65) Trustee Since 2000 Number of Portfolios in Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Robert E. La Blanc (68) President (since 1981) of Robert E. 74 La Blanc Associates, Inc. (telecommunications); formerly General Partner at Salomon Brothers and Vice-Chairman of Continental Telecom. Trustee of Manhattan College. Douglas H. McCorkindale (63) Formerly Vice Chairman (March 75 1984-May 2000) of Gannett Co. Inc. W. Scott McDonald, Jr. (65) Vice President (since 1997) of 79 Kaludis Consulting Group, Inc. (company serving higher education); Formerly principal (1995-1997), Scott McDonald & Associates, Chief Operating Officer (1991-1995), Fairleigh Dickinson University, Executive Vice President and Chief Operating Officer (1975-1991), Drew University, interim President (1988-1990), Drew University and former director of School, College and University Underwriters Ltd. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Robert E. La Blanc (68) Director of Storage Technology Corporation (since 1979) (technology), of Chartered Semiconductor Manufacturing Ltd. (since 1998) (Singapore), of Titan Corporation (electronics, since 1995) and of Salient 3 Communications, Inc. (since 1995) (technology); Director of First Financial Fund (since 1999) and Director of High Yield Plus (since April 1999). Douglas H. McCorkindale (63) Chairman (since February 2001), Chief Executive Officer (since June 2000) and President (since September 1997) of Gannett Co. Inc. (publishing and media); Director of Continental Airlines, Inc.; Director (since May 2001) of Lockheed Martin Corp. (aerospace and defense) and Director of High Yield Plus (since 1996). W. Scott McDonald, Jr. (65)
78 79 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd.
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Thomas T. Mooney (60) Trustee Since 1998 Stephen Stoneburn (59) Trustee Since 1999 Joseph Weber, Ph.D. (78) Trustee Since 2000 Clay T. Whitehead (63) Trustee Since 1999 P.O. Box 8090 McLean, VA 22106-8090 Number of Portfolios in Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Thomas T. Mooney (60) President of the Greater Rochester 95 Metro Chamber of Commerce; formerly Rochester City Manager; formerly Deputy Monroe County Executive; Trustee of Center for Governmental Research, Inc.; Director of Blue Cross of Rochester, Monroe County Water Authority and Executive Service Corps of Rochester. Stephen Stoneburn (59) President and Chief Executive Officer 74 (since June 1996) of Quadrant Media Corp. (a publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media and Senior Vice President of Fairchild Publications, Inc (1975-1989). Joseph Weber, Ph.D. (78) Vice President, Finance (retired), 62 Interclass (international corporate learning) since 1991; formerly President, The Alliance for Learning; retired Vice President, Member of the Board of Directors and Member of the Executive and Operating Committees, Hoffmann-LaRoche Inc; Member, Board of Overseers, New Jersey Institute of Technology. Trustee and Vice Chairman Emeritus, Fairleigh Dickinson University. Clay T. Whitehead (63) President (since 1983) of National 91 P.O. Box 8090 Exchange Inc. (new business McLean, VA 22106-8090 development firm). Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Thomas T. Mooney (60) Director, President and Treasurer of First Financial and Director of High Yield Plus (since 1988). Stephen Stoneburn (59) Joseph Weber, Ph.D. (78) Clay T. Whitehead (63) Director (since 2000) of P.O. Box 8090 First Financial and High McLean, VA 22106-8090 Yield Plus.
80 81 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. Interested Trustees
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- *Robert F. Gunia (55) Vice President Since 1999 and Trustee *David R. Odenath, Jr (45) President and Since 1999 Trustee Number of Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- *Robert F. Gunia (55) Executive Vice President and Chief 112 Administrative Officer (since June 1999) of Prudential Investments LLC (PI); Executive Vice President and Treasurer (since January 1996) of PI; President (since April 1999) of Prudential Investment Management Services LLC (PIMS); Corporate Vice President (since September 1997) of Prudential Financial, Inc. (Prudential); formerly Senior Vice President (March 1987-May 1999) of Prudential Securities Incorporated (Prudential Securities); formerly Chief Administrative Officer (July 1989-September 1996), Director (January 1989-September 1996) and Executive Vice President, Treasurer and Chief Financial Officer (June 1987-December 1996) of Prudential Mutual Funds Management, Inc. (PMF). Vice President and Director (since May 1992) of Nicholas-Applegate Fund, Inc. *David R. Odenath, Jr (45) President, Chief Executive Officer 115 and Chief Operating Officer (since June 1999) of PI; Senior Vice President (since June 1999) of Prudential; formerly Senior Vice President (August 1993-May 1999) of PaineWebber Group, Inc. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- *Robert F. Gunia (55) Vice President and Director (since May 1989) of The Asia Pacific Fund, Inc. *David R. Odenath, Jr (45)
82 83 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. Information pertaining to the Officers of the Trust is set forth below. Officers
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Judy A. Rice (54) Vice President Since 2001 Grace C. Torres (43) Treasurer and Since 2000 Principal Financial and Accounting Officer Marguerite E.H. Morrison (46) Secretary since 2002 Principal Occupations Name, Address** and Age During Past 5 Years ------------------------------- Judy A. Rice (54) Executive Vice President (since 1999) of PI; formerly various positions to Senior Vice President (1992-1999) of Prudential Securities; and various positions to Managing Director (1975-1992) of Salomon Smith Barney; Member of Board of Governors of the Money Management Institute; Member of the Prudential Securities Operating Council and the National Association for Variable Annuities. Grace C. Torres (43) Senior Vice President (since January 2000) of PI; formerly First Vice President (December 1996 - January 2000) of PI and First Vice President (March 1993-1999) of Prudential Securities. Marguerite E.H. Morrison (46) Vice President and Chief Legal Officer - Mutual Funds and Unit Investment Trusts (since August 2000) of Prudential; Assistant Secretary (since February 2001) of PI; Vice President and Assistant Secretary of PIMS (since October 2001), previously Vice President and Associate General Counsel (December 1996 - February 2001) of PI and Vice President and Associate General Counsel (September 1987 - September 1996) of Prudential Securities. Name, Address** and Age ------------------------------- Judy A. Rice (54) Grace C. Torres (43) Marguerite E.H. Morrison (46)
84 85 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. * 'Interested' Trustee, as defined in the 1940 Act, by reason of affiliation with the Manager, the Subadviser or the Distributor. ** Unless otherwise noted, the address of the Trustees and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, 9th Floor, Newark, New Jersey 07102-4077. *** There is no set term of office for Trustees and Officers. The Independent Trustees have adopted a retirement policy which calls for the retirement of Trustees on December 31 of the year in which they reach the age of 75, except for Mr. Weber, who will retire by December 31, 2002. The table shows the number of years that an individual has served as a Trustee or Officer. **** This column includes only directorships of companies required to report to the SEC under the Securities and Exchange Act of 1934 (that is, 'public companies') or other investment companies registered under the Act. Additional information about the Trust's Trustees is included in the Trust's statement of additional information, which is available without charge, upon request, by calling (800) 225-1852 or (732) 482-7555 (Calling from outside the U.S.)
86 87 Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Getting the Most from Your 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. www.strategicpartners.com (800) 225-1852 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 on the U.S. market and denominated in U.S. dollars. Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Class A Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -13.65% 0.71% Without Sales Charge -9.10% 2.11% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Conservative Growth Fund (Class A shares) with a similar investment in the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable front-end sales charge was deducted from the initial $10,000 investment in Class A shares; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with Securities and Exchange Commission (SEC) regulations. www.strategicpartners.com (800) 225-1852 Class B Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -14.24% 0.90% Without Sales Charge -9.81% 1.36% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Conservative Growth Fund (Class B shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable contingent deferred sales charge (CDSC) was deducted from the value of the investment in Class B shares, assuming full redemption on July 31, 2002; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Class C Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -11.59% 1.09% Without Sales Charge -9.81% 1.36% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Conservative Growth Fund (Class C shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the front-end sales charge was deducted from the initial $10,000 investment in Class C shares; (b) the applicable CDSC was deducted from the value of the investment in Class C shares, assuming full redemption on July 31, 2002; (c) all recurring fees (including management fees) were deducted; and (d) all dividends and distributions were reinvested. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. www.strategicpartners.com (800) 225-1852 Class Z Growth of a $10,000 Investment Average Annual Total Returns as of 7/31/02 One Year Since Inception - -8.87% 2.35% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Conservative Growth Fund (Class Z shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) all recurring fees (including management fees) were deducted, and (b) all dividends and distributions were reinvested. Class Z shares are not subject to a sales charge or distribution and service (12b- 1) fees. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. FOR MORE INFORMATION Strategic Partners Mutual Funds Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 (800) 225-1852 Visit our website at: www.strategicpartners.com Trustees Eugene C. Dorsey Saul K. Fenster Robert F. Gunia Robert E. La Blanc Douglas H. McCorkindale W. Scott McDonald, Jr. Thomas T. Mooney David R. Odenath, Jr. Stephen Stoneburn Joseph Weber Clay T. Whitehead Officers David R. Odenath, Jr., President Robert F. Gunia, Vice President Judy A. Rice, Vice President Grace C. Torres, Treasurer Marguerite E.H. Morrison, Secretary Manager Prudential Investments LLC Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 Investment Advisers EARNEST Partners, LLC 75 14th Street, Suite 2300 Atlanta, GA 30309 Franklin Advisers, Inc. 920 Park Place San Mateo, CA 94403 Jennison Associates LLC 466 Lexington Avenue New York, NY 10017 Pacific Investment Mgmt. Company LLC 840 Newport Center Dr. Newport Beach, CA 92660 Prudential Investment Management, Inc. Gateway Center Two Newark, NJ 07102 Distributor Prudential Investment Management Services LLC Gateway Center Three, 14th Floor 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 PO Box 8098 Philadelphia, PA 19101 Independent Accountants PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 Legal Counsel Shearman & Sterling 599 Lexington Avenue New York, NY 10022 Fund Symbols Nasdaq CUSIP Class A PCGAX 86276X103 Class B PBCFX 86276X202 Class C PCCFX 86276X301 Class Z PDCZX 86276X400 MFSP504E IFS-A074131 Mutual funds are not bank guaranteed or FDIC insured, and may lose value. ANNUAL REPORT JULY 31, 2002 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS STRATEGIC PARTNERS MODERATE GROWTH FUND Objective: Seeks Capital Appreciation and a Reasonable Level of Current Income This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. 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. Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Performance at a Glance INVESTMENT GOALS AND STYLE The Strategic Partners Moderate Growth Fund's investment objective is capital appreciation and a reasonable level of current income. The Fund is designed for investors who want investment professionals to make their asset allocation decisions, that is, it invests in a diversified portfolio of stocks and fixed income securities. The Fund is periodically rebalanced in accordance with its asset allocation strategy. There can be no assurance that the Fund will achieve its investment objective. ABSOLUTE AND RELATIVE PERFORMANCE We evaluate an investment's performance in two ways. The first considers how much more (or less) an investment is worth at the end of a reporting period. This is known as absolute performance. The second compares whether you did better (or worse) than the market average (the benchmark index) or the average return of comparable funds (the Lipper Average) regardless of your gain or loss. This is called relative performance. Three factors determine the absolute return of an asset allocation fund: the asset allocation, the benchmark return for each asset class, and the relative performance of the fund's holdings in each asset class compared to its benchmark index for that class. If, for example, your fund has a substantial allocation to small-cap stocks, its absolute return will depend on how well small-cap stocks perform in general. It will also depend on the relative performance of the investment advisers for the different asset classes. The fund's return is higher when the advisers outperform their benchmarks than when they underperform them. This "adviser contribution" has a greater impact in the asset classes with larger allocations. This is why, in the discussion of the performance of your Strategic Partners Asset Allocation Fund, we may say, for example, that the Fund's large allocation to a low-performing asset class hurt its return, even though the advisers' relative performance had a positive impact. www.strategicpartners.com (800) 225-1852 Annual Report July 31, 2002 Cumulative Total Returns1 As of 7/31/02 One Year Since Inception2 Class A -14.92% 0.94% Class B -15.56 -2.07 Class C -15.56 -2.07 Class Z -14.70 1.84 Lipper Multi-Cap Core Funds Avg..3 -22.40 -8.04 S&P 500 Index4 -23.62 -17.89 Average Annual Total Returns1 As of 6/30/02 One Year Since Inception2 Class A -13.55% 0.91% Class B -14.04 1.05 Class C -11.36 1.28 Class Z -8.71 2.62 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 Investments 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. Without the distribution and service (12b-1) fee waiver for Class A shares, the returns would have been lower. 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 the first six years respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares, on a quarterly basis. Class C shares are subject to a front-end sales charge of 1% and a CDSC of 1% for shares redeemed within 18 months of purchase. Class Z shares are not subject to a sales charge or distribution and service (12b-1) fees. The cumulative and average annual total returns in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. 2Inception date: Class A, B, C, and Z, 11/18/98. 3The Lipper Average is unmanaged, and is based on the average return for all funds in each share class for the one-year and since inception periods in the Lipper Multi-Cap Core Funds category. Funds in the Lipper Multi-Cap Core Funds Average invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi- cap funds typically have between 25% and 75% of their assets invested in companies with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the Standard & Poor's (S&P) SuperComposite 1500 Index. Multi-cap core funds have more latitude in the companies in which they invest. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value compared to the S&P SuperComposite 1500 Index. 4The Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. Investors cannot invest directly in an index. The returns for the Lipper Average and S&P 500 Index would be lower if they included the effect of sales charges, operating expenses, or taxes. 1 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS - ---------------------------------------------------------- September 16, 2002 DEAR SHAREHOLDER, The events of the past 12 months--economic recession, accounting and corporate governance scandals, terrorist attacks, turbulence in the Middle East, and fear that economic recovery will be slow--have shaken the confidence of many investors. In times like these, we believe the Strategic Partners Asset Allocation Funds are particularly appealing. Markets can move very quickly, and investors who have tried to time shifts from one asset class to another have generally not helped their long-term returns. The preferred approach is to have an asset allocation target that suits your personal investment goals, time horizon, and tolerance for volatility, and then to avoid being pressured to change it by current events. When the various asset classes perform in dramatically different ways--as they have been doing over the past several years, your Strategic Partners Moderate Growth Fund's rebalancing discipline will not only maintain your target allocation, but it may also enhance your return somewhat as it maneuvers to stay on course. With Strategic Partners mutual funds, you have the added comfort of knowing that our Strategic Investment Research Group regularly monitors the funds' investment advisers for consistent adherence to their style objectives, as well as for changes in practices or personnel that might affect their performance. During this reporting period, for example, we changed the subadviser for the funds' small/mid-cap value stocks. In the following pages, we explain the Strategic Partners Moderate Growth Fund's loss and its significant outperformance of its benchmark over this reporting period. We appreciate your confidence in Strategic Partners mutual funds through these difficult times. Sincerely, David R. Odenath, Jr., President Strategic Partners Asset Allocation Funds 2 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Annual Report July 31, 2002 INVESTMENT ADVISERS' REPORT AN EVENTFUL FISCAL YEAR The 12 months ended July 31, 2002, included a series of unexpected events of historical importance. The reporting period began in the middle of a very steep stock market decline as investors digested the signs that the U.S. economy was contracting. Expectations and share prices had previously been raised by the longest period of continuous economic growth in U.S. history. Not long into the reporting period, investors' expectations were jarred again by the first external attack on the United States since World War II. In response to both the economic slowdown and the terrorist shock, the Federal Reserve began to drive down interest rates very aggressively, pushing short- term rates to their lowest level in 40 years. The European and United Kingdom Central Banks also reduced interest rates. Investors expected the low interest rates to trigger an economic recovery, which it did, pushing share prices higher in the fourth quarter of 2001. During that brief wave of optimism, growth stocks responded most vigorously. Then the record for the largest bankruptcy in U.S. history was broken twice in short order by Enron and WorldCom. A leading accounting firm and several large, respected companies were involved in a string of accounting scandals and restatements of financial reports. Many investors lost confidence in the accuracy of audited financial reports and once again turned away from equity investments and toward bonds, cash, real estate, and gold. In addition, during the first half of 2002, the U.S. dollar began a long-predicted correction of its overvaluation against other currencies. The string of confidence-rattling issues did not go unaddressed. Accounting firms, Congress, the Securities and Exchange Commission (SEC), the New York Stock Exchange, and several corporations took steps to restore the credibility of financial reporting. These steps included measures to remove even the appearance of conflicts of interest by auditors and securities analysts, tighter standards for the independence of corporate directors from 3 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Annual Report July 31, 2002 management, more detailed financial reports, and a requirement that corporate CEOs and CFOs take personal legal responsibility for the accuracy of their firms' financial statements. In the United States, the only sectors to show rising net share prices over the period were large-cap consumer staples, buoyed by the continuing strength of consumer spending, and small-cap financial services, driven by continued consumer borrowing for houses, autos, and other goods. Since the issues that affected equity investing concerned the pace of economic and earnings growth and the reliability of future earnings estimates, growth stocks fared worse. Both large-cap and small-cap growth stocks had a dismal 12 months. The depressed level of spending on technology upgrades kept both large-cap and small-cap technology stocks at or near the bottom of the market with sector average stock declines greater than 40%. Enron's bankruptcy caused a retreat from industries that were very dependent upon debt financing, including energy utilities, and cable systems. Investors also moved away from large companies whose financial statements were complicated because they had grown through many acquisitions. Even such respected firms as General Electric (GE) and American International Group (AIG) saw their share prices drop sharply. Losses were more moderate in the large- and small-cap materials and processing sectors. The materials industries have gone through a period of consolidation and cost cutting, and were expected to benefit from an economic recovery. Gold mining companies also benefited from the political and economic uncertainty and the dollar's decline, all of which increased demand for gold. Small-cap value stocks were the best-performing equity class, although even they fell over the period. The profits of small companies usually respond more emphatically to changes in economic activity. In fact, in the last quarter of 2001 and the first half of 2002, the earnings of small-cap companies 4 www.strategicpartners.com (800) 225-1852 Asset Class Index Returns As of 7/31/02 (GRAPH) Source: Prudential Investments LLC and Lipper Inc. The performance cited does not represent the performance of any of the Strategic Partners Asset Allocation Funds. Past performance is not indicative of future results. Investors cannot invest directly in an index. The Russell 1000 Value Index comprises those securities in the Russell 1000 Index with a less-than-average growth orientation. Companies in this index generally have low price-to-book and price/earnings ratios, higher dividend yields, and lower forecasted growth values. The Russell 1000 Growth Index comprises those securities in the Russell 1000 Index with a greater-than-average growth orientation. Companies in this index tend to exhibit higher price-to-book and price/earnings ratios, lower dividend yields, and higher forecasted growth rates. The Russell 2000 Value Index is an unmanaged, weighted index that measures the performance of those Russell 2000 companies with lower price-to-book ratios. The Russell 2000 Growth Index is an unmanaged, weighted index that measures the performance of those Russell 2000 companies with higher price-to-book ratios. The Morgan Stanley Capital International Europe, Australia, and Far East Index (MSCI EAFE Index) is an unmanaged, weighted index of performance that reflects stock price movements in Europe, Australasia, and the Far East. The Lehman Brothers Aggregate Bond Index is an unmanaged index of investment-grade securities issued by the U.S. government and its agencies, and by corporations with between 1 and 10 years remaining to maturity. The Lehman Brothers Aggregate Bond Index gives a broad look at how short- and intermediate-term bonds have performed. The Lehman Brothers U.S. Corporate High Yield Index is an unmanaged index of fixed-rate, noninvestment-grade debt securities with at least one year remaining to maturity. The Lehman Brothers U.S. Corporate High Yield Index gives a broad look at how high yield ("junk") bonds have performed. 5 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Annual Report July 31, 2002 first declined less and then grew more than those of large caps. Bread-and-butter small companies were expected to benefit most from the improving economy. By "bread and butter," we mean, for example, companies whose products have an established demand, and whose profitability is not dependent upon the rapid growth of a new market: healthcare, food, and consumer services firms. In addition, small-cap value stocks continued their recovery from an extremely undervalued period at the onset of this bear market. Such corrections often overshoot, and may have done so during this reporting period. Stock markets outside the United States were driven by the same factors as U.S. markets: strong in the fourth quarter of 2001, but very weak over the rest of the reporting period. The decline in 2002 of the MSCI EAFE Index--representing developed country markets-- affected all sectors. European stocks were hit by reports of a sluggish 0.1% rise in Euro-zone GDP in the first quarter, which eroded confidence in the recovery's robustness. Surprisingly, Japanese stocks fell only modestly and outperformed the rest of the world's markets over this reporting period even as Moody's downgraded Japan's long-term debt rating because of its escalating public debt. However, sharp gains in both the euro and yen against the U.S. dollar significantly mitigated the declines for U.S. dollar-based investors. This was a good period for bonds because prices of existing bonds rise when interest rates fall. This boost was tempered by rising concern about credit risk. Many companies have been carrying high levels of debt in order to boost their earnings per share (a high degree of leverage). As the economy slowed, investors became more concerned about these firms' ability to service their debt. The massive bankruptcies of Enron and WorldCom heightened such concerns, as did the struggle of many other energy and telecommunications firms to cover their debt payments. This increased the premium that corporate borrowers had to pay over the interest rates on government securities (the credit spread). The combination of bankruptcies and rising credit spreads provided challenges for fixed income investors. 6 www.strategicpartners.com (800) 225-1852 YOUR FUND'S PERFORMANCE The Strategic Partners Moderate Growth Fund performed substantially better than the Lipper Multi-Cap Core Funds Average and the S&P 500 Index largely because of its 35% allocation to fixed income investments. Core bonds had an excellent 12-month return even though the Fund's holdings in the sector underperformed their benchmark, largely because of credit concerns. Although the portfolio was helped by its underweight in corporate bonds, a move into telecommunications and energy company bonds in the second quarter of 2002 hurt its return as corporate governance scandals pushed investors away from those industries. Return also was hurt by the portfolio's high yield and emerging market holdings. The Fund's portfolio benefited from an above-average duration (exposure to interest-rate changes) because the prices of its bonds rose as current interest rates fell. The strongly positive return on core bonds was a welcome balance to the decline in other asset classes. Although the Fund's high yield ("junk") bonds fell in value as investors moved away from risk exposures, their impact was relatively small, in part because their substantial outperformance of their benchmark mitigated the impact. Because of this outperformance and the substantial underperformance of the Fund's small-cap value stocks, the high yield holdings had the second best return. We changed subadvisers for the Fund's small-cap value stocks during this reporting period. Early in the reporting period, the portfolio's performance was helped by a strong selection of technology and consumer discretionary stocks. Under its new subadviser, in the poorer markets later in the period, the portfolio's overweight of technology stocks and underweight of financials detracted from its performance. Its return was helped by housing stocks and by several energy holdings. 7 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Annual Report July 31, 2002 Among equity investments, growth stocks performed worse than value stocks because the falling market represented skepticism about earnings growth rates. Their 20% allocation meant that large-cap growth stocks had the greatest negative impact on the Fund's return despite a modest outperformance by the Fund in this asset class. The largest detractions came from technology, media, and specialty retail stocks, and from financial firms that were exposed to the poor capital market environment or to consumer borrowing. Citigroup, the largest detractor, fit both of the latter criteria. The Fund had positive contributions from the defense contractor Northrop Grumman, from Pharmacia (a drug company that during this period agreed to be acquired by Pfizer), and from several consumer stocks, including Kohl's, Gillette, and Procter & Gamble. The impact of small-cap growth stocks was considerably less because of the Fund's small allocation to them, but the asset class fell further than the large caps, making it the worst performing class. The impact was mitigated somewhat by the outperformance of the asset class average by the Fund's holdings. This was due primarily to an emphasis on energy stocks and certain groups of technology stocks at times when they performed relatively well, e.g., software and semiconductor equipment manufacturers during the latter half of the reporting period. Some of these positions were sold or trimmed to take profits. Large-cap value stocks, also a 20% allocation, made the second- largest absolute detraction, underperforming a poor market, albeit not nearly as bad as that for growth stocks. Telecommunication services companies, such as the wireless firms Western Wireless and Sprint PCS, detracted heavily. The Fund had some exposure to Enron and Adelphia--two companies where accounting irregularities have been alleged. Although these were not large positions, the stocks fell substantially. Williams Companies was also a large detractor, in part as a by-product of the attention to Enron, because it is in the energy trading business. On the positive side, return was supported by tobacco and health service companies, and by good stock selection among the drug companies. Wyeth was the largest contributor. 8 www.strategicpartners.com (800) 225-1852 International stocks--as measured by the MSCI EAFE Index representing large-cap stocks in the developed country markets in Europe, Australasia, and the Far East--performed more or less in line with domestic large-cap value stocks, and the portfolio performed marginally better than that benchmark. During the early part of the reporting period, its holdings in companies that were aggressively restructuring their operations to improve their profitability detracted from return. Such companies, with low current profitability but the potential to improve through restructuring, have always played a role in the Fund's subadviser's strategy. However, an economic downturn makes implementing a major restructuring much more difficult. Toward the end of 2001, the Fund shifted capital from companies engaged in restructuring into those with a more consistent history of financial productivity in a variety of environments. In the falling markets of 2002, the Fund's continued focus on stocks that were inexpensive compared with their earnings helped its performance, particularly in the telecommunications sector. Its telecommunications and technology holdings outperformed the corresponding sectors in the benchmark, and its underweight in technology also helped its return. The Fund was negatively affected by its underweight in healthcare and its overweight in financial services stocks compared with the Index. Strategic Partners Moderate Growth Fund Management Team 9 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Annual Report July 31, 2002 WHAT IS AN ASSET ALLOCATION FUND? Diversification--spreading your investments over many different securities--is a basic principle of investing. It helps reduce the overall risk of your portfolio. Mutual funds not only provide professional money management, but they also allow a relatively small investment to be spread over many different securities, reducing the impact of any one security on your return. In addition, if you diversify your investments among asset classes and investment styles--between stocks and bonds, value and growth stocks, and investment-grade and high yield bonds--it is less likely that all the securities you own will move in the same direction at one time. Strategic Partners Asset Allocation Funds provide more of this buffer than funds investing in only one asset class. We believe this will result in more consistent returns over time. In addition, we rebalance the Strategic Partners Moderate Growth Fund to restore the original weighting of different asset classes. REBALANCING The Strategic Partners Moderate Growth Fund has a target allocation for each asset class. As some asset classes perform better than others, the portfolio will drift from this original target: the securities that rise most will become a larger proportion of the invested assets. We direct new investments to the asset classes that have fallen below their target ratio and, when necessary, sell certain securities in appreciated asset classes to maintain the balance. This keeps your risk exposure from changing too much. Forcing us to sell high may also increase our average selling price over time. Although an individual investor can diversify and rebalance, it would require a large investment to own the range of asset classes represented in the Strategic Partners Moderate Growth Fund. Moreover, calculating the amounts to allocate to each kind of security in a rebalancing would be difficult. Strategic Partners Asset Allocation Funds do it all for you. 10 www.strategicpartners.com (800) 225-1852 Glossary of Terms Asset classes are classifications of investments. The most basic classification of securities is among stocks, bonds, and money market investments. Stocks are shares of ownership in a firm. Owners share in the profits after debts are paid, and share in the firm's appreciation in value. Generally, the prices of stocks vary with investors' estimates of a firm's earnings prospects, including the impact of broader economic conditions. Bonds are loans to a company, government, or agency. They carry a fixed interest rate, or one that varies according to the terms specified in the bond. They have a maturity date at which they must be repaid. Generally, bond prices fluctuate with current interest rates and with events that affect the debtor's prospects of repaying the loan. Money market instruments are short-term loans that mature in 13 months or less. Bonds and money market instruments are called fixed income securities. High yield bonds are also known as "junk bonds." They are subject to greater risk of loss of principal and interest, including default risk, than higher-rated bonds. Strategic Partners Moderate Growth Fund Diversification Target (GRAPH) 11 ANNUAL REPORT JULY 31, 2002 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- LONG-TERM INVESTMENTS 97.0% COMMON STOCKS 63.2% - ------------------------------------------------------------------------------------- Aerospace & Defense 1.1% 5,500 Boeing Co. $ 228,360 5,400 General Dynamics Corp. 436,968 7,400 Lockheed Martin Corp. 474,414 10,600 Northrop Grumman Corp. 1,173,420 ---------------- 2,313,162 - ------------------------------------------------------------------------------------- Air Freight & Couriers 0.2% 10,100 Airborne, Inc. 136,552 15,100 Forward Air Corp.(a) 327,821 ---------------- 464,373 - ------------------------------------------------------------------------------------- Airlines 0.3% 10,400 Atlantic Coast Airlines Holdings, Inc.(a) 162,760 19,100 Continental Airlines, Inc. (Class B)(a) 204,752 18,900 Delta Air Lines, Inc. 294,462 ---------------- 661,974 - ------------------------------------------------------------------------------------- Auto Components 0.4% 14,300 Federal Signal Corp. 299,156 10,300 Gentex Corp.(a) 300,657 3,300 Superior Industries International, Inc. 144,771 ---------------- 744,584 - ------------------------------------------------------------------------------------- Automobiles 0.8% 8,300 Bayerische Motoren Werke (BMW) AG (Germany) 312,886 13,300 Harley-Davidson, Inc. 629,888 62,000 Nissan Motor Co., Ltd. (Japan) 433,848 12,000 Toyota Motor Corp. (Japan) 287,084 ---------------- 1,663,706 - ------------------------------------------------------------------------------------- Banks 2.9% 30,400 ABN AMRO Holding NV ADR (Netherlands) 432,169 24,600 Allied Irish Banks PLC (Ireland) 287,008 9,000 Astoria Financial Corp. 302,850
See Notes to Financial Statements 13 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- 10,300 Bank of America Corp. $ 684,950 10,800 Bank of Ireland (Ireland) 122,827 16,600 Bank One Corp. 645,906 31,000 Bankunited Financial Corp.(a) 527,000 12,920 BNP Paribas SA (France) 593,830 4,700 Commerce Bancorp, Inc. 217,234 4,800 Hibernia Corp. (Class A) 99,744 58,800 HSBC Holdings PLC (United Kingdom)(a) 675,151 2,800 Investors Financial Services Corp. 86,156 30,400 Oversea-Chinese Banking Corp., Ltd. (Singapore) 196,671 23,600 Sao paolo IMI SpA (Italy) 180,707 800 Silicon Valley Bancshares(a) 17,304 21,900 Standard Chartered PLC (United Kingdom) 222,550 10,000 UBS AG (Switzerland)(a) 440,655 1,900 Umpqua Holdings Corp. 29,279 29,896 United Overseas Bank, Ltd. (Singapore) 218,859 ---------------- 5,980,850 - ------------------------------------------------------------------------------------- Beverages 1.5% 21,500 Coca-Cola Co. 1,073,710 43,600 Diageo PLC (United Kingdom)(a) 528,549 12,767 Heineken NV (Netherlands) 522,585 21,000 PepsiCo, Inc. 901,740 ---------------- 3,026,584 - ------------------------------------------------------------------------------------- Biotechnology 0.9% 19,800 Amgen, Inc.(a) 903,672 20,100 Genentech, Inc.(a) 698,475 8,700 Medimmune, Inc.(a) 258,738 4,300 Ortec International, Inc.(a) 4,300 ---------------- 1,865,185 - ------------------------------------------------------------------------------------- Building & Construction 0.6% 2,114 CRH PLC (Ireland) 31,773 15,915 CRH PLC ADR (Ireland) 238,732
14 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- 21,650 D.R. Horton, Inc. $ 480,630 20,500 Hovnanian Enterprises, Inc. (Class A)(a) 585,070 ---------------- 1,336,205 - ------------------------------------------------------------------------------------- Building Products 0.1% 6,100 Crane Co. 140,178 12,500 Watsco, Inc. 177,500 ---------------- 317,678 - ------------------------------------------------------------------------------------- Chemicals 0.9% 10,000 Akzo Nobel NV (Netherlands) 354,814 3,700 Cabot Corp. 91,464 4,000 FMC Corp.(a) 98,560 31,500 IMC Global, Inc. 341,775 19,100 Lyondell Chemical Co. 252,120 5,600 Minerals Technologies, Inc. 209,160 16,300 Solutia, Inc. 102,038 5,900 The Scotts Co. (Class A)(a) 268,450 5,500 The Valspar Corp. 223,520 ---------------- 1,941,901 - ------------------------------------------------------------------------------------- Commercial Services & Supplies 1.3% 12,800 Administaff, Inc.(a) 96,000 21,800 Allied Waste Industries, Inc.(a) 143,880 4,500 CDI Corp.(a) 127,530 9,000 Concord EFS, Inc.(a) 175,500 900 CoStar Group, Inc.(a) 18,900 15,800 Global Payments, Inc.(a) 410,800 1,300 Headwaters, Inc.(a) 18,291 5,300 Heidrick & Struggles International, Inc.(a) 82,415 800 John H. Harland Co. 19,432 8,300 Kelly Services, Inc. 207,002 5,200 NCO Group, Inc.(a) 75,920 13,100 NDCHealth Corp. 282,829 4,400 Pegasus Solutions, Inc.(a) 70,136 10,200 ProBusiness Services, Inc.(a) 99,960 12,800 Republic Services, Inc.(a) 225,280
See Notes to Financial Statements 15 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- 6,700 Resources Connection, Inc.(a) $ 123,414 13,500 US Liquids, Inc.(a) 25,650 20,800 Waste Management, Inc.(a) 492,336 ---------------- 2,695,275 - ------------------------------------------------------------------------------------- Communications Equipment 1.1% 112,000 3Com Corp.(a) 505,120 8,600 Adaptec, Inc.(a) 50,740 16,700 Advanced Fibre Communications, Inc.(a) 287,741 10,200 Anaren Microwave, Inc.(a) 79,560 12,200 Avocent Corp.(a) 183,366 65,400 Cisco Systems, Inc.(a) 862,626 8,200 Ixia(a) 44,608 1,900 Nokia Oyj ADR (Finland) 23,560 17,300 Nokia Oyj (Finland) 215,408 13,100 Powerwave Technologies, Inc.(a) 80,434 7,200 Sierra Wireless, Inc.(a) 18,360 ---------------- 2,351,523 - ------------------------------------------------------------------------------------- Computers & Peripherals 1.3% 7,800 Advanced Digital Information(a) 40,560 26,800 Dell Computer Corp.(a) 668,124 80,400 EMC Corp.(a) 603,000 105,694 Hewlett-Packard Co. 1,495,570 ---------------- 2,807,254 - ------------------------------------------------------------------------------------- Construction & Engineering 0.1% 35,300 McDermott International, Inc.(a) 165,557 - ------------------------------------------------------------------------------------- Containers & Packaging 0.5% 7,600 Pactiv Corp.(a) 138,092 15,500 Temple-Inland, Inc. 832,350 ---------------- 970,442 - ------------------------------------------------------------------------------------- Diversified Financials 5.7% 12,100 A.G. Edwards, Inc. 416,240 4,800 Acom Co., Ltd. (Japan)(a) 289,388 1,700 AIFUL CORP. (Japan) 108,170
16 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- 37,300 American Express Co. $ 1,315,198 16,400 Americredit Corp.(a) 320,620 2,400 BlackRock, Inc.(a) 100,680 65,000 Citigroup, Inc. 2,180,100 3,000 Doral Financial Corp. 115,020 12,300 Eaton Vance Corp. 329,148 15,600 Fortis NL NV (Netherlands) 260,313 10,500 Freddie Mac 650,475 22,100 Goldman Sachs Group, Inc. 1,616,615 14,900 ING Groep NV (Netherlands) 322,842 20,300 Investor AB (Sweden) 133,435 8,900 Jefferies Group, Inc. 355,110 5,700 Knight Trading Group, Inc.(a) 23,313 21,700 Lehman Brothers Holdings, Inc. 1,230,607 14,600 MBNA Corp. 283,094 13,900 Merrill Lynch & Co., Inc. 495,535 4,400 Morgan Stanley 177,540 75,000 Nikko Securities Co., Ltd. (Japan) 316,894 2,700 Orix Corp. (Japan) 186,454 15,300 Principal Financial Group(a) 439,263 11,500 Raymond James Financial, Inc. 312,800 ---------------- 11,978,854 - ------------------------------------------------------------------------------------- Diversified Telecommunication Services 1.7% 5,200 ALLTEL Corp. 210,704 42,800 AT&T Corp. 435,704 29,300 BellSouth Corp. 786,705 60,770 BT Group PLC (United Kingdom) 191,294 103,600 Koninklijke KPN NV (Netherlands)(a) 485,511 57 Nippon Telegraph & Telephone Corp. (Japan) 233,224 15,500 SBC Communications, Inc. 428,730 66,700 Telecom Italia SpA (Italy) 527,075 10,000 Verizon Communications, Inc. 330,000 ---------------- 3,628,947
See Notes to Financial Statements 17 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- Electric Utilities 0.6% 29,500 CLP Holdings, Ltd. (Hong Kong) $ 115,357 8,850 E.ON AG (Germany) 433,401 23,820 Endesa SA (Spain) 265,297 12,200 PG&E Corp.(a) 169,580 10,500 PNM Resources, Inc. 209,475 ---------------- 1,193,110 - ------------------------------------------------------------------------------------- Electrical Equipment 0.3% 7,200 C&D Technologies, Inc. 110,664 12,200 Harris Corp. 391,742 14,100 Power-One, Ltd.(a) 64,296 2,400 Schneider Electric SA (France)(a) 115,462 ---------------- 682,164 - ------------------------------------------------------------------------------------- Electronic Equipment & Instruments 2.1% 18,900 Arrow Electronics, Inc.(a) 322,623 6,800 Cognex Corp.(a) 104,516 21,600 DDI Corp.(a) 13,824 11,500 Electro Scientific Industries, Inc.(a) 206,540 9,300 FLIR Systems, Inc.(a) 380,370 27,900 General Motors Corp. (Class H)(a) 276,210 8,900 Harman International Industries, Inc. 383,590 48,300 Ingram Micro, Inc.(a) 531,300 15,856 Koninklijke (Royal) Philips Electronics NV (Netherlands) 359,102 7,000 Merix Corp.(a) 43,750 6,500 Mettler-Toledo International, Inc.(a) 184,925 3,700 Park Electrochemical Corp. 74,000 7,700 Plexus Corp.(a) 107,030 2,200 Roper Industries, Inc. 65,450 5,200 Sirenza Microdevices, Inc.(a) 7,748 98,700 Solectron Corp.(a) 394,800 8,200 Sony Corp. (Japan) 370,436 7,900 Technitrol, Inc. 148,125 7,900 Trimble Navigation, Ltd.(a) 103,411 10,100 Varian Inc.(a) 321,685 ---------------- 4,399,435
18 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- Energy Equipment & Services 1.7% 7,400 Cal Dive International, Inc.(a) $ 141,932 26,700 ENSCO International, Inc. 690,195 15,900 FMC Technologies, Inc.(a) 294,150 27,700 GlobalSantaFe Corp. 624,358 10,500 Patterson-UTI Energy, Inc.(a) 251,055 24,700 Schlumberger, Ltd. 1,060,124 6,700 Superior Energy Services, Inc.(a) 54,672 10,800 Weatherford International, Ltd.(a) 438,048 ---------------- 3,554,534 - ------------------------------------------------------------------------------------- Exchange Traded 0.3% 37,100 Technology Select Sector SPDR Fund(a) 531,272 - ------------------------------------------------------------------------------------- Food & Drug Retailing 0.4% 37,300 Boots Co. PLC (United Kingdom) 326,895 7,000 Brio Software, Inc.(a) 7,490 4,300 Carrefour SA (France) 187,182 66,100 Tesco PLC (United Kingdom) 225,884 ---------------- 747,451 - ------------------------------------------------------------------------------------- Food Products 0.8% 6,400 Bunge, Ltd. 130,880 29,700 Cadbury Schweppes PLC (United Kingdom) 205,772 26,500 ConAgra Foods, Inc. 665,415 27,700 Sara Lee Corp. 519,098 25,900 Unilever PLC (United Kingdom) 227,593 ---------------- 1,748,758 - ------------------------------------------------------------------------------------- Gas Utilities 0.9% 29,800 El Paso Corp. 430,610 7,900 Energen Corp. 195,130 14,100 NiSource, Inc. 279,180 13,000 NOVA Chemicals Corp. 267,020 14,700 Oneok, Inc. 271,950 18,600 Sempra Energy 394,320 ---------------- 1,838,210 - ------------------------------------------------------------------------------------- Health Care Equipment & Supplies 1.1% 28,663 Amersham PLC (United Kingdom) 242,245
See Notes to Financial Statements 19 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- 18,700 Baxter International, Inc. $ 746,317 12,600 Diagnostic Products Corp. 452,340 7,100 The Cooper Cos., Inc. 311,690 7,900 Varian Medical Systems, Inc.(a) 330,220 7,600 Wilson Greatbatch Technologies, Inc.(a) 177,460 ---------------- 2,260,272 - ------------------------------------------------------------------------------------- Health Care Providers & Services 2.0% 3,600 AmerisourceBergen Corp. 241,164 7,700 Anthem, Inc.(a) 522,676 23,600 Covance, Inc.(a) 399,784 28,400 HCA, Inc. 1,334,800 10,700 Lincare Holdings, Inc.(a) 335,766 5,800 MAXIMUS, Inc.(a) 137,576 10,300 Orthodontic Centers of America, Inc.(a) 144,715 12,000 Pediatrix Medical Group, Inc.(a) 357,600 19,100 Pharmaceutical Product Development, Inc.(a) 440,217 12,800 Quintiles Transnational Corp.(a) 127,104 5,700 Service Corp. International(a) 12,825 5,300 Stewart Enterprises, Inc.(a) 28,302 ---------------- 4,082,529 - ------------------------------------------------------------------------------------- Hotels Restaurants & Leisure 1.3% 12,100 Brinker International, Inc.(a) 394,460 7,800 CEC Entertainment, Inc.(a) 294,060 1,700 Four Seasons Hotels, Inc. 64,940 2,800 Jack in the Box, Inc.(a) 77,560 17,400 Marriott International, Inc. (Class A) 582,900 17,800 McDonald's Corp.(a) 440,550 7,000 Outback Steakhouse, Inc.(a) 223,580 19,300 Starbucks Corp.(a) 378,859 11,500 Station Casinos, Inc.(a) 151,800 13,700 WMS Industries, Inc.(a) 144,535 ---------------- 2,753,244 - ------------------------------------------------------------------------------------- Household Products 0.4% 7,000 Kao Corp. (Japan) 157,821
20 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- 8,800 The Procter & Gamble Co. $ 783,112 ---------------- 940,933 - ------------------------------------------------------------------------------------- Industrial Conglomerates 0.5% 7,200 3M Co. 905,976 1,400 Furniture Brands International, Inc.(a) 35,560 3,500 Siemens AG (Germany) 173,289 ---------------- 1,114,825 - ------------------------------------------------------------------------------------- Insurance 3.6% 23,520 Alleanza Assicurazionni (Italy) 177,788 1,054 Allianz AG (Germany) 150,148 16,400 Allstate Corp. 623,364 19,212 American International Group, Inc. 1,228,031 5,100 AmerUs Group Co. 162,588 28,700 Hartford Financial Services Group, Inc. 1,452,220 2,100 IPC Holdings, Ltd. 66,444 11,600 Lincoln National Corp. 425,604 11,900 Loews Corp. 564,536 11,300 Philadelphia Consolidated Holding Corp.(a) 454,599 7,100 Protective Life Corp. 227,200 7,000 Reinsurance Group of America, Inc. 207,900 9,500 The Commerce Group, Inc. 352,450 20,300 XL Capital, Ltd. (Class A) 1,504,230 ---------------- 7,597,102 - ------------------------------------------------------------------------------------- Internet & Catalog Retail 0.2% 15,300 USA Interactive(a) 337,350 - ------------------------------------------------------------------------------------- Internet Software & Services 0.1% 4,600 MatrixOne, Inc.(a) 30,820 3,200 SkillSoft Corp.(a) 26,336 2,200 SmartForce PLC, ADR(a) 7,502 8,600 WebMethods, Inc.(a) 75,594 ---------------- 140,252
See Notes to Financial Statements 21 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- IT Consulting & Services 0.1% 6,700 Inforte Corp.(a) $ 53,600 11,500 Keane, Inc.(a) 94,875 ---------------- 148,475 - ------------------------------------------------------------------------------------- Machinery 0.5% 24,800 CNH Global N.V. 69,936 2,600 CUNO, Inc.(a) 84,916 10,800 Navistar International Corp.(a) 278,532 2,500 Oshkosh Truck Corp.(a) 137,375 4,900 Pentair, Inc. 199,283 5,000 Reliance Steel & Aluminum Co. 124,000 4,800 Snap-On, Inc. 130,416 ---------------- 1,024,458 - ------------------------------------------------------------------------------------- Media 3.2% 11,700 Acme Communications, Inc.(a) 102,960 6,000 AOL Time Warner, Inc.(a) 69,000 17,300 Entravision Communications Corp.(a) 173,000 7,800 Knight-Ridder, Inc. 472,290 8,000 Lagardere SA (France) 331,460 20,100 Lamar Advertising Co.(a) 634,758 84,400 Liberty Media Corp. (Class A)(a) 663,384 26,000 New York Times Co. (Class A) 1,176,500 61,000 Sinclair Broadcast Group, Inc. (Class A)(a) 716,750 21,900 Univision Communications, Inc. (Class A)(a) 626,121 42,330 Viacom, Inc. (Class B)(a) 1,647,907 2,220 Wolters Kluwer NV (Netherlands) 33,932 ---------------- 6,648,062 - ------------------------------------------------------------------------------------- Metals & Mining 0.6% 11,200 Alcoa, Inc. 302,960 64,449 BHP Billiton, Ltd. (Australia) 334,286 4,700 Cleveland-Cliffs, Inc. 114,680 24,900 Freeport-McMoRan Copper & Gold, Inc. (Class B)(a) 380,223 9,500 Stillwater Mining Co.(a) 90,250 ---------------- 1,222,399
22 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- Multiline Retail 2.3% 16,600 Costco Wholesale Corp.(a) $ 578,842 21,000 Federated Department Stores, Inc.(a) 789,810 18,400 Fred's, Inc. (Class A) 541,880 21,100 Kohl's Corp.(a) 1,392,600 9,800 Metro AG (Germany) 251,732 4,300 Tuesday Morning Corp.(a) 65,274 22,800 Wal-Mart Stores, Inc. 1,121,304 ---------------- 4,741,442 - ------------------------------------------------------------------------------------- Multi - Utilities 0.1% 10,450 Suez SA (France) 227,447 - ------------------------------------------------------------------------------------- Office Electronics 0.6% 10,000 Canon, Inc. (Japan) 339,022 123,900 Xerox Corp.(a) 861,105 ---------------- 1,200,127 - ------------------------------------------------------------------------------------- Oil & Gas 3.6% 68,600 BP Amoco PLC (United Kingdom) 532,620 12,100 Chesapeake Energy Corp.(a) 64,735 47,000 ENI SpA (Italy) 710,088 27,100 Exxon Mobil Corp. 996,196 15,600 Occidental Petroleum Corp. 422,604 14,100 PetroQuest Energy, Inc.(a) 54,144 21,800 Pioneer Natural Resources Co.(a) 527,778 3,000 Premcor, Inc.(a) 65,400 14,200 Royal Dutch Petroleum Co. (Netherlands) 648,763 5,000 Spinnaker Exploration Co.(a) 140,700 11,138 Stone Energy Corp.(a) 378,469 20,500 Swift Energy Co.(a) 271,830 21,700 Talisman Energy, Inc. (Canada) 882,973 7,600 Teekay Shipping Corp. 260,528 3,913 TotalFinaElf SA (France) 565,866 8,185 TotalFinaElf SA ADR (France) 593,822 20,900 XTO Energy, Inc. 375,155 ---------------- 7,491,671
See Notes to Financial Statements 23 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- Paper & Forest Products 1.2% 14,000 Boise Cascade Corp. $ 405,860 32,300 International Paper Co. 1,286,186 15,400 Weyerhaeuser Co. 904,750 ---------------- 2,596,796 - ------------------------------------------------------------------------------------- Personal Products 0.4% 22,600 Gillette Co. 743,088 - ------------------------------------------------------------------------------------- Pharmaceuticals 3.9% 23,400 Abbott Laboratories 968,994 11,100 Alpharma, Inc. (Class A) 123,876 8,300 Barr Laboratories, Inc.(a) 506,300 37,100 GlaxoSmithKline PLC (United Kingdom)(a) 720,413 17,600 Johnson & Johnson 932,800 14,800 KV Pharmaceutical Co.(a) 310,800 4,300 Medicis Pharmaceutical Corp.(a) 180,256 20,200 Novartis AG ADR (Switzerland) 822,648 20,325 Pfizer, Inc. 657,514 31,078 Pharmacia Corp. 1,390,430 10,000 Sepracor, Inc.(a) 67,500 37,400 Wyeth 1,492,260 ---------------- 8,173,791 - ------------------------------------------------------------------------------------- Real Estate Investment Trust 0.4% 3,500 Alexandria Real Estate Equities, Inc. 151,025 8,200 Boston Properties, Inc. 305,860 2,600 Colonial Properties Trust 93,470 6,800 Jones Lang LaSalle, Inc.(a) 136,952 4,800 SL Green Realty Corp. 154,800 ---------------- 842,107 - ------------------------------------------------------------------------------------- Road & Rail 0.3% 59 East Japan Railway (Japan) 275,894 5,800 Knight Transportation, Inc.(a) 102,660 1,500 Landstar System, Inc.(a) 149,715 ---------------- 528,269
24 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- Semiconductor Equipment & Products 2.6% 11,500 Advanced Energy Industries, Inc.(a) $ 169,855 22,500 Agere Systems, Inc. (Class A)(a) 42,750 215,800 Agere Systems, Inc. (Class B)(a) 420,810 5,600 Analog Devices, Inc.(a) 134,960 17,900 Applied Materials, Inc.(a) 266,173 9,400 Credence Systems Corp.(a) 128,780 7,300 Cymer, Inc.(a) 204,327 6,700 Emcore Corp.(a) 22,110 7,600 Exar Corp.(a) 126,692 19,200 Integrated Circuit Systems, Inc.(a) 337,344 2,900 Integrated Device Technology, Inc.(a) 37,120 27,300 Intel Corp. (Class A)(a) 512,967 3,200 Intersil Corp. (Class A) 69,728 4,000 KLA-Tencor Corp.(a) 157,560 6,600 Maxim Integrated Products, Inc.(a) 232,188 7,900 Micrel, Inc.(a) 90,613 11,000 National Semiconductor Corp.(a) 199,210 6,700 Oak Technology(a) 25,795 4,300 Pericom Semiconductor Corp.(a) 40,377 11,100 Rudolph Technologies, Inc.(a) 168,520 10,100 Semtech Corp.(a) 198,566 12,800 STMicroelectronics NV (Switzerland) 272,512 31,660 Taiwan Semiconductor Manufacturing Co., Ltd. ADR (Taiwan)(a) 288,739 32,100 Texas Instruments, Inc. 743,115 300 TTM Technologies, Inc.(a) 948 18,400 Varian Semiconductor Equipment Associates, Inc.(a) 483,552 ---------------- 5,375,311 - ------------------------------------------------------------------------------------- Software 2.3% 10,400 Adobe Systems, Inc. 249,184 13,800 Ascential Software Corp.(a) 33,810 7,800 Aspen Technology, Inc.(a) 33,150 5,300 BindView Development Corp.(a) 5,300 31,200 BMC Software, Inc.(a) 419,640 11,200 Borland Software Corp.(a) 96,992
See Notes to Financial Statements 25 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- 10,100 Catapult Communications Corp.(a) $ 126,553 9,000 Cerner Corp.(a) 390,600 16,700 Entrust, Inc.(a) 45,758 7,200 HNC Software, Inc.(a) 130,248 12,800 Informatica Corp.(a) 89,088 11,500 Jack Henry & Associates, Inc. 164,105 7,700 Lawson Software, Inc.(a) 36,960 10,800 Micromuse, Inc.(a) 33,372 31,400 Microsoft Corp.(a) 1,506,572 11,500 National Instruments Corp.(a) 311,995 4,800 Precise Software Solutions, Ltd.(a) 60,288 19,500 Synopsys, Inc.(a) 834,015 22,100 Verity, Inc.(a) 247,520 ---------------- 4,815,150 - ------------------------------------------------------------------------------------- Specialty Retail 2.0% 23,300 Bed, Bath & Beyond, Inc.(a) 722,300 12,000 Charming Shoppes, Inc.(a) 87,360 29,200 Circuit City Stores-Circuit City Group 497,860 9,900 Compagnie Financiere Richemont AG (Class A) (Switzerland) 182,382 4,500 Cost Plus, Inc.(a) 109,755 40,200 Kingfisher PLC (United Kingdom)(a) 121,519 2,100 Linens 'n Things, Inc.(a) 51,135 26,400 Lowe's Companies, Inc. 999,240 8,900 Movie Gallery, Inc.(a) 147,295 1,600 Regis Corp. 40,608 24,700 Tiffany & Co. 608,608 45,800 Toys 'R' Us, Inc.(a) 617,384 ---------------- 4,185,446 - ------------------------------------------------------------------------------------- Tobacco 1.0% 14,000 Altadis SA (Class A) (Spain) 277,263 24,080 Imperial Tobacco Group PLC (United Kingdom) 368,654 18,600 Loews Corp. - Carolina Group 459,420 20,500 Philip Morris Cos., Inc. 944,025 ---------------- 2,049,362
26 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ---------------------------------------------------------------------------------------- Wireless Telecommunication Services 0.4% 69,600 American Tower Corp. (Class A)(a) $ 155,904 145,270 Mmo2 PLC (United Kingdom)(a) 102,123 84 NTT DoCoMo, Inc. (Japan)(a) 187,281 243,200 Vodafone Group PLC (United Kingdom) 368,529 ---------------- 813,837 ---------------- Total common stocks 131,662,733 ---------------- PREFERRED STOCKS 0.4% - ------------------------------------------------------------------------------------- Cable 0.1% 3,430 CSC Holdings, Inc., Ser. H, 11.75% 171,500 - ------------------------------------------------------------------------------------- Media 0.3% 32,800 The News Corp., Ltd., ADR, 5.00% 557,600 - ------------------------------------------------------------------------------------- Publishing 1,000 Primedia, Inc., Ser. D, 10.00% 32,000 - ------------------------------------------------------------------------------------- Telecommunication Services 687 McLeodUSA, Inc., Ser. A, 2.50% 2,508 ---------------- Total preferred stocks 763,608 ---------------- RIGHTS 40,200 Kingfisher PLC (United Kingdom) 23,236 ---------------- WARRANTS(a) 1,525 McLeodUSA, Inc. 259 ----------------
CORPORATE BONDS 17.9%
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Aerospace & Defense 0.2% B2 $ 35 Alliant Techsystems, Inc., Sr. Sub. Notes, 8.50%, 5/15/11 36,575 Ba3 140 PanAmSat Corp., Notes, 8.50%, 2/1/12 128,100
See Notes to Financial Statements 27 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Ba3 $ 250 Sequa Corp., Sr. Notes, 9.00%, 8/1/09 $ 244,375 ---------------- 409,050 - ------------------------------------------------------------------------------------- Agricultural Products 0.1% IMC Global, Inc., Notes, Ba1 65 11.25%, 6/1/11 68,900 Ba2 50 6.50%, 8/1/03 48,569 Ba1 40 10.875%, 6/1/08 42,450 ---------------- 159,919 - ------------------------------------------------------------------------------------- Airlines 0.4% AMR Corp., Debs., MTN, B1 100 10.00%, 4/15/21 79,307 MTN, B1 100 10.55%, 3/12/21 78,972 Notes, B1 100 10.40%, 3/10/11 74,000 Ba2 77 Continental Airlines, Inc., Pass Through Trust, Ser. 1996-C Certificates, 9.50%, 10/15/13 70,488 Delta Air Lines, Inc., Notes, Ba3 200 7.70%, 12/15/05 175,480 Sr. Notes, Ba3 230 8.30%, 12/15/29 164,548 Northwest Airlines, Inc., Notes, B2 100 7.625%, 3/15/05 76,000 Sr. Notes, B2 100 8.875%, 6/1/06 78,000 ---------------- 796,795 - ------------------------------------------------------------------------------------- Auto & Truck 0.6% Baa3 225 ArvinMeritor, Inc., Notes, 8.75%, 3/1/12 242,827
28 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Ba2 $ 25 Autonation, Inc., Sr. Notes, 9.00%, 8/1/08 $ 25,812 Ba3 100 Dana Corp., Sr. Notes, 10.125%, 3/15/10 100,000 Caa1 75 Eagle-Picher, Inc., Gtd. Notes, 9.375%, 3/1/08 58,125 Baa1 750 Ford Motor Co., Notes, 7.45%, 7/16/31 672,885 Navistar International Corp., Sr. Notes, Ba1 100 7.00%, 2/1/03 99,750 Ba1 60 9.375%, 6/1/06 60,900 ---------------- 1,260,299 - ------------------------------------------------------------------------------------- Banking 0.2% Ba3 100 Chevy Chase Savings Bank, Sr. Sub. Debs., 9.25%, 12/1/05 100,250 Sovereign Bancorp, Inc., Sr. Notes, Ba2 110 10.25%, 5/15/04 115,500 Ba2 90 10.50%, 11/15/06 99,000 B1 55 Western Financial Svgs. Bank, Sub. Debs., 8.875%, 8/1/07 53,076 ---------------- 367,826 - ------------------------------------------------------------------------------------- Building & Construction 0.3% Ba2 45 Beazer Homes USA, Inc., Sr. Notes, 8.375%, 4/15/12 44,325 Ba1 350 D.R. Horton, Inc., Sr. Notes, 7.875%, 8/15/11 335,125 Ba3 95 KB Home, Sr. Sub. Notes, 8.625%, 12/15/08 93,100 B3 200 Nortek, Inc., Sr. Sub. Notes, 9.875%, 6/15/11 199,000 ---------------- 671,550
See Notes to Financial Statements 29 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Cable 0.6% NR $ 50 Callahan Nordrhein Nestfalen KG (Germany), Sr. Disc. Notes, 16.00%, 7/15/10 $ 1,250 Charter Communications Holdings, Sr. Disc. Notes, B2 445 Zero Coupon, (until 05/15/06), 11.75%, 5/15/11 144,625 Sr. Notes, B2 605 10.00%, 5/15/11 375,100 B2 75 10.75%, 10/1/09 48,000 B2 55 11.125%, 1/15/11 35,200 Ca 150 Diamond Cable Communications Co. (United Kingdom), Sr. Disc. Notes, 13.25%, 9/30/04 24,000 B3 75 Gray Communications Systems, Inc., Sr. Sub. Notes, 9.25%, 12/15/11 75,375 Caa1 125 Insight Communications, Inc., Sr. Disc. Notes, Zero Coupon, (until 2/15/06), 12.25%, 2/15/11 43,750 B2 250 Mediacom Broadband LLC, Sr. Notes, 11.00%, 7/15/13 201,250 B2 250 Mediacom LLC Capital Corp., Sr. Notes, 7.875%, 2/15/11 167,500 B3 175 Paxson Communications Corp., Sr. Sub. Notes, 10.75%, 7/15/08 155,969 Ca 235 Telewest PLC (United Kingdom), Sr. Disc. Notes, Zero Coupon, (until 2/1/10), 11.375%, 2/1/10 44,650 United Pan Europe Communications, Sr. Disc. Notes, Ca 100 Zero Coupon, (until 8/1/04), 12.50%, 8/1/09 4,125
30 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Sr. Sub. Notes, Ca $ 50 11.25%, 2/1/10 $ 2,062 ---------------- 1,322,856 - ------------------------------------------------------------------------------------- Casinos 1.0% Ba3 150 Aztar Corp., Sr. Sub. Notes, 8.875%, 5/15/07 150,375 B1 80 Boyd Gaming Corp., Sr. Sub. Notes, 8.75%, 4/15/12 81,200 NR 75 Coast Hotels & Casinos, Inc., Sr. Sub. Notes, 9.50%, 4/1/09 78,000 B3 60 Hollywood Casino Corp., Gtd. Notes, 11.25%, 5/1/07 64,500 Caa1 115 Hollywood Park, Inc., Sr. Sub. Notes, Ser. B, 9.25%, 2/15/07 102,350 B2 65 Horseshoe Gaming LLC, Sr. Sub. Notes, 8.625%, 5/15/09 65,975 Mandalay Resort Group, Debs. Notes, Ba2 100 6.70%, 11/15/96 101,091 Sr. Sub. Debs., Ba3 100 7.625%, 7/15/13 93,000 MGM Mirage, Inc., Gtd. Notes, Ba2 535 9.75%, 6/1/07 561,750 Sr. Notes, Ba1 10 8.50%, 9/15/10 10,132 Sr. Sub. Notes, Ba2 20 8.375%, 2/1/11 20,150 Ba3 35 Mohegan Tribal Gaming Authority, Sr. Sub. Notes, 8.00%, 4/1/12 34,650 Park Place Entertainment Corp., Sr. Notes, Ba1 300 7.50%, 9/1/09 293,422
See Notes to Financial Statements 31 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Sr. Sub. Notes, Ba2 $ 30 9.375%, 2/15/07 $ 31,088 Station Casinos, Inc., Notes, B2 50 9.75%, 4/15/07 51,625 Sr. Sub. Notes, B2 220 9.875%, 7/1/10 232,100 Caa1 175 Venetian Casino Resort LLC, Second Mtge., 11.00%, 6/15/10 174,563 ---------------- 2,145,971 - ------------------------------------------------------------------------------------- Chemicals 0.8% B3 50 Avecia Group PLC (United Kingdom), Sr. Notes, 11.00%, 7/1/09 47,500 Baa3 175 Ferro Corp., Sr. Notes, 9.125%, 1/1/09 188,031 Huntsman International LLC, Gtd. Notes, Caa1 200 10.125%, 7/1/09 176,000 Sr. Notes, B3 100 9.875%, 3/1/09 100,250 B2 160 ISP Chemco, Inc., Sr. Sub. Notes, Ser. B, 10.25%, 7/1/11 156,000 B2 375 Johnsondiversey, Inc., Sr. Sub. Notes, 9.625%, 5/15/12 388,125 Lyondell Chemical Co., Sr. Sec. Notes, Ba3 90 9.50%, 12/15/08 82,125 Sr. Sub. Notes, Ba3 100 9.875%, 5/1/07 93,750 B2 195 10.875%, 5/1/09 159,900 B3 275 OM Group, Inc., Sr. Sub. Notes, 9.25%, 12/15/11 268,125
32 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Ba1 $ 100 USEC, Inc., Sr. Notes, 6.75%, 1/20/09 $ 90,617 ---------------- 1,750,423 - ------------------------------------------------------------------------------------- Commercial Services 0.2% B3 40 CB Richard Ellis Services, Inc., Gtd. Notes, 11.25%, 6/15/11 32,400 B2 85 Iron Mountain, Inc., Sr. Sub. Notes, 8.625%, 4/1/13 83,513 B2 350 United Rentals, Inc., Gtd. Notes, 9.50%, 6/1/08 317,625 ---------------- 433,538 - ------------------------------------------------------------------------------------- Computer Services Ba1 100 Unisys Corp., Sr. Notes, 7.25%, 1/15/05 96,500 - ------------------------------------------------------------------------------------- Consumer Services 0.3% B1 200 Alliance Atlantis Commerce, Inc., Sr. Sub. Notes, 13.00%, 12/15/09 214,250 B3 150 KinderCare Learning Center, Inc., Sr. Sub. Notes, 9.50%, 2/15/09 142,500 B1 250 Service Corp. International, Sr. Notes, 6.50%, 3/15/08 207,500 ---------------- 564,250 - ------------------------------------------------------------------------------------- Diversified Manufacturing Operations 0.3% Ba3 123 American Axle & Manufacturing, Inc., Sr. Sub. Notes, 9.75%, 3/1/09 130,995 Baa1 300 Cox Enterprises, Inc., Sr. Notes, 2.7225%, 5/1/33 296,335 Ca 150 Gentek, Inc., Gtd. Notes, 11.00%, 8/1/09 12,000
See Notes to Financial Statements 33 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Terex Corp., Sr. Sub. Notes, B2 $ 40 9.25%, 7/15/11 $ 40,000 B2 55 10.375%, 4/1/11 56,100 Ba2 125 Tyco International Group SA, 4.95%, 8/1/03 113,125 Caa1 45 U.S. Can Corp., Sr. Sub. Notes, 12.375%, 10/1/10 36,338 ---------------- 684,893 - ------------------------------------------------------------------------------------- Diversified Operations 0.1% B3 75 Nextmedia Operating, Inc., Sr. Sub. Notes, 10.75%, 7/1/11 73,125 Ba3 250 Stena AB (Sweden), Sr. Notes, 8.75%, 6/15/07 236,250 ---------------- 309,375 - ------------------------------------------------------------------------------------- Electronic Components 0.3% Ba2 300 Flextronics International, Ltd. (Singapore), Sr. Notes, 9.875%, 7/1/10 303,000 Ba3 150 L-3 Communications Corp., Sr. Sub. Notes, 7.625%, 6/15/12 151,500 Caa1 150 Motors & Gears, Inc., Sr. Notes, 10.75%, 11/15/06 141,000 ---------------- 595,500 - ------------------------------------------------------------------------------------- Energy 0.3% B1 10 AES Drax Energy, Ltd., Sr. Sec. Notes, Ser. B, 11.50%, 8/30/10 3,000 Baa3 150 Cogentrix Energy, Inc., Sr. Notes, 8.75%, 10/15/08 152,500 El Paso Corp., Bonds, Baa2 50 7.125%, 5/6/09 34,315
34 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Sr. Notes, Baa2 $ 250 7.80%, 8/1/31 $ 184,010 El Paso Energy Corp., Sr. Notes Baa2 180 7.75%, 1/15/32 131,400 Sr. Sub. Notes, B1 40 8.50%, 6/1/11 37,200 ---------------- 542,425 - ------------------------------------------------------------------------------------- Engineering & Construction 0.1% Ba2 429 CSC Holdings, Inc., Sr. Sub. Debs., 10.50%, 5/15/16 287,430 - ------------------------------------------------------------------------------------- Financial Services 1.9% B3 17 Actuant Corp., Sr. Sub. Notes, 13.00%, 5/1/09 19,380 Ba1 75 AES Drax Holdings, Ltd., Sr. Sec. Bonds, 10.41%, 12/31/20 56,250 Ba2 300 Calair Capital Corp., Sr. Notes, 8.125%, 4/1/08 210,000 A2 200 CIT Group, Inc., Sr. Notes, 2.31%, 4/7/03 199,560 Caa2 135 Conseco, Inc., Sr. Notes, 10.75%, 6/15/09 39,150 NR 90 Finova Group, Inc., Sr. Sec'd Notes, 7.50%, 11/15/09 26,100 General Motors Acceptance Corp., FRN, A2 500 2.6125%, 5/4/04 491,831 MTN, A2 400 2.11%, 4/5/04 390,203 Notes, A2 500 6.875%, 9/15/11 494,139 Ba3 285 Midland Funding Corp., Debs., 13.25%, 7/23/06 275,143
See Notes to Financial Statements 35 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Ba3 $ 200 Midland Funding II, Sec. Deb. Notes, Ser. A, 11.75%, 7/23/05 $ 192,137 A2 500 National Rural Utilities Cooperative Finance Corp., Notes, 8.00%, 3/1/32 523,315 Ba3 500 Orion Power Holdings, Inc., Sr. Notes, 12.00%, 5/1/10 355,000 Qwest Capital Funding, Inc., Gtd. Notes, B2 300 7.00%, 8/03/09 117,000 B2 190 7.25%, 2/15/11 74,100 B2 780 7.90%, 8/15/10 304,200 B2 100 UCAR Finance, Inc., Gtd. Notes, 10.25%, 2/15/12 100,000 ---------------- 3,867,508 - ------------------------------------------------------------------------------------- Food & Beverage 0.2% B3 70 Agrilink Foods, Inc., Sr. Sub. Notes, 11.875%, 11/1/08 72,800 B2 105 Great Atlantic & Pacific Tea Co., Inc., Notes, 7.75%, 4/15/07 93,450 Ba2 50 Smithfield Foods, Inc., Sr. Notes, 8.00%, 10/15/09 50,250 Ba2 130 Winn Dixie Stores, Inc., Sr. Notes, 8.875%, 4/1/08 130,813 ---------------- 347,313 - ------------------------------------------------------------------------------------- Health Care 1.0% B2 75 Alaris Medical Systems, Inc., Sr. Sec. Notes, Ser. B, 11.625%, 12/1/06 81,375 Caa2 55 Alaris Medical, Inc., Sr. Disc. Notes, Zero Coupon, (until 8/1/03), 11.125%, 8/1/08 45,100
36 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- B3 $ 150 Concentra Operating Corp., Sr. Sub. Notes, Ser. B, 13.00%, 8/15/09 $ 168,000 HCA, Inc., Sr. Notes, Ba1 55 9.00%, 12/15/14 63,527 Deb., Ba1 50 8.36%, 4/15/24 54,530 Notes, Ba1 200 6.73%, 7/15/45 203,167 Ba1 150 7.125%, 6/1/06 156,649 Ba2 575 Healthsouth Corp., Sr. Sub. Notes, 10.75%, 10/1/08 589,375 Caa1 325 Magellan Health Services, Inc., Sr. Sub. Notes, 9.00%, 2/15/08 133,250 B2 25 Matria Healthcare, Inc., Sr. Notes, 11.00%, 5/1/08 21,750 B2 70 Resources Care, Inc., Sr. Notes, 10.625%, 11/15/08 62,650 B2 75 Rotech Healthcare, Inc., Sr. Sub. Notes, 9.50%, 4/1/12 72,750 B3 200 Select Medical Corp., Sr. Sub. Notes, 9.50%, 6/15/09 201,500 B2 90 Triad Hospitals, Inc., Sr. Sub. Notes, 11.00%, 5/15/09 98,325 ---------------- 1,951,948 - ------------------------------------------------------------------------------------- Hotels & Leisure 1.1% B2 35 Argosy Gaming, Sr. Notes, 9.00%, 9/1/11 35,744 B3 115 Carrols Corp., Sr. Sub. Notes, 9.50%, 12/1/08 111,550 B2 110 Extended Stay America, Inc., Sr. Sub. Notes, 9.875%, 6/15/11 109,450
See Notes to Financial Statements 37 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Ba3 $ 250 Felcor Suites L.P., Gtd. Sr. Notes, 7.375%, 10/1/04 $ 246,250 Ba3 30 Felcore Lodging L.P., Notes, 9.50%, 9/15/08 30,150 Ba3 300 HMH Properties, Inc., Gtd. Notes, Ser. B, 7.875%, 8/1/08 282,750 Ba3 200 Host Marriott L.P., Sr. Notes, Ser. H, 9.50%, 1/15/07 200,750 ITT Corp., Debs., Ba1 120 7.375%, 11/15/15 106,006 Notes, Ba1 125 6.75%, 11/15/05 119,867 Ba3 100 La Quinta Inns, Inc., Sr. Notes, 7.40%, 9/15/05 97,750 B1 85 Prime Hospitality Corp., Sr. Sub. Notes, 8.375%, 5/1/12 82,025 B3 250 Regal Cinemas Corp., Sr. Sub. Notes, 9.375%, 2/1/12 255,000 Royal Caribbean Cruises Ltd., Notes, Ba2 50 8.125%, 7/28/04 46,750 Sr. Notes, Ba2 50 8.75%, 2/2/11 45,500 B2 95 Six Flags, Inc., Sr. Notes, 9.75%, 6/15/07 95,237 Starwood Hotels & Resorts Worldwide, Inc., Deb. Notes, Ba1 130 7.375%, 5/1/07 124,150 Notes, Ba1 70 7.875%, 5/1/12 66,150 B2 255 Sun International Hotels Ltd., Sr. Sub. Notes, 8.875%, 8/15/11 257,550 ---------------- 2,312,629
38 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Machinery 0.1% Ba2 $ 100 JLG Industries, Inc., 8.375%, 6/15/12 $ 96,500 B2 175 Joy Global, Inc., Gtd. Notes, 8.75%, 3/15/12 174,125 ---------------- 270,625 - ------------------------------------------------------------------------------------- Manufacturing 0.1% Ba3 50 Dimon, Inc., Sr. Notes, 9.625%, 10/15/11 51,750 B2 30 Sun World International, Inc., First Mtge., Ser. B, 11.25%, 4/15/04 19,500 B3 175 TriMas Corp., Sr. Sub. Notes, 9.875%, 6/15/12 171,500 ---------------- 242,750 - ------------------------------------------------------------------------------------- Media 0.5% ABC Family Worldwide, Inc., Sr. Notes, Baa1 30 9.25%, 11/1/07 31,425 Baa1 294 10.25%, 11/1/07 310,258 B2 150 Canwest Media, Inc., Sr. Sub. Notes, 10.625%, 5/15/11 151,125 Ba3 200 Entercom Radio LLC, Gtd. Notes, 7.625%, 3/1/14 200,500 Lin Holdings Corp., Sr. Disc. Notes, Caa1 175 Zero Coupon, (until 3/1/03), 10.00%, 3/1/08 162,750 Caa1 75 Zero Coupon, (until 3/1/03), 10.00%, 3/1/08 69,750 B2 175 Sinclair Broadcast Group, Inc., Sr. Sub. Notes, 8.00%, 3/15/12 171,062 ---------------- 1,096,870
See Notes to Financial Statements 39 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Medical Products & Services 0.5% B2 $ 120 Bio-Rad Labs, Inc., Sr. Sub. Notes, 11.625%, 2/15/07 $ 132,000 B2 80 Biovail Corp., Sr. Sub. Notes, 7.875%, 4/1/10 77,200 Ba3 350 Coventry Health Care, Inc., Sr. Notes, 8.125%, 2/15/12 350,437 Ba2 75 Fresenius Medical Capital Trust III., Gtd. Notes, 7.875%, 2/1/08 61,500 Hanger Orthopedic Group, Inc., Sr. Sub. Notes, B3 15 11.25%, 6/15/09 14,850 Sr. Notes, B2 275 10.375%, 2/15/09 277,750 B2 175 Sybron Dental Specialties, Inc., Sr. Sub. Notes, 8.125%, 6/15/12 170,625 ---------------- 1,084,362 - ------------------------------------------------------------------------------------- Mining 0.1% Ba2 250 Newmont Yandal Operations, Ltd., Sr. Notes, 8.875%, 4/1/08 253,750 - ------------------------------------------------------------------------------------- Office Equipment & Supplies 0.1% B1 100 Xerox Capital Europe PLC, Gtd. Notes, 5.875%, 5/15/04 76,000 B1 160 Xerox Corp., Sr. Notes, 9.75%, 1/15/09 126,400 ---------------- 202,400 - ------------------------------------------------------------------------------------- Oil & Gas 0.8% Caa2 60 Eott Energy Partners, Sr. Notes, 11.00%, 10/1/09 34,800
40 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Hanover Equipment Test, Sr. Sec. Notes, B1 $ 250 8.50%, 9/1/08 $ 210,000 B1 65 8.75%, 9/1/11 53,950 B2 20 Houston Exploration Co., Sr. Sub. Notes, 8.625%, 1/1/08 20,300 Ba1 200 Parker & Parsley Petroleum Co., Sr. Notes, 8.25%, 8/15/07 208,832 B1 55 Parker Drilling Co., Sr. Notes, 9.75%, 11/15/06 55,825 Baa1 200 Petroleos Mexicanos (Mexico), Sr. Notes, 9.375%, 12/2/08 211,000 B2 215 Stone Energy Corp., Sr. Sub. Notes, 8.25%, 12/15/11 215,537 B3 55 Swift Energy Co., Sr. Sub. Notes, 10.25%, 8/1/09 54,450 B2 10 Tesoro Petroleum Corp., Sr. Sub. Notes, 9.00%, 7/1/08 7,450 B1 245 Vintage Petroleum, Inc., Sr. Sub. Notes, 9.75%, 6/30/09 237,650 Ba2 85 Western Oil Sands, Inc., Sec'd. Notes, 8.375%, 5/1/12 82,875 Williams Cos., Inc., Debs., Ser. A, B1 250 7.50%, 1/15/31 108,750 Notes, B1 500 7.125%, 9/1/11 230,000 ---------------- 1,731,419 - ------------------------------------------------------------------------------------- Paper & Packaging 0.6% Ba2 60 Caraustar Industries, Inc., Sr. Sub. Notes, 9.875%, 4/1/11 59,700 Ca 55 Doman Industries, Ltd. (Canada), Sr. Notes, 9.25%, 11/15/07 11,000
See Notes to Financial Statements 41 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Ba1 $ 145 Georgia Pacific Corp., Notes, 8.125%, 5/15/11 $ 126,209 Ba2 75 Norske Skog Canada, Ltd. (Canada), Sr. Notes, 8.625%, 6/15/11 75,563 B2 130 Radnor Holdings Corp., Sr. Notes, 10.00%, 12/1/03 117,000 B3 40 Riverwood International Corp., Sr. Notes, 10.625%, 8/1/07 41,500 B1 200 Silgan Holdings, Inc., Sr. Sub. Debs., 9.00%, 6/1/09 203,000 Stone Container Corp., Sr. Notes, B2 175 8.375%, 7/1/12 176,750 B2 230 11.50%, 8/15/06 243,800 Ba1 150 Tembec Industries, Inc., Gtd. Notes, 7.75%, 3/15/12 142,875 ---------------- 1,197,397 - ------------------------------------------------------------------------------------- Printing & Publishing 0.2% B2 50 American Media Operations, Inc., Sr. Sub. Notes, 10.25%, 5/1/09 51,875 B3 175 Primedia, Inc., Sr. Notes, 8.875%, 5/15/11 126,000 Quebecor Media, Inc., Sr. Disc. Notes, B2 150 Zero Coupon, (until 7/15/06), 13.75%, 7/15/11 76,875 Sr. Notes, B2 150 11.125%, 7/15/11 132,000 ---------------- 386,750 - ------------------------------------------------------------------------------------- Real Estate Investment Trust 0.2% B1 100 Intrawest Corp., Sr. Notes, 10.50%, 2/1/10 103,375
42 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Ba2 $ 175 Senior Housing Properties Trust, Sr. Notes, 8.625%, 1/15/12 $ 174,125 Ventas Realty L.P., Gtd. Notes, Ba3 55 8.75%, 5/1/09 55,413 Sr. Notes, Ba3 45 9.00%, 5/1/12 45,900 ---------------- 378,813 - ------------------------------------------------------------------------------------- Restaurants 0.2% Ba1 350 Yum! Brands, Inc., Sr. Notes, 8.875%, 4/15/11 369,250 - ------------------------------------------------------------------------------------- Retail 0.4% Dillards, Inc., Notes, Ba3 75 6.125%, 11/1/03 73,682 Ba3 145 6.43%, 8/1/04 141,759 JC Penney Co., Inc., Debs., Ba3 155 7.40%, 4/1/37 146,088 Notes, Ba3 203 9.00%, 8/1/12 200,970 Rite Aid Corp., Debs., Caa3 25 6.875%, 8/15/13 14,250 Caa3 25 6.875%, 12/15/28 12,500 Caa3 25 7.70%, 2/15/27 13,000 Notes, Caa3 100 6.00%, 12/15/05 65,500 B1 290 Saks, Inc., Notes, 7.375%, 2/15/19 211,700 ---------------- 879,449 - ------------------------------------------------------------------------------------- Semiconductors 0.2% B1 130 Amkor Tech, Inc., Debs., 9.25%, 2/15/08 105,950
See Notes to Financial Statements 43 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Fairchild Semiconductor Corp., Gtd. Notes, B2 $ 100 10.375%, 10/1/07 $ 104,500 Sr. Sub. Notes, B2 75 10.50%, 2/1/09 79,875 B3 60 ON Semiconductor Corp., Gtd. Notes, 12.00%, 5/15/08 48,900 ---------------- 339,225 - ------------------------------------------------------------------------------------- Steel & Metals 0.5% B1 150 AK Steel Corp., Sr. Notes, 7.75%, 6/15/12 150,000 Ba3 160 Century Aluminum Co., Sr. Sec. First Mtge., 11.75%, 4/15/08 164,800 B3 150 Compass Minerals Group, Inc., Sr. Sub. Notes, 10.00%, 8/15/11 153,750 B2 150 Greif Bros. Corp., Sr. Sub. Notes, Cl. A, 8.875%, 8/1/12 148,500 B1 25 Leviathan Corp., Sr. Sub. Notes, 10.375%, 6/1/09 24,500 B1 200 Oregon Steel Mills, Inc., First Mtge., 10.00%, 7/15/09 203,000 B2 65 Steel Dynamics, Inc., Sr. Notes, 9.50%, 3/15/09 66,625 Ba3 45 United States Steel LLC, Sr. Notes, 10.75%, 8/1/08 46,800 ---------------- 957,975 - ------------------------------------------------------------------------------------- Telecommunications 2.1% Caa1 45 American Tower Corp., Sr. Notes, 9.375%, 2/1/09 23,850 AT&T Corp., Notes, Baa2 50 7.75%, 3/1/07 46,148
44 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Sr. Notes, Baa2 $ 550 8.00%, 11/15/31 $ 451,000 Baa2 250 AT&T Wireless Services, Inc., Sr. Notes, 7.875%, 3/1/11 188,750 B3 100 Coaxial Communications, Inc., Gtd. Notes, 10.00%, 8/15/06 87,000 B3 160 Crown Castle International Corp., Sr. Notes, 10.75%, 8/1/11 108,000 Baa1 400 Deutsche Telekom International Finance BV, Bonds, 9.25%, 6/1/32 412,284 B3 20 Dobson Communications Corp., Sr. Notes, 10.875%, 7/1/10 12,850 B1 50 Echostar Broadband Corp., Sr. Notes, 10.375%, 10/1/07 47,625 B1 500 Echostar DBS Corp., Sr. Notes, 9.125%, 1/15/09 460,000 B3 95 FairPoint Communications, Inc., Sr. Sub. Notes, 12.50%, 5/1/10 84,550 Baa3 500 France Telecom SA (France), Notes, 8.25%, 3/1/11 501,015 Caa1 150 International Wire Group, Inc., Sr. Sub. Notes, 11.75%, 6/1/05 130,500 Caa3 105 Level 3 Communications, Inc., Sr. Disc. Notes, Zero Coupon, (until 12/1/03), 10.50%, 12/1/08 43,575 Ca 145 Netia Holdings BV (Poland), Gtd., Sr. Disc. Notes, 11.25%, 11/1/07 23,200 Nextel Communications, Inc., Sr. Disc. Notes, B3 630 Zero Coupon, (until 09/15/02), 10.65%, 9/15/07 432,338
See Notes to Financial Statements 45 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Sr. Notes, B3 $ 15 9.375%, 11/15/09 $ 9,825 Nortel Networks, Ltd., Gtd. Sr. Notes, Ba3 20 4.25%, 9/1/08 7,725 Sr. Notes, Ba3 60 6.125%, 2/15/06 27,900 Qwest Corp., Notes, Ba3 55 7.20%, 11/1/04 44,550 Ba3 250 8.875%, 3/15/12 197,500 Ba3 65 Rogers Wireless, Inc., Sr. Sec. Notes, 9.625%, 5/1/11 40,950 Sprint Capital Corp., Gtd. Notes, Baa3 150 5.70%, 11/15/03 134,781 Notes, Baa3 700 8.375%, 3/15/12 542,758 B3 125 Star Choice Communications, Sr. Sec'd. Notes, 13.00%, 12/15/05 130,156 Tritel PCS, Inc., Gtd. Notes, Baa2 72 Zero Coupon, (until 5/1/04), 12.75%, 5/15/09 52,560 Sr. Sub. Notes, Baa2 33 10.375%, 1/15/11 27,885 Baa2 156 Voicestream Wireless Corp., Sr. Disc. Notes, Zero Coupon, (until 11/15/04), 11.875%, 11/15/09 112,320 ---------------- 4,381,595 - ------------------------------------------------------------------------------------- Utilities 0.9% Calpine Corp., Sr. Notes, B1 500 8.50%, 2/15/11 255,000 B1 150 8.75%, 7/15/07 75,000 B1 410 10.50%, 5/15/06 219,350
46 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- A3 $ 400 Commonwealth Edison Co., First Mtge., Ser. 85, 7.375%, 9/15/02 $ 402,056 Mirant Americas Generation LLC, Ba1 30 7.20%, 10/1/08 15,900 Ba1 100 7.625%, 5/1/06 55,000 Ba1 200 8.30%, 5/1/11 107,000 D 400 Pacific Gas & Electric Co., 7.575%, 10/31/49(a)(b) 368,000 Baa3 100 Reliant Mid-Atlantic Power, Ser. C Pass-through Certs., 9.681%, 7/2/26 89,278 Ba3 175 Tnp Enterprises, Inc., Sr. Sub. Notes, 10.25%, 4/1/10 171,500 Western Resources, Inc., First Mtge., Ba1 195 7.875%, 5/1/07 183,389 Notes, Ba2 35 6.25%, 8/15/03 33,196 ---------------- 1,974,669 - ------------------------------------------------------------------------------------- Waste Management 0.4% Allied Waste North America, Inc., Sr. Notes, Ba3 75 7.375%, 1/1/04 72,375 Ba3 250 7.875%, 1/1/09 223,750 Ba3 365 8.50%, 12/1/08 333,975 Ba1 100 Waste Management, Inc., Sr. Deb., Notes, 8.75%, 5/1/18 109,336 ---------------- 739,436 ---------------- Total corporate bonds 37,364,733 ---------------- CONVERTIBLE BONDS 0.2% - ------------------------------------------------------------------------------------- Electronic Components Ba3 56 Solectron Corp., Zero Coupon, 5/8/20 32,620
See Notes to Financial Statements 47 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Financial Services 0.2% B2 $ 500 Hellenic Finance, Notes, 2.00%, 7/15/03 $ 498,788 ---------------- Total convertible bonds 531,408 ---------------- SOVEREIGN BONDS 6.1% Brazilian Government Bonds, B1 616 8.00%, 4/15/14 317,888 B1 750 11.00%, 1/11/12 337,500 German Government Bonds, Aaa 57 4.25%, 3/14/03 56,175 Aaa 1,324 4.75%, 12/13/02 1,303,916 Aaa 2,600 5.25%, 7/4/10 2,647,230 Aaa 4,000 5.25%, 1/4/11(d) 4,056,974 Aaa 1,400 5.375%, 1/4/10 1,437,098 Aa2 1,800 Italian Government Bonds, 5.75%, 9/15/02 1,769,166 Ba1 400 Panamanian Government Bonds, 9.625%, 2/8/11 382,000 Ba3 400 Peruvian Government Bonds, 9.125%, 2/21/12 323,000 ---------------- Total sovereign bonds 12,630,947 ---------------- COLLATERALIZED MORTGAGE OBLIGATIONS 3.8% Aaa 744 Banktrust Mortgage Trust, Ser. 1, Class G, 5.70%, 12/1/23 746,762 Aaa 471 Bear Stearns Mortgage Secs., Inc., Ser. 97-7, class 1, 7.00%, 2/25/28 498,400 Aaa 1,100 Brazos Student Finance Corp., Student Loan Assoc. Bkd., Notes, 2.67%, 6/1/23 1,100,994 Aaa 63 Capital Asset Research Funding L.P., Ser. 97-A, Class I, 6.40%, 12/15/04 64,556
48 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- NR $ 102 Credit Asset Receivable LLC, 6.274%, 10/31/03 $ 103,062 Aaa 438 Credit Suisse First Boston Mortgage, Washington Mutual Mtge. 1999, Class M1, 6.583%, 10/19/39 458,822 Aaa 37 FDIC Remic Trust, 1996 Class Commercial Mtge., Passthru Certificates, 6.75%, 5/25/26 37,409 Federal Home Loan Mortgage Corp., Ser. 119, Class H, Aaa 278 7.50%, 1/15/21 284,445 Ser. 2266, Class F, Aaa 136 2.28875%, 11/15/30 136,775 Ser. C007, Class C007A, Aaa 195 7.00%, 9/17/31 211,020 Federal National Mortgage Association, Aaa 148 2.2875%, 10/18/30 148,854 Ser. 1998-73, Class MZ, Aaa 614 6.30%, 10/17/38 625,085 AAA(f) 300 GE Capital Mortgage Services, Inc., Ser. 1999-S, Class A29, 6.50%, 5/25/29 316,191 Aaa 200 Georgia State Thruway Authority Rev., 5.00%, 3/1/21 203,420 Government National Mortgage Association, Ser. 2000-9, Class FH, Aaa 198 2.34%, 2/16/30 199,141 Single Family, 008052, Aaa 40 6.75%, 9/20/22 41,038 AAA(f) 49 Green Tree Financial Corp., Ser. 1999-B, Class A1B, 2.05875%, 11/15/29 48,815
See Notes to Financial Statements 49 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- AAA(f) $ 395 PNC Mortgage Secs. Corp., Ser. 1999-5, Class A3, 7.25%, 10/25/29 $ 412,918 Residential Funding Mortgage, Ser. 1993-S36, Class A9, Aaa 3 6.478%, 10/25/08 2,713 Ser. 1994-S5, Class A6, Aaa 500 6.50%, 2/25/24 518,905 Ser. 1999-S8, Class A1, AAA(f) 182 6.25%, 3/25/14 192,208 AAA(f) 62 Salomon Brothers Mortgage Securities, Inc., Ser. 1999-LBI, Class A, 2.13688%, 6/25/29 61,791 Aaa 400 San Antonio Texas Water Rev., 5.00%, 5/15/25 393,820 Aaa 400 South Carolina St. Hwy., Ser. B, 5.00%, 4/1/17 419,512 Aaa 133 Washington Mutual Mortgage Security, Ser. 2001-3, Class 2A1, 6.75%, 5/25/31 134,526 Aaa 507 Wells Fargo Mortgage Bkd Secs., Mtge. Certificate Class II, Ser. A, 6.55701%, 10/25/31 516,058 ---------------- Total collateralized mortgage obligations 7,877,240 ----------------
U.S. GOVERNMENT AND AGENCY SECURITIES 4.9%
Principal Amount (000) Description Value (Note 1) - ----------------------------------------------------------------------------------------- $ 567 Federal Home Loan Mortgage Corp., 6.00%, 8/1/06(d) 590,109 Federal National Mortgage Association, 315 4.471%, 5/1/36(d) 319,767 865 5.50%, 12/1/30(d) 852,675 1,350 5.50%, TBA 1,362,954 397 5.936%, 11/1/11(d) 408,517 500 6.00%, TBA 513,750
50 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Principal Amount (000) Description Value (Note 1) - ----------------------------------------------------------------------------------------- Government National Mortgage Association, $ 991 5.50%, 1/15/32(d) $ 979,738 500 5.50%, TBA 492,265 148 6.00%, 11/20/29(d) 151,938 2,500 6.50%, TBA 2,575,000 97 6.63%, 10/20/27(d) 100,296 1,000 7.00%, TBA 1,044,380 140 8.50%, 5/20/30(d) 148,996 259 8.50%, 4/20/31(d) 275,806 800 United States Treasury Notes, P/O, Zero Coupon, 2/15/15(d) 411,136 ---------------- Total U.S. government and agency securities 10,227,327 ---------------- Total long-term investments (cost $222,047,583) 201,081,491 ----------------
SHORT-TERM INVESTMENTS 10.8%
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- U.S. Government And Agency Securities 0.1% $ 105 Federal Home Loan Mortgage Corp., Zero Coupon, 8/1/02(d) 105,000 90 Federal National Mortgage Association, 2.10%, 11/29/02(d) 89,481 United State Treasury Bills, 10 1.621%(c), 11/29/02(e) 9,946 10 1.65%(c), 8/15/02(e) 9,993 10 1.74%(c), 8/15/02(e) 9,993 ---------------- 224,413 - ------------------------------------------------------------------------------------- Corporate Bonds 2.5% - ------------------------------------------------------------------------------------- Banking 1.3% Aa3 1,200 ANZ (Delaware), Inc., 1.77%, 8/5/02 1,199,764
See Notes to Financial Statements 51 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Moody's Principal Rating Amount (Unaudited) (000) Description Value (Note 1) - ------------------------------------------------------------------------------------------- Aa2 $ 1,500 Svenska Handelsbanken AB, 1.78%, 8/19/02 $ 1,498,665 ---------------- 2,698,429 Shares - ------------------------------------------------------------------------------------- Mutual Fund 4.2% 8,765,437 Prudential Core Investment Fund-Taxable Money Market Series (Note 3) 8,765,437 ---------------- Principal Amount (000) - ------------------------------------------------------------------------------------- Commercial Paper 1.2% PRIM1 $ 2,000 Abbey National NA LLC, 1.775%, 9/11/02 1,996,049 PRIM1 500 CDC Commercial Paper, Inc., 1.77%, 8/8/02 499,828 ---------------- 2,495,877 - ------------------------------------------------------------------------------------- Repurchase Agreements 4.0% 7,829 Joint Repurchase Agreement Account, 1.85%, 8/1/02 (Note 6) 7,829,000 ----------------
Principal Amount (000) Description Value (Note 1) - ----------------------------------------------------------------------------------------- $ 572 State Street Bank & Trust Co., 0.25%, dated 7/31/02, due 8/1/02 in the amount of $572,004 (cost $572,000; collateralized by $570,000 US Treasury Notes, 6.375% due 8/15/02, approximate value of collateral including accrued interest $587,375) 572,000 ---------------- Total short-term investments (cost $22,585,064) 22,585,156 ---------------- Total investments, before outstanding options written 107.3% (cost $244,632,647) 223,666,647 ----------------
52 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Contracts Description Value (Note 1) - ------------------------------------------------------------------------------------------ OUTSTANDING CALL OPTIONS WRITTEN Call Option (3) MedImmune, Inc., expiring 8/02 @ $25 $ (12,000) (22) United States Treasury Notes, 10 year futures, expiring 8/02 @ $108 (61,531) ---------------- Total outstanding options written (premiums $(30,696)) (73,531) ---------------- Total investments, net of outstanding options written 107.3% (cost $244,601,951) 223,593,116 Liabilities in excess of other assets (7.3%) (15,346,022) ---------------- Net Assets 100% $ 208,247,094 ---------------- ----------------
- ------------------------------ (a) Non-income producing security. (b) Represents issuer in default on interest payments, non income producing security. (c) Percentage quoted represents yield-to-maturity as of purchase date. (d) All or a portion of security segregated as collateral for TBA. (e) Pledged as initial margin on financial futures contracts. (f) S&P Rating. AB--Aktiebolag (Swedish Company). ADR--American Depository Receipt. AG--Aktiengesellschaft (Austrian, German or Swiss Corporation). BV--Besloten Vennootschap (Belgian or Dutch Limited Liability Company). FRN--Floating Rate Note. LLC--Limited Liability Company. L.P.--Limited Partnership. MTN--Medium Term Note. NR--Not Rated by Moody's or Standard & Poor's. NV--Naamloze Vennootschap (Belgian or Dutch Company). Oyj--Julkinen Osakeyhtio (Finnish Stock Company). PLC--Public Limited Company (British or Irish Limited Liability Company). P/O--Principal Only. SA--Sociedad Anomima (Spanish Corporation) or Societe Anonyme (French Corporation). SpA--Societa par Atione (Italian Corporation). TBA--Securities purchased on a forward commitment basis. The Fund's current Prospectus contains a description of Moody's and Standard & Poor's ratings. See Notes to Financial Statements 53 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Statement of Assets and Liabilities
July 31, 2002 - --------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $244,601,951) $ 223,666,647 Foreign currency, at value (cost $259,585) 258,288 Cash 393,258 Receivable for investments sold 23,329,689 Interest and dividends receivable 1,449,531 Receivable for Fund shares sold 680,477 Unrealized appreciation on forward currency contracts 99,829 Tax reclaim receivable 31,378 ------------- Total assets 249,909,097 ------------- LIABILITIES Payable for investments purchased 40,635,658 Payable for Fund shares reacquired 503,686 Distribution fee payable 146,106 Accrued expenses and other liabilities 143,902 Management fee payable 136,276 Outstanding options written (premium received $30,696) 73,531 Deferred trustee's fees payable 9,007 Due to broker-variation margin 8,888 Withholding taxes payable 3,919 Unrealized depreciation on forward currency contracts 1,030 ------------- Total liabilities 41,662,003 ------------- NET ASSETS $ 208,247,094 ------------- ------------- Net assets were comprised of: Shares of beneficial interest, at par $ 23,568 Paid-in capital in excess of par 254,057,947 ------------- 254,081,515 Overdistribution of net investment income (3,978) Accumulated net realized loss on investments (24,964,631) Net unrealized depreciation on investments (20,865,812) ------------- Net assets, July 31, 2002 $ 208,247,094 ------------- -------------
54 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Statement of Assets and Liabilities Cont'd.
July 31, 2002 - --------------------------------------------------------------------------------------- Class A: Net asset value and redemption price per share ($50,558,702 / 5,711,764 shares of beneficial interest issued and outstanding) $8.86 Maximum sales charge (5% of offering price) .47 ------------- Maximum offering price to public $9.33 ------------- ------------- Class B: Net asset value, offering price and redemption price per share ($107,775,151 / 12,204,852 shares of beneficial interest issued and outstanding) $8.83 ------------- ------------- Class C: Net asset value and redemption price per share ($47,164,600 / 5,341,244 shares of beneficial interest issued and outstanding) $8.83 Sales charge (1% of offering price) .09 ------------- Offering price to public $8.92 ------------- ------------- Class Z: Net asset value, offering price and redemption price per share ($2,748,641 / 309,990 shares of beneficial interest issued and outstanding) $8.87 ------------- -------------
See Notes to Financial Statements 55 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Statement of Operations
Year Ended July 31, 2002 - --------------------------------------------------------------------------------------- NET INVESTMENT INCOME Income Interest (net of foreign withholding taxes of $853) $ 5,332,826 Dividends (net of foreign withholding taxes of $67,388) 1,590,785 ------------- Total income 6,923,611 ------------- Expenses Management fee 1,641,900 Distribution fee--Class A 143,084 Distribution fee--Class B 1,169,596 Distribution fee--Class C 404,647 Custodian's fees and expenses 441,000 Transfer agent's fees and expenses 295,000 Reports to shareholders 168,000 Registration fees 63,000 Audit fee 27,000 Legal fees and expenses 26,000 Trustees' fees 17,000 Miscellaneous 6,996 ------------- Total expenses 4,403,223 ------------- Net investment income 2,520,388 ------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized gain (loss) on: Investment transactions (20,787,926) Foreign currency transactions (509,476) Financial futures transactions 375,625 ------------- (20,921,777) ------------- Net change in unrealized appreciation (depreciation) on: Investments (19,850,799) Foreign currencies 123,283 Financial futures transactions 125,694 Options written (42,835) ------------- (19,644,657) ------------- Net loss on investments and foreign currencies (40,566,434) ------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (38,046,046) ------------- -------------
56 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Statement of Changes in Net Assets
Year Ended July 31, ------------------------------ 2002 2001 - ---------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations Net investment income $ 2,520,388 $ 3,301,750 Net realized loss on investments and foreign currency transactions (20,921,777) (2,626,310) Net change in unrealized depreciation of investments and foreign currencies (19,644,657) (11,932,310) ------------- ------------- Net decrease in net assets resulting from operations (38,046,046) (11,256,870) ------------- ------------- Dividends and distributions (Note 1) Dividends from net investment income Class A (1,487,953) (647,380) Class B (1,869,042) (883,997) Class C (631,115) (234,932) Class Z (131,679) (23,928) ------------- ------------- (4,119,789) (1,790,237) ------------- ------------- Distributions from net realized gains Class A -- (2,725,332) Class B -- (5,430,267) Class C -- (1,443,155) Class Z -- (91,171) ------------- ------------- -- (9,689,925) ------------- ------------- Fund share transactions (net of share conversions) (Note 6) Net proceeds from shares sold 86,962,395 88,346,449 Net asset value of shares issued in reinvestment of dividends and distributions 3,998,554 11,170,245 Cost of shares reacquired (55,021,978) (40,429,816) ------------- ------------- Net increase in net assets from Fund shares transactions 35,938,971 59,086,878 ------------- ------------- Total increase (decrease) (6,226,864) 36,349,846 NET ASSETS Beginning of year 214,473,958 178,124,112 ------------- ------------- End of year(a) $ 208,247,094 $ 214,473,958 ------------- ------------- ------------- ------------- - ------------------------------ (a) Includes undistributed net investment income of: $ -- $ 1,688,868 ------------- -------------
See Notes to Financial Statements 57 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Strategic Partners Asset Allocation Funds (the 'Trust'), is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company presently consisting of three Portfolios: Strategic Partners Moderate Growth Fund (the 'Fund'), Strategic Partners Conservative Growth Fund and Strategic Partners High Growth Fund. These financial statements relate only to Strategic Partners Moderate Growth Fund. The financial statements of the other Portfolios are not presented herein. The Trust was organized as a business trust in Delaware on July 29, 1998. Jennison Associates LLC ('Jennison'), Prudential Investment Management, Inc. ('PIM'), Lazard Asset Management, Pacific Investment Company, Franklin Advisers, Inc., and EARNEST Partners, LLC are the 'Advisers'. The investment objective of the Fund is to provide capital appreciation and a reasonable level of current income. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity and fixed income securities. The ability of the issuers of the debt securities held by the Fund to meet their obligations may be affected by economic developments in a specific industry or country. Note 1. Accounting Policies The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Securities Valuation: Securities for which the primary market is on an exchange and Nasdaq National Market Securities are valued at the last sale price on such exchange on the day of valuation, or, if there was no sale on such day, at the mean between the last bid and asked prices on such day or at the bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC ('PI' or the 'Manager'), in consultation with the Adviser, to be over-the-counter, are valued by an independent pricing agent or principal market maker. U.S. government securities for which market quotations are available shall be valued at a price provided by an independent pricing agent or broker-dealer. Privately placed securities including equity securities for which market prices may be obtained from primary dealers shall be valued at the bid prices provided by such primary dealers. Securities for which market quotations are not readily available may be valued using the last available market quotation for a period not to exceed five days, provided the Manager and Adviser feel this is representative of market value; after that period, such securities are valued in good faith under procedures adopted by the Trustees. 58 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. 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. 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 securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to ensure the adequacy of the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities--at the closing daily 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 at the foreign exchange rates and market values at the close of the fiscal period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of portfolio securities sold during the fiscal period. Accordingly, realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions. Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the holdings of foreign currencies, currency gains (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 (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at year end exchange rates are 59 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. reflected as a component of net unrealized appreciation (depreciation) on investments and foreign currencies. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability and the level of governmental supervision and regulation of foreign securities markets. Financial Futures Contracts: A financial futures contract is an agreement to purchase (long) or sell (short) an agreed amount of securities at a set price for delivery on a future date. Upon entering into a financial futures contract, the Fund is required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount. This amount is known as the 'initial margin.' Subsequent payments known as 'variation margin,' are made or received by the Fund each day, depending on the daily fluctuations in the value of the underlying security. Such variation margin is recorded for financial statement purposes on a daily basis as unrealized gain (loss). When the contract expires or is closed, the gain (loss) is realized and is presented in the Statement of Operations as net realized gain (loss) on financial futures contracts. The Fund invests in financial futures contracts in order to hedge its existing portfolio securities, or securities the Fund intends to purchase, against fluctuations in value caused by changes in prevailing interest rates or market conditions. Should interest rates move unexpectedly, the Fund may not achieve the anticipated benefits of the financial futures contracts and may realize a loss. The use of futures transactions involves the risk of imperfect correlation in movements in the price of futures contracts, interest rates and the underlying hedged assets. Forward Currency Contracts: A forward currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The Fund enters into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings or on specific receivables and payables denominated in a foreign currency. The contracts are valued daily at current exchange rates and any unrealized gain (loss) is included in net unrealized appreciation or depreciation on investments. Gain (loss) is realized on the settlement date of the contract equal to the difference between the settlement value of the original and renegotiated forward contracts. This gain (loss), if any, is included in net realized gain (loss) on foreign currency transactions. Risks may arise upon entering into these contracts from the potential inability of the counterparties to meet the terms of their contracts. 60 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. Options: The Fund may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates with respect to securities which the Fund currently owns or intends to purchase. The Fund's principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Fund realizes a gain (loss) to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Fund has realized a gain (loss). The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain (loss). Gain (loss) on purchased options is included in net realized gain (loss) on investment transactions. Gain (loss) on written options is presented separately as net realized gain (loss) on written option transactions. The Fund, as writer of an option, may have no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. The Fund, as purchaser of an option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts. Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) on sales of 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 the accrual basis. The Fund amortizes premiums and discounts on portfolio securities as adjustments to interest income. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. As required, effective August 1, 2001, the Fund adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began amortizing premiums on debt securities. Prior to August 1, 2001, the Fund did not amortize premiums on debt securities. Upon initial adoption, the Fund was required to adjust the cost of its fixed-income securities by the cumulative amounts that would have been recognized had the amortization been in effect from the purchase date of each holding. Adopting this accounting principle does not affect the Fund's net asset value, but 61 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. changes the classification of certain amounts between interest income and realized and unrealized gain (loss) in the Statement of Operations. The current adjustments for the year ended July 31, 2002 resulted in a decrease to net investment income of $15,992, an increase of realized capital losses of $16,083 and an increase of unrealized appreciation of $91. The cumulative adjustment upon adoption through July 31, 2001 resulted in a decrease to overdistribution of net investment income of $22,857 and an increase to unrealized appreciation on investments of $22,857. Net investment income (loss) (other than distribution fees) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day. Dividends and Distributions: The Fund expects to pay dividends of net investment income semi-annually, and distributions of net realized capital and currency gains, if any, declared annually. Dividends and distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Taxes: For federal income tax purposes, each Fund in the Trust is treated as a separate taxpaying entity. It is the Fund's policy to continue to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends have been provided for in accordance with the Fund's understanding of the applicable country's tax rules and rates. Note 2. Agreements The Fund has a management agreement with PI. Pursuant to this agreement, PI manages the investment operations of the Fund, administers the Fund's affairs and supervises the Advisers' performance of all investment advisory services. PI pays for the costs pursuant to the advisory agreements, the cost of compensation of officers of the Fund, occupancy and certain clerical and accounting costs of the Fund. The Fund bears all other costs and expenses. The management fee paid to PI is computed daily and payable monthly at an annual rate of .75% of the average daily net assets of the Fund. PI, in turn, pays the Advisers' fees, based on the average daily net assets of the Fund segments they manage. The Fund has a distribution agreement with Prudential Investment Management Services LLC ('PIMS') which acts as the distributor of the Class A, Class B, Class C 62 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. 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 PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor for Class Z shares of the Fund. Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively. Such expenses under the Plans were .25 of 1%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively, for the year ended July 31, 2002. PIMS has advised the Fund that it has received approximately $269,400 and $179,600 in front-end sales charges resulting from sales of Class A and Class C shares, respectively, during the year ended July 31, 2002. PIMS has advised the Fund that for the year ended July 31, 2002, it has received approximately $306,200 and $27,000 in contingent deferred sales charges imposed upon certain redemptions by Class B and Class C shareholders, respectively. Jennison, PIMS, PIM and PI are indirect, wholly-owned subsidiaries of Prudential Financial, Inc. ('Prudential'). The Fund, along with other affiliated registered investment companies (the 'Funds'), is a party to a syndicated credit agreement ('SCA') with a group of banks. For the year ended July 31, 2002 the amounts of the commitment were as follows: $500 million from August 1, 2001 through September 13, 2001, $930 million from September 14, 2001 through December 31, 2001 and $500 million from January 1, 2002 through May 3, 2002. On May 3, 2002, the Funds renewed and amended the SCA, which effectively increased the banks' commitment to $800 million and allows the Funds to increase the commitment to $1 billion, if necessary. Interest on any borrowings under the SCA will be incurred at market rates. The Funds pay a commitment fee of .08 of 1% of the unused portion of the SCA. The commitment fee is accrued and paid quarterly on a pro rata basis by the Funds. The purpose of the SCA is to serve as an alternative source of funding for capital share redemptions. The expiration date on the SCA is May 2, 2003. The Fund did not borrow any amounts pursuant to the SCA during the year ended July 31, 2002. 63 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. Note 3. Other Transactions with Affiliates Prudential Mutual Fund Services LLC ('PMFS'), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund's transfer agent. During the year ended July 31, 2002, the Fund incurred fees of approximately $236,800 for the services of PMFS. As of July 31, 2002 approximately $22,000 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. The Fund paid networking fees to Prudential Securities, Inc. ('PSI'), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national mutual fund clearing system. The total amount paid to PSI during the year ended July 31, 2002 was $19,700 and is incurred in transfer agent's fees and expenses in the Statement of Operations. The Fund invests in the Taxable Money Market Series (the 'Series'), a portfolio of Prudential Core Investment Fund, pursuant to an exemptive order received from the Securities and Exchange Commission. The Series is a money market mutual fund registered under the Investment Company Act of 1940, as amended, and managed by PI. During the year ended July 31, 2002, the Fund earned $22,872 from the Series by investing its excess cash. Note 4. Portfolio Securities Purchases and sales of portfolio securities, other than short-term investments, for the year ended July 31, 2002, aggregated $491,467,299 and $457,746,657, respectively. At July 31, 2002, the Fund had outstanding forward currency contracts both to purchase and sell foreign currencies, as follows:
Value at Value at Foreign Currency July 31, Settlement Date Purchase Contract 2002 Payable (Depreciation) - ---------------------------------------- ---------- --------------- -------------- GBP 62,310, expiring 8/2/02 $ 98,388 $ 97,358 $ (1,030) ---------- --------------- -------------- ---------- --------------- -------------- Value at Value at Foreign Currency July 31, Settlement Date Sale Contract 2002 Receivable Appreciation - ---------------------------------------- ---------- --------------- -------------- EUR 4,447,000 expiring 8/14/02 $4,353,135 $ 4,452,964 $ 99,829 ---------- --------------- -------------- ---------- --------------- --------------
64 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. During the year ended July 31, 2002, the Fund entered into financial futures contracts. Details of financial futures contracts open at period end are as follows:
Value at Value at Unrealized Number of Expiration July 31, Trade Appreciation Contracts Type Date 2002 Date (Depreciation) - --------- --------------------- ----------- ---------- ---------- --------------- Long Position: 11 Eurodollars Mar. 2003 $2,693,075 $2,628,725 $ 64,350 5 Eurodollars Jun. 2003 1,219,313 1,193,688 25,625 8 5 yr. U.S. T-Notes Sept. 2002 882,625 846,750 35,875 Short Position: 27 10 yr. U.S. T-Notes Sept. 2002 2,986,453 2,986,297 (156) --------------- $ 125,694 --------------- ---------------
Transactions in written call options during the year ended July 31, 2002 were as follows:
Number of Premiums Contracts Received ---------- --------- Options outstanding at July 31, 2001 -- $ -- Options written 25 30,696 ---------- --------- Options outstanding at July 31, 2002 25 $ 30,696 ---------- --------- ---------- ---------
Note 5. Tax Information Distributions to shareholders, which are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principals, are recorded on the ex-dividend date. In order to present undistributed net investment income and accumulated net losses on the Statement of Assets and Liabilities that more closely represent their tax character, certain adjustments have been made to paid-in capital, overdistribution of net investment income and accumulated net realized loss on investments. For the year ended July 31, 2002, the adjustments were to increase overdistribution of net investment income and decrease accumulated net realized loss on investments by $93,445 due to foreign currency losses and paydown loss reclass. Net investment income, net realized losses and net assets were not affected by this change. For the year ended July 31, 2002, the tax character of dividends paid of $4,119,789 was ordinary income. As of July 31, 2002, the accumulated undistributed earnings on a tax basis were $172,313. This differs from the amount shown on the Statement of Assets and 65 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. Liabilities primarily due to the deferral for federal tax purposes of post-October currency losses of approximately $58,000 and other cumulative timing differences. As of July 31, 2002, the capital loss carryforward for tax purposes is approximately $8,507,000 which expires in 2010. The capital loss carryforward differs from the amount on the Statement of Assets and Liabilities primarily due to the Fund electing to treat post-October capital losses of approximately $13,288,000 and currency losses of approximately $58,000 as having occurred in the following fiscal year. The United States federal income tax basis of the Fund's investments and the net unrealized depreciation as of July 31, 2002 were as follows: Other Total Net Cost Basis Unrealized Tax Basis Appreciation Depreciation Adjustments Depreciation - ------------ ------------ ------------ ----------- ------------ $247,679,231 $ 6,428,705 $ 30,441,289 $(141,161) $ 24,153,745 The differences between book and tax basis are primarily attributable to the different treatment of amortization of premiums, wash sales and passive foreign investment companies for book and tax purposes. The other cost basis adjustments are primarily attributable to futures, forward currency contracts and mark to market of receivables and payables. Note 6. Joint Repurchase Agreement Account The Fund, along with other affiliated registered investment companies, transfers uninvested cash balances into a single joint account, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. As of July 31, 2002, the Fund had a 1.94% undivided interest in the joint account. The undivided interest for the Fund represents $7,829,000 in principal amount. As of such date, each repurchase agreement in the joint account and the collateral therefore were as follows: Greenwich Capital Markets, Inc., 1.85%, in the principal amount of $90,000,000, repurchase price $90,004,625, due 8/1/02. The value of the collateral including accrued interest was $91,800,242. UBS Warburg, 1.85%, in the principal amount of $100,000,000, repurchase price $100,005,138, due 8/1/02. The value of the collateral including accrued interest was $102,001,222. Bank of America Securities, LLC, 1.85%, in the principal amount of $123,884,000, repurchase price $123,890,366, due 8/1/02. The value of the collateral including accrued interest was $126,400,393. 66 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd. J.P. Morgan Chase, 1.85%, in the principal amount of $90,000,000, repurchase price $90,004,625, due 8/1/02. The value of the collateral including accrued interest was $91,802,009. Note 7. 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 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 qualified 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 an unlimited number of shares of beneficial interest at $.001 par value per share. Transactions in shares of beneficial interest were as follows:
Class A Shares Amount - ------------------------------------------------------------ ---------- ------------ Year ended July 31, 2002: Shares sold 1,626,004 $ 16,554,072 Shares issued in reinvestment of dividends and distributions 146,940 1,440,660 Shares reacquired (1,678,983) (16,899,015) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 93,961 1,095,717 Shares issued upon conversion from Class B 146,653 1,468,951 ---------- ------------ Net increase (decrease) in shares outstanding 240,614 $ 2,564,668 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 2,384,528 $ 26,932,178 Shares issued in reinvestment of dividends and distributions 305,915 3,288,581 Shares reacquired (1,496,350) (16,719,530) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 1,194,093 13,501,229 Shares issued upon conversion from Class B 222,872 2,518,136 ---------- ------------ Net increase (decrease) in shares outstanding 1,416,965 $ 16,019,365 ---------- ------------ ---------- ------------
67 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Notes to Financial Statements Cont'd.
Class B Shares Amount - ------------------------------------------------------------ ---------- ------------ Year ended July 31, 2002: Shares sold 3,289,589 $ 33,193,576 Shares issued in reinvestment of dividends and distributions 185,708 1,821,832 Shares reacquired (2,188,337) (21,480,205) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 1,286,960 13,535,203 Shares reacquired upon conversion from Class A (147,278) (1,468,951) ---------- ------------ Net increase (decrease) in shares outstanding 1,139,682 $ 12,066,252 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 3,775,256 $ 42,088,513 Shares issued in reinvestment of dividends 573,011 6,154,140 Shares reacquired (1,383,908) (15,299,565) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 2,964,359 32,943,088 Shares reacquired upon conversion from Class A (223,494) (2,518,136) ---------- ------------ Net increase (decrease) in shares outstanding 2,740,865 $ 30,424,952 ---------- ------------ ---------- ------------ Class C - ------------------------------------------------------------ Year ended July 31, 2002: Shares sold 3,265,611 $ 33,060,063 Shares issued in reinvestment of dividends and distributions 62,836 611,082 Shares reacquired (1,186,551) (11,564,547) ---------- ------------ Net increase (decrease) in shares outstanding 2,141,896 $ 22,106,598 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 1,351,621 $ 14,913,266 Shares issued in reinvestment of dividends 150,449 1,615,821 Shares reacquired (637,880) (7,061,147) ---------- ------------ Net increase (decrease) in shares outstanding 864,190 $ 9,467,940 ---------- ------------ ---------- ------------ Class Z - ------------------------------------------------------------ Year ended July 31, 2002: Shares sold 402,803 $ 4,154,684 Shares issued in reinvestment of dividends and distributions 12,645 124,980 Shares reacquired (503,938) (5,078,211) ---------- ------------ Net increase (decrease) in shares outstanding (88,490) $ (798,547) ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 399,898 $ 4,412,492 Shares issued in reinvestment of dividends and distributions 10,381 111,703 Shares reacquired (123,697) (1,349,574) ---------- ------------ Net increase (decrease) in shares outstanding 286,582 $ 3,174,621 ---------- ------------ ---------- ------------
68 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Financial Highlights
Class A ----------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) ---------------------------------------- Through 2002 2001 2000 July 31, 1999 - ------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE:(d) Net asset value, beginning of period $ 10.70 $ 12.03 $ 10.86 $ 10.00 ---------- ---------- ---------- -------- Income from investment operations: Net investment income .19 .24 .26 .12 Net realized and unrealized gain (loss) on investments and foreign currencies (1.76) (.83) 1.25 .83 ---------- ---------- ---------- -------- Total from investment operations (1.57) (.59) 1.51 .95 ---------- ---------- ---------- -------- Less distributions Dividends from net investment income (.27) (.14) (.26) (.09) Distributions from net realized capital gains -- (.60) (.08) -- ---------- ---------- ---------- -------- Total dividends and distributions (.27) (.74) (.34) (.09) ---------- ---------- ---------- -------- Net asset value, end of period $ 8.86 $ 10.70 $ 12.03 $ 10.86 ---------- ---------- ---------- -------- ---------- ---------- ---------- -------- TOTAL RETURN(b) (14.92)% (4.89)% 13.96% 9.47% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 50,559 $ 58,517 $ 48,786 $ 20,372 Average net assets (000) $ 57,234 $ 56,627 $ 34,809 $ 12,286 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 1.48% 1.54% 1.49% 1.88%(c) Expenses, excluding distribution and service (12b-1) fees 1.23% 1.29% 1.24% 1.63%(c) Net investment income 1.68% 2.18% 2.27% 1.59%(c) For Class A, B, C and Z shares: Portfolio turnover rate 217% 246% 155% 96%
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. See Notes to Financial Statements 69 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Financial Highlights Cont'd.
Class B ----------------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) ---------------------------------------------- Through 2002 2001 2000 July 31, 1999 - ------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE:(d) Net asset value, beginning of period $ 10.63 $ 12.01 $ 10.85 $ 10.00 ---------------- ---------- ---------- -------- Income from investment operations: Net investment income .11 .16 .17 .06 Net realized and unrealized gain (loss) on investments and foreign currencies (1.75) (.84) 1.23 .83 ---------------- ---------- ---------- -------- Total from investment operations (1.64) (.68) 1.40 .89 ---------------- ---------- ---------- -------- Less distributions Dividends from net investment income (.16) (.10) (.16) (.04) Distributions from net realized capital gains -- (.60) (.08) -- ---------------- ---------- ---------- -------- Total dividends and distributions (.16) (.70) (.24) (.04) ---------------- ---------- ---------- -------- Net asset value, end of period $ 8.83 $ 10.63 $ 12.01 $ 10.85 ---------------- ---------- ---------- -------- ---------------- ---------- ---------- -------- TOTAL RETURN(b) (15.56)% (5.72)% 12.88% 8.99% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $107,775 $ 117,664 $ 99,950 $ 58,678 Average net assets (000) $116,960 $ 109,534 $ 79,855 $ 36,645 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 2.23% 2.29% 2.24% 2.63%(c) Expenses, excluding distribution and service (12b-1) fees 1.23% 1.29% 1.24% 1.63%(c) Net investment income .93% 1.43% 1.48% .85%(c)
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. 70 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Financial Highlights Cont'd.
Class C ---------------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) --------------------------------------------- Through 2002 2001 2000 July 31, 1999 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE:(d) Net asset value, beginning of period $ 10.63 $ 12.01 $ 10.85 $ 10.00 -------- ---------- --------- -------- Income from investment operations: Net investment income .11 .16 .17 .06 Net realized and unrealized gain (loss) on investments and foreign currencies (1.75) (.84) 1.23 .83 -------- ---------- --------- -------- Total from investment operations (1.64) (.68) 1.40 .89 -------- ---------- --------- -------- Less distributions Dividends from net investment income (.16) (.10) (.16) (.04) Distributions from net realized capital gains -- (.60) (.08) -- -------- ---------- --------- -------- Total dividends and distributions (.16) (.70) (.24) (.04) -------- ---------- --------- -------- Net asset value, end of period $ 8.83 $ 10.63 $ 12.01 $ 10.85 -------- ---------- --------- -------- -------- ---------- --------- -------- TOTAL RETURN(b) (15.56)% (5.72)% 12.88% 8.99% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 47,165 $ 34,021 $ 28,040 $ 22,375 Average net assets (000) $ 40,465 $ 30,623 $ 25,835 $ 18,346 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 2.23% 2.29% 2.24% 2.63%(c) Expenses, excluding distribution and service (12b-1) fees 1.23% 1.29% 1.24% 1.63%(c) Net investment income .95% 1.43% 1.44% .79%(c)
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. See Notes to Financial Statements 71 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Financial Highlights Cont'd.
Class Z ---------------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) --------------------------------------------- Through 2002 2001 2000 July 31, 1999 - ----------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING PERFORMANCE:(d) Net asset value, beginning of period $10.72 $12.05 $ 10.87 $ 10.00 ------- ---------- --------- -------- Income from investment operations: Net investment income .22 .25 .27 .13 Net realized and unrealized gain (loss) on investments and foreign currencies (1.77) (.82) 1.27 .84 ------- ---------- --------- -------- Total from investment operations (1.55) (.57) 1.54 .97 ------- ---------- --------- -------- Less distributions Dividends from net investment income (.30) (.16) (.28) (.10) Distributions from net realized capital gains -- (.60) (.08) -- ------- ---------- --------- -------- Total dividends and distributions (.30) (.76) (.36) (.10) ------- ---------- --------- -------- Net asset value, end of period $ 8.87 $10.72 $ 12.05 $ 10.87 ------- ---------- --------- -------- ------- ---------- --------- -------- TOTAL RETURN(b) (14.70)% (4.75)% 14.18% 9.70% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $2,749 $4,272 $ 1,348 $ 13,578 Average net assets (000) $4,262 $2,685 $ 4,102 $ 21,914 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 1.23% 1.29% 1.24% 1.63%(c) Expenses, excluding distribution and service (12b-1) fees 1.23% 1.29% 1.24% 1.63%(c) Net investment income 1.93% 2.39% 2.11% 1.68%(c)
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. 72 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Report of Independent Accountants To the Shareholders and Board of Trustees of Strategic Partners Asset Allocation Funds-- Strategic Partners Moderate Growth Fund In our opinion, the accompanying Statement of Assets and Liabilities, including the portfolio of investments, and the related Statements of Operations and of Changes in Net Assets and the Financial Highlights present fairly, in all material respects, the financial position of Strategic Partners Asset Allocation Funds--Strategic Partners Moderate Growth Fund (the 'Fund') at July 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as 'financial statements') are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at July 31, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York September 25, 2002 73 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Tax Information (Unaudited) We are required by the Internal Revenue Code to advise you within 60 days of the Fund's fiscal year end (July 31, 2002) as to the federal income tax status of dividends paid by the Fund during such fiscal period. Accordingly, we are advising you that during its fiscal period ended July 31, 2002, the Fund paid an ordinary distribution for Class A, Class B, Class C and Class Z shares of $0.27 per share, $0.16 per share, $0.16 per share and $0.30 per share, respectively, which represents net investment income. Further, we wish to advise you that 44.37% of the ordinary income dividends paid in the fiscal period ended July 31, 2002 qualified for the corporate dividend received deduction available to corporate taxpayers. We are required by Massachusetts, Missouri and Oregon to inform you that dividends which have been derived from interest on federal obligations are not taxable to shareholders. Please be advised that 5.33% of the dividends paid from ordinary income in the fiscal year ended July 31, 2002, qualify for each of these states' tax exclusion. For the purpose of preparing your annual federal income tax return, however, you should report the amounts as reflected on the appropriate Form 1099-DIV or substitute 1099-DIV. 74 ANNUAL REPORT SEPTEMBER 30, 2002 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS STRATEGIC PARTNERS MODERATE GROWTH FUND Management of the Trust Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Information pertaining to the Trustees of the Fund is set forth below. Trustees who are not deemed to be 'interested persons' of the Trust defined in the 1940 Act are referred to as 'Independent Trustees.' Trustees who are deemed to be 'interested persons' of the Trust are referred to as 'Interested Trustees.' 'Fund Complex' consists of the Trust and any other investment companies managed by PI. Independent Trustees
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Eugene C. Dorsey (75) Trustee Since 1998 Saul K. Fenster, Ph.D. (69) Trustee Since 2000 Number of Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Eugene C. Dorsey (75) Retired President, Chief Executive 78 Officer and Trustee of the Gannett Foundation (now Freedom Forum) (since December 1989); formerly Publisher of four Gannett newspapers and Vice President of Gannett Co., Inc.; Chairman of Independent Sector, Washington, D.C. (largest national coalition of philanthropic organizations); Chairman of the American Council for the Arts. Saul K. Fenster, Ph.D. (69) Currently President Emeritus of New 79 Jersey Institute of Technology; formerly President (1978-2002) of New Jersey Institute of Technology; Commissioner (1998-2002) of the Middle States Association Commission on Higher Education; Commissioner (1985-2002) of the New Jersey Commission on Science and Technology; Director (since 1998) Society of Manufacturing Engineering Education Foundation, formerly a director or trustee of Liberty Science Center, Research and Development Council of New Jersey, New Jersey State Chamber of Commerce, and National Action Council for Minorities in Engineering. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Eugene C. Dorsey (75) Director (since 1996) of First Financial Fund, Inc. (First Financial) and Director (since 1996) of The High Yield Plus Fund, Inc. (High Yield Plus). Saul K. Fenster, Ph.D. (69) Member (since 2000), Board of Directors of IDT Corporation.
76 77 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd.
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Robert E. La Blanc (68) Trustee Since 1999 Douglas H. McCorkindale (63) Trustee Since 1998 W. Scott McDonald, Jr. (65) Trustee Since 2000 Number of Portfolios in Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Robert E. La Blanc (68) President (since 1981) of Robert E. 74 La Blanc Associates, Inc. (telecommunications); formerly General Partner at Salomon Brothers and Vice-Chairman of Continental Telecom; Trustee of Manhattan College. Douglas H. McCorkindale (63) Formerly Vice Chairman (March 75 1984-May 2000) of Gannett Co. Inc. W. Scott McDonald, Jr. (65) Vice President (since 1997) of 79 Kaludis Consulting Group, Inc. (company serving higher education); Formerly principal (1995-1997), Scott McDonald & Associates, Chief Operating Officer (1991-1995), Fairleigh Dickinson University, Executive Vice President and Chief Operating Officer (1975-1991), Drew University, interim President (1988-1990), Drew University and former director of School, College and University Underwriters Ltd. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Robert E. La Blanc (68) Director of Storage Technology Corporation (since 1979) (technology), of Chartered Semiconductor Manufacturing Ltd. (since 1998) (Singapore), of Titan Corporation (electronics, since 1995) and of Salient 3 Communications, Inc. (since 1995) (technology); Director of First Financial Fund (since 1999) and Director of High Yield Plus (since April 1999). Douglas H. McCorkindale (63) Chairman (since February 2001), Chief Executive Officer (since June 2000) and President (since September 1997) of Gannett Co. Inc. (publishing and media); Director of Continental Airlines, Inc.; Director (since May 2001) of Lockheed Martin Corp. (aerospace and defense) and Director of High Yield Plus (since 1996). W. Scott McDonald, Jr. (65)
78 79 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd.
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Thomas T. Mooney (60) Trustee Since 1998 Stephen Stoneburn (59) Trustee Since 1999 Joseph Weber, Ph.D. (78) Trustee Since 2000 Clay T. Whitehead (63) Trustee Since 1999 P.O. Box 8090 McLean, VA 22106-8090 Number of Portfolios in Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Thomas T. Mooney (60) President of the Greater Rochester 95 Metro Chamber of Commerce; formerly Rochester City Manager; formerly Deputy Monroe County Executive; Trustee of Center for Governmental Research, Inc.; Director of Blue Cross of Rochester, Monroe County Water Authority and Executive Service Corps of Rochester. Stephen Stoneburn (59) President and Chief Executive Officer 74 (since June 1996) of Quadrant Media Corp. (a publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media and Senior Vice President of Fairchild Publications, Inc (1975-1989). Joseph Weber, Ph.D. (78) Vice President, Finance (retired), 62 Interclass (international corporate learning) since 1991; formerly President, The Alliance for Learning; retired Vice President, Member of the Board of Directors and Member of the Executive and Operating Committees, Hoffmann-LaRoche Inc; Member, Board of Overseers, New Jersey Institute of Technology. Trustee and Vice Chairman Emeritus, Fairleigh Dickinson University. Clay T. Whitehead (63) President (since 1983) of National 91 P.O. Box 8090 Exchange Inc. (new business McLean, VA 22106-8090 development firm). Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Thomas T. Mooney (60) Director, President and Treasurer of First Financial and Director of High Yield Plus (since 1988). Stephen Stoneburn (59) Joseph Weber, Ph.D. (78) Clay T. Whitehead (63) Director (since 2000) of P.O. Box 8090 First Financial and High McLean, VA 22106-8090 Yield Plus.
80 81 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. Interested Trustees
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- *Robert F. Gunia (55) Vice President Since 1999 and Trustee *David R. Odenath, Jr (45) President and Since 1999 Trustee Number of Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- *Robert F. Gunia (55) Executive Vice President and Chief 112 Administrative Officer (since June 1999) of Prudential Investments LLC (PI); Executive Vice President and Treasurer (since January 1996) of PI; President (since April 1999) of Prudential Investment Management Services LLC (PIMS); Corporate Vice President (since September 1997) of Prudential Financial, Inc. (Prudential); formerly Senior Vice President (March 1987-May 1999) of Prudential Securities Incorporated (Prudential Securities); formerly Chief Administrative Officer (July 1989-September 1996), Director (January 1989-September 1996) and Executive Vice President, Treasurer and Chief Financial Officer (June 1987-December 1996) of Prudential Mutual Funds Management, Inc. (PMF). Vice President and Director (since May 1992) of Nicholas-Applegate Fund, Inc. *David R. Odenath, Jr (45) President, Chief Executive Officer 115 and Chief Operating Officer (since June 1999) of PI; Senior Vice President (since June 1999) of Prudential; formerly Senior Vice President (August 1993-May 1999) of PaineWebber Group, Inc. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- *Robert F. Gunia (55) Vice President and Director (since May 1989) of The Asia Pacific Fund, Inc. *David R. Odenath, Jr (45)
82 83 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. Information pertaining to the Officers of the Trust is set forth below. Officers
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Judy A. Rice (54) Vice President Since 2001 Grace C. Torres (43) Treasurer and Since 2000 Principal Financial and Accounting Officer Marguerite E.H. Morrison (46) Secretary since 2002 Principal Occupations Name, Address** and Age During Past 5 Years ------------------------------- Judy A. Rice (54) Executive Vice President (since 1999) of PI; formerly various positions to Senior Vice President (1992-1999) of Prudential Securities; and various positions to Managing Director (1975-1992) of Salomon Smith Barney; Member of Board of Governors of the Money Management Institute; Member of the Prudential Securities Operating Council and the National Association for Variable Annuities. Grace C. Torres (43) Senior Vice President (since January 2000) of PI; formerly First Vice President (December 1996 - January 2000) of PI and First Vice President (March 1993-1999) of Prudential Securities. Marguerite E.H. Morrison (46) Vice President and Chief Legal Officer - Mutual Funds and Unit Investment Trusts (since August 2000) of Prudential; Assistant Secretary (since February 2001) of PI; Vice President and Assistant Secretary of PIMS (since October 2001), previously Vice President and Associate General Counsel (December 1996 - February 2001) of PI and Vice President and Associate General Counsel (September 1987 - September 1996) of Prudential Securities. Name, Address** and Age ------------------------------- Judy A. Rice (54) Grace C. Torres (43) Marguerite E.H. Morrison (46)
84 85 Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. * 'Interested' Trustee, as defined in the 1940 Act, by reason of affiliation with the Manager, the Subadviser or the Distributor. ** Unless otherwise noted, the address of the Trustees and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, 9th Floor, Newark, New Jersey 07102-4077. *** There is no set term of office for Trustees and Officers. The Independent Trustees have adopted a retirement policy which calls for the retirement of Trustees on December 31 of the year in which they reach the age of 75, except for Mr. Weber, who will retire by December 31, 2002. The table shows the number of years that an individual has served as a Trustee or Officer. **** This column includes only directorships of companies required to report to the SEC under the Securities and Exchange Act of 1934 (that is, 'public companies') or other investment companies registered under the Act. Additional information about the Trust's Trustees is included in the Trust's statement of additional information, which is available without charge, upon request, by calling (800) 225-1852 or (732) 482-7555 (Calling from outside the U.S.)
86 87 www.strategicpartners.com (800) 225-1852 The Strategic Partners Mutual Fund Family Strategic Partners offers a variety of mutual funds designed to meet your individual needs. For information about these funds, contact your financial professional or call us at (800) 225-1852. Please read the applicable prospectus carefully before you invest or send money. Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Strategic Partners Moderate Growth Fund Strategic Partners High Growth Fund Strategic Partners Style Specific Funds Strategic Partners Large Capitalization Growth Fund Strategic Partners Large Capitalization Value Fund Strategic Partners Small Capitalization Growth Fund Strategic Partners Small Capitalization Value Fund Strategic Partners International Equity Fund Strategic Partners Total Return Bond Fund Strategic Partners Opportunity Funds Strategic Partners Focused Growth Fund Strategic Partners New Era Growth Fund Strategic Partners Focused Value Fund Strategic Partners Mid-Cap Value Fund Special Money Market Fund, Inc.* Money Market Series *This Fund is not a direct purchase money fund and is only an exchangeable money fund. Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Getting the Most from Your 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. www.strategicpartners.com (800) 225-1852 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 on the U.S. market and denominated in U.S. dollars. Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Class A Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -19.18% -1.13% Without Sales Charge -14.92% 0.25% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Moderate Growth Fund (Class A shares) with a similar investment in the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable front-end sales charge was deducted from the initial $10,000 investment in Class A shares; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with Securities and Exchange Commission (SEC) regulations. www.strategicpartners.com (800) 225-1852 Class B Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -19.71% -1.05% Without Sales Charge -15.56% -0.56% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Moderate Growth Fund (Class B shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable contingent deferred sales charge (CDSC) was deducted from the value of the investment in Class B shares, assuming full redemption on July 31, 2002; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. Strategic Partners Asset Allocation Funds Strategic Partners Moderate Growth Fund Class C Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -17.23% -0.83% Without Sales Charge -15.56% -0.56% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Moderate Growth Fund (Class C shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the front-end sales charge was deducted from the initial $10,000 investment in Class C shares; (b) the applicable CDSC was deducted from the value of the investment in Class C shares, assuming full redemption on July 31, 2002; (c) all recurring fees (including management fees) were deducted; and (d) all dividends and distributions were reinvested. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. www.strategicpartners.com (800) 225-1852 Class Z Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception - -14.70% 0.49% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners Moderate Growth Fund (Class Z shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) all recurring fees (including management fees) were deducted, and (b) all dividends and distributions were reinvested. Class Z shares are not subject to a sales charge or distribution and service (12b-1) fees. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. These returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. FOR MORE INFORMATION Strategic Partners Mutual Funds Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 (800) 225-1852 Visit our website at: www.strategicpartners.com Trustees Eugene C. Dorsey Saul K. Fenster Robert F. Gunia Robert E. La Blanc Douglas H. McCorkindale W. Scott McDonald, Jr. Thomas T. Mooney David R. Odenath, Jr. Stephen Stoneburn Joseph Weber Clay T. Whitehead Officers David R. Odenath, Jr., President Robert F. Gunia, Vice President Judy A. Rice, Vice President Grace C. Torres, Treasurer Marguerite E.H. Morrison, Secretary Manager Prudential Investments LLC Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 Investment Advisers EARNEST Partners, LLC 75 14th Street, Suite 2300 Atlanta, GA 30309 Franklin Advisers, Inc. 920 Park Place San Mateo, CA 94403 Jennison Associates LLC 466 Lexington Avenue New York, NY 10017 Lazard Asset Management 30 Rockefeller Plaza New York, NY 10112 Pacific Investment Mgmt. Company LLC 840 Newport Center Dr. Newport Beach, CA 92660 Prudential Investment Management, Inc. Gateway Center Two Newark, NJ 07102 Distributor Prudential Investment Management Services LLC Gateway Center Three, 14th Floor 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 PO Box 8098 Philadelphia, PA 19101 Independent Accountants PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 Legal Counsel Shearman & Sterling 599 Lexington Avenue New York, NY 10022 Fund Symbols Nasdaq CUSIP Class A PAMGX 86276X889 Class B DMGBX 86276X871 Class C PIMGX 86276X863 Class Z PDMZX 86276X855 MFSP504E3 IFS-A074130 Mutual funds are not bank guaranteed or FDIC insured, and may lose value. ANNUAL REPORT JULY 31, 2002 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS STRATEGIC PARTNERS HIGH GROWTH FUND Objective: Seeks Long-Term Capital Appreciation This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus. 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. Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Performance at a Glance INVESTMENT GOALS AND STYLE The Strategic Partners High Growth Fund's investment objective is long-term capital appreciation. The Fund is designed for investors who want investment professionals to make their asset allocation decisions, that is, it invests in a diversified portfolio of stocks. The Fund is periodically rebalanced in accordance with its asset allocation strategy. There can be no assurance that the Fund will achieve its investment objective. ABSOLUTE AND RELATIVE PERFORMANCE We evaluate an investment's performance in two ways. The first considers how much more (or less) an investment is worth at the end of a reporting period. This is known as absolute performance. The second compares whether you did better (or worse) than the market average (the benchmark index) or the average return of comparable funds (the Lipper Average) regardless of your gain or loss. This is called relative performance. Three factors determine the absolute return of an asset allocation fund: the asset allocation, the benchmark return for each asset class, and the relative performance of the fund's holdings in each asset class compared to its benchmark index for that class. If, for example, your fund has a substantial allocation to small-cap stocks, its absolute return will depend on how well small-cap stocks perform in general. It will also depend on the relative performance of the investment advisers for the different asset classes. The fund's return is higher when the advisers outperform their benchmarks than when they underperform them. This "adviser contribution" has a greater impact in the asset classes with larger allocations. This is why, in the discussion of the performance of your Strategic Partners Asset Allocation Fund, we may say, for example, that the Fund's large allocation to a low-performing asset class hurt its return, even though the advisers' relative performance had a positive impact. www.strategicpartners.com (800) 225-1852 Annual Report July 31, 2002 Cumulative Total Returns1 As of 7/31/02 One Year Since Inception2 Class A -21.49% -3.17% Class B -22.08 -5.68 Class C -22.08 -5.68 Class Z -21.35 -2.15 Lipper Multi-Cap Core Funds Avg.3 -22.62 -8.04 S&P 500 Index4 -23.62 -17.89 Average Annual Total Returns1 As of 6/30/02 One Year Since Inception2 Class A -18.32% 0.87% Class B -18.94 1.09 Class C -16.38 1.30 Class Z -13.76 2.61 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 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. Without the distribution and service (12b-1) fee waiver for Class A shares, the returns would have been lower. 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 the first six years respectively. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. Class C shares are subject to a front-end sales charge of 1% and a CDSC of 1% for shares redeemed within 18 months of purchase. Class Z shares are not subject to a sales charge or distribution and service (12b-1) fees. The cumulative and average annual total returns in the tables above do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. 2 Inception date: Class A, B, C, and Z, 11/18/98. 3 The Lipper Average is unmanaged, and is based on the average return for all funds in each share class for the one- year and since inception periods in the Lipper Multi-Cap Core Funds category. Funds in the Lipper Multi-Cap Core Funds Average invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap funds typically have between 25% and 75% of their assets invested in companies with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the Standard & Poor's (S&P) SuperComposite 1500 Index. Multi-cap core funds have more latitude in the companies in which they invest. These funds typically have an average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index. 4 The Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. Investors cannot invest directly in an index. The returns for the Lipper Average and S&P 500 Index would be lower if they included the effect of sales charges, operating expenses, or taxes. 1 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS September 16, 2002 DEAR SHAREHOLDER, The events of the past 12 months--economic recession, accounting and corporate governance scandals, terrorist attacks, turbulence in the Middle East, and fear that economic recovery will be slow--have shaken the confidence of many investors. In times like these, we believe the Strategic Partners Asset Allocation Funds are particularly appealing. Markets can move very quickly, and investors who have tried to time shifts from one asset class to another have generally not helped their long-term returns. The preferred conservative approach is to have an asset allocation target that suits your personal investment goals, time horizon, and tolerance for volatility, and then to avoid being pressured to change it by current events. When the various asset classes perform in dramatically different ways, as they have been doing over the past several years, your Strategic Partners High Growth Fund's rebalancing discipline will not only maintain your target allocation, but it may also enhance your return somewhat as it maneuvers to stay on course. With Strategic Partners mutual funds, you have the added comfort of knowing that our Strategic Investment Research Group regularly monitors the funds' investment advisers for consistent adherence to their style objectives, as well as for changes in practices or personnel that might affect their performance. During this reporting period, for example, we changed the adviser for the funds' small/mid-cap value stocks. In the following pages, we explain the Strategic Partners High Growth Fund's loss and its slight outperformance of its benchmark over this reporting period. We appreciate your confidence in Strategic Partners mutual funds through these difficult times. Sincerely, David R. Odenath, Jr., President Strategic Partners Asset Allocation Funds 2 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Annual Report July 31, 2002 INVESTMENT ADVISERS' REPORT AN EVENTFUL FISCAL YEAR The 12 months ended July 31, 2002, included a series of unexpected events of historical importance. The reporting period began in the middle of a very steep stock market decline as investors digested the signs that the U.S. economy was contracting. Expectations and share prices had previously been raised by the longest period of continuous economic growth in U.S. history. Not long into the reporting period, investors' expectations were jarred again by the first external attack on the United States since World War II. In response to both the economic slowdown and the terrorist shock, the Federal Reserve began to drive down interest rates very aggressively, pushing short-term rates to their lowest level in 40 years. The European and United Kingdom Central Banks also reduced interest rates. Investors expected the low interest rates to trigger an economic recovery, which it did, pushing share prices higher in the fourth quarter of 2001. During that brief wave of optimism, growth stocks responded most vigorously. Then the record for the largest bankruptcy in U.S. history was broken twice in short order by Enron and WorldCom. A leading accounting firm and several large, respected companies were involved in a string of accounting scandals and restatements of financial reports. Many investors lost confidence in the accuracy of audited financial reports and once again turned away from equity investments and toward bonds, cash, real estate, and gold. In addition, during the first half of 2002, the U.S. dollar began a long- predicted correction of its overvaluation against other currencies. The string of confidence-rattling issues did not go unaddressed. Accounting firms, Congress, the Securities and Exchange Commission (SEC), the New York Stock Exchange, and several corporations took steps to restore the credibility of financial reporting. These steps included measures to remove even the appearance of conflicts of interest by auditors and securities analysts, tighter standards for the independence of corporate directors from 3 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Annual Report July 31, 2002 management, more detailed financial reports, and a requirement that corporate CEOs and CFOs take personal legal responsibility for the accuracy of their firms' financial statements. In the United States, the only sectors to show rising net share prices over the period were large-cap consumer staples, buoyed by the continuing strength of consumer spending, and small-cap financial services, driven by continued consumer borrowing for houses, autos, and other goods. Since the issues that affected equity investing concerned the pace of economic and earnings growth and the reliability of future earnings estimates, growth stocks fared worse. Both large-cap and small-cap growth stocks had a dismal 12 months. The depressed level of spending on technology upgrades kept both large-cap and small-cap technology stocks at or near the bottom of the market with sector average stock declines greater than 40%. Enron's bankruptcy caused a retreat from industries that were very dependent upon debt financing, including energy utilities, and cable systems. Investors also moved away from large companies whose financial statements were complicated because they had grown through many acquisitions. Even such respected firms as General Electric (GE) and American International Group (AIG) saw their share prices drop sharply. Losses were more moderate in the large- and small-cap materials and processing sectors. The materials industries have gone through a period of consolidation and cost cutting, and were expected to benefit from an economic recovery. Gold mining companies also benefited from the political and economic uncertainty and the dollar's decline, all of which increased demand for gold. 4 www.strategicpartners.com (800) 225-1852 Asset Class Index Returns As of 7/31/02 (GRAPH) Source: Prudential Investments LLC and Lipper Inc. The performance cited does not represent the performance of any of the Strategic Partners Asset Allocation Funds. Past performance is not indicative of future results. Investors cannot invest directly in an index. The Russell 1000 Value Index comprises those securities in the Russell 1000 Index with a less-than-average growth orientation. Companies in this index generally have low price-to-book and price/earnings ratios, higher dividend yields, and lower forecasted growth values. The Russell 1000 Growth Index comprises those securities in the Russell 1000 Index with a greater-than-average growth orientation. Companies in this index tend to exhibit higher price-to-book and price/earnings ratios, lower dividend yields, and higher forecasted growth rates. The Russell 2000 Value Index is an unmanaged, weighted index that measures the performance of those Russell 2000 companies with lower price- to-book ratios. The Russell 2000 Growth Index is an unmanaged, weighted index that measures the performance of those Russell 2000 companies with higher price- to-book ratios. The Morgan Stanley Capital International Europe, Australasia, and Far East Index (MSCI EAFE Index) is an unmanaged, weighted index of performance that reflects stock price movements in Europe, Australasia, and the Far East. 5 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Annual Report July 31, 2002 Small-cap value stocks were the best-performing equity class, although even they fell over the period. The profits of small companies usually respond more emphatically to changes in economic activity. In fact, in the last quarter of 2001 and the first half of 2002, the earnings of small-cap companies first declined less and then grew more than those of large caps. Bread-and-butter small companies were expected to benefit most from the improving economy. By "bread and butter," we mean companies whose products have an established demand, and whose profitability is not dependent upon the rapid growth of a new market: healthcare, food, and consumer services firms. In addition, small-cap value stocks continued their recovery from an extremely undervalued period at the onset of this bear market. Such corrections often overshoot, and may have done so during this reporting period. Stock markets outside the United States were driven by the same factors as U.S. markets: strong in the fourth quarter of 2001, but very weak over the rest of the reporting period. The decline in 2002 of the MSCI EAFE Index-- representing developed country markets--affected all sectors. European stocks were hit by reports of a sluggish 0.1% rise in Euro-zone GDP in the first quarter, which eroded confidence in the recovery's robustness. Surprisingly, Japanese stocks fell only modestly and outperformed the rest of the world's markets over this reporting period even as Moody's downgraded Japan's long-term debt rating because of its escalating public debt. However, sharp gains in both the euro and yen against the U.S. dollar significantly mitigated the declines for U.S. dollar-based investors. YOUR FUND'S PERFORMANCE The Strategic Partners High Growth Fund performed slightly better than the Lipper Multi-Cap Core Funds Average and the S&P 500 Index largely because of its substantial allocation to international stocks and its relatively high allocation to small/mid-cap value stocks. Although both of these asset classes fell sharply, they held up much better than other sectors of the equity market. Both of the Fund's growth style allocations 6 www.strategicpartners.com (800) 225-1852 and its international stocks slightly outperformed their respective benchmarks, but the impact was more than offset by the underperformance of both of its value style allocations. International stocks--as measured by the MSCI EAFE Index representing large-cap stocks in the developed country markets in Europe, Australasia, and the Far East--performed more or less in line with domestic large-cap value stocks, and the portfolio performed marginally better than that benchmark. During the early part of the reporting period, its holdings in companies that were aggressively restructuring their operations to improve their profitability detracted from return. Such companies, with low current profitability but the potential to improve through restructuring, have always played a role in the strategy of the portfolio's subadviser. However, an economic downturn makes implementing a major restructuring much more difficult. Toward the end of 2001, the Fund shifted capital from companies engaged in restructuring into those with a more consistent history of financial productivity in a variety of environments. In the falling markets of 2002, the Fund's continued focus on stocks that were inexpensive compared with their earnings helped its performance, particularly in the telecommunications sector. Its telecommunications and technology holdings outperformed the corresponding sectors in the benchmark, and its underweight in technology also helped its return. The Fund was negatively affected by its underweight in healthcare and its overweight in financials compared with the Index. We changed subadvisers for the Fund's small-cap value stocks during this reporting period. Early in the reporting period, the portfolio's performance was helped by a strong selection of technology and consumer discretionary stocks. Under its new subadviser, in the poorer markets later in the period, the portfolio's overweight of technology stocks and underweight of financials detracted from its performance. Its return was helped by housing stocks and by several energy holdings. 7 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Annual Report July 31, 2002 Among equity investments, growth stocks performed worse than value stocks because the falling market represented skepticism about earnings growth rates. Their 25% allocation meant that large-cap growth stocks had the greatest negative impact on the Fund's return, despite a modest outperformance by the Fund in this asset class. The largest detractions came from technology, media, and specialty retail stocks, and from financial firms that were exposed to the poor capital market environment or to consumer borrowing. Citigroup, the largest detractor, fit both of the latter criteria. The Fund had positive contributions from the defense contractor Northrop Grumman, from Pharmacia (a drug company that during this period agreed to be acquired by Pfizer), and from several consumer stocks, including Kohl's, Gillette, and Procter & Gamble. Large-cap value stocks, also a 25% allocation, made the second-largest absolute detraction, underperforming a poor market, albeit not nearly as bad as that for growth stocks. Telecommunication services companies, such as the wireless firms Western Wireless and Sprint PCS, detracted heavily. The Fund had some exposure to Enron and Adelphia--two companies where accounting irregularities have been alleged. Although these were not large positions, the stocks fell substantially. Williams Companies was also a large detractor, in part as a by-product of the attention to Enron, because it is in the energy trading business. On the positive side, return was supported by tobacco and health service companies, and by good stock selection among the drug companies. Wyeth was the largest contributor. The impact of small-cap growth stocks was less because of the Fund's smaller allocation to them, but the asset class fell further than the large caps, making it the worst performer. The impact was mitigated somewhat by the outperformance of the asset class average by the Fund's holdings. This was due primarily to an emphasis on energy stocks and certain groups of technology stocks at times when they performed relatively well, e.g., software and semiconductor equipment manufacturers during the latter half of the reporting period. Some of these positions were sold or trimmed to take profits. Strategic Partners High Growth Fund Management Team 8 www.strategicpartners.com (800) 225-1852 [This page intentionally left blank.] 9 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Annual Report July 31, 2002 WHAT IS AN ASSET ALLOCATION FUND? Diversification--spreading your investments over many different securities--is a basic principle of investing. It helps reduce the overall risk of your portfolio. Mutual funds not only provide professional money management, but they also allow a relatively small investment to be spread over many different securities. When you own a large number of different securities, the impact of any one security on your return is reduced. In addition, if you diversify your investments among asset classes and investment styles--between stocks and bonds, value and growth stocks, and domestic and international markets-- it is less likely that all the securities you own will move in the same direction at one time. Strategic Partners Asset Allocation Funds provide more of this buffer than funds investing in only one asset class. We believe this will result in more consistent returns over time. In addition, we rebalance the Strategic Partners High Growth Fund to restore the original weighting of different asset classes. REBALANCING The Strategic Partners High Growth Fund has a target allocation for each asset class. As some asset classes perform better than others, the portfolio will drift from this original target: the securities that rise most will become a larger proportion of the invested assets. We direct new investments to the asset classes that have fallen below their target ratio and, when necessary, sell certain securities in appreciated asset classes to maintain the balance. This not only keeps your risk exposure from changing too much, but it may reduce the average cost of our investments and increase our average selling price over time. Although an individual investor can diversify and rebalance, it would require a large investment to own the range of asset classes represented in the Strategic Partners High Growth Fund. Moreover, calculating the amounts to allocate to each kind of security in a rebalancing would be difficult. Strategic Partners Asset Allocation Funds do it all for you. 10 www.strategicpartners.com (800) 225-1852 Glossary of Terms Asset classes are classifications of investments. The most basic classification of securities is among stocks, bonds, and money market investments. Stocks are shares of ownership in a firm. Owners share in the profits after debts are paid, and share in the firm's appreciation in value. Generally, the prices of stocks vary with investors' estimates of a firm's earnings prospects, including the impact of broader economic conditions. Global investing has a worldwide scope, while international investing generally means markets outside the United States. A U.S. domestic portfolio, together with an international portfolio, provides global scope. Strategic Partners High Growth Fund Diversification Target (GRAPH) 11 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ LONG-TERM INVESTMENTS 95.6% Common Stocks - ------------------------------------------------------------------------------------- Aerospace & Defense 1.4% 4,700 Boeing Co. $ 195,144 4,100 General Dynamics Corp. 331,772 6,000 Lockheed Martin Corp. 384,660 8,800 Northrop Grumman Corp. 974,160 ---------------- 1,885,736 - ------------------------------------------------------------------------------------- Air Freight & Couriers 0.4% 12,800 Airborne, Inc. 173,056 19,000 Forward Air Corp.(a) 412,490 ---------------- 585,546 - ------------------------------------------------------------------------------------- Airlines 0.5% 12,800 Atlantic Coast Airlines Holdings, Inc.(a) 200,320 16,100 Continental Airlines, Inc. (Class B)(a) 172,592 16,600 Delta Air Lines, Inc. 258,628 ---------------- 631,540 - ------------------------------------------------------------------------------------- Auto Components 0.7% 18,600 Federal Signal Corp. 389,112 12,900 Gentex Corp.(a) 376,551 4,200 Superior Industries International, Inc. 184,254 ---------------- 949,917 - ------------------------------------------------------------------------------------- Automobiles 1.3% 10,890 Bayerische Motoren Werke (BMW) AG (Germany) 410,522 11,200 Harley-Davidson, Inc. 530,432 80,000 Nissan Motor Co., Ltd. (Japan) 559,804 15,200 Toyota Motor Corp. (Japan) 363,639 ---------------- 1,864,397 - ------------------------------------------------------------------------------------- Banks 5.1% 38,700 ABN AMRO Holdings NV (Netherlands) 550,162 30,500 Allied Irish Banks PLC (Ireland) 355,843 12,100 Astoria Financial Corp. 407,165
12 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 7,900 Bank of America Corp. $ 525,350 13,500 Bank of Ireland (Ireland) 153,534 14,300 Bank One Corp. 556,413 42,300 BankUnited Financial Corp. (Class A)(a) 719,100 16,400 BNP Paribas SA (France) 753,778 6,200 Commerce Bancorp, Inc. 286,564 6,500 Hibernia Corp. (Class A) 135,070 74,800 HSBC Holdings PLC (United Kingdom) 858,866 4,000 Investors Financial Services Corp. 123,080 37,850 Overseas-Chinese Banking Corp., Ltd. (Singapore) 244,868 29,300 San Paolo Imi SpA (Italy) 224,352 1,000 Silicon Valley Bancshares(a) 21,630 27,900 Standard Chartered PLC (United Kingdom) 283,523 12,800 UBS AG (Switzerland)(a) 564,038 2,400 Umpqua Holdings Corp. 36,984 36,904 United Overseas Bank, Ltd. (Singapore) 270,163 ---------------- 7,070,483 - ------------------------------------------------------------------------------------- Beverages 2.1% 18,300 Coca-Cola Co. 913,902 55,700 Diageo PLC (United Kingdom) 675,233 16,310 Heineken NV (Netherlands) 667,609 16,200 PepsiCo, Inc. 695,628 ---------------- 2,952,372 - ------------------------------------------------------------------------------------- Biotechnology 1.1% 16,600 Amgen, Inc.(a) 757,624 17,000 Genentech, Inc.(a) 590,750 7,600 MedImmune, Inc.(a) 226,024 6,100 Ortec International, Inc.(a) 6,100 ---------------- 1,580,498 - ------------------------------------------------------------------------------------- Building Products 0.3% 8,100 Crane Co. 186,138 17,200 Watsco, Inc. 244,240 ---------------- 430,378
See Notes to Financial Statements 13 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Chemicals 1.8% 13,000 Akzo Nobel NV (Netherlands) $ 461,258 4,700 Cabot Corp. 116,184 5,700 FMC Corp.(a) 140,448 23,600 IMC Global, Inc. 256,060 16,800 Lyondell Chemical Co. 221,760 7,100 Minerals Technologies, Inc. 265,185 16,100 NOVA Chemicals Corp. (Canada) 330,694 20,700 Solutia, Inc. 129,582 7,500 The Scotts Co. (Class A)(a) 341,250 7,300 Valspar Corp. 296,672 ---------------- 2,559,093 - ------------------------------------------------------------------------------------- Commercial Services & Supplies 2.6% 17,900 Administaff, Inc.(a) 134,250 24,600 Allied Waste Industries, Inc.(a) 162,360 5,700 CDI Corp.(a) 161,538 7,300 Concord EFS, Inc.(a) 142,350 1,100 CoStar Group, Inc.(a) 23,100 20,900 Global Payments, Inc. 543,400 3,600 Headwaters, Inc.(a) 50,652 7,500 Heidrick & Struggles International, Inc.(a) 116,625 1,000 John H. Harland Co. 24,290 11,100 Kelly Services, Inc. (Class A) 276,834 7,200 MAXIMUS, Inc.(a) 170,784 6,600 NCO Group, Inc.(a) 96,360 18,200 NDCHealth Corp. 392,938 6,200 Pegasus Solutions, Inc.(a) 98,828 10,800 Plexus Corp.(a) 150,120 14,400 ProBusiness Services, Inc.(a) 141,120 17,400 Republic Services, Inc.(a) 306,240 9,500 Resources Connection, Inc.(a) 174,990 19,100 US Liquids, Inc.(a) 36,290 18,300 Waste Management, Inc. 433,161 ---------------- 3,636,230
14 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Communications Equipment 1.7% 83,700 3Com Corp.(a) $ 377,487 10,900 Adaptec, Inc.(a) 64,310 20,900 Advanced Fibre Communications, Inc.(a) 360,107 14,300 Anaren Microwave, Inc.(a) 111,540 15,200 Avocent Corp.(a) 228,456 53,800 Cisco Systems, Inc.(a) 709,622 11,600 Ixia(a) 63,104 21,900 Nokia Oyj (Finland) 272,684 1,700 Nokia Oyj ADR (Finland) 21,080 16,700 Powerwave Technologies, Inc.(a) 102,538 9,100 Sierra Wireless, Inc.(a) 23,205 ---------------- 2,334,133 - ------------------------------------------------------------------------------------- Computers & Peripherals 1.7% 11,000 Advanced Digital Information Corp.(a) 57,200 22,100 Dell Computer Corp.(a) 550,953 67,500 EMC Corp.(a) 506,250 86,747 Hewlett-Packard Co. 1,227,470 ---------------- 2,341,873 - ------------------------------------------------------------------------------------- Construction & Engineering 0.1% 30,200 McDermott International, Inc.(a) 141,638 - ------------------------------------------------------------------------------------- Construction Materials 0.2% 22,477 CRH PLC (Ireland) 337,164 - ------------------------------------------------------------------------------------- Containers & Packaging 0.6% 9,100 Pactiv Corp.(a) 165,347 13,600 Temple-Inland, Inc. 730,320 ---------------- 895,667 - ------------------------------------------------------------------------------------- Diversified Financials 8.1% 10,600 A.G. Edwards, Inc. 364,640 6,100 Acom Co., Ltd. (Japan) 367,764 2,100 Aiful Corp. (Japan) 133,622 31,500 American Express Co. 1,110,690
See Notes to Financial Statements 15 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 22,300 AmeriCredit Corp.(a) $ 435,965 3,000 BlackRock, Inc.(a) 125,850 52,600 Citigroup, Inc. 1,764,204 3,800 Doral Financial Corp. (Puerto Rico) 145,692 16,800 Eaton Vance Corp. 449,568 20,400 Fortis (Belgium) 340,409 8,000 Freddie Mac 495,600 18,400 Goldman Sachs Group, Inc. 1,345,960 19,300 ING Groep NV (Netherlands) 418,178 26,400 Investor AB (Sweden) 173,532 11,300 Jeffries Group, Inc. 450,870 7,200 Knight Trading Group, Inc.(a) 29,448 16,600 Lehman Brothers Holdings, Inc. 941,386 12,400 MBNA Corp. 240,436 11,900 Merrill Lynch & Co., Inc. 424,235 3,700 Morgan Stanley Dean Witter & Co. 149,295 95,000 Nikko Cordial Corp. (Japan) 401,399 3,500 Orix Corp. (Japan) 241,699 11,900 Principal Financial Group, Inc.(a) 341,649 15,800 Raymond James Financial, Inc. 429,760 ---------------- 11,321,851 - ------------------------------------------------------------------------------------- Diversified Telecommunication Services 2.6% 4,300 ALLTEL Corp. 174,236 37,500 AT&T Corp. 381,750 25,700 BellSouth Corp. 690,045 76,430 BT Group PLC (United Kingdom) 240,589 131,400 Koninklijke KPN NV (Netherlands)(a) 615,793 72 Nippon Telegraph & Telephone Corp. (Japan) 294,599 12,700 SBC Communications, Inc. 351,282 86,100 Telecom Italia SpA (Italy) 680,377 8,100 Verizon Communications, Inc. 267,300 ---------------- 3,695,971 - ------------------------------------------------------------------------------------- Electric Utilities 1.1% 37,000 CLP Holdings, Ltd. (Hong Kong) 144,685 11,200 E. ON AG (Germany) 548,485
16 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 30,800 Endesa SA (Spain) $ 343,037 10,500 PG&E Corp.(a) 145,950 14,300 PNM Resources, Inc. 285,285 ---------------- 1,467,442 - ------------------------------------------------------------------------------------- Electrical Equipment 0.5% 8,300 C&D Technologies, Inc. 127,571 11,100 Harris Corp. 356,421 20,900 Power-One, Inc.(a) 95,304 3,000 Schneider Electric SA (France) 144,327 ---------------- 723,623 - ------------------------------------------------------------------------------------- Electronic Equipment & Instruments 2.2% 15,400 Arrow Electronics, Inc.(a) 262,878 8,600 Cognex Corp.(a) 132,182 30,300 DDI Corp.(a) 19,392 14,600 Electro Scientific Industries, Inc.(a) 262,216 11,200 FLIR Systems, Inc.(a) 458,080 36,800 Ingram Micro, Inc. (Class A)(a) 404,800 9,200 Merix Corp.(a) 57,500 8,100 Mettler-Toledo International, Inc. (Switzerland)(a) 230,445 4,700 Park Electrochemical Corp. 94,000 3,100 Roper Industries, Inc. 92,225 7,400 Sirenza Microdevices, Inc.(a) 11,026 66,600 Solectron Corp.(a) 266,400 10,000 Technitrol, Inc. 187,500 9,500 Trimble Navigation, Ltd.(a) 124,355 6,300 TTM Technologies, Inc.(a) 19,908 12,500 Varian, Inc.(a) 398,125 ---------------- 3,021,032 - ------------------------------------------------------------------------------------- Energy Equipment & Services 2.3% 10,500 Cal Dive International, Inc.(a) 201,390 20,900 ENSCO International, Inc. 540,265 17,578 FMC Technologies, Inc.(a) 325,193 20,400 GlobalSantaFe Corp. 459,816 13,100 Patterson-UTI Energy, Inc.(a) 313,221
See Notes to Financial Statements 17 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 20,300 Schlumberger, Ltd. $ 871,276 9,500 Superior Energy Services, Inc.(a) 77,520 9,200 Weatherford International, Ltd.(a) 373,152 ---------------- 3,161,833 - ------------------------------------------------------------------------------------- Food & Drug Retailing 0.7% 47,300 Boots Co. PLC (United Kingdom) 414,534 5,600 Carrefour SA (France) 243,771 83,900 Tesco PLC (United Kingdom) 286,713 ---------------- 945,018 - ------------------------------------------------------------------------------------- Food Products 1.2% 9,100 Bunge, Ltd. 186,095 37,200 Cadbury Schweppes PLC (United Kingdom) 257,735 20,400 ConAgra Foods, Inc. 512,244 24,300 Sara Lee Corp. 455,382 33,000 Unilever PLC (United Kingdom)(a) 289,983 ---------------- 1,701,439 - ------------------------------------------------------------------------------------- Gas Utilities 1.1% 26,100 El Paso Corp. 377,145 9,900 Energen Corp. 244,530 12,400 NiSource, Inc. 245,520 20,000 Oneok, Inc. 370,000 15,600 Sempra Energy 330,720 ---------------- 1,567,915 - ------------------------------------------------------------------------------------- Health Care Equipment & Supplies 1.9% 37,268 Amersham PLC (United Kingdom) 314,971 15,500 Baxter International, Inc. 618,605 9,600 Cooper Cos., Inc. 421,440 17,300 Diagnostic Products Corp. 621,070 9,700 Varian Medical Systems, Inc.(a) 405,460 9,400 Wilson Greatbatch Technologies, Inc.(a) 219,490 ---------------- 2,601,036 - ------------------------------------------------------------------------------------- Health Care Providers & Services 3.0% 3,000 AmerisourceBergen Corp. 200,970
18 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 5,300 Anthem, Inc.(a) $ 359,764 32,200 Covance, Inc.(a) 545,468 24,200 HCA, Inc. 1,137,400 14,700 Lincare Holdings, Inc.(a) 461,286 14,000 Orthodontic Centers of America, Inc.(a) 196,700 16,300 Pediatrix Medical Group, Inc.(a) 485,740 26,000 Pharmaceutical Product Development, Inc.(a) 599,248 16,100 Quintiles Transnational Corp.(a) 159,873 8,100 Service Corp. International(a) 18,225 7,400 Stewart Enterprises, Inc. (Class A)(a) 39,516 ---------------- 4,204,190 - ------------------------------------------------------------------------------------- Hotels, Restaurants & Leisure 2.1% 16,500 Brinker International, Inc.(a) 537,900 10,800 CEC Entertainment, Inc.(a) 407,160 2,300 Four Seasons Hotels, Inc. 87,860 3,500 Jack In The Box, Inc.(a) 96,950 14,600 Marriott International, Inc. (Class A) 489,100 14,100 McDonald's Corp. 348,975 9,400 Outback Steakhouse, Inc.(a) 300,236 16,500 Starbucks Corp.(a) 323,895 14,300 Station Casinos, Inc.(a) 188,760 18,500 WMS Industries, Inc.(a) 195,175 ---------------- 2,976,011 - ------------------------------------------------------------------------------------- Household Durables 2.2% 29,550 D.R. Horton, Inc. 656,010 2,100 Furniture Brands International, Inc.(a) 53,340 12,000 Harman International Industries, Inc. 517,200 27,300 Hovnanian Enterprises, Inc. (Class A)(a) 779,142 20,147 Philips Electronics NV (Netherlands) 456,283 6,000 Snap-On, Inc. 163,020 10,500 Sony Corp. (Japan) 474,339 ---------------- 3,099,334 - ------------------------------------------------------------------------------------- Household Products 0.6% 9,000 Kao Corp. (Japan) 202,912
See Notes to Financial Statements 19 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 7,200 Procter & Gamble Co. $ 640,728 ---------------- 843,640 - ------------------------------------------------------------------------------------- Industrial Conglomerates 0.7% 5,700 3M Co. 717,231 4,400 Siemens AG (Germany) 217,849 ---------------- 935,080 - ------------------------------------------------------------------------------------- Insurance 5.0% 30,035 Alleanza Assicurazioni (Italy) 227,036 1,271 Allianz AG (Germany) 181,060 12,600 Allstate Corp. 478,926 16,450 American International Group, Inc. 1,051,484 7,200 AmerUs Group Co. 229,536 12,800 Commerce Group, Inc. 474,880 23,000 Hartford Financial Services Group, Inc. 1,163,800 3,000 IPC Holdings, Ltd. 94,920 9,000 Lincoln National Corp. 330,210 8,500 Loews Corp. 403,240 15,500 Philadelphia Consolidated Holding Corp.(a) 623,565 8,900 Protective Life Corp. 284,800 9,900 Reinsurance Group of America, Inc. 294,030 16,000 XL Capital, Ltd. (Class A) 1,185,600 ---------------- 7,023,087 - ------------------------------------------------------------------------------------- Internet & Catalog Retail 0.2% 12,700 USA Interactive(a) 280,022 - ------------------------------------------------------------------------------------- Internet Software & Services 0.1% 6,500 MatrixOne, Inc.(a) 43,550 4,000 SkillSoft Corp.(a) 32,920 3,100 SmartForce Public Ltd., Co. ADR(a) 10,571 10,900 webMethods, Inc.(a) 95,811 ---------------- 182,852 - ------------------------------------------------------------------------------------- IT Consulting & Services 0.1% 9,500 Inforte Corp.(a) 76,000
20 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 13,300 Keane, Inc.(a) $ 109,725 ---------------- 185,725 - ------------------------------------------------------------------------------------- Machinery 0.8% 31,400 CNH Global NV (Netherlands) 88,548 3,600 CUNO, Inc.(a) 117,576 8,900 Navistar International Corp.(a) 229,531 3,500 Oshkosh Truck Corp. 192,325 6,200 Pentair, Inc. 252,154 7,000 Reliance Steel & Aluminum Co. 173,600 ---------------- 1,053,734 - ------------------------------------------------------------------------------------- Media 5.0% 16,500 Acme Communications, Inc.(a) 145,200 5,200 AOL Time Warner, Inc.(a) 59,800 21,500 Entravision Communications Corp. (Class A)(a) 215,000 16,300 General Motors Corp. (Class H)(a) 161,370 6,800 Knight-Ridder, Inc. 411,740 10,450 Lagardere SCA (France) 432,970 16,900 Lamar Advertising Co.(a) 533,702 68,200 Liberty Media Corp. (Class A)(a) 536,052 23,200 New York Times Co. (Class A) 1,049,800 28,100 News Corp. Ltd., ADR (Australia)(a) 477,700 81,800 Sinclair Broadcast Group, Inc. (Class A)(a) 961,150 18,200 Univision Communications, Inc. (Class A)(a) 520,338 36,124 Viacom, Inc. (Class B)(a) 1,406,307 3,103 Wolters Kluwer NV (Netherlands)(a) 47,429 ---------------- 6,958,558 - ------------------------------------------------------------------------------------- Metals & Mining 1.0% 11,300 Alcoa, Inc. 305,665 83,183 BHP Billiton, Ltd. (Australia) 431,456 6,600 Cleveland-Cliffs, Inc.(a) 161,040 21,800 Freeport-McMoRan Copper & Gold, Inc. (Class B)(a) 332,886 13,300 Stillwater Mining Co.(a) 126,350 ---------------- 1,357,397
See Notes to Financial Statements 21 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Multiline Retail 3.2% 13,700 Costco Wholesale Corp.(a) $ 477,719 18,400 Federated Department Stores, Inc.(a) 692,024 24,800 Fred's, Inc. 730,360 18,200 Kohl's Corp.(a) 1,201,200 12,400 Metro AG (Germany) 318,519 5,500 Tuesday Morning Corp.(a) 83,490 19,300 Wal-Mart Stores, Inc. 949,174 ---------------- 4,452,486 - ------------------------------------------------------------------------------------- Multi - Utilities 0.2% 13,250 Suez Lynonnaise des Eaux (France)(a) 288,390 - ------------------------------------------------------------------------------------- Office Electronics 0.8% 13,000 Canon, Inc. (Japan) 440,729 106,300 Xerox Corp.(a) 738,785 ---------------- 1,179,514 - ------------------------------------------------------------------------------------- Oil & Gas 5.7% 91,717 BP PLC (United Kingdom) 712,103 17,100 Chesapeake Energy Corp.(a) 91,485 59,900 ENI SpA (Italy) 904,985 22,300 Exxon Mobil Corp. 819,748 13,700 Occidental Petroleum Corp. 371,133 19,800 PetroQuest Energy, Inc.(a) 76,032 29,700 Pioneer Natural Resources Co.(a) 719,037 2,700 Premcor, Inc.(a) 58,860 18,200 Royal Dutch Petroleum Co. (Netherlands) 831,513 6,300 Spinnaker Exploration Co.(a) 177,282 13,900 Stone Energy Corp.(a) 472,322 27,100 Swift Energy Co.(a) 359,346 17,500 Talisman Energy, Inc. 712,075 4,990 TotalFinaElf SA (France) 721,613 6,333 TotalFinaElf SA, ADR (France) 459,459 27,800 XTO Energy, Inc. 499,010 ---------------- 7,986,003
22 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Paper & Forest Products 1.5% 12,200 Boise Cascade Corp. $ 353,678 26,700 International Paper Co. 1,063,194 12,600 Weyerhaeuser Co. 740,250 ---------------- 2,157,122 - ------------------------------------------------------------------------------------- Personal Products 0.4% 19,100 Gillette Co. 628,008 - ------------------------------------------------------------------------------------- Pharmaceuticals 5.7% 19,600 Abbott Laboratories 811,636 15,100 Alpharma, Inc. (Class A) 168,516 9,500 Barr Laboratories, Inc.(a) 579,500 47,300 GlaxoSmithKline PLC (United Kingdom) 918,478 14,500 Johnson & Johnson 768,500 20,200 K-V Pharmaceutical Co. (Class B)(a) 424,200 5,000 Medicis Pharmaceutical Corp. (Class A)(a) 209,600 25,800 Novartis AG (Switzerland) 1,050,709 17,300 Pfizer, Inc. 559,655 25,501 Pharmacia Corp. 1,140,915 8,300 Sepracor, Inc.(a) 56,025 31,400 Wyeth 1,252,860 ---------------- 7,940,594 - ------------------------------------------------------------------------------------- Real Estate 0.3% 8,700 Jones Lang LaSalle, Inc.(a) 175,218 6,100 SL Green Realty Corp. 196,725 ---------------- 371,943 - ------------------------------------------------------------------------------------- Real Estate Investment Trust 0.4% 4,300 Alexandria Real Estate Equities, Inc. 185,545 6,700 Boston Properties, Inc. 249,910 3,600 Colonial Properties Trust 129,420 ---------------- 564,875 - ------------------------------------------------------------------------------------- Road & Rail 0.5% 68 East Japan Railway Co. (Japan) 317,979
See Notes to Financial Statements 23 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 7,300 Knight Transportation, Inc.(a) $ 129,210 2,300 Landstar Systems, Inc.(a) 229,563 ---------------- 676,752 - ------------------------------------------------------------------------------------- Semiconductor Equipment & Products 4.0% 17,100 Advanced Energy Industries, Inc.(a) 252,567 19,700 Agere Systems, Inc. (Class A)(a) 37,430 189,200 Agere Systems, Inc. (Class B)(a) 368,940 4,800 Analog Devices, Inc.(a) 115,680 15,200 Applied Materials, Inc.(a) 226,024 12,500 Credence Systems Corp.(a) 171,250 9,200 Cymer, Inc.(a) 257,508 9,500 EMCORE Corp.(a) 31,350 9,200 Exar Corp.(a) 153,364 24,400 Integrated Circuit Systems, Inc.(a) 428,708 3,600 Integrated Device Technology, Inc.(a) 46,080 23,400 Intel Corp. 439,686 4,800 Intersil Corp. (Class A)(a) 104,592 3,300 Kla-Tencor Corp.(a) 129,987 5,600 Maxim Integrated Products, Inc.(a) 197,008 9,000 Micrel, Inc.(a) 103,230 9,800 National Semiconductor Corp.(a) 177,478 9,500 Oak Technology, Inc.(a) 36,575 5,500 Pericom Semiconductor Corp.(a) 51,645 16,300 Rudolph Technologies, Inc.(a) 247,467 12,500 Semtech Corp.(a) 245,750 11,100 STMicroelectronics NV (Switzerland) 236,319 26,270 Taiwan Semiconductor Manufacturing Co., Ltd. ADR (Taiwan)(a) 239,582 27,400 Texas Instruments, Inc. 634,310 23,300 Varian Semiconductor Equipment Associates, Inc.(a) 612,324 ---------------- 5,544,854 - ------------------------------------------------------------------------------------- Software 3.5% 8,500 Adobe Systems, Inc. 203,660 19,400 Ascential Software Corp.(a) 47,530 10,900 Aspen Technology, Inc.(a) 46,325
24 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ 7,600 BindView Development Corp.(a) $ 7,600 26,700 BMC Software, Inc.(a) 359,115 14,100 Borland Software Corp.(a) 122,106 9,900 Brio Software, Inc.(a) 10,593 12,500 Catapult Communications Corp.(a) 156,625 12,200 Cerner Corp.(a) 529,480 23,400 Entrust, Inc.(a) 64,116 9,100 HNC Software, Inc.(a) 164,619 17,900 Informatica Corp.(a) 124,584 14,300 Jack Henry & Associates, Inc. 204,061 10,800 Lawson Software, Inc.(a) 51,840 14,300 Micromuse, Inc.(a) 44,187 25,900 Microsoft Corp.(a) 1,242,682 14,600 National Instruments Corp.(a) 396,098 6,800 Precise Software Solutions, Ltd.(a) 85,408 15,300 Synopsys, Inc.(a) 654,381 29,600 Verity, Inc.(a) 331,520 ---------------- 4,846,530 - ------------------------------------------------------------------------------------- Specialty Retail 2.7% 20,100 Bed Bath & Beyond, Inc.(a) 623,100 15,100 Charming Shoppes, Inc.(a) 109,928 22,000 Circuit City Stores-Circuit City Group 375,100 12,500 Compagnie Financiere Richemont AG (Switzerland) 230,281 5,500 Cost Plus, Inc.(a) 134,145 52,000 Kingfisher PLC (United Kingdom) 157,189 3,100 Linens 'n Things, Inc.(a) 75,485 22,200 Lowe's Companies, Inc. 840,270 11,700 Movie Gallery, Inc.(a) 193,635 2,000 Regis Corp. 50,760 20,700 Tiffany & Co. 510,048 36,400 Toys 'R' Us, Inc.(a) 490,672 ---------------- 3,790,613 - ------------------------------------------------------------------------------------- Tobacco 1.4% 17,700 Altadis SA (Spain) 350,539 30,520 Imperial Tobacco Group PLC (United Kingdom) 467,248 14,700 Loews Corp. - Carolina Group 363,090 17,900 Philip Morris Co., Inc. 824,295 ---------------- 2,005,172
See Notes to Financial Statements 25 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Shares Description Value (Note 1) - ------------------------------------------------------------------------------------------ Transportation 0.2% 7,400 Teekay Shipping Corp. (Bahamas) $ 253,672 - ------------------------------------------------------------------------------------- Wireless Telecommunication Services 0.7% 92,300 American Tower Corp. (Class A)(a) 206,752 181,330 mm02 PLC (United Kingdom)(a) 127,473 106 NTT DoCoMo, Inc. (Japan) 236,330 309,900 Vodafone Group PLC (United Kingdom) 469,602 ---------------- 1,040,157 - ------------------------------------------------------------------------------------- Mutual Fund 0.3% 28,500 Technology Select Sector SPDR Fund(a) 408,120 ---------------- Total common stocks (cost $151,841,042) 133,638,260 ---------------- - ------------------------------------------------------------------------------------- Rights 52,000 Kingfisher PLC (United Kingdom)(a) 30,057 ---------------- Total long-term investments (cost $151,912,777) 133,668,317 ---------------- SHORT-TERM INVESTMENTS 5.7% Principal Amount (000) - ------------------------------------------------------------------------------------- Investment Company 2.1% $ 2,938 Prudential Core Investment Fund--Taxable Money Market Series (cost $2,937,883; Note 3) 2,937,883 - ------------------------------------------------------------------------------------- Repurchase Agreements 3.6% 4,688 Joint Repurchase Agreement Account, 1.85%, 8/1/02 (cost $4,688,000; Note 6) 4,688,000 304 State Street Bank & Trust Co., 0.25%, dated 7/31/02, due 8/1/02 in the amount of $304,002 (cost $304,000; collateralized by $305,000 US Treasury Notes, 6.375% due 8/15/02, approximate value of collateral including accrued interest $314,297) 304,000 ---------------- Total repurchase agreements (cost $4,992,000) 4,992,000 ---------------- Total short-term investments (cost $7,929,883) 7,929,883 ---------------- Total Investments, before outstanding options written 114.8% (cost $159,842,660; Note 5) 141,598,200 ----------------
26 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Portfolio of Investments as of July 31, 2002 Cont'd.
Contracts Description Value (Note 1) - ------------------------------------------------------------------------------------------ OUTSTANDING OPTIONS WRITTEN - ------------------------------------------------------------------------------------- Call Option (25) Medimmune, Inc., expiring 8/25/02 @ $1.90 (Premium received $(4,753)) $ (10,000) ---------------- Total Investments, Net of Outstanding Options Written 101.3% (cost $159,837,907) 141,588,200 Liabilities in excess of other assets (1.3%) (1,843,565) ---------------- Net Assets 100% $ 139,744,635 ---------------- ----------------
- ------------------------------ (a) Non-income producing security. ADR--American Depository Receipt. AG--Aktiengesellschaft (German Company). NV--Naamloze Vennootschap (Dutch Corporation). Oyj--Osakehio (Finnish Company). PLC--Public Liability Company (British Company). SA--Sociedad Anonima (Spanish Corporation) or SA-- Societe Anonyme (French Corporation). SCA--Societe Capital Anonyme (French Corporation). SpA--Societa per Azione (Italian Corporation). See Notes to Financial Statements 27 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Statement of Assets and Liabilities
July 31, 2002 - ---------------------------------------------------------------------------------------- ASSETS Investments, at value (cost $159,842,660) $ 141,598,200 Cash 10,024 Receivable for investments sold 1,710,878 Receivable for Fund shares sold 380,347 Dividends and interest receivable 106,034 Tax reclaim receivable 44,303 -------------- Total assets 143,849,786 -------------- LIABILITIES Payable for investments purchased 3,525,012 Payable for Fund shares reacquired 250,867 Accrued expenses 114,585 Distribution fee payable 100,578 Management fee payable 91,559 Outstanding options written (Premium received $4,753) 10,000 Deferred trustees' fees payable 8,318 Foreign withholding tax payable 4,232 -------------- Total liabilities 4,105,151 -------------- NET ASSETS $ 139,744,635 -------------- -------------- Net assets were comprised of: Shares of beneficial interest, at par $ 16,962 Paid-in capital in excess of par 180,805,688 -------------- 180,822,650 Accumulated net investment loss (45,101) Accumulated net realized loss on investments (22,785,318) Net unrealized depreciation on investments and foreign currency transactions (18,247,596) -------------- Net assets, July 31, 2002 $ 139,744,635 -------------- --------------
28 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Statement of Assets and Liabilities Cont'd.
July 31, 2002 - ---------------------------------------------------------------------------------------- Class A: Net asset value and redemption price per share ($30,336,529 / 3,619,626 shares of beneficial interest issued and outstanding) $8.38 Maximum sales charge (5% of offering price) .44 -------------- Maximum offering price to public $8.82 -------------- -------------- Class B: Net asset value, offering price and redemption price per share ($70,043,258 / 8,546,396 shares of beneficial interest issued and outstanding) $8.20 -------------- -------------- Class C: Net asset value and redemption price per share ($37,467,599 / 4,571,672 shares of beneficial interest issued and outstanding) $8.20 Sales charge (1% of offering price) .08 -------------- Offering price to public $8.28 -------------- -------------- Class Z: Net asset value, offering price and redemption price per share ($1,897,249 / 224,500 shares of beneficial interest issued and outstanding) $8.45 -------------- --------------
See Notes to Financial Statements 29 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Statement of Operations
Year Ended July 31, 2002 - ---------------------------------------------------------------------------------------- NET INVESTMENT LOSS Income Dividends (net of foreign withholding taxes of $95,313) $ 1,772,104 Interest 200,622 -------------- Total income 1,972,726 -------------- Expenses Management fee 1,205,667 Distribution fee--Class A 90,378 Distribution fee--Class B 829,526 Distribution fee--Class C 388,743 Transfer agent's fees and expenses 352,000 Custodian's fees and expenses 320,000 Reports to shareholders 100,000 Registration fees 72,000 Audit fee 27,000 Legal fees 25,000 Trustees' fees 14,000 Miscellaneous 5,413 -------------- Total expenses 3,429,727 -------------- Net investment loss (1,457,001) -------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Net realized loss on: Investment transactions (20,744,475) Foreign currency transactions (44,242) -------------- (20,788,717) -------------- Net change in unrealized appreciation (depreciation) on: Investments (17,088,417) Foreign currency 2,391 Written options (5,247) -------------- (17,091,273) -------------- Net loss on investments and foreign currencies (37,879,990) -------------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(39,336,991) -------------- --------------
30 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Statement of Changes in Net Assets
Year Ended July 31, ---------------------------- 2002 2001 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS Operations Net investment loss $ (1,457,001) $ (858,277) Net realized gain (loss) on investments and foreign currency transactions (20,788,717) 1,212,882 Net change in unrealized depreciation of investments and foreign currencies (17,091,273) (18,668,075) ------------ ------------ Net decrease in net assets resulting from operations (39,336,991) (18,313,470) ------------ ------------ Distributions from net realized gains Class A (88,806) (2,991,298) Class B (205,210) (6,683,757) Class C (90,577) (2,720,970) Class Z (7,576) (122,496) ------------ ------------ (392,169) (12,518,521) ------------ ------------ Fund share transactions (net of share conversions) (Note 6) Net proceeds from shares sold 50,556,801 62,710,336 Net asset value of shares issued to shareholders in reinvestment of dividends and distributions 384,542 12,225,780 Cost of shares reacquired (37,855,579) (26,141,501) ------------ ------------ Net increase in net assets from Fund share transactions 13,085,764 48,794,615 ------------ ------------ Total increase (decrease) (26,643,396) 17,962,624 NET ASSETS Beginning of year 166,388,031 148,425,407 ------------ ------------ End of year $139,744,635 $166,388,031 ------------ ------------ ------------ ------------
See Notes to Financial Statements 31 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Strategic Partners Asset Allocation Funds (the 'Trust'), is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company presently consisting of three Portfolios: Strategic Partners High Growth Fund ('the Fund'), Strategic Partners Conservative Growth Fund and Strategic Partners Moderate Growth Fund. These financial statements relate only to Strategic Partners High Growth Fund. The financial statements of the other Portfolios are not presented herein. The Trust was organized as a business trust in Delaware on July 29, 1998. Jennison Associates LLC ('Jennison'), Prudential Investment Management, Inc. ('PIM'), Lazard Asset Management, Franklin Advisers, Inc. and EARNEST Partners, LLC are the Funds' 'Advisers'. The investment objective of the Fund is to provide long-term capital appreciation. The Fund seeks to achieve its investment objective by investing in a diversified portfolio of equity securities issued by U.S. and foreign companies. Under normal circumstances, substantially all of the Fund's assets will be invested in equity securities, including common stock, securities convertible into common stock and preferred stock. Note 1. Accounting Policies The following is a summary of significant accounting policies followed by the Trust in the preparation of its financial statements. Securities Valuation: Securities for which the primary market is on an exchange and NASDAQ National Market Securities are valued at the last sale price on such exchange on the day of valuation, or, if there was no sale on such day, at the mean between the last bid and asked prices on such day or at the bid price on such day in the absence of an asked price. Securities that are actively traded in the over-the-counter market, including listed securities for which the primary market is believed by Prudential Investments LLC ('PI' or 'Manager'), in consultation with the Adviser, to be over-the-counter, are valued by an independent pricing agent or principal market maker. Privately placed securities including equity securities for which market prices may be obtained from primary dealers shall be valued at the bid prices provided by such primary dealers. Securities for which market quotations are not readily available may be valued using the last available market quotation for a period not to exceed five days, provided the Manager and Adviser feel this is representative of market value; after that period, such securities are valued in good faith under procedures adopted by the Trustees. 32 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd. 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. Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities--at the closing daily 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 at the foreign exchange rates and market values at the close of the fiscal period, the Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the fluctuations arising from changes in the market prices of securities held at the end of the period. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of portfolio securities sold during the fiscal period. Accordingly, realized foreign currency gains (losses) are included in the reported net realized gains (losses) on investment transactions. Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from the holding of foreign currencies, currency gains (losses) realized between the trade date and settlement date on securities transactions, and the difference between the amounts of dividends, interest and foreign withholding taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities (other than investments) at year end exchange rates are reflected as a component of net unrealized appreciation (depreciation) on investments and foreign currencies. Foreign security and currency transactions may involve certain considerations and risks not typically associated with those of domestic origin as a result of, among other factors, the possibility of political and economic instability and the level of governmental supervision and regulation of foreign securities markets. 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 securities, the value of which exceeds the principal amount of the repurchase transaction, including accrued interest. To the 33 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd. extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to ensure the adequacy on the collateral. If the seller defaults and the value of the collateral declines or if bankruptcy proceedings are commenced with respect to the seller of the security, realization of the collateral by the Fund may be delayed or limited. Options: The Fund may either purchase or write options in order to hedge against adverse market movements or fluctuations in value caused by changes in prevailing interest rates with respect to securities which the Fund currently owns or intends to purchase. The Fund's principal reason for writing options is to realize, through receipt of premiums, a greater current return than would be realized on the underlying security alone. When the Fund purchases an option, it pays a premium and an amount equal to that premium is recorded as an asset. When the Fund writes an option, it receives a premium and an amount equal to that premium is recorded as a liability. The asset or liability is adjusted daily to reflect the current market value of the option. If an option expires unexercised, the Fund realizes a gain (loss) to the extent of the premium received or paid. If an option is exercised, the premium received or paid is recorded as an adjustment to the proceeds from the sale or the cost of the purchase in determining whether the Fund has realized a gain (loss). The difference between the premium and the amount received or paid on effecting a closing purchase or sale transaction is also treated as a realized gain (loss). Gain (loss) on purchased options is included in net realized gain (loss) on investment transactions. Gain (loss) on written options is presented separately as net realized gain (loss) on written options. The Fund, as writer of an option, may have no control over whether the underlying securities may be sold (called) or purchased (put). As a result, the Fund bears the market risk of an unfavorable change in the price of the security underlying the written option. The Fund, as purchaser of an option, bears the risk of the potential inability of the counterparties to meet the terms of their contracts. Written options, involve elements of both market and credit risk in excess of the amounts reflected on the Statement of Assets and Liabilities. Securities Transactions and Net Investment Income: Securities transactions are recorded on the trade date. Realized gains (losses) on sales of 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 the accrual basis. Expenses are recorded on the accrual basis which may require the use of certain estimates by management. 34 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd. Net investment income (loss) (other than distribution fees) and unrealized and realized gains (losses) are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day. Dividends and Distributions: The Fund expects to pay dividends of net investment income and distributions of net realized capital and currency gains, if any, annually. Dividends and distributions are recorded on the ex-dividend date. Income dividends and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. Taxes: For federal income tax purposes, each Fund in the Trust is treated as a separate taxpaying entity. It is the Fund's policy to meet the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable net income and capital gains, if any, to shareholders. Therefore, no federal income tax provision is required. Withholding taxes on foreign dividends have been provided for in accordance with the Fund's understanding of the applicable country's tax rules and rates. Note 2. Agreements The Fund has a management agreement with PI. Pursuant to this agreement, PI manages the investment operations of the Fund, administers the Fund's affairs and supervises the Advisers' performance of all investment advisory services. PI pays for the costs pursuant to the advisory agreements, the cost of compensation of officers of the Fund, occupancy and certain clerical and accounting costs of the Fund. The Fund bears all other costs and expenses. The management fee paid to PI is computed daily and payable monthly at an annual rate of .75% of the average daily net assets of the Fund. PI, in turn, pays the Advisers' fees, based on the average daily net assets of the Fund segments they manage. The Fund has a distribution agreement with Prudential Investment Management Services LLC ('PIMS') which acts as the distributor of the Class A, Class B, Class C and Class Z shares 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 PIMS. The distribution fees are accrued daily and payable monthly. No distribution or service fees are paid to PIMS as distributor for Class Z shares of the Fund. Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1% of the average daily net assets of the Class A, B and C shares, respectively. Such expenses 35 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd. 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 year ended July 31, 2002. PIMS has advised the Fund that it has received approximately $185,000 and $123,500 in front-end sales charges resulting from sales of Class A and Class C shares, respectively, during the year ended July 31, 2002. PIMS has advised the Fund that for the year ended July 31, 2002, it has received approximately $202,800 and $21,200 in contingent deferred sales charges imposed upon certain redemptions by Class B and Class C shareholders, respectively. Jennison, PIMS, PIM and PI are indirect, wholly-owned subsidiaries of The Prudential Financial, Inc. ('Prudential'). The Fund, along with other affiliated registered investment companies (the 'Funds'), is a party to a syndicated credit agreement ('SCA') with a group of banks. For the year ended July 31, 2002 the amounts of the commitment were as follows: $500 million from August 1, 2001 through September 13, 2001, $930 million from September 14, 2001 through December 31, 2001 and $500 million from January 1, 2002 through May 3, 2002. On May 3, 2002, the Funds renewed and amended the SCA, which effectively increased the banks' commitment to $800 million and allows the funds to increase commitment to $1 billion, if necessary. Interest on any borrowings under the SCA will be incurred at market rates. The Funds pay a commitment fee of .08 of 1% of the unused portion of the SCA. The commitment fee is accrued and paid quarterly on a pro rata basis by the Funds. The purpose of the SCA is to serve as an alternative source of funding for capital share redemptions. The expiration date on the SCA is May 2, 2003. The Fund did not borrow any amounts pursuant to the SCA during the year ended July 31, 2002. Note 3. Other Transactions with Affiliates Prudential Mutual Fund Services LLC ('PMFS'), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential, serves as the Fund's transfer agent. During the year ended July 31, 2002, the Fund incurred fees of approximately $281,600 for the services of PMFS. As of July 31, 2002 approximately $24,500 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. The Fund invested in the Taxable Money Market Series (the 'Series'), a portfolio of Prudential Core Investment Fund, pursuant to an exemptive order received from the Securities and Exchange Commission. The Series is a money market fund registered under the Investment Company Act of 1940, as amended, and managed by PI. During 36 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd. the year ended July 31, 2002, the Fund earned income from the Series of approximately $62,900 by investing its excess cash. Effective November 1, 2001, the Fund paid networking fees to Prudential Securities, Inc. ('PSI'), an affiliate of PI and an indirect, wholly-owned subsidiary of Prudential. These networking fees are payments made to broker/dealers that clear mutual fund transactions through a national mutual fund clearing system. The total amount paid to PSI during the period was $35,500 and is included in transfer agent's fees and expenses in the statement of operations. Note 4. Portfolio Securities Purchases and sales of portfolio securities, other than short-term investments, for the year ended July 31, 2002, aggregated $162,986,226 and $148,277,883, respectively. The Fund's written options activity was as follows: Contracts Premiums --------- -------- Balance as of July 31, 2001 0 $ 0 Options written 25 4,753 -------- -------- Balance as of July 31, 2002 25 $4,753 -------- -------- Note 5. Distributions and Tax Information Distributions to shareholders, which are determined in accordance with federal income tax regulations, which may differ from generally accepted accounting principles, are recorded on the ex-dividend date. In order to present undistributed net investment income and accumulated net realized gains (losses) on the statement of assets and liabilities that more closely represent their tax character, certain adjustments have been made to paid-in-capital in excess of par, undistributed net investment income and accumulated net realized gain (loss) on investments. For the year ended July 31, 2002, the adjustments were to decrease distributions in excess of net investment income by $1,497,342, decrease accumulated realized loss on investments by $45,897 and decrease paid-in-capital by $1,543,239, due to certain tax adjustments pertaining to the investment in Passive Foreign Investment Companies and differences between financial reporting and tax accounting. Net investment income, net realized losses and net assets were not affected by this change. For the year ended July 31, 2002, the tax character of distributions paid by the Fund of $392,169 was long term capital gains. 37 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd. The United States federal income tax basis of the Fund's investments and the net unrealized depreciation as of July 31, 2002 were as follows: Other Total Net Tax Basis Cost Basis Unrealized of Investments Appreciation Depreciation Adjustment Appreciation - -------------- ------------ ------------ ---------- ------------ $161,905,688 $5,839,411 $(26,146,899) $(3,137) $(20,310,625) As of July 31, 2002, the Fund had a capital loss carryforward for tax purposes of approximately $7,499,000 which expires in 2010. Accordingly, no capital gains distribution is expected to be paid to shareholders until net gains have been realized in excess of such amounts. The tax basis differs from the amount shown on the statement of assets and liabilities primarily due to the deferral for federal tax purposes of Post-October net foreign currency losses of $28,013 and $13,240,411 of capital losses incurred in the nine month period ended July 31, 2002 as having incurred in the following fiscal year. Note 6. Joint Repurchase Agreement Account The Fund, along with other affiliated registered investment companies, transfers uninvested cash balances into a single joint account, the daily aggregate balance of which is invested in one or more repurchase agreements collateralized by U.S. Treasury or federal agency obligations. As of July 31, 2002, the Fund had a 1.2% undivided interest in the joint account. The undivided interest for the Fund represents $4,688,000 in principal amount. As of such date, each repurchase agreement in the joint account and the collateral therefore were as follows: Greenwich Capital Markets, Inc., 1.85%, in the principal amount of $90,000,000, repurchase price $90,004,625, due 8/1/02. The value of the collateral including accrued interest was $91,800,242. UBS Warburg, 1.85%, in the principal amount of $100,000,000, repurchase price $100,005,138, due 8/1/02. The value of the collateral including accrued interest was $102,001,222. Bank of America Securities, LLC, 1.85%, in the principal amount of $123,884,000, repurchase price $123,890,366, due 8/1/02. The value of the collateral including accrued interest was $126,400,393. J.P. Morgan Chase, 1.85%, in the principal amount of $90,000,000, repurchase price $90,004,625, due 8/1/02. The value of the collateral including accrued interest was $91,802,009. 38 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd. Note 7. 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 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 qualified 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 an unlimited number of shares of beneficial interest at $.001 par value per share. Transactions in shares of beneficial interest were as follows:
Class A Shares Amount - ------------------------------------------------------------ ---------- ------------ Year ended July 31, 2002: Shares sold 991,885 $ 9,815,887 Shares issued in reinvestment of dividends and distributions 8,699 86,992 Shares reacquired (1,193,745) (11,877,183) ---------- ------------ Net increase (decrease) in shares outstanding before conversion (193,161) (1,974,304) Shares issued upon conversion from Class B 120,209 1,153,531 ---------- ------------ Net increase (decrease) in shares outstanding (72,952) $ (820,773) ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 1,257,928 $ 14,867,212 Shares issued in reinvestment of dividends and distributions 262,678 2,920,976 Shares reacquired (753,781) (8,636,896) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 766,825 9,151,292 Shares issued upon conversion from Class B 169,673 1,979,162 ---------- ------------ Net increase (decrease) in shares outstanding 936,498 $ 11,130,454 ---------- ------------ ---------- ------------ Class B - ------------------------------------------------------------ Year ended July 31, 2002: Shares sold 1,768,552 $ 17,310,439 Shares issued in reinvestment of dividends and distributions 20,597 202,465 Shares reacquired (1,364,338) (12,863,100) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 424,811 4,649,804 Shares reacquired upon conversion into Class A (122,522) (1,153,531) ---------- ------------ Net increase (decrease) in shares outstanding 302,289 $ 3,496,273 ---------- ------------ ---------- ------------
39 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Notes to Financial Statements Cont'd.
Class B Shares Amount - ------------------------------------------------------------ ---------- ------------ Year ended July 31, 2001: Shares sold 2,503,158 $ 28,942,699 Shares issued in reinvestment of dividends and distributions 597,823 6,582,027 Shares reacquired (891,341) (10,095,052) ---------- ------------ Net increase (decrease) in shares outstanding before conversion 2,209,640 25,429,674 Shares reacquired upon conversion into Class A (171,643) (1,979,162) ---------- ------------ Net increase (decrease) in shares outstanding 2,037,997 $ 23,450,512 ---------- ------------ ---------- ------------ Class C - ------------------------------------------------------------ Year ended July 31, 2002: Shares sold 2,209,436 $ 21,799,516 Shares issued in reinvestment of dividends and distributions 8,915 87,635 Shares reacquired (1,108,502) (10,543,165) ---------- ------------ Net increase (decrease) in shares outstanding 1,109,849 $ 11,343,986 ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 1,328,084 $ 15,425,950 Shares issued in reinvestment of dividends and distributions 236,394 2,602,699 Shares reacquired (563,097) (6,282,292) ---------- ------------ Net increase (decrease) in shares outstanding 1,001,381 $ 11,746,357 ---------- ------------ ---------- ------------ Class Z - ------------------------------------------------------------ Year ended July 31, 2002: Shares sold 163,862 $ 1,630,959 Shares issued in reinvestment of dividends and distributions 740 7,450 Shares reacquired (257,094) (2,572,131) ---------- ------------ Net increase (decrease) in shares outstanding (92,492) $ (933,722) ---------- ------------ ---------- ------------ Year ended July 31, 2001: Shares sold 304,334 $ 3,474,475 Shares issued in reinvestment of dividends and distributions 10,760 120,078 Shares reacquired (99,609) (1,127,261) ---------- ------------ Net increase (decrease) in shares outstanding 215,485 $ 2,467,292 ---------- ------------ ---------- ------------
40 ANNUAL REPORT SEPTEMBER 30, 2002 STRATEGIC PARTNERS ASSET ALLOCATION FUNDS STRATEGIC PARTNERS HIGH GROWTH FUND Financial Highlights Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Financial Highlights
Class A ----------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) ---------------------------------------- Through 2002 2001(d) 2000(d) July 31, 1999(d) - ------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.70 $ 12.95 $ 11.52 $ 10.00 ---------- ---------- ---------- -------- Income from investment operations: Net investment income (loss) (.03) --(e) --(e) --(e) Net realized and unrealized gain (loss) on investment and foreign currency transactions (2.27) (1.27) 2.14 1.52 ---------- ---------- ---------- -------- Total from investment operations (2.30) (1.27) 2.14 1.52 ---------- ---------- ---------- -------- Less distributions: Dividends in excess of net investment income -- -- (.43) -- Distributions from net realized gains (.02) (.98) (.28) -- ---------- ---------- ---------- -------- Total dividends and distributions (.02) (.98) (.71) -- ---------- ---------- ---------- -------- Net asset value, end of period $ 8.38 $ 10.70 $ 12.95 $ 11.52 ---------- ---------- ---------- -------- ---------- ---------- ---------- -------- TOTAL RETURN(b) (21.49)% (10.09)% 18.99% 15.20% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 30,337 $ 39,528 $ 35,678 $ 21,248 Average net assets (000) $ 36,151 $ 39,128 $ 27,528 $ 10,442 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 1.57% 1.64% 1.54% 1.73%(c) Expenses, excluding distribution and service (12b-1) fees 1.32% 1.39% 1.29% 1.48%(c) Net investment income (loss) (.35)% .02% .01% .02%(c) For Class A, B, C and Z shares: Portfolio turnover rate 98% 83% 67% 38%
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. (e) Less than $.005 per share. 42 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Financial Highlights Cont'd.
Class B ----------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) ---------------------------------------- Through 2002 2001(d) 2000(d) July 31, 1999(d) - ------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.55 $ 12.86 $ 11.47 $ 10.00 ---------- ---------- ---------- -------- Income from investment operations: Net investment income (loss) (.11) (.08) (.09) (.05) Net realized and unrealized gain (loss) on investment and foreign currency transactions (2.22) (1.25) 2.12 1.52 ---------- ---------- ---------- -------- Total from investment operations (2.33) (1.33) 2.03 1.47 ---------- ---------- ---------- -------- Less distributions: Dividends in excess of net investment income -- -- (.36) -- Distributions from net realized gains (.02) (.98) (.28) -- ---------- ---------- ---------- -------- Total dividends and distributions (.02) (.98) (.64) -- ---------- ---------- ---------- -------- Net asset value, end of period $ 8.20 $ 10.55 $ 12.86 $ 11.47 ---------- ---------- ---------- -------- ---------- ---------- ---------- -------- TOTAL RETURN(b) (22.08)% (10.66)% 18.13% 14.70% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 70,043 $ 86,941 $ 79,793 $ 41,049 Average net assets (000) $ 82,953 $ 84,949 $ 60,994 $ 24,260 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 2.32% 2.39% 2.29% 2.48%(c) Expenses, excluding distribution and service (12b-1) fees 1.32% 1.39% 1.29% 1.48%(c) Net investment income (loss) (1.09)% (.72)% (.71)% (.70)%(c)
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. See Notes to Financial Statements 43 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Financial Highlights Cont'd.
Class C ----------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) ---------------------------------------- Through 2002 2001(d) 2000(d) July 31, 1999(d) - ------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $ 10.55 $ 12.86 $ 11.47 $ 10.00 ---------- ---------- ---------- -------- Income from investment operations: Net investment income (loss) (.09) (.08) (.09) (.05) Net realized and unrealized gain (loss) on investment and foreign currency transactions (2.24) (1.25) 2.12 1.52 ---------- ---------- ---------- -------- Total from investment operations (2.33) (1.33) 2.03 1.47 ---------- ---------- ---------- -------- Less distributions: Dividends in excess of net investment income -- -- (.36) -- Distributions from net realized gains (.02) (.98) (.28) -- ---------- ---------- ---------- -------- Total dividends and distributions (.02) (.98) (.64) -- ---------- ---------- ---------- -------- Net asset value, end of period $ 8.20 $ 10.55 $ 12.86 $ 11.47 ---------- ---------- ---------- -------- ---------- ---------- ---------- -------- TOTAL RETURN(b) (22.08)% (10.66)% 18.13% 14.70% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $ 37,468 $ 36,507 $ 31,636 $ 19,914 Average net assets (000) $ 38,874 $ 35,387 $ 26,413 $ 15,204 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 2.32% 2.39% 2.29% 2.48%(c) Expenses, excluding distribution and service (12b-1) fees 1.32% 1.39% 1.29% 1.48%(c) Net investment income (loss) (1.09)% (.73)% (.73)% (.75)%(c)
- ------------------------------ (a) Commencement of investment operations. (b) Total return does not consider the effect of sales loads. Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. 44 See Notes to Financial Statements Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Financial Highlights Cont'd.
Class Z ----------------------------------------------------------------- Year Ended July 31, November 18, 1998(a) ---------------------------------------- Through 2002 2001(d) 2000(d) July 31, 1999(d) - ------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period $10.77 $12.98 $ 11.56 $ 10.00 ---------- ---------- ---------- -------- Income from investment operations: Net investment income (loss) (.01) .03 .02 .02 Net realized and unrealized gain (loss) on investment and foreign currency transactions (2.29) (1.26) 2.14 1.54 ---------- ---------- ---------- -------- Total from investment operations (2.30) (1.23) 2.16 1.56 ---------- ---------- ---------- -------- Less distributions: Dividends in excess of net investment income -- -- (.46) -- Distributions from net realized gains (.02) (.98) (.28) -- ---------- ---------- ---------- -------- Total dividends and distributions (.02) (.98) (.74) -- ---------- ---------- ---------- -------- Net asset value, end of period $ 8.45 $10.77 $ 12.98 $ 11.56 ---------- ---------- ---------- -------- ---------- ---------- ---------- -------- TOTAL RETURN(b) (21.35)% (9.74)% 19.23% 15.60% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $1,897 $3,413 $ 1,318 $ 36,413 Average net assets (000) $2,778 $2,270 $ 25,793 $ 45,999 Ratios to average net assets: Expenses, including distribution and service (12b-1) fees 1.32% 1.39% 1.29% 1.48%(c) Expenses, excluding distribution and service (12b-1) fees 1.32% 1.39% 1.29% 1.48%(c) Net investment income (loss) (.10)% .23% .12% .21%(c)
- ------------------------------ (a) Commencement of investment operations. (b) Total return is calculated assuming a purchase of shares on the first day and a sale on the last day and includes reinvestment of dividends and distributions. Total returns for periods of less than one full year are not annualized. (c) Annualized. (d) Calculated based upon weighted average shares outstanding during the period. See Notes to Financial Statements 45 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Report of Independent Accountants To the Shareholders and Board of Trustees of Strategic Partners Asset Allocation Funds-- Strategic Partners High Growth Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Strategic Partners Asset Allocation Funds--Strategic Partners High Growth Fund (the 'Fund') at July 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as 'financial statements') are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at July 31, 2002 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP New York, New York September 25, 2002 46 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Tax Information (Unaudited) We are required by the Internal Revenue Code to advise you within 60 days of the Fund's fiscal year end (July 31, 2002) as to the federal income tax status of dividends paid by the Fund during such fiscal period. Accordingly, we are advising you that during its fiscal period ended July 31, 2002, the Fund paid distributions of $.0246 per share which represent long-term capital gains. For the purpose of preparing your annual federal income tax return, however, you should report the amounts as reflected on the appropriate Form 1099-DIV or substitute 1099-DIV. 47 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Information pertaining to the Trustees of the Fund is set forth below. Trustees who are not deemed to be 'interested persons' of the Trust defined in the 1940 Act are referred to as 'Independent Trustees.' Trustees who are deemed to be 'interested persons' of the Trust are referred to as 'Interested Trustees.' 'Fund Complex' consists of the Trust and any other investment companies managed by PI. Independent Trustees
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Eugene C. Dorsey (75) Trustee Since 1998 Saul K. Fenster, Ph.D. (69) Trustee Since 2000 Number of Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Eugene C. Dorsey (75) Retired President, Chief Executive 78 Officer and Trustee of the Gannett Foundation (now Freedom Forum) (since December 1989); formerly Publisher of four Gannett newspapers and Vice President of Gannett Co., Inc.; Chairman of Independent Sector, Washington, D.C. (largest national coalition of philanthropic organizations); Chairman of the American Council for the Arts; Director of the Advisory Board of Chase Manhattan Bank of Rochester. Saul K. Fenster, Ph.D. (69) Currently President Emeritus of New 79 Jersey Institute of Technology; formerly President (1978-2002) of New Jersey Institute of Technology; Commissioner (1998-2002) of the Middle States Association Commission on Higher Education; Commissioner (1985-2002) of the New Jersey Commission on Science and Technology; Director (since 1998) Society of Manufacturing Engineering Education Foundation, formerly a director or trustee of Liberty Science Center, Research and Development Council of New Jersey, New Jersey State Chamber of Commerce, and National Action Council for Minorities in Engineering. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Eugene C. Dorsey (75) Director (since 1996) of First Financial Fund, Inc. (First Financial) and Director (since 1996) of The High Yield Plus Fund, Inc. (High Yield Plus). Saul K. Fenster, Ph.D. (69) Member (since 2000), Board of Directors of IDT Corporation.
48 49 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd.
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Robert E. La Blanc (68) Trustee Since 1999 Douglas H. McCorkindale (63) Trustee Since 1998 W. Scott McDonald, Jr. (65) Trustee Since 2000 Number of Portfolios in Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Robert E. La Blanc (68) President (since 1981) of Robert E. 74 La Blanc Associates, Inc. (telecommunications); formerly General Partner at Salomon Brothers and Vice-Chairman of Continental Telecom. Trustee of Manhattan College. Douglas H. McCorkindale (63) Formerly Vice Chairman (March 75 1984-May 2000) of Gannett Co. Inc. W. Scott McDonald, Jr. (65) Vice President (since 1997) of 79 Kaludis Consulting Group, Inc. (company serving higher education); Formerly principal (1995-1997), Scott McDonald & Associates, Chief Operating Officer (1991-1995), Fairleigh Dickinson University, Executive Vice President and Chief Operating Officer (1975-1991), Drew University, interim President (1988-1990), Drew University and former director of School, College and University Underwriters Ltd. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Robert E. La Blanc (68) Director of Storage Technology Corporation (since 1979) (technology), of Chartered Semiconductor Manufacturing Ltd. (since 1998) (Singapore), of Titan Corporation (electronics, since 1995) and of Salient 3 Communications, Inc. (since 1995) (technology); Director of First Financial Fund (since 1999) and Director of High Yield Plus (since April 1999). Douglas H. McCorkindale (63) Chairman (since February 2001), Chief Executive Officer (since June 2000) and President (since September 1997) of Gannett Co. Inc. (publishing and media); Director of Continental Airlines, Inc.; Director (since May 2001) of Lockheed Martin Corp. (aerospace and defense) and Director of High Yield Plus (since 1996). W. Scott McDonald, Jr. (65)
50 51 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd.
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Thomas T. Mooney (60) Trustee Since 1998 Stephen Stoneburn (59) Trustee Since 1999 Joseph Weber, Ph.D. (78) Trustee Since 2000 Clay T. Whitehead (63) Trustee Since 1999 P.O. Box 8090 McLean, VA 22106-8090 Number of Portfolios in Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- Thomas T. Mooney (60) President of the Greater Rochester 95 Metro Chamber of Commerce; formerly Rochester City Manager; formerly Deputy Monroe County Executive; Trustee of Center for Governmental Research, Inc.; Director of Blue Cross of Rochester, Monroe County Water Authority and Executive Service Corps of Rochester. Stephen Stoneburn (59) President and Chief Executive Officer 74 (since June 1996) of Quadrant Media Corp. (a publishing company); formerly President (June 1995-June 1996) of Argus Integrated Media, Inc.; Senior Vice President and Managing Director (January 1993-1995) of Cowles Business Media and Senior Vice President of Fairchild Publications, Inc (1975-1989). Joseph Weber, Ph.D. (78) Vice President, Finance (retired), 62 Interclass (international corporate learning) since 1991; formerly President, The Alliance for Learning; retired Vice President, Member of the Board of Directors and Member of the Executive and Operating Committees, Hoffmann-LaRoche Inc; Member, Board of Overseers, New Jersey Institute of Technology. Trustee and Vice Chairman Emeritus, Fairleigh Dickinson University. Clay T. Whitehead (63) President (since 1983) of National 91 P.O. Box 8090 Exchange Inc. (new business McLean, VA 22106-8090 development firm). Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- Thomas T. Mooney (60) Director, President and Treasurer of First Financial and Director of High Yield Plus (since 1988). Stephen Stoneburn (59) Joseph Weber, Ph.D. (78) Clay T. Whitehead (63) Director (since 2000) of P.O. Box 8090 First Financial and High McLean, VA 22106-8090 Yield Plus.
52 53 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. Interested Trustees
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- *Robert F. Gunia (55) Vice President Since 1999 and Trustee *David R. Odenath, Jr (45) President and Since 1999 Trustee Number of Fund Complex Principal Occupations Overseen by Name, Address** and Age During Past 5 Years Trustee ------------------------------- *Robert F. Gunia (55) Executive Vice President and Chief 112 Administrative Officer (since June 1999) of Prudential Investments LLC (PI); Executive Vice President and Treasurer (since January 1996) of PI; President (since April 1999) of Prudential Investment Management Services LLC (PIMS); Corporate Vice President (since September 1997) of Prudential Financial, Inc. (Prudential); formerly Senior Vice President (March 1987-May 1999) of Prudential Securities Incorporated (Prudential Securities); formerly Chief Administrative Officer (July 1989-September 1996), Director (January 1989-September 1996) and Executive Vice President, Treasurer and Chief Financial Officer (June 1987-December 1996) of Prudential Mutual Funds Management, Inc. (PMF). Vice President and Director (since May 1992) of Nicholas-Applegate Fund, Inc. *David R. Odenath, Jr (45) President, Chief Executive Officer 115 and Chief Operating Officer (since June 1999) of PI; Senior Vice President (since June 1999) of Prudential; formerly Senior Vice President (August 1993-May 1999) of PaineWebber Group, Inc. Other Directorships Held Name, Address** and Age by the Trustee**** ------------------------------- *Robert F. Gunia (55) Vice President and Director (since May 1989) of The Asia Pacific Fund, Inc. *David R. Odenath, Jr (45)
54 55 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. Information pertaining to the Officers of the Trust is set forth below. Officers
Term of Office and Length Position of Time Name, Address** and Age With Trust Served*** ------------------------------------------------------------------------- Judy A. Rice (54) Vice President Since 2001 Grace C. Torres (43) Treasurer and Since 2000 Principal Financial and Accounting Officer Marguerite E.H. Morrison (46) Secretary since 2002 Principal Occupations Name, Address** and Age During Past 5 Years ------------------------------- Judy A. Rice (54) Executive Vice President (since 1999) of PI; formerly various positions to Senior Vice President (1992-1999) of Prudential Securities; and various positions to Managing Director (1975-1992) of Salomon Smith Barney; Member of Board of Governors of the Money Management Institute; Member of the Prudential Securities Operating Council and the National Association for Variable Annuities. Grace C. Torres (43) Senior Vice President (since January 2000) of PI; formerly First Vice President (December 1996 - January 2000) of PI and First Vice President (March 1993-1999) of Prudential Securities. Marguerite E.H. Morrison (46) Vice President and Chief Legal Officer - Mutual Funds and Unit Investment Trusts (since August 2000) of Prudential; Assistant Secretary (since February 2001) of PI; Vice President and Assistant Secretary of PIMS (since October 2001), previously Vice President and Associate General Counsel (December 1996 - February 2001) of PI and Vice President and Associate General Counsel (September 1987 - September 1996) of Prudential Securities. Name, Address** and Age ------------------------------- Judy A. Rice (54) Grace C. Torres (43) Marguerite E.H. Morrison (46)
56 57 Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund www.strategicpartners.com (800) 225-1852 Management of the Trust (Unaudited) Cont'd. * 'Interested' Trustee, as defined in the 1940 Act, by reason of affiliation with the Manager, the Subadviser or the Distributor. ** Unless otherwise noted, the address of the Trustees and Officers is c/o: Prudential Investments LLC, Gateway Center Three, 100 Mulberry Street, 9th Floor, Newark, New Jersey 07102-4077. *** There is no set term of office for Trustees and Officers. The Independent Trustees have adopted a retirement policy which calls for the retirement of Trustees on December 31 of the year in which they reach the age of 75, except for Mr. Weber, who will retire by December 31, 2002. The table shows the number of years that an individual has served as a Trustee or Officer. **** This column includes only directorships of companies required to report to the SEC under the Securities and Exchange Act of 1934 (that is, 'public companies') or other investment companies registered under the Act. Additional information about the Trust's Trustees is included in the Trust's statement of additional information, which is available without charge, upon request, by calling (800) 225-1852 or (732) 482-7555 (Calling from outside the U.S.)
58 59 www.strategicpartners.com (800) 225-1852 The Strategic Partners Mutual Fund Family Strategic Partners offers a variety of mutual funds designed to meet your individual needs. For information about these funds, contact your financial professional or call us at (800) 225- 1852. Please read the applicable prospectus carefully before you invest or send money. Strategic Partners Asset Allocation Funds Strategic Partners Conservative Growth Fund Strategic Partners Moderate Growth Fund Strategic Partners High Growth Fund Strategic Partners Style Specific Funds Strategic Partners Large Capitalization Growth Fund Strategic Partners Large Capitalization Value Fund Strategic Partners Small Capitalization Growth Fund Strategic Partners Small Capitalization Value Fund Strategic Partners International Equity Fund Strategic Partners Total Return Bond Fund Strategic Partners Opportunity Funds Strategic Partners Focused Growth Fund Strategic Partners New Era Growth Fund Strategic Partners Focused Value Fund Strategic Partners Mid-Cap Value Fund Special Money Market Fund, Inc.* Money Market Series *This Fund is not a direct purchase money fund and is only an exchangeable money fund. Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Getting the Most from Your Mutual Fund Some mutual fund shareholders won't ever read this--they don't read annual and semiannual reports. It's quite understandable. These annual and semiannual reports are prepared to comply with federal regulations, and are often written in language that is difficult to understand. So when most people run into those particularly daunting sections of these reports, they don't read them. WE THINK THAT'S A MISTAKE We've made some changes to our mutual funds report to make it easier to understand and more pleasant to read. We hope you'll find it profitable to spend a few minutes familiarizing yourself with your investment. Here's what you'll find in the report: PERFORMANCE AT A GLANCE Since an investment's performance is often a shareholder's primary concern, we present performance information in two different formats. You'll find it first on the "Performance at a Glance" page where we compare the Fund and the comparable average calculated by Lipper, Inc., a nationally recognized mutual fund rating agency. We report both the cumulative total returns and the average annual total returns. The cumulative total return is the total amount of income and appreciation the Fund has achieved in various time periods. The average annual total return is an annualized representation of the Fund's performance. It gives you an idea of how much the Fund has earned in an average year for a given time period. Under the performance box, you'll see legends that explain the performance information, whether fees and sales charges have been included in the returns, and the inception dates for the Fund's share classes. See the performance comparison charts at the back of the report for more performance information. Please keep in mind that past performance is not indicative of future results. www.strategicpartners.com (800) 225-1852 INVESTMENT ADVISER'S REPORT The portfolio manager, who invests your money for you, reports on successful--and not-so-successful--strategies in this section of your report. Look for recent purchases and sales here, as well as information about the sectors the portfolio manager favors, and any changes that are on the drawing board. PORTFOLIO OF INVESTMENTS This is where the report begins to appear technical, but it's really just a listing of each security held at the end of the reporting period, along with valuations and other information. Please note that sometimes we discuss a security in the "Investment Adviser's Report" section that doesn't appear in this listing, because it was sold before the close of the reporting period. STATEMENT OF ASSETS AND LIABILITIES The balance sheet shows the assets (the value of the Fund's holdings), liabilities (how much the Fund owes), and net assets (the Fund's equity or holdings after the Fund pays its debts) as of the end of the reporting period. It also shows how we calculate the net asset value per share for each class of shares. The net asset value is reduced by payment of your dividend, capital gain, or other distribution--but remember that the money or new shares are being paid or issued to you. The net asset value fluctuates daily, along with the value of every security in the portfolio. STATEMENT OF OPERATIONS This is the income statement, which details income (mostly interest and dividends earned) and expenses (including what you pay us to manage your money). You'll also see capital gains here--both realized and unrealized. Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Getting the Most from Your Mutual Fund STATEMENT OF CHANGES IN NET ASSETS This schedule shows how income and expenses translate into changes in net assets. The Fund is required to pay out the bulk of its income to shareholders every year, and this statement shows you how we do it (through dividends and distributions) and how that affects the net assets. This statement also shows how money from investors flowed into and out of the Fund. NOTES TO FINANCIAL STATEMENTS This is the kind of technical material that can intimidate readers, but it does contain useful information. The notes provide a brief history and explanation of your Fund's objectives. In addition, they outline how Strategic Partners mutual funds prices securities. The notes also explain who manages and distributes the Fund's shares and, more important, how much they are paid for doing so. Finally, the notes explain how many shares are outstanding and the number issued and redeemed over the period. FINANCIAL HIGHLIGHTS This information contains many elements from prior pages, but on a per-share basis. It is designed to help you understand how the Fund performed, and to compare this year's performance and expenses to those of prior years. INDEPENDENT ACCOUNTANT'S REPORT Once a year, an independent accountant looks over our books and certifies that the financial statements are fairly presented in accordance with generally accepted accounting principles. TAX INFORMATION This is information that we report annually about how much of your total return is taxable. Should you have any questions, you may want to consult a tax adviser. www.strategicpartners.com (800) 225-1852 PERFORMANCE COMPARISON These charts are included in the annual report and are required by the Securities Exchange Commission. Performance is presented here as the return on a hypothetical $10,000 investment in the Fund since its inception or for 10 years (whichever is shorter). To help you put that return in context, we are required to include the performance of an unmanaged, broad-based securities index as well. The index does not reflect the cost of buying the securities it contains or the cost of managing a mutual fund. Of course, the index holdings do not mirror those of the Fund--the index is a broad-based reference point commonly used by investors to measure how well they are doing. A definition of the selected index is also provided. Investors cannot invest directly in an index. Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Getting the Most from Your 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. www.strategicpartners.com (800) 225-1852 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 on the U.S. market and denominated in U.S. dollars. Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Class A Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -25.42% -2.23% Without Sales Charge -21.49% -0.87% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners High Growth Fund (Class A shares) with a similar investment in the Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable front-end sales charge was deducted from the initial $10,000 investment in Class A shares; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with Securities and Exchange Commission (SEC) regulations. www.strategicpartners.com (800) 225-1852 Class B Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -25.97% -2.03% Without Sales Charge -22.08% -1.57% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners High Growth Fund (Class B shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the maximum applicable contingent deferred sales charge (CDSC) was deducted from the value of the investment in Class B shares, assuming full redemption on July 31, 2002; (b) all recurring fees (including management fees) were deducted; and (c) all dividends and distributions were reinvested. Approximately seven years after purchase, Class B shares will automatically convert to Class A shares on a quarterly basis. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. Strategic Partners Asset Allocation Funds Strategic Partners High Growth Fund Class C Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception With Sales Charge -23.63% -1.83% Without Sales Charge -22.08% -1.57% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners High Growth Fund (Class C shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) the front-end sales charge was deducted from the initial $10,000 investment in Class C shares; (b) the applicable CDSC was deducted from the value of the investment in Class C shares, assuming full redemption on July 31, 2002; (c) all recurring fees (including management fees) were deducted; and (d) all dividends and distributions were reinvested. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. www.strategicpartners.com (800) 225-1852 Class Z Growth of a $10,000 Investment (GRAPH) Average Annual Total Returns as of 7/31/02 One Year Since Inception - -21.35% -0.59% 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. The best- and worst-year information within the graph is designed to give you an idea of how much the Fund's returns can fluctuate from year to year by measuring the best and worst calendar years in terms of total annual return since inception of the share class. The graph compares a $10,000 investment in the Strategic Partners High Growth Fund (Class Z shares) with a similar investment in the S&P 500 Index by portraying the initial account values at the commencement of operations (November 18, 1998) and the account values at the end of the current fiscal year (July 31, 2002), as measured on a quarterly basis. For purposes of the graph, and unless otherwise indicated, it has been assumed that (a) all recurring fees (including management fees) were deducted, and (b) all dividends and distributions were reinvested. Class Z shares are not subject to a sales charge or distribution and service (12b-1) fees. The average annual total returns in the table and the returns on investment in the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or following the redemption of fund shares. The S&P 500 Index is an unmanaged index of 500 stocks of large U.S. companies. It gives a broad look at how stock prices have performed. The total returns include the reinvestment of all dividends, but do not include the effect of sales charges, operating expenses, or taxes of a mutual fund. The returns would be lower if they included the effect of sales charges, operating expenses, or taxes. The securities that comprise the S&P 500 Index may differ substantially from the securities in the Fund. The S&P 500 Index is not the only index that may be used to characterize performance of stock funds. Other indexes may portray different comparative performance. Investors cannot invest directly in an index. This graph is furnished to you in accordance with SEC regulations. FOR MORE INFORMATION Strategic Partners Mutual Funds Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 (800) 225-1852 Visit our website at: www.strategicpartners.com Trustees Eugene C. Dorsey Saul K. Fenster Robert F. Gunia Robert E. La Blanc Douglas H. McCorkindale W. Scott McDonald, Jr. Thomas T. Mooney David R. Odenath, Jr. Stephen Stoneburn Joseph Weber Clay T. Whitehead Officers David R. Odenath, Jr., President Robert F. Gunia, Vice President Judy A. Rice, Vice President Grace C. Torres, Treasurer Marguerite E.H. Morrison, Secretary Manager Prudential Investments LLC Gateway Center Three 100 Mulberry Street Newark, NJ 07102-4077 Investment Advisers EARNEST Partners, LLC 75 14th Street, Suite 2300 Atlanta, GA 30309 Franklin Advisers, Inc. 920 Park Place San Mateo, CA 94403 Jennison Associates LLC 466 Lexington Avenue New York, NY 10017 Lazard Asset Management 30 Rockefeller Plaza New York, NY 10112 Prudential Investment Management, Inc. Gateway Center Two Newark, NJ 07102 Distributor Prudential Investment Management Services LLC Gateway Center Three, 14th Floor 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 PO Box 8098 Philadelphia, PA 19101 Independent Accountants PricewaterhouseCoopers LLP 1177 Avenue of the Americas New York, NY 10036 Legal Counsel Shearman & Sterling 599 Lexington Avenue New York, NY 10022 Fund Symbols Nasdaq CUSIP Class A PHGAX 86276X509 Class B PIHGX 86276X608 Class C PHGCX 86276X707 Class Z PDHZX 86276X806 MFSP504E5 IFS-A074129 Mutual funds are not bank guaranteed or FDIC insured, and may lose value. -----END PRIVACY-ENHANCED MESSAGE-----