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SIGNATURE STEPHEN M. UNGERMAN
TITLE ASST. TREASURER
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<ACCUM-APPREC-OR-DEPREC> 506,301,420
<NET-ASSETS> (177,301,139)
<DIVIDEND-INCOME> 46,963,677
<INTEREST-INCOME> 5,447,044
<OTHER-INCOME> 0
<EXPENSES-NET> 23,040,355
<NET-INVESTMENT-INCOME> 29,370,366
<REALIZED-GAINS-CURRENT> 184,439,985
<APPREC-INCREASE-CURRENT> 363,934,627
<NET-CHANGE-FROM-OPS> 577,744,978
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (63,174,275)
<DISTRIBUTIONS-OTHER> (29,828,289)
<NUMBER-OF-SHARES-SOLD> 699,979,865
<NUMBER-OF-SHARES-REDEEMED> (681,144,020)
<SHARES-REINVESTED> 84,965,746
<NET-CHANGE-IN-ASSETS> 588,544,005
<ACCUMULATED-NII-PRIOR> 3,375,392
<ACCUMULATED-GAINS-PRIOR> 60,320,527
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,306,148
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,040,355
<AVERAGE-NET-ASSETS> 1,072,118,000
<PER-SHARE-NAV-BEGIN> 15.39
<PER-SHARE-NII> 6.58
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.04)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.93
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000803191
<NAME> PRUDENTIAL EQUITY INCOME FUND, INC.
<SERIES>
<NUMBER> 003
<NAME> EQUITY INCOME FUND (CLASS C)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 1,378,147,318
<INVESTMENTS-AT-VALUE> 1,884,656,601
<RECEIVABLES> 59,603,129
<ASSETS-OTHER> 641,362
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 26,329,106
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,342,938
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,231,262,242
<SHARES-COMMON-STOCK> 91,296,710
<SHARES-COMMON-PRIOR> 86,004,429
<ACCUMULATED-NII-CURRENT> (564,897)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 176,230,283
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 506,301,420
<NET-ASSETS> (177,301,139)
<DIVIDEND-INCOME> 46,963,677
<INTEREST-INCOME> 5,447,044
<OTHER-INCOME> 0
<EXPENSES-NET> 23,040,355
<NET-INVESTMENT-INCOME> 29,370,366
<REALIZED-GAINS-CURRENT> 184,439,985
<APPREC-INCREASE-CURRENT> 363,934,627
<NET-CHANGE-FROM-OPS> 577,744,978
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (63,174,275)
<DISTRIBUTIONS-OTHER> (29,828,289)
<NUMBER-OF-SHARES-SOLD> 699,979,865
<NUMBER-OF-SHARES-REDEEMED> (681,144,020)
<SHARES-REINVESTED> 84,965,746
<NET-CHANGE-IN-ASSETS> 588,544,005
<ACCUMULATED-NII-PRIOR> 3,375,392
<ACCUMULATED-GAINS-PRIOR> 60,320,527
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,306,148
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,040,355
<AVERAGE-NET-ASSETS> 11,432,000
<PER-SHARE-NAV-BEGIN> 15.39
<PER-SHARE-NII> 6.58
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.04)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.93
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000803191
<NAME> PRUDENTIAL EQUITY INCOME FUND, INC.
<SERIES>
<NUMBER> 004
<NAME> EQUITY INCOME FUND (CLASS Z)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 1,378,147,318
<INVESTMENTS-AT-VALUE> 1,884,656,601
<RECEIVABLES> 59,603,129
<ASSETS-OTHER> 641,362
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 0
<PAYABLE-FOR-SECURITIES> 26,329,106
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,342,938
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,231,262,242
<SHARES-COMMON-STOCK> 91,296,710
<SHARES-COMMON-PRIOR> 86,004,429
<ACCUMULATED-NII-CURRENT> (564,897)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 176,230,283
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 506,301,420
<NET-ASSETS> (177,301,139)
<DIVIDEND-INCOME> 46,963,677
<INTEREST-INCOME> 5,447,044
<OTHER-INCOME> 0
<EXPENSES-NET> 23,040,355
<NET-INVESTMENT-INCOME> 29,370,366
<REALIZED-GAINS-CURRENT> 184,439,985
<APPREC-INCREASE-CURRENT> 363,934,627
<NET-CHANGE-FROM-OPS> 577,744,978
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (63,174,275)
<DISTRIBUTIONS-OTHER> (29,828,289)
<NUMBER-OF-SHARES-SOLD> 699,979,865
<NUMBER-OF-SHARES-REDEEMED> (681,144,020)
<SHARES-REINVESTED> 84,965,746
<NET-CHANGE-IN-ASSETS> 588,544,005
<ACCUMULATED-NII-PRIOR> 3,375,392
<ACCUMULATED-GAINS-PRIOR> 60,320,527
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,306,148
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 23,040,355
<AVERAGE-NET-ASSETS> 57,369,000
<PER-SHARE-NAV-BEGIN> 15.42
<PER-SHARE-NII> 6.79
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.21)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 21.00
<EXPENSE-RATIO> 0.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
For the fiscal year ended 10/31/97
File number : 811-4864
SUB-ITEM 77 D
Policies with Respect to Securities
Investments
A) On February 19, 1997 the
Trustees approved a change in
investment policy permitting the
Fund to hold up to 15% of its net
assets in repurchase agreements
which have a maturity of longer
than 7 days or in other illiquid
securities.
B) On October 24, 1997 the
Trustees approved a change in investment
policies of the
Fund to expand the
definition of equity related securities
to include common stocks,
preferred stocks, rights,
warrants and debt securities or
preferred stocks which are
convertible or exchangeable
for common stocks or preferred stocks
and master limited
partnerships, among others.
C:\-word\n-sar\eif\12-97\12-97.77d
For the annual period ended October
31, 1997
File number: 811-4864
SUB-ITEM 77 0
EXHIBITS
Transactions Effected Pursuant to Rule 10f-3
1. Name of Issuer
Equity Office properties
2. Date of Purchase
7/7/97
3. Number of Securities Purchased
137,500
4. Dollar Amount of Purchase
$2,887,500
5. Price Per Unit
$21.00
6. Name(s) of Underwriter(s) or
Dealer(s)
From whom Purchased
Merrill Lynch
7. Other Members of the Underwriting
Syndicate
Lehman Brothers Inc.
Prudential Securities
Incorporated
Montgomery Securities
Donaldson, Lufkin & Jenrette
Securities Corporation
Smith Barney Inc.
Dean Witter Reynolds Inc.
Oppenheimer & Co.
William Blair & Co.
Furman Selz Inc.
Legg Mason Wood Walker, Inc.
McDonald & Company Securities,
Inc.
Piper Jaffray
Rauscher Pierce Refsnes, Inc.
Bear, Sterns and Company, Inc.
PaineWebber Incorporated
Deutsche Morgan Grenfell/C.J.
Lawerence Inc.
Fahnestock and Co. Inc.
The Robertson-Humphrey Company
Inc.
Salomon Brothers Inc.
Sutro & Co. Inc.
Goldman Sachs & Co.
ABN AMRO Chicago
Alex, Brown & Sons, Inc.
Chase Securities, Inc.
Citicorp Securities, Inc.
Credit Suisse First Boston
Corp.
Deutsche Morgan Grenfell, Inc.
A.G. Edwards & Sons, Inc.
Sanford C. Bernstein & Co.,
Inc.
William Blair & Company
J.C. Bradford & Co.
Neuberger & Berman
Charles Schwab & Co., Inc.
Stephens, Inc.
Blaylock & Partners, LP
First of Michigan Corp.
WR Lazard, Laidlaw, Inc.
NatCity Investments, Inc.
Roney & Co., Inc.
Samuel A. Ramirez & Co., Inc.
Muriel Sievert & Co.
Stifel, Nicolas & Company
Sturdivant & Co.
c:\-word\n-sar\eif\12-97\12-97.77O
- 2 -
Board of Directors or Trustees of:
Prudential Adjustable Rate Pruden
Securities Fund* tial
Prudential Allocation Fund (2 High
Portfolios) Yield
The BlackRock Government Income Fund
Trust Pruden
Global Utility Fund tial
Nicholas-Applegate Fund Income
Prudential California Municipal Vertib
Fund (2 Portfolios) le
Prudential Distressed Fund*
Securities Fund Pruden
Prudential Diversified Bond tial
Fund Interm
Prudential Equity Fund ediate
Prudential Equity Income Fund Global
Prudential Global Genesis Fund Income
Prudential Global Limited Fund
Maturity Fund Pruden
Prudential Global Natural tial
Resources Fund Jennis
The Global Government Plus Fund on
The Fund
Global Pruden
Total tial
Return MoneyM
Fund art
Pruden Assets
tial Pruden
Govern tial
ment Mortga
Income ge
Fund Income
Pruden Fund
tial Pruden
Gover tial
nment Multi-
Secur Sector
ities Fund
Trust Pruden
- tial
Money Munici
Marke pal
t Bond
Serie Fund
s (3
Portfo
lios)
Pruden
tial
Munici
pal
Series
Fund
(10
curren
t
Portfo
lios
and 3
merged
Portfo
lios*)
Pruden
tial
Nation
al
Munici
pals
Fund
Pruden
tial
Pacifi
c
Growth
Fund
Pruden
tial
Small
Compan
ies
Fund
Pruden
tial
Struct
ured
Maturi
ty
Fund
Pruden
tial
U.S.
Govern
ment
Fund*
Pruden
tial
Utilit
y Fund
Pruden
tial
World
Fund
* As of June 30, 1996, the Fund/Portfolio was no
longer in operation. The Fund/Portfolio merged into
another Fund within the Prudential Mutual Fund
Family.
We have examined the accompanying description of the
Prudential Multiple Class Pricing Worksheet (the
"Worksheet") application of State Street Bank and Trust
Company ("State Street"), custodian and recordkeeper
for the Prudential Mutual Funds (the "Funds"). Our
examination included procedures to obtain reasonable
assurance about whether (1) the accompanying
description presents fairly, in all material respects,
the aspects of State Street's policies and procedures
that may be relevant to a Fund's internal control
structure relating to the Worksheet, (2) the control
structure policies and procedures included in the
description were suitably designed to achieve the
control objectives specified in the description, if
those policies and procedures were complied with
satisfactorily, and (3) such policies and procedures
had been placed in operation as of June 30, 1996. The
control objectives were specified by Prudential Mutual
Fund Management, Inc. Our examination was performed in
accordance with standards established by the American
Institute of Certified Public Accountants and included
those procedures we considered necessary in the
circumstances to obtain a reasonable basis for
rendering our opinion.
In our opinion, the accompanying description of the
aforementioned application presents fairly, in all
material respects, the relevant aspects of State
Street's policies and procedures that had been placed
in operation as of June 30, 1996. Also, in our
opinion, the policies and procedures, as described, are
suitably designed to provide reasonable assurance that
the specified control objectives would be achieved if
the described policies and procedures were complied
with satisfactorily.
In addition to the procedures we considered necessary
to render our opinion as expressed in the previous
paragraph, we applied tests to specific policies and
procedures, listed in Section I, to obtain evidence
about their effectiveness in meeting the control
objectives, described in Section I during the period
from July 1, 1995 to June 30, 1996. The nature,
timing, extent, and results of the tests are listed in
Section II. In our opinion the policies and procedures
that were tested, as described in Section II, were
operating with sufficient effectiveness to provide
reasonable, but not absolute, assurance that the
control objectives specified in Section I were achieved
during the period from July 1, 1995 to June 30, 1996.
However, the scope of our engagement did not include
tests to determine whether control objectives not
listed in Section I were achieved; accordingly we
express no opinion on the achievement of control
objectives not included in Section I.
The relative effectiveness and significance of specific
policies and procedures at State Street, and their
effect on assessments of control risk on the Funds are
dependent on their interaction with the policies,
procedures, and other factors present at individual
Funds. We have performed no procedures to evaluate the
effectiveness of policies and procedures at individual
Funds in connection with this report.
The description of policies and procedures at State
Street is as of June 30, 1996, and information about
tests of the operating effectiveness of specified
policies and procedures covers the period from July 1,
1995 to June 30, 1996. Any projection of such
information to the future is subject to the risk that,
because of change, the description may no longer
portray the system in existence. The potential
effectiveness of specified policies and procedures at
State Street is subject to inherent limitations and,
accordingly, errors or irregularities may occur and not
be detected. Furthermore, the projection of any
conclusions, based on our findings, to future periods
is subject to the risk that changes may alter the
validity of such conclusions.
This report is intended solely for use by the
management and Boards of Directors/Trustees of the
Funds, the independent auditors of the Funds and the
Securities and Exchange Commission.
SECTION I
Policies and Procedures Placed in Operation
Prudential Multiple Class Pricing Worksheet
The Prudential Mutual Funds (the "Funds") have adopted
a multiple class pricing system. The multiple class
pricing system consists of four classes of shares
(Class A, Class B, Class C and Class Z). Class A
shares are subject to an initial sales charge, Class B
and Class C shares are subject to a contingent deferred
sales charge and Class Z shares have no sales charge
(Class Z shares which were first offered on March 1,
1996, are offered exclusively for sale to the PSI
Pension Plan). Each of the classes of shares represent
interests in the same portfolio of investments of the
respective Fund and are identical in all respects,
except that each class is subject to different
distribution expenses and has exclusive voting rights
with respect to the Rule 12b-1 distribution plan
pursuant to which such distribution expenses are paid.
In order to allocate income and expenses among the
classes of shares, State Street Bank and Trust Company
(the Funds' custodian and recordkeeper) utilizes the
Prudential Multiple Class Pricing Worksheet (the
"Worksheet") (see Exhibit I). The Worksheet is a
manual supplementary application that extracts relevant
data from the Funds' primary accounting system,
allocates income and expenses among the classes of
shares and computes the daily net asset value and, if
applicable, the dividend/distribution for each class of
shares. Internal accounting controls that are relevant
to the Fund can be divided into two components -
controls related to the mutual fund accounting system
resident at State Street Bank and Trust Company (the
"primary accounting system") and controls related to
the Worksheet.
The specific control objectives and policies and
procedures relating to the Worksheet are described on
pages 4 and 5. A description of the tests of the
policies and procedures designed to obtain evidence
about the operating effectiveness of those policies and
procedures in achieving the specific control objectives
is included in Section II.
Control Objectives and Policies and Procedures
Prudential Multiple Class Pricing Worksheet
The Worksheet is a supplementary manual application to
the Funds' primary accounting system. Certain data is
extracted from the primary accounting system to
allocate income and expenses and to calculate the daily
net asset value and, if applicable,
dividends/distributions for each class of shares. The
primary accounting system includes the details of
transactions in accordance with the Investment Company
Act of 1940, as amended.
The following represents the internal accounting
control objectives and policies and procedures for the
allocation of income and expenses and the computation
of the net asset value and, if applicable, the
dividend/distribution for each class of shares
utilizing the Worksheet. It does not cover the
internal accounting control policies and procedures
surrounding the processing of information into the
Funds' primary accounting system.
CONTROL
CONTROL OBJECTIVES POLICIES
AND
PROCEDUR
ES
A. Capital share activity as 1. Daily
reported by the Fund's transfer , the
agent is recorded for each class trans
in an accurate and timely manner fer
by the Fund. agent
forwa
rds
repor
ts of
capit
al
share
activ
ity
for
each
class
which
inclu
des a
summa
ry of
subsc
ripti
ons,
redem
ption
s,
excha
nges
and
other
infor
matio
n
(the
"Supe
rshee
t").
The
openi
ng
day's
balan
ce
for
share
s
outst
andin
g and
curre
nt
day
activ
ity
is
recor
ded
on
the
Works
heet.
2. Estim
ated
inter
im
share
activ
ity
for
the
curre
nt
day
not
recor
ded
in
the
Super
sheet
is
recei
ved
via
telef
ax
from
the
trans
fer
agent
and
is
recor
ded
for
each
class
on
the
Works
heet.
3. A
repor
t of
outst
andin
g
share
s
eligi
ble
for
divid
ends
is
recei
ved
from
the
trans
fer
agent
and
is
recor
ded
for
each
class
on
the
Works
heet.
B. Net Asset Value ("NAV") and, if 1. The prior days ending NAV per
applicable, the share (b) for each class is
dividend/distribution for each agreed to the prior day's
class are accurately computed on Worksheet.
a daily basis.
2. The daily net capital stock
activity for each class for the
current day is agreed to the
Supersheet as described in
Control Procedures A.1., 2. and
3., above.
3. Percentage Assets by Class and
Percentage Dividend Assets by
Class are calculated for each
class based upon information from
the prior day Worksheet, the
Supersheet and the telefax from
the transfer agent.
CONTROL
CONTROL OBJECTIVES POLICIES
AND
PROCEDUR
ES
4. Allocate investment income among
classes based on the appropriate
asset allocation percentage for
each class.
5. Agree composite income accounts,
management fees, other expenses,
realized gains and losses, and
unrealized
appreciation/depreciation to the
primary accounting system of the
Fund.
6. Allocate expenses among classes
as follows:
a. E
x
p
e
n
s
e
s
d
i
r
e
c
t
l
y
a
t
t
r
i
b
u
t
a
b
l
e
t
o
e
a
c
h
c
l
a
s
s
(
1
2
b-
1
d
i
s
t
r
i
b
u
t
i
o
n
e
x
p
e
n
s
e
s
)
a
r
e
c
a
l
c
u
l
a
t
e
d
a
n
d
r
e
c
o
r
d
e
d
t
o
t
h
a
t
c
l
a
s
s
.
b. E
x
p
e
n
s
e
s
a
t
t
r
i
b
u
t
a
b
l
e
t
o
b
o
t
h
c
l
a
s
s
e
s
a
r
e
a
l
l
o
c
a
t
e
d
i
n
a
c
c
o
r
d
a
n
c
e
w
i
t
h
t
h
e
a
p
p
r
o
p
r
i
a
t
e
a
s
s
e
t
a
l
l
o
c
a
t
i
o
n
p
e
r
c
e
n
t
a
g
e
f
o
r
e
a
c
h
c
l
a
s
s
.
7. Allocate realized and unrealized
gains and losses among the
classes in accordance with the
appropriate asset allocation
percentage of each class.
8. Record dividends/distributions to
shareholders of each class in the
primary accounting system.
9. Aggregate the net assets for each
class and agree to the total net
assets per the primary accounting
system.
10.For each class, reconcile the
current day's NAV and, if
applicable, the
dividend/distribution to the
previous day's NAV and dividend/
distribution for each class.
11.The above procedures are reviewed
by the Fund supervisor or
manager.
SECTION II
Tests of Operating Effectiveness
Prudential Multiple Class Pricing Worksheet
July 1, 1995 to June 30, 1996
We reviewed the methodology and procedures for
calculating the daily net asset value and, if
applicable, the dividends/distributions of the classes
of shares and the allocation of income and expenses
among the classes of shares.
The following are the detailed procedures which we
performed with respect to the Worksheet. These
procedures were performed for selected days
encompassing all Funds subject to multiple class
pricing during the year ended June 30, 1996, which we
believe is a representative sample, to test compliance
with the control policies and procedures as described
in Section I.
Prudential Mutual Fund Management, Inc. is the manager
of the Funds and has represented to us that adequate
facilities are in place to ensure implementation of the
methodology and procedures for calculating the net
asset value and dividends/distributions of the classes
of shares and the allocation of income and expenses
among the classes of shares. Based on our review of
the description of the policies and procedures of the
Worksheet, as described in Section I, and performance
of tests of operating effectiveness as described in
Section II, we concur with such representation.
Agreed "Prior Day NAV Per Share" to the previous
day's Worksheet.
Agreed "Shares Outstanding Beginning of the Day" to
the previous day's Worksheet and to the transfer
agency records for each class.
Recalculated "Activity/Estimate" by adding the
estimated interim share activity reported via fax
from the transfer agent and the current day's
"Capital Stock Activity" reported on the Supersheet
for each class.
Recalculated "Current Shares Outstanding" by adding
"Shares Outstanding Beginning of the Day" and
"Activity/Estimate" for each class.
Recalculated for each class "Adjusted Total Assets"
by multiplying "Prior Day NAV Per Share" by
"Current Shares Outstanding".
Recalculated "Percentage Assets-Class A/Front End"
by dividing "Adjusted Total Assets-Class A/Front
End" by "Adjusted Total Assets Composite".
Recalculated "Percentage Assets-Class B(C)/Back
End" by dividing "Adjusted Total Assets-Class
B(C)/Back End" by "Adjusted Total Assets
Composite".
Recalculated "Percentage Assets-Class Z/No Fee"
where applicable, by dividing "Adjusted Total
Assets-Class Z/No Fee" by "Adjusted Total Assets
Composite".
Agreed "Dividend Shares" to the transfer agency
records for each class.
Recalculated "Current Dividend Shares" by adding
"Dividend Shares Beginning of Day" and
"Activity/Estimate" for each class.
Recalculated for each class "Adjusted Dividend
Assets" by multiplying "Prior Day NAV Per Share" by
"Current Dividend Shares".
Recalculated "Percentage Dividend Assets-Class
A/Front End" by dividing "Adjusted Dividend Assets-
Class A/Front End" by "Adjusted Dividend Assets
Composite".
Recalculated "Percentage Dividend Assets-Class
B(C)/Back End" by dividing "Adjusted Dividend
Assets-Class B(C)/Back End" by "Adjusted Dividend
Assets Composite".
Recalculated "Percentage Dividend Assets-Class Z/No
Fee" where applicable, by dividing "Adjusted
Dividend Assets-Class Z" by "Adjusted Dividend
Assets Composite".
Agreed composite total of each component of income
to the primary accounting system.
Recalculated the allocation for each class of each
component of income for daily dividend funds by
multiplying the composite total by "Percentage
Dividend Assets-Class A/Front End", "Percentage
Dividend Assets-Class B(C)/Back End" and where
applicable, "percentage Dividend Assets-Class Z/No
Fee", and for non-daily dividend funds by
multiplying the composite total by "Percentage
Assets-Class A/Front End", "Percentage Assets-Class
B(C)/Back End" and where applicable, "Percentage
Assets-Class Z/No Fee".
Recalculated "Daily Income," composite and for each
class, by totaling each component of income.
Agreed composite total "Management Fee" and "Other
Fixed Expenses" to the primary accounting system.
Recalculated the allocation for each class of
"Management Fee" and "Other Fixed Expenses" for
daily dividend funds by multiplying the composite
total by "Percentage Dividend Assets-Class A/Front
End", "Percentage Dividend Assets-Class B(C)/Back
End" and where applicable, "percentage Dividend
Assets-Class Z/No Fee", and non-daily dividend
funds by multiplying the composite total by
"Percentage Assets-Class A/Front End", "Percentage
Assets-Class B(C)/Back End" " and where applicable,
"Percentage Assets-Class Z/No Fee"
Agreed the "12b-1 Fee-Class A/Front End" and "12b-1
Fee-Class B(C)/Back End" to the respective "PC
Expense Worksheet".
Recalculated "Daily Expense," composite and for
each class, by totaling "Management Fee," "12b-1
Fee" and "Other Fixed Expenses".
Recalculated "Daily Net Income" for each class by
subtracting "Daily Expense" from "Daily Income".
Recalculated "Dividend Rate" for each class for
daily dividend funds by dividing "Daily Net Income"
by "Dividend Shares Beginning of Day-Class A/Front
End", "Dividend Shares Beginning of Day-Class
B(C)/Back End" and where applicable, "Dividend
Shares Beginning of Day-Class Z/No Fee".
Agreed "Daily Income" and "Income Distribution" for
each class to the primary accounting system.
Agreed the "Capital Gain Distribution" to the
amount recorded in the primary accounting system.
Agreed composite total "Realized Gain/Loss" and
"Unrealized Appreciation/Depreciation" to the
primary accounting system.
Recalculated the allocation for each class of
"Realized Gain/Loss" and "Unrealized
Appreciation/Depreciation" by multiplying the
composite amount by the "Percentage Assets-Class
A/Front End", "Percentage Assets-Class B(C)/Back
End" and where applicable, "Percentage Assets-Class
Z/No Fee".
Agreed "Prior Days Net Assets" to the previous
day's Worksheet.
Recalculated "Net Assets", composite and for each
class, by totaling "Daily Net Income", "Income
nDistributed", "Capital Stock Activity", "Capital
Gain Distribution", "Realized Gain/Loss",
"Unrealized Appreciation/Depreciation", and "Prior
Days Net Assets".
Recalculated "NAV Per Share" dividing the "Net
Assets-Class A/Front End", "Net Assets - Class
B(C)/Back End" and where applicable, "Net Assets-
Class Z/No Fee" by "Current Shares Outstanding -
Class A/Front End", "Current Shares Outstanding -
Class B(C)/Back End" and where applicable, "Current
Shares Outstanding-Class Z/No Fee", respectively.
Recalculated "Offering Price" for Class A shares by
applying the "Load" percentage as stated in the
fund's prospectus.
December 19, 1997
To the Shareholders and Board of
Trustees of
Prudential Equity Income Fund
In planning and performing our audit of
the financial statements of Prudential
Equity Income Fund (the "Fund") for the
year ended October 31, 1997, we
considered its internal control,
including control activities for
safeguarding securities, in order to
determine our auditing procedures for
the purpose of expressing our opinion on
the financial statements and to comply
with the requirements of Form N-SAR, not
to provide assurance on internal
control.
The management of the Fund is
responsible for establishing and
maintaining internal control. In
fulfilling this responsibility,
estimates and judgments by management
are required to assess the expected
benefits and related costs of control
activities. Generally, control
activities that are relevant to an audit
pertain to the entity's objective of
preparing financial statements for
external purposes that are fairly
presented in conformity with generally
accepted accounting principles. Those
control activities include the
safeguarding of assets against
unauthorized acquisition, use or
disposition.
Because of inherent limitations in
internal control, errors or
irregularities may occur and not be
detected. Also, projection of any
evaluation of internal control to future
periods is subject to the risk that it
may become inadequate because of changes
in conditions or that the effectiveness
of the design and operation may
deteriorate.
Our consideration of internal control
would not necessarily disclose all
matters in internal control that might
be material weaknesses under standards
established by the American Institute of
Certified Public Accountants. A
material weakness is a condition in
which the design or operation of any
specific internal control components
does not reduce to a relatively low
level the risk that errors or
irregularities in amounts that would be
material in relation to the financial
statements being audited may occur and
not be detected within a timely period
by employees in the normal course of
performing their assigned functions.
However, we noted no matters involving
internal control, including control
activities for safeguarding securities,
that we consider to be material
weaknesses as defined above as of
October 31, 1997.
This report is intended solely for the
information and use of management and
the Board of Trustees of the Fund and
the Securities and Exchange Commission.
