ANNUAL REPORT
March 31, 1994
Prudential
Institutional
Liquidity
Portfolio, Inc.
(PICTURE)
Institutional Money
Market Series
(LOGO)
Directors
Eugene C. Dorsey
Donald D. Lennox
Lawrence C. McQuade
Richard A. Redeker
Stanley E. Shirk
Robin B. Smith
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote', Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, New York 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, New Jersey 07101
Distributor
Prudential Mutual Fund Distributors, Inc.
One Seaport Plaza
New York, New York 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, New Jersey 08906
Independent Accountants
Deloitte & Touche
1633 Broadway
New York, NY 10019
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, Illinois 60610-4795
Shareholder inquiries
Toll free (800) 225-1852
Collect (908) 417-7555
This report is not authorized for distribution to prospective
investors unless preceded or accompanied by a current prospectus.
750350109 MF137E
4440662
<PAGE>
Letter to Shareholders
May 6, 1994
Dear Shareholder:
After nine months with little change, short-term interest rates increased
earlier this year as the Federal Reserve began the process of tightening
monetary policy. Through the first quarter, the Prudential Institutional
Liquidity Portfolio -- Institutional Money Market Series sought to take
advantage of rising rates.
<TABLE>
Fund Performance
As of March 31, 1994
<CAPTION>
7-Day Weighted Net Total
Current Yield Avg. Maturity Asset Value Net Assets
<S> <C> <C> <C> <C>
Institutional Money
Market Series 3.18% 62 days $1.00 $385 mil.
IBC Donoghue's
Money Fund Avg.3 2.89% 48 days $1.00 N/A
(All Taxable)
</TABLE>
1 Yields will fluctuate from time to time and past performance is
not indicative of future results.
2 An investment in the Fund is neither insured nor guaranteed by the
U.S. government and there can be no assurance that the Fund will be
able to maintain a stable net asset value of $1.00 per share.
3 This is the average 7-day current yield, NAV and WAM of 649 funds
in IBC Donoghue's all taxable money market fund category, as of March
31, 1994.
Fund Overview
The Series seeks high current income consistent with the preservation of
principal and liquidity by investing in a diversified portfolio of
high-quality, U.S. dollar-denominated money market instruments, including
U.S. government obligations, commercial paper, bank obligations,
certificates of deposit and bankers' acceptances from domestic and
foreign issuers, with maturities ranging from one day to 13 months.
The Series attempts to avoid low-quality credits, purchasing only securities
rated in the highest categories, generally by at least two major rating
agencies, or in unrated securities deemed by the Investment Adviser to be
of equivalent quality.
<PAGE>
The past 12 months have been marked first, by flat interest rates
throughout most of 1993, and rising rates in the first few months
of 1994. The historically low interest rates of 1993 may in fact,
have been the lows for this business cycle. They were brought about
by slow growth, minimal inflation and the market's positive reactions
to the federal government's deficit-cutting actions.
The Fed Tightens
The picture began to change rapidly by year-end, however, as fourth
quarter gross domestic product reached an annualized rate of 7.0%.
Fearing that the rapidly growing economy might re-ignite inflation,
the Federal Reserve tightened monetary policy during the first quarter
by raising the target Fed Funds rate twice -- to 3.5% at the end of
March. In this rising rate environment, money market instruments
generally had higher returns than both stocks and bonds for the first
three months of the year.
The Fund Adjusts Its Weighted Average Maturity
In anticipation of rising rates, we reduced the portfolio's weighted
average maturity to 42 days in December from the 60-day level we
maintained for most of the fall. This enabled us to take advantage
of new investments offering higher interest rates that came to market.
We also purchased floating or variable rate notes, raising our weighting
in this category to 27.2% on March 31, 1994, from 15.2% a year ago.
Since the coupons on these securities adjust periodically to reflect
current interest rates, they help enhance yield when rates rise.
One issuer of variable rate securities we believe offers good value
is the Federal Home Loan Mortgage Corp.
In March, we extended the Series' maturities about 15 days beyond the
average money market fund, according to IBC Donoghue. Republic Bank
of New York was one issuer that made this move possible because it
offered longer maturity securities with attractive yields.
In addition, at the end of March, all of the portfolio's investments
were either rated in the highest category (A1, A1+, MIG1 or VMIG1) by
two major rating agencies or deemed to be of equivalent quality. Going
forward, we expect to shorten our average maturity, holding a more
neutral position in anticipation of furthered tightening.
<PAGE>
The Outlook
With the core rate of inflation now at roughly 3%, the real Fed Funds
rate (the funds rate less the inflation rate) was 0.75% at this writing.
We suspect that the Fed will continue to increase short-term rates,
certainly to 4% and perhaps more by the end of the year. As a
result, we expect economic activity to slow from its frenetic 7%
growth in the fourth quarter of 1993, with gross domestic product
averaging above 3% in 1994.
As always, it is a pleasure to have you as a shareholder of the
Prudential Institutional Liquidity Portfolio and to take the opportunity
to report our activities to you.
Sincerely,
Lawrence C. McQuade
President
Thomas J. Piskula
Portfolio Manager
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC. Portfolio of Investments
INSTITUTIONAL MONEY MARKET SERIES March 31, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
BANK NOTES--8.1%
Huntington National Bank
$ 8,000 3.45%, 4/28/94............... $ 8,000,391
1,000 3.30%, 5/10/94............... 999,470
NationsBank North Carolina
2,180 3.65%, 6/7/94................ 2,180,490
NBD Bank, N.A.
1,000 3.56%, 7/11/94............... 999,058
PNC Bank, N.A.
12,000 3.30%, 6/10/94............... 11,995,187
Republic National Bank
5,000 4.30%, 3/8/95................ 4,985,554
Society National Bank
Cleveland
2,000 3.55%, 1/20/95............... 1,997,406
------------
31,157,556
------------
CERTIFICATES OF DEPOSIT--
FOREIGN ISSUERS--7.5%
Banque Nationale De Paris
2,000 3.35%, 7/7/94................ 1,996,404
Barclays Bank PLC
9,000 3.25%, 6/13/94............... 9,000,540
Commerzbank
2,000 3.56%, 8/12/94............... 2,001,375
Norinchukin Bank
4,000 3.31%, 4/7/94................ 3,999,520
Societe Generale
3,000 3.40%, 5/2/94................ 3,000,176
9,000 3.80%, 6/3/94................ 8,999,838
------------
28,997,853
------------
COMMERCIAL PAPER--DOMESTIC
ISSUERS--42.3%
American Cyanamid Co.
2,800 3.80%, 6/7/94................ 2,780,198
4,140 3.80%, 6/17/94............... 4,106,351
Aristar, Inc.
$ 1,000 3.75%, 4/27/94............... $ 997,292
1,000 3.80%, 5/19/94............... 994,933
Avco Financial Services, Inc.
9,800 3.85%, 6/2/94................ 9,735,021
Bear Stearns Cos., Inc.
1,000 3.85%, 6/20/94............... 991,444
2,000 3.85%, 6/27/94............... 1,981,392
Bell Atlantic Financial
Service, Inc.
2,000 3.65%, 4/26/94............... 1,994,931
5,000 3.70%, 5/26/94............... 4,971,736
Ciesco, Inc.
5,000 3.09%, 4/4/94................ 4,998,712
Corporate Asset Funding Co.,
Inc.
1,675 3.35%, 4/13/94............... 1,673,130
12,387 3.35%, 10/6/94............... 12,170,296
Corporate Receivables Corp.
3,000 3.79%, 6/8/94................ 2,978,523
Dean Witter, Discover & Co.
2,000 3.74%, 5/31/94............... 1,987,533
Falcon Asset Securitization
Corp.
1,225 3.70%, 5/2/94................ 1,221,097
General Electric Capital
Corp.
10,005 3.23%, 7/11/94............... 9,914,335
11,000 3.43%, 9/29/94............... 10,810,302
General Motors Acceptance
Corp.
21,300 3.24%, 5/9/94................ 21,227,154
GTE Corp.
5,000 3.72%, 4/14/94............... 4,993,283
</TABLE>
-2- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
Heller Financial, Inc.
$ 3,000 3.65%, 4/25/94............... $ 2,992,700
Household Finance Corp.
9,000 3.22%, 4/4/94................ 8,997,585
International Business
Machines Corp.
7,000 3.67%, 4/11/94............... 6,992,864
International Lease Finance
Corp.
1,000 3.17%, 5/11/94............... 996,478
ITT Corp.
1,000 3.73%, 5/9/94................ 996,063
Merrill Lynch & Co., Inc.
1,730 3.12%, 4/6/94................ 1,729,250
2,300 3.78%, 6/7/94................ 2,283,819
2,000 3.82%, 6/21/94............... 1,982,810
Morgan Stanley Group, Inc.
3,000 3.75%, 5/16/94............... 2,985,937
Norwest Corp.
5,000 3.69%, 5/10/94............... 4,980,012
Nynex Corp.
4,000 3.93%, 7/5/94................ 3,958,517
PepsiCo, Inc.
1,500 3.68%, 4/8/94................ 1,498,927
Preferred Receivables Funding
Corp.
10,405 3.65%, 4/25/94............... 10,379,681
8,500 3.80%, 6/8/94................ 8,438,989
Smith Barney Shearson, Inc.
3,000 3.64%, 4/28/94............... 2,991,810
------------
162,733,105
------------
COMMERCIAL PAPER--FOREIGN
ISSUERS--12.7%
Abbey National North America
Corp.
6,000 3.22%, 4/7/94................ 5,996,780
American Honda Finance Corp.
1,000 3.75%, 4/4/94................ 999,687
ANZ Bank, Ltd.
$ 4,300 3.33%, 4/4/94................ $ 4,298,807
BAT Capital Corp.
900 3.70%, 4/25/94............... 897,780
Bradford & Bingley Building
Society
2,400 3.22%, 4/6/94................ 2,398,927
Isetan of America, Inc.
2,424 3.90%, 6/21/94............... 2,402,729
Kubota Finance (USA), Inc.
5,000 3.75%, 5/24/94............... 4,972,396
Leeds Permanent Building
Society
6,000 3.20%, 4/11/94............... 5,994,667
Maguire/Thomas Partners
3,674 3.69%, 4/7/94................ 3,671,740
Mitsubishi International
Corp.
600 3.80%, 5/12/94............... 597,403
980 3.85%, 6/10/94............... 972,664
800 4.00%, 7/5/94................ 791,556
NS Finance, Inc.
1,000 3.69%, 4/28/94............... 997,232
SRD Finance, Inc.
1,000 3.70%, 4/26/94............... 997,431
1,000 3.75%, 5/10/94............... 995,938
Sumitomo Corp. of America
2,000 3.85%, 5/26/94............... 1,988,236
5,000 4.08%, 9/16/94............... 4,904,800
Toronto Dominion Holdings
(U.S.A.), Inc.
5,000 3.37%, 9/7/94................ 4,925,579
------------
48,804,352
------------
</TABLE>
-3- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
OTHER CORPORATE
OBLIGATIONS--2.2%
American General Finance
Corp.
$ 2,365 9.25%, 7/1/94................ $ 2,398,127
Capital Auto Receivable Asset
Trust
1,550 3.30%, 4/15/94, 1993-3 A4.... 1,550,099
31 3.35%, 6/15/94, 1993-2 A1.... 31,438
Ford Motor Credit Corp.
1,000 8.00%, 6/1/94................ 1,007,193
Norwest Financial, Inc.
1,600 8.90%, 6/15/94............... 1,616,575
Philip Morris Companies, Inc.
2,050 9.60%, 5/10/94............... 2,063,250
------------
8,666,682
------------
VARIABLE RATE
INSTRUMENTS(D)--27.3%
Avco Financial Services, Inc.
4,000 3.73126%, 4/27/94............ 4,000,000
Federal Home Loan Mortgage
Corp.
8,000 3.575%, 6/15/94.............. 8,000,000
Ford Motor Credit Corp.
8,000 4.1719%, 6/23/94............. 8,000,000
Goldman Sachs Group, L.P.
23,000 3.50%, 8/2/94................ 23,000,000
Household Finance Corp.
5,000 3.55%, 4/12/94............... 5,000,000
Lehman Brothers Holdings,
Inc.
$ 11,000 3.9531%, 4/29/94............. $ 11,000,000
Merrill Lynch & Co., Inc.
12,000 3.20%, 4/20/94............... 12,000,000
Money Market Auto Loan Trust,
5,000 3.795%, 4/15/94, 1990-1...... 5,000,000
Money Market Credit Card
Trust,
3,000 3.72%, 4/11/94, 1989-1....... 2,999,687
Morgan Stanley Group, Inc.
3,000 3.28%, 4/15/94............... 3,000,000
5,000 3.87271%, 4/20/94............ 5,000,000
2,000 3.5925%, 5/13/94............. 2,000,000
Nynex Corp.
16,000 3.73%, 4/5/94................ 16,000,000
------------
104,999,687
------------
Total Investments--100.1%
(amortized cost
$385,359,235*)............. 385,359,235
Liabilities in excess of
other
assets--(0.1%)............. (336,307)
------------
Net Assets--100%............. $385,022,928
------------
------------
</TABLE>
- ---------------
* The cost of securities for federal income tax purposes is substantially the
same as for financial reporting purposes.
(D) For purposes of amortized cost valuation, the maturity date of variable
rate instruments is considered to be the next date on which the security
can be redeemed at par or the next date on which the rate of interest is
adjusted.
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
The industry classification of portfolio holdings and net liabilities shown as
a percentage of net assets as of March 31, 1994 was as follows:
<TABLE>
<S> <C>
Commercial Banks............................ 25.4%
Securities Brokers & Dealers................ 18.9
Personal Credit Institutions................ 16.9
Asset Backed................................ 13.4
Telephone Communications.................... 8.3
Business Credit (Finance)................... 6.1
Commodity Trading Firms..................... 2.4
Federal Credit Agencies..................... 2.1
Chemicals & Allied Products................. 1.8
Office Machines............................. 1.8
Bank Holding Companies--Domestic............ 1.3
Tobacco..................................... 0.8
Beverages................................... 0.4
Equipment Rental & Leasing.................. 0.3
Finance Services............................ 0.2
-----
100.1
Liabilities in excess of other assets....... (0.1)
-----
100.0%
-----
-----
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
Assets
March 31, 1994
--------------
<S>
<C>
Investments, at amortized cost which approximates
value................................. $385,359,235
Interest
receivable.....................................................................
1,176,992
Other
assets........................................................................
.... 23,871
--------------
Total
assets..........................................................................
386,560,098
--------------
Liabilities
Dividends
payable.......................................................................
969,855
Accrued
expenses........................................................................
311,159
Bank
overdraft.....................................................................
..... 166,468
Due to
Manager..........................................................................
68,344
Due to
Distributor......................................................................
21,344
--------------
Total
liabilities.....................................................................
1,537,170
--------------
Net
Assets........................................................................
...... $385,022,928
--------------
--------------
Net assets were comprised of:
Common stock, at
par.................................................................. $
385,023
Paid-in capital in excess of
par...................................................... 384,637,905
--------------
Net assets at March 31,
1994............................................................ $385,022,928
--------------
--------------
Net asset value, offering and redemption price per share
($385,022,928 (DIV) 385,022,928 shares of $.001 par value common stock issued
and
outstanding)..................................................................
........ $1.00
--------------
--------------
</TABLE>
See Notes to Financial Statements.
-6-
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
March 31,
Net Investment Income 1994
-----------
<S> <C>
Income
Interest and discount earned........ $14,896,025
-----------
Expenses
Management fee...................... 891,735
Distribution fee.................... 535,041
Transfer agent's fees and
expenses............................ 257,000
Custodian's fees and expenses....... 184,000
Registration fees................... 95,000
Directors' fees..................... 50,000
Audit fees.......................... 30,000
Reports to shareholders............. 22,000
Insurance expense................... 16,500
Legal fees.......................... 14,000
Miscellaneous....................... 24,179
-----------
Total expenses.................... 2,119,455
-----------
Net investment income................. 12,776,570
Realized Gain on Investments
Net realized gain on investment
transactions........................ 76,316
-----------
Net Increase in Net Assets
Resulting from Operations............. $12,852,886
-----------
-----------
</TABLE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended March 31,
Increase (Decrease) ---------------------------------
in Net Assets 1994 1993
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income.............. $ 12,776,570 $ 17,824,731
Net realized gain on
investment
transactions...... 76,316 394,996
--------------- ---------------
Net increase in net
assets resulting
from operations... 12,852,886 18,219,727
--------------- ---------------
Dividends and
distributions to
shareholders........ (12,852,886) (18,219,727)
--------------- ---------------
Fund share
transactions
(at $1 per share)
Proceeds from shares
subscribed........ 2,092,856,313 2,168,239,637
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions..... 12,113,835 17,946,742
Cost of shares
reacquired.......... (2,217,160,989) (2,132,144,119)
--------------- ---------------
Net increase
(decrease) in net
assets from Fund
share
transactions...... (112,190,841) 54,042,260
--------------- ---------------
Total increase
(decrease).......... (112,190,841) 54,042,260
Net Assets
Beginning of year..... 497,213,769 443,171,509
--------------- ---------------
End of year........... $ 385,022,928 $ 497,213,769
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-7-
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Notes to Financial Statements
Prudential Institutional Liquidity Portfolio, Inc.--Institutional Money
Market Series (the ``Fund'') is registered under the Investment Company Act of
1940 as an open-end, diversified management investment company. The investment
objective of the Fund is high current income consistent with the preservation
of principal and liquidity. The Fund invests primarily in money market
instruments maturing in thirteen months or less whose ratings are within the
two highest ratings categories by a nationally recognized statistical rating
organization or, if not rated, are of comparable quality. The ability of the
issuers of the securities held by the Fund to meet its obligations may be
affected by economic developments in a specific industry or region.
Note 1. Accounting The following is a summary
Policies of significant accounting poli
cies followed by the Fund in the preparation of
its financial statements.
Securities Valuations: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a
security at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of any discount or premium.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis.
Federal Income Taxes: It is the intent of the Fund to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies
and to distribute all of its taxable net income to its shareholders. Therefore,
no federal income tax provision is required.
Dividends and Distributions: The Fund declares all of its net investment income
and net realized short-term capital gains/losses, if any, as dividends daily to
its shareholders of record at the time of such declaration. Net investment
income for dividend purposes includes interest accrued or discount earned less
amortization of premium and the estimated expenses applicable to the dividend
period. The Fund does not expect to realize long-term capital gains or losses.
Note 2. Agreements The Fund has a management
agreement with Prudential Mutual Fund Management,
Inc. (``PMF''). Pursuant to this agreement, PMF has responsibility for all
investment advisory services and supervises the subadviser's performance of
such services. PMF has entered into a subadvisory agreement with The Prudential
Investment Corporation (``PIC''); PIC furnishes investment advisory services in
connection with the management of the Fund. PMF pays for the cost of the
subadviser's services, the compensation of officers of the
Fund, occupancy and certain clerical and bookkeeping costs of the Fund. The
Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly, at an
annual rate of .20 of 1% of the average daily net assets of the Fund.
The Fund has a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''), who acts as the distributor of the Fund's
shares. To reimburse PMFD for its expenses incurred pursuant to a plan of
distribution, the Fund pays PMFD a reimbursement which is accrued daily and
payable monthly at an annual rate of .12 of 1% of the average daily net assets
of the Fund. PMFD pays various broker-dealers or financial institutions,
including Prudential Securities Incorporated (``PSI'') and Pruco Securities
Corporation, affiliated broker-dealers, for account servicing fees and other
expenses incurred by such broker-dealers.
PMFD is a wholly-owned subsidiary of PMF; PSI, PMF and PIC are indirect,
wholly-owned subsidiaries of The Prudential Insurance Company of America.
Note 3. Other Prudential Mutual Fund
Transactions Services, Inc. (``PMFS''), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During
the year ended March 31, 1994, the Fund incurred fees of approximately $240,000
for the services of PMFS. As of March 31, 1994, approximately $20,000 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 non-affiliates.
-8-
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Financial Highlights
<TABLE>
<CAPTION>
Year Ended March 31,
- ---------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1994 1993
1992 1991 1990
<S> <C> <C>
<C> <C> <C>
---------
- -------- -------- -------- --------
Net asset value, beginning of year......................... $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income and net realized gains............... .029
.033 .054 .076 .087
Dividends and distributions to shareholders................ (.029)
(.033) (.054) (.076) (.087)
---------
- -------- -------- -------- --------
Net asset value, end of year............................... $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
---------
- -------- -------- -------- --------
---------
- -------- -------- -------- --------
TOTAL RETURN#:............................................. 2.92%
3.40% 5.57% 8.00% 9.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).............................. $ 385,023
$497,214 $443,172 $519,802 $417,354
Average net assets (000)................................... $ 445,867
$543,694 $540,380 $479,849 $421,540
Ratios to average net assets:
Expenses, including distribution fee..................... .48%
.44% .42% .46% .38%
Expenses, excluding distribution fee..................... .36%
.32% .30% .34% .26%
Net investment income.................................... 2.87%
3.28% 5.32% 7.58% 8.60%
</TABLE>
- ---------------
# Total return includes reinvestment of dividends and distributions.
See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors of
Prudential Institutional Liquidity Portfolio, Inc.--
Institutional Money Market Series
We have audited the accompanying statement of assets and liabilities of
Prudential Institutional Liquidity Portfolio, Inc.-- Institutional Money Market
Series, including the portfolio of investments, as of March 31, 1994, the
related statements of operations for the year then ended and of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
March 31, 1994 by correspondence with the custodian and brokers; where replies
were not received from brokers, we performed other auditing procedures. An
audit also includes assessing the accounting principles used and significant
estimates made by management as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Prudential
Institutional Liquidity Portfolio, Inc.--Institutional Money Market Series as
of March 31, 1994, the results of its operations, the changes in its net assets
and the financial highlights for the respective stated periods in conformity
with generally accepted accounting principles.
Deloitte & Touche
New York, New York
May 5, 1994
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IMPORTANT NOTICE FOR
CERTAIN SHAREHOLDERS
We are required by Massachusetts 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 hereby advise you that 1.91% of
the dividends paid by the Fund qualify for such state tax treatment.
Shortly after the close of the calendar year ending December 31, 1994, you
will be advised as to the federal tax status of the dividends you received
during the calendar year 1994. In addition, you will also be advised at that
time as to the portion of your dividends which might be exempt for other
states' tax purposes.
For more detailed information regarding your state and local taxes, you
should contact your tax adviser or the state/local taxing authorities.
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