Letter to Shareholders
May 5, 1995
Dear Shareholder:
As a result of strong economic growth and an aggressive Federal Reserve
policy over the past 12 months, money market yields have nearly doubled,
much to the advantage of investors in the Prudential Institutional Liquidity
Portfolio, Inc. -- Institutional Money Market Series (PILP). The Series'
7-day current yield is now approaching 6%, while a year ago on March 31,
1994 it was 3.16%.
Over the 12-month period, the Series has performed better than the average
competing fund, as measured by IBC Donoghue. We have done so by carefully
managing the Series' weighted average maturity and by adding value through
security selection.
<TABLE>
SERIES PERFORMANCE
As of March 31, 1995
<CAPTION>
7-Day Weighted Net Total
Current Avg. Asset Net
Yield* Maturity Value** Assets
<S> <C> <C> <C> <C>
PILP 5.83% 51 days $1.00 $476 mil.
IBC Donoghue's
Money Fund Avg.*** 5.53% 42 days 1.00 $538 bil.
(All Taxable)
</TABLE>
*Yields will fluctuate from time to time and past performance is no guarantee
of future results.
**An investment in the Series is neither insured nor guaranteed by the U.S.
government and there can be no assurance that the Series will be able to
maintain a stable net asset value of $1.00 per share.
***This is the average 7-day current yield, NAV and WAM of 732 funds in IBC
Donoghue's all taxable money market fund category as of March 28, 1995.
The Fund's Objective.
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 obligations of domestic and
foreign issuers, with maturities ranging from one day to 13 months.
The Series purchases securities rated in the two highest rating categories
by at least two major rating agencies (or if only one rating agency has
assigned a rating to the
-1-
<PAGE>
security, by that rating agency), or if unrated,
securities deemed by the adviser to be of equivalent quality.
The Federal Reserve Doubled Short-Term Interest Rates.
Since February 4, 1994, the Federal Reserve has doubled short-term interest
rates. The nation's central bank has implemented this restrictive monetary
policy in order to slow the pace of the economy and reduce the level of
resource utilization to a level consistent with non-inflationary growth. As
a result of the Federal Reserve's actions, many analysts expect that Gross
Domestic Product (GDP) in 1995 will be below the strong 4.1% pace of 1994.
It currently appears that the Federal Reserve's tighter monetary policy
has slowed the economy. However, it is not clear whether this is simply
the beginning of the elusive "soft landing," characterized by modest economic
expansion and low inflation, or merely a temporary slowdown. Those who
believe the Federal Reserve has succeeded in engineering a soft landing
point to moderation in employment gains and signs of weaker housing, auto
and retail sales. Others argue that the current downturn may be a result
of a temporary shift in consumers' behavior. While consumers have recently
experienced gains in income, they have boosted savings rather than
consumption. If this turns out to be a temporary phenomenon, increased
consumption later this year may refuel the economy and could jeopardize the
notion of a soft landing.
Until the strength of the underlying economy and inflation becomes clearer,
market participants will remain concerned that the Federal Reserve may
continue to tighten credit in this economic cycle. However, comments from
Federal Reserve officials imply that if the economy shows convincing signs
of a slowdown, the central bank may be willing to tolerate a modest increase
in inflation without raising interest rates further.
Strategy: Carefully Managed Maturity.
The Federal Reserve implements monetary policy by influencing the level of
short-term interest rates. As the central bank became more restrictive last
year, we shortened our maturities to take advantage of rising interest rates.
This strategy enabled us to quickly incorporate higher market rates into the
portfolio. On January 31, 1995, the weighted average maturity was 25 days.
However, when signs of slower economic growth emerged in February of 1995,
it appeared that the Federal Reserve may be near the end of its tightening
cycle, the average maturity was lengthened. We purchased high quality
securities with maturities as long as one year in order to lock in rates
that still reflected expectations of further aggressive Federal Reserve
tightenings. By March 31, 1995 the average maturity was 51 days.
-2-
<PAGE>
Adding Value Through Security Selection.
During the year, we increased our holdings in floating and variable rate
instruments to as much as 42% on August 31, 1994. This allowed us to take
advantage of rising interest rates, since the coupons on these securities
adjust periodically to reflect changes in interest rates. For example,
floating rate notes we purchase may be based on a money market index such as
LIBOR (London Interbank Offered Rate), the 3-month U.S. Treasury bill, or the
federal funds rate. These securities pay the quoted index rate plus a
specific amount, and the rate resets in a specified time period, such as
daily, weekly or monthly. However, we have reduced our holdings in these
securities in 1995 in favor of longer maturity, fixed-rate securities from
high-quality issuers such as General Electric Capital and Ford Motor Credit.
A Word About Quality.
We emphasize a conservative, quality-oriented investment approach. We believe
that preservation of capital and liquidity cannot be sacrificed for additional
yield. At the end of March, all the portfolio's investments were rated high
quality by two or more nationally recognized rating agencies, or deemed to be
of equivalent quality if unrated.
The Outlook.
The economy has yet to convince us that it has slowed to a sustainable,
non-inflationary level. We await further clues as to the extent of the
economic slowdown, which will either allow the nation's central bankers
to declare victory in their battle against inflation or prompt them to push
short-term interest rates even higher.
As always, it is a pleasure to work for you. Thank you for the confidence
you have shown in us by choosing the Prudential Institutional Liquidity
Portfolio, Inc. -- Institutional Money Market Series.
Sincerely,
Lawrence C. McQuade
President
Robert L. Wofchuck
Portfolio Manager
-3-
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC. Portfolio of Investments
INSTUTIONAL MONEY MARKET SERIES March 31, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
BANKERS ACCEPTANCE - FOREIGN
ISSUERS--0.3%
Rabobank Nederland
$ 1,572 6.45%, 5/1/95................ $ 1,563,532
------------
BANK HOLDING PAPER--4.4%
Bankers Trust New York Corp.
10,000 5.15%, 4/3/95................ 9,997,139
Citicorp
7,000 6.03%, 5/1/95................ 6,964,825
NationsBank Corp.
1,000 6.10%, 5/9/95................ 993,561
PNC Funding Corp.
3,000 6.07%, 4/17/95............... 2,991,907
------------
20,947,432
------------
BANK NOTES--6.2%
Bank One, Indianapolis, NA
1,000 7.18%, 2/5/96................ 1,003,324
Fifth Third Bank, Cincinnati,
NA
5,000 6.00%, 4/7/95................ 4,999,956
NationsBank of Texas, NA
1,000 6.82%, 10/31/95.............. 1,000,883
3,000 7.55%, 1/9/96................ 3,018,420
2,500 7.30%, 1/26/96............... 2,508,533
17,000 7.00%, 2/6/96................ 17,007,774
------------
29,538,890
------------
CERTIFICATES OF DEPOSIT - FOREIGN
ISSUERS--12.4%
Banque Nationale de Paris
1,000 6.25%, 4/12/95............... 1,000,039
Canadian Imperial Bank of
Commerce
19,000 6.04%, 4/10/95............... 19,000,019
Fuji Bank, Ltd.
$ 3,000 6.10%, 4/3/95................ $ 3,000,003
3,000 6.15%, 4/28/95............... 3,000,022
15,000 6.12%, 5/3/95................ 15,000,000
Industrial Bank of Japan,
Ltd.
1,000 6.36%, 4/24/95............... 1,000,000
Rabobank Nederland
4,000 6.66%, 2/27/96............... 3,992,997
Societe Generale
1,000 7.60%, 1/11/96............... 1,005,602
Sumitomo Bank, Ltd.
1,000 6.48%, 4/3/95................ 1,000,018
11,000 6.15%, 5/4/95................ 11,000,100
------------
58,998,800
------------
COMMERCIAL PAPER - DOMESTIC
ISSUERS--37.1%
American Express Credit Corp.
4,000 6.18%, 8/21/95............... 3,902,493
American Home Products Corp.
5,700 6.52%, 5/1/95................ 5,669,030
Aristar, Inc.
1,400 6.15%, 4/27/95............... 1,393,782
1,000 6.12%, 5/5/95................ 994,220
1,000 6.13%, 5/11/95............... 993,189
Beneficial Corp.
3,000 6.05%, 4/28/95............... 2,986,388
CIT Group Holdings, Inc.
2,000 6.10%, 4/3/95................ 1,999,323
Corporate Asset Funding Co.,
Inc.
15,187 6.10%, 4/13/95............... 15,156,120
Countrywide Funding Corp.
9,000 6.00%, 4/3/95................ 8,997,000
3,000 6.15%, 4/11/95............... 2,994,875
</TABLE>
-4- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTUTIONAL MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
COMMERCIAL PAPER - DOMESTIC
ISSUERS--(cont'd)
Dayton Hudson Corp.
$ 2,000 6.105%, 5/17/95.............. $ 1,984,398
Dean Witter, Discover & Co.
4,000 6.00%, 4/5/95................ 3,997,333
Duracell, Inc.
980 6.10%, 4/3/95................ 979,668
1,000 6.15%, 4/11/95............... 998,292
Finova Capital Corp.
4,145 6.12%, 4/6/95................ 4,141,477
1,500 6.17%, 4/19/95............... 1,495,372
4,000 6.15%, 5/11/95............... 3,972,667
Ford Motor Credit Co.
12,000 6.04%, 5/31/95............... 11,879,200
5,000 6.11%, 7/12/95............... 4,913,441
5,000 6.20%, 9/11/95............... 4,859,639
General Motors Acceptance
Corp.
1,000 6.15%, 4/17/95............... 997,267
3,599 6.17%, 4/17/95............... 3,589,131
5,423 6.10%, 4/19/95............... 5,406,460
10,000 6.55%, 5/4/95................ 9,939,958
Heller Financial, Inc.
2,000 6.05%, 5/4/95................ 1,988,908
Honeywell, Inc.
1,000 6.05%, 4/7/95................ 998,992
IBM Credit Corp.
5,000 6.125%, 4/20/95.............. 4,983,837
ITT Corp.
3,000 6.10%, 4/10/95............... 2,995,425
4,445 6.13%, 4/27/95............... 4,425,321
7,000 6.15%, 5/5/95................ 6,959,342
3,000 6.15%, 5/8/95................ 2,981,037
2,540 6.125%, 5/22/95.............. 2,517,960
ITT Financial Corp.
3,000 6.10%, 4/13/95............... 2,993,900
Merrill Lynch & Co., Inc.
$ 9,000 6.00%, 4/10/95............... $ 8,986,500
Morgan Stanley Group, Inc.
4,000 6.05%, 5/1/95................ 3,979,833
NYNEX Corp.
5,000 6.07%, 5/3/95................ 4,973,022
1,000 6.25%, 5/3/95................ 994,444
Preferred Receivables Funding
Corp.
6,945 6.00%, 4/5/95................ 6,940,370
3,000 6.00%, 4/20/95............... 2,990,500
Riverwoods Funding Corp.
1,000 6.00%, 4/5/95................ 999,333
USL Capital Corp.
3,000 6.05%, 5/2/95................ 2,984,371
Weyerhauser Mortgage Co.
1,500 6.10%, 4/20/95............... 1,495,171
Whirlpool Financial Corp.
3,210 6.10%, 4/19/95............... 3,200,209
2,000 6.10%, 4/26/95............... 1,991,528
WMX Technologies, Inc.
2,000 5.20%, 5/12/95............... 1,988,156
------------
176,608,882
------------
COMMERCIAL PAPER - FOREIGN
ISSUERS--4.6%
75 State Street Capital Corp.
1,000 6.03%, 4/17/95............... 997,320
American Honda Finance Corp.
12,996 6.15%, 5/15/95............... 12,898,313
B.B. Finance, Inc.
3,000 6.25%, 4/6/95................ 2,997,396
Canadian Imperial Holdings,
Inc.
4,000 6.00%, 4/20/95............... 3,987,333
Fundex Corp.
1,088 6.15%, 4/24/95............... 1,083,725
------------
21,964,087
------------
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTUTIONAL MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
OTHER CORPORATE OBLIGATIONS--3.5%
Associates Corp. of North
America
$ 5,000 4.50%, 2/15/96............... $ 4,903,179
Atlantic Richfield Co.
1,000 10.375%, 7/15/95............. 1,010,561
BP North America, Inc.
1,000 10.15%, 3/15/96.............. 1,030,960
CIT Group Holdings, Inc.
1,400 8.75%, 2/15/96............... 1,423,396
Commercial Credit Co.
1,000 9.20%, 6/15/95............... 1,005,506
Ford Motor Credit Corp.
1,000 8.875%, 3/15/96.............. 1,017,917
Morgan Stanley Group, Inc.
6,000 9.875%, 5/1/95............... 6,016,876
------------
16,408,395
------------
VARIABLE RATE INSTRUMENTSD--26.6%
American Express Centurion
Bank
2,000 6.125%, 4/5/95............... 1,999,931
4,000 6.125%, 4/18/95.............. 3,999,296
1,000 6.125%, 4/19/95.............. 999,962
Beneficial Corp.
10,000 6.36%, 4/3/95................ 10,000,000
Boatmen's National Bank of
St. Louis
19,500 6.35%, 4/3/95................ 19,500,000
General Electric Capital
Corp.
5,000 6.09375%, 4/26/95............ 5,000,000
4,000 6.125%, 4/28/95.............. 4,000,359
Goldman Sachs Group L.P.
18,000 6.3125%, 5/30/95............. 18,000,000
Key Bank of New York, NA
18,500 6.26%, 4/3/95................ 18,493,194
Lehman Brothers Holdings,
Inc.
10,000 6.325%, 4/24/95.............. 10,000,000
Merrill Lynch & Co., Inc.
$ 5,000 6.135%, 4/3/95............... $ 4,999,508
3,000 6.135%, 4/24/95.............. 2,999,721
Money Market Auto Loan
Trust 1990-1
7,000 6.275%, 4/17/95.............. 7,000,000
Money Market Credit Card
Trust 1989-1
1,773 6.22%, 4/10/95............... 1,772,729
Morgan Stanley Group, Inc.
3,000 6.375%, 4/17/95.............. 3,000,000
5,000 6.3763%, 4/19/95............. 5,000,000
2,000 6.4375%, 5/15/95............. 2,000,000
PNC Bank, NA
8,000 5.92%, 4/3/95................ 7,999,689
------------
126,764,389
------------
MEDIUM-TERM OBLIGATIONS--3.0%
Ford Motor Credit Corp.
2,000 6.125%, 12/11/95............. 1,991,902
General Electric Capital
Corp.
4,000 6.95%, 3/1/96................ 4,011,088
General Motors Acceptance
Corp.
3,150 6.85%, 5/12/95............... 3,153,733
2,000 6.50%, 5/23/95............... 1,998,773
Westdeutsche Landesbank Girozentrale
3,000 6.85%, 3/1/96................ 3,004,266
------------
14,159,762
------------
YANKEE EURO-TIME DEPOSITS--6.4%
Dai-Ichi Kangyo Bank, Ltd.
23,500 6.4375%, 4/3/95.............. 23,500,000
Mitsubishi Bank, Ltd.
7,000 6.1875%, 4/14/95............. 7,000,000
------------
30,500,000
------------
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
<TABLE>
<CAPTION>
Value
Description (Note 1)
<C> <S> <C>
Total Investments--104.5%
(amortized cost
$497,454,169*)............. $497,454,169
Liabilities in excess of
other
assets--(4.5%)............. (21,225,662)
------------
Net Assets--100%............. $476,228,507
------------
------------
</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 earliest of the next date on which the
security can be redeemed at par or the next date on which the rate of
interest is adjusted.
The industry classification of portfolio holdings and net liabilities shown as
a
percentage of net assets as of March 31, 1995 was as follows:
<TABLE>
<S> <C>
Commercial Banks......................... 39.6%
Personal Credit Institutions............. 18.5
Securities Brokers & Dealers............. 14.5
Asset Backed............................. 7.4
Business Credit (Finance)................ 6.7
Financial Services....................... 5.2
Domestic Bank Holding Companies.......... 3.8
Mortgage Banks........................... 2.5
Telephone & Communications............... 1.3
Pharmaceutical........................... 1.2
Household Appliances..................... 1.1
Equipment Rental & Leasing............... .6
Electrical............................... .4
Petroleum Refining....................... .4
Refuse/Sanitary Systems.................. .4
Variety Stores........................... .4
Paper & Allied Products.................. .3
Regulatory Controls...................... .2
Liabilities in excess of other assets.... (4.5)
-----
100.0%
-----
-----
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
March 31,
Assets
1995
------------
<S>
<C>
Investments, at
value.....................................................................
$497,454,169
Cash.........................................................................
............. 185,748
Interest
receivable...................................................................
.... 1,577,762
Other
assets.......................................................................
....... 19,172
------------
Total
assets.......................................................................
..... 499,236,851
------------
Liabilities
Payable for investments
purchased.........................................................
20,222,097
Dividends
payable.........................................................................
2,469,000
Accrued expenses and other
liabilities.................................................... 202,872
Management fee
payable....................................................................
86,568
Distribution fee
payable..................................................................
27,807
------------
Total
liabilities..................................................................
..... 23,008,344
------------
Net
Assets.......................................................................
......... $476,228,507
------------
------------
Net assets were comprised of:
Common stock, at
par.................................................................... $
476,229
Paid-in capital in excess of
par........................................................ 475,752,278
------------
Net assets at March 31,
1995..............................................................
$476,228,507
------------
------------
Net asset value, offering and redemption price per share
($476,228,507 / 476,228,507 shares of $.001 par value common stock issued and
outstanding).................................................................
........... $1.00
------------
------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Statement of Operations
<TABLE>
<CAPTION>
Year Ended
March 31,
Net Investment Income 1995
-----------
<S> <C>
Income
Interest and discount earned........ $20,672,654
-----------
Expenses
Management fee...................... 805,357
Distribution fee.................... 483,214
Transfer agent's fees and
expenses.......................... 250,000
Custodian's fees and expenses....... 165,000
Registration fees................... 40,000
Directors' fees..................... 40,000
Reports to shareholders............. 31,000
Audit fees.......................... 27,000
Legal fees.......................... 13,000
Insurance expense................... 13,000
Miscellaneous....................... 4,671
-----------
Total expenses.................... 1,872,242
-----------
Net investment income................. 18,800,412
Realized Gain on Investments
Net realized gain on investment
transactions........................ 16,348
-----------
Net Increase in Net Assets Resulting
from Operations....................... $18,816,760
-----------
-----------
</TABLE>
PRUDENTIAL INSTITUTIONAL
LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended March 31,
in Net Assets 1995 1994
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income.............. $ 18,800,412 $ 12,776,570
Net realized gain on
investment
transactions...... 16,348 76,316
--------------- ---------------
Net increase in net
assets resulting
from operations... 18,816,760 12,852,886
--------------- ---------------
Dividends and
distributions to
shareholders........ (18,816,760) (12,852,886)
--------------- ---------------
Fund share
transactions
Net proceeds from
shares
subscribed........ 1,920,194,727 2,092,856,313
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions..... 16,326,258 12,113,835
Cost of shares
reacquired........ (1,845,315,406) (2,217,160,989)
--------------- ---------------
Net increase
(decrease) in net
assets from Fund
share
transactions...... 91,205,579 (112,190,841)
--------------- ---------------
Total increase
(decrease).......... 91,205,579 (112,190,841)
Net Assets
Beginning of year..... 385,022,928 497,213,769
--------------- ---------------
End of year........... $ 476,228,507 $ 385,022,928
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-9-
<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 Ser-
Transactions vices, Inc. (``PMFS''), a
with Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's
transfer agent. During the year ended March 31, 1995, the Fund incurred fees of
$240,000 for the services of PMFS. As of March 31, 1995, $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.
-10-
<PAGE>
<PAGE>
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
INSTITUTIONAL MONEY MARKET SERIES
Financial Highlights
<TABLE>
<CAPTION>
Year Ended March 31,
- --------------------------------------------------------
PER SHARE OPERATING PERFORMANCE: 1995 1994
1993 1992 1991
--------
- -------- -------- -------- --------
<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............... .046
.029 .033 .054 .076
Dividends and distributions to shareholders................ (.046)
(.029) (.033) (.054) (.076)
--------
- -------- -------- -------- --------
Net asset value, end of year............................... $ 1.000 $
1.000 $ 1.000 $ 1.000 $ 1.000
--------
- -------- -------- -------- --------
--------
- -------- -------- -------- --------
TOTAL RETURN#:............................................. 4.69%
2.92% 3.40% 5.57% 8.00%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000).............................. $476,229
$385,023 $497,214 $443,172 $519,802
Average net assets (000)................................... $402,678
$445,867 $543,694 $540,380 $479,849
Ratios to average net assets:
Expenses, including distribution fee..................... .46%
.48% .44% .42% .46%
Expenses, excluding distribution fee..................... .34%
.36% .32% .30% .34%
Net investment income.................................... 4.67%
2.87% 3.28% 5.32% 7.58%
</TABLE>
- ---------------
# Total return is calculated assuming a purchase of shares on the first day and
a sale on the last day of each year reported and includes reinvestment of
dividends and distributions.
See Notes to Financial Statements.
-11-
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors
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, 1995, 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, 1995 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, 1995, 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 LLP
New York, New York
May 11, 1995
-12-
<PAGE>
<PAGE>
ADDITIONAL INFORMATION
Shortly after the close of the calendar year ending December 31, 1995, you
will be advised as to the federal tax status of the dividends you received
during the calendar year 1995.
For more detailed information regarding your state and local taxes, you
should contact your tax adviser or the state/local taxing authorities.
-13-
<PAGE>
