As filed with the Securities and Exchange Commission on May 30, 1996
Securities Act Registration Statement No. 33-17224
Investment Company Act Registration No. 811-5336
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. |_|
POST-EFFECTIVE AMENDMENT NO. 16 |X|
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 17 |X|
(Check appropriate box or boxes)
----------
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
(Exact name of registrant as specified in charter)
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
(Address of Principal Executive Offices) (Zip Code)
----------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 214-1250
S. JANE ROSE, ESQ.
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
(NAME AND ADDRESS OF AGENT FOR SERVICE OF PROCESS)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE
DATE OF THE REGISTRATION STATEMENT.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE
(CHECK APPROPRIATE BOX):
|_| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|X| on August 16, 1996 pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new
effective date for a previously filed post-effective
amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously registered an indefinite number of shares of Common Stock, par value
$.001 per share. The Registrant filed a notice under such Rule for its fiscal
year ended March 31, 1996 on or about May 24, 1996.
================================================================================
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
(AS REQUIRED BY RULE 495)
N-1A Item No. Location
- ------------- --------
PART A
<S> <C>
Item 1. Cover Page ..................................................... Cover Page
Item 2. Synopsis ....................................................... Fund Expenses; Fund Highlights
Item 3. Condensed Financial Information ................................ Fund Expenses; Calculation of Yield
Item 4. General Description of Registrant .............................. Cover Page; How the Fund Invests;
General Information
Item 5. Management of the Fund ......................................... How the Fund Is Managed; General
Information
Item 6. Capital Stock and Other Securities ............................. Taxes, Dividends and Distributions;
General Information
Item 7. Purchase of Securities Being Offered ........................... Shareholder Guide; How the Fund
Values Its Shares
Item 8. Redemption or Repurchase ....................................... Shareholder Guide; General
Information
Item 9. Pending Legal Proceedings ...................................... Not Applicable
PART B
Item 10. Cover Page ..................................................... Cover Page
Item 11. Table of Contents .............................................. Table of Contents
Item 12. General Information and History ................................ General Information
Item 13. Investment Objectives and Policies ............................. Investment Objective and Policies;
Investment Restrictions
Item 14. Management of the Fund ......................................... Directors and Officers; Manager;
Distributor
Item 15. Control Persons and Principal Holders of Securities ............ Directors and Officers
Item 16. Investment Advisory and Other Services ......................... Manager; Distributor; Custodian,
Transfer and Shareholder Servicing
Agent and Independent Accountants
Item 17. Brokerage Allocation and Other Practices ....................... Portfolio Transactions
Item 18. Capital Stock and Other Securities ............................. Not Applicable
Item 19. Purchase, Redemption and Pricing of Securities Being Offered ... Net Asset Value; Purchase of Shares
Item 20. Tax Status ..................................................... Taxes
Item 21. Underwriters ................................................... Distributor
Item 22. Calculation of Performance Data ................................ Calculation of Yield
Item 23. Financial Statements ........................................... Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Post-Effective Amendment to the
Registration Statement.
<PAGE>
The Prospectus of the Institutional Money Market Series of Prudential
Institutional Liquidity Portfolio, Inc. dated May 30, 1996, and the Statement of
Additional Information of Prudential Institutional Liquidity Portfolio, Inc.
dated May 30, 1996 are incorporated by reference in their entirety from
Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A of
Prudential Institutional Liquidity Portfolio, Inc. (File No. 33-17224) filed on
May 28, 1996.
This Registration Statement is not intended to amend the Prospectus dated
May 30, 1996 of the Institutional Money Market Series of Prudential
Institutional Liquidity Portfolio, Inc., nor the Statement of Additional
Information dated May 30, 1996 of Prudential Institutional Liquidity Portfolio,
Inc., each of which shall remain in full force and effect.
<PAGE>
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
Liquid Assets Series
- --------------------------------------------------------------------------------
Prospectus dated , 1996
- --------------------------------------------------------------------------------
The Liquid Assets Series (the Series) is one of two series of Prudential
Institutional Liquidity Portfolio, Inc. (the Fund), an open-end, diversified,
management investment company, or mutual fund. The Series offers investors an
efficient and economical means of investing in a professionally managed
portfolio of high quality money market instruments. The investment objective of
the Series is high current income consistent with the preservation of principal
and liquidity. There can be no assurance that the Series' investment objective
will be achieved. See "How the Fund Invests--Investment Objective and Policies."
Shares of the Series are offered only to investment advisory clients of
Prudential Securities Incorporated (Prudential Securities) (a) which participate
in certain managed account programs sponsored by Prudential Securities and (b)
which are "Eligible Benefit Plans" as defined below. "Eligible Benefit Plans"
include (i) employee benefit plans as defined in Section 3(3) of the Employee
Retirement Income Security Act (ERISA) other than governmental plans as defined
in Section 3(32) of ERISA and church plans as defined in Section 3(33) of ERISA,
(ii) pension, profit-sharing or other employee benefit plans qualified under
Section 401 of the Internal Revenue Code, (iii) deferred compensation and
annuity plans under Section 457 or 403(b)(7) of the Internal Revenue Code, and
(iv) Individual Retirement Accounts (IRAs) as defined in Section 408(a) of the
Internal Revenue Code.
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. See "How the Fund Values
its Shares."
The Fund's address is One Seaport Plaza, New York, New York 10292, and its
telephone number is (800) 521-7466.
This Prospectus sets forth concisely the information about the Fund and the
Series that a prospective investor ought to know before investing. Additional
information about the Fund and the Series has been filed with the Securities and
Exchange Commission in a Statement of Additional Information, dated May 30, 1996
and restated on ____________, 1996, which information is incorporated herein by
reference (is legally considered a part of this Prospectus) and is available
without charge at the address or telephone number noted above.
- ------------------------------------------------------------------------
Investors are advised to read this Prospectus and retain it for future
reference.
- ------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FUND HIGHLIGHTS
The following summary is intended to highlight certain information
contained in this Prospectus and is qualified in its entirety by the more
detailed information appearing elsewhere herein.
WHAT IS PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.?
Prudential Institutional Liquidity Portfolio, Inc. is a mutual fund whose
shares are offered in two series, each of which operates as a separate fund. A
mutual fund pools the resources of investors by selling its shares to the public
and investing the proceeds of such sale in a portfolio of securities designed to
achieve its investment objective. Technically, the Fund is an open-end,
diversified, management investment company. Only shares of the Liquid Assets
Series are offered through this Prospectus.
WHAT IS THE SERIES' INVESTMENT OBJECTIVE?
The Series' investment objective is high current income consistent with
the preservation of principal and liquidity. The Series invests primarily in a
portfolio of U.S. Government obligations, financial institution obligations and
other high quality money market instruments maturing in thirteen months or less.
There can be no assurance that the Series' investment objective will be
achieved. See "How the Fund Invests--Investment Objective and Policies" at page
5.
RISK FACTORS AND SPECIAL CHARACTERISTICS
It is anticipated that the net asset value (NAV) of the Series will remain
constant at $1.00 per share, although this cannot be assured. In order to
maintain such constant net asset value, the Series will value its portfolio
securities at amortized cost. While this method provides certainty in valuation,
it may result in periods during which the value of a security in the Series'
portfolio, as determined by amortized cost, is higher or lower than the price
the Series would receive if it sold such security. See "How the Fund Values its
Shares" at page 12.
The Series may invest in foreign securities without limit. Investing in
securities of foreign companies and countries involves certain considerations
and risks not typically associated with investing in securities of domestic
companies. See "How the Fund Invests--Investment Objective and Policies--Risks
of Investing in Foreign Securities" at page 7.
WHO MANAGES THE FUND?
Prudential Mutual Fund Management, Inc. (PMF or the Manager) is the Manager
of the Series. Although PMF does not charge a management fee for investment
advisory services provided to the Series, PMF is reimbursed by the Series for
certain administrative costs and expenses it incurs in providing services to the
Series. As of ____________, 1996, PMF served as manager or administrator to 60
investment companies, including 37 mutual funds, with aggregate assets of
approximately $52 billion. The Prudential Investment Corporation (PIC or the
Subadviser) furnishes investment advisory services in connection with the
management of the Series under a Subadvisory Agreement with PMF. See "How the
Fund is Managed--Manager" at page 9.
2
<PAGE>
WHO DISTRIBUTES THE SERIES' SHARES?
Prudential Securities Incorporated (Prudential Securities, PSI or the
Distributor) acts as the Distributor of the Series' shares pursuant to a
distribution agreement with the Fund and serves without compensation from the
Series. See "How the Fund is Managed--Distributor" at page 10.
WHAT IS THE MINIMUM INVESTMENT?
There are no minimum investment requirements. See "Shareholder Guide--How
to Buy Shares of the Fund" at page 14 and "Shareholder Guide--Shareholder
Services" at page 16.
HOW DO I PURCHASE SHARES?
Shares of the Series are offered only to investment advisory clients of
Prudential Securities (a) which participate in certain managed account programs
sponsored by Prudential Securities and (b) which are "Eligible Benefit Plans" as
defined below. "Eligible Benefit Plans" include (i) employee benefit plans as
defined in Section 3(3) of the Employee Retirement Income Security Act (ERISA)
other than governmental plans as defined in Section 3(32) of ERISA and church
plans as defined in Section 3(33) of ERISA, (ii) pension, profit-sharing or
other employee benefit plans qualified under Section 401 of the Internal Revenue
Code of 1986, as amended (Internal Revenue Code), (iii) deferred compensation
and annuity plans under Section 457 or 403(b)(7) of the Internal Revenue Code,
and (iv) Individual Retirement Accounts (IRAs) as defined in Section 408(a) of
the Internal Revenue Code. Prudential Securities will purchase shares on behalf
of these clients each business day pursuant to automatic purchase procedures.
See "Shareholder Guide--How to Buy Shares of the Fund" at page 14.
HOW DO I SELL MY SHARES?
Prudential Securities will redeem shares on behalf of participating
clients each business day at the current net asset value pursuant to automatic
redemption procedures. See "Shareholder Guide--How to Sell Your Shares" at page
15.
HOW ARE DIVIDENDS AND DISTRIBUTIONS PAID?
The Series expects to declare daily and pay monthly dividends of net
investment income and short-term capital gains, if any. Dividends and
distributions will be automatically reinvested in additional shares of the
Series at net asset value unless Prudential Securities has requested on your
behalf that they be paid to you in cash. See "Taxes, Dividends and
Distributions" at page 12.
3
<PAGE>
FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases.......................... None
Maximum Sales Load Imposed on Reinvested Dividends............... None
Deferred Sales Load.............................................. None
Redemption Fees.................................................. None
Exchange Fees.................................................... None
ANNUAL SERIES OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees.................................................. None*
12b-1 Fees....................................................... None
Other Expenses................................................... .26%*
-----
Total Series Operating Expenses.................................. .26%
=====
EXAMPLE
1 YEAR 3 YEARS
------ -------
You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2)
redemption at the end of each time period: ................ $3 $8
- ----------
The above example is based on expenses expected to have been incurred if the
Series had been in existence for the fiscal year ended March 31, 1996. The
example should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown.
The purpose of the table is to assist an investor in understanding the various
costs and expenses that an investor in the Series will bear, whether directly or
indirectly. For more complete descriptions of the various costs and expenses,
see "How the Fund is Managed." "Other Expenses" includes operating expenses of
the Series, such as Directors' and professional fees, registration fees, reports
to shareholders, transfer agency and custodian fees and certain administrative
costs.
* Shares of the Series are offered only to investment advisory clients of
Prudential Securities (a) which participate in a managed account program
sponsored by Prudential Securities and (b) which are "Eligible Benefit
Plans" as defined herein. See "Shareholder Guide--How to Buy Shares of the
Fund." Participants in these programs are charged a managed account program
fee based on a percentage of assets under management. The Series is not
charged a separate investment management fee. The Series pays an
administrative fee to the Manager at an annual rate of .04 of 1% of the
Series' average net assets and a transfer agency fee to an affiliate of the
Manager. These fees are included in "Other Expenses" above. See "How the
Fund is Managed--Manager" and "--Custodian and Transfer and Shareholder
Servicing Agent."
4
<PAGE>
CALCULATION OF YIELD
THE SERIES CALCULATES ITS "CURRENT YIELD" based on the net change,
exclusive of realized and unrealized capital gains or losses, in the value of a
hypothetical account over a seven calendar day base period. THE SERIES WILL ALSO
CALCULATE ITS "EFFECTIVE ANNUAL YIELD" assuming weekly compounding.
THE YIELD WILL FLUCTUATE FROM TIME TO TIME AND DOES NOT INDICATE FUTURE
PERFORMANCE.
Yield is computed in accordance with a standardized formula described in
the Statement of Additional Information. In addition, comparative performance
information may be used from time to time in advertising or marketing the shares
of the Series, including data from Lipper Analytical Services, Inc., Morningstar
Publications, Inc., IBC/Donoghue's Money Fund Report, The Bank Rate Monitor,
other industry publications, business periodicals and market indices.
HOW THE FUND INVESTS
INVESTMENT OBJECTIVE AND POLICIES
THE INVESTMENT OBJECTIVE OF THE SERIES IS HIGH CURRENT INCOME CONSISTENT
WITH THE PRESERVATION OF PRINCIPAL AND LIQUIDITY. THE SERIES PURSUES ITS
INVESTMENT OBJECTIVE THROUGH THE INVESTMENT POLICIES DESCRIBED BELOW. THERE CAN
BE NO ASSURANCE THAT THIS OBJECTIVE WILL BE ACHIEVED.
THE SERIES' INVESTMENT OBJECTIVE IS A FUNDAMENTAL POLICY AND, THEREFORE,
MAY NOT BE CHANGED WITHOUT THE APPROVAL OF THE HOLDERS OF A MAJORITY OF THE
SERIES' OUTSTANDING VOTING SECURITIES, AS DEFINED IN THE INVESTMENT COMPANY ACT
OF 1940, AS AMENDED (THE INVESTMENT COMPANY ACT). THE SERIES' POLICIES THAT ARE
NOT FUNDAMENTAL MAY BE MODIFIED BY THE BOARD OF DIRECTORS.
THE ASSETS OF THE SERIES WILL BE INVESTED IN HIGH QUALITY MONEY MARKET
INSTRUMENTS MATURING IN THIRTEEN MONTHS OR LESS, AND THE DOLLAR-WEIGHTED AVERAGE
MATURITY OF THE PORTFOLIO OF THE SERIES WILL BE 90 DAYS OR LESS. The Series also
may hold cash reserves as the investment adviser deems necessary for temporary
defensive purposes.
In selecting portfolio securities for investment by the Series, the
investment adviser considers ratings assigned by major rating services,
information concerning the financial history and condition of the issuer and its
revenue and expense prospects. The Board of Directors monitors the credit
quality of securities purchased for the Series' portfolio. If a portfolio
security held by the Series is assigned a lower rating or ceases to be rated,
the investment adviser under the supervision of the Board of Directors will
promptly reassess whether that security presents minimal credit risks and
whether the Series should continue to hold the security in its portfolio. If a
portfolio security no longer presents minimal credit risks or is in default, the
Series will dispose of the security as soon as reasonably practicable unless the
Board of Directors determines that to do so is not in the best interest of the
Series and its shareholders.
The Series utilizes the amortized cost method of valuation in accordance
with regulations of the Securities and Exchange Commission (SEC). See "How the
Fund Values its Shares." Accordingly, the Series will limit its portfolio
investments to those instruments which present minimal credit risks and which
are of "eligible quality," as determined by the Fund's investment adviser under
the supervision of the Board of Directors. "Eligible quality," for this purpose,
means (i) a security rated in one of the two highest rating categories by at
least two nationally recognized statistical rating organizations assigning a
rating to the security or issuer (or, if only one such rating organization
assigned a rating, that rating organization) or (ii) an unrated security deemed
of comparable quality by the Fund's investment adviser under the supervision of
the Board of Directors.
5
<PAGE>
As long as the Series utilizes the amortized cost method of valuation, it
will also comply with certain diversification requirements and will invest no
more than 5% of its total assets in "second-tier securities," with no more than
1% of the Series' assets in any one issuer of a second-tier security. A
"second-tier security," for this purpose, is a security of "eligible quality"
that does not have the highest rating from at least two rating organizations
assigning a rating to that security or issuer (or, if only one rating
organization assigned a rating, that rating organization) or an unrated security
that is deemed of comparable quality by the Fund's investment adviser under the
supervision of the Fund's Board of Directors.
UNDER NORMAL MARKET CONDITIONS, THE SERIES WILL INVEST ITS ASSETS IN HIGH
QUALITY U.S. DOLLAR-DENOMINATED MONEY MARKET OBLIGATIONS OF DOMESTIC AND FOREIGN
ISSUERS, INCLUDING THE U.S. GOVERNMENT AND FINANCIAL INSTITUTIONS AS DESCRIBED
BELOW. There is no limitation on the percentage of the Series' assets that may
be invested in each of these categories. In addition, the Series may utilize the
investment techniques described below under "Other Investments and Policies."
U.S. GOVERNMENT OBLIGATIONS. The Series may invest in obligations issued
or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities.
U.S. TREASURY OBLIGATIONS. The Series may invest in U.S. Treasury
obligations, including bills, notes, bonds and other debt obligations issued by
the U.S. Treasury. These instruments are direct obligations of the U.S.
Government and, as such, are backed by the "full faith and credit" of the United
States. They differ primarily in their interest rates, the lengths of their
maturities and the dates of their issuances.
OBLIGATIONS ISSUED OR GUARANTEED BY U.S. GOVERNMENT AGENCIES AND
INSTRUMENTALITIES. The Series may also invest in obligations issued by agencies
of the U.S. Government or instrumentalities established or sponsored by the U.S.
Government. These obligations, including those which are guaranteed by federal
agencies or instrumentalities, may or may not be backed by the full faith and
credit of the United States. Obligations of the Government National Mortgage
Association (GNMA), the Farmers Home Administration and the Small Business
Administration are backed by the full faith and credit of the United States. In
the case of obligations not backed by the full faith and credit of the United
States, the Series must look principally to the agency issuing or guaranteeing
the obligation for ultimate repayment and may not be able to assert a claim
against the United States if the agency or instrumentality does not meet its
commitments. Instruments in which the Series may invest which are not backed by
the full faith and credit of the United States include obligations issued by the
Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation (FHLMC), the
Federal National Mortgage Association (FNMA), the Resolution Funding
Corporation, the Student Loan Marketing Association, and the Tennessee Valley
Authority, each of which has the right to borrow under certain circumstances
from the U.S. Treasury to meet its obligations, and obligations of the Farm
Credit System, the obligations of which may be satisfied only by the individual
credit of the issuing agency. The Series' investment in mortgage-backed
securities (e.g., GNMA, FNMA and FHLMC certificates) will be made only to the
extent such securities are used as collateral for repurchase agreements entered
into by the Series.
FINANCIAL INSTITUTION OBLIGATIONS. The Series may invest in obligations
(including certificates of deposit and bankers' acceptances) of (a) banks
organized under the laws of the United States or any state thereof (including
foreign branches of such banks) or (b) U.S. branches of foreign banks or (c)
foreign banks and foreign branches thereof; provided that such banks have, at
the time of acquisition by the Series of such obligations, total assets of not
less than $1 billion or its equivalent. The term "certificates of deposit"
includes both Eurodollar certificates of deposit, for which there is generally a
market, and Eurodollar time deposits, for which there is generally not a market.
Eurodollars are U.S. dollars deposited in branches of banks outside the United
States.
OTHER MONEY MARKET INSTRUMENTS. The Series may invest in commercial paper,
variable amount demand master notes, bills, notes and other obligations issued
by a U.S. company, a foreign company or a foreign government, its
6
<PAGE>
agencies or instrumentalities, maturing in thirteen months or less, denominated
in U.S. dollars, which, at the date of investment, are of "eligible quality." If
such obligations are guaranteed or supported by a letter of credit issued by a
bank, such bank (including a foreign bank) must meet the requirements set forth
above under "Financial Institution Obligations." If such obligations are
guaranteed or insured by an insurance company or other non-bank entity, such
insurance company or other non-bank entity must represent a credit of comparable
quality, as determined by the Fund's investment adviser under the supervision of
the Fund's Board of Directors. In the case of instruments issued by foreign
companies or a foreign government, the Series will only invest in instruments
which are not currently subject to foreign withholding taxes.
RISKS OF INVESTING IN FOREIGN SECURITIES
There is no limitation on the percentage of the Series' assets that may be
invested in foreign securities (which do not include obligations of foreign
branches of U.S. banks). Since the portfolio of the Series may contain
obligations of foreign issuers, an investment in the Series involves certain
risks. These risks include future political and economic developments in the
country of the issuer, the possible imposition of withholding taxes on interest
income payable on such obligations held by the Series, the possible seizure or
nationalization of foreign deposits and the possible establishment of exchange
controls or other foreign governmental laws or restrictions which might affect
adversely the payment of principal and interest on such obligations held by the
Series. In addition, there may be less publicly available information about a
foreign issuer than about a domestic issuer, and such issuers may not be subject
to the same accounting, auditing and financial recordkeeping standards and
requirements as domestic issuers. Securities issued by foreign issuers may be
subject to greater fluctuations in price than securities issued by U.S.
entities. Finally, in the event of a default with respect to any such foreign
debt obligations, it may be more difficult for the Fund to obtain or to enforce
a judgment against the issuers of such securities.
OTHER INVESTMENTS AND POLICIES
LIQUIDITY PUTS
The Series may purchase instruments of the types described above together
with the right to resell the instruments to brokers, dealers or financial
institutions at an agreed-upon price or yield within a specified period prior to
the maturity date of the instruments. Such a right to resell is commonly known
as a "put," and the aggregate price that the Series pays for instruments with a
put may be higher than the price that otherwise would be paid for the
instruments. Puts may be exercised prior to the expiration date in order to fund
obligations to purchase other securities or meet redemption requests.
Since the value of the put is dependent on the ability of the put writer
to meet its obligation to repurchase, the Series' policy is to enter into put
transactions only with such brokers, dealers or financial institutions which
present minimal credit risks. There is a credit risk associated with the
purchase of puts in that the broker, dealer or financial institution might
default on its obligation to repurchase an underlying security. Changes in the
credit quality of these institutions could cause losses to the Series and affect
its share price. In the event such a default should occur, the Fund is unable to
predict whether all or any portion of any loss sustained could subsequently be
recovered from the broker, dealer or financial institution.
FLOATING RATE AND VARIABLE RATE SECURITIES
The Series may purchase "floating rate" and "variable rate" obligations.
The interest rates on such obligations fluctuate generally with changes in
market interest rates, and in some cases, the Series is able to demand repayment
of the principal amount of such obligations at par plus accrued interest. For
additional information concerning variable rate and floating rate obligations,
see "Investment Objective and Policies" in the Statement of Additional
Information.
7
<PAGE>
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
The Series may purchase securities on a "when-issued" or delayed delivery
basis. When-issued or delayed delivery transactions arise when securities are
purchased by the Series with payment and delivery taking place as much as a
month or more into the future in order to secure what is considered to be an
advantageous price and yield to the Series at the time of entering into the
transaction. The Series will limit such purchases to those in which the date for
delivery and payment falls within 90 days of the date of the commitment. The
Series will make commitments for such when-issued transactions only with the
intention of actually acquiring the securities. The Fund's Custodian will
maintain, in a segregated account of the Series, cash, U.S. Government
securities or other high grade, liquid debt obligations having a value equal to
or greater than the Series' purchase commitments. If the Series chooses to
dispose of the right to acquire a when-issued security prior to its acquisition,
it could, as with the disposition of any other portfolio security, incur a gain
or loss due to market fluctuations. The securities so purchased are subject to
market fluctuation and no interest accrues to the purchaser during the period
between purchase and settlement.
PLEDGING OF ASSETS AND BORROWING
The Series may borrow (including through entering into reverse repurchase
agreements) up to 15% of the value of its total assets (computed at the time the
loan is made) from banks for temporary, extraordinary or emergency purposes. The
Series may pledge up to 15% of its total assets to secure such borrowings. The
Series will not purchase portfolio securities if its borrowings exceed 5% of its
net assets.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
The Series may purchase securities and concurrently enter into "repurchase
agreements" with the seller, whereby the seller agrees to repurchase such
securities at a specified price within a specified time (generally seven days or
less). Repurchase agreements will only be entered into with member banks of the
Federal Reserve System or primary reporting dealers in U.S. Government
obligations and will be fully secured only by obligations permitted by the
Series' investment policies. The repurchase agreements provide that the Series
will sell the underlying instruments back to the dealer or the bank at the
specified price and at a fixed time in the future, usually not more than seven
days from the date of purchase. The difference between the purchase price and
the resale price represents the interest earned by the Series, which is
unrelated to the coupon rate or maturity of the purchased security. Repurchase
agreements will at all times be fully collateralized in an amount at least equal
to the resale price. Such collateral will be held by the Fund's Custodian,
either physically or in a book-entry account.
The Series participates in a joint repurchase account with other
investment companies managed by Prudential Mutual Fund Management, Inc. pursuant
to an order of the SEC. See "Investment Objective and Policies--Liquid Assets
Series--Repurchase Agreements" in the Statement of Additional Information.
The Series will enter into repurchase transactions only with parties which
meet creditworthiness standards approved by the Fund's Board of Directors. The
Fund's investment adviser monitors the creditworthiness of such parties under
the general supervision of the Board of Directors. In the event of a default or
bankruptcy by a seller, the Series will promptly seek to liquidate the
collateral. To the extent that the proceeds from any sale of such collateral
upon a default in the obligation to repurchase are less than the resale price,
the Series will suffer a loss. If the financial institution that is a party to
the repurchase agreement petitions for bankruptcy or becomes subject to the U.S.
Bankruptcy Code, the law regarding the rights of the Fund is unsettled. As a
result, under these extreme circumstances, there may be a restriction on the
Series' ability to sell the collateral, and the Series could suffer a loss.
Reverse repurchase agreements have the characteristics of borrowing and
involve the sale of securities held by the Series with an agreement to
repurchase the securities at a specified price, date and interest payment. The
Series intends only to use the reverse repurchase technique when it will be to
its advantage to do so. These transactions are only
8
<PAGE>
advantageous if the Series has an opportunity to earn a greater rate of interest
on the cash derived from the transaction than the interest cost of obtaining
that cash. The Series may be unable to realize earnings from the use of the
proceeds equal to or greater than the interest required to be paid. The use of
reverse repurchase agreements may exaggerate any increase or decrease in the
value of the Series' portfolio. The Fund's Custodian will maintain in a
segregated account cash, U.S. Government securities or other high grade, liquid
debt obligations, maturing not later than the expiration of the reverse
repurchase agreements and having a value equal to or greater than such
commitments.
SECURITIES LENDING
The Series may lend its portfolio securities to brokers or dealers, banks
or other recognized institutional borrowers of securities, provided that the
borrower at all times maintains cash collateral in an amount equal to a least
100% of the market value of the securities loaned. During the time the portfolio
securities are on loan, the borrower will pay the Series an amount equivalent to
any interest paid on such securities and the Series may invest the cash
collateral and earn additional income.
ILLIQUID SECURITIES
The Series may hold up to 10% of its net assets in illiquid securities,
including securities with legal or contractual restrictions on resale
(restricted securities), securities that are not readily marketable in
securities markets either within or outside of the United States, privately
placed commercial paper and repurchase agreements which have a maturity of
longer than seven days. Restricted securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933, as amended (the Securities Act), and
privately placed commercial paper that have a readily available market are not
considered illiquid for purposes of this limitation. The Series' investment in
Rule 144A securities could have the effect of increasing illiquidity to the
extent that qualified institutional buyers become, for a limited time,
uninterested in purchasing Rule 144A securities. The Series intends to comply
with any applicable state Blue Sky laws restricting the Series' investments in
illiquid securities. See "Investment Restrictions" in the Statement of
Additional Information. The investment adviser will monitor the liquidity of
such restricted securities under the supervision of the Board of Directors.
Repurchase agreements subject to demand are deemed to have a maturity equal to
the applicable notice period.
INVESTMENT RESTRICTIONS
The Series is subject to certain investment restrictions which, like its
investment objective, constitute fundamental policies. Fundamental policies
cannot be changed without the approval of the holders of a majority of the
Series' outstanding voting securities, as defined in the Investment Company Act.
See "Investment Restrictions" in the Statement of Additional Information.
HOW THE FUND IS MANAGED
THE FUND HAS A BOARD OF DIRECTORS WHICH, IN ADDITION TO OVERSEEING THE
ACTIONS OF THE FUND'S MANAGER, SUBADVISER AND DISTRIBUTOR, AS SET FORTH BELOW,
DECIDES UPON MATTERS OF GENERAL POLICY. THE FUND'S OFFICERS CONDUCT AND
SUPERVISE THE DAILY BUSINESS OPERATIONS OF THE FUND. THE FUND'S SUBADVISER
FURNISHES DAILY INVESTMENT ADVISORY SERVICES.
The Series is responsible for the payment of certain fees and expenses
including, among others, the following:(i) certain administrative costs and
expenses of the Manager; (ii) the fees of unaffiliated Directors; (iii) the fees
of the Fund's Custodian and Transfer and Shareholder Servicing Agent; (iv) the
fees of the Fund's legal counsel and independent accountants; (v) brokerage
commissions, if any, incurred in connection with portfolio transactions; (vi)
all taxes and charges of governmental agencies; and (vii) expenses related to
shareholder communications including all
9
<PAGE>
expenses of shareholders' and Board of Directors' meetings and of preparing,
printing and mailing reports, proxy statements and prospectuses to shareholders.
MANAGER
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. (PMF OR THE MANAGER), ONE SEAPORT
PLAZA, NEW YORK, NEW YORK 10292, IS THE MANAGER OF THE FUND. It was incorporated
in May 1987 under the laws of the State of Delaware. See "Manager" in the
Statement of Additional Information.
As of ______________, 1996, PMF served as the manager to 37 open-end
investment companies, constituting all of the Prudential Mutual Funds, and as
manager or administrator to 22 closed-end investment companies with aggregate
assets of approximately $52 billion.
UNDER THE MANAGEMENT AND ADMINISTRATIVE SERVICES AGREEMENT (THE
ADMINISTRATIVE SERVICES AGREEMENT) WITH THE FUND, PMF MANAGES THE INVESTMENT
OPERATIONS OF THE SERIES AND ALSO ADMINISTERS THE FUND'S CORPORATE AFFAIRS. See
"Manager" in the Statement of Additional Information. PMF does not charge a
management fee for investment advisory services provided to the Series. PMF is
reimbursed by the Series for certain administrative costs and expenses it incurs
in providing services to the Series at an annual rate of up to .04 of 1% of the
average daily net assets of the Series. These administrative costs and expenses
include the following: (i) furnishing office facilities; (ii) paying the
salaries and expenses of the Fund's officers and other personnel engaged in
administering the Fund's business; (iii) monitoring financial and shareholder
accounting services provided by State Street Bank and Trust Company and
Prudential Mutual Fund Services, Inc., respectively; (iv) responding to
shareholder inquiries and disseminating information to shareholders; (v)
monitoring compliance with the Series' registration statements and other
operating documents, with federal and state securities laws and rules thereunder
and with the Internal Revenue Code; (vi) preparing semi-annual and annual
reports to shareholders; (vii) preparing filings required by the SEC; (viii)
preparing federal, state and local tax returns; (ix) maintaining the Series'
registration in each of the 50 states, District of Columbia and Puerto Rico; (x)
preparing information required by the Board of Directors for ongoing review,
approval and action; and (xi) organizing meetings of the Board of Directors and
annual and special meetings of the Series' shareholders. See "Manager" in the
Statement of Additional Information.
UNDER A SUBADVISORY AGREEMENT BETWEEN PMF AND THE PRUDENTIAL INVESTMENT
CORPORATION (PIC OR THE SUBADVISER), PIC FURNISHES INVESTMENT ADVISORY SERVICES
IN CONNECTION WITH THE MANAGEMENT OF THE FUND AND IS REIMBURSED BY PMF FOR ITS
REASONABLE COSTS AND EXPENSES INCURRED IN PROVIDING SUCH SERVICES. Under the
Administrative Services Agreement, PMF continues to have responsibility for all
investment advisory services and supervises PIC's performance of such services.
PMF and PIC are wholly-owned subsidiaries of The Prudential Insurance
Company of America (Prudential), a major diversified insurance and financial
services company.
DISTRIBUTOR
PRUDENTIAL SECURITIES INCORPORATED (PRUDENTIAL SECURITIES, PSI OR THE
DISTRIBUTOR), ONE SEAPORT PLAZA, NEW YORK, NEW YORK 10292, IS A CORPORATION
ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE AND SERVES WITHOUT
COMPENSATION FROM THE SERIES AS THE FUND'S DISTRIBUTOR PURSUANT TO A
DISTRIBUTION AGREEMENT. IT IS AN INDIRECT, WHOLLY-OWNED SUBSIDIARY OF
PRUDENTIAL.
The Manager (or one of its affiliates) may make payments out of its own
resources to dealers and other persons which distribute shares of the Series.
Such payments may be calculated by reference to the net asset value of shares
sold by such persons or otherwise.
On October 21, 1993, PSI entered into an omnibus settlement with the SEC,
state securities regulators (with the exception of the Texas Securities
Commissioner, who joined the settlement on January 18, 1994) and the National
10
<PAGE>
Association of Securities Dealers, Inc. (the NASD) to resolve allegations that
from 1980 through 1990 PSI sold certain limited partnership interests in
violation of securities laws to persons for whom such securities were not
suitable and misrepresented the safety, potential returns and liquidity of these
investments. Without admitting or denying the allegations asserted against it,
PSI consented to the entry of an SEC Administrative Order which stated that
PSI's conduct violated the federal securities laws, directed PSI to cease and
desist from violating the federal securities laws, pay civil penalties, and
adopt certain remedial measures to address the violations.
Pursuant to the terms of the SEC settlement, PSI agreed to the imposition
of a $10,000,000 civil penalty, established a settlement fund in the amount of
$330,000,000 and procedures to resolve legitimate claims for compensatory
damages by purchasers of the partnership interests. PSI has agreed to provide
additional funds, if necessary, for the purpose of the settlement fund. PSI's
settlement with the state securities regulators included an agreement to pay a
penalty of $500,000 per jurisdiction. PSI consented to the payment of a
$5,000,000 fine in settling the NASD action.
In October 1994, a criminal complaint was filed with the United States
Magistrate for the Southern District of New York alleging that PSI committed
fraud in connection with the sale of certain limited partnership interests in
violation of federal securities laws. An agreement was simultaneously filed to
defer prosecution of these charges for a period of three years from the signing
of the agreement, provided that PSI complies with the terms of the agreement.
If, upon completion of the three year period, PSI has complied with the terms of
the agreement, no prosecution will be instituted by the United States for the
offenses charged in the complaint. If on the other hand, during the course of
the three year period, PSI violates the terms of the agreement, the U.S.
Attorney can then elect to pursue these charges. Under the terms of the
agreement, PSI agreed, among other things, to pay an additional $330,000,000
into the fund established by the SEC to pay restitution to investors who
purchased certain PSI limited partnership interests.
For more detailed information concerning the foregoing matters, see
"Distributor" in the Statement of Additional Information, a copy of which may be
obtained at no cost by calling 1-800-225-1852.
The Fund is not affected by PSI's financial condition and is an entirely
separate legal entity separate from PSI, which has no beneficial ownership
therein, and the Fund's assets, which are held by State Street Bank and Trust
Company, an independent custodian, are separate and distinct from PSI.
PORTFOLIO TRANSACTIONS
Prudential Securities may also act as a broker for the Series, provided
that the commissions, fees or other remuneration it receives are fair and
reasonable. See "Portfolio Transactions" in the Statement of Additional
Information.
CUSTODIAN AND TRANSFER AND SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company (State Street), One Heritage Drive,
North Quincy, Massachusetts 02171, serves as Custodian for the Series' portfolio
securities and cash and, in that capacity, maintains certain financial and
accounting books and records pursuant to an agreement with the Fund. Its mailing
address is P.O. Box 1713, Boston, Massachusetts 02105.
Prudential Mutual Fund Services, Inc. (PMFS or the Transfer Agent),
Raritan Plaza One, Edison, New Jersey 08837, serves as Transfer Agent and as
Shareholder Servicing Agent and in those capacities maintains certain books and
records for the Fund. PMFS is a wholly-owned subsidiary of PMF. Its mailing
address is P.O. Box 15005, New Brunswick, New Jersey 08906-5005.
PMFS provides customary transfer agency services to the Series, including
the handling of shareholder communications, the processing of shareholder
transactions, the maintenance of shareholder account records, payment of
dividends and distributions and related functions. For these services, PMFS
receives an annual fee ($9.50)
11
<PAGE>
per shareholder account, a new account set up fee ($2.00) for each
manually-established account and a monthly inactive zero balance account fee
($0.20) per shareholder account plus its out-of-pocket expenses, including but
not limited to postage, stationery, printing, allocable communications and other
costs.
HOW THE FUND VALUES ITS SHARES
THE SERIES' NET ASSET VALUE PER SHARE OR NAV IS DETERMINED BY SUBTRACTING
ITS LIABILITIES FROM THE VALUE OF ITS ASSETS AND DIVIDING THE REMAINDER BY THE
NUMBER OF OUTSTANDING SHARES. THE BOARD OF DIRECTORS HAS FIXED THE SPECIFIC TIME
OF DAY FOR THE COMPUTATION OF THE NAV TO BE AS OF 4:30 P.M., NEW YORK TIME,
IMMEDIATELY AFTER THE DAILY DECLARATION OF DIVIDENDS.
The Series will compute its NAV once daily on the days that the New York
Stock Exchange is open for trading, except on days on which no orders to
purchase, sell or redeem Series shares have been received or days on which
changes in the value of the Series' portfolio securities do not materially
affect the net asset value. The New York Stock Exchange is closed on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Series determines the value of its portfolio securities by the
amortized cost method. This method involves valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Series would receive if it sold the
instrument. During these periods, the yield to an existing shareholder may
differ somewhat from that which could be obtained from a similar fund which
marks its portfolio securities to market each day. For example, during periods
of declining interest rates, if the use of the amortized cost method resulted in
a lower value of the Series' portfolio on a given day, a prospective investor in
the Series would be able to obtain a somewhat higher yield and existing
shareholders would receive correspondingly less income. The converse would apply
during periods of rising interest rates. The Board of Directors has established
procedures designed to stabilize, to the extent reasonably possible, the net
asset value of the shares of the Series at $1.00 per share.
TAXES, DIVIDENDS AND DISTRIBUTIONS
TAXATION OF THE SERIES
THE SERIES INTENDS TO ELECT TO QUALIFY AND TO REMAIN QUALIFIED AS A
REGULATED INVESTMENT COMPANY UNDER THE INTERNAL REVENUE CODE. ACCORDINGLY, THE
SERIES WILL NOT BE SUBJECT TO FEDERAL INCOME TAXES ON ITS NET INVESTMENT INCOME
AND CAPITAL GAINS, IF ANY, THAT IT DISTRIBUTES TO ITS SHAREHOLDERS PROVIDED THAT
IT DISTRIBUTES TO SHAREHOLDERS EACH YEAR AT LEAST 90% OF SUCH INCOME. If the
Series defers until the subsequent calendar year the distribution of more than a
minimal amount of income, it will be subject to a 4% nondeductible excise tax on
the deferred distribution. The Series intends to make timely and complete
distributions in order to avoid any such taxes.
TAXATION OF SHAREHOLDERS
All dividends out of net investment income, together with distributions of
net short-term gains (i.e., the excess of net short-term capital gains over net
long-term capital losses), will be taxable to shareholders as ordinary income
whether or not reinvested. However, the Series intends to declare capital gains
distributions to the extent of its net capital gains
12
<PAGE>
(i.e., the excess of net long-term capital gains over net short-term capital
losses). Capital gains distributions, if any, are taxable to shareholders as net
long-term capital gains, regardless of the length of time a shareholder has
owned his or her shares. The Series does not anticipate realizing long-term
capital gains.
Any gain or loss realized upon a sale or redemption of shares by a
shareholder who is not a dealer in securities will be treated as long-term
capital gain or loss if the shares have been held more than one year and
otherwise as short-term capital gain or loss. Any such loss, however, although
otherwise treated as a short-term capital loss, will be treated as long-term
capital loss to the extent of any capital gain distributions received by the
shareholder, if the shares have been held for six months or less.
Dividends and distributions may be subject to state and local taxes. Some
classes of Eligible Benefit Plans are exempt from federal income tax.
Shareholders are advised to consult their own tax advisers regarding specific
questions as to federal, state or local taxes.
WITHHOLDING TAXES
Under the Internal Revenue Code, the Fund is required to withhold and
remit to the U.S. Treasury 31% of dividends, capital gain income and redemption
proceeds on the accounts of most shareholders who fail to furnish their tax
identification numbers on IRS Form W-9 with the required certifications
regarding the shareholder's status under the federal income tax law.
DIVIDENDS AND DISTRIBUTIONS
THE SERIES WILL DECLARE A DIVIDEND, IMMEDIATELY PRIOR TO 4:30 P.M., NEW
YORK TIME, ON EACH DAY THAT NET ASSET VALUE PER SHARE IS DETERMINED, OF ALL OF
ITS DAILY NET INVESTMENT INCOME TO SHAREHOLDERS OF RECORD AS OF 4:30 P.M., NEW
YORK TIME, ON THE PRECEDING BUSINESS DAY. Net investment income of the Series
consists of interest accrued or discount earned (including both original issue
and market discount) on the obligations held by the Series, less amortization of
premium and the estimated expenses of the Series applicable to that dividend
period. The Series does not expect to realize long-term capital gains or losses.
Distributions of any net realized short-term capital gains will be taxable to
shareholders as ordinary income. The amount of discount or premium on
instruments held by the Series is fixed at the time of their purchase.
The net investment income of the Series for dividend purposes is
determined on a daily basis. Each such dividend will be payable to shareholders
of record at the time of its declaration. The amount of the dividend may
fluctuate from day to day and may be omitted on some days if net realized losses
on portfolio securities exceed the Series' net investment income. Dividends are
accrued and paid daily in additional full or fractional shares of the Series at
the net asset value per share determined on the date of declaration. Each
shareholder will receive periodically a summary of his or her account from
Prudential Securities, including information as to dividends paid.
The Internal Revenue Code imposes a 4% nondeductible excise tax to the
extent the Series does not meet certain minimum distribution requirements by the
end of each calendar year. The Series intends to make timely distributions in
order to avoid this excise tax. For this purpose, dividends declared in October,
November and December payable to shareholders of record on a specified date in
October, November and December and paid in the following January will be treated
as having been received by shareholders on December 31 of the calendar year in
which declared. Under this rule, therefore, a shareholder may be taxed in the
prior year on dividends or distributions actually received in January of the
following year.
Should the Series incur or anticipate any unusual expense or loss or
depreciation which would adversely affect its net asset value per share or
income for a particular period, the Board of Directors would at that time
consider whether to adhere to the present dividend policy described above or to
revise it in light of the then prevailing circumstances. For example, if the net
asset value per share of the Series is reduced, or is anticipated to be reduced,
below $1.00, the Board
13
<PAGE>
of Directors may suspend further dividend payments of the Series until net asset
value is returned to $1.00 per share. Thus, such expenses or losses or
depreciation could result in shareholders receiving no dividends for the period
during which they held their shares and in their receiving upon redemption a
price per share lower than that which they paid.
GENERAL INFORMATION
DESCRIPTION OF COMMON STOCK
THE FUND WAS INCORPORATED IN MARYLAND ON SEPTEMBER 1, 1987. THE FUND IS
AUTHORIZED TO ISSUE 5 BILLION SHARES OF COMMON STOCK OF $.001 PAR VALUE WHICH
ARE CURRENTLY DIVIDED INTO TWO PORTFOLIOS OR SERIES, EACH OF WHICH CONSISTS OF
2.5 BILLION AUTHORIZED SHARES.
The Board of Directors may increase or decrease the aggregate number of
shares of common stock that the Fund has authority to issue. The Fund does not
intend to issue stock certificates unless requested. Shares of the Fund, when
issued, are fully paid, nonassessable, fully transferable and redeemable at the
option of the holder. Shares are also redeemable at the option of Prudential
Securities under certain circumstances as described under "Shareholder Guide--
How to Sell Your Shares." All shares of the Series are equal as to earnings,
assets and voting privileges. There are no conversion, preemptive or other
subscription rights. In the event of liquidation, each share of common stock of
the Series is entitled to its portion of all of the Series' assets after all
debts and expenses of the Series have been paid. The Series' shares do not have
cumulative voting rights for the election of Directors. Pursuant to the Fund's
Articles of Incorporation, the Board of Directors may authorize the creation of
additional series, with such preferences, privileges, limitations and voting and
dividend rights as the Board may determine.
THE FUND DOES NOT INTEND TO HOLD ANNUAL SHAREHOLDER MEETINGS UNLESS
REQUIRED BY LAW. THE FUND WILL NOT BE REQUIRED TO HOLD ANNUAL MEETINGS OF
SHAREHOLDERS UNLESS, FOR EXAMPLE, THE ELECTION OF DIRECTORS IS REQUIRED TO BE
ACTED ON BY SHAREHOLDERS UNDER THE INVESTMENT COMPANY ACT. SHAREHOLDERS HAVE
CERTAIN RIGHTS, INCLUDING THE RIGHT TO CALL A MEETING UPON A VOTE OF 10% OF THE
FUND'S OUTSTANDING SHARES FOR THE PURPOSE OF VOTING ON THE REMOVAL OF ONE OR
MORE DIRECTORS OR TO TRANSACT ANY OTHER BUSINESS.
ADDITIONAL INFORMATION
This Prospectus, including the Statement of Additional Information which
has been incorporated by reference herein, does not contain all the information
set forth in the Registration Statement filed by the Fund with the SEC under the
Securities Act of 1933. Copies of the Registration Statement may be obtained at
a reasonable charge from the SEC or may be examined, without charge, at the
office of the SEC in Washington, D.C.
SHAREHOLDER GUIDE
HOW TO BUY SHARES OF THE FUND
SHARES OF THE SERIES ARE OFFERED ONLY TO INVESTMENT ADVISORY CLIENTS OF
PRUDENTIAL SECURITIES (a) WHICH PARTICIPATE IN CERTAIN MANAGED ACCOUNT PROGRAMS
SPONSORED BY PRUDENTIAL SECURITIES AND (b) WHICH ARE "ELIGIBLE BENEFIT PLANS" AS
DEFINED BELOW. "ELIGIBLE BENEFIT PLANS" INCLUDE (i) EMPLOYEE BENEFIT PLANS AS
DEFINED IN SECTION 3(3) OF ERISA OTHER THAN GOVERNMENTAL PLANS AS DEFINED IN
SECTION 3(32) OF ERISA AND CHURCH PLANS AS DEFINED IN SECTION 3(33) OF ERISA,
(ii) PENSION, PROFIT-SHARING OR OTHER EMPLOYEE BENEFIT PLANS QUALIFIED UNDER
SECTION 401 OF THE
14
<PAGE>
INTERNAL REVENUE CODE, (iii) DEFERRED COMPENSATION AND ANNUITY PLANS UNDER
SECTION 457 OR 403(b)(7) OF THE INTERNAL REVENUE CODE, AND (iv) INDIVIDUAL
RETIREMENT ACCOUNTS (IRAS) AS DEFINED IN SECTION 408(a) OF THE INTERNAL REVENUE
CODE. SEE "PURCHASE OF SHARES" IN THE STATEMENT OF ADDITIONAL INFORMATION FOR A
LIST OF THE MANAGED ACCOUNT PROGRAMS SPONSORED BY PRUDENTIAL SECURITIES IN WHICH
SHARES OF THE SERIES ARE OFFERED.
Prudential Securities will purchase shares of the Series on behalf of
participating clients each business day at current net asset value pursuant to
the automatic purchase procedures described below. There is no sales charge.
There are no minimum investment requirements. The Fund does not intend to issue
stock certificates unless requested. The Series reserves the right to reject any
purchase order or to suspend or modify the continuous offering of its shares.
AUTOMATIC PURCHASE PROCEDURES. Free credit cash balances of $1.00 or more
held in the managed account of a participating client will automatically be
invested in shares of the Series as described below. Specifically, an order to
purchase shares of the Series is placed (i) in the case of a free credit cash
balance resulting from the proceeds of a securities sale, on the settlement date
of the securities sale, and (ii) in the case of a free credit cash balance
resulting from a non-trade related credit (e.g., receipt of a dividend or
interest payment, maturity of a bond or a cash payment by the client into the
clients' account), on the business day after the receipt by Prudential
Securities of the non-trade related credit.
All shares purchased pursuant to these automatic purchase procedures will
begin earning dividends on the business day after the order is placed.
Prudential Securities will arrange for investment in shares of the Series at
4:30 P.M., New York time, on the business day the order is placed and cause
payment to be made in federal funds for the shares prior to 4:30 P.M., New York
time, on the next business day. Prudential Securities will have the use of free
credit cash balances until delivery to the Series.
Shares of the Series purchased by Prudential Securities on behalf of its
client will be held by Prudential Securities as record holder. Prudential
Securities will therefore receive statements and dividends directly from the
Fund and will in turn provide investors with Prudential Securities account
statements reflecting Series purchases, redemptions and dividend payments.
Managed account clients of Prudential Securities are required to consent to the
automatic purchase procedures.
HOW TO SELL YOUR SHARES
Shares will be redeemed each business day at current NAV in accordance
with the automatic redemption procedures described below.
AUTOMATIC REDEMPTION. Redemptions will be automatically effected by
Prudential Securities on each business day at current NAV to satisfy debit
balances arising from securities transactions in an account to the nearest
highest dollar or to satisfy redemption requests made on behalf of a
participating client. Each participating client's managed account will be
automatically scanned for debits each business day as of the close of business
on that day and after application of any free credit cash balances in the
account to such debits, a sufficient number of shares of the Series will be
redeemed as of that business day to satisfy any remaining debits in the account.
In the event of an automatic redemption of shares, the client will be entitled
to dividends declared on the redeemed shares through the business day preceding
the day on which the redemption is effective. Dividends declared on the date of
redemption will be retained by Prudential Securities which has advanced monies
to satisfy debits in the participating client's managed account.
The Fund may suspend the right of redemption or postpone the date of
payment for a period of up to seven days. Suspensions or postponements may not
exceed seven days except (1) for any period (a) during which the New York Stock
Exchange is closed other than customary weekend and holiday closings or (b)
during which trading on the New York Stock Exchange is restricted; (2) for any
period during which an emergency exists as a result of which (a) disposal by the
Series of securities owned by it is not reasonably practicable or (b) it is not
reasonably practicable for a Series
15
<PAGE>
fairly to determine the value of its net assets; or (3) for such other periods
as the SEC may by order permit for the protection of shareholders of the Series.
The SEC by rules and regulations determines the conditions under which (i)
trading shall be deemed to be restricted and (ii) an emergency is deemed to
exist within the meaning of clause (2) above.
If the Board of Directors of the Fund determines that it would be
detrimental to the best interests of the remaining shareholders of the Series to
make payment wholly or partly in cash, the Series may pay the redemption price
in whole or in part by a distribution in kind of securities from the portfolio
of the Series, in lieu of cash, in conformity with applicable rules of the SEC.
If shares are redeemed in kind, the redeeming shareholder might incur brokerage
costs in converting the assets into cash. The method of valuing portfolio
securities is described under "How the Fund Values its Shares," and such
valuation will be made as of the same time the redemption price is determined.
The Fund, however, has elected to be governed by Rule 18f-1 under the Investment
Company Act pursuant to which the Series is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net asset value of the Series
during any 90-day period for any one shareholder.
The total value of a shareholder's investment in the Series at the time of
redemption may be more or less than his or her cost, depending on the value of
the securities held by the Fund at such time and income earned.
Prudential Securities has the right to terminate an account for any
reason. In such event, all shares held in a shareholder's account will be
redeemed.
SHAREHOLDER SERVICES
As a shareholder in the Series, you can take advantage of the following
additional services and privileges:
o REPORTS TO SHAREHOLDERS. The Fund will send you annual and semi-annual
reports. The financial statements appearing in the annual reports are audited by
independent accountants. In order to reduce duplicate mailing and printing
expenses, the Fund will provide one annual and semi-annual shareholder report
and annual prospectus per household. You may request additional copies of such
reports by calling (800) 225-1852 or by writing to the Fund at One Seaport
Plaza, New York, New York 10292.
o EXCHANGE PRIVILEGE. The Fund does not currently offer an exchange
privilege for shares of the Series.
o SHAREHOLDER INQUIRIES. Shareholder inquiries should be addressed to the
Fund at One Seaport Plaza, New York, New York 10292, or by telephone, at (800)
521-7466 (toll-free).
16
<PAGE>
DESCRIPTION OF SECURITY RATINGS
MOODY'S INVESTORS SERVICE
BOND RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than Aaa bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
SHORT-TERM DEBT RATINGS
Moody's short-term debt ratings are opinions of the ability of issuers to
repay punctually senior debt obligations which have an original maturity not
exceeding one year.
P-1: Issuers rated "Prime-1" or "P-1" (or supporting institutions) have a
superior ability for repayment of senior short-term debt obligations.
P-2: Issuers rated "Prime-2" or "P-2" (or supporting institutions) have a
strong ability for repayment of senior short-term debt obligations.
SHORT-TERM RATINGS
VMIG-1: Variable rate short-term indebtedness rated "VMIG-1" is of the
best quality. There is present strong protection by established cash flows,
superior liquidity support or demonstrated broad-based access to the market for
refinancing.
STANDARD & POOR'S RATINGS GROUP
BOND RATINGS
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to
pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood
of timely payment of debt considered short-term in the relevant market.
A-1: The A-1 designation indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with the designation A-2 is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
A-1
<PAGE>
DUFF & PHELPS CREDIT RATING CO.
LONG-TERM DEBT RATINGS
AAA: Bonds rated AAA are considered to be of the highest credit quality.
The risk factors are negligible, being only slightly more than for risk-free
U.S. Treasury debt.
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
SHORT-TERM DEBT RATINGS
D-1+: Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of funds, is
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations.
D-1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.
D-1-: High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very small.
D-2: Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
FITCH INVESTORS SERVICES, L.P.
BOND RATINGS
AAA: Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated 'AAA'. Because bonds rated
in the 'AAA' and 'AA' categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated 'F-1+'.
SHORT-TERM DEBT RATINGS
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.
F-1: Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
'F-1+'.
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as great
as the 'F-1+' and 'F-1' categories.
A-2
<PAGE>
THE PRUDENTIAL MUTUAL FUND FAMILY
Prudential Mutual Fund Management offers a broad range of mutual funds
designed to meet your individual needs. We welcome you to review the investment
options available through our family of funds. For more information on the
Prudential Mutual Funds, including charges and expenses, contact your Prudential
Securities financial adviser or Prusec representative or telephone the Fund at
(800) 225-1852 for a free prospectus. Read the prospectus carefully before you
invest or send money.
TAXABLE BOND FUNDS
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential Mortgage Income Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
The BlackRock Government Income Trust
TAX-EXEMPT BOND FUNDS
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Yield Series
Insured Series
Intermediate Series
Prudential Municipal Series Fund
Florida Series
Hawaii Income Series
Maryland Series
Massachusetts Series
Michigan Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
GLOBAL FUNDS
Prudential Europe Growth Fund, Inc.
Prudential Global Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Global Limited Maturity Fund, Inc.
Limited Maturity Portfolio
Prudential Global Natural Resources Fund, Inc.
Prudential Intermediate Global Income Fund, Inc.
Prudential Pacific Growth Fund, Inc.
The Global Government Plus Fund, Inc.
The Global Total Return Fund, Inc.
Global Utility Fund, Inc.
EQUITY FUNDS
Prudential Allocation Fund
Balanced Portfolio
Strategy Portfolio
Prudential Distressed Securities Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
Prudential Growth Opportunity Fund, Inc.
Prudential Jennison Fund, Inc.
Prudential Multi-Sector Fund, Inc.
Prudential Utility Fund, Inc.
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
MONEY MARKET FUNDS
o Taxable Money Market Funds
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
o Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
o Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
o Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
Liquid Assets Series
B-1
<PAGE>
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations, other than those contained in
this Prospectus, in connection with the offer contained herein, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Fund or the Distributor. This Prospectus does not
constitute an offer by the Fund or by the Distributor to sell or a solicitation
of any offer to buy any of the securities offered hereby in any jurisdiction to
any person to whom it is unlawful to make such offer in such jurisdiction.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
----
FUND HIGHLIGHTS....................................... 2
Risk Factors and Special Characteristics............. 2
FUND EXPENSES......................................... 4
CALCULATION OF YIELD.................................. 5
HOW THE FUND INVESTS.................................. 5
Investment Objective and Policies.................... 5
Other Investments and Policies....................... 7
Investment Restrictions.............................. 9
HOW THE FUND IS MANAGED............................... 9
Manager.............................................. 9
Distributor.......................................... 10
Portfolio Transactions............................... 11
Custodian and Transfer and
Shareholder Servicing Agent......................... 11
HOW THE FUND VALUES ITS SHARES........................ 11
TAXES, DIVIDENDS AND DISTRIBUTIONS.................... 12
GENERAL INFORMATION................................... 13
Description of Common Stock.......................... 13
Additional Information............................... 14
SHAREHOLDER GUIDE..................................... 14
How to Buy Shares of the Fund........................ 14
How to Sell Your Shares.............................. 15
Shareholder Services................................. 16
DESCRIPTION OF SECURITY RATINGS....................... A-1
THE PRUDENTIAL MUTUAL FUND FAMILY..................... B-1
- --------------------------------------------------------------------------------
MF137A 44071B
CUSIP No.: 744350505
- --------------------------------------------------------------------------------
P R O S P E C T U S ___________________,1996
- --------------------------------------------------------------------------------
Prudential
Institutional Liquidity
Portfolio, Inc.
----------
Liquid Assets
Series
PRUDENTIAL MUTUAL FUNDS [LOGO]
BUILDING YOUR FUTURE
ON OUR STRENGTH(sm)
<PAGE>
PRUDENTIAL INSTITUTIONAL LIQUIDITY PORTFOLIO, INC.
Statement of Additional Information
dated May 30, 1996 and restated on _____________, 1996
Prudential Institutional Liquidity Portfolio, Inc. (the Fund) is an
open-end, diversified, management investment company comprised of two
series--the Institutional Money Market Series and the Liquid Assets Series. The
Fund offers investors an efficient and economical means of investing in
professionally managed portfolios of high quality money market instruments. The
investment objective of each Series is high current income consistent with the
preservation of principal and liquidity. See "Investment Objective and
Policies." The minimum initial investment for the Institutional Money Market
Series is $100,000 and there is no minimum investment requirement for the Liquid
Assets Series. The Fund's address is One Seaport Plaza, New York, New York
10292, and its telephone number is (800) 521-7466.
This Statement of Additional Information has been restated effective
______________, 1996 to reflect the addition of the Liquid Assets Series.
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus of the Institutional Money Market Series
dated May 30, 1996 and the Prospectus of the Liquid Assets Series, dated
____________, 1996, copies of which may be obtained from the Fund upon request.
Subject to the specific restatements set forth below of certain sections
of the Statement of Additional Information dated May 30, 1996 (SAI), all general
statements relating to the "Series" in the SAI should be read to include the
Liquid Assets Series.
INVESTMENT OBJECTIVE AND POLICIES
LIQUID ASSETS SERIES--REPURCHASE AGREEMENTS
The Liquid Assets Series participates in a joint repurchase account with
other investment companies managed by Prudential Mutual Fund Management, Inc.
(PMF or the Manager) pursuant to an order of the Securities and Exchange
Commission. On a daily basis, any uninvested cash balances of the Series may be
aggregated with those of such other investment companies and invested in one or
more repurchase agreements. Each fund participates in the income earned or
accrued in the joint account based on the percentage of its investment.
INVESTMENT RESTRICTIONS
Investment Restrictions Number 4 and 10 are not applicable to the Liquid
Assets Series. In addition, the Liquid Assets Series has adopted the following
investment restrictions:
The Liquid Assets Series may not:
1. Purchase any security (other than obligations of the U.S. Government, its
agencies or instrumentalities) if as a result, with respect to 75% of the
Series' total assets, more than 5% of the Series' total assets (determined
at the time of investment) would then be invested in the securities of a
single issuer.
2. Purchase any securities (other than obligations of the U.S. Government, its
agencies or instrumentalities) if as a result 25% or more of the value of
the Series' total assets (determined at the time of investment) would be
invested in the securities of one or more issuers conducting their
principal business activities in the same industry, provided that there is
no limitation with respect to money market instruments of domestic banks.
For purposes of this exception, domestic banks shall include all banks
which are organized under the laws of the United States or a State (as
defined in the Investment Company Act), U.S. branches of foreign banks that
are subject to the same regulations as U.S. banks and foreign branches of
domestic banks.
To the extent that the domestic parent will make the foreign branch whole,
the investment risk associated with investing in instruments issued by the
foreign branch of the domestic bank is the same as that of investing in
instruments issued by the domestic parent.
B-1
<PAGE>
MANAGER
PMF, the Manager of the Fund, is a subsidiary of Prudential Securities
Incorporated (Prudential Securities or PSI) and The Prudential Insurance Company
of America (Prudential). PMF has three wholly-owned subsidiaries: Prudential
Mutual Fund Distributors, Inc., Prudential Mutual Fund Services, Inc. (PMFS or
the Transfer Agent) and Prudential Mutual Fund Investment Management. PMFS
serves as the transfer agent for the Prudential Mutual Funds and, in addition,
provides customer service, record keeping and management and administration
services to qualified plans. The Prudential investment Corporation (PIC) serves
as the investment adviser for the Fund. See "How the Fund is Managed--Manager"
in the Prospectuses of the Fund. The unit of PIC which provides investment
advisory services to the Fund is known as Prudential Mutual Fund Investment
Management.
The Fund, on behalf of the Liquid Assets Series, has a separate management
and administrative services agreement (the Administrative Services Agreement)
with PMF. The management and administrative services provided to the Liquid
Assets Series under its Administrative Services Agreement are described in the
Prospectus of the Liquid Assets Series. The description of the Management
Agreement on page B-8 refers to the Institutional Money Market Series only.
Pursuant to the Administrative Services Agreement with the Liquid Assets
Series, PMF, subject to the supervision of the Fund's Board of Directors and in
conformity with the stated policies of the Series, manages both the investment
operations of the Series and the composition of the Series' portfolio, including
the purchase, retention, disposition and loan of securities. In connection
therewith, PMF is obligated to keep certain books and records of the Series. PMF
also administers the Series' corporate affairs and, in connection therewith,
furnishes the Series with the services enumerated in the prospectus. The
management services of PMF for the Series are not exclusive under the terms of
the Administrative Services Agreement and PMF is free to, and does, render
management services to others.
PMF is reimbursed for the administrative services it performs pursuant to
the Administrative Services Agreement in an annual amount of up to .04 of 1% of
the average daily net assets of the Series. The fee is computed daily and
payable monthly. PMF does not receive an investment advisory fee in connection
with the management of the Series' portfolio. The Administrative Services
Agreement provides that, in the event the expenses of the Series (excluding
interest, taxes, brokerage commissions and litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business) for any fiscal year exceed the lowest applicable annual
expense limitation established and enforced pursuant to the statutes or
regulations of any jurisdiction in which the Series' shares are qualified for
offer and sale, the amount of reimbursement due to PMF will be reduced by the
amount of such excess. Currently, the Fund believes that the most restrictive
expense limitation of state securities commissions is 2-1/2% of the Series'
average daily net assets up to $30 million, 2% of the next $70 million of such
assets and 1-1/2% of such assets in excess of $100 million.
In connection with its management of the corporate affairs of the Fund,
PMF bears the following expenses:
(a) the salaries and expenses of all of its and the Fund's personnel
except the fees and expenses of Directors who are not affiliated persons of
PMF or the Fund's investment adviser;
(b) all expenses incurred by PMF or by the Fund in connection with
managing the ordinary course of the Fund's business, other than those
assumed by the Fund as described below; and
(c) the costs and expenses payable to The Prudential Investment
Corporation (PIC) pursuant to the subadvisory agreement between PMF and PIC
(the Subadvisory Agreement).
Under the terms of the Administrative Services Agreement, the Series is
responsible for the payment of the following expenses: (a) the expenses to be
reimbursed to the Manager, (b) the fees and expenses of Directors who are not
affiliated persons of the Manager or the Fund's investment adviser, (c) the fees
and certain expenses of the Custodian and Transfer and Dividend Disbursing
Agent, including the cost of providing records to the Manager in connection with
its obligation of maintaining required records of the Series and of pricing the
Series' shares, (d) the charges and expenses of legal counsel and independent
accountants for the Fund, (e) brokerage commissions and any issue or transfer
taxes chargeable to the Fund in connection with its securities transactions, (f)
all taxes and corporate fees payable by the Fund to governmental agencies, (g)
the fees of any trade associations of which the Fund may be a member, (h) the
cost of stock certificates, if any, representing shares of the Fund, (i) the
cost of fidelity and liability insurance, (j) the fees and expenses involved in
registering and maintaining registration of the Series and of its shares with
the Securities and Exchange Commission, registering the Fund as a broker or
dealer and qualifying its shares under state securities laws, including the
preparation and printing of the Fund's registration statements and prospectuses
for such purposes, (k) allocable communications expenses with respect to
investor services and all expenses of shareholders' and Directors' meetings and
of preparing, printing and mailing reports, proxy statements and prospectuses to
shareholders in the amount necessary for distribution to the shareholders, and
(l) litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Fund's business.
B-2
<PAGE>
The Administrative Services Agreement provides that PMF will not be liable
for any error of judgment or for any loss suffered by the Series in connection
with the matters to which the Administrative Services Agreement relates, except
a loss resulting from willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. The Administrative Services Agreement provides that
it will terminate automatically if assigned, and that it may be terminated
without penalty by either party upon not more than 60 days' nor less than 30
days' written notice. The Administrative Services Agreement will continue in
effect for a period of more than two years from the date of execution only so
long as such continuance is specifically approved at least annually in
conformity with the Investment Company Act. The Administrative Services
Agreement was approved by the Board of Directors of the Fund, including all of
the Directors who are not parties to the contract or "interested persons" of any
such party, on August 24, 1995, and by the sole shareholder of the Series, on
__________________, 1996.
DISTRIBUTOR
There is no plan of distribution for the Liquid Assets Series. All
references to the Plan of Distribution refer to that of the Institutional Money
Market Series. Prudential Securities Incorporated (Prudential Securities), One
Seaport Plaza, New York, New York 10292, acts as distributor for the Liquid
Assets Series pursuant to a distribution agreement between Prudential Securities
and the Fund (the Distribution Agreement). See "How the Fund is
Managed-Distributor" in the Prospectus for the Liquid Assets Series. Prudential
Securities is an indirect, wholly-owned subsidiary of Prudential. The services
it provides to the Series are described in the Prospectus for the Liquid Assets
Series. See "How the Fund is Managed-Distributor."
The Distribution Agreement for the Liquid Asset Series provides that it
will terminate automatically if assigned and that it may be terminated, without
payment of any penalty, by a majority of the Directors who are not parties to
the Distribution Agreement or interested persons of any such parties and who
have no direct or indirect financial interest in the Distribution Agreement or
in any agreement related thereto or by vote of a majority of the outstanding
voting securities of the Series or by the Distributor, on 60 days' written
notice to the other party. The Distribution Agreement was last approved by the
Board of Directors, including a majority of the Directors who are not interested
persons of the Fund and who have no direct or indirect financial interest in the
Distribution Agreement, on November 3, 1995.
PURCHASE OF SHARES
Shares of the Liquid Assets Series are offered to investment advisory
clients of Prudential Securities which are Eligible Benefit Plans as described
in the Prospectus and which participate in the following managed account
programs sponsored by Prudential Securities: Gibraltar Advisors, Prudential
Securities Portfolio Management (PSPM), Quantum Portfolio Management, Managed
Assets Consulting Services (MACS), Prudential Securities Investment Supervisory
Group, and The Mutual Fund Timing Service. Investment Management Services, a
unit of the Client Advisory Service Group of Prudential Securities, administers
the Gibraltar Advisors, PSPM, Quantum Portfolio Management and MACS programs. A
client who applies to participate in these managed account programs will be
eligible to purchase shares of the Series during the period between submission
to and acceptance of the application by Prudential Securities. Investment
advisory clients of Prudential Securities which participate in the Investment
Management Consulting & Research Program and the Managed Assets Consulting
Services Custom Services programs are not eligible to purchase shares of the
Series.
B-3
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS:
(1) Financial statements included in the Prospectuses constituting
Part A of this Registration Statement:
Financial Highlights for Institutional Money Market Series
(2) Financial statements included in the Statement of Additional
Information constituting Part B of this Registration Statement:
Portfolio of Investments at March 31, 1996 for Institutional
Money Market Series
Statement of Assets and Liabilities at March 31, 1996 for
Institutional Money Market Series
Statement of Operations for the Year Ended March 31, 1996 for
Institutional Money Market Series
Statement of Changes in Net Assets for the Years Ended March 31,
1996 and 1995 for Institutional Money Market Series
Notes to Financial Statements for Institutional Money Market
Series
Financial Highlights for Institutional Money Market Series
Independent Auditors' Report
(b) EXHIBITS:
1. (a) Articles of Restatement, incorporated by reference to Exhibit No. 1(a)
to Post-Effective Amendment No. 15 to the Registration Statement on Form
N-1A (File No. 33-17224) filed via EDGAR on May 28, 1996.
(b) Articles Supplementary, incorporated by reference to Exhibit No. 1(b)
to Post-Effective Amendment No. 15 to the Registration Statement on Form
N-1A (File No. 33-17224) filed via EDGAR on May 28, 1996.
2. (a) Amended By-Laws of the Registrant, incorporated by reference to Exhibit
No. 2 to Post-Effective Amendment No. 1 to the Registration Statement on
Form N-1A (File No. 33-17224) filed on May 20, 1988.
(b) Amendment to By-Laws, incorporated by reference to Exhibit No. 2(b) to
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on July 2, 1990.
4. (a) Specimen certificates for shares of common stock, $.001 par value per
share, of the Registrant, incorporated by reference to Exhibit No. 4 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on May 20, 1988.
(b) Instruments defining rights of holders of the securities being offered,
incorporated by reference to Exhibit Nos. 1 and 2 above.
5. (a) Management Agreement between the Registrant and Prudential Mutual Fund
Management, Inc., incorporated by reference to Exhibit No. 5(a) to
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on July 2, 1990.
(b) Subadvisory Agreement between Prudential Mutual Fund Management, Inc.
and The Prudential Investment Corporation, incorporated by reference to
Exhibit No. 5(b) to Post-Effective Amendment No. 3 to the Registration
Statement on Form N-1A (File No. 33-17224) filed on July 2, 1990.
(c) Form of Management and Administrative Services Agreement between the
Fund, on behalf of the Liquid Assets Series, and Prudential Mutual Fund
Management, Inc., incorporated by reference to Exhibit No. 5(c) to
Post-Effective Amendment No. 10 to the Registation Statement on Form N-1A
(File No. 33-17224) filed via EDGAR on August 4, 1995.
C-1
<PAGE>
6. (a) Amended and Restated Distribution Agreement, incorporated by reference
to Exhibit No. 6(c) to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A (File No. 33-17224) filed via EDGAR on May 26, 1995.
(b) Form of Distribution Agreement for the Liquid Assets Series,
incorporated by reference to Exhibit No. 6(d) to Post-Effective Amendment
No. 11 to the Registration Statement on Form N-1A (File No. 33-17224) filed
via EDGAR on October 13, 1995.
(c) Amendment to Distribution Agreement, incorporated by reference to
Exhibit No. 6(c) to Post-Effective Amendment No. 15 to the Registration
Statement on Form N-1A (File No. 33-17224) filed via EDGAR on May 28, 1996.
8. (a) Custodian Contract between the Registrant and State Street Bank and
Trust Company, incorporated by reference to Exhibit No. 8(a) to
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on May 30, 1989.
(b) Subcustodian Agreement between State Street Bank and Trust Company and
Security Pacific National Bank, incorporated by reference to Exhibit No.
8(b) to Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A (File No. 33-17224) filed on May 30, 1989.
(c) Subcustodian Agreement for Repurchase Transactions between State Street
Bank and Trust Company and Security Pacific National Bank, incorporated by
reference to Exhibit No. 8(c) to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A (File No. 33-17224) filed on May 30,
1989.
9. Transfer Agency and Service Agreement between the Registrant and Prudential
Mutual Fund Services, Inc. incorporated by reference to Exhibit No. 9 to
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on May 30, 1989.
10. (a) Opinion of Counsel, incorporated by reference to Exhibit No. 10 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on November 6, 1987.
(b) Opinion of Counsel, incorporated by reference to Exhibit No. 10(b) to
Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A
(File No. 33-17224) filed via EDGAR on May 27, 1994.
(c) Opinion of Counsel, incorporated by reference to Exhibit No. 10(c) to
Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A
(File No. 33-17224) filed via EDGAR on May 28, 1996.
11. Consent of Independent Auditors.*
13. Purchase Agreement, incorporated by reference to Exhibit No. 13 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on November 6, 1987.
15. (a) Plan of Distribution pursuant to Rule 12b-1, incorporated by reference
to Exhibit No. 15 to Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A (File No. 33-17224) filed on May 30, 1989.
(b) Distribution and Service Plan between the Registrant and Prudential
Mutual Fund Distributors, Inc., as amended on July 1, 1993, incorporated by
reference to Exhibit No. 15(b) to Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A (File No. 33-17224) filed via EDGAR on
May 27, 1994.
17. Financial Data Schedule, filed as Exhibit No. 27 to Post-Effective
Amendment No. 15 to the Registration Statement on Form N-1A (File No.
33-17224) filed via EDGAR on May 28, 1996.
C-2
<PAGE>
OTHER EXHIBITS
Powers of Attorney for:
Eugene C. Dorsey**
Donald D. Lennox**
Stanley F. Shirk**
Robin B. Smith**
- ----------
* Filed herewith.
** Executed copies filed under Other Exhibits to Post-Effective Amendment No.
2 to the Registration Statement on Form N-1A filed on May 30, 1989 (File
No. 33-17224).
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of May 17,1996 there were 532 record holders of shares of common stock,
$.001 par value per share, of the Institutional Money Market Series of the Fund.
ITEM 27. INDEMNIFICATION.
As permitted by Sections 17(h) and (i) of the Investment Company Act of
1940 (the 1940 Act) and pursuant to Article VII of the Registrant's By-Laws
(Exhibit 2(a) to the Registration Statement), officers, directors, employees and
agents of the Registrant will not be liable to the Registrant, any stockholder,
officer, director, employee, agent or other person for any action or failure to
act, except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Section 2-418 of Maryland General Corporation Law permits indemnification of
directors who acted in good faith and reasonably believed that the conduct was
in the best interests of the Registrant. As permitted by Section 17(i) of the
1940 Act, pursuant to Section 10 of the Distribution Agreements (Exhibit 6 to
the Registration Statement), the Distributor of the Registrant may be
indemnified against liabilities which it may incur, except liabilities arising
from bad faith, gross negligence, willful misfeasance or reckless disregard of
duties.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (Securities Act) may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the 1940 Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in connection with the successful defense
of any action, suit or proceeding) is asserted against the Registrant by such
director, officer or controlling person in connection with the shares being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1940 Act and will be governed by the final
adjudication of such issue.
The Registrant has purchased an insurance policy insuring its officers and
directors against liabilities, and certain costs of defending claims against
such officers and directors, to the extent such officers and directors are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers and directors under certain circumstances.
Section 9 of the Management Agreements (Exhibits 5(a) and 5(c) to the
Registration Statement) and Section 4 of the Subadvisory Agreement (Exhibit 5(b)
to the Registration Statement) limit the liability of Prudential Mutual Fund
C-3
<PAGE>
Management, Inc. (PMF) and The Prudential Investment Corporation (PIC),
respectively, to liabilities arising from willful misfeasance, bad faith or
gross negligence in the performance of their respective duties or from reckless
disregard by them of their respective obligations and duties under the
agreements.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its By-Laws and the Distribution Agreements in a manner consistent
with Release No. 11330 of the Securities and Exchange Commission under the 1940
Act so long as the interpretation of Sections 17(h) and 17(i) of such Act remain
in effect and are consistently applied.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a) Prudential Mutual Fund Management, Inc.
See "How the Fund Is Managed--Manager" in the Prospectuses constituting
Part A of this Registration Statement and "Manager" in the Statement of
Additional Information constituting Part B of this Registration Statement.
The business and other connections of the officers of PMF are listed in
Schedules A and D of Form ADV of PMF as currently on file with the Securities
and Exchange Commission, the text of which is hereby incorporated by reference
(File No. 801-31104, filed on March 28, 1996).
The business and other connections of PMF's directors and principal
executive officers are set forth below. Except as otherwise indicated, the
address of each person is One Seaport Plaza, New York, NY 10292.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ---------------- ----------------- ---------------------
<S> <C> <C>
Stephen P. Fisher Senior Vice President Senior Vice President, PMF; Senior Vice President,
Prudential Securities Incorporated (Prudential
Securities); Vice President, Prudential
Mutual Fund Distributors, Inc. (PMFD)
Frank W. Giordano Executive Vice Executive Vice President, General Counsel,
President, General Secretary and Director, PMF and PMFD;
Counsel, Secretary Senior Vice President, Prudential Securities;
and Director Director, Prudential Mutual Fund Services, Inc.
(PMFS)
Robert F. Gunia Executive Vice President, Executive Vice President, Chief Financial and
Chief Financial and Administrative Officer, Treasurer and Director, PMF;
Administrative Officer, Senior Vice President, Prudential Securities;
Treasurer and Director Executive Vice President, Chief Financial Officer,
Treasurer and Director, PMFD; Director, PMFS
Theresa A. Hamacher Director Director, PMF; Vice President, The Prudential Insurance
751 Broad Street Company of America (Prudential); Vice President, The
Newark, NJ 07102 Prudential Investment Corporation (PIC); President,
Prudential Mutual Fund Investment Management
(PMFIM)
Timothy J. O'Brien Director President, Chief Executive Officer, Chief Operating
Raritan Plaza One Officer and Director, PMFD; Chief Executive Officer
Edison, NJ 08837 and Director, PMFS; Director, PMF
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ---------------- ----------------- ---------------------
<S> <C> <C>
Richard A. Redeker President, Chief Executive President, Chief Executive Officer and Director, PMF;
Officer and Director Executive Vice President, Director and Member of
Operating Committee, Prudential Securities;
Director, Prudential Securities Group, Inc. (PSG);
Executive Vice President, PIC; Director,
PMFD; Director, PMFS
S. Jane Rose Senior Vice President, Senior Vice President, Senior Counsel and Assistant
Senior Counsel and Secretary, PMF; Senior Vice President and Senior
Assistant Secretary Counsel, Prudential Securities
Donald Webber Executive Vice President Executive Vice President and Director of Sales, PMF
and Director of Sales
</TABLE>
(b) The Prudential Investment Corporation (PIC)
See "How the Fund is Managed--Manager" in the Prospectuses constituting
Part A of this Registration Statement and "Manager" in the Statement of
Additional Information constituting Part B of this Registration Statement.
The business and other connections of PIC's directors and executive
officers are as set forth below. Except as otherwise indicated, the address of
each person is Prudential Plaza, Newark, NJ 07102.
<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ---------------- ----------------- ---------------------
<S> <C> <C>
William M. Bethke Senior Vice President Senior Vice President, Prudential; Senior Vice
Two Gateway Center President, PIC
Newark, NJ 07102
Barry M. Gillman Director Director, PIC
Theresa A. Hamacher Vice President Vice President, Prudential; Vice President, PIC;
Director, PMF; President, PMFIM
Richard A. Redeker Executive Vice President President, Chief Executive Officer and Director, PMF;
One Seaport Plaza Executive Vice President, Director and Member of
New York, New York 10292 Operating Committee, Prudential Securities; Director,
PSG; Executive Vice President, PIC; Director, PMFD;
Director, PMFS
John L. Reeve Senior Vice President Managing Director, Prudential Asset Management
Group; Senior Vice President, PIC
Eric A. Simonsen Vice President and Director Vice President and Director, PIC; Executive
Vice President, Prudential
</TABLE>
C-5
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Prudential Securities Incorporated
Prudential Securities is distributor for The BlackRock Government Income
Trust, Command Money Fund, Command Government Fund, Command Tax-Free Fund, The
Global Government Plus Fund, Inc., The Global Total Return Fund, Inc., Global
Utility Fund, Inc., Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth
Equity Fund), Prudential Allocation Fund, Prudential California Municipal Fund,
Prudential Distressed Securities Fund, Inc., Prudential Diversified Bond Fund,
Inc., Prudential Equity Fund, Inc., Prudential Equity Income Fund, Prudential
Europe Growth Fund, Inc., Prudential Global Fund, Inc., Prudential Global
Genesis Fund, Inc., Prudential Global Limited Maturity Fund, Inc., Prudential
Global Natural Resources Fund, Inc., Prudential Government Income Fund, Inc.,
Prudential Government Securities Trust, Prudential Growth Opportunity Fund,
Inc., Prudential High Yield Fund, Inc., Prudential Institutional Liquidity
Portfolio, Inc., Prudential Intermediate Global Income Fund, Inc., Prudential
Jennison Fund, Inc., Prudential MoneyMart Assets, Inc., Prudential Mortgage
Income Fund, Inc., Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond
Fund, Prudential Municipal Series Fund, Prudential National Municipals Fund,
Inc., Prudential Pacific Growth Fund, Inc., Prudential Special Money Market
Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential Tax-Free Money
Fund, Inc., Prudential Utility Fund, Inc. and The Target Portfolio Trust.
Prudential Securities is also a depositor for the following unit investment
trusts:
Corporate Investment Trust Fund
Prudential Equity Trust Shares
National Equity Trust
Prudential Unit Trusts
Government Securities Equity Trust
National Municipal Trust
(b) Information concerning the officers and directors of Prudential
Securities Incorporated is set forth below.
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME(1) UNDERWRITER REGISTRANT
- ------- ----------- ----------
Robert Golden........... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Alan D. Hogan........... Executive Vice President, Chief None
Administrative Officer and Director
George A. Murray........ Executive Vice President and Director None
Leland B. Paton......... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Martin Pfinsgraff....... Executive Vice President, Chief Financial None
Officer and Director
Vincent T. Pica II...... Executive Vice President and Director None
One New York Plaza
New York, NY 10292
Richard A. Redeker...... Executive Vice President and Director President and
Director
C-6
<PAGE>
POSITIONS AND POSITIONS AND
OFFICES WITH OFFICES WITH
NAME(1) UNDERWRITER REGISTRANT
- ------- ----------- ----------
Hardwick Simmons........ Chief Executive Officer, President and None
Director
Lee B. Spencer, Jr...... Executive Vice President, Secretary, None
General Counsel and Director
- ----------
(1) The address of each person named is One Seaport Plaza, New York, NY 10292
unless otherwise indicated.
(c) Registrant has no principal underwriter who is not an affiliated person
of the Registrant.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder are maintained at the
offices of State Street Bank and Trust Company, One Heritage Drive, North
Quincy, Massachusetts 02171, The Prudential Investment Corporation, Prudential
Plaza, 745 Broad Street, Newark, New Jersey 07102, the Registrant, One Seaport
Plaza, New York, New York 10292, and Prudential Mutual Fund Services, Inc.,
Raritan Plaza One, Edison, New Jersey 08837. Documents required by Rules
31a-1(b)(5), (6), (7), (9), (10) and (11) and 31a-1(f) will be kept at Two
Gateway Center, documents required by Rules 31a-1(b)(4) and (11) and 31a-1(d) at
One Seaport Plaza and the remaining accounts, books and other documents required
by such other pertinent provisions of Section 31(a) and the Rules promulgated
thereunder will be kept by State Street Bank and Trust Company and Prudential
Mutual Fund Services, Inc.
ITEM 31. MANAGEMENT SERVICES
Other than as set forth under the captions "How the Fund is
Managed--Manager" and "How the Fund is Managed--Distributor" in the Prospectuses
and the captions "Manager" and "Distributor" in the Statement of Additional
Information, constituting Parts A and B, respectively, of this Registration
Statement, Registrant is not a party to any management-related service contract.
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes to file a post-effective amendment, using
financial statements which need not be certified, within four to six months from
the effective date of the Post-Effective Amendment to the Registration Statement
relating to the Liquid Assets Series.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
and State of New York, on the 30th day of May, 1996.
PRUDENTIAL INSTITUTIONAL LIQUIDITY
PORTFOLIO, INC.
/s/ RICHARD A. REDEKER
----------------------
Richard A. Redeker, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ EUGENE S. STARK Treasurer and Principal Financial May 30, 1996
- ----------------------- and Accounting Officer
Eugene S. Stark
/s/ EUGENE C. DORSEY Director May 30, 1996
- -----------------------
Eugene C. Dorsey
/s/ DONALD D. LENNOX Director May 30, 1996
- -----------------------
Donald D. Lennox
/s/ RICHARD A. REDEKER Director and President May 30, 1996
- -----------------------
Richard A. Redeker
/s/ STANLEY E. SHIRK Director May 30, 1996
- -----------------------
Stanley E. Shirk
/s/ ROBIN B. SMITH Director May 30, 1996
- -----------------------
Robin B. Smith
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1. (a) Articles of Restatement, incorporated by reference to Exhibit No. 1(a)
to Post-Effective Amendment No. 15 to the Registration Statement on Form
N-1A (File No. 33-17224) filed via EDGAR on May 28, 1996.
(b) Articles Supplementary, incorporated by reference to Exhibit No. 1(b)
to Post-Effective Amendment No. 15 to the Registration Statement on Form
N-1A (File No. 33-17224) filed via EDGAR on May 28, 1996.
2. (a) Amended By-Laws of the Registrant. Incorporated by reference to Exhibit
No. 2 to Post-Effective Amendment No. 1 to the Registration Statement on
Form N-1A (File No. 33-17224) filed on May 20, 1988.
(b) Amendment to By-Laws. Incorporated by reference to Exhibit No. 2(b) to
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on July 2, 1990.
4. (a) Specimen certificates for shares of common stock, $.001 par value per
share, of the Registrant. Incorporated by reference to Exhibit No. 4 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on May 20, 1988.
(b) Instruments defining rights of holders of securities being offered,
incorporated by reference to Exhibit Nos. 1 and 2 above.
5. (a) Management Agreement between the Registrant and Prudential Mutual Fund
Management, Inc. Incorporated by reference to Exhibit No. 5(a) to
Post-Effective Amendment No. 3 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on July 2, 1990.
(b) Subadvisory Agreement between Prudential Mutual Fund Management, Inc.
and The Prudential Investment Corporation. Incorporated by reference to
Exhibit No. 5(b) to Post-Effective Amendment No. 3 to the Registration
Statement on Form N-1A (File No. 33-17224) filed on July 2, 1990.
(c) Form of Management and Administrative Services Agreement between the
Fund, on behalf of Liquid Assets Series, and Prudential Mutual Fund
Management, Inc. Incorporated by reference to Exhibit No. 5(c) to
Post-Effective Amendment No. 10 to the Registation Statement on Form N-1A
(File No. 33-17224) filed via EDGAR on August 4, 1995.
6. (a) Amended and Restated Distribution Agreement, incorporated by reference
to Exhibit No. 6(c) to Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A (File No. 33-17224) filed via EDGAR on May 26, 1995.
(b) Form of Distribution Agreement for the Liquid Assets Series,
incorporated by reference to Exhibit No. 6(d) to Post-Effective Amendment
No. 11 to the Registration Statement on Form N-1A (File No. 33-17224) filed
via EDGAR on October 13, 1995.
(c) Amendment to Distribution Agreement, incorporated by reference to
Exhibit No. 6(c) to Post-Effective Amendment No. 15 to the Registration
Statement on Form N-1A (File No. 33-17224) filed via EDGAR on May 28, 1996.
8. (a) Custodian Contract between the Registrant and State Street Bank and
Trust Company. Incorporated by reference to Exhibit No. 8(a) to
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on May 30, 1989.
(b) Subcustodian Agreement between State Street Bank and Trust Company and
Security Pacific National Bank. Incorporated by reference to Exhibit No.
8(b) to Post-Effective Amendment No. 2 to the Registration Statement on
Form N-1A (File No. 33-17224) filed on May 30, 1989.
(c) Subcustodian Agreement for Repurchase Transactions between State Street
Bank and Trust Company and Security Pacific National Bank. Incorporated by
reference to Exhibit No. 8(c) to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A (File No. 33-17224) filed on May 30,
1989.
9. Transfer Agency and Service Agreement between the Registrant and Prudential
Mutual Fund Services, Inc. Incorporated by reference to Exhibit No. 9 to
Post-Effective Amendment No. 2 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on May 30, 1989.
10. (a) Opinion of Counsel, incorporated by reference to Exhibit No. 10 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on November 6, 1987.
(b) Opinion of Counsel, incorporated by reference to Exhibit No. 10(b) to
Post-Effective Amendment No. 8 to the Registration Statement on Form N-1A
(File No. 33-17224) filed via EDGAR on May 27, 1994.
(c) Opinion of Counsel, incorporated by reference to Exhibit No. 10(c) to
Post-Effective Amendment No. 15 to the Registration Statement on Form N-1A
(File No. 33-17224) filed via EDGAR on May 28, 1996.
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
11. Consent of Independent Auditors.*
13. Purchase Agreement. Incorporated by reference to Exhibit No. 13 to
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A
(File No. 33-17224) filed on November 6, 1987.
15. (a) Plan of Distribution pursuant to Rule 12b-1. Incorporated by reference
to Exhibit No. 15 to Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A (File No. 33-17224) filed on May 30, 1989.
(b) Distribution and Service Plan between the Registrant and Prudential
Mutual Fund Services, Inc., as amended on July 1, 1993, incorporated by
reference to Exhibit No. 15(b) to Post-Effective Amendment No. 8 to the
Registration Statement on Form N-1A (File No. 33-17224) filed via EDGAR on
May 27, 1994.
17. Financial Data Schedule, filed as Exhibit No. 27 to Post-Effective
Amendment No. 15 to the Registration Statement on Form N-1A (File No.
33-17224) filed via EDGAR on May 28, 1996.
Other Exhibits
Powers of Attorney for:
Eugene C. Dorsey**
Donald D. Lennox**
Stanley F. Shirk**
Robin B. Smith**
- ----------
*Filed herewith.
**Executed copies filed under Other Exhibits to Post-Effective Amendment No. 2
to the Registration Statement on Form N-1A filed on May 30, 1989 (File No.
33-17224).
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in Post-Effective Amendment No. 16 to Registration
Statement No. 33-17224 of Prudential Institutional Liquidity Portfolio, Inc. of
our report dated May 9, 1996, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
references to us under the headings "Financial Highlights" in the Prospectus of
Institutional Money Market Series, which is a part of such Registration
Statement, and "Custodian, Transfer and Shareholder Servicing Agent and
Independent Accountants" in the Statement of Additional Information.
Deloitte & Touche LLP
New York, New York
May 28, 1996
