SEMI ANNUAL REPORT December 31, 1994
Prudential
Special Money
Market Fund
(ICON)
Money Market Series
(LOGO)
<PAGE>
Letter to Shareholders
January 19, 1995
Dear Shareholder:
With short-term interest rates steadily rising, 1994 was a very good year for
money market investors and shareholders of the Prudential Special Money Market
Fund. Since June 30, 1994, the Fund's 7-day yield rose nearly one and one-half
percentage points from 3.85% to 5.30% as the year closed.
FUND FACTS
As of December 31, 1994
<TABLE>
<CAPTION>
7-Day Net Asset Weighted Total Net
Current Yld Value Avg. Mat. Assets (mil.)
<S> <C> <C> <C> <C>
Special Money 5.30% $1.00 35 days $475.2
Market
IBC Donoghue's 5.12 1.00 36 days N/A
Money Fund
Average (All Taxable)
</TABLE>
Note: Yields will fluctuate from time to time and past performance is no
guarantee of future results. An investment in the Fund is neither insured nor
guaranteed by the U.S. government and there can be no assurance that the Fund
will be able to maintain a stable net asset value.
*This is the average 7-day current yield, NAV and WAM of 696 funds in IBC
Donoghue's all taxable money market fund category as of December 27, 1994.
Fund Overview
The Prudential Special Money Market Fund -- Money Market Series seeks high
current income consistent with the preservation of principal and liquidity. The
Fund is a diversified portfolio of high quality, U.S. dollar-denominated money
market securities issued by the U.S. government and its agencies, foreign
governments, major corporations and commercial banks of the U.S. and foreign
countries. Maturities can range from one day to a maximum of 13 months. We
typically purchase only securities rated in the highest categories by at least
two major rating agencies, or, if unrated, deemed to be of equivalent quality
by our credit research staff.
-1-
<PAGE>
The Federal Reserve Tightens.
Despite higher interest rates, the U.S. economy grew at a robust rate of
about 4% in 1994. Gross Domestic Product (GDP), the measure of goods produced
and services delivered, grew at a rate that many believed was far faster than
the Federal Reserve would have liked to have seen. This supports our view that
more interest rate increases are on the horizon. In 1994, the central bank
raised short-term interest rates six times, increasing the federal funds rate
(the interbank overnight lending rate) by 2.5 percentage points to 5.5%.
Long-term interest rates rose as bond investors worried that prices would rise.
As it turned out, inflation, as measured by the Consumer Price Index, grew by
only 2.7% in 1994 -- the fourth straight year under 3%. It can be argued that
inflation usually lags behind actual economic growth. For example, commodity
prices have been rising and employment growth has been robust. Approximately
three million people found jobs in 1994 sending the unemployment rate to a
four-year low, while consumer confidence soared. If this view proves correct,
then inflation might rise to 3.5% or even 4% in the coming year.
We Shortened Maturities.
The returns for money market funds are greatly affected by changes in
monetary policy. As interest rates rose, we shortened our maturities to take
advantage of rising interest rates. For example, our weighted average maturity
(WAM) was as low as 25 days on August 16, 1994, just before the Federal Reserve
raised rates by a half of a percentage point. This enabled us to take advantage
of new investments offering higher interest rates as they came to market.
Similarly, when it became apparent that interest rates would increase once more
in November, we at first shortened our WAM to 31 days before the Federal
Reserve meeting and then extended it afterward to as much as 43 days,
anticipating a pause in additional interest rate increases.
Earlier in the year, we modestly increased our holdings in floating and
variable rate instruments to allow us to capture these higher rates. Since the
coupons on these securities adjust periodically to reflect current interest
rates, they help enhance yield when short-term interest rates rise. For
example, floating rate notes we purchase may be based on a money market index
such as LIBOR (London Interbank Offered Rate), the three-month U.S. Treasury
bill, or the federal funds rate. These securities pay the quoted index rate
plus a specific amount, and the rate is reset in a specified time period, such
as daily, weekly or monthly.
-2-
<PAGE>
As of this writing, attractive sectors of the money market include U. S.
government agency obligations that have become priced more competitively than
Treasury obligations because of increased supply.
A Word About Quality
At the end of the year, all of the Fund's investments were rated in the
highest ratings category by two or more nationally recognized credit rating
agencies, or they were deemed to be of equivalent quality if they were unrated.
The Outlook
Since the economy has not yet slowed enough to prevent the threat of rising
inflation, we believe that further credit tightening will occur in 1995.
Short-term interest rates will continue to rise until the Federal Reserve is
satisfied that this risk has subsided.
As always, it is a pleasure to work for you. We are pleased to be able to
report this good news to you and thank you for choosing the Prudential Special
Money Market Fund -- Money Market Series.
Sincerely,
Lawrence C. McQuadex
President
Robert N. Felice
Portfolio Manager
<PAGE>
PORTFOLIO Q&A
(PHOTO)
Robert N. Felice
A Word About Derivatives and Money Markets
Derivatives have been in the news in recent months. Not all derivatives are
created equal, however. Money market mutual funds have invested for a long time
in securities which are, in the most broadly defined terms, derivatives. The
following talk with Portfolio Manager Robert N. Felice should help you
understand more about how we use derivatives in Prudential taxable money market
funds.
Q. What is a derivative?
A. A derivative is a financial instrument whose value is derived from the value
of an underlying asset, like a stock, bond, commodity, currency or from an
index. That covers just about all financial instruments except plain stocks
or bonds.
Q. What derivatives are used by the Prudential Special Money Market
Fund -- Money Market Series?
A. We use adjustable rate securities and occasionally liquidity puts, which are
considered derivatives. Liquidity puts simply allow us to resell a security
for cash to the issuer or a third party on a specified date. The adjustable
rate securities we purchase for the Fund have interest rates which are
pegged to a money market index, such as LIBOR, the three-month U.S. Treasury
Bill or the federal funds rate. We do not invest in those derivative-related
securities that the SEC has suggested are inappropriate for money market
funds, such as inverse floaters, dual or cost of funds index floaters.
Q. Is there a danger of Prudential money market funds breaking the $1.00 per
share net asset value?
A. While there is never a guarantee any Fund will maintain its $1.00 share
value, Prudential taxable money market funds emphasize a conservative,
quality oriented investment approach. We continue to believe that
preservation of capital and liquidity cannot be sacrificed for additional
yield.
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND Portfolio of Investments
MONEY MARKET SERIES December 31, 1994 (Unaudited)
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
BANKERS ACCEPTANCE--YANKEE--0.4%
Rabobank Nederland
$ 2,000 5.94%, 1/30/95............... $ 1,990,430
------------
1,990,430
------------
BANK HOLDING PAPER--1.0%
Bankers Trust New York Corp.
4,000 5.44%, 1/24/95............... 3,986,098
800 5.40%, 1/27/95............... 796,880
------------
4,782,978
------------
BANK NOTES--7.9%
Fifth Third Bank, Cincinnati
4,000 6.20%, 2/7/95................ 4,000,199
First National Bank of
Chicago
8,500 5.688%, 2/22/95.............. 8,500,000
NationsBank Corp.
7,000 6.03%, 1/31/95............... 7,000,000
PNC Bank, N.A.
7,000 5.15%, 2/22/95............... 7,000,020
PNC Bank, Ohio
1,000 3.50%, 1/31/95............... 999,895
Republic National Bank
of New York
9,000 4.30%, 3/8/95................ 8,995,043
Society National Bank of
Cleveland
1,000 3.55%, 1/20/95............... 999,916
------------
37,495,073
------------
CERTIFICATES OF DEPOSIT-YANKEE--12.6%
Bank of Tokyo, Ltd.
10,000 6.46%, 3/30/95............... 10,000,000
Bayerische Vereinsbank
4,000 5.83%, 1/23/95............... 4,000,048
Fuji Bank, Ltd.
3,000 5.906%, 1/20/95.............. 3,000,000
10,000 6.36%, 3/21/95............... 10,000,000
Industrial Bank of Japan,
Ltd.
$12,000 6.375%, 3/28/95.............. $ 12,000,000
Sanwa Bank, Ltd.
5,000 6.04%, 2/2/95................ 5,000,000
Societe Generale
4,000 5.65%, 2/6/95................ 4,000,000
6,000 5.65%, 2/7/95................ 6,000,000
Sumitomo Bank, Ltd.
2,000 5.89%, 1/25/95............... 2,000,000
4,000 6.06%, 2/1/95................ 4,000,000
------------
60,000,048
------------
COMMERCIAL PAPER-DOMESTIC--54.4%
American Home Products Corp.
3,858 5.90%, 1/31/95............... 3,839,032
12,142 5.92%, 2/6/95................ 12,070,119
Aristar, Inc.
1,300 5.85%, 1/17/95............... 1,296,620
Asset Securitization
Cooperative Corp.
4,000 5.50%, 1/23/95............... 3,986,556
2,000 5.52%, 1/23/95............... 1,993,253
Associates Corp. of North
America
9,000 5.77%, 1/25/95............... 8,965,380
3,000 6.25%, 3/14/95............... 2,962,500
Beneficial Corp.
5,000 6.25%, 3/14/95............... 4,937,500
Chrysler Financial Corp.
8,000 5.75%, 1/18/95............... 7,978,278
CIT Group Holdings, Inc.
3,000 5.50%, 1/17/95............... 2,992,667
8,000 5.97%, 2/1/95................ 7,958,873
10,000 6.27%, 3/13/95............... 9,876,342
Coca-Cola Enterprises, Inc.
5,000 6.015%, 2/1/95............... 4,974,102
Commercial Credit Co.
2,000 5.75%, 1/31/95............... 1,990,417
</TABLE>
-5- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
COMMERCIAL PAPER-DOMESTIC (cont'd.)
Corporate Receivables Corp.
$ 1,000 6.28%, 3/6/95................ $ 988,836
Dean Witter, Discover & Co.
1,627 5.78%, 1/23/95............... 1,621,253
Deere & Co.
4,000 6.05%, 2/1/95................ 3,979,161
Duracell, Inc.
1,000 6.30%, 2/10/95............... 993,000
Falcon Asset Securitization
Corp.
1,000 6.17%, 2/7/95................ 993,659
Ford Motor Credit Corp.
26,400 5.78%, 2/1/95................ 26,268,601
General Electric Capital
Corp.
4,000 5.85%, 1/30/95............... 3,981,150
7,000 6.45%, 4/13/95............... 6,872,075
General Motors Acceptance
Corp.
21,900 5.74%, 1/17/95............... 21,844,131
4,000 6.20%, 1/31/95............... 3,979,333
Greyhound Financial Corp.
1,000 6.20%, 1/13/95............... 997,933
5,000 6.00%, 1/23/95............... 4,981,667
2,000 6.29%, 2/8/95................ 1,986,721
Heller Financial, Inc.
1,000 6.30%, 3/13/95............... 987,575
2,000 6.30%, 3/14/95............... 1,974,800
Household Finance Corp.
3,000 5.50%, 1/12/95............... 2,994,958
4,000 5.79%, 1/30/95............... 3,981,343
IBM Credit Corp.
15,000 5.76%, 1/23/95............... 14,947,200
International Lease Finance
Corp.
2,000 5.75%, 1/18/95............... 1,994,569
ITT Corp.
3,000 5.82%, 1/17/95............... 2,992,240
Merrill Lynch & Co., Inc.
$ 8,000 5.75%, 1/17/95............... $ 7,979,555
3,000 5.77%, 1/19/95............... 2,991,345
2,000 5.87%, 1/31/95............... 1,990,217
Norwest Financial, Inc.
20,000 5.76%, 1/17/95............... 19,948,800
Pennsylvania Power &
Light Energy Trust
1,123 5.83%, 1/17/95............... 1,120,090
Preferred Receivables Funding
Corp.
5,000 5.65%, 1/11/95............... 4,992,153
Sears Roebuck Acceptance
Corp.
5,000 5.87%, 1/27/95............... 4,978,803
7,000 5.83%, 2/3/95................ 6,962,591
6,500 5.88%, 2/21/95............... 6,445,855
Smith Barney, Inc.
1,000 5.76%, 1/18/95............... 997,280
1,000 5.80%, 1/25/95............... 996,133
6,000 5.78%, 1/26/95............... 5,975,917
WCP Funding, Inc.
2,000 6.28%, 3/6/95................ 1,977,671
Whirlpool Financial Corp.
1,000 5.66%, 2/2/95................ 994,969
2,000 5.60%, 2/6/95................ 1,988,800
1,000 5.60%, 2/9/95................ 993,933
WMX Technologies, Inc.
2,000 5.20%, 5/12/95............... 1,962,156
------------
258,478,112
------------
COMMERCIAL PAPER-YANKEE--7.3%
American Honda Finance Corp.
2,000 6.15%, 1/30/95............... 1,990,092
4,000 5.98%, 1/31/95............... 3,980,066
Deerfield Capital
8,000 6.09%, 1/17/95............... 7,978,347
</TABLE>
-6- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
COMMERCIAL PAPER-YANKEE (cont'd.)
Hanson Finance, PLC.
$ 2,000 6.28%, 3/1/95................ $ 1,979,416
2,000 6.26%, 3/3/95................ 1,978,785
4,000 6.27%, 3/7/95................ 3,954,717
6,000 6.27%, 3/9/95................ 5,929,985
Maguire/Thomas Partners W/S Partnership
2,000 6.10%, 1/18/95............... 1,994,239
Westpac Capital Corp.,
5,000 6.28%, 3/14/95............... 4,937,200
------------
34,722,847
------------
TIME DEPOSIT-EURODOLLAR--0.3%
Chemical Bank New York
1,195 6.25%, 1/3/95................ 1,195,000
------------
1,195,000
------------
VARIABLE RATE INSTRUMENTS#--14.8%
American Express Centurion
Bank
2,000 6.0625%, 1/5/95.............. 1,999,882
2,000 6.125%, 1/19/95.............. 1,999,867
1,000 5.9375%, 1/30/95............. 999,926
Avco Financial Services, Inc.
1,000 6.19232%, 1/13/95............ 1,000,000
Beneficial Corp.
6,000 6.14253%, 1/19/95............ 5,997,759
Goldman Sachs Group, L.P.
20,000 5.375%, 1/30/95.............. 20,000,000
Lehman Brothers Holdings,
Inc.
11,000 6.1844%, 1/23/95............. 11,000,000
Merrill Lynch & Co., Inc.
3,000 6.0725%, 1/3/95.............. 2,999,561
4,000 6.0725%, 1/23/95............. 3,999,436
Money Market Auto Loan Trust 1990-1
6,000 6.335%, 1/17/95.............. 6,000,000
Money Market Credit Card Trust 1189-1
3,273 6.22%, 1/10/95............... 3,272,727
Morgan Stanley Group, Inc.
$ 1,000 5.75%, 1/17/95............... $ 1,000,000
10,000 5.9375%, 2/15/95............. 10,000,000
------------
70,269,158
------------
Total Investments--98.7%
(amortized cost
$468,933,646*)............. 468,933,646
Other assets in excess of
liabilities--1.3%.......... 6,219,435
------------
Net Assets--100%............. $475,153,081
------------
------------
</TABLE>
* The federal income tax basis of portfolio
securities is the same as for financial
reporting purposes.
# For purposes of amortized cost valuation, the
maturity date
of these instruments is considered to be the
later of the next date on which the security can
be redeemed at par or the next date on which the
rate of interest is adjusted.
The industry classification of portfolio holdings shown as a
percentage of net assets as of December 31, 1994 was as follows:
<TABLE>
<S> <C>
Personal Credit Institutions.............. 25.3%
Banks..................................... 25.2
Security Brokers & Dealers................ 15.1
Business Credit Institutions.............. 12.8
Asset Backed Securities................... 5.1
Financial Services........................ 3.8
Pharmaceuticals........................... 3.4
Tobacco................................... 2.9
Bank Holding Companies.................... 1.2
Beverages................................. 1.1
Farm Machinery & Equipment................ 0.8
Household Appliances...................... 0.8
Equipment Rental & Leasing................ 0.4
Refuse Systems/Sanitary................... 0.4
Electrical Services....................... 0.2
Miscellaneous Electricals, Equipment &
Supplies................................ 0.2
-----
98.7
Other assets in excess of liabilities..... 1.3
-----
100.0%
-----
-----
</TABLE>
-7- See Notes to Financial Statements.
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Assets and Liabilities
(Unaudited)
<TABLE>
<CAPTION>
Assets December 31, 1994
-----------------
<S> <C>
Investments, at amortized cost which approximates value............................... $ 468,933,646
Receivable for Fund shares sold....................................................... 8,461,972
Interest receivable................................................................... 1,611,999
Deferred expenses and other assets.................................................... 36,838
-----------------
Total assets...................................................................... 479,044,455
-----------------
Liabilities
Payable for Fund shares reacquired.................................................... 3,387,525
Management fee payable................................................................ 219,062
Accrued expenses and other liabilities................................................ 150,234
Dividends payable..................................................................... 134,553
-----------------
Total liabilities................................................................. 3,891,374
-----------------
Net Assets............................................................................ $ 475,153,081
-----------------
-----------------
Net assets were comprised of:
Common stock, $0.001 at par......................................................... $ 475,153
Paid-in capital in excess of par.................................................... 474,677,928
-----------------
Net assets, December 31, 1994....................................................... $ 475,153,081
-----------------
-----------------
Net asset value, offering price and redemption price per share
($475,153,081 / 475,153,081 shares of common stock issued and outstanding; two
billion shares authorized)........................................................ $1.00
-----------------
-----------------
</TABLE>
See Notes to Financial Statements.
-8-
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
December
31,
Net Investment Income 1994
-----------
<S> <C>
Income
Interest and discount earned......... $11,323,673
-----------
Expenses
Management fee....................... 1,102,628
Transfer agent's fees and expenses... 152,000
Custodian's fees and expenses........ 57,000
Registration fees.................... 55,000
Audit fee............................ 18,500
Reports to shareholders.............. 18,000
Amortization of organization
expense.............................. 13,500
Directors' fees...................... 7,500
Legal fees........................... 5,000
Miscellaneous........................ 4,945
-----------
Total expenses..................... 1,434,073
-----------
Net investment income.................. 9,889,600
Realized Loss on Investments
Net realized loss on investment
transactions......................... (5,438)
-----------
Net Increase in Net Assets
Resulting from Operations.............. $ 9,884,162
-----------
-----------
</TABLE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Statement of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
Increase (Decrease) December 31, June 30,
in Net Assets 1994 1994
--------------- ---------------
<S> <C> <C>
Operations
Net investment
income.............. $ 9,889,600 $ 8,036,713
Net realized gain
(loss) on
investment
transactions...... (5,438) 35,906
--------------- ---------------
Net increase in net
assets resulting
from operations... 9,884,162 8,072,619
--------------- ---------------
Dividends and
distributions to
shareholders........ (9,884,162) (8,072,619)
--------------- ---------------
Fund share
transactions
(at $1 per share)
Proceeds from shares
subscribed........ 1,096,918,552 1,796,491,879
Net asset value of
shares
issued to
shareholders in
reinvestment of
dividends and
distributions..... 8,225,978 6,433,981
Cost of shares
reacquired........ (1,103,048,025) (1,506,126,858)
--------------- ---------------
Net increase in net
assets from Series
share
transactions...... 2,096,505 296,799,002
--------------- ---------------
Total increase........ 2,096,505 296,799,002
Net Assets
Beginning of period... 473,056,576 176,257,574
--------------- ---------------
End of period......... $ 475,153,081 $ 473,056,576
--------------- ---------------
--------------- ---------------
</TABLE>
See Notes to Financial Statements. See Notes to Financial Statements.
-9-
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Notes to Financial Statements
(Unaudited)
Prudential-Bache Special Money Market Fund, Inc., doing business as
Prudential Special Money Market Fund (the ``Fund''), is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company consisting of only the Money Market Series (the ``Series''). The Fund
was incorporated in Maryland on October 20, 1989 and had no operations until
November 30, 1989 when 100,000 shares of the Series' common stock was sold for
$100,000 to Prudential Mutual Fund Management, Inc. (PMF). Investment operations
commenced January 22, 1990.
The investment objective of the Series is high current income consistent with
the preservation of principal and liquidity. The Series invests in a diversified
portfolio of high quality money market securities maturing in 13 months or less.
The ability of issuers of securities held by the Series to meet their
obligations may be affected by economic developments in a specific industry or
region.
Note 1. Accounting The following is a summary of
Policies significant accounting policies
followed by the Fund in the preparation of its
financial statements.
Securities Valuation: Portfolio securities are valued at amortized cost, which
approximates market value. The amortized cost method of valuation involves
valuing a security at its cost on the date of purchase and thereafter assuming a
constant amortization to maturity of the difference between the principal amount
due at maturity and cost.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis.
Federal Income Taxes: It is the intent of the Fund to continue to meet the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable net income to its shareholders.
Therefore, no federal income tax provision is required.
Dividends and Distributions: The Fund declares daily and pays monthly dividends
from net investment income and short-term capital gains. Dividends are recorded
on ex-dividend date. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
Deferred Organization Expenses: Organization expenses of approximately $135,000
were incurred in connection with the organization and initial registration of
the Fund. The total organization expenses have been deferred and are being
amortized over the period of benefit not to exceed 60 months from the date of
commencement of investment operations for the Fund. PMF has agreed not to
redeem the 100,000 shares purchased until all organization expenses have been
amortized.
Note 2. Agreements The Fund has a management
agreement with PMF. Pursuant to this agreement,
PMF has responsibility for all investment advisory services and supervises the
subadviser's performance of such services. PMF has entered into a subadvisory
agreement with The Prudential Investment Corporation (``PIC''); PIC furnishes
investment advisory services in connection with the management of the Fund. PMF
pays for the cost of the subadviser's services, the compensation of officers and
employees of the Fund, occupancy and certain clerical and bookkeeping costs of
the Fund. The Fund bears all other costs and expenses.
The management fee paid PMF is computed daily and payable monthly at an
annual rate of .50% of the average daily net assets of the Fund.
The Fund has a distribution agreement with Prudential Mutual Fund
Distributors, Inc. (``PMFD''). PMFD serves the Fund without compensation.
PMFD is a wholly-owned subsidiary of PMF; PMF and PIC are (indirect)
wholly-owned subsidiaries of The Prudential Insurance Company of America.
Note 3. Other Prudential Mutual Fund
Transactions With Services, Inc. (``PMFS''), a
Affiliates wholly-owned subsidiary of
PMF, serves as the Fund's transfer agent. During
the six months ended December 31, 1994, the Series incurred fees of
approximately $152,000 for the services of PMFS. As of December 31, 1994,
approximately $52,000 of such fees were owed to PMFS. Transfer agent fees and
expenses in the Statement of Operations include certain out of pocket expenses
paid to non-affiliates.
-10-
<PAGE>
<PAGE>
PRUDENTIAL SPECIAL MONEY MARKET FUND
MONEY MARKET SERIES
Financial Highlights
(Unaudited)
<TABLE>
<CAPTION>
January 22,
Six Months
1990*
Ended Year Ended June 30,
Through
December 31, -------------------------------------------
June 30,
1994 1994 1993 1992 1991
1990
----------------- -------- -------- -------- --------
-----------
<S> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
Net investment income and net realized
gains.................................. 0.022 0.030 0.027 0.044
0.071# 0.036#
Dividends and distributions.............. (0.022) (0.030) (0.027) (0.044)
(0.071) (0.036)
----------------- -------- -------- -------- --------
-----------
Net asset value, end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
$ 1.00
----------------- -------- -------- -------- --------
-----------
----------------- -------- -------- -------- --------
-----------
TOTAL RETURN:**.......................... 2.25% 3.09% 2.77% 4.49%
7.36% 3.65%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000).......... $ 475,153 $473,057 $176,258 $183,093 $284,849
$ 181,690
Average net assets (000)................. $ 437,456 $271,869 $213,948 $249,223 $328,899
$ 177,412
Ratios to average net assets:
Expenses............................... 0.65%(D) 0.72% 0.81% 0.83%
0.61%# 0.19%(D)#
Net investment income.................. 4.48%(D) 2.96% 2.73% 4.36%
6.98%# 8.12%(D)#
</TABLE>
- ---------------
* Commencement of investment operations.
** Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes
reinvestment of dividends and distributions. Total returns for periods
for less than a full year are not annualized.
(D) Annualized.
# Net of expense subsidy and/or management fee waiver.
See Notes to Financial Statements.
-11-
<PAGE>
<PAGE>
Directors
Edward D. Beach
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Richard A. Redeker
Stanley E. Shirk
Stephen Stoneburn
Nancy H. Teeters
Officers
Lawrence C. McQuade, President
Robert F. Gunia, Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Manager
Prudential Mutual Fund Management, Inc.
One Seaport Plaza
New York, NY 10292
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07101
Distributors
Prudential Mutual Fund Distributors, Inc.
One Seaport Plaza
New York, NY 10292
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
Prudential Mutual Funds
One Seaport Plaza
New York, NY 10292
Toll Free (800) 225-1852, Collect (908) 417-7555
The accompanying financial statements as of December 31, 1994, were
not audited and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
74430JJ103 (LOGO) MF 141E
