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008 D02AA01 NJ
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008 B00AA02 A
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008 D01AA02 NEW YORK
008 D02AA02 NY
008 D03AA02 10292
011 A00AA01 PRUDENTIAL MUTUAL FUND DISTRIBUTORS, INC.
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011 C01AA01 NEW YORK
011 C02AA01 NY
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<PAGE> PAGE 2
012 A00AA01 PRUDENTIAL MUTUAL FUND SERVICES, INC.
012 B00AA01 84-4110019
012 C01AA01 NEW BRUNSWICK
012 C02AA01 NJ
012 C03AA01 08906
013 A00AA01 DELOITTE & TOUCHE LLP
013 B01AA01 NEW YORK
013 B02AA01 NY
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014 A00AA02 PRUDENTIAL MUTUAL FUNDS DISTRIBUTORS, INC.
014 B00AA02 8-38739
014 A00AA03 PRUCO SECURITIES CORPORATION
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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015 A00AA02 STATE STREET BANK AND TRUST COMPANY
015 B00AA02 S
015 C01AA02 UNITED KINGDOM
015 D01AA02 UNITED KINGDOM
015 E04AA02 X
015 A00AA03 THE EUROCLEAR SYSTEM CEDEL
015 B00AA03 S
015 C01AA03 TRANSNATIONAL
015 D01AA03 TRANSNATIONAL
015 E04AA03 X
015 A00AA04 CEDEL
015 B00AA04 S
015 C01AA04 LUXEMBOURG
015 D01AA04 LUXEMBOURG
015 E04AA04 X
015 A00AA05 STATE STREET LIMITED
015 B00AA05 S
015 C01AA05 UNITED KINGDOM
015 D01AA05 UNITED KINGDOM
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015 A00AA06 THE BANK OF ENGLAND
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SIGNATURE SUSAN C. COTE'
TITLE TREASURER
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NSAR6.DOC - Windows - August 10, 1995
PRINT ON COMPAQ
The Board of Directors of
Prudential Special Money Market Fund, Inc. - Money Market Series:
In planning and performing our audit of the financial statements of Prudential
Special Money Market Fund, Inc. - Money Market Series ("Fund") for the year
ended June 30, 1995, we considered its internal control structure, including
procedures for safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial statements
and to comply with the requirements of Form N-SAR, not to provide assurance on
the internal control structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
June 30, 1995.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
August 21, 1995
Board of Directors or Trustees of:
Prudential Adjustable Rate Securities Fund
Prudential IncomeVertible Fund
The BlackRock Government Income Trust
Prudential Intermediate Global Income Fund
Prudential California Municipal Fund (2 Portfolios)
Prudential Multi-Sector Fund
Prudential Equity Fund
Prudential Municipal Bond Fund (3 Portfolios)
Prudential Equity Income Fund
Prudential Municipal Series Fund (12 Portfolios)
Prudential FlexiFund (2 Portfolios)
Prudential National Municipals Fund
Prudential GNMA Fund
Prudential Pacific Growth Fund
Prudential Global Fund
Prudential Short-Term Global Income Fund (2 Portfolios)
Prudential Global Genesis Fund
Prudential Structured Maturity Fund
Prudential Global Natural Resources Fund
Prudential U.S. Government Fund
Prudential Government Plus Fund
Prudential Utility Fund
Prudential Growth Fund
Global Utility Fund, Inc.
Prudential Growth Opportunity Fund
Nicholas-Applegate Fund, Inc.
Prudential High Yield Fund
We have examined the accompanying description of the
Prudential Dual Pricing
Worksheet (the "Worksheet") application of State Street Bank
and Trust Company
("State Street"), custodian and recordkeeper for the
Prudential Mutual Funds
(the "Funds"). Our examination included procedures to
obtain reasonable
assurance about whether (1) the accompanying description
presents fairly, in
all material respects, the aspects of State Street's
policies and procedures
that may be relevant to a Fund's internal control structure
relating to the
Worksheet, (2) the control structure policies and procedures
included in the
description were suitably designed to achieve the control
objectives specified
in the description, if those policies and procedures were
complied with
satisfactorily, and (3) such policies and procedures had
been placed in
operation as of June 30, 1994. The control objectives were
specified by
Prudential Mutual Fund Management. Our examination was
performed in accordance
with standards established by the American Institute of
Certified Public
Accountants and included those procedures we considered
necessary in the
circumstances to obtain a reasonable basis for rendering our
opinion.
In our opinion, the accompanying description of the
aforementioned application
presents fairly, in all material respects, the relevant
aspects of State
Street's policies and procedures that had been placed in
operation as of
June 30, 1994. Also, in our opinion, the policies and
procedures, as
described, are suitably designed to provide reasonable
assurance that the
specified control objectives would be achieved if the
described policies and
procedures were complied with satisfactorily.
In addition to the procedures we considered necessary to
render our opinion as
expressed in the previous paragraph, we applied tests to
specific policies and
procedures, listed in Section I, to obtain evidence about
their effectiveness
in meeting the control objectives, described in Section I
during the period
from July 1, 1993 to June 30, 1994. The nature, timing,
extent, and results of
the tests are listed in Section II. In our opinion the
policies and procedures
that were tested, as described in Section II, were operating
with sufficient
effectiveness to provide reasonable, but not absolute,
assurance that the
control objectives specified in Section I were achieved
during the period from
July 1, 1993 to June 30, 1994.
The relative effectiveness and significance of specific
policies and procedures
at State Street, and their effect on assessments of control
risk on the Funds
are dependent on their interaction with the policies,
procedures, and other
factors present at individual Funds. We have performed no
procedures to
evaluate the effectiveness of policies and procedures at
individual Funds in
connection with this report.
The description of policies and procedures at State Street
is as of June 30,
1994, and information about tests of the operating
effectiveness of specified
policies and procedures covers the period from July 1, 1993
to June 30, 1994.
Any projection of such information to the future is subject
to the risk that,
because of change, the description may no longer portray the
system in
existence. The potential effectiveness of specified
policies and procedures at
State Street is subject to inherent limitations and,
accordingly, errors or
irregularities may occur and not be detected. Furthermore,
the projection of
any conclusions, based on our findings, to future periods is
subject to the
risk that changes may alter the validity of such
conclusions.
This report is intended solely for use by the management and
Boards of
Directors/Trustees of the Funds, the independent auditors of
the Funds and the
Securities and Exchange Commission.
July 28, 1994
SECTION I
Policies and Procedures Placed in
Operation
Prudential Dual Pricing Worksheet
Effective January 22, 1990, the Funds, offered by Prudential
Securities
Incorporated (formerly Prudential-Bache Securities, Inc.)
and Prudential Mutual
Fund Distributors, Inc., adopted a dual pricing system. The
dual pricing
system consists of two classes of shares (Class A and Class
B for all funds
except the Florida Series of Prudential Municipal Series
Fund. This Fund
offers Class A and Class D shares.) for the Funds. The
Class A shares are
subject to a front-end sales load and the Class B and Class
D shares are
subject to a contingent deferred sales charge. Each of the
classes of shares
represent interests in the same portfolio of investments of
the respective Fund
and are identical in all respects, except that each class is
subject to
different distribution expenses and has exclusive voting
rights with respect to
the Rule 12b-1 distribution plan pursuant to which such
distribution expenses
are paid.
In order to allocate income and expenses between the two
classes of shares,
State Street Bank and Trust Company (the Funds' custodian
and recordkeeper)
utilizes the Prudential Dual Pricing Worksheet (the
"Worksheet") (see Exhibit
I). The Worksheet is a manual supplementary application
that extracts relevant
data from the Funds' primary accounting system, allocates
income and expenses
between the two classes of shares and computes the daily net
asset value and,
if applicable, the dividend/distribution for each class of
shares. Internal
accounting controls that are relevant to the Fund can be
divided into two
components - controls related to the mutual fund accounting
system resident at
State Street Bank and Trust Company (the "primary accounting
system") and
controls related to the Worksheet.
The spcific control objectives and policies and procedures
relating to the
Worksheet are described on pages 4, 5 and 6. A description
of the tests of the
policies and procedures designed to obtain evidence about
the operating
effectiveness of those policies and procedures in achieving
the specific
control objectives is included in Section II.
Control Objectives and Policies and
Procedures
Prudential Dual Pricing Worksheet
The Worksheet is a supplementary manual application to the
Funds' primary
accounting system. Certain data is extracted from the
primary accounting
system to allocate income and expenses and to calculate the
daily net asset
value and, if applicable, dividends/distributions for each
class of shares.
The primary accounting system includes the details of
transactions in
accordance with the Investment Company Act of 1940, as
amended.
The following represents the internal accounting control
objectives and
policies and procedures for the allocation of income and
expenses and the
computation of the net asset value and, if applicable, the
dividend/distribution for each class of shares utilizing the
Worksheet. It
does not cover the internal accounting control policies and
procedures
surrounding the processing of information into the Funds'
primary accounting
system.
CONTROL
POLICIES CONTROL
OBJECTIVES AND PROCEDURES
A. Capital share activity
as reported by the
1. Daily, the transfer
agent forwards
reports of
Fund's transfer agent is recorded for each
capital share activity
for each class which
class in an accurate and timely manner by includes a
summary of
subscriptions,
the Fund. redemptions,
exchanges and other
information (the
"Supersheet"). The
opening day's
balance for shares
outstanding
and current day
activity is recorded
on the Worksheet.
2. Estimated
interim share activity
for the current day
not recorded in the
Supersheet is
received via telefax from
the transfer agent
and is recorded for
each class on the
Worksheet.
3. A report of
outstanding shares
eligible for
dividends is received from
the transfer agent
and is recorded for
each class on the
Worksheet.
B. Net Asset Value
("NAV") and, if
applicable, 1.
The prior days
ending NAV per share
the dividend/distribution for each class
(unrounded) for each class is
agreed to the
are accurately computed on a daily basis. prior
day's Worksheet.
2. The daily net
capital stock
activity for each
class for the current
day is agreed to the
Supersheet as
described in Control
Procedures A.1, 2.
and 3., above.
CONTROL POLICIES
CONTROL OBJECTIVES AND PROCEDURES
3. Percentage
Assets by Class and
Percentage Dividend
Assets by Class are
calculated for each
class based upon
information from the
prior day
Worksheet, the
Supersheet and the
telefax from the
transfer agent.
4. Allocate investment
income between
classes based on the
appropriate asset
allocation
percentage for each class.
5. Agree composite
income accounts,
management fees,
other expenses,
realized gains and
losses, and
unrealized
appreciation/depreciation to
the primary
accounting system of the
Fund.
6. Allocate expenses
between classes as
follows:
a. Expenses
directly
attributable
to each
class (12b-1
distribution
expenses)
are calculated and
recorded
to that class.
b. Expenses
attributable to both
classes
are
allocated in accordance
with the
appropriate asset allocation
percentage
for each class.
7. Allocate realized
and unrealized
gains and losses
between the classes in
accordance with the
appropriate asset
allocation
percentage of each class.
8.Record
dividends/distributions to
shareholders of each
class in the
primary accounting
system.
9.Aggregate the net
assets for each class
and agree to the
total net assets per
the primary
accounting system.
10.For each class,
reconcile the current
day's NAV and, if
applicable, the
dividend/distribution to the previous
day's NAV and
dividend/distribution for
each class.
CONTROL POLICIES
CONTROL OBJECTIVES AND PROCEDURES
11.The above procedures
are reviewed by the
Fund supervisor or
manager.
SECTION II
Tests of Operating Effectiveness
Prudential Dual Pricing Worksheet
July 1, 1993 to June 30, 1994
We reviewed the methodology and procedures for calculating
the daily net asset
value and, if applicable, the dividends/distributions of the
two classes of
shares and the allocation of income and expenses between the
two classes of
shares.
The following are the detailed procedures which we performed
with respect to
the Worksheet. These procedures were performed for selected
days encompassing
all Funds subject to dual pricing during the year ended June
30, 1994, which we
believe is a representative sample, to test compliance with
the control
policies and procedures as described in Section I.
Prudential Mutual Fund Management, Inc. is the manager of
the Funds and has
represented to us that adequate facilities are in place to
ensure
implementation of the methodology and procedures for
calculating the net asset
value and dividends/distributions of the two classes of
shares and the
allocation of income and expenses between the two classes of
shares. Based on
our review of the description of the policies and procedures
of the Worksheet,
as described in Section I, and performance of tests of
operating effectiveness
as described in Section II, we concur with such
representation.
Agreed "Prior Day NAV Per Share" to the previous day's
Worksheet.
Agreed "Shares Outstanding Beginning of the Day" to the
previous day's
Worksheet and to the transfer agency records for each
class.
Recalculated "Activity/Estimate" by adding the
estimated interim share
activity reported via fax from the transfer agent and
the current day's
"Capital Stock Activity" reported on the Supersheet for
each class.
Recalculated "Current Shares Outstanding" by adding
"Shares Outstanding
Beginning of the Day" and "Activity/Estimate" for each
class.
Recalculated for each class "Adjusted Total Assets" by
multiplying "Prior
Day NAV Per Share" by "Current Shares Outstanding".
Recalculated "Percentage Assets-Class A/Front End" by
dividing "Adjusted
Total Assets-Class A/Front End" by "Adjusted Total
Assets Composite".
Recalculated "Percentage Assets-Class B(D)/Back End" by
dividing "Adjusted
Total Assets-Class B(D)/Back End" by "Adjusted Total
Assets Composite".
Agreed "Dividend Shares" to the transfer agency records
for each class.
Recalculated "Current Dividend Shares" by adding
"Dividend Shares
Beginning of Day" and "Activity/Estimate" for each
class.
Recalculated for each class "Adjusted Dividend Assets"
by multiplying
"Prior Day NAV Per Share" by "Current Dividend Shares".
Recalculated "Percentage Dividend Assets-Class A/Front
End" by dividing
"Adjusted Dividend Assets-Class A/Front End" by
"Adjusted Dividend Assets
Composite".
Recalculated "Percentage Dividend Assets-Class
B(D)/Back End" by dividing
"Adjusted Dividend Assets-Class B(D)/Back End" by
"Adjusted Dividend
Assets Composite".
Agreed composite total of each component of income to
the primary
accounting system.
Recalculated the allocation for each class of each
component of income for
daily dividend funds by multiplying the composite total
by "Percentage
Dividend Assets-Class A/Front End" and "Percentage
Dividend Assets-Class
B(D)/Back End," and for non-daily dividend funds by
multiplying the
composite total by "Percentage Assets-Class A/Front
End" and "Percentage
Assets-Class B(D)/Back End".
Recalculated "Daily Income," composite and for each
class, by totaling
each component of income.
Agreed composite total "Management Fee" and "Other
Fixed Expenses" to the
primary accounting system.
Recalculated the allocation for each class of
"Management Fee" and "Other
Fixed Expenses" for daily dividend funds by multiplying
the composite
total by "Percentage Dividend Assets-Class A/Front End"
and "Percentage
Dividend Assets-Class B(D)/Back End," and non-daily
dividend funds by
multiplying the composite total by "Percentage Assets-
Class A/Front End"
and "Percentage Assets-Class B(D)/Back End".
Agreed the "12b-1 Fee-Class A/Front End" and "12b-1 Fee-
Class B(D)/Back
End" to the respective "PC Expense Worksheet".
Recalculated "Daily Expense," composite and for each
class, by totaling
"Management Fee," "12b-1 Fee" and "Other Fixed
Expenses".
Recalculated "Daily Net Income" for each class by
subtracting "Daily
Expense" from "Daily Income".
Recalculated "Dividend Rate" for each class for daily
dividend funds by
dividing "Daily Net Income" by "Dividend Shares
Beginning of Day-Class
A/Front End" and "Dividend Shares Beginning of Day-
Class B(D)/Back End".
Agreed "Daily Income" and "Income Distribution" for
each class to the
primary accounting system.
Agreed the "Capital Gain Distribution" to the amount
recorded in the
primary accounting system.
Agreed composite total "Realized Gain/Loss" and
"Unrealized
Appreciation/Depreciation" to the primary accounting
system.
Recalculated the allocation for each class of "Realized
Gain/Loss" and
"Unrealized Appreciation/Depreciation" by multiplying
the composite amount
by the "Percentage Assets-Class A/Front End" and
"Percentage Assets-Class
B(D)/Back End".
Agreed "Prior Days Net Assets" to the previous day's
Worksheet.
Recalculated "Net Assets", composite and for each
class, by totaling
"Daily Net Income", "Income Distributed", "Capital
Stock Activity",
"Capital Gain Distribution", "Realized Gain/Loss",
"Unrealized
Appreciation/Depreciation", and "Prior Days Net
Assets".
Recalculated "NAV Per Share" dividing the "Net Assets-
Class A/Front End"
and "Net Assets - Class B(D)/Back End" by "Current
Shares Outstanding -
Class A/Front End" and "Current Shares Outstanding -
Class B(D)/Back End",
respectively.
Recalculated "Offering Price" for Class A shares by
applying the "Load"
percentage as stated in the fund's prospectus.
