THE PRUDENTIAL
INSTITUTIONAL
FUND
ANNUAL REPORT
SEPTEMBER 30, 1994
GROWTH STOCK FUND
STOCK INDEX FUND
INTERNATIONAL STOCK FUND
ACTIVE BALANCED FUND
BALANCED FUND
INCOME FUND
MONEY MARKET FUND
<PAGE>
THE PRUDENTIAL
TABLE OF
INSTITUTIONAL
CONTENTS
FUND
LETTER TO SHAREHOLDERS 1
GROWTH STOCK FUND 2
STOCK INDEX FUND 6
INTERNATIONAL STOCK FUND 17
ACTIVE BALANCED FUND 22
BALANCED FUND 27
INCOME FUND 33
MONEY MARKET FUND 37
FINANCIAL STATEMENTS 40
NOTES TO FINANCIAL STATEMENTS 46
INDEPENDENT AUDITORS' REPORT 53
FEDERAL INCOME TAX
INFORMATION 54
<PAGE>
THE PRUDENTIAL
LETTER TO
INSTITUTIONAL
SHAREHOLDERS
FUND
November 10, 1994
We are pleased to provide you with the Annual Report of The Prudential
Institutional Fund for the year ended September 30, 1994. During the fiscal
year, the total net assets of the Fund's seven portfolios have grown steadily
from $238.5 million on September 30, 1993 to $493.1 million on September 30,
1994. Each of the portfolios has a distinct investment objective designed to
allow shareholders the opportunity to select various options to match different
goals and risk tolerances.
Economy
The economy grew rapidly in 1994, although at a pace less robust than last
year's fourth quarter growth rate of 6.3%, the strongest in a decade. Gross
Domestic Product has increased at a rate of 3.6% thus far this year. Also,
employment has grown by 270,000 a month, 76,000 more per month than last year,
as measured by the U.S. Bureau of Labor Statistics.
In response to this growth, the Federal Reserve moved to head off potential
inflationary pressures and raised the federal funds rate five times between
February and August from 3% to 4.75%. This, along with continued inflation
concerns, weakness in the dollar and trade tension with Japan, contributed to
increasing long-term interest rates.
Market Review
During the last 12 months, the U.S. stock and bond markets have performed
below average, primarily as a result of the increasing short-and long-term
interest rates. The stock market, as measured by the S&P 500, rose 3.7%. Basic
manufacturing and cyclical industry sectors were stronger sectors, while
consumer areas like retail were weaker.
Continued rising interest rates resulted in declining bond prices. As
measured by the Lehman Aggregate Index, the bond market declined 3.2% on a total
return basis.
International stocks were the bright spot for the fiscal year as the Morgan
Stanley Europe, Australia, Far East Index (EAFE) rose 9.8%.
Fund Performance
For the 12 month period, Fund performance was mixed as some exceeded and some
lagged their relevant benchmarks. With the exception of the International Stock
and Money Market Funds, absolute returns were low and in some cases negative for
the year.
Since each Fund's inception, returns have been positive and compare favorably
with the respective competitive benchmarks. Performance information, comments
from each investment adviser and holdings for each Fund can be found in the
following pages.
While volatility may continue in both stocks and bonds over the near-term,
prudent investors should be rewarded for sticking with a disciplined approach
and not overreacting to shorter-term price movements.
Sincerely,
Mark R. Fetting
President
1
<PAGE>
THE PRUDENTIAL
GROWTH STOCK FUND
INSTITUTIONAL
FUND
OBJECTIVE: Seeks to achieve long-term growth of capital through investment
primarily in equity securities of established companies with above-
average growth prospects. Current income, if any, is incidental.
INVESTMENT APPROACH: The Adviser concentrates
on large capitalization companies with the potential for above-average growth.
Stocks are selected on a company-by-company basis through the use of fundamental
analysis.
The Adviser looks for attractively valued companies that demonstrate superior
sales growth, high levels of unit growth, high return on assets and equity and a
strong balance sheet.
ADVISER: The Growth Stock Fund is managed by Jennison Associates Capital Corp.
Founded in 1969 and acquired by The Prudential in 1985, Jennison adheres to
clearly defined investment philosophies and is dedicated to achieving superior
investment results for institutional investors. Jennison manages over $21
billion in equity, balanced and fixed income accounts.
ADVISER'S COMMENTS: Over the Fund's fiscal year, growth stocks have largely
underperformed the market. The last 12 months have seen interest rates bottom
and then begin a rapid rise as a result of both Federal Reserve Bank actions and
market fears of inflation. This has impacted the valuation of growth stocks and
stocks with higher price earnings ratios. Throughout the first three quarters of
the fiscal year, the larger capitalization, steady growth consumer and health
care groups, a traditional staple for growth stock investing, under performed
relative to other groups. With the economy stronger in manufacturing and
cyclical industries and weaker in consumer areas like retail, the investing
backdrop has been challenging. Another traditional area for finding growth
stocks - technology - was very volatile.
As a result of these trends, it was a difficult time for the Fund. While
occasional periods of underperformance have historically been the case with
growth funds, every effort is being made to ensure that the earnings growth
characteristics of the Fund maintain their high standards. This should
ultimately result in the reversal of this temporary period of underperformance
by growth stocks. Despite the difficulties, technology, health care and selected
consumer stocks were the best contributors over the year, while other consumer,
technology, and financial stocks hurt performance the most. This once again
demonstrates the need to focus on company fundamentals.
We feel that strong growth prospects and modest valuations overall should lead
the Fund's portfolio positions to outperform once again. Results in the latest
quarter seem to indicate we may begin to embark on a period when the environment
for growth stocks is more favorable.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Periods ended 9/30/94 Fund S&P 500
------------------------- ------------- ----------
<S> <C> <C>
One Year................. -0.50% +3.69%
From Inception
(11/5/92)................ +10.36% +8.50%
</TABLE>
Returns from inception are average annual returns. Fund performance figures are
historical and reflect reinvestment of dividends and distributions. Investment
return and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The manager is currently limiting the
expenses of the Fund. Without this reduction of expenses, the total return would
have been lower.
2
<PAGE>
THE PRUDENTIAL
GROWTH STOCK FUND
INSTITUTIONAL
Comparison of Change in Value
FUND
of A $10,000 Investment
(GRAPH)
-------------- Growth Stock Fund - - - - S&P 500 Index
Past performance is no guarantee of future results and an investor's
shares may be worth more or less than their original cost.
This graph is furnished to you in accordance with SEC regulations. It
compares a $10,000 investment in The Prudential Institutional Fund:
Growth Stock Fund (the ``Fund'') with a similar investment in the
Standard & Poor's 500 Index (S&P 500) by portraying the initial account
value at the commencement of operations and subsequent account values at
the end of each fiscal year (September 30) beginning in 1992. For
purposes of the graph and, unless otherwise indicated in the
accompanying table, it has been assumed that all recurring fees
(including management fees) were deducted and all dividends and
distributions were reinvested.
The S&P 500 is a capital-weighted index, representing the aggregate
market value of the common equity of 500 stocks primarily traded on the
New York Stock Exchange. The S&P 500 is an unmanaged index and includes
the reinvestment of all dividends, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in the
Fund. The securities which comprise the S&P 500 may differ substantially
from the securities in the Fund's portfolio. S&P 500 is not the only
index that may be used to characterize performance of growth funds and
other indices may portray different comparative performance.
3
<PAGE>
THE PRUDENTIAL
GROWTH STOCK FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
LONG-TERM INVESTMENTS
Common Stocks--91.5%
Aerospace/Defense--1.4%
34,200 Boeing Co.......................... $ 1,474,875
-----------
Airlines--0.4%
5,250 UAL Corp........................... 455,438
-----------
Banking--2.1%
36,200 Fleet Financial Group, Inc......... 1,362,025
110,600 Hibernia Corp...................... 884,800
-----------
2,246,825
-----------
Beverage--2.4%
53,200 Coca-Cola Co....................... 2,586,850
-----------
Capital Goods--2.2%
52,400 Duracell International, Inc........ 2,390,750
-----------
Computer Software & Services--16.6%
29,500 AutoDesk, Inc...................... 1,843,750
71,500 Cisco Systems, Inc.*............... 1,957,313
Computer Associates International,
33,100 Inc.............................. 1,472,950
49,200 CUC International, Inc.*........... 1,623,600
99,100 Intergraph Corp.*.................. 904,288
54,100 Microsoft Corp.*................... 3,036,362
87,700 Novell, Inc.*...................... 1,293,575
36,100 Oracle Systems Corp.*.............. 1,552,300
42,000 Sybase, Inc.*...................... 1,926,750
70,000 Symbol Technologies, Inc.*......... 2,135,000
-----------
17,745,888
-----------
Consumer Goods--2.8%
Kimberly Clark de Mexico S.A. (ADR)
27,900 (Mexico)......................... 1,170,056
39,300 Lowes Companies, Inc............... 1,517,963
20,200 Whole Foods Market, Inc.*.......... 303,000
-----------
2,991,019
-----------
Cosmetics & Soaps--1.8%
27,900 Gillette Co........................ 1,973,925
-----------
Drugs & Medical Supplies--3.4%
94,100 Astra AB Class A (Sweden).......... $ 2,252,945
26,300 Biogen, Inc.*...................... 1,433,350
-----------
3,686,295
-----------
Electronics--10.9%
14,300 AMP, Inc........................... 1,106,462
45,300 Hewlett-Packard Co................. 3,958,087
55,100 Intel Corp......................... 3,388,650
60,200 Motorola, Inc...................... 3,175,550
-----------
11,628,749
-----------
Financial Services--4.1%
32,700 Block (H&R), Inc................... 1,500,112
18,000 Federal National Mortgage Assn..... 1,417,500
24,900 First Financial Mgmt. Corp......... 1,431,750
-----------
4,349,362
-----------
Health Care Services--2.4%
53,700 Humana, Inc.*...................... 1,268,663
26,300 Value Health, Inc.*................ 1,262,400
-----------
2,531,063
-----------
Hospital Management--3.9%
78,600 United Healthcare Corp............. 4,165,800
-----------
Insurance--2.4%
American International Group,
12,300 Inc.............................. 1,093,162
42,000 Life Re Corp....................... 892,500
12,800 UNUM Corp.......................... 588,800
-----------
2,574,462
-----------
Leisure--1.6%
43,400 Disney (Walt) Co................... 1,687,175
-----------
Lodging--2.1%
18,300 Hilton Hotels Corp................. 1,095,713
34,650 Promus Cos., Inc.*................. 1,165,106
-----------
2,260,819
-----------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
THE PRUDENTIAL
GROWTH STOCK FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Media--3.6%
Clear Channel Communications
22,900 Inc.*............................ $ 1,176,487
Grupo Televisa, S.A. (ADR)
23,700 (Mexico)......................... 1,371,637
25,200 Omnicom Group...................... 1,266,300
-----------
3,814,424
-----------
Miscellaneous Basic Industry--2.7%
28,900 Applied Materials, Inc.*........... 1,351,075
36,300 Cerner Corp.*...................... 1,483,762
-----------
2,834,837
-----------
Misc. Consumer Growth--1.3%
46,600 American Greetings Corp............ 1,345,575
-----------
Office Equipment & Supplies--1.8%
59,100 Compaq Computer Corp.*............. 1,928,138
-----------
Petroleum--1.3%
31,200 Western Atlas, Inc.*............... 1,365,000
-----------
Petroleum Services--2.6%
21,300 Anadarko Petroleum Corp............ 953,175
YPF Sociedad Anonima (ADR)*
71,600 (Argentina)...................... 1,807,900
-----------
2,761,075
-----------
Railroads--1.2%
25,700 Consolidated Rail Corp............. 1,272,150
-----------
Restaurants--1.3%
55,100 McDonald's Corp.................... 1,446,375
-----------
Retail--6.1%
32,900 Bed-Bath & Beyond, Inc.*........... 847,175
6,000 Gap, Inc........................... 197,250
42,300 Heilig Meyers, Co.................. 1,099,800
50,733 Home Depot, Inc.................... 2,130,786
27,900 Kohls Corp.*....................... 1,353,150
64,800 Shaw Industries, Inc............... $ 931,500
-----------
6,559,661
-----------
Technology--3.7%
44,200 Adobe Systems, Inc................. 1,436,500
21,900 BMC Software, Inc.*................ 985,500
18,700 Chiron Corp.*...................... 1,243,550
8,400 LSI Logic Corp.*................... 313,950
-----------
3,979,500
-----------
Telecommunications--4.0%
Ericsson (L.M.) Telephone Co.,
(ADR)
17,300 (Sweden)......................... 929,875
68,300 MCI Communications Corp............ 1,750,188
Telefonos de Mexico S.A. (ADR)
25,600 (Mexico)......................... 1,600,000
-----------
4,280,063
-----------
Transportation--1.4%
Wisconsin Central Transportation
36,000 Corp.*........................... 1,476,000
-----------
Total common stocks
(cost $91,284,417)................. 97,812,093
-----------
Principal
Amount
(000) SHORT-TERM INVESTMENT
- - --------
Repurchase Agreement--4.1%
$ 4,428 Joint Repurchase Agreement Account,
4.83%, 10/3/94 (Note 5)
(cost $4,428,000)................ 4,428,000
-----------
Total Investments--95.6%
(cost $95,712,417; Note 4)......... 102,240,093
Other assets in excess of
liabilities--4.4%.................. 4,715,875
-----------
Net Assets--100%................... $106,955,968
-----------
-----------
</TABLE>
- - ---------------
* Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements.
5
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
FUND
OBJECTIVE: Seeks to provide investment results
that correspond to the price and yield performance
of the S&P 500 Composite Stock Index.
INVESTMENT APPROACH: The portfolio is
managed using a passive, indexing approach
instead of traditional methods of security analysis.
The Advisor tries to accomplish this goal by
purchasing securities that, as a group, reflect the
price and yield performance of the S&P 500.
The Fund will not adopt a temporary defensive
investment posture in times of declining market
conditions; therefore, investors bear the risk of such
market conditions.
ADVISER: Prudential Diversified Investment
Strategies (PDI) is a business unit of The Prudential
Investment Corporation dedicated to equity index
and balanced fund investing for institutional
clients. Established in 1975, PDI began managing
equity index portfolios in 1979 and currently
manages $3.7 billion in stock index funds.
ADVISER'S COMMENTS: The Fund continued to
meet its objective of tracking the S&P 500 Index.
Before fees, the Stock Index Fund led the S&P 500
Index by 0.2% for the 12 months ended September
30, 1994.
This has been a disappointing year for stocks.
Between 1926 and 1993, the total return on the S&P
500 Index has averaged about 10% per year. When
measured against that standard, as well as against
the experience of the 1980's, recent returns have
certainly been discouraging. Most of the blame can
be placed on rising interest rates. Spurred by rising
inflationary expectations, the yield on long-term
Treasury bonds rose steadily from about 6% last fall
to nearly 8%. As a result, bonds became a more
competitive alternative to stocks, thereby
depressing equity prices. Nevertheless, there are
good fundamental reasons to remain optimistic
about the stock market. Stocks presently trade for
roughly 14 times consensus 1995 earnings forecasts.
Although this isn't cheap, it doesn't suggest an
expensive stock market either. Throughout 1994
positive earnings surprises have outnumbered
negative ones and analysts continue to mark-up
earnings estimates at a steady clip. Finally, recent
data indicates that, for the first time in years, the US
has a global competitive advantage. As major
foreign economies emerge from recession, exports
(which account for approximately 20% of S&P
earnings) should support continued profit growth
into 1995.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Periods ended 9/30/94 Fund S&P 500
------------------------- ------- ----------
<S> <C> <C>
One Year................. +3.33% +3.69%
From Inception
(11/5/92)................ +7.85% +8.50%
</TABLE>
Returns from inception are average annual returns. Fund performance figures are
historical and reflect reinvestment of dividends and distributions. Investment
return and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The manager is currently limiting the
expenses of the Fund. Without this reduction of expenses, the total return would
have been lower.
6
<PAGE>
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
Comparison of Change in Value
FUND
of A $10,000 Investment
(GRAPH)
-------------- Stock Index Fund - - - - S&P 500 Index
Past performance is no guarantee of future results and an investor's
shares may be worth more or less than their original cost.
This graph is furnished to you in accordance with SEC regulations. It
compares a $10,000 investment in The Prudential Institutional Fund:
Stock Index Fund (the ``Fund'') with a similar investment in the
Standard & Poor's 500 Index (S&P 500) by portraying the initial account
value at the commencement of operations and subsequent account values at
the end of each fiscal year (September 30) beginning in 1992. For
purposes of the graph and, unless otherwise indicated in the
accompanying table, it has been assumed that all recurring fees
(including management fees) were deducted and all dividends and
distributions were reinvested.
The S&P 500 is a capital-weighted index, representing the aggregate
market value of the common equity of 500 stocks primarily traded on the
New York Stock Exchange. The S&P 500 is an unmanaged index and includes
the reinvestment of all dividends, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in the
Fund. The securities which comprise the S&P 500 may differ substantially
from the securities in the Fund's portfolio. S&P 500 is not the only
index that may be used to characterize performance of equity funds and
other indices may portray different comparative performance.
7
<PAGE>
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
LONG-TERM INVESTMENTS
Common Stocks and Equivalents--86.6%
Aerospace/Defense--1.6%
3,700 Allied-Signal, Inc................. $ 126,262
4,400 Boeing Co.......................... 189,750
500 E-Systems, Inc..................... 20,688
800 General Dynamics Corp.............. 35,000
800 Lockheed Corp...................... 55,700
1,100 Loral Corp......................... 43,313
1,200 Martin Marietta Corp............... 53,400
500 McDonnell Douglas Corp............. 57,750
600 Northrop Corp...................... 27,150
1,800 Raytheon Co........................ 115,425
2,800 Rockwell International Corp........ 95,900
-----------
820,338
-----------
Airlines--0.3%
1,050 AMR Corp.*......................... 54,075
700 Delta Airlines, Inc................ 31,325
1,800 Southwest Airlines Co.............. 40,500
500 USAir Group, Inc................... 2,313
-----------
128,213
-----------
Aluminum--0.4%
2,900 Alcan Aluminum Ltd................. 76,487
1,200 Aluminum Co. of America............ 101,700
750 Reynolds Metals Co................. 42,469
-----------
220,656
-----------
Automobiles & Trucks--2.4%
4,600 Chrysler Corp...................... 206,425
500 Cummins Engine, Inc................ 19,687
1,300 Dana Corp.......................... 36,400
700 Echlin, Inc........................ 21,263
12,900 Ford Motor Co...................... 357,975
9,600 General Motors Corp................ 450,000
1,600 Genuine Parts Co................... 56,200
500 Johnson Controls, Inc.............. 24,875
920 Navistar International Corp.*...... $ 12,765
700 Safety Kleen Corp.................. 11,375
-----------
1,196,965
-----------
Banking--5.0%
5,237 Banc One Corp...................... 156,455
1,400 Bank of Boston Corp................ 37,275
4,800 BankAmerica Corp................... 211,800
1,000 Bankers Trust NY Corp.............. 66,750
1,300 Barnett Banks, Inc................. 57,525
1,300 Boatmen's Bancshares............... 40,381
2,400 Chase Manhattan Corp............... 83,100
3,200 Chemical Banking Corp.............. 112,000
5,000 Citicorp........................... 212,500
1,800 CoreStates Financial Corp.......... 47,925
1,200 First Chicago Corp................. 55,050
1,000 First Fidelity Bancorp............. 42,000
1,100 First Interstate Bank Corp......... 89,237
2,300 First Union Corp................... 99,475
1,800 Fleet Financial Group, Inc......... 67,725
800 Golden West Financial Corp......... 31,700
1,700 Great Western Financial Corp....... 32,725
1,500 H.F. Ahmanson & Co................. 31,313
3,100 KeyCorp............................ 94,550
1,250 Mellon Bank Corp................... 70,312
2,500 Morgan (J.P.) & Co., Inc........... 151,875
1,700 National City Corp................. 47,813
3,500 NationsBank Corp................... 171,500
2,000 NBD Bancorp, Inc................... 57,250
4,100 Norwest Corp....................... 101,475
3,000 PNC Financial Corp................. 77,625
1,500 Shawmut National Corp.............. 31,125
1,700 Suntrust Banks, Inc................ 82,875
1,200 U.S. Bancorp....................... 30,600
700 Wells Fargo & Co................... 101,588
-----------
2,493,524
-----------
Beverages--3.0%
500 Adolph Coors Co.................... 9,250
3,400 Anheuser Busch Cos., Inc........... 172,975
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
- - ------------------------------------------------------------
<C> <S> <C>
Beverages, cont'd.
900 Brown-Forman Corp.................. $ 24,300
16,700 Coca-Cola Co....................... 812,037
10,300 PepsiCo, Inc....................... 341,188
4,800 Seagram Co., Ltd................... 145,200
-----------
1,504,950
-----------
Chemicals--2.9%
1,500 Air Products & Chemicals, Inc...... 70,125
550 Albemarle Corp..................... 7,906
American Cyanamid Company and
1,150 rights........................... 114,425
3,600 Dow Chemical Co.................... 281,700
8,800 duPont (E.I.) de Nemours & Co...... 510,400
1,100 Eastman Chemical Co................ 59,812
1,200 Grace (W.R.) & Co.................. 49,800
600 Hercules, Inc...................... 61,725
1,500 Monsanto Co........................ 120,562
900 Nalco Chemical Co.................. 29,588
900 Rohm & Haas Co..................... 51,413
300 Sigma-Aldrich...................... 10,500
1,900 Union Carbide Corp................. 64,600
-----------
1,432,556
-----------
Chemical - Specialty--0.4%
1,250 Engelhard Corp..................... 33,594
200 First Mississippi Corp............. 4,050
900 Great Lakes Chemical Corp.......... 52,875
1,800 Morton International, Inc.......... 49,500
1,700 Praxair, Inc....................... 41,437
500 Raychem Corp....................... 20,500
-----------
201,956
-----------
Commercial Services--0.1%
1,100 Deluxe Corp........................ 32,313
400 Harland (John H) Co................ 8,400
1,300 Moore Corp., Ltd................... 23,887
500 Ogden Corp......................... 10,500
-----------
75,100
-----------
Computer Software & Services--2.3%
300 AutoDesk, Inc...................... $ 18,750
1,900 Automatic Data Processing, Inc..... 106,638
600 Ceridian Corp.*.................... 14,775
3,300 Cisco Systems, Inc.*............... 90,338
Computer Associates International,
2,100 Inc.............................. 93,450
650 Computer Sciences Corp............. 28,275
500 Intergraph Corp.*.................. 4,562
600 Lotus Development Corp.*........... 22,050
1,100 Micron Technology, Inc............. 37,950
7,500 Microsoft Corp.*................... 420,937
4,700 Novell, Inc.*...................... 69,325
3,800 Oracle Systems Corp.*.............. 163,400
1,200 Sun Microsystems, Inc.*............ 35,250
1,400 Tandem Computers, Inc.*............ 22,750
-----------
1,128,450
-----------
Construction--0.2%
1,200 Fluor Corp......................... 59,700
500 Foster Wheeler Corp................ 17,187
300 Kaufman & Broad Home Corp.......... 4,088
300 Pulte Corp......................... 6,525
-----------
87,500
-----------
Consumer Goods--0.6%
400 Centex Corp........................ 9,250
600 Fleetwood Enterprises, Inc......... 15,075
2,000 Lowes Companies, Inc............... 77,250
2,000 Masco Corp......................... 48,250
1,300 Maytag Corp........................ 20,963
500 Owens Corning Fiberglas Corp....... 16,750
Pioneer Hi Bred International,
1,100 Inc.............................. 34,650
100 Skyline Corp....................... 2,025
600 Stanley Works...................... 24,375
1,000 Whirlpool Corp..................... 51,375
-----------
299,963
-----------
Containers--0.1%
400 Ball Corp.......................... 11,350
600 Bemis, Inc......................... 14,850
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
- - ------------------------------------------------------------
<C> <S> <C>
Containers, cont'd.
1,200 Crown Cork & Seal, Inc.*........... $ 46,200
-----------
72,400
-----------
Cosmetics & Soaps--2.0%
300 Alberto Culver Co.................. 7,012
950 Avon Products, Inc................. 56,763
700 Clorox Co.......................... 36,488
1,900 Colgate-Palmolive Co............... 110,200
2,900 Gillette Co........................ 205,175
International Flavors & Fragrances,
1,450 Inc.............................. 60,356
8,800 Procter & Gamble Co................ 524,700
-----------
1,000,694
-----------
Diversified Gas--0.2%
1,400 Coastal Corp....................... 39,025
300 Eastern Enterprises, Inc........... 7,875
800 Enserch Corp....................... 11,100
700 NICOR, Inc......................... 16,975
300 Oneok, Inc......................... 5,063
-----------
80,038
-----------
Drugs & Medical Supplies--6.6%
10,600 Abbott Laboratories................ 332,575
1,000 ALZA Corp.*........................ 20,625
4,000 American Home Products Corp........ 240,000
1,700 Amgen, Inc......................... 90,525
600 Bard (C.R.), Inc................... 15,000
800 Bausch & Lomb, Inc................. 31,200
3,500 Baxter International, Inc.......... 98,437
900 Becton Dickinson & Co.............. 43,425
1,400 Biomet, Inc.*...................... 17,325
6,650 Bristol-Myers Squibb Co............ 381,543
8,300 Johnson & Johnson Co............... 428,488
3,800 Lilly (Eli) & Co................... 219,925
1,600 Medtronic, Inc..................... 84,600
16,200 Merck & Co., Inc.,................. 575,100
4,200 Pfizer, Inc........................ 290,325
2,500 Schering-Plough Corp............... 177,500
600 St. Jude Medical, Inc.............. $ 21,488
700 United States Surgical Corp........ 18,813
2,200 Upjohn Co.......................... 75,075
1,800 Warner Lambert Co.................. 144,450
-----------
3,306,419
-----------
Electronics--3.3%
1,200 Advanced Micro Devices, Inc.*...... 35,700
1,500 Amdahl Corp........................ 13,125
1,400 AMP, Inc........................... 108,325
1,500 Apple Computer..................... 50,531
300 Cray Research, Inc.*............... 6,150
200 Data General Corp.*................ 2,000
1,800 Digital Equipment Corp............. 47,700
600 EG&G, Inc.......................... 9,150
2,900 Emerson Electric Co................ 172,912
500 Harris Corp........................ 24,312
3,300 Hewlett-Packard Co................. 288,337
5,400 Intel Corp......................... 332,100
7,200 Motorola, Inc...................... 379,800
1,500 National Semiconductors Corp.*..... 23,438
600 Perkin Elmer Corp.................. 18,825
800 Tandy Corp......................... 34,400
400 Tektronix, Inc..................... 15,500
1,200 Texas Instruments, Inc............. 82,050
250 Thomas & Betts Corp................ 16,938
500 Zenith Electronics Corp.*.......... 5,688
-----------
1,666,981
-----------
Financial Services--2.2%
6,400 American Express Co................ 194,400
700 Beneficial Corp.................... 28,525
1,400 Block (H&R), Inc................... 64,225
2,258 Dean Witter Discover & Co.......... 84,957
2,300 Federal Home Loan Mortgage Corp.... 122,762
3,550 Federal National Mortgage Assn..... 279,562
1,100 First Data Corp.................... 55,275
1,200 Household International Corp....... 42,900
1,950 MBNA Corp.......................... 45,094
2,700 Merrill Lynch & Co., Inc........... 93,488
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
- - ------------------------------------------------------------
<C> <S> <C>
Financial Services, cont'd.
1,400 Salomon, Inc....................... $ 55,300
950 Transamerica Corp.................. 47,738
-----------
1,114,226
-----------
Food & Beverage--2.7%
4,431 Archer-Daniels-Midland Co.......... 115,212
1,700 Borden, Inc........................ 23,375
3,200 Campbell Soup Co................... 126,400
3,200 ConAgra, Inc....................... 100,800
1,900 CPC Int'l., Inc.................... 96,188
500 Fleming Cos., Inc.................. 11,687
2,050 General Mills, Inc................. 118,387
700 Giant Foods, Inc................... 15,050
3,300 Heinz (H.J.) Co.................... 120,863
1,100 Hershey Foods Corp................. 49,500
2,950 Kellogg Co......................... 169,256
1,300 Pet, Inc........................... 25,675
900 Quaker Oats Co..................... 68,850
1,300 Ralston Purina Co.................. 53,788
6,100 Sara Lee Corp...................... 137,250
2,400 Sysco Corp......................... 60,900
1,500 Wrigley (W.M.) Junior Co........... 61,125
-----------
1,354,306
-----------
Forest Products--1.7%
500 Boise Cascade Corp................. 14,750
1,200 Champion International Corp........ 46,500
500 Federal Paper Board, Inc........... 15,750
1,150 Georgia Pacific Corp............... 87,975
1,600 International Paper Co............. 125,600
1,100 James River Corp................... 26,675
2,100 Kimberly Clark Corp................ 123,375
1,400 Louisiana Pacific Corp............. 46,375
800 Mead Corp.......................... 41,600
400 Potlatch Corp...................... 16,500
1,000 Scott Paper Co..................... 61,125
1,200 Stone Container Corp............... 23,400
700 Temple Inland, Inc................. 38,675
900 Union Camp Corp.................... 44,212
800 Westvaco Corp...................... $ 30,500
2,700 Weyerhaeuser Co.................... 120,488
-----------
863,500
-----------
Gas Pipelines--0.5%
700 Columbia Gas System, Inc.*......... 18,813
1,200 Consolidated Natural Gas Co........ 46,650
3,200 Enron Corp......................... 96,800
1,400 Noram Energy Corp.................. 9,100
1,500 Panhandle Eastern Corp............. 34,875
400 Peoples Energy Corp................ 10,500
500 Transco Energy Co.................. 7,500
1,300 Williams Cos., Inc................. 39,000
-----------
263,238
-----------
Hospital Management--1.0%
1,000 Beverly Enterprises, Inc.*......... 15,375
4,352 Columbia Healthcare Corp........... 189,312
500 Community Psychiatric Centers...... 6,812
800 Manor Care, Inc.................... 21,300
National Medical Enterprises,
2,100 Inc.............................. 35,963
1,100 Service Corp. International........ 28,325
300 Shared Medical Systems Corp........ 8,250
2,100 U.S. HealthCare, Inc............... 97,781
2,100 United Healthcare Corp............. 111,300
-----------
514,418
-----------
Housing Construction
500 Armstrong World Industries......... 21,688
-----------
Insurance--2.8%
1,400 Aetna Life & Casualty Co........... 64,925
Alexander & Alexander Services,
500 Inc.............................. 9,750
2,700 American General Corp.............. 73,237
American International Group,
4,175 Inc.............................. 371,053
1,150 Chubb Corp......................... 81,793
950 CIGNA Corp......................... 58,543
600 Continental Corp................... 8,100
1,100 General Re Corp.................... 116,463
650 Jefferson-Pilot Corp............... 34,369
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Insurance, cont'd.
1,200 Lincoln National Corp.............. $ 44,850
1,000 Marsh & McLennan Cos............... 78,125
1,300 Providian Corp..................... 40,950
800 SAFECO Corp........................ 41,200
1,100 St. Paul Companies, Inc............ 44,688
950 Torchmark Corp..................... 41,681
4,131 Travelers, Inc..................... 135,807
1,000 UNUM Corp.......................... 46,000
1,000 USF&G Corp......................... 13,250
300 USLIFE Corp........................ 9,938
2,200 Wachovia Corp...................... 70,950
-----------
1,385,672
-----------
Leisure--0.8%
500 Bally Entertainment Group*......... 3,750
1,200 Brunswick Corp..................... 24,150
7,000 Disney (Walt) Co................... 272,125
400 Handleman Co....................... 4,300
1,200 Hasbro, Inc........................ 35,400
500 King World Productions, Inc.*...... 19,125
2,300 Mattel, Inc........................ 62,388
200 Outboard Marine Corp............... 4,550
-----------
425,788
-----------
Lodging--0.3%
600 Hilton Hotels Corp................. 35,925
1,700 Marriott International, Inc........ 49,087
1,300 Promus Cos., Inc.*................. 43,713
-----------
128,725
-----------
Machinery--1.2%
250 Briggs & Stratton Corp............. 17,562
2,700 Caterpillar, Inc................... 146,137
400 Cincinnati Milacron, Inc........... 10,300
200 Clark Equipment Co.*............... 13,850
1,500 Cooper Industries, Inc............. 60,375
1,100 Deere & Co......................... 75,487
700 Dover Corp......................... 39,813
1,100 Eaton Corp......................... 52,250
400 Giddings & Lewis, Inc.............. $ 7,125
300 Harnischfeger Industries, Inc...... 7,913
1,400 Ingersoll Rand Co.................. 49,525
502 PACCAR Inc......................... 22,872
600 Parker Hannifin Corp............... 23,925
500 Snap-On Tools Corp................. 17,625
50 SPX Corp........................... 863
400 Timken Co.......................... 15,050
600 Varity Corp.*...................... 22,425
-----------
583,097
-----------
Media--2.2%
2,000 Capital Cities/ABC, Inc............ 164,000
204 CBS, Inc........................... 65,433
3,050 Comcast Corp....................... 46,703
2,000 Donnelley (R.R.) & Sons, Co........ 60,000
1,200 Dow Jones & Co., Inc............... 36,000
2,200 Dun & Bradstreet Corp.............. 126,500
1,850 Gannett, Inc....................... 88,800
1,000 Interpublic Group Cos., Inc........ 33,000
650 Knight-Ridder, Inc................. 32,337
600 McGraw Hill, Inc................... 43,950
200 Meredith Corp...................... 9,300
1,300 New York Times Co.................. 28,438
4,800 Time Warner, Inc................... 168,600
1,600 Times Mirror Co.................... 49,200
900 Tribune Co......................... 48,600
2,196 Viacom, Inc.*...................... 87,566
3,200 Viacom, Inc. (Rights).............. 4,200
-----------
1,092,627
-----------
Mineral Resources--0.9%
American Barrick Resources Corp.
(ADR)
3,700 (Canada)......................... 98,512
500 ASARCO, Inc........................ 16,437
1,150 Cyprus Minerals Corp............... 35,937
1,300 Echo Bay Mines, Ltd................ 17,875
1,700 Homestake Mining Co................ 36,125
1,500 INCO, Ltd.......................... 45,188
1,098 Newmont Mining Corp................ 49,410
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Mineral Resources, cont'd.
900 Phelps-Dodge Corp.................. $ 55,913
500 Pittston Minerals Group............ 14,250
3,100 Placer Dome, Inc................... 77,888
-----------
447,535
-----------
Miscellaneous Basic Industry--4.3%
Bassett Furniture Industries,
225 Inc.............................. 5,878
2,500 Browning Ferris Industries, Inc.... 79,375
400 Crane Co........................... 10,250
800 Ecolab, Inc........................ 17,400
450 FMC Corp.*......................... 28,013
22,000 General Electric Co................ 1,058,750
600 General Signal Corp................ 21,075
700 Grainger (W.W.), Inc............... 41,475
1,500 Illinois Tool Works, Inc........... 64,125
1,500 ITT Corp........................... 125,062
1,000 Mallinckrodt Group Inc............. 32,375
400 Millipore Corp..................... 21,500
400 Morrison Knudsen Corp.............. 6,650
150 NACCO Industries, Inc.............. 8,906
1,433 Pall Corp.......................... 24,719
2,700 PPG Industries, Inc................ 106,987
Rollins Environmental Services,
700 Inc.............................. 4,288
600 Teledyne, Inc...................... 9,525
1,100 Textron, Inc....................... 55,963
400 Trinova Corp....................... 13,950
900 TRW, Inc........................... 65,250
600 Tyco International Limited......... 28,500
1,600 United Technologies Corp........... 100,200
4,500 Westinghouse Electric Corp......... 58,500
6,200 WMX Technologies, Inc.............. 179,025
100 Zurn Industries, Inc............... 1,963
-----------
2,169,704
-----------
Miscellaneous Consumer Growth--2.2%
800 Allergan, Inc...................... 20,300
1,000 American Greetings Corp............ 28,875
1,100 Black & Decker Corp................ 24,062
2,700 Corning, Inc....................... 87,412
1,200 Dial Corp.......................... $ 25,050
4,300 Eastman Kodak Co................... 222,525
600 Jostens, Inc....................... 10,725
Minnesota Mining & Manufacturing
5,500 Co............................... 303,875
100 National Education Corp.*.......... 513
600 Polaroid Corp...................... 21,075
800 Premark International, Inc......... 33,800
2,100 Rubbermaid, Inc.................... 55,913
2,050 Unilever N.V....................... 232,419
1,400 Whitman Corp....................... 23,450
-----------
1,089,994
-----------
Office Equipment & Supplies--2.0%
700 Alco Standard Corp................. 43,487
700 Avery Dennison Corp................ 24,062
3,300 Compaq Computer Corp.*............. 107,663
1,700 Honeywell, Inc..................... 58,650
International Business Machines
7,400 Corp............................. 514,300
2,000 Pitney Bowes, Inc.................. 71,000
2,100 Unisys Corp.*...................... 22,575
1,350 Xerox Corp......................... 144,113
-----------
985,850
-----------
Petroleum--7.9%
1,200 Amerada Hess Corp.................. 55,800
6,400 Amoco Corp......................... 379,200
800 Ashland Oil, Inc................... 28,300
2,050 Atlantic Richfield Co.............. 206,793
1,700 Burlington Resources, Inc.......... 63,750
8,400 Chevron Corp....................... 349,650
16,050 Exxon Corp......................... 924,881
700 Kerr Mcgee Corp.................... 34,038
400 Louisiana Land & Exploration Co.... 17,500
1,300 Maxus Energy Corp.*................ 5,850
5,200 Mobil Corp......................... 411,450
3,900 Occidental Petroleum Corp.......... 81,900
600 Pennzoil Co........................ 28,125
3,400 Phillips Petroleum Co.............. 116,450
6,900 Royal Dutch Petroleum Co........... 740,888
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Petroleum, cont'd.
1,100 Santa Fe Energy Resources, Inc..... $ 10,175
1,400 Sun Co., Inc....................... 40,250
2,200 Tenneco, Inc....................... 97,075
3,300 Texaco, Inc........................ 198,000
3,100 Unocal Corp........................ 87,575
3,600 USX Marathon Group................. 63,900
600 Western Atlas, Inc.*............... 26,250
-----------
3,967,800
-----------
Petroleum Services--0.8%
1,800 Baker Hughes, Inc.................. 33,525
2,200 Dresser Industries, Inc............ 44,550
1,500 Halliburton Co..................... 47,250
300 Helmerich & Payne, Inc............. 8,437
700 McDermott International, Inc....... 18,025
1,200 Oryx Energy Co..................... 16,650
1,000 Rowan Cos., Inc.*.................. 7,250
3,200 Schlumberger, Ltd.................. 174,000
1,100 Sonat, Inc......................... 34,513
-----------
384,200
-----------
Railroads--1.0%
1,200 Burlington Northern, Inc........... 60,300
1,000 Consolidated Rail Corp............. 49,500
1,400 CSX Corp........................... 95,900
1,800 Norfolk Southern Corp.............. 112,050
2,400 Santa Fe Pacific Corp.............. 54,300
2,600 Union Pacific Corp................. 139,425
-----------
511,475
-----------
Restaurants--0.6%
300 Luby's Cafeterias, Inc............. 6,900
9,200 McDonald's Corp.................... 241,500
600 Ryans Family Steak Houses, Inc.*... 3,562
500 Shoney's, Inc.*.................... 6,938
1,300 Wendy's International, Inc......... 18,850
-----------
277,750
-----------
Retail--5.7%
3,300 Albertsons, Inc.................... $ 96,112
1,800 American Stores Co................. 45,450
200 Brown Group, Inc................... 6,725
900 Brunos, Inc........................ 8,325
1,300 Charming Shoppes, Inc.............. 10,562
1,200 Circuit City Stores, Inc........... 31,050
1,000 Dayton Hudson Corp................. 76,500
1,400 Dillard Department Stores, Inc..... 37,450
1,900 Gap, Inc........................... 62,462
100 Genesco, Inc.*..................... 237
Great Atlantic & Pacific Tea,
500 Inc.............................. 12,687
1,000 Harcourt General, Inc.............. 34,375
300 Hartmarx Corp.*.................... 1,612
5,766 Home Depot, Inc.................... 242,172
5,200 K-Mart Corp........................ 92,950
1,400 Kroger Co.*........................ 37,275
4,700 Limited, Inc....................... 92,238
1,000 Liz Claiborne, Inc................. 22,750
300 Longs Drug Stores Corp............. 10,388
3,200 May Department Stores Co........... 126,000
1,400 Melville Corp...................... 49,875
500 Mercantile Stores, Inc............. 20,750
2,000 Newell Co.......................... 44,500
1,000 NIKE, Inc.......................... 58,875
1,100 Nordstrom, Inc..................... 44,000
100 Oshkosh `B` Gosh, Inc.............. 1,438
3,100 Penney (J.C.), Inc................. 160,038
800 Pep Boys - Manny, Moe & Jack....... 27,800
2,752 Price Costco, Inc.*................ 44,204
1,100 Reebok International Ltd........... 39,325
1,000 Rite-Aid Corp...................... 20,750
4,600 Sears Roebuck & Co................. 220,800
1,100 Sherwin Williams Co................ 34,238
600 Stride Rite Corp................... 8,400
900 Supervalue, Inc.................... 23,400
900 TJX Companies, Inc................. 18,900
3,800 Toys `R` Us, Inc.*................. 135,375
29,700 Wal-Mart Stores, Inc............... 694,238
1,600 Walgreen Co........................ 60,200
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Retail, cont'd.
1,000 Winn-Dixie Stores, Inc............. $ 50,000
1,700 Woolworth Corp..................... 29,537
-----------
2,833,963
-----------
Rubber--0.2%
1,100 Cooper Tire & Rubber............... 25,712
300 Goodrich (B.F.) Co................. 12,600
1,900 Goodyear Tire & Rubber Co.......... 63,413
-----------
101,725
-----------
Steel--0.4%
1,200 Armco, Inc......................... 7,200
1,400 Bethlehem Steel Corp............... 29,400
500 Inland Steel Industries, Inc.*..... 19,687
1,100 Nucor Corp......................... 76,588
1,000 USX Corp. - U.S. Steel Group....... 41,875
1,150 Worthington Industries, Inc........ 24,725
-----------
199,475
-----------
Telecommunications--1.9%
7,100 Ameritech Corp..................... 285,775
400 Andrew Corp.*...................... 20,050
1,400 DSC Communications Corp.*.......... 39,900
100 M/A-Com, Inc.*..................... 762
7,000 MCI Communications Corp............ 179,375
3,300 Northern Telecom Ltd............... 114,675
450 Scientific Atlanta, Inc............ 18,394
4,400 Sprint Corp........................ 167,750
7,400 Tele Communications Inc.*.......... 164,187
-----------
990,868
-----------
Textiles--0.2%
National Service Industries,
600 Inc.............................. 15,900
500 Russell Corp....................... 15,250
200 Springs Industries, Inc............ 7,200
900 VF Corp............................ 44,438
-----------
82,788
-----------
Tobacco--1.7%
2,600 American Brands, Inc............... $ 94,250
11,250 Philip Morris Cos., Inc............ 687,656
2,600 UST, Inc........................... 74,425
-----------
856,331
-----------
Trucking & Shipping--0.2%
500 Consolidated Freightways, Inc.*.... 11,000
700 Federal Express Corp.*............. 43,312
500 Roadway Services, Inc.............. 28,750
1,000 Ryder System, Inc.................. 25,625
300 Yellow Corp........................ 5,588
-----------
114,275
-----------
Utility - Communications--6.9%
6,300 AirTouch Communications*........... 180,337
20,300 AT&T Corp.......................... 1,096,200
5,700 Bell Atlantic Corp................. 302,100
6,400 BellSouth Corp..................... 356,800
12,400 GTE Corp........................... 376,650
5,400 NYNEX Corp......................... 207,900
5,400 Pacific Telesis Group.............. 166,050
7,800 Southwestern Bell Corp............. 331,500
2,900 Texas Utilities Co................. 94,613
5,900 U.S. West, Inc..................... 228,625
2,800 Unicom Corp........................ 62,300
1,300 Union Electric Co.................. 45,500
-----------
3,448,575
-----------
Utility - Electric--2.9%
2,400 American Electric Power, Inc....... 75,300
1,900 Baltimore Gas & Electric........... 43,700
2,100 Carolina Power & Light Co.......... 55,387
2,400 Central & South West Corp.......... 53,400
3,000 Consolidated Edison Co............. 74,625
1,900 Detroit Edison Co.................. 48,450
2,200 Dominion Resources, Inc............ 81,950
2,700 Duke Power Co...................... 105,300
3,000 Entergy Corp....................... 69,750
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
THE PRUDENTIAL
STOCK INDEX FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Utility - Electric, cont'd.
2,500 FPL Group, Inc..................... $ 81,250
1,700 Houston Industries, Inc............ 59,925
1,800 Niagara Mohawk Power Corp.......... 23,850
900 Northern States Power Co........... 38,025
2,000 Ohio Edison Co..................... 38,000
1,100 Pacific Enterprises................ 23,375
5,500 Pacific Gas & Electric Co.......... 125,125
3,600 Pacificorp......................... 60,750
2,900 PECO Energy Co..................... 73,587
700 PSI Resources, Inc................. 15,662
3,200 Public Service Enterprise Group.... 84,000
5,700 SCE Corp........................... 74,100
8,400 Southern Co........................ 156,450
-----------
1,461,961
-----------
Total common stocks
(cost $41,492,300)................. 43,388,257
-----------
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
SHORT-TERM INVESTMENTS--10.3%
U. S. Government--0.5%
$ 250 (D) United States Treasury Bill
4.78%, 12/15/94
(cost $247,615)................. $ 247,615
-----------
Repurchase Agreement--9.8%
4,914 Joint Repurchase Agreement
Account,
4.83%, 10/3/94 (Note 5)
(cost $4,914,000)............... 4,914,000
-----------
Total short-term investments
(cost $5,161,615)................. 5,161,615
-----------
Total Investments--96.9%
(cost $46,653,915; Note 4)........ 48,549,872
Other assets in excess of
liabilities--3.1%................. 1,569,452
-----------
Net Assets--100%.................. $50,119,324
-----------
-----------
</TABLE>
--------
* Non-income producing security.
(D)Pledged as initial margin on futures contracts.
ADR--American Depository Receipt.
See Notes to Financial Statements.
16
<PAGE>
THE PRUDENTIAL
INTERNATIONAL STOCK FUND
INSTITUTIONAL
FUND
OBJECTIVE: Seeks to achieve long-term growth of capital through investment in
equity securities of foreign companies. Income is a secondary objective.
INVESTMENT APPROACH: While the Fund may invest anywhere outside the U.S., it is
expected that most investments will be made in developed countries in North
America, Western Europe and the Pacific Basin.
The Adviser maintains a consistently applied valuation process and remains
sensitive to stock prices and keeping a long-term, global perspective. To this
end, each market is screened for undervalued securities using both historical
and forecasted data.
ADVISER: The Fund's Adviser is Mercator Asset Management, a wholly-owned
subsidiary of The Prudential. Mercator is dedicated to global and international
common stock investing. Organized in 1984 by senior professionals formerly
associated with Templeton Investment Counsel, Mercator is a conservative,
value-oriented manager, which places great emphasis on capital preservation.
Mercator manages $1.7 billion for institutional clients.
ADVISER'S COMMENTS: The fiscal year's total return for the Fund was +21.7%,
significantly higher than the historical average annual return for foreign
stocks. The early part of the fiscal year saw interest rates trending down with
stock and bond prices moving higher. A global stock and bond market correction
began in February and continued through fiscal year-end. At the moment, the
focus doesn't appear to be on earnings, which Mercator thinks are good for the
stocks in your portfolio. The weak U.S. dollar has also given some investors
cause for concern, in spite of the fact that U.S. holders of foreign stocks
usually benefit from dollar weakness. The global economic picture continues to
improve as the economies of most industrial nations have or are about to emerge
from recession. Inflation, on a global basis remains subdued; a positive for
capital markets.
The Fund's strong performance this year resulted primarily from some emphasis on
European cyclical companies and our avoidance of the Japanese market, which
looked overvalued. Initial investments in Argentina were made where there are a
number of attractively priced companies. Mercator likes both Mexico and Korea on
a longer-term basis. We have put money into Germany for the first time in a long
while and have taken new positions in Finland. Good values are also identifiable
in the Netherlands and Norway. We believe the Fund, when viewed on a price to
cash flow, price to book multiple and forecasted earnings growth, offers good
value.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
EAFE In-
Periods ended 9/30/94 Fund dex
------------------------- -------- ----------
<S> <C> <C>
One Year................. +21.71% +9.83%
From Inception
(11/5/92)................ +24.03% +22.08%
</TABLE>
Results from inception are average annual returns. Fund performance figures are
historical and reflect reinvestment of dividends and distributions. Investment
return and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. Investing in foreign markets involves
additional risks such as currency fluctuations and political and social
developments, which are described in detail in the Fund's prospectus. The
manager is currently limiting the expenses of the Fund. Without this reduction
of expenses, the total return would have been lower.
17
<PAGE>
THE PRUDENTIAL
INTERNATIONAL STOCK FUND
INSTITUTIONAL
Comparison of Change in Value
FUND
of A $10,000 Investment
(GRAPH)
-------------- International Stock Fund - - - - MS EAFE Index
Past performance is no guarantee of future results and an investor's
shares may be worth more or less than their original cost.
This graph is furnished to you in accordance with SEC regulations. It
compares a $10,000 investment in The Prudential Institutional Fund:
International Stock Fund (the ``Fund'') with a similar investment in the
Morgan Stanley ``EAFE'' Index by portraying the initial account values
at the commencement of operations and subsequent account values at the
end of each fiscal year (September 30) beginning in 1992. For purposes
of the graph and, unless otherwise indicated in the accompanying table,
it has been assumed that all recurring fees (including management fees)
were deducted and all dividends and distributions were reinvested.
The EAFE Index is an arithmetical average weighted by market value of
the performance of 1023 companies representing the stock markets of
Europe, Australia, New Zealand and the Far East. The EAFE Index is an
unmanaged index and includes the reinvestment of all dividends, but does
not reflect the payment of transaction costs and advisory fees
associated with an investment in the Fund. The securities which comprise
the EAFE Index may differ substantially from the securities in the
Fund's portfolio. The EAFE Index is not the only index that may be used
to characterize performance of international equity funds and other
indices may portray different comparative performance.
18
<PAGE>
THE PRUDENTIAL
INTERNATIONAL STOCK FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - -------------------------------------------------------------
LONG-TERM INVESTMENTS
Common Stocks and Equivalents--90.3%
Argentina--2.9%
22,000 Telecom Argentina ............... $ 1,469,600
(Utilities)
60,000 YPF Sociedad Anonima (ADR)* ..... 1,515,000
(Oil & Gas) -----------
2,984,600
-----------
Australia--5.7%
610,000 CSR, Ltd. ....................... 2,023,232
(Multi-Industry)
240,000 National Australia Bank Ltd. .... 1,833,702
(Commercial Banking)
800,000 Pioneer International Ltd. ...... 1,984,142
(Building Materials & -----------
Components)
5,841,076
-----------
Belgium--1.3%
11,000 Groupe Brussels Lambert S.A. .... 1,371,855
(Commercial Banking) -----------
Canada--3.2%
86,000 Bank of Nova Scotia ............. 1,681,001
(Commercial Banking)
106,000 MacMillan Bloedel Ltd. .......... 1,588,480
(Forestry & Paper) -----------
3,269,481
-----------
Finland--4.0%
220,000 Enso-Gutzeit, Class R ........... 2,053,138
(Forestry & Paper)
100,000 Outokumpu O.V. .................. $ 2,024,770
(Metals-Non Ferrous) -----------
4,077,908
-----------
France--6.5%
13,500 Bon Marche ...................... 2,018,120
(Consumer Goods)
7,200 Chargeurs Reunis S.A. ........... 1,657,984
(Multi-Industry)
22,000 Gan ............................. 1,083,805
(Insurance)
13,400 Peugeot S.A. .................... 1,982,937
(Automobile Manufacturing) -----------
6,742,846
-----------
Germany--1.7%
6,400 Volkswagen A.G. ................. 1,755,287
(Automobile Manufacturing) -----------
Italy--1.4%
54,000 Avir Finanziaria S.P.A. ......... 325,072
(Misc. Materials & Commodities)
730,000 Pirelli, S.P.A. ................. 1,164,073
(Tires & Rubber) -----------
1,489,145
-----------
Mexico--7.4%
210,875 Cementos Mexicanos S.A. ......... 1,948,116
(Misc. Materials & Commodities)
1,200,000 Grupo Financiero Bancomer ....... 1,456,903
(Commercial Banking)
570,263 Grupo Situr S.A. ................ 1,956,051
(Real Estate)
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
THE PRUDENTIAL
INTERNATIONAL STOCK FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - -------------------------------------------------------------
Mexico, cont'd.
260,000 Vitro, S.A. ..................... $ 2,221,895
(Industrial Components) -----------
7,582,965
-----------
Netherlands--11.2%
14,000 Akzo Nobel N.V. ................. 1,643,317
(Chemicals)
19,000 Gamma Holdings N.V. ............. 1,008,569
(Textiles & Apparel)
45,000 Internationale Nederlander Bank 1,940,994
N.V.
(Insurance)
58,000 KLM Royal Dutch Airlines ........ 1,617,783
(Airlines/Military Technology)
63,000 Knp Bt (kon) Nv ................. 1,884,058
(Forestry & Paper)
72,000 Pakhoed Holdings N.V. ........... 1,884,058
(Energy Equipment & Services)
63,000 Stork N.V. ...................... 1,557,971
(Machinery & Engineering) -----------
11,536,750
-----------
New Zealand--3.8%
750,000 Fletcher Challenge Industries Ltd. 1,919,672
...............................
(Forestry & Paper)
1,040,000 Lion Nathan Ltd. ................ 1,972,971
(Beverages & Tobacco) -----------
3,892,643
-----------
Norway--5.6%
175,000 Aker A.S. ....................... 1,777,670
(Multi-Industry)
106,000 Hafslund Nycomed A.S. ........... 1,747,784
(Health & Personal Care)
55,000 Orkla Borregaard A.S. ........... $ 1,514,148
(Food & Household Products)
40,000 Unitor Shipping Service, A.S. ... 727,262
(Business & Public Services) -----------
5,766,864
-----------
South Korea--5.5%
17,000 Dong Shin Pharmaceuticals ....... 953,550
(Health & Personal Care)
16,850 Korea First Bank ................ 280,587
(Commercial Banking)
20,118 Korea Long Term Credit Bank ..... 592,929
(Commercial Banking)
34,000 Korea Zinc ...................... 864,154
(Metals-Non Ferrous)
9,000 Lucky Development Co.
(including 1,429 rights expiring
October '94).................... 202,830
(Construction & Housing)
4,500 Pohang Iron & Steel Co., Ltd. ... 499,750
(Metals - Steel)
25,000 Sam Yang Co. .................... 913,985
(Misc. Materials & Commodities)
36,120 Tong Yang Cement ................ 1,365,749
(Construction & Housing) -----------
5,673,534
-----------
Spain--5.6%
67,000 Banco Bilbao Vizcaya, S.A. ...... 1,646,600
(Commercial Banking)
18,000 Banco de Andalucia .............. 1,966,869
(Commercial Banking)
260,000 Iberdrola ....................... 1,643,957
(Utilities)
23,614 Prosegur Compania ............... 511,472
(Business & Public Services) -----------
5,768,898
-----------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
THE PRUDENTIAL
INTERNATIONAL STOCK FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - -------------------------------------------------------------
Sweden--4.7%
36,000 Electrolux AB ................... $ 1,699,743
(Appliances)
88,000 SKF International AB ............ 1,531,690
(Consumer Goods)
90,000 Volvo AB ........................ 1,638,524
(Automobile Manufacturing) -----------
4,869,957
-----------
Switzerland--9.5%
2,600 Alusuisse-Lonza Holdings Ltd. ... 1,357,975
(Metals-Non Ferrous)
3,400 Ciba-Geigy Ltd. ................. 1,907,551
(Chemicals)
3,500 Hero ............................ 1,708,706
(Food & Household Products)
6,800 Merkur Holding AG ............... 1,833,779
(Merchandising)
2,000 Sulzer Ltd. ..................... 1,377,814
(Machinery & Engineering)
1,700 Zurich Versicherung ............. 1,541,323
(Insurance) -----------
9,727,148
-----------
United Kingdom--10.3%
212,076 Allied-Lyons PLC ................ 1,887,808
(Beverages & Tobacco)
460,000 Ladbroke Group PLC .............. 1,116,083
(Leisure & Tourism)
350,000 Lloyds Abbey Life PLC ........... $ 1,803,157
(Insurance)
180,000 National Westminster Bank PLC
(ADR)........................... 1,381,081
(Commercial Banking)
135,000 Rank Organisation PLC (ADR) ..... 856,086
(Leisure & Tourism)
495,375 Tesco PLC ....................... 1,837,989
(Food & Household Products)
196,000 Whitbread & Co., Ltd. ........... 1,665,961
(Beverages & Tobacco) -----------
10,548,165
-----------
Total common stocks & equivalents
(cost $84,914,223)................ 92,899,122
-----------
Principal
Amount
(000) SHORT-TERM INVESTMENT
- - ----------
Repurchase Agreement--8.7%
$ 8,958 Joint Repurchase Agreement
Account,
4.83%, 10/3/94 (Note 5)
(cost $8,958,000)............... 8,958,000
-----------
Total Investments--99.0%
(cost $93,872,223; Note 4)........ 101,857,122
Other assets in excess of
liabilities--1.0%............... 967,210
-----------
Net Assets--100%.................. $102,824,332
-----------
-----------
</TABLE>
- - ---------------
* Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements.
21
<PAGE>
THE PRUDENTIAL
ACTIVE BALANCED FUND
INSTITUTIONAL
FUND
OBJECTIVE: Seeks to achieve total returns approaching equity returns, while
accepting less risk than an all-equity portfolio, through an actively-managed
portfolio of equity securities, fixed income securities and money market
instruments.
INVESTMENT APPROACH: Under normal operating
parameters, the Adviser will use the following ranges, as an approximate
percentage of total assets, for each type of security to be purchased by the
Fund:
- 40%-75% will be invested in common stocks, preferred stocks and other
equity-related securities.
- 25%-60% will be invested in investment-grade fixed income securities.
- 0%-35% will be invested in money market instruments.
The Fund's investments will be actively shifted among these asset classes in an
attempt to capitalize on intermediate-term valuation opportunities and maximize
the Fund's total investment return.
ADVISER: Jennison Associates Capital Corp. is dedicated to achieving superior
investment results for institutional investors. Founded in 1969 and acquired by
The Prudential in 1985, Jennison adheres to clearly defined investment
philosophies. Jennison manages over $21 billion in equity, balanced and fixed
income accounts.
ADVISER'S COMMENTS: The past year has represented a challenging investment
environment. The year began with interest rates declining to very low levels and
stock market valuation at the high end of historic valuation parameters. On this
basis, we assumed a relatively cautious outlook for both stocks and bonds, and
took a defensive asset allocation policy.
As it turned out, the bond market experienced a severe corrective phase, with
the Lehman Government/Corporate Bond Index down 4.1% for the year and longer
term government bonds down 13% for the period. The stock market, as measured by
the S&P 500 managed to gain 3.7% for the period, which was better than expected,
but the return masks the significantly worse experience of the average stock.
Given the investment backdrop, we are relatively pleased with the 1% gain that
was achieved for the Fund for the year.
The past six months has shown similar trends to the 12-month experience, as the
stock market has continued to produce better results than bonds, again within
the framework of a rotational stock market. We have maintained our relatively
cautious view of equities, with an exposure at approximately 40% which is within
our 40-75% range, as we remain concerned that equities have yet to experience a
corrective phase. We have, however, taken a more favorable view for the
intermediate outlook for bonds, given the significant backup in interest rates
that has already occurred, and our benign outlook for inflation.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Composite
Periods ended 9/30/94 Fund Index (1)
------------------------- ------- ----------
<S> <C> <C>
One Year................. +1.07% +0.56%
From Inception (1/4/93).. +6.57% +5.34%
</TABLE>
Results from inception are average annual returns. Fund performance figures are
historical and reflect reinvestment of dividends and distributions. Investment
return and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
Past performance is no guarantee of future results. The manager is currently
limiting the expenses of the Fund. Without this reduction of expenses, the total
return would have been lower.
(1) The Composite Index is a weighted average as follows: 60% S&P 500 Index and
40% Lehman Gov't/Corp Index. The Fund, on average, has been invested 41% in
stocks, 33% in bonds and 26% in short-term investments for each of the periods.
The S&P 500 returned 3.69% and 6.54% and the Lehman Gov't/Corp. Index returned
- - -4.14% and 3.51% for each of the periods, respectively.
22
<PAGE>
THE PRUDENTIAL
ACTIVE BALANCED FUND
INSTITUTIONAL
Comparison of Change in Value
FUND
of A $10,000 Investment
(GRAPH)
-------------- Active Balanced Fund . . . . S&P 500 - - - - Lehman
Gov't./Corp. Index
Past performance is no guarantee of future results and an investor's
shares may be worth more or less than their original cost.
This graph is furnished to you in accordance with SEC regulations. It
compares a $10,000 investment in The Prudential Institutional Fund:
Active Balanced Fund (the ``Fund'') with similar investments in the
Lehman Government/Corporate Bond Index (GCI) and the S&P 500 Index (S&P
500) by portraying the initial account values at the commencement of
operations and subsequent account values at the end of each fiscal year
(September 30) beginning in 1993. For purposes of the graph and, unless
otherwise indicated in the accompanying table, it has been assumed that
all recurring fees (including management fees) were deducted and all
dividends and distributions were reinvested.
The GCI is a weighted index comprised of public, fixed rate,
non-convertible domestic corporate debts that are rated at least
investment grade (BBB/Baa or higher) and public obligations of the U.S.
Treasury. The S&P 500 is a capital-weighted index, representing the
aggregate market value of the common equity of 500 stocks primarily
traded on the New York Stock Exchange. The GCI and the S&P 500 are
unmanaged indices and both include the reinvestment of all income, but
do not reflect the payment of transaction costs and advisory fees
associated with an investment in the Fund. The securities which comprise
the GCI and the S&P 500 may differ substantially from the securities in
the Fund's portfolio. The GCI and the S&P 500 are not the only indices
which may be used to characterize performance of actively balanced funds
and other indices may portray different comparative performance.
23
<PAGE>
THE PRUDENTIAL
ACTIVE BALANCED FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
LONG-TERM INVESTMENTS--77.2%
Common Stocks--39.4%
Airlines--0.5%
4,600 UAL Corp........................... $ 399,050
-----------
Automobiles & Trucks--1.3%
22,000 General Motors Corp................ 1,031,250
-----------
Banking--3.3%
34,800 Boatmen's Bancshares............... 1,080,975
29,700 Fleet Financial Group, Inc......... 1,117,462
56,000 Hibernia Corp...................... 448,000
-----------
2,646,437
-----------
Capital Goods--0.5%
9,100 Duracell International, Inc........ 415,188
-----------
Chemicals--0.5%
19,200 Dexter Corp........................ 444,000
-----------
Computer Software & Services--1.9%
14,200 CUC International, Inc.*........... 468,600
31,000 Intergraph Corp.*.................. 282,875
23,000 Novell, Inc.*...................... 339,250
14,800 Symbol Technologies, Inc.*......... 451,400
-----------
1,542,125
-----------
Consumer Goods--0.3%
11,500 Masco Corp......................... 277,438
-----------
Diversified Gas--0.6%
16,600 Coastal Corp....................... 462,725
-----------
Drugs & Medical Supplies--1.6%
9,100 Amgen, Inc.*....................... 484,575
10,100 Biogen, Inc.*...................... $ 550,450
26,800 Wellcome Plc (ADR) ............... 274,700
(United Kingdom) -----------
1,309,725
-----------
Electronics--3.3%
11,300 Hewlett-Packard Co................. 987,337
17,500 Intel Corp......................... 1,076,250
24,400 International Rectifier Corp.*..... 497,150
2,100 Texas Instruments, Inc............. 143,588
-----------
2,704,325
-----------
Food & Beverages--0.6%
23,400 Pet, Inc........................... 462,150
-----------
Forest Products--0.9%
9,900 Georgia Pacific Corp............... 757,350
-----------
Insurance--3.2%
11,900 Aetna Life & Casualty Co........... 551,862
25,200 CIGNA Corp......................... 1,552,950
22,700 Life Re Corp....................... 482,375
-----------
2,587,187
-----------
Lodging--0.9%
12,500 Hilton Hotels Corp................. 748,438
-----------
Media--4.8%
10,000 Dow Jones & Co., Inc............... 300,000
13,300 Dun & Bradstreet Corp.............. 764,750
9,600 McGraw Hill, Inc................... 703,200
40,400 New York Times Co.................. 883,750
9,000 Omnicom Group...................... 452,250
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
THE PRUDENTIAL
ACTIVE BALANCED FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Media, cont'd.
4,700 Scholastic Corp.*.................. $ 229,125
10,300 Tribune Co......................... 556,200
-----------
3,889,275
-----------
Mineral Resources--1.3%
22,974 Newmont Mining Corp................ 1,033,830
-----------
Miscellaneous Basic Industry--1.9%
5,600 Avalon Properties, Inc............. 118,300
21,200 Blanch E W Hldgs, Inc.............. 484,950
Irvine Apartment Communities,
15,300 Inc.............................. 273,488
11,000 United Technologies Corp........... 688,875
-----------
1,565,613
-----------
Miscellaneous Consumer Growth--1.0%
15,200 Eastman Kodak Co................... 786,600
-----------
Petroleum--0.5%
10,000 Western Atlas, Inc.*............... 437,500
-----------
Petroleum Services--4.2%
9,500 Anadarko Petroleum Corp............ 425,125
27,700 Baker Hughes, Inc.................. 515,912
42,000 Dresser Industries, Inc............ 850,500
24,200 Petroleum Geo Svcs A/S (ADR)* .... 468,875
(Norway)
13,700 Tenneco, Inc....................... 604,512
20,300 YPF Sociedad Anonima (ADR)* ...... 512,575
(Argentina) -----------
3,377,499
-----------
Pharmaceuticals--0.2%
11,800 Vertex Pharmaceuticals, Inc........ 168,150
-----------
Railroads--0.9%
15,200 Southern Pacific Rail Corp.*....... 285,000
7,600 Union Pacific Corp................. 407,550
-----------
692,550
-----------
Retail--1.1%
9,000 Harcourt General, Inc.............. 309,375
31,900 Limited, Inc....................... $ 626,038
-----------
935,413
-----------
Steel--0.6%
11,100 USX Corp. -U.S. Steel Group........ 464,812
-----------
Technology--1.0%
15,100 Adobe Systems, Inc................. 490,750
5,000 Chiron Corp.*...................... 332,500
-----------
823,250
-----------
Telecommunications--2.0%
19,600 MCI Communications Corp............ 502,250
8,800 Telefonos de Mexico S.A. (ADR) ... 550,000
(Mexico)
Vodafone Group PLC ...............
(United Kingdom)
18,000 564,750
-----------
1,617,000
-----------
Trucking/Shipping--0.5%
16,100 Ryder System, Inc.................. 412,563
-----------
Total common stocks
(cost $30,545,114)................. 31,991,443
-----------
Principal
Amount Debt Obligations--37.8%
(000) Convertible Bond--0.7%
- - --------
Conner Peripherals, Inc.,
$ 685 6.50%, 3/1/02
(cost $608,684).................... 540,294
-----------
U. S. Government Securities--37.1%
United States Treasury Notes,
2,165 8.875%, 11/15/98................... 2,294,229
4,510 7.50%, 11/15/01.................... 4,515,637
12,565 6.25%, 2/15/03..................... 11,546,104
13,335 5.75%, 8/15/03..................... 11,757,736
-----------
Total U. S. government securities
(cost $32,186,696)................. 30,113,706
-----------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
THE PRUDENTIAL
ACTIVE BALANCED FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Total debt obligations
(cost $32,795,380)................ $30,654,000
-----------
Total long-term investments
(cost $63,340,494)................ 62,645,443
-----------
SHORT-TERM INVESTMENT
Repurchase Agreement--23.1%
Joint Repurchase Agreement
$ 18,768 Account,
4.83%, 10/3/94 (Note 5)
(cost $18,768,000).............. 18,768,000
-----------
Total Investments--100.3%
(cost $82,108,494; Note 4)........ 81,413,443
Liabilities in excess of other
assets--(0.3%).................... (237,013)
-----------
Net Assets--100%.................. $81,176,430
-----------
-----------
</TABLE>
--------
* Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements.
26
<PAGE>
THE PRUDENTIAL
BALANCED FUND
INSTITUTIONAL
FUND
OBJECTIVE: Seeks to realize long-term total return consistent with moderate
portfolio risk.
INVESTMENT APPROACH: Under normal operating
parameters, the Adviser will use the following ranges, as a percentage of total
assets, for each type of security to be purchased by the Fund:
- 25%-50% will be invested in common and preferred stocks and other
equity-related securities.
- 30%-60% will be invested in investment-grade fixed income securities of
intermediate maturities.
- 0%-45% will be invested in money market instruments.
ADVISER: Prudential Diversified Investment Strategies (PDI) is a business unit
of The Prudential Investment Corporation dedicated to equity index and balanced
fund investing for institutional clients. Established in 1975, PDI is among the
oldest quantitatively oriented balanced managers in the country, currently
managing over $17 billion in equity, balanced and fixed income accounts.
ADVISER'S COMMENTS: The Federal Reserve increased short-term interest rates
five times by the end of the third quarter of 1994, in multiple attempts to keep
the economy from overheating. The financial markets were more volatile during
1994 than they have been in several years. Bond traders sold on every piece of
inflationary news, while the stock market remained captive to interest rates.
The bond market lost value during 1994; however, both the bond and cash portions
of the portfolio kept pace with their respective benchmarks. The stock portion,
on the other hand, lagged its benchmark, the S&P 500, because of its
underweighted position in the consumer sector for a large part of the year. In
contrast, gains in the consumer sector resulted in a 700 basis points increase
over the S&P 500 benchmark in fiscal 1993. We continue to expect little more
than normal returns from financial assets over the remainder of 1994. At this
stage of the business cycle, we believe that the risks associated with being out
of the markets exceed those of major declines in stock and bond prices.
Consequently, we are not ready to make a significant commitment to cash. The
Fund's allocation as of September 30, 1994 was 45.5% of net assets in stocks,
39.9% in bonds and 14.6% in cash and equivalents.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Composite
Periods ended 9/30/94 Fund Index (1)
<S> <C> <C>
------------------------- ------- ----------
One Year................. -1.88% +0.19%
From Inception (11/5/92) +8.29% +6.22%
</TABLE>
Results from inception are average annual returns. Fund performance figures are
historical and reflect reinvestment of dividends and distributions. Investment
return and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Past performance
is no guarantee of future results. The manager is currently limiting the
expenses of the Fund. Without this reduction of expenses, the total return would
have been lower.
(1) The Composite Index is a weighted average as follows: 45% S&P 500; 45%
Lehman Brothers Government/Corporate Index; 10% T-Bill return. The Fund, on
average, has been invested approximately 44% in stocks, 42% in bonds and 14% in
short-term investments for each of the periods. The S&P 500 returned 3.69%, and
8.50%; the Lehman Gov't/Corp. Index returned -4.14%, and 4.50%; and T-bills
returned 3.88% and 3.52% for each of the periods, respectively.
27
<PAGE>
THE PRUDENTIAL
BALANCED FUND
INSTITUTIONAL
Comparison of Change in Value
FUND
of A $10,000 Investment
(GRAPH)
-------------- Balanced Fund . . . . S&P 500 - - - - Lehman
Gov't./Corp. Index
Past performance is no guarantee of future results and an investor's
shares may be worth more or less than their original cost.
This graph is furnished to you in accordance with SEC regulations. It
compares a $10,000 investment in The Prudential Institutional Fund:
Balanced Fund (the ``Fund'') with similar investments in the Lehman
Government/Corporate Bond Index (GCI) and the S&P 500 Index (S&P 500) by
portraying the initial account values at the commencement of operations
and subsequent account values at the end of each fiscal year (September
30) beginning in 1992. For purposes of the graph and, unless otherwise
indicated in the accompanying table, it has been assumed that all
recurring fees (including management fees) were deducted and all
dividends and distributions were reinvested.
The GCI is a weighted index comprised of public, fixed rate,
non-convertible domestic corporate debts that are rated at least
investment grade (BBB/Baa or higher) and public obligations of the U.S.
Treasury. The S&P 500 is a capital-weighted index, representing the
aggregate market value of the common equity of 500 stocks primarily
traded on the New York Stock Exchange. The GCI and the S&P 500 are
unmanaged indices and both include the reinvestment of all income, but
do not reflect the payment of transaction costs and advisory fees
associated with an investment in the Fund. The securities which comprise
the GCI and the S&P 500 may differ substantially from the securities in
the Fund's portfolio. The GCI and the S&P 500 are not the only indices
which may be used to characterize performance of balanced funds and
other indices may portray different comparative performance.
28
<PAGE>
THE PRUDENTIAL
BALANCED FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
LONG-TERM INVESTMENTS--85.4%
Common Stocks--45.5%
Aerospace/Defense--1.0%
4,500 Boeing Co.......................... $ 194,063
3,500 Loral Corp......................... 137,813
14,100 Martin Marietta Corp.*............. 282,000
-----------
613,876
-----------
Aluminum--0.7%
5,200 Aluminum Co. of America............ 440,700
-----------
Automobiles & Trucks--0.7%
8,800 Donaldson Co., Inc................. 195,800
9,000 Ford Motor Co...................... 249,750
-----------
445,550
-----------
Banking--2.4%
19,300 Bank of New York, Inc.............. 571,745
12,900 Norwest Corp....................... 319,275
2,900 Summit Bancorporation.............. 60,719
8,100 Washington Mutual Savings Bank..... 165,038
2,800 Wells Fargo & Co................... 406,350
-----------
1,523,127
-----------
Capital Goods--0.3%
Fisher Scientific International,
5,700 Inc.............................. 190,950
-----------
Chemicals--2.0%
5,200 Air Products & Chemicals, Inc...... 243,100
3,500 Dow Chemical Co.................... 273,875
4,800 Eastman Chemical Co................ 261,000
6,800 IMC Fertilizer Group, Inc.......... 302,600
3,300 Imperial Chemical Ind. (ADR)....... 172,425
700 Praxair, Inc....................... 17,063
-----------
1,270,063
-----------
Commercial Services--0.4%
500 DeVRY, Inc.*....................... $ 13,500
8,400 ServiceMaster L.P.................. 212,100
-----------
225,600
-----------
Computer Software & Services--1.1%
7,800 Automatic Data Processing, Inc..... 437,775
3,800 Microsoft Corp.*................... 213,275
4,100 National Data Corp................. 88,150
-----------
739,200
-----------
Consumer Goods--1.2%
8,800 A.T. Cross, Co..................... 146,300
2,100 Danaher Corp....................... 93,450
5,000 Kendall International, Inc......... 301,250
4,400 Modine Manufacturing Co............ 121,000
3,900 Rival Co........................... 85,800
-----------
747,800
-----------
Cosmetics & Soaps--0.3%
2,300 Gillette Co........................ 162,725
-----------
Drugs & Medical Supplies--1.2%
7,700 Abbott Laboratories................ 241,588
9,400 Baxter International, Inc.......... 264,375
3,700 Schering-Plough Corp............... 262,700
-----------
768,663
-----------
Electronics--1.7%
18,300 ADT, Ltd.*......................... 210,450
6,860 Baldor Electric Co................. 166,355
10,300 Emerson Electric Co................ 614,138
6,150 Thermotrex Corp.*.................. 98,400
-----------
1,089,343
-----------
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
THE PRUDENTIAL
BALANCED FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Financial Services--3.2%
5,000 Block (H&R), Inc................... $ 229,375
10,800 Dean Witter Discover & Co.......... 406,350
3,000 Equitable Companies, Inc........... 108,000
9,000 Federal Home Loan Mortgage Corp.... 480,375
5,900 First Data Corp.................... 296,475
1,600 First Financial Management Corp.... 92,000
4,300 GFC Financial Corp................. 153,188
9,000 National Auto Credit, Inc.*........ 109,125
3,800 Penncorp Financial Group, Inc...... 56,525
8,500 Riggs National Corp................ 86,594
2,200 T. Rowe Price & Associates, Inc.... 73,700
-----------
2,091,707
-----------
Food & Beverage--1.4%
26,815 Archer-Daniels-Midland Co.......... 697,190
4,300 Dr. Pepper/Seven Up Cos., Inc.*.... 99,975
4,800 Sbarro, Inc........................ 122,400
-----------
919,565
-----------
Forest Products--0.9%
11,000 Willamette Industries, Inc......... 563,750
-----------
Gas Pipelines--0.2%
6,700 Seagull Energy Corp.*.............. 156,613
-----------
Glass Products--0.2%
5,800 Libbey, Inc........................ 100,050
-----------
Hospital Management--1.5%
10,562 Columbia Healthcare Corp........... 459,447
6,900 Health Care & Retirement Corp.*.... 195,788
5,500 Healthtrust-The Hospital Co.*...... 180,813
National Medical Enterprises,
8,900 Inc.............................. 152,413
-----------
988,461
-----------
Housing Related--1.6%
7,800 Crescent Real Estate Equities...... $ 219,375
Equity Residential Property
7,400 Trust............................ 234,950
3,900 Federal Realty Investment Trust.... 83,363
9,500 Manufactured Home Community, Inc... 190,000
5,900 Toll Brothers, Inc................. 67,113
2,400 Vornado Realty Trust............... 82,200
3,800 Weingarten Realty Investors........ 135,850
-----------
1,012,851
-----------
Insurance--2.1%
American International Group,
4,800 Inc.............................. 426,600
5,100 CCP Insurance, Inc................. 116,663
3,300 Chubb Corp......................... 234,713
2,980 General Re Corp.................... 315,508
3,600 NAC Re Corp........................ 91,800
3,600 Torchmark Corp..................... 157,950
-----------
1,343,234
-----------
Leisure--0.6%
8,500 Carnival Cruise Lines, Inc......... 372,938
-----------
Lodging
200 Marriott International, Inc........ 5,775
-----------
Machinery
1,000 Gorman-Rupp Co..................... 23,375
-----------
Media--2.2%
8,300 American Business Information*..... 122,425
3,600 Capital Cities/ABC, Inc............ 295,200
7,700 Enquirer Star Group, Inc........... 129,938
2,300 Grupo Televisa S.A................. 133,113
(Mexico)
8,300 Rogers Communications, Inc.*....... 125,926
2,500 Scholastic Corp.*.................. 121,875
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
THE PRUDENTIAL
BALANCED FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Media, cont'd.
2,900 TCA Cable TV, Inc.................. $ 70,688
32,000 Television Broadcasts, Ltd.*....... 148,670
5,600 Tribune Co......................... 302,400
-----------
1,450,235
-----------
Mineral Resources--0.5%
11,600 Placer Dome, Inc................... 291,450
-----------
Miscellaneous Basic Industry--5.1%
6,700 Belden, Inc........................ 139,025
5,600 Cabot Corp......................... 152,600
5,200 Duke Realty Investments, Inc....... 130,000
10,700 General Electric Co................ 514,938
10,000 Illinois Tool Works, Inc........... 427,500
8,800 Potash Corp........................ 359,700
6,700 Thermo Electron Corp.*............. 307,363
8,900 Thermo Fibertek, Inc.*............. 130,163
8,800 Tyco International Limited......... 418,000
4,400 Unifi, Inc......................... 110,000
2,900 Valspar Corp....................... 98,963
8,100 Wellman, Inc....................... 276,413
7,000 WMX Technologies, Inc.............. 202,125
-----------
3,266,790
-----------
Miscellaneous Consumer Growth--0.4%
4,400 Eastman Kodak Co................... 227,700
-----------
Office Equipment & Supplies--0.5%
International Business Machines
4,800 Corp............................. 333,600
-----------
Oil & Gas Exploration/Production--0.5%
15,700 Mesa, Inc.*........................ 86,350
8,600 TOTAL S.A. (ADR)................... 251,550
-----------
337,900
-----------
Paper--0.3%
6,000 Caraustar Inds., Inc............... $ 124,125
2,500 Pentair, Inc....................... 98,750
-----------
222,875
-----------
Petroleum--3.0%
4,700 Amoco Corp......................... 278,475
12,300 Baker Hughes, Inc.................. 229,088
Broken Hill Proprietary Ltd.
7,800 (ADR)............................ 451,425
(Australia)
13,100 Cross Timbers Oil Co............... 191,588
2,600 Kaydon Corp........................ 60,450
6,700 Royal Dutch Petroleum Co........... 719,413
-----------
1,930,439
-----------
Petroleum Services--0.2%
2,900 Schlumberger, Ltd.................. 157,688
-----------
Power Generation--0.1%
2,500 AES Corp........................... 49,375
-----------
Railroads--0.3%
4,300 Illinois Central Corp.............. 129,000
900 Santa Fe Pacific Corp.*............ 15,560
3,800 Southern Pacific Rail Corp.*....... 71,250
-----------
215,810
-----------
Retail--1.4%
3,900 Harcourt General, Inc.............. 134,063
4,550 Kellwood Co........................ 109,769
13,200 Newell Co.......................... 293,700
8,600 Sothebys Holdings Inc.............. 110,725
2,600 Tiffany & Co....................... 96,200
4,800 Toys 'R' Us, Inc.*................. 171,000
-----------
915,457
-----------
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
THE PRUDENTIAL
BALANCED FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
Rubber--0.6%
12,500 Goodyear Tire & Rubber Co.......... $ 417,188
-----------
Steel--1.4%
3,000 Carpenter Technology Corp.......... 190,500
12,900 LTV Corp.*......................... 264,450
21,200 Worthington Industries, Inc........ 455,800
-----------
910,750
-----------
Technology--0.3%
American Management Systems,
5,600 Inc.*............................ 131,600
4,500 McWhorter Technologies, Inc.*...... 83,813
-----------
215,413
-----------
Telecommunications--1.8%
7,000 Shaw Communications, Inc........... 52,124
8,184 Tele Communications, Inc.*......... 181,583
14,000 Telefonos de Mexico S.A. (ADR)..... 875,000
(Mexico)
1,100 Telephone & Data Systems, Inc...... 50,600
-----------
1,159,307
-----------
Textiles--0.4%
2,400 Russell Corp....................... 73,200
3,200 VF Corp............................ 158,000
-----------
231,200
-----------
Tobacco--0.4%
1,200 Philip Morris Cos., Inc............ 73,350
5,700 UST, Inc........................... 163,163
-----------
236,513
-----------
Trucking & Shipping--0.2%
5,700 Expeditors International, Inc...... 114,000
-----------
Utility - Communications--1.2%
7,900 Airtouch Communications, Inc.*..... $ 226,138
10,300 AT&T Corp.......................... 556,200
-----------
782,338
-----------
Total common stocks
(cost $27,775,985)................. 29,261,944
-----------
Principal
Amount DEBT OBLIGATIONS
(000) U. S. Government Securities--39.9%
- - --------
United States Treasury Bond,
$ 6,500 11.25%, 2/15/15.................... 8,616,530
United States Treasury Notes,
2,500 7.25%, 11/15/96.................... 2,528,900
4,000 6.00%, 11/30/97.................... 3,891,880
5,000 9.00%, 5/15/98..................... 5,299,200
5,500 6.375%, 1/15/99.................... 5,337,585
-----------
Total U. S. government securities
(cost $27,191,632)................. 25,674,095
-----------
Total long-term investments
(cost $54,967,617)................. 54,936,039
SHORT-TERM INVESTMENT
Repurchase Agreement--13.6%
8,763 Joint Repurchase Agreement Account,
4.83%, 10/3/94 (Note 5)
(cost $8,763,000)................ 8,763,000
-----------
Total Investments--99.0%
(cost $63,730,617; Note 4)......... 63,699,039
Other assets in excess of
liabilities--1.0%................ 613,544
-----------
Net Assets--100%................... $64,312,583
-----------
-----------
</TABLE>
- - ---------------
* Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements.
32
<PAGE>
THE PRUDENTIAL
INCOME FUND
INSTITUTIONAL
FUND
OBJECTIVE: To achieve a high level of income over the longer term while
providing reasonable safety of principal.
INVESTMENT APPROACH: This Fund is primarily an investment grade, intermediate
maturity, fixed income portfolio. It is managed with the objective of
outperforming the Lehman Aggregate Index (an unmanaged benchmark of U.S.
government, corporate, mortgage-and asset-backed securities) is commonly used by
institutional pension funds as a proxy for the U.S. investment grade debt
market. Historically, the returns of the index itself compare favorably with
that of the average general fixed income mutual fund. The Fund attempts to
outperform the index through issue and sector selection. Forecasting interest
rates plays only a subsidiary role in the management of the portfolio.
ADVISER: The Income Fund is managed by Prudential Fixed Income Advisers (PFIA),
a business unit of Prudential Investment Corporation. Organized in 1984, PFIA is
a recognized leader in asset/liability management and other structured bond
portfolios for the institutional marketplace. PFIA manages over $16 billion in
fixed income accounts.
ADVISER'S COMMENTS: The fixed-income markets have followed a decidedly bearish
course over the last 12 months. Evidence of stronger economic growth combined
with fears of inflationary pressure effectively put an end to the 1993 rally.
For the 12 months ending September 30, the Lehman Aggregate returned a
disappointing -3.22%. Mortgages provided the best relative return of -2.03%,
followed by governments with -4.04% and corporates with -4.49%.
The Income Fund continues with several investment themes that have been in place
over the last year; portfolio positioned with less price sensitivity to changes
in interest rates than the Lehman Aggregate Index, emphasis on ``spread''
product such as mortgages, corporates and asset-backeds, and a yield-curve
flattening bias.
The Fund ended the third calendar quarter only modestly overweighted in
mortgages and corporates relative to the benchmark, but fourth quarter
technicals may provide attractive opportunities to increase exposure.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Lehman
Aggregate
Periods ended 9/30/94 Fund Index
------------------------- ------- ----------
<S> <C> <C>
One Year................. -3.91% -3.22%
From Inception (3/1/93).. +1.23% +1.24%
</TABLE>
Results from inception are average annual returns. Fund performance figures are
historical and reflect reinvestment of dividends and distributions. Investment
return and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Past performance
cannot guarantee comparable future results. The manager is currently limiting
the expenses of the Fund. Without this reduction of expenses, the total return
would have been lower.
33
<PAGE>
THE PRUDENTIAL
INCOME FUND
INSTITUTIONAL
Comparison of Change in Value
FUND
of A $10,000 Investment
(GRAPH)
-------------- Income Fund - - - - Lehman Aggregate Index
Past performance is no guarantee of future results and an investor's
shares may be worth more or less than their original cost.
This graph is furnished to you in accordance with SEC regulations. It
compares a $10,000 investment in The Prudential Institutional Fund:
Income Fund (the ``Fund'') with a similar investment in the Lehman
Brothers Aggregate Index (LBAI) by portraying the initial account values
at the commencement of operations and subsequent account values at the
end of each fiscal year (September 30) beginning in 1993. For purposes
of the graph and, unless otherwise indicated in the accompanying table,
it has been assumed that all recurring fees (including management fees)
were deducted and all dividends and distributions were reinvested.
The LBAI is a combination of the Lehman Brothers Government/Corporate,
Mortgage-Backed and Asset-Backed Indices and contains approximately
6,000 issues. The LBAI is an unmanaged index and includes the
reinvestment of all income, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in the
Fund. The securities which comprise the LBAI may differ substantially
from the securities in the Fund's portfolio. The LBAI is not the only
index that may be used to characterize performance of income funds and
other indices may portray different comparative performance.
34
<PAGE>
THE PRUDENTIAL
INCOME FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
LONG-TERM INVESTMENTS--88.9%
Asset Backed Security--2.5%
Standard Credit Card Trust,
$ 1,000 Series 1991-3A, 8.875%, 9/07/99
(cost $1,071,562)................. $ 1,042,180
-----------
Corporate Bonds--14.6%
Atlantic Richfield Co.,
400 9.875%, 3/01/16................... 444,028
Bell Atlantic Financial Services,
Inc.,
300 6.71%, 2/03/03.................... 276,813
Chrysler Corp.,
150 13.00%, 3/01/97................... 153,942
Eastman Kodak Co.,
500 9.875%, 11/01/04.................. 533,665
Equity Lord Realty Corp.,
300 10.50%, 12/30/97.................. 318,810
General Motors Acceptance Corp.,
350 8.00%, 4/10/97.................... 354,459
475 8.15%, 9/17/96.................... 482,571
Grand Metropolitan Investment
Corp.,
800 Zero Coupon, 1/06/04.............. 376,720
Household Finance Corp.,
1,000 7.80%, 11/01/96................... 1,013,010
IC Industries Financial Corp.,
705 8.00%, 7/01/96.................... 714,254
Intermediate American Development
Bank,
435 8.50%, 3/15/11.................... 442,634
SunAmerica, Inc.,
275 6.58%, 1/15/02.................... 249,769
Tenneco Credit Corp.,
400 10.125%, 12/01/97................. 429,316
Union Bank Finland,
250 5.25%, 6/15/96.................... 242,080
-----------
Total corporate bonds
(cost $6,265,019)................. $ 6,032,071
-----------
Foreign Government Obligations--2.3%
New Zealand Government Bond,
$ 500 10.50%, 7/16/00................... 540,313
Province of Quebec,
400 9.00%, 5/08/01.................... 413,875
-----------
Total foreign government
obligations
(cost $1,033,354)................. 954,188
-----------
U. S. Government and Agency
Securities--69.5%
Federal Home Loan Mortgage Corp.,
841 7.00%, 7/01/08.................... 804,444
Federal National Mortgage Assn.,
2,378 7.00%, 9/01/23 - 7/01/24.......... 2,184,248
1,506 8.00%, 9/01/09 - 7/01/24.......... 1,478,529
Government National Mortgage
Assn.,
1,397 7.00%, 2/15/09 - 6/15/23.......... 1,310,716
3,775 7.50%, 12/15/22 - 10/15/24........ 3,545,937
2,988 9.00%, 7/15/18 - 8/15/24.......... 3,069,554
Tennessee Valley Authority,
600 6.875%, 12/15/43.................. 482,484
United States Treasury Bonds,
120 6.25%, 8/15/23.................... 97,387
500 8.75%, 5/15/20.................... 539,530
400 11.25%, 2/15/15................... 530,248
750 12.00%, 8/15/13................... 1,005,818
United States Treasury Notes,
4,500 5.75%, 10/31/97................... 4,353,750
1,700 6.375%, 1/15/99................... 1,649,799
2,400 8.25%, 7/15/98.................... 2,487,384
2,400 8.625%, 8/15/97................... 2,506,872
</TABLE>
See Notes to Financial Statements.
35
<PAGE>
THE PRUDENTIAL
INCOME FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
U. S. Government and Agency Securities, cont'd.
United States Treasury Strips,
$ 1,500 Zero Coupon, 11/15/07............. $ 530,055
1,850 Zero Coupon, 5/15/08.............. 625,855
2,500 Zero Coupon, 8/15/08.............. 828,525
1,500 Zero Coupon, 8/15/11.............. 385,170
1,500 Zero Coupon, 11/15/11............. 376,560
-----------
Total U. S. government and agency
securities
(cost $30,413,230)................ 28,792,865
-----------
Total long-term investments
(cost $38,783,165)................ 36,821,304
-----------
SHORT-TERM INVESTMENTS--17.3%
Corporate Bonds--2.1%
Ashland Oil, Inc.,
400 9.85%, 9/15/95.................... 411,716
Masco Industries, Inc.,
450 10.00%, 3/15/95................... 456,188
-----------
Total corporate bonds
(cost $876,614)................... 867,904
-----------
Repurchase Agreement--15.2%
Joint Repurchase Agreement
6,280 Account,
4.83%, 10/3/94 (Note 5)
(cost $6,280,000)................. 6,280,000
-----------
Total short-term investments
(cost $7,156,614)................. 7,147,904
-----------
Total Investments--106.2%
(cost $45,939,779; Note 4)........ 43,969,208
Liabilities in excess of other
assets--(6.2%).................... (2,567,891)
-----------
Net Assets--100%.................. $41,401,317
-----------
-----------
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
THE PRUDENTIAL
MONEY MARKET FUND
INSTITUTIONAL
FUND
OBJECTIVE: To achieve high current income,
preservation of principal and maintenance of
liquidity.
INVESTMENT APPROACH: The Fund invests in
U.S. dollar-denominated money market instruments,
including commercial paper and bank obligations
such as certificates of deposits and banker's
acceptance notes from domestic and foreign issuers.
The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less and purchase
only instruments maturing in 13 months or less,
which have been determined to present minimal
credit risks. The Fund's yield will fluctuate, and the
Fund seeks to maintain a net asset value of $1.00 per
share for purchases and redemptions.
ADVISER: Prudential Liquidity Asset Manage-
ment, a business unit of The Prudential Investment
Corporation, specializes in short-term fixed income
portfolio management. Formed in 1980, Pru
Liquidity is a recognized leader in the investment of
short-term securities, managing over $21 billion in
short-term client assets.
ADVISER'S COMMENTS: Money market yields
have risen dramatically over the last six months,
and your Fund has worked to take advantage of
these rising short-term interest rates. The Fund's
7-day current yield is now over 4% for the first time
since its inception.
Since September 30, 1993, the Federal Reserve Bank
has launched a battle against potential inflation by
increasing the federal funds rate in several steps
(the interbank overnight lending rate) to 4.75% from
3%. The Fund moved out of concern that a faster
growing economy could potentially re-ignite
inflation. To date, movement in the Consumer Price
Index has been benign, but other indices have been
more troubling. Commodity prices are a concern, as
the Commodities Research Bureau raw industrials
spot index, a measure of prices of materials for
immediate delivery, has risen 22% this year from its
1993 low. The economy has continued to grow
rapidly this year at an annualized rate of 3.3% in the
first quarter of 1994 and 4.1% in the second quarter.
As the Fed tightened, we shortened our maturities
to take advantage of rising interest rates. On
September 30, our weighted average maturity was
36 days, nearly half of what it was a year earlier--62
days. This enabled us to take advantage of new
investments offering higher interest rates as they
came to the market. At the same time, we kept
quality high. At the end of September, all the
portfolio's investments were rated high quality by
two or more nationally recognized statistical rating
agencies, or if unrated, deemed to be of equivalent
quality.
The economy has not yet slowed sufficiently to
prevent the threat of rising inflation. We expect
short-term interest rates will continue to increase
until the Fed is satisfied that the risk has subsided.
We anticipate that there will be further credit
tightening in the very near future.
PERFORMANCE RESULTS:
As of September 30, 1994, the current seven-day
yield was 4.35%. The net asset value remained at
$1.00 per share.
An investment in the Fund is neither insured nor guaranteed by
the U.S. Government and there can be no assurance that the
Fund will be able to maintain a stable net asset value of $1.00 per
share.
37
<PAGE>
THE PRUDENTIAL
MONEY MARKET FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
ASSET BACKED SECURITIES--4.0%
Money Market Auto Loan Trust,
$ 1,000 5.065%, 8/31/95................... $ 1,000,532
Money Market Credit Card Trust,
818 4.96%, 6/12/95.................... 818,182
Premier Auto Trust,
35 3.28%, 2/2/95..................... 35,188
-----------
1,853,902
-----------
BANK NOTES--8.6%
American Express Centurion Bank,
1,000 5.0625%, 9/28/95.................. 999,901
NationsBank,
1,000 5.40%, 5/19/95.................... 999,144
PNC Bank of North America,
1,000 5.02%, 4/21/95.................... 999,514
Republic National Bank,
1,000 4.30%, 3/8/95..................... 998,480
-----------
3,997,039
-----------
CERTIFICATES OF DEPOSIT--DOMESTIC--2.2%
Morgan Stanley Group, Inc.,
1,000 5.25%, 10/7/94.................... 999,125
-----------
CERTIFICATES OF DEPOSIT--
YANKEE--6.5%
Bank of Tokyo, Ltd.,
1,000 4.86%, 10/17/94................... 1,000,000
Sanwa Bank, Ltd.,
1,000 4.81%, 10/11/94................... 1,000,000
Sumitomo Bank, Ltd.,
1,000 5.03%, 10/28/94................... 1,000,000
-----------
3,000,000
-----------
COMMERCIAL PAPER--
DOMESTIC--41.3%
Asset Securitization Cooperative
Corp.,
$ 335 5.00%, 10/5/94.................... $ 334,814
CIT Group Holdings, Inc.,
500 4.81%, 11/9/94.................... 497,395
1,000 4.88%, 12/1/94.................... 991,731
Corporate Receivables Corp.,
1,000 4.95%, 11/1/94.................... 995,738
Countrywide Funding Corp.,
1,000 4.80%, 10/5/94.................... 999,467
General Motors Acceptance Corp.,
1,700 4.90%, 11/14/94................... 1,689,819
Greyhound Financial Corp.,
1,000 5.08%, 10/20/94................... 997,319
GTE Corp.,
1,000 4.85%, 10/14/94................... 998,249
Household Finance Corp.,
1,000 4.90%, 11/17/94................... 993,603
International Business Machines
Corp.,
1,000 4.84%, 10/25/94................... 996,773
ITT Corp.,
1,000 4.82%, 10/3/94.................... 999,732
Merrill Lynch & Co., Inc.,
1,000 4.85%, 10/17/94................... 997,844
Pennsylvania Power & Lighting Co.,
1,664 4.82%, 10/17/94................... 1,660,435
PHH Corp.,
1,000 4.80%, 10/18/94................... 997,733
Pitney Bowes Inc.,
723 4.80%, 10/26/94................... 720,590
Sears Roebuck Acceptance Corp.,
1,000 5.00%, 10/26/94................... 996,528
Smith Barney Shearson, Inc.,
1,000 4.78%, 10/11/94................... 998,672
Weyerhauser Mtge. Corp.,
1,910 4.95%, 10/25/94................... 1,903,697
Weyerhauser Real Estate,
344 4.97%, 10/14/94................... 343,383
-----------
19,113,522
-----------
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
THE PRUDENTIAL
MONEY MARKET FUND
INSTITUTIONAL
PORTFOLIO OF INVESTMENTS
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- - ------------------------------------------------------------
COMMERCIAL PAPER--YANKEE--15.3%
American Honda Finance Corp.,
$ 1,000 5.00%, 10/17/94................... $ 997,778
BAT Capital Corp.,
435 5.00%, 10/26/94................... 433,490
Bridgestone/Firestone, Inc.,
1,000 4.83%, 10/14/94................... 998,256
1,000 4.83%, 10/18/94................... 997,719
DIC Americas, Inc.,
300 4.87%, 10/14/94................... 299,472
MCA Funding Corp.,
1,000 5.12%, 1/17/95.................... 984,640
Michelin Tire Corp.,
400 5.02%, 10/11/94................... 399,442
National Australia Funding,
Delaware Inc.,
1,000 4.93%, 10/31/94................... 995,892
State Street Capital Corp.,
1,000 5.00%, 10/28/94................... 996,250
-----------
7,102,939
-----------
GOVERNMENT COUPON ISSUE--2.2%
Federal Farm Credit Bank,
500 3.48%, 11/1/94.................... 499,951
Federal National Mortgage Assoc.,
500 9.25%, 11/10/94................... 502,611
-----------
1,002,562
-----------
MASTER NOTE--2.2%
Lehman Brothers, Inc.,
1,000 5.25%, 5/23/95.................... 1,000,000
-----------
MEDIUM--TERM OBLIGATIONS--10.8%
Beneficial Corp.,
1,000 4.87%, 7/19/95.................... 999,454
General Motors Acceptance Corp.,
500 6.90%, 5/8/95..................... 503,177
Goldman, Sachs & Co., L.P.,
2,000 5.375%, 10/9/95................... 2,000,000
Merrill Lynch & Co., Inc.,
500 4.885%, 10/2/95................... 499,902
Union Pacific Corp.,
$ 1,000 9.90%, 10/2/94.................... $ 1,000,163
-----------
5,002,696
-----------
TIME DEPOSITS--1.9%
Industrial Bank of Japan,
906 3.525%, 10/3/94................... 906,000
-----------
VARIABLE RATE OBLIGATIONS*--3.2%
Merrill Lynch & Co., Inc.,
500 4.925%, 10/12/94.................. 500,000
Morgan Stanley Group, Inc.,
1,000 5.00%, 11/15/94................... 1,000,000
-----------
1,500,000
-----------
Total Investments--98.2%
(amortized cost $45,477,785**).... 45,477,785
Other assets in excess of
liabilities--1.8%............... 852,947
-----------
Net Assets--100%.................. $46,330,732
-----------
-----------
</TABLE>
--------
* For purposes of amortized cost valuation, the maturity
date of these instruments is considered to be the next
date on which the security can be redeemed at par or the
next date on which the rate of interest is adjusted.
** The cost of securities for federal income tax purposes
is substantially the same as for financial reporting
purposes.
The industry classification of portfolio holdings and other net assets shown as
a percentage of net assets as of September 30, 1994 was as follows:
<TABLE>
<S> <C>
Business Credit (Finance)............. 23.4%
Commercial Banks...................... 19.8
Security Brokers & Dealers............ 17.3
Personal Credit Institutions.......... 16.0
Asset Backed.......................... 6.9
Telecommunications.................... 4.3
Electric Services..................... 3.6
Federal Credit Agencies............... 2.2
Railroads............................. 2.2
Office Machines....................... 1.6
Tobacco............................... 0.9
-----
98.2
Other assets in excess of liabilities 1.8
-----
100.8%
-----
-----
</TABLE>
See Notes to Financial Statements.
39
<PAGE>
THE PRUDENTIAL
STATEMENT OF ASSETS
INSTITUTIONAL
AND LIABILITIES
FUND
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
GROWTH STOCK INTERNATIONAL ACTIVE MONEY
STOCK INDEX STOCK BALANCED BALANCED INCOME MARKET
FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C>
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Assets
Investments, at value*... $102,240,093 $48,549,872 $ 101,857,122 $81,413,443 $63,699,039 $43,969,208 $45,477,785
Cash..................... 644 287 854 263 8,089 706 --
Foreign currency, at
value (cost $104,937
and $113,360,
respectively).......... -- -- 106,150 -- 113,527 -- --
Receivable for
investments sold....... 2,547,970 -- 1,335,371 136,101 1,212,767 -- --
Interest and dividends
receivable............. 75,177 129,883 265,964 473,381 559,563 538,086 163,053
Receivable for Fund
shares sold............ 6,006,889 1,620,822 789,303 905,994 116,931 59,145 710,420
Due from Manager......... -- 2,417 -- -- -- -- --
Deferred expenses and
other assets........... 21,068 59,784 98,059 45,059 77,898 42,505 43,483
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Total assets....... 110,891,841 50,363,065 104,452,823 82,974,241 65,787,814 44,609,650 46,394,741
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Liabilities
Payable for investments
purchased.............. 3,713,611 140,635 1,283,648 1,671,921 1,246,489 3,015,319 --
Payable for Fund shares
reacquired............. 81,967 10,130 98,628 16,786 126,055 139,976 1,547
Accrued expenses......... 50,155 79,378 159,161 55,315 100,628 32,172 48,183
Due to broker-variation
margin................. -- 8,200 -- -- -- -- --
Management fee payable... 78,945 -- 75,583 44,805 725 16,270 9,293
Administration fee
payable................ 11,195 5,398 11,471 8,984 1,334 4,596 4,986
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Total
liabilities............ 3,935,873 243,741 1,628,491 1,797,811 1,475,231 3,208,333 64,009
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net Assets............... $106,955,968 $50,119,324 $ 102,824,332 $81,176,430 $64,312,583 $41,401,317 $46,330,732
------------ ----------- ----------------- ----------- ----------- ----------- -----------
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net assets were comprised
of:
Shares of beneficial
interest, at par....... $ 8,916 $ 4,447 $ 6,929 $ 7,433 $ 5,806 $ 4,412 $ 46,331
Paid-in capital in excess
of par................. 104,146,596 47,039,203 91,209,168 79,525,295 62,304,835 44,193,027 46,284,401
------------ ----------- ----------------- ----------- ----------- ----------- -----------
104,155,512 47,043,650 91,216,097 79,532,728 62,310,641 44,197,439 46,330,732
Undistributed net
investment income...... 103,636 1,146,661 1,411,865 2,343,730 1,990,088 -- --
Accumulated net realized
gain (loss) on
investments............ (3,830,856) 122,431 2,208,375 (4,977) 43,265 (825,551) --
Net unrealized
appreciation
(depreciation) on
investments and foreign
currencies............. 6,527,676 1,806,582 7,987,995 (695,051) (31,411) (1,970,571) --
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net assets, September 30,
1994..................... $106,955,968 $50,119,324 $ 102,824,332 $81,176,430 $64,312,583 $41,401,317 $46,330,732
------------ ----------- ----------------- ----------- ----------- ----------- -----------
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Shares of beneficial
interest issued and
outstanding............ 8,916,134 4,446,658 6,929,145 7,433,158 5,806,020 4,411,907 46,330,732
------------ ----------- ----------------- ----------- ----------- ----------- -----------
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net asset value per
share.................. $ 12.00 $ 11.27 $ 14.84 $ 10.92 $ 11.08 $ 9.38 $ 1.00
------------ ----------- ----------------- ----------- ----------- ----------- -----------
------------ ----------- ----------------- ----------- ----------- ----------- -----------
*Identified cost......... $ 95,712,417 $46,653,915 $ 93,872,223 $82,108,494 $63,730,617 $45,939,779 $45,477,785
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
THE PRUDENTIAL
STATEMENT OF
INSTITUTIONAL
OPERATIONS
FUND
YEAR ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
GROWTH STOCK INTERNATIONAL ACTIVE MONEY
STOCK INDEX STOCK BALANCED BALANCED INCOME MARKET
FUND FUND FUND FUND FUND FUND FUND
------------ ----------- ----------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income
Income
Interest............... $ 120,137 $ 147,146 $ 271,215 $ 1,939,933 $ 1,328,507 $ 2,248,061 $ 1,505,021
DividendsD............. 619,637 973,764 1,561,310 455,383 373,241 -- --
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Total income........... 739,774 1,120,910 1,832,525 2,395,316 1,701,748 2,248,061 1,505,021
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Expenses
Management fee......... 500,141 152,392 787,473 412,941 308,338 189,009 171,766
Administration fee..... 97,886 52,195 93,814 80,820 60,347 51,798 52,294
Custodian's fees and
expenses............. 80,000 139,000 197,000 74,000 114,000 34,000 60,000
Registration fees...... 38,000 20,000 30,000 29,000 33,000 20,000 20,000
Transfer agent's fees
and expenses......... 19,293 10,287 18,489 15,929 11,894 10,207 10,307
Amortization of
organization
expenses............. 13,275 13,275 13,275 13,212 13,275 13,005 13,212
Legal fees............. 11,000 11,000 11,000 11,000 11,000 11,000 11,000
Audit fee.............. 10,000 10,000 12,000 10,000 10,000 10,000 8,000
Reports to
shareholders......... 10,000 10,000 10,000 6,000 10,000 6,000 6,000
Trustees' fees......... 8,572 8,572 8,572 8,572 8,572 8,572 8,572
Miscellaneous.......... 4,233 3,699 5,346 3,739 3,603 3,606 3,889
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Total expenses....... 792,400 430,420 1,186,969 665,213 584,029 357,197 365,040
Less: expense subsidy
(Note 2)............. (77,913) (201,831) (91,229) (75,297) (143,625) (91,216) (136,071)
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net expenses............. 714,487 228,589 1,095,740 589,916 440,404 265,981 228,969
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net investment income.... 25,287 892,321 736,785 1,805,400 1,261,344 1,982,080 1,276,052
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Realized and Unrealized
Gain
(Loss) on Investment
and
Foreign Currency
Transactions
Net realized gain (loss)
on securities.......... (3,784,112) 101,967 2,429,888 119,065 170,465 (826,310) 1,550
Net realized gain (loss)
on futures
transactions........... -- 84,415 -- -- (7,150) (223) --
Net realized gain (loss)
on foreign currency
transactions........... 5,464 24 (194,207) -- 44 -- --
------------ ----------- ----------------- ----------- ----------- ----------- -----------
(3,778,648) 186,406 2,235,681 119,065 163,359 (826,533) 1,550
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net change in unrealized
appreciation
(depreciation) on:
Securities............. 3,531,929 471,775 5,701,535 (1,395,057) (1,878,445) (2,659,530) --
Financial futures
contracts............ -- (90,905) -- -- -- -- --
------------ ----------- ----------------- ----------- ----------- ----------- -----------
3,531,929 380,870 5,701,535 (1,395,057) (1,878,445) (2,659,530) --
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net gain (loss) on
investments and foreign
currencies............. (246,719) 567,276 7,937,216 (1,275,992) (1,715,086) (3,486,063) 1,550
------------ ----------- ----------------- ----------- ----------- ----------- -----------
Net Increase (Decrease)
in Net Assets Resulting
from Operations.......... $ (221,432) $ 1,459,597 $ 8,674,001 $ 529,408 $ (453,742) $(1,503,983) $ 1,277,602
------------ ----------- ----------------- ----------- ----------- ----------- -----------
------------ ----------- ----------------- ----------- ----------- ----------- -----------
D Net of foreign withholding taxes of $5,175, $6,488, $235,519, $2,680 and $5,531, respectively.
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
THE PRUDENTIAL
STATEMENT OF CHANGES
INSTITUTIONAL
IN NET ASSETS
FUND
<TABLE>
<CAPTION>
GROWTH STOCK INTERNATIONAL
STOCK INDEX STOCK
FUND FUND FUND
----------------------------- ------------------------------- -----------------------------
November 5, November 5,
Year 1992* 1992* Year
Ended Through Year Through Ended
September September Ended September September
30, 30, September 30, 30, 30,
1994 1993 1994 1993 1994
------------ ----------- ----------------- ----------- -----------
Increase (Decrease) in
Net Assets
<S> <C> <C> <C> <C> <C>
Operations
Net investment
income............... $ 25,287 $ 48,664 $ 892,321 $ 408,753 $ 736,785
Net realized gain
(loss) on investments
and foreign currency
transactions......... (3,778,648) 84,385 186,406 42,988 2,235,681
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... 3,531,929 2,995,747 380,870 1,425,712 5,701,535
------------ ------------- ------------- ----------------- ------------
Net increase (decrease)
in net assets
resulting from
operations........... (221,432) 3,128,796 1,459,597 1,877,453 8,674,001
------------ ------------- ------------- ----------------- ------------
Net equalization
credits................. 44,776 45,668 289,937 108,290 695,692
------------ ------------- ------------- ----------------- ------------
Dividends and
distributions
Dividends to
shareholders from net
investment income.... (43,709) (22,514) (481,228) (71,436) (98,619)
------------ ------------- ------------- ----------------- ------------
Distributions to
shareholders from net
realized gains....... (131,129) -- (106,939) -- (493,097)
------------ ------------- ------------- ----------------- ------------
Fund share transactions
Net proceeds from
shares sold.......... 80,605,272 49,088,805 29,356,230 27,729,562 86,220,384
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 174,838 22,514 588,167 71,436 591,716
Cost of shares
redeemed............. (21,470,653) (4,290,264) (8,128,767) (2,597,978) (24,473,332)
------------ ------------- ------------- ----------------- ------------
Net increase in net
assets from Fund
share transactions... 59,309,457 44,821,055 21,815,630 25,203,020 62,338,768
------------ ------------- ------------- ----------------- ------------
Net increase............ 58,957,963 47,973,005 22,976,997 27,117,327 71,116,745
Net Assets
Beginning of period.... 47,998,005 25,000 27,142,327 25,000 31,707,587
------------ ------------- ------------- ----------------- ------------
End of period.......... $106,955,968 $47,998,005 $50,119,324 $27,142,327 $102,824,332
------------ ------------- ------------- ----------------- ------------
------------ ------------- ------------- ----------------- ------------
* Commencement of investment operations.
<CAPTION>
INTERNATIONAL ACTIVE
STOCK BALANCED
FUND FUND
----------------- --------------------------------
November 5, January 4,
1992* Year 1993*
Through Ended Through
September September September
30, 30, 30,
1993 1994 1993
------------- -------------- -------------
Increase (Decrease) in
Net Assets
<S> <C> <C> <C>
Operations
Net investment
income............... $ 188,224 $ 1,805,400 $ 253,982
Net realized gain
(loss) on investments
and foreign currency
transactions......... 184,668 119,065 271,775
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... 2,286,460 (1,395,057) 700,006
------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations........... 2,659,352 529,408 1,225,763
------------- ------------- -------------
Net equalization
credits................. 185,770 296,744 491,372
------------- ------------- -------------
Dividends and
distributions
Dividends to
shareholders from net
investment income.... (14,864) (503,768) --
------------- ------------- -------------
Distributions to
shareholders from net
realized gains....... -- (395,817) --
------------- ------------- -------------
Fund share transactions
Net proceeds from
shares sold.......... 31,029,495 56,588,609 37,480,048
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 14,864 899,585 --
Cost of shares
redeemed............. (2,192,030) (15,023,860) (412,654)
------------- ------------- -------------
Net increase in net
assets from Fund
share transactions... 28,852,329 42,464,334 37,067,394
------------- ------------- -------------
Net increase............ 31,682,587 42,390,901 38,784,529
Net Assets
Beginning of period.... 25,000 38,785,529 1,000
------------- ------------- -------------
End of period.......... $31,707,587 $81,176,430 $38,785,529
------------- ------------- -------------
------------- ------------- -------------
* Commencement of investment operations.
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
THE PRUDENTIAL
STATEMENT OF CHANGES
INSTITUTIONAL
IN NET ASSETS
FUND
<TABLE>
<CAPTION>
MONEY
BALANCED INCOME MARKET
FUND FUND FUND
------------------------------- ------------------------------- -------------------------------
November 5, March 1, January 4,
Year 1992* Year 1993* Year 1993*
Ended Through Ended Through Ended Through
September 30, September 30, September 30, September 30, September 30, September 30,
1994 1993 1994 1993 1994 1993
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets
Operations
Net investment
income............... $ 1,261,344 $ 496,213 $ 1,982,080 $ 694,172 $ 1,276,052 $ 508,590
Net realized gain
(loss) on investments
and foreign currency
transactions......... 163,359 615,333 (826,533) 138,218 1,550 9,661
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... (1,878,445) 1,847,034 (2,659,530) 688,959 -- --
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations........... (453,742) 2,958,580 (1,503,983) 1,521,349 1,277,602 518,251
------------- ------------- ------------- ------------- ------------- -------------
Net equalization
credits................ 721,188 178,724 -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Dividends and
distributions
Dividends to
shareholders from net
investment income.... (604,065) (63,360) (1,982,080) (694,172) (1,277,602) (518,251)
------------- ------------- ------------- ------------- ------------- -------------
Distributions to
shareholders from net
realized gains....... (735,383) -- (137,236) -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Fund share transactions
Net proceeds from
shares sold.......... 42,441,610 25,721,891 15,768,473 33,496,854 32,311,167 29,718,814
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 1,339,448 63,360 2,119,316 694,172 1,277,602 518,251
Cost of shares
redeemed............. (6,059,058) (1,221,610) (7,878,160) (4,216) (17,493,001) (3,101)
------------- ------------- ------------- ------------- ------------- -------------
Net increase in net
assets from Fund
share transactions... 37,722,000 24,563,641 10,009,629 34,186,810 16,095,768 30,233,964
------------- ------------- ------------- ------------- ------------- -------------
Net increase............ 36,649,998 27,637,585 6,386,330 35,013,987 16,095,768 30,233,964
Net Assets
Beginning of period.... 27,662,585 25,000 35,014,987 1,000 30,234,964 1,000
------------- ------------- ------------- ------------- ------------- -------------
End of period.......... $64,312,583 $27,662,585 $41,401,317 $35,014,987 $46,330,732 $30,234,964
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
* Commencement of investment operations.
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
THE PRUDENTIAL
FINANCIAL HIGHLIGHTS
INSTITUTIONAL
FUND
<TABLE>
<CAPTION>
GROWTH STOCK INTERNATIONAL
STOCK INDEX STOCK
FUND FUND FUND
------------------------------ ----------------------------------- ------------
Year November 5, November 5, Year
Ended 1992* Year 1992* Ended
September Through Ended Through September
30, September 30, September 30, September 30, 30,
1994 1993 1994 1993 1994
------------ ------------- ------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
PER SHARE
OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 12.10 $ 10.00 $ 11.12 $ 10.00 $ 12.35
------------ ------------- ------------- ----------------- ------------
Income from
investment operations:
Net investment
incomeD................ -- .04 .26 .23 .13
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions........... (.06) 2.08 .11 .94 2.54
------------ ------------- ------------- ----------------- ------------
Total from investment
operations........... (.06) 2.12 .37 1.17 2.67
------------ ------------- ------------- ----------------- ------------
Less distributions:
Dividends from net
investment income...... (.01) (.02) (.18) (.05) (.03)
Distributions from net
realized gains......... (.03) -- (.04) -- (.15)
------------ ------------- ------------- ----------------- ------------
Total distributions..... (.04) (.02) (.22) (.05) (.18)
------------ ------------- ------------- ----------------- ------------
Net asset value, end of
period................. $ 12.00 $ 12.10 $ 11.27 $ 11.12 $ 14.84
------------ ------------- ------------- ----------------- ------------
------------ ------------- ------------- ----------------- ------------
TOTAL RETURN#........... (0.50)% 21.22% 3.33% 11.73% 21.71%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000)........... $ 106,956 $ 47,998 $ 50,119 $ 27,142 $ 102,824
Average net assets
(000).................. $ 71,449 $ 17,592 $ 38,098 $ 18,807 $ 68,476
Ratios to average net
assets: D
Expenses............... 1.00% 1.00%DD .60% .60%DD 1.60%
Net investment
income............... .04% .31%DD 2.34% 2.41%DD 1.08%
Portfolio turnover
rate................... 65% 84% 2% 1% 21%
<CAPTION>
ACTIVE
BALANCED
FUND
-------------------------------
November 5, January 4,
1992* Year 1993*
Through Ended Through
September 30, September 30, September 30,
1993 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
PER SHARE
OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 10.00 $ 11.05 $ 10.00
------------- ------------- -------------
Income from
investment operations:
Net investment
incomeD................ .16 .24 .21
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions........... 2.21 (.12) .84
------------- ------------- -------------
Total from investment
operations........... 2.37 .12 1.05
------------- ------------- -------------
Less distributions:
Dividends from net
investment income...... (.02) (.14) --
Distributions from net
realized gains......... -- (.11) --
------------- ------------- -------------
Total distributions..... (.02) (.25) --
------------- ------------- -------------
Net asset value, end of
period................. $ 12.35 $ 10.92 $ 11.05
------------- ------------- -------------
------------- ------------- -------------
TOTAL RETURN#........... 23.74% 1.07% 10.50%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000)........... $ 31,708 $ 81,176 $ 38,786
Average net assets
(000).................. $ 14,491 $ 58,992 $ 12,815
Ratios to average net
assets: D
Expenses............... 1.60%DD 1.00% 1.00%DD
Net investment
income............... 1.44%DD 3.06% 2.68%DD
Portfolio turnover
rate................... 15% 40% 47%
</TABLE>
- - ---------------
* Commencement of investment operations.
D Net of expense subsidy.
DD Annualized.
# 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
return for periods of less than a full year are not annualized.
See Notes to Financial Statements.
44
<PAGE>
THE PRUDENTIAL
FINANCIAL HIGHLIGHTS
INSTITUTIONAL
FUND
<TABLE>
<CAPTION>
MONEY
BALANCED INCOME MARKET
FUND FUND FUND
------------------------------- ------------------------------- -------------------------------
November 5, March 1, January 4,
Year 1992* Year 1993* Year 1993*
Ended Through Ended Through Ended Through
September 30, September 30, September 30, September 30, September 30, September 30,
1994 1993 1994 1993 1994 1993
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 11.80 $ 10.00 $ 10.33 $ 10.00 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- ------------- -------------
Income from
investment operations:
Net investment
incomeD................ .31 .31 .52 .27 .03 .02
Net realized and
unrealized gain (loss)
on investment and
foreign currency
transactions........... (.52) 1.54 (.91) .33 -- --
------------- ------------- ------------- ------------- ------------- -------------
Total from investment
operations........... (.21) 1.85 (.39) .60 .03 .02
------------- ------------- ------------- ------------- ------------- -------------
Less distributions:
Dividends from net
investment income...... (.23) (.05) (.52) (.27) (.03) (.02)
Distributions from net
realized gains......... (.28) -- (.04) -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total distributions..... (.51) (.05) (.56) (.27) (.03) (.02)
------------- ------------- ------------- ------------- ------------- -------------
Net asset value, end of
period................. $ 11.08 $ 11.80 $ 9.38 $ 10.33 $ 1.00 $ 1.00
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
TOTAL RETURN#........... (1.88)% 18.58% (3.91)% 6.11% 3.32% 2.08%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (000)........... $ 64,313 $ 27,663 $ 41,401 $ 35,015 $ 46,331 $ 30,235
Average net assets
(000).................. $ 44,048 $ 17,401 $ 37,802 $ 25,626 $ 38,170 $ 25,296
Ratios to average net
assets: D
Expenses............... 1.00% 1.00%DD .70% .70%DD .60% .60%DD
Net investment
income............... 2.86% 3.16%DD 5.24% 4.62%DD 3.34% 2.73%DD
Portfolio turnover
rate................... 52% 74% 83% 93% -- --
</TABLE>
- - ---------------
* Commencement of investment operations.
D Net of expense subsidy.
DD Annualized.
# 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
return for periods of less than a full year are not annualized.
See Notes to Financial Statements.
45
<PAGE>
THE PRUDENTIAL
NOTES TO
INSTITUTIONAL
FINANCIAL STATEMENTS
FUND
The Prudential Institutional Fund (the ``Company'') is registered under the
Investment Company Act of 1940 as an open-end, diversified management investment
company. The Company was established as a Delaware business trust on May 11,
1992 and consists of seven separate funds (Fund or Funds): Growth Stock Fund,
Stock Index Fund, International Stock Fund, Active Balanced Fund, Balanced Fund,
Income Fund and Money Market Fund. The Company had no operations until July 7,
1992 when 10,000 shares of beneficial interest (2,500 shares each of Growth
Stock Fund, Stock Index Fund, International Stock Fund and Balanced Fund) were
sold for $100,000 to Prudential Institutional Fund Management, Inc. (``PIFM'').
Investment operations commenced on: November 5, 1992 for the Growth Stock Fund,
Stock Index Fund, International Stock Fund and Balanced Fund; January 4, 1993
for the Active Balanced Fund and Money Market Fund; and March 1, 1993 for the
Income Fund.
The Funds' investment objectives are as follows: Growth Stock Fund--long-term
growth of capital through investment primarily in equity securities of
established companies with above-average growth prospects; Stock Index
Fund--investment results that correspond to the price and yield performance of
Standard & Poor's 500 Composite Stock Price Index; International Stock
Fund--long-term growth of capital through investment in equity securities of
foreign issues with income as a secondary objective; Active Balanced Fund--total
returns approaching equity returns, while accepting less risk than an all-equity
portfolio, through an actively-managed portfolio of equity securities, fixed
income securities and money market instruments; Balanced Fund--long-term total
return consistent with moderate portfolio risk; Income Fund--a high level of
income over the longer term while providing reasonable safety of principal; and
Money Market Fund--high current income, preservation of principal and
maintenance of liquidity, while maintaining a $1.00 net asset value per share.
The ability of issuers of debt securities, other than those issued or
guaranteed by the U.S. Government, held by the Funds to meet their obligations
may be affected by economic developments in a specific industry, region, or
country.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund.
Securities Valuations: Securities, including options, warrants, futures
contracts and options thereon, for which the primary market is on a national
securities exchange, commodities exchange or board of trade and NASDAQ national
market equity securities are valued at the last sale price on such exchange or
board of trade on the date of valuation or, if there was no sale on such day, at
the average of readily available closing bid and asked prices on such day.
Securities, that are actively traded in the over-the-counter market,
including listed securities for which the primary market is believed to be
over-the-counter, shall be valued at the average of the most recently quoted bid
and asked prices provided by a principal market maker or dealer.
U.S. Government securities for which market quotations are available shall be
valued at a price provided by an independent broker/dealer or pricing service.
Securities for which reliable market quotations are not available or for
which the pricing agent or principal market maker does not provide a valuation
or provides a valuation that, in the judgment of one of the subadvisers, does
not represent fair value, shall be valued at fair value as determined under
procedures established by the Trustees.
Quotations of foreign securities in a foreign currency shall be converted to
U.S. dollar
46
<PAGE>
<PAGE>
THE PRUDENTIAL
NOTES TO
INSTITUTIONAL
FINANCIAL STATEMENTS
FUND
equivalents at the current rate obtained from a recognized bank or dealer.
Forward currency exchange contracts shall be valued at the current cost of
covering or offsetting such contracts.
Securities held by the Money Market Fund are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and cost. Short-term securities held by the other Funds which mature in
more than 60 days are valued at current market quotations. Short-term securities
held by the other Funds which mature in 60 days or less are valued at amortized
cost. In the event that a Subadviser determines that amortized cost does not
represent fair value for certain short-term securities with remaining maturities
of 60 days or less, such securities will be valued at market value.
In connection with transactions in repurchase agreements, it is the Company's
policy that its custodian or designated subcustodians, as the case may be under
triparty repurchase agreements, take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. To the extent that any repurchase
transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. If
the seller defaults, and the value of the collateral declines or, if bankruptcy
proceedings are commenced with respect to the seller of the security,
realization of the collateral by the Company may be delayed or limited.
Securities Transactions and Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date and interest income is recorded on the accrual basis.
Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of securities at a set price
for delivery on a future date. Upon entering into a financial futures contract,
a Fund is required to pledge to the broker an amount of cash and/or other assets
equal to a certain percentage of the contract amount. This is known as the
``initial margin''. Subsequent payments, known as ``variation margin'', are made
or received by the Fund each day, depending on the daily fluctuations in the
value of the underlying security. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss until
the contracts expire or are closed, at which time the gain or loss is
reclassified to realized gain or loss. The Funds invest in financial futures
contracts solely for the purpose of hedging their existing portfolio securities
or securities the Funds intend to purchase against fluctuations in value caused
by changes in prevailing market conditions or for other non-speculative
purposes. Should market conditions move unexpectedly, a Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the underlying
hedged assets.
Dollar Rolls: The Fund may enter into dollar rolls in which the Fund sells
securities for delivery in the current month and simultaneously contracts to
repurchase somewhat similar securities on a specified future date. During the
roll period, the Fund forgoes principal and interest paid on the securities. The
Fund is compensated by the interest earned on the cash proceeds of the initial
sale and by the lower repurchase price at the future date.
47
<PAGE>
<PAGE>
THE PRUDENTIAL
NOTES TO
INSTITUTIONAL
FINANCIAL STATEMENTS
FUND
Foreign Currency Translation: The books and records of the Funds are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and liabilities--at
the closing rates of exchange.
(ii) purchases and sales of investment securities, income and expenses--at
the rate of exchange prevailing on the respective dates of such transactions.
Although the net assets of the Funds are presented at the foreign exchange
rates and market values at the close of the fiscal year, the Funds do not
isolate that portion of the results of operations arising as a result of changes
in the foreign exchange rates from the fluctuations arising from changes in the
market prices of securities held at the end of the fiscal year. Similarly, the
Funds do not isolate the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of long-term portfolio
securities sold during the fiscal year. Accordingly, these realized foreign
currency gains (losses) are included in the reported net realized gains (losses)
on investment transactions.
Net realized gains (losses) on foreign currency transactions, if any,
represent net foreign exchange gains (losses) from holding of foreign
currencies, currency gains or losses realized between the trade and settlement
dates of securities transactions, and the difference between the amounts of
dividends and foreign taxes recorded on the Funds' books and the U.S. dollar
equivalent amounts actually received or paid. Net currency gains and losses from
valuing foreign currency denominated assets and liabilities at year end exchange
rates are reflected as a component of net unrealized appreciation/
depreciation on investments and foreign currencies.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the level of governmental supervision and regulation of
foreign securities markets and the possibility of political or economic
instability.
Equalization: The Funds (except for the Income and Money Market Funds) follow
the accounting practice known as equalization by which a portion of the proceeds
from sales and costs of reacquisitions of Fund shares, equivalent on a per share
basis to the amount of distributable net investment income on the date of the
transaction, is credited or charged to undistributed net investment income. As a
result, undistributed net investment income per share is unaffected by sales or
reacquisitions of the Funds' shares.
Dividends and Distributions: Dividends and distributions of each Fund are
declared in cash and automatically reinvested in additional shares of the Fund.
The Income Fund and Money Market Fund will declare dividends of their net
investment income and, for the Money Market Fund, net capital gain (loss), daily
and distribute such dividends monthly. Each other Fund will declare and
distribute a dividend of its net investment income, if any, at least annually.
Except for the Money Market Fund, each Fund will declare and distribute its net
capital gains, if any, at least annually. Distributions of income dividends and
capital gains distributions of each Fund are made on the payment date and
reinvested at the per share net asset value as of the record date or such other
date as the Board may determine. On the ``ex-dividend'' date, the net asset
value per share excludes the dividend (i.e., is reduced by the amount of the
distribution).
Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.
48
<PAGE>
<PAGE>
THE PRUDENTIAL
NOTES TO
INSTITUTIONAL
FINANCIAL STATEMENTS
FUND
Taxes: It is the Funds' policy 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.
Withholding taxes on foreign dividends have been provided for in accordance
with the Funds' understanding of the applicable country's tax rules and rates.
Reclassification of Capital Accounts: Effective October 1, 1993, the Company
began accounting and reporting for distributions to shareholders in accordance
with Statement of Position 93-2: Determination, Disclosure, and Financial
Statement Presentation of Income, Capital Gain, and Return of Capital
Distributions by Investment Companies. As a result of this statement, the
Company changed the classification of distributions to shareholders to disclose
better the differences between financial statement amounts and distributions
determined in accordance with income tax regulations. The effect caused by
adopting this statement was to decrease undistributed net investment income by
$86,916 and increase accumulated net realized gain on investments by $86,916 for
the International Stock Fund compared to amounts previously reported through
September 30, 1993.
For the year ended September 30, 1994, the application of this statement
effected undistributed net investment income (``UNI'') and accumulated net
realized gain (loss) on investments (``G/L'') by the following amounts:
<TABLE>
<CAPTION>
UNI G/L
--------- --------
<S> <C> <C>
Growth Stock
Fund $ 5,464 $ (5,464)
Stock Index
Fund 24 (24)
International
Stock Fund (194,207) 194,207
Balanced Fund 44 (44)
</TABLE>
Net investment income, net realized gains and net assets were not affected by
this change.
Deferred Organizational Expenses: Costs incurred of approximately $450,000,
in connection with the organization and initial registration of the Company have
been deferred and will be amortized ratably over the period of benefit not to
exceed 60 months from the date each of the Funds' commence of investment
operations.
Note 2. Agreements
The Company has entered into a management agreement with PIFM. Pursuant to
this agreement, PIFM has responsibility for all investment advisory services and
supervises the subadviser's performance of such services. PIFM is an indirect,
wholly-owned subsidiary of The Prudential Insurance Company of America
(Prudential).
PIFM has entered into subadvisory agreements with The Prudential Investment
Corporation (``PIC''), Jennison Associates Capital Corp. (``Jennison'') and
Mercator Asset Management, Inc. (``Mercator''), each a wholly-owned subsidiary
of Prudential. Each subadviser will furnish investment advisory services in
connection with the management of the various Funds. Jennison serves as
subadviser to the Growth Stock Fund and the Active Balanced Fund. PIC serves as
subadviser to the Balanced Fund, the Stock Index Fund, the Income Fund and the
Money Market Fund. Mercator serves as subadviser to the International Stock
Fund. PIFM will pay for the costs and expenses attributable to the subadvisory
agreements and the salaries and expenses of all personnel of the Company except
for fees and expenses of unaffiliated Trustees. The Funds will bear all other
costs and expenses.
Each Fund will pay PIFM a fee for its services provided to the Fund that is
computed daily and payable monthly at the annual rate specified below of the
value of each Funds' average daily net assets:
49
<PAGE>
THE PRUDENTIAL
NOTES TO
INSTITUTIONAL
FINANCIAL STATEMENTS
FUND
<TABLE>
<CAPTION>
Fund Management Fee
- - -------------------------- ---------------
<S> <C>
Growth Stock Fund .70%
Stock Index Fund .40
International Stock Fund 1.15
Active Balanced Fund .70
Balanced Fund .70
Income Fund .50
Money Market Fund .45
</TABLE>
PIFM has voluntarily agreed to subsidize a portion of the operating expenses
of the Funds until September 30, 1996. Such expenses may be recouped by PIFM
through December 31, 1996 so long as the total expense ratios do not exceed
certain predetermined levels set forth in the Company's prospectus. For the year
ended September 30, 1994, PIFM subsidized the following amounts:
<TABLE>
<CAPTION>
Percentage of
Average Net Amount per
Fund Assets Share
- - ------------------------- ------------- ------------------
<S> <C> <C>
Growth Stock Fund .11% $ .009
Stock Index Fund .53 .059
International Stock Fund .13 .016
Active Balanced Fund .13 .010
Balanced Fund .33 .035
Income Fund .24 .024
Money Market Fund .36 .003
</TABLE>
The Company has entered into an administration agreement with Prudential
Mutual Fund Management, Inc. (``PMF''), an indirect wholly-owned subsidiary of
Prudential. The administration fee paid PMF will be computed daily and payable
monthly, at an annual rate of .17% of the Company's daily net assets up to $250
million and .15% of the Company's average daily net assets in excess of $250
million. PMF will furnish to the Company such services as the Company may
require in connection with administration of the Company's business affairs. PMF
will also provide certain transfer agent services through its wholly-owned
subsidiary, Prudential Mutual Fund Services, Inc. (``PMFS''). For such services,
PMFS will be paid .03% of the Company's daily net assets up to $250 million and
.02% of the Company's average daily net assets in excess of $250 million from
the administration fee paid to PMF.
Note 3. Other Transactions with Affiliates
For the year ended September 30, 1994, Prudential Securities Incorporated, an
affiliate of PIFM, earned approximately $3,200 in brokerage commissions from
portfolio transactions executed on behalf of the Balanced Fund.
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-term
investments, for the year ended September 30, 1994 were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
- - ---------------------------- ------------ -----------
<S> <C> <C>
Growth Stock Fund $113,352,851 $43,942,284
Stock Index Fund 17,835,552 543,031
International Stock Fund 68,386,927 13,000,496
Active Balanced Fund 62,415,952 17,903,812
Balanced Fund 52,003,003 19,820,872
Income Fund 38,071,891 29,202,622
</TABLE>
The federal income tax basis and unrealized appreciation/depreciation of the
Fund's investments as of September 30, 1994 were as follows:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation/ Gross Unrealized
Fund Basis Depreciation Appreciation Depreciation
- - -------------------- ----------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
Growth Stock Fund $95,745,954 $ 6,494,139 $10,441,290 $3,947,151
Stock Index Fund 46,656,403 1,893,469 3,523,128 1,629,659
International Stock 93,872,223 7,984,899 11,044,612 3,059,713
Active Balanced 82,110,634 (697,191) 2,508,115 3,205,306
Balanced Fund 63,779,456 (80,417) 2,088,926 2,169,343
Income Fund 45,939,779 (1,970,571) -- 1,970,571
</TABLE>
On September 30, 1994, the Stock Index Fund purchased twenty three financial
futures contracts on the S&P 500 Index expiring December, 1994. The cost of such
contracts was $5,416,750. The value of
50
<PAGE>
THE PRUDENTIAL
NOTES TO
INSTITUTIONAL
FINANCIAL STATEMENTS
FUND
such contracts on September 30, 1994 was $5,327,375, thereby resulting in an
unrealized loss of $89,375.
The following Funds will elect to treat net losses incurred in the eleven
month period ended September 30, 1994 as having been incurred in the following
fiscal year:
<TABLE>
<CAPTION>
Capital Currency
---------- --------
<S> <C> <C>
Growth Stock Fund $3,796,000 --
International Fund -- $186,000
Income Fund 828,000 --
</TABLE>
Note 5. Joint Repurchase Agreement Account
The Company, along with other affiliated registered investment companies,
transfers uninvested cash balances into a single joint account, the daily
aggregate balance of which is invested in one or more repurchase agreements
collateralized by U.S. Treasury or federal agency obligations. At September 30,
1994, the Company had a 7.33% undivided interest, in the aggregate, in the
repurchase agreements in the joint account which represented $52,111,000 in
principal amount, in the aggregate, as follows:
<TABLE>
<CAPTION>
Percentage Principal
Company Interest Amount
- - ---------------------------- ---------- -----------
<S> <C> <C>
Growth Stock Fund .62% $ 4,428,000
Stock Index Fund .69 4,914,000
International Stock Fund 1.26 8,958,000
Active Balanced Fund 2.64 18,768,000
Balanced Fund 1.23 8,763,000
Income Fund .89 6,280,000
</TABLE>
As of such date, each repurchase agreement in the joint account and the
collateral therefor was as follows:
Goldman, Sachs & Co., 4.85%, in the principal amount of $237,000,000,
repurchase price $237,095,787, due 10/3/94. The value of the collateral
including accrued interest is $242,478,687.
Nomura Securities International, 4.75%, in the principal amount of
$237,000,000, repurchase price $237,093,812, due 10/3/94. The value of the
collateral including accrued interest is $241,948,993.
Smith Barney, Inc., 4.88%, in the principal amount of $237,000,000,
repurchase price $237,096,380, due 10/3/94. The value of the collateral
including accrued interest is $241,950,829.
Note 6. Capital
Each Fund has authorized an unlimited number of shares of beneficial interest
at $.001 par value per share.
Transactions in shares of beneficial interest during the year ended September
30, 1994 and the period ended September 30, 1993 were as follows:
Year ended September 30, 1994:
<TABLE>
<CAPTION>
Shares
Issued in
Reinvestment
of Dividends Increase
Shares and Shares in Shares
Fund Sold Distributions Redeemed Outstanding
- - ----------------------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Growth Stock Fund 6,739,890 14,450 (1,804,735) 4,949,605
Stock Index Fund 2,697,792 52,328 (744,579) 2,005,541
International Stock
Fund 6,022,403 42,326 (1,702,734) 4,361,995
Active Balanced Fund 5,244,905 81,781 (1,404,380) 3,922,306
Balanced Fund 3,900,150 118,117 (556,779) 3,461,488
Income Fund 1,613,971 216,368 (809,032) 1,021,307
Money Market Fund 32,311,167 1,277,602 (17,493,001) 16,095,768
</TABLE>
51
<PAGE>
THE PRUDENTIAL
NOTES TO
INSTITUTIONAL
FINANCIAL STATEMENTS
FUND
Period ended September 30, 1993:
<TABLE>
<CAPTION>
Shares
Issued in Increase
Shares Reinvestment Shares in Shares
Fund Sold of Dividends Redeemed Outstanding
- - ----------------------- ---------- ------------- ---------- -----------
<S> <C> <C> <C> <C>
Growth Stock Fund 4,341,461 2,064 (379,496 ) 3,964,029
Stock Index Fund 2,674,154 6,823 (242,360 ) 2,438,617
International Stock
Fund 2,749,239 1,453 (186,042 ) 2,564,650
Active Balanced Fund 3,550,356 -- (39,604 ) 3,510,752
Balanced Fund 2,447,014 6,175 (111,157 ) 2,342,032
Income Fund 3,322,489 68,418 (407 ) 3,390,500
Money Market Fund 29,718,814 518,251 (3,101 ) 30,233,964
</TABLE>
Of the shares outstanding at September 30, 1994, PIFM and affiliates owned
the following shares:
<TABLE>
<CAPTION>
Fund Shares
- - -------------------------- ----------
<S> <C>
Growth Stock Fund 3,482,769
Stock Index Fund 2,759,447
International Stock Fund 4,586,508
Active Balanced Fund 2,294,383
Balanced Fund 2,984,528
Income Fund 2,718,382
Money Market Fund 26,370,451
</TABLE>
52
<PAGE>
THE PRUDENTIAL
INDEPENDENT
INSTITUTIONAL
AUDITORS' REPORT
FUND
The Shareholders and Trustees of
The Prudential Institutional Fund:
We have audited the accompanying statements of assets and liabilities of The
Prudential Institutional Fund (consisting of the Growth Stock Fund, Stock Index
Fund, International Stock Fund, Active Balanced Fund, Balanced Fund, Income Fund
and Money Market Fund), including the portfolios of investments, as of September
30, 1994, the related statements of operations and of changes in net assets, and
the financial highlights for the periods presented. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
September 30, 1994, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
respective portfolios constituting The Prudential Institutional Fund as of
September 30, 1994, the results of their operations, the changes in their net
assets, and the financial highlights for the periods presented in conformity
with generally accepted accounting principles.
Deloitte & Touche LLP
New York, New York
November 10, 1994
53
<PAGE>
THE PRUDENTIAL
FEDERAL INCOME
INSTITUTIONAL
TAX INFORMATION
FUND
As required by the Internal Revenue Code, we wish to advise you as to the
federal tax status of dividends and distributions paid by the Fund during its
fiscal year ended September 30, 1994.
Detailed below, please find the aggregate dividends and distributions, per
share, paid by each portfolio during the fiscal year ended September 30, 1994 as
well as the corporate dividend received deduction percentage:
<TABLE>
<CAPTION>
Ordinary Dividends* Long-Term Total Corporate
------------------------- Capital Dividends Dividend
Short-Term Gains and Received
Portfolio Income Capital Gains Distributions Distributions Deduction
- - ------------------------------------------ ------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Growth Stock Fund $.01 $ .03 -- $ .04 100%
Stock Index Fund .18 .02 $ .02 .22 100
International Stock Fund .03 .15 -- .18 --
Active Balanced Fund .14 .11 -- .25 25
Balanced Fund .23 .28 -- .51 29
Income Fund .52 .04 -- .56 --
Money Market Fund .03 -- -- .03 --
</TABLE>
* For federal income tax purposes, ordinary income dividends and short-term
capital gains distributions are taxable as ordinary income. Long-term capital
gains distributions are taxable as capital gains income.
54
<PAGE>
THE PRUDENTIAL
INSTITUTIONAL
FUND
Trustees
William P. Link, Chairman
Mark R. Fetting
David A. Finley
William E. Fruhan, Jr.
August G. Olsen
James W. Stevens
Herbert G. Stolzer
Officers
Mark R. Fetting, President
Thomas A. Early, Vice President
Robert F. Gunia, Vice President
Walter E. Watkins, Jr., Vice President
Susan C. Cote, Treasurer
S. Jane Rose, Secretary
Manager
Prudential Institutional Fund Management, Inc.
30 Scranton Office Park
Moosic, PA 18507
Investment Advisers
The Prudential Investment Corporation
751 Broad Street
Newark, NJ 07102
Jennison Associates Capital Corp.
466 Lexington Avenue
New York, NY 10017
Mercator Asset Management, Inc.
2400 East Commercial Boulevard
Fort Lauderdale, FL 33308
Administrator
Prudential Mutual Fund Management, Inc.
199 Water Street
New York, NY 10292
Distributor
Prudential Retirement Services, Inc.
30 Scranton Office Park
Moosic, PA 18507
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services, Inc.
Raritan Plaza One
Edison, NJ 08837
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Kirkpatrick and Lockhart
1800 M Street, N.W.
Washington, D.C. 20036
This report is not authorized for distribution
to prospective investors unless preceded or accompanied by a current prospectus.
The Prudential Institutional Fund
21 Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
<PAGE>
The Prudential Institutional Fund Bulk Rate
21 Prudential Plaza U.S. Postage
751 Broad Street PAID
Newark, NJ 07102-3777 Permit No. 2145
Newark, N.J.
(LOGO)<PAGE>
