THE PRUDENTIAL
INSTITUTIONAL
FUND
ANNUAL REPORT
SEPTEMBER 30, 1995
GROWTH STOCK FUND
STOCK INDEX FUND
INTERNATIONAL STOCK FUND
ACTIVE BALANCED FUND
BALANCED FUND
INCOME FUND
MONEY MARKET FUND
(LOGO)
<PAGE>
THE PRUDENTIAL TABLE OF
(LOGO) 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 34
MONEY MARKET FUND 39
FINANCIAL STATEMENTS 43
NOTES TO FINANCIAL STATEMENTS 51
INDEPENDENT AUDITORS' REPORT 58
FEDERAL INCOME TAX
INFORMATION 59
SUPPLEMENTAL PROXY
INFORMATION 60
<PAGE>
THE PRUDENTIAL LETTER TO
(LOGO) INSTITUTIONAL SHAREHOLDERS
FUND
November 16, 1995
We are pleased to provide you with the Annual Report of The Prudential
Institutional Fund for the year ended September 30, 1995. The period was
generally characterized by bullish financial markets which, along with strong
cash flow from shareholders and retirement plan participants, resulted in
significant increases in the size of many of the Fund's portfolios. Total net
assets grew to $784.9 million at September 30, 1995 from $493.1 million at
September 30, 1994. The Fund has seven portfolios, each with a distinct
investment objective designed to allow shareholders the opportunity to select
various options to match different goals and risk tolerances.
Economy
Gross Domestic Product grew at a rate of 3.3% this fiscal year, compared to
4.4% the last fiscal year. The Fed ended its relentless pattern of rate
increases (six hikes during 1994) and cut short-term interest rates .25% in
July, 1995. The economy appears to be moving ahead at a reasonable pace, albeit
at one that's slower than 1994.
Leading indicators have been trending sideways --housing and auto sales
remain high but are off earlier peaks and employment remains relatively stable.
Restrained growth in both wages and consumer prices have kept inflation under
control. Although inflation isn't a problem, moderate economic growth led the
Fed to shelve any plans for further interest rate cuts.
Market Review
Returns for the U.S. stock and bond markets were lackluster toward the end
of
1994. By the first quarter of 1995, the financial markets welcomed slower
economic growth and the S&P 500 Index returned nearly 10% --one of the best
quarters on record. Despite turmoil in the foreign exchange markets, bonds
rallied steadily throughout the first quarter. The surprisingly strong 1995
rally in stocks and bonds continued right through the third quarter. By the end
of September, 1995, the S&P 500 Index was up 29.7% for the fiscal year, while
the Lehman Government/Corporate Bond Index was up 14.3%.
Foreign stocks, as measured by the Morgan Stanley Europe, Australia and Far
East Index (EAFE), gained 5.8%. This relative performance is a reversal from
fiscal 1994 when the EAFE index outperformed both the S&P 500 Index and Lehman
index returns.
Fund Performance
As a result of the strength in the financial markets, each of the Fund's
portfolios achieved absolute positive returns for the year. For the most part,
comparable benchmarks proved difficult to surpass. Since each portfolio's
inception, returns have been very positive and compare satisfactorily versus the
benchmarks. This performance information along with comments from each
portfolio's adviser and portfolio holdings may be found on the following pages.
Summary
While we do not expect gains of this magnitude to be repeated in the near
future, we believe that investors who stick with a disciplined approach to
investing their retirement savings should be rewarded over the long term. We
look forward to continuing to meet the retirement and investment needs of our
shareholders.
Sincerely,
Mark R. Fetting
President
1
<PAGE>
THE PRUDENTIAL GROWTH STOCK FUND
(LOGO) 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 companies that demonstrate superior sales growth, high
levels of unit growth, high return on assets and equity, and a strong balance
sheet, as well as being attractively valued in the judgment of the Adviser.
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 $28
billion in equity, balanced, and fixed income accounts at September 30, 1995.
ADVISER'S COMMENTS: For the year ended September 30, 1995, the Fund increased
35.1% versus the market overall, as measured by the S&P 500, which improved
29.7% in the same period. The Lipper Growth Fund Average increased 25.9% over
the same period. This positive performance can be attributed mostly to
particularly strong performance in three areas: financial services, capital
spending, and technology. The lower interest rate environment which began in
November 1994 helped boost interest rate sensitive stocks in the portfolio.
Strong capital spending both domestically and abroad helped bolster the current
and future earnings prospects of many capital goods producers. In technology,
there are a number of evolving long-term trends which have, and should continue
to have, both positive earnings and valuation consequences for companies in the
portfolio.
Throughout the past year we have had substantial net, positive earnings estimate
surprises. This has been a key to the out performance of the Fund and is the key
to our objective over time. Our goal is to own the best growth stocks we can
find at a reasonable valuation.
By and large we remain optimistic about growth stocks in a slow economic growth
environment like we are currently experiencing, which is characterized by low
inflation and low interest rates. As always, growth stocks will be more volatile
than the market overall, but we believe there are ample opportunities for
companies with growing revenue and earnings to provide significant positive
returns.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Average Annual Returns Fund S&P 500
<S> <C> <C>
-------------------------- ------------- --------
One Year ended 9/30/95 +35.14% +29.74%
From Inception (11/5/92) +18.34% +15.40%
</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
(LOGO) INSTITUTIONAL Comparison of Change in Value
FUND of A $10,000 Investment
(CHART)
-------------- 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
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS
Common Stocks--98.7%
Aerospace/Defense--2.4%
78,200 Boeing Co.......................... $ 5,337,150
-----------
Airlines--1.9%
56,900 AMR Corp.(a)....................... 4,103,913
-----------
Beverages--3.0%
49,500 Coca-Cola Co....................... 3,415,500
61,000 PepsiCo Inc........................ 3,111,000
-----------
6,526,500
-----------
Commercial Services--1.4%
90,850 CUC International, Inc.(a)......... 3,168,394
-----------
Computer Software & Services--14.3%
55,400 America Online Inc................. 3,808,750
78,300 AutoDesk, Inc...................... 3,425,625
85,300 Cisco Systems, Inc.(a)............. 5,885,700
Computer Associates International,
72,150 Inc.............................. 3,048,337
36,400 Macromedia Inc..................... 2,079,350
52,900 Microsoft Corp.(a)................. 4,787,450
64,600 SAP AG (ADR) (Germany)............. 3,544,925
62,300 Silicon Graphics Inc.(a)........... 2,141,563
87,400 Symbol Technologies, Inc.(a)....... 2,895,125
-----------
31,616,825
-----------
Cosmetics & Soaps--1.7%
79,300 Gillette Co........................ 3,776,663
-----------
Drugs & Medical Supplies--7.4%
109,000 Astra AB Class A (Sweden).......... 3,904,135
44,900 Lilly (Eli) & Co................... 4,035,388
62,900 Merck & Co., Inc................... 3,522,400
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
Smith Kline Beecham PLC (ADR)
94,300 (United Kingdom)................. $ 4,773,937
-----------
16,235,860
-----------
Electronics--11.1%
104,400 Hewlett-Packard Co................. 8,704,350
131,500 Intel Corp......................... 7,906,437
102,000 Motorola, Inc...................... 7,790,250
-----------
24,401,037
-----------
Financial Services--7.3%
43,900 Federal National Mortgage Assn..... 4,543,650
35,900 First Financial Mgmt. Corp......... 3,504,737
27,200 Morgan Stanley Group, Inc.......... 2,614,600
61,500 Mutual Risk Management, Ltd........ 2,429,250
61,800 The PMI Group Inc.................. 2,927,775
-----------
16,020,012
-----------
Health Care Services--0.6%
53,800 Value Health, Inc.(a).............. 1,425,700
-----------
Hospital Management--1.9%
86,100 United Healthcare Corp............. 4,208,138
-----------
Insurance--1.1%
American International Group,
29,450 Inc.............................. 2,503,250
-----------
Leisure--3.8%
94,300 Disney (Walt) Co................... 5,410,462
99,600 Harrahs Entertainment Inc.(a)...... 2,913,300
-----------
8,323,762
-----------
Lodging--0.8%
75,300 Promus Cos., Inc.(a)............... 1,713,075
-----------
Machinery--1.2%
78,300 Harnischfeger Industries, Inc...... 2,613,263
-----------
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
THE PRUDENTIAL GROWTH STOCK FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Media--7.1%
Clear Channel Communications,
44,400 Inc.(a).......................... $ 3,363,300
News Corp. Ltd. (ADR)
120,100 (Australia)...................... 2,642,200
48,900 Omnicom Group...................... 3,184,613
Reuters Holdings PLC (ADR)
70,100 (United Kingdom)................. 3,706,537
43,800 Scholastic Corp.(a)................ 2,748,450
-----------
15,645,100
-----------
Miscellaneous Basic Industry--4.2%
36,000 Applied Materials, Inc.(a)......... 3,681,000
62,400 Cerner Corp.(a).................... 2,137,200
27,300 ITT Corp........................... 3,385,200
-----------
9,203,400
-----------
Miscellaneous Consumer Growth--0.9%
29,900 Eastman Kodak Co................... 1,771,575
7,000 Luxottica Group (ADR) (Italy)...... 342,125
-----------
2,113,700
-----------
Office Equipment & Supplies--1.3%
58,000 Compaq Computer Corp.(a)........... 2,805,750
-----------
Railroads--1.1%
37,800 Union Pacific Corp................. 2,504,250
-----------
Restaurants--2.5%
Lone Star Steakhouse & Saloon,
69,400 Inc.(a).......................... 2,845,400
68,000 McDonald's Corp.................... 2,601,000
-----------
5,446,400
-----------
Retail--4.6%
122,300 AutoZone, Inc.(a).................. 3,118,650
85,350 Dollar General Corp................ 2,507,156
55,533 Home Depot, Inc.................... 2,214,379
46,400 Kohls Corp. (a).................... 2,407,000
-----------
10,247,185
-----------
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
Technology--10.8%
74,600 Adobe Systems, Inc................. $ 3,860,550
37,800 Broderbund Software Inc............ 2,877,525
34,233 Chiron Corp.(a).................... 3,098,086
35,700 Cirrus Logic, Inc.(a).............. 2,043,825
59,500 Intuit Inc......................... 2,796,500
123,900 LSI Logic Corp.(a)................. 7,155,225
101,800 Pyxis Corp.(a)..................... 1,972,375
-----------
23,804,086
-----------
Telecommunications--4.8%
74,700 Nokia Corp. (ADR) (Finland)........ 5,210,325
46,800 Tellabs, Inc.(a)................... 1,971,450
Vodafone Group PLC (ADR)
82,100 (United Kingdom)................. 3,366,100
-----------
10,547,875
-----------
Transportation--1.5%
Wisconsin Central Transportation
48,900 Corp.(a)......................... 3,264,075
-----------
Total common stocks
(cost $163,489,413)................ 217,555,363
-----------
Principal
Amount
(000) SHORT-TERM INVESTMENT
- --------
Repurchase Agreement--2.2%
$ 4,819 Joint Repurchase Agreement Account,
6.39%, 10/2/95 (Note 5)
(cost $4,819,000)................ 4,819,000
-----------
Total Investments--100.9%
(cost $168,308,413; Note 4)........ 222,374,363
Liabilities in excess of other
assets--(0.9%)................... (1,868,969)
-----------
Net Assets--100%................... $220,505,394
-----------
-----------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements.
5
<PAGE>
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) 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 Adviser
accomplishes 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 $4.5 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 .06%
for the twelve months ended September 30, 1995.
In 1994, the negative impact of rising interest rates offset the positive
effects of strong corporate earnings. As a result, the S&P 500 was even for the
fourth quarter, despite fluctuations in the stock market that accompanied the
Fed's sixth rate hike. In sharp contrast, 1995 has been an excellent year for
the S&P 500. The stock market welcomed slower economic growth and by the end of
the first quarter, the S&P 500 was up nearly 10% --one of the best returns on
record. The rally continued throughout the second quarter and the S&P 500
returned over 20% for the first six months of the year. Led by technology, most
sectors participated in the rally. The skyrocketing technology stocks led growth
stocks to outpace value stocks by the end of the second quarter. Early in the
third quarter, the Fed cut short-term interest rates by .25%. Concerns about the
economy caused industrial sectors such as steel and heavy machinery to lag the
overall market during the third quarter. Growth stocks lost their lead and
posted returns equal to value stocks. Overall, the S&P 500 returned nearly 8%
for the quarter, bringing both the year-to-date and one year returns ending
September 30, 1995 to almost 30%.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Average Annual Returns Fund S&P 500
<S> <C> <C>
------------------------- ------------- --------
One Year ended 9/30/95 +29.02% +29.74%
From Inception (11/5/92) +14.72% +15.40%
</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.
The S&P 500 Index is a commonly used unmanaged indicator of stock market
performance. ``Standard & Poor's,'' ``S&P,'' ``S&P 500,'' ``Standard & Poor's
500,'' and ``500'' are trademarks of McGraw-Hill, Inc. and have been licensed
for use by The Prudential Insurance Company of America and its affiliates and
subsidiaries. The Fund is not sponsored, endorsed, sold or promoted by S&P, and
S&P makes no representation regarding the advisability of investing in the Fund.
6
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL Comparison of Change in Value
FUND of A $10,000 Investment
(CHART)
-------------- 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>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS
Common Stocks and Equivalents--81.7%
Aerospace/Defense--1.7%
5,400 Allied-Signal, Inc................. $ 238,275
6,600 Boeing Co.......................... 450,450
1,200 General Dynamics Corp.............. 65,850
3,830 Lockheed Corp...................... 257,089
1,700 Loral Corp......................... 96,900
2,200 McDonnell Douglas Corp............. 182,050
1,000 Northrop Corp...................... 60,875
2,400 Raytheon Co........................ 204,000
4,200 Rockwell International Corp........ 198,450
-----------
1,753,939
-----------
Airlines--0.3%
1,450 AMR Corp.(a)....................... 104,581
1,000 Delta Airlines, Inc................ 69,250
2,700 Southwest Airlines Co.............. 68,175
1,200 USAir Group Inc.(a)................ 13,800
-----------
255,806
-----------
Aluminum--0.4%
4,400 Alcan Aluminum Ltd................. 142,450
3,400 Aluminum Co. of America............ 179,775
1,250 Reynolds Metals Co................. 72,188
-----------
394,413
-----------
Automobiles & Trucks--2.0%
7,400 Chrysler Corp...................... 392,200
800 Cummins Engine, Inc................ 30,800
2,000 Dana Corp.......................... 57,750
1,200 Echlin Inc......................... 42,900
20,700 Ford Motor Co...................... 644,287
14,400 General Motors Corp................ 675,000
2,400 Genuine Parts Co................... 96,300
800 Johnson Controls, Inc.............. 50,600
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
1,420 Navistar International Corp.(a).... $ 17,040
1,200 Safety Kleen Corp.................. 17,550
-----------
2,024,427
-----------
Banking--5.1%
7,637 Banc One Corp...................... 278,750
2,200 Bank of Boston Corp................ 104,775
3,700 Bank of New York Co., Inc.......... 172,050
7,200 BankAmerica Corp................... 431,100
1,500 Bankers Trust NY Corp.............. 105,375
1,900 Barnett Banks, Inc................. 107,588
2,500 Boatmen's Bancshares............... 92,500
3,400 Chase Manhattan Corp............... 207,825
4,900 Chemical Banking Corp.............. 298,287
7,700 Citicorp........................... 544,775
2,700 CoreStates Financial Corp.......... 98,888
1,700 First Chicago Corp................. 116,662
1,500 First Fidelity Bancorp, Inc........ 101,250
1,500 First Interstate Bank Corp......... 151,125
3,300 First Union Corp................... 168,300
2,700 Fleet Financial Group, Inc......... 101,925
1,100 Golden West Financial Corp......... 55,550
2,700 Great Western Financial Corp....... 64,125
2,300 H.F. Ahmanson & Co................. 58,363
4,400 KeyCorp............................ 150,700
2,825 Mellon Bank Corp................... 126,066
3,600 Morgan (J.P.) & Co., Inc........... 278,550
2,900 National City Corp................. 89,538
5,300 NationsBank Corp................... 356,425
3,000 NBD Bancorp, Inc................... 114,750
6,200 Norwest Corp....................... 203,050
4,400 PNC Financial Corp................. 122,650
1,100 Republic New York Corp............. 64,350
2,400 Shawmut National Corp.............. 80,700
2,200 Suntrust Banks, Inc................ 145,475
1,800 U.S. Bancorp....................... 50,850
900 Wells Fargo & Co................... 167,062
-----------
5,209,379
-----------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Beverages--3.0%
800 Adolph Coors Co.................... $ 14,500
4,900 Anheuser Busch Cos., Inc........... 305,637
1,200 Brown-Forman Corp.................. 46,650
24,400 Coca-Cola Co....................... 1,683,600
15,200 PepsiCo Inc........................ 775,200
7,200 Seagram Co., Ltd................... 258,300
-----------
3,083,887
-----------
Chemicals--2.1%
2,200 Air Products & Chemicals, Inc...... 114,675
550 Albemarle Corp..................... 10,313
5,200 Dow Chemical Co.................... 387,400
10,700 duPont (E.I.) de Nemours & Co...... 735,625
1,600 Eastman Chemical Co................ 102,400
1,800 Grace (W.R.) & Co.................. 120,150
2,200 Hercules, Inc...................... 127,600
2,300 Monsanto Co........................ 231,725
1,300 Nalco Chemical Co.................. 44,362
1,300 Rohm & Haas Co..................... 78,487
1,000 Sigma-Aldrich...................... 48,500
2,600 Union Carbide Corp................. 103,350
-----------
2,104,587
-----------
Chemical-Specialty--0.4%
2,625 Engelhard Corp..................... 66,609
400 First Mississippi Corp............. 15,950
1,300 Great Lakes Chemical Corp.......... 87,913
2,800 Morton International, Inc.......... 86,800
2,600 Praxair, Inc....................... 69,550
900 Raychem Corp....................... 40,500
-----------
367,322
-----------
Commercial Services--0.2%
3,350 CUC International, Inc.(a)......... 116,831
1,500 Deluxe Corp........................ 49,687
600 Harland (John H.) Co............... 13,275
1,900 Moore Corp. Ltd.................... 38,238
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
800 Ogden Corp......................... $ 18,800
-----------
236,831
-----------
Computer Software & Services--3.0%
900 AutoDesk, Inc...................... 39,375
2,800 Automatic Data Processing, Inc..... 190,750
1,400 Cabletron Systems, Inc.(a)......... 92,225
900 Ceridian Corp.(a).................. 39,937
5,200 Cisco Systems, Inc.(a)............. 358,800
Computer Associates International,
4,600 Inc.............................. 194,350
1,050 Computer Sciences Corp.(a)......... 67,594
1,000 Intergraph Corp.(a)................ 12,125
4,000 Micron Technology Inc.............. 318,000
11,300 Microsoft Corp.(a)................. 1,022,650
6,900 Novell, Inc.(a).................... 125,925
8,350 Oracle Systems Corp.(a)............ 320,431
3,000 Silicon Graphics Inc.(a)........... 103,125
1,800 Sun Microsystems Inc.(a)........... 113,400
1,900 Tandem Computers Inc.(a)........... 23,275
-----------
3,021,962
-----------
Construction--0.1%
1,600 Fluor Corp......................... 89,600
700 Foster Wheeler Corp................ 24,762
600 Kaufman & Broad Home Corp.......... 7,575
500 Pulte Corp......................... 14,188
-----------
136,125
-----------
Consumer Goods--0.5%
600 Centex Corp........................ 17,400
600 Fleetwood Enterprises, Inc......... 11,925
3,100 Lowes Companies, Inc............... 93,000
3,200 Masco Corp......................... 88,000
2,200 Maytag Corp........................ 38,500
1,000 Owens-Corning Fiberglas Corp.(a)... 44,625
Pioneer Hi Bred International,
1,600 Inc.............................. 73,600
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Consumer Goods, cont'd.
900 Stanley Works...................... $ 39,038
1,500 Whirlpool Corp..................... 86,625
-----------
492,713
-----------
Containers--0.1%
600 Ball Corp.......................... 17,775
900 Bemis, Inc......................... 24,863
1,700 Crown Cork & Seal, Inc.(a)......... 65,875
-----------
108,513
-----------
Cosmetics & Soaps--1.9%
500 Alberto Culver Co.................. 15,250
1,350 Avon Products, Inc................. 96,863
1,000 Clorox Co.......................... 71,375
2,800 Colgate-Palmolive Co............... 186,550
8,600 Gillette Co........................ 409,575
International Flavors & Fragrances
2,150 Inc.............................. 103,737
13,300 Procter & Gamble Co................ 1,024,100
-----------
1,907,450
-----------
Diversified Gas--0.1%
2,100 Coastal Corp....................... 70,613
400 Eastern Enterprises, Inc........... 12,850
1,400 Enserch Corp....................... 23,100
1,000 NICOR Inc.......................... 27,250
500 Oneok Inc.......................... 11,625
-----------
145,438
-----------
Drugs & Medical Supplies--7.1%
15,300 Abbott Laboratories................ 652,162
1,600 ALZA Corp.(a)...................... 36,800
6,000 American Home Products Corp........ 509,250
5,100 Amgen, Inc.(a)..................... 254,362
1,000 Bard (C.R.), Inc................... 30,500
1,100 Bausch & Lomb, Inc................. 45,513
Value
Shares Description (Note 1)
- ------------------------------------------------------------
5,300 Baxter International Inc........... $ 217,962
1,300 Becton Dickinson & Co.............. 81,738
2,300 Biomet, Inc.(a).................... 39,675
2,900 Boston Scientific Corp.(a)......... 123,613
9,850 Bristol-Myers Squibb Co............ 717,819
12,500 Johnson & Johnson Co............... 926,562
5,700 Lilly (Eli) & Co................... 512,287
4,500 Medtronic, Inc..................... 241,875
23,900 Merck & Co., Inc................... 1,338,400
12,200 Pfizer Inc......................... 651,175
7,200 Schering-Plough Corp............... 370,800
900 St. Jude Medical, Inc.(a).......... 56,925
1,100 United States Surgical Corp........ 29,425
3,300 Upjohn Co.......................... 147,263
2,600 Warner Lambert Co.................. 247,650
-----------
7,231,756
-----------
Electronics--4.0%
2,000 Advanced Micro Devices, Inc.(a).... 58,250
2,500 Amdahl Corp.(a).................... 24,063
4,184 AMP Inc............................ 161,084
2,400 Apple Computer, Inc................ 89,400
400 Cray Research, Inc.(a)............. 8,850
400 Data General Corp.(a).............. 4,150
2,800 Digital Equipment Corp.(a)......... 127,750
1,100 EG&G, Inc.......................... 21,450
4,300 Emerson Electric Co................ 307,450
800 Harris Corp........................ 43,900
9,900 Hewlett-Packard Co................. 825,412
15,900 Intel Corp......................... 955,987
11,400 Motorola, Inc...................... 870,675
2,300 National Semiconductors Corp.(a)... 63,538
800 Perkin Elmer Corp.................. 28,500
1,300 Tandy Corp......................... 78,975
600 Tektronix, Inc..................... 35,400
3,700 Texas Instruments Inc.............. 295,537
350 Thomas & Betts Corp................ 22,619
900 Zenith Electronics Corp.(a)........ 7,763
-----------
4,030,753
-----------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Financial Services--2.4%
9,400 American Express Co................ $ 417,125
1,000 Beneficial Corp.................... 52,250
2,000 Block (H&R), Inc................... 76,000
3,258 Dean Witter Discover & Co.......... 183,262
3,500 Federal Home Loan Mortgage Corp.... 241,937
5,350 Federal National Mortgage Assn..... 553,725
2,300 First Data Corp.................... 142,600
1,900 Household International Corp....... 117,800
2,850 MBNA Corp.......................... 118,631
3,400 Merrill Lynch & Co., Inc........... 212,500
1,500 Morgan Stanley Group, Inc.......... 144,188
2,100 Salomon, Inc....................... 80,325
1,350 Transamerica Corp.................. 96,188
-----------
2,436,531
-----------
Food & Beverage--2.3%
10,596 Archer-Daniels-Midland Co.......... 162,910
4,800 Campbell Soup Co................... 241,200
4,700 ConAgra, Inc....................... 186,237
2,900 CPC International, Inc............. 191,400
700 Fleming Cos., Inc.................. 16,800
3,050 General Mills, Inc................. 170,038
1,200 Giant Foods, Inc................... 37,650
4,700 Heinz (H.J.) Co.................... 215,025
1,500 Hershey Foods Corp................. 96,563
4,250 Kellogg Co......................... 307,594
2,600 Quaker Oats Co..................... 86,125
2,000 Ralston Purina Co.................. 115,750
9,200 Sara Lee Corp...................... 273,700
3,500 Sysco Corp......................... 95,375
2,300 Wrigley (W.M.) Junior Co........... 116,150
-----------
2,312,517
-----------
Forest Products--1.5%
900 Boise Cascade Corp................. 36,338
1,900 Champion International Corp........ 102,362
160 Crown Vantage Inc.(a).............. 3,560
900 Federal Paper Board, Inc........... 34,538
1,750 Georgia Pacific Corp............... 153,125
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
4,900 International Paper Co............. $ 205,800
1,600 James River Corp................... 51,200
3,100 Kimberly Clark Corp................ 208,087
2,100 Louisiana Pacific Corp............. 50,663
1,000 Mead Corp.......................... 58,625
600 Potlatch Corp...................... 24,525
2,900 Scott Paper Co..................... 140,650
1,900 Stone Container Corp............... 36,100
1,100 Temple Inland Inc.................. 58,575
1,300 Union Camp Corp.................... 74,912
1,300 Westvaco Corp...................... 59,313
3,900 Weyerhaeuser Co.................... 177,937
1,000 Willamette Industries, Inc......... 66,750
-----------
1,543,060
-----------
Gas Pipelines--0.5%
3,018 Cinergy Corp....................... 84,127
1,000 Columbia Gas System, Inc.(a)....... 38,625
1,800 Consolidated Natural Gas Co........ 72,675
4,900 Enron Corp......................... 164,150
2,300 Noram Energy Corp.................. 18,112
2,900 Panhandle Eastern Corp............. 79,025
700 Peoples Energy Corp................ 19,250
2,000 Williams Cos., Inc................. 78,000
-----------
553,964
-----------
Hospital Management--0.9%
1,900 Beverly Enterprises, Inc.(a)....... 26,125
8,552 Columbia Healthcare Corp........... 415,841
700 Community Psychiatric Centers...... 8,225
1,200 Manor Care, Inc.................... 40,800
1,800 Service Corp. International........ 70,425
500 Shared Medical Systems Corp........ 20,750
4,000 Tenet Healthcare Corp.(a).......... 69,500
3,000 U.S. HealthCare Inc................ 106,125
3,300 United Healthcare Corp............. 161,287
-----------
919,078
-----------
Housing Construction
700 Armstrong World Industries......... 38,850
-----------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Insurance--3.1%
2,200 Aetna Life & Casualty Co........... $ 161,425
Alexander & Alexander Services,
800 Inc.............................. 19,400
8,574 Allstate Corp...................... 303,305
4,000 American General Corp.............. 149,500
American International Group,
9,212 Inc.............................. 783,020
1,650 Chubb Corp......................... 158,400
1,450 CIGNA Corp......................... 150,981
1,600 General Re Corp.................... 241,600
950 Jefferson-Pilot Corp............... 61,038
1,800 Lincoln National Corp.............. 84,825
1,400 Marsh & McLennan Cos............... 123,025
1,900 Providian Corp..................... 78,850
1,200 SAFECO Corp........................ 78,750
1,600 St. Paul Companies, Inc............ 93,400
1,450 Torchmark Corp..................... 61,081
6,131 Travelers, Inc..................... 325,709
1,400 UNUM Corp.......................... 73,850
2,300 USF&G Corp......................... 44,563
750 USLIFE Corp........................ 21,938
3,300 Wachovia Corp...................... 142,312
-----------
3,156,972
-----------
Leisure--0.9%
1,100 Bally Entertainment Group(a)....... 11,963
2,000 Brunswick Corp..................... 40,500
10,100 Disney (Walt) Co................... 579,487
400 Handleman Co....................... 3,550
1,900 Harrahs Entertainment Inc.(a)...... 55,575
1,800 Hasbro, Inc........................ 56,025
700 King World Productions, Inc.(a).... 25,637
4,250 Mattel, Inc........................ 124,844
300 Outboard Marine Corp............... 6,450
-----------
904,031
-----------
Lodging--0.1%
900 Hilton Hotels Corp................. 57,488
2,400 Marriott International, Inc........ 89,700
-----------
147,188
-----------
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
Machinery--0.9%
600 Briggs & Stratton Corp............. $ 24,150
3,800 Caterpillar Inc.................... 216,125
700 Cincinnati Milacron, Inc........... 22,050
2,000 Cooper Industries, Inc............. 70,500
1,700 Deere & Co......................... 138,337
2,200 Dover Corp......................... 84,150
1,600 Eaton Corp......................... 84,800
700 Giddings & Lewis, Inc.............. 12,206
1,000 Harnischfeger Industries, Inc...... 33,375
2,100 Ingersoll Rand Co.................. 78,750
802 PACCAR Inc......................... 37,494
1,450 Parker Hannifin Corp............... 55,100
800 Snap-On Tools Corp................. 30,400
600 Timken Co.......................... 25,575
800 Varity Corp.(a).................... 35,600
-----------
948,612
-----------
Media--2.1%
3,000 Capital Cities/ABC, Inc............ 352,875
1,220 CBS, Inc........................... 97,447
4,550 Comcast Corp....................... 91,000
3,000 Donnelley (R.R.) & Sons, Co........ 117,000
1,800 Dow Jones & Co., Inc............... 66,375
3,300 Dun & Bradstreet Corp.............. 190,987
2,750 Gannett, Inc....................... 150,219
1,500 Interpublic Group Cos., Inc........ 59,625
950 Knight-Ridder, Inc................. 55,694
1,000 McGraw Hill, Inc................... 81,750
600 Meredith Corp...................... 23,850
1,700 New York Times Co.................. 46,538
7,500 Time Warner, Inc................... 298,125
2,100 Times Mirror Co.................... 60,375
1,300 Tribune Co......................... 86,288
6,939 Viacom Inc.(a)..................... 345,215
-----------
2,123,363
-----------
Mineral Resources--0.8%
800 ASARCO Inc......................... 25,200
Barrick Gold Corp. (ADR)
6,900 (Canada)......................... 178,537
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Mineral Resources, cont'd.
1,850 Cyprus Minerals Co................. $ 52,031
2,400 Echo Bay Mines, Ltd................ 26,100
Freeport-McMoRan Copper & Gold
3,800 Inc.............................. 97,375
2,500 Homestake Mining Co................ 42,500
2,300 INCO, Ltd.......................... 78,775
1,698 Newmont Mining Corp................ 72,165
1,300 Phelps-Dodge Corp.................. 81,413
800 Pittston Minerals Group............ 21,700
4,600 Placer Dome, Inc................... 120,750
2,240 Santa Fe Pacific Gold Corp......... 28,280
-----------
824,826
-----------
Miscellaneous Basic Industry--4.4%
1,700 Applied Materials, Inc.(a)......... 173,825
Bassett Furniture Industries,
225 Inc.............................. 5,653
4,100 Browning Ferris Industries, Inc.... 124,537
600 Crane Co........................... 20,700
1,300 Ecolab, Inc........................ 35,913
750 FMC Corp.(a)....................... 57,000
32,800 General Electric Co................ 2,091,000
1,000 General Signal Corp................ 29,250
1,000 Grainger (W.W.) Inc................ 60,375
2,300 Illinois Tool Works, Inc........... 135,412
2,300 ITT Corp........................... 285,200
1,100 Loews Corp......................... 160,050
1,500 Mallinckrodt Group Inc............. 59,438
900 Millipore Corp..................... 33,750
400 Morrison Knudsen Corp.............. 3,100
150 NACCO Industries, Inc.............. 8,906
2,033 Pall Corp.......................... 47,267
3,900 PPG Industries, Inc................ 181,350
1,127 Teledyne, Inc...................... 30,212
1,600 Textron, Inc....................... 109,200
600 Trinova Corp....................... 20,250
1,200 TRW Inc............................ 89,250
1,500 Tyco International Ltd............. 94,500
2,400 United Technologies Corp........... 212,100
7,500 Westinghouse Electric Corp......... 112,500
9,300 WMX Technologies, Inc.............. 265,050
Value
Shares Description (Note 1)
- ------------------------------------------------------------
100 Zurn Industries, Inc............... $ 2,538
-----------
4,448,326
-----------
Miscellaneous Consumer Growth--1.8%
1,300 Allergan, Inc...................... 43,388
1,400 American Greetings Corp............ 42,700
1,600 Black & Decker Corp................ 54,600
4,500 Corning, Inc....................... 128,812
1,900 Dial Corp.......................... 47,025
6,600 Eastman Kodak Co................... 391,050
700 Jostens, Inc....................... 16,450
Minnesota Mining & Manufacturing
8,100 Co............................... 457,650
800 Polaroid Corp...................... 31,800
1,300 Premark International Inc.......... 66,137
3,000 Rubbermaid, Inc.................... 82,875
3,100 Unilever N.V....................... 403,000
2,000 Whitman Corp....................... 41,250
-----------
1,806,737
-----------
Office Equipment & Supplies--1.9%
1,100 Alco Standard Corp................. 93,225
1,000 Avery Dennison Corp................ 42,000
5,100 Compaq Computer Corp.(a)........... 246,712
2,500 Honeywell, Inc..................... 107,188
International Business Machines
11,000 Corp............................. 1,038,125
2,900 Pitney Bowes, Inc.................. 121,800
3,500 Unisys Corp.(a).................... 27,563
2,150 Xerox Corp......................... 288,906
-----------
1,965,519
-----------
Petroleum--6.7%
1,800 Amerada Hess Corp.................. 87,525
9,600 Amoco Corp......................... 615,600
1,100 Ashland Oil, Inc................... 36,713
3,150 Atlantic Richfield Co.............. 338,231
2,400 Burlington Resources Inc........... 93,000
12,600 Chevron Corp....................... 612,675
24,050 Exxon Corp......................... 1,737,612
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Petroleum, cont'd.
1,000 Kerr McGee Corp.................... $ 55,500
700 Louisiana Land & Exploration Co.... 24,938
7,700 Mobil Corp......................... 767,112
6,300 Occidental Petroleum Corp.......... 138,600
900 Pennzoil Co........................ 39,488
5,100 Phillips Petroleum Co.............. 165,750
Royal Dutch Petroleum Co. (ADR)
10,400 (Netherlands).................... 1,276,600
Santa Fe Energy Resources,
1,700 Inc.(a).......................... 16,150
1,500 Sun Co., Inc....................... 38,625
3,500 Tenneco, Inc....................... 161,875
5,000 Texaco, Inc........................ 323,125
4,800 Unocal Corp........................ 136,800
5,600 USX Marathon Corp.................. 110,600
1,100 Western Atlas, Inc.(a)............. 52,112
-----------
6,828,631
-----------
Petroleum Services--0.6%
2,600 Baker Hughes Inc................... 52,975
3,400 Dresser Industries, Inc............ 81,175
2,200 Halliburton Co..................... 91,850
500 Helmerich & Payne, Inc............. 14,063
1,000 McDermott International, Inc....... 19,750
1,900 Oryx Energy Co.(a)................. 24,700
1,400 Rowan Cos., Inc.(a)................ 10,500
4,700 Schlumberger, Ltd.................. 306,675
1,600 Sonat Inc.......................... 51,200
-----------
652,888
-----------
Railroads--0.8%
1,765 Burlington Northern Inc............ 127,975
1,500 Consolidated Rail Corp............. 103,125
2,000 CSX Corp........................... 168,250
2,500 Norfolk Southern Corp.............. 186,875
4,000 Union Pacific Corp................. 265,000
-----------
851,225
-----------
Restaurants--0.6%
3,150 Darden Restaurants Inc............. 36,225
Value
Shares Description (Note 1)
- ------------------------------------------------------------
400 Luby's Cafeterias, Inc............. $ 8,600
13,400 McDonald's Corp.................... 512,550
Ryan's Family Steak Houses,
900 Inc.(a).......................... 7,088
700 Shoney's Inc.(a)................... 7,700
2,100 Wendy's International, Inc......... 44,362
-----------
616,525
-----------
Retail--4.3%
4,900 Albertsons, Inc.................... 167,212
2,800 American Stores Co................. 79,450
300 Brown Group, Inc................... 5,513
39 Bruno's, Inc....................... 444
1,700 Charming Shoppes, Inc.............. 7,650
1,900 Circuit City Stores, Inc........... 60,087
1,400 Dayton Hudson Corp................. 106,225
2,200 Dillard Department Stores, Inc..... 70,125
2,800 Gap, Inc........................... 100,800
Great Atlantic & Pacific Tea
700 Inc.............................. 19,600
1,300 Harcourt General, Inc.............. 54,438
9,266 Home Depot, Inc.................... 369,482
8,800 K mart Corp........................ 127,600
2,400 Kroger Co.(a)...................... 81,900
7,000 Limited, Inc....................... 133,000
1,500 Liz Claiborne, Inc................. 37,875
400 Longs Drug Stores Corp............. 16,600
4,800 May Department Stores Co........... 210,000
2,000 Melville Corp...................... 69,000
700 Mercantile Stores, Inc............. 31,500
3,200 Newell Co.......................... 79,200
1,400 NIKE, Inc.......................... 155,575
1,600 Nordstrom, Inc..................... 66,800
4,400 Penney (J.C.), Inc................. 218,350
1,200 Pep Boys - Manny, Moe & Jack....... 32,550
3,752 Price Costco, Inc.(a).............. 64,253
1,600 Reebok International, Ltd.......... 55,000
1,500 Rite-Aid Corp...................... 42,000
7,500 Sears Roebuck & Co................. 276,562
1,600 Sherwin Williams Co................ 56,000
1,100 Stride Rite Corp................... 12,513
1,400 Supervalue, Inc.................... 41,125
1,400 TJX Companies, Inc................. 16,625
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Retail, cont'd.
5,300 Toys 'R' Us Inc.(a)................ $ 143,100
44,400 Wal-Mart Stores, Inc............... 1,104,450
4,800 Walgreen Co........................ 134,400
1,500 Winn-Dixie Stores, Inc............. 89,437
2,600 Woolworth Corp..................... 40,950
-----------
4,377,391
-----------
Rubber--0.2%
1,700 Cooper Tire & Rubber............... 41,225
500 Goodrich (B.F.) Co................. 32,938
2,900 Goodyear Tire & Rubber Co.......... 114,187
-----------
188,350
-----------
Steel--0.2%
1,900 Armco Inc.(a)...................... 12,350
1,800 Bethlehem Steel Corp.(a)........... 25,425
1,000 Inland Steel Industries, Inc....... 22,750
1,700 Nucor Corp......................... 76,075
1,500 USX Corp. - U.S. Steel Group....... 46,500
1,850 Worthington Industries, Inc........ 33,994
-----------
217,094
-----------
Telecommunications--1.3%
3,700 ALLTEL Corp........................ 110,538
750 Andrew Corp.(a).................... 45,844
2,200 DSC Communications Corp.(a)........ 130,350
13,000 MCI Communications Corp............ 338,812
4,900 Northern Telecom Ltd............... 174,562
1,500 Scientific Atlanta, Inc............ 25,313
6,800 Sprint Corp........................ 238,000
12,500 Tele Communications, Inc.(a)....... 218,750
1,700 Tellabs, Inc.(a)................... 71,613
-----------
1,353,782
-----------
Textiles--0.2%
1,500 Fruit of the Loom, Inc.(a)......... 30,938
National Service Industries,
1,000 Inc.............................. 29,250
700 Russell Corp....................... 17,850
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
400 Springs Industries, Inc............ $ 15,700
1,200 VF Corp............................ 61,200
-----------
154,938
-----------
Tobacco--1.6%
3,700 American Brands Inc................ 156,325
16,250 Philip Morris Cos., Inc............ 1,356,875
3,800 UST, Inc........................... 108,775
-----------
1,621,975
-----------
Trucking & Shipping--0.2%
900 Consolidated Freightways, Inc...... 22,275
1,100 Federal Express Corp.(a)........... 91,300
5,600 Laidlaw Inc........................ 49,000
800 Roadway Services, Inc.............. 39,800
1,400 Ryder System, Inc.................. 35,525
400 Yellow Corp........................ 5,500
-----------
243,400
-----------
Utility-Communications--6.6%
9,600 AirTouch Communications(a)......... 294,000
10,700 Ameritech Corp..................... 557,737
30,700 AT&T Corp.......................... 2,018,525
8,500 Bell Atlantic Corp................. 521,687
9,600 BellSouth Corp..................... 702,000
18,700 GTE Corp........................... 733,975
8,300 NYNEX Corp......................... 396,325
8,200 Pacific Telesis Group.............. 252,150
11,800 SBC Communications Inc............. 649,000
9,100 U.S. West, Inc..................... 428,838
4,200 Unicom Corp........................ 127,050
-----------
6,681,287
-----------
Utility-Electric--2.8%
3,600 American Electric Power, Inc....... 130,950
2,700 Baltimore Gas & Electric Co........ 69,863
3,000 Carolina Power & Light Co.......... 100,875
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
THE PRUDENTIAL STOCK INDEX FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Utility - Electric, cont'd.
3,600 Central & South West Corp.......... $ 91,800
4,500 Consolidated Edison Co............. 136,687
2,800 Detroit Edison Co.................. 90,300
3,400 Dominion Resources, Inc............ 127,925
4,000 Duke Power Co...................... 173,500
4,300 Entergy Corp....................... 112,337
3,600 FPL Group, Inc..................... 147,150
2,200 General Public Utilities Corp...... 68,475
2,500 Houston Industries, Inc............ 110,312
2,800 Niagara Mohawk Power Corp.......... 36,750
1,300 Northern States Power Co........... 58,988
3,000 Ohio Edison Co..................... 68,250
1,700 Pacific Enterprises................ 42,713
8,200 Pacific Gas & Electric Co.......... 244,975
5,400 Pacificorp......................... 102,600
4,300 PECO Energy Co..................... 123,087
4,700 Public Service Enterprise Group.... 139,825
8,700 SCE Corp........................... 154,425
12,800 Southern Co........................ 302,400
4,400 Texas Utilities Co................. 153,450
2,000 Union Electric Co.................. 74,750
-----------
2,862,387
-----------
Total common stocks
(cost $67,756,491)................. 83,284,748
-----------
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS--12.9%
U. S. Government--0.7%
United States Treasury Bills
$ 550(b) 5.31%, 12/14/95................... $ 544,003
150(b) 5.41%, 12/14/95................... 148,350
-----------
692,353
-----------
Repurchase Agreement--12.2%
12,494 Joint Repurchase Agreement
Account,
6.39%, 10/2/95 (Note 5)........... 12,494,000
-----------
Total short-term investments
(cost $13,186,353)................ 13,186,353
-----------
Total Investments--94.6%
(cost $80,942,844; Note 4)........ 96,471,101
Other assets in excess of
liabilities--5.4%............... 5,473,465
-----------
Net Assets--100%.................. $101,944,566
-----------
-----------
</TABLE>
--------
(a) Non-income producing security.
(b) Pledged as initial margin on futures contracts.
ADR--American Depository Receipt.
See Notes to Financial Statements.
16
<PAGE>
THE PRUDENTIAL INTERNATIONAL STOCK FUND
(LOGO) 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 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, Inc. Mercator is
dedicated to global and international common stock investing. Organized in 1984,
Mercator is a conservative, value-oriented manager, which places great emphasis
on capital preservation. Mercator manages $1.8 billion for institutional
clients.
ADVISER'S COMMENTS: Earlier in the fiscal year interest rates were rising and
both stock and bond prices were falling. Foreign stock markets were in the
doldrums, with the emerging markets of the world being particularly hard hit,
as
investors sold stocks after the Mexican devaluation. Cash flows into foreign
stock markets by U.S. investors declined, thereby reducing demand for foreign
equities. During the second half of the fiscal year, the performance of foreign
markets improved as corporate earnings were very good and in many cases exceeded
expectations. Interest rates, with few exceptions, moved down; with rates
currently at levels not seen in eighteen months. The outlook for inflation
continues to be positive as labor costs remain subdued and raw material prices
trend down. Currencies, which had been stable, were more active late in the
period as the U.S. dollar staged a big rally against the Japanese yen, but had
little effect on most other foreign currencies.
During the year we eliminated our positions in Mexico due to the negative
outlook for stocks based on lack of earnings growth. Devaluation, high
inflation, high interest rates and the political risk were the major factors
causing us to significantly reduce our Mexican earnings estimates. Our sells in
other countries were not significant enough to alter their allocation in the
portfolio. While Japanese stocks continued to be overvalued relative to stocks
we monitor, Mercator identified several stocks that were attractively priced and
purchased them. We increased our positions in Switzerland, Sweden, Korea,
Australia and Canada. Analyzing stocks by sectors, we identified better values
in the consumer and financial groups and fewer opportunities in the basic
cyclicals.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Average Annual Returns Fund EAFE Index
<S> <C> <C>
------------------------- ------------- -------------
One Year ended 9/30/95 +5.95% +5.79%
From Inception (11/5/92) +17.48% +16.20%
</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 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
(LOGO) INSTITUTIONAL Comparison of Change in Value
FUND of A $10,000 Investment
(CHART)
-------------- 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
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- -------------------------------------------------------------
LONG-TERM INVESTMENTS
Common Stocks--94.5%
Argentina--2.3%
35,000 Telecom Argentina (ADR) ......... $ 1,465,625
(Utilities)
95,000 YPF Sociedad Anonima (ADR) ...... 1,710,000
(Oil & Gas) -----------
3,175,625
-----------
Australia--7.3%
800,000 CSR, Ltd. ....................... 2,662,008
(Multi-Industry)
540,000 Mayne Nickless Ltd. ............. 2,560,519
(Multi-Industry)
270,000 National Australia Bank Ltd. .... 2,389,001
(Commercial Banking)
900,000 Pioneer International Ltd. ...... 2,382,195
(Building Materials & -----------
Components)
9,993,723
-----------
Canada--4.6%
100,000 Bank of Nova Scotia ............. 2,104,675
(Commercial Banking)
Canadian Tire Corp., Ltd.,
210,000 Class A ......................... 2,366,362
(Automotive Parts)
145,000 MacMillan Bloedel Ltd. .......... 1,782,455
(Forestry & Paper) -----------
6,253,492
-----------
<CAPTION>
Value
Shares Description (Note 1)
- -------------------------------------------------------------
<C> <S> <C>
Finland--2.5%
140,000 Enso-Gutzeit Oy, Class R ........ $ 1,186,316
(Forestry & Paper)
124,000 Outokumpu Oy .................... 2,205,966
(Metals - Non Ferrous) -----------
3,392,282
-----------
France--5.7%
12,000 Chargeurs S.A. .................. 2,484,523
(Multi-Industry)
30,075 Christian Dior S.A. ............. 2,734,923
(Textiles & Apparel)
19,000 Peugeot S.A. .................... 2,595,555
(Automobile Manufacturing) -----------
7,815,001
-----------
Germany--1.7%
7,000 Volkswagen A.G. ................. 2,272,059
(Automobile Manufacturing) -----------
Italy--0.7%
890,000 Bca Fideuram S.P.A. ............. 992,565
(Financial Services) -----------
Japan--5.9%
263,000 Hitachi Ltd. .................... 2,857,545
(Electrical Equipment)
165,000 Matsushita Electric Industrial 2,523,139
Co., Ltd. .
(Electrical Equipment)
51,000 Sony Corp. ...................... 2,637,223
(Electronics) -----------
8,017,907
-----------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
THE PRUDENTIAL INTERNATIONAL STOCK FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- -------------------------------------------------------------
Netherlands--11.3%
20,000 AKZO N.V. ....................... $ 2,400,650
(Chemicals)
30,000 Gamma Holding N.V. .............. 1,349,663
(Textiles & Apparel)
52,000 Internationale - Nederlanden Groep 3,018,495
N.V. .
(Insurance)
77,000 KLM Royal Dutch Airlines ........ 2,699,138
(Airline/Military Technology)
65,000 Knp Bt (kon) Nv ................. 1,929,205
(Forestry & Paper)
84,000 Pakhoed Holdings N.V. ........... 2,461,635
(Energy Equipment & Services)
63,000 Stork N.V. ...................... 1,574,606
(Machinery & Engineering) -----------
15,433,392
-----------
New Zealand--3.6%
700,000 Fisher & Paykel Industries Ltd. 2,165,471
...............................
(Consumer Durable Goods)
1,320,000 Lion Nathan Ltd. ................ 2,762,851
(Beverages & Tobacco) -----------
4,928,322
-----------
Norway--7.5%
195,000 Aker A.S. ....................... 2,827,438
(Multi-Industry)
101,000 Hafslund Nycomed A.S. ........... 2,623,168
(Health & Personal Care)
65,000 Orkla A.S. ...................... 2,899,936
(Food & Household Products)
127,900 Unitor Shipping Service, A.S. ... 1,956,405
(Business & Public Services) -----------
10,306,947
-----------
Value
Shares Description (Note 1)
- -------------------------------------------------------------
South Korea--7.4%
85,000 Korea Zinc ...................... $ 2,135,512
(Metals - Non Ferrous)
30,575 Lucky Development Co. ........... 704,475
(Construction & Housing)
4,500 Pohang Iron & Steel Co., Ltd. ... 388,375
(Metals - Steel)
13,134 Samsung Electronics Co., Ltd. ... 2,829,572
(Manufacturing)
2,599 Samsung Electronics Co., Ltd., new
shares.......................... 556,542
(Manufacturing)
35,000 Sam Yang Co. .................... 1,298,490
(Misc. Materials & Commodities)
60,020 Tong Yang Cement Corp. .......... 2,117,342
(Construction & Housing) -----------
10,030,308
-----------
Spain--5.9%
87,000 Banco Bilbao Vizcaya ............ 2,678,116
(Commercial Banking)
21,000 Banco de Andalucia .............. 2,726,963
(Commercial Banking)
355,000 Iberdrola ....................... 2,685,974
(Utilities) -----------
8,091,053
-----------
Sweden--7.5%
47,000 Electrolux AB ................... 2,245,708
(Appliances)
95,000 Pharmacia AB .................... 2,854,971
(Commercial Banking)
132,000 SKF International AB ............ 2,910,967
(Consumer Goods)
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
THE PRUDENTIAL INTERNATIONAL STOCK FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- -------------------------------------------------------------
Sweden, cont'd.
90,000 Volvo AB ........................ $ 2,205,278
(Automobile Manufacturing) -----------
10,216,924
-----------
Switzerland--11.0%
4,100 Ciba-Geigy Ltd. ................. 3,284,256
(Chemicals)
3,500 Hero ............................ 1,680,363
(Food & Household Products)
11,000 Merkur Holding AG ............... 2,531,142
(Merchandising)
4,000 SMH-Swiss Corp. for
Microelectronics and Watchmaking
Industries Ltd.................. 2,595,156
(Electronics)
4,500 Sulzer Brothers Ltd. ............ 2,608,131
(Machinery & Engineering)
8,500 Zurich Insurance Co. ............ 2,382,353
(Insurance) -----------
15,081,401
-----------
United Kingdom--9.6%
270,076 Allied-Domecq PLC ............... 2,293,666
(Beverages & Tobacco)
Value
Shares Description (Note 1)
- -------------------------------------------------------------
445,000 Lloyds Abbey Life PLC ........... $ 3,173,557
(Insurance)
210,000 National Westminster Bank PLC ... 2,105,613
(Commercial Banking)
385,000 Takare .......................... 1,363,888
(Commercial Banking)
470,000 Tesco PLC ....................... 2,319,116
(Food & Household Products)
196,000 Whitbread PLC ................... 1,900,144
(Beverages & Tobacco) -----------
13,155,984
-----------
Total common stocks
(cost $111,841,426)............... 129,156,985
-----------
Principal
Amount
(000) SHORT-TERM INVESTMENT
- ----------
Repurchase Agreement--6.0%
$ 8,175 Joint Repurchase Agreement
Account,
6.39%, 10/2/95 (Note 5)
(cost $8,175,000)................. 8,175,000
-----------
Total Investments--100.5%
(cost $120,016,426; Note 4)....... 137,331,985
Liabilities in excess of other
assets--(0.5%).................. (646,763)
-----------
Net Assets--100%.................. $136,685,222
-----------
-----------
</TABLE>
- ---------------
ADR--American Depository Receipt.
See Notes to Financial Statements.
21
<PAGE>
<PAGE>
THE PRUDENTIAL ACTIVE BALANCED FUND
(LOGO) 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 a 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 to
capitalize on intermediate-term valuation opportunities and to maximize the
Fund's total investment return.
ADVISER: Jennison Associates Capital Corp.
ADVISER'S COMMENTS: The past year represented an excellent period for both
stocks and bonds, but not without significant cross-currents and challenge. The
year started off with a continued difficult environment for both stocks and
bonds, but beginning with the second quarter of the fiscal year, both stocks and
bonds began a strong rally phase which lasted the year. The Fund participated
in
this advance, but performance was adversely affected by our conservative equity
exposure. This caused us to under-perform the 60% S&P 500/40% Lehman
Gov't./Corp. Index.
Two powerful forces drove the stock market over the past year --declining
interest rates and strong corporate profit growth. These forces overpowered what
we believed to be valuation problems for the equity market. As the fiscal year
progressed, the economy entered into a significantly slower growth mode. The
resulting slowdown in corporate profit growth, coupled with the continued
advancement of equities has only exacerbated our valuation concerns. With this
backdrop, the Fund is maintaining a conservative equity exposure while
continuing to search for opportunities to add to the equity component. The
equity sector of the portfolio has very strong current characteristics, with
expected earnings growth well ahead of that of the market, but with portfolio
valuation at a significant discount to the market.
The bond market continues to be positively influenced by slow economic growth
and a benign inflation outlook. We closed the fiscal year with 34% in an all
Treasury bond portfolio with a 6 year duration, well in excess of the Lehman
Gov't./Corp. Index. It is our view that bonds offer stiff competition for stocks
at the present time.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Composite
Average Annual Returns Fund Index (1)
<S> <C> <C>
------------------------- ------------- ----------
One Year ended 9/30/95 +17.66% +23.58%
From Inception (1/4/93) +10.49% +11.63%
</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 Government/Corp Index, an unmanaged indicator of bond market
performance. The Fund, on average, has been invested approximately 42% in
stocks, 35% in bonds and 23% in short-term money market instruments for each of
the periods. The S&P 500 returned 29.74% and 14.49%; and the Lehman Index
returned 14.35% and 7.34% for each period, respectively.
22
<PAGE>
THE PRUDENTIAL ACTIVE BALANCED FUND
(LOGO) INSTITUTIONAL Comparison of Change in Value
FUND of A $10,000 Investment
(CHART)
-------------- 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
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--80.9%
Common Stocks--47.3%
Aerospace/Defense--0.5%
10,500 Boeing Co.......................... $ 716,625
-----------
Airlines--1.4%
12,100 Delta Airlines, Inc................ 837,925
6,300 UAL Corp........................... 1,076,513
-----------
1,914,438
-----------
Automobiles & Trucks--1.8%
51,600 General Motors Corp................ 2,418,750
-----------
Banking--2.8%
38,400 Boatmen's Bancshares............... 1,420,800
9,300 Chemical Banking Corp.............. 566,138
17,800 Fleet Financial Group, Inc......... 671,950
102,300 Hibernia Corp...................... 1,035,787
-----------
3,694,675
-----------
Capital Goods--0.7%
20,900 Duracell International, Inc........ 937,888
-----------
Chemicals--0.8%
41,600 Dexter Corp........................ 1,060,800
-----------
Commercial Services--1.5%
19,850 CUC International, Inc.(a)......... 692,269
30,900 York International Corp............ 1,301,662
-----------
1,993,931
-----------
Computer Software & Services--0.4%
6,800 Novell, Inc.(a).................... 124,100
13,700 Symbol Technologies, Inc.(a)....... 453,812
-----------
577,912
-----------
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
Diversified Gas--0.3%
10,300 Coastal Corp....................... $ 346,338
-----------
Drugs & Medical Supplies--0.9%
Smith Kline Beecham PLC (ADR)
17,700 (United Kingdom)................. 896,063
19,600 Vertex Pharmaceuticals, Inc........ 367,500
-----------
1,263,563
-----------
Electronics--3.1%
22,000 Hewlett-Packard Co................. 1,834,250
22,700 Intel Corp......................... 1,364,837
24,700 International Rectifier Corp.(a)... 994,175
-----------
4,193,262
-----------
Financial Services--0.5%
13,000 The PMI Group Inc.................. 615,875
-----------
Forest Products--0.9%
13,900 Georgia Pacific Corp............... 1,216,250
-----------
Insurance--2.8%
8,000 Aetna Life & Casualty Co........... 587,000
30,700 CIGNA Corp......................... 3,196,637
-----------
3,783,637
-----------
Leisure--0.6%
37,200 Brunswick Corp..................... 753,300
-----------
Lodging--1.2%
24,500 Hilton Hotels Corp................. 1,564,938
-----------
Machinery--0.6%
23,547 Harnischfeger Industries, Inc...... 785,881
-----------
Media--5.5%
17,700 Dow Jones & Co., Inc............... 652,688
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
THE PRUDENTIAL ACTIVE BALANCED FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Media, cont'd.
13,800 Dun & Bradstreet Corp.............. $ 798,675
11,900 McGraw-Hill, Inc................... 972,825
News Corp. Ltd. (ADR)
35,400 (Australia)...................... 778,800
71,800 New York Times Co.................. 1,965,525
10,300 Omnicom Group...................... 670,787
8,100 Scholastic Corp.(a)................ 508,275
14,700 Tribune Co......................... 975,712
-----------
7,323,287
-----------
Mineral Resources--1.5%
47,974 Newmont Mining Corp................ 2,038,895
-----------
Miscellaneous Basic Industry--6.4%
62,900 Avalon Properties, Inc............. 1,281,587
20,200 Champion International Corp........ 1,088,275
11,200 ITT Corp........................... 1,388,800
26,400 Mead Corp.......................... 1,547,700
25,300 Reynolds Metals Co................. 1,461,075
8,500 United Technologies Corp........... 751,188
40,000 Wellman Inc........................ 980,000
-----------
8,498,625
-----------
Miscellaneous Consumer Growth--0.4%
8,600 Eastman Kodak Co................... 509,550
-----------
Office Equipment & Supplies--2.0%
41,200 Apple Computer, Inc................ 1,534,700
9,300 Compaq Computer Corp.(a)........... 449,887
5,000 Xerox Corp......................... 671,875
-----------
2,656,462
-----------
Petroleum--0.5%
15,700 Tenneco, Inc....................... 726,125
-----------
Value
Shares Description (Note 1)
- ------------------------------------------------------------
Petroleum Services--1.4%
18,500 Anadarko Petroleum Corp............ $ 876,438
43,400 Dresser Industries, Inc............ 1,036,175
-----------
1,912,613
-----------
Railroads--1.4%
10,901 Southern Pacific Rail Corp.(a)..... 264,349
24,400 Union Pacific Corp................. 1,616,500
-----------
1,880,849
-----------
Retail--1.5%
9,800 Harcourt General, Inc.............. 410,375
84,000 Limited, Inc....................... 1,596,000
-----------
2,006,375
-----------
Steel--0.3%
12,300 USX Corp. - U.S. Steel Group....... 381,300
-----------
Technology--1.8%
19,700 Adobe Systems, Inc................. 1,019,475
8,605 Chiron Corp.(a).................... 778,753
30,600 Pyxis Corp.(a)..................... 592,875
-----------
2,391,103
-----------
Telecommunications--2.8%
78,300 MCI Communications Corp............ 2,040,694
17,300 QUALCOMM Inc.(a)................... 793,637
Vodafone Group PLC (ADR) (United
20,600 Kingdom)......................... 844,600
-----------
3,678,931
-----------
Trucking & Shipping--1.0%
50,700 Ryder System, Inc.................. 1,286,513
-----------
Total common stocks
(cost $52,575,805)................. 63,128,691
-----------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
THE PRUDENTIAL ACTIVE BALANCED FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
DEBT OBLIGATIONS--33.6%
U. S. Government Securities
United States Treasury Notes,
$ 3,015 8.875%, 11/15/98................. $ 3,263,255
5,510 7.50%, 11/15/01.................. 5,900,879
17,435 6.25%, 2/15/03................... 17,532,985
14,750 5.75%, 8/15/03................... 14,351,308
United States Treasury Bonds,
3,230 7.875%, 2/15/21.................. 3,703,905
------------
Total debt obligations
(cost $43,190,765)............... 44,752,332
------------
Total long-term investments
(cost $95,766,570)............... 107,881,023
------------
SHORT-TERM INVESTMENTS
Repurchase Agreement--19.2%
25,625 Joint Repurchase Agreement Account,
6.39%, 10/2/95 (Note 5)
(cost $25,625,000)............. 25,625,000
------------
Total Investments--100.1%
(cost $121,391,570; Note 4)...... 133,506,023
Liabilities in excess of other
assets--(0.1%)................. (154,136)
------------
Net Assets--100%................. $133,351,887
------------
------------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements.
26
<PAGE>
<PAGE>
THE PRUDENTIAL BALANCED FUND
(LOGO) 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 approximately $19 billion in equity, balanced and fixed income
accounts.
ADVISER'S COMMENTS: During 1994, the Federal Reserve raised short-term interest
rates six times. This relentless increase in rates had the intended effect of
slowing the economy; however, the stock market posted a small gain and the bond
market was down for the year. Fearing the Fed would repeat past mistakes by
stepping too hard on the monetary brakes, financial markets welcomed slower
economic growth in 1995. By the end of the first quarter, the return on the S&P
500 Index was one of the best on record, returning nearly 10%. Bonds also
rallied steadily throughout the quarter. By the end of June, 1995, the S&P 500
Index had returned more than 20%, while returns on bonds were the fourth best
in
the last 70 years. Although growth stocks faltered during the third quarter, the
S&P 500 Index return reached almost 30% for the year. Despite a hiccup in July
and August, the yield on Treasury bonds fell to almost 6.5% --the lowest yield
since the opening weeks of 1994. The Lehman Aggregate Bond Index was up over 13%
for the year by the end of the third quarter. The Balanced Fund's allocation was
overweight in stocks (over 46% of assets) for the entire year. However, the
value stock holdings in the fund's portfolio underperformed the broader market
index (S&P 500) for the year. The underweighting in the technology and consumer
sector stocks were the primary reason for the fund's underperformance. Bonds
were slightly underweight for the year, while cash was slightly overweight.
Although we've taken some gains, we continue to favor stocks. With the economy
slowing, earnings momentum looks somewhat high. As long as earnings don't
surprise us on the downside, stocks can continue to outperform bonds if further
declines in interest rates accompany the economy's ``soft landing.''
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Composite
Average Annual Returns Fund Index (1)
<S> <C> <C>
------------------------- ------------- ----------
One Year ended 9/30/95 +15.90% +20.42%
From Inception (11/5/92) +10.85% +10.86%
</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. For each of the
periods, the Fund, on average, has been invested 46% in stocks, 43% in bonds and
11% in money market instruments. The S&P 500 returned 29.74%, and 15.40%; the
Lehman Gov't/Corp Index returned 14.35%, and 7.79%, and T-Bills returned 5.80%
and 4.20% for each period, respectively.
27
<PAGE>
THE PRUDENTIAL BALANCED FUND
(LOGO) INSTITUTIONAL Comparison of Change in Value
FUND of A $10,000 Investment
(CHART)
----- 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
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--89.7%
Common Stocks--45.7%
Aerospace/Defense--0.5%
15,100 Martin Marietta Corp............... $ 296,338
2,100 Rockwell International Corp........ 99,225
-----------
395,563
-----------
Automobiles & Trucks--1.3%
4,700 Allied Signal Automotive, Inc...... 207,387
5,000 Danaher Corp....................... 163,750
General Motors Corp.
4,000 Class E............................ 182,000
10,000 Class H............................ 410,000
3,700 Modine Manufacturing Co............ 105,450
-----------
1,068,587
-----------
Banking--2.8%
7,400 Bank of Boston Corp................ 352,425
16,800 Bank of New York, Inc.............. 781,200
1,900 First Chicago Corp................. 130,387
2,700 First Interstate Bank Corp......... 272,025
23,600 Norwest Corp....................... 772,900
-----------
2,308,937
-----------
Building Materials & Components--0.3%
9,000 USG Corp.(a)....................... 252,000
-----------
Capital Goods--0.6%
Fisher Scientific International,
15,000 Inc.............................. 485,625
-----------
Chemicals--3.9%
7,000 Agrium, Inc........................ 256,845
2,000 Air Products & Chemicals, Inc...... 104,250
10,400 Cytec Industries, Inc.(a).......... 601,900
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
8,000 duPont (E.I.) de Nemours & Co...... $ 550,000
3,000 Eastman Chemical Co................ 192,000
9,000 Grace (W.R.) & Co.................. 600,750
Imperial Chemical Inds. (ADR)
8,000 (United Kingdom)................. 406,000
6,600 Olin Corp.......................... 453,750
-----------
3,165,495
-----------
Chemical-Specialty--1.0%
7,500 Hanna (M.A.) Co.................... 197,812
10,600 Mississippi Chemical Corp.......... 222,600
3,100 OM Group, Inc...................... 94,163
36,100 Uniroyal Chemical Corp.(a)......... 324,900
-----------
839,475
-----------
Commercial Services--0.6%
11,000 York International Corp............ 463,375
-----------
Computer Software & Services--0.5%
6,000 Automatic Data Processing, Inc..... 408,750
-----------
Construction--0.5%
32,000 Giant Cement Holding Inc.(a)....... 388,000
-----------
Consumer Goods--1.6%
13,000 Ethan Allen Interiors, Inc.(a)..... 279,500
13,000 Libbey, Inc........................ 310,375
16,000 Owens Corning Fiberglas Corp.(a)... 714,000
-----------
1,303,875
-----------
Drugs & Medical Supplies--1.8%
10,100 Baxter International Inc........... 415,362
8,000 Schering-Plough Corp............... 412,000
30,000 Whitman Corp....................... 618,750
-----------
1,446,112
-----------
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
THE PRUDENTIAL BALANCED FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Electrical Equipment--0.9%
14,000 Anixter International Inc.(a)...... $ 579,250
6,800 UCAR International Inc.(a)......... 185,300
-----------
764,550
-----------
Electronics--1.0%
6,000 Emerson Electric Co................ 429,000
7,200 Oak Industries, Inc.(a)............ 216,900
2,500 Sundstrand Corp.................... 161,875
-----------
807,775
-----------
Financial Services--1.6%
12,400 Dean Witter Discover & Co.......... 697,500
10,500 Equitable Companies, Inc........... 388,500
4,700 Finova Group, Inc.................. 209,150
-----------
1,295,150
-----------
Food & Beverage--0.1%
4,000 Sbarro, Inc........................ 92,000
-----------
Forest Products--0.4%
7,000 Pentair, Inc....................... 315,000
-----------
Freight Transportation--0.3%
9,000 Pittston Services Group............ 244,125
-----------
Furniture
1,900 INTERCO Inc.(a).................... 14,963
-----------
Gas Pipelines--1.9%
19,400 Cabot Oil & Gas Corp............... 264,325
12,900 Enron Corp......................... 280,575
15,700 Mesa, Inc.(a)...................... 74,575
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
11,000 Parker & Parsley Petroleum Co...... $ 220,000
6,700 Seagull Energy Corp.(a)............ 135,675
20,000 Total S.A. (ADR) (France).......... 602,500
-----------
1,577,650
-----------
Health Care--0.3%
10,000 Quorum Health Group(a)............. 226,250
-----------
Hospital Management--1.3%
10,400 Columbia Healthcare Corp........... 505,700
33,000 Tenet Healthcare Corp.(a).......... 573,375
-----------
1,079,075
-----------
Insurance--3.7%
7,300 Emphesys Financial Group, Inc...... 271,013
7,000 John Alden Financial Corp.......... 158,375
3,900 NAC Re Corp........................ 141,375
9,700 National Re Corp................... 343,137
16,000 Penncorp Financial Group, Inc...... 382,000
Reinsurance Group of America,
17,200 Inc.............................. 606,300
15,000 TIG Holdings, Inc.................. 403,125
6,000 Travelers, Inc..................... 318,750
28,900 Western National Corp.............. 397,375
-----------
3,021,450
-----------
Machinery--1.5%
Gardner Denver Machinery,
26,000 Inc.(a).......................... 442,000
10,000 IDEX Corp.......................... 357,500
17,100 United Dominion Inds............... 412,537
-----------
1,212,037
-----------
Manufacturing--0.2%
4,500 Parker-Hannifin Corp............... 171,000
-----------
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
THE PRUDENTIAL BALANCED FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Media--2.2%
10,000 Comcast Corp....................... $ 198,750
14,900 Cox Communications, Inc.(a)........ 301,725
9,400 Gannett, Inc....................... 513,475
News Corp. Ltd. (ADR)
6,000 (Australia)...................... 119,250
10,000 Time Warner, Inc................... 397,500
9,437 Times Mirror Co.................... 271,314
-----------
1,802,014
-----------
Medical Technology--0.3%
8,200 Guidant Corp....................... 239,850
-----------
Mineral Resources--0.5%
23,500 INDRESCO, Inc.(a).................. 420,063
-----------
Miscellaneous Basic Industry--4.5%
21,100 ADT Ltd.(a)........................ 290,125
15,600 Belden, Inc........................ 409,500
6,900 Crane Co........................... 238,050
19,500 Ferro Corp......................... 485,062
7,000 FMC Corp.(a)....................... 532,000
9,000 Illinois Tool Works, Inc........... 529,875
17,960 Mark IV Industries, Inc............ 399,610
10,000 Tyco International Ltd............. 630,000
2,500 United Technologies Corp........... 220,938
-----------
3,735,160
-----------
Office Equipment & Supplies--0.6%
12,100 Honeywell, Inc..................... 518,788
-----------
Oil & Gas-Equipment & Services--0.8%
20,700 Frontier Corp...................... 551,138
5,400 Vintage Petroleum, Inc............. 113,400
-----------
664,538
-----------
<CAPTION>
Value
Shares Description (Note 1)
- ------------------------------------------------------------
Petroleum--1.2%
30,000 Cross Timbers Oil Co............... $ 427,500
18,000 Occidental Petroleum Corp.......... 396,000
Santa Fe Energy Resources,
15,000 Inc.(a).......................... 142,500
-----------
966,000
-----------
Petroleum Services--0.5%
33,300 Oryx Energy Co..................... 432,900
-----------
Publishing--0.3%
17,000 American Publishing Co., Class A... 212,500
-----------
Railroads--1.5%
6,400 Burlington Northern Inc............ 464,000
8,900 Illinois Central Corp.............. 348,212
7,000 Union Pacific Corp................. 463,750
-----------
1,275,962
-----------
Restaurants--0.1%
4,300 Shoney's Inc.(a)................... 47,300
-----------
Retail--1.4%
50,000 Best Products, Inc.(a)............. 425,000
12,000 Dillard Department Stores, Inc..... 382,500
4,900 Eckerd Corp.(a).................... 196,000
4,100 Harcourt General, Inc.............. 171,687
-----------
1,175,187
-----------
Rubber--0.4%
9,000 Goodyear Tire & Rubber Co.......... 354,375
-----------
Steel--0.1%
3,000 Carpenter Technology Corp.......... 117,375
-----------
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
THE PRUDENTIAL BALANCED FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Value
Shares Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Technology--0.8%
14,500 Coltec Inds., Inc.(a).............. $ 174,000
10,400 Litton Industries Inc.(a).......... 452,400
-----------
626,400
-----------
Telecommunications--1.5%
20,900 MCI Communications Corp............ 544,706
36,500 Tele Communications, Inc.(a)....... 706,275
-----------
1,250,981
-----------
Utility-Communications--0.4%
9,100 AirTouch Communications(a)......... 278,688
600 WorldCom Inc.(a)................... 19,275
-----------
297,963
-----------
Total common stocks
(cost $31,721,047)................. 37,484,175
-----------
Principal
Amount
(000) DEBT OBLIGATIONS--44.0%
- --------
Asset Backed Securities--0.5%
Standard Credit Card Master Trust
I,
Series 1995 Class - A1
$ 400 8.25%, 1/7/07 (cost $444,938)...... 438,872
-----------
Corporate Bonds--7.2%
African Development Bank,
400 7.70%, 7/15/02..................... 424,732
(Banking)
American General Finance Corp.,
400 7.25%, 5/15/05..................... 412,132
(Financial Services)
Comdisco Inc.,
300 6.50%, 6/15/00..................... 296,730
(Commercial Services)
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Consolidated Edison Co., Inc.,
$ 300 6.625%, 2/1/02.................... $ 299,175
(Utilities)
Detroit Edison Co.,
350 6.34%, 3/15/00.................... 346,038
(Utilities)
Federal Express Corp.,
350 10.00%, 9/1/98.................... 381,836
(Shipping)
Ford Motor Credit Co.,
400 9.375%, 12/15/97.................. 424,116
(Financial Services)
General Electric Capital Corp.,
400 8.75%, 11/26/96................... 411,024
(Financial Services)
General Motors Acceptance Corp.,
400 9.625%, 5/15/00................... 447,896
(Financial Services)
Greyhound Financial Corp.,
100 8.50%, 5/1/98..................... 104,629
(Financial Services)
Hanson PLC.,
400 7.375%, 1/15/03................... 413,828
(Industrial) (United Kingdom)
International Lease Finance Corp.,
200 5.50%, 4/1/97..................... 197,634
(Financial Services)
Lehman Brothers, Inc.,
200 7.125%, 7/15/02................... 198,082
(Financial Services)
Norwest Corp.,
300 7.125%, 4/1/00.................... 307,899
(Banking)
Salomon, Inc.,
200 8.64%, 2/27/98.................... 207,340
(Financial Services)
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
THE PRUDENTIAL BALANCED FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
Corporate Bonds, cont'd.
Sears Roebuck & Co.,
$ 100 9.48%, 7/24/01.................... $ 113,359
(Retail)
Sears Roebuck Acceptance Corp.,
300 6.75%, 9/15/05.................... 297,726
(Financial Services)
Texas Utilities Co.,
300 6.375%, 8/1/97.................... 299,787
(Utilities)
Union Oil Co.,
300 7.75%, 4/20/05.................... 316,758
-----------
(Petroleum)
Total corporate bonds
(cost $5,852,940)................. 5,900,721
-----------
U. S. Government Securities--36.3%
United States Treasury Bonds,
1,600 10.75%, 8/15/05................... 2,120,256
6,300 11.25%, 2/15/15................... 9,473,625
United States Treasury Notes,
3,700 6.00%, 11/30/97................... 3,709,250
400 5.625%, 1/31/98................... 397,688
4,325 9.00%, 5/15/98.................... 4,644,661
5,500 6.375%, 1/15/99................... 5,565,285
2,000 7.50%, 10/31/99................... 2,105,940
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
- ------------------------------------------------------------
<C> <S> <C>
United States Treasury Notes,
$ 150 7.75%, 11/30/99................... $ 159,421
1,100 6.375%, 8/15/02................... 1,116,324
500 7.25%, 8/15/04.................... 534,610
-----------
Total U. S. Government Securities
(cost $29,249,979).............. 29,827,060
-----------
Total debt obligations
(cost $35,547,857).............. 36,166,653
-----------
Total long-term investments
(cost $67,268,904).............. 73,650,828
-----------
SHORT-TERM INVESTMENT
Repurchase Agreement--8.9%
7,338 Joint Repurchase Agreement
Account,
6.39%, 10/2/95 (Note 5)
(cost $7,338,000)............... 7,338,000
-----------
Total Investments--98.6%
(cost $74,606,904; Note 4)........ 80,988,828
Other assets in excess of
liabilities--1.4%................. 1,121,118
-----------
Net Assets--100%.................. $82,109,946
-----------
-----------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements.
33
<PAGE>
<PAGE>
THE PRUDENTIAL INCOME FUND
(LOGO) INSTITUTIONAL
FUND
OBJECTIVE: Seeks 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, a benchmark which 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 Global Advisers (PGA), a
business unit of Prudential Investment Corporation. PGA specializes in domestic
and global fixed income management. PGA manages approximately $22 billion in
fixed income accounts.
ADVISER'S COMMENTS: Fixed income market participants have enjoyed a sustained
rally throughout the first nine months of 1995. The rally was triggered early
in
the year by economic releases depicting a slowing economy and benign inflation.
Expectations that the Fed would shift from a tightening to an easing stance were
also reflected in market price action. Interest rates on 30-year Treasury bonds
declined by 137 basis points to 6.50% by the end of the third quarter. In
addition, the spread between two-year and 30-year Treasuries steepened by 47
basis points over the period.
During the last twelve months, the Lehman Aggregate returned 14.06%, with the
bulk of the returns occurring in the first six months of 1995 (11.44%).
Corporates were the star performer with a 16.99% return, followed by governments
at 13.57% and mortgages at 13.53%.
Since our last report to you six months ago, corporate exposure in the Income
Fund increased by 12% and we are now overweighted in the sector, relative to the
Lehman Aggregate, by about 11%. We believe that strong investor appetite for
yield combined with continued strong corporate earnings and cash flow and
limited new supply should provide ongoing favorable performance in the sector.
We have also lengthened the overall maturity of our corporate holdings in order
to more fully participate in anticipated strong corporate relative performance
in the future.
The Income Fund's mortgage exposure was reduced by almost 10% to a relatively
neutral 31% over the period. We also lowered the Fund's average mortgage
pass-through coupon. Once again, rallying markets triggered prepayment fears and
caused prices to lag in this sector of the market. Fund performance was enhanced
by our move to avoid the most prepayment sensitive areas of the mortgage market.
<TABLE>
PERFORMANCE RESULTS:
<CAPTION>
Lehman
Aggregate
Average Annual Returns Fund Index
<S> <C> <C>
------------------------- ------------- ------------
One Year ended 9/30/95 +13.11% +14.06%
From Inception (3/1/93) +5.68% +6.03%
</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.
34
<PAGE>
THE PRUDENTIAL INCOME FUND
(LOGO) INSTITUTIONAL Comparison of Change in Value
FUND of A $10,000 Investment
(CHART)
-------------- 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.
35
<PAGE>
THE PRUDENTIAL INCOME FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- -------------------------------------------------------------
LONG-TERM INVESTMENTS--95.9%
Asset Backed Securities--4.0%
Nationsbank Credit Card Trust,
$ 500 Series 1995-1, 6.45%, 4/15/03.... $ 501,875
Prime Credit Card
500 Series 1995-1, 6.75%, 11/15/05... 500,000
Standard Credit Card Trust,
500 Series 1994-4, 8.25%, 11/07/03... 541,090
500 Series 1995-1, 8.25%, 1/07/07.... 548,590
------------
Total asset backed securities
(cost $2,084,823)................ 2,091,555
------------
Corporate Bonds--23.9%
African Development Bank,
500 7.75%, 12/15/01.................. 529,150
(Financial Services)
American General Finance Corp.,
500 7.25%, 5/15/05................... 515,165
(Financial Services)
Associates Corp. of North
America,
(Financial Services)
500 6.625%, 6/15/05.................. 493,845
400 7.25%, 5/15/98................... 409,296
Columbia Healthcare Corp,
500 7.58%, 9/15/25................... 512,500
(Hospital Management)
Comdisco Inc.,
500 6.50%, 6/15/00................... 494,550
(Commercial Services)
Detroit Edison Co.,
500 6.34%, 3/15/00................... 494,340
(Utilities)
Digital Equipment Corp.,
250 7.125%, 10/15/02................. 243,505
(Electronics)
Dresdner Bank AG,
500 7.25%, 9/15/15................... 501,040
(Banking) (Germany)
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
- -------------------------------------------------------------
<C> <S> <C>
Equity Lord Realty Corp.,
$ 300 10.50%, 12/30/97................. $ 316,875
(Real Estate)
Federal Express Corp.,
500 10.00%, 9/01/98.................. 545,480
(Shipping)
General Electric Capital Corp.,
500 7.95%, 2/02/98................... 518,360
(Financial Services)
General Motors Acceptance Corp.,
350 8.00%, 4/10/97................... 358,981
(Financial Services)
Grand Metropolitan Investment
Corp.,
800 Zero Coupon, 1/06/04............. 454,656
(Financial Services) (United Kingdom)
Household Finance Corp.,
1,000 6.375%, 6/30/00.................. 993,560
(Financial Services)
Hydro Quebec,
500 8.00%, 2/01/13................... 525,450
(Utilities) (Canada)
IC Industries Financial Corp.,
705 8.00%, 7/01/96................... 714,166
(Financial Services)
Intermediate American Development
Bank,
435 8.50%, 3/15/11................... 501,046
(Banking)
International Lease Finance
Corp.,
300 5.50%, 4/01/97................... 296,451
(Financial Services)
Lehman Brothers Holdings, Inc.,
400 7.625%, 7/15/99.................. 409,120
(Financial Services)
Petroliam Nasional Berhad,
500 7.75%, 8/15/15................... 511,100
(Petroleum)
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
THE PRUDENTIAL INCOME FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- -------------------------------------------------------------
Corporate Bonds, cont'd.
Salomon, Inc.,
$ 400 8.64%, 2/27/98................... $ 414,680
(Financial Services)
Sears Roebuck Acceptance Corp.,
500 6.75%, 9/15/05................... 496,210
(Financial Services)
SunAmerica, Inc.,
275 6.58%, 1/15/02................... 270,281
(Insurance)
Tenneco Credit Corp.,
400 10.125%, 12/01/97................ 428,396
(Financial Services)
Time Warner Inc.,
300 9.15%, 2/01/23................... 325,533
(Media)
Union Bank Finland, Ltd.,
250 5.25%, 6/15/96................... 247,670
------------
(Banking) (Finland)
Total corporate bonds
(cost $12,342,321)............... 12,521,406
------------
Foreign Government Obligations--1.9%
New Zealand Government Bond,
500 10.50%, 7/16/00.................. 541,721
Province of Quebec,
400 9.00%, 5/08/01................... 438,952
------------
Total foreign government
obligations
(cost $1,015,099)................ 980,673
------------
U.S. Government and Agency Securities--66.1%
Federal Home Loan Mortgage Corp.,
802 7.00%, 7/01/08................... 804,823
500 7.00%, 8/15/23................... 486,405
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
- -------------------------------------------------------------
Federal National Mortgage Assn.,
$ 500 6.50%, 2/25/24................... $ 463,905
1,000(a) 6.50%, 15 yr..................... 986,250
1,000(a) 6.50%, 30 yr..................... 964,370
2,268 7.00%, 9/25/23 - 7/01/24......... 2,236,387
2,000(a) 7.50%, 30 yr..................... 2,012,500
1,444 8.00%, 9/01/09 - 7/01/24......... 1,478,962
1,493 9.50%, 1/01/25 - 3/01/25......... 1,577,843
Government National Mortgage
Assn.,
843 7.00%, 2/15/09................... 849,303
2,441(b) 7.00%, 30 yr..................... 2,413,594
697 7.50%, 12/15/22 - 7/15/23........ 707,019
1,261 9.00%, 9/15/19 - 7/15/21......... 1,336,782
Tennessee Valley Authority,
600 7.25%, 7/15/43................... 590,646
United States Treasury Bonds,
200 7.625%, 2/15/25.................. 226,468
450 9.00%, 11/15/18.................. 573,327
200 9.25%, 2/15/16................... 257,406
1,000 10.75%, 8/15/05.................. 1,325,160
1,350 12.00%, 8/15/13.................. 1,986,403
United States Treasury Notes,
3,350 5.25%, 7/31/98................... 3,292,414
650 5.625%, 1/31/98.................. 646,243
1,500 5.75%, 10/31/97.................. 1,496,955
500 5.875%, 3/31/99.................. 498,670
600 6.25%, 2/15/03................... 603,372
150 6.375%, 8/15/02.................. 152,226
2,400 6.375%, 1/15/99.................. 2,428,488
2,100 8.625%, 8/15/97.................. 2,202,375
United States Treasury Strips,
1,500 Zero Coupon, 2/15/08............. 676,680
2,000 Zero Coupon, 8/15/08............. 870,400
700 Zero Coupon, 8/15/11............. 244,657
500 Zero Coupon, 11/15/11............ 171,485
------------
Total U.S. government and
agency securities
(cost $33,818,383)............... 34,561,518
------------
</TABLE>
See Notes to Financial Statements.
37
<PAGE>
THE PRUDENTIAL INCOME FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
- -------------------------------------------------------------
<C> <S> <C>
Total long-term investments
(cost $49,260,626)............... $ 50,155,152
------------
SHORT-TERM INVESTMENT
Repurchase Agreement--14.3%
Joint Repurchase Agreement
$ 7,478 Account,
6.39%, 10/2/95 (Note 5)
(cost $7,478,000)................ 7,478,000
------------
Total Investments--110.2%
(cost $56,738,626; Note 4)....... 57,633,152
Liabilities in excess of other
assets--(10.2%).................. (5,335,785)
------------
Net Assets--100%................. $ 52,297,367
------------
------------
</TABLE>
- ---------------
(a) Mortgage dollar roll, see Note 1.
(b) $2,000,000 of principal amount is a mortgage dollar roll, see Note 1.
See Notes to Financial Statements.
38
<PAGE>
THE PRUDENTIAL MONEY MARKET FUND
(LOGO) INSTITUTIONAL
FUND
OBJECTIVE: Seeks 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 Global Advisors is a business unit of The Prudential
Investment Corporation which specializes in domestic and international fixed
income management. PGA currently manages approximately $22 billion in fixed
income accounts, including $2 billion in money market accounts.
ADVISER'S COMMENTS: In 1994 and early 1995 the Federal Reserve raised
short-term interest rates aggressively to control an inflationary economic
growth rate. Between February 1994 and February 1995 the Fed raised the Federal
Funds target rate from 3.0% to 6.0%. Shortly after the February 1995 rate hike,
the economy decelerated as consumers slowed the rate of spending. As the economy
slowed, inflation fears dissipated. A lower inflation environment allowed the
Fed to lower the target rate from 6.00% to 5.75% on July 6, 1995.
The Fund invested in relatively short maturity securities as the Fed tightened
their monetary stance during 1994. This allowed the Fund to incorporate higher
rates as the Federal Reserve pushed short-term interest rates higher. The
average maturity rose temporarily late in 1994 as the Fund exploited seasonal
interest rate patterns. In the Spring of 1995, economic growth slowed,
and interest rates began to decline. Securities
with longer-dated maturities were selected for the Fund, and the average
maturity increased correspondingly. The average maturity reached 65 days during
the summer, a maximum for the past 12 months. In general, a shorter average
maturity allows the Fund to incorporate new rates more quickly, while a longer
average maturity allows the Fund to hang on to higher rates for a longer time.
Recently, a modest rebound in economic activity has raised uncertainties about
the future direction of short-term interest rates. The Fund ended the quarter
with an average maturity of 50 days, relatively neutral to the competition.
We have continued to maintain a high quality portfolio. At the end of September,
all the portfolio's investments were rated in the highest category by at least
two nationally recognized rating agencies, or if unrated, deemed to be of
equivalent quality.
PERFORMANCE RESULTS:
As of September 30, 1995, the current seven-day yield was 5.47%. 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. The Manager is currently limiting
the expenses of the Fund. Without this reduction, the seven-day yield would have
been 5.15%.
39
<PAGE>
THE PRUDENTIAL MONEY MARKET FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- -------------------------------------------------------------
BANK HOLDING PAPER--4.8%
Bank of New York, Inc.,
5.87%, 10/27/95
$ 2,800 (amortized cost $2,788,129)...... $ 2,788,129
------------
COMMERCIAL PAPER -
DOMESTIC--36.6%
Aristar, Inc.,
2,000 5.80%, 10/17/95.................. 1,994,844
800 5.82%, 10/19/95.................. 797,672
Caterpillar Financial Services
N.V.,
489 5.67%, 11/21/95.................. 485,072
Chrysler Financial Corp.,
400 5.85%, 10/27/95.................. 398,310
Countrywide Funding Corp.,
2,050 5.80%, 10/31/95.................. 2,040,092
Dayton Hudson Corp.,
2,800 5.78%, 10/25/95.................. 2,789,211
Finova Capital Corp.,
2,100 5.83%, 10/11/95.................. 2,096,599
735 5.90%, 11/2/95................... 731,145
Honeywell, Inc.,
470 5.80%, 11/13/95.................. 466,744
IBM Credit Corp.,
1,300 5.80%, 10/16/95.................. 1,296,858
ITT Corp.,
2,100 5.83%, 10/3/95................... 2,099,320
349 5.85%, 10/4/95................... 348,830
Nike Inc.,
988 6.75%, 10/2/95................... 987,815
Nynex Corp.,
2,800 6.80%, 10/2/95................... 2,799,471
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
- -------------------------------------------------------------
<C> <S> <C>
Public Service Elec. & Gas Co.,
$ 1,150 5.78%, 10/17/95.................. $ 1,147,046
Smith Barney, Inc.,
770 5.75%, 10/18/95.................. 767,909
------------
Total commercial paper - domestic
(amortized cost $21,246,938)..... 21,246,938
------------
CORPORATE BONDS--12.6%
Associates Corp. of North
America,
500 6.00%, 12/1/95................... 500,058
400 4.50%, 2/15/96................... 397,922
1,000 8.80%, 3/1/96.................... 1,008,706
Ford Motor Credit Corp.,
1,000 8.25%, 5/15/96................... 1,013,983
600 8.875%, 8/1/96................... 613,532
General Electric Co.,
840 7.875%, 5/1/96................... 849,202
General Motors Acceptance Corp.,
100 8.75%, 2/1/96.................... 100,850
Household Finance Corp.,
900 9.375%, 2/15/96.................. 908,981
International Lease Finance
Corp.,
430 6.875%, 12/15/95................. 430,568
375 6.625%, 6/1/96................... 376,208
NationsBank Corp.,
500 5.375%, 12/1/95.................. 499,554
Transamerica Finance Corp.,
600 8.55%, 6/15/96................... 610,567
------------
Total corporate bonds
(amortized cost $7,310,131)...... 7,310,131
------------
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
THE PRUDENTIAL MONEY MARKET FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
<C> <S> <C>
- -------------------------------------------------------------
DEPOSIT NOTES--2.6%
Society National Bank Cleveland,
$ 1,000 6.70%, 4/15/96................... $ 1,004,941
500 6.00%, 4/25/96................... 498,649
------------
Total deposit notes
(amortized cost $1,503,590)...... 1,503,590
------------
VARIABLE RATE OBLIGATIONS(a)--28.5%
American Express Centurion Bank,
1,000 6.26%, 10/2/95................... 1,000,245
Bank One Columbus N.A.,
2,700 6.08%, 10/2/95................... 2,698,150
FCC National Bank,
1,400 6.15%, 10/2/95................... 1,399,944
Ford Motor Credit Corp.,
200 6.14%, 12/18/95.................. 200,233
Goldman Sachs Group, L.P.,
2,700 6.00%, 10/30/95.................. 2,700,000
IBM Credit Corp.,
1,500 5.615%, 10/16/95................. 1,499,775
John Deere Capital Corp.,
1,000 6.095%, 10/23/95................. 1,001,783
John Deere Owner Trust,
1,460 5.8125%, 10/16/95................ 1,460,089
Key Bank New York,
1,400 6.49%, 10/2/95................... 1,398,953
Lehman Brothers, Inc.,
1,000 6.11%, 10/24/95.................. 1,000,000
Merrill Lynch & Co., Inc.,
500 5.885%, 10/2/95.................. 500,000
Money Market Auto Loan Trust,
700 6.005%, 10/16/95................. 700,000
Morgan Stanley Group, Inc.,
1,000 6.00%, 11/15/95.................. 1,000,000
------------
Total variable rate obligations
(amortized cost $16,559,172)..... 16,559,172
------------
<CAPTION>
Principal
Amount Value
(000) Description (Note 1)
- -------------------------------------------------------------
LOAN PARTICIPATIONS--4.8%
Engelhard Corp.,
$ 800 6.20%, 10/2/95................... $ 800,000
General Electric Capital Corp.,
2,000 6.00%, 10/2/95................... 2,000,000
------------
Total loan participations
(amortized cost $2,800,000)...... 2,800,000
------------
MEDIUM-TERM OBLIGATIONS--9.1%
Associates Corp. of North
America,
100 4.68%, 3/29/96................... 99,143
Deere & Co.,
1,000 8.47%, 3/18/96................... 1,011,224
Ford Motor Credit Corp.,
1,000 5.15%, 3/15/96................... 993,295
General Motors Acceptance Corp.,
2,100 4.80%, 11/15/95.................. 2,095,777
570 4.75%, 2/14/96................... 567,268
International Lease Finance
Corp.,
500 5.00%, 5/28/96................... 496,536
------------
Total medium-term obligations
(amortized cost $5,263,243)...... 5,263,243
------------
Total Investments--99.0%
(amortized cost
$57,471,203(b))................ 57,471,203
Other assets in excess of
liabilities--1.0%.............. 582,874
------------
Net Assets--100%................. $ 58,054,077
------------
------------
</TABLE>
- ---------------
(a) 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.
(b) The cost of securities for federal income tax purposes is
substantially the same as for financial reporting
purposes.
See Notes to Financial Statements.
41
<PAGE>
THE PRUDENTIAL MONEY MARKET FUND
(LOGO) INSTITUTIONAL PORTFOLIO OF INVESTMENTS
FUND SEPTEMBER 30, 1995
The industry classification of portfolio holdings and other net
assets shown as a percentage of net assets as of September 30,
1995 were as follows:
<TABLE>
<S> <C>
Personal Credit Institutions.......... 20.1%
Business Credit (Finance)............. 11.6
Bank Holding Co....................... 10.3
Security Brokers & Dealers............ 10.3
Commercial Banks...................... 9.1
Financial Services.................... 9.0
Telecommunications.................... 4.8
Variety Store......................... 4.8
Asset Backed.......................... 3.7
Mortgage Bankers...................... 3.5
Farm Machinery........................ 3.5
Equip. Rental & Leasing............... 2.2
Electric Services..................... 2.0
Footwear.............................. 1.7
Chemicals-Specialty................... 1.4
Regulating Controls................... 1.0
Other assets in excess of liabilities 1.0
-----
100.0%
-----
-----
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
THE PRUDENTIAL STATEMENT OF ASSETS
(LOGO) INSTITUTIONAL AND LIABILITIES
FUND SEPTEMBER 30, 1995
<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
(a)...................... $222,374,363 $ 96,471,101 $137,331,985
$133,506,023 $80,988,828 $57,633,152 $57,471,203
Cash....................... -- -- 184
417 872 897 440
Foreign currency, at value
(cost $153,643).......... -- -- 153,891
-- -- -- --
Receivable for investments
sold..................... 1,199,509 5,941,403 --
176,030 1,133,257 -- --
Interest and dividends
receivable............... 162,987 206,021 404,440
641,767 685,304 563,134 386,072
Receivable for Fund shares
sold..................... 789,547 361,069 323,593
191,349 207,730 58,336 227,193
Due from Manager........... -- 1,754 --
-- -- 4,635 --
Deferred expenses and other
assets................... 29,670 32,252 29,485
30,735 28,919 31,988 30,486
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Total assets........... 224,556,076 103,013,600 138,243,578
134,546,321 83,044,910 58,292,142 58,115,394
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Liabilities
Payable for investments
purchased................ 2,555,583 872,222 987,689
1,013,369 667,995 5,934,375 --
Payable for Fund shares
reacquired............... 1,286,353 85,455 314,389
46,984 155,532 11,863 34,386
Accrued expenses........... 77,378 70,888 148,784
51,045 44,922 42,870 16,633
Due to broker-variation
margin................... -- 29,670 --
-- -- -- --
Management fee payable..... 107,403 -- 92,756
68,472 57,582 -- 3,953
Administration fee
payable.................. 23,965 10,799 14,738
14,564 8,933 5,667 6,345
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Total liabilities...... 4,050,682 1,069,034 1,558,356
1,194,434 934,964 5,994,775 61,317
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net Assets................. $220,505,394 $101,944,566 $136,685,222
$133,351,887 $82,109,946 $52,297,367 $58,054,077
------------ ------------ -------------
- ------------ ----------- ----------- -----------
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net assets were comprised
of:
Shares of beneficial
interest, at par......... $ 13,604 $ 7,169 $ 8,964 $
10,703 $ 6,576 $ 5,238 $ 58,054
Paid-in capital in excess
of par................... 169,441,843 80,650,936 121,007,773
116,928,121 71,932,999 52,130,203 57,996,023
------------ ------------ -------------
- ------------ ----------- ----------- -----------
169,455,447 80,658,105 121,016,737
116,938,824 71,939,575 52,135,441 58,054,077
Undistributed net
investment income........ -- 1,562,991 1,582,613
2,883,961 1,706,435 -- --
Accumulated net realized
gain (loss) on
investments.............. (3,016,003) 4,001,988 (3,235,336 )
1,414,649 2,082,012 (732,600) --
Net unrealized appreciation
(depreciation) on
investments and foreign
currencies............... 54,065,950 15,721,482 17,321,208
12,114,453 6,381,924 894,526 --
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net assets, September 30,
1995..................... $220,505,394 $101,944,566 $136,685,222
$133,351,887 $82,109,946 $52,297,367 $58,054,077
------------ ------------ -------------
- ------------ ----------- ----------- -----------
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Shares of beneficial
interest issued and
outstanding.............. 13,604,202 7,168,801 8,964,457
10,703,173 6,575,791 5,237,904 58,054,077
------------ ------------ -------------
- ------------ ----------- ----------- -----------
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net asset value per
share.................... $ 16.21 $ 14.22 $ 15.25 $
12.46 $ 12.49 $ 9.98 $ 1.00
------------ ------------ -------------
- ------------ ----------- ----------- -----------
------------ ------------ -------------
- ------------ ----------- ----------- -----------
(a) Identified cost........ $168,308,413 $ 80,942,844 $120,016,426
$121,391,570 $74,606,904 $56,738,626 $57,471,203
</TABLE>
See Notes to Financial Statements.
43
<PAGE>
THE PRUDENTIAL STATEMENT OF
(LOGO) INSTITUTIONAL OPERATIONS
FUND YEAR ENDED SEPTEMBER 30, 1995
<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................. $ 198,002 $ 637,099 $ 499,812 $
3,847,389 $ 2,407,512 $ 3,187,231 $ 3,128,647
Dividends (a)............ 1,190,186 1,623,115 3,287,355
896,599 560,304 -- --
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Total income........... 1,388,188 2,260,214 3,787,167
4,743,988 2,967,816 3,187,231 3,128,647
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Expenses
Management fee........... 1,049,893 286,843 1,367,665
733,748 496,395 231,931 236,009
Administration fee....... 201,075 96,138 159,439
140,527 95,069 62,187 70,311
Custodian's fees and
expenses................. 88,000 124,000 280,000
74,000 72,000 65,000 73,000
Registration fees........ 63,000 35,000 32,000
60,000 23,000 25,000 30,000
Transfer agent's fees and
expenses............... 36,092 17,256 28,618
25,224 17,064 11,162 12,621
Reports to
shareholders............. 25,000 25,000 25,000
13,000 25,000 13,000 13,000
Amortization of
organization
expenses............... 13,385 13,385 13,385
13,213 13,385 13,049 13,213
Legal fees............... 11,000 11,000 15,000
11,000 11,000 11,000 11,000
Audit fee................ 12,000 11,000 15,000
12,000 11,000 11,000 9,000
Trustees' fees........... 8,572 8,572 8,572
8,572 8,572 8,572 8,572
Miscellaneous............ 6,056 4,525 5,856
5,244 4,762 4,256 4,382
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Total expenses......... 1,514,073 632,719 1,950,535
1,096,528 777,247 456,157 481,108
Expense subsidy (Note
2)..................... (14,225) (202,456) (47,700)
(48,317) (68,112) (131,453) (166,428)
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net expenses............... 1,499,848 430,263 1,902,835
1,048,211 709,135 324,704 314,680
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net investment income
(loss)................... (111,660) 1,829,951 1,884,332
3,695,777 2,258,681 2,862,527 2,813,967
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Realized and Unrealized
Gain (Loss) on Investment
and Foreign Currency
Transactions
Net realized gain (loss)
on:
Securities............... 820,651 1,869,439 (2,892,161)
1,585,229 2,197,085 92,951 --
Futures transactions..... -- 2,175,415 --
-- -- -- --
Foreign currency
transactions............. (5,798) -- (192,785)
-- (1,009) -- --
------------ ------------ -------------
- ------------ ----------- ----------- -----------
814,853 4,044,854 (3,084,946)
1,585,229 2,196,076 92,951 --
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net change in unrealized
appreciation
(depreciation) on:
Securities and foreign
currencies............... 47,538,274 13,632,300 9,333,213
12,809,504 6,413,335 2,865,097 --
Financial futures
contracts................ -- 282,600 --
-- -- -- --
------------ ------------ -------------
- ------------ ----------- ----------- -----------
47,538,274 13,914,900 9,333,213
12,809,504 6,413,335 2,865,097 --
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net gain on investments and
foreign currencies....... 48,353,127 17,959,754 6,248,267
14,394,733 8,609,411 2,958,048 --
------------ ------------ -------------
- ------------ ----------- ----------- -----------
Net Increase in Net Assets
Resulting from
Operations................. $ 48,241,467 $ 19,789,705 $8,132,599 $
18,090,510 $10,868,092 $ 5,820,575 $ 2,813,967
------------ ------------ -------------
- ------------ ----------- ----------- -----------
------------ ------------ -------------
- ------------ ----------- ----------- -----------
(a)Net of foreign withholding taxes of $26,902, $11,248, $461,615, $3,187,
$10,097, respectively.
</TABLE>
See Notes to Financial Statements.
44
<PAGE>
THE PRUDENTIAL STATEMENT OF CHANGES
(LOGO) INSTITUTIONAL IN NET ASSETS
FUND
<TABLE>
<CAPTION>
GROWTH STOCK
INTERNATIONAL
STOCK INDEX
STOCK
FUND FUND
FUND
---------------------------
- ---------------------------- -------------------------
Year Ended September 30, Year Ended
September 30, Year Ended September 30,
---------------------------
- ---------------------------- -------------------------
1995 1994 1995
1994 1995
------------ ------------ -------------
- ------------ -----------
<S> <C> <C> <C> <C>
<C>
Increase (Decrease) in
Net Assets
Operations
Net investment income
(loss)............... $(111,660) $25,287 $1,829,951
$892,321 $1,884,332
Net realized gain
(loss) on investments
and foreign currency
transactions......... 814,853 (3,778,648) 4,044,854
186,406 (3,084,946)
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... 47,538,274 3,531,929 13,914,900
380,870 9,333,213
------------ ------------- -------------
- ------------- ------------
Net increase (decrease)
in net assets
resulting from
operations........... 48,241,467 (221,432) 19,789,705
1,459,597 8,132,599
------------ ------------- -------------
- ------------- ------------
Net equalization
credits................. -- 44,776 --
289,937 --
------------ ------------- -------------
- ------------- ------------
Dividends and
distributions
Dividends to
shareholders from net
investment income.... (48,781) (43,709) (1,015,394)
(481,228) (750,797)
------------ ------------- ------------
- -------------- ------------
Distributions to
shareholders from net
realized gains....... -- (131,129) (165,297)
(106,939) (2,440,090)
------------ ------------- ------------
- -------------- ------------
Fund share transactions
Net proceeds from
shares sold.......... 138,943,130 80,605,272 52,960,096
29,356,230 93,624,206
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 48,781 174,838 1,180,691
588,167 3,190,887
Cost of shares
redeemed............. (73,635,171) (21,470,653) (20,924,559)
(8,128,767) (67,895,915)
------------ ------------- -------------
- ------------- ------------
Net increase in net
assets from Fund
share transactions... 65,356,740 59,309,457 33,216,228
21,815,630 28,919,178
------------ ------------- ------------
- ------------- ------------
Net increase............ 113,549,426 58,957,963 51,825,242
22,976,997 33,860,890
Net Assets
Beginning of year...... 106,955,968 47,998,005 50,119,324
27,142,327 102,824,332
------------ ------------- ------------
- ------------- ------------
End of year...... ...... $220,505,394 $106,955,968 $101,944,566
$50,119,324 $136,685,222
------------ ------------- ------------
- ------------- ------------
------------ ------------- ------------
- ------------- ------------
<CAPTION>
INTERNATIONAL ACTIVE
STOCK BALANCED
FUND FUND
---------------------------
- ----------------------------
Year Ended September 30, Year Ended
September 30,
---------------------------
- ----------------------------
1994 1995
1994
------------ -------------
- ------------
<S> <C> <C> <C>
Increase (Decrease) in
Net Assets
Operations
Net investment income
(loss)............... $ 736,785 $ 3,695,777
$ 1,805,400
Net realized gain
(loss) on investments
and foreign currency
transactions........ . 2,235,681 1,585,229
119,065
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... 5,701,535 12,809,504
(1,395,057)
------------- -------------
- -------------
Net increase (decrease)
in net assets
resulting from
operations......... .. 8,674,001 18,090,510
529,408
------------- -------------
- -------------
Net equalization
credits................. 695,692 --
296,744
------------- -------------
- -------------
Dividends and
distributions
Dividends to
shareholders from net
investment incom e.... (98,619) (2,260,245)
(503,768)
------------- -------------
- -------------
Distributions to
shareholders from net
realized gains....... (493,097) (272,788)
(395,817)
------------- -------------
- -------------
Fund share transactions
Net proceeds from
shares sold.......... 86,220,384 54,908,716
56,588,609
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 591,716 2,533,033
899,585
Cost of shares
redeemed............. (24,473,332) (20,823,769)
(15,023,860)
------------- -------------
- --------------
Net increase in net
assets from Fund
share transactions... 62,338,768 36,617,980
42,464,334
------------- -------------
- --------------
Net increase............ 71,116,745 52,175,457
42,390,901
Net Assets
Beginning of year...... 31,707,587 81,176,430
38,785,529
------------- -------------
- --------------
End of year............ $ 102,824,332 $ 133,351,887
$81,176,430
------------- -------------
- --------------
------------- -------------
- --------------
</TABLE>
See Notes to Financial Statements.
45
<PAGE>
THE PRUDENTIAL STATEMENT OF CHANGES
(LOGO) INSTITUTIONAL IN NET ASSETS
FUND
<TABLE>
<CAPTION>
MONEY
BALANCED
INCOME MARKET
FUND
FUND FUND
-------------------------------
- ------------------------------- -------------------------------
Year Ended September 30, Year Ended
September 30, Year Ended September 30,
-------------------------------
- ------------------------------- -------------------------------
1995 1994 1995
1994 1995 1994
------------- ------------- -------------
------------- ------------- -------------
<S> <C> <C> <C>
<C> <C> <C>
Increase (Decrease) in
Net Assets
Operations
Net investment
income............... $ 2,258,681 $ 1,261,344 $ 2,862,527
$ 1,982,080 $ 2,813,967 $ 1,276,052
Net realized gain
(loss) on investments
and foreign currency
transactions......... 2,196,076 163,359 92,951
(826,533) -- 1,550
Net change in
unrealized
appreciation
(depreciation) on
investments and
foreign currencies... 6,413,335 (1,878,445) 2,865,097
(2,659,530) -- --
------------- ------------- -------------
------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations........... 10,868,092 (453,742) 5,820,575
(1,503,983) 2,813,967 1,277,602
------------- ------------- -------------
------------- ------------- -------------
Net equalization
credits................ -- 721,188 --
-- -- --
------------- ------------- -------------
------------- ------------- -------------
Dividends and
distributions
Dividends to
shareholders from net
investment income.... (1,529,788) (604,065) (2,862,527)
(1,982,080) (2,813,967) (1,277,602)
------------- ------------- -------------
------------- ------------- -------------
Distributions to
shareholders from net
realized gains....... (269,963) (735,383) --
(137,236) -- --
------------- ------------- -------------
------------- ------------- -------------
Fund share transactions
Net proceeds from
shares sold.......... 26,091,264 42,441,610 11,549,255
15,768,473 55,919,976 32,311,167
Net asset value of
shares issued to
shareholders in
reinvestment of
dividends and
distributions........ 1,799,751 1,339,448 2,862,527
2,119,316 2,813,967 1,277,602
Cost of shares
redeemed............. (19,161,993) (6,059,058) (6,473,780)
(7,878,160) (47,010,598) (17,493,001)
------------- ------------- -------------
------------- ------------- -------------
Net increase in net
assets from Fund
share transactions... 8,729,022 37,722,000 7,938,002
10,009,629 11,723,345 16,095,768
------------- ------------- -------------
------------- ------------- -------------
Net increase............ 17,797,363 36,649,998 10,896,050
6,386,330 11,723,345 16,095,768
Net Assets
Beginning of year...... 64,312,583 27,662,585 41,401,317
35,014,987 46,330,732 30,234,964
------------- ------------- -------------
------------- ------------- -------------
End of year............ $ 82,109,946 $64,312,583 $52,297,367
$41,401,317 $ 58,054,077 $46,330,732
------------- ------------- -------------
------------- ------------- -------------
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See Notes to Financial Statements.
46
<PAGE>
THE PRUDENTIAL FINANCIAL HIGHLIGHTS
(LOGO) INSTITUTIONAL
FUND
<TABLE>
<CAPTION>
GROWTH
STOCK
STOCK
INDEX
FUND
FUND
- ---------------------------------------------- ---------
November 5, Year Ended
1992(a) September
Year Ended September 30,
Through 30,
----------------------------
September 30, ---------
1995 1994
1993 1995
--------- -------------
------------- ---------
<S> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 12.00 $ 12.10
$ 10.00 $ 11.27
--------- -------------
------------- ---------
Income from investment operations:
Net investment income(b)...................... -- --
.04 .23
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions................................. 4.22 (.06)
2.08 2.97
--------- -------------
------------- ---------
Total from investment operations............. 4.22 (.06)
2.12 3.20
--------- -------------
------------- ---------
Less distributions:
Dividends from net investment income.......... (.01) (.01)
(.02) (.22)
Distributions from net realized gains......... -- (.03)
-- (.03)
--------- -------------
------------- ---------
Total distributions........................... (.01) (.04)
(.02) (.25)
--------- -------------
------------- ---------
Net asset value, end of period................ $ 16.21 $ 12.00
$ 12.10 $ 14.22
--------- -------------
------------- ---------
--------- -------------
------------- ---------
TOTAL RETURN(d)............................... 35.14% (0.50)%
21.22% 29.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $ 220,505 $ 106,956
$47,998 $ 101,945
Average net assets (000)...................... $ 149,985 $ 71,449
$17,592 $ 71,711
Ratios to average net assets: (b)
Expenses..................................... 1.00% 1.00%
1.00%(c) .60%
Net investment income........................ (.07)% .04%
.31%(c) 2.55%
Portfolio turnover rate....................... 64% 65%
84% 11%
<CAPTION>
STOCK
INDEX
FUND
--------------------------------
November 5,
1992(a)
Year Ended Through
September 30, September 30,
1994 1993
------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 11.12 $ 10.00
------------- -------------
Income from investment operations:
Net investment income(b)...................... .26 .23
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions................................. .11 .94
------------- -------------
Total from investment operations............. .37 1.17
------------- -------------
Less distributions:
Dividends from net investment income.......... (.18) (.05)
Distributions from net realized gains......... (.04) --
------------- -------------
Total distributions........................... (.22) (.05)
------------- -------------
Net asset value, end of period................ $ 11.27 $ 11.12
------------- -------------
------------- -------------
TOTAL RETURN(d)............................... 3.33% 11.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $50,119 $27,142
Average net assets (000)...................... $38,098 $18,807
Ratios to average net assets: (b)
Expenses..................................... .60% .60%(c)
Net investment income........................ 2.34% 2.41%(c)
Portfolio turnover rate....................... 2% 1%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Net of expense subsidy.
(c) Annualized.
(d) 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. Total return includes the effect of expense subsidies.
See Notes to Financial Statements.
47
<PAGE>
THE PRUDENTIAL FINANCIAL HIGHLIGHTS
(LOGO) INSTITUTIONAL
FUND
<TABLE>
<CAPTION>
ACTIVE
BALANCED
INTERNATIONAL
FUND
STOCK
---------
FUND
- ---------------------------------------------- Year
November 5, Ended
1992(a) September
Year Ended September 30,
Through 30,
----------------------------
September 30, ---------
1995 1994
1993 1995
--------- -------------
------------- ---------
<S> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 14.84 $ 12.35
$ 10.00 $ 10.92
--------- -------------
------------- ---------
Income from investment operations:
Net investment income(b)...................... .18 .13
.16 .33
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions................................. .66 2.54
2.21 1.54
--------- -------------
------------- ---------
Total from investment operations............. .84 2.67
2.37 1.87
--------- -------------
------------- ---------
Less distributions:
Dividends from net investment income.......... (.10) (.03)
(.02) (.29)
Distributions from net realized gains......... (.33) (.15)
-- (.04)
--------- -------------
------------- ---------
Total distributions........................... (.43) (.18)
(.02) (.33)
--------- -------------
------------- ---------
Net asset value, end of period................ $ 15.25 $ 14.84
$ 12.35 $ 12.46
--------- -------------
------------- ---------
--------- -------------
------------- ---------
TOTAL RETURN(d)............................... 5.95% 21.71%
23.74% 17.66%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $ 136,685 $ 102,824
$31,708 $ 133,352
Average net assets (000)...................... $ 118,927 $ 68,476
$14,491 $ 104,821
Ratios to average net assets:(b)
Expenses..................................... 1.60% 1.60%
1.60%(c) 1.00%
Net investment income........................ 1.58% 1.08%
1.44%(c) 3.53%
Portfolio turnover rate....................... 20% 21%
15% 30%
<CAPTION>
ACTIVE
BALANCE
FUND
--------------------------------
January 4,
1993(a)
Year Ended Through
September 30, September 30,
1994 1993
------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 11.05 $ 10.00
------------- -------------
Income from investment operations:
Net investment income(b)...................... .24 .21
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions................................. (.12) .84
------------- -------------
Total from investment operations............. .12 1.05
------------- -------------
Less distributions:
Dividends from net investment income.......... (.14) --
Distributions from net realized gains......... (.11) --
------------- -------------
Total distributions........................... (.25) --
------------- -------------
Net asset value, end of period................ $ 10.92 $ 11.05
------------- -------------
------------- -------------
TOTAL RETURN(d)............................... 1.07% 10.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $81,176 $38,786
Average net assets (000)...................... $58,992 $12,815
Ratios to average net assets:(b)
Expenses..................................... 1.00% 1.00%(c)
Net investment income........................ 3.06% 2.68%(c)
Portfolio turnover rate....................... 40% 47%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Net of expense subsidy.
(c) Annualized.
(d) 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. Total return includes the effect of expense subsidies.
See Notes to Financial Statements.
48
<PAGE>
THE PRUDENTIAL FINANCIAL HIGHLIGHTS
(LOGO) INSTITUTIONAL
FUND
<TABLE>
<CAPTION>
BALANCED
INCOME
FUND
FUND
- ---------------------------------------------- ---------
November 5,
1992(a) Year Ended
Year Ended September 30,
Through September 30,
----------------------------
September 30, ---------
1995 1994
1993 1995
--------- -------------
------------- ---------
<S> <C> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 11.08 $ 11.80
$ 10.00 $ 9.38
--------- -------------
------------- ---------
Income from investment operations:
Net investment income(b)...................... .18 .31
.31 .59
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions................................. 1.53 (.52)
1.54 .60
--------- -------------
------------- ---------
Total from investment operations............. 1.71 (.21)
1.85 1.19
--------- -------------
------------- ---------
Less distributions:
Dividends from net investment income.......... (.25) (.23)
(.05) (.59)
Distributions from net realized gains......... (.05) (.28)
-- --
--------- -------------
------------- ---------
Total distributions........................... (.30) (.51)
(.05) (.59)
--------- -------------
------------- ---------
Net asset value, end of period................ $ 12.49 $ 11.08
$ 11.80 $ 9.98
--------- -------------
------------- ---------
--------- -------------
------------- ---------
TOTAL RETURN(d)............................... 15.90% (1.88)%
18.58% 13.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $82,110 $64,313
$27,663 $52,297
Average net assets (000)...................... $70,914 $44,048
$17,401 $46,386
Ratios to average net assets: (b)
Expenses..................................... 1.00% 1.00%
1.00%(c) .70%
Net investment income........................ 3.19% 2.86%
3.16%(c) 6.17%
Portfolio turnover rate....................... 65% 52%
74% 145%
<CAPTION>
INCOME
FUND
--------------------------------
March 1,
1993(a)
Year Ended Through
September 30, September 30,
1994 1993
------------- -------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 10.33 $ 10.00
------------- -------------
Income from investment operations:
Net investment income(b)...................... .52 .27
Net realized and unrealized gain (loss) on
investment and foreign currency
transactions................................. (.91) .33
------------- -------------
Total from investment operations............. (.39) .60
------------- -------------
Less distributions:
Dividends from net investment income.......... (.52) (.27)
Distributions from net realized gains......... (.04) --
------------- -------------
Total distributions........................... (.56) (.27)
------------- -------------
Net asset value, end of period................ $ 9.38 $ 10.33
------------- -------------
------------- -------------
TOTAL RETURN(d)............................... (3.91)% 6.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $41,401 $35,015
Average net assets (000)...................... $37,802 $25,626
Ratios to average net assets: (b)
Expenses..................................... .70% .70%(c)
Net investment income........................ 5.24% 4.62%(c)
Portfolio turnover rate....................... 83% 93%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Net of expense subsidy.
(c) Annualized.
(d) 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. Total return includes the
effect of expense subsidies.
See Notes to Financial Statements.
49
<PAGE>
THE PRUDENTIAL FINANCIAL HIGHLIGHTS
(LOGO) INSTITUTIONAL
FUND
<TABLE>
<CAPTION>
MONEY
MARKET
FUND
- -----------------------------------------------------
January 4,
1993(a)
Year Ended September
30, Through
- ------------------------------- September 30,
1995 1994
1993
---------
- ------------- -------------
<S> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.......... $ 1.00 $
1.00 $ 1.00
Net investment income and net realized
gains(b)..................................... .05
.03 .02
Dividends from net investment income.......... (.05)
(.03) (.02)
---------
- ------------- -------------
Net asset value, end of period................ $ 1.00 $
1.00 $ 1.00
---------
- ------------- -------------
---------
- ------------- -------------
TOTAL RETURN(d)............................... 5.47%
3.32% 2.08%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)............... $58,054
$46,331 $30,235
Average net assets (000)...................... $52,446
$38,170 $25,296
Ratios to average net assets: (b)
Expenses..................................... .60%
.60% .60%(c)
Net investment income........................ 5.37%
3.34% 2.73%(c)
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Net of expense subsidy.
(c) Annualized.
(d) 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. Total return includes
the effect of expense subsidies.
See Notes to Financial Statements.
50
<PAGE>
THE PRUDENTIAL NOTES TO
(LOGO) 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 equivalents at the current rate obtained from a recognized bank or
dealer. Forward currency
51
<PAGE>
THE PRUDENTIAL NOTES TO
(LOGO) INSTITUTIONAL FINANCIAL STATEMENTS
FUND
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 and those 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,
the 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 amount 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. When the contract expires or is closed, the gain or loss is realized and
is presented in the statement of operations as net realized gain (loss) on
financial futures contracts.
The Funds invest in financial futures contracts in order to hedge their
existing portfolio securities, or securities the Funds intend to purchase,
against fluctuations in value. Under a variety of circumstances, a Fund may not
achieve the anticipated benefits of the financial futures contracts and may
realized a loss. The use of futures transactions involves the risk of imperfect
correlation in movements in the price of futures contracts and the underlying
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.
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
52
<PAGE>
THE PRUDENTIAL NOTES TO
(LOGO) INSTITUTIONAL FINANCIAL STATEMENTS
FUND
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 losses on foreign currency transactions represent net foreign
exchange 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 securities 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: During the fiscal year ended September 30, 1995, the Funds
(except for the Income and Money Market Funds) discontinued the accounting
practice of equalization. Equalization is a practice whereby a portion of the
proceeds from sales and costs of repurchases of capital 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. The following balances of undistributed net investment income at
September 30, 1994, resulting from equalization were transferred to paid-in
capital in excess of par for each of the respective Funds:
Growth Stock Fund $ 90,444
Stock Index Fund 398,227
International Stock Fund 881,462
Active Balanced Fund 788,116
Balanced Fund 899,912
Such reclassifications have no effect on net assets, results of operations,
or net asset value per share of the Funds.
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.
53
<PAGE>
THE PRUDENTIAL NOTES TO
(LOGO) 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: The Company accounts for and reports
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies.
For the year ended September 30, 1995, the application of this statement
affected undistributed net investment income (``UNI''), accumulated net realized
gain (loss) on investments (``G/L'') and paid-in capital in excess of par
(``PIC'') by the following amounts:
<TABLE>
<CAPTION>
UNI G/L PIC
--------- -------- ---------
<S> <C> <C> <C>
Growth Stock Fund $ 141,451 $ 5,798 $(147,249)
International Stock Fund (81,325) 81,325 --
Active Balanced Fund (107,185) 107,185 --
Balanced Fund (112,634) 112,634 --
</TABLE>
Net investment income, net realized gains and net assets were not affected
by
this change.
Deferred Organizational Expenses: Approxi-
mately $450,000 of costs were incurred in connection with the organization and
initial registration of the Company and have been deferred and are being
amortized ratably over the period of benefit not to exceed 60 months from the
date each of the Funds' commenced 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. The fees
are computed daily and payable monthly at the annual rates specified below of
the value of each Funds' average daily net assets:
Fund Management Fee
- -------------------------- ---------------
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
PIFM has voluntarily agreed to subsidize a portion of the operating expenses
of the Funds until September 30, 1996. Such expenses may be recovered by PIFM
through December 31, 1996 so long as the total expense ratios do not exceed
54
<PAGE>
THE PRUDENTIAL NOTES TO
(LOGO) INSTITUTIONAL FINANCIAL STATEMENTS
FUND
certain predetermined levels set forth in the Company's prospectus. For the year
ended September 30, 1995, PIFM subsidized the following amounts:
<TABLE>
<CAPTION>
Percentage
of Average Amount per
Fund Net Assets Share
- ------------------------- ------------- ------------------
<S> <C> <C>
Growth Stock Fund .01% $ .001
Stock Index Fund .28 .025
International Stock Fund .04 .002
Active Balanced Fund .05 .004
Balanced Fund .10 .005
Income Fund .28 .027
Money Market Fund .32 .001
</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 the 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, 1995, Prudential Securities Incorporated,
an
affiliate of PIFM, earned approximately $1,000 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, 1995 were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
- ---------------------------- ------------ -----------
<S> <C> <C>
Growth Stock Fund $166,285,606 $94,901,288
Stock Index Fund 31,191,257 6,793,307
International Stock Fund 51,878,167 22,058,837
Active Balanced Fund 55,254,010 24,449,598
Balanced Fund 51,413,549 41,017,407
Income Fund 72,942,188 62,818,679
</TABLE>
On September 30, 1995, the Stock Index Fund purchased 62 financial futures
contracts on the S&P 500 Index expiring December, 1995. The cost of such
contracts was $18,040,975. The value of such contracts on September 30, 1995 was
$18,234,200, thereby resulting in an unrealized gain of $193,225.
The federal income tax basis and unrealized appreciation/depreciation of the
Fund's investments as of September 30, 1995 were as follows:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation/
Depreciation
-------------- Gross Unrealized
Fund Basis Appreciation Depreciation
- ------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Growth Stock Fund $168,492,267 $ 53,882,096 $55,631,552 $1,749,456
Stock Index Fund 80,984,245 15,486,856 16,243,442 756,586
International Stock
Fund 120,016,426 17,315,559 19,620,167 2,304,608
Active Balanced
Fund 121,485,163 12,020,860 12,744,154 723,294
Balanced Fund 74,648,132 6,340,696 6,845,882 505,186
Income Fund 56,738,626 894,526 1,086,048 191,522
</TABLE>
The following Funds elected to treat net losses incurred in the eleven month
period ended September 30, 1994 as having occurred in the current fiscal year:
<TABLE>
<CAPTION>
Capital Currency
---------- --------
<S> <C> <C>
Growth Stock Fund $3,796,000 --
International Stock Fund -- $186,000
Income Fund 828,000 --
</TABLE>
55
<PAGE>
<PAGE>
THE PRUDENTIAL NOTES TO
(LOGO) INSTITUTIONAL FINANCIAL STATEMENTS
FUND
The following Funds will elect to treat net losses incurred in the eleven
month period ended September 30, 1995 as having been incurred in the following
fiscal year:
<TABLE>
<CAPTION>
Capital Currency
---------- --------
<S> <C> <C>
Growth Stock Fund -- $ 4,000
International Stock Fund $3,066,000 169,000
Balanced Fund -- 1,000
</TABLE>
For federal income tax purposes, the following Funds have a capital loss
carryforward as of September 30, 1995 which expires in 2003:
Growth Stock Fund $2,825,300
Income Fund 723,300
The average monthly balance of dollar rolls outstanding during the year ended
September 30, 1995 for the Income Fund was approximately $4,142,000. The amount
of dollar rolls outstanding at September 30, 1995 was $5,940,665, which was
10.2% of total assets.
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,
1995, the Company had a 9.01% undivided interest, in the aggregate, in the
repurchase agreements in the joint account which represented $65,929,000 in
principal amount, in the aggregate, as follows:
<TABLE>
<CAPTION>
Percentage Principal
Company Interest Amount
- ---------------------------- ---------- -----------
<S> <C> <C>
Growth Stock Fund .66% $ 4,819,000
Stock Index Fund 1.71 12,494,000
International Stock Fund 1.12 8,175,000
Active Balanced Fund 3.50 25,625,000
Balanced Fund 1.00 7,338,000
Income Fund 1.02 7,478,000
</TABLE>
As of such date, each repurchase agreement in the joint account and the
collateral therefor was as follows:
Bear, Stearns & Co., Inc., 6.375%, in the principal amount of $225,000,000,
repurchase price $225,119,531, due 10/2/95. The value of the collateral
including accrued interest was $229,660,959.
BT Securities Corp., 6.10%, in the principal amount of $56,863,000,
repurchase price $56,891,905, due 10/2/95. The value of the collateral including
accrued interest was $58,082,904.
Goldman, Sachs & Co., 6.45%, in the principal amount of $225,000,000,
repurchase price $225,120,938, due 10/2/95. The value of the collateral
including accrued interest was $229,500,013.
Smith Barney, Inc., 6.43%, in the principal amount of $225,000,000,
repurchase price $225,120,563, due 10/2/95. The value of the collateral
including accrued interest was $229,500,366.
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 years ended
September 30, 1995 and 1994 were as follows:
Year ended September 30, 1995:
<TABLE>
<CAPTION>
Shares
Issued in
Reinvestment Increase
Shares of Dividends/ Shares in Shares
Fund Sold Distributions Redeemed Outstanding
- ----------------------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Growth Stock Fund 9,932,496 4,078 (5,248,506) 4,688,068
Stock Index Fund 4,340,797 107,238 (1,725,892) 2,722,143
International Stock
Fund 6,497,880 228,737 (4,691,305) 2,035,312
Active Balanced Fund 4,883,689 242,395 (1,856,069) 3,270,015
Balanced Fund 2,303,919 168,832 (1,702,980) 769,771
Income Fund 1,204,925 296,456 (675,384) 825,997
Money Market Fund 55,919,976 2,813,967 (47,010,598) 11,723,345
</TABLE>
56
<PAGE>
THE PRUDENTIAL NOTES TO
(LOGO) INSTITUTIONAL FINANCIAL STATEMENTS
FUND
Year ended September 30, 1994:
<TABLE>
<CAPTION>
Shares
Issued in
Reinvestment Increase
Shares of Dividends/ 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>
Of the shares outstanding at September 30, 1995, PIFM and affiliates owned
the following shares:
<TABLE>
<CAPTION>
Fund Shares
- -------------------------- ----------
<S> <C>
Growth Stock Fund 4,724,608
Stock Index Fund 3,429,256
International Stock Fund 4,962,191
Active Balanced Fund 2,396,951
Balanced Fund 3,356,418
Income Fund 2,889,945
Money Market Fund 27,811,405
</TABLE>
57
<PAGE>
THE PRUDENTIAL INDEPENDENT
(LOGO) INSTITUTIONAL AUDITORS' REPORT
FUND
The Shareholders and Trustees of
The Prudential Institutional Fund:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, 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),
as of September 30, 1995, the related statements of operations for the year then
ended and of changes in net assets for each of the two years in the period then
ended, and the financial highlights for 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, 1995, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the
respective portfolios constituting The Prudential Institutional Fund as of
September 30, 1995, 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 16, 1995
58
<PAGE>
THE PRUDENTIAL FEDERAL INCOME
(LOGO) 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 Funds during their
fiscal year ended September 30, 1995.
Detailed below, please find the aggregate dividends and distributions, per
share, paid by each Fund during the fiscal year ended September 30, 1995 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
Fund Income Capital Gains
Distributions Distributions Deduction
- ------------------------------------------ ------ -------------
- ------------- ------------- -------------
<S> <C> <C>
<C> <C> <C>
Growth Stock Fund $.005 --
-- $.005 100%
Stock Index Fund .215 $.025
$.010 .250 87
International Stock Fund .107 .060
.258 .425 --
Active Balanced Fund .290 .010
.025 .325 23
Balanced Fund .255 .005
.040 .300 24
Income Fund .594 --
-- .594 --
Money Market Fund .053 --
-- .053 --
</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.
59
<PAGE>
THE PRUDENTIAL SUPPLEMENTAL
(LOGO) INSTITUTIONAL PROXY INFORMATION
FUND
A Special Meeting of Shareholders of The Prudential Institutional Fund,
International Stock Fund (the ``Fund'') was held on Thursday, November 16, 1995
at the offices of The Prudential Insurance Company of America, Prudential Plaza,
751 Broad Street, Newark, New Jersey. The meeting was held for the following
purposes:
(1) To approve a new Subadvisory Agreement between Prudential Institutional Fund
Management, Inc. and Mercator Asset Management, L.P. on behalf of the Fund.
(2) To transact such other business as may properly come before the meeting or
any adjournments thereof.
The results of the proxy solicitation on the above matters were as follows:
Votes for Votes against Abstentions
---------- -------------- ------------
Mercator Asset
(1) Management, L.P. 5,678,306 124,086 31,474
(2) There was no other business voted upon at the Special Meeting of
Shareholders.
60
<PAGE>
THE PRUDENTIAL
(LOGO) INSTITUTIONAL
FUND
Trustees
William P. Link, Chairman
Mark R. Fetting
David A. Finley
William E. Fruhan, Jr.
August G. Olsen
Eric A. Simonson
Herbert G. Stolzer
Officers
Mark R. Fetting, President
Thomas A. Early, Vice President
Robert F. Gunia, Vice President
Walter E. Watkins, Jr., Vice President
Eugene S. Stark, Treasurer
S. Jane Rose, Secretary
Marguerite E.H. Morrison, Assistant 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 Auditors
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Kirkpatrick and Lockhart LLP
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>
<PAGE>
The Prudential Institutional Fund
21 Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777
(LOGO)
Bulk Rate
U.S. Postage
PAID
Permit No. 2145
Newark, N.J.
95133-11/95
