(ICON)
Prudential
Bond
Market
Index Fund
SEMI
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential Bond Market Index Fund
A Series of the Prudential Index Series Fund
Performance At A Glance
At the start of our six-month period which ran through March
31, 1999, a
global financial crisis prompted many investors to buy the
safest securities,
such as U.S. Treasuries. However, after the financial
turmoil began to
subside, they sold Treasuries and bought higher-yielding
assets. Then the
bond market resumed its sell-off after faster-than-expected
U.S. economic
growth sparked fears that the Federal Reserve might increase
a key short-term
interest rate to slow the economy and avoid higher
inflation. As a result,
your Prudential Bond Market Index Fund and the Lehman
Brothers Aggregate
Index provided a negative return for the six months.
Cumulative Total Returns1
As of 3/31/99
<TABLE>
<CAPTION>
Six One
Since
Months Year
Inception2
<S> <C> <C>
<C>
Class Z -0.08% (-0.28) 6.35% (5.94)
10.69% (10.05)
Lipper Intermediate
U.S. Gov't Avg.3 -0.86 5.44
9.52
Lehman Brothers
Aggregate Index4 -0.16 6.49
11.33
</TABLE>
Average Annual Total Returns1
As of 3/31/99
<TABLE>
<CAPTION>
One
Since
Year
Inception2
<S> <C>
<C>
Class Z 6.35%
(5.94)% 7.03% (6.62)
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be
worth more or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc. Without
waiver of management fees and/or expense subsidization, the
Fund's cumulative
and average annual total returns would have been lower, as
indicated in
parentheses ( ).
2 Inception date: Class Z, 10/1/97. The Lipper reporting
period begins 9/30/97.
3 The Lipper Since Inception return is for all funds in the
Intermediate U.S.
Government Fund category.
4 Source: Lehman Brothers, Inc., based on data retrieved by
Lipper, Inc. The
Lehman Brothers Aggregate Index is an unmanaged index that
measures the total
return provided by a universe of bonds weighted by market
value. The Fund is
neither sponsored by, nor affiliated with Lehman Brothers,
Inc. Investors
cannot invest directly in an index.
How Investments Compared
(as of 3/31/99)
(GRAPH)
U.S. General General U.S.
Growth Bond Muni Debt Taxable
Funds Funds Funds Money Funds
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past
performance should never be used to predict future results.
The risks to
each of the investments listed above are different--we
provide 12-month
total returns for several Lipper mutual fund categories to
show you that
reaching for higher returns means tolerating more risk. The
greater the
risk, the larger the potential reward or loss. In addition,
we've included
historical 20-year average annual returns. These returns
assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received
higher historical total returns from stocks than from most
other investments.
Smaller capitalization stocks offer greater potential for
long-term growth,
but may be more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help
smooth out their total returns year by year. But their
prices still fluctuate
(sometimes significantly), and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments,
state agencies and/or municipalities. This investment
provides income that
is usually exempt from federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value; they
don't fluctuate much in price but, historically, their
returns have been
generally among the lowest of the major investment
categories.
<PAGE>
Portfolio Manager's Report
Jim Herbst
Fund Manager
(PHOTO)
Investment Goals and Style
The Prudential Bond Market Index Fund seeks to provide
investment results
that correspond to the total return performance of a broad-
based index of
fixed-income securities which, currently, is the Lehman
Brothers Aggregate
Index. The Lehman Aggregate is composed of U.S. government
securities,
corporate bonds, mortgage-backed securities, and asset-
backed securities--all
of which must be investment grade and pay a fixed interest
rate. The
difference between the Fund's return and that of the Index
is primarily
due to fees and management expenses. There can be no
assurance that the
Fund will achieve its investment objective.
Market Review
U.S. Treasuries rallied sharply at first
Our six-month period began on a dramatic note. U.S.
Treasuries rallied
sharply in early October 1998 amid growing concern about a
global financial
crisis that had spread beyond Asia to Russia and Latin
America during the
summer. There was also talk that the U.S. economy could
suffer if some
countries in Asia and Latin America continued to buy fewer
American-made
goods. Many investors responded to these challenging market
conditions by
purchasing the safest government securities such as
Treasuries, and selling
stocks, mortgage-backed securities, asset-backed securities,
and corporate
bonds. Therefore, the 30-year Treasury bond yield--which
moves in the
opposite direction of its price--fell in early October to
4.71%, its lowest
level since April 1967.
The "flight-to-quality" trend reversed
This "flight-to-quality" trend also reflected disappointment
over the modest
change in U.S. monetary policy that occurred on September
29. On that day,
the Federal Reserve cut the Federal funds rate (the rate
U.S. banks charge
each other for overnight loans) by a quarter percentage
point to 5.25%.
Reducing the key rate lowers borrowing costs which, in turn,
stimulates
economic growth in the United States. Although this was the
first rate cut
in more than two years, many investors feared it was not
enough to calm world
financial markets and keep the U.S. economic expansion on
track. A second and
third reduction of the same magnitude followed on October 15
and November 17,
leaving the Federal funds rate at 4.75%. The second move,
however, seemed to
carry the most weight because it marked the first time in 4-
1/2 years that
the key rate was changed between the central bank's
regularly scheduled
meetings. Reassured by the Federal Reserve's aggressive
stance on monetary
policy, investors began to reverse the "flight-to-quality"
trend in the
autumn of 1998 by selling Treasuries and buying higher-
yielding assets
such as mortgage-backed securities, asset-backed securities,
and corporate
bonds.
Inflation fears hurt bond markets
Concern about the global financial crisis continued to fade
in 1999. With
less to worry about in Latin America and Asia, investors
turned their
attention to the surprising strength of the U.S. economy.
They feared
such brisk economic growth could ignite mounting
inflationary pressures,
which erodes the value of a bond's fixed interest payments.
<PAGE>
The inflation jitters led to talk that the Federal Reserve's
next move
would be an increase in the Federal funds rate to slow rapid
U.S. economic
growth and head off higher inflation. With this in mind,
many investors
sold bonds, which drove their prices lower and yields
higher. As a result,
the Fund, the Lipper average, and the Lehman Aggregate Index
posted negative
returns for the six months ended March 31, 1999. Treasuries
lost 1.76% for
the six-month period, based on Lehman Brothers indexes.
The other investment-grade U.S. bond markets fared somewhat
better than
Treasuries, according to Lehman Brothers indexes. U.S.
government agency
securities lost 0.45%, while corporate bonds lost 0.11%.
Besides the worries
about inflation, corporate bond prices were also hurt by the
heavy supply of
newly issued debt. Many companies had rushed to borrow money
while interest
rates remained at relatively low levels. Because Wall Street
was so busy,
one of the best performing sectors of the corporate bond
market was financial
companies, which includes brokerage firms.
Some U.S. bond markets managed to post positive--albeit
modest--returns for
the six-month period, based on Lehman Brothers indexes.
Asset-backed
securities gained 1.10%. They had sold off sharply during
the "flight-to-
quality" trend. But, as that trend faded, investors seeking
bonds that
provided higher yields than Treasuries went bargain hunting
among asset-
backed securities.
Meanwhile, mortgage-backed securities returned 1.79%. As
mortgage rates rose
along with bond yields, there was less opportunity for
homeowners to save
money by refinancing their mortgages. When the underlying
mortgages are
refinanced, mortgage-backed securities get paid off early,
forcing investors
to decide whether to reinvest their money at lower interest
rates. The
prospect that fewer mortgages would be refinanced heightened
the appeal
of mortgage-backed securities.
Looking Ahead
A preference for higher-yielding bonds
Although the U.S. economy has remained surprisingly robust
in 1999, we still
expect inflation to stay in check for the time being. We
also believe the
Federal Reserve will leave short-term interest rates
unchanged, despite
news of a larger-than-expected increase in a widely watched
inflation
barometer. Under this market scenario, corporate bonds,
mortgage-backed
securities, and asset-backed securities should continue to
perform better
than Treasuries as investors prefer bonds that provide
higher yields.
Portfolio Composition
Expressed as a percentage of total long-term
investments as of 3/31/99
Mortgage-Backed 33%
U.S. Treasury Securities 32%
Corporates 22%
U.S. Government Agency 7%
Collateralized Mortgage
Obligations 2%
Asset-backed 2%
Foreign Government
Obligations 2%
Credit Quality
Expressed as a percentage of total long-term
investments as of 3/31/99
Aaa 76%
Aa 3%
A 13%
Baa 8%
- ------------------------------------------------------------
- -------------------
1
<PAGE>
A Message to Our Shareholders
May 19, 1999
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a
handful of very large companies. These stocks were getting
more and more
expensive--out of proportion to their earnings expectations.
As a result,
there was a substantial disparity in value between large and
small companies,
and between growth and value stocks. In recent months,
however, that gap has
started to narrow amid news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value
stocks that typically fare better in a growing economy, and
have been selling
at a significant discount to the market.
Many sectors of the bond market have also begun to rebound
from last year's
global financial crisis. Furthermore, while bonds have not
generated higher
returns than stocks in recent years, they have demonstrated
that they hold
up better during market downturns. That's a thought to keep
in mind going
forward.
Diversification is critical
History shows that the markets generally bring prices in
line with earnings
performance, sooner or later. It also shows that two
investment styles--value
and growth--typically alternate in periods of superior
performance.
What does this suggest? Instead of chasing popular market
winners, investors
should have a well-diversified asset allocation strategy in
place and keep
to it. It is also a good practice to rebalance your
holdings, when necessary,
to keep your asset allocation consistent with your long-term
objectives and
risk tolerance. A properly diversified portfolio of value-
and growth-oriented
equity funds, bond funds, and money market funds could help
you weather
inevitable market turbulence and receive more consistent
returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders
diversify. We have also designed several balanced and
diversified funds to
allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
- ------------------------------------------------------------
- -------------------
2
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
LONG-TERM INVESTMENTS--88.3%
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Corporate Bonds--18.0%
Finance--6.5%
BankAmerica Corp.
Aa3 7.20% 4/15/06 $ 330 $
346,658
BankAmerica Corp.
Aa3 7.125 5/01/06 110
115,752
BankBoston Corp.
A3 6.125 3/15/02 115
115,147
Chase Manhattan Corp.
A1 7.125 3/01/05 250
261,558
Chemical Bank
Aa3 7.00 6/01/05 180
186,518
Citicorp
A1 7.625 5/01/05 300
318,546
Donaldson, Lufkin & Jenrette, Inc.
A3 6.50 6/01/08 350
341,960
First Union Corp.
A2 7.50 7/15/06 110
117,240
Goldman Sachs Group
A1 6.625 12/01/04 360
364,837
Heller Financial, Inc.
A3 6.00 3/19/04 200
198,242
Lehman Brothers Holdings, Inc.
Baa1 6.625 2/05/06 35
34,568
Merrill Lynch and Co., Inc.
Aa3 6.50 4/01/01 60
61,066
Spieker Properties LP
Baa2 6.65 12/15/00 325
326,879
- ------------
2,788,971
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Industrials--8.0%
Coca Cola Enterprises, Inc.
A3 8.50 2/01/22 50
59,192
Comcast Corp.
Baa3 6.20 11/15/08 400
394,708
Delta Air Lines, Inc.
Baa3 9.75 5/15/21 150
186,567
Ford Motor Co.
A1 9.98 2/15/47 220
306,935
General Motors Corp.
A2 5.85 1/14/09 300
288,828
General Motors Corp.
A2 7.70 4/15/16 500
545,455
Lockheed Martin Corp.
Baa1 7.70 6/15/08 210
228,190
Lucent Technologies, Inc.
A2 6.45 3/15/29 150
145,928
News America Holdings, Inc.
Baa3 9.25 2/01/13 200
241,648
Northrop Grumman Corp.
Baa3 8.625 10/15/04 200
220,528
Penney (J.C.) & Co.
A2 9.05 3/01/01 250
263,437
Rockwell International Corp.
A1 6.625 6/01/05 450
464,517
TCI Communications, Inc.
A2 8.75 8/01/15 100
121,537
- ------------
3,467,470
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Utilities--3.5%
AT&T Corp.
A1 6.00 3/15/09 150
149,028
Carolina Power & Light Co.
A2 6.80 8/15/07 70
73,421
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Utilities (cont'd.)
GTE Corp.
Baa1 6.36% 4/15/06 $ 250 $
252,900
GTE Corp.
Baa1 7.51 4/01/09 75
82,246
Pacificorp
A2 6.375 5/15/08 300
302,655
Worldcom, Inc.
Baa2 7.55 4/01/04 600
639,456
- ------------
1,499,706
- ------------
Total corporate bonds (cost $7,742,020)
7,756,147
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Asset Backed Securities--1.8%
Credit Card Receivables Trust, Series 1998-I
Aaa 6.478 12/22/04 285
283,235
World Financial Network Credit Card Master Trust, Series
1996 B, Class A
Aaa 6.95 4/15/06 500
515,000
- ------------
Total asset backed securities (cost $797,327)
798,235
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Collateralized Mortgage Securities--2.0%
American Housing Trust, Series VI, Class 1-I
Aaa 9.15 5/25/20 147
156,984
Lb Commercial Conduit Mortgage Trust, Series 1998 C1, Class
A3
Aaa 6.48 1/18/08 300
302,092
Shurgard Securities Trust, Series 1, Class 1
AA(b) 8.24 6/15/01 380
393,122
- ------------
Total collateralized mortgage obligations (cost $863,038)
852,198
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Mortgage Backed Securities--28.9%
Federal Home Loan Mortgage Corp.
6.50 11/01/28 914 910,289
Federal Home Loan Mortgage Corp.(a)
8.00 11/12/28 1,000 1,040,310
Federal Home Loan Mortgage Corp.(a)
7.00 11/18/28 1,000 1,015,000
Federal National Mortgage Assoc.
9.50 7/01/25 251 267,450
Federal National Mortgage Assoc.(a)
6.00 10/14/28 2,000 1,985,000
Federal National Mortgage Assoc.(a)
6.50 10/14/28 1,000 995,310
Federal National Mortgage Assoc.(a)
6.50 10/19/28 500 504,530
Federal National Mortgage Assoc.(a)
7.50 10/19/28 1,000 1,031,560
Federal National Mortgage Assoc.(a)
7.50 11/12/28 2,500 2,568,750
Government National Mortgage Assoc.
8.49 1/15/19 128 135,851
Government National Mortgage Assoc.(a)
6.50 11/18/28 1,000 995,620
Government National Mortgage Assoc.(a)
7.50 11/18/28 1,000 1,030,000
- ------------
Total mortgage backed securities (cost $12,451,158)
12,479,670
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
U.S. Government Obligations--28.4%
United States Treasury Bond(c)
11.875% 11/15/03 $ 450 $ 569,038
United States Treasury Bond(c)
12.00 8/15/13 500 728,125
United States Treasury Bond(c)
7.50 11/15/16 750 880,665
United States Treasury Bond(c)
8.125 8/15/19 400 503,688
United States Treasury Bond(c)
7.875 2/15/21 1,975 2,444,991
United States Treasury Bond(c)
8.125 8/15/21 100 127,109
United States Treasury Bond(c)
7.125 2/15/23 400 461,812
United States Treasury Bond(c)
6.375 8/15/27 120 128,344
United States Treasury Bond(c)
5.25 11/15/28 520 484,983
United States Treasury Note(c)
6.00 8/15/00 1,400 1,418,592
United States Treasury Note(c)
6.25 8/31/00 750 762,540
United States Treasury Note(c)
5.75 11/15/00 200 202,250
United States Treasury Note(c)
6.25 1/31/02 975 1,003,333
United States Treasury Note(c)
5.75 10/31/02 200 203,688
United States Treasury Note(c)
5.50 1/31/03 125 126,309
United States Treasury Note(c)
6.50 8/15/05 60 63,619
United States Treasury Note(c)
5.875 11/15/05 1,095 1,125,112
United States Treasury Note(c)
5.625 5/15/08 770 783,837
United States Treasury Note
4.75 11/15/08 275 264,902
- ------------
Total U.S. government obligations (cost $12,141,525)
12,282,937
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
U. S. Government Agency Obligations--6.5%
Federal Home Loan Mortgage Corp.
4.75 12/14/01 1,250 1,233,850
Federal National Mortgage Assoc.
5.125 2/13/04 700 687,421
Federal National Mortgage Assoc.
6.72 8/01/05 200 209,624
Small Business Administration
6.55 12/01/17 664 679,972
- ------------
Total U.S. government agency obligations (cost $2,793,933)
2,810,867
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Foreign Corporate Bonds--1.4%
Hanson PLC (United Kingdom)
A3 7.375 1/15/03 300
314,880
Tyco International Group (Luxembourg)
Baa1 6.375 6/15/05 300
301,818
- ------------
Total foreign corporate bonds (cost $608,651)
616,698
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount
Value
Description
Rating Rate Date (000) (Note
1)
<S>
<C> <C> <C> <C> <C>
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
Foreign Government Obligations--1.3%
Quebec Hydro (Canada)
(cost $524,835)
A2 7.50% 4/01/16 $ 500 $
545,520
- ------------
Total long-term investments (cost $37,922,487)
38,142,272
- ------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------
SHORT-TERM INVESTMENTS--36.5%
Repurchase Agreement--26.7%
Joint Repurchase Agreement Account (Note 5)
NR 4.912 4/01/99 11,516
11,516,000
U.S. Government Obligations--9.8%
United States Treasury Note(c)
5.375 1/31/00 445 446,740
United States Treasury Note(c)
7.75 1/31/00 2,000 2,045,940
United States Treasury Note
5.50 3/31/00 1,750 1,760,395
- ------------
Total short-term investments (cost $15,752,838)
15,769,075
- ------------
Total Investments--124.8%
(cost $53,675,325; Note 4)
53,911,347
Liabilities in excess of other assets--(24.8)%
(10,720,746)
- ------------
Net Assets--100%
$ 43,190,601
- ------------
- ------------
</TABLE>
- ---------------
LP--Limited Partnership.
NR--Not rated by Moody's or Standard & Poor's.
PLC--Public Limited Company (British Corporation).
(a) Mortgage dollar roll, see Note 1.
(b) Standard & Poor's Rating.
(c) Pledged as collateral for dollor rolls.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Statement of Assets and Liabilities (Unaudited)
PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
- --------------
<S>
<C>
Investments excluding repurchase agreement, at value (cost
$42,159,325).................................... $
42,395,347
Repurchase Agreement, at value (cost
$11,516,000)................................................
.......... 11,516,000
Cash........................................................
...............................................
691
Receivable for investments
sold........................................................
.................... 12,726,980
Dividends and interest
receivable..................................................
........................ 490,380
Receivable for Fund shares
sold........................................................
.................... 36,617
Due from
Manager.....................................................
...................................... 6,624
Prepaid
expenses....................................................
....................................... 92
- --------------
Total
assets......................................................
...................................... 67,172,731
- --------------
Liabilities
Payable for investments
purchased...................................................
....................... 12,747,782
Dollar roll
payable.....................................................
................................... 11,172,559
Accrued
expenses....................................................
....................................... 56,556
Payable for Fund shares
reacquired..................................................
....................... 5,233
- --------------
Total
liabilities.................................................
...................................... 23,982,130
- --------------
Net
Assets......................................................
........................................... $
43,190,601
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par.........................................................
.......... $ 4,191
Paid-in capital in excess of
par.........................................................
............... 42,338,772
- --------------
42,342,963
Undistributed net investment
income......................................................
.................. 564,871
Accumulated net realized gain on
investments.................................................
.............. 46,745
Net unrealized appreciation on
investments.................................................
................ 236,022
- --------------
Net assets, March 31,
1999........................................................
......................... $ 43,190,601
- --------------
- --------------
Class Z:
Net asset value, offering price and redemption price per
share
($43,190,601 / 4,191,034 shares of beneficial interest
issued and outstanding).......................
$10.31
- --------------
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL BOND MARKET INDEX FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six
Months
Ended
Net Investment Income March 31,
1999
<S> <C>
Income
Interest..................................... $
1,165,868
----------
- ----
Expenses
Management fee...............................
51,298
Custodian's fees and expenses................
41,000
Registration fees............................
24,000
Audit fee....................................
10,000
Reports to shareholders......................
9,000
Legal fees...................................
7,000
Directors fees...............................
3,000
Transfer agent's fees and expenses...........
3,000
Miscellaneous................................
877
----------
- ----
Total operating expenses..................
149,175
Less: Expense subsidy (Note 2)...............
(67,098)
----------
- ----
Net expenses..............................
82,077
----------
- ----
Net investment income..........................
1,083,791
----------
- ----
Realized and Unrealized Gain (Loss) on
Investments
Net realized gain on investment transactions...
49,802
Net change in unrealized appreciation
investments..................................
(1,194,797)
----------
- ----
Net loss on investments........................
(1,144,995)
----------
- ----
Net Decrease in Net Assets
Resulting from Operations...................... $
(61,204)
----------
- ----
----------
- ----
</TABLE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL BOND MARKET INDEX FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months October 1,
1997(a)
Ended
Through
Increase in March 31,
September 30,
Net Assets 1999
1998
<S> <C> <C>
Operations
Net investment income.......... $ 1,083,791 $
1,904,798
Net realized gain on investment
transactions................ 49,802
220,276
Net change in unrealized
appreciation on investments (1,194,797)
1,430,819
----------- ----------
- --------
Net increase (decrease) in net
assets resulting from
operations.................. (61,204)
3,555,893
----------- ----------
- --------
Dividends and distributions (Note 1)
Dividends from net investment
income...................... (1,981,623)
(461,718)
----------- ----------
- --------
Distributions from net realized
gains....................... (204,867)
(18,466)
----------- ----------
- --------
Fund share transactions
Net proceeds from shares
sold........................ 5,731,367
38,076,778
Net asset value of shares
issued in reinvestment of
dividends and
distributions............... 2,184,408
469,351
Cost of shares reacquired...... (2,267,088)
(1,832,230)
----------- ----------
- --------
Net increase in net assets from
Fund share transactions..... 5,648,687
36,713,899
----------- ----------
- --------
Total increase................... 3,400,993
39,789,608
Net Assets
Beginning of period.............. 39,789,608 --
----------- ----------
- --------
End of period(b)................. $43,190,601 $
39,789,608
----------- ----------
- --------
----------- ----------
- --------
- ---------------
(a) Commencement of operations.
(b) Includes undistributed net
investment income of....... $ 564,871 $
1,462,703
----------- ----------
- --------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Notes to Financial Statements (Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
Prudential Index Series 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
currently consists of five separate funds. Prudential Bond
Market Index Fund
(the 'Fund') commenced investment operations on October 1,
1997 when 3,000,020
shares of beneficial interest of the Fund were sold for
$30,000,200 to the
Prudential Insurance Company of America ('The Prudential').
The Fund's investment objective is to seek to provide
investment results that
correspond to the total return performance of a broad-based
index of
fixed-income securities, currently the Lehman Brothers
Aggregate Bond Index.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Company and the Fund in the preparation of its financial
statements.
Securities Valuation: Securities for which the primary
market is on an exchange
are valued at the last sale price on such exchange on the
day of valuation or,
if there were no sales on such day, at the mean between the
last bid price and
asked prices on such day or at the bid price on such day in
the absence of an
asked price. 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, are valued by an independent pricing agent
or a principal
market maker. U.S. Government securities for which market
quotations are
available are valued at a price provided by an independent
broker/dealer or
pricing service.
Options on securities that are listed on an exchange are
valued at the last
sales price at the close of trading on such exchange or, if
there were no sales
on the applicable option exchange, on such day at the
average of the quoted bid
and asked prices as of the close of such exchange. Futures
contracts and options
thereon traded on a commodities exchange or board of trade
are valued at the
last sale price at the close of trading on such exchange or
board of trade or,
if there was no sale on the applicable commodities exchange
or board of trade on
such day, at the average of the quoted bid and asked prices
as of the close of
such exchange or board of trade. 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 methodology that, in the
judgement of the subadviser,
represent fair value, are valued at fair value as determined
by procedures
established by the Company's Trustees.
Short-term securities which mature in more than 60 days are
valued at current
market quotations. Short-term securities which mature in 60
days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements
with U.S. financial
institutions, it is the Company's policy that its custodian
or designated
subcustodians, under triparty repurchase agreements as the
case may be, 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 Fund may be
delayed or limited.
Dollar Rolls: The Fund enters into mortgage dollar rolls in
which the Fund sells
mortgage securities for delivery in the current month,
realizing a gain or loss
and simultaneously contracts to repurchase somewhat similar
(same type, coupon
and maturity) 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. The
difference between the
sales proceeds and the lower repurchase price is recorded as
interest income.
The Fund maintains a segregated account, the dollar value of
which is at least
equal to its obligations, in respect of dollar rolls.
Securities Transactions and Net Investment Income:
Securities transactions are
recorded on the trade date. Realized gains or losses from
investment
transactions are calculated on the identified cost basis.
Interest income is
recorded on the accrual basis. The Fund accretes discounts
and amortizes
premiums on portfolio securities as adjustments to interest
income. Expenses are
recorded on the accrual basis which may require the use of
certain estimates by
management.
Dividends and Distributions: The Fund expects to pay
dividends of net investment
income and distributions of net realized capital gains, if
any, at least
annually. Dividends and distributions are recorded on the ex-
dividend date.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
- ------------------------------------------------------------
- --------------------
9
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Notes to Financial Statements (Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
Taxes: For federal income tax purposes, each fund in the
Company is treated as a
separate taxpaying entity. It is the Fund's 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
investment income to its
shareholders. Therefore, no federal income tax provision is
required.
- ------------------------------------------------------------
Note 2. Agreements
The Company has a management agreement with Prudential
Investments Fund
Management LLC ('PIFM'). Pursuant to this agreement, PIFM
has responsibility for
all investment advisory services and supervises the
subadviser's performance of
such services. PIFM has entered into a subadvisory agreement
with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment
advisory services in
connection with the management of the Company. PIFM pays for
the cost of the
subadviser's services, the compensation of officers of the
Company, occupancy
and certain clerical and bookkeeping costs of the Company.
The Company bears all
other costs and expenses.
The management fee paid PIFM is computed daily and payable
monthly, at an annual
rate of .25 of 1% of the Fund's average daily net assets.
The Company has a distribution agreement with Prudential
Investment Management
Services LLC ('PIMS') which acts as the distributor of the
Fund. No distribution
or service fees are paid to PIMS as distributor of the Fund.
PIFM, PIC and PIMS are indirect wholly owned subsidiaries of
The Prudential
Insurance Company of America.
PIFM has agreed to subsidize the operating expenses of the
Fund, so that total
Fund operating expenses do not exceed .40% on an annualized
basis of the Fund's
average daily net assets. This voluntary waiver may be
terminated at any time
without notice. For the six months ended March 31, 1999,
PIFM subsidized $67,098
of the expenses of the Fund (0.33% of the average daily net
assets annualized or
$0.016 per share).
As of March 11, 1999, the Company, along with other
affiliated registered
investment companies (the 'Funds'), entered into a
syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment
under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of
.065 of 1% on the
unused portion of the credit facility, which is accrued and
paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9,
2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements are to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Company's transfer agent. During the six
months ended March 31,
1999, the Fund incurred fees of approximately $2,900 for the
services of PMFS.
As of March 31, 1999, approximately $600 of such fees were
due to PMFS. Transfer
agent fees and expenses in the Statement of Operations also
include certain
out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended March 31, 1999, were $30,390,894
and $27,466,943,
respectively, which includes purchases and sales of U.S.
government obligations
of $27,150,497 and $26,163,348, respectively.
The federal income tax basis of the Fund's investments at
March 31, 1999 was
$53,696,672 and, accordingly, net unrealized appreciation
for federal income tax
purposes was $214,675 (gross unrealized appreciation-
$356,026; gross unrealized
depreciation-$141,351).
The average balance of dollar rolls outstanding during the
six months ended
March 31, 1999 was approximately $10,027,648. The value of
dollar rolls
outstanding at March 31, 1999 was $11,166,080, which was 17%
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. As of March 31,
1999, the Fund had a 2.08% undivided interest in the
repurchase agreements in
the joint account. This undivided interest represented
$11,516,000 in principal
amount. As of such date, the repurchase agreements in the
joint account and the
value of the collateral therefore were as follows:
- ------------------------------------------------------------
- --------------------
10
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Notes to Financial Statements (Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
Bear Stearns & Co. Inc., 4.92%, in the principal amount of
$170,000,000,
repurchase price $170,023,233, due 4/1/99. The value of the
collateral including
accrued interest was $174,282,442.
Salomon Smith Barney Inc., 4.90%, in the principal amount of
$170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $174,947,170.
Morgan Stanley Dean Witter, 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $173,474,773.
Warburg Dillon Read LLC, 4.97%, in the principal amount of
$44,773,000,
repurchase price $44,779,181, due 4/1/99. The value of the
collateral including
accrued interest was $45,668,747.
- ------------------------------------------------------------
Note 6. Capital
The Fund has authorized an unlimited number of shares of
Class Z beneficial
interest at $.001 par value per share. Transactions in
shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
Class Z Shares
- -------------------------------------------------- --------
- -
<S> <C>
Six months ended March 31, 1999:
Shares sold.......................................
548,895
Shares issued in reinvestment of dividends and
distributions...................................
213,322
Shares reacquired.................................
(217,254)
--------
- -
Net increase in shares outstanding................
544,963
October 1, 1997(a) through September 30, 1998:
Shares sold.......................................
3,776,725
Shares issued in reinvestment of dividends and
distributions...................................
46,470
Shares reacquired.................................
(177,124)
--------
- -
Net increase in shares outstanding................
3,646,071
</TABLE>
At March 31, 1999, 3,220,966 shares were owned by The
Prudential.
- ---------------
(a) Commencement of investment operations.
- ------------------------------------------------------------
- --------------------
11
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Financial Highlights (Unaudited) PRUDENTIAL
BOND MARKET INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Six Months October 1, 1997(c)
Ended Through
March 31, September 30,
1999 1998
- ---------- ------------------
<S>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period.....................................................
$ 10.91 $ 10.00
- ---------- ------
Income from investment operations
Net investment
income(d)...................................................
.............. .27 .55
Net realized and unrealized gain (loss) on investment
transactions....................... (.28)
.52
- ---------- ------
Total from investment
operations..................................................
.... (.01) 1.07
- ---------- ------
Less distributions
Dividends from net investment
income.....................................................
(.53) (.15)
Distributions from net realized
gains....................................................
(.06) (.01)
- ---------- ------
Total dividends and
distributions...............................................
...... (.59) (.16)
- ---------- ------
Net asset value, end of
period......................................................
..... $ 10.31 $ 10.91
- ---------- ------
- ---------- ------
TOTAL
RETURN(a):..................................................
....................... (.08)% 10.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).......................................................
... $ 43,191 $ 39,790
Average net assets
(000).......................................................
.......... $ 41,151 $ 33,637
Ratios to average net assets:(b)(d)
Expenses....................................................
.......................... .40%
.40%
Net investment
income......................................................
........... 5.28% 5.68%
Portfolio turnover
rate........................................................
....... 71% 33%
</TABLE>
- ---------------
(a) Total return is calculated assuming a purchase of shares
on the first day
and a sale on the last day of each period reported and
includes reinvestment
of dividends and distributions. Total returns for
periods of less than a
full year are not annualized.
(b) Annualized.
(c) Commencement of investment operations.
(d) Net of expense subsidy.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the
Fund's portfolio
holdings are for the period covered by this report, and are
subject to change
thereafter.
The accompanying financial statements as of March 31, 1999,
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors
unless preceded or accompanied by a current prospectus.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
74431F837 MF174E6X#X
(ICON)
Prudential
Europe
Index Fund
SEMI
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential Europe Index Fund
A Series of the Prudential Index Series Fund
Performance At A Glance
In the six months ended March 31, 1999, European stock
markets bounced back
from last summer's funk, which had been triggered by Russian
debt defaults
and by a threatened Brazilian currency devaluation and Latin
American economic
collapse. Investors realized they had overreacted and again
bought European
stocks. The MSCI Europe Index climbed 26% to peak on January
6, 1999. Then
investors noted the slowing German economy and backed off,
leaving a still
substantial 16% six-month gain. Over the past 12 months--
including the steep
summer drop--the Europe Index's return was still solidly
positive. The
Prudential Europe Index Fund performed in line with its
target over both
periods--a couple of percentage points ahead of the Lipper
average of actively
managed Europe funds.
Cumulative Total Returns1
As of 3/31/99
<TABLE>
<CAPTION>
Six One
Since
Months Year
Inception2
<S> <C> <C>
<C>
Class Z 15.80% (14.94) 4.95% (3.03)
24.11% (21.22)
Lipper European Region
Fund Avg.3 13.32 -0.40
17.70
MSCI Europe Index4 16.39 4.89
26.47
</TABLE>
Average Annual Total Returns1
As of 3/31/99
<TABLE>
<CAPTION>
One
Since
Year
Inception2
<S> <C>
<C>
Class Z 4.95% (3.03)
15.54% (13.74)
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be
worth more or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc. Without
waiver of management fees and/or expense subsidization, the
Fund's cumulative
and average annual total returns would have been lower, as
indicated in
parentheses ( ).
2 Inception date: Class Z, 10/1/97. The Lipper reporting
period begins 9/30/97.
3 The Lipper Since Inception return is for all funds in the
European Region
Fund category.
4 The Morgan Stanley Capital International (MSCI) Europe
Index is an
unmanaged, weighted index comprised of approximately 620
companies
representing about 15 developed European countries. The Fund
is neither
sponsored by, nor affiliated with, Morgan Stanley & Co.
Incorporated. The
benchmark return shown does not reflect foreign dividend
withholding taxes.
Investors cannot invest directly in an index.
How Investments Compared.
(As of 3/31/99)
(GRAPH)
U.S. General General U.S.
Growth Bond Muni Debt Taxable
Funds Funds Funds Money Funds
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past
performance should never be used to predict future results.
The risks to each
of the investments listed above are different--we provide 12-
month total
returns for several Lipper mutual fund categories to show
you that reaching
for higher returns means tolerating more risk. The greater
the risk, the
larger the potential reward or loss. In addition, we've
included historical
20-year average annual returns. These returns assume the
reinvestment of
dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received
higher historical total returns from stocks than from most
other investments.
Smaller capitalization stocks offer greater potential for
long-term growth,
but may be more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help
smooth out their total returns year by year. But their
prices still fluctuate
(sometimes significantly), and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments,
state agencies and/or municipalities. This investment
provides income that
is usually exempt from federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value; they
don't fluctuate much in price but, historically, their
returns have been
generally among the lowest of the major investment
categories.
<PAGE>
Portfolio Manager's Report
(PHOTO)
John Moschberger
Fund Manager
Investment Goals and Style
The Prudential Europe Index Fund seeks to provide investment
results that
correspond to the price and yield performance of a broad-
based index of
stocks of European issuers. Currently, we use the Morgan
Stanley Capital
International (MSCI) Europe Index. The MSCI Europe Index
consists of stocks
in 15 countries. The U.K. represented 31% of the MSCI Index
on March 31,
and France and Germany together made up 26%. Switzerland
represented 10%.
The difference between the Fund's return and that of the
Index is
primarily fees and management expenses. There can be no
assurance that
the Fund will achieve its investment objective.
Market Review
The impact of the Russian economic and financial turmoil
helped slow European
growth to a sluggish level. Germany (Europe's largest
economy) was
particularly hard hit. In fact, the economies of both
Germany and Italy
contracted. This, together with the Balkan disturbances,
reduced investor
confidence. The largest exceptions were Sweden and the
Netherlands.
However, corporations in Europe continued on a path of
consolidation and
restructuring. The most notable instance was the maneuvers
concerning Telecom
Italia, which reacted to a hostile takeover bid by Olivetti
by finding a
potential "white knight" in Deutsche Telekom. This cross-
national
consolidation of erstwhile government-owned monopolies is a
sign of the
extent to which Europe's financial environment has been
transformed. Had
the merger proceeded as planned, it would have been the
largest in European
history, creating an $82 billion giant. (In May, Olivetti
bought 51% of
Telecom Italia at a 20% premium to the market price.)
In banking, there were announcements of mergers in France
between Societe
Generale and Banqe Paribas, and in Spain between Banco
Santander SA and Banco
Central Hispanoamericano. In Italy, Banca Commerciale
Italiana was considering
merging with UniCredito Italiano SpA. At least some of the
projected cost
savings of these combinations have worked their way into
share prices. In
fact, a review of the European stocks with the largest gains
reveals an
exceptional proportion that have recently grown by
consolidation.
The strongest industries
Financial service companies, particularly banks, made a
strong contribution
to the Index's return. UBS (the merged combination of two
large Swiss banks,
and now the largest bank in Switzerland) and Credit Suisse
Group each
returned more than 60% (in U.S. dollars). A trio of U.K.-
based banks--HSBC
Holdings plc, Lloyds TSB Group plc, and Barclays plc--also
made large
contributions to the Europe Index. Banco Bilbao Vizcaya SA
and Banqe Paribas
also were among the strong performers, the latter more than
doubling in
market value. Two of Europe's largest insurance companies
(each the result
of fairly recent consolidations) joined in the financials'
strength: France-
based Axa-UAP (up 45%) and Netherlands-based ING Groep N.V.
(up 22%).
Telecommunications equipment and service providers had a
strong six months.
Nokia Oyj, the Finnish company that is the world's largest
manufacturer of
mobile telephones,
<PAGE>
more than doubled in price. Ericsson, its Sweden-based
competitor, also
turned in a strong performance, although not as spectacular.
Among service
providers, the U.K.-based Vodafone Group plc--a mobile
telecommunications
provider that is becoming global, in part, by acquisition--
had a substantial
gain, while four large, formerly state-owned telephone
utilities (France
Telecom SA, British Telecom plc, Deutsche Telekom, and
Telecom Italia SpA)
also moved up sharply.
Pharmaceuticals was another top-performing industry. In the
U.K., Smithkline
Beecham plc and Glaxo Wellcome plc made substantial gains,
while the Swiss-
based Roche Holdings AG also had a good six-month return.
Portfolio Composition
Expressed as a percentage of net assets as of 3/31/99
United Kingdom 30.5%
Germany 13.2
France 12.6
Switzerland 10.0
Netherlands 8.1
Italy 6.9
Spain 4.1
Sweden 3.7
Finland 2.4
Belgium 2.3
Denmark 1.0
Portugal 0.8
Ireland 0.6
Norway 0.5
Austria 0.4
Source: Prudential
How The MSCI Europe Index Performed Since the Fund's
Inception*
(GRAPH)
The performance cited does not represent the performance of
the
Prudential Europe Index Fund. Investors cannot invest
directly
in an index.
*The actual inception date for Class Z is 10/1/97. The
Lipper
reporting period begins 9/30/97.
Source: Lipper, Inc.
The strongest country markets
The relatively small Finnish stock market was driven by
Nokia Oyj's
performance to a 66% average gain--the best among developed
European
markets. Ireland, Sweden, and Italy also posted returns
above 20% for the
six months. Ireland and Sweden have rapidly growing
economies, while Italy's
stock market benefited from restructuring in the banking and
telecommunications industries. Many relatively small Italian
banks had
good returns, but the primary driver of the country's stock
index over
our reporting period was Olivetti's takeover bid for Telecom
Italia SpA,
which put the company in play. The U.K., which accounted for
31% of the
MSCI Europe Index at the end of our reporting period, turned
in a 20%
average return. The U.K. was well represented in the
financial service,
telecommunications, and pharmaceutical industries, which had
very strong
performances. The U.K.-based Zeneca Group plc bought
Sweden's AB during
this period to create the world's third-largest
pharmaceutical company.
The combined Astrazeneca shares made a large contribution to
the U.K. return.
Media companies
- ------------------------------------------------------------
- -------------------
1
<PAGE>
(Granada Group plc and Reuters Group plc) and BP Amoco
(another recent
merger of giants and still growing by acquisition) also
contributed to the
strong period.
Switzerland, which makes up 10% of the MSCI Europe Index,
turned in a solid,
middle-rank performance, anchored by its financial service
companies. Of its
multinationals, the drug company Novartis AG had a mediocre
gain, and Nestle
SA shares fell during this period. The Netherland's return
was anchored by
the solid performance of its multinationals--notably, Royal
Philips
Electronics N.V. 55% gain.
The slower markets
The Danish stock market registered a small loss over the six
months--the only
one in the Index's universe to do so. However, Germany, the
second-largest
stock market in the Index, had an unsatisfactory 1% gain. A
slowing economy
and a sharp decline by SAP (one of its largest components)
contributed to
Germany's poor market showing. The diversion of corporate
technology spending
to computer problems associated with the year 2000 is
probably hurting SAP's
global enterprise management software business. This may
rebound after the
transition to the new millennium.
Looking Ahead
A shot of confidence
Clearly European companies are moving ahead into a new era
of transnational
competition and restructuring for greater efficiency. After
the end of our
reporting period, the European central bank cut interest
rates by 50 basis
points (half of one percent), and the U.K. reduced rates by
25 basis points.
These actions gave consumers and investors a shot of
confidence. With Asian
economies other than Japan showing signs of recovery, Japan
of bottoming and
Brazil surviving its currency devaluation without
catastrophe (albeit not
without stress), European export markets are not facing
further erosion.
There is room for further good news in the stock markets.
- ------------------------------------------------------------
- -------------------
2
A Message to Our Shareholders
May 19, 1999
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a
handful of very large companies. These stocks were getting
more and more
expensive--out of proportion to their earnings expectations.
As a result,
there was a substantial disparity in value between large and
small companies,
and between growth and value stocks. In recent months,
however, that gap has
started to narrow amid news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value
stocks that typically fare better in a growing economy, and
have been selling
at a significant discount to the market.
Many sectors of the bond market have also begun to rebound
from last year's
global financial crisis. Furthermore, while bonds have not
generated higher
returns than stocks in recent years, they have demonstrated
that they hold
up better during market downturns. That's a thought to keep
in mind going
forward.
Diversification is critical
History shows that the markets generally bring prices in
line with earnings
performance, sooner or later. It also shows that two
investment styles--value
and growth--typically alternate in periods of superior
performance.
What does this suggest? Instead of chasing popular market
winners, investors
should have a well-diversified asset allocation strategy in
place and keep
to it. It is also a good practice to rebalance your
holdings, when necessary,
to keep your asset allocation consistent with your long-term
objectives and
risk tolerance. A properly diversified portfolio of value-
and growth-oriented
equity funds, bond funds, and money market funds could help
you weather
inevitable market turbulence and receive more consistent
returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders
diversify. We have also designed several balanced and
diversified funds
to allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
- ------------------------------------------------------------
- -------------------
3
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--97.1%
COMMON STOCKS--96.6%
- ------------------------------------------------------------
Austria--0.4%
40 Austria Tabak AG $
2,695
100 Austrian Airlines
3,250
482 Bank Austria AG
28,672
50 Boehler-Uddeholm AG
2,405
25 EA-Generali AG
5,290
80 Flughafen Wien AG
3,384
150 Oesterreichische
Electrizitaetswirtschafts AG, Ser.
A
23,916
130 OMV AG
11,494
65 Va Technologie AG
4,677
35 Wienerberger Baustoffindustrie AG
6,144
--------
- ----
91,927
- ------------------------------------------------------------
Belgium--2.3%
20 D'Ieteren SA
9,047
44 Barco Industries N.V.
7,434
6 Bekaert N.V.
2,656
68 Cimenteries CBR Cementbedrijven
6,104
12 Colruyt N.V.
7,851
30 Compaignie Maritime Belge SA
1,144
197 Delhaize-Le Lion SA
18,248
229 Electrabel SA
82,078
147 Fortis AG CVG
681
2,970 Fortis AG NVP
109,658
1,323 Fortis AG Strip VVPR
14
20 Glaverbel SA
1,842
106 Groupe Bruxelles Lambert SA
19,339
40 KBC Bancassurance Holding Strip N.V.
2
1,245 KBC Bancassurance Holding N.V.
82,997
110 PetroFina SA
60,208
340 Solvay SA
20,849
340 Tractebel
53,590
600 Ucb SA $
26,888
78 Union Miniere SA
2,700
--------
- ----
513,330
- ------------------------------------------------------------
Denmark--1.0%
30 Bang & Olufsen Holding A/S
2,092
129 Carlsberg A/S, Ser. A
5,228
94 Carlsberg A/S, Ser. B
3,796
5 D/S 1912, Ser. B
37,403
4 D/S Svendborg, Ser. B
42,414
235 Danisco A/S
10,752
206 Den Danske Bank Group
21,640
170 FLS Industries A/S, Ser. B
3,334
60 International Service Systems A/S
3,899
300 Novo Nordisk A/S, Ser. B
33,553
521 Tele Danmark A/S
51,612
212 Unidanmark A/S
14,473
--------
- ----
230,196
- ------------------------------------------------------------
Finland--2.4%
180 Cultor Oyj, Ser. 1
3,440
40 Instrumentarium Group, Ser. A
1,296
500 Kemira Oyj
3,131
350 Kesko Oyj
5,248
50 Kone Corp., Ser. B
5,263
3,200 Merita plc, Ser. A
17,135
150 Metra Oyj, Ser. B
3,028
2,000 Nokia Oyj, Ser. A
321,932
610 Nokia Oyj, Ser. K
98,123
500 Outokumpu Oyj, Ser. A
5,155
80 Pohjola Insurance Group, Ser. A
4,232
200 Sampo Insurance Co. Ltd., Ser. A
6,262
1,660 Sonera Group Oyj
27,598
130 Tieto Corp, Ser. B
5,354
1,050 UPM-Kymmene Oyj
29,019
--------
- ----
536,216
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
France--12.6%
150 Accor SA $
37,246
840 Alcatel Alsthom SA
96,579
1,450 Axa-UAP
192,230
720 Banqe Paribas
80,373
913 Banque Nationale de Paris
79,444
110 Bouygues SA
30,520
130 Canal Plus
38,104
290 Cap Gemini SA
48,559
160 Carrefour SA
123,332
50 Club Mediterranee SA
4,426
410 Compagnie de Saint Gobain
65,066
50 Compagnie Francaise d'Etudes et de
Construction Technip
5,339
660 Compagnie General des Eaux
162,384
20 Compagnie Generale de Geophysique SA
745
550 Compagnie Generale des Etablissements
Michelin, Ser. B
24,671
310 Danone
78,012
350 Dassault Systemes SA
12,960
1,150 Elf Aquitaine SA
156,183
100 Eridania Beghin-Say SA
14,812
40 Essilor International SA
13,344
310 Etablissements Economiques du Casino
Guichard-Perrachon SA
27,510
4,190 France Telecom SA
338,806
50 Groupe GTM
4,966
50 Imetal SA
5,776
376 L'Air Liquide
56,017
280 L'OREAL
177,138
430 Lafarge SA
38,762
450 Lagardere S.C.A.
14,618
110 Legrand SA
23,098
380 Louis Vuitton Moet Hennessy
94,150
30 Pathe SA
7,708
230 Pechiney
8,318
200 Pernod Ricard
12,707
505 Pinault-Printemps-Redoute SA
80,579
50 Primagaz Cie
3,881
80 Promodes
48,883
200 PSA Peugeot Citroen
28,760
1,610 Rhone-Poulenc SA, Ser. A
72,828
20 Sagem SA $
11,001
450 Sanofi SA
75,787
660 Schneider SA
36,517
50 SEB SA
3,671
150 SEITA
10,194
100 Sidel SA
7,827
50 Simco SA
4,372
200 Societe Bic SA
10,526
10 Societe Eurafrance SA
4,804
420 Societe Generale
80,710
120 Sodexho Alliance
19,627
600 Suez Lyonnaise des Eaux
111,024
610 Thomson CSF
18,637
1,020 Total SA, Ser. B
125,644
20 Unibail SA
2,505
950 Usinor SA
12,512
303 Valeo SA
23,716
--------
- ----
2,867,908
- ------------------------------------------------------------
Germany--12.7%
160 Adidas-Salomon AG
14,276
150 AGIV AG
2,826
1,015 Allianz AG
309,009
150 AMB Aachener & Muenchener
Beteiligungs AG
17,975
100 Axa Colonia Konzern AG
9,932
2,690 BASF AG
98,448
3,110 Bayer AG
116,505
1,700 Bayerische Vereinsbank AG
101,675
300 Beiersdorf AG, Ser. A
22,185
100 Bilfinger & Berger Bau AG
1,879
10 Buderus AG
3,228
500 Continental AG
12,361
4,021 DaimlerChrysler AG
349,885
2,250 Deutsche Bank AG
115,745
1,520 Deutsche Lufthansa AG
33,230
9,050 Deutsche Telekom
368,826
100 Douglas Holding AG
4,248
6 Douglas Holding AG NPV
246
2,110 Dresdner Bank AG
84,511
200 Fag Kugelfischer Georg Schaefer AG
1,501
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Germany (cont'd.)
200 Heidelberger Zement AG $
12,199
250 Hochtief AG
8,286
30 Karstadt AG
10,704
50 Linde AG
28,555
500 MAN AG
14,008
1,600 Mannesmann AG
204,343
650 Merck KGaA
22,455
1,130 Metro AG
70,719
412 Muenchener Ruckversicherungs-
Gesellschaft AG
83,175
342 Muenchener Ruckversicherungs-
Gesellschaft AG (Registered)
68,121
60 Preussag AG
32,193
1,980 RWE AG
87,641
260 SAP AG
74,524
290 Schering AG
33,766
50 SGL Carbon AG
2,094
2,420 Siemens AG
161,719
1,700 Thyssen AG
33,586
2,070 VEBA AG
108,832
115 Viag AG
63,429
1,310 Volkswagen AG
87,259
--------
- ----
2,876,099
- ------------------------------------------------------------
Ireland--0.6%
4,000 Allied Irish Banks plc
69,093
1,350 CRH plc
23,304
200 DCC plc
1,544
1,000 Fyffes plc
2,354
600 Greencore Group plc
2,105
1,000 Independent Newspapers plc
4,534
1,250 Irish Life plc
12,145
300 Irish Permanent plc
4,567
3,900 Jefferson Smurfit Group plc
7,873
600 Kerry Group plc, Ser. A
8,000
500 Ryanair Holdings plc
4,093
800 Tullow Oil plc
553
--------
- ----
140,165
Italy--6.9%
7,600 Alitalia SpA $
25,845
4,264 Assicurazioni Generali
170,784
7,500 Banca Commerciale Italiana
61,536
9,400 Banca Intesa SpA
55,408
2,000 Banca Intesa SpA (Nonconvertible)
5,808
1,000 Banca Popolare di Milano
9,317
6,000 Benetton Group SpA
10,785
1,000 Bulgari SpA
6,240
500 Burgo (Cartiere) SpA
3,509
2,740 Edison SpA
25,232
34,370 ENI SpA
218,921
16,960 Fiat SpA
56,028
3,500 Fiat SpA (Nonconvertible)
6,272
5,872 Istituto Bancario San Paolo di Torino
95,407
16,700 Istituto Nazionale delle
Assicurazioni (INA)
50,481
500 Italcementi SpA
5,506
3,500 Italgas (Soc Ital) SpA
17,003
500 La Rinascente SpA
3,903
2,800 Magneti Marelli
4,051
140 Marzotto (Gaetano) & Figlia SpA
1,186
4,810 Mediaset SpA
45,229
2,400 Mediobanca SpA
32,258
500 Mondadori (Arnoldo) Editore SpA
7,476
19,000 Montedison SpA
19,692
11,500 Olivetti Group SpA
36,004
5,500 Parmalat Finanziaria SpA
7,838
8,670 Pirelli SpA
24,710
1,680 Riunione Adriatica di Sicurta SpA
17,575
500 Riunione Adriatica di Sicurta SpA
(Nonconvertible)
4,448
1,000 Sirti SpA
5,938
2,000 Snia BPD SpA
2,699
500 Societa Assicuratrice Industriale
(SAI)
6,396
28,350 Telecom Italia Mobile SpA
190,676
6,000 Telecom Italia Mobile SpA (di Risp)
23,189
15,410 Telecom Italia SpA
163,702
3,500 Telecom Italia SpA (di Risp)
20,782
20,260 Unicredito Italiano SpA
109,362
16,000 Unione Immobiliare SpA
8,378
--------
- ----
1,559,574
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Netherlands--8.1%
5,968 ABN AMRO Holding N.V. $
124,349
2,420 AEGON N.V.
220,895
1,180 Akzo Nobel N.V.
43,695
324 Buhrmann N.V.
5,632
2,632 Elsevier N.V.
39,212
365 Getronics N.V.
13,476
550 Hagemeyer N.V.
16,923
1,307 Heineken N.V.
65,894
100 Hollandsche Beton Groep N.V.
1,053
93 IHC Caland N.V.
3,514
3,896 ING Groep N.V.
214,719
269 KLM Royal Dutch Airlines N.V.
7,551
2,650 Koninklijke Ahold N.V.
101,562
121 Koninklijke Hoogovens N.V.
4,010
2,004 Koninklijke KPN BT
79,724
107 Koninklijke Pakhoed Holdings N.V.
2,593
308 Oce N.V.
7,648
8,890 Royal Dutch Petroleum Co.
472,676
1,523 Royal Philips Electronics N.V.
124,055
100 Stork N.V.
1,959
2,019 TNT Post Group N.V.
60,813
2,650 Unilever N.V.
184,099
180 Vedior N.V.
4,168
284 Wolters Kluwer N.V.
51,509
--------
- ----
1,851,729
- ------------------------------------------------------------
Norway--0.5%
200 Aker RGI ASA
2,225
200 Bergesen dy ASA, Ser. A
2,743
100 Bergesen dy ASA, Ser. B
1,294
2,300 Christiania Bank Og Kreditkasse
8,987
2,600 Den Norske Bank ASA
9,520
100 Dyno Industrier ASA
1,682
200 Elkem ASA
2,950
150 Kvaerner ASA, Ser. A
2,669
120 Leif Hoegh & Co. ASA
1,366
350 Merkantildata ASA
3,147
700 NCL Holdings ASA
1,503
1,150 Norsk Hydro ASA
46,871
100 Norske Skogindustrier ASA, Ser. A
3,261
600 Orkla ASA, Ser. A
9,199
160 Orkla ASA, Ser. B $
2,132
200 Petroleum Geo Services
3,054
140 Sas Norge ASA
1,205
200 Schibsted ASA
2,381
80 Smedvig ASA
895
1,100 Storebrand ASA, Ser. A
8,113
200 Tomra Systems ASA
7,453
--------
- ----
122,650
- ------------------------------------------------------------
Portugal--0.8%
878 Banco Comercial Portugues SA
26,540
520 Banco Espirito Santo e Comercial de
Lisboa
14,001
300 BPI-SGPS SA
9,117
220 Brisa-Auto Estradas de Portugal SA
10,189
350 Cimpor-Cimentos de Portugal, SGPS SA
9,786
50 Companhia de Seguros Tranquilidade
1,414
2,560 EDP-Electricadade de Portugal SA
50,521
300 Jeronimo Martins, SGPS SA
10,688
350 Portucel Industrial-Empresa Produtora
de Celulose SA
1,912
750 Portugal Telecom SA
33,594
170 Sonae Investimentos-Sociedade
Gestorade Participacoes Sociais SA
6,622
100 Unicer-Uniao Cervejeira
2,127
--------
- ----
176,511
- ------------------------------------------------------------
Spain--4.1%
200 Acerinox SA
5,074
119 Acs Actividades Co.
3,687
967 Autopistas del Sol SA
12,392
218 Azucarera Ebro Agricolas
4,279
8,610 Banco Bilbao Vizcaya SA
128,274
4,713 Banco Central Hispanoamericano
59,072
4,686 Banco Santander SA
96,120
2,028 Corporacion Bancaria de Espana
48,736
54 Corporacion Financiera Alba SA
7,724
216 Corporacion Mapfre
4,279
200 Dragados & Construcciones SA
6,564
4,110 Endesa SA
103,739
220 Fomento de Construcion Y Contra
13,538
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Spain (cont'd.)
632 Gas Natural SDG SA $
58,336
3,756 Iberdrola SA
55,633
210 Metrovacesa SA
4,908
1,330 Repsol SA
68,490
164 Sociedade General de Aguas de
Barcelona SA
9,862
740 Tabacalera SA, Ser. A
14,995
4,384 Telefonica de Espana SA
185,955
709 Telepizza
5,412
1,073 Union Electrica Fenosa SA
16,021
300 Vallehermoso SA
3,206
100 Viscofan Industria Navarra Envolturas
Celuosicas SA
1,324
169 Zardoya Otis SA
4,247
--------
- ----
921,867
- ------------------------------------------------------------
Sweden--3.7%
3,000 ABB AB, Ser. A
37,213
1,100 ABB AB, Ser. B
13,645
500 AGA AB, Ser. A
6,263
400 AGA AB, Ser. B
5,010
50 Asticus AB
705
5,600 Astra AB, Ser. A
128,372
1,400 Astra AB, Ser. B
31,752
500 Atlas Copco AB, Ser. A
13,560
200 Atlas Copco AB, Ser. B
5,302
100 Diligentia AB
791
500 Drott AB
4,408
1,700 Electrolux AB, Ser. B
33,698
1,500 Forenings Sparbanken AB, Ser. A
35,297
850 Hennes & Mauritz AB, Ser. B
64,089
400 NetCom Systems AB
13,620
400 OM Gruppen AB
5,010
800 Sandvik AB, Ser. A
15,955
200 Sandvik AB, Ser. B
3,989
1,200 Securitas AB, Ser. B
18,971
2,000 Skandia Forsakring AB
37,213
2,200 Skandinaviska Enskilda Banken, Ser. A
26,888
500 Skanska AB, Ser. B
17,025
100 SKF AB, Ser. A
1,405
200 SKF AB, Ser. B
2,846
800 Svenska Cellulosa AB, Ser. B $
17,366
900 Svenska Handelsbanken, Ser. A
31,357
50 Svenska Handelsbanken, Ser. B
1,605
300 Svenskt Stal AB, Ser. A
3,758
1,300 Swedish Match AB
4,553
8,100 Telefonaktiebolaget LM Ericsson
197,008
400 Trelleborg AB, Ser. B
3,867
600 Volvo AB, Ser. A
15,505
1,300 Volvo AB, Ser. B
34,069
300 Wm-Data AB, Ser. B
11,711
--------
- ----
843,826
- ------------------------------------------------------------
Switzerland--10.0%
33 ABB AG
43,654
15 ABB AG (Registered)
3,973
70 Adecco SA
35,517
25 Alusuisse-Lonza Holding AG
(Registered)
27,497
1,090 Credit Suisse Group
203,250
7 Fischer (Georg) AG
2,317
10 Forbo Holding AG
4,155
20 Holderbank Financiere Glarus AG
22,363
35 Holderbank Financiere Glarus AG
(Registered)
9,305
2 Jelmoli Holding AG
1,897
1 Kuoni Reisen AG
3,716
10 Merkur Holding AG
2,351
162 Nestle SA
294,307
254 Novartis AG
412,023
25 Novartis AG (Registered)
40,705
7 Roche Holdings AG
124,853
29 Roche Holdings AG (Registered)
353,648
50 Sairgroup
10,759
1 Schindler Holding AG
1,553
3 Schindler Holding AG (Registered)
5,057
56 Schweizerische Rueckversicherungs-
Gesellschaft
123,907
3 SGS Societe Generale de Surveillance
Holding SA
2,471
10 SGS Societe Generale de Surveillance
Holding SA (Registered)
2,121
7 Sika Finanz AG
1,866
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Switzerland (cont'd.)
14 SMH AG $
8,891
50 SMH AG (Registered)
6,942
10 Sulzer AG
6,384
300 Swisscom AG
117,151
881 UBS-Union Bank of Switzerland
276,773
190 Zurich Versicherungs-Gesellschaft
121,562
--------
- ----
2,270,968
- ------------------------------------------------------------
United Kingdom--30.5%
5,850 Abbey National plc
120,973
6,550 Allied Zurich
88,290
840 Anglian Water plc
10,305
3,050 Arjo Wiggins Appleton plc
6,844
3,450 Associated British Foods plc
24,254
4,400 BAA plc
49,010
6,350 Barclays plc
182,874
750 Barratt Development plc
3,572
3,457 Bass plc
46,849
1,450 BBA Group plc
9,901
16,629 BG plc
97,847
1,450 BICC plc
2,200
2,800 Blue Circle Industries plc
16,091
2,100 BOC Group plc
29,222
4,100 Boots Co. plc
59,435
550 Bowthorpe plc
3,787
1,900 BPB plc
8,281
7,500 British Aerospace plc
50,124
4,350 British Airways plc
30,318
6,550 British America Tobacco plc
54,666
1,900 British Land Co. plc
16,363
39,950 British Petroleum Co. plc
675,223
7,050 British Sky Broadcasting plc
60,944
7,800 British Steel plc
15,991
26,450 British Telecom plc
430,398
1,400 Bunzl plc
5,503
750 Burmah Castrol plc
11,502
9,800 Cable & Wireless plc
121,973
4,300 Cadbury Schweppes plc
61,779
1,800 Caradon plc
3,966
2,100 Carlton Communications plc
20,713
16,800 Centrica plc $
29,561
1,750 Coats Viyella plc
1,243
300 Cobham plc
4,511
5,350 Commercial Union plc
84,120
2,900 Compass Group plc
33,566
850 De La Rue plc
3,094
15,005 Diageo plc
168,468
1,400 Electrocomponents plc
10,503
1,170 Elementis plc
1,757
3,050 EMI Group plc
21,799
850 English China Clay plc
3,170
1,800 FKI plc
4,562
11,400 General Electric Co. plc
102,413
2,900 GKN plc
43,678
14,950 Glaxo Wellcome plc
501,258
3,850 Granada Group plc
77,688
1,000 Great Portland Estates plc
3,204
4,200 Great Universal Stores plc
45,596
3,047 Guardian Royal Exchange plc
18,015
10,550 Halifax plc
129,435
900 Hammerson plc
6,066
2,000 Hanson plc
17,935
400 Hepworth plc
1,082
3,600 HSBC Holdings plc (GBP)
116,055
7,350 HSBC Holdings plc (HKD)
234,692
300 Hyder plc
3,802
1,050 IMI plc
4,466
3,400 Imperial Chemical Industries plc
30,462
7,850 J. Sainsbury plc
48,661
750 Johnson Matthey plc
5,648
5,650 Kingfisher plc
71,051
4,450 Ladbroke Group plc
20,689
400 Laird Group plc
1,427
2,000 Land Securities plc
26,475
3,350 LASMO plc
6,814
5,400 Legal & General Group plc
63,897
200 Lex Service plc
1,329
22,150 Lloyds TSB Group plc
333,610
663 Lonrho plc
4,891
5,500 Lucas Varity plc
25,415
12,200 Marks & Spencer plc
80,302
1,156 MEPC plc
8,024
250 Meyer International plc
1,614
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
United Kingdom (cont'd.)
2,000 Misys plc $
20,276
6,052 National Grid Co. plc
44,233
4,900 National Power plc
37,612
1,400 Next plc
16,046
360 Ocean Group plc
5,416
2,500 P & O Finance plc
36,483
2,500 Pearson plc
57,227
3,850 Pilkington plc
5,159
916 Provident Financial plc
14,255
8,150 Prudential Corp. plc
106,239
1,000 Racal Electronic plc
6,433
2,150 Railtrack Group plc
49,146
3,000 Rank Group plc
10,957
4,600 Reed International plc
40,916
11,900 Rentokil Initial plc
72,999
6,066 Reuters Group plc
88,914
1,477 Rexam plc
4,900
4,400 Rio Tinto Finance plc
60,730
1,000 RMC Group plc
13,447
5,600 Rolls-Royce plc
23,730
6,550 Royal & Sun Alliance Insurance Group
plc
61,856
3,650 Royal Bank Scotland Group plc
79,604
1,750 Rugby Group plc
3,164
4,100 Safeway plc
16,050
1,125 Schroders plc
26,261
2,450 Scottish & Newcastle plc
26,657
3,400 Scottish Hydro-Electric plc
30,764
4,750 ScottishPower plc
41,560
15,745 Siebe plc
69,325
1,350 Slough Estates plc
6,941
22,850 Smithkline Beecham plc
329,952
1,150 Smiths Industries plc
16,838
1,300 St. James's Place Capital plc
5,173
4,000 Stagecoach Holdings plc
14,626
3,471 Tarmac plc
5,925
1,600 Tate & Lyle plc
10,771
1,250 Taylor Woodrow plc $
3,602
28,150 Tesco plc
74,639
1,191 Thames Water plc
18,073
1,850 TI Group plc
11,976
950 Unigate plc
6,740
13,600 Unilever plc
126,019
1,155 United Biscuits Holding plc
3,524
2,000 United Utilities plc
23,892
766 Vickers plc
1,651
12,950 Vodafone Group plc
240,409
2,492 Williams plc
16,091
2,150 Wolseley plc
16,313
4,000 Zeneca Group plc
189,454
--------
- ----
6,914,214
--------
- ----
Total common stocks
(cost US$18,595,453)
21,917,180
--------
- ----
- ------------------------------------------------------------
PREFERRED STOCKS--0.5%
- ------------------------------------------------------------
Germany--0.5%
10 Dyckerhoff AG, DM 21.43
2,699
10 Friedrich Grohe AG, DM 24.00
2,450
150 MAN AG, DM 1.60
2,931
510 RWE AG, DM 1.80
14,976
180 Sap AG, EUR 1.60
57,909
400 Volkswagen AG, DM 1.60
16,021
--------
- ----
96,986
- ------------------------------------------------------------
Italy
4,500 Fiat SpA, L 120.00(a)
7,579
--------
- ----
Total preferred stocks
(cost US$111,336)
104,565
--------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of March 31, 1999
PRUDENTIAL INDEX SERIES FUND
(Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Warrants/
Units Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
WARRANTS(a)
- ------------------------------------------------------------
France
20 Axa-UAP, expiring 12/31/01 $
102
- ------------------------------------------------------------
Germany
12 Muenchener
Ruckversicherungs-Gesellschaft AG,
expiring 6/3/02
428
- ------------------------------------------------------------
Italy
400 Mediobanca SpA, expiring 12/31/00
1,213
--------
- ----
Total warrants (cost US$0)
1,743
--------
- ----
COMMON STOCK UNITS(a)
--------------------------------------------------------
- ----
Ireland
2,600 Waterford Wedgewood plc
(cost US$3,396)
2,049
--------
- ----
Total long-term investments
(cost US$18,710,185)
22,025,537
--------
- ----
SHORT-TERM INVESTMENTS--1.2%
<CAPTION>
Principal
Amount
- ------------------------------------------------------------
U.S. Government Securities--0.2%
U.S. Treasury Bills
$50,000 4.37%, 6/17/99(b)
(cost US$49,533)
49,521
--------
- ----
- ------------------------------------------------------------
Repurchase Agreement--1.0%
227,000 Joint Repurchase Agreement Account
4.91%, 4/1/99
(cost US$227,000; Note 5)
227,000
--------
- ----
Total short-term investments
(cost US$276,533)
276,521
--------
- ----
Total Investments--98.3%
(cost US$18,986,718; Note 4) $
22,302,058
Other assets in excess of
liabilities--1.7%
388,769
--------
- ----
Net Assets--100% $
22,690,827
--------
- ----
--------
- ----
</TABLE>
- ---------------
(a) Non-income producing security.
(b) Pledged as collateral for financial futures contracts.
The industry classification of portfolio holdings and other
assets in excess of liabilities shown as a percentage of net
assets as of March 31, 1999 was as follows:
<TABLE>
<S> <C>
Finance...............................................
23.1%
Utilities.............................................
15.0
Health Technology.....................................
10.6
Energy Minerals.......................................
8.3
Consumer Non-Durables.................................
7.3
Process Industries....................................
6.2
Electronic Technology.................................
5.2
Retail Trade..........................................
4.6
Producer Manufacturing................................
3.8
Consumer Durables.....................................
3.2
Commercial Services...................................
2.3
Consumer Services.....................................
2.1
Transportation........................................
1.8
Non-Energy Minerals...................................
1.4
Industrial Services...................................
1.1
Technology Services...................................
1.1
Repurchase Agreement..................................
1.0
U.S. Government Obligations...........................
0.2
----
- -
98.3
Other assets in excess of liabilities.................
1.7
----
- -
100.0%
----
- -
----
- -
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 11
<PAGE>
PRUDENTIAL INDEX SERIES FUND
Statement of Assets and Liabilities (Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
- --------------
<S>
<C>
Investments, at value (cost
$18,986,718)................................................
................... $ 22,302,058
Foreign currency, at value (cost
$355,625)...................................................
.............. 350,910
Cash........................................................
...............................................
731
Dividends and interest
receivable..................................................
........................ 94,983
Due from
Manager.....................................................
...................................... 77,556
Receivable for Fund shares
sold........................................................
.................... 7,137
Due from broker- variation
margin......................................................
.................... 6,527
Deferred expenses and other
assets......................................................
................... 112
Forward currency contracts-net amount receivable from
counterparties.......................................
20
- --------------
Total
assets......................................................
...................................... 22,840,034
- --------------
Liabilities
Accrued expenses and other
liabilities.................................................
.................... 128,762
Foreign withholding taxes
payable.....................................................
..................... 18,925
Payable for Fund shares
reacquired..................................................
....................... 1,520
- --------------
Total
liabilities.................................................
...................................... 149,207
- --------------
Net
Assets......................................................
........................................... $
22,690,827
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par.........................................................
.......... $ 18,826
Paid-in capital in excess of
par.........................................................
............... 19,428,096
- --------------
19,446,922
Distribution in excess of net investment
income......................................................
... (134,565)
Accumulated net realized gains on investment transactions
and foreign currencies........................
62,563
Net unrealized appreciation on investments and foreign
currencies.......................................
3,315,907
- --------------
Net assets, March 31,
1999........................................................
......................... $ 22,690,827
- --------------
- --------------
Net asset value per share
($22,690,827 / 1,882,563 shares of beneficial interest
issued and outstanding).......................... $
12.05
- --------------
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL EUROPE INDEX FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income March 31,
1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes
of $7,974)............................ $ 124,110
Interest................................. 7,907
-------------
- -
Total Income.......................... 132,017
-------------
- -
Expenses
Management fee........................... 42,212
Custodian's fees and expenses............ 125,000
Reports to shareholders.................. 22,000
Registration fees........................ 17,000
Audit fee and expenses................... 9,000
Legal fees and expenses.................. 6,000
Trustees' fees........................... 3,000
Transfer agent's fees and expenses....... 2,000
Miscellaneous............................ 529
-------------
- -
Total expenses........................ 226,741
Less: Subsidy expense (Note 2)...........
(163,433)
-------------
- -
Net expenses.......................... 63,308
-------------
- -
Net investment income....................... 68,709
-------------
- -
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions
Net realized gain (loss) on:
Investment transactions.................. 26,079
Foreign currency transactions............
(13,050)
Financial futures transactions........... 64,139
-------------
- -
77,168
-------------
- -
Net change in unrealized appreciation
(depreciation) on:
Investments.............................. 2,734,711
Foreign currencies.......................
(10,720)
Financial futures........................ 18,186
-------------
- -
2,742,177
-------------
- -
Net gain on investments and foreign
currencies............................... 2,819,345
-------------
- -
Net Increase in Net Assets
Resulting from Operations................... $ 2,888,054
-------------
- -
-------------
- -
</TABLE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL EUROPE INDEX FUND
Statement of Operations (Unaudited)
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months October 1,
1997(a)
Ended
Through
Increase (Decrease) March 31, September
30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income...... $ 68,709 $
288,375
Net realized gain on
investments and foreign
currency transactions... 77,168
37,994
Net change in unrealized
appreciation/depreciation
on investments and
foreign currencies...... 2,742,177
573,730
----------- -------------
- --------
Net increase in net assets
resulting from
operations.............. 2,888,054
900,099
----------- -------------
- --------
Dividends and distributions
(Note 1):
Dividends from net
investment income....... (403,257)
(108,089)
----------- -------------
- --------
Distributions from net
realized gains.......... (52,600) --
----------- -------------
- --------
Fund share transactions (Note
6):
Net proceeds from shares
sold.................... 2,987,825
18,141,700
Net asset value of shares
issued in reinvestment
of
dividends and
distributions........... 455,044
108,032
Cost of shares
reacquired.............. (1,210,549)
(1,015,432)
----------- -------------
- --------
Net increase in net assets
from Fund share
transactions............ 2,232,320
17,234,300
----------- -------------
- --------
Total increase................ 4,664,517
18,026,310
Net Assets
Beginning of period........... 18,026,310 --
----------- -------------
- --------
End of period(b).............. $22,690,827
$18,026,310
----------- -------------
- --------
----------- -------------
- --------
- ---------------
(a) Commencement of investment
operations.
(b) Undistributed net
investment income......... $ -- $
213,033
----------- -------------
- --------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 13
<PAGE>
PRUDENTIAL INDEX SERIES FUND
Notes to Financial Statements (Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
- --------------------
Prudential Index Series 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 currently consists of five separate Funds.
Prudential Europe Index Fund
(the 'Fund') commenced investment operations on October 1,
1997 when 1,500,000
shares of beneficial interest of the Fund were sold for
$15,000,000 to The
Prudential Insurance Company of America ('The Prudential').
The Fund's investment objective is to seek to provide
investment results that
correspond to the price and yield performance of a broad-
based index of
securities of European issuers, currently the Morgan Stanley
Capital
International Europe Index.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Company and the Fund in the preparation of its financial
statements.
Securities Valuation: Securities for which the primary
market is on an exchange,
are valued at the last sale price on such exchange on the
day of valuation or,
if there were no sales on such day, at the mean between the
last bid and asked
prices on such day or at the bid price in the absence of an
asked price.
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, are valued by an independent pricing agent
or a principal
market maker. 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 methodology or provides a valuation or
methodology that, in the
judgment of the subadviser, does not represent fair value,
are valued at fair
value as determined by procedures established by the
Company's Trustees.
Short-term securities which mature in more than 60 days are
valued at current
market quotations. Short-term securities which mature in 60
days or less are
valued at amortized cost.
In connection with transactions in repurchase agreements
with U.S. financial
institutions, it is the Company's policy that its custodian
or designated
subcustodians, under triparty repurchase agreements, as the
case may be, takes
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 Fund may be
delayed or limited.
Foreign Currency Translation: The books and records of the
Fund are maintained
in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and
liabilities--at the
closing rates of exchange;
(ii) purchases and sales of investment securities, income
and expenses--at the
rate of exchange prevailing on the respective dates of such
transactions.
Although the net assets of the Fund are presented at the
foreign exchange rates
and market values at the close of the fiscal period, the
Fund does 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 period.
Similarly, the Fund
does not isolate the effect of changes in foreign exchange
rates from the
fluctuations arising from changes in the market prices of
long-term securities
sold during the fiscal period. Accordingly, realized foreign
currency gains
(losses) are included in the reported net realized gains on
investment
transactions.
Net realized losses on foreign currency transactions
represent net foreign
exchange gains or losses from forward currency contracts,
disposition of foreign
currencies, currency gains or losses realized between the
trade and settlement
dates on security transactions, and the difference between
the amounts of
interest, dividends and foreign taxes recorded on the Fund's
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
fiscal period end exchange rates are reflected as a
component of unrealized
appreciation on investments and foreign currencies.
Foreign security and currency transactions may involve
certain considerations
and risks not typically associated with those of domestic
origin as a result of,
among other factors, the possibility of political and
economic instability and
the level of governmental supervision and regulation of
foreign securities
markets.
Forward Currency Contracts: A forward currency contract is a
commitment to
purchase or sell a foreign currency at a future date at a
negotiated forward
rate. The Fund enters into forward currency contracts in
order to hedge its
exposure to changes in foreign currency exchange rates on
its foreign
- ------------------------------------------------------------
- --------------------
14
<PAGE>
PRUDENTIAL INDEX SERIES FUND
Notes to Financial Statements (Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
- --------------------
portfolio holdings or on specific receivables and payables
denominated in a
foreign currency. The contracts are valued daily at current
exchange rates and
any unrealized gain or loss is included in net unrealized
appreciation or
depreciation on investments. Gain or loss is realized on
settlement date of the
contract equal to the difference between settlement value of
the original and
renegotiated forward contracts. This gain or loss, if any,
is included in net
realized gain (loss) on foreign currency transactions. Risks
may arise upon
entering into these contracts from the potential inability
of the counter
parties to meet the terms of their contracts.
Financial Futures Contracts: A financial futures contract is
an agreement to
purchase (long) or sell (short) an agreed amount of
securities or commodities 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 Fund invests in financial futures contracts in order to
hedge existing
portfolio securities, or securities the Fund intends to
purchase, against
fluctuations in value. Under a variety of circumstances, the
Fund may not
achieve the anticipated benefits of the financial futures
contracts and may
realize a loss. The use of futures transactions involves the
risk of imperfect
correlation in movements in the price of futures contracts
and the underlying
assets.
Securities Transactions and Net Investment Income:
Securities transactions are
recorded on the trade date. Realized gains and losses from
investment and
foreign currency transactions are calculated on the
identified cost basis.
Dividend income is recorded on the ex-dividend date and
interest income is
recorded on an accrual basis. Expenses are recorded on the
accrual basis which
may require the use of certain estimates by management.
Dividends and Distributions: The Fund expects to pay
dividends of net investment
income and distributions of net realized capital and
currency gains, if any,
annually. Dividends and distributions are recorded on the ex-
dividend date.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
Taxes: It is the Fund's policy to meet the requirements of
the Internal Revenue
Code applicable to regulated investment companies and to
distribute all of its
taxable income to shareholders. Therefore, no federal income
tax provision is
required.
Withholding taxes on foreign dividends, interest and capital
gains have been
provided for in accordance with the Fund's understanding of
the applicable
country's tax rules and rates.
Reclassification of Capital Accounts: The Fund accounts for
and reports
distributions to shareholders in accordance with American
Institute of Certified
Public Accountants (AICPA), Statement of Position 93-2:
Determination,
Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and
Return of Capital Distributions by Investment Companies. The
effect of applying
this Statement of Position was to reclassify $13,050 of
foreign currency losses
from accumulated net realized gains on investments to
distributions in excess of
net investment income. Net investment income, net realized
gains and net assets
were not affected by this change.
- ------------------------------------------------------------
Note 2. Agreements
The Company has a management agreement with Prudential
Investments Fund
Management LLC ('PIFM'). Pursuant to this agreement, PIFM
has responsibility for
all investment advisory services and supervises the
subadviser's performance of
such services. PIFM has entered into a subadvisory agreement
with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment
advisory services in
connection with the management of the Fund. PIFM pays for
the cost of the
subadviser's services, the compensation of officers of the
Company, occupancy
and certain clerical and bookkeeping costs of the Company.
The Company bears all
other costs and expenses.
The management fee paid to PIFM is computed daily and
payable monthly at an
annual rate of .40 of 1% of the average daily net assets of
the Fund.
PIFM has agreed to subsidize the operating expenses of the
Fund so that total
Fund operating expenses do not exceed .60% on an annualized
basis of the Fund's
average daily net assets. This voluntary waiver may be
terminated at any time
without notice. For the six months ended March
- ------------------------------------------------------------
- --------------------
15
<PAGE>
PRUDENTIAL INDEX SERIES FUND
Notes to Financial Statements (Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
- --------------------
31, 1999, PIFM subsidized $163,433 of the expenses of the
Fund (1.55% of average
daily net assets, annualized, or $0.09 per share).
The Fund has a distribution agreement with PIMS, which acts
as the distributor
of the Fund. No distribution or service fees are paid to
PIMS as distributor of
the Fund.
PIFM, PIMS and PIC are wholly owned subsidiaries of The
Prudential.
As of March 11, 1999, the Fund, along with other
unaffiliated registered
investment companies (the 'Funds'), entered into a
syndicated agreement ('SCA')
with an unaffiliated lender. The maximum commitment under
the SCA is $1 billion.
The Funds pay a commitment fee at an annual rate of .065 of
1% on the unused
portion of the credit facility, which is accrued and paid
quarterly on a pro
rata basis by the Funds. The SCA expires on March 9, 2000.
Prior to March 11,
1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements is to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Company's transfer agent. During the six
months ended March 31,
1999, the Fund incurred fees of approximately $1,800 for the
services of PMFS.
As of March 31, 1999, approximately $400 of such fees were
due to PMFS. Transfer
agent fees and expenses in the Statement of Operations
include certain
out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended March 31, 1999 were $1,936,525 and
$249,378,
respectively.
The United States federal income tax cost basis of the
Fund's investments at
March 31, 1999 was $19,126,322 and, accordingly, net
unrealized appreciation for
federal income tax purposes was $3,175,736 (gross unrealized
appreciation--$4,168,821; gross unrealized depreciation--
$993,085).
At March 31, 1999, the Fund had open buys of 100 EUROTOP and
40 FTSE 100
financial futures contracts expiring on June 19, 1999.
The unrealized appreciation on such contracts as of March
31, 1999 were as
follows:
<TABLE>
<CAPTION>
Value at Value on
Unrealized
Acquisition March 31, 1999
Appreciation
----------- --------------
- ------------
<S> <C> <C>
<C>
EUROTOP..................... $ 292,300 $292,800
$ 500
FTSE 100.................... 200,690 203,886
3,196
FTSE 100.................... 87,489 89,627
2,138
- -----
$5,834
- -----
- -----
</TABLE>
At March 31, 1999, the Fund had outstanding forward currency
contracts to sell
foreign currencies as follows:
<TABLE>
<CAPTION>
Value at
Forward Currency Settlement Date Current
Unrealized
Sale Contracts Receivable Value
Appreciation
- ------------------------------- --------------- -------
- ------------
<S> <C> <C>
<C>
Great Britain Pound,
expiring 4/1/99............... $20,020 $20,000
$ 20
------ -------
- ----
------ -------
- ----
</TABLE>
- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account
The Fund, 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. As of March
31, 1999, the Fund
had a .04% undivided interest in the repurchase agreements
in the joint account.
This undivided interest represented $227,000 in principal
amount. As of such
date, the repurchase agreement in the joint account and the
value of the
collateral therefore was as follows:
Bear, Stearns & Co., Inc., 4.92%, in the principal amount of
$170,000,000,
repurchase price $170,023,223, due 4/1/99. The value of the
collateral including
accrued interest was $174,282,442.
Salomon Smith Barney, Inc., 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $174,947,170.
Morgan Stanley Dean Witter, 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $173,474,773.
- ------------------------------------------------------------
- --------------------
16
<PAGE>
PRUDENTIAL INDEX SERIES FUND
Notes to Financial Statements (Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
- --------------------
SBC Warburg Dillon Read, Inc., 4.97%, in the principal
amount of $44,773,000,
repurchase price $44,779,181, due 4/1/99. The value of the
collateral including
accrued interest was $45,668,747.
- ------------------------------------------------------------
Note 6. Capital
The Fund has authorized an unlimited number of Class Z
shares of beneficial
interest at $.001 par value per share. Class Z shares are
not subject to any
sales or redemption charges and are offered exclusively for
sale to a limited
group of investors. Transactions in shares of beneficial
interest were as
follows:
<TABLE>
<CAPTION>
Six months ended March 31, 1999: Shares
- --------------------------------------------------- -------
- --
<S> <C>
Shares sold........................................
249,936
Shares issued in reinvestment of dividends and
distributions....................................
39,397
Shares reacquired..................................
(101,569)
-------
- --
Net increase in shares outstanding.................
187,764
-------
- --
-------
- --
<CAPTION>
October 1, 1997(a) through September 30, 1998:
- ---------------------------------------------------
Shares sold........................................
1,771,843
Shares issued in reinvestment of dividends and
distributions....................................
11,206
Shares reacquired..................................
(88,250)
-------
- --
Net increase in shares outstanding.................
1,694,799
-------
- --
-------
- --
</TABLE>
As of March 31, 1999, 1,544,903 of the outstanding shares
were owned by The
Prudential.
- ---------------
(a) Commencement of investment operations.
- ------------------------------------------------------------
- --------------------
17
<PAGE>
PRUDENTIAL INDEX SERIES FUND
Financial Highlights (Unaudited)
PRUDENTIAL EUROPE INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Six Months October 1, 1997(a)
Ended Through
March 31, September 30,
1999 1998
- ----------- ------------------
<S>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period..................................................
$ 10.64 $ 10.00
- ----------- ------
Income from investment operations
Net investment
income(c)...................................................
........... .04 .18
Net realized and unrealized gain on investment and foreign
currency transactions...... 1.63
.53
- ----------- ------
Total from investment
operations..................................................
. 1.67 .71
- ----------- ------
Less distributions
Dividends from net investment
income..................................................
(.23) (.07)
Distributions from net realized
gains.................................................
(.03) --
- ----------- ------
Total
distributions...............................................
................. (.26) (.07)
- ----------- ------
Net asset value, end of
period......................................................
.. $ 12.05 $ 10.64
- ----------- ------
- ----------- ------
TOTAL
RETURN(d):..................................................
.................... 15.80% 7.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).......................................................
$22,691 $ 18,026
Average net assets
(000).......................................................
....... $21,164 $ 17,728
Ratios to average net assets:(b)/(c)
Expenses....................................................
....................... .60%
.60%
Net investment
income......................................................
........ .65% 1.64%
Portfolio
turnover....................................................
................ 1% 4%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Net of expense subsidy.
(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 returns for
periods of less than a
full year are not annualized.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 18
<PAGE>
Getting The Most From Your Prudential Mutual Fund
How many times have you read these letters -- or other
financial materials --
and stumbled across a word that you don't understand?
Many shareholders have run into the same problem. We'd like
to help. So we'll
use this space from time to time to explain some of the
words you might have
read, but not understood. And if you have a favorite word
that no one can
explain to your satisfaction, please write to us.
Basis Point: 1/100th of 1%. For example, one-half of one
percent is 50 basis
points.
Collateralized Mortgage Obligations (CMOs): Mortgage-backed
bonds that
separate mortgage pools into different maturity classes,
called tranches.
These instruments are sensitive to changes in interest rates
and homeowner
refinancing activity. They are subject to prepayment and
maturity extension
risk.
Derivatives: Securities that derive their value from other
securities. The
rate of return of these financial instruments rises and
falls -- sometimes
very suddenly -- in response to changes in some specific
interest rate,
currency, stock, or other variable.
Discount Rate: The interest rate charged by the Federal
Reserve on loans to
member banks.
Federal Funds Rate: The interest rate charged by one bank to
another on
overnight loans.
Futures Contract: An agreement to purchase or sell a
specific amount of a
commodity or financial instrument at a set price at a
specified date in the
future.
Leverage: The use of borrowed assets to enhance return. The
expectation is
that the interest rate charged on borrowed funds will be
lower than the
return on the investment. While leverage can increase
profits, it can also
magnify losses.
Liquidity: The ease with which a financial instrument (or
product)
can be bought or sold (converted into cash) in the financial
markets.
Price/Earnings Ratio: The price of a share of stock divided
by the earnings
per share for a 12-month period.
Option: An agreement to purchase or sell something, such as
shares
of stock, by a certain time for a specified price. An option
need not
be exercised.
Spread: The difference between two values; often used to
describe the
difference between "bid" and "asked" prices of a security,
or between
the yields of two similar maturity bonds.
Yankee Bond: A bond sold by a foreign company or government
in the U.S.
market and denominated in U.S. dollars.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive
financial advice
through a Prudential Securities financial advisor or
Prudential/Pruco
Securities registered representative. Your advisor or
representative can
provide you with the following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you match the
reward you seek with the risk you can tolerate. And risk can
be difficult to
gauge--sometimes even the simplest investments bear
surprising risks. The
educated investor knows that markets seldom move in just one
direction--there
are times when a market sector or asset class will lose
value or provide
little in the way of total return. Managing your own
expectations is easier
with help from someone who understands the markets and who
knows you!
Keeping Up With The Joneses
A financial advisor or registered representative can help
you wade through
the numerous mutual funds available to find the ones that
fit your own
individual investment profile and risk tolerance. While the
newspapers and
popular magazines are full of advice about investing, they
are aimed at
generic groups of people or representative individuals, not
at you personally.
Your financial advisor or registered representative will
review your
investment objectives with you. This means you can make
financial decisions
based on the assets and liabilities in your current
portfolio and your risk
tolerance--not just based on the current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are among the
most common investor mistakes. But sometimes it's difficult
to hold on to an
investment when it's losing value every month. Your
financial advisor or
registered representative can answer questions when you're
confused or
worried about your investment, and remind you that you're
investing for
the long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report, and information about
the Fund's
portfolio holdings, are for the period covered by this
report, and are
subject to change thereafter.
The accompanying financial statements as of March 31, 1999,
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors
unless preceded or accompanied by a current prospectus.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
74431F811 MF174E8
(ICON)
Prudential
Pacific
Index Fund
SEMI
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential Pacific Index Fund
A Series of the Prudential Index Series Fund
Performance At A Glance
Attracted by low share prices, and buoyed by signs that
Pacific economies might be stabilizing, investors returned
to the Pacific region dramatically during our six-month
reporting period, pushing the MSCI Pacific Free Index up
40% in U.S. dollars. Japan accounts for three-fourths of
the Index, and double- and triple-digit gains were
predominant
among Japanese stocks as foreign investors raced to get in
on
the ground floor of any recovery. The Prudential Pacific
Index Fund performed in line with its Index target, and more
than five percentage points ahead of actively managed
Pacific
Region funds, as measured by Lipper, Inc.
<TABLE>
Cumulative Total Returns1 As of 3/31/99
<CAPTION>
Six One
Since
Months Year
Inception2
<S> <C> <C>
<C>
Class Z 39.58% (38.95) 9.87% (8.50) -
11.11% (-12.72)
Lipper Pacific
Region Fund Avg.3 32.19 0.61
- -21.39
MSCI Pacific Free Index4 40.31 10.66
- -9.33
</TABLE>
<TABLE>
Average Annual Total Returns1 As
of 3/31/99
<CAPTION>
One Since
Year Inception2
<S> <C> <C>
Class Z 9.87% (8.50) -7.48% (-8.60)
</TABLE>
Past performance is not indicative of future results.
Principal
and investment return will fluctuate so that an investor's
shares,
when redeemed, may be worth more or less than their original
cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc.
Without waiver of management fees and/or expense
subsidization,
the Fund's cumulative and average annual total returns would
have
been lower, as indicated in parentheses ( ).
2 Inception date: Class Z, 9/24/97. The Lipper and Factset
reporting
period begins 9/30/97.
3 The Lipper Since Inception return is for all funds in the
Pacific
Region Fund category.
4 Source: Morgan Stanley Capital International, based on
data
retrieved by Factset. The Morgan Stanley Capital
International
(MSCI) Pacific Free Index is an unmanaged, diversified,
capitalization-weighted index currently consisting of 522
equity securities listed on the stock exchanges of
Australia,
Japan, Hong Kong, New Zealand, and Singapore. The Fund is
neither
sponsored by, nor affiliated with, Morgan Stanley & Co.
Incorporated.
The benchmark return shown does not reflect the reduction of
foreign
dividend withholding taxes. Investors cannot invest directly
in an index.
How Investments Compared
(As of 3/31/99)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's
past performance should never be used to predict future
results.
The risks to each of the investments listed above are
different--we
provide 12-month total returns for several Lipper mutual
fund
categories to show you that reaching for higher returns
means
tolerating more risk. The greater the risk, the larger
the potential reward or loss. In addition, we've included
historical
20-year average annual returns. These returns assume the
reinvestment
of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received
higher historical total returns from stocks than from most
other
investments. Smaller capitalization stocks offer greater
potential
for long-term growth, but may be more volatile
than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can
help smooth out their total returns year by year. But their
prices
still fluctuate (sometimes significantly), and their returns
have
been historically lower than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state agencies and/or municipalities. This
investment
provides income that is usually exempt from federal and
state income
taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value;
they don't fluctuate much in price but, historically, their
returns
have been generally among the lowest of the major investment
categories.
<PAGE>
Portfolio Manager's Report
(PHOTO)
John Moschberger
Fund Manager
Investment Goals and Style
The Prudential Pacific Index Fund seeks to provide
investment results that correspond to the price and yield of
a
broad-based index of stocks of Pacific Region issuers.
Currently, we use the Morgan Stanley Capital International
(MSCI)
Pacific Free Index. ("Free" means that it includes only
companies
that are open to foreign investors.) Over the past six
months, the
MSCI Pacific Free Index represented stocks in Japan,
Australia,
Hong Kong, Singapore, and New Zealand. Malaysia was removed
from
the Index at the start of our period because it imposed
controls
on capital movement. Currently, Japanese stocks represent
about 80%
of the MSCI Pacific Free Index. There can be no assurance
that the
Fund will achieve its investment objective.
Market Review
Japan. Japan alone accounts for about three-fourths of the
MSCI
Pacific Free Index. Japanese stocks saw an extraordinary
bounce--
averaging more than 40%--with negative returns for only a
handful.
The two largest companies, by far, are Toyota Motor
Corporation, and Nippon Telephone and Telegraph. Together
they
account for more than 10% of the market value of Pacific
Free
Index stocks, and each gained 30% or more in the six-month
reporting
period. Even more striking was Bank of Tokyo-Mitsubishi
(about 3% of the Index), which more than doubled in this
period.
Indeed, despite the troubled state of Japan's banking
industry,
other large banks, such as Sumitomo, Fuji, Sakura, Tokai,
and
Asahi, also saw very large gains. It appears that the low
prices of the stocks, the prospect of economic recovery in
Japan, and the government's efforts to restructure the
industry--
which included investing 7.5 trillion yen, closing some
banks, and
forcing others into mergers--made a very attractive
package to overseas investors. However, many companies on
the Index
with much smaller capitalizations tended to have even higher
returns
than those of the well-known giant companies.Australia. The
second
largest country component (10%) of the MSCI Pacific Free
Index is
Australia, which has the soundest economy in the region (and
one
of the fastest-growing in the world). Its GDP grew 5.1% in
1998,
and its stocks contributed a 31% return to the Index.
Telstra,
Australia's dominant telecommunications company and one of
its
largest, returned 88%. National Australia Bank is about the
same
size in market capitalization, and it returned 53% for our
six-month reporting period. Australia deregulated its
financial
sector in the 1980s. By the time the regional financial
crisis
hit, its banks had adequate credit controls in place.
Troubled
debt now amounts to only 1% of outstanding loans. Westpac
Banking,
another large banking firm, returned 35%. Broken Hill
Proprietary, a
large commodities conglomerate, is the third largest
Australian firm
on the Index. The prices of commodities--the focus of
Australia's
exports--began to rise during our reporting period, pushing
Broken
Hill's return to 21%.
Hong Kong. Hong Kong accounts for about 8% of the Index, and
its
components averaged a 39% gain. Six of the nine largest
contributions
to the return were from companies predominantly in property
and
development, including two that more than doubled in market
value
over the six months: Sun Hung Kai Properties and Sino Land
Co. have
been one of the mainstays of the
<PAGE>
Hong Kong economy, and investors appear convinced that the
worst
impact of the regional recession is over. Other major
contributors
to the return included Hutchison Whampoa (a conglomerate
primarily
in shipping, telecommunications, retail, and oil--up 51%)
and Hang
Seng Bank (up 50%).
Singapore. Singapore is a much smaller (3%) component of the
Index,
so its 49% return had less impact than the countries we have
already
discussed. Three banks, two of which more than doubled in
value, had
the greatest positive impact. A development company City
Developments
(returning 137%), and Singapore Airlines (28%) had the next
greatest
impact.
Portfolio Composition
Sectors expressed as a percentage of net assets
as of 3/31/99
Japan 77.1%
Australia 9.6
Hong Kong 7.3
Cash & Equivalents 3.0
Singapore 2.4
New Zealand 0.6
Source: Prudential
How the MSCI Pacific Index Performed Since the Fund's
Inception*
(GRAPH)
The performance cited does not represent the performance of
the
Prudential Pacific Index Fund. Investors cannot invest
directly
in an index.
*The actual inception date for Class Z is 9/24/97. The
Lipper
reporting period begins 9/30/97.
Source: Lipper, Inc.
New Zealand. The revival of global prices for forest
products
helped push the average return of New Zealand's small (less
than 1%)
representation on the Index to 31% by significantly boosting
the prospects of Fletcher Challenge and Carter Holt Harvey.
However, the largest single New Zealand component of the
Index
(though, less than half a percent) is Telecom Corporation of
New
Zealand, which had a 31% return.
Looking Ahead
Japan accounts for the lion's share of the Pacific markets.
There
are signs that the process of restructuring large Japanese
firms
has begun. Although unemployment there is rising, and the
economy
is not likely to recover quickly, stock prices are
moving upward in anticipation of positive changes. Elsewhere
in
the Pacific, economic restructuring and recovery is more
advanced.
We see no reason to expect these trends to reverse.
1
<PAGE>
A Message to Our Shareholders May
19, 1999
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks
of a handful of very large companies. These stocks were
getting more
and more expensive--out of proportion to their earnings
expectations.
As a result, there was a substantial disparity in value
between
large and small companies, and between growth and value
stocks.
In recent months, however, that gap has started to narrow
amid
news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value stocks that typically fare better in a
growing
economy, and have been selling at a significant discount to
the market.
Many sectors of the bond market have also begun to rebound
from
last year's global financial crisis. Furthermore, while
bonds have
not generated higher returns than stocks in recent years,
they have
demonstrated that they hold up better during
market downturns. That's a thought to keep in mind going
forward.
Diversification is critical
History shows that the markets generally bring prices in
line with
earnings performance, sooner or later. It also shows that
two
investment styles--value and growth--typically alternate in
periods of superior performance.
What does this suggest? Instead of chasing popular market
winners, investors should have a well-diversified asset
allocation strategy in place and keep to it. It is also a
good practice to rebalance your holdings, when necessary,
to keep your asset allocation consistent with your long-term
objectives and risk tolerance. A properly diversified
portfolio
of value- and growth-oriented equity funds, bond funds, and
money market funds could help you weather inevitable market
turbulence and receive more consistent returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders diversify. We have also designed several
balanced
and diversified funds to allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
2
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--97.0%
COMMON STOCKS--96.4%
- ------------------------------------------------------------
Australia--9.0%
6,600 Amcor Ltd. $
32,926
11,900 AMP Ltd.
129,781
3,109 Australian Gas Light Co.
22,087
12,202 Boral Ltd.
17,576
2,600 Brambles Industries, Ltd.
65,815
20,231 Broken Hill Proprietary Co., Ltd.
171,835
10,168 Coca Cola Amatil Ltd.
43,920
12,807 Coles Myer Ltd.
69,206
9,100 Colonial Ltd.
36,031
3,300 CRA Ltd.
45,924
9,682 Crown Ltd.(a)
4,891
1,000 CSL Ltd.
8,292
10,300 CSR Ltd.
22,239
2,955 Email Ltd.
5,094
1,249 F. H. Faulding & Co. Ltd.
7,414
18,800 Fosters Brewing Group Ltd.
55,099
4,907 Futuris Corp., Ltd.
6,259
14,254 General Property Trust
24,844
6,768 GIO Australia Holdings Ltd.
19,340
13,251 Goodman Fielder Ltd.
13,665
4,000 Hardie (James) Industries Ltd.
8,765
2,788 ICI Australia Ltd.
14,613
2,700 Leighton Holdings Ltd.
8,883
5,549 Lend Lease Corp. Ltd.
70,403
17,560 M.I.M. Holdings Ltd.
7,873
2,400 Mayne Nickless Ltd.
7,881
15,841 National Australia Bank Ltd.
286,602
2,300 Newcrest Mining Ltd.(a)
4,474
21,966 News Corp., Ltd.
161,908
17,823 Normandy Mining Ltd.(a)
14,182
7,681 North Ltd.
12,175
10,400 Pacific Dunlop Ltd.
18,061
9,200 Pioneer International Ltd.
18,185
3,836 QBE Insurance Group Ltd.
15,869
2,100 RGC Ltd.
0
1,200 Rothmans Holdings Ltd.
10,685
6,531 S.A. Brewing Holdings Ltd.
26,441
6,200 Santos Ltd.
17,854
4,000 Schroders Property Fund $
6,113
1,825 Smith (Howard) Ltd.
14,118
3,258 Smorgon Steel Group Ltd.
4,115
5,300 Star City Holdings Ltd.
5,389
3,425 Stockland Trust Group
8,328
2,500 Suncorp-Metway Ltd.
15,156
3,000 TABCORP Holdings Ltd.
22,734
55,200 Telstra Corp.
287,759
2,200 Wesfarmers Ltd.
20,585
12,918 Western Mining Corp. Holdings Ltd.
40,952
13,373 Westfield Trust
28,326
20,936 Westpac Banking Corp. Ltd.
152,042
1,377 Westralian Sands Ltd.
3,137
11,400 Woolworths Ltd.
36,355
---------
- ---
2,152,201
---------
- ---
- ------------------------------------------------------------
Hong Kong--7.3%
13,000 Bank of East Asia
22,059
35,000 Cathay Pacific Airways
40,196
25,000 Cheung Kong Ltd.
190,333
26,000 China Light & Power Holdings, Ltd.
124,807
20,000 Chinese Estates Holdings
2,942
3,000 Dickson Concept Inc.
2,439
11,000 Hang Lung Development Co.
13,343
21,000 Hang Seng Bank Ltd.
193,076
44,000 Hong Kong & China Gas Co.
62,171
4,000 Hong Kong Construction Holdings
1,626
11,000 Hong Kong & Shanghai Hotels
8,446
2,000 Hong Kong Aircraft Engineering Co.
Ltd.
2,942
130,000 Hong Kong Telecommunications Ltd.
256,660
8,800 Hopewell Holdings Ltd.
4,258
42,000 Hutchison Whampoa Ltd.
330,600
9,000 Hysan Development Co.
11,730
10,000 Johnson Electric Holdings, Ltd.
28,195
6,000 Miramar Hotel & Investment Co.
6,310
21,000 New World Development Co., Ltd.
41,325
14,000 Oriental Press Group
1,264
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 3
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Hong Kong (cont'd.)
6,000 Peregrine Investments Holdings Ltd. $
8
38,000 Regal Hotel International
3,727
16,000 Shangri-La Asia Ltd.
16,311
14,000 Shun Tak Holdings Ltd.
2,710
32,000 Sino Land Co.
16,827
14,000 South China Morning Post
7,768
26,000 Sun Hung Kai Properties Ltd.
194,592
17,000 Swire-Pacific, Ltd. 'A'
78,972
4,000 Television Broadcasts Ltd.
14,581
2,000 Varitronix International, Ltd.
3,123
23,000 Wharf Holdings Ltd.
35,318
2,000 Wing Lung Bank
6,994
---------
- ---
1,725,653
---------
- ---
- ------------------------------------------------------------
Japan--77.1%
4,000 77th Bank, Ltd.(a)
38,673
1,600 Acom Co., Ltd.
113,079
1,000 Advantest Corp.
76,416
7,000 Ajinomoto Co., Inc.
83,340
2,000 Alps Electric Co. Ltd.
33,691
3,000 Amada Co. Ltd.
15,959
1,000 Amano Corp.
7,684
3,000 Aoki Corp.
1,951
800 Aoyama Trading Co., Ltd.
21,616
500 Arabian Oil Co.
8,486
26,000 Asahi Bank Ltd.
137,212
5,000 Asahi Breweries Ltd.
65,439
16,000 Asahi Chemical Industry Co., Ltd.
93,625
13,000 Asahi Glass Co. Ltd.
94,402
5,000 Ashikaga Bank
9,668
400 Autobacs Seven Co. Ltd.
16,381
49,000 Bank of Tokyo-Mitsubishi, Ltd.
675,234
12,000 Bank of Yokohama
30,398
9,000 Bridgestone Corp.
229,503
3,000 Brother Industries, Ltd.
9,221
9,000 Canon Inc.
222,663
3,000 Casio Computer Co.
20,341
8,000 Chiba Bank
34,991
10,000 Chichibu Onoda Cement Corp.
28,287
2,000 Chiyoda Corp.
4,323
2,000 Chugai Phamacy Co.
23,102
3,000 Citizen Watch Co.
20,772
5,000 Cosmo Oil Co. $
8,993
1,700 Credit Saison Co. Ltd.
37,322
600 CSK Corp.
18,948
8,000 Dai Nippon Printing Co., Ltd.
121,591
4,000 Daicel Chemical Industries, Ltd.
13,172
4,000 Daido Steel Co.
5,674
7,000 Daiei Inc.
20,155
1,000 Daifuku Co. Ltd.
6,628
3,000 Daiichi Pharmaceutical Co.
50,410
3,000 Daikin Industries Ltd.
29,714
2,000 Daikyo Inc.
3,901
3,000 Daimaru Inc.
14,186
8,000 Dainippon Ink & Chemicals, Inc.
26,412
2,000 Dainippon Screen Manufacturing Co.,
Ltd.
7,768
1,400 Daito Trust Construction Co., Ltd.
14,706
6,000 Daiwa House Industries
68,496
2,000 Daiwa Kosho Lease Co., Ltd
7,346
14,000 Daiwa Securities Co., Ltd.
75,065
5,000 Denki Kagaku Kogyo K.K.
8,528
9,000 Denso Corp.
176,687
43 East Japan Railway Co.
255,611
3,000 Ebara Corp.
33,134
3,000 Eisai Co., Ltd.
62,695
1,000 Ezaki Glico Co.
6,029
2,700 Fanuc Ltd.
110,344
32,000 Fuji Bank
189,411
5,000 Fuji Photo Film Co.
189,141
4,000 Fujikura Ltd.
21,616
5,000 Fujita Corp.
3,842
1,000 Fujita Kanko Inc.
9,204
20,000 Fujitsu Ltd.
321,202
7,000 Furukawa Electric Co. Ltd.
28,962
1,000 Gakken Co.
1,182
5,000 Gunma Bank
39,390
2,000 Gunze Ltd.
4,644
9,000 Hankyu Corp.
39,137
2,000 Hankyu Department Stores
14,253
3,000 Hazama Corp.
2,432
3,000 Higo Bank Ltd.
12,640
400 Hirose Electric Co., Ltd.
33,437
36,000 Hitachi Ltd.
266,588
10,000 Hitachi Zosen Corp.
12,835
6,000 Hokuriku Bank
11,399
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Japan (cont'd.)
10,000 Honda Motor Co., Ltd. $
451,744
1,000 House Foods Corp.
14,186
1,000 Hoya Corp.
56,742
2,000 Inax Corp.
13,611
28,000 Indonesia Bank
189,141
2,000 Isetan Co.
19,083
3,000 Ishihara Sangyo Kaisha(a)
4,610
4,000 Ito Yokado Co., Ltd.
257,367
15,000 Itochu Corp.
31,158
2,000 Itoham Foods Inc.
8,241
2,000 Iwatani International Corp.
4,323
1,000 JACCS Co., Ltd.
4,230
20,000 Japan Air Lines Co.(a)
65,355
11,000 Japan Energy Corp.
12,446
4,000 Japan Steel Works
4,729
2,000 JGC Corp.
4,340
9,000 Joyo Bank
38,149
3,000 JUSCO Co., Ltd.
52,183
11,000 Kajima Corp.
33,437
3,000 Kamigumi Co., Ltd.
13,932
2,000 Kandenko Co.
13,341
5,000 Kanebo Ltd.(a)
5,488
4,000 Kaneka Corp.
31,749
10,600 Kansai Electrical Power Co., Inc.
214,363
3,000 Kansai Paint Co.
7,954
7,000 Kao Corp.
154,564
1,000 Katokichi Co.
13,687
15,000 Kawasaki Heavy Industries Ltd.
32,678
6,000 Kawasaki Kisen Ltd.
11,804
35,000 Kawasaki Steel Corp.
59,107
5,000 Keihin Elecetric Express Railway
Co., Ltd.
16,339
2,000 Kikkoman Corp.
13,645
3,000 Kinden Corp.
41,797
18,000 Kinki Nippon Railway
96,361
11,000 Kirin Brewery Co.
128,920
1,000 Kissei Pharmaceutical Co., Ltd.
20,265
1,000 Kokuyo Co.
16,499
10,000 Komatsu Ltd.
51,423
1,000 Komori Corp.
18,534
450 Konami Co.
16,643
4,000 Konica Corp.
16,820
2,000 Koyo Seiko Co. $
12,007
15,000 Kubota Corp.
39,897
7,000 Kumagai Gumi Co.(a)
6,147
3,000 Kurabo Industries
3,673
3,000 Kuraray Co.
32,551
2,000 Kureha Chemical Industry Co. Ltd.
5,201
1,000 Kurita Water Industries
16,364
2,100 Kyocera Corp.
113,130
4,000 Kyowa Hakko Kogyo Co., Ltd.
21,008
1,000 Kyudenko Co., Ltd.
6,122
3,000 Lion Corp.
11,323
1,000 Maeda Road Construction Co.
6,333
1,000 Makino Milling Machine Co., Ltd.
6,147
2,000 Makita Corp.
22,309
15,000 Marubeni Corp.
28,498
3,000 Maruha Corp.
3,166
4,000 Marui Co.(a)
68,057
22,000 Matsushita Electric Industrial Co.,
Ltd.
429,114
3,000 Meiji Milk Product Co., Ltd.
9,575
4,000 Meiji Seika Kaisha
17,901
4,000 Minebea Co.(a)
41,341
1,000 Misawa Homes Co.
3,394
24,000 Mitsubishi Chemical Corp.
68,091
17,000 Mitsubishi Corp.
111,247
24,000 Mitsubishi Electric Corp.
80,250
14,000 Mitsubishi Estate Co., Ltd.
142,447
5,000 Mitsubishi Gas Chemicals Co.
14,017
37,000 Mitsubishi Heavy Industries Ltd.
167,145
2,000 Mitsubishi Logistics Corp.
23,018
12,000 Mitsubishi Material Corp.
25,838
5,000 Mitsubishi Oil Co.
8,613
3,000 Mitsubishi Paper Mills
4,990
6,000 Mitsubishi Rayon Co.
15,148
14,000 Mitsubishi Trading & Banking
145,166
18,000 Mitsui & Co.
121,743
8,000 Mitsui Engineering & Shipbuilding
Co., Ltd.(a)
7,431
9,000 Mitsui Fudosan Co., Ltd.
81,086
8,000 Mitsui Marine & Fire Insurance Co.,
Ltd.
40,530
5,000 Mitsui Mining & Smelting Co.
24,149
11,000 Mitsui O.S.K. Lines
22,663
1,000 Mitsui Soko Co.
3,580
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Japan (cont'd.)
12,000 Mitsui Trust & Banking Co. $
17,732
5,000 Mitsukoshi Ltd.
13,975
1,000 Mori Seiki Co.
11,475
2,000 Murata Manufacturing Co., Ltd.
106,392
3,000 Mycal Corp.
18,517
2,000 Nagase & Co.
8,191
8,000 Nagoya Railroad Co.
28,236
500 Namco Ltd.
13,172
5,000 Nankai Electric Railway Co.
23,938
17,000 NEC Corp.
204,551
4,000 NGK Insulators Ltd.
45,191
2,000 NGK Spark Plug Co.
23,068
5,000 Nichido Fire & Marine Insurance
29,300
3,000 Nichirei Corp.
6,257
4,000 Nikon Corp.
48,636
1,000 Nippon Comsys Corp.
14,017
12,000 Nippon Express Co., Ltd.
71,029
6,000 Nippon Fire & Marine Insurance
19,049
5,000 Nippon Light Metal Co., Ltd.
5,488
2,000 Nippon Meat Packers, Inc.
28,236
13,000 Nippon Oil Co.
50,823
10,000 Nippon Paper Industries Co.
50,241
1,000 Nippon Sharyo Ltd.
3,057
4,000 Nippon Sheet Glass Co.
13,848
3,000 Nippon Shinpan Co.
6,839
2,000 Nippon Shokubai Co.
11,332
74,000 Nippon Steel Corp.
151,837
3,000 Nippon Suisan Kaisha(a)
3,876
134 Nippon Telegraph & Telephone Corp.
1,312,505
13,000 Nippon Yusen K.K.
51,592
3,000 Nishimatsu Construction Co.
15,807
27,000 Nissan Motor Co., Ltd.(a)
104,872
2,000 Nisshinbo Industries, Inc.
7,650
1,000 Nissin Food Products Co., Ltd.
22,207
2,000 Nitto Denko Corp.
35,211
38,000 NKK Corp.
24,065
2,000 NOF Corp.
3,867
21,000 Nomura Securities Co., Ltd.
219,877
2,000 Noritake Co.
10,724
6,000 NSK Ltd.
27,865
5,000 NTN Corp.
17,268
8,000 Obayashi Corp. $
44,583
7,000 Odakyu Electric Railway
26,184
11,000 Oji Paper Co.
58,608
1,000 Okuma Corp.
5,142
3,000 Okumura Corp.
12,311
3,000 Olympus Optical Co.
39,517
3,000 Omron Corp.
37,491
2,000 Onward Kashiyama & Co., Ltd.
23,727
3,000 Orient Corp.
7,827
700 Orix Corp.
52,546
28,000 Osaka Gas Co.
96,462
100 Oyo Corp.
1,544
4,000 Penta-Ocean Construction
7,532
2,000 Pioneer Electronic Corp.
37,153
2,000 Q.P. Corp.
15,705
3,000 Renown Inc.
2,330
1,000 Rohm Co., Ltd.
119,480
40,000 Sakura Bank
121,253
1,000 Sanden Corp.
8,410
2,000 Sankyo Aluminium Industry Co.
1,908
5,000 Sankyo Co.
107,236
1,000 Sanrio Co.(a)
18,576
2,000 Sanwa Shutter Corp.
10,301
22,000 Sanyo Electric Co.
77,092
3,000 Sapporo Breweries Ltd.
14,135
1,000 Secom Co., Ltd.
94,739
1,000 Sega Enterprises Ltd.
18,154
1,000 Seino Transportation Co.
5,911
2,000 Seiyu Ltd.
9,525
6,000 Sekisui Chemical Corp., Ltd.
42,709
8,000 Sekisui House Ltd.
85,114
12,000 Sharp Corp.
126,657
500 Shimachu Co.
11,864
1,000 Shimano Inc.
24,360
9,000 Shimizu Corp.
36,477
4,000 Shin-Etsu Chemical Co., Ltd.
105,041
4,000 Shionogi & Co.
35,126
4,000 Shiseido Co., Ltd.
55,391
8,000 Shizuoka Bank
96,597
11,000 Showa Denko K.K.
11,332
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Japan (cont'd.)
1,000 Skylark Co. $
19,843
700 SMC Corp.
62,653
3,000 Snow Brand Milk Products
16,465
4,400 Sony Corp.
406,823
33,000 Sumitomo Bank
446,669
18,000 Sumitomo Chemical Co., Ltd.
72,499
12,000 Sumitomo Corp.
78,730
8,000 Sumitomo Electric Industries
94,841
2,000 Sumitomo Forestry Co., Ltd.
13,763
6,000 Sumitomo Heavy Industries Ltd.
12,919
7,000 Sumitomo Marine & Fire Insurance Co.
44,803
40,000 Sumitomo Metal Industries(a)
48,299
6,000 Sumitomo Metal Mining
25,585
5,000 Sumitomo Osaka Cement Co.
11,272
10,000 Taisei Corp.
23,474
4,000 Taisho Pharmacy Co., Ltd.
124,968
1,000 Taiyo Yuden Co.
12,961
2,000 Takara Shuzo Co.
12,666
1,000 Takara Standard Co., Ltd.
7,093
3,000 Takashimaya Co.
27,485
9,000 Takeda Chemical Industries
348,814
1,000 Takuma Co. Ltd.
6,713
10,000 Teijin Ltd.
40,361
3,000 Teikoku Oil Co.
9,905
2,000 Toa Corp.
3,496
9,000 Tobu Railway Co.
26,522
1,000 Toei Co.
2,786
200 Toho Co.
27,105
5,500 Tohoku Electrical Power Co., Inc.
83,640
22,000 Tokai Bank
141,923
17,000 Tokio Marine & Fire Insurance Co.
193,929
2,000 Tokyo Broadcasting System Inc.
25,416
2,000 Tokyo Dome Corp.
11,652
14,600 Tokyo Electric Power Co.
314,363
2,000 Tokyo Electron Ltd.
103,521
32,000 Tokyo Gas Co.
78,088
1,400 Tokyo Steel Manufacturing Co.
6,715
1,000 Tokyo Style Co.
10,133
2,000 Tokyo Tatemono Co. Ltd.
4,188
3,000 Tokyotokeiba Co.
4,610
11,000 Tokyu Corp.
28,701
7,000 Toppan Printing Co. $
91,674
15,000 Toray Industries Inc.
77,894
5,000 Tosoh Corp.
9,246
2,000 Tostem Corp.
36,984
4,000 Toto Ltd.
29,756
2,000 Toyo Engineering
2,195
2,000 Toyo Seikan Kaisha
43,148
7,000 Toyobo Co., Ltd.
9,694
3,000 Toyoda Auto Loom Works Ltd.
54,843
40,000 Toyota Motor Corp.
1,158,490
2,000 Tsubakimoto Chain Co.
4,644
8,000 Ube Industries Ltd.
15,402
700 Uni-Charm Corp.
31,445
5,000 Unitika Ltd.(a)
3,462
2,000 Uny Co. Ltd.
36,308
2,000 Wacoal Corp.
23,119
2,000 Yamaguchi Bank
21,532
2,000 Yamaha Corp.
21,177
12,000 Yamaichi Securities Co.(d)
0
4,000 Yamanouchi Pharmaceutical Co., Ltd.
126,657
4,000 Yamato Transport Co.
65,321
2,000 Yamazaki Baking Co.
26,868
15,000 Yasuda Trust & Banking(a)
18,492
3,000 Yokogawa Electric Corp.
14,768
---------
- ---
18,320,059
---------
- ---
- ------------------------------------------------------------
Malaysia
350 Silverstone Berhad (b)
0
- ------------------------------------------------------------
New Zealand--0.6%
27,900 Brierley Investment Ltd
6,844
16,000 Carter Holt Harvey Ltd.
15,018
3,300 Fletcher Challenge Building
4,453
3,400 Fletcher Challenge Energy, Ltd.
6,491
8,000 Fletcher Challenge Forestry, Ltd.
3,114
6,700 Fletcher Challenge Paper
4,288
5,500 Lion Nathan Ltd.
13,786
19,900 Telecom Corp. of New Zealand
96,788
---------
- ---
150,782
---------
- ---
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Singapore--2.4%
8,000 City Developments Ltd. $
41,655
1,000 Creative Technology Ltd.(a)
11,629
2,000 Cycle & Carriage Ltd.(a)
8,447
10,000 DBS Land, Ltd.
14,753
6,500 Development Bank of Singapore, Ltd.
49,263
3,000 First Capital Corp.
2,916
3,000 Fraser & Neave Ltd.
10,674
4,000 Hotel Properties Ltd.
1,874
2,000 Inchcape Motors Ltd.
2,314
8,000 Keppel Corp., Ltd.
21,568
3,000 NatSteel Ltd.
3,142
7,000 Neptune Orient Lines Ltd.
2,389
11,000 Oversea-Chinese Banking Corp., Ltd.
74,458
1,000 Overseas-Union Enterprise
1,718
3,000 Parkway Holdings, Ltd.
5,866
27,000 S.T. Engineering(a)
24,368
15,872 Sembcorp Industries
17,355
9,000 Singapore Airlines Ltd.
65,086
3,445 Singapore Press Holdings Ltd.
38,068
67,000 Singapore Telecommunications, Ltd.
95,355
3,000 Straits Trading Co.(a)
2,690
8,000 United Overseas Bank Ltd.
49,986
6,000 United Overseas Land
4,061
10,000 UTD Industrial Corp.
5,207
2,000 Venture Manufacturing Ltd.
9,025
---------
- ---
563,867
---------
- ---
Total common stocks
(cost $25,248,834)
22,912,562
---------
- ---
- ------------------------------------------------------------
PREFERRED STOCKS--0.6%
Australia
19,371 News Corp. Ltd.
(cost $85,789)
132,603
- ------------------------------------------------------------
Units
WARRANTS(a)
Hong Kong
2,000 Chinese Estates Holdings
Warrants expiring November 1999
@ HKD 0.97
88
2,000 Chinese Estates Holdings
Warrants expiring November 2000
@ HKD 1.02 $
58
2,000 Hong Kong & China Gas Co.
Warrants expiring September 1999
@ HKD 12.27
77
800 Hong Kong Construction Holdings
Warrants expiring December 1999
@ HKD 5.00
31
900 Hysan Development Co.
Warrants expiring April 1999
@ HKD 16.00
1
1,150 Wharf Holdings Ltd.
Warrants expiring December 1999
@ HKD 17.50
60
---------
- ---
Total warrants
315
---------
- ---
Total long-term investments
(cost $25,334,623)
23,045,480
---------
- ---
Principal
Amount
(000)
SHORT-TERM INVESTMENT--0.1%
---------------------------------------------------------
- ---
U.S. Government Securities
$30 United States Treasury Bill(c),
4.37%, 6/17/99
(cost $29,718)
29,718
---------
- ---
- ------------------------------------------------------------
Total Investments--97.1%
(cost $25,364,341; Note 4)
23,075,198
Other assets in excess of
liabilities--2.9%
684,812
---------
- ---
Net Assets--100% $
23,760,010
---------
- ---
---------
- ---
</TABLE>
- ---------------
(a) Non-income producing security.
(b) Issue in bankruptcy.
(c) Pledged as initial margin for financial futures
contracts.
(d) Fair-valued security.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL PACIFIC INDEX FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------
The industry classification of portfolio holdings and other
assets in excess of liabilities shown as a percentage of net
assets as of March 31, 1999 was as follows:
<S> <C>
Commercial Banking....................................
13.7%
Telecommunications....................................
8.6
Automobiles & Auto Parts..............................
8.1
Electronics...........................................
5.3
Appliances & Household Durables.......................
4.6
Real Estate...........................................
4.0
Drugs & Health Care...................................
3.9
Retail................................................
3.1
Electrical Utilities..................................
3.1
Chemicals.............................................
2.8
Diversified Industries................................
2.7
Railroads.............................................
2.2
Food & Beverage.......................................
2.2
Financial Services....................................
2.2
Building & Construction...............................
1.9
Machinery & Equipment.................................
1.8
Wholesale.............................................
1.6
Oil & Gas.............................................
1.6
Photography...........................................
1.5
Insurance.............................................
1.5
Transportation & Warehousing..........................
1.4
Computers.............................................
1.4
Broadcasting & Other Media............................
1.4
Iron & Steel..........................................
1.3
Engineering & Construction............................
1.2
Office Equipment & Supplies...........................
1.1
Electrical Equipment..................................
1.1
Rubber................................................
1.0
Mining................................................
1.0%
Printing & Publishing.................................
0.9
Electronic Components.................................
0.9
Cosmetics & Toiletries................................
0.9
Airlines..............................................
0.7
Paper.................................................
0.6
Health Care/Acute.....................................
0.6
Building Materials & Components.......................
0.6
Glass Products........................................
0.5
Property Investment...................................
0.4
Metals................................................
0.4
Business Services.....................................
0.4
Hotels................................................
0.3
Entertainment.........................................
0.3
Retail Trade..........................................
0.2
Publishing............................................
0.2
Gaming................................................
0.2
Diversified Resources.................................
0.2
Diversified Funds.....................................
0.2
Containers............................................
0.2
Computer Software & Services..........................
0.2
Beverages.............................................
0.2
Apparel...............................................
0.2
Textiles..............................................
0.1
Paper & Packaging.....................................
0.1
Diversified Manufacturing.............................
0.1
Diversified Operations................................
0.1
Tobacco...............................................
0.1
----
- -
97.1
Other assets in excess of liabilities.................
2.9
----
- -
100.0%
----
- -
----
- -
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 9
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Statement of Assets and Liabilities (Unaudited) PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
- --------------
<S>
<C>
Investments, at value (cost
$25,364,341)................................................
................... $ 23,075,198
Foreign currency, at value (cost
$496,720)...................................................
.............. 541,578
Cash........................................................
...............................................
77,782
Due from
manager.....................................................
...................................... 48,798
Dividends and interest
receivable..................................................
........................ 104,955
Receivable for Fund shares
sold........................................................
.................... 1,127
Other
assets......................................................
......................................... 52
- --------------
Total
assets......................................................
...................................... 23,849,490
- --------------
Liabilities
Accrued
expenses....................................................
....................................... 70,434
Foreign withholding taxes
payable.....................................................
..................... 13,443
Due to broker-variation
margin......................................................
....................... 5,409
Payable for investments
purchased...................................................
....................... 194
- --------------
Total
liabilities.................................................
...................................... 89,480
- --------------
Net
Assets......................................................
........................................... $
23,760,010
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par.........................................................
.......... $ 26,981
Paid-in capital in excess of
par.........................................................
............... 26,537,128
- --------------
26,564,109
Undistributed net investment
income......................................................
............... 29,712
Accumulated net realized loss on
investments.................................................
........... (610,927)
Net unrealized depreciation on investments and foreign
currencies.......................................
(2,222,884)
- --------------
Net assets, March 31,
1999........................................................
......................... $ 23,760,010
- --------------
- --------------
Net asset value per share
($23,760,010 / 2,698,076 shares of beneficial interest
issued and outstanding).......................... $
8.81
- --------------
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 10
<PAGE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL PACIFIC INDEX FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income March 31,
1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes
of $15,064)........................... $ 137,060
Interest................................. 5,302
-------------
- -
Total income.......................... 142,362
-------------
- -
Expenses
Management fee........................... 40,535
Custodian's fees and expenses............ 101,500
Registration fees........................ 10,000
Audit fee and expenses................... 9,000
Reports to shareholders.................. 5,000
Legal fees and expenses.................. 3,500
Trustees' fees........................... 3,000
Transfer agent's fees and expenses....... 500
Miscellaneous............................ 1,079
-------------
- -
Total operating expenses.............. 174,114
Less: Expense subsidy (Note 2)........... (113,310)
-------------
- -
Net expenses.......................... 60,804
-------------
- -
Net investment income....................... 81,558
-------------
- -
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions
Net realized gain (loss) on:
Investment transactions.................. (258,126)
Foreign currency transactions............ (44,576)
Financial futures contracts.............. 37,080
-------------
- -
(265,622)
-------------
- -
Net change in unrealized depreciation on:
Investments.............................. 6,592,128
Foreign currencies....................... 57,949
Financial futures contracts.............. 27,691
-------------
- -
6,677,768
-------------
- -
Net gain on investments and foreign
currencies............................... 6,412,146
-------------
- -
Net Increase in Net Assets
Resulting from Operations................... $6,493,704
-------------
- -
-------------
- -
</TABLE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL PACIFIC INDEX FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) March 31,
September 30,
in Net Assets 1999
1998
<S> <C> <C>
Operations
Net investment income............ $ 81,558 $
155,134
Net realized loss on investments
and foreign currency
transactions.................. (265,622)
(397,409)
Net change in unrealized
appreciation (depreciation) on
investments and foreign
currencies.................... 6,677,768
(8,592,169)
----------- -------
- ------
Net increase (decrease) in net
assets resulting from
operations.................... 6,493,704
(8,834,444)
----------- -------
- ------
Dividends from net investment income
(Note 1)......................... (156,767)
(25,244)
----------- -------
- ------
Fund share transactions (Note 5)
Net proceeds from shares sold.... 1,892,138
942,289
Net asset value of shares issued
in reinvestment of
dividends..................... 156,767
25,244
Cost of shares reacquired........ (1,066,989)
(365,748)
----------- -------
- ------
Net increase in net assets from
Fund share transactions....... 981,916
601,785
----------- -------
- ------
Total increase (decrease)........... 7,318,853
(8,257,903)
----------- -------
- ------
Net Assets
Beginning of period................. 16,441,157
24,699,060
----------- -------
- ------
End of period(a).................... $23,760,010 $
16,441,157
----------- -------
- ------
----------- -------
- ------
- ---------------
(a) Includes undistributed net
investment income of............ $ 29,712 $
149,497
----------- -------
- ------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 11
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Notes to Financial Statements (Unaudited) PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
- --------------------
Prudential Index Series 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
currently consists of five separate funds. Prudential
Pacific Index Fund (the
'Fund') commenced investment operations on September 24,
1997 when 2,500,020
shares of beneficial interest of the Fund were sold for
$25,000,200 to The
Prudential Insurance Company of America ('The Prudential').
The investment
objective of the Fund is to seek to provide investment
results that correspond
to the price and yield performance of a broad-based index of
securities of
issuers in the Pacific region, currently the Morgan Stanley
Capital
International Pacific Free Index ('MSCI-PFI').
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Company and the Fund in the preparation of its financial
statements.
Securities Valuation: Securities for which the primary
market is on an exchange
are valued at the last sale price on such exchange on the
day of valuation or,
if there was no sale on such day, at the mean between the
last bid and asked
prices on such day or at the bid price in the absence of an
asked price.
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, are valued by an independent pricing agent
or a principal
market maker. U.S. Government securities for which market
quotations are readily
available are 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 methodology or provides a valuation
or methodology that,
in the judgment of the subadviser, does not represent fair
value, are valued at
fair value as determined by procedures established by the
Company's Trustees.
Due to current market conditions, the Company's Board of
Directors reduced the
valuation of securities held in Malaysian currency by 15
percent effective
February 26, 1999.
Short-term securities which mature in more than 60 days are
valued at current
market quotations. Short-term securities which mature in 60
days or less are
valued at amortized cost.
Repurchase Agreements: In connection with transactions in
repurchase agreements
with U.S. financial institutions, it is the Company's policy
that its custodian
or designated subcustodians under triparty repurchase
agreements, as the case
may be, takes 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 Fund
may be delayed or limited.
All securities are valued as of 4:15 p.m., New York time.
Foreign Currency Translation: The books and records of the
Fund are maintained
in U.S. dollars. Foreign currency amounts are translated
into U.S. dollars on
the following basis:
(i) market value of investment securities, other assets and
liabilities--at the
closing rates of exchange;
(ii) purchases and sales of investment securities, income
and expenses--at the
rate of exchange prevailing on the respective dates of such
transactions.
Although the net assets of the Fund are presented at the
foreign exchange rates
and market values at the close of the period, the Fund does
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 period.
Similarly, the Fund does not
isolate the effect of changes in foreign exchange rates from
the fluctuations
arising from changes in the market prices of long-term debt
securities sold
during the period. Accordingly, realized foreign currency
gains (losses) are
included in the reported net realized gains on investment
transactions.
Net realized losses on foreign currency transactions
represent net foreign
exchange gains or losses from forward currency contracts,
disposition of foreign
currencies, currency gains or losses realized between the
trade and settlement
dates on security transactions, and the difference between
the amounts of
interest, dividends and foreign taxes recorded on the Fund's
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
period-end exchange rates are reflected as a component of
unrealized
appreciation on investments and foreign currencies.
Foreign security and currency transactions may involve
certain considerations
and risks not typically associated with those of domestic
origin as a
- ------------------------------------------------------------
- --------------------
12
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Notes to Financial Statements (Unaudited) PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
- --------------------
result of, among other factors, the possibility of political
and economic
instability and the level of governmental supervision and
regulation of foreign
securities markets.
Securities Transactions and Net Investment Income:
Securities transactions are
recorded on the trade date. Realized gains and losses from
investment and
foreign currency transactions 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. Expenses are recorded on the
accrual basis which
may require the use of certain estimates by management.
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 Fund invests in financial futures contracts in order to
hedge existing
portfolio securities, or securities the Fund intends to
purchase, against
fluctuations in value. Under a variety of circumstances, the
Fund may not
achieve the anticipated benefits of the financial futures
contracts and may
realize a loss. The use of futures transactions involves the
risk of imperfect
correlation in movements in the price of futures contracts
and the underlying
assets.
Dividends and Distributions: The Fund expects to pay
dividends of net investment
income and distributions of net realized capital and
currency gains, if any,
annually. Dividends and distributions are recorded on the ex-
dividend date.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
Taxes: For federal income tax purposes, each fund in the
Company is treated as a
separate tax paying entity. It is the Fund's policy to
continue to meet the
requirements of the Internal Revenue Code applicable to
regulated investment
companies and to distribute all of its taxable income to
shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends, interest and capital
gains have been
provided for in accordance with the Fund's understanding of
the applicable
country's tax rules and rates.
Reclassification of Capital Accounts: The Fund 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. The
effect of applying
this statement was to decrease undistributed net investment
income and to
decrease accumulated net realized loss on investments by
$44,576, relating to
net realized foreign currency losses. Net investment income,
net realized gains
and net assets were not affected by these changes.
- ------------------------------------------------------------
Note 2. Agreements
The Company has a management agreement with Prudential
Investments Fund
Management LLC ('PIFM'). Pursuant to this agreement, PIFM
has responsibility for
all investment advisory services and supervises the
subadviser's performance of
such services. PIFM has entered into a subadvisory agreement
with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment
advisory services in
connection with the management of the Company. PIFM pays for
the cost of the
subadviser's services, the compensation of officers of the
Company, occupancy
and certain clerical and bookkeeping costs of the Company.
The Company bears all
other costs and expenses.
The management fee paid PIFM is computed daily and payable
monthly at an annual
rate of .40 of 1% of the average daily net assets of the
Fund.
PIFM has agreed to subsidize the operating expenses of the
Fund so that total
Fund operating expenses do not exceed .60% on an annualized
basis of the Fund's
average daily net assets. This voluntary waiver may be
terminated at any time
without notice. For the six months ended March 31, 1999,
PIFM subsidized
$113,310 of the expenses of the Fund (1.12% of average net
assets annualized or
$0.04 per share).
The Company has a distribution agreement with Prudential
Investment Management
Services ('PIMS'), which acts as the distributor of the
Company. No distribution
or service fees are paid to PIMS as distributor of the Fund.
- ------------------------------------------------------------
- --------------------
13
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Notes to Financial Statements (Unaudited) PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
- --------------------
PIFM, PIC and PIMS are indirect, wholly owned subsidiaries
of The Prudential.
As of March 11, 1999, the Company, along with other
affiliated registered
investment companies (the 'Funds'), entered into a
syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment
under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of
.065 of 1% on the
unused portion of the credit facility, which is accrued and
paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9,
2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements are to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Company's transfer agent. During the six
months ended March 31,
1999, the Fund incurred fees of approximately $400 for the
services of PMFS.
Transfer agent fees and expenses in the Statement of
Operations also include
certain out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended March 31, 1999 were $887,459 and
$292,539,
respectively.
The cost basis of investments for federal income tax
purposes at March 31, 1999
was $25,408,791 and, accordingly, net unrealized
depreciation for federal income
tax purposes was $2,333,591 (gross unrealized appreciation--
$1,361,291; gross
unrealized depreciation--$3,694,882).
The Fund elected to treat approximately $20,600 of net
currency losses and
$376,500 of net capital losses incurred during the 11-month
period ended
September 30, 1998 as having occurred in the current fiscal
year.
During the six months ended March 31, 1999, the Fund entered
into financial
futures contracts. Details of open contracts as of March 31,
1999 are as
follows:
<TABLE>
<CAPTION>
Value
at Value at Unrealized
Number of Expiration March
31, Trade Appreciation/
Contracts Type Date
1999 Date (Depreciation)
- -------------- ------------------- ---------- -----
- ---- -------- --------------
<S> <C> <C> <C>
<C> <C>
Long Positions:
1 Hang Seng Apr. 1999
$70,294 $ 69,746 $ 548
2 ASX All Ordinaries Jun. 1999
93,746 95,419 (1,673)
20 Nikkei 300 Jun. 1999
425,061 403,496 21,565
- ------
$ 20,440
- ------
- ------
</TABLE>
- ------------------------------------------------------------
Note 5. Capital
The Fund has authorized an unlimited number of Class Z
shares of beneficial
interest at $.001 par value per share. Class Z shares are
not subject to any
sales or redemption charges and are offered exclusively for
sale to a limited
group of investors. Transactions in shares of beneficial
interest were as
follows:
<TABLE>
<CAPTION>
Shares
------
- --
<S> <C>
Six months ended March 31, 1999:
Shares sold.........................................
232,439
Shares issued in reinvestment of dividends..........
20,021
Shares reacquired...................................
(132,504)
------
- --
Net increase in shares outstanding..................
119,956
------
- --
------
- --
Year ended September 30, 1998:
Shares sold.........................................
122,342
Shares issued in reinvestment of dividends..........
3,333
Shares reacquired...................................
(47,575)
------
- --
Net increase in shares outstanding..................
78,100
------
- --
------
- --
</TABLE>
As of March 31, 1999, 2,522,480 of the outstanding shares
were owned by The
Prudential.
- ------------------------------------------------------------
- --------------------
14
<PAGE>
PRUDENTIAL
INDEX SERIES FUND
Financial Highlights (Unaudited) PRUDENTIAL
PACIFIC INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
September 24,
Six Months 1997(a)
Ended Year Ended Through
March 31, September 30, September 30,
1999 1998 1997
- ----------- ------------- -------------
<S>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period..................................... $ 6.38
$ 9.88 $ 10.00
- ----------- ------ ------
Income from investment operations
Net investment
income(b).................................................
0.03 0.06 0.02
Net realized and unrealized gain (loss) on investment and
foreign
currency
transactions................................................
. 2.46 (3.55) (0.14)
- ----------- ------ ------
Total from investment
operations......................................
2.49 (3.49) (0.12)
- ----------- ------ ------
Less distributions
Dividends from net investment
income..................................... (.06)
(.01) --
- ----------- ------ ------
Net asset value, end of
period........................................... $
8.81 $ 6.38 $ 9.88
- ----------- ------ ------
- ----------- ------ ------
TOTAL
RETURN(d)...................................................
....... 37.84% (35.54)% (1.20)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).......................................... $23,760
$16,441 $24,699
Average net assets
(000).................................................
$20,323 $19,827 $24,802
Ratios to average net assets:(b)
Expenses....................................................
.......... .60%(c) .60%
.60%(c)
Net investment
income.................................................
.80%(c) .78% 13.14%(c)
Portfolio
turnover....................................................
... 1% 2% 0%
</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 returns for
periods of less than a
full year are not annualized.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 15
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive
financial
advice through a Prudential Securities financial advisor or
Prudential/Pruco Securities registered representative. Your
advisor
or representative can provide you with the following
services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you
match the reward you seek with the risk you can tolerate.
And risk
can be difficult to gauge--sometimes even the simplest
investments
bear surprising risks. The educated investor knows
that markets seldom move in just one direction--there are
times
when a market sector or asset class will lose value or
provide
little in the way of total return. Managing your own
expectations
is easier with help from someone who understands the
markets and who knows you!
Keeping Up With The Joneses
A financial advisor or registered representative can help
you wade
through the numerous mutual funds available to find the ones
that
fit your own individual investment profile and risk
tolerance. While
the newspapers and popular magazines are full of advice
about
investing, they are aimed at generic groups of people or
representative individuals, not at you personally. Your
financial advisor or registered representative will review
your investment objectives with you. This means you can make
financial decisions based on the assets and liabilities in
your current portfolio and your risk tolerance--not just
based
on the current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom
are among the most common investor mistakes. But, sometimes
it's
difficult to hold on to an investment when it's losing value
every
month. Your financial advisor or registered
representative can answer questions when you're confused or
worried about your investment, and remind you that you're
investing for the long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report, and information about
the
Fund's portfolio holdings, are for the period covered by
this
report, and are subject to change thereafter.
The accompanying financial statements as of March 31, 1999,
were not audited and, accordingly, no opinion is expressed
on them.
This report is not authorized for distribution to
prospective
investors unless preceded or accompanied by a current
prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds BULK RATE
Gateway Center Three U.S. POSTAGE
100 Mulberry Street PAID
Newark, NJ 07102-4077 Permit 6807
(800) 225-1852 New York, NY
74431F811 MF174E10
(ICON)
Prudential
Small-Cap
Index Fund
SEMI
ANNUAL
REPORT
March 31, 1999
<PAGE>
Prudential Small-Cap Index Fund
A Series of the Prudential Index Series Fund
Performance At A Glance
Small-cap stocks bounced up from a bear-market bottom on
October 8, 1998, and
climbed 39% before stalling and fading--a net 7% return for
the six months
ended March 31, 1999. As investors gradually overcame their
economic anxieties,
the returns of different small-cap sectors and investment
styles were very
dispersed. The Prudential Small-Cap Index Fund slightly
outperformed the S&P
SmallCap 600 Index. As we go into the second quarter with
renewed confidence in
the global economy, small caps are much less expensive than
stocks of larger
companies with comparable earnings and assets.
Cumulative Total Returns1 As of
3/31/99
<TABLE>
<CAPTION>
Six One
Since
Months Year
Inception2
<S> <C> <C>
<C>
Class Z 7.49% (7.11) -18.58% (-19.44)
- -12.91% (-14.15)
Lipper Small-Cap Fund Avg.3 12.53 -15.48
- -10.43
S&P SmallCap 600 Index4 7.02 -19.13
- -12.96
</TABLE>
Average Annual Total Returns1
As of 3/31/99
<TABLE>
<CAPTION>
One Since
Year Inception2
<S> <C> <C>
Class Z -18.58% (-19.44) -8.83% (-9.70)
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be worth
more or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc. Without
waiver of management fees an/or expense subsidization, the
Fund's cumulative
and average annual total returns would have been lower, as
indicated in
parentheses ( ).
2 Inception date: Class Z, 10/1/97. The Lipper reporting
period begins 9/30/97.
3 The Lipper Since Inception return is for all funds in the
Small-Cap Fund
category.
4 The Standard & Poor's SmallCap 600 Stock Price Index (S&P
SmallCap 600 Index)
is a market capitalization-weighted index comprising 600
domestic stocks chosen
for market size, liquidity, and industry group
representation. The Index is
unmanaged, 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 in the Index may
differ substantially
from the securities in the Fund. The S&P SmallCap 600 Index
is not the only
index that may be used to characterize performance of stock
funds, and other
indexes may portray different comparative performance.
Investors cannot invest
directly in an index.
How Investments Compared.
(As of 3/31/99)
(GRAPH)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past
performance should never be used to predict future results.
The risks to each
of the investments listed above are different--we provide 12-
month total
returns for several Lipper mutual fund categories to show
you that reaching for
higher returns means tolerating more risk. The greater the
risk, the larger the
potential reward or loss. In addition, we've included
historical 20-year
average annual returns. These returns assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term
growth, but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth
out their total returns year by year. But their prices still
fluctuate
(sometimes significantly), and their returns have been
historically lower than
those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state
agencies and/or municipalities. This investment provides
income that is usually
exempt from federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value; they don't
fluctuate much in price but, historically, their returns
have been generally
among the lowest of the major investment categories.
<PAGE>
Portfolio Manager's Report
- ------------------------------------------------------------
- -------------------
(PHOTO)
Wai Chiang
Fund Manager
Investment Goals and Style
The Prudential Small-Cap Index Fund seeks to provide
investment results
that correspond to the price and yield of a broad-based
index of
small-capitalization stocks. Currently we use the Standard &
Poor's SmallCap
600 Stock Price Index (S&P SmallCap 600 Index). The S&P
SmallCap 600 Index
consists of 600 U.S. stocks selected to be representative of
the industry
composition of the small-cap market. On March 31, 1999, the
market values of
the S&P SmallCap 600 Index ranged from $23 million to $3,621
million, with a
median of $402 million. The difference between the Fund's
return and that of
the Index is primarily due to fees and management expenses.
There can be no
assurance that the Fund will achieve its investment
objective.
Market Review
Shortly after our reporting period began (September 30,
1998), the S&P 600
bounced back from its summer bear market--rising 29% in a
rapid sweep in just
four weeks following its trough on October 8, 1998. However,
investors still
were uncertain about the global economy, and the trend was
down during most of
the first quarter of 1999. The net return for six months was
7%. Growth stocks
outperformed value stocks by more than nine percentage
points in this market;
all but one point of this advantage were gained before year
end. (When market
sentiment turned more clearly positive after our reporting
period ended, value
stocks moved ahead.)
Performance varied markedly among small-cap companies
The variance was not as marked across sectors as it was
within them. In each
sector, except the tiny communications and transportation
sectors, some stocks
rose very sharply while others registered double-digit
declines. Many stocks
in the S&P 600 more than doubled in price, and many others
fell to a fraction
of their starting value.
Transportation and technology lead
The small-cap transportation sector, led by the steep rise
of American
Freightways stock, had the largest average return--a 25%
gain in the six
months. However, the really positive news was the 18%
advance of the
technology sector, which makes up 16% of the S&P 600. Nine
of its 95 members
more than doubled in the period, including Digital Micro,
Macromedia, VLSI
Technology, Novellus, and Factset Research.
Capital goods also rose
Capital goods led the solid middle range of sector returns,
turning in a 11%
return. Capital goods and transportation companies are
cyclical sectors--
sectors whose earnings and stock performance are normally
related to the pace
of economic activity. As the U.S. economy demonstrated its
resilience, and
signs appeared that Asia's downturn had bottomed, the
prospects for these
sectors looked positive. Sanmina, a contract electronics
manufacturer that
accounts for 8% of the small-cap capital goods sector,
gained 127% in the
period. Contract manufacturers are a rapidly growing
industry because they free
electronics companies to focus on their design and marketing
strengths.
However, the varied trio of Dycom Industries, Cognex, and
Dionex make up
another 7% of the capital goods sector, and they also were
among the top
performers. The first two also more than doubled in the
period.
<PAGE>
Healthcare had several large winners
Healthcare's 8% gain was the fourth best performance among
small-cap sectors.
The two top performers manufacture the only two FDA-approved
laser systems for
vision improvement. Visx rose 221% in the half year, and
alone accounts for
11% of the sector's market capitalization. The smaller
Summit Technology
gained 196%. Five other companies in the sector more than
doubled in the half
year, including Express Scripts, a pharmaceutical benefit
management firm that
constitutes 7% of the sector.
Financials and consumer cyclicals had modest gains
The middle range of performance--ranging from 4% to 6%
advances--was occupied
by financials, consumer cyclicals, and consumer staples. The
financial sector
had a somewhat narrower range of returns, with the top eight
performers
(accounting for almost 20% of the sector's capitalization)
returning between
16% and 79%. The consumer cyclical sector has 134 members--
more than any
other--so no single firm dominated its return. The largest
of the top
performers were Ann Taylor Stores and Linens 'N Things,
returning 118% and
65%, respectively.
How The S&P SmallCap 600 Index Performed Since the Fund's
Inception*
(GRAPH)
The S&P SmallCap 600 Index currently measures the
performance of selected U.S.
stocks with a market value no greater than $3,621 million
(as of March 31,
1999). "S&P SmallCap 600" and "Standard & Poor's 600" are
trademarks of The
McGraw-Hill Companies, Inc., and have been licensed for use
by Prudential and
its affiliates and subsidiaries. Prudential Small-Cap Index
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. The
performance cited
does not represent the performance of the Prudential Small-
Cap Index Fund.
Past performance is not indicative of future results.
Investors cannot invest
directly in an index.
*Actual Class Z inception is 10/1/97. The Lipper reporting
period begins
9/30/97.
Source: Lipper, Inc.
Consumer staples: narrow range, but diverging returns
The consumer staples sector's 4% return is the result of
differing fates of
some of its larger components. On the positive side, the
largest company in the
sector, Valassis Communications (7% of the sector's market
cap), returned 29%.
It is the world's leading publisher of promotional materials
such as coupons
and newspaper inserts. However, 10 firms in the sector had
higher returns,
including CEC Entertainment (2% of the sector, 77% return),
Foodmaker (3%, up
63%), Westwood One (3%, up 59%), and Richfood Holdings (3%,
up 40%). On the
negative side, CKE Restaurants, Interim Services,
Earthgrains, and World Color
Press--aggregating more than 12% of the sector's market cap-
- -each fell more
than 25% in the period.
Energy and basic materials stocks lag
The two worst-performing sectors were industrial sectors--
energy and basic
materials--which hadn't yet responded to the rising investor
1
<PAGE>
Review Con't.
- ------------------------------------------------------------
- -------------------
confidence. The energy sector was the period's worst
performing, with a 12%
decline, yet this masks an upward movement beginning in
February. Oil explorers
make up much of the sector, with Barrett Research (up 24%)
and Newfield
Exploration (up 1%) together accounting for 17% of its
market capitalization.
However, only eight of the 24 firms in the energy sector
posted positive
returns for the six-month period. Another explorer, Cross
Timbers, was among
the worst performers, with a 53% decline.
Basic materials hadn't yet turned
The basic materials sector was down 5% at period end.
Improvement in this
sector's performance is spotty, industry by industry. Many
metals companies
that had been among the worst performers, such as Birmingham
Steel (down 50%)
and Hecla Mining (down 47%), saw their prices surge in
April. However, some of
the larger non-metals companies in the sector, such as Delta
& Pine Land
(cotton and soybean breeder, down 30%) and Buckeye
Technology (cellulose-based
products, down 22%), also were among the poorest performers.
Other companies
in the sector were strong performers over our reporting
period, including
Getchell Gold (up 24%) and Stillwater Mining
(platinum/palladium, up 25%).
Utilities flat
The utilities sector was essentially flat, having begun a
gradual recovery in
February. A relatively stable sector, its returns ranged
from a high of 37%
(Southwest Gas) to a low of -17% (United Illuminating).
S&P SmallCap 600 Index
<TABLE>
<CAPTION>
As of 3/31/99 Six Month
% of
Total Return
Index
<S> <C>
<C>
Transportation 25%
3%
Technology 18
16
Capital Goods 11
13
Healthcare 8
11
Financial 6
15
Consumer Staples 4
9
Consumer Cyclicals 4
20
Utilities 0
5
Communication Svcs. -1
1
Basic Materials -5
4
Energy -12
3
S&P SmallCap 600 Index 7
100
-- -
- --
</TABLE>
Source: Standard & Poor's
Looking Ahead
Small-cap stocks poised to rally
Small-cap stocks tend to lead the economic cycle. Their
prices were held down
over the past two years by concern that the economic
downturns in Asia and
Brazil would affect U.S. companies. But the U.S. economy is
reporting very
strong growth even after Russia's debt default last summer
and Brazil's
currency devaluation and recession. Investors are beginning
to believe our
long-running economic expansion can continue. U.S. stock
performance began to
broaden early in April, with value stocks outperforming
growth stocks, and
small-cap stocks outperforming those of the largest
companies. Although it has
not been long enough to establish a trend, these
developments are consistent
with a search for better investment value. If investors are
reasonably
confident that earning trends will continue, they are less
likely to pay much
higher prices for the earnings of the larger and more stable
companies.
Currently, a dollar of earnings of a small-cap company sells
at a significant
discount to a dollar of large-cap earnings. We believe this
might prove to be
a good time to own small-cap stocks.
2
<PAGE>
A Message to Our Shareholders
May 19, 1999
- ------------------------------------------------------------
- -------------------
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a handful
of very large companies. These stocks were getting more and
more expensive--out
of proportion to their earnings expectations. As a result,
there was a
substantial disparity in value between large and small
companies, and between
growth and value stocks. In recent months, however, that gap
has started to
narrow amid news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value
stocks that typically fare better in a growing economy, and
have been selling
at a significant discount to the market.
Many sectors of the bond market have also begun to rebound
from last year's
global financial crisis. Furthermore, while bonds have not
generated higher
returns than stocks in recent years, they have demonstrated
that they hold up
better during market downturns. That's a thought to keep in
mind going forward.
Diversification is critical
History shows that the markets generally bring prices in
line with earnings
performance, sooner or later. It also shows that two
investment styles--value
and growth--typically alternate in periods of superior
performance.
What does this suggest? Instead of chasing popular market
winners, investors
should have a well-diversified asset allocation strategy in
place and keep to
it. It is also a good practice to rebalance your holdings,
when necessary, to
keep your asset allocation consistent with your long-term
objectives and risk
tolerance. A properly diversified portfolio of value- and
growth-oriented
equity funds, bond funds, and money market funds could help
you weather
inevitable market turbulence and receive more consistent
returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders
diversify. We have also designed several balanced and
diversified funds to
allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--95.1%
COMMON STOCKS--95.1%
- ------------------------------------------------------------
Advertising--1.1%
3,450 HA-LO Industries, Inc.(a) $
42,478
3,500 True North Communications, Inc.
98,438
3,000 Valassis Communications, Inc.
155,250
--------
- ---
296,166
- ------------------------------------------------------------
Aerospace--0.7%
1,000 Aviation Sales Co.(a)
44,500
1,900 BE Aerospace, Inc.(a)
28,025
2,900 Orbital Sciences Corp.(a)
82,106
1,700 Trimble Navigation, Ltd.(a)
16,575
--------
- ---
171,206
- ------------------------------------------------------------
Airlines--0.5%
2,275 Comair Holdings, Inc.
53,747
2,200 Mesa Air Group, Inc.(a)
13,750
1,900 SkyWest, Inc.
54,862
--------
- ---
122,359
- ------------------------------------------------------------
Automobiles & Trucks--1.3%
2,800 Breed Technologies, Inc.
9,975
1,300 Discount Auto Parts, Inc.(a)
27,950
5,700 Gentex Corp.
122,906
1,400 Simpson Industries, Inc.
13,475
1,850 Smith (A.O.) Corp.
35,150
900 Spartan Motors, Inc.
5,288
1,000 Standard Motor Products, Inc. (Class
'A' Stock)
20,687
1,600 TBC Corp.(a)
9,700
1,600 Titan International, Inc.
12,300
3,600 Tower Automotive, Inc.(a)
67,055
1,800 Wabash National Corp.
20,925
--------
- ---
345,411
Banks--6.2%
1,400 Anchor BanCorp, Inc. $
21,525
1,800 Banknorth Group, Inc.
50,850
1,800 Carolina First Corp.
39,600
2,100 Centura Banks, Inc.
122,194
2,158 Commerce Bancorp, Inc.
89,017
4,800 Commercial Federal Corp.(a)
111,300
2,190 Downey Financial Corp.
40,104
7,000 First Merit Corp.
180,250
2,300 First Midwest Bancorp, Inc.
87,400
2,300 FirstBank Puerto Rico(a)
55,344
3,457 HUBCO, Inc.
116,026
800 JSB Financial, Inc.
40,100
2,000 Maf Bancorp, Inc.
44,500
1,900 Premier Bancshares, Inc.
37,525
1,900 Provident Bankshares Corp.
49,637
1,700 Queens County Savings Bank Corp.
45,900
2,400 Riggs National Corp.
40,500
1,600 Silicon Valley Bancshares
33,100
3,300 St. Paul Bancorp, Inc.
71,466
2,800 Susquehanna Bancshares, Inc.
51,450
2,140 Trustco Bank Corp.
53,500
3,400 United Bankshares, Inc.
77,775
3,300 UST Corp.
72,084
1,900 Whitney Holding Corp.
70,122
--------
- ---
1,601,269
- ------------------------------------------------------------
Broadcasting--0.5%
1,300 Metro Networks, Inc.(a)
71,500
2,300 Westwood One, Inc.(a)
65,550
--------
- ---
137,050
- ------------------------------------------------------------
Chemicals--2.2%
1,900 Cambrex Corp.
42,037
800 Chemed Corp.
20,600
1,500 Chemfirst, Inc.(a)
35,250
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Chemicals (cont'd.)
1,400 Dames & Moore, Inc. $
15,663
1,865 Enzo Biochem, Inc.
17,484
1,800 Geon Co.
40,950
1,300 Ionics, Inc.(a)
39,162
1,800 Lilly Industries, Inc., (Class 'A'
Stock)
27,788
2,000 MacDermid, Inc.
67,875
1,200 Material Sciences Corp.(a)
7,650
800 McWhorter Technologies, Inc.(a)
10,900
2,000 Mississippi Chemical Corp.(a)
18,750
1,900 OM Group, Inc.
62,700
500 Penford Corp.
7,438
700 Quaker Chemical Corp.
9,888
1,500 Scotts Co. (Class 'A' Stock)(a)
56,062
2,300 Tetra Tech, Inc.
48,444
1,000 TETRA Technologies, Inc.(a)
6,750
1,200 WD 40 Co.
34,800
--------
- ---
570,191
- ------------------------------------------------------------
Commercial Services--3.6%
2,150 AAR Corp.
38,297
1,700 ABM Industries, Inc.
51,850
1,700 ADVO, Inc.
32,831
2,900 Billing Concepts Corp.
34,438
2,800 Bowne & Co., Inc.
32,725
1,500 Catalina Marketing Corp.(a)
128,812
1,500 CDI Corp.
36,094
2,300 Central Parking Corp.
79,350
800 Central Vermont Public Service Corp.
8,050
1,100 Fair Issac & Co., Inc.
40,769
1,600 G & K Services, Inc. (Class 'A' Stock)
73,900
800 Insurance Auto Auctions, Inc.(a)
9,700
3,700 Interim Services, Inc.(a)
55,500
1,200 Lason, Inc.(a)
67,500
1,200 Merrill Corp.
16,050
1,600 NFO Worldwide, Inc.(a)
16,000
2,000 Norrell Corp.
26,125
1,982 Quintiles Transnational, Corp.(a)
74,828
2,000 Vantive Corp.
24,125
1,200 Volt Information Sciences, Inc.(a)
19,725
3,000 World Color Press, Inc.(a)
63,750
--------
- ---
930,419
Computer Services--7.3%
6,100 Acxiom Corp.(a) $
161,650
3,300 American Management Systems, Inc.(a)
112,612
1,700 Analysts International Corp.
19,550
1,500 BancTec, Inc.(a)
18,469
2,100 BISYS Group, Inc.(a)
118,125
2,500 Cerner Corp.(a)
40,156
4,200 Ciber, Inc.
80,587
1,200 Consolidated Graphics, Inc.(a)
69,300
1,100 Customtracks Corp.
16,500
1,800 Dendrite International, Inc.(a)
40,163
1,200 Factset Research Systems, Inc.
51,900
3,200 Harbinger Corp.(a)
21,600
1,600 Henry (Jack) & Associates, Inc.
58,800
2,000 HNC Software, Inc.
65,500
1,900 Hutchinson Technology, Inc.
47,262
2,345 Hyperion Software Corp.
34,003
3,476 Inacom Corp.(a)
26,939
3,200 Macromedia, Inc.(a)
145,000
2,800 Mercury Interactive Corp.
99,750
1,300 Micros Systems, Inc.(a)
42,900
2,700 National Data Corp.
113,400
2,600 National Instruments Corp.
74,100
3,100 Platinum Software Corp.(a)
22,863
1,350 Progress Software Corp.(a)
46,069
3,800 Read-Rite Corp.(a)
25,056
1,400 Scott Technologies, Inc.
24,325
3,700 System Software Associates, Inc.
8,325
3,200 Technology Solutions Co.
22,800
1,200 Telxon Corp.
11,325
800 Wall Data, Inc.(a)
11,500
4,000 Whittman Hart, Inc.
86,000
3,300 Xylan Corp.(a)
121,481
2,500 Zebra Technologies Corp. (Class 'A'
Stock)(a)
59,375
--------
- ---
1,897,385
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Computers--1.2%
2,000 Auspex System, Inc. $
21,375
1,451 BMC Software, Inc.(a)
53,787
1,600 Computer Task Group, Inc.
34,200
1,000 Digi International, Inc.
6,750
1,700 Exabyte Corp.(a)
8,075
1,800 Gerber Scientific, Inc.
36,338
2,500 MicroAge, Inc.(a)
61,250
1,600 Network Equipment Technologies, Inc.
14,300
1,200 Standard Microsystems Corp.
9,450
1,900 Xircom, Inc.(a)
47,737
--------
- ---
301,324
- ------------------------------------------------------------
Construction--0.9%
600 Butler Manufacturing Co.(a)
14,062
1,800 Dycom Industries, Inc.
78,300
2,100 Insituform Technologies, Inc.(a)
36,750
4,100 Morrison Knudsen Corp. (Class 'A'
Stock)(a)
40,744
900 Southern Energy Homes, Inc.(a)
4,838
2,300 Standard Pacific Corp.
29,612
1,000 Stone & Webster, Inc.
22,875
--------
- ---
227,181
- ------------------------------------------------------------
Consumer Cyclical--2.1%
1,500 Barnes Group, Inc.
28,125
3,800 Champion Enterprises, Inc.(a)
73,625
5,000 D.R. Horton, Inc.
83,750
2,300 Eagle Hardware & Garden, Inc.
87,832
2,000 Justin Industries, Inc.
22,000
1,400 Manitowoc Co., Inc.
58,625
2,800 Mueller Industries, Inc.(a)
62,650
1,400 Myers Industries, Inc.
29,575
900 Republic Group, Inc.
13,556
1,200 Standard Products Co.
19,500
3,400 Wolverine World Wide, Inc.
32,300
1,500 Wynns International, Inc.
26,156
--------
- ---
537,694
Consumer Growth & Stable--1.2%
3,800 Bio-Technology General Corp.(a) $
22,681
4,100 Caseys Gen. Stores, Inc.
60,475
1,100 Cooper Companies, Inc.
16,912
5,500 DeVry, Inc.(a)
159,500
3,400 Dimon, Inc.
12,963
1,600 Franklin Covey Co.
14,400
1,100 Nelson Thomas, Inc.
11,000
--------
- ---
297,931
- ------------------------------------------------------------
Containers & Packaging--0.6%
2,800 Aptargroup, Inc.
72,800
2,000 Caraustar Industries, Inc.
46,000
2,150 Shorewood Packaging Corp.(a)
42,194
--------
- ---
160,994
- ------------------------------------------------------------
Cosmetics & Soaps--0.1%
1,400 Natures Sunshine Products, Inc.
15,400
1,000 USA Detergent, Inc.(a)
6,250
--------
- ---
21,650
- ------------------------------------------------------------
Distribution/Wholesalers--0.7%
1,700 Applied Industrial Technologies, Inc.
18,912
4,100 Brightpoint, Inc.
24,216
1,100 Castle (A.M.) & Co.
13,269
1,900 Hughes Supply, Inc.
43,225
1,950 Insight Enterprises, Inc.(a)
48,262
800 Lawson Products, Inc.
16,400
600 Swiss Army Brands, Inc.
5,719
--------
- ---
170,003
- ------------------------------------------------------------
Drugs & Medical Supplies--7.9%
1,600 ADAC Laboratories
21,800
3,000 Advanced Tissue Sciences, Inc.(a)
6,469
2,600 Alliance Pharmaceutical Corp.
7,150
2,100 Alpharma, Inc. (Class 'A' Stock)
82,425
2,400 Ballard Medical Products
58,500
1,800 Barr Laboratories, Inc.(a)
54,900
1,700 Bindley Western Industries, Inc.
48,556
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Drugs & Medical Supplies (cont'd.)
900 Biomatrix, Inc.(a) $
70,200
2,200 Cephalon, Inc.(a)
19,250
1,900 Coherent, Inc.(a)
26,125
1,900 COR Therapeutics, Inc.(a)
18,881
1,600 Cygnus, Inc.(a)
12,000
3,600 Dura Pharmaceuticals, Inc.(a)
50,850
1,000 Hologic, Inc.(a)
9,063
1,600 IDEC Pharmaceuticals Corp.(a)
82,200
3,000 IDEXX Laboratories, Inc.(a)
71,812
1,800 Immune Response Corp.
15,863
2,200 Incyte Pharmaceuticals, Inc.(a)
44,137
2,300 Invacare Corp.
55,919
2,300 Jones Pharmaceutical, Inc.
79,925
1,100 Maxxim Medical, Inc.
20,763
4,200 Medimmune, Inc.(a)
248,587
1,900 Mentor Corp.
27,906
1,400 Molecular Biosystems, Inc.(a)
3,763
5,300 NBTY, Inc.(a)
25,837
2,500 North American Vaccine, Inc.(a)
15,000
1,600 Noven Pharmaceuticals, Inc.(a)
7,400
2,500 Owens & Minor, Inc.
25,312
1,900 Parexel International Corp.
39,306
2,650 Patterson Dental Co.(a)
114,612
1,900 Pharmaceutical Product Development,
Inc.
63,769
1,016 Priority Healthcare Corp.
45,974
1,400 Protein Design Labs, Inc.(a)
21,088
2,400 Regeneron Pharmaceuticals, Inc.(a)
15,900
1,600 Resound Corp.(a)
6,000
2,500 Respironics, Inc.(a)
32,969
2,500 Roberts Pharmaceutical Corp.
51,875
4,200 Safeskin Corp.(a)
31,237
700 SpaceLabs Medical, Inc.(a)
11,769
2,400 Summit Technology, Inc.(a)
26,400
1,700 Sunrise Medical, Inc.(a)
10,625
900 Syncor International Corp.(a)
25,088
2,100 US Bioscience, Inc.(a)
22,838
2,000 Vertex Pharmaceuticals, Inc.(a)
50,500
2,400 VISX, Inc.(a)
258,150
1,000 Vital Signs, Inc.
18,000
--------
- ---
2,056,693
Electrical Equipment--3.8%
1,000 Analogic Corp. $
32,937
3,200 Anixter International, Inc.(a)
38,200
3,300 Applied Magnetics Corp.
13,819
2,900 Baldor Electric Co.
58,362
1,900 Belden, Inc.
32,419
2,850 Burr-Brown Corp.
66,975
2,900 C-Cube Microsystems, Inc.(a)
57,456
3,100 Cognex Corp.
73,431
900 Electro Scientific Industries, Inc.(a)
41,850
1,500 Electroglas, Inc.(a)
19,313
1,700 Etec Systems, Inc.(a)
50,044
1,100 Hadco Corp.(a)
34,650
850 Harmon Industries, Inc.
17,053
1,700 Helix Technology Corp.
26,138
1,100 Innovex, Inc.
14,713
1,500 Juno Lighting, Inc.
33,656
3,000 KEMET Corp.(a)
34,500
2,100 Kent Electronics Corp.(a)
20,869
4,100 Komag, Inc.(a)
17,938
1,800 Kulicke & Soffa Industries, Inc.(a)
45,450
3,100 Novellus Systems, Inc.
170,887
1,300 Technitrol, Inc.
29,981
2,000 Valence Technology, Inc.(a)
13,250
3,300 Vicor Corp.(a)
41,250
--------
- ---
985,141
- ------------------------------------------------------------
Electronics--4.8%
900 Alliant Techsystems, Inc.(a)
69,919
700 Bell Industries, Inc.
7,263
900 Benchmark Electronics, Inc.(a)
27,000
2,100 BMC Industries, Inc.
9,319
2,250 Cable Design Technologies Corp.(a)
24,750
2,400 Checkpoint Systems, Inc.
19,950
1,100 CTS Corp.
54,381
2,200 Dallas Semiconductor Corp.
84,975
4,800 Digital Microwave Corp.
40,200
1,800 Dionex Corp.(a)
67,950
2,400 Filenet Corp.
16,800
1,400 Harman International Industries, Inc.
51,450
900 Integrated Circuit Systems, Inc.(a)
16,256
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Electronics (cont'd.)
1,100 Itron, Inc.(a) $
10,312
1,300 Marshall Industries(a)
17,550
2,700 Methode Eletronics, Inc. (Class 'A'
Stock)
30,037
1,600 Micrel, Inc.(a)
80,100
800 Park Electrochemical Corp.
18,800
1,900 Photronics, Inc.(a)
35,387
2,000 Pioneer-Standard Electronics, Inc.
13,125
1,200 Plexus Corp.(a)
33,450
4,000 S3, Inc.(a)
30,000
4,500 Sanmina Corp.(a)
286,875
1,200 SpeedFam International, Inc.(a)
14,400
500 Three-Five Systems, Inc.(a)
4,313
1,600 Ultratech Stepper, Inc.(a)
22,600
2,500 Unitrode Corp.(a)
35,469
3,600 VLSI Technology, Inc.(a)
69,750
500 Watkins Johnson Co.
11,312
900 Whittaker Corp.
19,744
1,600 X-Rite, Inc.
10,400
--------
- ---
1,233,837
- ------------------------------------------------------------
Exploration & Production--0.3%
3,200 Newfield Exploration Co.(a)
72,400
- ------------------------------------------------------------
Financial Services--4.5%
4,900 Americredit Corp.
64,313
2,500 Capital Resources Corp.
43,125
1,800 CMAC Investment Corp.
70,200
2,100 Cullen/Frost Bankers, Inc.
100,669
1,000 Dain Rauscher Corp.
34,000
1,630 Delphi Financial Group, Inc.(a)
55,216
2,800 Eaton Vance Corp.
56,350
1,400 Gallagher (Arthur J.) & Co.
64,400
1,900 Jefferies Group, Inc.
90,131
4,400 Legg Mason, Inc.
148,225
2,100 Orion Capital Corp.
65,625
2,000 Pioneer Group, Inc.
29,625
1,678 Primark Corp.(a)
35,658
3,750 Raymond James Financial, Inc.
74,062
1,400 SEI Investments Corp.
129,500
1,500 U.S. Trust Corp.
111,281
--------
- ---
1,172,380
Food & Beverage--2.2%
1,400 Canandaigua Wine, Inc. (Class 'A'
Stock)(a) $
70,525
5,100 Chiquita Brands International, Inc.
51,956
700 Coca-Cola Bottling Co.
38,675
3,400 Earthgrains Co.
75,437
3,000 Fleming, Inc.
25,688
700 J & J Snack Foods Corp.(a)
14,088
1,700 Michael Foods, Inc.
32,406
800 Nash-Finch Co.
6,700
2,400 Ralcorp Holdings, Inc.
45,600
3,700 Richfood Holdings, Inc.
79,781
2,900 Smithfield Foods, Inc.(a)
65,794
2,100 Whole Foods Market, Inc.
72,187
--------
- ---
578,837
- ------------------------------------------------------------
Forest Products--0.2%
1,000 Pope & Talbot, Inc.
6,375
1,600 Universal Forest Products, Inc.
32,800
--------
- ---
39,175
- ------------------------------------------------------------
Furniture--1.6%
1,000 Bassett Furniture Industries, Inc.
22,125
800 Dixie Group, Inc.
5,700
2,200 Ethan Allen Interiors, Inc.(a)
91,438
4,100 La-Z-Boy, Inc.
77,900
1,400 Libbey, Inc.
43,400
4,800 Mohawk Industries, Inc.(a)
144,000
1,200 Thomas Industries, Inc.
22,500
--------
- ---
407,063
- ------------------------------------------------------------
Health Care--1.7%
2,500 American Oncology Resources, Inc.
22,500
4,600 Coventry Healthcare, Inc.(a)
34,500
1,000 Curative Health Services, Inc.
11,500
1,200 Datascope Corp.
32,400
1,100 Diagnostic Products Corp.
26,675
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Health Care (cont'd.)
800 Hauser, Inc. $
2,100
4,054 Integrated Health Services, Inc.
22,297
3,000 Liposome Co., Inc.(a)
40,312
2,400 Magellan Health Services, Inc.
10,050
2,600 Medquist, Inc.(a)
78,000
1,500 NCS Healthcare, Inc.
18,000
2,300 Organogenesis, Inc.(a)
26,594
500 Pharmaceutical Marketing Services
7,507
3,400 Renal Care Group, Inc.(a)
66,725
2,100 Sierra Health Services, Inc.(a)
27,300
1,900 Sola International, Inc.(a)
22,919
--------
- ---
449,379
- ------------------------------------------------------------
Hospitals/Hospital Management--1.0%
2,700 Genesis Health Ventures, Inc.(a)
13,163
5,712 Mariner Post-Acute Network, Inc.
12,495
3,700 Orthodontic Centers of America, Inc.(a)
58,275
1,200 Pediatrix Medical Group, Inc.(a)
33,750
5,900 PhyCor, Inc.(a)
28,025
2,600 Universal Health Services, Inc. (Class
'B' Stock)(a)
112,450
--------
- ---
258,158
- ------------------------------------------------------------
Housing Related--0.9%
2,800 Fedders Corp.
14,175
1,400 M.D.C. Holdings, Inc.
20,125
600 National Presto Industries, Inc.
21,263
1,400 Oak Industries, Inc.
44,450
3,600 Oakwood Homes Corp.
50,625
1,200 Ryland Group, Inc.
30,375
700 Skyline Corp.
19,425
1,100 U.S. Home Corp.
35,887
--------
- ---
236,325
- ------------------------------------------------------------
Insurance--3.5%
3,400 American Bankers Insurance Group, Inc.
176,800
3,400 AMRESCO, Inc.
26,137
800 Compdent Corp.(a)
10,000
2,900 Enhance Financial Services Group, Inc.
65,975
900 Executive Risk, Inc. $
63,900
2,268 Fidelity National Financial, Inc.
34,020
4,700 First American Financial Corp.
74,319
5,500 Fremont General Corp.
104,844
2,900 Frontier Insurance Group, Inc.
34,437
900 Galey & Lord, Inc.
3,994
900 Hilb, Rogal & Hamilton Co.
15,244
3,200 Mutual Risk Management Ltd.
122,400
1,500 NAC RE Corp.
80,531
2,200 Selective Insurance Group, Inc.
38,775
700 Trenwick Group, Inc.
19,688
1,300 Zenith National Insurance Corp.
31,606
--------
- ---
902,670
- ------------------------------------------------------------
Leisure--1.6%
1,000 Anchor Gaming Inc., Corp.(a)
43,750
2,100 Arctic Cat, Inc.
20,869
3,500 Aztar Corp.(a)
16,844
900 Carmike Cinemas, Inc. (Class 'A'
Stock)(a)
16,256
2,000 Family Golf Centers, Inc.(a)
14,875
600 GC Companies, Inc.(a)
18,862
2,000 Hollywood Park, Inc.(a)
20,625
900 Huffy Corp.
10,800
1,300 K2, Inc.(a)
10,238
2,350 Marcus Corp.
28,200
2,936 Midway Games, Inc.
25,506
2,500 Players International, Inc.(a)
15,625
2,000 Polaris Industries, Inc.
63,500
4,000 Prime Hospitality Corp.(a)
39,750
2,100 Sturm Ruger & Co., Inc.
21,000
950 Thor Industries, Inc.
21,494
1,700 Winnebago Industries, Inc.
23,800
--------
- ---
411,994
- ------------------------------------------------------------
Machinery--1.7%
3,095 Applied Power, Inc. (Class 'A' Stock)
84,339
1,500 Astec Industries, Inc.(a)
46,312
1,100 Flow International Corp.(a)
10,863
1,200 Gardner Machinery, Inc.(a)
19,050
1,600 Graco, Inc.
35,300
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Machinery (cont'd)
2,200 Halter Marine Group, Inc. $
12,787
3,400 JLG Industries, Inc.
46,325
1,000 Lindsay Manufacturing Co.(a)
19,875
3,700 Paxar Corp.
27,519
1,600 Regal Beloit Corp.
28,900
800 Robbins & Myers, Inc.
13,800
2,400 Roper Industries, Inc.
57,300
1,500 Royal Appliance Manufacturing Co.(a)
5,625
1,000 Toro Co.
31,375
--------
- ---
439,370
- ------------------------------------------------------------
Metals-Ferrous--0.6%
700 Acme Metals, Inc.(a)
175
1,800 Birmingham Steel Corp.
7,088
1,100 Commercial Metals Co.
22,000
3,600 Mascotech, Inc.
55,800
1,100 Quanex Corp.
17,050
1,500 Reliance Steel and Aluminum Co.
43,219
800 Steel Technologies, Inc.
6,300
1,300 WHX Corp.(a)
10,237
--------
- ---
161,869
- ------------------------------------------------------------
Metals-Non Ferrous--0.4%
700 Amcast Industrial Corp.
11,288
2,100 AMCOL International Corp.
21,000
1,300 Brush Wellman, Inc.
18,850
1,200 Commonwealth Industries, Inc.
10,800
4,300 Hecla Mining Co.(a)
11,825
1,300 IMCO Recycling, Inc.(a)
16,737
1,600 RTI International Metals, Inc.(a)
15,000
--------
- ---
105,500
- ------------------------------------------------------------
Mineral Resources--0.6%
3,066 Delta & Pine Land Co.
94,280
950 Kronos, Inc.(a)
23,275
1,600 Lone Star Industries, Inc.
49,600
--------
- ---
167,155
Miscellaneous Basic Industry--3.5%
2,100 Apogee Enterprises, Inc. $
24,938
2,900 Blount International, Inc. (Class 'A'
Stock)
83,737
2,000 Clarcor, Inc.
34,125
2,800 Corn Products International, Inc.
67,025
800 CPI Corp.
17,900
1,300 Esterline Technologies Corp.
16,819
1,500 Florida Rock Industries, Inc.
51,187
1,200 Gibson Greetings, Inc.(a)
8,775
1,700 Global Industrial Technologies, Inc.
17,850
2,300 Griffon Corp.(a)
15,813
600 Insteel Industries, Inc.
3,375
4,100 Interface, Inc.
39,462
916 Intermagnetics General Corp.
7,557
2,000 Intermet Corp.(a)
26,750
1,800 Kaman Corp.
23,063
1,600 Kroll - O' Gara Co.(a)
43,400
900 LSB Industies, Inc.
2,475
1,200 Lydall, Inc.(a)
9,975
1,200 O' Sullivan Corp.
9,900
1,900 Pre-Paid Legal Services, Inc.(a)
46,550
1,300 Service Experts, Inc.(a)
17,550
1,000 SPS Technologies, Inc.(a)
39,250
1,000 Standex International Corp.
21,875
2,500 Superior Services, Inc.(a)
49,531
1,700 Texas Industries, Inc.
42,181
2,900 Tredegar Industries, Inc.
89,719
1,900 Valmont Industries, Inc.
26,362
600 Walbro Corp.
5,400
2,200 Watsco, Inc.
32,175
1,100 Wolverine Tube, Inc.(a)
23,238
--------
- ---
897,957
- ------------------------------------------------------------
Office Equipment & Supplies--0.3%
2,400 John H. Harland Co.
31,050
500 Nashua Corp.
5,750
1,100 New England Business Service, Inc.
31,556
--------
- ---
68,356
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Oil & Gas--1.4%
2,300 Benton Oil & Gas Co.(a) $
8,338
1,900 Cabot Oil & Gas Corp. (Class 'A' Stock)
27,431
800 Cascade Natural Gas Corp.
11,950
1,200 Cross (A.T.) Co. (Class 'A' Stock)
8,775
3,500 Cross Timbers Oil Co.
24,719
1,400 HS Resources, Inc.
12,250
1,900 Northwest Natural Gas Co.
41,562
7,900 Santa Fe Energy Resources, Inc.(a)
57,769
2,600 Snyder Oil Corp.
38,512
2,400 Southwest Gas Corp.
66,000
1,200 Stone Energy Corp.(a)
38,400
4,100 Vintage Petroleum, Inc.
36,900
--------
- ---
372,606
- ------------------------------------------------------------
Oil & Gas Services--1.7%
2,500 Barrett Resources Corp.(a)
62,656
1,300 Daniel Industries, Inc.
19,825
2,500 Devon Energy Corp.
68,906
3,900 Input/Output, Inc.(a)
24,619
1,700 Oceaneering International, Inc.(a)
25,712
1,600 Offshore Logistics, Inc.(a)
18,600
800 Pennsylvania Enterprises, Inc.
19,200
1,300 Plains Resources, Inc.(a)
19,500
3,100 Pogo Producing Co.
40,300
1,600 Pool Energy Services Co.(a)
24,500
3,900 Pride International, Inc.
32,175
1,600 Remington Oil and Gas Corp. (Class 'B'
Stock)(a)
4,600
1,800 Seitel, Inc.(a)
25,088
1,900 Southwestern Energy Co.
13,419
800 St. Mary Land & Exploration Co.
13,900
3,500 Tuboscope Vetco International, Inc.(a)
31,500
--------
- ---
444,500
- ------------------------------------------------------------
Paper and Related Products--0.4%
1,800 Brady (W.H.) Co. (Class 'A' Stock)
37,688
2,800 Buckeye Technologies, Inc.(a)
39,200
1,200 Schweitzer-Mauduit International, Inc.
13,800
--------
- ---
90,688
Precious Metals--0.5%
1,700 Coeur d'Alene Mines Corp. $
7,012
2,400 Getchell Gold Corp.(a)
62,850
2,650 Stillwater Mining Co.(a)
69,894
--------
- ---
139,756
- ------------------------------------------------------------
Real Estate-Developers--0.2%
2,900 Toll Brothers, Inc.(a)
52,563
- ------------------------------------------------------------
Restaurants--2.3%
2,400 Applebee's International, Inc.
59,550
800 Au Bon Pain Co., Inc. (Class 'A'
Stock)(a)
4,200
1,400 CEC Entertainment, Inc.
50,225
1,600 Cheesecake Factory, Inc.(a)
38,000
4,095 CKE Restaurants, Inc.
80,876
2,006 Consolidated Products, Inc.
35,231
3,000 Foodmaker, Inc.(a)
76,500
800 IHOP Corp.
31,400
2,300 Landry's Seafood Restaurants, Inc.
14,734
1,800 Luby's Cafeterias, Inc.
30,375
2,600 Ruby Tuesday, Inc.(a)
45,175
3,100 Ryan's Family Steak Houses, Inc.(a)
37,394
1,500 Sonic Corp.(a)
40,406
1,000 Taco Cabana, Inc.(a)
8,813
1,700 TCBY Enterprises, Inc.
10,200
2,300 TriArc Companies, Inc. (Class 'A'
Stock)(a)
40,106
--------
- ---
603,185
- ------------------------------------------------------------
Retail--6.5%
2,000 AnnTaylor Stores Corp.(a)
88,375
2,900 Bombay Company, Inc.(a)
11,600
1,300 Books-A-Million, Inc.(a)
13,244
1,400 Brown Group, Inc.
18,463
900 Building Materials Holdings Corp.(a)
9,113
1,900 Cash America International, Inc.
24,463
2,100 Cato Corp. (Class 'A' Stock)
19,556
400 Damark International, Inc. (Class 'A'
Stock)(a)
3,450
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 11
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Retail (cont'd.)
1,800 Dress Barn, Inc.(a) $
24,975
2,700 Express Scripts, Inc. (Class 'A' Stock)
232,031
1,900 Footstar, Inc.(a)
60,800
2,600 Goody's Family Clothing, Inc.
36,238
900 Gottschalks, Inc.(a)
6,188
1,500 Hancock Fabrics, Inc.
9,469
1,100 J. Baker, Inc.(a)
4,125
2,200 Jan Bell Marketing, Inc.(a)
9,350
1,500 Jo Ann Stores, Inc.
20,625
2,400 Just For Feet, Inc.
30,000
800 K-Swiss, Inc. (Class 'A' Stock)
20,200
1,300 Lechters, Inc.(a)
2,803
700 Lillian Vernon Corp.
8,400
3,100 Linens N Things, Inc.
140,662
2,200 Michaels Stores, Inc.(a)
54,312
1,700 O'Reilly Automotive, Inc.(a)
76,075
1,600 Pacific Sunwear of California(a)
55,600
7,600 Pier 1 Imports, Inc.
61,750
2,850 Regis Corp.
75,881
1,800 Russ Berrie & Co., Inc.
47,025
2,100 Shopko Stores, Inc.
62,737
2,400 Sports Authority, Inc.
17,550
3,500 Stein Mart, Inc.(a)
35,000
3,600 Stride Rite Corp.
44,100
2,700 The Men's Wearhouse, Inc.
77,962
900 Timberland Co. (Class 'A' Stock)
56,756
4,400 Williams-Sonoma, Inc.(a)
124,300
2,900 Zale Corp.
99,144
--------
- ---
1,672,972
- ------------------------------------------------------------
Telecommunications--3.6%
2,100 Allen Telecom, Inc.(a)
12,731
3,900 Aspect Telecommunications Corp.(a)
25,838
1,900 Avid Technology, Inc.(a)
33,131
700 C-Cor Electronics, Inc.
12,075
1,100 California Microwave, Inc.(a)
11,825
500 Centigram Communications Corp.(a)
4,938
3,900 Commscope, Inc.
81,656
1,300 Dialogic Corp.
39,650
3,800 General Communication, Inc.(a)
17,338
2,800 General Semiconductor, Inc.
20,300
2,000 Intermediate Telephone, Inc.
31,125
4,000 International Rectifier Corp.(a) $
28,000
2,200 InterVoice, Inc.(a)
24,200
1,900 Lattice Semiconductor Corp.(a)
86,569
3,400 P-COM, Inc.(a)
25,925
3,000 Picturetel Corp.(a)
21,000
1,400 Plantronics, Inc.(a)
87,587
1,100 Symmetricom, Inc.(a)
6,944
1,700 TCSI Corp.(a)
3,241
3,800 Tele-Save Holdings, Inc.
39,662
1,200 TJ International, Inc.
28,950
5,900 Vitesse Semiconductor Corp.(a)
298,687
--------
- ---
941,372
- ------------------------------------------------------------
Textiles--1.1%
700 Angelica Corp.
9,800
1,100 Ashworth, Inc.(a)
3,850
1,800 Authentic Fitness Corp.
27,787
1,900 Cone Mills Corp.(a)
9,263
1,200 Cyrk, Inc.
9,075
1,800 Delta Woodside Industries, Inc.
8,663
1,800 Guilford Mills, Inc.
15,750
1,800 Gymboree Corp.(a)
16,087
600 Haggar Corp.
6,075
2,700 Hartmarx Corp.(a)
13,163
800 Johnston Industies, Inc.
1,700
1,700 Kellwood Co.
37,506
2,900 Nautica Enterprises, Inc.(a)
32,806
1,400 Oshkosh B'Gosh, Inc. (Class'A' Stock)
24,762
600 Oxford Industries, Inc.
14,625
2,100 Phillips-Van Heusen Corp.
14,569
1,134 Pillowtex Corp.
16,089
1,300 St. John Knits, Inc.
34,287
--------
- ---
295,857
- ------------------------------------------------------------
Transportation/Trucking/Shipping--2.2%
2,600 Air Express International Corp.
39,325
2,500 American Freightways, Inc.
32,187
1,500 Arkansas Best Corp.
10,219
2,000 Expeditors International of Washington,
Inc.
108,000
2,800 Fritz Companies, Inc.(a)
19,250
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
Portfolio of Investments as of PRUDENTIAL
INDEX SERIES FUND
March 31, 1999 (Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Transportation/Trucking/Shipping (cont'd.)
1,300 Frozen Food Express Industries, Inc. $
8,288
2,300 Heartland Express, Inc.(a)
34,931
1,600 Kirby Corp.(a)
30,300
800 Landstar Systems, Inc.(a)
26,500
1,000 M.S. Carriers, Inc.(a)
26,437
1,500 Pittston Burlington Group
10,406
700 Railtex, Inc.
7,963
4,500 Rollins Truck Leasing Corp.
42,469
1,100 Rural/Metro Corp.
8,731
2,100 USFreightways Corp.
69,037
3,725 Werner Enterprises, Inc.
58,669
2,000 Yellow Corp.
34,750
--------
- ---
567,462
- ------------------------------------------------------------
Utilities - Electric--3.8%
900 Aquarion Co.
24,750
2,400 Atmos Energy Corp.
57,750
500 Bangor Hydro-Electric Co.(a)
6,344
1,300 Central Hudson Gas & Electric Co.
46,556
1,100 CILCORP, Inc.
66,069
1,700 Commonwealth Energy Systems
65,450
800 Connecticut Energy Corp.
19,400
1,600 Eastern Utilities Associates
45,300
2,300 Energen Corp.
34,356
400 Green Mountain Power Corp.
3,875
2,200 KCS Energy, Inc.
2,888
1,400 New Jersey Resources Corp.
49,787
1,100 Orange & Rockland Utilities, Inc.
63,181
3,202 Philadelphia Suburban Corp.
72,645
2,400 Piedmont Natural Gas, Inc.
84,000
1,600 Public Service Co., Inc.
45,400
2,500 Sierra Pacific Resources
87,969
1,200 The United Illuminating Co.
50,325
1,100 TNP Enterprises, Inc.
31,625
2,900 United Water Resources, Inc.
60,175
2,900 Wicor, Inc.
58,725
--------
- ---
976,570
Utilities - Water--0.1%
700 American States Water Co. $
16,975
--------
- ---
Total long-term investments
(cost $28,864,360)
24,616,348
--------
- ---
---------------------------------------------------------
- ---
Principal
Amount
(000)
SHORT-TERM INVESTMENTS--5.2%
- ------------------------------------------------------------
U.S. GOVERNMENT SECURITY--0.8%
$200(b) United States Treasury Bill,
4.45%, 6/17/99
(cost $198,118)
198,118
- ------------------------------------------------------------
REPURCHASE AGREEMENT--4.4%
1,152 Joint Repurchase Agreement Account,
4.91%, 4/1/99 (Note 5)
(cost $1,152,000)
1,152,000
--------
- ---
Total short-term investments
(cost $1,350,118)
1,350,118
- ------------------------------------------------------------
Total Investments--100.3%
(cost $30,214,478; Note 4)
25,966,466
Liabilities in excess of other
assets--(0.3%)
(90,430)
--------
- ---
Net Assets--100%
$25,876,036
--------
- ---
--------
- ---
</TABLE>
- ---------------
(a) Non-income producing security.
(b) Pledged as initial margin on futures contracts.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 13
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL
INDEX SERIES FUND
(Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
<S>
<C>
Investments, at value (cost
$30,214,478)................................................
................... $ 25,966,466
Cash........................................................
...............................................
32,849
Receivable for investments
sold........................................................
.................... 45,992
Receivable from
Manager.....................................................
............................... 30,226
Dividends and interest
receivable..................................................
........................ 14,726
Receivable for Fund shares
sold........................................................
.................... 13,653
Other
assets......................................................
......................................... 69
- --------------
Total
assets......................................................
...................................... 26,103,981
- --------------
Liabilities
Payable for investments
purchased...................................................
....................... 144,147
Accrued expenses and other
liabilities.................................................
.................... 62,476
Payable for Fund shares
repurchased.................................................
....................... 13,572
Due to broker - variation
margin......................................................
..................... 7,750
- --------------
Total
liabilities.................................................
...................................... 227,945
- --------------
Net
Assets......................................................
........................................... $
25,876,036
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par.........................................................
.......... $ 30,595
Paid-in capital in excess of
par.........................................................
............... 29,482,797
- --------------
29,513,392
Undistributed net investment
income......................................................
............... 41,463
Accumulated net realized gain on
investments.................................................
........... 580,544
Net unrealized depreciation on
investments.................................................
............. (4,259,363)
- --------------
Net assets, March 31,
1999........................................................
......................... $ 25,876,036
- --------------
- --------------
Net asset value per share
($25,876,036 / 3,059,451 shares of beneficial interest
issued and outstanding)..........................
$8.46
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 14
<PAGE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL SMALL-CAP INDEX FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income March 31,
1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $17)......................... $ 101,252
Interest................................. 44,319
-------------
- -
Total income.......................... 145,571
-------------
- -
Expenses
Management fee........................... 37,254
Custodian's fees and expenses............ 79,800
Registration fees........................ 18,500
Reports to shareholders.................. 9,800
Audit fees............................... 9,000
Legal fees............................... 5,000
Transfer agent's fees and expenses....... 2,600
Trustees' fees........................... 2,100
Miscellaneous............................ 715
-------------
- -
Total operating expenses.............. 164,769
Less: Expense subsidy (Note 2).............. (102,676)
-------------
- -
Net expenses.......................... 62,093
-------------
- -
Net investment income....................... 83,478
-------------
- -
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on:
Investment transactions.................. 436,719
Financial futures contracts.............. 281,895
-------------
- -
718,614
-------------
- -
Net change in unrealized depreciation on:
Investments.............................. 798,412
Financial futures contracts.............. (8,200)
-------------
- -
790,212
-------------
- -
Net gain on investments..................... 1,508,826
-------------
- -
Net Increase in Net Assets
Resulting from Operations................... $1,592,304
-------------
- -
-------------
- -
</TABLE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL SMALL-CAP INDEX FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months October 1,
1997(a)
Ended
through
Increase (Decrease) March 31,
September 30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income........ $ 83,478 $
108,532
Net realized gain on
investment transactions
and financial futures
contracts................. 718,614
389,346
Net change in unrealized
appreciation on
investments and financial
futures contracts......... 790,212
(5,049,575)
----------- -----------
- --------
Net increase in net assets
resulting from
operations................ 1,592,304
(4,551,697)
----------- -----------
- --------
Dividends and distributions
(Note 1):
Dividends to shareholders
from net investment
income.................... (138,793)
(31,374)
----------- -----------
- --------
Distributions to shareholders
from net realized gains... (527,416) --
----------- -----------
- --------
Fund share transactions (Note
6):
Net proceeds from shares
sold...................... 7,469,219
28,670,830
Net asset value of shares
issued to shareholders in
reinvestment of
distributions............. 665,853
31,360
Cost of shares reacquired.... (3,440,818)
(3,863,432)
----------- -----------
- --------
Net increase in net assets
from Fund share
transactions... 4,694,254
24,838,758
----------- -----------
- --------
Net increase.................... 5,620,349
20,255,687
----------- -----------
- --------
Net Assets
Beginning of period............. 20,255,687 --
----------- -----------
- --------
End of period(b)................ $25,876,036
$20,255,687
----------- -----------
- --------
----------- -----------
- --------
- ---------------
(a) Commencement of investment operations.
(b) Includes undistributed net
investment income of........ $ 41,463 $
96,778
----------- -----------
- --------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 15
<PAGE>
Notes to Financial Statements PRUDENTIAL
INDEX SERIES FUND
(Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- --------------------
The Prudential Index Series 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 currently consists of five separate funds (the
'Funds'). Prudential
Small-Cap Index Fund (the 'Fund') commenced investment
operations on October 1,
1997 when 1,860,203 shares of beneficial interest of the
Fund were sold for
$18,602,031 to The Prudential Insurance Company of America
('The Prudential').
The Fund's investment objective is to provide investment
results that correspond
to the price and yield performance of a broad-based index of
Small Cap stocks.
The Fund currently uses the Standard & Poor's 600 Small
Capitalization Stock
Price Index price for that purpose.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Fund.
Securities Valuation: 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 or Nasdaq
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 mean between the
closing bid and asked
prices quoted on such day or at the bid price in the absence
of an asked price.
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, are valued by a principal market maker or
independent pricing
agent.
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
methodology or provides a valuation or methodology that, in
the judgment of the
subadvisers does not represent fair value, are valued at
fair value as
determined under procedures established by the Trustees.
In connection with transactions in repurchase agreements, it
is the Fund's
policy that its custodian or designated subcustodians under
triparty repurchase
agreements, as the case may be, 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 Fund may be delayed or
limited.
Securities Transactions and Net 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. Expenses
are recorded on the accrual basis which may require the use
of certain estimates
by management.
Financial Futures Contracts: A financial futures contract is
an agreement to
purchase (long) or sell (short) an agreed amount of
securities or commodities 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
or commodity. 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 Fund invests in financial futures contracts in order to
hedge existing
portfolio securities, or securities the Fund intends to
purchase, against
fluctuations in value. Under a variety of circumstances, the
Fund may not
achieve the anticipated benefits of the financial futures
contracts and may
realize a loss. The use of futures transactions involves the
risk of imperfect
correlation in movements in the price of futures contracts
and the underlying
assets.
Dividends and Distributions: Dividends and distributions of
the Fund are
declared in cash and automatically reinvested in additional
shares of the Fund.
The Fund will declare and distribute its net investment
income and net capital
gains, if any, at least annually. Dividends and
distributions are recorded on
the ex-dividend date.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
- ------------------------------------------------------------
- --------------------
16
<PAGE>
Notes to Financial Statements PRUDENTIAL
INDEX SERIES FUND
(Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- --------------------
Federal Income Taxes: It is the Fund's policy to meet the
requirements of the
Internal Revenue Code applicable to regulated investment
companies and to
distribute all of its taxable net investment income and net
capital gains, if
any, to its shareholders. Therefore, no federal income tax
provision is
required.
Withholding taxes on foreign dividends have been provided
for in accordance with
the Fund's understanding of the applicable country's tax
rules and rates.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential
Investment Fund Management
LLC ('PIFM' or the 'Manager'). Pursuant to this agreement
PIFM has
responsibility for all investment advisory services. PIFM
has entered into a
subadvisory agreement with The Prudential Investment
Corporation ('PIC'). PIC,
subject to the supervision of PIFM, manages the assets of
the Fund in accordance
with its investment objective and policies. PIFM pays for
the costs and expenses
attributable to the subadvisory agreement and the salaries
and expenses of all
personnel of the Fund except for fees and expenses of
unaffiliated Trustees. The
management fee paid PIFM is computed daily and payable
monthly at an annual rate
of .30 of 1% of the Fund's average daily net assets.
PIFM has agreed to reimburse the Fund so that total
operating expenses do not
exceed .50% of the average net assets of the Fund for the
six months ended March
31, 1999. This voluntary waiver may be terminated at any
time without notice.
For the six months ended March 31, 1999, PIFM subsidized
$102,676 for the
expenses of the Fund (.64% of the average net assets of the
Fund/$.03 per
share.)
Prudential Securities Incorporated ('PSI') acted as the
distributor of the
Fund's shares through May 31, 1998. Prudential Investment
Management Services
('PIMS') became the distributor of the Fund effective June
1998 and is serving
under the same terms and conditions as under the agreement
with PSI. Under the
distribution agreement, PSI and PIMS incurred the expenses
of distributing the
Fund's shares, none of which is reimbursed or paid for by
the Fund.
PIC, PIFM, PIMS and PSI are wholly owned subsidiaries of The
Prudential
Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated
registered
investment companies (the 'Funds'), entered into a
syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment
under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of
.065 of 1% on the
unused portion of the credit facility, which is accrued and
paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9,
2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements are to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months
ended March 31, 1999,
the Fund incurred fees of approximately $2,300 for the
services of PMFS. As of
March 31, 1999, approximately $900 of such fees were due to
PMFS. Transfer agent
fees and expenses in the Statement of Operations also
include certain
out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-
term investments,
for the six months ended March 31, 1999 aggregated
$7,415,121 and $2,437,041,
respectively.
On March 31, 1999, the Fund held the following two futures
contracts expiring
June 1999.
<TABLE>
<CAPTION>
Unrealized
Future Cost Market Value Gain/(Loss)
- ------------ -------- ------------ -----------
<S> <C> <C> <C>
Russell 2000 $809,100 $797,000 $ (12,100)
Mid Cap 400 367,550 368,300 750
-----------
$ (11,350)
-----------
-----------
</TABLE>
The cost basis of investments for federal income tax
purposes is $30,368,269
and, accordingly, as of March 31, 1999, net unrealized
depreciation for federal
income tax purposes was $4,401,803 (gross unrealized
appreciation--$2,618,752;
gross unrealized depreciation--$7,020,555).
- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account
The Fund, 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. As of
- ------------------------------------------------------------
- --------------------
17
<PAGE>
Notes to Financial Statements PRUDENTIAL
INDEX SERIES FUND
(Unaudited) PRUDENTIAL
SMALL-CAP INDEX FUND
- ------------------------------------------------------------
- --------------------
March 31, 1999, the Fund had a .21% undivided interest in
the repurchase
agreements in the joint account. The undivided interest
represented $1,152,000
in principal amount. As of such date, each repurchase
agreement in the joint
account and the collateral therefore was as follows:
Bear Stearns & Co., Inc., 4.92%, in the principal amount of
$170,000,000,
repurchase price $170,023,233, due 4/1/99. The value of the
collateral including
accrued interest was $174,282,442.
Salomon Smith Barney, Inc. 4.90%, in the principal amount of
$170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $174,947,170.
Morgan Stanley Dean Witter, 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $173,474,773.
SBC Warburg Dillon Read, Inc., 4.97%, in the principal
amount of $44,773,000,
repurchase price $44,779,181, due 4/1/99. The value of the
collateral including
accrued interest was $45,668,747.
- ------------------------------------------------------------
Note 6. Capital
The Series offers Class Z shares. Class Z shares are not
subject to any sales or
redemption charge and are offered exclusively for sale to a
limited group of
investors.
The Fund has authorized an unlimited number of shares of
beneficial interest at
$.001 par value. Transactions in shares of beneficial
interest for the six
months ended March 31, 1999 and the year ended September 30,
1998 were as
follows:
<TABLE>
<CAPTION>
Class Z Shares
- ------------------------------------------------- --------
- -
<S> <C>
Six months ended March 31, 1999:
Shares sold......................................
880,619
Shares issued in reinvestment of dividends and
distributions..................................
77,335
Shares reacquired................................
(400,752)
--------
- -
Net increase in shares outstanding...............
557,202
--------
- -
--------
- -
Year ended September 30, 1998:
Shares sold......................................
2,895,380
Shares issued in reinvestment of dividends and
distributions..................................
3,379
Shares reacquired................................
(396,510)
--------
- -
Net increase in shares outstanding...............
2,502,249
--------
- -
--------
- -
</TABLE>
Of the shares outstanding at March 31, 1999, PIFM and
affiliates owned 4,342,666
shares of the Fund.
- ------------------------------------------------------------
- --------------------
18
<PAGE>
Financial Highlights PRUDENTIAL INDEX
SERIES FUND
(Unaudited) PRUDENTIAL SMALL-
CAP INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class Z
- ------------------------------------
Six Months October 1, 1997(a)
Ended through
March 31, September 30,
1999 1998
- ----------- ------------------
<S>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period....................................................
$ 8.09 $ 10.00
- ----------- ------
Income from investment operations
Net investment
income(c)...................................................
............. .02 .04
Net realized and unrealized gain (loss) on
investment................................... .59
(1.94)
- ----------- ------
Total from investment
operations..................................................
... .61 (1.90)
- ----------- ------
Less distributions:
Dividends from net investment
income....................................................
(.05) (.01)
Distributions from net realized capital
gains...........................................
(.19) --
- ----------- ------
Total dividends and
distributions...............................................
..... (.24) (.01)
- ----------- ------
Net asset value, end of
period......................................................
.... $ 8.46 $ 8.09
- ----------- ------
- ----------- ------
TOTAL
RETURN(d):..................................................
...................... 7.49% (18.98)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000).......................................................
.. $25,876 $ 20,256
Average net assets
(000).......................................................
......... $24,904 $ 22,676
Ratios to average net assets:(c)
Expenses....................................................
......................... .50%(b)
.50%
Net investment
income......................................................
.......... .67%(b) .48%
Portfolio
turnover....................................................
.................. 12% 52%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Net of expense subsidy.
(d) Total return is calculated assuming a purchase of shares
on the first day
and a sale on the last day of the 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. 19
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive
financial advice
through a Prudential Securities financial advisor or
Prudential/Pruco
Securities registered representative. Your advisor or
representative can
provide you with the following services:
- ------------------------------------------------------------
- -------------------
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you match the
reward you seek with the risk you can tolerate. And risk can
be difficult to
gauge--sometimes even the simplest investments bear
surprising risks. The
educated investor knows that markets seldom move in just one
direction--there
are times when a market sector or asset class will lose
value or provide little
in the way of total return. Managing your own expectations
is easier with help
from someone who understands the markets and who knows you!
- ------------------------------------------------------------
- -------------------
Keeping Up With The Joneses
A financial advisor or registered representative can help
you wade through the
numerous mutual funds available to find the ones that fit
your own individual
investment profile and risk tolerance. While the newspapers
and popular
magazines are full of advice about investing, they are aimed
at generic groups
of people or representative individuals, not at you
personally. Your financial
advisor or registered representative will review your
investment objectives
with you. This means you can make financial decisions based
on the assets and
liabilities in your current portfolio and your risk
tolerance--not just based
on the current investment fad.
- ------------------------------------------------------------
- -------------------
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are among the
most common investor mistakes. But sometimes it's difficult
to hold on to an
investment when it's losing value every month. Your
financial advisor or
registered representative can answer questions when you're
confused or worried
about your investment, and remind you that you're investing
for the long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the
Fund's portfolio
holdings are for the period covered by this report,and are
subject to change
thereafter.
The accompanying financial statements as of March 31, 1999,
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors unless
preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
74431F845 MF174E12
(ICON)
Prudential
Stock Index
Fund
SEMI
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential Stock Index Fund
A Series of the Prudential Index Series Fund
Performance At A Glance
S&P 500 stocks in eight of 12 economic sectors bounced back
from the summer's declines to return about 20% or more for
the
six-month period ended March 31, 1999. The S&P 500 Index
gained
more than 27%; the Prudential Stock Index Fund performed in
line
with the Lipper S&P 500 Fund Average.
<TABLE>
Cumulative Total Returns1 As of
3/31/99
<CAPTION>
Six One
Five Since
Months Year
Years Inception2
<S> <C> <C> <C>
<C>
Class Z 27.19% (27.14) 18.23% (18.19) 213.14%
(212.81) 243.24% (242.89)
Class I 27.24 (27.19) 18.24 (18.20)
N/A 38.29 (38.15)
Lipper S&P 500 27.03 17.99
213.78 **
Fund Avg.3
S&P 500 Index5 27.32 18.49
220.54 ***
</TABLE>
<TABLE>
Average Annual Total Returns1 As
of 3/31/99
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class Z 18.23% (18.19) 25.65% (25.62) 21.26%
(21.24)
Class I 18.24 (18.20) N/A 21.54
(21.46)
</TABLE>
Past performance is not indicative of future results.
Principal and investment return will fluctuate so that
an investor's shares, when redeemed, may be worth more
or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc. Without waiver of management fees and/or expense
subsidization, the Fund's cumulative and average annual
total returns would have been lower, as indicated in
parentheses ( ).
2 Inception dates: Class Z, 11/5/92, and Class I, 8/1/97.
For Class Z, the Lipper reporting period begins 10/31/92.
For Class I, the Lipper reporting period begins 7/31/97.
3 Lipper average returns are for all funds in each share
class
for the six-month, one-, and five-year periods in the S&P
500
Fund category.
4 The Standard & Poor's 500 Composite Stock Price Index (S&P
500
Index) is a market capitalization-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 the total return 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 S&P 500 Index is not the only index that may be
used
to characterize performance of stock funds, and other
indexes
may portray different comparative performance. Investors
cannot
invest directly in an index.
** Lipper Since Inception returns are 246.15% for Class Z
and
37.16% for Class I, based on all funds in each share class.
*** The S&P 500 Since Inception returns are 255.26% for
Class Z
and 38.28% for Class I.
How Investments Compared
(As of 3/31/99)
(GRAPH)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's
past performance should never be used to predict future
results.
The risks to each of the investments listed above are
different--we
provide 12-month total returns for several Lipper mutual
fund
categories to show you that reaching for higher returns
means
tolerating more risk. The greater the risk, the larger the
potential reward or loss. In addition, we've included
historical
20-year average annual returns. These returns assume the
reinvestment
of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have
received higher historical total returns from stocks than
from
most other investments. Smaller capitalization stocks offer
greater potential for long-term growth, but may be more
volatile
than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which
can help smooth out their total returns year by year. But
their
prices still fluctuate (sometimes significantly), and their
returns have been historically lower than those of stock
funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state agencies and/or municipalities. This
investment provides income that is usually exempt from
federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value; they don't fluctuate much in price but,
historically,
their returns have been generally among the lowest of the
major
investment categories.
<PAGE>
Portfolio Manager's Report
(PHOTO)
John Moschberger
Fund Manager
Investment Goals and Style
The Prudential Stock Index Fund seeks to provide investment
results
that correspond to the price and yield performance of the
Standard
& Poor's 500 Composite Stock Price Index. The S&P 500 is
widely
regarded as representative of the performance of the U.S.
stock
market as a whole, and is comprised of stocks that represent
more than 80% of the total market value of all publicly
traded
U.S. common stocks. The difference between the Fund's return
and that of the Index is primarily fees and management
expenses.
There can be no assurance that the Fund will achieve its
investment objective.
Market Review
The Federal Reserve responded aggressively last fall to
insulate
U.S. markets from the summer's foreign financial crises,
cutting
a key short-term lending rate three times in quick
succession
(aggregating a significant 0.75%) to calm U.S. markets. The
return of investor confidence was further aided by the
apparent
bottoming of the crisis in Asia, and by evidence that low
inflation, high economic growth, and booming employment in
the United States seemed to continue independent of troubles
elsewhere around the globe. Federal Reserve Chairman Alan
Greenspan cited an economic "virtuous cycle" at work but,
at the same time, cautioned that stocks remain highly valued
by traditional standards. This is especially true for the
biggest, most familiar names: in every economic sector,
our S&P 500 stocks had higher returns than the stocks of
smaller companies in the S&P 400 MidCap Index.
The gaining sectors
The euphoria for large stocks in the six-month period lifted
nearly every sector of the S&P 500. The technology sector,
which alone represented more than 20% of the S&P 500 on
March 31, 1999, drove Index performance, gaining 50%.
Technology companies are widely thought to be driving
productivity, which is important to economic growth.
Temporary concerns about weakening demand or slowing
revenue growth in some stocks were soon dwarfed by
expectations of Y2K-related growth, the introduction
later in 1999 of the Pentium III microprocessor, and
the bottoming-out of Asian markets. Most of the sector's
gains came from huge advances by the stocks of industry
giants like Sun Microsystems, up 174%, and America Online,
rocketing up 480%. Since being placed on the S&P 500 list
on January 1, 1999, AOL has grown to represent 1.2% of
the entire index by itself--the market size of Ford and
General Motors combined.
Many sectors responded well to the continuing good
economic news, including consumer cyclicals, up 41%,
and financials, up 31%. Market leaders such as Lowes,
The Gap, and Wal-Mart posted better than 60% returns
in the period, though traditional retailers like J.C.
Penney and Federated Department Stores continued to
lose ground. Strong sales pushed up automotive stocks:
General Motors, representing nearly 6% of the sector,
surged 63%. Financials were helped by accelerating merger
activity.
Capital goods gained on U.S. economic strength, as well as
consumer
staples and transportation, which reversed their losses
during the
12 months ended September 30, 1998. Prospects of new bundled
<PAGE>
services helped fuel interest in communications services, up
32%. Even the long-suffering energy and basic materials
sectors
ended in positive territory: they posted gains of 7% and 4%,
respectively, as prospects grew for improvements in demand
for
commodities, especially petroleum products, and long-overdue
consolidation began in paper products industries.
Healthcare gained 20%, driven primarily by enthusiasm over
new products brought to market by drug companies and by
continuing merger activity. Care providers held back the
sector again this period, with several companies posting
double-digit declines.
S&P 500 Index as of 3/31/99
Six Month % of
Total Return Index
Technology 50% 20%
Consumer Cyclicals 41 9
Communication Svcs. 32 8
Financials 31 16
Capital Goods 25 8
Healthcare 20 12
Consumer Staples 20 14
Transportation 19 1
Energy 7 6
Basic Materials 4 3
Utilities -7 3
S&P 500 Index 27 100
Source: Standard & Poor's
How The S&P 500 Index Performed Since the Fund's Inception*
(GRAPH)
The S&P 500 Index, composed of stocks representing
approximately
80% of the total market value of all publicly traded U.S.
common
stocks, is widely regarded as representative of the
performance
of the U.S. stock market as a whole. "Standard & Poor's,"
"S&P(r)," "S&P 500(r)," "Standard & Poor's 500," and "500"
are trademarks of The McGraw-Hill Companies, Inc., and have
been licensed for use by Prudential and its affiliates and
subsidiaries. The Prudential Stock Index 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. The performance cited does not represent
the performance of the Prudential Stock Index Fund. Past
performance is not indicative of future results. Investors
cannot invest directly in an index.
*Actual Class Z inception is 11/5/92. The Lipper reporting
period begins 10/31/92.
Source: Lipper, Inc.
Lagging utilities
Utilities, which gained 30% on average last year, finished
down 7% in the current reporting period. Utilities are often
considered a "bond substitute," because their relative
stability
and independence from economic fluctuations make them
popular
during downturns. As the economy continued to show signs of
strength, utilities lost that advantage. Furthermore, the
electric industry is undergoing deregulation, bringing with
it competition--and volatility.
Looking Forward
The U.S. economy is likely to continue to grow at a
sustainable
pace. Although stock market gains have been focused on a
very
few star performers, investor confidence may spread to other
S&P 500 sectors, and even to stocks of smaller companies.
The
leadership of the stocks in the S&P 500 Index over other
U.S.
markets could diminish, but its performance may rest on a
much
broader base.
1
<PAGE>
A Message to Our Shareholders May 19, 1999
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a handful of very large companies. These stocks
were
getting more and more expensive--out of proportion to their
earnings expectations. As a result, there was a substantial
disparity in value between large and small companies, and
between growth and value stocks. In recent months, however,
that gap has started to narrow amid news of strong economic
growth.
Our current economic environment has prompted many investors
to turn to value stocks that typically fare better in a
growing
economy, and have been selling at a significant discount to
the
market.
Many sectors of the bond market have also begun to rebound
from
last year's global financial crisis. Furthermore, while
bonds have
not generated higher returns than stocks in recent years,
they have
demonstrated that they hold up better during
market downturns. That's a thought to keep in mind going
forward.
Diversification is critical
History shows that the markets generally bring prices in
line with
earnings performance, sooner or later. It also shows that
two
investment styles--value and growth--typically alternate in
periods of superior performance.
What does this suggest? Instead of chasing popular market
winners,
investors should have a well-diversified asset allocation
strategy
in place and keep to it. It is also a good practice to
rebalance
your holdings, when necessary, to keep your asset
allocation consistent with your long-term objectives and
risk
tolerance. A properly diversified portfolio of value- and
growth-oriented equity funds, bond funds, and money market
funds could help you weather inevitable market turbulence
and receive more consistent returns over time. Prudential
offers a wide range of mutual funds to help our shareholders
diversify. We have also designed several balanced and
diversified funds to allow one-decision diversification.
Thank you for your continued confidence in Prudential
mutual funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
2
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--95.0%
COMMON STOCKS
- ------------------------------------------------------------
Aerospace/Defense--1.3%
4,325 Aeroquip-Vickers, Inc. $
247,877
82,824 Allied Signal, Inc.
4,073,905
147,484 Boeing Co.
5,032,891
19,506 General Dynamics Corp.
1,253,261
59,056 Lockheed Martin Corp.
2,225,673
9,920 Northrop Grumman Corp.
593,960
48,744 Raytheon Co.
2,857,617
29,563 Rockwell International Corp.
1,254,580
32,860 United Technologies Corp.
4,450,476
----------
- ----
21,990,240
- ------------------------------------------------------------
Airlines--0.3%
27,649 AMR Corp.(a)
1,619,195
20,984 Delta Airlines, Inc.
1,458,388
50,922 Southwest Airlines Co.
1,540,390
12,521 USAir Group, Inc.(a)
611,181
----------
- ----
5,229,154
- ------------------------------------------------------------
Aluminum--0.2%
33,529 Alcan Aluminum Ltd.
865,468
56,632 Alcoa Inc.
2,332,530
8,836 Reynolds Metals Co.
426,889
----------
- ----
3,624,887
- ------------------------------------------------------------
Automobiles & Trucks--1.3%
6,579 Cummins Engine Co., Inc.
233,966
23,340 Dana Corp.
886,920
181,289 Ford Motor Co.
10,288,151
98,378 General Motors Corp.
8,546,589
29,599 Genuine Parts Co.
852,821
12,876 Johnson Controls, Inc.
803,140
8,760 Navistar International Corp.(a)
352,042
----------
- ----
21,963,629
Banking--6.8%
17,600 AmSouth Bancorporation $
800,800
109,286 Associates First Capital Corp.
4,917,870
115,836 Bank of New York Co., Inc.
4,162,856
175,716 Bank One Corp.
9,675,362
257,967 BankAmerica Corp.
18,218,920
44,528 BankBoston Corp.
1,928,619
13,477 Bankers Trust Corp.
1,189,345
10,289 Capital One Financial
1,553,639
126,784 Chase Manhattan Corp.
10,309,124
23,561 Comerica, Inc.
1,471,090
39,064 Fifth Third Bancorp
2,575,783
146,949 First Union Corp.
7,852,587
34,800 Firstar Corporation Wisconsin
3,114,600
84,944 Fleet Financial Group, Inc.
3,196,018
8,464 Golden West Financial Corp.
808,312
29,710 Huntington Bancshares, Inc.
919,153
26,790 J.P. Morgan & Co., Inc.
3,305,216
69,035 KeyCorp
2,092,624
38,373 Mellon Bank Corp.
2,700,500
25,086 Mercantile Bancorporation, Inc.
1,191,585
49,649 National City Corp.
3,295,452
16,881 Northern Trust Corp.
1,499,244
44,736 PNC Bank Corp.
2,485,644
20,901 Providian Financial Corp.
2,299,110
15,629 Republic New York Corp.
720,888
22,700 SouthTrust Corp.
846,994
24,631 State Street Corp.
2,024,360
25,677 Summit Bancorp
1,001,403
47,283 Suntrust Banks, Inc.
2,943,367
109,558 U.S. Bancorp
3,731,819
20,900 Union Planters Corp.
918,294
246,340 Wells Fargo & Co.
8,637,296
----------
- ----
112,387,874
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 3
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Beverages--2.6%
4,847 Adolph Coors Co. $
261,738
72,527 Anheuser Busch Companies, Inc.
5,525,651
10,238 Brown-Forman Corp.
589,965
367,732 Coca-Cola Co.
22,569,551
58,700 Coca-Cola Enterprises, Inc.
1,775,675
219,181 PepsiCo, Inc.
8,589,155
59,121 Seagram Co., Ltd.
2,956,050
----------
- ----
42,267,785
- ------------------------------------------------------------
Chemicals--1.3%
37,032 Air Products & Chemicals, Inc.
1,268,346
33,294 Dow Chemical Co.
3,102,585
169,015 E.I. du Pont de Nemours & Co.
9,813,433
11,693 Eastman Chemical Co.
491,837
4,273 FMC Corp.(a)
210,979
17,731 Hercules, Inc.
447,708
92,230 Monsanto Co.
4,236,815
9,098 Nalco Chemical Co.
241,666
25,245 Rohm & Haas Co.
847,285
13,516 Sigma-Aldrich Corp.
395,343
19,753 Union Carbide Corp.
892,589
----------
- ----
21,948,586
- ------------------------------------------------------------
Chemical-Specialty--0.2%
21,704 Engelhard Corp.
367,611
8,890 Great Lakes Chemical Corp.
326,708
19,865 Morton International, Inc.
730,039
22,679 Praxair, Inc.
817,861
10,164 Raychem Corp.
229,325
8,344 W.R. Grace & Co.
101,171
----------
- ----
2,572,715
- ------------------------------------------------------------
Commercial Services--0.0%
12,019 Deluxe Corp.
350,054
10,134 Moore Corp. Ltd.
100,073
----------
- ----
450,127
Computer Software & Services--10.8%
55,762 3Com Corp.(a) $
1,299,952
11,505 Adobe Systems, Inc.
652,909
152,300 America Online, Inc.(a)
22,235,800
9,005 Autodesk, Inc.
364,140
94,378 Automatic Data Processing, Inc.
3,904,890
31,100 BMC Software, Inc.(a)
1,152,644
23,185 Cabletron Systems, Inc.(a)
189,827
19,790 Ceridian Corp.(a)
723,572
235,886 Cisco Systems, Inc.(a)
25,844,260
79,458 Computer Associates International,
Inc.
2,825,725
22,951 Computer Sciences Corp.(a)
1,266,608
54,000 Compuware Corp.(a)
1,289,250
379,940 Dell Computer Corp.(a)
15,530,047
75,504 EMC Corp.(a)
9,645,636
65,432 First Data Corp.
2,797,218
23,446 Gateway 2000 Inc.(a)
1,607,516
13,710 KLA Instruments Corp.(a)
665,792
36,308 Micron Technology, Inc.
1,751,861
752,306 Microsoft Corp.(a)
67,425,425
54,302 Novell, Inc.(a)
1,367,732
215,160 Oracle Corp.(a)
5,674,845
39,679 Parametric Technology Co.(a)
783,660
33,500 Peoplesoft Inc.(a)
489,937
36,965 Seagate Technology, Inc.(a)
1,092,778
27,546 Silicon Graphics, Inc.(a)
459,674
57,812 Sun Microsystems, Inc.(a)
7,222,887
----------
- ----
178,264,585
- ------------------------------------------------------------
Construction--0.1%
13,537 Fluor Corp.
365,499
11,714 Foster Wheeler Corp.
142,032
5,791 Kaufman & Broad Home Corp.
130,660
5,743 Pulte Corp.
119,526
----------
- ----
757,717
- ------------------------------------------------------------
Containers--0.1%
3,758 Ball Corp.
176,391
6,905 Bemis Co., Inc.
214,487
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Containers (cont'd.)
20,176 Crown Cork & Seal Co., Inc.(a) $
576,277
22,126 Owens-Illinois, Inc.(a)
553,150
----------
- ----
1,520,305
- ------------------------------------------------------------
Cosmetics & Soaps--2.3%
6,657 Alberto-Culver Co.
155,607
40,072 Avon Products, Inc.
1,885,888
18,366 Clorox Co.
2,152,266
43,065 Colgate-Palmolive Co.
3,961,980
165,039 Gillette Co.
9,809,506
15,275 International Flavors & Fragrances,
Inc.
573,767
199,519 Procter & Gamble Co.
19,540,392
----------
- ----
38,079,406
- ------------------------------------------------------------
Diversified Gas--0.1%
33,403 Coastal Corp.
1,102,299
3,508 Eastern Enterprises, Inc.
127,604
7,423 NICOR, Inc.
266,764
5,576 Oneok, Inc.
138,006
----------
- ----
1,634,673
- ------------------------------------------------------------
Drugs & Medical Supplies--11.1%
227,374 Abbott Laboratories
10,643,945
10,191 Allergan, Inc.
895,534
14,303 ALZA Corp.(a)
547,090
198,191 American Home Products Corp.
12,931,963
75,962 Amgen, Inc.(a)
5,687,655
9,638 Bausch & Lomb, Inc.
626,470
43,237 Baxter International, Inc.
2,853,642
38,012 Becton Dickinson & Co.
1,456,335
16,788 Biomet, Inc.(a)
704,047
59,962 Boston Scientific Corp.(a)
2,432,209
297,514 Bristol-Myers Squibb Co.
19,133,869
6,856 C.R. Bard, Inc.
345,800
40,549 Cardinal Health, Inc.
2,676,234
163,897 Eli Lilly & Co.
13,910,758
44,148 Guidant Corp.
2,670,954
201,874 Johnson & Johnson
18,913,070
9,903 Mallinckrodt, Inc.
263,667
87,079 Medtronic, Inc.
6,247,918
356,844 Merck & Co., Inc. $
28,614,428
194,486 Pfizer, Inc.
26,984,932
75,514 Pharmacia & Upjohn, Inc.
4,710,186
219,824 Schering- Plough Corp.
12,159,015
10,366 St. Jude Medical, Inc.(a)
252,671
123,156 Warner-Lambert Co.
8,151,388
----------
- ----
183,813,780
- ------------------------------------------------------------
Electronics--4.1%
19,062 Advanced Micro Devices, Inc.(a)
295,461
33,792 AMP, Inc.
1,814,208
19,106 Apple Computer, Inc.
686,622
9,741 Data General Corp.(a)
98,628
5,085 EG&G, Inc.
134,117
74,600 Electronic Data Systems Corp.
3,632,087
66,175 Emerson Electric Co.
3,503,139
12,106 Harris Corp.
346,534
152,618 Hewlett-Packard Co.
10,349,408
250,072 Intel Corp.
29,789,827
19,522 LSI Logic Corp.(a)
608,842
90,012 Motorola, Inc.
6,593,379
22,876 National Semiconductor Corp.(a)
213,033
7,241 Perkin-Elmer Corp.
702,829
37,100 Solectron Corp. (a)
1,801,669
13,627 Tandy Corp.
869,573
6,012 Tektronix, Inc.
151,803
58,188 Texas Instruments, Inc.
5,775,159
7,633 Thomas & Betts Corp.
286,715
----------
- ----
67,653,033
- ------------------------------------------------------------
Financial Services--5.2%
67,153 American Express Co.
7,890,478
17,760 Bear, Stearns & Co., Inc.
793,650
60,487 Charles Schwab Corp.
5,814,313
336,858 Citigroup, Inc.
21,516,805
15,837 Countrywide Mortgage Investments,
Inc.
593,888
25,688 Dun & Bradstreet Corp.
915,135
20,630 Equifax, Inc.
709,156
155,634 Fannie Mae
10,777,654
100,632 Federal Home Loan Mortgage Corp.
5,748,603
35,914 Franklin Resources, Inc.
1,010,081
14,680 H&R Block, Inc.
695,465
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Financial Services (cont'd.)
72,050 Household International Corp. $
3,287,281
16,887 Lehman Brothers Holdings, Inc.
1,008,998
117,643 MBNA Corp.
2,808,727
53,517 Merrill Lynch & Co., Inc.
4,732,910
86,718 Morgan Stanley Dean Witter & Co.
8,666,380
25,900 Paychex, Inc.
1,228,631
33,400 Regions Financial Corp.
1,156,475
24,364 SLM Holding Corp.
1,017,197
36,566 Synovus Financial Corp.
747,318
19,698 Transamerica Corp.
1,398,558
90,725 Washington Mutual, Inc.
3,708,384
----------
- ----
86,226,087
- ------------------------------------------------------------
Foods--1.8%
89,034 Archer-Daniels Midland Co.
1,307,687
43,054 Bestfoods
2,023,538
64,947 Campbell Soup Co.
2,642,531
71,243 ConAgra, Inc.
1,821,149
23,436 General Mills, Inc.
1,770,883
55,314 H.J. Heinz & Co.
2,620,501
21,958 Hershey Foods Corp.
1,229,648
60,070 Kellogg Co.
2,031,117
19,989 Quaker Oats Co.
1,250,562
49,077 Ralston Purina Co.
1,309,742
137,186 Sara Lee Corp.
3,395,353
49,390 SYSCO Corp.
1,299,574
96,052 Unilever N.V.
6,381,455
16,752 Wm. Wrigley Jr. Co.
1,515,009
----------
- ----
30,598,749
- ------------------------------------------------------------
Forest Products--0.8%
6,549 Boise Cascade Corp.
211,205
15,450 Champion International Corp.
634,416
34,723 Fort James Corp.
1,100,285
13,734 Georgia-Pacific Corp.
1,019,749
46,652 International Paper Co.
1,968,131
80,416 Kimberly-Clark Corp.
3,854,942
13,256 Louisiana-Pacific Corp.
246,893
15,269 Mead Corp.
469,522
3,337 Potlatch Corp.
113,249
7,345 Temple-Inland, Inc.
460,899
10,045 Union Camp Corp. $
674,271
16,730 Westvaco Corp.
351,330
31,100 Weyerhaeuser Co.
1,726,050
15,680 Willamette Industries, Inc.
591,920
----------
- ----
13,422,862
- ------------------------------------------------------------
Gas Pipelines--0.5%
22,097 Cinergy Corp.
607,667
11,306 Columbia Gas System, Inc.(a)
590,739
13,845 Consolidated Natural Gas Co.
674,078
49,653 Enron Corp.
3,190,205
3,832 Peoples Energy Corp.
123,822
33,239 Sempra Energy
637,773
64,992 Williams Companies, Inc.
2,567,184
----------
- ----
8,391,468
- ------------------------------------------------------------
Health Care--0.2%
42,376 McKesson HBOC, Inc.
2,796,816
- ------------------------------------------------------------
Hospital Management--0.5%
96,831 Columbia/HCA Healthcare Corp.
1,833,737
16,260 HCR Manor Care Inc.
370,931
61,749 Healthsouth Corp.(a)
640,646
21,810 Humana, Inc.(a)
376,223
48,610 IMS Health Inc.
1,610,206
45,260 Service Corp. International
644,955
3,097 Shared Medical Systems Corp.
172,464
44,248 Tenet Healthcare Corp.(a)
837,947
27,306 United Healthcare Corp.
1,436,978
----------
- ----
7,924,087
- ------------------------------------------------------------
Housing Related--0.5%
6,104 Armstrong World Industries, Inc.
275,825
8,097 Centex Corp.
270,237
4,250 Fleetwood Enterprises, Inc.
121,656
53,674 Lowe's Companies, Inc.
3,247,277
49,326 Masco Corp.
1,393,460
14,518 Maytag Corp.
876,524
8,714 Owens Corning(a)
277,214
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Housing Related (cont'd.)
38,083 Pioneer Hi-Bred International, Inc. $
1,432,873
12,838 Stanley Works
328,974
7,240 Tupperware Corp.
130,320
11,339 Whirlpool Corp.
616,558
----------
- ----
8,970,918
- ------------------------------------------------------------
Insurance--3.4%
21,393 Aetna Life & Casualty Co.
1,775,619
125,108 Allstate Corp.
4,636,815
37,740 American General Corp.
2,660,670
183,721 American International Group, Inc.
22,161,346
24,893 Aon Corp.
1,574,482
24,734 Chubb Corp.
1,448,485
31,497 CIGNA Corp.
2,639,842
27,214 Cincinnati Financial Corp.
991,610
46,060 Conseco, Inc.
1,422,103
34,253 ITT Hartford Group, Inc.
1,945,999
14,891 Jefferson-Pilot Corp.
1,008,865
15,915 Lincoln National Corp.
1,573,596
37,870 Marsh & McLennan Companies, Inc.
2,809,481
13,972 MBIA, Inc.
810,376
18,020 MGIC Investment Corp.
631,826
10,593 Progressive Corp.
1,520,095
19,700 Provident Companies, Inc.
680,881
21,229 SAFECO Corp.
858,448
33,617 St. Paul Companies, Inc.
1,044,228
20,215 Torchmark Corp.
639,299
19,585 UNUM Corp.
931,512
30,408 Wachovia Corp.
2,468,749
----------
- ----
56,234,327
- ------------------------------------------------------------
Leisure--0.5%
13,899 Brunswick Corp.
264,949
90,800 Carnival Corp.
4,409,475
19,724 Harrah's Entertainment, Inc.(a)
375,989
30,154 Hasbro, Inc.
872,581
9,102 King World Productions, Inc.(a)
278,180
41,113 Mattel, Inc.
1,022,686
25,907 Mirage Resorts, Inc.(a)
550,524
----------
- ----
7,774,384
Lodging--0.1%
38,921 Hilton Hotels Corp. $
547,327
36,952 Marriott International, Inc.
(Class 'A' Stock)
1,242,511
----------
- ----
1,789,838
- ------------------------------------------------------------
Machinery--0.6%
2,764 Briggs & Stratton Corp.
136,300
11,725 Case Corp.
297,522
52,428 Caterpillar, Inc.
2,408,411
14,520 Cooper Industries, Inc.
618,915
34,040 Deere & Co.
1,314,795
34,562 Dover Corp.
1,136,226
10,977 Eaton Corp.
784,855
22,521 Harnischfeger Industries, Inc.
128,088
25,995 Ingersoll-Rand Co.
1,290,002
12,582 PACCAR, Inc.
518,221
15,292 Parker Hannifin Corp.
523,751
7,642 Snap-On, Inc.
221,618
21,902 Thermo Electron Corp.(a)
297,046
7,537 Timken Co.
122,476
----------
- ----
9,798,226
- ------------------------------------------------------------
Manufacturing--0.1%
19,800 Danaher Corp.
1,034,550
8,296 Milacron, Inc.
130,662
----------
- ----
1,165,212
- ------------------------------------------------------------
Media--3.3%
107,328 CBS Corp.
4,393,740
39,538 Clear Channel Communications,
Inc.(a)
2,651,517
54,610 Comcast Corp.
3,437,017
307,013 Disney (Walt) Co.
9,555,780
21,840 Donnelley (R.R.) & Sons, Co.
702,975
14,904 Dow Jones & Co., Inc.
703,282
42,389 Gannett Co., Inc.
2,670,507
21,906 Interpublic Group of Companies, Inc.
1,705,930
12,283 Knight-Ridder, Inc.
614,150
29,000 McGraw Hill Companies., Inc.
1,580,500
90,681 Mediaone Group, Inc.
5,758,243
6,696 Meredith Corp.
210,506
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Media (cont'd.)
26,990 New York Times Co. $
769,215
183,416 Time Warner, Inc.
13,033,999
10,738 Times Mirror Co.
580,523
17,641 Tribune Co.
1,154,383
52,916 Viacom, Inc.(a)
4,441,637
----------
- ----
53,963,904
- ------------------------------------------------------------
Mineral Resources--0.2%
8,898 ASARCO, Inc.
122,348
58,824 Barrick Gold Corp. (ADR) (Canada)
1,003,684
34,665 Battle Mountain Gold Co.
95,329
11,362 Cyprus Amax Minerals Co.
137,764
22,428 Freeport-McMoran Copper & Gold, Inc.
243,905
34,684 Homestake Mining Co.
299,150
21,303 INCO Ltd.
283,596
24,297 Newmont Mining Corp.
425,197
9,285 Phelps Dodge Corp.
457,286
34,270 Placer Dome, Inc.
383,396
----------
- ----
3,451,655
- ------------------------------------------------------------
Miscellaneous Basic Industry--5.3%
55,422 Applied Materials, Inc.(a)
3,418,845
46,358 BB&T Corp.
1,677,580
27,777 Browning-Ferris Industries, Inc.
1,071,151
127,759 Cendant Corp.(a)
2,012,204
10,383 Crane Co.
251,139
19,541 Ecolab, Inc.
693,705
24,608 Fortune Brands, Inc.
952,022
490,824 General Electric Co.
54,297,405
24,564 General Instruments Corp.
744,596
36,768 Illinois Tool Works, Inc.
2,275,020
14,986 ITT Industries, Inc.
530,130
17,334 Loews Corp.
1,293,550
5,061 Millipore Corp.
122,097
1,523 NACCO Industries, Inc.
112,797
25,767 Omnicom Group
2,059,750
16,504 Pall Corp.
273,348
25,574 PPG Industries, Inc.
1,310,667
12,518 Sealed Air Corp.
615,729
23,867 Textron, Inc.
1,846,709
17,249 TRW, Inc. $
784,829
97,456 Tyco International Ltd.
6,992,468
13,874 W.W. Grainger, Inc.
597,449
88,013 Waste Management, Inc.
3,905,577
----------
- ----
87,838,767
- ------------------------------------------------------------
Miscellaneous Consumer Growth--0.6%
9,598 American Greetings Corp.
243,549
11,532 Black & Decker Corp.
639,305
35,599 Corning, Inc.
2,135,940
48,165 Eastman Kodak Co.
3,076,539
6,358 Jostens, Inc.
135,108
58,899 Minnesota Mining & Manufacturing Co.
4,167,104
5,069 Polaroid Corp.
101,697
----------
- ----
10,499,242
- ------------------------------------------------------------
Office Equipment & Supplies--2.8%
17,368 Avery Dennison Corp.
998,660
250,947 Compaq Computer Corp.(a)
7,951,883
18,502 Honeywell, Inc.
1,402,683
18,041 Ikon Office Solutions, Inc.
231,150
138,317 International Business Machines
Corp.
24,516,688
40,925 Pitney Bowes, Inc.
2,608,969
68,250 Staples, Inc.(a)
2,243,719
39,090 Unisys Corp.(a)
1,082,304
97,498 Xerox Corp.
5,203,956
----------
- ----
46,240,012
- ------------------------------------------------------------
Petroleum--4.8%
13,578 Amerada Hess Corp.
683,143
16,910 Anadarko Petroleum Corp.
638,353
12,387 Apache Corp.
322,836
11,645 Ashland Oil, Inc.
476,717
48,238 Atlantic Richfield Co.
3,521,374
25,982 Burlington Resources, Inc.
1,037,656
98,062 Chevron Corp.
8,672,358
362,592 Exxon Corp.
25,585,398
12,259 Kerr-McGee Corp.
402,251
116,781 Mobil Corp.
10,276,728
49,038 Occidental Petroleum Corp.
882,684
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Petroleum (cont'd.)
39,336 Phillips Petroleum Co. $
1,858,626
322,131 Royal Dutch Petroleum Co. (ADR)
(Netherlands)
16,750,812
13,614 Sunoco, Inc.
490,955
24,258 Tenneco, Inc.
677,708
79,746 Texaco, Inc.
4,525,586
37,245 Union Pacific Resources Group, Inc.
442,284
33,839 Unocal Corp.
1,245,698
48,260 USX- Marathon Corp.
1,327,150
----------
- ----
79,818,317
- ------------------------------------------------------------
Petroleum Services--0.7%
49,479 Baker Hughes, Inc.
1,202,958
67,811 Halliburton Co.
2,610,723
9,058 Helmerich & Payne, Inc.
205,503
7,310 McDermott International, Inc.
185,034
55,052 PG&E Corp.
1,710,053
16,510 Rowan Companies, Inc.(a)
209,471
80,921 Schlumberger, Ltd.
4,870,433
15,859 Sonat, Inc.
475,770
----------
- ----
11,469,945
- ------------------------------------------------------------
Railroads--0.4%
71,923 Burlington Northern, Inc.
2,364,469
34,503 CSX Corp.
1,343,460
55,211 Norfolk Southern Corp.
1,456,190
36,729 Union Pacific Corp.
1,962,706
----------
- ----
7,126,825
- ------------------------------------------------------------
Restaurants--0.7%
19,902 Darden Restaurants, Inc.
410,479
203,130 McDonald's Corp.
9,204,328
23,466 Tricon Global Restaurants, Inc.
1,648,486
17,279 Wendy's International, Inc.
491,372
----------
- ----
11,754,665
- ------------------------------------------------------------
Retail--6.2%
36,706 Albertson's, Inc.
1,993,595
39,821 American Stores Co.
1,314,093
22,000 AutoZone, Inc. $
668,250
14,289 Circuit City Stores, Inc.
1,094,895
15,224 Consolidated Stores Corp.(a)
461,478
58,996 CVS Corp.
2,802,310
66,391 Dayton Hudson Corp.
4,423,300
16,223 Dillards, Inc.
411,659
26,512 Dollar General Corp.
901,408
32,875 Federated Department Stores, Inc.(a)
1,319,109
86,442 Gap, Inc.
5,818,627
4,177 Great Atlantic & Pacific Tea Co.,
Inc.
125,310
10,968 Harcourt General, Inc.
486,019
220,856 Home Depot, Inc.
13,748,286
40,684 J.C. Penney Co., Inc.
1,647,702
74,157 Kmart Corp.(a)
1,246,765
23,900 Kohl's Corp.
1,693,912
37,861 Kroger Co.(a)
2,266,927
8,396 Liz Claiborne, Inc.
273,920
4,682 Longs Drug Stores Corp.
142,508
52,772 May Department Stores Co.
2,064,685
23,706 Meyer, (Fred), Inc.(a)
1,395,691
41,328 Newell Rubbermaid, Inc.
1,963,061
42,138 Nike, Inc.
2,430,836
22,200 Nordstrom, Inc.
907,425
6,073 Pep Boys - Manny, Moe & Jack
92,613
33,404 Price Costco, Inc.(a)
3,058,554
6,849 Reebok International Ltd.
108,728
36,687 Rite-Aid Corp.
917,175
72,000 Safeway Inc.(a)
3,694,500
58,096 Sears, Roebuck & Co.
2,625,213
25,216 Sherwin-Williams Co.
709,200
15,412 Supervalu, Inc.
317,873
36,311 The Limited, Inc.
1,438,823
49,316 TJX Companies, Inc.
1,676,744
35,207 Toys 'R' Us, Inc.(a)
662,332
332,563 Wal-Mart Stores, Inc.
30,658,152
146,478 Walgreen Co.
4,138,003
20,740 Winn-Dixie Stores, Inc.
775,157
----------
- ----
102,474,838
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 9
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Rubber--0.1%
11,799 B.F. Goodrich Co. $
404,853
9,588 Cooper Tire & Rubber Co.
176,180
24,971 Goodyear Tire & Rubber Co.
1,243,868
----------
- ----
1,824,901
- ------------------------------------------------------------
Steel - Producers--0.1%
29,237 Allegheny Teldyne, Inc.
553,676
15,334 Bethlehem Steel Corp.(a)
126,505
14,828 Nucor Corp.
653,359
12,909 USX Corp. - U.S. Steel Group
303,361
11,408 Worthington Industries, Inc.
134,044
----------
- ----
1,770,945
- ------------------------------------------------------------
Telecommunications--4.7%
40,134 Alltel Corp.
2,503,358
10,622 Andrew Corp.(a)
130,783
33,608 Ascend Communications, Inc.(a)
2,812,570
11,300 Century Telephone Enterprises, Inc.
793,825
27,581 Frontier Corp.
1,430,764
197,622 Lucent Technologies, Inc.
21,293,771
273,500 MCI WorldCom, Inc.(a)
24,221,844
43,620 Nextel Communications, Inc.(a)
1,597,583
99,315 Northern Telecom, Ltd.
6,169,944
11,188 Scientific- Atlanta, Inc.
304,873
131,288 Sprint Corp.
9,385,038
28,947 Tellabs, Inc.(a)
2,829,569
74,275 US West, Inc.
4,089,767
----------
- ----
77,563,689
- ------------------------------------------------------------
Textiles--0.1%
11,885 Fruit of the Loom Ltd.
123,307
5,040 National Service Industries, Inc.
171,675
6,048 Russell Corp.
121,716
4,188 Springs Industries, Inc.
113,338
16,934 V.F. Corp.
799,073
----------
- ----
1,329,109
Tobacco--0.9%
363,079 Philip Morris Companies, Inc. $
12,775,842
46,200 RJR Nabisco Holdings Corp.
1,155,000
28,299 UST, Inc.
739,312
----------
- ----
14,670,154
- ------------------------------------------------------------
Transportation--0.0%
47,256 Laidlaw, Inc. (Class 'B' Stock)
274,676
- ------------------------------------------------------------
Trucking & Shipping--0.1%
21,758 FDX Corp.
2,019,414
9,221 Ryder System, Inc.
254,730
----------
- ----
2,274,144
- ------------------------------------------------------------
Utilities-Communications--5.5%
86,231 AirTouch Communications Inc.(a)
8,332,070
165,593 Ameritech Corp.
9,583,695
315,987 AT&T Corp.
25,219,713
231,522 Bell Atlantic Corp.
11,966,793
292,556 BellSouth Corp.
11,720,525
143,214 GTE Corp.
8,664,447
291,418 SBC Communications, Inc.
13,733,073
33,370 Unicom Corp.
1,220,091
----------
- ----
90,440,407
- ------------------------------------------------------------
Utilities - Electric--1.7%
28,200 AES Corp.(a)
1,050,450
20,969 Ameren Corp.
758,816
30,071 American Electric Power, Inc.
1,193,443
20,729 Baltimore Gas & Electric Co.
525,998
24,282 Carolina Power & Light Co.
918,163
35,101 Central & South West Corp.
822,680
36,451 Consolidated Edison, Inc.
1,651,686
27,449 Dominion Resources, Inc.
1,013,897
20,487 DTE Energy Co.
787,469
55,731 Duke Energy Co.
3,044,306
55,162 Edison International
1,227,354
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 10
<PAGE>
Portfolio of Investments as of
PRUDENTIAL INDEX SERIES FUND
March 31, 1999 (Unaudited)
PRUDENTIAL STOCK INDEX FUND
- ------------------------------------------------------------
- -------------------
- ------------------------------------------------------------
- -------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Utilities - Electric (cont'd.)
38,115 Entergy Corp. $
1,048,163
33,677 FirstEnergy Corp.
940,851
26,236 FPL Group, Inc.
1,397,067
19,428 GPU, Inc.
724,907
16,600 New Century Energies, Inc.
565,437
26,524 Niagara Mohawk Holdings Inc.
356,416
21,173 Northern States Power Co.
490,949
42,482 PacifiCorp
732,815
35,155 PECO Energy Co.
1,625,919
21,726 PP&L Resources, Inc.
537,719
34,897 Public Service Enterprise Group Inc.
1,332,629
41,279 Reliant Energy Inc.
1,075,834
102,315 Southern Co.
2,385,218
42,214 Texas Utilities Co.
1,759,796
----------
- ----
27,967,982
Total common stocks
(cost $1,164,999,410)
1,572,005,647
----------
- ----
SHORT-TERM INVESTMENTS--5.2%
U.S. Government Securities--0.3%
United States Treasury Bill,
$5,000 4.45%, 6/17/99
(cost $4,952,945) $
4,952,945
----------
- ----
- ------------------------------------------------------------
Repurchase Agreement--4.9%
81,013 Joint Repurchase Agreement Account,
4.912%, 4/1/99(Note 5)
(cost $81,013,000)
81,013,000
----------
- ----
Total short-term investments
(cost $85,965,945)
85,965,945
- ------------------------------------------------------------
Total Investments--100.2%
(cost $1,250,965,355)
1,657,971,592
Liabilities in excess of other
assets--(0.2%)
(3,275,411)
----------
- ----
Net Assets--100%
$1,654,696,181
----------
- ----
----------
- ----
</TABLE>
- ---------------
(a) Non-income producing.
(b) Pledged as initial margin on futures contracts.
ADR--American Depository Receipt.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 11
<PAGE>
Statement of Assets and Liabilities PRUDENTIAL
INDEX SERIES FUND
(Unaudited) PRUDENTIAL
STOCK INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
<S>
<C>
Investments, at value (cost
$1,250,965,355).............................................
................... $1,657,971,592
Cash........................................................
...............................................
118,953
Receivable for Fund shares
sold........................................................
.................... 10,134,559
Dividends and interest
receivable..................................................
........................ 1,620,219
Receivable from
Manager.....................................................
............................... 199,221
Prepaid
expenses....................................................
....................................... 6,289
- --------------
Total
assets......................................................
...................................... 1,670,050,833
- --------------
Liabilities
Payable for investments
purchased...................................................
....................... 7,071,007
Payable for Fund shares
reacquired..................................................
....................... 6,842,890
Due to broker-variation
margin......................................................
....................... 1,321,600
Accrued
expenses....................................................
....................................... 119,155
- --------------
Total
liabilities.................................................
...................................... 15,354,652
- --------------
Net
Assets......................................................
...........................................
$1,654,696,181
- --------------
- --------------
Net assets were comprised of:
Shares of beneficial interest, at
par.........................................................
.......... $ 57,208
Paid-in capital in excess of
par.........................................................
............... 1,230,853,720
- --------------
1,230,910,928
Undistributed net investment
income......................................................
............... 5,105,325
Accumulated net realized gain on
investments.................................................
........... 12,808,441
Net unrealized appreciation on
investments.................................................
............. 405,871,487
- --------------
Net assets, March 31,
1999........................................................
......................... $1,654,696,181
- --------------
- --------------
Class I:
Net asset value and redemption price per share
($949,977,905 / 32,836,037 shares of beneficial
interest issued and outstanding).....................
$28.93
- --------------
- --------------
Class Z:
Net asset value and redemption price per share
($704,718,276 / 24,371,980 shares of beneficial
interest issued and outstanding).....................
$28.92
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL STOCK INDEX FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income March 31, 1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $12,677)................... $ 8,568,489
Interest............................... 1,791,897
---------------
- -
Total income........................ 10,360,386
---------------
- -
Expenses
Management fee......................... 2,005,545
Transfer agent's fees and expenses..... 405,000
Custodian's fees and expenses.......... 96,000
Reports to shareholders................ 50,000
Registration fees...................... 33,000
Legal fees............................. 15,000
Audit fees............................. 12,000
Trustees' fees......................... 4,000
Miscellaneous.......................... 16,286
---------------
- -
Total expenses...................... 2,636,831
Less: Expense subsidy (Note 2)............ (330,793)
---------------
- -
Net expenses........................ 2,306,038
---------------
- -
Net investment income..................... 8,054,348
---------------
- -
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on:
Investment transactions................ 5,991,435
Financial futures contracts............ 10,630,797
---------------
- -
16,622,232
---------------
- -
Net change in unrealized appreciation (depreciation) on:
Investments............................ 272,584,991
Financial futures contracts............ (862,575)
---------------
- -
271,722,416
---------------
- -
Net gain on investments................... 288,344,648
---------------
- -
Net Increase in Net Assets
Resulting from Operations................. $296,398,996
---------------
- -
---------------
- -
</TABLE>
PRUDENTIAL INDEX SERIES FUND
PRUDENTIAL STOCK INDEX FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) March 31, September
30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income....... $ 8,054,348 $
11,235,227
Net realized gain on
investment transactions
and financial futures
contracts................ 16,622,232
4,662,002
Net change in unrealized
appreciation on
investments.............. 271,722,416
17,807,145
-------------- ---------
- -----
Net increase in net assets
resulting from
operations............... 296,398,996
33,704,374
-------------- ---------
- -----
Dividends and distributions (Note 1):
Dividends to shareholders
from net investment
income................... (12,614,911)
(5,903,209)
-------------- ---------
- -----
Distributions to
shareholders from net
realized gains........... (8,023,152)
(10,316,301)
-------------- ---------
- -----
Fund share transactions (Note
6):
Net proceeds from shares
sold..................... 692,642,494
1,025,544,442
Net asset value of shares
issued to shareholders in
reinvestment of
distributions............ 20,622,769
16,213,432
Cost of shares reacquired... (355,112,076)
(536,468,042)
-------------- ---------
- -----
Net increase in net assets
from Fund share
transactions............. 358,153,187
505,289,832
-------------- ---------
- -----
Net increase................... 633,914,120
522,774,696
Net Assets
Beginning of period............ 1,020,782,061
498,007,365
-------------- ---------
- -----
End of period(a)............... $1,654,696,181
$1,020,782,061
-------------- ---------
- -----
-------------- ---------
- -----
- ---------------
(a) Includes undistributed net
investment income of........ $ 5,105,325 $
9,665,888
-------------- ---------
- -----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 13
<PAGE>
Notes to Financial Statements PRUDENTIAL
INDEX SERIES FUND
(Unaudited) PRUDENTIAL
STOCK INDEX FUND
- ------------------------------------------------------------
- --------------------
The Prudential Index Series Fund (the 'Company'), formerly
the Prudential Dryden
Fund 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 currently
consists of five separate
funds, one of which is the Prudential Stock Index Fund (the
'Fund').
The Company had no operations until July 7, 1992 when 10,000
shares of
beneficial interest of the Company were sold for $100,000 to
Prudential
Institutional Fund Management, Inc. Investment operations of
the Fund commenced
on November 5, 1992. The Fund's investment objective is to
provide investment
results that correspond to the price and yield performance
of Standard & Poor's
500 Composite Stock Price Index.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Fund.
Securities Valuation: 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 or Nasdaq
are valued at the
last sale price on such exchange or board of trade on the
date of valuation or,
if there were no sales on such day, at the mean between the
closing bid and
asked prices quoted on such day or at the bid price in the
absence of an asked
price.
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, are valued by a principal market maker or
independent pricing
agent.
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
methodology or provides a valuation or methodology that, in
the judgment of the
subadvisers, does not represent fair value, are valued at
fair value as
determined under procedures established by the Trustees.
Repurchase Agreements: In connection with transactions in
repurchase agreements,
it is the Fund's policy that its custodian or designated
subcustodians, under
triparty repurchase agreements, as the case may be 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 Fund may be
delayed or limited.
Securities Transactions and Net 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. Expenses
are recorded on the accrual basis which may require the use
of certain estimates
by management.
Net investment income (other than transfer agent fees) and
unrealized and
realized gains or losses are allocated daily to each class
of shares based upon
the relative proportion of net assets of each class at the
beginning of the day.
Transfer agent fees are allocated based on shareholder
activity and number of
accounts for each class.
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 Fund invests in financial futures contracts in order to
hedge existing
portfolio securities, or securities the Fund intends to
purchase, against
fluctuations in value. Under a variety of circumstances, the
Fund may not
achieve the anticipated benefits of the financial futures
contracts and may
realize a loss. The use of futures transactions involves the
risk of imperfect
correlation in movements in the price of futures contracts
and the underlying
assets.
Dividends and Distributions: Dividends and distributions of
the Fund are
declared in cash and automatically reinvested in additional
shares of the Fund.
The Fund will declare and distribute its net investment
income and net capital
gains, if any, at least annually. Dividends and
distributions are recorded on
the ex-dividend date.
- ------------------------------------------------------------
- --------------------
14
<PAGE>
Notes to Financial Statements PRUDENTIAL INDEX
SERIES FUND
(Unaudited) PRUDENTIAL STOCK
INDEX FUND
- ------------------------------------------------------------
- --------------------
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
Taxes: It is the Fund's 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 investment income and net
capital gains, if
any, to its shareholders. Therefore, no federal income tax
provision is
required.
Withholding taxes on foreign dividends have been provided
for in accordance with
the Fund's understanding of the applicable country's tax
rules and rates.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential
Investments Fund Management
('PIFM'). Pursuant to this agreement PIFM has responsibility
for all investment
advisory services. PIFM has a subadvisory agreement with The
Prudential
Investment Corporation ('PIC'). PIC, subject to the
supervision of PIFM, manages
the assets of the Fund in accordance with its investment
objective and policies.
PIFM pays for the costs and expenses attributable to the
subadvisory agreement
and the salaries and expenses of all personnel of the Fund
except for fees and
expenses of unaffiliated Trustees. The management fee paid
to PIFM is computed
daily and payable monthly at an annual rate of .30 of 1% of
the Fund's average
daily net assets.
PIFM has agreed to reimburse the Fund so that total
operating expenses do not
exceed .40% of the average net assets for Class Z shares of
the Fund. PIFM has
agreed to reimburse the Fund so that total operating
expenses do not exceed .30%
of the average net assets for Class I shares of the Fund.
This voluntary waiver
may be terminated at any time without notice. For the six
months ended March 31,
1999, PIFM subsidized $330,793 of the expenses of the Fund
(.02% of the average
net assets of the Fund $.006 per share).
Prudential Securities Incorporated ('PSI') acted as the
distributor of the
Fund's shares through May 31, 1998. Prudential Investment
Management Services
('PIMS') became the distributor of the Fund effective June
1, 1998 and is
serving under the same terms and conditions as under the
agreement with PSI.
Under the distribution agreement, PSI and PIMS incurred the
expenses of
distributing the Fund's shares, none of which is reimbursed
or paid for by the
Fund.
PIC, PIFM, PIMS and PSI are wholly owned subsidiaries of The
Prudential
Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated
registered
investment companies (the 'Funds'), entered into a
syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment
under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of
.065 of 1% on the
unused portion of the credit facility, which is accrued and
paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9,
2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements are to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months
ended March 31, 1999,
the Fund incurred fees of approximately $390,000 for the
services of PMFS. As of
March 31, 1999, approximately $75,000 of such fees were due
to PMFS. Transfer
agent fees and expenses in the Statement of Operations also
include certain
out-of-pocket expenses paid to nonaffiliates.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of portfolio securities, excluding short-
term investments,
for the six months ended March 31, 1999 aggregated
$316,624,301 and $21,268,200,
respectively.
On March 31, 1999, the Fund held 236 purchased financial
futures contracts on
the S&P 500 Index expiring by June 1999. The cost of such
contracts was
$77,439,450. The value of such contracts on March 31, 1999
was $76,304,700,
thereby resulting in an unrealized loss of $1,134,750.
The cost basis of investments for federal income tax
purposes was $1,250,970,994
and, accordingly, as of March 31, 1999, net unrealized
appreciation for federal
income tax purposes was $407,000,598 (gross unrealized
appreciation--$441,008,887; gross unrealized depreciation--
$34,008,289).
- ------------------------------------------------------------
- --------------------
15
<PAGE>
Notes to Financial Statements PRUDENTIAL INDEX
SERIES FUND
(Unaudited) PRUDENTIAL STOCK
INDEX FUND
- ------------------------------------------------------------
- --------------------
Note 5. Joint Repurchase Agreement Account
The Fund, 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 March 31,
1999, the Fund had
a 14.6% undivided interest in the repurchase agreements in
the joint account.
The undivided interest represented $81,013,000 in principal
amount. As of such
date, each repurchase agreement in the joint account and the
collateral therefor
was as follows:
Bear, Stearns & Co., 4.92%, in the principal amount of
$170,000,000, repurchase
price $170,023,233, due 4/1/99. The value of the collateral
including accrued
interest was $174,282,442.
Morgan Stanley Dean Witter, 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $173,474,773.
Solomon Smith Barney, Inc., 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $174,947,170.
SBC Warburg Dillon Read, Inc., 4.97%, in the principal
amount of $44,773,000,
repurchase price $44,779,181, due 4/1/99. The value of the
collateral including
accrued interest was $45,668,747.
- ------------------------------------------------------------
Note 6. Capital
The Fund offers Class I and Class Z shares. Class I shares
are not subject to
any sales or redemption charge and are offered to certain
pension, profit
sharing or other employee benefit plans qualified under
Section 401, 457 or
403(b)(7) of the Internal Revenue Code. Class Z shares are
not subject to any
sales or redemption charge and are offered exclusively for
sale to a limited
group of investors.
The Fund has authorized an unlimited number of shares of
beneficial interest at
$.001 par value dividend into two classes, designated Class
Z and Class I.
Transactions in shares of beneficial interest during the six
months ended March
31, 1999 and the fiscal year ended September 30, 1998 were
as follows:
<TABLE>
<CAPTION>
Class I Shares Amount
- --------------------------------- ----------- ---------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold...................... 11,896,497 $
324,474,059
Shares issued in reinvestment of
dividends and distributions.... 490,382
12,784,255
Shares reacquired................ (7,192,224)
(192,760,487)
----------- ---------
- ----
Net increase in shares
outstanding.................... 5,194,655 $
144,497,827
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold...................... 25,552,010 $
611,299,960
Shares issued in reinvestment of
dividends and distributions.... 498,260
10,662,778
Shares reacquired................ (12,681,495)
(302,961,258)
----------- ---------
- ----
Net increase in shares
outstanding.................... 13,368,775 $
319,001,480
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class Z
- ---------------------------------
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold...................... 13,550,491 $
368,168,435
Shares issued in reinvestment of
dividends and distributions.... 300,787
7,838,514
Shares reacquired................ (5,980,992)
(162,351,589)
----------- ---------
- ----
Net increase in shares
outstanding.................... 7,870,286 $
213,655,360
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold...................... 17,424,666 $
414,244,482
Shares issued in reinvestment of
dividends and distributions.... 259,498
5,550,654
Shares reacquired................ (9,685,172)
(233,506,784)
----------- ---------
- ----
Net increase in shares
outstanding.................... 7,998,992 $
186,288,352
----------- ---------
- ----
----------- ---------
- ----
</TABLE>
Of the shares outstanding at March 31, 1999, PIFM and
affiliates owned
10,897,468 shares of the Fund.
- ------------------------------------------------------------
- --------------------
16
<PAGE>
Financial Highlights PRUDENTIAL INDEX
SERIES FUND
(Unaudited) PRUDENTIAL STOCK
INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class Z
-----
- ------------------------------------------------------------
- ----------
Six
Months
Ended Year Ended September 30,
March 31, ---------------------------------------------
- --------------
1999 1998 1997 1996 1995
1994
-----
- ------ -------- -------- -------- --------
- -------
<S> <C>
<C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $
23.11 $ 21.86 $ 16.06 $ 14.22 $ 11.27
$ 11.12
-----
- ------ -------- -------- -------- --------
- -------
Income from investment operations:
Net investment income(a)............................
.09 .15 .46 .25 .23
.26
Net realized and unrealized gain on investment
transactions.....................................
6.16 1.69 5.75 2.44 2.97
.11
-----
- ------ -------- -------- -------- --------
- -------
Total from investment operations..................
6.25 1.84 6.21 2.69 3.20
.37
-----
- ------ -------- -------- -------- --------
- -------
Less distributions:
Dividends from net investment income................
(.26) (.21) (.26) (.28) (.22)
(.18)
Distributions from net realized gains...............
(.18) (.38) (.15) (.57) (.03)
(.04)
-----
- ------ -------- -------- -------- --------
- -------
Total distributions...............................
(.44) (.59) (.41) (.85) (.25)
(.22)
-----
- ------ -------- -------- -------- --------
- -------
Net asset value, end of period...................... $
28.92 $ 23.11 $ 21.86 $ 16.06 $ 14.22
$ 11.27
-----
- ------ -------- -------- -------- --------
- -------
-----
- ------ -------- -------- -------- --------
- -------
TOTAL RETURN(b).....................................
27.19% 8.61% 39.34% 19.72% 29.02%
3.33%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..................... $
704,718 $381,374 $185,881 $184,379 $101,945
$50,119
Average net assets (000)............................ $
542,470 $313,721 $254,644 $142,540 $ 71,711
$38,098
Ratios to average net assets:(a)
Expenses..........................................
.40%(c) .40% .46% .60% .60%
.60%
Net investment income.............................
1.15%(c) 1.30% 1.66% 1.92% 2.55%
2.34%
Portfolio turnover rate.............................
2% 1% 5% 2% 11%
2%
</TABLE>
- ---------------
(a) Net of expense subsidy.
(b) 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.
(c) Annualized.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 17
<PAGE>
Financial Highlights PRUDENTIAL
INDEX SERIES FUND
(Unaudited) PRUDENTIAL
STOCK INDEX FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class I
----
- -------------------------------------------
August 1,
Six
Months 1997(a)
Ended Year Ended Through
March 31, September 30, September 30,
1999 1998 1997
----
- ------- ------------- -------------
<S> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $
23.13 $ 21.87 $ 21.87
----
- ------- ------------- -------------
Income from investment operations:
Net investment income(b)............................
.17 .31 .06
Net realized and unrealized gain on investment
transactions.....................................
6.09 1.55 (.06)
----
- ------- ------------- -------------
Total from investment operations..................
6.26 1.86 --
----
- ------- ------------- -------------
Less distributions:
Dividends from net investment income................
(.28) (.22) --
Distributions from net realized gains...............
(.18) (.38) --
----
- ------- ------------- -------------
Total distributions...............................
(.46) (.60) --
----
- ------- ------------- -------------
Net asset value, end of period...................... $
28.93 $ 23.13 $ 21.87
----
- ------- ------------- -------------
----
- ------- ------------- -------------
TOTAL RETURN(d).....................................
27.24% 8.69% 0%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)..................... $
949,978 $ 639,408 $ 312,127
Average net assets (000)............................ $
798,233 $ 505,605 $ 296,788
Ratios to average net assets:(b)
Expenses..........................................
.30%(c) .30% .30%(c)
Net investment income.............................
1.24%(c) 1.42% 1.73%(c)
Portfolio turnover rate.............................
2% 1% 5%
</TABLE>
- ---------------
(a) Commencement of offering of Class I shares.
(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. 18
<PAGE>
Getting The Most From Your Prudential Mutual Fund
How many times have you read these letters--or other
financial
materials-- and stumbled across a word that you don't
understand?
Many shareholders have run into the same problem. We'd like
to
help. So we'll use this space from time to time to explain
some
of the words you might have read, but not understood. And if
you
have a favorite word that no one can explain to your
satisfaction, please write to us.
Basis Point: 1/100th of 1%. For example, one-half of one
percent
is 50 basis points.
Collateralized Mortgage Obligations (CMOs): Mortgage-backed
bonds that separate mortgage pools into different maturity
classes, called tranches. These instruments are sensitive
to changes in interest rates and homeowner refinancing
activity. They
are subject to prepayment and maturity extension risk.
Derivatives: Securities that derive their value from other
securities. The rate of return of these financial
instruments
rises and falls--sometimes very suddenly --in response to
changes in some specific interest rate, currency, stock or
other
variable.
Discount Rate: The interest rate charged by the Federal
Reserve on loans to member banks.
Federal Funds Rate: The interest rate charged by one bank
to another on overnight loans.
Futures Contract: An agreement to purchase or sell a
specific
amount of a commodity or financial instrument at a set price
at a specified date in the future.
Leverage: The use of borrowed assets to enhance return. The
expectation is that the interest rate charged on borrowed
funds will be lower than the return on the investment. While
leverage can increase profits, it can also magnify losses.
Liquidity: The ease with which a financial instrument (or
product) can be bought or sold (converted into cash) in
the financial markets.
Price/Earnings Ratio: The price of a share of stock divided
by the earnings per share for a 12-month period.
Option: An agreement to purchase or sell something, such
as shares of stock, by a certain time for a specified price.
An option need not be exercised.
Spread: The difference between two values; often used to
describe the difference between "bid" and "asked" prices
of a security, or between the yields of two similar maturity
bonds.
Yankee Bond: A bond sold by a foreign company or government
in the U.S. market and denominated in U.S. dollars.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive
financial advice through a Prudential Securities financial
advisor or Prudential/Pruco Securities registered
representative.
Your advisor or representative can provide you with the
following
services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you match the reward you seek with the risk you can
tolerate.
And risk can be difficult to gauge--sometimes even the
simplest
investments bear surprising risks. The educated investor
knows
that markets seldom move in just one direction--there are
times
when a market sector or asset class will lose value or
provide
little in the way of total return. Managing your own
expectations
is easier with help from someone who understands the
markets and who knows you!
Keeping Up With The Joneses
A financial advisor or registered representative can help
you
wade through the numerous mutual funds available to find the
ones that fit your own individual investment profile and
risk
tolerance. While the newspapers and popular magazines are
full
of advice about investing, they are aimed at generic groups
of
people or representative individuals, not at you personally.
Your financial advisor or registered representative will
review
your investment objectives with you. This means you can make
financial decisions based on the assets and liabilities in
your
current portfolio and your risk tolerance--not just based on
the
current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom
are among the most common investor mistakes. But, sometimes
it's difficult to hold on to an investment when it's losing
value every month. Your financial advisor or registered
representative can answer questions when you're confused or
worried about your investment, and remind you that you're
investing for the long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report, and are subject to change thereafter.
The accompanying financial statements as of March 31,
1999, were not audited and, accordingly, no opinion is
expressed on them.
This report is not authorized for distribution to
prospective investors unless preceded or accompanied
by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds BULK RATE
Gateway Center Three U.S. POSTAGE
100 Mulberry Street PAID
Newark, NJ 07102-4077 Permit 6807
(800) 225-1852 New York, NY
74431F209 MF174E2
74431F860
