<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Bond Market Index Fund
Fund Type Bond
Objective Provide investment results that correspond to
the total return performance of the applicable index
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
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 that currently is the Lehman Brothers
Aggregate Index (the Index). The Index is composed of
U.S. government securities, investment-grade 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.
Portfolio Composition
Expressed as a percentage of
long-term investments as of 3/31/00
34.7% Mortgage-Backed
29.4 U.S. Treasury Securities
21.7 Corporates
8.5 U.S. Government Agency
2.3 Collateralized Mortgage Obligations
1.7 Asset-Backed
1.7 Foreign Gov't Obligations
Credit Quality
Expressed as a percentage of long-term
total investments as of 3/31/00
77.2% Aaa
4.1 Aa
10.9 A
7.5 Baa
0.3 Ba
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Since
Months Year Inception2
Class Z 1.88% (1.78) 1.29% (1.08) 12.12% (11.32)
Lipper Intermediate
U.S Gov't Fund Avg.3 1.53 0.97 10.57
Lehman Brothers
Aggregate Bond Index4 2.08 1.87 13.42
Average Annual Total Returns1 As of 3/31/00
One Since
Year Inception2
Class Z 1.29% (1.08) 4.69% (4.39)
Distributions and Yields As of 3/31/00
Total Distributions 30-Day
Paid for Six Months SEC Yield
Class Z $0.57 6.53%
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 LLC 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 Lipper average returns are for all funds in each share
class for the six-month, one-year, and since-inception
periods in the Intermediate U.S. Government Fund
category. The Lipper average is unmanaged. Intermediate
U.S. Government funds invest at least 65% of their assets
in securities issued or
guaranteed by the U.S. government, its agencies, or its
instrumentalities, with dollar-weighted average
maturities of five to ten years.
4 Source: Lehman Brothers, Inc. based on data retrieved
by Lipper Inc. The Lehman Brothers Aggregate Bond 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.
1
<PAGE>
Prudential Bond Market Index Fund
Message From the Fund's President May 24, 2000
Dear Shareholder,
On May 24, 2000, the Board of Trustees of Prudential
Index Series Fund for Prudential Bond Index Fund decided
that it was in our shareholders' best interest to
liquidate the Fund as soon as possible, but no later than
September 29, 2000. The decision to liquidate was based
upon the determination that over its lifetime, the Fund
was unable to gather enough assets to operate
efficiently. You should receive further communication
about this decision shortly.
The Fund's Class Z shares returned 1.88% for the six
months that ended on March 31, 2000, which was below the
2.08% return on the Lehman Brothers Aggregate Bond Index,
but above the 1.53% return on the Lipper Intermediate
U.S. Government Fund Average.
The low returns of the Fund, the Lehman Index, and the
Lipper Average reflect a period during which several
variables affected the U.S. bond markets. For example,
the fixed-income markets had to contend with repeated
increases in short-term interest rates by the Federal
Reserve, as well as technical factors that created
imbalances in the supply and demand for certain types of
debt securities. The following report examines these
trends during our six-month review period, and explains
how the Fund was positioned accordingly.
Thank you for your continued confidence in Prudential
mutual funds.
Sincerely,
John R. Strangfeld, President
Prudential Index Series Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
There was rarely a dull moment in the U.S. bond markets
during the six months that ended on March 31, 2000.
Besides a trend toward higher interest rates in the
United States, bond investors dealt with a rapidly
shrinking supply of longer-term U.S. Treasury securities
and a legislative proposal to end the federal
government's implicit support of the nation's two largest
buyers of home mortgages. These developments heightened
volatility in the domestic fixed-income markets.
Interest-rate fears deepened on October 5, 1999, when
Federal Reserve policy makers announced they were leaning
toward tightening monetary policy. The Fed had already
raised short-term rates twice in the summer of 1999,
hoping that higher borrowing costs would slow U.S.
economic activity and prevent rising inflation. But the
central bankers remained so concerned about economic
conditions that they stood ready to increase rates again,
if necessary.
In anticipation of the next rate hike, investors began to
drive bond yields higher, which caused their prices to
fall. On November 16, 1999, the Fed boosted its target
for the federal funds rate (the rate U.S. banks charge
each other for overnight loans) by a quarter of a
percentage point to 5.50%.
Its discount rate on banks that borrow from the Federal
Reserve system was increased to 5.00% from 4.75%.
Prices of longer-term Treasuries climbed...
Prices in U.S. fixed-income markets continued to decline,
pushing up the
30-year Treasury bond yield to 6.74% in mid-January 2000--
its highest level during our six-month review period.
However, the sell-off soon turned into a powerful rally,
at least for longer-term Treasuries.
The U.S. Treasury Department announced it would issue
fewer of its longer-term securities because of the
growing federal budget surplus and a reduced need to sell
new debt. It also commenced its program to buy back
$30 billion of older, mostly longer-term Treasuries by
the end of 2000.
3
<PAGE>
Prudential Bond Market Index Fund
Investment Adviser's Report
The buyback amount is a small portion of the more than
$3.3 trillion in publicly traded U.S. government debt.
Nevertheless, the prospect of a declining supply of
longer-term Treasuries set off a stampede to buy them.
This trend drove the price of 30-year Treasury bonds so
high that their yield slid below 6.00%, which was lower
than the yield on two-year Treasury notes. This anomaly
is called an inversion of the yield curve, which is a
graph that depicts yields on Treasuries from the shortest
to the longest maturity. Although an inverted yield curve
typically signals an impending economic recession, we
believe it occurred this time primarily because the
demand for longer-term Treasuries exceeded the supply.
...leaving other U.S. bond markets in the dust
Other U.S. fixed-income markets could not keep up with
the rally in longer-term Treasuries. For example,
investment-grade corporate bonds returned only 1.46% for
the six months that ended on March 31, 2000, compared
with 3.02% for Treasuries. Investor demand for
investment-grade corporate bonds faded amid concern that
the Fed might raise rates enough to materially slow U.S.
economic growth and hurt corporate credit quality. The
central bank engineered quarter-point rate hikes in
February and March 2000. These moves raised the federal
funds rate to 6.00% and its discount rate to 5.50%.
Clinton support of legislative proposal rocked
mortgage-backed securities
Besides the changes in monetary policy, there was also
concern about the remarks of a U.S. Treasury official who
said the Clinton administration backs a bill that would
end implicit government support for Fannie Mae and
Freddie Mac. These two government-sponsored enterprises
buy select mortgages from financial institutions and
package the mortgages into securities that are sold to
investors by Wall Street brokerage firms.
4
<PAGE>
www.prudential.com (800) 225-1852
Neither Fannie Mae's nor Freddie Mac's mortgage-backed
securities are backed by the full faith and credit of the
U.S. government. However, both have a line of credit from
the U.S. Treasury that can be drawn on in a crisis. The
possibility that this line of credit may be repealed led
some investors to sell the mortgage-backed securities and
bonds of Fannie Mae and Freddie Mac. For the six-month
period, mortgage-backed securities returned a modest
1.77%.
Looking Ahead
On May 16, 2000, the Fed increased the federal funds rate
and its discount rate by half of a percentage point to
6.50% and 6.00%, respectively. We believe the central
bank will continue to tighten monetary policy by another
half of a percentage point this year. Because of the
Fed's repeated efforts, we expect U.S. economic growth to
moderate slightly and inflation to taper off in the
second half of the year.
Under these more favorable economic conditions,
investment-grade corporate bonds, mortgage-backed
securities, federal agency securities, and asset-backed
securities should perform better than Treasuries later in
the year. Their improved performance is all the more
likely because these bond markets cheapened substantially
relative to Treasuries in the first quarter of 2000.
Prudential Index Series Fund Management Team
Prudential Bond Market Index Fund
5
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description (a) Rating Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 98%
Corporate Bonds 20%
----------------------------------------------------------------------------------------
Finance 9.1%
Bank Tokyo Mitsubishi Ltd. A3 8.40% 04/15/10 $ 150 $ 151,875
BankAmerica Corp. Aa3 7.20 04/15/06 330 324,852
BankBoston Corp. A2 6.125 03/15/02 115 112,353
Chase Manhattan Corp. A1 7.125 03/01/05 250 247,393
Chemical Bank Aa3 7.00 06/01/05 180 176,364
Citicorp A1 7.625 05/01/05 300 302,460
Donaldson, Lufkin & Jenrette, Inc. A3 6.50 06/01/08 350 320,348
First Union Corp. A2 7.50 07/15/06 110 109,329
General Motors Acceptance Corp. A2 7.75 01/19/10 360 363,323
Heller Financial, Inc. A3 6.00 03/19/04 200 189,136
Intermediate American Development
Bank Aaa 7.375 01/15/10 245 246,377
Lehman Brothers Holdings, Inc. A3 6.625 02/05/06 35 33,423
Merrill Lynch and Co., Inc. Aa3 6.50 04/01/01 60 59,602
Merrill Lynch and Co., Inc. Aa3 6.00 02/17/09 500 446,235
Morgan Stanley Dean Witter Aa3 7.125 01/15/03 500 496,715
Nations Bank Aa3 7.50 09/15/06 100 99,893
Swiss Bank Corp. Aa1 7.00 10/15/15 200 188,660
U.S. West Capital Funding, Inc. Baa1 6.875 08/15/01 200 198,680
-----------
4,067,018
----------------------------------------------------------------------------------------
Industrials 7.6%
Caterpillar, Inc. A2 9.00 04/15/06 180 192,368
Coca Cola Enterprises, Inc. A2 8.50 02/01/22 50 54,451
Comcast Cable(b) Baa2 6.20 11/15/08 400 360,696
Delta Air Lines, Inc. Baa3 8.30 12/15/29 150 139,460
Ford Motor Co. A1 6.375 02/01/29 100 84,337
Ford Motor Credit Co. A1 9.98 02/15/47 220 277,768
IBM Corp.(b) A1 5.625 04/12/04 150 141,702
IBM Corp. A1 5.50 01/15/09 225 200,988
Lockheed Martin Corp. Baa3 7.25 05/15/06 200 191,666
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description (a) Rating Rate Date (000) (Note 1)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
News America Holdings, Inc.(b) Baa3 8.875% 04/26/23 $ 300 $ 316,578
News America Holdings, Inc. Baa3 9.25 02/01/13 200 219,046
Northrop Grumman Corp. Baa3 8.625 10/15/04 200 205,410
Penney (J.C.) & Co.(b) Baa2 9.05 03/01/01 250 251,662
Rockwell International Corp.(b) A1 6.625 06/01/05 450 439,141
Union Pacific Corp. Baa3 6.625 02/01/29 200 169,590
Waste Management, Inc. Ba1 6.625 07/15/02 150 140,518
-----------
3,385,381
----------------------------------------------------------------------------------------
Utilities 3.3%
AT&T Corp. A1 6.00 03/15/09 150 135,719
Carolina Power & Light Co. A2 6.80 08/15/07 70 67,435
Electric Lightwave, Inc. A2 6.05 05/15/04 150 140,250
Empresa Electric Pehuenche S.A. Baa1 7.30 05/01/03 300 285,009
GTE Corp. Baa1 6.36 04/15/06 250 235,497
GTE Corp. Baa1 7.51 04/01/09 75 74,671
Pacificorp A2 6.375 05/15/08 300 273,315
Sprint Capital Corp. Baa1 6.90 05/01/19 180 164,704
TCI Communications, Inc.(b) A2 8.75 08/01/15 100 109,532
-----------
1,486,132
-----------
Total corporate bonds
(cost $9,319,667) 8,938,531
----------------------------------------------------------------------------------------
Asset Backed Securities 1.7%
Credit Card Receivables Trust,
Series 1998-I Aaa 6.478 12/22/04 252 246,150
World Financial Network Credit Card
Master Trust, Series 1996 B,
Class A Aaa 6.95 04/15/06 500 495,000
-----------
Total asset backed securities
(cost $764,350) 741,150
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description (a) Rating Rate Date (000) (Note 1)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Collateralized Mortgage Obligations 2.2%
First Union National Bank Chase
Certificate 1999 C2 Aaa 6.65% 04/15/09 $ 650 $ 612,803
Shurgard Securities Trust, Series 1,
Class 1 Aaa 8.24 06/15/01 380 380,890
-----------
Total collateralized mortgage
obligations (cost $1,004,749) 993,693
----------------------------------------------------------------------------------------
Mortgage Backed Securities 34.0%
Federal Home Loan Mortgage Corp. 08.00 10/01/24 55 55,085
Federal Home Loan Mortgage Corp. 08.00 08/01/27 922 927,043
Federal Home Loan Mortgage Corp. 6.50 11/01/28 848 797,083
Federal Home Loan Mortgage Corp.(a) 7.00 04/01/30 1,500 1,442,805
Federal National Mortgage Assoc. 7.50 05/01/13 276 276,585
Federal National Mortgage Assoc. 7.50 01/01/14 100 100,315
Federal National Mortgage Assoc. 7.50 04/01/14 387 387,601
Federal National Mortgage Assoc. 6.00 06/01/14 954 898,149
Federal National Mortgage Assoc. 7.50 06/01/26 480 472,965
Federal National Mortgage Assoc. 7.50 11/01/27 418 411,480
Federal National Mortgage Assoc. 7.50 09/01/28 327 321,965
Federal National Mortgage Assoc. 6.00 04/01/29 489 445,423
Federal National Mortgage Assoc. 6.00 06/01/29 495 450,695
Federal National Mortgage Assoc.(a) 6.50 04/01/30 3,000 2,812,500
Federal National Mortgage Assoc.(a) 6.50 02/27/15 1,500 1,444,215
Federal National Mortgage Assoc. 6.50 08/15/04 400 391,312
Federal National Mortgage Assoc.(a) 7.00 04/01/15 400 392,936
Government National Mortgage Assoc. 8.49 01/15/19 84 86,222
Government National Mortgage Assoc. 7.50 04/15/26 48 47,765
Government National Mortgage Assoc. 7.50 04/15/27 311 308,664
Government National Mortgage Assoc. 7.50 08/15/28 416 413,431
Government National Mortgage Assoc. 6.50 09/15/28 935 882,491
Government National Mortgage
Assoc.(a) 7.00 04/01/30 1,500 1,453,125
-----------
Total mortgage backed securities
(cost $18,373,233) 15,219,855
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description (a) Rating Rate Date (000) (Note 1)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Obligations 28.8%
United States Treasury Bond(b) 10.75% 02/15/03 $ 950 $ 1,053,607
United States Treasury Bond(b) 13.875 05/15/11 540 737,942
United States Treasury Bond(b) 10.375 11/15/12 570 700,832
United States Treasury Bond(b) 11.25 02/15/15 300 443,625
United States Treasury Bond(b) 8.75 08/15/20 200 258,782
United States Treasury Bond(b) 7.125 02/15/23 3,100 3,469,086
United States Treasury Bond(b) 6.375 08/15/27 85 88,546
United States Treasury Bond 6.125 08/15/29 125 127,403
United States Treasury Bond(b) 11.875 11/15/03 315 368,008
United States Treasury Note(b) 7.875 08/15/01 710 722,539
United States Treasury Note(b) 6.50 02/28/02 2,700 2,698,731
United States Treasury Note(b) 6.25 08/31/02 480 477,374
United States Treasury Note(b) 5.75 10/31/02 200 196,562
United States Treasury Note(b) 6.25 02/15/03 900 894,654
United States Treasury Note(b) 6.00 08/15/04 45 44,389
United States Treasury Note(b) 5.875 11/15/04 560 549,847
United States Treasury Note(b) 6.50 08/15/05 60 60,356
-----------
Total U.S. government obligations
(cost $9,969,150) 12,892,283
----------------------------------------------------------------------------------------
U.S. Government Agency Obligations 8.4%
Federal Farm Credit Bank 5.25 05/01/02 400 387,760
Federal Home Loan Mortgage Corp. 5.50 05/15/02 700 679,766
Federal National Mortgage Assoc.(b) 5.75 06/15/05 1,200 1,129,872
Federal National Mortgage Assoc. 5.25 01/15/09 100 87,516
Federal National Mortgage Assoc. 6.375 06/15/09 700 662,375
Federal National Mortgage Assoc. 6.72 08/01/05 200 196,124
Small Business Administration 6.55 12/01/17 627 596,358
-----------
Total U.S. government agency obligations
(cost $3,887,615) 3,739,771
----------------------------------------------------------------------------------------
Foreign Corporate Bonds 1.3%
Hanson PLC (United Kingdom)(b) A3 7.375 01/15/03 300 299,796
Tyco International Group
(Luxembourg)(b) Baa1 6.375 06/15/05 300 281,391
-----------
Total foreign corporate bonds
(cost $606,443) 581,187
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Interest Maturity Amount Value
Description (a) Rating Rate Date (000) (Note 1)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Foreign Government Obligations 1.6%
Hydro Quebec (Canada) A2 8.00% 02/01/13 $ 500 $ 526,305
United Mexican States (Mexico) Baa3 10.375 02/17/09 100 107,500
United Mexican States (Mexico) Baa3 9.875 02/01/10 100 103,938
-----------
Total foreign government securities
(cost $732,315) 737,743
-----------
Total long-term investments
(cost $44,657,522) 43,844,213
-----------
SHORT-TERM INVESTMENTS 17.6%
Repurchase Agreement 16.9%
Joint Repurchase Agreement Account,
6.153%, 04/3/00
(cost $7,570,000; Note 5) 6.153 04/03/00 7,570 7,570,000
----------------------------------------------------------------------------------------
Corporate Bond 0.7%
Spieker Properties LP (Finance)(b) Baa2 6.65 12/15/00 325 322,611
-----------
Total short-term investments
(cost $7,895,650) 7,892,611
-----------
Total Investments 115.6%
(cost $52,553,172; Note 4) 51,736,824
Liabilities in excess of other
assets (15.6)% (7,007,474)
-----------
Net Assets 100% $44,729,350
-----------
-----------
</TABLE>
------------------------------
LP--Limited Partnership.
PLC--Public Limited Company (British Corporation).
(a) Mortgage dollar roll, see Note 1 and Note 4.
(b) All or partial principal amount pledged as collateral for dollar rolls.
10 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments excluding repurchase agreement, at value (cost
$44,983,172) $44,166,824
Repurchase agreement, at value (cost $7,570,000) 7,570,000
Interest receivable 525,893
Receivable for Fund shares sold 61,017
Prepaid expenses 283
-----------------
Total assets 52,324,017
-----------------
LIABILITIES
Dollar roll payable 7,534,817
Accrued expenses 33,627
Payable for Fund shares repurchased 25,328
Due to Manager 895
-----------------
Total liabilities 7,594,667
-----------------
NET ASSETS $44,729,350
-----------------
-----------------
Net assets were comprised of:
Shares of beneficial interest, at par 4,533
Paid-in capital in excess of par 45,797,125
-----------------
45,801,658
Undistributed net investment income 722,063
Accumulated net realized loss on investments (978,023)
Net unrealized depreciation on investments (816,348)
-----------------
Net assets, March 31, 2000 $44,729,350
-----------------
-----------------
Class Z:
Net asset value per share ($44,729,350 / 4,533,219 shares of
beneficial interest issued and outstanding) $9.87
-----------------
-----------------
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 1,502,343
-----------------
Expenses
Management fee 56,389
Custodian's fees and expenses 40,000
Audit fee 9,000
Registration expense 8,500
Reports to shareholders 7,000
Legal fees 5,000
Transfer agent's fees and expenses 9,500
Trustees' fees 4,300
Miscellaneous 818
-----------------
Total operating expenses 140,507
Less: Expense subsidy (Note 2) (50,275)
-----------------
Net expenses 90,232
-----------------
Net investment income 1,412,111
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions (618,099)
Net change in unrealized appreciation on investments 11,804
-----------------
Net loss on investments (606,295)
-----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $ 805,816
-----------------
-----------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 30, 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 1,412,111 $ 2,357,212
Net realized loss on investments (618,099) (356,867)
Net change in unrealized
appreciation/depreciation on
investments 11,804 (2,258,971)
----------------- ------------------
Net increase (decrease) in net assets
resulting from operations 805,816 (258,626)
----------------- ------------------
Dividends and distributions (Note 1)
Dividends from net investment income (2,528,340) (1,981,623)
----------------- ------------------
Distributions from net realized gains -- (204,867)
----------------- ------------------
Fund share transactions
Net proceeds from shares sold 4,686,515 12,886,652
Net asset value of shares issued in
reinvestment of dividends and
distributions 2,511,934 2,184,408
Cost of shares reacquired (5,708,736) (7,453,391)
----------------- ------------------
Net increase in net assets from Fund
share transactions 1,489,713 7,617,669
----------------- ------------------
Total increase (decrease) (232,811) 5,172,553
NET ASSETS
Beginning of period 44,962,161 39,789,608
----------------- ------------------
End of period(a) $44,729,350 $ 44,962,161
----------------- ------------------
----------------- ------------------
---------------
(a) Includes undistributed net investment
income of $ 722,063 $ 1,838,292
----------------- ------------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Notes to Financial Statements (Unaudited)
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, one of which is Prudential
Bond Market Index Fund (the 'Fund').
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 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
mean between the most recently quoted bid and asked prices on 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 mean between the most
recently quoted bid and asked prices on 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 manager or subadviser, represents
fair value, are valued by the Valuation Committee or Board of Trustees in
consultation with the manager and the subadviser.
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
14
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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.
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 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
15
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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 services of
PIC, the cost of compensation of officers of the Fund, occupancy and certain
clerical and bookkeeping costs of the Fund. 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.
PIC, PIFM and PIMS are wholly owned subsidiaries of The Prudential
Insurance Company of America ('The Prudential').
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. For the six months ended March 31, 2000, PIFM
subsidized $50,275 of the expenses of the Fund (0.22% of the average daily net
assets or $0.011 per share).
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.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of credit facility. The commitment fee is accrued and paid quarterly on a pro
rata basis by the Funds. The expiration date of the SCA is March 9, 2001. Prior
to March 9, 2000, the commitment fee was .065 of 1% of the unused portion of the
credit facility. The Fund did not borrow any amounts pursuant to the SCA during
the year ended March 31, 2000.
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,
2000, the Fund incurred fees of approximately $9,200 for the services of PMFS.
As of March 31, 2000, approximately $1,500 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, 2000, were $72,912,622 and $71,502,651,
16
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
respectively, which includes purchases and sales of U.S. government obligations
of $38,235,259 and $67,186,500, respectively.
The federal income tax basis of the Fund's investments at March 31, 2000
was $52,674,381 and, accordingly, net unrealized depreciation for federal income
tax purposes was $937,557 (gross unrealized appreciation-$170,030; gross
unrealized depreciation-$1,107,587).
For federal income tax purposes, the Fund had a capital loss carryforward
as of September 30, 1999 of $34,592 which expires in 2007. Accordingly, no
capital gains distributions are expected to be paid to shareholders until future
net gains have been realized in excess of such carryforward.
The Fund elected, for United States Federal income tax purposes, to treat
short-term capital losses of $374,080 and long-term capital gains of $57,975
incurred in the eleven months ended September 30, 1999 as having incurred in the
current fiscal year.
The average monthly balance of dollar rolls outstanding during the six
months ended March 31, 2000 was approximately $6,750,000.
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,
2000, the Fund had a 1.15% undivided interest in the repurchase agreements in
the joint account. This undivided interest represented $7,570,000 in principal
amount. As of such date, the repurchase agreements in the joint account and the
value of the collateral therefor were as follows:
Bear, Stearns & Co., Inc., 6.10%, in the principal amount of $120,000,000,
repurchase price $120,061,000, due 04/3/00. The value of the collateral
including accrued interest was $123,642,827.
Credit Suisse First Boston Corp., 6.10%, in the principal amount of
$130,000,000, repurchase price $130,066,083, due 04/3/00. The value of the
collateral including accrued interest was $134,450,258.
Greenwich Capital Markets, Inc., 6.15%, in the principal amount of
$100,000,000, repurchase price $100,051,250, due 04/3/00. The value of the
collateral including accrued interest was $102,005,200.
Goldman, Sachs & Co., 6.09%, in the principal amount of $100,000,000,
repurchase price $100,050,750, due 04/3/00. The value of the collateral
including accrued interest was $102,000,425.
17
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.09%, in the principal
amount of $207,289,000, repurchase price $207,396,963, due 04/3/00. The value of
the collateral including accrued interest was $211,435,308.
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>
Class Z Shares
------------------------------------------------------------------------- ----------
<S> <C>
Six months ended March 31, 2000:
Shares sold 467,682
Shares issued in reinvestment of dividends and distributions 257,899
Shares reacquired (577,238)
----------
Net increase in shares outstanding 148,343
----------
----------
Year ended September 30, 1999:
Shares sold 1,253,085
Shares issued in reinvestment of dividends and distributions 213,321
Shares reacquired (727,602)
----------
Net increase in shares outstanding 738,804
----------
----------
</TABLE>
As of March 31, 2000, 3,407,808 shares of the Fund were owned by The
Prudential.
18
<PAGE>
Prudential Index Series Fund Prudential Bond Market Index Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
October 1, 1997(c)
Six Months Ended Year Ended Through
March 31, September 30, September 30,
2000 1999 1998
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 10.25 $ 10.91 $ 10.00
-------- -------- --------
Income from investment operations
Net investment income(d) .31 .55 .55
Net realized and unrealized gain
(loss) on investment
transactions (.12) (.62) .52
-------- -------- --------
Total from investment
operations .19 (.07) 1.07
-------- -------- --------
Less distributions
Dividends from net investment
income (.57) (.53) (.15)
Distributions from net realized
gains -- (.06) (.01)
-------- -------- --------
Total dividends and
distributions (.57) (.59) (.16)
-------- -------- --------
Net asset value, end of period $ 9.87 $ 10.25 $ 10.91
-------- -------- --------
-------- -------- --------
TOTAL RETURN(a): 1.88% (.66)% 10.79%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 44,729 $ 44,962 $ 39,790
Average net assets (000) $ 45,111 $ 42,388 $ 33,637
Ratios to average net assets(d):
Expenses .40%(b) .40% .40%(b)
Net investment income 6.26%(b) 5.56% 5.68%(b)
Portfolio turnover rate 162%(e) 313%(e) 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.
(e) Includes dollar rolls.
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 from a Prudential Securities
Financial Advisor or 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. 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 available mutual funds to
find the ones that fit your 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
should remind you that you're investing for the long
haul.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
William V. Healey, Assistant Secretary
Stephen M. Ungerman, Assistant Treasurer
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
194 Wood Avenue South
Iselin, NJ 08830
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
Fund Symbols NASDAQ CUSIP
Class Z PBIDX 74438C605
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, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF174E6 74438C605
(LOGO) Printed on Recycled Paper
<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Europe Index Fund
Fund Type Stock
Objective -Provide investment results that correspond to the total
return performance of the applicable index
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or
accompanied by a current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
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.
This Index consists of stocks in 15 countries. The
United Kingdom represented 31% of the MSCI Index on
September 30, 1999, and France and Germany together
made up more than 28%. The difference between the
Fund's return and that of the Index is primarily
management fees and expenses. There can be no
assurance that the Fund will achieve its investment
objective.
Geographic Concentration
Expressed as a percentage of net assets as of 3/31/00
29.5% United Kingdom
15.3 France
14.2 Germany
7.6 Switzerland
7.6 Netherlands
6.3 Italy
5.0 Sweden
4.8 Finland
3.9 Spain
1.6 Belgium
1.2 Denmark
0.7 Portugal
0.6 Ireland
0.5 Norway
0.3 Austria
0.9 Cash & Equivalents
MSCI Europe Index Performance*
Growth of a $100 investment
from 9/30/97 to 3/31/00*
(GRAPH)
The actual inception date
for Class Z is 10/1/97.
The performance cited is for the since inception
period for Prudential Europe Index Fund, but does
not represent its performance. Investors cannot
invest directly in an index.
Source: Lipper Inc. The Lipper reporting period
begins 9/30/97.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Since
Months Year Inception2
Class Z 17.29% (16.79) 18.36% (17.44) 46.90% (42.92)
Lipper European
Region Fund Avg.3 33.17 33.83 54.28
MSCI Europe Index4 17.48 18.49 49.19
Average Annual Total Returns1 As of 3/31/00
One Since
Year Inception2
Class Z 18.36% (17.44) 16.65% (15.38)
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
LLC and Lipper Inc. Class Z shares are not subject
to a sales charge or distribution and service (12b-
1) fees. 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 is from 9/30/97 to 3/31/99.
3 Lipper average returns are for all funds in each
share class for the six-month, one-year, and since-
inception periods in the European Region Fund
category. The Lipper average is unmanaged. European
Region funds concentrate their investments in
equity securities whose primary trading markets or
operations are concentrated in the European region
or a single country within this region.
4 The Morgan Stanley Capital International (MSCI)
Europe Index is an unmanaged, weighted index
comprising more than 550 companies representing
about 15 developed European countries. The Fund is
neither sponsored by, nor affiliated with, Morgan
Stanley & Co. Incorporated. The benchmark shown
includes net dividends reinvested, reflecting a
subtraction for withholding taxes retained at the
source of foreigners who do not benefit from a
double taxation treaty. Investors cannot invest
directly in an index.
1
<PAGE>
Prudential Europe Index Fund
Message From the Fund's President May 24, 2000
Dear Shareholder,
On May 24, 2000, the Board of Trustees of
Prudential Index Series Fund for Prudential Europe
Index Fund decided that it was in our shareholders'
best interest to liquidate the Fund as soon as
possible, but no later than September 29, 2000. The
decision to liquidate was based upon the
determination that over its lifetime, the Fund was
unable to gather enough assets to operate
efficiently. You should receive further
communication about this decision shortly.
Performance
For the six months that ended March 31, 2000,
Prudential Europe Index Fund generated a return of
17.29%, slightly trailing the 17.48% return of the
Morgan Stanley Capital International (MSCI) Europe
Index. The period under review was a volatile one.
During the final two months of 1999, the
technology, telecommunications, and media sectors
staged a worldwide rally. These sectors greatly
contributed to the Fund's return. However,
following the explosive advance, a sharp
correction--led by richly valued new economy stocks--
erased much of the gains. Share prices stabilized
somewhat at period end.
Diversification helps spread risk
The volatility in technology and telecommunications
stocks was once again evidence of the advantages of
index funds. Investors who concentrated mainly on
the "hot" sectors of the market were taken for a
heart-stopping ride. In contrast, your Fund was
broadly represented among different market sectors
and geographical regions. The diversified approach
of indexing tends to catch winners in a variety of
sectors while providing some downside cushion in
volatile markets.
Sincerely,
John R. Strangfeld, President
Prudential Index Series Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
Europe was characterized by active consolidation
and restructuring against the backdrop of a
strengthening but still muted economic recovery
during the six-month reporting period ended March
31, 2000. The adoption of one currency, the euro,
for much of Western Europe resulted in an improved
ability to control costs, as did productivity
gains resulting from the growth of e-commerce on
the Internet. Without regional currency differences
to complicate the process, European firms were able
to negotiate more aggressively with their suppliers
in the United States and elsewhere. The result was
a mildly deflationary environment in which prices
were falling, real incomes were rising, and there
was increasing concern among workers about job
security.
One important development during the period was a
sharply falling euro relative to both the U.S.
dollar and the Japanese yen. Although the effect of
currency fluctuations tends to be somewhat delayed,
the weaker euro made European exports more
attractive to the region's trading partners, and
was expected to provide a substantial boost to that
portion of the European economy. Interest rates in
the region edged upward, although not nearly to the
degree evident in the United States. European Union
central bank officials attempted to walk a fine
line between moderate rate increases intended to
support their weaker-than-expected currency and
keeping rates low enough to avoid derailing the
economic recovery. While European central bankers
were no doubt glad for the stimulating effects of a
weaker currency, they prefer to have a stable euro
that is neither excessively strong nor excessively
weak.
Restructuring continued apace, as an increasing
number of firms geared up to try to compete on a
pan-European basis. Consequently, the prices of
many stocks were aided by merger and acquisition
news. There was also a divergence in the
performance of new economy/old economy stocks that
paralleled that occurring in the United States. For
approximately the first month of the period, old
economy stocks--that is, shares of companies in
established industries such as industrial
equipment, transportation, energy,
3
<PAGE>
Prudential Europe Index Fund
Investment Adviser's Report
finance, and the like--were stronger performers.
However, technology, telecommunications, Internet,
and media stocks experienced a tremendous rally
during the final two months of 1999. Like their
U.S. counterparts, these stocks also experienced a
stiff correction toward the end of the period.
Nevertheless, the new economy sectors led the
Fund's German stocks to a 33.15% gain during the
period, while French stocks posted a 23.67% return.
Finland and Sweden, though much smaller components
of the Fund and the Index, also were strong, with
returns of 115.96% and 73.45%, respectively. The
United Kingdom, comprising almost one-third of the
Fund's holdings, finished with a 4.06% return. Many
U.K. stocks were adversely affected by sharply
higher interest rates, as monetary authorities
there--like the Federal Reserve Board in the United
States--sought to slow economic growth and head off
inflation. The United Kingdom also had a relatively
smaller representation of new economy stocks in the
Index than the better-performing countries, which
also hurt the Fund's returns from that region.
Telecommunications stocks from a number of
countries were among the Fund's strongest
performers. Deutsche Telecom and France Telecom
both came close to doubling in price. Finnish
telecommunications equipment provider Nokia was
another strong stock, as was Sweden's L.M.
Ericsson. Other outperformers in the sector
included Spain's Telefonica SA and Italy's Telecom
Italia Spa.
Barriers to restructuring falling
Epitomizing the new, friendlier attitude toward
consolidation in Europe, U.K. wireless telephone
provider Vodafone Airtouch made a successful
hostile bid for German competitor Mannesmann during
the period. In the past, the German government
might have blocked such a bid, but in this case the
government offered no resistance. This precedent
was widely perceived to have important implications
for restructuring initiatives across the entire
European Union. It appeared to demonstrate that
barriers to pan-European restructuring were
genuinely being phased out.
4
<PAGE>
www.prudential.com (800) 225-1852
Mannesmann stock advanced sharply in response to
the takeover bid, roughly doubling during the
period.
Another potentially strong catalyst for
restructuring was revealed in December. In a move
that took most observers by surprise, the German
government proposed the elimination of the capital
gains tax. The tax was seen as a barrier to
restructuring because of the sizable capital gains
that would be recorded by firms that allowed
themselves to be bought out by other companies.
This was especially the case for the many family-
owned businesses started since the end of World War
II. Eliminating the tax would remove a powerful
disincentive to sell these companies.
Looking Ahead
The advantage of investing in an index fund is that
you don't have to try to guess where superior
performance is going to come from next. If, as
seems likely, old economy stocks come into favor
again or there is a more balanced demand for old
and new economy shares, the Fund will be positioned
to benefit. Similarly, if political considerations,
such as the German initiative to eliminate the tax
on capital gains, create a particularly favorable
environment for equities in a specific country or
region, the Fund should share in those gains. With
an asset class like stocks, which have demonstrated
a tendency to rise over the long term, one of the
keys to success is simply to be represented in a
broad range of issues. Indexing provides that
advantage.
Prudential Index Series Fund Management Team
5
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 99.1%
Common Stocks 98.4%
-------------------------------------------------------------------------------------
Austria 0.3%
40 Austria Tabak AG $ 1,531
100 Austrian Airlines 1,478
482 Bank Austria AG 23,476
50 Boehler-Uddeholm AG 2,105
25 EA-Generali AG 3,720
80 Flughafen Wien AG 2,970
150 Oesterreichische Electrizitaetswirtschafts AG,
Ser. A 16,075
130 OMV AG 9,942
65 VA Technologie AG 4,105
280 Wienerberger Baustoffindustrie AG 5,758
----------------
71,160
-------------------------------------------------------------------------------------
Belgium 1.6%
20 D'Ieteren SA 5,741
44 Barco Industries N.V. 5,642
60 Bekaert N.V. 2,871
120 Colruyt N.V. 5,252
30 Compaignie Maritime Belge SA 1,372
197 Delhaize-Le Lion SA 10,632
12 Dolmen Computer Applications N.V. (a) 287
229 Electrabel SA 60,588
147 Fortis AG CVG 1,125
2,970 Fortis AG NVP 76,163
1,323 Fortis AG Strip VVPR 13
20 Glaverbel SA 1,282
106 Groupe Bruxelles Lambert SA 22,568
32 Heidelberger Zement AG 1,715
1,245 KBC Bancassurance Holding N.V. 44,674
40 KBC Bancassurance Holding Strip N.V. 1
340 Solvay SA 24,400
330 Suez Lyonnaise des Eaux SA 56,680
360 Suez Lyonnaise des Eaux SA Strip VVPR 3
495 Total Fina Elf SA 74,600
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
495 Total Fina Elf SA Strip VVPR $ 5
600 UCB SA 21,817
78 Union Miniere SA 2,702
----------------
420,133
-------------------------------------------------------------------------------------
Denmark 1.2%
30 Bang & Olufsen Holding A/S 1,099
129 Carlsberg A/S, Ser. A 3,730
94 Carlsberg A/S, Ser. B 2,827
5 D/S 1912, Ser. B 57,001
3 D/S Svendborg, Ser. B 48,583
235 Danisco A/S 7,521
206 Den Danske Bank Group 21,578
170 FLS Industries A/S, Ser. B 3,037
60 International Service Systems A/S 3,933
80 Navision Software A/S (a) 7,197
300 Novo Nordisk A/S, Ser. B 40,486
962 Tele Danmark A/S 86,549
212 Unidanmark A/S 13,596
30 Vesta Wind Systems A/S 10,912
50 William Demant A/S 7,969
----------------
316,018
-------------------------------------------------------------------------------------
Finland 4.8%
40 Instrumentarium Oyj 1,168
500 Kemira Oyj 2,799
350 Kesko Oyj 4,739
150 Kone Corp., Ser. B. 8,683
150 Metra Oyj, Ser. B 2,727
500 Metso Oyj 6,746
4,730 Nokia Oyj 1,000,249
500 Outokumpu Oyj, Ser. A 6,220
80 Pohjola Insurance Group, Ser. A 5,971
200 Sampo Insurance Co. Ltd., Ser. A 7,655
13 Sanitec Oyj 166
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
2,760 Sonera Group Oyj $ 188,301
230 Tieto Corp, Ser. B 13,799
1,050 UPM-Kymmene Oyj 29,639
----------------
1,278,862
-------------------------------------------------------------------------------------
France 15.3%
750 Accor SA 29,424
800 Alcatel Alsthom SA 175,529
475 Altadis SA 6,272
1,430 Axa-UAP 202,650
1,657 Banque Nationale de Paris 130,807
120 Bouygues SA 95,075
520 Canal Plus 114,442
290 Cap Gemini SA 78,531
1,380 Carrefour SA 176,813
50 Club Mediterranee SA 6,172
380 Compagnie de Saint Gobain 48,542
50 Compagnie Francaise d'Etudes et de Construction
Technip 6,071
550 Compagnie Generale des Etablissements Michelin,
Ser. B 17,651
320 Danone 70,732
350 Dassault Systemes SA 33,022
100 Eridania Beghin-Say SA 8,344
40 Essilor International SA 10,219
310 Etablissements Economiques du Casino
Guichard-Perrachon SA 28,032
4,010 France Telecom SA 690,671
20 Gecina 2,021
50 Groupe GTM 3,703
50 Imetal SA 6,090
376 L'Air Liquide 52,205
275 L'OREAL 177,620
469 Lafarge SA 39,986
450 Lagardere S.C.A. 36,536
398 Louis Vuitton Moet Hennessy 166,501
230 Pechiney 11,279
250 Pernod Ricard 12,021
505 Pinault-Printemps-Redoute SA 93,552
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
200 PSA Peugeot Citroen $ 43,251
20 Publicis SA 10,717
3,010 Rhone Poulenc SA, Ser. A 164,747
50 Sagem SA 65,546
2,640 Sanofi-Synthelabo SA 100,667
660 Schneider SA 42,123
50 SEB SA 2,895
100 Sidel SA 6,507
50 Simco SA 3,780
200 Societe BIC SA 8,133
10 Societe Eurafrance SA 4,545
440 Societe Generale 87,741
140 Sodexho Alliance 21,782
1,080 ST Microelectronics 198,417
490 Suez Lyonnaise des Eaux 84,209
710 Thomson CSF 28,874
2,429 Total SA, Ser. B 363,744
20 Unibail SA 2,622
950 Usinor SA 15,090
333 Valeo SA 16,394
2,215 Vivendi 255,397
----------------
4,057,694
-------------------------------------------------------------------------------------
Germany 13.6%
160 Adidas-Salomon AG 8,880
150 AGIV AG 2,756
965 Allianz AG 394,746
2,590 BASF AG 122,800
2,960 Bayer AG 132,497
1,700 Bayerische Vereinsbank AG 105,328
300 Beiersdorf AG, Ser. A 21,817
100 Bilfinger & Berger Bau AG 1,448
260 Buderus AG 4,354
500 Continental AG 9,090
3,981 DaimlerChrysler AG 259,110
2,420 Deutsche Bank AG 160,242
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
1,520 Deutsche Lufthansa AG $ 34,907
11,700 Deutsche Telekom 940,415
106 Douglas Holding AG 3,317
2,110 Dresdner Bank AG 86,797
430 EM. TV & Merchandising AG 35,303
200 Fag Kugelfischer Georg Schaefer AG 1,761
200 Fresenius Medical Care AG 14,908
200 Gehe AG 6,696
212 Heidelberger Zement AG 11,946
44 Heidelberger Zement AG VVPR 0
250 Hochtief AG 7,057
50 Kamps AG 2,943
300 Karstadt AG 9,189
430 Linde AG 18,598
500 MAN AG 17,712
650 Merck KGaA 20,774
1,130 Metro AG 44,764
714 Munchener Ruckversicherungs-Gesellschaft AG 222,042
716 Preussag AG 32,879
1,980 RWE AG 70,669
250 SAP AG 140,182
290 Schering AG 38,294
50 SGL Carbon AG 3,780
2,330 Siemens AG 334,405
2,250 Thyssen AG 55,439
2,070 VEBA AG 105,474
2,830 Viag AG 57,029
1,310 Volkswagen AG 57,473
400 WCM Beteilgungs-und Grundbesitz AG 14,085
----------------
3,611,906
-------------------------------------------------------------------------------------
Ireland 0.6%
3,700 Allied Irish Banks plc 35,935
1,550 CRH plc 27,809
200 DCC plc 2,134
8,000 Eircom plc 35,595
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
1,000 Fyffes plc $ 2,105
600 Greencore Group plc 1,751
1,000 Independent Newspapers plc 9,808
870 Irish Permanent plc 7,909
3,900 Jefferson Smurfit Group plc 9,143
600 Kerry Group plc, Ser. A 7,808
1,000 Ryanair Holdings plc 8,708
836 Tullow Oil plc 840
----------------
149,545
-------------------------------------------------------------------------------------
Italy 6.3%
7,600 Alitalia SpA 16,581
4,564 Assicurazioni Generali 126,561
500 Autogrill SpA 4,641
11,000 Banca Di Roma 12,136
15,918 Banca Intesa SpA 54,986
2,000 Banca Intesa SpA (Nonconvertible) 3,866
1,000 Banca Popolare di Milano 6,928
6,000 Benetton Group SpA 12,344
1,000 Bulgari SpA 11,061
500 Burgo (Cartiere) SpA 3,177
28,500 Enel 127,628
32,630 ENI SpA 163,295
1,696 Fiat SpA 44,710
350 Fiat SpA (Nonconvertible) 4,632
450 Fiat SpA (Private) 6,610
1,000 Immsi SpA 1,914
500 Italcementi SpA 4,406
4,250 Italgas (Soc Ital) SpA 19,479
500 La Rinascente SpA 2,392
1,400 Magneti Marelli 5,157
140 Marzotto (Gaetano) & Figlia SpA 1,199
4,810 Mediaset SpA 95,549
2,400 Mediobanca SpA 19,474
500 Mondadori (Arnoldo) Editore SpA 12,750
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
9,880 Montedison SpA $ 17,253
18,350 Olivetti Group SpA 65,845
5,500 Parmalat Finanziaria SpA 6,121
8,670 Pirelli SpA 22,524
2,180 Riunione Adriatica di Sicurta SpA 20,192
6,132 San Paolo-IMI SpA 83,965
1,000 Sirti SpA 2,115
2,000 Snia BPD SpA 1,923
500 Societa Assicuratrice Industriale (SAI) 3,756
26,420 Telecom Italia Mobile SpA 324,097
6,000 Telecom Italia Mobile SpA (di Risp) 28,706
14,890 Telecom Italia SpA 222,266
3,500 Telecom Italia SpA (di Risp) 23,845
20,210 Unicredito Italiano SpA 80,448
----------------
1,664,532
-------------------------------------------------------------------------------------
Netherlands 7.6%
5,968 ABN AMRO Holding N.V. 133,000
2,560 AEGON N.V. 204,541
1,180 Akzo Nobel N.V. 50,358
470 ASM Lithography Holding N.V. (a) 52,484
324 Buhrmann N.V. 8,216
2,632 Elsevier N.V. 26,696
365 Getronics N.V. 27,906
550 Hagemeyer N.V. 11,694
1,307 Heineken N.V. 69,848
100 Hollandsche Beton Groep N.V. 1,316
93 IHC Caland N.V. 3,978
3,886 ING Groep N.V. 210,462
2,650 Koninklijke Ahold N.V. 68,946
1,884 Koninklijke KPN BT 215,699
201 Koninklijke Luchtvaart Maatschappij N.V. 4,299
1,341 Koninklijke Philips Electronics N.V. 225,324
107 Koninklijke Vopak N.V. 2,969
308 Oce N.V. 4,185
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
8,450 Royal Dutch Petroleum Co. $ 493,302
100 Stork N.V. 1,373
2,019 TNT Post Group N.V. 45,342
2,366 Unilever N.V. 116,707
180 Vedior N.V. 1,886
1,136 Wolters Kluwer N.V. 26,088
----------------
2,006,619
-------------------------------------------------------------------------------------
Norway 0.5%
200 Bergesen dy ASA, Ser. A 3,626
100 Bergesen dy ASA, Ser. B 1,742
2,300 Christiania Bank Og Kreditkasse 11,937
2,600 Den Norske Bank ASA 9,982
100 Dyno Industrier ASA 2,346
200 Elkem ASA 3,389
210 Kvaerner ASA, Ser. A 3,135
120 Leif Hoegh & Co. ASA 1,109
350 Merkantildata ASA 3,318
1,250 Norsk Hydro ASA 47,324
100 Norske Skogindustrier ASA, Ser. A 3,733
845 Orkla ASA, Ser. A 12,917
200 Petroleum Geo Services 3,507
140 Sas Norge ASA 1,344
200 Schibsted ASA 4,953
80 Smedvig ASA 1,213
1,100 Storebrand ASA, Ser. A 6,713
400 Tomra Systems ASA 8,010
----------------
130,298
-------------------------------------------------------------------------------------
Portugal 0.7%
4,390 Banco Comercial Portugues SA 23,671
520 Banco Espirito Santo e Comercial de Lisboa 12,439
1,100 Brisa-Auto Estrada de Portugal SA 8,094
560 Cimpor-Cimentos de Portugal, SGPS SA 8,316
50 Companhia de Seguros Tranquilidade 1,555
2,560 EDP-Electricadade de Portugal SA 47,890
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
300 Jeronimo Martins, SGPS SA $ 5,440
350 Portucel Industrial-Empresa Produtora de Celulose
SA 2,344
3,750 Portugal Telecom 48,083
170 Sonae Investimentos-Sociedade Gestorade
Participacoes Sociais SA 8,467
2,000 SPI-SGPS SA 7,100
100 Unicer-Uniao Cervejeira 2,823
----------------
176,222
-------------------------------------------------------------------------------------
Spain 3.9%
200 Acerinox SA 7,846
119 Acs Actividades Co. 3,302
1,015 Autopistas del Sol SA 9,557
218 Azucarera Ebro Agricolas 2,835
11,930 Banco Bilbao Vizcaya SA 175,342
14,686 Banco Central Hispanoamericano 157,811
324 Corporacion Financiera Alba SA 9,766
216 Corporacion Mapfre 3,421
600 Dragados & Constucciones SA 5,167
4,110 Endesa SA 94,268
440 Fomento de Construcion Y Contra 9,389
1,896 Gas Natural SDG SA 36,466
3,756 Iberdrola SA 48,986
210 Metrovacesa SA 3,466
4,390 Repsol SA 96,238
492 Sociedad General de Aguas De Barcelona SA 7,768
500 Sol Melia SA 6,268
740 Tabacalera SA, Ser. A 9,913
12,952 Telefonica de Espana SA 327,187
709 Telepizza 6,174
1,073 Union Electrica Fenosa SA 21,982
300 Vallehermoso SA 2,009
100 Viscofan Industria Navarra Envolturas Celuosicas
SA 771
338 Zardoya Otis SA 2,979
----------------
1,048,911
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Sweden 5.0%
582 ABB Ltd. $ 71,166
571 Atlas Copco AB, Ser. A 13,879
200 Atlas Copco AB, Ser. B 4,653
156 Boliden Ltd. AB 274
100 Diligentia AB 1,024
500 Drott AB, Ser. B (a) 5,093
1,700 Electrolux AB, Ser. B 32,170
2,250 Forenings Sparbanken AB, Ser. A 30,599
3,400 Hennes & Mauritz AB, Ser. B 94,444
400 NetCom Systems AB 34,491
400 OM Gruppen AB 16,667
800 Sandvik AB, Ser. A 20,556
200 Sandvik AB, Ser. B 5,185
1,200 Securitas AB, Ser. B 29,028
2,200 Skandia Forsakring AB 104,144
2,880 Skandinaviska Enskilda Banken, Ser. A 31,000
500 Skanska AB, Ser. B 16,956
100 SKF AB, Ser. A 2,164
200 SKF AB, Ser. B 4,444
900 Svenska Cellulosa AB, Ser. B 21,250
3,000 Svenska Handelsbanken, Ser. A 36,979
150 Svenska Handelsbanken, Ser. B 1,727
300 Svenskt Stal AB, Ser. A 3,524
1,300 Swedish Match AB 4,002
7,600 Telefonaktiebolaget LM Ericsson 667,639
400 Trelleborg AB, Ser. B 2,824
600 Volvo AB, Ser. A 15,590
1,300 Volvo AB, Ser. B 35,058
300 Wm-Data AB, Ser. B 16,319
----------------
1,322,849
-------------------------------------------------------------------------------------
Switzerland 7.6%
604 ABB AG 66,857
70 Adecco SA 48,415
25 Alusuisse-Lonza Holding AG (Registered) 15,788
1,060 Credit Suisse Group 211,019
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
7 Fischer (Georg) AG $ 2,168
10 Forbo Holding AG 3,915
20 Holderbank Financiere Glarus AG 23,817
35 Holderbank Financiere Glarus AG (Registered) 11,178
2 Jelmoli Holding AG 2,886
10 Lonza Group AG 5,425
10 Merkur Holding AG 2,947
155 Nestle SA 277,802
280 Novartis AG (Registered) 382,944
6 Roche Holdings AG 73,976
28 Roche Holdings AG (Registered) 304,132
50 Sairgroup 9,397
1 Schindler Holding AG 1,461
3 Schindler Holding AG (Registered) 4,390
56 Schweizerische Rueckversicherungs-Gesellschaft 97,033
3 SGS Societe Generale de Surveillance Holding SA 5,891
10 SGS Societe Generale de Surveillance Holding SA
(Registered) 3,609
7 Sika Finanz AG 2,282
14 SMH AG 16,326
50 SMH AG (Registered) 11,803
10 Sulzer AG 6,736
300 Swisscom AG 115,114
836 UBS-Union Bank of Switzerland 219,722
190 Zurich Allied AG 95,760
----------------
2,022,793
-------------------------------------------------------------------------------------
United Kingdom 29.4%
2,150 3I Group plc (a) 45,206
5,650 Abbey National plc 74,000
800 Airtours plc 4,301
6,550 Allied Zurich 71,473
2,300 Amvescap plc 31,298
840 Anglian Water plc 7,504
3,050 Arjo Wiggins Appleton plc 7,931
600 Arm Holdings plc 36,373
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
4,400 BAA plc $ 26,673
6,000 Barclays plc 160,806
750 Barratt Development plc 2,836
3,457 Bass plc 42,768
1,450 BBA Group plc 9,415
14,781 BG plc 83,002
1,450 BICC plc 1,607
2,800 Blue Circle Industries plc 18,716
2,100 BOC Group plc 41,475
4,100 Boots Co. plc 35,271
76,550 BP Amoco 711,656
12,216 British Aerospace plc 68,209
4,350 British Airways plc 22,554
7,250 British America Tobacco plc 39,902
1,900 British Land Co. plc 12,124
7,000 British Sky Broadcasting plc 197,769
25,300 British Telecom plc 474,243
1,400 Bunzl plc 6,611
625 Burmah Castrol plc 15,395
8,600 Cadbury Schweppes plc 56,387
2,635 Canary Wharf Group 14,965
796 Capita Group plc 20,432
1,800 Caradon plc 4,049
2,100 Carlton Communications plc 25,394
600 Celltech Group 10,768
15,120 Centrica plc 57,890
1,750 Coats Viyella plc 1,187
5,550 Commercial Union plc 77,118
2,900 Compass Group plc 37,751
11,330 Corus Group plc 18,210
722 De La Rue plc 2,995
14,205 Diageo plc 107,244
1,400 Electrocomponents plc 14,182
3,050 EMI Group plc 33,087
1,800 FKI plc 6,576
2,900 GKN plc 36,086
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
14,350 Glaxo Wellcome plc $ 409,777
7,700 Granada Group plc 82,670
1,000 Great Portland Estates plc 3,175
4,200 Great Universal Stores plc 25,528
9,158 Halifax plc 97,593
900 Hammerson plc 5,743
2,000 Hanson plc 14,198
5,200 Hays plc 33,846
400 Hepworth plc 1,008
33,050 HSBC Holdings plc 390,163
1,050 IMI plc 3,802
3,200 Imperial Chemical Industries plc 26,801
15,745 Invensys plc 70,268
7,850 J. Sainsbury plc 35,440
750 Johnson Matthey plc 8,555
5,850 Kingfisher plc 48,342
5,400 Ladbroke Group plc 25,112
2,000 Land Securities plc 23,930
3,350 LASMO plc 6,413
21,600 Legal & General Group plc 56,167
200 Lex Service plc 1,394
21,700 Lloyds TSB Group plc 229,864
1,350 Logica plc 45,981
121 London Bridge Software Holdings plc 11,437
11,000 Marconi plc 131,437
12,500 Marks & Spencer plc 50,202
1,156 MEPC plc 7,635
250 Meyer International plc 2,033
2,007 Misys plc 28,272
6,052 National Grid Co. plc 55,225
5,200 National Power plc 26,048
5,467 New Dixons Group plc 25,291
2,000 Nycomed Amersham plc 16,272
360 Ocean Group plc 6,679
2,500 P & O Finance plc 26,003
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
2,500 Pearson plc $ 87,024
3,850 Pilkington plc 4,484
916 Provident Financial plc 8,212
8,000 Prudential Corp. plc 121,626
200 Psion plc 13,158
1,000 Racal Electronic plc 6,732
2,150 Railtrack Group plc 25,038
3,000 Rank Group plc 7,179
4,600 Reed International plc 33,610
12,500 Rentokil Initial plc 32,554
5,916 Reuters Group plc 119,860
1,477 Rexam plc 4,948
4,400 Rio Tinto Finance plc 74,405
1,000 RMC Group plc 12,284
3,650 Royal Bank Scotland Group plc 53,861
4,300 Sage Group plc 48,705
1,125 Schroders plc 23,744
6,350 ScottishPower plc 51,360
1,450 Sema Group plc 28,707
1,350 Slough Estates plc 7,538
800 Smith & Nephew plc 2,297
22,200 Smithkline Beecham plc 291,825
1,150 Smiths Industries plc 13,925
4,000 Stagecoach Holdings plc 7,721
1,600 Tate & Lyle plc 5,494
1,250 Taylor Woodrow plc 2,911
28,400 Tesco plc 95,144
1,191 Thames Water plc 13,357
1,850 TI Group plc 9,120
950 Unigate plc 4,850
11,716 Unilever plc 76,071
1,155 United Biscuits Holding plc 4,841
2,000 United Utilities plc 20,739
234,181 Vodafone Group plc 1,307,560
2,492 Williams plc 12,602
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares/
Warrants/
Rights Description Value (Note 1)
<C> <S> <C> <C>
-----------------------------------------------------------------------------------------
2,150 Wolseley plc $ 12,005
2,850 WPP Group plc 49,558
7,131 Zeneca Group plc (a) 286,677
----------------
7,787,469
----------------
Total common stocks (cost $19,249,893) 26,065,011
----------------
Preferred Stocks 0.6%
-------------------------------------------------------------------------------------
Germany
100 Dyckerhoff AG, DM1.5 2,488
150 MAN AG, DM1.6 3,531
510 RWE AG, EUR1.0 14,674
175 SAP AG, EUR1.6 124,585
400 Volkswagen AG, DM1.6 10,334
----------------
Total preferred stocks (cost $98,713) 155,612
----------------
Warrants(a)
-------------------------------------------------------------------------------------
France
468 Banque National de Paris, expiring 7/15/02 @
EUR100.00 3,287
-------------------------------------------------------------------------------------
Germany
12 Munchener Ruckversicherungs-Gesellschaft AG,
expiring 6/3/02 @ EUR163.61 1,033
-------------------------------------------------------------------------------------
Italy
400 Mediobanca SpA, expiring 12/31/00 @ EUR8.26 402
----------------
Total warrants (cost US$0) 4,722
----------------
Rights(a)
-------------------------------------------------------------------------------------
Norway
120 Leif Hoegh & Co. ASA, expiring 4/14/2000 @ NOK2.00
(cost US$0) 18
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Units Description Value (Note 1)
<C> <S> <C> <C>
-----------------------------------------------------------------------------------------
Common Stock Unit(a)
-------------------------------------------------------------------------------------
Ireland
2,600 Waterford Wedgewood plc
(cost US$3,396) $ 2,363
<CAPTION>
Corporate Bonds 0.1%
Principal
Amount
<C> <S> <C> <C>
-------------------------------------------------------------------------------------
United Kingdom
$ 2,000 BG Transco Holdings, 4.19%, 12/14/22 3,151
2,000 BG Transco Holdings, 7.00%, 12/16/24 3,174
2,000 BG Transco Holdings, 7.06%, 12/14/09 3,211
1,489 British Aerospace, 7.45%, 3/31/03 2,304
----------------
Total Corporate Bonds (cost US$10,186) 11,840
----------------
Total long-term investments (cost US$19,362,188) 26,239,566
----------------
SHORT-TERM INVESTMENTS 0.4%
-----------------------------------------------------------------------------------
U.S. Government Securities 0.2%
50,000(b) United States Treasury Bills
5.68%, 6/10/00
(cost US$49,409) 49,389
-------------------------------------------------------------------------------------
Repurchase Agreements 0.2%
68,000 Joint Repurchase Agreement Account
6.15%, 4/3/00
(cost US$68,000; Note 5) 68,000
----------------
Total short-term investments (cost US$117,409) 117,389
----------------
Total Investments 99.5% (cost $19,479,597; Note
4) 26,356,955
Other assets and liabilities--0.5% 123,067
----------------
Net Assets 100% $ 26,480,022
----------------
----------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Pledged as initial margin for financial futures contracts.
See Notes to Financial Statements 21
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<S> <C> <C>
The industry classification of portfolio holdings and other assets in excess
of liabilities shown as a percentage of net assets as of March 31, 2000 was as
follows:
Utilities 22.4%
Finance 20.4
Electronic Technology 11.5
Health Technology 7.7
Energy Minerals 7.0
Process Industries 5.6
Consumer Non-Durables 5.2
Retail Trade 3.4
Consumer Services 3.1
Technology Services 2.3
Producer Manufacturing 2.2
Consumer Durables 2.2
Commercial Services 2.2
Transportation 1.3
Non-Energy Minerals 1.2
Industrial Services 1.2
Short-Term Investments 0.4
Miscellaneous 0.2
-----
99.5
Other assets in excess of liabilities 0.5
-----
100.0%
-----
-----
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Statement of Assets (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $19,479,597) $ 26,356,955
Foreign currency, at value (cost $164,944) 163,665
Cash 445
Dividends and interest receivable 94,651
Receivable for Fund shares sold 24,245
Receivable for investments sold 2,539
Due from broker-variation margin 1,177
Deferred expenses and other assets 211
--------------
Total assets 26,643,888
--------------
LIABILITIES
Payable for investments purchased 70,193
Accrued expenses and other liabilities 59,211
Payable for Fund shares repurchased 23,319
Foreign withholding taxes payable 7,124
Due to Manager 4,019
--------------
Total liabilities 163,866
--------------
NET ASSETS $ 26,480,022
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 1,886
Paid-in capital in excess of par 19,513,519
--------------
19,515,405
Distributions in excess of net investment income (94,176)
Accumulated net realized gains on investment transactions
and foreign currencies 186,341
Net unrealized appreciation on investments and foreign
currencies 6,872,452
--------------
Net assets, March 31, 2000 $ 26,480,022
--------------
--------------
Net asset value per share ($26,480,022 / 1,886,193 shares of
common stock issued and outstanding) $ 14.04
--------------
--------------
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $15,837) $ 110,412
Interest 9,738
-----------------
Total Income 120,150
-----------------
Expenses
Management fee 50,072
Custodian's fees and expenses 105,000
Audit fee and expenses 9,000
Registration fees 9,000
Reports to shareholders 9,000
Legal fees and expenses 5,000
Trustees' fees and expenses 4,000
Transfer agent's fees and expenses 3,000
Miscellaneous 472
-----------------
Total expenses 194,544
Less: Expense subsidy (Note 2) (119,436)
-----------------
Net expenses 75,108
-----------------
Net investment income 45,042
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investment transactions 159,900
Foreign currency transactions (13,506)
Financial futures transactions 46,452
-----------------
192,846
-----------------
Net change in unrealized appreciation (depreciation) on:
Investments 3,658,156
Foreign currencies (6,925)
Financial futures transactions 11,714
-----------------
3,662,945
-----------------
Net gain on investments and foreign currencies 3,855,791
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,900,833
-----------------
-----------------
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 30, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income $ 45,042 $ 341,792
Net realized gain on investments and
foreign currency transactions 192,846 120,533
Net change in unrealized
appreciation/depreciation on
investments and foreign currencies 3,662,945 2,635,777
-------------- ------------------
Net increase in net assets resulting from
operations 3,900,833 3,098,102
-------------- ------------------
Dividends and distributions (Note 1):
Dividends from net investment income (249,634) (403,257)
-------------- ------------------
Distributions from net realized gains (140,535) (52,600)
-------------- ------------------
Fund share transactions (Note 6):
Net proceeds from shares sold 1,320,752 4,333,863
Net asset value of shares issued in
reinvestment of dividends and
distributions 389,377 455,044
Cost of shares reacquired (1,415,962) (2,782,271)
-------------- ------------------
Net increase in net assets from Fund
share transactions 294,167 2,006,636
-------------- ------------------
Total increase 3,804,831 4,648,881
NET ASSETS
Beginning of period 22,675,191 18,026,310
-------------- ------------------
End of period(a) $ 26,480,022 $ 22,675,191
-------------- ------------------
-------------- ------------------
---------------
(a) Undistributed net investment income $ -- $ 123,922
-------------- ------------------
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Notes to Financial Statements (Unaudited)
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, one of which is the
Prudential Europe Index Fund (the 'Fund'). 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 manager or subadviser, does not represent fair value, are valued
by the Valuation Committee or Board of Trustees in consultation with the manager
or the subadviser.
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.
26
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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.
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
27
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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: 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 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 increase accumulated net realized gain and
decrease distributions in excess of net investment income by $13,506 for
realized foreign currency losses during the six
28
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
months ended March 31, 2000. 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 Company. PIFM pays for the services of
PIC, the cost of 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. For the six months ended March 31, 2000, PIFM
subsidized $119,436 of the expenses of the Fund (0.48% of average daily net
assets, or $0.06 per share).
The Fund 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, PIMS and PIC are wholly owned subsidiaries of The Prudential
Insurance Company of America ('Prudential').
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.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was .065 of 1% of the unused portion
of the credit facility. The Fund did not borrow any amounts pursuant to the SCA
during the year ended March 31, 2000.
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,
29
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
2000, the Fund incurred fees of approximately $2,600 for the services of PMFS.
As of March 31, 2000, approximately $500 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, 2000 were $1,582,801 and $1,324,590,
respectively.
The United States federal income tax cost basis of the Fund's investments
at March 31, 2000 was $19,480,382 and, accordingly, net unrealized appreciation
for federal income tax purposes was $6,876,573 (gross unrealized
appreciation--$8,553,036; gross unrealized depreciation--$1,676,463).
At March 31, 2000, the Fund had open purchases of 10 CAC 40 and 10 FTSE
100 financial futures contracts expiring on June 17, 2000.
The unrealized depreciation on such contracts as of March 31, 2000 was as
follows:
<TABLE>
<CAPTION>
Unrealized
Value at Value on Appreciation
Acquisition March 31, 2000 (Depreciation)
----------- -------------- --------------
<S> <C> <C> <C>
CAC 40 $ 62,115 $ 59,824 $ (2,291)
FTSE 100 104,668 105,298 630
--------------
$ (1,661)
--------------
--------------
</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, 2000, the Fund
had a 0.01% undivided interest in the repurchase agreements in the joint
account. This undivided interest represented $68,000 in principal amount. As of
such date, the repurchase
30
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
agreements in the joint account and the value of the collateral therefor were as
follows:
Bear, Stearns & Co. Inc., 6.10%, in the principal amount of $120,000,000,
repurchase price $120,061,000, due 4/3/00. The value of the collateral including
accrued interest was $123,642,827.
Credit Suisse First Boston Corp., 6.10%, in the principal amount of
$130,000,000, repurchase price $130,066,083, due 4/3/00. The value of the
collateral including accrued interest was $134,450,258.
Goldman, Sachs & Co., 6.09%, in the principal amount of $100,000,000,
repurchase price $100,050,750, due 4/3/00. The value of the collateral including
accrued interest was $102,000,425.
Greenwich Capital Market Inc., 6.15%, in the principal amount of
$100,000,000, repurchase price $100,051,250, due 4/3/00. The value of the
collateral including accrued interest was $102,005,200.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.25%, in the principal
amount of $207,289,000, repurchase price $207,396,963, due 4/3/00. The value of
the collateral including accrued interest was $211,435,308.
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, 2000: Shares
--------------------------------------------------------------------------- ----------
<S> <C>
Shares sold 98,141
Shares issued in reinvestment of dividends and distributions 29,276
Shares reacquired (106,235)
----------
Net increase in shares outstanding 21,182
----------
----------
<CAPTION>
Year ended September 30, 1999: Shares
--------------------------------------------------------------------------- ----------
<S> <C>
Shares sold 360,875
Shares issued in reinvestment of dividends and distributions 39,398
Shares reacquired (230,061)
----------
Net increase in shares outstanding 170,212
----------
----------
</TABLE>
As of March 31, 2000, 1,569,413 of the outstanding shares were owned by
The Prudential Insurance Company of America.
31
<PAGE>
Prudential Index Series Fund Prudential Europe Index Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Year Ended October 1, 1997(a)
March 31, September 30, Through
2000 1999 September 30, 1998
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 12.16 $ 10.64 $ 10.00
-------- -------- --------
Income from investment
operations
Net investment income(c) .03 .17 .18
Net realized and unrealized gain
on investment and foreign
currency transactions 2.07 1.61 .53
-------- -------- --------
Total from investment
operations 2.10 1.78 .71
-------- -------- --------
Less distributions
Dividends from net investment
income (.14) (.23) (.07)
Distributions from net realized
gains (.08) (.03) --
-------- -------- --------
Total distributions (.22) (.26) (.07)
-------- -------- --------
Net asset value, end of period $ 14.04 $ 12.16 $ 10.64
-------- -------- --------
-------- -------- --------
TOTAL RETURN(d): 17.29% 16.86% 7.17%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 22,480 $ 22,675 $18,026
Average net assets (000) $ 25,036 $ 21,984 $17,728
Ratios to average net assets:(c)
Expenses .60%(b) .60% .60%(b)
Net investment income .36%(b) 1.55% 1.64%(b)
Portfolio turnover rate 5% 4% 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.
32 See Notes to Financial Statements
<PAGE>
Prudential Europe Index Fund
Getting the Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--
they don't read annual and semiannual reports. It's
quite understandable. These annual and semiannual
reports are prepared to comply with federal
regulations, and are often written in language that
is difficult to understand. So when most people run
into those particularly daunting sections of these
reports, they don't read them.
We think that's a mistake
At Prudential Mutual Funds, we've made some changes
to our report to make it easier to understand and
more pleasant to read. We hope you'll find it
profitable to spend a few minutes familiarizing
yourself with your investment. Here's what you'll
find in the report:
Performance at a Glance
Since an investment's performance is often a
shareholder's primary concern, we present
performance information in two different formats.
You'll find it first on the "Performance at a
Glance" page where we compare the Fund and the
comparable average calculated by Lipper, Inc., a
nationally recognized mutual fund rating agency. We
report both the cumulative total returns and the
average annual total returns. The cumulative total
return is the total amount of income and
appreciation the Fund has achieved in various time
periods. The average annual total return is an
annualized representation of the Fund's
performance. It gives you an idea of how much the
Fund has earned in an average year for a given time
period. Under the performance box, you'll see
legends that explain the performance information,
whether fees and sales charges have been included
in returns, and the inception dates for the Fund's
share classes.
See the performance comparison charts at the back
of the report for more performance information.
Please keep in mind that past performance is not
indicative of future results.
<PAGE>
Prudential Europe Index Fund
Getting the Most From Your Prudential Mutual Fund
Performance review
The portfolio manager, who invests your money for
you, reports on successful--and not-so-successful--
strategies in this section of your report. Look for
recent purchases and sales here, as well as
information about the sectors the portfolio manager
favors, and any changes that are on the drawing
board.
Portfolio of Investments
This is where the report begins to appear
technical, but it's really just a listing of each
security held at the end of the reporting period,
along with valuations and other information. Please
note that sometimes we discuss a security in the
Performance Review that doesn't appear in this
listing because it was sold before the close of the
reporting period.
Statement of Assets and Liabilities
The balance sheet shows the assets (the value of
the Fund's holdings), liabilities (how much the
Fund owes), and net assets (the Fund's equity, or
holdings after the Fund pays its debts) as of the
end of the reporting period. It also shows how we
calculate the net asset value per share for each
class of shares. The net asset value is reduced by
payment of your dividend, capital gain, or other
distribution, but remember that the money or new
shares are being paid or issued to you. The net
asset value fluctuates daily, along with the value
of every security in the portfolio.
Statement of Operations
This is the income statement, which details income
(mostly interest and dividends earned) and
expenses (including what you pay us to manage your
money). You'll also see capital gains here--both
realized and unrealized.
<PAGE>
www.prudential.com (800) 225-1852
Statement of Changes in Net Assets
This schedule shows how income and expenses
translate into changes in net assets. The Fund is
required to pay out the bulk of its income to
shareholders every year, and this statement shows
you how we do it (through dividends and
distributions) and how that affects the net assets.
This statement also shows how money from investors
flowed into and out of the Fund.
Notes to Financial Statements
This is the kind of technical material that can
intimidate readers, but it does contain useful
information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition,
they outline how Prudential Mutual Funds prices
securities. The Notes also explain who manages and
distributes the Fund's shares and, more
importantly, how much they are paid for doing so.
Finally, the Notes explain how many shares are
outstanding and the number issued and redeemed over
the period.
Financial Highlights
This information contains many elements from prior
pages, but on a per-share basis. It is designed to
help you understand how the Fund performed, and to
compare this year's performance and expenses to
those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our
books and certifies that the information is fairly
presented and complies with generally accepted
accounting principles.
Tax Information
This is information that we report annually about
how much of your total return is taxable. Should
you have any questions, you may want to consult a
tax adviser.
<PAGE>
Prudential Europe Index Fund
Getting the Most From Your Prudential Mutual Fund
Performance Comparison
These charts are included in the annual report and
are required by the Securities Exchange Commission.
Performance is presented here as a hypothetical
$10,000 investment in the Fund since its inception
or for 10 years (whichever is shorter). To help you
put that return in context, we are required to
include the performance of an unmanaged, broad-
based securities index as well. The index does not
reflect the cost of buying the securities it
contains or the cost of managing a mutual fund. Of
course, the index holdings do not mirror those of
the Fund--the index is a broad-based reference point
commonly used by investors to measure how well they
are doing. A definition of the selected index is
also provided. Investors cannot invest directly in
an index.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E. H. Morrison, Secretary
William V. Healey, Assistant Secretary
Stephen M. Ungerman, Assistant Treasurer
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
194 Wood Avenue South
Iselin, NJ 08830
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, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<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
MF174E8 74438C704
(LOGO) Printed on Recycled Paper
<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Pacific Index Fund
Fund Type Stock
Objective Provide investment results that correspond to
the price and yield performance of the applicable index
(GRAPH)
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
Prudential Pacific Index Fund seeks to provide investment
results that correspond to the price and yield
performance 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 companies that are open to foreign
investors.) Over the past year, the MSCI Pacific Free
Index included stocks in Japan, Australia, Hong Kong,
Singapore, and New Zealand. The difference between the
Fund's return and that of the Index is primarily
management fees and expenses. There can
be no assurance that the Fund will achieve its investment
objective.
Geographic Concentration
Expressed as a percentage of
net assets as of 3/31/00
81.2% Japan
6.8 Hong Kong
6.7 Australia
2.5 Singapore
0.4 New Zealand
2.4 Cash & Equivalents
MSCI Pacific Free Index Performance*
Growth of a $100 investment
from 9/30/97 to 3/31/00
(GRAPH)
* The actual inception date for Class Z is 9/24/97. The
performance cited is for the since inception period for
Prudential Pacific Index Fund, but does not represent its
performance. Investors cannot invest directly in an
index.
Source: Lipper Inc. The Lipper reporting period begins
9/30/97.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Since
Months Year Inception2
Class Z 13.67% (13.29) 38.83% (37.91) 23.41% (21.06)
Lipper Pacific
Region Fund Avg.3 30.14 75.32 30.90
MSCI Pacific
Free Index4 15.58 40.62 27.04
Average Annual Total Returns1 As of 3/31/00
One Since
Year Inception2
Class Z 38.83% (37.91) 8.72% (7.89)
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 LLC and
Lipper Inc. Class Z shares are not subject to a sales
charge or distribution and service (12b-1) fees. 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 reporting
period begins 9/30/97.
3 Lipper average returns are for all funds in each share
class for the six-month, one-year, and since-
inception periods in the Pacific Region Fund category.
The Lipper average is unmanaged. Pacific Region funds
concentrate their investments in equity securities with
primary trading markets or operations in the Western
Pacific Basin region or a single country within this
region.
4 The Morgan Stanley Capital International (MSCI) Pacific
Free Index is an unmanaged, diversified,
capitalization-weighted index currently consisting of 422
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 shown
includes net dividends reinvested, reflecting a
subtraction for withholding taxes retained at the source
for foreigners who do not benefit from a double taxation
treaty. Investors cannot invest directly in an index.
1
<PAGE>
Prudential Pacific Index Fund
Message From the Fund's President As of May 24, 2000
Dear Shareholder,
On May 24, 2000, the Board of Trustees of Prudential
Index Series Fund for Prudential Pacific Index Fund
decided that it was in our shareholders' best interest to
liquidate the Fund as soon as possible, but no later than
September 29, 2000. The decision to liquidate was based
upon the determination that over its lifetime, the Fund
was unable to gather enough assets to operate
efficiently. You should receive further communication
about this decision shortly.
Performance
For the six months that ended March 31, 2000, Prudential
Pacific Index Fund finished with a return of 13.67%,
compared to 15.58% for the Morgan Stanley Capital
International (MSCI) Pacific Free Index. It was a
volatile period marked by an explosive advance that was
led by the technology and telecommunications sectors,
followed by a sharp correction that erased much of the
gains. Share prices stabilized somewhat at period end. A
slightly stronger yen added to the Fund's returns in U.S.
dollar terms, but currency fluctuation played a much less
significant role than in the prior fiscal period.
Diversification helps spread risk
The volatility in technology and telecommunications
stocks was once again evidence of the advantages of index
funds. Investors who concentrated mainly on the "hot"
sectors of the market were taken for a heart-stopping
ride. In contrast, your Fund owned a mix of new and old
economy stocks. The diversified approach of indexing
tends to catch winners in a variety of sectors while
providing some downside cushion in volatile markets.
Sincerely,
John R. Strangfeld, President
Prudential Index Series Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
During the six-month reporting period ended March 31,
2000, the Japanese economy provided evidence that the
country was making slow progress toward better times.
However, the signals continued to be very mixed for the
country that comprises roughly three-fourths of the Fund
and the Morgan Stanley Capital International (MSCI)
Pacific Free Index. After cheering investors with two
consecutive quarters of positive GDP growth in 1999, the
latest two quarters have seen negative growth, indicating
an economy that is still very fragile. Consumer spending
was fairly strong, but consumers were preoccupied with
bargain hunting, which helps discount retailers but hurts
the traditional department stores. The government
appeared committed to jump-starting the economy with
liberal spending policies, but Japan's tradition of
spending freely in areas such as capital spending (on
average, the percentage allocated to capital projects by
Japan's government is about double the comparable figure
in the U.S. budget) has in the past resulted in
substantial waste and misallocation of capital. Thus, as
the bloated parts of the budget are pared back and
spending for information technology increases, there are
likely to be further bumps along the way in GDP growth.
Nonetheless, there were some solid indications of
progress. More and more companies appeared to be engaged
in serious restructuring, if only as a result of
heightened competitive pressures. Moreover, the
government recently passed legislation that will make it
easier for foreign companies to acquire Japanese
companies--a major breakthrough for a country that in the
past turned down repeated requests from its trading
partners for such a law. This legislation followed
closely on the heels of another law that facilitated
stock buybacks--a tool frequently employed by Western
corporations to increase shareholder value. Consequently,
while maximizing shareholder value is still not second
nature for many Japanese companies--especially those
controlled by a single family--it is becoming increasingly
accepted as a requirement of doing business in a globally
competitive world.
3
<PAGE>
Prudential Pacific Index Fund
Investment Adviser's Report
Export-related stocks shine
Japanese stocks, reflecting investors' expectations of
improving economic conditions, did moderately well, aided
(in U.S. dollar terms) by modest appreciation in the yen
against the dollar. There were several areas of strength
in the Fund's Japanese holdings, which returned 16.33%
during the period. Export-related companies, benefiting
from a relatively stable yen and strong demand from the
United States and Europe, performed well. Examples
included Toyota, Sony, Kyocera, and Canon. Small stocks
representing the new economy also did well, though a
sharp correction during the second half of the period
offset many of the gains in these sectors. Japanese
retail investors returned to the stock market in force
and, like their counterparts in the United States and
Europe, focused on two sectors that outshone all others
on a worldwide basis, especially during the final quarter
of 1999: technology and telecommunications. Cellular
phone equipment and service providers were particularly
strong, driven by the popularity of recently introduced
phones with Internet capabilities.
Enthusiastic buying in these sectors drove share prices
to dizzying heights, and created huge discrepancies
between the leaders and the laggards in the Japanese
market. A decline in new economy stocks also occurred,
paralleling similar corrections in other markets, but the
Japanese pullback began earlier and was intensified by
additional selling from investors who had bought high-
flying stocks on margin. Nevertheless, stocks such as
Softbank, an Internet investment company, managed to
finish the period with triple-digit gains. Specialty and
discount retailers also did well, as did securities
firms, reflecting investors' enthusiastic participation
in the markets.
Looking elsewhere in the Pacific Basin, the Hong Kong
component of the Fund did well, gaining 30.44%. The
market there appears to be in transition. When Hong Kong
was under British rule, banks, property companies, and
conglomerates dominated the market. Lately, the
traditional favorites have had problems, and stocks more
representative of Mainland China--such as China Telecom--
have come to the fore. Prices for real estate and other
commodities
4
<PAGE>
www.prudential.com (800) 225-1852
are still too high in Hong Kong, and will probably have
to come down to levels that reflect the new realities of
the region. Currently there are plans to increase the
weighting of Hong Kong and Taiwanese stocks in the Index.
Australia, comprising on average 7.4% of the Fund and the
Index during the
period, suffered as the rest of the region's prospects
improved. During Asia's financial crisis, Pacific Basin
investors retreated to the relative safety of Australian
stocks, driving up share prices. When prospects for the
region improved, investors looked for greener pastures in
Japan, Hong Kong, and other markets. Finally, in smaller
markets such as Indonesia, there was a realization that
the road to recovery would be longer and harder than
previously thought.
Looking ahead
Structural problems remain in Japan, but solid attempts
by the government to rid the economy of its
inefficiencies represent cause for optimism. Another
favorable influence on Japan is the fact that the rest of
Asia is growing vigorously once again. Furthermore, there is
evidence that prices and volume in the Japanese
commercial real estate market are turning up--an
indication that the long bear market there may be over.
An improvement in the real estate market would be very
positive for Japanese banks, whose problems with bad real
estate loans are by now legendary.
Finally, these developments are occurring at a time when
investors worldwide appear to be reconsidering the values
inherent in the old economy, which includes industries
such as finance and industrial manufacturing. Buying
stocks simply because of their association with the
Internet, in the absence of earnings, may become less
fashionable than was the case during much of the period.
Technology investing will not simply go away, of course,
but investors, chastened by a stiff correction and the
accompanying shrinkage in their accounts, are likely to
be more value-conscious in the future than they have been
recently.
Prudential Index Series Fund Management Team
5
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 97.6%
Common Stocks 96.9%
-------------------------------------------------------------------------------------
Australia 6.0%
6,800 Amcor Ltd. $ 23,560
4,000 AMP Diversified Property Trust 5,512
11,100 AMP Ltd. 104,838
6,768 AMP Ltd.(d) 0
4,077 Australian Gas & Light Co. 19,674
6,286 Boral Ltd.(a) 8,623
2,200 Brambles Industries, Ltd. 55,953
1,200 British American Tobacco Australasia Ltd. 6,818
17,493 Broken Hill Proprietary Co., Ltd. 189,449
11,019 Coca Cola Amatil Ltd. 27,423
11,490 Coles Myer Ltd. 45,333
9,800 Colonial Ltd. 45,036
1,400 CSL Ltd. 17,421
12,100 CSR Ltd. 25,412
2,955 Email Ltd. 4,036
1,275 F. H. Faulding & Co. Ltd. 5,400
17,800 Fosters Brewing Group Ltd. 44,190
5,398 Futuris Corp., Ltd. 5,439
18,537 General Property Trust 28,692
13,939 Goodman Fielder Ltd. 10,153
4,000 Hardie (James) Industries Ltd. 8,925
1,377 Iluka Resources Ltd. 3,009
2,700 Leighton Holdings Ltd. 7,773
5,131 Lend Lease Corp. Ltd. 66,317
17,955 M.I.M. Holdings Ltd. 11,444
3,610 Mayne Nickless Ltd. 7,362
14,684 National Australia Bank Ltd. 188,779
2,300 Newcrest Mining Ltd.(a) 4,607
20,330 News Corp., Ltd. 284,071
18,879 Normandy Mining Ltd.(a) 9,970
7,681 North Ltd. 13,381
2,836 Orica Ltd. 11,103
6,286 Origin Energy Ltd. 5,456
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
10,400 Pacific Dunlop Ltd. $ 9,943
9,200 Pioneer International Ltd. 25,074
4,045 QBE Insurance Group Ltd. 17,188
3,000 Rio Tinto Ltd. 42,638
6,200 Santos Ltd. 14,512
1,864 Smith (Howard) Ltd. 9,357
6,477 Southcorp Ltd. 18,738
3,548 Stockland Trust Group 7,408
2,500 Suncorp-Metway Ltd. 11,533
3,962 TABCORP Holdings Ltd. 22,245
75,900 Telstra Corp. 350,138
2,932 Wesfarmers Ltd. 20,760
11,718 Western Mining Corp. Holdings Ltd. 45,820
17,131 Westfield Trust 32,131
18,313 Westpac Banking Corp. Ltd. 114,638
12,059 Woolworths Ltd. 37,404
--------------
2,074,686
-------------------------------------------------------------------------------------
Hong Kong 6.8%
15,000 Bank of East Asia 33,327
122,600 Cable & Wireless HKT Ltd. 321,202
34,000 Cathay Pacific Air 50,433
23,000 Cheung Kong Ltd. 344,121
21,000 China Light & Power Holdings, Ltd. 94,124
20,000 Chinese Estates Holdings 3,391
8,000 Giordano International Limited 9,709
11,000 Hang Lung Development Co. 9,041
19,000 Hang Seng Bank Ltd. 165,928
47,400 Hong Kong & China Gas Co. 59,353
11,000 Hong Kong & Shanghai Hotels 5,616
2,000 Hong Kong Aircraft Engineering Co., Ltd. 3,185
4,000 Hong Kong Construction Holdings 991
8,800 Hopewell Holdings Ltd. 4,634
39,000 Hutchison Whampoa Ltd. 703,718
9,000 Hysan Development Co. 9,767
9,000 Johnson Electric Holdings, Ltd. 61,549
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
6,000 Miramar Hotel & Investment Co. $ 5,009
22,169 New World Development Co., Ltd. 30,891
14,000 Oriental Press Group 4,180
6,000 Peregrine Investments (b) 8
38,000 Regal Hotel International 2,538
24,026 Shangri La Asia Ltd. 26,999
14,000 Shun Tak Holdings Ltd. 2,086
38,000 Sino Land Co. 15,861
20,000 South China Morning Post 19,264
24,000 Sun Hung Kai Properties Ltd. 208,052
16,000 Swire-Pacific, Ltd. 'A' 82,605
5,000 Television Broadcasts Ltd. 44,468
2,000 Varitronix International Ltd. 4,649
23,896 Wharf Holdings Ltd. 45,727
2,000 Wing Lung Bank 7,423
--------------
2,379,849
-------------------------------------------------------------------------------------
Japan 81.2%
4,000 77th Bank(a) 28,587
1,500 Acom Co., Ltd. 162,482
1,000 Advantest Corp. 212,451
7,000 Ajinomoto Co., Inc. 85,312
2,000 Alps Electric Co. 27,339
3,000 Amada Co. 24,277
1,000 Amano Corp. 8,278
900 Aoyama Trading Co. 13,908
500 Arabian Oil Co. 1,735
28,000 Asahi Bank 156,974
5,000 Asahi Breweries 50,212
14,000 Asahi Chemical Industries 89,407
12,000 Asahi Glass Co. 102,491
400 Asatsu-DK Inc. 20,319
5,000 Ashikaga Bank 11,164
400 Autobacs Seven Co. 12,363
47,000 Bank Of Tokyo-Mitsubishi, Ltd. 672,247
12,000 Bank of Yokohama 48,672
500 Benesse Corp. 51,285
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
500 Benesse Corp. (New) $ 44,021
9,000 Bridgestone Corp. 198,752
3,000 Brother Industries 7,839
9,000 Canon Inc. 390,484
3,000 Casio Computer Co. 31,853
23 Central Japan Railway Co. 139,258
2,000 Chiyoda Corp. 3,120
3,000 Chugai Pharmacy Co. 56,247
4,200 Chuo Mitsui Trust & Banking Co., Ltd. 24,201
4,000 Citizen Watch Co. 33,735
5,000 Cosmo Oil Co. 6,727
1,900 Credit Saison Co., Ltd. 31,492
700 CSK Corp. 32,760
8,000 Dai Nippon Printing Co., Ltd. 129,947
4,000 Daicel Chemical Industries 13,650
8,000 Daiei Inc. 28,626
1,000 Daifuku Co. 9,009
3,000 Daiichi Pharmaceutical Co. 46,507
3,000 Daikin Industries 55,574
2,000 Daikyo Inc. 4,309
3,000 Daimaru Inc. 10,150
9,000 Dainippon Ink & Chemicals, Inc. 36,416
2,000 Dainippon Screen Manufacturing Co., Ltd. 13,864
1,400 Daito Trust Construction Co., Ltd. 23,983
16,000 Daiwa Bank 47,424
5,000 Daiwa House Industries 34,271
2,000 Daiwa Kosho Lease Co., Ltd. 5,850
13,000 Daiwa Securities Co., Ltd. 244,625
5,000 Denki Kagaku Kogyo K.K. 19,061
9,000 Denso Corp. 214,547
40 East Japan Railway Co. 207,478
3,000 Ebara Corp. 39,195
3,000 Eisai Co., Ltd. 79,121
2,400 Fanuc Ltd. 251,782
35,000 Fuji Bank 329,303
200 Fuji Machine MFG. Co., Ltd. 14,878
5,000 Fuji Photo Film Co. 220,348
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
400 Fuji S Ware Abc $ 27,300
4,000 Fujikura Ltd. 19,851
5,000 Fujita Corp.(a) 2,730
19,000 Fujitsu Ltd. 583,532
6,000 Fukuoka Chuo Bank Ltd. 41,184
7,000 Furukawa Electric Co., Ltd. 117,730
6,000 Gunma Bank 32,877
2,000 Gunze Ltd. 5,187
2,000 Hankyu Department Stores 11,544
4,000 Haseko Corp.(a) 1,716
400 Hirose Electric Co., Ltd. 56,510
34,000 Hitachi Ltd. 404,095
10,000 Hitachi Zosen Corp. 8,970
6,000 Hokuriku Bank 15,210
10,000 Honda Motor Co., Ltd. 413,396
1,000 House Foods Corp. 14,820
1,000 Hoya Corp. 94,574
2,000 Inax Corp. 10,393
26,000 Indonesia Bank 237,781
3,000 Isetan Co. 26,529
3,000 Ishihara Sangyo Kaisha(a) 5,616
15,000 Ishikawajima-Harima Heavy Industries Co., Ltd. 17,550
4,000 Ito Yokado Co., Ltd. 286,257
15,000 Itochu Corp. 79,998
2,000 Iwatani International Corp. 4,524
1,000 Jaccs Co., Ltd. 3,344
18,000 Japan Air Lines Co.(a) 48,262
11,000 Japan Energy Corp. 9,652
4,000 Japan Steel Works 4,485
20 Japan Tobacco, Inc. 143,324
2,000 JGC Corp. 5,577
9,000 Joyo Bank 36,416
3,000 Jusco Co. 44,928
100 Kadokawa Shoten Publishing Co., Ltd. 23,741
10,000 Kajima Corp. 27,690
1,000 Kaken Pharmaceutical Co., Ltd. 6,396
3,000 Kamigumi Co., Ltd. 13,747
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
5,000 Kanebo Ltd.(a) $ 9,409
4,000 Kaneka Corp. 49,998
9,700 Kansai Electrical Power 145,077
6,000 Kao Corp. 183,688
1,000 Katokichi Co. 21,401
17,000 Kawasaki Heavy Industries 20,387
6,000 Kawasaki Kisen Ltd. 10,530
32,000 Kawasaki Steel Corp. 53,663
5,000 Keihin Electric Express Railway Co., Ltd. 18,232
2,000 Kikkoman Corp. 15,034
3,000 Kinden Corp. 22,961
16,000 Kinki Nippon Railway 65,363
10,000 Kirin Brewery Co. 122,459
1,000 Kokuyo Co. 13,162
10,000 Komatsu Ltd. 47,580
1,000 Komori Corp. 15,356
500 Konami Co., Ltd. 34,125
500 Konami Co., Ltd. (New) 34,125
4,000 Konica Corp. 18,252
2,000 Koyo Seiko Co. 15,015
14,000 Kubota Corp. 48,184
7,000 Kumagai Gumi Co.(a) 4,573
4,000 Kuraray Co. 36,582
2,000 Kureha Chemical Industry Co., Ltd. 5,557
1,000 Kurita Water Industries 19,402
1,900 Kyocera Corp. 317,886
2,000 Kyowa Exeo Corp. 15,561
5,000 Kyowa Hakko Kogyo Co., Ltd. 56,842
1,000 Maeda Road Construction Co. 4,582
1,000 Makino Milling Machine 9,565
2,000 Makita Corp. 17,725
15,000 Marubeni Corp. 56,598
4,000 Marui Co.(a) 72,422
21,000 Matsushita Electric Industrial Co., Ltd. 628,577
3,000 Meiji Milk Product Co., Ltd. 18,340
4,000 Meiji Seika Kaisha 27,924
600 Meitec Corp. 21,060
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
4,000 Minebea Co.(a) $ 53,234
21,000 Mitsubishi Chemical Corp. 83,742
16,000 Mitsubishi Corp. 145,235
22,000 Mitsubishi Electric Corp. 207,634
13,000 Mitsubishi Estate Co., Ltd. 141,071
5,000 Mitsubishi Gas Chemicals Co. 12,041
33,000 Mitsubishi Heavy Industries Ltd. 103,924
2,000 Mitsubishi Logistics Corp. 17,355
12,000 Mitsubishi Material Corp. 40,950
3,000 Mitsubishi Paper Mills 4,592
6,000 Mitsubishi Rayon Co. 14,859
13,000 Mitsubishi Trading & Banking 120,665
16,000 Mitsui & Co. 129,479
8,000 Mitsui Engineering & Shipbuilding Co., Ltd.(a) 5,850
8,000 Mitsui Fudosan Co., Ltd. 76,439
8,000 Mitsui Marine & Fire Insurance Co., Ltd. 36,036
5,000 Mitsui Mining & Smelting Co. 30,517
1,000 Mitsui Soko Co. 2,437
5,000 Mitsukoshi Ltd. 21,645
1,000 Mori Seiki Co. 16,672
2,000 Murata Manufacturing Co., Ltd. 486,521
3,000 Mycal Corp. 10,969
600 Namco Ltd. 24,628
16,000 NEC Corp. 472,676
4,000 NGK Insulators Ltd. 34,710
2,000 NGK Spark Plug Co. 22,815
700 Nichiei Co., Ltd. 13,274
3,000 Nichirei Corp. 8,336
300 Nidec Corp. 27,787
300 Nidec Corp. (New) 27,202
4,000 Nikon Corp. 153,659
1,400 Nintendo Co., Ltd. 246,380
1,000 Nippon Comsys Corp. 18,622
11,000 Nippon Express Co., Ltd. 81,831
5,000 Nippon Light Metal Co., Ltd. 4,485
3,000 Nippon Meat Packers, Inc. 34,515
15,000 Nippon Mitsubishi Oil Corp. 54,843
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
9,000 Nippon Paper Industries Co. $ 64,671
1,000 Nippon Sharyo Ltd. 2,106
5,000 Nippon Sheet Glass Co. 50,700
3,000 Nippon Shinpan Co. 7,517
2,000 Nippon Shokubai Co. 8,775
67,000 Nippon Steel Corp. 160,045
3,000 Nippon Suisan Kaisha(a) 5,236
127 Nippon Telegraph & Telephone Corp. 2,018,329
12,000 Nippon Yusen K.K. 50,778
3,000 Nishimatsu Construction Co. 11,144
40,000 Nissan Motor Co., Ltd.(a) 163,798
2,000 Nisshin Flour Mill 16,185
2,000 Nisshinbo Industries, Inc. 9,808
1,000 Nissin Food Products Co., Ltd. 22,571
2,000 Nitto Denko Corp. 79,949
2,000 NOF Corp. 5,128
20,000 Nomura Securities Co., Ltd. 653,244
2,000 Noritake Co. 8,892
6,000 NSK Ltd. 44,928
5,000 NTN Corp. 15,112
8,000 Obayashi Corp. 29,250
10,000 Oji Paper Co., Ltd. 70,297
1,000 Okuma Corp. 3,958
3,000 Okumura Corp. 10,033
3,000 Olympus Optical Co. 46,507
3,000 Omron Corp. 85,409
2,000 Onward Kashiyama & Co., Ltd. 24,180
3,000 Orient Corp. 13,309
1,000 Oriental Land Co., Ltd. 109,394
840 Orix Corp. 121,620
25,000 Osaka Gas Co. 60,449
100 Oyo Corp. 1,219
4,000 Penta-Ocean Construction 5,538
2,000 Pioneer Electronic Corp. 56,744
1,200 Promise Co., Ltd. 92,546
3,000 Renown Inc. 4,183
1,100 Rohm Co., Ltd. 382,879
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
40,000 Sakura Bank $ 304,587
1,000 Sanden Corp. 5,499
5,000 Sankyo Co. 126,018
1,000 Sanrio Co.(a) 33,345
2,000 Sanwa Shutter Corp. 6,103
19,000 Sanyo Electric Co. 113,372
3,000 Sapporo Breweries Ltd. 11,671
2,000 Secom Co., Ltd. 171,598
1,000 Sega Enterprises Ltd. 20,377
1,000 Seino Transportation Co. 5,167
3,000 Seiyu Ltd. 8,102
6,000 Sekisui Chemical Corp., Ltd. 19,831
7,000 Sekisui House Ltd. 64,223
11,000 Sharp Corp. 235,412
500 Shimachu Co. 5,923
400 Shimamura Co. 43,680
1,500 Shimano Inc. 28,489
9,000 Shimizu Corp. 25,184
4,000 Shin-Etsu Chemical Co., Ltd. 242,968
4,000 Shionogi & Co. 71,057
4,000 Shiseido Co., Ltd. 54,404
8,000 Shizuoka Bank 67,859
11,000 Showa Denko K.K. 14,693
4,000 Showa Shell Sekiyu K.K. 15,678
1,000 Skylark Co. 27,202
700 SMC Corp. 146,736
3,000 Snow Brand Milk Products 12,724
1,100 Softbank Corp. 981,329
4,500 Sony Corp. 636,182
4,500 Sony Corp. (New) 640,569
32,000 Sumitomo Bank 477,356
16,000 Sumitomo Chemical Co., Ltd. 87,515
11,000 Sumitomo Corp. 133,418
7,000 Sumitomo Electric Industries 98,757
2,000 Sumitomo Forestry Co., Ltd. 12,831
6,000 Sumitomo Heavy Industries Ltd. 14,508
7,000 Sumitomo Marine & Fire Insurance Co. 35,490
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
38,000 Sumitomo Metal Industries(a) $ 29,640
7,000 Sumitomo Metal Mining Co. 20,953
5,000 Sumitomo Osaka Cement Co. 18,476
11,000 Taiheiyo Cement Corp. 18,554
12,000 Taisei Corp. 19,071
3,000 Taisho Pharmacy Co., Ltd. 103,544
1,000 Taiyo Yuden Co. 64,642
2,000 Takara Shuzo Co. 44,850
1,000 Takara Standard Co., Ltd. 4,192
4,000 Takashimaya Co. 32,682
9,000 Takeda Chemical Industries 640,569
1,500 Takefuji Corp. 160,874
1,000 Takuma Co., Ltd. 9,262
9,000 Teijin Ltd. 38,171
3,000 Teikoku Oil Co. 9,711
2,000 Terumo Corp. 60,059
2,000 Toa Corp. 2,886
9,000 Tobu Railway Co. 25,711
3,000 Toda Corporation 11,086
1,000 Toei Co. 8,395
200 Toho Co. 53,722
5,000 Tohoku Electrical Power Co., Inc. 64,106
22,000 Tokai Bank 132,989
15,000 Tokio Marine & Fire Insurance Co. 154,292
2,000 Tokyo Broadcasting System Inc. 78,974
2,000 Tokyo Dome Corp. 10,627
13,500 Tokyo Electric Power Co. 296,154
2,000 Tokyo Electron Ltd. 302,247
28,000 Tokyo Gas Co. 60,332
1,000 Tokyo Style Co. 9,652
2,000 Tokyo Tatemono Co., Ltd. 3,763
3,000 Tokyotokeiba Co. 4,036
11,000 Tokyu Corp. 48,691
7,000 Toppan Printing Co. 78,487
14,000 Toray Industries Inc. 54,053
33,000 Toshiba Corp. 336,547
7,000 Tosoh Corp. 34,193
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
2,000 Tostem Corp. $ 32,370
4,000 Toto Ltd. 20,592
2,000 Toyo Seikan Kaisha 34,203
7,000 Toyobo Co. 10,579
38,000 Toyota Motor Corp. 1,989,567
200 Trans Cosmos Inc. 56,549
2,000 Tsubakimoto Chain Co. 8,385
8,000 Ube Industries Ltd. 18,096
800 Uni-Charm Corp. 52,650
5,000 Unitika Ltd.(a) 3,851
2,000 Uny Co. 17,530
2,000 Wacoal Corp. 16,906
300 World Co., Ltd. 23,107
150 World Co., Ltd. (New) 10,442
2,000 Yakult Honsha Co., Ltd. 17,784
2,000 Yamaha Corp. 16,224
3,000 Yamanouchi Pharmaceutical Co., Ltd. 164,383
4,000 Yamato Transport Co. 114,659
3,000 Yamazaki Baking Co. 28,665
3,000 Yokogawa Electric Corp. 27,904
--------------
28,239,100
-------------------------------------------------------------------------------------
Malaysia
350 Silverstone Berhad (b) 0
-------------------------------------------------------------------------------------
New Zealand 0.4%
27,900 Brierley Investments Ltd. 5,405
18,500 Carter Holt Harvey Ltd. 15,989
6,300 Contact Energy Ltd.(a) 8,355
1,000 Fisher & Paykel Industries Ltd. 3,005
3,300 Fletcher Challenge Building 3,573
3,400 Fletcher Challenge Energy, Ltd. 7,583
8,000 Fletcher Challenge Forestry, Ltd. 2,106
6,700 Fletcher Challenge Paper 4,559
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
7,600 Lion Nathan Ltd. $ 13,023
16,600 Telecom Corp. Of New Zealand 75,114
--------------
138,712
-------------------------------------------------------------------------------------
Singapore 2.5%
9,000 City Developments Ltd. 40,777
1,000 Creative Technology Ltd.(a) 31,745
3,000 Cycle & Carriage Ltd.(a) 8,068
13,885 DBS Group Holdings Ltd. 183,453
14,500 DBS Land, Ltd. 18,904
3,000 First Capital Corp. 2,561
3,000 Fraser & Neave Ltd. 8,559
1,000 Haw Par Corp., Ltd. 1,590
4,000 Hotel Properties Ltd. 3,508
2,000 Inchcape Motors Ltd. 1,695
9,000 Keppel Corp., Ltd. 21,151
3,000 Natsteel Ltd. 7,015
12,000 Neptune Orient Lines Ltd. 10,593
12,650 Overseas Chinese Banking Corp., Ltd. 78,391
1,000 Overseas Union Enterprise 2,607
3,000 Parkway Holdings Ltd. 8,489
29,000 S.T. Engineering(a) 34,755
18,872 Sembcorp Industries 19,197
13,000 Singapore Airlines Ltd. 121,600
3,445 Singapore Press Holdings Ltd. 54,982
62,000 Singapore Telecommunications 88,441
3,000 Straits Trading Co.(a) 2,982
10,000 United Industrial Corp. 4,209
11,504 United Overseas Bank Ltd. 70,617
6,000 United Overseas Land 4,315
3,000 Venture Manufacturing Ltd. 41,215
--------------
871,419
--------------
Total Common Stocks (cost $26,933,896) 33,703,766
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
PREFERRED STOCKS 0.7%
Australia
21,377 News Corp. Ltd.
(cost $116,563) $ 253,026
<CAPTION>
Units
-------------------------------------------------------------------------------------
WARRANTS(a)
<C> <S> <C> <C>
Hong Kong
2,000 Chinese Estates Holdings
Warrants expiring November 2000
@HKD 1.02 105
<CAPTION>
CORPORATE BONDS
Principal
Amount
(000)
<C> <S> <C> <C>
-------------------------------------------------------------------------------------
Australia
$ 19 AMP Group Finance
(cost $19,258) 10,285
--------------
Total long-term Investments (cost $27,069,717) 33,967,182
SHORT-TERM INVESTMENTS 0.5%
-------------------------------------------------------------------------------------
United States 0.4%
130 United States Treasury Bill(c),
5.675%,06/15/00
(cost $128,456) 128,456
-------------------------------------------------------------------------------------
Repurchase Agreements 0.1%
34 Joint Repurchase Agreement Account,
6.153%, 04/03/00 (Note 5) 34,000
--------------
Total short-term Investments (cost $162,456) 162,456
--------------
Total Investments 98.1%
(cost $27,232,173; Note 4) 34,129,638
Other assets in excess of liabilities 1.9% 665,643
--------------
Net Assets 100% $ 34,795,281
--------------
--------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Issuer in bankruptcy.
(c) Pledged as initial margin for financial futures contracts.
(d) Reinsurance note.
18 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
The industry classification of portfolio holdings and other asets (net) shown as
a percentage of net assets as of March 31, 2000 was as follows:
<TABLE>
<S> <C>
Electronics............................................................... 10.7%
Commercial Banking........................................................ 10.4
Telecommunications........................................................ 8.2
Automobiles & Auto Parts.................................................. 8.1
Appliances & Household Durables........................................... 4.8
Financial Services........................................................ 4.3
Drugs & Health Care....................................................... 3.9
Real Estate............................................................... 3.2
Diversified Industries.................................................... 3.0
Investment Companies...................................................... 2.8
Chemicals................................................................. 2.5
Retail.................................................................... 2.3
Electronic Components..................................................... 2.2
Broadcasting & Other Media................................................ 1.9
Electrical Utilities...................................................... 1.8
Machinery & Equipment..................................................... 1.7
Food & Beverage........................................................... 1.7
Computers................................................................. 1.7
Wholesale................................................................. 1.6
Photography............................................................... 1.5
Office Equipment & Supplies............................................... 1.2
Transportation & Warehousing.............................................. 1.1
Electrical Equipment...................................................... 1.0
Railroads................................................................. 0.9
Oil & Gas................................................................. 0.9
Building & Construction................................................... 0.9
Toy Manufacturer.......................................................... 0.7
Printing & Publishing..................................................... 0.7
Mining.................................................................... 0.7
Iron & Steel.............................................................. 0.7
Insurance................................................................. 0.7
Entertainment............................................................. 0.7
Engineering & Construction................................................ 0.7
Cosmetics/Toiletries...................................................... 0.7
Rubber.................................................................... 0.6
Paper..................................................................... 0.6
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<S> <C>
Airlines.................................................................. 0.6
Business Services......................................................... 0.5
U.S. Government Securities................................................ 0.4
Transportation-Road & Rail................................................ 0.4
Tobacco................................................................... 0.4
Glass Products............................................................ 0.4
Computer Software & Services.............................................. 0.4
Building Materials & Components........................................... 0.4
Metals.................................................................... 0.3
Health Care/Acute......................................................... 0.3
Commercial Services....................................................... 0.3
Software.................................................................. 0.2
Publishing................................................................ 0.2
Property Investment....................................................... 0.2
Medical Products & Services............................................... 0.2
Hotels.................................................................... 0.2
Diversified Resources..................................................... 0.2
Diversified Funds......................................................... 0.2
Apparel................................................................... 0.2
Textiles.................................................................. 0.1
Retail Trade.............................................................. 0.1
Repurchase Agreement...................................................... 0.1
Paper & Packaging......................................................... 0.1
Gaming.................................................................... 0.1
Electrical Services....................................................... 0.1
Diversified Manufacturing................................................. 0.1
Containers................................................................ 0.1
Beverages................................................................. 0.1
Advertising............................................................... 0.1
-----
98.1
Other assets in excess of liabilities..................................... 1.9
-----
100.0%
-----
-----
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $27,232,173) $ 34,129,638
Foreign currency, at value (cost $506,364) 514,060
Cash 113,777
Dividends and interest receivable 105,202
Due from Manager 11,996
Receivable for Fund shares sold 11,742
Other assets 205
--------------
Total assets 34,886,620
--------------
LIABILITIES
Accrued expenses 61,355
Foreign withholding taxes payable 14,342
Payable for Fund shares repurchased 12,688
Due to broker-variation margin 2,954
--------------
Total liabilities 91,339
--------------
NET ASSETS $ 34,795,281
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 2,879
Paid-in capital in excess of par 27,169,266
--------------
27,172,145
Distribution in excess of net investment income (28,723)
Accumulated net realized gain on investments 728,969
Net unrealized appreciation on investments and foreign
currencies 6,922,890
--------------
Net assets, March 31, 2000 $ 34,795,281
--------------
--------------
Class Z:
Net asset value per share
($34,795,281 / 2,879,478 shares of beneficial interest
issued and outstanding) $ 12.08
--------------
--------------
</TABLE>
See Notes to Financial Statements 21
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $17,887) $ 175,189
Interest 3,164
-----------------
Total income 178,353
-----------------
Expenses
Management fee 72,473
Custodian's fees and expenses 112,000
Audit fee and expenses 7,500
Registration fees 7,500
Reports to shareholders 5,000
Legal fees and expenses 5,000
Trustees' fees 5,000
Transfer agent's fees and expenses 2,000
Miscellaneous 3,920
-----------------
Total operating expenses 220,393
Less: Expense subsidy (Note 2) (111,809)
-----------------
Net expenses 108,584
-----------------
Net investment income 69,769
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain on:
Investment transactions 1,173,640
Foreign currency transactions 158,683
Financial futures contracts 165,991
-----------------
1,498,314
-----------------
Net change in unrealized appreciation (depreciation) on:
Investments 3,717,514
Foreign currencies (102,499)
Financial futures contracts 18,066
-----------------
3,633,081
-----------------
Net gain on investments and foreign currencies 5,131,395
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,201,164
-----------------
-----------------
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 30, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 69,769 $ 177,801
Net realized gain (loss) on investments
and foreign currency transactions 1,498,314 (149,866)
Net change in unrealized appreciation on
investments and foreign currencies 3,633,081 12,190,461
-------------- ------------------
Net increase in net assets resulting from
operations 5,201,164 12,218,396
-------------- ------------------
Dividends from net investment income (Note
1) (498,620) (156,768)
-------------- ------------------
Fund share transactions (Note 6)
Net proceeds from shares sold 12,888,128 13,554,042
Net asset value of shares issued in
reinvestment of dividends 421,213 156,768
Cost of shares reacquired (19,800,124) (5,630,075)
-------------- ------------------
Net increase (decrease) in net assets
from Fund share transactions (6,490,783) 8,080,735
-------------- ------------------
Total increase (decrease) (1,788,239) 20,142,363
-------------- ------------------
NET ASSETS
Beginning of period 36,583,520 16,441,157
-------------- ------------------
End of period(a) $ 34,795,281 $ 36,583,520
-------------- ------------------
-------------- ------------------
------------------------------
(a) Includes undistributed net investment
income of $ -- $ 241,445
-------------- ------------------
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Notes to Financial Statements (Unaudited)
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, one of which is the
Prudential Pacific Index Fund (the 'Fund').
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 manager or subadviser, does not represent fair value, are
valued by the Valuation Committee or Board of Trustees in consultation with the
manager and the subadviser.
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.
24
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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 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
25
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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 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 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
26
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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 distribution in excess of net investment income and to decrease
accumulated net realized gain on investments by $158,683, relating to net
realized foreign currency gains. 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 services of
PIC, the cost of 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. For the six months ended March 31, 2000, PIFM
subsidized $111,089 of the expenses of the Fund (0.62% of average net assets
annualized or $0.04 per share).
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 wholly owned subsidiaries of The Prudential
Insurance Company of America ('The Prudential').
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.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was
27
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
.065 of 1% of the unused portion of the credit facility. The Fund did not borrow
any amounts pursuant to the SCA during the six months ended March 31, 2000.
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,
2000, the Fund incurred fees of approximately $1,900 for the services of PMFS.
As of March 31, 2000, approximately $400 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, 2000 were $1,224,224 and $6,360,424,
respectively.
The cost basis of investments for federal income tax purposes at March 31,
2000 was $27,464,702 and, accordingly, net unrealized appreciation for federal
income tax purposes was $6,664,936 (gross unrealized appreciation--$9,798,236;
gross unrealized depreciation--$3,133,300).
For Federal income tax purposes, the Fund had a capital loss carryforward
as of September 30, 1999 of $450,909 which expires in 2007. Accordingly, no
capital gains distributions are expected to be paid to shareholders until future
net gains have been realized in excess of such carryforward.
The Fund will elect, for United States Federal income tax purposes, to
treat long-term capital losses of $118,458 incurred in the eleven months ended
September 30, 1999 as having been incurred in the current fiscal year.
During the six months ended March 31, 2000, the Fund entered into
financial futures contracts. Details of open contracts as of March 31, 2000 are
as follows:
<TABLE>
<CAPTION>
Value at Value at Unrealized
Number of Expiration March 31, Trade Appreciation/
Contracts Type Date 2000 Date (Depreciation)
--------------- ---------------- ---------- --------- -------- --------------
<C> <C> <S> <C> <C> <C>
Long Positions:
1 Hang Seng Apr. 2000 $ 112,117 $117,671 $ (5,554)
ASX All
Ordinaries Jun. 2000 96,542 99,850 (3,308)
2
13 Nikkei 300 Jun. 2000 410,666 386,584 24,082
--------------
$ 15,220
--------------
--------------
</TABLE>
28
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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, 2000, the Fund
has a 0.01% undivided interest in the repurchase agreements in the joint
account. The undivided interest for the Fund represents $34,000 in principal
amount. As of such date, the repurchase agreements in the joint account and the
value of the collateral therefor were as follows:
Bear, Stearns & Co. Inc., 6.10%, in the principal amount of $120,000,000,
repurchase price $120,061,000, due 04/3/00. The value of the collateral
including accrued interest was $123,642,827.
Credit Suisse First Boston Corp., 6.10%, in the principal amount of
$130,000,000, repurchase price $130,066,083, due 04/3/00. The value of the
collateral including accrued interest was $134,450,258.
Goldman, Sachs & Co., 6.09%, in the principal amount of $100,000,000,
repurchase price $100,050,750, due 04/3/00. The value of the collateral
including accrued interest was $102,000,426.
Greenwich Capital Markets, Inc., 6.15%, in the principal amount of
$100,000,000, repurchase price $100,051,250, due 04/3/00. The value of the
collateral including accrued interest was $102,005,200.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.25%, in the principal
amount of $207,289,000, repurchase price $207,396,963, due 04/3/00. The value of
the collateral including accrued interest was $211,435,308.
29
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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>
Shares
----------
<S> <C>
Six months ended March 31, 2000:
Shares sold 1,120,583
Shares issued in reinvestment of dividends 36,755
Shares reacquired (1,677,741)
----------
Net decrease in shares outstanding (520,403)
----------
----------
Year ended September 30, 1999:
Shares sold 1,381,345
Shares issued in reinvestment of dividends 20,021
Shares reacquired (579,605)
----------
Net increase in shares outstanding 821,761
----------
----------
</TABLE>
As of March 31, 2000, 2,553,996 of the outstanding shares were owned by
The Prudential.
30
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Financial
Highlights
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.76
--------
Income from investment operations
Net investment income(b) 0.01
Net realized and unrealized gain (loss) on investment and
foreign currency transactions 1.45
--------
Total from investment operations 1.46
--------
Less distributions
Dividends from net investment income (0.14)
--------
Net asset value, end of period $ 12.08
--------
--------
TOTAL RETURN(d): 13.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 34,795
Average net assets (000) $ 36,237
Ratios to average net assets:(b)
Expenses .60%(c)
Net investment income .39%(c)
Portfolio turnover 4%
</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.
32 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Pacific Index Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Year Ended September 30, September 24, 1997(a)
------------------------------------------ through September 30,
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 6.38 $ 9.88 $ 10.00
-------- -------- --------
0.05 0.06 0.02
4.39 (3.55) (0.14)
-------- -------- --------
4.44 (3.49) (0.12)
-------- -------- --------
(.06) (.01) --
-------- -------- --------
$ 10.76 $ 6.38 $ 9.88
-------- -------- --------
-------- -------- --------
70.48% (35.54)% (1.20)%
$ 36,584 $ 16,441 $ 24,699
$ 24,660 $ 19,827 $ 24,802
.60% .60% .60%(c)
.72% .78% 13.14%(c)
5% 2% 0%
</TABLE>
See Notes to Financial Statements 33
<PAGE>
Prudential Pacific Index Fund
Prudential Mutual Fund Family
Prudential offers a broad range of mutual funds designed
to meet your individual needs. For information about
these funds, contact your financial adviser or call us at
(800) 225-1852. Read the prospectus carefully before you
invest or send money.
STOCK FUNDS
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Prudential Equity Fund, Inc.
Prudential Equity Income Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
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Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential 20/20 Focus Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Target Funds
Large Capitalization Growth Fund
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Small Capitalization Value Fund
Asset Allocation/Balanced Funds
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Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
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GLOBAL FUNDS
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Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
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Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Global Utility Fund, Inc.
Target Funds
International Equity Fund
Global Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
<PAGE>
www.prudential.com (800) 225-1852
BOND FUNDS
Taxable Bond Funds
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Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
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Prudential Structured Maturity Fund, Inc.
Income Portfolio
Target Funds
Total Return Bond Fund
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Prudential California Municipal Fund
California Series
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High Income Series
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North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
MONEY MARKET FUNDS
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Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Prudential Pacific Index Fund
Getting the Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you
receive financial advice from a Prudential Securities
Financial Advisor or 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. 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 available mutual funds to
find the ones that fit your 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
should remind you that you're investing for the long
haul.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E. H. Morrison, Secretary
William V. Healey, Assistant Secretary
Stephen M. Ungerman, Assistant Treasurer
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
194 Wood Avenue South
Iselin, NJ 08830
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
Cusip Number 74438C803
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, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF174E10 74438C803
(LOGO) Printed on Recycled Paper
<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Small-Cap Index Fund
Fund Type Stock
Objective Provide investment results that correspond to the price and
yield performance of the applicable index
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or
accompanied by a current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
Prudential Small-Cap Index Fund seeks to provide
investment results that correspond to the price and
yield performance of a broad-based index of small
capitalization stocks. Currently we use the
Standard & Poor's SmallCap 600 Stock 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, their individual
market values ranged from $17 million to $6,080
million, with a median of $466 million. Differences
between the Fund's return and that of the Index are
due in part to management fees and expenses. Small-
cap stocks have limited marketability and may be
subject to more abrupt or erratic market movements
than large-cap stocks. There can be no assurance
that the Fund will achieve its investment
objective.
S&P SmallCap 600 Index As of 3/31/00
(GRAPH)
Source: Standard & Poor's.
The S&P SmallCap 600 Index currently measures the
performance of selected U.S. stocks with a market
value no greater than $6,080 million (as of March
31, 2000). "S&P(R)", "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.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Since
Months Year Inception2
Class Z 19.09% (18.75) 30.35% (29.61) 13.53% (11.58)
Lipper S&P
Small-Cap
Core Fund Avg.3 36.05 54.26 27.85
S&P SmallCap
600 Index4 19.00 30.70 13.76
Average Annual Total Returns1 As of 3/31/00
One Since
Year Inception2
Class Z 30.35% (29.61) 5.21% (4.48)
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
LLC and Lipper Inc. Class Z shares are not subject
to a sales charge or distribution and service (12b-
1) fees. 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 Lipper average returns are for all funds in each
share class for the six-month, one-year, and since-
inception periods in the Small-Cap Core Fund
category. The Lipper average is unmanaged. Small-
Cap Core funds, by portfolio practice, invest at
least 75% of their equity assets in companies with
market capitalizations (on a three-year weighted
basis) of less than 250% of the dollar-weighted
median market capitalization of the S&P SmallCap
600 Index. Small-Cap Core funds have wide latitude
in the companies in which they invest. These funds
will normally have an average price/earnings ratio,
price-to-book ratio, and three-year earnings growth
figure, compared to the U.S. diversified small-cap
funds universe average.
4 The S&P SmallCap 600 Index is a market
capitalization-weighted index comprised of 600
domestic stocks chosen for market size, liquidity,
and industry group representation. The Index is
unmanaged, 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.
Investors cannot invest directly in an index.
1
<PAGE>
Prudential Small-Cap Index Fund
Message From the Fund's President May 24, 2000
Dear Shareholder,
On May 24, 2000, the Board of Trustees for
Prudential Small-Cap Index Fund decided that it was
in our shareholders' best interest to liquidate the
Fund as soon as possible, but no later than
September 29, 2000. The decision to liquidate was
based upon the determination that over its
lifetime, the Fund was unable to gather enough
assets to operate efficiently. You should receive
further communication about this decision shortly.
For the first time since a global financial panic
began in Asia in 1997, Standard & Poor's SmallCap
600 Stock Index had two successive positive
quarters--the six months ended March 31, 2000--
providing the basis for a 19.09% half-year return
for the Fund. This exceeded the return for the full
12 months of its last fiscal year. Performance came
not just from the new economy stocks in
communications services, technology, and
biotechnology, but also from energy, capital goods,
and financial stocks, although many of the
strongest capital goods returns were technology-
related.
In the second half of this reporting period,
Standard & Poor's small-cap index had more than
doubled the return of its large-cap counterpart.
With large-cap technology stocks at very high
prices, investors began to look among smaller firms
for potential growth. In the first quarter of 1999,
small-cap technology stocks moved up sharply, led
by computer-related industries. Then, biotechnology
and telecommunications stocks took up the lead.
This period was marked by dramatic and frequent
changes in the fortunes of particular companies,
sectors, and investment styles. Such shifts in
market sentiment are not unusual in the securities
markets and are why werecommend that investors
maintain a broadly diversified portfolio. A
diversified portfolio is likely to be less
volatile than any of its components.
Yours sincerely,
John R. Strangfeld, President
Prudential Index Series Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
The technology sector now comprises more than a
quarter of the S&P SmallCap 600 Index market
capitalization (the total value of outstanding
shares). For much of our reporting period--the six
months ended March 31, 2000--exuberant buying drove
up technology stocks. The sector's advance was
driven by technological service companies such as
Mercury Interactive (tools for testing enterprise-
scale software applications), Clarify (front-office
software), and Macromedia (Web design and graphics
tools). The stocks of these three firms more than
doubled in price during the half-year.
The tiny (three-company) communications services
sector had the largest average gain, but a larger
contribution to the overall Index came from the
healthcare sector. Biotechnology companies--led by
Idec Pharmaceuticals and Incyte Pharmaceuticals--
soared.
The technology and telecommunications sectors and
the biotech group of the healthcare sector have
been the market darlings. They make up what has
been called the "new economy." Market swings,
particularly in March 2000, tended to alternate
between new economy and old economy stocks.
This reporting period also saw a rebound in
financial stocks, such as U.S. Trust and Silicon
Valley Bancshares. As the name of the latter
suggests, the impact of the rapid growth of new
economy companies contributes to growth in other
sectors. The customers of Silicon Valley Bancshares
are primarily in technology and life sciences (as
well as wine and entertainment). Similarly, the
largest gains in the capital goods sector were made
by firms with names such as Valence Technology,
Three-Five Systems, and C-Cor.Net.
3
<PAGE>
Prudential Small-Cap Index Fund
Investment Adviser's Report
Although more sectors advanced than retreated over
the reporting period, consumer-oriented sectors,
utilities, and basic materials still had negative
average returns over the six months. However, March
performance almost represented an inversion of the
sector performance profile for the first two
months. The previously market-leading sectors came
off their highs, while formerly lagging sectors had
positive returns. The month was extraordinarily
volatile. Such volatility illustrates the advantage
of owning an index fund. As former market leaders
drop to the bottom of the pack, an investor who was
concentrated in one sector would experience sharp
changes in fortune. We are unlikely to have seen
the last of the technology sector's strong gains,
but they well may come after the rest of the market
has caught up a bit.
Looking Ahead
The market appears to be correcting some of the
extraordinary gains of the past half-year.
Volatility is increasing. The gains of some of the
high-flying Internet stocks have "come back to
earth." Market leadership seems to be continuing to
alternate between new economy stocks and previously
neglected old economy stocks.
One can predict neither the market's change in
sentiment nor the rapidity of those changes. A
portfolio representative of a broad spectrum of
market capitalization and industry groups is a wise
precaution. An index fund enables one to
participate in the market advances, regardless of
whichever sector leads.
Prudential Index Series Fund Management Team
4
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 98.8%
Common Stocks
-------------------------------------------------------------------------------------
Advertising 0.9%
3,750 HA-LO Industries, Inc.(a) $ 29,531
5,600 Snyder Communications, Inc. 126,000
3,800 True North Communications, Inc. 149,388
--------------
304,919
-------------------------------------------------------------------------------------
Aerospace 0.5%
1,100 Aviation Sales Co.(a) 6,944
1,900 BE Aerospace, Inc.(a) 11,162
3,200 GenCorp, Inc. 24,800
2,900 Orbital Sciences Corp.(a) 43,500
2,100 Teledyne Technologies, Inc.(a) 36,488
1,800 Trimble Navigation, Ltd.(a) 46,350
--------------
169,244
-------------------------------------------------------------------------------------
Airlines 0.5%
1,400 Atlantic Coast Airlines Holdings, Inc. 36,225
2,600 Mesa Air Group, Inc.(a) 16,250
1,100 Midwest Express Holdings, Inc.(a) 28,188
1,900 SkyWest, Inc. 74,337
--------------
155,000
-------------------------------------------------------------------------------------
Automobiles & Trucks 1.7%
4,200 Copart, Inc.(a) 73,500
1,300 Discount Auto Parts, Inc.(a) 11,619
5,800 Gentex Corp.(a) 214,962
1,600 Group 1 Automotive, Inc.(a) 18,600
1,300 Midas, Inc. 31,200
1,400 Simpson Industries, Inc. 13,738
1,850 Smith (A.O.) Corp. 33,300
900 Spartan Motors, Inc. 3,713
1,000 Standard Motor Products, Inc. (Class 'A' Stock) 14,875
1,600 TBC Corp.(a) 8,100
2,600 Tenneco Automotive, Inc. 20,638
1,600 Titan International, Inc. 11,500
</TABLE>
See Notes to Financial Statements 5
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Automobiles & Trucks (cont'd.)
3,700 Tower Automotive, Inc.(a) $ 60,587
1,800 Wabash National Corp. 25,087
--------------
541,419
-------------------------------------------------------------------------------------
Banks 4.4%
1,900 Anchor BanCorp, Inc.(a) 30,163
1,800 Banknorth Group, Inc. 48,263
2,000 Carolina First Corp. 26,250
3,100 Centura Banks, Inc. 142,019
2,200 Chittenden Corp. 65,312
2,370 Commerce Bancorp, Inc. 87,690
4,500 Commercial Federal Corp. 74,812
3,900 Community First Bankshares, Inc. 62,400
2,190 Downey Financial Corp. 46,538
3,250 First Midwest Bancorp, Inc. 78,812
2,200 FirstBank Puerto Rico(a) 38,775
3,954 HUBCO, Inc. 85,752
1,200 Investors Financial Services Corp. 70,650
1,900 Maf Bancorp, Inc. 30,756
2,000 Provident Bankshares Corp. 31,500
1,600 Queens County Savings Bank Corp. 28,900
2,200 Riggs National Corp. 26,813
1,800 Silicon Valley Bancshares 129,375
2,200 Southwest Bancorp of Texas, Inc.(a) 42,763
3,100 Staten Island Bancorp, Inc. 53,087
2,900 Susquehanna Bancshares, Inc. 40,056
4,180 Trustco Bank Corp. 48,854
3,300 United Bankshares, Inc. 72,600
1,800 Whitney Holding Corp. 58,725
--------------
1,420,865
-------------------------------------------------------------------------------------
Chemicals 2.5%
2,000 Cambrex Corp. 87,000
800 Chemed Corp. 24,000
1,400 Chemfirst, Inc. 27,213
1,965 Enzo Biochem, Inc.(a) 138,532
</TABLE>
6 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Chemicals (cont'd.)
1,800 Geon Co. $ 38,700
1,300 Ionics, Inc.(a) 33,231
1,800 Lilly Industries, Inc., (Class 'A' Stock) 22,275
2,400 MacDermid, Inc. 63,600
1,200 Material Sciences Corp.(a) 16,200
700 McWhorter Technologies, Inc.(a) 8,400
2,000 Mississippi Chemical Corp.(a) 13,625
1,900 OM Group, Inc. 86,450
3,200 Omnova Solutions, Inc. 18,000
500 Penford Corp. 9,063
700 Quaker Chemical Corp. 11,900
2,200 Scotts Co. (Class 'A' Stock)(a) 92,400
3,000 Tetra Tech, Inc.(a) 71,250
1,000 TETRA Technologies, Inc.(a) 13,375
1,200 WD 40 Co. 25,200
--------------
800,414
-------------------------------------------------------------------------------------
Commercial Services 3.1%
2,150 AAR Corp. 35,878
1,800 ABM Industries, Inc. 42,300
1,600 ADVO, Inc. 40,000
3,000 Billing Concepts Corp.(a) 21,094
1,000 Blanch (E.W.) Holdings, Inc. 20,000
1,100 F.Y.I. Inc.(a) 29,837
2,900 Bowne & Co., Inc. 37,338
1,500 Catalina Marketing Corp.(a) 151,875
1,500 CDI Corp.(a) 28,500
2,900 Central Parking Corp. 58,000
900 Central Vermont Public Service Corp. 9,394
2,300 ChoicePoint, Inc(a) 85,962
1,100 Fair Issac & Co., Inc. 42,763
1,600 G & K Services, Inc. (Class 'A' Stock) 31,275
900 Insurance Auto Auctions, Inc.(a) 15,188
5,000 Interim Services, Inc.(a) 92,812
3,350 Labor Ready, Inc.(a) 33,081
1,400 Lason, Inc.(a) 9,231
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Commercial Services (cont'd.)
1,700 NFO Worldwide, Inc.(a) $ 37,400
3,800 Profit Recovery Group International, Inc.(a) 70,300
2,300 StaffMark, Inc.(a) 18,256
6,700 US Oncology, Inc.(a) 30,150
1,200 Volt Information Sciences, Inc.(a) 43,125
--------------
983,759
-------------------------------------------------------------------------------------
Computer Software & Services 13.6%
1,700 Actel Corp.(a) 60,669
3,200 American Management Systems, Inc.(a) 140,200
1,700 Analysts International Corp. 16,788
1,700 Apex, Inc.(a) 63,113
2,000 Aspen Technology, Inc.(a) 80,750
1,100 BARRA Inc.(a) 37,263
2,200 BISYS Group, Inc.(a) 146,300
1,600 Black Box Corp.(a) 110,775
2,600 Cerner Corp.(a) 70,200
4,600 Ciber, Inc.(a) 94,300
1,100 Concord Communications, Inc.(a) 39,119
1,100 Consolidated Graphics, Inc.(a) 14,094
3,400 eLoyalty Corp.(a) 81,175
1,500 DBT Online, Inc.(a) 27,844
3,050 Dendrite International, Inc.(a) 63,859
3,200 Epicor Software Corp.(a) 27,200
2,500 Factset Research Systems, Inc. 67,656
1,300 Great Plains Software, Inc.(a) 69,388
3,100 Harbinger Corp.(a) 90,287
3,200 Henry (Jack) & Associates, Inc. 118,000
2,000 HNC Software, Inc.(a) 144,125
1,900 Hutchinson Technology, Inc.(a) 33,488
2,545 Hyperion Software Corp.(a) 82,712
3,576 Inacom Corp.(a) 9,834
2,200 Information Resources, Inc.(a) 17,600
1,050 Kronos, Inc.(a) 31,106
3,900 Macromedia, Inc.(a) 352,219
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Computer Software & Services (cont'd.)
10,200 MarchFirst, Inc.(a) $ 364,012
1,700 Mercury Computer Systems Inc.(a) 83,087
6,100 Mercury Interactive Corp.(a) 483,425
1,300 Micros Systems, Inc.(a) 81,819
2,600 National Data Corp. 67,600
4,000 National Instruments Corp.(a) 187,750
3,800 Pinnacle Systems Inc.(a) 126,350
2,700 Progress Software Corp.(a) 63,281
1,700 Project Software & Development, Inc.(a) 96,050
3,900 Read-Rite Corp.(a) 18,281
2,300 Remedy Corp.(a) 96,887
3,100 RSA Security, Inc.(a) 160,619
2,300 SAGA Systems, Inc.(a) 82,225
1,400 Scott Technologies, Inc. 26,425
1,300 Telxon Corp.(a) 22,831
1,400 THQ, Inc.(a) 25,025
2,500 Verity, Inc.(a) 101,875
2,500 Zebra Technologies Corp. (Class 'A' Stock)(a) 125,000
1,200 ZixIt Corp. 87,375
--------------
4,389,981
-------------------------------------------------------------------------------------
Computers 1.3%
2,100 Auspex System, Inc. 23,100
1,600 Computer Task Group, Inc. 17,600
1,500 Cybex Computer Products Corp.(a) 56,437
1,100 Digi International, Inc.(a) 10,175
1,700 Exabyte Corp.(a) 12,644
1,700 Gerber Scientific, Inc. 32,831
1,600 MicroAge, Inc.(a) 3,750
2,500 National Computer Systems, Inc. 126,875
1,600 Network Equipment Technologies, Inc.(a) 16,000
1,200 Standard Microsystems Corp.(a) 17,475
2,400 Xircom, Inc.(a) 88,800
--------------
405,687
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Construction 1.1%
500 Butler Manufacturing Co. $ 12,219
3,050 Dycom Industries, Inc.(a) 148,687
1,550 Elcor Corp. 53,475
2,000 Insituform Technologies, Inc.(a) 61,250
4,100 Morrison Knudsen Corp. (Class 'A' Stock)(a) 30,238
2,300 Standard Pacific Corp. 23,000
1,000 Stone & Webster, Inc. 14,500
--------------
343,369
-------------------------------------------------------------------------------------
Consumer Cyclical 1.2%
1,400 Barnes Group, Inc. 20,300
3,700 Champion Enterprises, Inc.(a) 21,275
4,800 D.R. Horton, Inc. 62,700
1,500 Jakks Pacific Inc.(a) 32,344
2,000 Justin Industries, Inc. 36,000
2,000 Manitowoc Co., Inc. 54,125
2,800 Mueller Industries, Inc.(a) 85,050
1,550 Myers Industries, Inc. 18,600
900 Republic Group, Inc. 9,675
3,200 Wolverine World Wide, Inc. 35,200
1,400 Wynns International, Inc. 19,337
--------------
394,606
-------------------------------------------------------------------------------------
Consumer Growth & Stable 0.5%
4,100 Bio-Technology General Corp.(a) 63,550
4,100 Caseys Gen. Stores, Inc. 44,587
1,100 Cooper Companies, Inc. 35,406
3,500 Dimon, Inc. 8,313
1,500 Franklin Covey Co.(a) 10,875
1,100 Nelson Thomas, Inc. 8,731
--------------
171,462
-------------------------------------------------------------------------------------
Containers & Packaging 0.3%
2,900 Aptargroup, Inc. 77,394
2,000 Caraustar Industries, Inc. 28,250
--------------
105,644
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Cosmetics & Soaps
1,300 Natures Sunshine Products, Inc. $ 10,400
-------------------------------------------------------------------------------------
Distribution/Wholesalers 0.7%
1,600 Applied Industrial Technologies, Inc. 25,600
4,200 Brightpoint, Inc.(a) 51,450
1,100 Castle (A.M.) & Co. 13,750
1,800 Hughes Supply, Inc. 27,900
2,050 Insight Enterprises, Inc.(a) 74,697
800 Lawson Products, Inc. 19,050
600 Swiss Army Brands, Inc. 2,925
--------------
215,372
-------------------------------------------------------------------------------------
Drugs & Medical Supplies 9.0%
1,600 ADAC Laboratories 22,000
4,400 Advanced Tissue Sciences, Inc.(a) 29,700
3,700 Alliance Pharmaceutical Corp.(a) 55,269
2,300 Alpharma, Inc. (Class 'A' Stock) 84,525
1,800 Barr Laboratories, Inc.(a) 75,600
2,600 Bindley Western Industries, Inc. 35,262
1,800 Biomatrix, Inc.(a) 45,900
2,600 Cephalon, Inc.(a) 97,500
2,000 Coherent, Inc.(a) 104,000
1,200 CONMED Corp.(a) 30,075
2,000 COR Therapeutics, Inc.(a) 131,844
1,900 Cygnus, Inc.(a) 27,550
3,400 Dura Pharmaceuticals, Inc.(a) 41,862
1,500 Hanger Orthopedic Group, Inc.(a) 7,969
1,200 Hologic, Inc.(a) 9,525
3,400 IDEC Pharmaceuticals Corp.(a) 334,050
2,900 IDEXX Laboratories, Inc.(a) 67,606
2,000 Immune Response Corp.(a) 23,000
2,300 Incyte Pharmaceuticals, Inc.(a) 201,106
2,400 Invacare Corp. 65,850
5,175 Jones Pharmaceutical, Inc. 157,191
2,300 Medicis Pharmaceutical Corp.(a) 92,000
1,900 Mentor Corp. 51,300
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Drugs & Medical Supplies (cont'd.)
5,200 NBTY, Inc.(a) $ 71,175
2,500 North American Vaccine, Inc.(a) 6,719
1,600 Noven Pharmaceuticals, Inc.(a) 17,500
1,100 Osteotech, Inc.(a) 14,713
2,500 Owens & Minor, Inc. 26,563
1,900 Parexel International Corp.(a) 17,931
2,650 Patterson Dental Co.(a) 101,362
1,900 Pharmaceutical Product Development, Inc. 32,181
1,724 Priority Healthcare Corp.(a) 86,631
1,500 Protein Design Labs, Inc.(a) 119,250
2,500 Regeneron Pharmaceuticals, Inc.(a) 73,906
1,200 ResMed, Inc.(a) 85,650
2,300 Respironics, Inc.(a) 33,063
700 SpaceLabs Medical, Inc.(a) 11,156
3,600 Summit Technology, Inc.(a) 32,850
1,700 Sunrise Medical, Inc.(a) 10,625
900 Syncor International Corp.(a) 29,700
1,600 Techne Corp.(a) 110,400
2,500 Varian Medical Systems, Inc. 114,062
2,000 Vertex Pharmaceuticals, Inc.(a) 93,625
1,000 Vital Signs, Inc. 22,938
--------------
2,902,684
-------------------------------------------------------------------------------------
Electrical Equipment 6.6%
1,600 Alpha Industries, Inc. 152,000
1,000 Analogic Corp. 36,875
2,800 Anixter International, Inc.(a) 78,050
2,900 Artesyn Technologies, Inc.(a) 54,919
2,800 Baldor Electric Co. 50,575
1,900 Belden, Inc. 52,250
4,375 Burr-Brown Corp.(a) 237,891
1,000 C&D Technologies, Inc. 59,000
3,200 C-Cube Microsystems, Inc.(a) 233,000
3,300 Cognex Corp.(a) 190,369
2,100 Electro Scientific Industries, Inc.(a) 121,800
1,600 Electroglas, Inc.(a) 54,800
1,100 Hadco Corp.(a) 71,087
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Electrical Equipment (cont'd.)
1,800 Helix Technology Corp. $ 108,112
1,100 Innovex, Inc. 10,759
3,500 KEMET Corp.(a) 221,375
2,200 Kent Electronics Corp.(a) 64,212
4,300 Komag, Inc.(a) 16,327
1,900 Kulicke & Soffa Industries, Inc.(a) 121,719
1,300 Technitrol, Inc. 75,725
2,700 Valence Technology, Inc.(a) 63,619
3,200 Vicor Corp.(a) 57,600
--------------
2,132,064
-------------------------------------------------------------------------------------
Electronics 6.0%
800 Alliant Techsystems, Inc.(a) 47,100
1,500 American Xtal Technology, Inc.(a) 48,563
1,700 Audiovox Corp.(a) 74,162
1,300 Benchmark Electronics, Inc.(a) 48,100
2,100 BMC Industries, Inc. 11,944
2,250 Cable Design Technologies Corp.(a) 76,359
2,300 Checkpoint Systems, Inc.(a) 19,263
2,200 CTS Corp. 125,400
4,600 Dallas Semiconductor Corp. 161,575
5,500 Digital Microwave Corp.(a) 186,312
1,800 Dionex Corp.(a) 59,288
2,600 Filenet Corp.(a) 77,350
1,400 Harman International Industries, Inc. 84,000
850 Harman Industries, Inc. 15,406
1,100 Itron, Inc.(a) 7,631
2,900 Methode Eletronics, Inc. (Class 'A' Stock) 146,450
3,300 Micrel, Inc.(a) 316,800
800 Park Electrochemical Corp. 19,600
1,900 Photronics, Inc.(a) 67,094
2,100 Pioneer-Standard Electronics, Inc. 33,075
1,400 Plexus Corp.(a) 93,275
6,000 S3, Inc.(a) 126,000
967 Three-Five Systems, Inc.(a) 58,000
1,600 Ultratech Stepper, Inc.(a) 22,800
1,600 X-Rite, Inc. 16,200
--------------
1,941,747
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Exploration & Production 0.6%
1,100 Atwood Oceanics, Inc.(a) $ 72,944
122 Eagle Geophysical, Inc.(a) 6
3,300 Newfield Exploration Co.(a) 116,325
--------------
189,275
-------------------------------------------------------------------------------------
Financial Services 4.0%
5,900 Americredit Corp. 96,244
4,200 Cullen/Frost Bankers, Inc. 111,037
1,000 Dain Rauscher Corp. 65,938
1,595 Delphi Financial Group, Inc.(a) 48,448
2,800 Eaton Vance Corp. 120,225
2,900 Gallagher (Arthur J.) & Co. 94,250
100 Investment Technology Group, Inc. 3,525
1,800 Jeffries Group, Inc. 41,175
1,700 Maximus, Inc.(a) 51,850
1,400 National Discount Brokers Group, Inc.(a) 69,125
2,100 Pioneer Group, Inc. 48,825
1,578 Primark Corp.(a) 38,069
3,650 Raymond James Financial, Inc. 75,738
1,400 SEI Investments Corp. 158,812
1,500 U.S. Trust Corp. 283,500
--------------
1,306,761
-------------------------------------------------------------------------------------
Food & Beverage 2.1%
1,400 American Italian Pasta Co.(a) 34,475
1,600 Beringer Wine Estates Holdings, Inc.(a) 57,400
1,400 Canandaigua Wine, Inc. (Class 'A' Stock)(a) 71,400
5,100 Chiquita Brands International, Inc. 24,225
700 Coca-Cola Bottling Co. 37,056
3,300 Earthgrains Co. 49,087
3,000 Fleming, Inc. 45,187
1,400 Hain Food Group Inc.(a) 39,637
700 J & J Snack Foods Corp.(a) 13,913
1,600 Michael Foods, Inc. 33,600
800 Nash-Finch Co. 6,500
1,100 Performance Food Group Co.(a) 24,063
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Food & Beverage (cont'd.)
2,400 Ralcorp Holdings, Inc.(a) $ 34,800
4,400 Smithfield Foods, Inc.(a) 88,000
1,400 United Natural Foods, Inc.(a) 21,000
2,100 Whole Foods Market, Inc.(a) 87,019
--------------
667,362
-------------------------------------------------------------------------------------
Forest Products 0.2%
1,000 Deltic Timber Corp. 23,688
1,200 Pope & Talbot, Inc. 22,050
1,600 Universal Forest Products, Inc. 19,800
--------------
65,538
-------------------------------------------------------------------------------------
Furniture 0.8%
1,500 Aaron Rents, Inc. 22,594
900 Bassett Furniture Industries, Inc. 12,600
900 Dixie Group, Inc.(a) 3,994
3,200 Ethan Allen Interiors, Inc.(a) 80,000
4,800 La-Z-Boy, Inc. 73,800
1,300 Libbey, Inc. 35,587
1,200 Thomas Industries, Inc. 22,500
--------------
251,075
-------------------------------------------------------------------------------------
Health Care 1.5%
4,600 Coventry Health Care, Inc.(a) 39,100
700 Curative Health Services, Inc. 4,200
1,200 Datascope Corp. 38,100
1,100 Diagnostic Products Corp. 26,881
1,900 Laser Vision Centers, Inc.(a) 13,181
3,000 Liposome Co., Inc.(a) 52,406
2,500 Magellan Health Services, Inc.(a) 12,031
2,800 Medquist, Inc.(a) 76,125
2,400 Organogenesis, Inc.(a) 28,950
3,500 Renal Care Group, Inc.(a) 75,906
2,100 Sierra Health Services, Inc.(a) 10,369
1,900 Sola International, Inc.(a) 11,638
2,300 Theragenics Corp.(a) 30,763
1,400 Wesley Jessen VisionCare, Inc.(a) 50,312
--------------
469,962
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Hospital Management 0.7%
1,600 Advance Paradiam, Inc.(a) $ 19,000
3,800 Orthodontic Centers of America, Inc.(a) 71,250
1,200 Pediatrix Medical Group, Inc.(a) 8,700
2,400 Universal Health Services, Inc. (Class 'B' Stock)(a) 117,600
--------------
216,550
-------------------------------------------------------------------------------------
Housing Related 1.4%
2,800 Fedders Corp. 15,575
2,500 Fleetwood Enterprises, Inc. 36,875
1,700 M.D.C. Holdings, Inc. 30,494
600 National Presto Industries, Inc. 19,575
3,700 Oakwood Homes Corp. 14,106
2,900 Radian Group, Inc. 138,113
1,100 Ryland Group, Inc. 20,625
900 Salton, Inc.(a) 39,038
2,800 Toll Brothers, Inc.(a) 56,000
1,700 Windmere Durable Holdings, Inc. 25,075
700 Skyline Corp. 15,181
1,100 U.S. Home Corp. 41,800
--------------
452,457
-------------------------------------------------------------------------------------
Insurance 1.7%
3,000 Enhance Financial Services Group, Inc. 42,375
5,268 Fidelity National Financial, Inc. 72,764
5,100 First American Financial Corp. 72,356
5,500 Fremont General Corp. 32,656
2,700 Frontier Insurance Group, Inc. 2,700
1,000 Hilb, Rogal & Hamilton Co. 27,313
2,600 Hooper Holmes, Inc. 89,213
3,400 Mutual Risk Management Ltd. 68,000
800 RLI Corp.(a) 26,800
1,000 SCPIE Holdings, Inc. 30,625
2,100 Selective Insurance Group, Inc. 35,831
1,400 Trenwick Group, Inc. 19,775
1,300 Zenith National Insurance Corp. 28,844
--------------
549,252
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Leisure 1.3%
1,200 Action Performance Co., Inc.(a) $ 15,975
1,000 Anchor Gaming(a) 37,938
1,900 Arctic Cat, Inc. 19,475
3,400 Aztar Corp.(a) 32,300
800 Carmike Cinemas, Inc. (Class 'A' Stock)(a) 4,350
600 GC Companies, Inc.(a) 20,850
800 Huffy Corp. 3,500
1,400 K2, Inc.(a) 11,113
2,350 Marcus Corp. 30,403
2,936 Midway Games, Inc. 38,902
2,000 Pinnacle Entertainment, Inc. 40,625
1,900 Polaris Industries, Inc. 57,237
3,800 Prime Hospitality Corp.(a) 27,550
2,100 Sturm Ruger & Co., Inc. 18,375
950 Thor Industries, Inc. 23,097
1,700 Winnebago Industries, Inc. 30,706
--------------
412,396
-------------------------------------------------------------------------------------
Machinery 2.1%
3,095 Applied Power, Inc. (Class 'A' Stock) 88,207
1,500 Astec Industries, Inc.(a) 39,844
1,400 Dril Quip, Inc.(a) 65,975
1,100 Flow International Corp.(a) 12,925
1,100 Gardner Denver, Inc.(a) 20,694
1,600 Graco, Inc. 46,400
2,300 IDEX Corp. 62,675
3,500 JLG Industries, Inc. 31,937
900 Lindsay Manufacturing Co.(a) 15,413
3,600 Paxar Corp.(a) 34,650
1,600 Regal Beloit Corp. 28,000
800 Robbins & Myers, Inc. 18,900
2,400 Roper Industries, Inc. 81,450
1,300 Royal Appliance Manufacturing Co.(a) 6,419
1,500 Specialty Equipment Co., Inc.(a) 31,125
2,300 SpeedFam-IPEC, Inc.(a) 45,712
1,000 Toro Co. 29,938
--------------
660,264
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Metals-Ferrous 0.6%
1,800 Birmingham Steel Corp. $ 9,225
1,100 Commercial Metals Co. 30,387
3,500 Mascotech, Inc. 41,125
1,100 Quanex Corp. 19,800
2,150 Reliance Steel and Aluminum Co. 48,106
3,700 Steel Dynamics, Inc.(a) 42,781
800 Steel Technologies, Inc. 6,350
1,100 WHX Corp.(a) 7,563
--------------
205,337
-------------------------------------------------------------------------------------
Metals-Non Ferrous 0.3%
700 Amcast Industrial Corp. 6,431
2,100 AMCOL International Corp. 32,288
1,300 Brush Wellman, Inc. 22,913
1,300 Commonwealth Industries, Inc. 11,781
1,300 IMCO Recycling, Inc. 14,381
1,600 RTI International Metals, Inc.(a) 14,100
--------------
101,894
-------------------------------------------------------------------------------------
Miscellaneous Basic Industry 3.5%
800 Agribrands International, Inc.(a) 31,450
2,100 Apogee Enterprises, Inc. 8,334
1,900 Clarcor, Inc. 33,725
2,900 Corn Products International, Inc. 69,781
700 CPI Corp. 16,319
1,300 Cuno, Inc.(a) 35,262
3,066 Delta & Pine Land Co. 60,553
1,000 Enesco Group, Inc. 7,063
1,300 Esterline Technologies Corp. 16,900
1,500 Florida Rock Industries, Inc. 42,000
3,200 Foster Wheeler Corp. 21,600
2,300 Griffon Corp.(a) 17,969
600 Insteel Industries, Inc. 3,375
4,100 Interface, Inc. 17,425
1,016 Intermagnetics General Corp.(a) 17,272
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Miscellaneous Basic Industry (cont'd.)
2,000 Intermet Corp. $ 18,250
1,800 Kaman Corp. 17,550
1,700 Kroll - O' Gara Co.(a) 18,594
4,438 Lennox International, Inc. 38,833
1,200 Lydall, Inc. 10,500
1,800 Pre-Paid Legal Services, Inc.(a) 53,437
1,100 QRS Corp.(a) 82,775
900 SEACOR SMIT, Inc.(a) 54,337
2,600 Silicon Valley Group, Inc.(a) 71,500
1,000 Simpson Manufacturing Co., Inc. 39,500
2,800 SLI, Inc. 47,600
1,000 SPS Technologies, Inc.(a) 30,500
1,000 Standex International Corp. 15,500
1,700 Texas Industries, Inc. 52,912
2,900 Tredegar Industries, Inc. 78,119
1,200 URS Corp. 15,750
1,800 Valmont Industries, Inc. 31,050
2,200 Watsco, Inc. 22,963
2,000 Watts Industries, Inc. 24,750
1,000 Wolverine Tube, Inc.(a) 12,813
--------------
1,136,261
-------------------------------------------------------------------------------------
Office Equipment & Supplies 0.5%
2,300 John H. Harland Co. 31,050
400 Nashua Corp. 3,350
1,000 New England Business Service, Inc. 17,250
2,700 United Stationers, Inc. 96,356
--------------
148,006
-------------------------------------------------------------------------------------
Oil & Gas 1.5%
1,900 Cabot Oil & Gas Corp. (Class 'A' Stock) 34,319
800 Cascade Natural Gas Corp. 12,900
1,300 Cross (A.T.) Co. (Class 'A' Stock)(a) 7,638
3,800 Cross Timbers Oil Co. 49,638
3,054 Friede Goldman Halter, Inc.(a) 20,996
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Oil & Gas (cont'd.)
1,400 HS Resources, Inc.(a) $ 29,575
1,900 Northwest Natural Gas Co. 37,050
3,731 Southern Union Co. 67,391
2,400 Southwest Gas Corp. 45,750
1,500 Stone Energy Corp.(a) 73,875
4,900 Vintage Petroleum, Inc. 98,612
--------------
477,744
-------------------------------------------------------------------------------------
Oil & Gas Services 1.9%
2,600 Barrett Resources Corp.(a) 77,512
1,200 Cal Dive International, Inc.(a) 60,900
3,900 Input/Output, Inc.(a) 23,888
1,500 Laclede Gas Co. 30,000
1,800 NorthWestern Corp. 37,125
1,800 Oceaneering International, Inc.(a) 33,750
1,600 Offshore Logistics, Inc. 22,200
1,400 Plains Resources, Inc.(a) 17,500
3,200 Pogo Producing Co. 91,400
4,700 Pride International, Inc.(a) 107,219
1,600 Remington Oil and Gas Corp. (Class 'B' Stock)(a) 6,700
1,900 Seitel, Inc.(a) 15,081
1,900 Southwestern Energy Co. 12,588
900 St. Mary Land & Exploration Co. 26,887
3,500 Tuboscope Vetco International, Inc.(a) 59,500
--------------
622,250
-------------------------------------------------------------------------------------
Paper 0.4%
1,800 Brady (W.H.) Co. (Class 'A' Stock) 56,137
2,700 Buckeye Technologies, Inc.(a) 47,588
1,200 Schweitzer-Mauduit International, Inc. 15,525
--------------
119,250
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Precious Metals 0.4%
2,300 Coeur d'Alene Mines Corp. $ 6,756
3,050 Stillwater Mining Co.(a) 122,000
--------------
128,756
-------------------------------------------------------------------------------------
Restaurants 1.6%
2,100 Applebee's International, Inc. 59,062
2,150 CEC Entertainment, Inc.(a) 58,319
1,600 Cheesecake Factory, Inc.(a) 66,600
3,895 CKE Restaurants, Inc. 24,831
2,316 Consolidated Products, Inc. 21,857
1,500 IHOP Corp.(a) 21,000
3,000 Jack in the Box Inc.(a) 63,937
1,900 Landry's Seafood Restaurants, Inc. 12,112
1,700 Luby's, Inc. 16,044
900 Panera Bread Co.(a) 6,750
2,400 Ruby Tuesday, Inc. 42,000
2,800 Ryan's Family Steak Houses, Inc.(a) 26,775
1,400 Sonic Corp.(a) 38,150
1,000 Taco Cabana, Inc.(a) 5,938
1,800 TCBY Enterprises, Inc. 10,350
1,800 TriArc Companies, Inc. (Class 'A' Stock)(a) 36,000
--------------
509,725
-------------------------------------------------------------------------------------
Retail 4.9%
2,300 Ames Department Stores, Inc.(a) 56,494
2,500 AnnTaylor Stores Corp.(a) 57,500
2,800 Bombay Company, Inc.(a) 9,275
1,400 Books-A-Million, Inc.(a) 8,400
1,400 Brown Shoe Co., Inc. 16,800
900 Building Materials Holdings Corp.(a) 8,156
2,000 Cash America International, Inc. 24,875
2,000 Cato Corp. (Class 'A' Stock) 23,500
1,600 Cost Plus, Inc.(a) 54,100
400 Damark International, Inc. (Class 'A' Stock)(a) 15,250
1,300 Department 56, Inc.(a) 19,256
1,500 Dress Barn, Inc.(a) 28,875
1,600 Footstar, Inc.(a) 45,200
</TABLE>
See Notes to Financial Statements 21
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Retail (cont'd.)
2,550 Fossil, Inc.(a) $ 59,766
2,600 Goody's Family Clothing, Inc.(a) 15,763
900 Gottschalks, Inc.(a) 4,725
1,400 Hancock Fabrics, Inc. 4,025
1,100 J. Baker, Inc. 7,700
1,700 Jan Bell Marketing, Inc.(a) 4,887
1,400 Jo Ann Stores, Inc. 11,725
2,400 Just For Feet, Inc. 150
800 K-Swiss, Inc. (Class 'A' Stock) 11,850
700 Lillian Vernon Corp. 6,650
3,100 Linens N Things, Inc. 106,175
2,500 Michaels Stores, Inc.(a) 101,875
2,633 99 Cents Only Stores(a) 103,345
4,000 O'Reilly Automotive, Inc.(a) 56,750
2,450 Pacific Sunwear of California 94,325
7,400 Pier 1 Imports, Inc. 75,850
1,700 Quiksilver, Inc. 29,856
3,150 Regis Corp. 46,659
1,600 Russ Berrie & Co., Inc. 29,600
2,400 Shopko Stores, Inc. 42,600
2,500 Sports Authority, Inc.(a) 6,406
3,500 Stein Mart, Inc.(a) 28,875
3,500 Stride Rite Corp. 28,219
3,300 The Men's Wearhouse, Inc. 97,762
1,700 Timberland Co. (Class 'A' Stock)(a) 86,700
1,000 Wet Seal, Inc.(a) 15,750
2,800 Zale Corp.(a) 132,125
--------------
1,577,794
-------------------------------------------------------------------------------------
Telecommunications 8.0%
2,800 Adaptive Broadband Corp.(a) 149,800
2,100 Allen Telecom, Inc.(a) 33,469
2,207 Applied Materials, Inc.(a) 207,972
3,900 Aspect Telecommunications Corp.(a) 144,544
1,900 Avid Technology, Inc.(a) 33,963
2,500 C-Cor Electronics, Inc. 122,500
500 Centigram Communications Corp.(a) 9,500
1,600 Cohu, Inc. 66,700
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Telecommunications (cont'd.)
4,000 Commscope, Inc.(a) $ 182,500
4,100 General Communication, Inc.(a) 22,038
2,900 General Semiconductor, Inc. 50,025
2,100 Intermediate Telephone, Inc. 57,487
4,800 International Rectifier Corp.(a) 183,000
2,500 InterVoice, Inc.(a) 72,187
3,800 Lattice Semiconductor Corp.(a) 257,212
2,470 Nortel Networks Corp. 311,220
5,700 P-COM, Inc.(a) 105,450
3,100 Picturetel Corp.(a) 27,125
1,300 Plantronics, Inc.(a) 121,144
1,600 Powerwave Technologies, Inc.(a) 200,000
1,000 Proxim, Inc.(a) 119,687
1,100 Symmetricom, Inc.(a) 11,619
5,100 TALK.com, Inc.(a) 81,600
--------------
2,570,742
-------------------------------------------------------------------------------------
Textiles 0.6%
600 Angelica Corp. 5,963
1,100 Ashworth, Inc.(a) 4,744
2,000 Cone Mills Corp.(a) 8,625
1,200 Cyrk, Inc.(a) 10,575
1,500 Guilford Mills, Inc. 11,531
1,900 Gymboree Corp.(a) 7,837
500 Haggar Corp. 6,875
2,300 Hartmarx Corp.(a) 6,325
2,200 Kellwood Co. 38,637
2,700 Nautica Enterprises, Inc.(a) 31,725
1,200 Oshkosh B'Gosh, Inc. (Class 'A' Stock) 21,600
600 Oxford Industries, Inc. 10,875
2,100 Phillips-Van Heusen Corp. 16,144
1,034 Pillowtex Corp. 4,136
--------------
185,592
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Transportation/Trucking/Shipping 2.2%
2,500 American Freightways, Inc. $ 37,344
1,500 Arkansas Best Corp.(a) 15,750
1,200 Coachmen Industries, Inc. 16,575
2,200 EGL, Inc.(a) 53,763
4,000 Expeditors International of Washington, Inc. 159,000
2,800 Fritz Companies, Inc.(a) 28,350
1,200 Frozen Food Express Industries, Inc. 4,050
2,300 Heartland Express, Inc.(a) 32,308
1,900 Kirby Corp. 37,525
800 Landstar Systems, Inc.(a) 43,800
1,000 M.S. Carriers, Inc.(a) 23,500
1,500 Monaco Coach Corp.(a) 28,500
4,400 Rollins Truck Leasing Corp. 37,125
1,100 Rural/Metro Corp. 1,306
2,100 USFreightways Corp. 78,619
3,725 Werner Enterprises, Inc. 63,325
1,900 Yellow Corp.(a) 35,031
--------------
695,871
-------------------------------------------------------------------------------------
Utilities - Electric 2.0%
2,500 Atmos Energy Corp. 40,938
500 Bangor Hydro-Electric Co.(a) 8,656
1,300 CH Energy Group, Inc. 39,488
1,600 Eastern Utilities Associates 50,200
2,300 Energen Corp. 36,656
400 Green Mountain Power Corp. 2,675
1,400 New Jersey Resources Corp. 59,850
3,202 Philadelphia Suburban Corp. 58,036
2,500 Piedmont Natural Gas, Inc. 65,156
1,100 The United Illuminating Co. 43,175
1,100 TNP Enterprises, Inc. 48,194
3,100 United Water Resources, Inc. 107,725
3,000 Wicor, Inc. 93,000
--------------
653,749
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Utilities - Water 0.1%
700 American States Water Co. $ 20,825
--------------
Total common stocks (cost $28,650,240) 31,783,324
RIGHTS
-------------------------------------------------------------------------------------
Telecommunications
235 TALK.com, Inc.(a)
Rights Expires 12Feb2000 @ $17
(cost $0) 0
SHORT-TERM INVESTMENTS 2.2%
<CAPTION>
Principal
Amount
(000)
------------------------------------------------------------------------------------------
U.S. Government Securities 0.5%
$ 150 United States Treasury Bills,
5.6725%, 6/22/00(b)
(cost $148,062) 148,002
-------------------------------------------------------------------------------------
Repurchase Agreement 1.7%
549 Joint Repurchase Agreement Account,
6.15%, 4/3/00 (Note 5)
(cost $549,000) 549,000
--------------
Total short-term investments (cost $697,062) 697,002
--------------
Total Investments 101.0%
(cost $29,347,302; Note 4) 32,480,326
Liabilities in excess of other assets (1.0%) (307,933)
--------------
Net Assets 100% $ 32,172,393
--------------
--------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) Pledged as initial margin on futures contracts.
See Notes to Financial Statements 25
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $29,347,302) $ 32,480,326
Receivable for Fund shares sold 41,328
Due from Manager 33,655
Due from broker-variation margin 13,659
Dividends and interest receivable 13,557
Deferred expenses and other assets 201
--------------
Total assets 32,582,726
--------------
LIABILITIES
Bank overdraft 37,645
Payable for investments purchased 231,889
Accrued expenses 115,374
Payable for Fund shares repurchased 25,425
--------------
Total liabilities 410,333
--------------
NET ASSETS $ 32,172,393
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 3,069
Paid-in capital in excess of par 29,448,955
--------------
29,452,024
Undistributed net investment income 27,657
Distributions in excess of net realized gain on investments (408,862)
Net unrealized appreciation on investments 3,101,574
--------------
Net assets, March 31, 2000 $ 32,172,393
--------------
--------------
Class Z:
Net asset value per share ($32,172,393 / 3,068,504 shares
of beneficial interest issued and outstanding) $10.48
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $126) $ 106,189
Interest 35,520
--------------
Total income 141,709
--------------
Expenses
Management fee 46,173
Custodian's fees and expenses 73,000
Registration fees 18,000
Audit fees and expenses 9,000
Reports to shareholders 7,000
Transfer agent's fees and expenses 6,000
Legal fees and expenses 4,000
Trustees' fees and expenses 4,000
Miscellaneous 2,423
--------------
Total operating expenses 169,596
Less: Subsidy expense (92,642)
--------------
Net expenses 76,954
--------------
Net investment income 64,755
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Investment transactions (88,216)
Financial futures contracts 191,096
--------------
102,880
--------------
Net change in unrealized appreciation (depreciation) on:
Investments 5,175,906
Financial futures contracts 35,425
--------------
5,211,331
--------------
Net gain on investments 5,314,211
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,378,966
--------------
--------------
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 30, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income $ 64,755 $ 160,842
Net realized gain on investment
transactions 102,880 931,812
Net change in unrealized appreciation
(depreciation) on investments 5,211,331 2,939,818
-------------- ------------------
Net increase in net assets resulting from
operations 5,378,966 4,032,472
-------------- ------------------
Dividends and distributions (Note 1):
Dividends to shareholders from net
investment income (155,924) (138,794)
-------------- ------------------
Distributions from net realized gains (896,622) (527,416)
-------------- ------------------
Distributions in excess of net realized
gains (408,862) --
-------------- ------------------
Fund share transactions (Note 6):
Net proceeds from shares sold 2,071,774 10,442,356
Net asset value of shares issued to
shareholders in reinvestment of
distributions 1,454,458 665,853
Cost of shares reacquired (3,941,196) (6,060,359)
-------------- ------------------
Net increase (decrease) in net assets
from Fund share transactions (414,964) 5,047,850
-------------- ------------------
Net increase 3,502,594 8,414,112
-------------- ------------------
NET ASSETS
Beginning of period 28,669,799 20,255,687
-------------- ------------------
End of period(a) $ 32,172,393 $ 28,669,799
-------------- ------------------
-------------- ------------------
------------------------------
(a) Includes undistributed net investment
income of $ 27,657 $ 118,826
-------------- ------------------
-------------- ------------------
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Notes to Financial Statements (Unaudited)
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, one of which is the
Prudential Small-Cap Index Fund (the 'Fund').
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 for that purpose.
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 traded on an exchange and NASDAQ
National Market System are valued at the last sale price on such exchange system
or, if there was no sale on such day, at the mean between the last bid and asked
prices, or at the bid price in the absence of an asked price. Corporate bonds
(other than convertible) and U.S. government securities are valued on the basis
of valuations provided by an independent pricing agent or principal market
maker. Convertible debt securities are valued at the mean between the last
reported bid and asked prices provided by principal market makers. Options are
valued at the mean between the most recently quoted bid and asked prices on the
exchange on which they are traded. Futures contracts and options thereon are
valued at their last sale prices as of the close of trading on the applicable
commodities exchange or board of trade or, if there was no sale on such day, at
the mean between the most recently quoted bid and asked prices. Securities for
which reliable market quotations are not readily available, or for which the
pricing agent or principal market maker does not provide a valuation, in the
judgement of the manager or subadviser, that represents fair value, are valued
by the Valuation Committee or Board of Trustees in consultation with the manager
or subadviser.
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, 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
29
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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: 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.
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
30
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
all of its taxable net income to its shareholders. Therefore, no federal income
tax provision is required.
Withholding taxes on foreign dividends have been provided for in
accordance with the Fund's understanding of the applicable country's tax rules
and rates.
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
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 .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 daily net assets of the Fund. For the six months
ended March 31, 2000, PIFM subsidized $92,642 of the expenses of the Fund (0.60%
of the average daily net assets of the Fund; $.03 per share.)
The Fund 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.
PIC, PIFM and PIMS are wholly owned subsidiaries of The Prudential
Insurance Company of America ('Prudential').
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.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was .065 of 1% of the unused portion
of the credit facility. The Fund did not borrow any amounts pursuant to the SCA
during the six months ended March 31, 2000.
31
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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,
2000, the Fund incurred fees of approximately $5,800 for the services of PMFS.
As of March 31, 2000, 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, 2000 aggregated $5,355,907 and $5,890,273,
respectively.
On March 31, 2000, the Fund held a financial futures contract on the
Russell 2000 expiring June 2000. The cost of such contracts was $304,125. The
value of the contracts on March 31, 2000 was $272,675, thereby resulting in an
unrealized loss of $31,450.
The cost basis of investments for federal income tax purposes is
$29,501,178 and, accordingly, as of March 31, 2000, net unrealized appreciation
for federal income tax purposes was $2,979,148 (gross unrealized
appreciation--$8,586,142; gross unrealized depreciation--$5,606,994).
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, 2000, the Fund
had a .084% undivided interest in the repurchase agreements in the joint
account. The undivided
32
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
interest represented $549,000 in principal amount. As of such date, each
repurchase agreement in the joint account and the collateral therefor were as
follows:
Bear, Stearns & Co. Inc., 6.10%, in the principal amount of $120,000,000,
repurchase price $120,061,000, due 4/3/00. The value of the collateral including
accrued interest was $123,642,827.
Credit Suisse First Boston Corp., 6.10%, in the principal amount of
$130,000,000, repurchase price $130,066,083, due 4/3/00. The value of the
collateral including accrued interest was $134,450,258.
Goldman, Sachs & Co., 6.09%, in the principal amount of $100,000,000,
repurchase price $100,050,750, due 4/3/00. The value of the collateral including
accrued interest was $102,000,425.
Greenwich Capital Markets, Inc., 6.15%, in the principal amount of
$100,000,000, repurchase price $100,051,250, due 4/3/00. The value of the
collateral including accrued interest was $102,005,200.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.25%, in the principal
amount of $207,289,000, repurchase price $207,396,963, due 4/3/00. The value of
the collateral including accrued interest was $211,435,308.
Note 6. Capital
The Fund has authorized an unlimited number of shares of beneficial interest at
$.001 par value per share. Class Z shares are not subject to any sales or
redemption charge and are offered exclusively for sale to a limited group of
investors.
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
Class Z Shares
--------------------------------------------------------------------------- ---------
<S> <C>
Six months ended March 31, 2000:
Shares sold 212,870
Shares issued in reinvestment of dividends and distributions 156,058
Shares reacquired (396,888)
---------
Net decrease in shares outstanding (27,960)
---------
---------
Year ended September 30, 1999:
Shares sold 1,201,757
Shares issued in reinvestment of dividends and distributions 77,335
Shares reacquired (684,877)
---------
Net increase in shares outstanding 594,215
---------
---------
</TABLE>
Of the total shares outstanding on March 31, 2000, PIFM and affiliates
owned 2,013,153 shares of the Fund.
33
<PAGE>
Prudential Index Series Fund Prudential Small-Cap Index Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------------
October 1, 1997(a)
Six Months Ended Year Ended Through
March 31, September 30, September 30,
2000 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period $ 9.26 $ 8.09 $ 10.00
-------- -------- --------
Income from investment operations
Net investment income(b) .02 .05 .04
Net realized and unrealized gain
(loss) on investments 1.68 1.36 (1.94)
-------- -------- --------
Total from investment
operations 1.70 1.41 (1.90)
-------- -------- --------
Less distributions:
Dividends from net investment
income (.05) (.05) (.01)
Distributions from net realized
gains (.30) (.19) --
-------- -------- --------
Distributions in excess of net
realized gains (.13) -- --
-------- -------- --------
Total dividends and
distributions (.48) (.24) (.01)
-------- -------- --------
Net asset value, end of period $ 10.48 $ 9.26 $ 8.09
-------- -------- --------
-------- -------- --------
TOTAL RETURN(c): 19.09% 17.65% (18.98)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 32,172 $ 28,670 $ 20,256
Average net assets (000) $ 30,782 $ 26,722 $ 22,676
Ratios to average net assets:(b)
Expenses .50%(d) .50% .50%(d)
Net investment income .42%(d) .60% .48%(d)
Portfolio turnover 18% 28% 52%
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Net of expense subsidy.
(c) 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 includes the effect of expense
subsidies. Total returns for periods of less than a full year are not
annualized.
(d) Annualized.
34 See Notes to Financial Statements
<PAGE>
<PAGE>
Prudential Small-Cap Index Fund
Prudential Mutual Fund Family
Prudential offers a broad range of
mutual funds designed to meet your individual
needs. For information about these funds, contact
your financial adviser or call us at (800) 225-
1852. Read the prospectus carefully before you
invest or send money.
STOCK FUNDS
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential 20/20 Focus Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
Asset Allocation/Balanced Funds
Prudential Balanced Fund
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
GLOBAL FUNDS
Global Stock Funds
Prudential Developing Markets Fund
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
-Prudential Jennison International Growth Fund
Global Utility Fund, Inc.
Target Funds
International Equity Fund
Global Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
<PAGE>
www.prudential.com (800) 225-1852
BOND FUNDS
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Target Funds
Total Return Bond Fund
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E. H. Morrison, Secretary
William V. Healey, Assistant Secretary
Stephen M. Ungerman, Assistant Treasurer
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
194 Wood Avenue South
Iselin, NJ 08830
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, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Stock Index Fund
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
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 (S&P 500 Index). The S&P 500 Index is
widely regarded as representative of the performance of
the U.S. stock market as a whole, and comprises stocks
representing 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 management fees and expenses. There can be no
assurance that the Fund will achieve its investment
objective.
S&P 500 Index As of 3/31/00
(GRAPH)
Source: Standard & Poor's
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(R)", "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. 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.
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Five Since
Months Year Years Inception2
Class A N/A N/A N/A 5.42%
Class B N/A N/A N/A 5.11
Class C N/A N/A N/A 5.11
Class Z 17.30% 17.50% 218.98% 303.31
Class I 17.36 (17.33) 17.65 (17.54) N/A 62.70 (62.35)
Lipper S&P
500 Index
Fund Avg.3 17.10 17.18 219.73 **
S&P 500
Index4 17.50 17.93 227.18 ***
Average Annual Total Returns1 As of 3/31/00
One Five Since
Year Years Inception2
Class A N/A N/A N/A
Class B N/A N/A N/A
Class C N/A N/A N/A
Class Z 17.50% 26.11% 20.74%
Class I 17.65 (17.54) N/A 20.05 (19.95)
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 LLC and
Lipper Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns
do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 5% for Class
A shares. Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%,
2%, 1%, and 1% for six years. Class B shares will
automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. Class C
shares are subject to a front-end sales charge of 1% and
a CDSC of 1% for 18 months. Class Z shares are not
subject to a sales charge or distribution and service
(12b-1) fees.
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 A, B, and C, 11/18/99; Class Z,
11/5/92; and Class I, 8/1/97. For Class A, B, and C, the
Lipper reporting period begins 11/30/99. 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 Index Fund category. The Lipper average is
unmanaged. S&P 500 Index funds are passively managed,
have limited expenses, and are designed to replicate the
performance of the S&P 500 Index on a reinvested basis.
4 The Standard & Poor's 500 Composite Stock Price Index
(S&P 500 Index) is an unmanaged index of 500 stocks of
large U.S. companies that gives a broad look at how stock
prices have performed. These returns do not include the
effect of any operating expenses of a mutual fund, and
the returns would be lower if they included the effect of
operating expenses. Investors cannot invest directly in
an index.
**Lipper Since Inception returns are 8.07% for Class A,
B, and C, 293.02% for Class Z, and 70.37% for Class I,
based on all funds in each share class.
***The S&P 500 Index Since Inception returns are 8.31%
for Class A, B, and C, 305.20% for Class Z, and 72.75%
for Class I.
1
<PAGE>
Prudential Stock Index Fund
Message From the Fund's President May 16, 2000
Dear Shareholder,
Technology and telecommunications stocks led the way to
another strong performance for Prudential Stock Index
Fund Class Z shares, which returned 17.30% during the
six-month period ended March 31, 2000. The Fund's
benchmark, the Standard & Poor's 500 Composite Stock
Price Index (S&P 500), returned 17.50% over the same
period. The market advance was fairly narrow because many
sectors were adversely affected by rising interest rates.
Yet the Fund, with a significant representation in the
most favored sectors, was able to participate in the
rally.
One of the most important benefits of index investing is
the ability to "catch the wave" of whatever sector is
working at the moment while maintaining investments in a
broad range of other sectors. If you are invested in an
index fund, you don't have to worry about whether the
current trend favors "old" or "new" economy, technology
or financial services, value or growth. You know that
your fund has investments in all of these areas, and that
you will likely benefit from share price appreciation in
any of them.
Thank you for your confidence in Prudential mutual funds.
Sincerely,
John R. Strangfeld, President
Prudential Index Series Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
The beginning of our reporting period on October 1, 1999,
occurred near an important intermediate-term bottom in
the S&P 500, providing yet another example of the recent
tendency of the market to find a bottom around that time
of year. Since establishing an all-time intraday high of
1420.14 on July 19, the Index has experienced volatility
as it attempts to digest increases in short-term interest
rates by the Federal Reserve Board in June and August.
The Fed sought to head off a resurgence of inflation by
using higher rates to slow economic growth, as evidence
continued to point to a more rapidly growing economy than
had been anticipated earlier in the year.
Report of a 1.1% rise in September's producer price
index--its biggest gain in nine years--had investors in a
negative frame of mind around mid-October. However,
subsequent reports on consumer prices, the employment
cost index, and other inflation gauges failed to confirm
the presence of any significant inflation, setting the
stage for a rally in both stock and bond markets. As it
turned out, the rally in stocks was the beginning of a
significant advance that carried through the end of the
year. During this phase, technology, telecommunications,
media, and biotechnology were the clear favorites. The
speculative froth in the market was reflected in the
sizzling market for Internet-related initial public
offerings (IPOs), many of which soared to stratospheric
levels on their first day of trading.
As expected, the Fed raised interest rates again in
November, but investors kept buying stocks in the most
favored sectors, perhaps feeling that rates would
stabilize now that the Fed had offset the three decreases
in rates that had occurred in the fall of 1998. Although
financial services stocks were not particularly strong
during this rally, there was one bright spot for this
sector. On November 12, President Clinton signed into law
the Gramm-Leach-Bliley Act. This legislation repealed the
Glass-Steagall Act enacted in 1933, which barred
commercial banks from merging with brokerage firms,
investment banks, and insurance companies. The new law
was widely expected to precipitate a fresh round of
mergers and acquisitions in the finance sector.
3
<PAGE>
Prudential Stock Index Fund
Investment Adviser's Report
The S&P 500's positive momentum abruptly vanished at the
outset of the new year. In the face of the realization
that the Fed was probably not
finished raising interest rates, buying became even more
narrowly concentrated on the "new economy" stocks in the
technology, telecommunications, and media sectors. This
preoccupation led to a curious divergence in the market.
Many days in January and February, the Dow Jones
Industrial Average--dominated by finance, industrial
equipment, and other "old economy" sectors--declined while
the technology-heavy NASDAQ Composite Index rose. The S&P
500, representing something of a compromise between the
other two indexes, drifted irregularly lower for the
first two months of 2000. The Fed fulfilled expectations
by raising interest rates for the fourth time in nine
months on February 2, 2000.
Around the same time, however, the U.S. Treasury,
reacting to recent budget surpluses that have reduced the
government's borrowing needs, announced a buyback program
for a number of its debt securities. The program was
expected to involve repurchasing up to $30 billion in
longer-term Treasury securities by the end of 2000. It
was also stated that issuance of new two-, five-, and 10-
year notes would be reduced, as would issuance of 30-year
bonds. Reacting to the prospect of increased demand and
lower supply of Treasury securities, fixed-income
investors pushed the yield on the 30-year Treasury bond
down sharply.
Although the effect was not immediate, the decline in
bond yields appeared to reassure many stock investors,
prompting the apparent beginnings of a rotation from "new
economy" into "old economy" stocks. The negative effects
of this movement were felt most by marginal technology
stocks with no earnings. Another contributing factor was
the fact that after falling sharply for two months, "old
economy" stocks appeared to be at bargain
levels. Technology shares, on the other hand, had been in
a strong uptrend for over four months and had become
increasingly pricey. Anticipation of rosy first-quarter
earnings reports also undoubtedly contributed to
investors' interest in many of the more established
components of the S&P
4
<PAGE>
www.prudential.com (800) 225-1852
500. All of these influences combined to trigger an
explosive rise on March 16 that sent the S&P 500 soaring
over 66 points, while the Dow gained over 500 points.
More gains followed in the last two weeks of March, and
the S&P 500 ended the period within striking distance of
its new all-time intraday high of 1552.87. In spite of
the slackening interest in the more speculative segments
of the technology sector, stalwarts such as Intel, Cisco
Systems, Oracle, Qualcomm, and Sun Microsystems populated
the list of the strongest contributors to the Fund's
returns.
Index funds positioned to benefit
from rapid sector rotation
The fundamentally sound U.S. economy has led to a
steadily rising stock market characterized by frequent
sector rotation. Under all but the most extreme
conditions--the crisis that occurred in the fall of 1998
was one example--managers of actively managed funds have
reacted to changing market conditions, not by taking
money out of the market but by redeploying it in sectors
that seem more appealing. Moreover, these rotations are
occurring more quickly than before--so quickly, in fact,
that it is difficult for those who are not already
positioned to benefit. This was particularly true of the
rally in cyclical shares that occurred in April and May
1999.
A rotational market environment is ideal for index funds,
which, through their broad diversification, are able to
catch strong trends in virtually any sector. Moreover,
index funds do not incur the high transaction expenses
involved in switching back and forth between "hot"
sectors since their portfolios remain relatively stable.
5
<PAGE>
Prudential Stock Index Fund
Investment Adviser's Report
Looking Ahead
The delayed effects of higher interest rates should soon
begin to slow economic growth, allowing the Fed to
stabilize rates for a while. If the Fed can achieve its
goal of slowing the economy without pushing it into
recession, there may even be an opportunity for lowering
rates again. A growing economy with stable or falling
rates would constitute a favorable background for stocks,
and we would expect this to be reflected in higher share
prices. With the bubble in technology perhaps beginning
to burst, the emphasis going forward should be on
traditional measures of value such as price/earnings
ratios. This renewed focus on value could hurt the more
speculative issues, but should benefit those companies
with solid earnings prospects, many of which are included
in the S&P 500.
Prudential Index Series Fund Management Team
6
<PAGE>
Prudential Stock Index Fund
Financial
Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 96.1%
Common Stocks
-------------------------------------------------------------------------------------
Advertising
12,000 Young & Rubicam, Inc. $ 564,000
-------------------------------------------------------------------------------------
Aerospace/Defense 0.8%
167,884 Boeing Co. 6,369,099
35,506 General Dynamics Corp. 1,766,424
69,156 Lockheed Martin Corp. 1,413,376
11,820 Northrop Grumman Corp. 625,721
60,244 Raytheon Co. 1,069,331
33,863 Rockwell International Corp. 1,415,897
87,920 United Technologies Corp. 5,555,445
----------------
18,215,293
-------------------------------------------------------------------------------------
Airlines 0.2%
28,149 AMR Corp.(a) 897,249
23,484 Delta Airlines, Inc. 1,250,523
91,083 Southwest Airlines Co. 1,895,665
12,521 USAir Group, Inc.(a) 348,240
----------------
4,391,677
-------------------------------------------------------------------------------------
Aluminum 0.3%
40,529 Alcan Aluminum Ltd. 1,372,920
66,532 ALCOA, Inc. 4,673,873
11,736 Reynolds Metals Co. 784,845
----------------
6,831,638
-------------------------------------------------------------------------------------
Automobiles & Trucks 1.0%
6,579 Cummins Engine Co., Inc. 247,124
29,440 Dana Corp. 829,840
101,184 Delphi Automotive Systems Corp. 1,618,944
218,389 Ford Motor Co. 10,032,245
115,578 General Motors Corp. 9,571,303
31,599 Genuine Parts Co. 754,426
14,676 Johnson Controls, Inc. 793,421
10,760 Navistar International Corp.(a) 431,745
----------------
24,279,048
</TABLE>
8 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Banking 4.7%
68,400 AmSouth Bancorporation $ 1,021,725
128,586 Associates First Capital Corp. 2,756,562
310,067 Bank of America Corp. 16,259,138
132,836 Bank of New York Co., Inc. 5,520,996
209,316 Bank One Corp. 7,195,237
36,767 Capital One Financial 1,762,518
148,784 Chase Manhattan Corp. 12,972,105
27,261 Comerica, Inc. 1,141,554
56,464 Fifth Third Bancorp 3,557,232
178,549 First Union Corp. 6,650,950
177,164 Firstar Corporation Wisconsin 4,063,699
165,226 FleetBoston Financial Corp. 6,030,749
29,292 Golden West Financial Corp. 913,544
41,381 Huntington Bancshares, Inc. 925,900
31,090 J.P. Morgan & Co., Inc. 4,096,107
77,135 KeyCorp 1,465,565
91,546 Mellon Financial Corp. 2,700,607
108,798 National City Corp. 2,243,959
40,562 Northern Trust Corp. 2,740,470
21,500 Old Kent Financial Corp. 694,719
52,336 PNC Bank Corp. 2,358,391
25,301 Providian Financial Corp. 2,191,699
29,100 SouthTrust Corp. 740,231
28,731 State Street Corp. 2,783,316
29,777 Summit Bancorp 781,646
59,583 Suntrust Banks, Inc. 3,440,918
133,758 U.S. Bancorp 2,925,956
23,700 Union Planters Corp. 730,256
296,140 Wells Fargo & Co. 12,291,075
----------------
112,956,824
-------------------------------------------------------------------------------------
Beverages 1.8%
6,847 Adolph Coors Co. 327,372
85,027 Anheuser Busch Companies, Inc. 5,292,931
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Beverages (cont'd.)
12,138 Brown-Forman Corp. $ 660,762
445,932 Coca-Cola Co. 20,930,933
74,700 Coca-Cola Enterprises Inc. 1,610,719
263,881 PepsiCo, Inc. 9,120,387
77,421 Seagram Co., Ltd. 4,606,550
----------------
42,549,654
-------------------------------------------------------------------------------------
Chemicals 1.1%
40,832 Air Products & Chemicals, Inc. 1,161,160
40,194 Dow Chemical Co. 4,582,116
187,644 E.I. du Pont de Nemours & Co. 9,921,676
14,693 Eastman Chemical Co. 668,532
5,273 FMC Corp.(a) 297,925
17,731 Hercules, Inc. 285,912
116,730 Monsanto Co. 6,011,595
39,070 Rohm & Haas Co. 1,743,499
18,516 Sigma-Aldrich Corp. 497,618
23,153 Union Carbide Corp. 1,350,109
----------------
26,520,142
-------------------------------------------------------------------------------------
Chemical-Specialty 0.1%
21,704 Engelhard Corp. 328,273
10,890 Great Lakes Chemical Corp. 370,260
27,379 Praxair, Inc. 1,139,651
10,344 W. R. Grace & Co. 131,240
----------------
1,969,424
-------------------------------------------------------------------------------------
Coal
2,866 Arch Coal, Inc. 20,061
-------------------------------------------------------------------------------------
Computer Software & Services 16.7%
63,362 3Com Corp.(a) 3,524,511
23,010 Adobe Systems, Inc. 2,561,301
12,105 Autodesk, Inc. 550,778
113,378 Automatic Data Processing, Inc. 5,470,489
43,200 BMC Software, Inc.(a) 2,133,000
33,485 Cabletron Systems, Inc.(a) 981,529
24,790 Ceridian Corp.(a) 475,658
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Computer Software & Services (cont'd.)
1,231,544 Cisco Systems, Inc.(a) $ 95,383,833
33,100 Citrix Systems, Inc.(a) 2,192,875
97,158 Computer Associates International, Inc. 5,750,539
29,551 Computer Sciences Corp.(a) 2,504,385
63,200 Compuware Corp.(a) 1,331,150
459,740 Dell Computer Corp.(a) 24,964,432
183,952 EMC Corp.(a) 22,994,000
75,032 First Data Corp. 3,320,166
57,192 Gateway, Inc.(a) 3,031,176
324,934 International Business Machines Corp. 38,342,212
32,420 KLA Instruments Corp.(a) 2,731,385
49,408 Micron Technology, Inc. 6,225,408
935,806 Microsoft Corp.(a) 99,588,762
15,900 NCR Corp.(a) 637,988
59,302 Novell, Inc.(a) 1,697,520
512,920 Oracle Corp.(a) 40,039,817
47,679 Parametric Technology Co.(a) 1,004,239
49,500 PeopleSoft, Inc.(a) 990,000
40,865 Seagate Technology, Inc.(a) 2,462,116
31,546 Silicon Graphics, Inc.(a) 333,205
282,048 Sun Microsystems, Inc.(a) 26,588,074
4,000 VERITAS Software Corp. 524,000
----------------
398,334,548
-------------------------------------------------------------------------------------
Construction 0.1%
13,537 Fluor Corp. 419,647
7,791 Kaufman & Broad Home Corp. 167,020
6,743 Pulte Corp. 140,760
17,600 Vulcan Materials Co. 806,300
----------------
1,533,727
-------------------------------------------------------------------------------------
Containers 0.1%
4,758 Ball Corp. 164,448
13,305 Bemis Co., Inc. 490,622
23,176 Crown Cork & Seal Co., Inc.(a) 370,816
27,126 Owens-Illinois, Inc.(a) 457,751
27,258 Pactiv Corp.(a) 238,508
----------------
1,722,145
</TABLE>
See Notes to Financial Statements 11
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Cosmetics & Soaps 1.3%
9,657 Alberto-Culver Co. $ 229,957
46,472 Avon Products, Inc. 1,350,593
41,132 Clorox Co. 1,336,790
105,630 Colgate-Palmolive Co. 5,954,891
193,339 Gillette Co. 7,286,464
17,975 International Flavors & Fragrances, Inc. 630,248
237,619 Procter & Gamble Co. 13,366,069
----------------
30,155,012
-------------------------------------------------------------------------------------
Diversified Gas 0.1%
39,603 Coastal Corp. 1,821,738
4,308 Eastern Enterprises, Inc. 257,942
7,423 NICOR, Inc. 244,495
5,576 Oneok, Inc. 139,400
----------------
2,463,575
-------------------------------------------------------------------------------------
Drugs & Medical Supplies 8.2%
276,774 Abbott Laboratories 9,738,985
22,782 Allergan, Inc. 1,139,100
19,103 ALZA Corp.(a) 717,556
235,691 American Home Products Corp. 12,638,930
183,924 Amgen, Inc.(a) 11,288,336
9,638 Bausch & Lomb, Inc. 502,983
51,837 Baxter International, Inc. 3,249,532
44,012 Becton Dickinson & Co. 1,158,066
27,000 Biogen, Inc.(a) 1,886,625
19,788 Biomet, Inc.(a) 719,789
75,262 Boston Scientific Corp.(a) 1,604,021
357,314 Bristol-Myers Squibb Co. 20,634,883
7,856 C.R. Bard, Inc. 303,929
50,649 Cardinal Health, Inc. 2,323,523
197,197 Eli Lilly & Co. 12,423,411
55,348 Guidant Corp. 3,255,154
250,674 Johnson & Johnson 17,562,847
10,903 Mallinckrodt, Inc. 313,461
216,358 Medtronic, Inc. 11,128,915
</TABLE>
12 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Drugs & Medical Supplies (cont'd.)
421,344 Merck & Co., Inc. $ 26,175,996
700,858 Pfizer, Inc. 25,625,121
94,514 Pharmacia & Upjohn, Inc. 5,599,954
266,624 Schering-Plough Corp. 9,798,432
15,766 St. Jude Medical, Inc.(a) 406,960
155,456 Warner-Lambert Co. 15,156,960
16,800 Watson Pharmaceuticals, Inc.(a) 666,750
----------------
196,020,219
-------------------------------------------------------------------------------------
Electronics 8.2%
27,062 Advanced Micro Devices, Inc.(a) 1,544,225
63,600 Analog Devices, Inc.(a) 5,123,775
28,806 Apple Computer, Inc. 3,912,215
37,600 Conexant Systems, Inc.(a) 2,669,600
86,700 Electronic Data Systems Corp. 5,565,056
77,475 Emerson Electric Co. 4,096,491
17,900 Florida Progress Corp. 821,163
183,318 Hewlett-Packard Co. 24,301,092
602,544 Intel Corp. 79,669,668
53,044 LSI Logic Corp.(a) 3,852,320
34,250 Molex Inc. 2,012,187
128,271 Motorola, Inc. 18,262,584
30,676 National Semiconductor Corp.(a) 1,859,732
36,764 PE Corp.--PE Biosystems Group 3,547,726
8,085 PerkinElmer, Inc. 537,653
106,000 Solectron Corp.(a) 4,246,625
34,554 Tandy Corp. 1,753,616
8,012 Tektronix, Inc. 448,672
31,200 Teradyne, Inc.(a) 2,566,200
146,176 Texas Instruments, Inc. 23,548,160
11,433 Thomas & Betts Corp. 322,982
57,800 Xilinx Inc.(a) 4,786,562
----------------
195,448,304
-------------------------------------------------------------------------------------
Financial Services 5.1%
80,953 American Express Co. 12,056,937
21,798 Bear, Stearns & Co., Inc. 994,534
</TABLE>
See Notes to Financial Statements 13
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Financial Services (cont'd.)
148,974 Charles Schwab Corp. $ 8,463,585
609,587 Citigroup, Inc.(a) 36,156,129
19,637 Countrywide Mortgage Investments, Inc. 535,108
12,019 Deluxe Corp. 318,504
27,688 Dun & Bradstreet Corp. 792,569
23,630 Equifax, Inc. 596,658
126,132 Federal Home Loan Mortgage Corp. 5,573,458
184,334 Federal National Mortgage Association 10,403,350
44,614 Franklin Resources, Inc. 1,491,781
16,980 H&R Block, Inc. 759,855
83,050 Household International Corp. 3,098,803
21,787 Lehman Brothers Holdings, Inc. 2,113,339
144,543 MBNA Corp. 3,685,846
66,517 Merrill Lynch & Co., Inc. 6,984,285
204,436 Morgan Stanley Dean Witter & Co. 16,829,280
28,000 PaineWebber Group, Inc. 1,232,000
46,150 Paychex, Inc. 2,417,106
40,200 Regions Financial Corp. 917,063
28,264 SLM Holding Corp 941,545
50,566 Synovus Financial Corp. 954,433
21,000 T. Rowe Price & Associates, Inc. 829,500
102,725 Washington Mutual, Inc. 2,722,212
----------------
120,867,880
-------------------------------------------------------------------------------------
Foods 1.2%
106,835 Archer-Daniels-Midland Co. 1,108,413
49,054 Bestfoods 2,296,340
75,647 Campbell Soup Co. 2,326,145
88,243 ConAgra, Inc. 1,599,404
54,072 General Mills, Inc. 1,956,730
65,314 H.J. Heinz & Co. 2,277,826
24,158 Hershey Foods Corp. 1,177,703
72,270 Kellogg Co. 1,851,919
24,889 Quaker Oats Co. 1,508,896
58,077 Ralston Purina Co. 1,589,858
164,186 Sara Lee Corp. 2,955,348
58,290 Sysco Corp. 2,080,224
</TABLE>
14 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Foods (cont'd.)
104,435 Unilever N. V. $ 5,025,934
22,052 Wm. Wrigley Jr. Co. 1,693,869
----------------
29,448,609
-------------------------------------------------------------------------------------
Forest Products 0.7%
9,549 Boise Cascade Corp. 331,828
19,150 Champion International Corp. 1,019,738
37,923 Fort James Corp. 834,306
30,268 Georgia-Pacific Corp. 1,197,478
76,040 International Paper Co. 3,250,710
97,816 Kimberly-Clark Corp. 5,634,496
16,256 Louisiana-Pacific Corp. 225,552
17,269 Mead Corp. 603,336
4,337 Potlatch Corp. 186,491
10,245 Temple-Inland, Inc. 510,329
16,730 Westvaco Corp. 558,364
42,400 Weyerhaeuser Co. 2,416,800
21,980 Willamette Industries, Inc. 881,948
----------------
17,651,376
-------------------------------------------------------------------------------------
Gas Pipelines 0.7%
29,297 Cinergy Corp. 629,886
15,506 Columbia Gas System, Inc.(a) 918,731
42,059 El Paso Energy Corp. 1,698,132
128,706 Enron Corp. 9,636,862
5,832 Peoples Energy Corp. 160,016
39,398 Sempra Energy 659,916
77,092 Williams Companies, Inc. 3,387,230
----------------
17,090,773
-------------------------------------------------------------------------------------
Health Care 0.1%
19,260 Manor Care, Inc.(a) 260,010
49,376 McKesson HBOC, Inc. 1,036,896
19,000 Quintiles Transnational, Corp.(a) 324,188
12,000 Wellpoint Health Networks, Inc. 838,500
----------------
2,459,594
</TABLE>
See Notes to Financial Statements 15
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Hospital Management 0.3%
101,831 Columbia/HCA Healthcare Corp. $ 2,577,597
71,749 Healthsouth Corp.(a) 399,104
25,810 Humana, Inc.(a) 188,736
55,610 IMS Health, Inc. 941,894
4,097 Shared Medical Systems Corp. 212,532
56,348 Tenet Healthcare Corp.(a) 1,296,004
32,206 United Healthcare Corp. 1,920,283
----------------
7,536,150
-------------------------------------------------------------------------------------
Housing Related 0.4%
6,804 Armstrong World Industries, Inc. 157,372
10,097 Centex Corp. 240,435
35,000 Leggett & Platt, Inc. 752,500
70,274 Lowe's Companies, Inc. 4,102,245
82,926 Masco Corp. 1,699,983
14,518 Maytag Corp. 480,909
49,527 Newell Rubbermaid Inc. 1,228,889
9,714 Owens Corning(a) 188,209
14,838 Stanley Works 391,352
12,240 Tupperware Corp. 193,545
13,339 Whirlpool Corp. 781,999
----------------
10,217,438
-------------------------------------------------------------------------------------
Insurance 2.8%
27,493 Aetna Life & Casualty Co. 1,531,016
47,800 AFLAC, Inc. 2,177,887
148,208 Allstate Corp. 3,529,203
43,540 American General Corp. 2,443,682
279,051 American International Group, Inc. 30,556,084
44,489 Aon Corp. 1,434,770
31,234 Chubb Corp. 2,110,247
35,397 CIGNA Corp. 2,681,323
30,214 Cincinnati Financial Corp. 1,136,802
55,660 Conseco, Inc. 636,611
41,253 ITT Hartford Group, Inc. 2,176,096
19,091 Jefferson-Pilot Corp. 1,270,745
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Insurance (cont'd.)
34,330 Lincoln National Corp. $ 1,150,055
48,070 Marsh & McLennan Companies, Inc. 5,302,722
19,372 MBIA, Inc. 1,008,555
18,020 MGIC Investment Corp. 786,123
13,393 Progressive Corp. 1,018,705
23,229 SAFECO Corp. 617,020
40,617 St. Paul Companies, Inc. 1,386,055
23,815 Torchmark Corp. 550,722
40,526 UnumProvident Corp. 688,942
35,608 Wachovia Corp. 2,405,765
----------------
66,599,130
-------------------------------------------------------------------------------------
Internet Services 1.8%
408,700 America Online, Inc.(a) 27,653,200
95,100 Yahoo! Inc.(a) 16,297,762
----------------
43,950,962
-------------------------------------------------------------------------------------
Leisure 0.2%
14,899 Brunswick Corp. 282,150
110,300 Carnival Corp. 2,736,819
23,724 Harrah's Entertainment, Inc.(a) 440,377
33,154 Hasbro, Inc. 547,041
72,013 Mattel, Inc. 751,635
34,907 Mirage Resorts, Inc.(a) 676,323
----------------
5,434,345
-------------------------------------------------------------------------------------
Lodging 0.1%
63,921 Hilton Hotels Corp. 495,388
48,552 Marriott International, Inc. (Class 'A' Stock) 1,529,388
----------------
2,024,776
-------------------------------------------------------------------------------------
Machinery 0.5%
3,264 Briggs & Stratton Corp. 134,232
63,928 Caterpillar, Inc. 2,521,160
17,720 Cooper Industries, Inc. 620,200
41,340 Deere & Co. 1,570,920
37,862 Dover Corp. 1,812,643
14,577 Eaton Corp. 1,137,006
</TABLE>
See Notes to Financial Statements 17
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Machinery (cont'd.)
28,095 Ingersoll-Rand Co. $ 1,398,079
13,582 PACCAR, Inc. 679,100
20,292 Parker Hannifin Corp. 838,313
10,042 Snap-On, Inc. 262,975
25,902 Thermo Electron Corp.(a) 527,753
9,537 Timken Co. 154,976
----------------
11,657,357
-------------------------------------------------------------------------------------
Media 3.7%
138,820 CBS Corp. 7,860,682
61,938 Clear Channel Communications, Inc.(a) 4,277,593
168,620 Comcast Corp. 7,313,892
17,304 Dow Jones & Co., Inc. 1,242,644
50,289 Gannett Co., Inc. 3,539,088
50,212 Interpublic Group of Companies, Inc. 2,372,517
14,683 Knight-Ridder, Inc. 747,915
34,500 McGraw Hill Companies, Inc. 1,569,750
109,681 MediaOne Group, Inc.(a) 8,884,161
7,696 Meredith Corp. 213,083
30,990 New York Times Co. 1,330,633
21,840 R.R. Donnelley & Sons, Co. 457,275
232,116 Time Warner, Inc. 23,211,600
12,738 Times Mirror Co. 1,183,838
42,182 Tribune Co. 1,542,279
124,532 Viacom, Inc.(a) 6,569,063
371,713 Walt Disney Co. 15,379,625
----------------
87,695,638
-------------------------------------------------------------------------------------
Mineral Resources 0.2%
69,824 Barrick Gold Corp. (ADR) (Canada) 1,095,364
27,428 Freeport-McMoran Copper & Gold, Inc. 330,850
47,684 Homestake Mining Co. 286,104
31,303 INCO Ltd. 573,236
29,297 Newmont Mining Corp. 657,351
14,330 Phelps Dodge Corp. 680,675
56,270 Placer Dome, Inc. 457,194
----------------
4,080,774
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Miscellaneous Basic Industry 6.1%
29,000 Allied Waste Industries, Inc.(a) $ 190,313
137,444 Applied Materials, Inc.(a) 12,954,097
64,658 BB&T Corp. 1,814,465
127,759 Cendant Corp.(a) 2,363,541
10,383 Crane Co. 244,649
26,600 Danaher Corp. 1,356,600
22,341 Ecolab, Inc. 819,635
29,808 Fortune Brands, Inc. 745,200
592,524 General Electric Co. 91,952,318
27,300 Harley-Davidson Inc. 2,166,937
55,168 Illinois Tool Works, Inc. 3,048,032
14,986 ITT Industries, Inc. 465,503
18,334 Loews Corp. 916,700
7,661 Millipore Corp. 432,368
2,123 NACCO Industries, Inc. 101,771
31,967 Omnicom Group, Inc. 2,986,917
22,504 Pall Corp. 504,934
32,174 PPG Industries, Inc. 1,683,102
14,418 Sealed Air Corp. 783,078
28,067 Textron, Inc. 1,708,579
23,749 TRW, Inc. 1,389,317
306,372 Tyco International Ltd. 15,280,303
16,874 W.W. Grainger, Inc. 915,415
----------------
144,823,774
-------------------------------------------------------------------------------------
Miscellaneous Consumer Growth 0.9%
12,598 American Greetings Corp. 229,914
15,832 Black & Decker Corp. 594,690
48,999 Corning, Inc. 9,661,006
56,565 Eastman Kodak Co. 3,072,187
6,358 Jostens, Inc. 154,976
72,399 Minnesota Mining & Manufacturing Co. 6,411,836
10,069 Polaroid Corp. 239,139
----------------
20,363,748
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Networking
18,600 Adaptec, Inc.(a) $ 718,425
-------------------------------------------------------------------------------------
Office Equipment & Supplies 1.4%
19,968 Avery Dennison Corp. 1,219,296
305,747 Compaq Computer Corp.(a) 8,140,514
142,815 Honeywell, Inc. 7,524,565
26,041 IKON Office Solutions, Inc. 161,129
22,852 Lexmark International Group, Inc.(a) 2,416,599
8,296 Milacron, Inc. 119,774
54,200 Network Appliance, Inc. 4,485,050
65,300 Office Depot, Inc.(a) 755,031
48,125 Pitney Bowes, Inc. 2,150,586
83,550 Staples, Inc.(a) 1,671,000
56,890 Unisys Corp.(a) 1,450,695
115,998 Xerox Corp. 3,015,948
----------------
33,110,187
-------------------------------------------------------------------------------------
Petroleum 4.5%
16,678 Amerada Hess Corp. 1,077,816
21,010 Anadarko Petroleum Corp. 812,824
20,187 Apache Corp. 1,004,303
11,645 Ashland Oil, Inc. 389,380
58,638 Atlantic Richfield Co. 4,984,230
39,782 Burlington Resources, Inc. 1,471,934
118,462 Chevron Corp. 10,950,331
622,807 Exxon Mobil Corp. 48,462,170
18,459 Kerr-McGee Corp. 1,066,007
65,938 Occidental Petroleum Corp. 1,368,214
43,736 Phillips Petroleum Co. 2,022,790
385,431 Royal Dutch Petroleum Co. (ADR) (Netherlands) 22,347,547
15,614 Sunoco, Inc. 427,433
100,946 Texaco, Inc. 5,413,229
27,000 Tosco Corp. 821,813
37,163 Transocean Sedco Forex Inc. 1,906,926
43,245 Union Pacific Resources Group, Inc. 627,053
44,339 Unocal Corp. 1,319,085
</TABLE>
20 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Petroleum (cont'd.)
57,260 USX-Marathon Corp. $ 1,492,339
----------------
107,965,424
-------------------------------------------------------------------------------------
Petroleum Services 0.7%
58,879 Baker Hughes, Inc. 1,781,090
110,150 Conoco, Inc. 2,822,594
78,511 Halliburton Co. 3,218,951
7,310 McDermott International, Inc. 67,161
73,352 PG&E Corp. 1,540,392
16,510 Rowan Companies, Inc.(a) 486,013
99,021 Schlumberger Ltd. 7,575,106
----------------
17,491,307
-------------------------------------------------------------------------------------
Railroads 0.3%
81,923 Burlington Northern, Inc. 1,812,546
37,003 CSX Corp. 869,571
20,500 Kansas City Southern Industries, Inc. 1,761,719
67,611 Norfolk Southern Corp. 971,908
45,729 Union Pacific Corp. 1,789,147
----------------
7,204,891
-------------------------------------------------------------------------------------
Restaurants 0.5%
21,902 Darden Restaurants, Inc. 390,129
245,330 McDonald's Corp. 9,215,208
27,366 Tricon Global Restaurants, Inc. 850,056
20,279 Wendy's International, Inc. 409,382
----------------
10,864,775
-------------------------------------------------------------------------------------
Retail 5.6%
74,213 Albertson's, Inc. 2,300,603
25,000 AutoZone, Inc. 693,750
25,000 Bed Bath & Beyond Inc.(a) 984,375
37,300 Best Buy Co., Inc. 3,207,800
36,378 Circuit City Stores, Inc. 2,214,511
18,224 Consolidated Stores Corp.(a) 207,298
80,708 Costco Wholesale Corp. 4,242,214
69,696 CVS Corp. 2,617,956
16,223 Dillards, Inc. 266,666
</TABLE>
See Notes to Financial Statements 21
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Retail (cont'd.)
47,040 Dollar General Corp. $ 1,264,200
38,275 Federated Department Stores, Inc.(a) 1,597,981
155,213 Gap, Inc. 7,731,548
6,177 Great Atlantic & Pacific Tea Co., Inc. 120,452
13,868 Harcourt General, Inc. 516,583
416,684 Home Depot, Inc. 26,876,118
45,684 J.C. Penney Co., Inc. 679,550
84,157 Kmart Corp. 815,271
29,900 Kohl's Corp. 3,064,750
151,334 Kroger Co.(a) 2,657,803
40,811 Limited, Inc. 1,719,163
10,396 Liz Claiborne, Inc. 476,267
5,682 Longs Drug Stores Corp. 129,266
59,271 May Department Stores Co. 1,689,224
49,438 Nike, Inc. 1,958,981
24,200 Nordstrom, Inc. 713,900
14,073 Pep Boys - Manny, Moe & Jack 83,558
6,849 Reebok International Ltd. 63,353
42,687 Rite-Aid Corp. 234,779
92,900 Safeway,Inc.(a) 4,203,725
67,496 Sears, Roebuck & Co. 2,083,939
29,216 Sherwin-Williams Co. 640,926
23,412 Supervalu, Inc. 443,365
79,591 Target Corp. 5,949,427
55,116 TJX Companies, Inc. 1,222,886
43,207 Toys 'R' Us, Inc.(a) 640,004
802,226 Wal-Mart Stores, Inc. 44,523,543
180,878 Walgreen Co. 4,657,608
26,140 Winn-Dixie Stores, Inc. 508,096
----------------
134,001,439
-------------------------------------------------------------------------------------
Rubber 0.1%
19,899 B.F. Goodrich Co. 570,853
11,588 Cooper Tire & Rubber Co. 145,574
27,371 Goodyear Tire & Rubber Co. 638,086
----------------
1,354,513
</TABLE>
22 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Steel - Producers 0.1%
15,618 Allegheny Teldyne, Inc. $ 313,336
23,334 Bethlehem Steel Corp.(a) 140,004
14,828 Nucor Corp. 741,400
17,809 USX Corp. - U.S. Steel Group 445,225
13,408 Worthington Industries, Inc. 165,924
----------------
1,805,889
-------------------------------------------------------------------------------------
Telecommunications 7.1%
54,000 ADC Telecommunications, Inc. 2,909,250
56,234 Alltel Corp. 3,546,257
12,622 Andrew Corp.(a) 288,728
26,650 CenturyTel, Inc. 989,381
13,900 Comverse Technology, Inc.(a) 2,627,100
138,056 Global Crossing Ltd. 5,803,136
573,167 Lucent Technologies, Inc. 34,971,770
510,900 MCI WorldCom, Inc.(a) 23,317,812
65,920 Nextel Communications, Inc.(a) 9,772,640
259,130 Nortel Networks Corp. 32,814,180
132,500 Qualcomm, Inc.(a) 19,948,150
30,776 Scientific- Atlanta, Inc. 1,952,352
157,784 Sprint Corp. 9,940,392
155,092 Sprint Corp. (PCS Group)(a) 10,129,446
73,494 Tellabs, Inc.(a) 4,628,974
90,975 US West, Inc. 6,607,059
----------------
170,246,627
-------------------------------------------------------------------------------------
Textiles
7,040 National Service Industries, Inc. 148,280
6,048 Russell Corp. 86,562
4,188 Springs Industries, Inc. 159,144
20,234 V.F. Corp. 486,881
----------------
880,867
-------------------------------------------------------------------------------------
Tobacco 0.4%
55,600 Nabisco Group Holding Corp. 667,200
425,279 Philip Morris Companies, Inc. 8,984,019
32,399 UST, Inc. 506,234
----------------
10,157,453
</TABLE>
See Notes to Financial Statements 23
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Travel
20,341 Sabre Holdings Corp.(a) $ 751,346
-------------------------------------------------------------------------------------
Trucking & Shipping 0.1%
52,716 FedEx Corp.(a) 2,055,924
11,221 Ryder System, Inc. 254,576
----------------
2,310,500
-------------------------------------------------------------------------------------
Utility Communications 4.4%
575,980 AT&T Corp. 32,398,875
281,222 Bell Atlantic Corp. 17,189,695
339,456 BellSouth Corp. 15,954,432
175,614 GTE Corp. 12,468,594
615,101 SBC Communications, Inc. 25,834,242
38,770 Unicom Corp. 1,415,105
----------------
105,260,943
-------------------------------------------------------------------------------------
Utilities - Electric 1.3%
37,300 AES Corp.(a) 2,937,375
25,169 Ameren Corp. 778,666
34,071 American Electric Power, Inc. 1,015,742
27,382 Carolina Power & Light Co. 888,204
38,101 Central & South West Corp. 650,098
21,800 CMS Energy Corp. 395,125
39,351 Consolidated Edison, Inc. 1,141,179
26,729 Constellation Energy Group, Inc. 851,987
51,052 Dominion Resources, Inc. 1,962,311
24,487 DTE Energy Co. 710,123
65,731 Duke Energy Co. 3,450,877
65,562 Edison International 1,085,871
45,715 Entergy Corp. 922,872
39,677 FirstEnergy Corp. 818,338
31,736 FPL Group, Inc. 1,461,840
22,228 GPU, Inc. 608,492
20,600 New Century Energies, Inc. 619,288
33,524 Niagara Mohawk Holdings, Inc. 452,574
29,173 Northern States Power Co. 579,813
</TABLE>
24 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Utilities - Electric (cont'd.)
32,455 PECO Energy Co. $ 1,196,778
14,000 Pinnacle West Capital Corp. 394,625
25,726 PPL Corp. 538,638
37,997 Public Service Enterprise Group, Inc. 1,125,661
50,679 Reliant Energy, Inc. 1,187,789
118,615 Southern Co. 2,579,876
48,214 Texas Utilities Co. 1,431,353
----------------
29,785,495
-------------------------------------------------------------------------------------
Waste Management 0.1%
114,113 Waste Management, Inc. 1,561,922
----------------
Total common stocks (cost $1,585,869,842) 2,291,349,618
----------------
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <S> <C> <C>
SHORT-TERM INVESTMENTS 3.8%
-------------------------------------------------------------------------------------
Repurchase Agreement 3.6%
$ 86,017 Joint Repurchase Agreement Account,
6.153%, 04/03/00 (Note 5) 86,017,000
-------------------------------------------------------------------------------------
U.S. Government Securities 0.2%
5,000(b) United States Treasury Bills,
5.6725%, 6/22/00 4,931,824
----------------
Total short-term investments
(cost $90,952,397) 90,948,824
----------------
Total Investments 99.9%
(cost $1,676,822,239; Note 4) 2,382,298,442
Other assets in excess of liabilities 0.1% 2,735,145
----------------
Net Assets 100% $ 2,385,033,587
----------------
----------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing.
(b) Pledged as initial margin for financial futures contracts.
ADR--American Depository Receipt.
See Notes to Financial Statements 25
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
--------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $1,676,822,239) $2,382,298,442
Foreign currency at value (cost $4,112) 4,079
Cash 134,971
Receivable for Fund shares sold 21,272,553
Dividends and interest receivable 2,030,024
Due from broker - variation margin 605,000
Prepaid expenses 24,605
--------------
Total assets 2,406,369,674
--------------
LIABILITIES
Payable for Fund shares reacquired 15,845,810
Payable for investments purchased 4,915,753
Management fee payable 480,105
Distribution fee payable 50,607
Accrued expenses 43,812
--------------
Total liabilities 21,336,087
--------------
NET ASSETS $2,385,033,587
--------------
--------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 71,654
Paid-in capital in excess of par 1,672,009,628
--------------
1,672,081,282
Undistributed net investment income 4,218,431
Accumulated net realized loss on investments (2,657,796)
Net unrealized appreciation on investments and foreign
currencies 711,391,670
--------------
Net assets, March 31, 2000 $2,385,033,587
--------------
--------------
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
March 31, 2000
--------------------------------------------------------------------------------------
<S> <C> <C>
Class A:
Net asset value, offering and redemption price per share
($20,774,489 / 625,091 shares of beneficial interest
issued and outstanding) $33.23
Class B:
Net asset value, offering and redemption price per share
($41,857,410 / 1,262,921 shares of beneficial interest
issued and outstanding) $33.14
Class C:
Net asset value, offering and redemption price per share
($20,646,077 / 622,900 shares of beneficial interest
issued and outstanding) $33.15
Sales charge (1% of offering price) .33
Offering price to the public $33.48
Class Z:
Net asset value, offering and redemption price per share
($1,006,882,313 / 30,248,915 shares of beneficial
interest issued and outstanding) $33.29
Class I:
Net asset value, offering and redemption price per share
($1,294,873,298 / 38,894,400 shares of beneficial
interest issued and outstanding) $33.29
--------------
--------------
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Dividends (net of foreign withholding taxes of $25,501) $ 11,750,964
Interest 2,374,128
--------------
Total income 14,125,092
--------------
Expenses
Management fee 3,202,542
Distribution fee--Class A 7,398
Distribution fee--Class B 77,886
Distribution fee--Class C 42,512
Transfer agent fee--Class A 52,500
Transfer agent fee--Class B 14,500
Transfer agent fee--Class C 4,500
Transfer agent fee--Class Z 634,000
Transfer agent fee--Class I 60
Registration fees 200,000
Reports to shareholders 110,000
Custodian's fees and expenses 99,000
Legal fees 15,000
Trustees' fees 9,000
Audit fees 8,000
Miscellaneous 1,803
--------------
Total expenses 4,478,701
Less: Expense subsidy (Note 2) (490,235)
--------------
Net expenses 3,988,466
--------------
Net investment income 10,136,626
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
Net realized gain (loss) on:
Investment transactions (1,377,766)
Foreign currency transactions (4,724)
Financial futures contracts 508,990
--------------
(873,500)
--------------
Net change in unrealized appreciation/depreciation on:
Investments 320,255,421
Foreign currencies (32)
Financial futures contracts 9,131,750
--------------
329,387,139
--------------
Net gain on investments 328,513,639
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $338,650,265
--------------
--------------
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 30, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE IN NET ASSETS
Operations
Net investment income $ 10,136,626 $ 19,421,960
Net realized gain (loss) on investments
and foreign currency transactions (873,500) 24,134,380
Net change in unrealized appreciation on
investments and foreign currencies 329,387,139 247,855,460
--------------- ------------------
Net increase in net assets resulting
from operations 338,650,265 291,411,800
--------------- ------------------
Dividends and distributions (Note 1):
Dividends from net investment income
Class Z (9,917,456) (4,694,229)
Class I (12,228,311) (7,920,682)
--------------- ------------------
(22,145,767) (12,614,911)
--------------- ------------------
Distributions from net realized gains
Class Z (10,541,195) (3,159,577)
Class I (11,809,055) (4,863,575)
--------------- ------------------
(22,350,250) (8,023,152)
--------------- ------------------
Fund share transactions (net of
conversions) (Note 6):
Net proceeds from shares sold 1,232,311,910 1,320,487,868
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 44,452,564 20,622,768
Cost of shares reacquired (1,071,680,428) (746,871,141)
--------------- ------------------
Net increase in net assets from Fund
share transactions 205,084,046 594,239,495
--------------- ------------------
Net increase 499,238,294 865,013,232
NET ASSETS
Beginning of period 1,885,795,293 1,020,782,061
--------------- ------------------
End of period(a) $ 2,385,033,587 $1,885,795,293
--------------- ------------------
--------------- ------------------
---------------
(a) Includes undistributed net investment
income of $ 4,218,431 $ 16,232,296
--------------- ------------------
--------------- ------------------
</TABLE>
See Notes to Financial Statements 29
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited)
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, one of which is the
Prudential Stock Index Fund (the 'Fund').
The Fund 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
Company and 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 a 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
manager or subadviser, does not represent fair value, are valued by the
Valuation Committee or Board of Trustees in consultation with the manager or the
subadviser.
30
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
Foreign Currency Translation: The books and records of the Company 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 daily 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 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 portfolio
securities sold during the period. Accordingly, these realized foreign currency
gains (losses) are included in the reported net realized gains (losses) on
investment transactions.
Net realized losses on foreign currency transactions represent net foreign
exchange gains or losses from holdings of foreign currencies, currency gains or
losses realized between the trade and settlement dates on security transactions,
and the difference between the amounts of dividends, interest and foreign taxes
recorded on the Fund's books and the U.S. dollar equivalent amounts actually
received or paid. Net unrealized currency gains or losses from valuing foreign
currency denominated assets and liabilities (other than investments) at
period-end exchange rates are reflected as a component of net 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.
Repurchase Agreements: In connection with transactions in repurchase
agreements, 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
31
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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 distribution and 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: 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.
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
32
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
all of its taxable net income to its shareholders. Therefore, no federal income
tax provision is required.
Withholding taxes on foreign dividends have been provided for in
accordance with the 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 decrease
accumulated net realized loss on investments by $4,724. 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. 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
Company 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 .65%, 1.40%, 1.40%, .40% and .30% of the average daily net assets for
Class A, Class B, Class C, Class Z and Class I shares, respectively. For the six
months ended March 31, 2000, PIFM subsidized $490,235 of the expenses of the
Fund (1.32%, .10%, .04%, 1.05% and .03% of the average daily net assets of the
Class A, Class B, Class C, Class Z and Class I shares, respectively; $.0625,
$.0079, $.0032, $.0114 and $.0059 per Class A, Class B, Class C, Class Z and
Class I shares, respectively).
The Company has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'), which acts as the distributor of the Class A,
Class B, Class C, Class Z and Class I shares of the Company. The Company
compensates PIMS for distributing and servicing the Company's Class A, Class B
and Class C shares, pursuant to plans of distribution, (the 'Class A, B and C
plans'), regardless of
33
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
expenses actually incurred by them. The distribution fees are accrued daily and
payable monthly. No distribution or service fees are paid to PIMS as distributor
for Class Z and Class I shares of the Company.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Plans were .25 of 1%, 1% and 1% of the average daily net
assets of the Class A, B and C shares, respectively, for the six months ended
March 31, 2000.
PIMS has advised the Fund that it received approximately $179,600 in
front-end sales charges resulting from sales of Class C shares during the six
months ended March 31, 2000. From these fees, PIMS paid such sales charges to
affiliated broker-dealers which in turn paid commissions to salespersons and
incurred other distribution costs.
PIMS has advised the Fund that for the six months ended March 31, 2000,
they received approximately $11,000 and $4,200 in contingent deferred sales
charges imposed upon certain redemptions by Class B and Class C shareholders,
respectively.
PIC, PIFM and PIMS are wholly owned subsidiaries of The Prudential
Insurance Company of America.
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.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was .065 of 1% of the unused portion
of the credit facility. The Fund did not borrow any amounts pursuant to the SCA
during the six months ended March 31, 2000.
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, 2000,
the Fund incurred fees of approximately $52,000, $14,000, $4,000, $633,000 and
$50 for Class A, Class B, Class C, Class Z and Class I shares, respectively, for
the services of PMFS. As of March 31, 2000, approximately $12,000, $5,300,
$1,100, $115,000 and $10 for Class A, Class B, Class C, Class Z and Class I
shares, respectively, of such fees were due to PMFS. Transfer agent fees and
34
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
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, 2000 aggregated $170,195,602 and $7,295,169,
respectively.
On March 31, 2000, the Fund held 220 long financial futures contracts on
the S&P 500 Index which expire in December 2000. The cost of such contracts was
$77,426,000. The value of such contracts on March 31, 2000 was $83,341,500,
thereby resulting in an unrealized gain of $5,915,500.
The cost basis of investments for federal income tax purposes was
$1,676,830,591 and, accordingly, as of March 31, 2000, net unrealized
appreciation for federal income tax purposes was $705,467,851 (gross unrealized
appreciation--$826,523,957; gross unrealized depreciation--$121,056,106.
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, 2000, the Fund had
a 13.1% undivided interest in the repurchase agreements in the joint account.
The undivided interest represented $86,017,000 in principal amount. As of such
date, each repurchase agreement in the joint account and the collateral therefor
was as follows:
Bear, Stearns & Co. Inc., 6.10%, in the principal amount of $120,000,000,
repurchase price $120,061,000, due 04/3/00. The value of the collateral
including accrued interest was $123,642,827.
Credit Suisse First Boston Corp., 6.10%, in the principal amount of
$130,000,000, repurchase price $130,066,083, due 04/3/00. The value of the
collateral including accrued interest was $134,450,258.
Greenwich Capital Markets, Inc., 6.15%, in the principal amount of
$100,000,000, repurchase price $100,051,250, due 04/3/00. The value of the
collateral including accrued interest was $102,005,200.
Goldman, Sachs & Co., 6.09%, in the principal amount of $100,000,000,
repurchase price $100,050,750, due 04/3/00. The value of the collateral
including accrued interest was $102,000,425.
35
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.25%, in the principal
amount of $207,289,000, repurchase price $207,396,963, due 04/3/00. The value of
the collateral including accrued interest was $211,435,308.
Note 6. Capital
The Fund offers Class A, Class B, Class C, Class Z and Class I shares. Class A,
Class Z and Class I shares are not subject to any sales or redemption charge and
are offered exclusively for sale to a limited group of investors. Class B shares
are sold with a contingent deferred sales charge which declines from 5% to zero
depending upon the period of time the shares are held. Class C shares are sold
with a front-end sales charge of 1% and a contingent deferred sales charge of 1%
during the first 18 months. Class B shares will automatically convert to Class A
shares on a quarterly basis approximately seven years after purchase.
The Fund has authorized an unlimited number of shares of beneficial
interest at $.001 par value divided into five classes, designated Class A, Class
B, Class C, Class Z and Class I. Transactions in shares of beneficial interest
were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
---------------------------------------------------------- ----------- -------------
<S> <C> <C>
November 18, 1999(a) through March 31, 2000:
Shares sold 683,707 $ 20,830,666
Shares reacquired (74,047) $ (2,320,331)
----------- -------------
Net increase in shares outstanding before conversion 609,660 18,510,335
Shares issued upon conversion from Class B 15,431 479,036
----------- -------------
Net increase in shares outstanding 625,091 $ 18,989,371
----------- -------------
----------- -------------
<CAPTION>
Class B
----------------------------------------------------------
<S> <C> <C>
November 18, 1999(a) through March 31, 2000:
Shares sold 1,373,354 $ 43,096,098
Shares reacquired (94,970) (2,945,322)
----------- -------------
Net increase in shares outstanding before conversion 1,278,384 40,150,776
Shares reacquired upon conversion into Class A (15,463) (479,036)
----------- -------------
Net increase in shares outstanding 1,262,921 $ 39,671,740
----------- -------------
----------- -------------
<CAPTION>
Class C
----------------------------------------------------------
<S> <C> <C>
November 18, 1999(a) through March 31, 2000:
Shares sold 651,169 $ 20,489,761
Shares reacquired (28,269) (876,336)
----------- -------------
Net increase in shares outstanding 622,900 $ 19,613,425
----------- -------------
----------- -------------
</TABLE>
36
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z Shares Amount
---------------------------------------------------------- ----------- -------------
Six months ended March 31, 2000:
<S> <C> <C>
Shares sold 23,680,609 $ 741,599,650
Shares issued in reinvestment of dividends and
distributions 653,914 20,415,201
Shares reacquired (24,010,360) (758,273,541)
----------- -------------
Net increase in shares outstanding 324,163 $ 3,741,310
----------- -------------
----------- -------------
Year ended September 30, 1999:
Shares sold 25,482,340 $ 725,667,595
Shares issued in reinvestment of dividends and
distributions 300,787 7,838,514
Shares reacquired (12,360,069) (353,240,852)
----------- -------------
Net increase in shares outstanding 13,423,058 $ 380,265,257
----------- -------------
----------- -------------
<CAPTION>
Class I
----------------------------------------------------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 12,817,881 $ 406,295,735
Shares issued in reinvestment of dividends and
distributions 769,688 24,037,363
Shares reacquired (9,843,122) (307,264,898)
----------- -------------
Net increase in shares outstanding 3,744,447 $ 123,068,200
----------- -------------
----------- -------------
Year ended September 30, 1999:
Shares sold 20,880,114 $ 594,820,273
Shares issued in reinvestment of dividends and
distributions 490,382 12,784,254
Shares reacquired (13,861,925) (393,630,289)
----------- -------------
Net increase in shares outstanding 7,508,571 $ 213,974,238
----------- -------------
----------- -------------
</TABLE>
------------------------------
(a) Commencement of offering of Class A, Class B and Class C shares.
37
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial
Highlights
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------------
November 18, 1999(d)
Through March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 31.53
--------
Income from investment operations:
Net investment income(a) .03
Net realized and unrealized gain on investment
transactions 1.67
--------
Total from investment operations 1.70
--------
Less distributions:
Dividends from net investment income --
Distributions from net realized gains --
--------
Total distributions --
--------
Net asset value, end of period $ 33.23
--------
--------
TOTAL RETURN(b) 5.42%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 20,775
Average net assets (000) $ 8,253
Ratios to average net assets:(a)
Expenses, including distribution fees .65%(c)
Expenses, excluding distribution fees .40%(c)
Net investment income .71%(c)
For Class A, B, C, Z and I:
Portfolio turnover rate 0%
</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.
(d) Commencement of offering of Class A shares.
See Notes to Financial Statements 39
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
----------------------
November 18, 1999(d)
Through March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 31.53
--------
Income from investment operations:
Net investment income(a) (.01)
Net realized and unrealized gain on investment
transactions 1.62
--------
Total from investment operations 1.61
--------
Less distributions:
Dividends from net investment income --
Distributions from net realized gains --
--------
Total distributions --
--------
Net asset value, end of period $ 33.14
--------
--------
TOTAL RETURN(b) 5.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 41,857
Average net assets (000) $ 21,761
Ratios to average net assets:(a)
Expenses, including distribution fees 1.40%(c)
Expenses, excluding distribution fees .40%(c)
Net investment income (.06)%(c)
</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.
(d) Commencement of offering of Class B shares.
40 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
----------------------
November 18, 1999(d)
Through March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 31.53
--------
Income from investment operations:
Net investment income(a) (.01)
Net realized and unrealized gain on investment
transactions 1.63
--------
Total from investment operations 1.62
--------
Less distributions:
Dividends from net investment income --
Distributions from net investment income --
--------
Total distributions --
--------
Net asset value, end of period $ 33.15
--------
--------
TOTAL RETURN(b) 5.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 20,646
Average net assets (000) $ 11,877
Ratios to average net assets:(a)
Expenses, including distribution fees 1.40%(c)
Expenses, excluding distribution fees .40%(c)
Net investment income (.06)%(c)
</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.
(d) Commencement of offering of Class C shares.
See Notes to Financial Statements 41
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 28.96
----------------
Income from investment operations:
Net investment income(a) .18
Net realized and unrealized gain on investment transactions 4.81
----------------
Total from investment operations 4.99
----------------
Less distributions:
Dividends from net investment income (.32)
Distributions from net realized gains (.34)
----------------
Total distributions (.66)
----------------
Net asset value, end of period $ 33.29
----------------
----------------
TOTAL RETURN(b) 17.50%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $1,006,882
Average net assets (000) $ 993,243
Ratios to average net assets:(a)
Expenses .40%(c)
Net investment income .91%(c)
</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.
42 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
----------------------------------------------------------------------------------------------------------
Year Ended August 31,
----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 23.11 $ 21.86 $ 16.06 $ 14.22 $ 11.27
---------------- ---------------- ---------------- ---------------- ----------------
.22 .15 .46 .25 .23
6.07 1.69 5.75 2.44 2.97
---------------- ---------------- ---------------- ---------------- ----------------
6.29 1.84 6.21 2.69 3.20
---------------- ---------------- ---------------- ---------------- ----------------
(.26) (.21) (.26) (.28) (.22)
(.18) (.38) (.15) (.57) (.03)
---------------- ---------------- ---------------- ---------------- ----------------
(.44) (.59) (.41) (.85) (.25)
---------------- ---------------- ---------------- ---------------- ----------------
$ 28.96 $ 23.11 $ 21.86 $ 16.06 $ 14.22
---------------- ---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ---------------- ----------------
27.41% 8.61% 39.34% 19.72% 29.02%
$866,762 $381,374 $185,881 $184,379 $101,945
$681,129 $313,721 $254,644 $142,540 $ 71,711
.40% .40% .46% .60% .60%
1.16% 1.30% 1.66% 1.92% 2.55%
3% 1% 5% 2% 11%
</TABLE>
See Notes to Financial Statements 43
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class I
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 28.99
----------------
Income from investment operations:
Net investment income(a) .21
Net realized and unrealized gain on investment transactions 4.78
----------------
Total from investment operations 4.99
----------------
Less distributions:
Dividends from net investment income (.35)
Distributions from net realized gains (.34)
----------------
Total distributions (.69)
----------------
Net asset value, end of period $ 33.29
----------------
----------------
TOTAL RETURN(b) 17.65%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $1,294,873
Average net assets (000) $1,111,797
Ratios to average net assets:(a)
Expenses .30%(c)
Net investment income 1.01%(c)
</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.
(d) Commencement of offering of Class I shares.
44 See Notes to Financial Statements
<PAGE>
Prudential Index Series Fund Prudential Stock Index Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class I
---------------------------------------------------------------------------------------
Year Ended September 30, August 1, 1997(d)
------------------------------------------ Through September 30,
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 23.13 $ 21.87 $ 21.87
---------------- ---------------- ----------
.36 .31 .06
5.96 1.55 (.06)
---------------- ---------------- ----------
6.32 1.86 --
---------------- ---------------- ----------
(.28) (.22) --
(.18) (.38) --
---------------- ---------------- ----------
(.46) (.60) --
---------------- ---------------- ----------
$ 28.99 $ 23.13 $ 21.87
---------------- ---------------- ----------
---------------- ---------------- ----------
27.55% 8.69% 0%
$1,019,034 $639,408 $312,127
$ 915,642 $505,605 $296,788
.30% .30% .30%(c)
1.26% 1.42% 1.73%(c)
</TABLE>
See Notes to Financial Statements 45
<PAGE>
Prudential Stock Index Fund
Prudential Mutual Fund Family
Prudential offers a broad range of mutual funds designed
to meet your individual needs. For information about
these funds, contact your financial adviser or call us at
(800) 225-1852. Read the prospectus carefully before you
invest or send money.
STOCK FUNDS
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential 20/20 Focus Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
Asset Allocation/Balanced Funds
Prudential Balanced Fund
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
GLOBAL FUNDS
Global Stock Funds
Prudential Developing Markets Fund
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Global Utility Fund, Inc.
Target Funds
International Equity Fund
Global Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
<PAGE>
www.prudential.com (800) 225-1852
BOND FUNDS
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Target Funds
Total Return Bond Fund
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Prudential Stock Index Fund
Getting the Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they
don't read annual and semiannual reports. It's quite
understandable. These annual and semiannual reports are
prepared to comply with federal regulations, and are
often written in language that is difficult to
understand. So when most people run into those
particularly daunting sections of these reports, they
don't read them.
We think that's a mistake
At Prudential Mutual Funds, we've made some changes to
our report to make it easier to understand and more
pleasant to read. We hope you'll find it profitable to
spend a few minutes familiarizing yourself with your
investment. Here's what you'll find in the report:
Performance at a Glance
Since an investment's performance is often a
shareholder's primary concern, we present performance
information in two different formats. You'll find it
first on the "Performance at a Glance" page where we
compare the Fund and the comparable average calculated by
Lipper, Inc., a nationally recognized mutual fund rating
agency. We report both the cumulative total returns and
the average annual total returns. The cumulative total
return is the total amount of income and appreciation the
Fund has achieved in various time periods. The average
annual total return is an annualized representation of
the Fund's performance. It gives you an idea of how much
the Fund has earned in an average year for a given time
period. Under the performance box, you'll see legends
that explain the performance information, whether fees
and sales charges have been included in returns, and the
inception dates for the Fund's share classes.
See the performance comparison charts at the back of the
report for more performance information. Please keep in
mind that past performance is not indicative of future
results.
<PAGE>
www.prudential.com (800) 225-1852
Performance review
The portfolio manager, who invests your money for you,
reports on successful--and not-so-successful--strategies in this
section of your report. Look for recent purchases and
sales here, as well as information about the sectors the
portfolio manager favors, and any changes that are on the
drawing board.
Portfolio of Investments
This is where the report begins to appear technical, but
it's really just a
listing of each security held at the end of the reporting
period, along with valuations and other information.
Please note that sometimes we discuss a security in the
Performance Review that doesn't appear in this listing
because it was sold before the close of the reporting
period.
Statement of Assets and Liabilities
The balance sheet shows the assets (the value of the Fund's holdings),
liabilities (how much the Fund owes), and net assets (the
Fund's equity, or holdings after the Fund pays its debts) as of
the end of the reporting period. It also shows how we
calculate the net asset value per share for each class of
shares. The net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but
remember that the money or new shares are being paid or
issued to you. The net asset value fluctuates daily,
along with the value of every security in the portfolio.
Statement of Operations
This is the income statement, which details income
(mostly interest and
dividends earned) and expenses (including what you pay us
to manage your money). You'll also see capital gains
here--both realized and unrealized.
<PAGE>
Prudential Stock Index Fund
Getting the Most From Your Prudential Mutual Fund
Statement of Changes in Net Assets
This schedule shows how income and expenses translate into changes
in net assets. The Fund is required to pay out the bulk
of its income to shareholders every year, and this
statement shows you how we do it (through
dividends and distributions) and how that affects the net
assets. This statement also shows how money from
investors flowed into and out of the Fund.
Notes to Financial Statements
This is the kind of technical material that can
intimidate readers, but it does contain useful
information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition, they
outline how Prudential Mutual Funds prices securities.
The Notes also explain who manages and distributes the
Fund's shares and, more importantly, how much they are
paid for doing so. Finally, the Notes explain how many
shares are outstanding and the number issued and redeemed
over the period.
Financial Highlights
This information contains many elements from prior pages,
but on a per-share basis. It is designed to help you understand
how the Fund performed, and to compare this year's performance and
expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and
certifies that the information is fairly presented and
complies with generally accepted accounting principles.
Tax Information
This is information that we report annually about how
much of your total return is taxable. Should you have any
questions, you may want to consult a tax adviser.
<PAGE>
www.prudential.com (800) 225-1852
Performance Comparison
These charts are included in the annual report and are
required by the Securities Exchange Commission.
Performance is presented here as a hypothetical $10,000
investment in the Fund since its inception or for 10
years (whichever is shorter). To help you put that return
in context, we are required to include the performance of an unmanaged,
broad-based securities index as well. The index does not
reflect the cost of buying the securities it contains or
the cost of managing a mutual fund. Of course, the index
holdings do not mirror those of the Fund--the index is a
broad-based reference point commonly used by investors to
measure how well they are doing. A definition of the
selected index is also provided. Investors cannot invest
directly in an index.
<PAGE>
Prudential Stock Index Fund
Getting the Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you
receive financial advice from a Prudential Securities
Financial Advisor or 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. 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 available mutual funds to
find the ones that fit your 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
should remind you that you're investing for the long
haul.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E. H. Morrison, Secretary
William V. Healey, Assistant Secretary
Stephen M. Ungerman, Assistant Treasurer
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
194 Wood Avenue South
Iselin, NJ 08830
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
Fund Symbols NASDAQ CUSIP
Class A PSIAX 74438C100
Class B PBSIX 74438C209
Class C PSICX 74438C308
Class Z PSIFX 74438C407
Class I PDSIX 74438C506
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, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
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Gateway Center Three
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