(ICON)
Prudential
Active
Balanced
Fund
SEMI
ANNUAL
March 31, 1999
(LOGO)
<PAGE>
Prudential Active Balanced Fund
A Series of The Prudential Investment Portfolios, Inc.
Performance At A Glance
Markets were very turbulent during the six months ended
March 31, 1999. The
period began with a sharp upward bounce from the steep
summer decline, but
also included a drop in February. Unsettled markets give
balanced funds a
chance to show their mettle: the Prudential Active Balanced
Fund beat the
Lipper Balanced Fund Average by three percentage points.
Diversification is
intended to smooth returns over time, and we believe that
striving for
significantly higher returns would have required risks
inconsistent with
the goals of balanced funds.
Cumulative Total Returns1 As of
3/31/99
<TABLE>
<CAPTION>
Six One Five
Since
Months Year
Years Inception2
<S> <C> <C> <C>
<C>
Class A 15.72% 11.37%
N/A 38.58%
Class B 15.21 10.53
N/A 36.18
Class C 15.21 10.53
N/A 36.18
Class Z 15.80 11.53
86.43% 105.73
Lipper Balanced
Fund Avg.3 12.58 6.47
100.34 ***
</TABLE>
Average Annual Total Returns1 As of
3/31/99
<TABLE>
<CAPTION>
One Five
Since
Year Years
Inception2
<S> <C> <C>
<C>
Class A 5.80%
N/A 12.18%
Class B 5.53
N/A 12.72
Class C 8.42
N/A 13.30
Class Z 11.53
13.27% 12.27
</TABLE>
Past performance is not indicative of future results.
Principal and investment
return will fluctuate so that an investor's shares, when
redeemed, may be
worth more or less than their original cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc. 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 C shares bought before
November 2, 1998,
have a 1% CDSC if sold within one year. Class Z shares are
not subject to a
sales charge or distribution fee.
2 Inception dates: Class A, B, and C, 11/7/96; Class Z,
1/4/93.
3 Lipper average returns are for all funds in each share
class for the six-
month, one-, and five-year periods in the Balanced Fund
category.
*** Lipper Since Inception returns are 41.79% for Class A,
B, and C; and
115.08% for Class Z based on all funds in each share class.
How Investments Compared.
(As of 3/31/99)
(GRAPH)
U.S. General General U.S.
Growth Bond Muni Debt Taxable
Funds Funds Funds Money Funds
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past
performance should never be used to predict future results.
The risks to
each of the investments listed above are different--we
provide 12-month
total returns for several Lipper mutual fund categories to
show you that
reaching for higher returns means tolerating more risk. The
greater the
risk, the larger the potential reward or loss. In addition,
we've included
historical 20-year average annual returns. These returns
assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received higher
historical total returns from stocks than from most other
investments. Smaller
capitalization stocks offer greater potential for long-term
growth, but may be
more volatile than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth
out their total returns year by year. But their prices still
fluctuate
(sometimes significantly), and their returns have been
historically lower
than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments,
state agencies and/or municipalities. This investment
provides income that
is usually exempt from federal and state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value; they
don't fluctuate much in price but, historically, their
returns have been
generally among the lowest of the major investment
categories.
<PAGE>
Portfolio Managers' Report
Mark Stumpp, James H. Scott,
& Martin Lawlor--
Fund Managers
Investment Goals and Style
The Prudential Active Balanced Fund seeks income and long-
term growth of
capital by investing in a portfolio of equity, fixed-income,
and money-market
securities that is actively managed to take advantage of
opportunities created
by what we see as market misvaluations. The Fund's
investments will be
actively shifted among equity securities, fixed-income
securities, and
money market instruments to capitalize on such opportunities
and to maximize
the Fund's total investment return. Mark Stumpp and James
Scott manage the
asset allocation using a quantitative model. They also
manage the stocks,
using behavioral finance models to select securities that
they believe to be
underpriced, but maintaining a risk profile like that of the
S&P 500 Index.
Martin Lawlor manages the bonds. There can be no assurance
that the Fund will
meet its investment objective.
Hedge funds are offshore investment companies that typically
take large
positions with borrowed money.
Performance Review
We bought stocks at depressed prices
Our performance is determined by our allocation of funds
among asset classes,
and also by the returns of our holdings in each class. We
use quantitative
models to determine which market sectors offer the best
opportunities. We
monitor the changes in companies' earnings expectations and
stock prices,
comparing the expected return on stocks with the interest
rates on bonds.
We try to increase the proportion of the kind of security
that offers the
best value at any time. Since asset class has a greater
impact on returns
over the long term than selection of individual securities,
these shifts in
allocation may affect your return significantly.
When we began our reporting period, fears associated with
collapsing hedge
funds and declining emerging market economies had depressed
U.S. stock prices.
We held nearly 65% of our assets in stocks (our norm is 55%
to 60%). We
benefited from this shift to more stocks when the market
recovered ground it
had lost in the summer. As prices rose, we took our gains
and reduced our
stock holdings into our normal range. We continued to move
away from stocks
in the first quarter of 1999, as rising interest rates and
stock prices made
stock ownership much less attractive. This shift away from
stocks had mixed
results because the bonds we purchased early in 1999 lost
some value when
rising interest rates caused a corresponding reduction in
prices.
We held the leading growth stocks
We generally hold at least 175 different stocks, and
generally buy no more
than 0.75 percentage points more or less than their
representation in the S&P
500. Our goal is to limit the difference between our stock
performance and
that of the Index, while increasing the likelihood that our
return will be
higher than the Index. At the beginning of our reporting
period, exposure to
a few key growth stocks was the name of the game.
Fortunately, we were there.
We emphasized the large-capitalization, growth-oriented
stocks that were
leading the S&P 500. Companies like Microsoft, General
Electric, and Wal-Mart
were solid performers in the portfolio over the entire six-
month period. We
also benefited from good security selection among smaller
growth stocks such
as America Online, Schwab, and EMC Corp.--each of which more
than doubled over
the last six months. Our stocks outperformed the S&P 500
despite our exposure
to underperforming stocks of mid-cap and small companies.
<PAGE>
Sector focuses had mixed results
We don't choose individual sectors or industries that we
expect to do well,
but our earnings forecasts for individual companies--in
conjunction with their
current share prices--may lead to small sector emphases or
de-emphases
compared with the S&P 500. These are kept small to reduce
the risk of
deviating greatly from the Index return. For example, we
exceeded the Index
proportion of retailers by about one percentage point.
Retailers, of which
we had a diverse selection, performed strongly over our
reporting period.
Moreover, the retail stocks we owned performed even better
than the average
in this sector. Our holdings included Best Buy, Circuit
City, Kohls, Nine
West, Abercrombie & Fitch, and Home Depot, in addition to
Wal-Mart.
These focuses do not always add to our return. For example,
we also held a
somewhat greater proportion of health service stocks than
the S&P 500, and
this sector performed poorly. Moreover, our health service
stocks--including
medical/dental distributors and medical/nursing services--
underperformed the
average stock in that sector.
Our bonds had a positive return in a difficult period. Bonds
rose only
marginally by the end of 1998, but investors had retreated
from other
securities to U.S. Treasury bonds in the summer panic, and
corporate bonds
performed better in the fall as investors' confidence
returned and demand
for a higher yield increased. We had a significantly larger
representation
of corporate bonds than our benchmark. These corporate bonds
continued to
benefit our portfolio when bond markets gave up their gains
in the first
quarter of 1999. Our holdings fell less than most.
Looking Ahead
Stocks are expensive
At the end of our reporting period, our quantitative model
recommended an
equity allocation between 50% and 55% of total assets--a
lower allocation
than normal, and less than the typical balanced fund. This
year's increase
in interest rates, higher stock prices, and low current
earnings expectations
all lead us to favor bonds over stocks in making adjustments
from our normal
risk profile.
We have been emphasizing growth-oriented stocks, and have
tilted slightly
toward more attractively priced smaller and mid-cap issues.
Again, any active
position typically represents a relatively small departure
from the S&P 500
Index proportions. The vast majority of our stock assets are
invested in blue-
chip names.
We continue to favor bonds that offer more yield than U.S.
Treasuries and
have a slight focus on mortgage-backed securities.
Five Largest Holdings
Expressed as a percentage of net assets
as of 3/31/99
Microsoft Corporation 2.3%
Computer Software & Services
General Electric Co. 1.6
Diversified Operations
Wal-Mart Stores, Inc. 1.2
Retail
Intel Corp. 1.1
Electronic Components
American Int'l Group, Inc. 0.9
Insurance
Portfolio Composition
Expressed as a percentage of net assets
as of 3/31/99
Bonds 32%
Equity:
Electronic Tech & Services 9
Finance 8
Health Services & Technology 6
Utilities 5
Consumer Durables &
Non Durables 5
Process Industries 4
Energy & Nonenergy
Minerals 3
Retail Trade 3
Consumer Services 2
Commercial Services 1
Producer Manufacturing 1
Transportation 1
Cash & Equivalents 20*
*Primarily collateral for stock and bond
futures contracts used to manage asset
allocation.
Source: Prudential
- ------------------------------------------------------------
- -------------------
1
<PAGE>
A Message to Our Shareholders
May 19, 1999
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a
handful of very large companies. These stocks were getting
more and more
expensive--out of proportion to their earnings expectations.
As a result,
there was a substantial disparity in value between large and
small companies,
and between growth and value stocks. In recent months,
however, that gap has
started to narrow amid news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value
stocks that typically fare better in a growing economy, and
have been selling
at a significant discount to the market.
Many sectors of the bond market have also begun to rebound
from last year's
global financial crisis. Furthermore, while bonds have not
generated higher
returns than stocks in recent years, they have demonstrated
that they hold
up better during market downturns. That's a thought to keep
in mind going
forward.
Diversification is critical
History shows that the markets generally bring prices in
line with earnings
performance, sooner or later. It also shows that two
investment styles--value
and growth--typically alternate in periods of superior
performance.
What does this suggest? Instead of chasing popular market
winners, investors
should have a well-diversified asset allocation strategy in
place and keep to
it. It is also a good practice to rebalance your holdings,
when necessary, to
keep your asset allocation consistent with your long-term
objectives and risk
tolerance. A properly diversified portfolio of value- and
growth-oriented
equity funds, bond funds, and money market funds could help
you weather
inevitable market turbulence and receive more consistent
returns over time.
Prudential offers a wide range of mutual funds to help our
shareholders
diversify. We have also designed several balanced and
diversified funds to
allow one-decision diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
- ------------------------------------------------------------
- -------------------
2
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--68.5%
COMMON STOCKS--48.1%
- ------------------------------------------------------------
Aerospace/Defense--0.7%
7,300 Allied Signal, Inc. $
359,069
3,000 Raytheon Co.
175,875
3,200 United Technologies Corp.
433,400
-------
- -----
968,344
- ------------------------------------------------------------
Airlines--0.2%
1,100 Alaska Air Group, Inc.(a)
52,250
4,500 AMR Corp.(a)
263,531
700 Southwest Airlines Co.
21,175
-------
- -----
336,956
- ------------------------------------------------------------
Aluminum--0.2%
5,000 Alcoa Inc.
205,938
- ------------------------------------------------------------
Apparel
3,000 Fruit of the Loom, Inc.(a)
31,125
- ------------------------------------------------------------
Automobiles & Trucks--0.9%
4,500 Arvin Industries, Inc.
151,594
3,300 DaimlerChrysler AG(a)
283,181
13,300 Ford Motor Co.
754,775
1,200 PACCAR, Inc.
49,425
-------
- -----
1,238,975
- ------------------------------------------------------------
Banking--2.2%
5,994 Bank One Corp.
330,045
1,400 Bankers Trust NY Corp.
123,550
1,600 Chase Manhattan Corp.
130,100
6,200 First Union Corp.
331,313
10,500 Fleet Financial Group, Inc.
395,062
13,900 Hibernia Corp.
182,438
10,000 Huntington Bancshares, Inc.
309,375
13,000 Keycorp
394,062
400 Mercantile Bancorporation, Inc.
19,000
4,400 National City Corp.
292,050
10,400 Regions Financial Corp. $
360,100
3,100 Suntrust Banks, Inc.
192,975
-------
- -----
3,060,070
- ------------------------------------------------------------
Beverages--0.4%
7,900 Coca-Cola Co.
484,862
1,300 Coca-Cola Enterprises Inc.
39,325
-------
- -----
524,187
- ------------------------------------------------------------
Building & Construction
1,600 Masco Corp.
45,200
- ------------------------------------------------------------
Business Services--0.4%
5,700 Omnicom Group, Inc.
455,644
2,000 Ryder System, Inc.
55,250
-------
- -----
510,894
- ------------------------------------------------------------
Cellular Communications
600 AirTouch Communications, Inc.(a)
57,975
- ------------------------------------------------------------
Chemicals--0.2%
100 E.I. Du Pont De Nemours & Co.
5,806
18,800 Schulman (A.), Inc.
256,150
-------
- -----
261,956
- ------------------------------------------------------------
Commercial Services--0.3%
7,500 Paychex, Inc.
355,781
- ------------------------------------------------------------
Computer Software & Services--5.7%
800 Adobe Systems, Inc.
45,400
7,600 America Online, Inc.(a)
1,109,600
10,700 BMC Software Inc.(a)
396,569
3,700 Comverse Technology, Inc.(a)
314,500
1,200 Electronic Arts, Inc.(a)
57,000
5,900 EMC Corp.(a)
753,725
2,000 Gateway 2000, Inc.(a)
137,125
2,700 Intuit Inc.(a)
274,725
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 3
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Computer Software & Services (cont'd.)
35,000 Microsoft Corp.(a) $
3,136,875
17,300 Oracle Systems Corp.(a)
456,287
300 Siebel Systems, Inc.(a)
14,250
4,900 Sterling Software, Inc.(a)
116,375
5,300 Sun Microsystems, Inc.(a)
662,169
7,500 SunGuard Data Systems Inc.(a)
300,000
-------
- -----
7,774,600
- ------------------------------------------------------------
Computer Systems/Peripherals--1.2%
4,300 Dell Computer Corp.(a)
175,763
2,500 Hewlett-Packard Co.
169,531
4,700 International Business Machines Corp.
833,075
1,800 Linear Technology Corp.
92,250
11,600 Seagate Technology, Inc.(a)
342,925
-------
- -----
1,613,544
- ------------------------------------------------------------
Containers--0.1%
4,400 Owens-Illinois Holdings Corp.(a)
110,000
- ------------------------------------------------------------
Diversified Consumer Products--1.6%
7,300 Baltimore Gas & Electric Co.
185,237
11,000 Fortune Brands, Inc.
425,563
11,500 Procter & Gamble Co.
1,126,281
7,300 Unilever NV
484,994
-------
- -----
2,222,075
- ------------------------------------------------------------
Diversified Operations--1.7%
20,300 General Electric Co.
2,245,687
- ------------------------------------------------------------
Diversified Manufacturing--0.3%
7,000 Harsco Corp.
176,313
9,400 Tenneco, Inc.
262,612
-------
- -----
438,925
Electrical Utilities--1.5%
200 American Electric Power Co., Inc. $
7,938
3,900 Consolidated Edison, Inc.
176,719
2,800 Dominion Resources, Inc.
103,425
12,900 Entergy Corp.
354,750
7,600 Florida Progress Corp.
286,900
7,500 GPU, Inc.
279,844
1,700 Hawaiian Electric Industries Inc.
59,606
4,896 PP & L Resources, Inc.
121,176
18,600 Public Service Company of New Mexico
316,200
3,100 Public Service Enterprise Group Inc.
118,381
11,700 Southern Co.
272,756
-------
- -----
2,097,695
- ------------------------------------------------------------
Electronic Components--1.5%
400 Arrow Electronics, Inc.(a)
6,000
13,100 Intel Corp.
1,560,538
4,500 KLA-Tencor Corp.(a)
218,531
6,400 Micron Technology, Inc.(a)
308,800
-------
- -----
2,093,869
- ------------------------------------------------------------
Financial Services--4.4%
5,200 American Express Co.
611,000
600 Associates First Capital Corp.
27,000
3,760 BankAmerica Corp.
265,550
2,800 Bear Stearns Companies, Inc.
125,125
6,650 Citigroup Inc.
424,769
9,400 Countrywide Credit Industries, Inc.
352,500
9,700 Federal Home Loan Mortgage Corp.
554,112
10,600 Federal National Mortgage Assoc.
734,050
800 Golden West Financial Corp.
76,400
6,200 Lehman Brothers Holdings, Inc.
370,450
500 Merrill Lynch & Co., Inc.
44,219
3,800 Morgan (J.P.) & Co., Inc.
468,825
3,100 Morgan Stanley, Dean Witter & Co.
309,806
3,800 Providian Financial Corp.
418,000
6,350 Schwab (Charles) Corp.
610,394
6,372 Washington Mutual, Inc.
260,456
9,300 Wells Fargo Co.
326,081
-------
- -----
5,978,737
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Foods--0.6%
10,395 Archer-Daniels Midland Co. $
152,677
1,100 Bestfoods
51,700
6,700 ConAgra, Inc.
171,269
4,000 General Mills, Inc.
302,250
1,100 Hershey Foods Corp.
61,600
1,500 Sara Lee Corp.
37,125
-------
- -----
776,621
- ------------------------------------------------------------
Health Care Services
700 American Home Products Corp.
45,675
- ------------------------------------------------------------
Home Furnishings--0.3%
5,700 Newell Rubbermaid Inc.
270,750
5,200 Springs Industries, Inc.
140,725
-------
- -----
411,475
- ------------------------------------------------------------
Human Resources--0.2%
8,500 Kelly Services, Inc.
235,875
- ------------------------------------------------------------
Insurance--2.4%
13,600 Allstate Corp.
504,050
10,400 American International Group, Inc.
1,254,500
4,800 CIGNA Corp.
402,300
5,900 Hartford Financial Services Group
335,194
1,200 Marsh & McLennan Cos., Inc.
89,025
16,500 Old Republic International Corp.
301,125
600 Progressive Corp.
86,100
2,600 Torchmark Corp.
82,225
2,600 Transamerica Corp.
184,600
-------
- -----
3,239,119
- ------------------------------------------------------------
Machinery & Equipment--0.5%
7,500 Applied Materials, Inc.(a)
462,656
2,900 Caterpillar, Inc.
133,219
3,100 Kennametal Inc.
54,250
8,800 MagneTek, Inc.(a)
73,700
-------
- -----
723,825
- ------------------------------------------------------------
Media & Communications--0.5%
1,000 Gannett Co., Inc.
63,000
2,300 Time Warner Inc. $
163,444
15,700 Walt Disney Co.
488,662
-------
- -----
715,106
- ------------------------------------------------------------
Medical Devices--0.3%
7,000 Guidant Corp.(a)
423,500
- ------------------------------------------------------------
Medical Products & Services--1.9%
12,500 Bergen Brunswig Corp.
250,000
2,900 Johnson & Johnson Co.
271,694
14,900 Schering Plough Corp.
824,156
8,500 Tyco International Ltd.
609,875
8,800 Warner-Lambert Co.
582,450
-------
- -----
2,538,175
- ------------------------------------------------------------
Medical Technology--0.6%
3,900 Abbott Laboratories
182,569
7,600 Amgen, Inc.(a)
569,050
-------
- -----
751,619
- ------------------------------------------------------------
Metals
100 Alcan Aluminum Ltd.
2,581
- ------------------------------------------------------------
Miscellaneous/Diversified--0.4%
4,100 Harley-Davidson Inc.
235,750
22,900 Service Corp. International
326,325
-------
- -----
562,075
- ------------------------------------------------------------
Miscellaneous Industrial--0.3%
3,200 Clorox Co.
375,000
- ------------------------------------------------------------
Networking--0.7%
8,100 Cisco Systems, Inc.(a)
887,456
- ------------------------------------------------------------
Oil & Gas Equipment & Services--0.1%
600 Enron Corp.
38,550
1,600 Tidewater, Inc.
41,400
-------
- -----
79,950
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Oil & Gas Exploration/Production--1.1%
9,500 Coastal Corp. $
313,500
1,200 MCN Energy Group Inc..
19,275
16,500 Royal Dutch Petroleum Co.
858,000
6,200 Texaco, Inc.
351,850
-------
- -----
1,542,625
- ------------------------------------------------------------
Oil & Gas Services--1.0%
4,400 Amerada Hess Corp.
221,375
1,100 Chevron Corp.
97,281
2,700 Consolidated Natural Gas Co.
131,456
8,500 Exxon Corp.
599,781
8,800 KeySpan Energy
221,100
1,400 Mobil Corp.
123,200
-------
- -----
1,394,193
- ------------------------------------------------------------
Pharmaceuticals--2.2%
16,400 Bristol Myers Squibb Co.
1,054,725
1,300 Eli Lilly & Co.
110,337
14,800 Merck & Co., Inc.
1,186,775
4,500 Pfizer, Inc.
624,375
-------
- -----
2,976,212
- ------------------------------------------------------------
Printing & Publishing--0.3%
1,800 Lexmark International Group, Inc.(a)
201,150
900 New York Times Co.
25,650
1,400 Tribune Co.
91,613
100 Washington Post Company
52,150
-------
- -----
370,563
- ------------------------------------------------------------
Retail--4.4%
3,800 Abercrombie & Fitch Co.(a)
349,600
2,600 Best Buy Co., Inc.(a)
135,200
5,400 Circuit City Stores-Circut City Group
413,775
700 Dayton-Hudson Corp.
46,638
2,400 Dollar Tree Stores, Inc.(a)
74,250
3,800 Federated Department Stores, Inc.(a)
152,475
8,450 Gap, Inc. $
568,791
14,400 Home Depot, Inc.
896,400
4,700 Kohl's Corp.(a)
333,113
7,500 Lowes Companies, Inc.
453,750
9,000 McDonald's Corp.
407,812
3,400 Penney (J.C.) Co., Inc.
137,700
11,200 Staples, Inc.(a)
368,200
17,400 Wal-Mart Stores, Inc.
1,604,062
-------
- -----
5,941,766
- ------------------------------------------------------------
Steel & Metals--0.2%
3,900 AK Steel Holding Corp.
87,994
8,100 Carpenter Technology Corp.
210,094
-------
- -----
298,088
- ------------------------------------------------------------
Telecommunication Services--3.9%
11,800 Ameritech Corp.
682,925
14,900 AT&T Corp.
1,189,206
14,600 Bell Atlantic Corp.
754,637
18,800 BellSouth Corp.
753,175
500 Century Telephone Enterprises, Inc.
35,125
11,400 GTE Corp.
689,700
5,875 MCI WorldCom, Inc.(a)
520,305
3,000 SBC Communications, Inc.
141,375
6,200 Sprint Corp.
608,375
-------
- -----
5,374,823
- ------------------------------------------------------------
Telecommunications Equipment--1.3%
7,600 ADC Telecommunications, Inc.(a)
362,425
11,400 Lucent Technologies, Inc.
1,228,350
2,400 Tellabs, Inc.(a)
234,600
-------
- -----
1,825,375
- ------------------------------------------------------------
Textile-Apparel Manufacturing--0.3%
28,400 Burlington Industries, Inc.(a)
188,150
15,600 Unifi, Inc.(a)
198,900
-------
- -----
387,050
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value
(Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Tobacco--0.7%
18,800 Philip Morris Co., Inc. $
661,525
9,500 UST, Inc.
248,187
-------
- -----
909,712
- ------------------------------------------------------------
Transportation--0.1%
8,600 Wisconsin Central Transportation
Corp.(a)
113,950
- ------------------------------------------------------------
Transportation/Trucking/Shipping--0.3%
8,000 Burlington Northern, Inc.
263,000
4,700 CSX Corp.
183,006
-------
- -----
446,006
Total common stocks
(cost $56,683,842)
65,520,948
-------
- -----
- ------------------------------------------------------------
<CAPTION>
Principal
Moody's Amount
Rating (000)
- ------------------------------------------------------------
DEBT OBLIGATIONS--20.4%
CORPORATE BONDS--16.1%
- ------------------------------------------------------------
Aerospace/Defense--1.5%
A1 $ 700 Boeing Inc., Deb.
8.10%, 11/15/06
779,436
Baa3 700 Northrop Grumman Corp.,
Deb.
7.75%, 3/1/16
739,039
Baa1 500 Raytheon Co. Note
6.30%, 3/15/05
503,555
------
- ------
2,022,030
- ------------------------------------------------------------
Airlines--0.2%
Baa3 225 Delta AirLines, Inc., Deb.
9.75%, 5/15/21
279,851
- ------------------------------------------------------------
Asset Backed Securities--1.5%
Aaa 1,500 Citibank Credit Card
Master Trust, Cl. A
6.05%, 1/15/10
1,481,250
Aaa 500 MBNA Master Credit Card
Trust, Ser. C, Cl. A
6.45%, 2/15/08
510,625
------
- ------
1,991,875
Automotive--0.4%
A1 $ 530 Ford Motor Co. (Del.),
Bond
6.50%, 8/1/18 $
513,416
- ------------------------------------------------------------
Banking--2.3%
Aa2 1,000 BankAmerica Corp., MTN
7.125%, 5/12/05
1,045,830
Aa3 1,000 Chemical Bank, Sub. Note
7.00%, 6/1/05
1,036,210
A1 500 Citicorp, Sub. Note
7.125%, 9/1/05
520,640
Aa2 560 Deutsche Bank, Sub. Note
7.50%, 4/25/09
599,155
------
- ------
3,201,835
- ------------------------------------------------------------
Beverages--0.2%
Coca-Cola Enterprises Inc., Deb.
A3 50 8.50%, 2/1/22
59,191
A3 205 6.75%, 9/15/28
201,749
------
- ------
260,940
- ------------------------------------------------------------
Building & Construction--0.6%
A3 800 Hanson Overseas BV, Sr.
Note
6.75%, 9/15/05
822,432
- ------------------------------------------------------------
Financial Services--4.7%
Aa3 750 Associates Corp. North
America, Sr. Note
6.75%, 7/15/01
767,648
A2 1,000 Bear, Stearns & Co. Inc.,
Sr. Note
8.75%, 3/15/04
1,104,530
A1 285 Ford Motor Credit Corp.,
Deb.
7.40%, 11/1/46
297,546
A2 570 General Motors Acceptance
Corp., Sr. Note
6.75%, 2/7/02
583,976
A1 700 Goldman, Sachs Group LP,
Note
7.25%, 10/1/05
728,217
A3 400 Heller Financial Inc.,
Note
6.00%, 3/19/04
396,484
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
<S> <C> <C> <C>
- ------------------------------------------------------------
Financial Services (cont'd.)
A1 $ 400 International Lease
Finance Corp., Note
6.00%, 5/15/02 $
401,784
Lehman Brothers Holdings,
Inc., Notes
Baa1 300 6.625%, 4/1/04
299,355
Baa1 85 6.625%, 2/5/06
83,951
Aa3 500 Merrill Lynch & Co., MTN
6.02%, 5/11/01
504,295
Santander Finance
Issuances, Notes
A1 520 6.80%, 7/15/05
532,449
A1 170 7.00%, 4/1/06
173,859
A3 600 US West Capital Funding
Inc., Note
6.125%, 7/15/02
606,258
------
- ------
6,480,352
- ------------------------------------------------------------
Media & Communications--1.1%
Baa3 600 News America Holdings,
Inc., Deb.
9.25%, 2/1/13
724,944
Baa3 600 Time Warner, Inc., Sr.
Note
9.125%, 1/15/13
733,128
------
- ------
1,458,072
- ------------------------------------------------------------
Medical Products & Services--0.3%
Baa1 400 Tyco International Group,
Note
6.375%, 6/15/05
402,424
- ------------------------------------------------------------
Oil & Gas Exploration/Production--0.6%
A2 700 Atlantic Richfield Co.,
Deb.
10.875%, 7/15/05
878,024
- ------------------------------------------------------------
Retail--0.4%
A2 565 Penney (J.C.) Co., Inc.,
MTN
7.05%, 5/23/05
577,758
- ------------------------------------------------------------
Telecommunication Services--1.0%
A1 500 AT&T Corp., Note
6.00%, 3/15/09
496,760
GTE Corp., Deb.
Baa1 $ 220 6.36%, 4/15/06 $
222,552
Baa1 210 7.51%, 4/1/09
230,288
Baa1 430 Sprint Capital Corp., Note
6.875%, 11/15/28
424,582
------
- ------
1,374,182
- ------------------------------------------------------------
Telecommunications Equipment--0.3%
A2 400 Lucent Technologies, Inc.,
Deb.
6.45%, 3/15/29
389,140
- ------------------------------------------------------------
Utilities--1.0%
A2 300 Hydro Quebec, Deb.
(Canada)
7.50%, 4/1/16
327,312
A2 1,000 Southern California Edison
Co., Note
6.50%, 6/1/01
1,018,100
------
- ------
1,345,412
Total corporate bonds
(cost $22,059,442)
21,997,743
------
- ------
- ------------------------------------------------------------
U.S. GOVERNMENT SECURITIES--4.3%
- ------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--0.7%
Aaa 400 First Union-Lehman
Brothers Bank, Ser. 1998
6.56%, 11/18/08
405,091
Aaa 500 LB Commercial Conduit
Mortgage Trust, Ser. C,
Class A
6.48%, 1/18/08
503,486
------
- ------
Total collateralized
mortgage obligations
(cost $916,573)
908,577
------
- ------
- ------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH OBLIGATIONS--
1.3%
Federal National Mortgage Assoc.,
785 8.50%, 10/1/24
823,728
449 9.50%, 7/1/25
479,484
470 8.50%, 2/1/28
493,978
------
- ------
Total U.S. government
agency mortgage
pass-through obligations
(cost $1,790,588)
1,797,190
------
- ------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 8
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
<S> <C> <C> <C>
- ------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--2.3%
United States Treasury
Bond,
$ 550 7.875%, 2/15/21 $
680,883
United States Treasury
Notes,
1,950 7.50%, 2/15/05
2,161,751
275 6.50%, 8/15/05
291,585
------
- ------
Total U.S. government
obligations
(cost $3,141,371)
3,134,219
------
- ------
Total U.S. government
securities
(cost $5,848,532)
5,839,986
------
- ------
Total debt obligations
(cost $27,907,974)
27,837,729
------
- ------
Total long-term
investments
(cost $84,591,816)
93,358,677
------
- ------
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS--43.4%
- ------------------------------------------------------------
COMMERCIAL PAPER--11.3%
General Electric Capital
Corp.,
P-1 4,000 5.12%, 4/1/99
4,000,000
GTE Funding, Inc.,
P-1 3,000 5.00%, 4/7/99
2,997,500
Salomon Smith Barney
Holdings, Inc.,
P-1 3,000 4.89%, 4/8/99
2,997,147
Societe Generale Cayman,
NR 1,426 5.125%, 4/1/99
1,426,000
Windmill Funding Corp.,
P-1 3,993 4.88%, 4/19/99
3,983,257
------
- ------
Total commercial paper
(cost $15,403,904)
15,403,904
------
- ------
- ------------------------------------------------------------
CORPORATE BONDS--0.3%
- ------------------------------------------------------------
Health Care Services
A2 365 American Home Products
Corp., Note
7.70%, 2/15/00
(cost $370,888)
372,614
------
- ------
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH OBLIGATIONS--
10.8%
$ 2,500(c) 7.50%, 12/1/99 $
2,568,750
5,500(c) 6.50%, 12/1/99
5,474,205
3,500(c) 7.00%, 12/1/99
3,548,125
2,000(c) 6.50%, 12/1/99
2,018,120
Government National
Mortgage Assoc.,
1,000(c) 8.00%, 12/15/99
1,041,870
------
- ------
Total U.S. government
agency mortgage
pass-through obligations
(cost $14,631,719)
14,651,070
------
- ------
- ------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--0.7%
United States Treasury
Bills,
1,000(b) Zero Coupon, 6/17/99
(cost $990,590)
990,632
------
- ------
- ------------------------------------------------------------
REPURCHASE AGREEMENT--20.3%
27,714 Joint Repurchase Agreement
Account
4.911%, 4/1/99
(cost $27,714,000; Note
5)
27,714,000
------
- ------
Total short-term
investments
(cost $59,111,101)
59,132,220
------
- ------
- ------------------------------------------------------------
Total Investments--111.9%
(cost $143,702,917; Note
4)
152,490,897
Liabilities in excess of
other
assets--(11.9%)
(16,220,503)
------
- ------
Net Assets--100%
$136,270,394
------
- ------
------
- ------
</TABLE>
- ---------------
(a) Non-income producing security.
(b) All or partial amount of security is segregated as
collateral for financial
futures transactions. Aggregate market value of $990,632
segregated at
3/31/99
(c) Mortgage dollar roll, see Note 1.
MTN--Medium Term Note.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current SAI contains a description of Moody's and
Standard & Poor's
ratings.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 9
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Statement of Assets and Liabilities (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
- --------------
<S>
<C>
Investments, at value (cost
$143,702,917)...............................................
................... $ 124,776,897
Repurchase
Agreement...................................................
.................................... 27,714,000
Receivable for investments
sold........................................................
.................... 14,740,578
Dividends and interest
receivable..................................................
........................ 517,775
Receivable for Fund shares
sold........................................................
.................... 314,518
Deferred
expenses....................................................
...................................... 2,326
- --------------
Total
assets......................................................
..................................... 168,066,094
- --------------
Liabilities
Bank
overdraft...................................................
..........................................
1,432,293
Payable for investments
purchased...................................................
....................... 29,447,674
Payable for Fund shares
reacquired..................................................
....................... 634,510
Due to broker-variation
margin......................................................
....................... 149,294
Management fee
payable.....................................................
................................ 74,311
Accrued
expenses....................................................
....................................... 50,166
Distribution fee
payable.....................................................
.............................. 7,452
- --------------
Total
liabilities.................................................
..................................... 31,795,700
- --------------
Net
Assets......................................................
........................................... $
136,270,394
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................... $ 10,318
Paid-in capital in excess of
par.........................................................
............... 115,548,090
- --------------
115,558,408
Undistributed net investment
income......................................................
............... 1,418,108
Accumulated net realized gain on
investments.................................................
........... 10,400,791
Net unrealized appreciation on
investments.................................................
............. 8,893,087
- --------------
Net assets, March 31,
1999........................................................
......................... $ 136,270,394
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($7,167,303 / 542,528 shares of common stock issued
and outstanding).................................
$13.21
Maximum sales charge (5% of offering
price)......................................................
....... .70
Maximum offering price to
public......................................................
.................. $13.91
Class B:
Net asset value, offering price and redemption price per
share
($7,021,744 / 532,644 shares of common stock issued
and outstanding).................................
$13.18
Class C:
Net asset value and redemption price per share
($664,620 / 50,415 shares of common stock issued and
outstanding)....................................
$13.18
Maximum sales charge (1% of offering
price)......................................................
....... .13
Maximum offering price to
public......................................................
.................. $13.31
Class Z:
Net asset value, offering price and redemption price per
share
($121,416,727 / 9,193,136 shares of common stock
issued and outstanding).............................
$13.21
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 10
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL ACTIVE BALANCED FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six
Months
Ended
Net Investment Income March 31,
1999
<S> <C>
Income
Interest.................................... $
2,108,844
Dividends (net of foreign withholding taxes
of $107).................................
467,512
----------
- ----
Total income...............................
2,576,356
----------
- ----
Expenses
Management fee..............................
469,560
Distribution fee--Class A...................
5,626
Distribution fee--Class B...................
22,891
Distribution fee--Class C...................
2,490
Transfer agent's fees and expenses..........
140,000
Registration fees...........................
64,000
Reports to shareholders.....................
62,000
Custodian's fees and expenses...............
50,000
Legal fees and expenses.....................
12,000
Audit fee and expenses......................
10,000
Directors' fees.............................
3,000
Miscellaneous...............................
1,028
----------
- ----
Total expenses.............................
842,595
----------
- ----
Net investment income..........................
1,733,761
----------
- ----
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain on:
Investment transactions.....................
4,514,816
Financial futures contracts.................
4,316,544
----------
- ----
8,831,360
Net change in unrealized appreciation (depreciation) on:
Investments.................................
12,929,959
Financial futures contracts.................
(609,128)
----------
- ----
12,320,831
Net gain on investments........................
21,152,191
----------
- ----
Net Increase in Net Assets
Resulting from Operations...................... $
22,885,952
----------
- ----
----------
- ----
</TABLE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL ACTIVE BALANCED FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) March 31,
September 30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income......... $ 1,733,761 $
5,391,746
Net realized gain on
investments................ 8,831,360
26,438,362
Net change in unrealized
appreciation (depreciation)
on investments............. 12,320,831
(28,216,192)
------------- --------
- -----
Net increase in net assets
resulting from
operations................. 22,885,952
3,613,916
------------- --------
- -----
Dividends and distributions (Note
1)
Dividends to shareholders from
net investment income
Class A.................... (74,318)
(24,889)
Class B.................... (52,406)
(4,933)
Class C.................... (4,693)
(273)
Class Z.................... (4,048,216)
(4,664,569)
------------- --------
- -----
(4,179,633)
(4,694,664)
------------- --------
- -----
Distributions to shareholders
from net realized gains
Class A.................... (438,657)
(82,174)
Class B.................... (480,842)
(24,906)
Class C.................... (43,068)
(1,378)
Class Z.................... (21,035,473)
(13,860,433)
------------- --------
- -----
(21,998,040)
(13,968,891)
------------- --------
- -----
Fund share transactions (net of
share conversion) (Note 6)
Net proceeds from shares
sold....................... 40,278,946
105,305,809
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions.......... 26,171,714
18,663,277
Cost of shares reacquired..... (95,266,412)
(100,421,933)
------------- --------
- -----
Net increase (decrease) in net
assets from Fund share
transactions............... (28,815,752)
23,547,153
------------- --------
- -----
Total increase (decrease)........ (32,107,473)
8,497,514
Net Assets
Beginning of period.............. 168,377,867
159,880,353
------------- --------
- -----
End of period(a)................. $ 136,270,394 $
168,377,867
------------- --------
- -----
------------- --------
- -----
- ---------------
(a) Includes undistributed net
investment income of......... $ 1,418,108 $
3,863,980
------------- --------
- -----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 11
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
- --------------------
The Prudential Active Balanced Fund (the 'Fund') is a
separately managed series
of The Prudential Investment Portfolios, Inc. (the
'Series'), formerly
Prudential Jennison Series Fund, Inc. (the 'Jennison Fund').
The Jennison Fund
was incorporated in Maryland on August 10, 1995 and is
registered under the
Investment Company Act of 1940 as a diversified, open-end,
management investment
company.
The Company had no operations until July 7, 1992 when 10,000
shares of
beneficial interest of the Company were sold for $100,000 to
Prudential
Institutional Fund Management, Inc. Investment operations of
the Portfolio
commenced on January 4, 1993
The Fund's investment objective is to seek income and long-
term growth of
capital by investing in a portfolio of equity, fixed-income
and money market
securities, which is actively managed to capitalize on
opportunities created by
perceived misvaluation.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Series in the preparation of its financial statements.
Securities Valuation: Securities listed on a securities
exchange (other than
options on securities and indices) are valued at the last
sales price on such
exchange or system 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 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 by the Manager, in consultation
with the Subadviser,
to be over-the-counter, are valued by an independent pricing
agent or principal
market maker. Convertible debt securities that are actively
traded in the
over-the-counter market, including listed securities for
which the primary
market is believed by the Manager and the Subadviser to be
over-the-counter, are
valued at the mean between the last reported bid and asked
prices provided by a
principal market maker. Options on securities and indices
traded 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 sales
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 market quotations are not
readily available,
other than private placements, are valued at a price
supplied by an independent
pricing agent which is, in the opinion of such pricing
agent, representative of
the market value of such securities as of the time of
determination of net asset
value or, using a methodology developed by an independent
pricing agent, which
is, in the judgement of the Manager and Subadviser, able to
produce prices which
are representative of market value.
Short-term securities which mature in more than 60 days, for
which market
quotations are readily available, are valued at current
market quotations as
provided by an independent pricing agent or principal market
maker. Short-term
securities which mature in 60 days or less are valued at
cost with interest
accrued or discount amortized to the date of maturity,
unless the Board of
Directors determines that such variation does not represent
fair value.
All securities are valued as of 4:15 p.m., New York time.
In connection with transactions in repurchase agreements, it
is the Fund's
policy that its custodian or designated subcustodians, under
triparty repurchase
agreements, as the case may be, take possession of the
underlying collateral
securities, the value of which exceeds the principal amount
of the repurchase
transaction, including accrued interest. To the extent that
any repurchase
transaction exceeds one business day, the value of the
collateral is
marked-to-market on a daily basis to ensure the adequacy of
the collateral. If
the seller defaults and the value of the collateral declines
or, if bankruptcy
proceedings are commenced with respect to the seller of the
security,
realization of the collateral by the Fund may be delayed or
limited.
Financial Futures Contracts: A financial futures contract is
an agreement to
purchase (long) or sell (short) an agreed amount of debt
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.
The Fund invests in financial futures contracts in order to
hedge their existing
portfolio securities or securities the Fund intends to
purchase against
fluctuations in value caused by changes in prevailing
interest rates or market
conditions. Should interest rates move unexpectedly, 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
- ------------------------------------------------------------
- --------------------
12
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
- --------------------
imperfect correlation in movements in the price of futures
contracts, interest
rates and the underlying hedged assets.
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 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 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.
Dividends and Distributions: Dividends and distributions of
the Fund are
declared in cash and automatically reinvested in additional
shares of the Fund.
The Fund will declare and distribute its net investment
income and net capital
gains, if any, at least annually. Dividends and
distributions are recorded on
the ex-dividend date.
Income distributions and capital gain distributions are
determined in accordance
with income tax regulations which may differ from generally
accepted accounting
principles.
Taxes: It is the Fund's policy to continue to meet the
requirements of the
Internal Revenue Code applicable to regulated investment
companies and to
distribute all of its taxable net investment income to its
shareholders.
Therefore, no federal income tax provision is required.
Withholding taxes on foreign dividends have been provided
for in accordance with
the Fund's understanding of the applicable country's tax
rules and rates.
Note 2. Agreements
The Fund has a management agreement with Prudential
Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has
responsibility for all
investment advisory services and supervises the subadviser's
performance of such
services. PIFM has entered into a subadvisory agreement with
The Prudential
Investment Corporation ('PIC'); PIC furnishes investment
advisory services in
connection with the management of the Fund. PIFM pays for
the service of PIC,
the compensation of officers of the Fund, occupancy and
certain clerical and
bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The management fee paid PIFM is computed daily and payable
monthly at an annual
rate of .65 of 1% of the Fund's average daily net assets.
The Fund has a distribution agreement with Prudential
Investmenmt Management
Services LLC ('PIMS'), which acts as the distributor of the
Class A, Class B,
Class C and Class Z shares. The Fund compensates PIMS for
distributing and
servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of
distribution (the 'Class A, B and C Plans'), regardless of
expenses actually
incurred. The distribution fees are accrued daily and
payable monthly. No
distribution or service fees were paid to PIMS as
distributor of the Class Z
shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensated
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, 1999.
PIMS has advised the Fund that it received approximately
$21,000 in front-end
sales charges resulting from sales of Class A shares and
after November 2, 1998
Class C shares during the six months ended March 31, 1999.
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, 1999, it
received approximately $49,900 and $30 in contingent
deferred sales charges
imposed upon certain redemptions by Class B and Class C
shareholders,
respectively.
PIC, PIFM and PIMS are indirect, wholly owned subsidiaries
of The Prudential
Insurance Company of America.
- ------------------------------------------------------------
- --------------------
13
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
- --------------------
As of March 11, 1999, the Fund, along with other affiliated
registered
investment companies (the 'Funds'), entered into a
syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment
under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of
.065 of 1% on the
unused portion of the credit facility, which is accrued and
paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9,
2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements are to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months
ended March 31, 1999,
the Fund incurred fees of approximately $134,600 for the
services of PMFS. As of
March 31, 1999, approximately $15,700 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 of the Fund,
other than short-term
investments, for the six months ended March 31, 1999 were
$143,583,192 and
$189,765,713, respectively, which includes purchases and
sales of U.S.
government obligations of $11,230,781 and $12,934,273,
respectively.
The average balance of dollar rolls outstanding during the
six months ended
March 31, 1999 was approximately $1,723,100. The amount of
dollar rolls
outstanding at March 31, 1999 was $14,686,016 (principal
$14,500,000), which was
8.7% of total assets.
The cost basis of investments for federal income tax
purposes as of March 31,
1999 was $143,805,156 and accordingly, net unrealized
depreciation of
investments for federal income tax purposes was $8,661,874
(gross unrealized
appreciation--$11,837,254, gross unrealized depreciation--
$3,175,380).
During the six months ended March 31, 1999, the Fund entered
into financial
futures contracts. Details of open contracts at March 31,
1999 are as follows:
<TABLE>
<CAPTION>
Value at
Value at Unrealized
Number of Expiration March
31, Trade Appreciation/
Contracts Type Date 1999
Date (Depreciation)
- ----------- ---------------- ------------ ---------
- -- ----------- --------------
<S> <C> <C> <C>
<C> <C>
Long Position:
4 S&P 500 June 99 $
5,173,200 $ 5,132,688 $ 40,512
59 U.S. T-Bond June 99
7,113,188 7,105,000 8,188
132 U.S. T-Bond June 99
14,709,750 14,653,344 56,406
- -------
$105,106
- -------
- -------
</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. Government or federal agency obligations. At March
31, 1999, the Fund
had a 5.0% undivided interest in repurchase agreements in
the joint account. The
undivided interest for the Fund represented $27,714,000 in
principal amount. As
of such date, each repurchase agreement in the joint account
and the value of
the collateral therefore was as follows:
Bear, Stearns & Co., Inc., 4.92%, in the principal amount of
$170,000,000,
repurchase price $170,023,233, due 4/1/99. The value of the
collateral including
accrued interest was $174,282,442.
Salomon Smith Barney, Inc., 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $174,947,170.
Morgan Stanley Dean Witter, 4.90%, in the principal amount
of $170,000,000,
repurchase price $170,023,139, due 4/1/99. The value of the
collateral including
accrued interest was $173,474,773.
Warburg Dillon Read LLC, 4.97%, in the principal amount of
$44,773,000,
repurchase price $44,779,181, due 4/1/99. The value of the
collateral including
accrued interest was $45,668,747.
- ------------------------------------------------------------
Note 6. Capital
The Fund offers Class A, Class B, Class C and Class Z
shares. Class A shares are
sold with a front-end sales charge of up to 5%. Class B
shares are sold with a
contingent deferred sales charge which declines from 5% to
zero depending on the
period of time the shares are held. Prior to November 2,
1998, Class C shares
were sold with a contingent deferred sales charge of 1%
during the first year.
Effective November 2, 1998, Class
- ------------------------------------------------------------
- --------------------
14
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited)
PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
- --------------------
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. A special exchange privilege is also available for
shareholders who
qualify to purchase Class A shares at net asset value. Class
Z shares are not
subject to any sales or redemption charge and are offered
exclusively for sale
to a limited group of investors.
There are 3 billion shares of $.001 par value common stock
authorized which are
divided into three Series, each of which offers four
classes, designated Class
A, Class B, Class C and Class Z, each of which consists of
250 million
authorized shares.
Transactions in shares of common stocks were as follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- ----------------------------------- ---------- --------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 400,034 $
5,264,099
Shares issued in reinvestment of
dividends and distributions...... 41,285
510,288
Shares reacquired.................. (141,180)
(1,879,038)
---------- --------
- ----
Net increase in shares outstanding
before conversion................ 300,139
3,895,349
Shares issued upon conversion
from Class B..................... 225
2,972
---------- --------
- ----
Net increase in shares
outstanding...................... 300,364 $
3,898,321
---------- --------
- ----
---------- --------
- ----
Year ended September 30, 1998:
Shares sold........................ 324,143 $
4,450,999
Shares issued in reinvestment of
dividends and distributions...... 8,312
107,053
Shares reacquired.................. (159,004)
(2,196,936)
---------- --------
- ----
Net increase in shares
outstanding...................... 173,451 $
2,361,116
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class B
- -----------------------------------
Six months ended March 31, 1999:
Shares sold........................ 285,173 $
3,747,938
Shares issued in reinvestment of
dividends and distributions...... 41,784
516,862
Shares reacquired.................. (23,864)
(309,791)
---------- --------
- ----
Net increase in shares outstanding
before conversion................ 303,093
3,955,009
Shares reacquired upon conversion
into
Class A.......................... (225)
(2,972)
---------- --------
- ----
Net increase in shares
outstanding...................... 302,868 $
3,952,037
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class B Shares
Amount
- ----------------------------------- ---------- --------
- ----
<S> <C> <C>
Year ended September 30, 1998:
Shares sold........................ 224,444 $
3,091,278
Shares issued in reinvestment of
dividends and distributions...... 2,309
29,757
Shares reacquired.................. (11,806)
(161,521)
---------- --------
- ----
Net increase in shares
outstanding...................... 214,947 $
2,959,514
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class C
- -----------------------------------
Six months ended March 31, 1999:
Shares sold........................ 48,683 $
628,350
Shares issued in reinvestment of
dividends and distributions...... 3,860
47,750
Shares reacquired.................. (23,598)
(306,619)
---------- --------
- ----
Net increase in shares
outstanding...................... 28,945 $
369,481
---------- --------
- ----
---------- --------
- ----
Year ended September 30, 1998:
Shares sold........................ 22,836 $
314,699
Shares issued in reinvestment of
dividends and distributions...... 127
1,642
Shares reacquired.................. (1,859)
(25,489)
---------- --------
- ----
Net increase in shares
outstanding...................... 21,104 $
290,852
---------- --------
- ----
---------- --------
- ----
<CAPTION>
Class Z
- -----------------------------------
Six months ended March 31, 1999:
Shares sold........................ 2,338,927 $
30,638,559
Shares issued in reinvestment of
dividends and distributions...... 2,032,131
25,096,814
Shares reacquired.................. (7,331,804)
(92,770,964)
---------- --------
- ----
Net decrease in shares
outstanding...................... (2,960,746)
$(37,035,591)
---------- --------
- ----
---------- --------
- ----
Year ended September 30, 1998:
Shares sold........................ 6,947,226 $
97,448,833
Shares issued in reinvestment of
dividends and distributions...... 1,437,147
18,524,825
Shares reacquired.................. (7,211,135)
(98,037,987)
---------- --------
- ----
Net increase in shares
outstanding...................... 1,173,238 $
17,935,671
---------- --------
- ----
---------- --------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
15
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Financial Highlights (Unaudited) PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A Class B
----------------------
- ------------------------ ----------------------------
November 7,
Six Months
1996(a) Six Months
Ended Year
Ended Through Ended Year Ended
March 31,
September 30, September 30, March 31, September
30,
1999
1998 1997 1999 1998
---------- -------
- ------ ------------- ---------- -------------
<S> <C> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $13.29 $
14.41 $ 13.40 $13.22 $ 14.34
----- --
- --- ----- ----- -----
Income from investment operations:
Net investment income............. .17
.44 .21(b) .10 .27
Net realized and unrealized gain
(loss) on investment
transactions................... 1.79
(.20) 1.97 1.79 (.14)
----- --
- --- ----- ----- -----
Total from investment
operations.................. 1.96
.24 2.18 1.89 .13
----- --
- --- ----- ----- -----
Less distributions:
Dividends from net investment
income......................... (.30)
(.32) (.39) (.19) (.21)
Distributions from net realized
gains.......................... (1.74)
(1.04) (.78) (1.74) (1.04)
----- --
- --- ----- ----- -----
Total distributions............ (2.04)
(1.36) (1.17) (1.93) (1.25)
----- --
- --- ----- ----- -----
Net asset value, end of period.... $13.21 $
13.29 $ 14.41 $13.18 $ 13.22
----- --
- --- ----- ----- -----
----- --
- --- ----- ----- -----
TOTAL RETURN(d)................... 15.72%
1.93% 17.48% 15.21% 1.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $7,167 $
3,218 $ 990 $7,022 $ 3,038
Average net assets (000).......... $4,513 $
2,090 $ 100 $4,591 $ 1,285
Ratios to average net assets:
Expenses, including
distribution fees........... 1.37%(c)
1.28% 1.31%(c) 2.12%(c) 2.03%
Expenses, excluding
distribution fees........... 1.12%(c)
1.03% 1.06%(c) 1.12%(c) 1.03%
Net investment income.......... 2.19%(c)
2.72% 2.69%(c) 1.43%(c) 1.95%
Portfolio turnover rate........ 119%
256% 50% 119% 256%
<CAPTION>
November 7,
1996(a)
Through
September 30,
1997
-------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 13.40
-----
Income from investment operations:
Net investment income............. .19(b)
Net realized and unrealized gain
(loss) on investment
transactions................... 1.92
-----
Total from investment
operations.................. 2.11
-----
Less distributions:
Dividends from net investment
income......................... (.39)
Distributions from net realized
gains.......................... (.78)
-----
Total distributions............ (1.17)
-----
Net asset value, end of period.... $ 14.34
-----
-----
TOTAL RETURN(d)................... 16.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $ 213
Average net assets (000).......... $ 71
Ratios to average net assets:
Expenses, including
distribution fees........... 2.06%(c)
Expenses, excluding
distribution fees........... 1.06%(c)
Net investment income.......... 1.94%(c)
Portfolio turnover rate........ 50%
</TABLE>
- ---------------
(a) Commencement of offering of Class A and B shares.
(b) Calculated based upon weighted average shares
outstanding during the year.
(c) Annualized.
(d) Total return does not consider the effects of sales
loads. Total return is
calculated assuming a purchase of shares on the first
day and a sale on the
last day of each period reported and includes
reinvestment of dividends and
distributions. Total return for periods of less than a
full year are not
annualized.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 16
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Financial Highlights (Unaudited) PRUDENTIAL ACTIVE
BALANCED FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class C Class Z
----------------------
- ------------------------ -------------------------------
- -----
November 7,
Six Months
1996(e) Six Months Year Ended September
Ended Year
Ended Through Ended 30,
March 31,
September 30, September 30, March 31, ---------
- ------------
1999
1998 1997 1999 1998
1997
---------- -------
- ------ ------------- ---------- -------- ---
- -----
<S> <C> <C>
<C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $13.22 $
14.34 $ 13.40 $ 13.32 $ 14.45 $
13.01
----- --
- --- ----- ---------- -------- ---
- -----
Income from investment operations:
Net investment income............. .11
.48 .13(b) .17 .38
.39(b)
Net realized and unrealized gain
(loss) on investment
transactions................... 1.78
(.35) 1.98 1.80 (.12)
2.22
----- --
- --- ----- ---------- -------- ---
- -----
Total from investment
operations.................. 1.89
.13 2.11 1.97 .26
2.61
----- --
- --- ----- ---------- -------- ---
- -----
Less distributions:
Dividends from net investment
income......................... (.19)
(.21) (.39) (.34) (.35)
(.39)
Distributions from net realized
gains.......................... (1.74)
(1.04) (.78) (1.74) (1.04)
(.78)
----- --
- --- ----- ---------- -------- ---
- -----
Total distributions............ (1.93)
(1.25) (1.17) (2.08) (1.39)
(1.17)
----- --
- --- ----- ---------- -------- ---
- -----
Net asset value, end of period.... $13.18 $
13.22 $ 14.34 $ 13.21 $ 13.32 $
14.45
----- --
- --- ----- ---------- -------- ---
- -----
----- --
- --- ----- ---------- -------- ---
- -----
TOTAL RETURN(d)................... 15.21%
1.10% 16.91% 15.80% 2.12%
21.34%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $ 664 $
284 $ 5 $121,417 $161,838
$158,672
Average net assets (000).......... $ 499 $
118 $ 1 $135,274 $177,443
$154,199
Ratios to average net assets:
Expenses, including
distribution fees........... 2.12%(c)
2.03% 2.06%(c) 1.12%(c) 1.03%
1.06%
Expenses, excluding
distribution fees........... 1.12%(c)
1.03% 1.06%(c) 1.12%(c) 1.03%
1.06%
Net investment income.......... 1.39%(c)
2.04% 1.94%(c) 2.44%(c) 2.99%
2.94%
Portfolio turnover rate........ 119%
256% 50% 119% 256%
50%
<CAPTION>
1996 1995
1994
-------- --------
- -------
<S> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 12.46 $ 10.92
$ 11.05
-------- --------
- -------
Income from investment operations:
Net investment income............. .29(a) .33(a)
.24(a)
Net realized and unrealized gain
(loss) on investment
transactions................... .81 1.54
(.12)
-------- --------
- -------
Total from investment
operations.................. 1.10 1.87
.12
-------- --------
- -------
Less distributions:
Dividends from net investment
income......................... (.37) (.29)
(.14)
Distributions from net realized
gains.......................... (.18) (.04)
(.11)
-------- --------
- -------
Total distributions............ (.55) (.33)
(.25)
-------- --------
- -------
Net asset value, end of period.... $ 13.01 $ 12.46
$ 10.92
-------- --------
- -------
-------- --------
- -------
TOTAL RETURN(d)................... 9.11% 17.66%
1.07%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $153,588 $133,352
$81,176
Average net assets (000).......... $142,026 $104,821
$58,992
Ratios to average net assets:
Expenses, including
distribution fees........... 1.00%(a)
1.00%(a) 1.00(a)
Expenses, excluding
distribution fees........... 1.00%(a)
1.00%(a) 1.00(a)
Net investment income.......... 3.09%(a)
3.53%(a) 3.06(a)
Portfolio turnover rate........ 51% 30%
40%
</TABLE>
- ---------------
(a) Net of expense subsidy.
(b) Calculated based upon weighted average shares
outstanding during the year.
(c) Annualized.
(d) Total return does not consider the effects of sales
loads. 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 where
applicable.
(e) Commencement of offering of Class C shares.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 17
<PAGE>
Getting The Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they
don't read annual
and semi-annual reports. It's quite understandable. These
annual and semi-
annual reports are prepared to comply with Federal
regulations. They 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, in hopes
you'll find it
profitable to spend a few minutes familiarizing yourself
with your investment.
Here's what you'll find in the report:
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 "At A Glance" page where we compare the Fund
and the comparable
average calculated by Lipper Analytical Services, 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 generally smoothes out returns
and gives you an
idea 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. And keep in mind that past
performance is not
indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports
onsuccessful--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 look 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 Portfolio Manager's Report that doesn't
appear in this
listing because it was sold before the close of the
reporting period.
<PAGE>
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.
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
also 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 which we report annually about how much
of your total
return is taxable. Should you have any questions, you may
want to consult
a tax advisor.
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 broadly
based reference point commonly used by investors to measure
how well they are
doing. A definition of the selected index is also provided.
Investors
generally cannot invest directly in an index.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive
financial advice
through a Prudential Securities financial advisor or
Prudential/Pruco
Securities registered representative. Your advisor or
representative can
provide you with the following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you match the
reward you seek with the risk you can tolerate. And risk can
be difficult to
gauge--sometimes even the simplest investments bear
surprising risks. The
educated investor knows that markets seldom move in just one
direction--there
are times when a market sector or asset class will lose
value or provide
little in the way of total return. Managing your own
expectations is easier
with help from someone who understands the markets and who
knows you!
Keeping Up With The Joneses
A financial advisor or registered representative can help
you wade through
the numerous mutual funds available to find the ones that
fit your own
individual investment profile and risk tolerance. While the
newspapers and
popular magazines are full of advice about investing, they
are aimed at
generic groups of people or representative individuals, not
at you personally.
Your financial advisor or registered representative will
review your
investment objectives with you. This means you can make
financial decisions
based on the assets and liabilities in your current
portfolio and your risk
tolerance--not just based on the current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are among the
most common investor mistakes. But sometimes it's difficult
to hold on to an
investment when it's losing value every month. Your
financial advisor or
registered representative can answer questions when you're
confused or
worried about your investment, and remind you that you're
investing for the
long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Trustees
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the
Fund's
portfolio holdings are for the period covered by this
report, and are
subject to change thereafter.
The accompanying financial statements as of March 31, 1999,
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective investors
unless preceded or accompanied by a current prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
74437E883
74437E875 MF185E2
74437E867
74437E859
(ICON)
Prudential
Jennison
Growth
Fund
SEMI
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential Jennison Growth Fund
A Series of The Prudential Investment Portfolios, Inc.
Performance At A Glance
The six months ended March 31, 1999 included a stock market
rebound from the steep drop in the summer of 1998 that had
been
triggered by concerns about the global economy. The rebound
was
concentrated in stocks of a small number of growth companies
that
had suffered particularly in the summer panic. Our portfolio
included several of these, so we finished our reporting
period
a substantial 15 percentage points ahead of the very high
Lipper
six-month average. It was an extraordinary return for a half
year.
<TABLE>
Cumulative Total Returns1 As of 3/31/99
<CAPTION>
Six One Five Since
Months Year Years Inception2
<S> <C> <C> <C> <C>
Class A 43.72% 32.78% N/A 127.87%
Class B 43.24 31.84 N/A 122.25
Class C 43.24 31.84 N/A 122.25
Class Z 44.01 33.19 224.64% 284.07
Lipper Growth
Fund Avg.3 28.23 13.56 158.00 ***
</TABLE>
<TABLE>
Average Annual Total Returns1 As of
3/31/99
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 26.14% N/A 25.43%
Class B 26.84 N/A 26.07
Class C 29.53 N/A 26.03
Class Z 33.19 26.56% 23.41
</TABLE>
Past performance is not indicative of future results.
Principal and
investment return will fluctuate so that an investor's
shares, when
redeemed, may be worth more or less than their original
cost.
1Source: Prudential Investments Fund Management 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 C shares bought before November 2,
1998, have a 1%
CDSC if sold within one year. Class Z shares are not
subject to a
sales charge or distribution fee.
2 Inception dates: Class A, B, and C, 11/2/95. Class Z,
4/15/96. On
9/20/96, The Prudential Institutional Fund - Growth Stock
Fund merged
into the Prudential Jennison Growth Fund, Class Z shares.
Performance
prior to 9/20/96 is for the Growth Stock Fund, which had an
inception
date of 11/5/92.
3 Lipper average returns are for all funds in each share
class for
the six-month, one-, and five-year periods in the Growth
Fund category.
*** Lipper Since Inception returns are 99.56% for Class A,
B, and C;
and 196.49% for Class Z based on all funds in each share
class.
How Investments Compared
(As of 3/31/99)
(GRAPH)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's past
performance should never be used to predict future results.
The risks to
each of the investments listed above are different-we
provide
12-month total returns for several Lipper mutual fund
categories to show you
that reaching for higher returns means tolerating more risk.
The greater the
risk, the larger the potential reward or loss. In addition,
we've included
historical 20-year average annual returns. These returns
assume the
reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received
higher historical total returns from stocks than from most
other
investments. Smaller capitalization stocks offer
greater potential for long-term growth, but may be more
volatile than larger
capitalization stocks.
General Bond Funds provide more income than stock funds,
which can help smooth
out their total returns year by year. But their prices still
fluctuate
(sometimes significantly), and their returns have been
historically lower
than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state agencies and/or municipalities. This
investment
provides income that is usually exempt from federal and
state income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share value;
they don't fluctuate much in price but, historically, their
returns
have been generally among the lowest of the major investment
categories.
<PAGE>
Portfolio Managers' Report Spiros Segalas,
James Kanry,
& Kathleen
McCarragher--
Fund Managers
Investment Goals and Style
The Prudential Jennison Growth Fund seeks to achieve long-
term
growth of capital primarily through investment in stocks
of medium and large companies (generally those with a total
market value of at least $1billion) that we believe have
above-average
prospects for growth. The Fund may also invest in stocks of
foreign
companies, investment-grade bonds, and securities issued or
backed by the U.S. government and its agencies, such as
mortgage-backed
securities. There can be no assurance that the Fund will
achieve
its investment objective.
David Poiesz resigned, and a new team of portfolio managers
assumed control of
the Fund on February 26. They are Spiros Segalas, one of
Jennison's
founders with 39 years of investment experience, James Kanry
and Kathleen McCarragher. Jennison Associates, founded in
1969, is
a Prudential subsidiary (since 1985) specializing in
growth stock investing. The firm's growth equity portfolio
managers meet regularly with the team of research analysts a
nd jointly determine target positions in many growth stocks.
These targets
constrain the variation among the different Jennison-managed
portfolios.
Consequently, we expect little impact on the Fund or its
performance from our
recent change of portfolio managers.
Performance Review
Financials bounced back
The Prudential Jennison Growth Fund typically limits its
holdings to about
60 companies. (We had 61 on March 31, 1999.) Our portfolio
tends to be more
volatile than the overall market. When price movements of
holdings are very
large, as they were for Charles Schwab (up 266%), Morgan
Stanley Dean Witter
(up 133%), and Chase Manhattan (up 91%), the impact can be
dramatic. These
three stocks alone accounted for 7% of our as
sets on March 31, 1999.During the financial crises of the
summer of 1998,
financial stocks were hit hard by investors who feared
exposure to emerging
markets, to other financial institutions that were
themselves vulnerable to
emerging markets, or to an economic slowdown. As confidence
in the global
economy returned, financials recovered from these depressed
levels. Companies that profit from greater stock market
activity, such
as Charles Schwab, also did well as the pace of investment
recovered. Financial
services stocks make up about 19% of our portfolio.
Our technology focus paid off
About a third of our holdings are in technology stocks,
which we believe are
driving the current cycle of economic growth.
Telecommunications and Internet-
related stocks performed particularly well during our
reporting period. Our
largest holding is MCI WorldCom (up 81%), a long distance
and cable
service company. We also chalked up large returns from
Microsoft (63%),
Cisco Systems (77%), Texas Instruments (88%), and
Qwest Communications International (130%). CBS, although a
media company, also
benefited from the Internet craze because Internet companies
have
been advertising heavily on radio, television, and
billboards.
But the sector is volatile
We bought 3Com (down 50%), which makes computer networking
equipment,
early in our reporting period, then reduced our position as
we suspected
that their earnings would not meet our original
expectations. We still
held some when they announced an earnings shortfall;
Portfolio Composition
Expressed as a percentage of net assets
as of 3/31/99
Technology 32%
Consumer Staples 19
Financial Services 19
Healthcare 14
Intermediate Goods & Services 12
Capital Spending 3
Cash & Equivalents 1
<PAGE>
the subsequent sharp decline in its stock price reduced our
return.
A few other technology stocks disappointed us. It is
important to realize
that high potential returns in the technology sector are
normally accompanied
by widely varying returns. We benefit not from being able to
avoid all
losing stocks, but from the frequency of winners, the size
of their gains, and our ability to limit losses.
Looking Ahead
Large-cap growth stocks
still in favor
Recently, cyclical stocks have outperformed growth stocks,
due in part
to profit taking after six months of great performance by
growth stocks,
and in part to the notion that world growth is accelerating,
which would
lead to inflationary pressures. Bond yields have risen, also
reflecting
these concerns. We believe that stronger, non-inflationary
growth will gradually extend to other areas of the globe. At
the
same time, we think the current rate of real growth in the
United States will
slow modestly. We think earnings for the S&P 500 will rise
10% this year and
that our portfolio will grow at two to three times that
rate. Furthermore, any
pressure on growth stocks should be short term: we are still
in a
disinflationary environment. Manufacturers have excess
capacity,
operating rates are not high, raw materials are in excess
supply, and
technology continues to reduce costs and increase productive
capacity. In short, producers lack pricing power. This is an
environment that favors large-cap growth companies with good
earnings
prospects.
Five Largest Holdings
Expressed as a percentage of net assets
as of 3/31/99
MCI WorldCom, Inc. 4.4%
Telecommunications
Microsoft Corp. 3.9
EDP Software & Services
Citigroup, Inc. 3.4
Banks & Financial Services
Cisco Systems, Inc. 3.2
Networking
General Electric Co. 3.0
Diversified Operations
1
<PAGE>
A Message to Our Shareholders May
19, 1999
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by the
stocks of a
handful of very large companies. These stocks were getting
more and more
expensive-out of proportion to their earnings expectations.
As a result, there was a substantial disparity in
value between large and small companies, and between growth
and value
stocks. In recent months, however, that gap has started to
narrow amid
news of strong economic growth.
Our current economic environment has prompted many investors
to turn to value
stocks that typically fare better in a growing economy, and
have been
selling at a significant discount to the market.
Many sectors of the bond market have also begun to rebound
from last
year's global financial crisis. Furthermore, while bonds
have not
generated higher returns than stocks in recent years, they
have
demonstrated that they hold up better during
market downturns. That's a thought to keep in mind going
forward.
Diversification is critical
History shows that the markets generally bring prices in
line with earnings
performance, sooner or later. It also shows that two
investment styles-value
and growth-typically alternate in periods of superior
performance.
What does this suggest? Instead of chasing popular market
winners, investors
should have a well-diversified asset allocation strategy in
place and keep
to it. It is also a good practice to rebalance your
holdings,
when necessary, to keep your asset allocation consistent
with your
long-term objectives and risk tolerance. A properly
diversified
portfolio of value-and growth-oriented equity funds, bond
funds,
and money market funds could help you weather inevitable
market
turbulence and receive more consistent returns over
time. Prudential offers a wide range of mutual funds to
help our shareholders diversify. We have also designed
several balanced
and diversified funds to allow one-decision diversification
.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
2
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL JENNISON
GROWTH FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--98.3%
COMMON STOCKS--98.3%
- ------------------------------------------------------------
Banks & Financial Services--14.2%
1,207,300 Associates First Capital Corp. $
54,328,500
1,476,200 Chase Manhattan Corp.
120,033,512
2,124,750 Citigroup, Inc.
135,718,406
2,420,975 MBNA Corp.
57,800,778
907,490 Morgan Stanley Dean Witter
90,692,282
653,950 Schwab (Charles) Corp.
62,860,944
1,146,500 Washington Mutual, Inc.
46,863,188
-----------
- ---
568,297,610
- ------------------------------------------------------------
Business Services--3.4%
900,500 Omnicom Group, Inc.
71,983,719
1,171,500 Xerox Corp.
62,528,812
-----------
- ---
134,512,531
- ------------------------------------------------------------
Computer Systems/Peripherals--5.9%
1,485,000 Dell Computer Corp.(a)
60,699,375
160,100 EMC Corp.(a)
20,452,775
825,400 Hewlett-Packard Co.
55,972,437
565,900 International Business Machines
Corp.
100,305,775
-----------
- ---
237,430,362
- ------------------------------------------------------------
Diversified Operations--3.0%
1,090,500 General Electric Co.
120,636,563
- ------------------------------------------------------------
EDP Software & Services--8.9%
219,100 America Online, Inc.
31,988,600
1,422,800 Cadence Design Systems, Inc.(a)
36,637,100
501,700 Intuit, Inc.(a)
51,047,975
1,732,600 Microsoft Corp.(a)
155,284,275
1,711,750 Oracle Systems Corp.(a)
45,147,406
1,310,000 Rational Software Corp.(a)
35,124,375
-----------
- ---
355,229,731
Electronic Components--6.1%
666,800 Altera Corp. $
39,674,600
844,300 Intel Corp.
100,577,237
1,055,200 Texas Instruments, Inc.
104,728,600
-----------
- ---
244,980,437
- ------------------------------------------------------------
Health Care Services--1.0%
598,868 Mckesson Hboc, Inc.
39,525,288
- ------------------------------------------------------------
Hotels--0.8%
891,100 Promus Hotel Corp.(a)
32,413,763
- ------------------------------------------------------------
Household & Personal Care Products--1.9%
421,600 Estee Lauder Co., Inc.
39,841,200
642,500 Gillette Co.
38,188,594
-----------
- ---
78,029,794
- ------------------------------------------------------------
Industrial Technology/Instruments--4.1%
1,264,200 Applied Materials, Inc.(a)
77,985,337
788,400 KLA Tencor Corp.(a)
38,286,675
1,070,200 Symbol Technologies, Inc.
48,159,000
-----------
- ---
164,431,012
- ------------------------------------------------------------
Insurance--4.4%
1,703,400 ACE, Ltd.
53,124,787
675,700 American International Group,
Inc.
81,506,312
1,052,666 Mutual Risk Management, Ltd.
40,264,475
-----------
- ---
174,895,574
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 3
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as of March 31, 1999 (Unaudited)
PRUDENTIAL JENNISON
GROWTH FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------
Media--5.7%
2,851,900 CBS Corp. $
116,749,656
1,195,800 Clear Channel Communications,
Inc.(a)
80,193,338
1,253,600 Infinity Broadcasting Corp.
32,280,200
-----------
- ---
229,223,194
- ------------------------------------------------------------
Networking--4.5%
326,000 3Com Corp.(a)
7,599,875
246,400 Ascend Communications, Inc.(a)
20,620,600
1,174,450 Cisco Systems, Inc.(a)
128,675,678
326,400 Equant N V (ADR) (Netherlands)
24,561,600
-----------
- ---
181,457,753
- ------------------------------------------------------------
Pharmaceuticals--12.5%
1,335,500 American Home Products Corp.
87,141,375
648,900 Eli Lilly & Co.
55,075,387
918,100 Merck & Co., Inc.
73,620,144
496,800 Pfizer, Inc.
68,931,000
645,300 Pharmacia & Upjohn, Inc.
40,250,587
1,718,400 Schering Plough Corp.
95,049,000
1,214,500 Warner-Lambert Co.
80,384,719
-----------
- ---
500,425,212
- ------------------------------------------------------------
Restaurants--2.1%
1,900,400 McDonald's Corp.
86,111,875
- ------------------------------------------------------------
Retail--9.7%
481,712 Abercrombie & Fitch Co.(a)
44,317,504
742,500 CVS Corp.
35,268,750
923,025 Gap, Inc.
62,131,120
1,498,300 Home Depot, Inc.
93,269,175
1,010,100 Kohl's Corp.(a)
71,590,838
1,792,250 Staples, Inc.(a)
58,920,219
240,400 Wal-Mart Stores, Inc.
22,161,875
-----------
- ---
387,659,481
- ------------------------------------------------------------
Telecommunications--8.3%
707,100 AirTouch Communications, Inc.(a)
68,323,538
315,000 Level 3 Communications, Inc.
22,935,938
1,998,600 MCI WorldCom, Inc. $
177,001,012
916,200 Qwest Communications
International, Inc.(a)
66,052,294
-----------
- ---
334,312,782
- ------------------------------------------------------------
Telecommunications Equipment--1.8%
330,800 Nokia Corp. (ADR)(Finland)
51,522,100
229,600 Tellabs, Inc.(a)
22,443,400
-----------
- ---
73,965,500
-----------
- ---
Total long-term investments
(cost $2,742,217,637)
3,943,565,462
-----------
- ---
<CAPTION>
Principal
Moody's Amount
Rating (000)
SHORT-TERM INVESTMENTS--1.8%
Commercial Paper--1.1%
P-1 $ 43,787 Ford Motor Credit Co.,
4.71%, 4/1/99
(cost $43,787,000)
43,787,000
- ------------------------------------------------------------
U.S. Government Securities--0.7%
30,000 United States Treasury
Bills,
4.53%, 4/1/99
(cost $29,988,659)
29,988,659
-----
- ---------
Total short-term
investments
(cost $73,775,659)
73,775,659
-----
- ---------
- ------------------------------------------------------------
Total Investments--100.1%
(cost $2,815,993,296;
Note 4)
4,017,341,121
Liabilities in excess of
other assets--(0.1%)
(5,477,341)
-----
- ---------
Net Assets--100%
$4,011,863,780
-----
- ---------
-----
- ---------
</TABLE>
- ---------------
(a) Non-income producing security.
ADR--American Depository Receipt.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Statement of Assets and Liabilities (Unaudited)
PRUDENTIAL JENNISON
GROWTH FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
- --------------
<S>
<C>
Investments, at value (cost
$2,815,993,296).............................................
................... $4,017,341,121
Cash........................................................
...............................................
182,998
Receivable for investments
sold........................................................
.................... 27,285,109
Receivable for Series shares
sold........................................................
.................. 23,180,710
Dividends and interest
receivable..................................................
........................ 1,898,258
Deferred expenses and other
assets......................................................
................... 83,386
- --------------
Total
assets......................................................
...................................... 4,069,971,582
- --------------
Liabilities
Payable for investments
purchased...................................................
....................... 39,665,451
Payable for Series shares
reacquired..................................................
..................... 14,643,620
Management fee
payable.....................................................
................................ 1,958,784
Distribution fees
payable.....................................................
............................. 1,355,956
Accrued expenses and other
liabilities.................................................
.................... 430,219
Withholding taxes
payable.....................................................
............................. 53,772
- --------------
Total
liabilities.................................................
...................................... 58,107,802
- --------------
Net
Assets......................................................
...........................................
$4,011,863,780
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................... $ 201,120
Paid-in capital in excess of
par.........................................................
............... 2,769,659,001
- --------------
2,769,860,121
Net investment
loss........................................................
............................. (8,486,823 )
Accumulated net realized gain on
investments.................................................
........... 49,153,998
Net unrealized appreciation on
investments.................................................
............. 1,201,336,484
- --------------
Net assets, March 31,
1999........................................................
......................... $4,011,863,780
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($815,283,089 / 40,592,430 shares of common stock
issued and outstanding)............................
$20.08
Maximum sales charge (5% of offering
price)......................................................
....... 1.06
- --------------
Maximum offering price to
public......................................................
.................. $21.14
- --------------
- --------------
Class B:
Net asset value, offering price and redemption price per
share
($1,375,387,671 / 70,391,161 shares of common stock
issued and outstanding)..........................
$19.54
- --------------
- --------------
Class C:
Net asset value and redemption price per share
($106,747,608 / 5,462,946 shares of common stock
issued and outstanding).............................
$19.54
Sales charge (1% of offering
price)......................................................
............... .20
- --------------
Offering price to
public......................................................
.......................... $19.74
- --------------
- --------------
Class Z:
Net asset value, offering price and redemption price per
share
($1,714,445,412 / 84,673,116 shares of common stock
issued and outstanding)..........................
$20.25
- --------------
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended
Net Investment Income (Loss) March 31,
1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $55,228)..................... $ 8,198,234
Interest................................. 2,203,505
-------------
- -
Total income.......................... 10,401,739
-------------
- -
Expenses
Management fee........................... 9,063,083
Distribution fee--Class A................ 774,535
Distribution fee--Class B................ 4,929,603
Distribution fee--Class C................ 338,895
Transfer agent's fees and expenses....... 3,060,000
Registration fees........................ 275,000
Reports to shareholders.................. 273,000
Custodian's fees and expenses............ 77,000
Legal fees and expenses.................. 28,000
Insurance expense........................ 26,000
Amortization of deferred organization
expenses.............................. 18,932
Audit fee and expenses................... 10,000
Directors' fees and expenses............. 3,750
Miscellaneous............................ 10,764
-------------
- -
Total expenses........................ 18,888,562
-------------
- -
Net investment loss......................... (8,486,823
)
-------------
- -
Realized and Unrealized Gain
on Investments
Net realized gain on investment
transactions............................. 33,763,341
Net change in unrealized appreciation on
investments.............................. 1,003,132,691
-------------
- -
Net gain on investments..................... 1,036,896,032
-------------
- -
Net Increase in Net Assets
Resulting from Operations...................
$1,028,409,209
-------------
- -
-------------
- -
</TABLE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) March 31, September
30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment loss......... $ (8,486,823) $
(6,754,609)
Net realized gain on
investments.............. 33,763,341
131,020,013
Net change in unrealized
appreciation of
investments.............. 1,003,132,691
(190,394,651)
-------------- ---------
- -----
Net increase (decrease) in
net assets resulting from
operations............... 1,028,409,209
(66,129,247)
-------------- ---------
- -----
Distributions from net realized
capital gains (Note 1)
Class A..................... (17,349,524)
(12,677,688)
Class B..................... (27,545,469)
(37,861,226)
Class C..................... (1,752,623)
(2,330,817)
Class Z..................... (38,052,986)
(55,817,957)
-------------- ---------
- -----
(84,700,602)
(108,687,688)
-------------- ---------
- -----
Series share transactions (net
of conversion) (Note 5)
Net proceeds from shares
sold..................... 1,414,992,614
1,822,040,223
Net asset value of shares
issued in reinvestment of
distributions............ 83,061,464
106,812,422
Cost of shares reacquired... (652,386,435)
(730,978,040)
-------------- ---------
- -----
Net increase in net assets
from Series share
transactions............. 845,667,643
1,197,874,605
-------------- ---------
- -----
Total increase................. 1,789,376,250
1,023,057,670
Net Assets
Beginning of period............ 2,222,487,530
1,199,429,860
-------------- ---------
- -----
End of period.................. $4,011,863,780
$2,222,487,530
-------------- ---------
- -----
-------------- ---------
- -----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited) PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
Prudential Jennison Growth Fund (the 'Series') is a
separately managed series of
The Prudential Investment Portfolios, Inc. (the 'Fund'). The
Fund was
incorporated in Maryland on August 10, 1995 and is
registered under the
Investment Company Act of 1940 as a diversified, open-end
management investment
company. The Series had no significant operations other than
the issuance of
3,334 shares of Class A and 3,333 shares of Class B and
Class C common stock for
$100,000 on September 13, 1995 to Prudential Investments
Fund Management LLC
('PIFM'). Investment operations commenced on November 2,
1995.
The Series' investment objective is to achieve long-term
growth of capital. It
invests primarily in equity securities (common stock,
preferred stock and
securities convertible into common stock) of established
companies with
above-average growth prospects.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Series in the preparation of its financial statements.
Securities Valuation: Securities listed on a securities
exchange (other than
options on securities and indices) are valued at the last
sales price on such
exchange or system 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 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 by the Manager, in consultation
with the Subadviser,
to be over-the-counter, are valued by an independent pricing
agent or principal
market maker. Convertible debt securities that are actively
traded in the
over-the-counter market, including listed securities for
which the primary
market is believed by the Manager and the Subadviser to be
over-the-counter, are
valued at the mean between the last reported bid and asked
prices provided by a
principal market maker. Options on securities and indices
traded 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 sales
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 market quotations are not
readily available,
other than private placements, are valued at a price
supplied by an independent
pricing agent, which is, in the opinion of such pricing
agent, representative of
the market value of such securities as of the time of
determination of net asset
value, or using a methodology developed by an independent
pricing agent, which
is, in the judgment of the Manager and the Subadviser, able
to produce prices
which are representative of market value.
Short-term securities which mature in more than 60 days, for
which market
quotations are readily available, are valued at current
market quotations as
provided by an independent pricing agent or principal market
maker. Short-term
securities which mature in 60 days or less are valued at
cost with interest
accrued or discount amortizied to the date of maturity,
unless the Board of
Directors determines that such valuation does not represent
fair value.
All securities are valued as of 4:15 p.m., New York time.
Securities Transactions and Net Investment Income:
Securities transactions are
recorded on the trade date. Realized gains or losses on
sales of securities are
calculated on the identified cost basis. Dividend income is
recorded on the
ex-dividend date; interest income is recorded on the accrual
basis and is net of
discount accretion and premium amortization. Expenses are
recorded on the
accrual basis which may require the use of certain estimates
by management.
Net investment income (loss), other than distribution fees,
and realized and
unrealized 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.
Dividends and Distributions: The Series expects to pay
dividends of net
investment income, if any, semi-annually and to make
distributions of any net
capital gains 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 Series' policy to continue to meet the
requirements of the
Internal Revenue Code applicable to regulated investment
companies and to
distribute all of its taxable net income to its
shareholders. Therefore, no
federal income tax provision is required.
Withholding taxes on foreign dividends have been provided
for in accordance with
the Series' understanding of the applicable country's tax
rules and rates.
Deferred Organization Expenses: Approximately $200,000 of
expenses were incurred
in connection with the organization of the Fund. These costs
have been deferred
and are being amortized ratably over a period of sixty
months from the date the
Series commenced investment operations.
- ------------------------------------------------------------
- --------------------
7
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited) PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
Note 2. Agreements
The Fund has a management agreement with PIFM. Pursuant to a
subadvisory
agreement between PIFM and Jennison Associates LLC
('Jennison'), Jennison
furnishes investment advisory services in connection with
the management of the
Fund. Under the subadvisory agreement, Jennison, subject to
the supervision of
PIFM, is responsible for managing the assets of the Series
in accordance with
its investment objectives and policies.
The management fee paid PIFM will be computed daily and
payable monthly, at an
annual rate of .60 of 1% of the average daily net assets of
the Series. PIFM
pays Jennison a subadvisory fee at an annual rate of .30 of
1% of the average
daily net assets of the Series up to and including $300
million and .25 of 1% of
such assets in excess of $300 million. PIFM also pays the
cost of compensation
of officers and employees of the Fund, occupancy and certain
clerical and
bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The Fund has a distribution agreement with Prudential
Investment Management
Services LLC ('PIMS'), which acts as the distributor of the
Fund. The Fund
compensates PIMS for distributing and servicing the Fund's
Class A, Class B,
Class C and Class Z shares, pursuant to plans of
distribution, (the 'Class A, B
and C Plans'), regardless of 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 of the Class Z
shares of the Fund.
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, 1999.
PIMS has advised the Series that it received approximately
$1,108,900 and
$275,900 in front-end sales charges resulting from sales of
Class A and Class C
shares during the six months ended March 31, 1999. 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 Series that for the six months ended
March 31, 1999, it
received approximately $810,000 and $16,800 in contingent
deferred sales charges imposed upon certain redemptions by
Class B and C
shareholders, respectively.
PIFM, PIMS and Jennison are indirect, wholly owned
subsidiaries of The
Prudential Insurance Company of America ('Prudential').
As of March 11, 1999, the Fund along with other unaffiliated
registered
investment companies (the 'Funds'), entered into a
syndicated agreement ('SCA')
with an unaffiliated lender. The maximum commitment under
the SCA is $1 billion.
The Funds pay a commitment fee at an annual rate of .065 of
1% on the unused
portion of the credit facility, which is accrued and paid
quarterly on a pro
rata basis by the Funds. The SCA expires on March 10, 2000.
Prior to March 11,
1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March 31, 1999. The
purpose of the
agreements is to serve as an alternative source of funding
for capital share
redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months
ended March 31, 1999,
the Series incurred fees of approximately $3,009,000 for the
services of PMFS.
As of March 31, 1999, approximately $512,000 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.
For the six months ended March 31, 1999, Prudential
Securities Incorporated
('PSI'), which is an indirect, wholly owned subsidiary of
Prudential, earned
approximately $306,900 in brokerage commissions from
portfolio transactions
executed on behalf of the Series.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended March 31, 1999 were $1,460,346,570
and $703,170,408,
respectively.
The cost of investments for federal income tax purposes at
March 31, 1999, was
$2,819,908,629 and, accordingly, net unrealized appreciation
of investments for
federal income tax purposes was $1,197,432,492 (gross
unrealized
appreciation--$1,222,174,623; gross unrealized depreciation-
- -$24,742,131).
- ------------------------------------------------------------
- --------------------
8
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited) PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
Note 5. Capital
The Series offers Class A, Class B, Class C and Class Z
shares. Class A shares
are sold with a front-end sales charge of up to 5%. Class B
shares are sold with
a contingent deferred sales charge which declines from 5% to
zero depending on
the period of time the shares are held. Class B shares
automatically convert to
Class A shares on a quarterly basis approximately seven
years after purchase. A
special exchange privilege is also available for
shareholders who qualified to
purchase Class A shares at net asset value. 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. Prior to November 2, 1998, Class C
shares were sold with a
contingent deferred sales charge of 1% during the first
year. Class Z shares are
not subject to any sales or redemption charge and are
offered for sale to a
limited group of investors.
There are 3 billion shares of $.001 par value common stock
authorized which are
divided into three series, each of which offers four
classes, designated Class
A, Class B, Class C and Class Z, each of which consists of
250 million
authorized shares. Of the shares outstanding at March 31,
1999, PIFM owned
10,000 shares of the Series.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ----------- ---------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 14,933,539 $
267,827,154
Shares issued in reinvestment of
distributions.................... 1,032,752
16,627,307
Shares reacquired.................. (7,553,664)
(134,977,145)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 8,412,627
149,477,316
Shares issued upon conversion from
Class B.......................... 1,216,612
22,546,440
----------- ---------
- ----
Net increase in shares
outstanding...................... 9,629,239 $
172,023,756
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 14,958,226 $
229,811,039
Shares issued due to merger of
Prudential Multi-Sector Fund,
Inc.............................. 15,525,419
255,703,652
Shares issued in reinvestment of
distributions.................... 913,659
12,215,617
Shares reacquired.................. (10,632,449)
(163,008,985)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 20,764,855
334,721,323
Shares issued upon conversion from
Class B.......................... 777,059
11,419,782
----------- ---------
- ----
Net increase in shares
outstanding...................... 21,541,914 $
346,141,105
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class B Shares Amount
- ----------------------------------- ----------- ---------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 26,268,648 $
472,740,111
Shares issued in reinvestment of
distributions.................... 1,698,149
26,677,924
Shares reacquired.................. (6,545,002)
(111,277,688)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 21,421,795
388,140,347
Shares reacquired upon conversion
into Class A..................... (1,249,211)
(22,546,440)
----------- ---------
- ----
Net increase in shares
outstanding...................... 20,172,584 $
365,593,907
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 22,754,015 $
342,894,551
Shares issued due to merger of
Prudential Multi-Sector Fund,
Inc.............................. 7,486,124
120,751,178
Shares issued in reinvestment of
distributions.................... 2,776,715
36,513,797
Shares reacquired.................. (9,639,289)
(143,137,800)
----------- ---------
- ----
Net increase in shares outstanding
before conversion................ 23,377,565
357,021,726
Shares reacquired upon conversion
into
Class A.......................... (793,565)
(11,419,782)
----------- ---------
- ----
Net increase in shares
outstanding...................... 22,584,000 $
345,601,944
----------- ---------
- ----
----------- ---------
- ----
<CAPTION>
Class C
- -----------------------------------
Six months ended March 31, 1999:
Shares sold........................ 3,235,959 $
58,601,958
Shares issued in reinvestment of
distributions.................... 108,868
1,710,321
Shares reacquired.................. (1,080,605)
(18,911,056)
----------- ---------
- ----
Net increase in shares
outstanding...................... 2,264,222 $
41,401,223
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 1,687,844 $
25,645,005
Shares issued due to merger of
Prudential Multi-Sector Fund,
Inc.............................. 260,502
4,201,896
Shares issued in reinvestment of
distributions.................... 172,793
2,272,229
Shares reacquired.................. (578,482)
(8,683,902)
----------- ---------
- ----
Net increase in shares
outstanding...................... 1,542,657 $
23,435,228
----------- ---------
- ----
----------- ---------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
9
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements (Unaudited) PRUDENTIAL
JENNISON GROWTH FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class Z Shares Amount
- ----------------------------------- ----------- ---------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................ 33,868,732 $
615,823,391
Shares issued in reinvestment of
distributions.................... 2,345,617
38,045,912
Shares reacquired.................. (21,862,546)
(387,220,546)
----------- ---------
- ----
Net increase in shares
outstanding...................... 14,351,803 $
266,648,757
----------- ---------
- ----
----------- ---------
- ----
Year ended September 30, 1998:
Shares sold........................ 52,992,987 $
825,209,682
Shares issued due to merger of
Prudential Multi-Sector Fund,
Inc.............................. 1,075,632
17,823,220
Shares issued in reinvestment of
distributions.................... 4,155,680
55,810,779
Shares reacquired.................. (27,380,773)
(416,147,353)
----------- ---------
- ----
Net increase in shares
outstanding...................... 30,843,526 $
482,696,328
----------- ---------
- ----
----------- ---------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
10
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Financial Highlights (Unaudited) PRUDENTIAL JENNISON
GROWTH FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A Class B
----------------------
- ------------------------------- ------------------------
- ------------
Six
November 2,
Months
Year Ended 1995(a) Six Months
Year Ended
Ended
September 30, Through Ended
September 30,
March 31, --------
- ------------- September 30, March 31, ---------
- ------------
1999 1998
1997 1996 1999 1998
1997
--------- --------
- -------- ------------- ---------- -------- -
- -------
<S> <C> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period......................... $ 14.44 $ 15.39
$ 10.97 $ 10.00 $ 14.11 $ 15.18 $
10.89
--------- --------
- -------- ------ ---------- -------- -
- -------
Income from investment operations
Net investment income (loss)(c)... (.04)
(.04) (.03) (.03) (.10)
(.15) (.12)
Net realized and unrealized gain
on investment transactions..... 6.22 .40
4.45 1.00 6.07 .39
4.41
--------- --------
- -------- ------ ---------- -------- -
- -------
Total from investment
operations.................. 6.18 .36
4.42 .97 5.97 .24
4.29
--------- --------
- -------- ------ ---------- -------- -
- -------
Less distributions
Distributions from net realized
gains.......................... (.54)
(1.31) -- -- (.54)
(1.31) --
--------- --------
- -------- ------ ---------- -------- -
- -------
Net asset value, end of period.... $ 20.08 $ 14.44
$ 15.39 $ 10.97 $ 19.54 $ 14.11 $
15.18
--------- --------
- -------- ------ ---------- -------- -
- -------
--------- --------
- -------- ------ ---------- -------- -
- -------
TOTAL RETURN(b)................... 43.72%
3.02% 40.29% 9.70% 43.24%
2.21% 39.39%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)... $815,283 $446,996
$145,022 $85,440 $1,375,388 $708,463
$419,405
Average net assets (000).......... $621,330 $251,118
$105,982 $70,667 $ 988,629 $557,823
$299,476
Ratios to average net assets:
Expenses, including
distribution fees........... 1.10%(d)
1.08% 1.09% 1.23%(d) 1.85%(d)
1.83% 1.84%
Expenses, excluding
distribution fees........... .85%(d)
.83% .84% .98%(d) .85%(d)
.83% .84%
Net investment income (loss)... (.41)%(d)
(.26)% (.25)% (.37)%(d) (1.16)%(d)
(1.01)% (1.00)%
For Class A, B, C and Z shares:
Portfolio turnover rate........ 23%
58% 63% 42% 23%
58% 63%
<CAPTION>
November 2,
1995(a)
Through
September 30,
1996
-------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period......................... $ 10.00
-------------
Income from investment operations
Net investment income (loss)(c)... (.10)
Net realized and unrealized gain
on investment transactions..... .99
-------------
Total from investment
operations.................. .89
-------------
Less distributions
Distributions from net realized
gains.......................... --
-------------
Net asset value, end of period.... $ 10.89
-------------
-------------
TOTAL RETURN(b)................... 8.90%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)... $ 231,541
Average net assets (000).......... $ 162,412
Ratios to average net assets:
Expenses, including
distribution fees........... 1.98%(d)
Expenses, excluding
distribution fees........... .98%(d)
Net investment income (loss)... (1.12)%(d)
For Class A, B, C and Z shares:
Portfolio turnover rate........ 42%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Total return does not consider the effects of sales
loads. 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.
(c) Calculated based upon weighted average shares
outstanding during the period.
(d) Annualized.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 11
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
Financial Highlights (Unaudited) PRUDENTIAL JENNISON
GROWTH FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class C Class Z
----------------------
- ----------------------------- --------------------------
- ------------
Six
November 2,
Months Year
Ended 1995(a) Six Months Year
Ended
Ended
September 30, Through Ended
September 30,
March 31, --------
- ----------- September 30, March 31, -----------
- ------------
1999 1998
1997 1996 1999 1998
1997
--------- -------
- ------- ------------- ---------- ----------
- --------
<S> <C> <C>
<C> <C> <C> <C>
<C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period......................... $ 14.11 $ 15.18
$ 10.89 $ 10.00 $ 14.53 $ 15.45
$ 10.98
--------- -------
- ------- ------ ---------- ----------
- --------
Income from investment operations
Net investment income (loss)(c)... (.10) (.15)
(.12) (.10) (.01) --
- --
Net realized and unrealized gain
on investment transactions..... 6.07 .39
4.41 .99 6.27 .39
4.47
--------- -------
- ------- ------ ---------- ----------
- --------
Total from investment
operations.................. 5.97 .24
4.29 .89 6.26 .39
4.47
--------- -------
- ------- ------ ---------- ----------
- --------
Less distributions
Distributions from net realized
gains....................... (.54) (1.31)
- -- -- (.54) (1.31)
- --
--------- -------
- ------- ------ ---------- ----------
- --------
Net asset value, end of period.... $ 19.54 $ 14.11
$ 15.18 $ 10.89 $ 20.25 $ 14.53
$ 15.45
--------- -------
- ------- ------ ---------- ----------
- --------
--------- -------
- ------- ------ ---------- ----------
- --------
TOTAL RETURN(b)................... 43.24% 2.21%
39.39% 8.90% 44.01% 3.22%
40.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)... $106,748 $45,126
$25,134 $15,281 $1,714,445 $1,021,903
$609,869
Average net assets (000).......... $ 67,965 $35,337
$18,248 $12,550 $1,351,403 $ 810,296
$455,684
Ratios to average net assets:
Expenses, including
distribution fees........... 1.85%(d) 1.83%
1.84% 1.98%(d) .85%(d) .83%
.84%
Expenses, excluding
distribution fees........... .85%(d) .83%
.84% .98%(d) .85%(d) .83%
.84%
Net investment income (loss)... (1.16)%(d)
(1.01)% (1.00)% (1.12)%(d) (.16)%(d)
(.01)% --
<CAPTION>
April 15,
1996(a)
Through
September 30,
1996
-------------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period......................... $ 10.32
-------------
Income from investment operations
Net investment income (loss)(c)... (.02)
Net realized and unrealized gain
on investment transactions..... .68
-------------
Total from investment
operations.................. .66
-------------
Less distributions
Distributions from net realized
gains....................... --
-------------
Net asset value, end of period.... $ 10.98
-------------
-------------
TOTAL RETURN(b)................... 6.40%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)... $ 362,416
Average net assets (000).......... $ 26,829
Ratios to average net assets:
Expenses, including
distribution fees........... .98%(d)
Expenses, excluding
distribution fees........... .98%(d)
Net investment income (loss)... (.12)%(d)
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Total return does not consider the effects of sales
loads. 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.
(c) Calculated based upon weighted average shares
outstanding during the period.
(d) Annualized.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information
about the Fund's portfolio holdings are for the period
covered by this report, and are subject to change
thereafter.
The accompanying financial statements as of March 31, 1999,
were not audited
and, accordingly, no opinion is expressed on them.
This report is not authorized for distribution to
prospective
investors unless preceded or accompanied by a current
prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
74437E107
74437E206 MF168E2
74437E305
74437E404
(ICON)
Prudential
Jennison
Growth &
Income
Fund
SEMI
ANNUAL
REPORT
March 31, 1999
(LOGO)
<PAGE>
Prudential Jennison Growth & Income Fund
A Series of The Prudential Investment Portfolios, Inc.
Performance At A Glance
During the six months ending March 31, 1999, stock markets
recovered from the steep drop in the summer of 1998 that had
been triggered by crises in Asia and Russia and concern
about
Brazil. Confidence in economic growth grew slowly: the
strong
market rebound initially was concentrated in stocks of a
small
number of growth companies, but then turned toward the less
expensive growth stocks we favor. Overall, we had a very
strong six-month return, but slightly trailed the Lipper
Average.
<TABLE>
Cumulative Total Returns1 As of 3/31/99
<CAPTION>
Six One Since
Months Year inception2
<S> <C> <C> <C>
Class A 18.29% 1.53% 39.02%
Class B 17.88 0.87 36.67
Class C 17.88 0.87 36.67
Class Z 18.51 1.63 40.04
Lipper Growth &
Income Fund Avg.3 20.06 5.47 ***
</TABLE>
<TABLE>
Average Annual Total Returns1 As of 3/31/99
<CAPTION>
One Since
Year inception2
<S> <C> <C>
Class A -3.54% 12.33%
Class B -4.13 12.89
Class C -1.14 13.47
Class Z 1.63 15.11
</TABLE>
Past performance is not indicative of future results.
Principal and
investment return will fluctuate so that an investor's
shares, when
redeemed, may be worth more or less than their original
cost.
1 Source: Prudential Investments Fund Management and Lipper,
Inc.
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 a
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 C shares
bought
before November 2, 1998, have a 1% CDSC if sold within one
year.
Class Z shares are not subject to a sales charge or
distribution fee.
2 Inception dates: Class A, B, C, and Z, 11/7/96.
3 Lipper average returns are for all funds in each share
class for
the six-month and one-year periods in the Growth & Income
Fund category.
*** Lipper Since Inception returns are 57.64% for Class A,
B, C,
and Z based on all funds in each share class.
How Investments Compared
(As of 3/31/99)
(GRAPH)
Source: Lipper, Inc. Financial markets change, so a mutual
fund's
past performance should never be used to predict future
results.
The risks to each of the investments listed above are
different--we
provide 12-month total returns for several Lipper mutual
fund categories
to show you that reaching for higher returns means
tolerating more risk.
The greater the risk, the larger the potential reward or
loss. In
addition, we've included historical 20-year average annual
returns.
These returns assume the reinvestment of dividends.
U.S. Growth Funds will fluctuate a great deal. Investors
have received
higher historical total returns from stocks than from most
other
investments. Smaller capitalization stocks offer greater
potential
for long-term growth, but may be more volatile
than larger capitalization stocks.
General Bond Funds provide more income than stock funds,
which can
help smooth out their total returns year by year. But their
prices
still fluctuate (sometimes significantly), and their returns
have
been historically lower than those of stock funds.
General Municipal Debt Funds invest in bonds issued by state
governments, state agencies and/or municipalities. This
investment
provides income that is usually exempt from federal and
state
income taxes.
U.S. Taxable Money Funds attempt to preserve a constant
share
value; they don't fluctuate much in price but, historically,
their returns have been generally among the lowest of the
major
investment categories.
<PAGE>
Portfolio Manager's Report
(PHOTO)
Bradley Goldberg
Fund Manager
Investment Goals and Style
The Prudential Jennison Growth & Income Fund invests
primarily
in stocks of established companies with growth prospects
that we
believe are largely unrecognized by most investors. We aim
for
strong total investment returns by combining a focus on
earnings
growth and attention to valuation (the price the market is
placing
on the entire company). This discipline discourages us from
paying
too much for projected growth or from continuing to hold a
stock
when the market offers more than a fair price. There can be
no
assurance that the Fund will reach its investment objective.
Performance Review
A selective market
We look for companies that we expect to have strong earnings
increases,
but whose stock prices do not yet reflect that future
growth. In
1998, investors generally preferred the stocks of a few
large
growth companies, which became much more expensive
than the stocks of many smaller firms with similar earnings
and
growth prospects. At the beginning of our reporting period,
skittish investors focused very narrowly on these very large
growth companies; they drove the market advances. Our
investment
style had led us away from these expensive stocks, so we
didn't
share in their advance. In fact, because of the uncertainty
when
we began this period, we then had about 15% of our assets in
cash.
During the period, however, we put most of that money
to work.
While they were feeling skittish, investors severely
punished any
companies whose earnings fell short of expectations. We
owned a
few of these, including Lockheed Martin and American
Greetings.
We have reduced our growth estimates for Lockheed Martin,
but,
even for these lower expectations, we believe the stock is
still
inexpensive and have kept it. However, we sold our shares in
American Greetings.
Dole Food also had earnings problems because of turmoil in
emerging
markets and hurricane Mitch's interruption of their Honduras
production. We believe both of these difficulties will
abate,
and that the company's longer-term potential is not
reflected in current prices.
A turnaround for cyclicals?
When investors worried about the global economy, they
avoided the
stocks of companies whose fortunes tend to vary with the
pace of
business activity--the consumer and industrial cyclicals.
For
example, Asia is a major market for paper companies
whose earnings and stock prices were depressed by the Asian
recession. But during our reporting period, signs emerged
that
Asia's economy had bottomed.
Stock prices tend to lead an economic recovery, so prices of
some industrial cyclicals began to rise swiftly. Paper
stocks,
which made up 9% of our assets on March 31, had particularly
strong
gains. (These continued even more strongly into April,
after the end of our reporting period.) Smurfit-Stone
Container
Corporation (a recent purchase) was one of the largest
contributors
to our return. We also own Boise Cascade and Temple-Inland.
Other
basic materials stocks, such as metal companies
(Alcoa, U.S. Steel), are also beginning to move up in
anticipation
of revived demand.
<PAGE>
Among consumer cyclicals, our return benefited particularly
from
The Limited and General Motors. They are two of our three
largest
positions, and both moved up very sharply during the period.
Tandy
is a recent purchase in this sector that also is
advancing nicely.
Looking Forward
A more positive view
We share the view that the global economy is recovering. The
U.S.
economy is growing strongly, and our anxiety level is much
lower.
We are now fully invested and expect other investors to show
increasing interest in the cyclical, smaller, and
inexpensive companies that make up our portfolio. We saw the
beginning of a shift in investor sentiment in March, and it
continued more strongly in April. In a favorable
environment,
why should investors pay more than they have to for growth
potential? We expect them to continue this move toward the
better-value stocks that we own.
Five Largest Holdings
Expressed as a percentage of net assets
as of 3/31/99
General Motors 3.37%
Motor Vehicles
CIGNA Corporation 3.14
Insurance
The Limited, Inc. 3.10
Retail
Raytheon Company 3.09
Aerospace
CBS Corporation 2.97
Media
1
<PAGE>
A Message to Our Shareholders May 19,
1999
(PHOTO)
Dear Shareholder:
As 1999 began, major index advances have been driven by
the stocks of a handful of very large companies. These
stocks
were getting more and more expensive--out of proportion to
their
earnings expectations. As a result, there was a substantial
disparity in value between large and small companies, and
between
growth and value stocks. In recent months, however, that gap
has
started to narrow amid news of strong economic growth.
Our current economic environment has prompted many investors
to
turn to value stocks that typically fare better in a growing
economy, and have been selling at a significant discount to
the market.
Many sectors of the bond market have also begun to rebound
from
last year's global financial crisis. Furthermore, while
bonds have
not generated higher returns than stocks in recent years,
they have
demonstrated that they hold up better during
market downturns. That's a thought to keep in mind going
forward.
Diversification is critical
History shows that the markets generally bring prices in
line with
earnings performance, sooner or later. It also shows that
two
investment styles--value and growth--typically alternate in
periods
of superior performance.
What does this suggest? Instead of chasing popular market
winners,
investors should have a well-diversified asset allocation
strategy
in place and keep to it. It is also a good practice to
rebalance
your holdings, when necessary, to keep your asset
allocation consistent with your long-term objectives and
risk tolerance. A properly diversified portfolio of value-
and growth-oriented equity funds, bond funds, and money
market
funds could help you weather inevitable market turbulence
and receive
more consistent returns over time. Prudential offers a wide
range
of mutual funds to help our shareholders diversify. We have
also
designed several balanced and diversified funds to allow one-
decision
diversification.
Thank you for your continued confidence in Prudential mutual
funds.
Sincerely,
John R. Strangfeld
Chief Investment Officer
Prudential Investments
2
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note
1)
<C> <S> <C>
- ------------------------------------------------------------
LONG-TERM INVESTMENTS--96.9%
COMMON STOCKS--96.9%
- ------------------------------------------------------------
Aerospace/Defense--5.7%
40,300 Lockheed Martin Corp. $
1,518,806
71,740 Raytheon Co.
4,142,985
57,600 The B.F. Goodrich Co.
1,976,400
-------
- -----
7,638,191
- ------------------------------------------------------------
Airlines--1.9%
44,400 AMR Corp.
2,600,175
- ------------------------------------------------------------
Aluminum--1.4%
27,600 Alcoa, Inc.
1,136,775
14,700 Reynolds Metals Co.
710,194
-------
- -----
1,846,969
- ------------------------------------------------------------
Apparel--1.4%
95,800 Polo Ralph Lauren Corp.(a)
1,904,025
- ------------------------------------------------------------
Banking--6.6%
46,900 Chase Manhattan Corp.
3,813,556
49,300 Fleet Financial Group, Inc.
1,854,913
167,400 Hibernia Corp., Class A
2,197,125
8,000 J.P. Morgan & Co., Inc.
987,000
-------
- -----
8,852,594
- ------------------------------------------------------------
Business Services--7.2%
36,200 3Com Corp.(a)
843,913
133,400 Convergys Corp.(a)
2,284,475
49,300 Hertz Corp.
2,637,550
64,900 Ogden Corp.
1,561,656
81,400 Ryder System, Inc.
2,248,675
-------
- -----
9,576,269
Chemicals--6.7%
70,100 Crompton & Knowles Corp. $
1,104,075
76,100 Cytec Industries, Inc.(a)
1,697,981
91,800 Dexter Corp.
2,891,700
87,800 IMC Global, Inc.
1,794,413
119,400 W.R. Grace & Co.(a)
1,447,725
-------
- -----
8,935,894
- ------------------------------------------------------------
Computer Systems/Peripherals--1.6%
13,600 Hewlett-Packard Co.
922,250
25,825 Symbol Technologies, Inc.(a)
1,162,125
-------
- -----
2,084,375
- ------------------------------------------------------------
Consumer Products--1.7%
48,400 Kimberly-Clark Corp.
2,320,175
- ------------------------------------------------------------
Diversified Manufacturing--1.2%
72,500 Raychem Corp.
1,635,781
- ------------------------------------------------------------
EDP Software & Services--3.1%
40,500 Autodesk, Inc.
1,637,719
59,900 Cadence Design Systems, Inc.(a)
1,542,425
153,700 Intergraph Corp.(a)
1,037,475
-------
- -----
4,217,619
- ------------------------------------------------------------
Foods--1.4%
61,100 Dole Food Co., Inc.
1,817,725
- ------------------------------------------------------------
Hotels--2.4%
125,400 Hilton Hotels Corp.
1,763,437
39,100 Promus Hotel Corp.(a)
1,422,263
-------
- -----
3,185,700
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 3
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note
1)
<C> <S> <C>
- ------------------------------------------------------------
Industrial Technology/Instruments--1.6%
89,600 Millipore Corp. $
2,161,600
- ------------------------------------------------------------
Insurance--4.5%
50,200 CIGNA Corp.
4,207,388
32,800 NAC Re Corp.
1,760,950
-------
- -----
5,968,338
- ------------------------------------------------------------
Media--3.6%
97,400 CBS Corp.
3,987,313
19,705 Chris-Craft Industries, Inc.(a)
899,037
-------
- -----
4,886,350
- ------------------------------------------------------------
Motor Vehicles & Equipment--3.4%
52,000 General Motors Corp., Class H
4,517,500
- ------------------------------------------------------------
Oil Services--3.3%
54,200 McDermott International, Inc.
1,371,938
83,200 Unocal Corp.
3,062,800
-------
- -----
4,434,738
- ------------------------------------------------------------
Paper & Forest Products--8.5%
75,500 Boise Cascade Corp.(a)
2,434,875
63,500 Champion International Corp.
2,607,469
200,054 Smurfit-Stone Container Corp.(a)
3,863,543
39,900 Temple-Inland, Inc.
2,503,725
-------
- -----
11,409,612
- ------------------------------------------------------------
Petroleum--3.4%
17,900 Anadarko Petroleum Corp.
675,725
36,700 Burlington Resources, Inc.
1,465,706
31,600 Tosco Corp.
784,075
61,700 USX - Marathon Group
1,696,750
-------
- -----
4,622,256
Pharmaceuticals--1.2%
61,500 Vertex Pharmaceuticals, Inc.(a) $
1,552,875
- ------------------------------------------------------------
Photography/Image Technology--0.4%
28,400 Polaroid Corp.
569,775
- ------------------------------------------------------------
Publishing--4.8%
102,900 New York Times Co., Class A
2,932,650
53,000 Tribune Co.
3,468,187
-------
- -----
6,400,837
- ------------------------------------------------------------
Real Estate Investment Trust--0.7%
77,971 Meditrust Corp.-Paired Stock
969,764
- ------------------------------------------------------------
Retail--10.0%
83,400 AutoZone, Inc.(a)
2,533,275
85,400 Boise Cascade Office Products
Corp.(a)
950,075
64,500 Sears, Roebuck & Co.
2,914,593
43,900 Tandy Corp.
2,801,369
105,000 The Limited, Inc.
4,160,625
-------
- -----
13,359,937
- ------------------------------------------------------------
Savings & Loan--0.8%
26,550 Washington Mutual, Inc.
1,085,231
- ------------------------------------------------------------
Semiconductors--1.6%
121,200 International Rectifier Corp.(a)
848,400
144,800 National Semiconductor Corp.(a)
1,348,450
-------
- -----
2,196,850
- ------------------------------------------------------------
Shipbuilding--0.9%
37,100 Newport News Shipbuilding, Inc.
1,175,606
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 4
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Portfolio of Investments as of March 31, 1999 (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note
1)
<C> <S> <C>
- ------------------------------------------------------------
Steel & Metals--1.1%
64,600 USX-U.S. Steel Group, Inc. $
1,518,100
- ------------------------------------------------------------
Telecommunications--0.9%
86,800 Loral Space & Communications,
Ltd.(a)
1,253,175
- ------------------------------------------------------------
Transportation--0.6%
43,500 Knightsbridge Tankers Ltd.
750,375
- ------------------------------------------------------------
Trucking--2.4%
50,300 CNF Transportation, Inc.
1,901,969
34,100 Dana Corp.
1,295,800
---------
- ------
3,197,769
- ------------------------------------------------------------
Waste Management--0.9%
27,800 Waste Management, Inc.
1,233,625
---------
- ------
Total long-term investments
(cost $117,967,062)
129,879,805
---------
- ------
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000)
SHORT-TERM INVESTMENTS--3.1%
- ------------------------------------------------------------
COMMERCIAL PAPER--3.0%
P-1 $ 4,043 Ford Motor Credit Corp.,
4.71%, 4/1/99
(cost $4,043,000) $
4,043,000
------
- ---------
U.S. GOVERNMENT SECURITIES--0.1%
United States Treasury
Bills,
125 4.49%, 4/15/99
(cost $124,787)
124,493
------
- ---------
Total short-term
investments
(cost $4,167,787)
4,167,493
------
- ---------
Total Investments--100.0%
(cost $122,134,849; Note 4)
134,047,298
Other assets in excess of
liabilities
61,302
------
- ---------
Net Assets--100% $
134,108,600
------
- ---------
------
- ---------
</TABLE>
- ---------------
(a) Non-income producing securities.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 5
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Statement of Assets and Liabilities (Unaudited)
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Assets
March 31, 1999
- --------------
<S>
<C>
Investments, at value (cost
$122,134,849)...............................................
................... $134,047,298
Receivable for investments
sold........................................................
.................... 936,273
Receivable for Series shares
sold........................................................
.................. 287,219
Dividends and interest
receivable..................................................
........................ 183,040
- --------------
Total
assets......................................................
...................................... 135,453,830
- --------------
Liabilities
Bank
overdraft...................................................
..........................................
3,689
Payable for Series shares
reacquired..................................................
..................... 597,361
Payable for investments
purchased...................................................
....................... 487,238
Accrued
expenses....................................................
....................................... 96,255
Distribution fees
payable.....................................................
............................. 91,382
Management fee
payable.....................................................
................................ 69,305
- --------------
Total
liabilities.................................................
...................................... 1,345,230
- --------------
Net
Assets......................................................
...........................................
$134,108,600
- --------------
- --------------
Net assets were comprised of:
Common stock, at
par.........................................................
........................... $ 11,210
Paid-in capital in excess of
par.........................................................
............... 118,132,290
- --------------
118,143,500
Undistributed net investment
income......................................................
............... 192,581
Accumulated net realized gain on
investments.................................................
........... 3,860,070
Net unrealized appreciation on
investments.................................................
............. 11,912,449
- --------------
Net assets, March 31,
1999........................................................
......................... $134,108,600
- --------------
- --------------
Class A:
Net asset value and redemption price per share
($33,911,927 / 2,829,896 shares of common stock issued
and outstanding)..............................
$11.98
Maximum sales charge (5% of offering
price)......................................................
....... .63
- --------------
Maximum offering price to
public......................................................
.................. $12.61
- --------------
- --------------
Class B:
Net asset value, offering price and redemption price per
share
($89,970,816 / 7,525,773 shares of common stock issued
and outstanding)..............................
$11.96
- --------------
- --------------
Class C:
Net asset value and redemption price per share
($7,007,856 / 586,185 shares of common stock issued
and outstanding).................................
$11.96
Sales charge (1% of offering
price)......................................................
............... .12
- --------------
Offering price to
public......................................................
.......................... $12.08
- --------------
- --------------
Class Z:
Net asset value, offering price and redemption price per
share
($3,218,001 / 267,979 shares of common stock issued
and outstanding).................................
$12.01
- --------------
- --------------
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 6
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
INCOME FUND
Statement of Operations (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six
Months
Ended
Net Investment Income March 31,
1999
<S> <C>
Income
Dividends................................... $
1,022,808
Interest....................................
460,028
----------
- ----
Total income.............................
1,482,836
----------
- ----
Expenses
Distribution fee--Class A...................
41,807
Distribution fee--Class B...................
459,270
Distribution fee--Class C...................
38,227
Management fee..............................
406,057
Reports to shareholders.....................
135,000
Transfer agent's fees and expenses..........
102,000
Custodian's fees and expenses...............
57,000
Dividends on securities sold short..........
27,518
Registration fees...........................
25,000
Legal fees and expenses.....................
22,000
Audit fees and expenses.....................
10,000
Directors' fees.............................
3,750
Miscellaneous...............................
3,687
----------
- ----
Total expenses...........................
1,331,316
----------
- ----
Net investment income..........................
151,520
----------
- ----
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on:
Investment transactions.....................
5,720,682
Financial futures contracts.................
(115,040)
Short sales.................................
(389,500)
----------
- ----
5,216,142
----------
- ----
Net change in unrealized
appreciation/depreciation on:
Investments.................................
18,388,690
Short sales.................................
(1,664,436)
----------
- ----
16,724,254
----------
- ----
Net gain on investments........................
21,940,396
----------
- ----
Net Increase in Net Assets Resulting from
Operations..................................... $
22,091,916
----------
- ----
----------
- ----
</TABLE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
INCOME FUND
Statement of Changes in Net Assets (Unaudited)
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Year
Ended
Increase (Decrease) March 31,
September 30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income.......... $ 151,520 $
908,928
Net realized gain on investment
transactions................ 5,216,142
10,777,238
Net change in unrealized
appreciation/depreciation on
investments................. 16,724,254
(25,848,538)
------------ --------
- -----
Net increase (decrease) in net
assets resulting from
operations.................. 22,091,916
(14,162,372)
------------ --------
- -----
Dividends and distributions (Note
1)
Dividends from net investment income
Class A..................... (153,895)
(350,759)
Class B..................... (76,687)
(267,306)
Class C..................... (6,448)
(22,287)
Class Z..................... (12,628)
(17,381)
------------ --------
- -----
(249,658)
(657,733)
------------ --------
- -----
Distributions from net realized
capital gains
Class A..................... (2,540,009)
(1,652,658)
Class B..................... (6,978,507)
(4,349,846)
Class C..................... (586,830)
(352,855)
Class Z..................... (164,166)
(39,211)
------------ --------
- -----
(10,269,512)
(6,394,570)
------------ --------
- -----
Series share transactions (net of
share conversions) (Note 5)
Net proceeds from shares
sold........................ 17,882,784
49,851,743
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions........... 10,032,426
6,672,687
Cost of shares reacquired...... (30,429,237)
(40,383,538)
------------ --------
- -----
Net increase (decrease) in net
assets from Fund share
transactions................ (2,514,027)
16,140,892
------------ --------
- -----
Total increase (decrease)......... 9,058,719
(5,073,783)
Net Assets
Beginning of period............... 125,049,881
130,123,664
------------ --------
- -----
End of period(a).................. $134,108,600 $
125,049,881
------------ --------
- -----
------------ --------
- -----
- ---------------
(a) Includes undistributed net
investment income of.......... $ 192,581 $
290,719
------------ --------
- -----
------------ --------
- -----
</TABLE>
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 7
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------
- --------------------
Prudential Jennison Growth & Income Fund (the 'Series') is a
separately managed
series of The Prudential Investment Portfolios, Inc., (the
'Fund'). The Fund was
incorporated in Maryland on August 10, 1995 and is
registered under the
Investment Company Act of 1940 as a diversified, open-end,
management investment
company. Investment operations of the Series commenced on
November 7, 1996.
The Series' investment objective is to achieve long-term
growth of capital and
income, with current income as a secondary objective. The
Series seeks to
achieve its objectives by investing primarily in common
stocks of established
companies with growth prospects believed to be
underappreciated by the market.
- ------------------------------------------------------------
Note 1. Accounting Policies
The following is a summary of significant accounting
policies followed by the
Series in the preparation of its financial statements.
Securities Valuation: Securities listed on a securities
exchange (other than
options on securities and indices) are valued at the last
sales price on such
exchange or system 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 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 by the Manager, in consultation
with the subadvisor,
to be over-the-counter, are valued by an independent pricing
agent of principal
market maker. Convertible debt securities that are actively
traded in the
over-the-counter market, including listed securities for
which the primary
market is believed by the Manager and the Subadvisor to be
over-the-counter, are
valued at the mean between the last reported bid and asked
prices provided by a
principal market maker. Options on securities and indices
traded 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 sales
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 market quotations are not
readily available,
other than private placements, are valued at a price
supplied by an independent
pricing agent, which is, in the opinion of such pricing
agent, representative of
the market value of such securities as of the time of
determination of net asset
value, or using a methodology developed by an independent
pricing agent, which
is, in the judgment of the Manager and the Subadviser, able
to produce prices
which are representative of market value.
Short-term securities which mature in more than 60 days, for
which market
quotations are readily available, are valued at current
market quotations as
provided by an independent pricing agent or principal market
maker. Short-term
securities which mature in 60 days or less are valued at
cost with interest
accrued or discount amortized to the date of maturity,
unless the Board of
Directors determines that such valuation does not represent
fair value.
All securities are valued as of 4:15 p.m., New York time.
Securities Transactions and Net Investment Income:
Securities transactions are
recorded on the trade date. Realized gains or losses on
sales of securities are
calculated on the identified cost basis. Dividend income is
recorded on the
ex-dividend date; interest income is recorded on the accrual
basis and is net of
discount accretion and premium amortization. Expenses are
recorded on the
accrual basis which may require the use of certain estimates
by management.
Net investment income, other than distribution fees, and
realized and unrealized
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.
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 Series 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 Series 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 Series invests in financial futures contracts in order
to hedge its existing
portfolio securities, or securities the Series intends to
purchase, against
fluctuations in value caused by changes in market conditions
or prevailing
interest rates. Should interest rates move unexpectedly, the
Series may not
achieve the anticipated benefits of the financial futures
contracts and may
realize a loss. The use of futures transactions involves
- ------------------------------------------------------------
- --------------------
8
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------
- --------------------
the risk of imperfect correlation in movements in the price
of futures
contracts, interest rates and the underlying hedged assets.
Short Sales: The Series may sell a security it does not own
in anticipation of a
decline in the market value of that security (short sale).
When the Series makes
a short sale, it must borrow the security sold short and
deliver it to the
broker-dealer through which it made the short sale. The
proceeds received from
the short sale are maintained as collateral for its
obligation to deliver the
security upon conclusion of the sale. In addition, the
Series may have to make
additional subsequent deposits with the broker equal to the
change in the market
value of the security sold short. The Series may have to pay
a fee to borrow the
particular security and may be obligated to remit any
payments received on such
borrowed securities. A gain, limited to the price at which
the Series sold the
security short, or a loss, unlimited in magnitude, will be
recognized upon the
termination of a short sale if the market price at
termination is less than or
greater than, respectively, the proceeds originally
received.
Dividends and Distributions: The Series expects to pay
dividends of net
investment income, if any, semi-annually and to make
distributions of any net
capital gains 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 Series' policy to continue to meet the
requirements of the
Internal Revenue Code applicable to regulated investment
companies and to
distribute all of its taxable net income to its
shareholders. Therefore, no
federal income tax provision is required.
- ------------------------------------------------------------
Note 2. Agreements
The Fund has a management agreement with Prudential
Investments Fund Management
LLC ('PIFM'). Pursuant to a subadvisory agreement between
PIFM and Jennison
Associates LLC ('Jennison'), Jennison furnishes investment
advisory services in
connection with the management of the Fund. Under the
subadvisory agreement,
Jennison, subject to the supervision of PIFM, is responsible
for managing the
assets of the Series in accordance with its investment
objectives and policies.
The management fee paid PIFM is computed daily and payable
monthly, at an annual
rate of .60 of 1% of the average daily net assets of the
Series. PIFM pays
Jennison a subadvisory fee at an annual rate of .30 of 1% of
the average daily
net assets of the Series up to and including $300 million
and .25 of 1% of such
assets in excess of $300 million. PIFM also pays the cost of
compensation of
officers and employees of the Fund, occupancy and certain
clerical and
bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.
The Fund has a distribution agreement with Prudential
Investment Management
Services LLC ('PIMS') which acts as the distributor of the
Fund. The Fund
compensates PIMS for distributing and servicing the Fund's
Class A, Class B and
Class C shares, pursuant to plans of distribution (the
'Class A, B and C
Plans'), regardless of 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 of the Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Series
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
average daily net
assets of the Class A, B and C shares, respectively, for the
six months ended
March 31, 1999.
PIMS has advised the Series that it received approximately
$36,900 and $4,000 in
front-end sales charges resulting from sales of Class A and
C shares,
respectively, during the six months ended March 31, 1999.
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 Series that for the six months ended
March 31, 1999, it
received approximately $162,600 and $500 in contingent
deferred sales charges
imposed upon certain redemptions by Class B and C
shareholders, respectively.
PIFM, PIMS and Jennison are wholly owned subsidiaries of The
Prudential
Insurance Company of America.
As of March 11, 1999, the Fund, along with other affiliated
registered
investment companies (the 'Funds'), entered into a
syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment
under the SCA is $1
billion. The Funds pay a commitment fee at an annual rate of
.065 of 1% on the
unused portion of the credit facility, which is accrued and
paid quarterly on a
pro rata basis by the Funds. The SCA expires on March 9,
2000. Prior to March
11, 1999, the Funds had a credit agreement with a maximum
commitment of
$200,000,000. The commitment fee was .055 of 1% on the
unused portion of the
credit facility. The Fund did not borrow any amounts
pursuant to either
agreement during the six months ended March
- ------------------------------------------------------------
- --------------------
9
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------
- --------------------
31, 1999. The purpose of the agreements are to serve as an
alternative source of
funding for capital share redemptions.
- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned
subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months
ended March 31, 1999,
the Series incurred fees of approximately $92,800 for the
services of PMFS. As
of March 31, 1999, approximately $15,700 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.
For the six months ended March 31, 1999, Prudential
Securities Incorporated
('PSI') earned approximately $22,800 in brokerage
commissions from portfolio
transactions executed on behalf of the Series.
- ------------------------------------------------------------
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than
short-term investments,
for the six months ended March 31, 1999 were $70,957,397 and
$71,743,939,
respectively.
The United States federal income tax cost basis of the
Series investments as of
March 31, 1999 was substantially the same as for financial
reporting purposes
and, accordingly, net unrealized depreciation of investments
for federal income
tax purposes was $11,912,449 (gross unrealized appreciation-
$18,186,350; gross
unrealized depreciation--$6,273,901).
- ------------------------------------------------------------
Note 5. Capital
The Series offers Class A, Class B, Class C and Class Z
shares. Class A shares
are sold with a front-end sales charge of up to 5%. Class B
shares are sold with
a contingent deferred sales charge which declines from 5% to
zero depending on
the period of time the shares are held. Class B shares will
automatically
convert to Class A shares on a quarterly basis approximately
seven years after
purchase. A special exchange privilege is also available for
shareholders who
qualified to purchase Class A shares at net asset value.
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. Prior to November 2, 1998, Class
C shares were sold
with a contingent deferred sales charge of 1% during the
first year. Class Z
shares are not subject to any sales or redemption charge and
are offered
exclusively for sale to a limited group of investors.
There are 3 billion shares of $.001 par value common stock
authorized which are
divided into three series, each of which offers four
classes, designated Class
A, Class B, Class C and Class Z, each of which consists of
250 million
authorized shares.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares
Amount
- -------------------------------------- ---------- -------
- ----
<S> <C> <C>
Six months ended March 31, 1999:
Shares sold........................... 440,462 $
5,197,025
Shares issued in reinvestment of
dividends and distributions......... 226,178
2,592,004
Shares reacquired..................... (784,757)
(9,231,630)
---------- -------
- ----
Net decrease in shares outstanding
before conversion................... (118,117)
(1,442,601)
Shares issued upon conversion from
Class B............................. 94,853
1,114,489
---------- -------
- ----
Net decrease in shares outstanding.... (23,264) $
(328,112)
---------- -------
- ----
---------- -------
- ----
Year ended September 30, 1998:
Shares sold........................... 1,121,704
$13,786,056
Shares issued in reinvestment of
dividends and distributions......... 162,663
1,913,429
Shares reacquired..................... (1,213,010)
(14,774,385)
---------- -------
- ----
Net increase in shares outstanding
before conversion................... 71,357
925,100
Shares issued upon conversion from
Class B............................. 77,566
935,576
---------- -------
- ----
Net increase in shares outstanding.... 148,923 $
1,860,676
---------- -------
- ----
---------- -------
- ----
<CAPTION>
Class B
- --------------------------------------
Six months ended March 31, 1999:
Shares sold........................... 816,328 $
9,573,721
Shares issued in reinvestment of
dividends and distributions......... 583,174
6,683,168
Shares reacquired..................... (1,512,524)
(17,743,265)
---------- -------
- ----
Net increase in shares outstanding
before conversion................... (113,022)
(1,486,376)
Shares reacquired upon conversion from
Class A............................. (95,009)
(1,114,489)
---------- -------
- ----
Net decrease in shares outstanding.... (208,031)
$(2,600,865)
---------- -------
- ----
---------- -------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
10
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
INCOME FUND
Notes to Financial Statements (Unaudited)
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class B Shares
Amount
- -------------------------------------- ---------- -------
- ----
<S> <C> <C>
Year ended September 30, 1998:
Shares sold........................... 2,383,930
$29,462,184
Shares issued in reinvestment of
dividends and distributions......... 369,244
4,332,243
Shares reacquired..................... (1,750,224)
(21,297,211)
---------- -------
- ----
Net increase in shares outstanding
before conversion................... 1,002,950
12,497,216
Shares reacquired upon conversion from
Class A............................. (77,755)
(935,576)
---------- -------
- ----
Net increase in shares outstanding.... 925,195
$11,561,640
---------- -------
- ----
---------- -------
- ----
<CAPTION>
Class C
- --------------------------------------
Six months ended March 31, 1999:
Shares sold........................... 85,658 $
992,884
Shares issued in reinvestment of
dividends and distributions......... 51,069
585,254
Shares reacquired..................... (200,616)
(2,362,559)
---------- -------
- ----
Net decrease in shares outstanding.... (63,889) $
(784,421)
---------- -------
- ----
---------- -------
- ----
Year ended September 30, 1998:
Shares sold........................... 217,879 $
2,701,940
Shares issued in reinvestment of
dividends and distributions......... 31,625
371,055
Shares reacquired..................... (152,419)
(1,873,645)
---------- -------
- ----
Net increase in shares outstanding.... 97,085 $
1,199,350
---------- -------
- ----
---------- -------
- ----
<CAPTION>
Class Z
- --------------------------------------
Six months ended March 31, 1999:
Shares sold........................... 179,248 $
2,119,154
Shares issued in reinvestment of
dividends
and distributions................... 14,996
172,000
Shares reacquired..................... (93,093)
(1,091,783)
---------- -------
- ----
Net increase in shares outstanding.... 101,151 $
1,199,371
---------- -------
- ----
---------- -------
- ----
Year ended September 30, 1998:
Shares sold........................... 309,216 $
3,901,563
Shares issued in reinvestment of
dividends
and distributions................... 4,713
55,960
Shares reacquired..................... (194,189)
(2,438,297)
---------- -------
- ----
Net increase in shares outstanding.... 119,740 $
1,519,226
---------- -------
- ----
---------- -------
- ----
</TABLE>
- ------------------------------------------------------------
- --------------------
11
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
Financial Highlights (Unaudited) INCOME FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class A Class B
----------
- ------------------------------------------ ---------
Six
November 7, Six
Months
1996(a) Months
Ended
Year Ended Through Ended
March 31,
September 30, September 30, March 31,
1999
1998 1997 1999
---------
- ------------- -------------------- ---------
<S> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $ 10.98
$ 12.89 $ 10.00 $ 10.96
---------
- ------ ------ ---------
Income from investment operations
Net investment income......................... .05
.15 .09 --(d)
Net realized and unrealized gain (loss) on
investment transactions.................... 1.92
(1.32) 2.87 1.92
---------
- ------ ------ ---------
Total from investment operations........... 1.97
(1.17) 2.96 1.92
---------
- ------ ------ ---------
Less distributions
Dividends from net investment income.......... (.06)
(.12) (.07) (.01)
Distributions from net realized gains......... (.91)
(.62) -- (.91)
---------
- ------ ------ ---------
Total distributions........................ (.97)
(.74) (.07) (.92)
---------
- ------ ------ ---------
Net asset value, end of period................ $ 11.98
$ 10.98 $ 12.89 $ 11.96
---------
- ------ ------ ---------
---------
- ------ ------ ---------
TOTAL RETURN(c)............................... 18.29%
(9.40)% 29.72% 17.88%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $33,912
$31,339 $ 34,846 $89,971
Average net assets (000)...................... $33,537
$35,145 $ 27,008 $92,106
Ratios to average net assets:
Expenses, including distribution fees......
1.42%(b) 1.31% 1.58%(b)
2.17%(b)
Expenses, excluding distribution fees......
1.17%(b) 1.06% 1.33%(b)
1.17%(b)
Net investment income......................
.76%(b) 1.20% .90%(b)
.02%(b)
Portfolio turnover rate....................... 59%
99% 55% 59%
<CAPTION>
November 7,
1996(a)
Year Ended
Through
September
30, September 30,
1998
1997
------------
- - -------------
<S> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $ 12.86
$ 10.00
------
- ------
Income from investment operations
Net investment income......................... .06
.02
Net realized and unrealized gain (loss) on
investment transactions.................... (1.31)
2.86
------
- ------
Total from investment operations........... (1.25)
2.88
------
- ------
Less distributions
Dividends from net investment income.......... (.03)
(.02)
Distributions from net realized gains......... (.62)
- --
------
- ------
Total distributions........................ (.65)
(.02)
------
- ------
Net asset value, end of period................ $ 10.96
$ 12.86
------
- ------
------
- ------
TOTAL RETURN(c)............................... (10.01)%
28.83%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $84,751
$87,558
Average net assets (000)...................... $93,465
$62,575
Ratios to average net assets:
Expenses, including distribution fees...... 2.06%
2.33%(b)
Expenses, excluding distribution fees...... 1.06%
1.33%(b)
Net investment income...................... .46%
.15%(b)
Portfolio turnover rate....................... 99%
55%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales
loads. 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.
(d) Less than $.005 per share.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 12
<PAGE>
THE PRUDENTIAL
INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON
GROWTH &
Financial Highlights (Unaudited) INCOME FUND
- ------------------------------------------------------------
- --------------------
<TABLE>
<CAPTION>
Class C Class Z
----------
- ------------------------------------------ ---------
Six
November 7, Six
Months
1996(a) Months
Ended
Year Ended Through Ended
March 31,
September 30, September 30, March 31,
1999
1998 1997 1999
---------
- ------------- -------------------- ---------
<S> <C>
<C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $ 10.96
$ 12.86 $10.00 $ 11.00
---------
- ----- ----- ---------
Income from investment operations
Net investment income......................... --
(d) .06 .02 .06
Net realized and unrealized gain (loss) on
investment transactions.................... 1.92
(1.31) 2.86 1.93
---------
- ----- ----- ---------
Total from investment operations........... 1.92
(1.25) 2.88 1.99
---------
- ----- ----- ---------
Less distributions
Dividends from net investment income.......... (.01)
(.03) (.02) (.07)
Distributions from net realized gains......... (.91)
(.62) -- (.91)
---------
- ----- ----- ---------
Total distributions........................ (.92)
(.65) (.02) (.98)
---------
- ----- ----- ---------
Net asset value, end of period................ $ 11.96
$ 10.96 $12.86 $ 12.01
---------
- ----- ----- ---------
---------
- ----- ----- ---------
TOTAL RETURN(c)............................... 17.88%
(10.01)% 28.83% 18.51%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $ 7,008
$ 7,124 $7,111 $ 3,218
Average net assets (000)...................... $ 7,666
$ 7,734 $5,631 $ 2,414
Ratios to average net assets:
Expenses, including distribution fees......
2.17%(b) 2.06% 2.33%(b)
1.17%(b)
Expenses, excluding distribution fees......
1.17%(b) 1.06% 1.33%(b)
1.17%(b)
Net investment income......................
.03%(b) .46% .15%(b)
.97%(b)
Portfolio turnover rate....................... 59%
99% 55% 59%
<CAPTION>
November 7,
1996(a)
Year Ended
Through
September
30, September 30,
1998
1997
------------
- - -------------
<S> <C>
<C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.......... $ 12.93
$ 10.00
-----
- -----
Income from investment operations
Net investment income......................... .17
.10
Net realized and unrealized gain (loss) on
investment transactions.................... (1.33)
2.92
-----
- -----
Total from investment operations........... (1.16)
3.02
-----
- -----
Less distributions
Dividends from net investment income.......... (.15)
(.09)
Distributions from net realized gains......... (.62)
- --
-----
- -----
Total distributions........................ (.77)
(.09)
-----
- -----
Net asset value, end of period................ $ 11.00
$ 12.93
-----
- -----
-----
- -----
TOTAL RETURN(c)............................... (9.31)%
30.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $ 1,836
$ 609
Average net assets (000)...................... $ 1,374
$ 227
Ratios to average net assets:
Expenses, including distribution fees...... 1.06%
1.33%(b)
Expenses, excluding distribution fees...... 1.06%
1.33%(b)
Net investment income...................... 1.54%
1.15%(b)
Portfolio turnover rate....................... 99%
55%
</TABLE>
- ---------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales
loads. 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.
(d) Less than $.005 per share.
- ------------------------------------------------------------
- --------------------
See Notes to Financial Statements. 13
<PAGE>
Getting The Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they
don't
read annual and semi-annual reports. It's quite
understandable. These
annual and semi-annual reports are prepared to comply with
Federal
regulations. They 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, in
hopes you'll
find it profitable to spend a few minutes familiarizing
yourself with
your investment. Here's what you'll find in the report:
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 "At A Glance" page where we
compare the
Fund and the comparable average calculated
by Lipper Analytical Services, 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 generally smoothes out returns and gives you an idea 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. And keep in mind that past
performance
is not indicative of future results.
Portfolio Manager's Report
The portfolio manager who invests your money for you reports
onsuccessful--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 look 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 Portfolio
Manager's
Report that doesn't appear in this listing because it was
sold
before the close of the reporting period.
<PAGE>
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.
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 also 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 which we report annually about how much
of
your total return is taxable. Should you have any questions,
you
may want to consult a tax advisor.
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 broadly based reference point commonly used by
investors
to measure how well they are doing. A definition of the
selected
index is also provided. Investors generally cannot
invest directly in an index.
<PAGE>
Getting The Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you receive
financial advice through a Prudential Securities financial
advisor or Prudential/Pruco Securities registered
representative.
Your advisor or representative can provide you with the
following services:
There's No Reward Without Risk; But Is This Risk Worth It?
Your financial advisor or registered representative can help
you match
the reward you seek with the risk you can tolerate. And risk
can be
difficult to gauge--sometimes even the simplest investments
bear
surprising risks. The educated investor knows that markets
seldom
move in just one direction--there are times when a market
sector
or asset class will lose value or provide little in the way
of
total return. Managing your own expectations is easier with
help
from someone who understands the markets and who knows you!
Keeping Up With The Joneses
A financial advisor or registered representative can help
you wade
through the numerous mutual funds available to find the ones
that
fit your own individual investment profile and risk
tolerance.
While the newspapers and popular magazines are full
of advice about investing, they are aimed at generic groups
of
people or representative individuals, not at you personally.
Your financial advisor or registered representative will
review
your investment objectives with you. This means you can make
financial decisions based on the assets and liabilities in
your
current portfolio and your risk tolerance--not just based on
the
current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are
among the most common investor mistakes. But sometimes it's
difficult
to hold on to an investment when it's losing value every
month. Your
financial advisor or registered representative can answer
questions
when you're confused or worried about your investment, and
remind you
that you're investing for the long haul.
<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
http://www.prudential.com
Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
Richard A. Redeker
Robin B. Smith
Louis A. Weil, III
Clay T. Whitehead
Officers
Robert F. Gunia, President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Marguerite E.H. Morrison, Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
Jennison Associates LLC
466 Lexington Avenue
New York, NY 10017
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 15005
New Brunswick, NJ 08906
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
The views expressed in this report and information about the
Fund's
portfolio holdings are for the period covered by this
report, and
are subject to change thereafter.
The accompanying financial statements as of March 31, 1999,
were
not audited and, accordingly, no opinion is expressed on
them.
This report is not authorized for distribution to
prospective
investors unless preceded or accompanied by a current
prospectus.
<PAGE>
(LOGO)
Prudential Mutual Funds BULK RATE
Gateway Center Three U.S. POSTAGE
100 Mulberry Street PAID
Newark, NJ 07102-4077 Permit 6807
(800) 225-1852 New York, NY
74437E503
74437E602 MF172E2
74437E701
74437E800
