PRUDENTIAL INVESTMENT PORTFOLIOS INC, N-30D, 1999-12-09

PRUDENTIAL INVESTMENT PORTFOLIOS INC
N-30D, 1999-12-09

Previous: GENDELL JEFFREY L ET AL, SC 13D/A, 1999-12-09

Next: BOSTON PARTNERS ASSET MANAGEMENT L P, SC 13G/A, 1999-12-09

<PAGE>

(ICON)

Prudential
Active
Balanced
Fund

ANNUAL
REPORT
Sept. 30, 1999

(LOGO)

<PAGE>

A Message from the Fund's President November 18, 1999
- -------------------------------------------------------------------------------
(PHOTO)

Dear Shareholder,
The fiscal year ended September 30, 1999, was an excellent one for Prudential
Active Balanced Fund. The 16.07% return of its Class A shares was well above
the historical average for large-cap stocks. Moreover, the Fund's return was
less volatile than a portfolio of stocks alone, which is the primary reason
investors buy balanced funds. In the last quarter of 1998, when stock markets
rebounded from their steep summer drop, the Fund's return did not rise as high,
but it also held up better in the third quarter of 1999 when the S&P 500 fell
6%. The Fund's performance range was much narrower than stocks alone.

Its performance also was strong in comparison to other balanced
funds--three-and-a-half percentage points above the Lipper Balanced Fund
Average. Both its bonds and stocks beat their respective benchmarks. Active
asset allocation also added value--the portfolio managers transferred funds
from one asset class to another as the various markets rallied and fell in
this turbulent fiscal year. Their models told them when overall market values
got out of balance; they took advantage of the bargain opportunities when
offered and reduced their exposure to stocks when markets looked extended.

The strong stock market gains of the last three years may have tempted many
investors whose time horizon or temperament suits them poorly for occasional
losses. Declining quarters, such as the third quarter of 1999, serve to remind
us of the benefits of diversification. Bonds tend to hold up better in
downturns. Investors who cannot accept the volatility of a portfolio
consisting entirely of stocks, but who want to share in the inflation
protection and growth potential of equity investing, have an excellent choice
in Prudential Active Balanced Fund.

Sincerely,

John R. Strangfeld
President
The Prudential Investment Portfolios, Inc.

<PAGE>

Performance Review
- -------------------------------------------------------------------------------
(PHOTO) (PHOTO) (PHOTO)

Equity Portfolio Managers Mark S. Stumpp and James H. Scott, and Michael
Lillard, team leader of the U.S. Liquidity team.

Investment Goals and Style
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 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 they believe to be underpriced, but maintaining a
risk profile like that of the S&P 500 Index. Prudential Investment's U.S.
Liquidity Team manages the bonds. There can be no assurance that the Fund will
meet its investment objective.

We moved well
We began our reporting period as the markets were rebounding from their steep
decline in the summer of 1998. We were well above our neutral position in
stocks, and the impact of the rebound was magnified by this overweight. As
stocks moved up in price, we reduced our allocation, moving to a neutral one by
year end and to an underweight by the end of the first quarter of 1999. This
helped in the third quarter of 1999 when stocks generally declined. We held
very little cash through most of the fiscal year, but rose above our neutral
cash position at the end.

We held the leading growth stocks
We generally hold at least 175 different stocks and generally buy no more than
0.75 percentage points or less than their representation in the S&P 500 Index.
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, market gains were focused
on a few key growth stocks. We emphasized the large-capitalization,
growth-oriented stocks that then led the S&P 500 Index. In fact, companies
like Microsoft, General Electric, and Wal-Mart were solid performers in the
portfolio over the fiscal year. However, during the first quarter of 1999,
their positive impact was offset by a decline of our value stocks, and we
trailed the S&P 500 Index slightly. In the following quarter, value stocks shot
ahead to lead the market, and ours drove us slightly ahead of our stock
benchmark. In the last quarter of our fiscal year, the strength of our growth
stocks supported our portfolio, as it held up better than the S&P 500 Index in
a generally falling market. Over the full fiscal year, we benefited most from
our stock selection in

Active Asset Allocation
Asset class has a greater impact on returns over the long term than selection
of individual securities. We use quantitative models to determine which market
sectors offer the best opportunities. Using companies' earnings expectations
and stock prices, we compare the expected returns on stocks with the interest
rates on bonds. We try to increase the proportion of the type of securities
that offer the best value at any time, monitoring our allocation daily. We
implement most of these allocation changes with stock and bond futures
contracts because it is quicker and less expensive than trading the actual
securities. Our neutral position is 57.5% stocks, 40% bonds, and 2.5% cash.

<PAGE>

the strongly rising quarter that began our reporting period and in the
declining market that ended it.

Our bonds had a positive return in a difficult period
The Lehman Aggregate Bond Index posted a negative return for the year, but our
portfolio came in slightly positive. 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. 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 and our focus on higher-grade bonds contributed to our
superior bond return. Our modest overweight in mortgage-backed securities also
helped.

Looking Ahead
Stocks are expensive
At the end of our reporting period, our quantitative model recommended a lower
equity allocation than normal. This year's increase in interest rates and stock
prices led us to favor bonds over stocks in making adjustments from our normal
risk profile. However, the degree of market overvaluation varies considerably
from day to day.

Performance at a Glance

Cumulative Total Returns1 As of 9/30/99
<TABLE>
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 16.07% N/A 39.00%
Class B 15.12 N/A 36.08
Class C 15.12 N/A 36.08
Class Z 16.32 85.05% 106.67
Lipper Balanced Fund Avg3 12.56 96.33 ***
</TABLE>

Average Annual Total Returns1 As of 9/30/99
<TABLE>
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 10.27% N/A 10.08%
Class B 10.12 N/A 10.38
Class C 12.97 N/A 10.85
Class Z 16.32 13.10% 11.38
</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 LLC and Lipper, Inc. The
cumulative total returns do not take into account sales charges. The average
annual total returns do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 5% for Class A shares. Class B
shares are subject to a declining contingent deferred sales charge (CDSC) of
5%, 4%, 3%, 2%, 1%, and 1% for six years. Class B shares will automatically
convert to Class A shares, on a quarterly basis, approximately seven years
after purchase. Class C shares are subject to a front-end sales charge of 1%
and a CDSC of 1% for 18 months. Class 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 and service (12b-1) fees.

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 one- and
five-year periods in the Balanced Fund category. The Lipper average is
unmanaged. Balanced funds are funds whose primary objective is to conserve
principal by maintaining at all times a balanced portfolio of both stocks and
bonds. Typically, the stock/bond ratio ranges around 60%/40%.

***Lipper Since Inception returns are 42.02% for Class A, B, and C; and
115.21% for Class Z, based on all funds in each share class.

<PAGE>

Review Cont'd.
- -------------------------------------------------------------------------------

The uncertainty about interest-rate direction and the slowing U.S. economy have
led us to increase our cash position to slightly above neutral.

Our stock portfolio emphasizes--within the limits we describedearlier--
electronic technology, finance, technology services, manufacturers, and
retailers. We are underrepresenting health technology and consumer nondurables.
Our bond holdings favor corporate and mortgage-backed bonds because we believe
they continue to offer an attractively greater return in a generally healthy
economy.

Additional Performance Tracking Tools
You can access comprehensive information about the performance of your
Prudential mutual funds 24 hours a day through our Web site and automated phone
service. At www.prudential.com/investing, you'll find the daily closing
values, changes from the previous day, and quarterly performance for all of
our retail mutual funds. Other available resources include daily, monthly, and
quarterly market commentary.

Prudential is committed to meeting shareholders' needs. That is why we continue
to upgrade and make improvements to our Web site. Please send us your comments
about how we can continue to improve our site to meet your needs.

Daily fund values are also a toll-free call away from any touch-tone phone.
Call (800) 225-1852 and follow the voice prompts to obtain mutual fund closing
values and yields. You can even set up a personalized "watch list" to track
specific Prudential mutual funds.

Mutual Fund Automated Service: (800) 225-1852

Main Menu Submenus
1. Account information 1. Account balance
2. Transactions
3. Order forms
2. Prices and yields
3. Transactions
4. Order checks and statements
5. PIN change

Five Largest Equity Holdings
Expressed as a percentage of net assets as of 9/30/99

Microsoft Corporation 1.9%
Computer Software & Services
General Electric Co. 1.6
Diversified Operations
Wal-Mart Stores, Inc. 1.0
Retail
CISCO Systems, Inc. 1.0
Networking
IBM Corp. 0.9
Computer Systems/Peripherals

Portfolio Composition
Expressed as a percentage of net assets as of 9/30/99
Bonds 44.0%

Equity:
Electronic Tech & Services 11.8
Finance 7.3
Producer Manufacturing 4.4
Utilities 4.4
Health Services & Technology 4.1
Consumer Durables & Nondurables 3.5
Retail Trade 3.5
Process Industries 2.3
Consumer Services 1.7
Transportation 0.9
Commercial Services 0.7
Energy & Nonenergy Minerals 0.1
Cash & Equivalents 11.3*

* Primarily collateral for stock and bond futures contracts used to manage
asset allocation.

2
<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ----------------------------------------------------------------
LONG-TERM INVESTMENTS--73.3%
COMMON STOCKS--44.7%
- ----------------------------------------------------------------
Aerospace/Defense--0.9%
5,900 Allied Signal, Inc. $ 353,631
5,500 Boeing Co. 234,438
3,600 General Dynamics Corp. 224,775
1,600 Lockheed Martin Corp. 52,300
3,000 Raytheon Co. 148,875
5,200 United Technologies Corp. 308,425
-------------
1,322,444
- ------------------------------------------------------------
Airlines--0.5%
2,500 Alaska Air Group, Inc. (a) 101,719
5,900 America West Holdings Corp. 102,144
3,300 AMR Corp. 179,850
4,500 Delta Airlines, Inc. 218,250
1,350 Southwest Airlines Co. 20,503
1,800 UAL Corp. (a) 117,562
-------------
740,028
- ------------------------------------------------------------
Appliances--0.1%
5,700 Maytag Corp. 189,881
- ------------------------------------------------------------
Automobiles & Trucks--0.9%
4,500 Arvin Industries, Inc. 139,219
12,900 Ford Motor Co. 647,419
3,600 General Motors Corp. 226,575
6,900 PACCAR, Inc. 351,037
-------------
1,364,250
- ------------------------------------------------------------
Advertising
1,000 Interpublic Group of Companies, Inc. 41,125
- ------------------------------------------------------------
Automotive Parts--0.2%
7,000 TRW, Inc. 348,250
- ------------------------------------------------------------
Banking--1.7%
5,994 Bank One Corp. 208,666
4,620 Charter One Financial, Inc. 106,838
3,900 Chase Manhattan Corp. 293,962
1,400 Dime Bancorp, Inc. 24,500
6,200 First Union Corp. 220,487
836 Firstar Corp. $ 21,423
11,400 Fleet Financial Group, Inc. 417,525
13,900 Hibernia Corp. 161,587
3,500 Huntington Bancshares, Inc. 92,969
13,600 KeyCorp 351,050
1,500 Pacific Century Financial Corp. 30,656
3,900 PNC Bank Corp. 205,481
3,200 Regions Financial Corp. 96,000
3,000 Suntrust Banks, Inc. 197,250
1,000 U.S. Bancorp 30,188
-------------
2,458,582
- ------------------------------------------------------------
Beverages--0.6%
2,600 Anheuser-Busch Companies, Inc. 182,162
7,900 Coca-Cola Co. 379,694
8,500 PepsiCo, Inc. 257,125
-------------
818,981
- ------------------------------------------------------------
Building & Construction
1,600 Masco Corp. 49,600
- ------------------------------------------------------------
Business Services--0.2%
4,400 Omnicom Group, Inc. 348,425
- ------------------------------------------------------------
Chemicals--0.3%
500 Air Products & Chemicals, Inc. 14,531
1,100 Dow Chemical Co. 124,987
100 E.I. Du Pont de Nemours & Co. 6,088
1,100 Octel Corp. (a) 12,375
400 Praxair, Inc. 18,400
11,000 Schulman (A.), Inc. 190,437
300 Union Carbide Corp. 17,044
800 Waters Corp. (a) 48,450
-------------
432,312
- ------------------------------------------------------------
Computer Services--0.2%
2,500 Electronic Data Systems Corp. 132,344
2,000 First Data Corp. 87,750
1,000 Unisys Corp. (a) 45,125
-------------
265,219
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- -----------------------------------------------------------------
Computer Software & Services--5.5%
800 Adobe Systems, Inc. $ 90,800
6,500 America Online, Inc. (a) 676,000
7,200 BMC Software Inc. (a) 515,250
6,200 Citrix Systems, Inc. (a) 384,012
10,300 Computer Associates International,
Inc. 630,875
600 Compuware Corp. (a) 15,638
2,950 Comverse Technology, Inc. (a) 278,222
4,500 DST Systems, Inc. (a) 255,937
10,100 EMC Corp. 721,519
30,900 Microsoft Corp. (a) 2,798,381
12,400 Oracle Systems Corp. (a) 564,200
300 Siebel Systems, Inc. (a) 19,988
7,900 Sun Microsystems, Inc. (a) 734,700
9,400 Teradyne, Inc. (a) 331,350
-------------
8,016,872
- ------------------------------------------------------------
Computer Systems/Peripherals--1.5%
3,400 Apple Computer, Inc. (a) 215,262
4,200 Dell Computer Corp. (a) 175,613
4,000 Hewlett-Packard Co. 368,000
11,300 International Business Machines Corp. 1,371,537
-------------
2,130,412
- ------------------------------------------------------------
Cosmetics/Toiletries--0.1%
3,000 Colgate-Palmolive Co. 137,250
- ------------------------------------------------------------
Distribution/ Wholesalers--0.1%
900 Costco Wholesale Corp. 64,800
- ------------------------------------------------------------
Diversfied Consumer Products--0.9%
9,800 Procter & Gamble Co. 918,750
1,000 Ralston-Purina Group 27,812
5,717 Unilever NV 389,471
-------------
1,336,033
- ------------------------------------------------------------
Diversified Operations--1.6%
20,300 General Electric Co. 2,406,819
- ------------------------------------------------------------
Diversified Manufacturing--0.5%
1,000 Corning Inc. 68,562
3,900 Eaton Corp. 336,619
3,800 Harsco Corp. 104,975
1,200 Illinois Tool Works Inc. $ 89,475
600 PPG Industries, Inc. 36,000
500 Textron, Inc. 38,688
3,400 Trinity Industries, Inc. 104,975
-------------
779,294
- ------------------------------------------------------------
Electrical Utilities--1.5%
200 American Electric Power Co., Inc. 6,825
5,500 Central & South West Corp. 116,187
2,600 Consolidated Edison, Inc. 107,900
2,200 Dominion Resources, Inc. 99,275
3,300 DTE Energy Co. 119,212
3,400 Duke Energy Corp. 187,425
12,400 Entergy Corp. 358,825
7,200 Florida Progress Corp. 333,000
7,500 GPU, Inc. 244,687
2,696 PP & L Resources, Inc. 72,961
15,000 Public Service Company of New Mexico 273,750
2,500 Public Service Enterprise Group Inc. 96,563
6,100 Southern Co. 157,075
-------------
2,173,685
- ------------------------------------------------------------
Electrical Services--0.1%
5,900 Edison International 143,444
- ------------------------------------------------------------
Electronic Components--1.8%
2,200 Emerson Electric Co. 139,012
18,300 Intel Corp. 1,359,919
5,500 KLA-Tencor Corp. (a) 357,500
3,400 Motorola, Inc. 299,200
6,300 Solectron Corp. (a) 452,419
700 Xilinx, Inc. (a) 45,872
-------------
2,653,922
- ------------------------------------------------------------
Financial Services--4.2%
500 Allmerica Financial Corp. 23,813
5,800 AMBAC Financial Group, Inc. 274,775
3,300 American Express Co. 444,262
9,060 BankAmerica Corp. 504,529
8,600 Bear Stearns Companies, Inc. 330,563
7,900 Charles Schwab Corp. 266,131
19,425 Citigroup Inc. 854,700
6,800 Countrywide Credit Industries, Inc. 219,300
5,700 Federal Home Loan Mortgage Corp. 296,400
7,400 Federal National Mortgage Assoc. 463,887
3,800 Golden West Financial Corp. 373,350
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- ------------------------------------------------------------------
Financial Services (cont'd.)
1,900 Lehman Brothers Holdings, Inc. $ 110,794
3,900 MBNA Corp. 88,969
700 Merrill Lynch & Co., Inc. 47,031
3,600 Morgan (J.P.) & Co., Inc. 411,300
4,800 Morgan Stanley, Dean Witter & Co. 428,100
3,600 PaineWebber Group, Inc. 130,500
4,700 Providian Financial Corp. 372,181
3,400 SLM Holding Corp. 146,200
700 The PMI Group, Inc. 28,613
9,300 Wells Fargo Co. 368,512
-------------
6,183,910
- ------------------------------------------------------------
Food Distribution
1,000 SYSCO Corp. 35,063
- ------------------------------------------------------------
Foods--0.6%
10,914 Archer-Daniels Midland Co. 133,014
6,700 ConAgra, Inc. 151,169
2,700 General Mills, Inc. 219,037
1,500 H.J. Heinz Co. 64,500
1,600 Kellogg Co. 59,900
300 Nabisco Group Holdings Corp. 4,500
4,200 Sara Lee Corp. 98,438
3,400 Suiza Foods Corp. (a) 127,500
-------------
858,058
- ------------------------------------------------------------
Health Care Services--0.1%
700 American Home Products Corp. 29,050
1,900 United Healthcare Corp. 92,506
-------------
121,556
- ------------------------------------------------------------
Home Furnishings--0.1%
4,000 Springs Industries, Inc. 135,750
- ------------------------------------------------------------
Hospital Management
2,200 Columbia/HCA Healthcare Corp. 46,613
- ------------------------------------------------------------
Hotels & Leisure
600 Marriott International, Inc. 19,613
- ------------------------------------------------------------
Human Resources--0.1%
7,000 Kelly Services, Inc. 210,875
Insurance--1.4%
14,400 Allstate Corp. $ 359,100
10,800 American International Group, Inc. 938,925
2,000 CIGNA Corp. 155,500
2,700 Hartford Financial Services Group 110,362
1,200 Marsh & McLennan Cos., Inc. 82,200
12,900 Old Republic International Corp. 186,244
4,000 SAFECO Corp. 112,000
2,600 Torchmark Corp. 67,275
-------------
2,011,606
- ------------------------------------------------------------
Leisure & Tourism--0.1%
3,200 Carnival Corp. 139,200
- ------------------------------------------------------------
Machinery & Equipment--0.3%
2,900 Caterpillar, Inc. 158,956
700 Deere & Co. 27,081
600 Dover Corp. 24,525
500 Ingersoll-Rand Co. 27,469
8,800 MagneTek, Inc. (a) 78,650
700 Rockwell International Corp. 36,750
2,400 Tecumseh Products Co. 120,300
-------------
473,731
- ------------------------------------------------------------
Measuring & Control Instruments
500 Honeywell Inc. 55,657
100 Johnson Controls, Inc. 6,631
-------------
62,288
- ------------------------------------------------------------
Media & Communications--0.5%
1,300 Gannett Co., Inc. 89,944
600 McGraw-Hill Companies, Inc. 29,025
3,800 Time Warner Inc. 230,850
5,100 Univision Communications Inc. (a) 415,012
-------------
764,831
- ------------------------------------------------------------
Medical Products & Services--1.6%
1,300 Baxter International Inc. 78,325
4,700 Johnson & Johnson Co. 431,812
13,800 Schering-Plough Corp. 602,025
8,500 Tyco International Ltd. 877,625
6,100 Warner-Lambert Co. 404,888
-------------
2,394,675
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- -------------------------------------------------------------------
Medical Technology--0.6%
9,600 Abbott Laboratories $ 352,800
5,000 Amgen, Inc. (a) 407,500
700 Biogen, Inc.(a) 55,169
900 Genzyme Corp. 40,556
500 VISX, Inc. (a) 39,547
-------------
895,572
- ------------------------------------------------------------
Metals Processing--0.1%
3,100 Precision Castparts Corp. 94,550
- ------------------------------------------------------------
Networking--1.0%
21,300 Cisco Systems, Inc. (a) 1,460,381
- ------------------------------------------------------------
Office Equipment & Supplies--0.1%
1,100 Pitney Bowes Inc. 67,031
- ------------------------------------------------------------
Oil & Gas Equipment & Services--0.1%
3,600 Enron Corp. 148,500
- ------------------------------------------------------------
Oil & Gas Exploration/Production--1.2%
2,300 Atlantic Richfield Co. 203,837
4,800 Coastal Corp. 196,500
1,000 Kerr-McGee Corp. 55,063
2,000 Phillips Petroleum Co. 97,500
16,500 Royal Dutch Petroleum Co. 974,531
3,100 Texaco, Inc. 195,688
2,800 USX - Marathon Group 81,900
-------------
1,805,019
- ------------------------------------------------------------
Oil & Gas Services--1.1%
3,800 Amerada Hess Corp. 232,750
4,400 Chevron Corp. 390,500
8,800 Exxon Corp. 668,250
2,600 Mobil Corp. 261,950
-------------
1,553,450
- ------------------------------------------------------------
Paper & Packaging
500 Fort James Corp. 13,344
- ------------------------------------------------------------
Paper & Forest Products--0.4%
100 Champion International Corp. 5,137
5,200 Georgia-Pacific Group 210,600
1,900 International Paper Co. 91,319
800 Weyerhaeuser Co. 46,100
3,800 Willamette Industries, Inc. 163,875
-------------
517,031
Pharmaceuticals--1.8%
900 Allergan, Inc. $ 99,000
13,000 Bristol-Myers Squibb Co. 877,500
700 Eli Lilly & Co. 44,800
17,000 Merck & Co., Inc. 1,101,813
13,900 Pfizer, Inc. 499,531
-------------
2,622,644
- ------------------------------------------------------------
Photography--0.1%
1,600 Eastman Kodak Co. 120,700
- ------------------------------------------------------------
Precious Metals
700 Barrick Gold Corp. 15,225
- ------------------------------------------------------------
Printing & Publishing--0.4%
2,100 Knight-Ridder, Inc. 115,237
3,600 Lexmark International Group, Inc. (a) 289,800
900 New York Times Co. 33,750
2,800 Tribune Co. 139,300
-------------
578,087
- ------------------------------------------------------------
Railroads--0.1%
5,800 Canadian National Railway Co. 175,813
- ------------------------------------------------------------
Retail--3.6%
7,200 Abercrombie & Fitch Co. (a) 245,250
1,800 Bed Bath & Beyond Inc. (a) 62,888
2,600 Best Buy Co., Inc. (a) 161,362
10,800 Circuit City Stores-Circuit City Group 455,625
1,700 CVS Corp. 69,381
2,200 Dayton-Hudson Corp. 132,138
5,000 Federated Department Stores, Inc. (a) 218,437
10,975 Gap, Inc. 351,200
12,800 Home Depot, Inc. 878,400
16,700 Kmart Corp.(a) 195,181
4,300 Kohl's Corp. (a) 284,337
1,300 May Department Stores Co. 47,369
6,700 McDonald's Corp. 288,100
2,500 Safeway Inc. (a) 95,156
1,600 Sears, Roebuck & Co. 50,200
1,000 TJX Companies, Inc. 28,063
200 Tricon Global Restaurants, Inc. (a) 8,188
31,700 Wal-Mart Stores, Inc. 1,507,731
5,000 Walgreen Co. 126,875
100 Winn-Dixie Stores, Inc. 2,969
-------------
5,208,850
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- --------------------------------------------------------------------
Steel & Metals--0.1%
5,700 Carpenter Technology Corp. $ 139,650
- ------------------------------------------------------------
Telecommunication Services--2.9%
8,900 Ameritech Corp. 597,969
22,350 AT&T Corp. 972,225
8,500 Bell Atlantic Corp. 572,156
4,800 BellSouth Corp. 216,000
750 CenturyTel, Inc. 30,469
820 Global Crossing Ltd. (a) 21,730
8,100 GTE Corp. 622,687
5,875 MCI WorldCom, Inc. (a) 422,266
11,600 SBC Communications, Inc. 592,325
4,000 Sprint Corp. 217,000
-------------
4,264,827
- ------------------------------------------------------------
Telecommunications Equipment--1.9%
400 General Instrument Corp. (a) 19,250
13,700 Lucent Technologies, Inc. 888,787
15,800 Nortel Networks Corp. 805,800
3,000 QUALCOMM, Inc. (a) 567,563
7,600 Tellabs, Inc. (a) 432,725
-------------
2,714,125
- ------------------------------------------------------------
Textile-Apparel Manufacturing--0.2%
25,300 Burlington Industries, Inc. (a) 112,269
11,300 Unifi, Inc. (a) 124,300
-------------
236,569
- ------------------------------------------------------------
Tobacco--0.6%
18,800 Philip Morris Co., Inc. 642,725
4,100 Universal Corp. 107,113
5,900 UST, Inc. 178,106
-------------
927,944
- ------------------------------------------------------------
Transportation/Trucking/Shipping--0.2%
2,000 Arnold Industries, Inc. 25,250
7,700 Burlington Northern, Inc. 211,750
1,200 FDX Corp. (a) $ 46,500
100 Kansas City Southern Industries, Inc. 4,644
1,000 Union Pacific Corp. 48,062
-------------
336,206
Total common stocks
(cost $57,888,147) 65,574,915
-------------
- ------------------------------------------------------------
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000)
- ------------------------------------------------------------
DEBT OBLIGATIONS--28.6%
CORPORATE BONDS--14.0%
- ------------------------------------------------------------
Aerospace/Defense--1.3%
A1 $ 700(d) Boeing Inc., Deb.
8.10%, 11/15/2006 739,410
Baa3 700(d) Northrop Grumman Corp.,
Deb.
7.75%, 3/1/2016 679,000
Baa1 500(d) Raytheon Co., Note
6.30%, 3/15/2005 482,145
------------
1,900,555
- ------------------------------------------------------------
Airlines--0.2%
Baa3 225 Delta Air Lines, Inc.,
Deb.
9.75%, 5/15/2021 255,460
- ------------------------------------------------------------
Asset Backed Securities--1.6%
Aaa 500 Citibank Credit Card
Master Trust I, Class A
5.875%, 3/10/2011 459,685
Aaa 1,500(d) Citibank Credit Card
Master Trust, Cl. A
6.05%, 1/15/2010 1,406,250
Aaa 500(d) MBNA Master Credit Card
Trust, Ser. C, Cl. A
6.45%, 2/15/2008 494,060
------------
2,359,995
- ------------------------------------------------------------
Automobiles & Trucks--0.1%
A1 150(d) Ford Motor Co., Deb.
6.50%, 8/1/2018 135,130
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000) Description Value (Note 1)
<C> <C> <S> <C>
- ------------------------------------------------------------
Banking--2.1%
Aa2 $ 1,000(d) BankAmerica Corp., MTN
7.125%, 5/12/2005 $ 1,003,050
Aa3 1,000(d) Chase Manhattan Bank,
Sub. Note
7.00%, 6/1/2005 997,300
A1 500(d) Citicorp, Sub. Note
7.125%, 9/1/2005 501,600
Deutsche Bank, Deb.
A1 160 6.70%, 12/13/2006 154,640
A1 280(d) 7.50%, 4/25/2009 281,532
Aa3 150 National Westminster Bank
PLC, Sub. Note
7.375%, 10/1/2009 149,824
------------
3,087,946
- ------------------------------------------------------------
Beverages--0.1%
A2 100 Coca Cola Enterprises
Inc., Note
7.125%, 9/30/2009 99,667
- ------------------------------------------------------------
Building & Construction--0.5%
A3 800(d) Hanson Overseas BV, Sr.
Note
6.75%, 9/15/2005 786,088
- ------------------------------------------------------------
Consulting--0.3%
Baa1 400(d) Comdisco, Inc., Note
5.95%, 4/30/2002 387,656
- ------------------------------------------------------------
Financial Services--4.3%
Aa3 750(d) Associates Corp. North
America, Sr. Note
6.75%, 7/15/2001 754,635
A1 160 BCH Cayman Islands Ltd.,
Sub Note
7.70%, 7/15/2006 160,758
A2 1,000(d) Bear, Stearns & Co. Inc.,
Sr. Note
8.75%, 3/15/2004 1,064,270
A1 285(d) Ford Motor Credit Corp.,
Deb.
7.40%, 11/1/2046 272,460
A2 $ 570(d) General Motors Acceptance
Corp., Sr. Note
6.75%, 2/7/2002 $ 573,568
A1 700(d) Goldman, Sachs Group LP,
Note
7.25%, 10/1/2005 703,157
A3 400(d) Heller Financial Inc.,
Note
6.00%, 3/19/2004 383,520
A1 400(d) International Lease
Finance Corp., Note
6.00%, 5/15/2002 395,156
A1 100 Keycorp Capital III,
Capital Securities,
7.75%, 7/15/2029 95,399
Lehman Brothers Holdings,
Inc., Notes
A3 240(d) 6.625%, 4/1/2004 231,912
A3 130(d) 6.625%, 2/5/2006 124,595
Aa3 500(d) Merrill Lynch & Co., MTN
6.02%, 5/11/2001 497,430
A1 520(d) Santander Finance
Issuances, Note
6.80%, 7/15/2005 507,848
Baa1 600(d) US West Capital Funding
Inc., Note
6.125%, 7/15/2002 586,668
------------
6,351,376
- ------------------------------------------------------------
Foreign Government Bonds--0.1%
Aa3 120 Comunidad Autonoma De
Andalucia, Note
7.25%, 10/1/2029 118,416
- ------------------------------------------------------------
Leisure--0.1%
Baa1 175 Marriott International
Inc.,
Ser. C, Note
7.875%, 9/15/2009 174,661
- ------------------------------------------------------------
Media & Communications--0.7%
Baa3 300(d) News America Holdings,
Inc., Deb.
9.25%, 2/1/2013 330,555
Baa3 600(d) Time Warner, Inc., Sr.
Note
9.125%, 1/15/2013 673,560
------------
1,004,115
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8

<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000) Description Value (Note 1)
<C> <C> <S> <C>
- ------------------------------------------------------------
Medical Products & Services--0.2%
Baa1 $ 400(d) Tyco International Group,
Note
6.375%, 6/15/2005 $ 386,508
- ------------------------------------------------------------
Oil & Gas Exploration/Production--0.6%
A2 700(d) Atlantic Richfield Co.,
Deb.
10.875%, 7/15/2005 837,445
- ------------------------------------------------------------
Oil & Gas Services
Baa1 50 Amerada Hess Corp., Note
7.875%, 10/1/2029 49,377
- ------------------------------------------------------------
Railroads
Baa3 50 Union Pacific Corp., Sr.
Note
7.375%, 9/15/2009 49,775
- ------------------------------------------------------------
Retail--0.4%
A3 565(d) Penney (J.C.) Co., Inc.,
MTN
7.05%, 5/23/2005 543,728
- ------------------------------------------------------------
Telecommunication Services--0.5%
GTE Corp.,
Baa1 220(d) 6.36%, 4/15/2006, Deb. 210,989
Baa1 210(d) 7.51%, 4/1/2009, Note 216,027
Baa1 330(d) Sprint Capital Corp., Note
6.875%, 11/15/2028 299,158
------------
726,174
- ------------------------------------------------------------
Utilities--0.9%
A2 300(d) Hydro Quebec, Deb.
(Canada)
7.50%, 4/1/2016 301,311
A2 1,000(d) Southern California Edison
Co., Note
6.50%, 6/1/2001 1,000,170
------------
1,301,481
Total corporate bonds
(cost $21,457,973) 20,555,553
------------
COLLATERALIZED MORTGAGE OBLIGATIONS--0.6%
Aaa $ 400 First Union-Lehman
Brothers Bank., Ser.
1998
6.56%, 11/18/2008 $ 382,003
Aaa 500 LB Commercial Conduit
Mortgage Trust, Ser. C,
Class A
6.48%, 1/18/2008 472,856
------------
Total collateralized
mortgage obligations
(cost $915,860) 854,859
------------
- ------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH OBLIGATIONS--10.8%
Aaa 1,000(c) Federal Home Loan Mortgage
Corp.,
7.00%, 12/1/2029 983,120
Federal National Mortgage
Assoc.,
Aaa 2,100(c) 6.50%, 12/1/2014 2,060,625
Aaa 1,000(c) 7.50%, 12/1/2014 1,015,000
Aaa 620 8.50%, 10/1/2024 641,604
Aaa 132(e) 9.50%, 7/1/2025 140
Aaa 361 8.50%, 2/1/2028 373,676
Aaa 4,000(c) 6.50%, 12/1/2029 3,835,000
Aaa 2,000(c) 7.00%, 12/1/2029 1,965,000
Aaa 2,500(c) 7.50%, 12/1/2029 2,507,025
Government National
Mortgage Assoc.,
Aaa 1,500(c) 7.00%, 12/15/2029 1,471,395
Aaa 1,000(c) 8.00%, 12/15/2029 1,021,870
------------
Total U.S. government
agency mortgage
pass-through obligations
(cost $15,803,931) 15,874,455
------------
- ------------------------------------------------------------
U.S. GOVERNMENT SECURITIES--3.2%
United States Treasury
Bonds,
Aaa 55(d) 5.25%, 11/15/2028 47,670
Aaa 715 5.25%, 2/15/2029 625,739
United States Treasury
Notes,
Aaa 400 6.00%, 8/15/2004 403,876
Aaa 1,140(d) 7.50%, 2/15/2005 1,218,375
Aaa 890 6.00%, 8/15/2009 897,227
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9

<PAGE>

Portfolio of Investments as THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
of September 30, 1999 PRUDENTIAL ACTIVE BALANCED FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Amount
(Unaudited) (000) Description Value (Note 1)
<C> <C> <S> <C>
- ----------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES (cont'd.)
United States Treasury
Stripped Interest,
NR $ 2,765 Zero Coupon, 2/15/2010 $ 1,435,643
------------
Total U.S. government
securities
(cost $4,693,178) 4,628,530
------------
Total debt obligations
(cost $42,870,942) 41,913,397
------------
Total long-term
investments
(cost $100,759,089) 107,488,312
------------
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS--36.6%
- ------------------------------------------------------------
COMMERCIAL PAPER--10.9%
Bombardier Capital Inc.,
P-2 3,288 5.80%, 10/1/1999 3,288,000
Centric Capital Corp.,
P-1 1,600 5.45%, 10/5/1999 1,599,031
Conagra, Inc.,
P-1 3,600 5.49%, 10/29/1999 3,584,628
Dayton Hudson Corp., Deb.
P-2 1,000 5.55%, 10/15/1999 997,841
Delaware Funding Corp.,
P-1 2,603 5.40%, 11/15/1999 2,585,430
Rohm & Haas Co.,
P-2 4,000 5.60%, 10/6/1999 3,996,889
------------
Total commercial paper
(cost $16,051,819) 16,051,819
------------
- ------------------------------------------------------------
CORPORATE BONDS--0.2%
- ------------------------------------------------------------
Health Care Services
A2 365(d) American Home Products
Corp., Note
7.70%, 2/15/2000
(cost $367,534) 367,745
------------
- ------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH OBLIGATIONS--3.5%
Aaa 5,106 Federal Home Loan Mortgage
Discount Notes
5.20%, 10/1/1999
(cost $5,106,000) 5,106,000
------------

<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <C> <S> <C>
- ----------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES--0.7%
United States Treasury
Bills,
$ 100(b) 4.55%, 12/16/1999 $ 99,040
1,000(b) 4.615%, 12/16/1999 990,257
------------
Total U.S. government
securities
(cost $1,089,297) 1,089,297
------------
- ------------------------------------------------------------
REPURCHASE AGREEMENT--21.3%
31,201 Joint Repurchase Agreement
Account
5.22%, 10/1/1999
(cost $31,201,000; Note
5) 31,201,000
------------
Total short-term
investments
(cost $53,815,650) 53,815,861
------------
- ------------------------------------------------------------
Total Investments--109.9%
(cost $154,574,739; Note
4) 161,304,173
Liabilities in excess of
other
assets--(9.9%) (14,561,181)
------------
Net Assets--100% $146,742,992
------------
------------
</TABLE>
- ---------------
(a) Non-income producing security.
(b) All or partial amount of security is segregated as initial margin for
financial futures transactions.
(c) Mortgage dollar roll, see Note 1 and Note 4.
(d) All or partial principal amount pledged as collateral for mortgage dollar
rolls.
(e) Figures are actual and not rounded to the nearest thousand.
MTN--Medium Term Note.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Statement of Additional Information contains a description of
Moody's and Standard & Poor's ratings.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 10

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Statement of Assets and Liabilities PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at value (cost $123,373,739).............................................................. $ 130,103,173
Repurchase agreement (cost $31,201,000)................................................................ 31,201,000
Cash................................................................................................... 10,681
Receivable for investments sold........................................................................ 9,754,014
Receivable for Series shares sold...................................................................... 834,456
Dividends and interest receivable...................................................................... 502,037
Due from broker-variation margin....................................................................... 261,660
Other assets........................................................................................... 5,706
------------------
Total assets....................................................................................... 172,672,727
------------------
Liabilities
Payable for investments purchased...................................................................... 24,759,123
Payable for Series shares reacquired................................................................... 893,055
Accrued expenses....................................................................................... 186,596
Management fee payable................................................................................. 79,004
Distribution fee payable............................................................................... 11,957
------------------
Total liabilities.................................................................................. 25,929,735
------------------
Net Assets............................................................................................. $ 146,742,992
------------------
------------------
Net assets were comprised of:
Common stock, at par................................................................................ $ 11,066
Paid-in capital in excess of par.................................................................... 130,746,428
------------------
130,757,494
Undistributed net investment income................................................................. 2,395,226
Accumulated net realized gain on investments........................................................ 7,135,434
Net unrealized appreciation on investments.......................................................... 6,454,838
------------------
Net assets, September 30, 1999......................................................................... $ 146,742,992
------------------
------------------
Class A:
Net asset value and redemption price per share
($10,396,956 / 784,592 shares of common stock issued and outstanding)............................ $13.25
Maximum sales charge (5% of offering price)......................................................... .70
------------------
Maximum offering price to public.................................................................... $13.95
Class B:
Net asset value, offering price and redemption price per share
($10,979,133 / 833,370 shares of common stock issued and outstanding)............................ $13.17
Class C:
Net asset value and redemption price per share
($1,116,852 / 84,777 shares of common stock issued and outstanding).............................. $13.17
Sales charge (1% of offering price)................................................................. .13
------------------
Offering price to public............................................................................ $13.30
Class Z:
Net asset value, offering price and redemption price per share
($124,250,051 / 9,363,638 shares of common stock issued and outstanding)......................... $13.27
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 11

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL ACTIVE BALANCED FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income September 30, 1999
<S> <C>
Income
Interest.............................. $ 4,361,548
Dividends (net of foreign withholding
taxes
of $13,694)........................ 977,951
------------------
Total income......................... 5,339,499
------------------
Expenses
Management fee........................ 940,298
Distribution fee--Class A............. 17,294
Distribution fee--Class B............. 70,178
Distribution fee--Class C............. 6,737
Transfer agent's fees and expenses.... 260,000
Reports to shareholders............... 165,000
Custodian's fees and expenses......... 140,000
Registration fees..................... 110,000
Legal fees and expenses............... 25,000
Audit fee and expenses................ 20,000
Directors' fees and expenses.......... 7,500
Miscellaneous......................... 4,301
------------------
Total expenses....................... 1,766,308
------------------
Net investment income.................... 3,573,191
------------------
Realized and Unrealized Gain
on Investments
Net realized gain on:
Investment transactions............... 5,565,895
Financial futures contracts........... 4,358,935
------------------
9,924,830
------------------
Net change in unrealized appreciation (depreciation) on:
Investments........................... 10,871,412
Financial futures contracts........... (988,830)
------------------
9,882,582
------------------
Net gain on investments.................. 19,807,412
------------------
Net Increase in Net Assets
Resulting from Operations................ $ 23,380,603
------------------
------------------
</TABLE>

THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL ACTIVE BALANCED FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended September 30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income.......... $ 3,573,191 $ 5,391,746
Net realized gain on
investments................. 9,924,830 26,438,362
Net change in unrealized
appreciation (depreciation)
on investments.............. 9,882,582 (28,216,192)
------------ ------------
Net increase in net assets
resulting from operations... 23,380,603 3,613,916
------------ ------------
Dividends and distributions (Note
1)
Dividends 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 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)
------------ ------------
Series share transactions (net of
share conversion) (Note 6)
Net proceeds from shares
sold........................ 69,542,543 105,305,809
Net asset value of shares
issued to shareholders in
reinvestment of dividends
and distributions........... 26,157,302 18,663,277
Cost of shares reacquired...... (114,537,650) (100,421,933)
------------ ------------
Net increase (decrease) in net
assets from Series share
transactions................ (18,837,805) 23,547,153
------------ ------------
Total increase (decrease)......... (21,634,875) 8,497,514
Net Assets
Beginning of year................. 168,377,867 159,880,353
------------ ------------
End of year(a).................... $146,742,992 $168,377,867
------------ ------------
------------ ------------
- ---------------
(a) Includes undistributed net
investment income of.......... $ 2,395,226 $ 3,863,980
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
Prudential Active Balanced 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' investment objective is to seek income and long-term growth of
capital. It invests 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
Fund and the Series in the preparation of its financial statements.

Securities Valuation: Securities listed on a securities exchange and NASDAQ
(other than options on securities and indices) are valued at the last sale 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. Futures contracts and options thereon traded on a
commodities exchange or board of trade are valued at the last sale price at the
close of trading on such exchange or board of trade or, if there was no sale on
the applicable commodities exchange or board of trade on such day, at the mean
between the most recently quoted bid and asked prices on such exchange or board
of trade. Securities for which 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 Series'
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 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.

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 prevailing interest rates or market
conditions. 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 the risk of imperfect correlation
in movements in the price of futures contracts, interest rates and the
underlying hedged assets.

Dollar Rolls: The Series enters into mortgage dollar rolls in which the Series
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 Series forgoes principal and interest paid on the securities. The
Series 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 Series maintains a segregated account, the dollar value of
which is at least equal to its obligations in respect of dollar rolls.
- --------------------------------------------------------------------------------
13
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
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: The Series 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 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 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.

Reclassification of Capital Accounts: The Series accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants, Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to decrease undistributed net investment income by $862,312,
decrease accumulated net realized gain on investments by $4,358,827, and
increase paid-in capital by $5,221,139 for redemptions utilized as distributions
for federal income tax purposes during the year ended September 30, 1999. Net
investment income, net realized gains and net assets were not affected by this
change.

- ------------------------------------------------------------
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 subadvisor'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 Series. 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 Series' average daily net assets.

The Fund has a distribution agreement with Prudential Investment 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 Series' 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 Series.

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 the average daily net
assets of the Class A, B and C shares, respectively, for the year ended
September 30, 1999.

PIMS has advised the Series that it received approximately $60,400 and $6,600 in
front-end sales charges resulting from sales of Class A shares and Class C
shares, respectively, during the year ended September 30, 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 year ended September 30, 1999, it
received approximately $27,500 and $700 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.

PIC, PIFM and PIMS are wholly owned subsidiaries of The Prudential Insurance
Company of America ('Prudential').

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. Interest on any borrowings will be at market rates. 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 year
- --------------------------------------------------------------------------------
14
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
ended September 30, 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 year ended September 30, 1999,
the Series incurred fees of approximately $233,400 for the services of PMFS. As
of September 30, 1999, approximately $16,900 of such fees were due to PMFS.
Transfer agent fees and expenses in the Statement of Operations also include
certain out-of-pocket expenses paid to nonaffiliates.

- ------------------------------------------------------------
Note 4. Portfolio Securities

Purchases and sales of investment securities other than short-term investments,
for the year ended September 30, 1999 were $264,840,951 and $310,274,690,
respectively.

The average monthly balance of dollar rolls outstanding during the year ended
September 30, 1999 was approximately $15,856,258. The value of dollar rolls
outstanding at September 30, 1999 was $14,859,035 (principal $15,100,000), which
was 8.6% of total assets.

The cost basis of investments for federal income tax purposes as of September
30, 1999 was $154,670,010 and, accordingly, net unrealized appreciation of
investments for federal income tax purposes was $6,634,163 (gross unrealized
appreciation--$11,505,180, gross unrealized depreciation--$4,871,017).

During the year ended September 30, 1999, the Series entered into financial
futures contracts. Details of open contracts at September 30, 1999 are as
follows:

<TABLE>
<CAPTION>
Value at Value at Unrealized
Number of Expiration September 30, Trade Appreciation/
Contracts Type Date 1999 Date (Depreciation)
- ----------- ---------------- ------------ ------------- ----------- --------------
<C> <S> <C> <C> <C> <C>
Long Position:
17 U.S. T-Bond Dec. 99 $ 1,936,938 $ 1,947,297 $ (10,359)
42 S&P Bond Dec. 99 13,631,094 13,977,675 (346,581)
155 U.S. T-Note Dec. 99 16,812,656 16,730,312 82,344
--------------
$ (274,596)
--------------
--------------
</TABLE>

- ------------------------------------------------------------
Note 5. Joint Repurchase Agreement Account

The Series, 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 September
30, 1999, the Series had a 4.9% undivided interest in repurchase agreements in
the joint account. The undivided interest for the Series represented $32,201,000
in principal amount. As of such date, each repurchase agreement in the joint
account and the value of the collateral therefore was as follows:

Warburg Dillon Read LLC, 5.32%, in the principal amount of $190,000,000,
repurchase price of $190,028,077, due 10/1/99. The value of the collateral
including accrued interest was $193,802,299.

Bear, Stearns & Co. Inc., 5.32%, in the principal amount of $190,000,000,
repurchase price of $190,028,077, due 10/1/99. The value of the collateral
including accrued interest was $194,200,266.

Morgan (J.P.) Securities, Inc., 5.25%, in the principal amount of $190,000,000,
repurchase price $190,027,708, due 10/1/99. The value of the collateral
including accrued interest was $193,800,121.

Goldman, Sachs & Co., 4.75%, in the principal amount of $88,875,000, repurchase
price $88,886,726, due 10/1/99. The value of the collateral including accrued
interest was $90,653,200.

- ------------------------------------------------------------
Note 6. 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. 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 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 of the Fund
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.
- --------------------------------------------------------------------------------
15
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
Transactions in shares of common stocks were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold........................ 806,345 $ 10,710,045
Shares issued in reinvestment of
dividends and distributions...... 41,285 510,287
Shares reacquired.................. (305,438) (4,105,228)
---------- ------------
Net increase in shares outstanding
before conversion................ 542,192 7,115,104
Shares issued upon conversion
from Class B..................... 236 3,120
---------- ------------
Net increase in shares
outstanding...................... 542,428 $ 7,118,224
---------- ------------
---------- ------------
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
- -----------------------------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold........................ 652,713 $ 8,665,383
Shares issued in reinvestment of
dividends and distributions...... 41,783 516,862
Shares reacquired.................. (90,666) (1,202,053)
---------- ------------
Net increase in shares outstanding
before conversion................ 603,830 7,980,192
Shares reacquired upon conversion
into
Class A.......................... (236) (3,120)
---------- ------------
Net increase in shares
outstanding...................... 603,594 $ 7,977,072
---------- ------------
---------- ------------
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 Shares Amount
- ----------------------------------- ---------- ------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold........................ 98,943 $ 1,301,393
Shares issued in reinvestment of
dividends and distributions...... 3,860 47,750
Shares reacquired.................. (39,496) (519,205)
---------- ------------
Net increase in shares
outstanding...................... 63,307 $ 829,938
---------- ------------
---------- ------------
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
- -----------------------------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold........................ 3,692,823 $ 48,865,722
Shares issued in reinvestment of
dividends and distributions...... 2,032,131 25,082,403
Shares reacquired.................. (8,515,198) (108,711,164)
---------- ------------
Net decrease in shares
outstanding...................... (2,790,244) $(34,763,039)
---------- ------------
---------- ------------
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>
- --------------------------------------------------------------------------------
16
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Financial Highlights PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B
------------------------------------ ------------------------------------
November 7, November 7,
Year Ended 1996(a) Year Ended 1996(a)
September 30, Through September 30, Through
------------------ September 30, ------------------ September 30,
1999 1998 1997 1999 1998 1997
------- ------ ------------- ------- ------ -------------
<S> <C> <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 $ 13.40
------- ------ ----- ------- ------ -----
Income from investment operations:
Net investment income............. .31 .44 .21(b) .19 .27 .19(b)
Net realized and unrealized gain
(loss) on investment
transactions................... 1.69 (.20) 1.97 1.69 (.14) 1.92
------- ------ ----- ------- ------ -----
Total from investment
operations.................. 2.00 .24 2.18 1.88 .13 2.11
------- ------ ----- ------- ------ -----
Less distributions:
Dividends from net investment
income......................... (.30) (.32) (.39) (.19) (.21) (.39)
Distributions from net realized
gains.......................... (1.74) (1.04) (.78) (1.74) (1.04) (.78)
------- ------ ----- ------- ------ -----
Total distributions............ (2.04) (1.36) (1.17) (1.93) (1.25) (1.17)
------- ------ ----- ------- ------ -----
Net asset value, end of period.... $ 13.25 $13.29 $ 14.41 $ 13.17 $13.22 $ 14.34
------- ------ ----- ------- ------ -----
------- ------ ----- ------- ------ -----
TOTAL RETURN(d):.................. 16.07% 1.93% 17.48% 15.12% 1.10% 16.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $10,397 $3,218 $ 990 $10,979 $3,038 $ 213
Average net assets (000).......... $ 6,918 $2,090 $ 100 $ 7,018 $1,285 $ 71
Ratios to average net assets:
Expenses, including
distribution fees........... 1.41% 1.28% 1.31%(c) 2.16% 2.03% 2.06%(c)
Expenses, excluding
distribution fees........... 1.16% 1.03% 1.06%(c) 1.16% 1.03% 1.06%(c)
Net investment income.......... 2.29% 2.72% 2.69%(c) 1.54% 1.95% 1.94%(c)
Portfolio turnover rate........... 230% 256% 50% 230% 256% 50%
</TABLE>
- ---------------
(a) Commencement of offering of Class A and B shares.
(b) Calculated based upon weighted average shares outstanding during the period.
(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. 17

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Financial Highlights PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Z
----------------------------------- -----------------------------------------------
November 7,
Year Ended 1996(e)
September 30, Through Year Ended September 30,
----------------- September 30, -----------------------------------------------
1999 1998 1997 1999 1998 1997 1996
------ ------ ------------- -------- -------- -------- --------
<S> <C> <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 $ 12.46
------ ------ ----- -------- -------- -------- --------
Income from investment operations:
Net investment income............. .19 .48 .13(b) .35 .38 .39(b) .29(a)
Net realized and unrealized gain
(loss) on investment
transactions................... 1.69 (.35) 1.98 1.68 (.12) 2.22 .81
------ ------ ----- -------- -------- -------- --------
Total from investment
operations.................. 1.88 .13 2.11 2.03 .26 2.61 1.10
------ ------ ----- -------- -------- -------- --------
Less distributions:
Dividends from net investment
income......................... (.19) (.21) (.39) (.34) (.35) (.39) (.37)
Distributions from net realized
gains.......................... (1.74) (1.04) (.78) (1.74) (1.04) (.78) (.18)
------ ------ ----- -------- -------- -------- --------
Total distributions............ (1.93) (1.25) (1.17) (2.08) (1.39) (1.17) (.55)
------ ------ ----- -------- -------- -------- --------
Net asset value, end of period.... $13.17 $13.22 $ 14.34 $ 13.27 $ 13.32 $ 14.45 $ 13.01
------ ------ ----- -------- -------- -------- --------
------ ------ ----- -------- -------- -------- --------
TOTAL RETURN(d):.................. 15.12% 1.10% 16.91% 16.32% 2.12% 21.34% 9.11%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $1,117 $ 284 $ 5 $124,250 $161,838 $158,672 $153,588
Average net assets (000).......... $ 674 $ 118 $ 1 $130,052 $177,443 $154,199 $142,026
Ratios to average net assets:
Expenses, including
distribution fees........... 2.16% 2.03% 2.06%(c) 1.16% 1.03% 1.06% 1.00%(a)
Expenses, excluding
distribution fees........... 1.16% 1.03% 1.06%(c) 1.16% 1.03% 1.06% 1.00%(a)
Net investment income.......... 1.54% 2.04% 1.94%(c) 2.54% 2.99% 2.94% 3.09%(a)
Portfolio turnover rate........... 230% 256% 50% 230% 256% 50% 51%
<CAPTION>

1995
--------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period......................... $ 10.92
--------
Income from investment operations:
Net investment income............. .33(a)
Net realized and unrealized gain
(loss) on investment
transactions................... 1.54
--------
Total from investment
operations.................. 1.87
--------
Less distributions:
Dividends from net investment
income......................... (.29)
Distributions from net realized
gains.......................... (.04)
--------
Total distributions............ (.33)
--------
Net asset value, end of period.... $ 12.46
--------
--------
TOTAL RETURN(d):.................. 17.66%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)... $133,352
Average net assets (000).......... $104,821
Ratios to average net assets:
Expenses, including
distribution fees........... 1.00(a)
Expenses, excluding
distribution fees........... 1.00(a)
Net investment income.......... 3.53(a)
Portfolio turnover rate........... 30%
</TABLE>
- ---------------
(a) Net of expense subsidy.
(b) Calculated based upon weighted average shares outstanding during the period.
(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.
(e) Commencement of offering of Class C shares.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 18

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Report of Independant Accountants PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
The Shareholders and Board of Directors of
The Prudential Investment Portfolios, Inc.--Prudential Active Balanced Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Prudential Investment
Portfolios, Inc.--Prudential Active Balanced Fund (the 'Fund,' one of the
portfolios constituting The Prudential Investment Portfolios, Inc.) at September
30, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the three years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above. The accompanying financial highlights for each of
the two years in the year ended September 30, 1996 were audited by other
independent accountants, whose opinion dated November 13, 1996 was unqualified.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
November 17, 1999
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 19

<PAGE>

Federal Income Tax Information THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
(Unaudited) PRUDENTIAL ACTIVE BALANCED FUND
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Series' fiscal year end (September 30, 1999) as to the federal tax status of
dividends and distributions paid by the Series during such fiscal year.
Accordingly, we are advising you that in the fiscal year ended September 30,
1999, dividends paid from net investment income were $.30 per share for Class A
shares, $.19 per share for Class B and Class C shares and $.34 per share for
Class Z shares, which are taxable as ordinary income. In addition, the Series
paid to Class A, B, C and Z shares a short-term capital gain distribution of
$.125 per share which is taxable as ordinary income and a long-term capital gain
distribution of $1.61 per share which is taxable as such. The Series' utilized
redemptions as distributions in the amount of $.068, $.022, and $.323 of
ordinary income, short-term capital gains and long-term capital gains,
respectively, for each class of shares.

We are required by Massachusetts, Missouri and Oregon to inform you that
dividends which have been derived from interest on federal obligations are not
taxable to shareholders. Please be advised that 5.0% of the dividends paid from
ordinary income in the fiscal year ended September 30, 1999 qualify for each of
these states' tax exclusion.

We also wish to advise you that 17.48% of the dividends paid from ordinary
income in the fiscal year ended September 30, 1999 qualified for the corporate
dividends received deduction available to corporate taxpayers.

In January 2000, you will be advised on IRS Form 1099 DIV or substitute 1099 DIV
as to the federal tax status of the distributions received by you in calendar
year 1999.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 20

<PAGE>

Getting the Most from Your Prudential Mutual Fund
How many times have you read these reports--or other financial materials--and
stumbled across a word that you don't understand?

Many shareholders have run into the same problem. We'd like to help. So we'll
use this space from time to time to explain some of the words you might have
read, but not understood. And if you have a favorite word that no one can
explain to your satisfaction, please write to us.

Basis Point: 1/100th of 1%. For example, one-half of one percent is 50 basis
points.

Collateralized Mortgage Obligations (CMOs): Mortgage-backed bonds that separate
mortgage pools into different maturity classes, called tranches. These
instruments are sensitive to changes in interest rates and homeowner
refinancing activity. They are subject to prepayment and maturity extension
risk.

Derivatives: Securities that derive their value from other securities. The
rate of return of these financial instruments rises and falls--sometimes very
suddenly--in response to changes in some specific interest rate, currency,
stock, or other variable.

Discount Rate: The interest rate charged by the Federal Reserve on loans to
member banks.

Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.

Futures Contract: An agreement to purchase or sell a specific amount of a
commodity or financial instrument at a set price at a specified date in the
future.

Leverage: The use of borrowed assets to enhance return. The expectation is that
the interest rate charged on borrowed funds will be lower than the return on
the investment. While leverage can increase profits, it can also magnify
losses.

Liquidity: The ease with which a financial instrument (or product) can be
bought or sold (converted into cash) in the financial markets.

Price/Earnings Ratio: The price of a share of stock divided by the earnings
per share for a 12-month period.

Option: An agreement to purchase or sell something, such as shares of stock,
by a certain time for a specified price. An option need not be exercised.

Spread: The difference between two values; often used to describe the
difference between "bid" and "asked" prices of a security, or between the
yields of two similar maturity bonds.

Yankee Bond: A bond sold by a foreign company or government in the U.S. market
and denominated in U.S. dollars.

<PAGE>

Getting the Most from Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they don't read annual and
semiannual reports. It's quite understandable. These annual and semi-annual
reports are prepared to comply with federal regulations, and are often written
in language that is difficult to understand. So, when most people run into
those particularly daunting sections of these reports, they don't read them.

We think that's a mistake.

At Prudential Mutual Funds, we've made some changes to our report to make it
easier to understand and more pleasant to read. We hope you'll find it
profitable to spend a few minutes familiarizing yourself with your investment.
Here's what you'll find in the report:

Performance at a Glance
Since an investment's performance is often a shareholder's primary concern, we
present performance information in two different formats. You'll find it first
on the "Performance at a Glance" page where we compare the Fund and the
comparable average calculated by Lipper, Inc., a nationally recognized mutual
fund rating agency. We report both the cumulative total returns and the average
annual total returns. The cumulative total return is the total amount of income
and appreciation the Fund has achieved in various time periods. The average
annual total return is an annualized representation of the Fund's performance.
It gives you an idea of how much the Fund has earned in an average year for a
given time period. Under the performance box, you'll see legends that explain
the performance information, whether fees and sales charges have been included
in returns, and the inception dates for the Fund's share classes.

See the performance comparison charts at the back of the report for more
performance information. Please keep in mind that past performance is not
indicative of future results.

Portfolio Manager's Report
The portfolio manager, who invests your money for you, reports on successful--
and not-so-successful--strategies in this section of your report. Look for
recent purchases and sales here, as well as information about the sectors the
portfolio manager favors, and any changes that are on the drawing board.

Portfolio of Investments
This is where the report begins to appear technical, but it's really just a
listing of each security held at the end of the reporting period, along with
valuations and other information. Please note that sometimes we discuss a
security in the 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 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 adviser.

Performance Comparison
These charts are included in the annual report and are required by the
Securities Exchange Commission. Performance is presented here as a hypothetical
$10,000 investment in the Fund since its inception or for 10 years (whichever
is shorter). To help you put that return in context, we are required to include
the performance of an unmanaged, broad-based securities index as well. The
index does not reflect the cost of buying the securities it contains or the
cost of managing a mutual fund. Of course, the index holdings do not mirror
those of the Fund--the index is a broad-based reference point commonly used by
investors to measure how well they are doing. A definition of the selected
index is also provided. Investors cannot invest directly in an index.

<PAGE>

Comparing a $10,000 Investment
- ---------------------------------------------------------
Prudential Active Balanced Fund vs. the S&P 500 Index and
the Lehman Brothers Government/Corporate Bond Index

Chart A
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 10.08%
One Year 10.27%

Without Sales Load
Since Inception 12.05%
One Year 16.07%

Chart B
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 10.38%
One Year 10.12%

Without Sales Load
Since Inception 11.23%
One Year 15.12%

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. These graphs compare a $10,000
investment in The Prudential Investment Portfolios, Inc.: Prudential Active
Balanced Fund (Class A, B, C, and Z shares) with similar investments in the
Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) and the
Lehman Brothers Government/Corporate Bond Index (the Lehman Index) by
portraying the initial account values at the commencement of operations of
each class, and subsequent account values at the end of each fiscal year
(September 30), as measured on a quarterly basis, beginning in 1996 for Class
A, B, and C shares, and in 1993 for Class Z shares. For purposes of the graphs,
and unless otherwise indicated in the accompanying tables, it has been assumed
that (a) the maximum applicable front-end sales charge was deducted from the
initial $10,000 investment in Class A shares; (b) the maximum applicable
contingent deferred sales charges were deducted from the value of the
investment in Class B and Class C shares, assuming full redemption on
September 30, 1999; (c) all recurring fees (including management fees) were
deducted; and (d) all dividends and distributions were reinvested. Class B
shares will automatically convert to Class A

<PAGE>

Chart C
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 10.85%
One Year 12.97%

Without Sales Load
Since Inception 11.23%
One Year 15.12%

Chart Z
(GRAPH)

Average Annual Total Returns
Since Inception 11.38%
Five Years 13.10%
One Year 16.32%

shares, on a quarterly basis, approximately seven years after purchase. This
conversion feature is not reflected in the graphs. Class Z shares are not
subject to a sales charge or distribution and service (12b-1) fees.

The Lehman Index is a weighted index comprising of public, fixed-rate,
nonconvertible domestic corporate debt that is rated at least investment grade
(BBB/Baa or higher) and public obligations of the U.S. Treasury. The S&P 500
Index is a market capitalization-weighted index representing the aggregate
market value of the common equity of 500 stocks primarily traded on the New
York Stock Exchange. The Lehman Index and the S&P 500 Index are unmanaged
indexes, and both include the reinvestment of all income and dividends, but do
not reflect the payment of transaction costs and advisory fees associated with
an investment in the Fund. The Lehman Index and the S&P 500 Index are not the
only indexes that may be used to characterize performance of actively balanced
funds, and other indexes may portray different comparative performance.
Investors cannot invest directly in an index. These graphs are furnished to
you in accordance with SEC regulations.

<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

(800) 225-1852
http://www.prudential.com

Class NASDAQ Cusip
A -- 74437E883
B -- 74437E875
C -- 74437E867
Z PABFX 74437E859

Directors
Edward D. Beach
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
Stephen M. Ungerman, Assistant Treasurer

Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077

Investment Adviser
The Prudential Investment Corporation
Prudential Plaza, Newark, NJ 07102-3777

Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street, Newark, NJ 07102-4077

Custodian
State Street Bank and Trust Company
One Heritage Drive, North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services LLC
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

Prudential Investments is a unit of The Prudential Insurance Company of
America, 751 Broad Street, Newark, NJ 07102.

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.

This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.

MF185E

<PAGE>

(ICON)

Prudential
Jennison
Growth
Fund

ANNUAL
REPORT

Sept. 30, 1999
(LOGO)

<PAGE>
A Message from the Fund's President November 18, 1999
(PHOTO)

Dear Shareholder,

The Prudential Jennison Growth Fund had an exceptionally good fiscal year
ending September 30, 1999, returning 43.58%. Our reporting period began as
U.S. stock markets rebounded from their sharp drop in the summer of 1998. At
first the gains were narrowly focused in stocks with strong earnings momentum,
but cyclical stocks shot ahead during the second quarter of 1999. For the rest
of our reporting period, the market refocused on earnings growth. Once again,
the Prudential Jennison Growth Fund benefited from its strong position in
leading technology companies, which comprise over a third of the Fund's assets.

The Fund's performance was also helped by its holdings in media and
advertising, and in telecommunications. However, its drug stocks, which had a
strong run earlier, fell back somewhat, reflecting concerns about Medicare
reimbursements and possible pricing pressures.

New benchmark peer group
Our benchmark in this report reflects the new categories for mutual funds
introduced by Lipper, Inc. in September 1999. Funds now are classified by
their actual holdings instead of by their objectives; they are in either a
value, growth, or core peer group. In a predominantly growth-style market
over our reporting period, the Prudential Jennison Growth Fund is matched
against other funds that benefited from the favorable environment.
Nonetheless, the Fund beat the Lipper Large-Cap Growth Fund Average by well
over five percentage points. It had an excellent performance relative to its
competitors, as well as in absolute terms.

Growth investing has outperformed value by very substantial margins in each of
the past three years. The Prudential Jennison Growth Fund, nonetheless,
outperformed the Lipper Large-Cap Growth Average, more than doubling in value
over that time. Historically, however, investment styles have tended to
alternate in periods of outperformance that may last several years. Over the
long term, owning both growth and value portfolios is likely to reduce the
volatility of your overall return. Moreover, investors should not expect
returns to remain so far ahead of the historical average for the broad market.

In the following pages, the Fund's portfolio managers describe how they
achieved their strong results this fiscal year, and what their strategy is for
the future.

Sincerely,

John R. Strangfeld
President
The Prudential Investment Portfolios, Inc.

<PAGE>
Performance Review
(PHOTO) (PHOTO) (PHOTO)

James Kannry, Kathleen McCarragher, and Spiros Segalas--Fund Managers.

Investment Goals and Style
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 $1 billion) that we
believe have above-average prospects for growth. There can be no assurance
that the Fund will reach its investment objective.

Jennison Associates tries to identify stocks with substantial potential for
earnings growth over the coming 12 to 18 months. Because we look for firms
that have room to grow, we tend to focus on medium- to large-sized companies.
We use a longer time horizon than many growth investors, so we can weather the
turbulence, or even benefit, when a well-managed company has a short-term
disappointment. Occasionally, some stocks are sold to make room for others
that we believe have greater growth potential, either short or long term.

Technology. Recently, we have had a strong focus on the technology sector,
which is widely believed to be driving this longest sustained period of
peacetime economic expansion in U.S. history. It was the primary reason for
our superior performance in this reporting period, when the S&P 500 Technology
sector gained 74%, far outperforming even the second-place 37% gain of
Communications Services (another focus of our Fund). On September 30, 1999,
about a third of our portfolio, including our three largest holdings, were
technology companies.

We increased our positions in Cisco Systems, which provides the networking
equipment that makes up the Internet infrastructure, Texas Instruments, and
Microsoft. We added JDS Uniphase and Juniper. We sold 3Com, among our worst
performers, which has been losing ground in the networking market. We also
sold our holdings in Oracle and Intuit.

In telecommunications, we own wireless handsets and hardware (Nokia) and
services (Vodafone Airtouch), large multi-service companies (MCI WorldCom),
and emerging providers (Qwest Communications, Nextlink Communications,
Allegiance Telecom). Such companies are providing the infrastructure for the
communications revolution, and have tremendous long-term growth potential.
During this reporting period, we added NextLink and acquired Vodafone shares
in exchange for our Airtouch stock when the firm was acquired.

Healthcare. Drug companies held up well in the 1998 market drop, but shared
nonetheless in the steep rise afterward through the first quarter of 1999,
making them somewhat expensive. When concerns arose about

Portfolio Sector Composition
Expressed as a percentage of net assets
as of 9/30/99

Technology 35.3%
Healthcare 12.4
Finance 12.1
Consumer Cyclicals 10.9
Consumer Staples 10.1
Communication Services 9.7
Capital Goods 7.2
Cash & Equivalents 2.3

<PAGE>
Medicare reimbursement for drugs, the sector corrected. American Home
Products, Schering Plough, and Monsanto (Searle) were among the largest
negative contributors to our performance. We sold Monsanto because its
acquisition by American Home fell through, and we established tax losses in
Pfizer, Lilly, and Merck. We added Johnson and Johnson, and Glaxo.

Financials. Our substantial financial holdings (Schwab, Morgan Stanley Dean
Witter, Chase Manhattan; and Citigroup) were hurt in the 1998 global financial
crisis. They rebounded strongly in the first half of our reporting period, but
lagged afterward. After their rebound, we began to reduce our holdings because
we thought it more likely that the Federal Reserve would increase interest
rates, which tends to hurt financials, than cut them. We reduced our
commitment to the sector by the end of the first quarter of 1999, so we
avoided the worst of their subsequent fall-off. More recently, we have added
to our holdings of the global consolidators in this rapidly changing industry.

Consumer Cyclicals. Our media companies (e.g., CBS and Clear Channel
Communications), which benefited from the strong economy, high profit margins,
and an Internet-related advertising boom, also helped us.

Performance at a Glance
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of 9/30/99
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 43.58% N/A 127.64%
Class B 42.51 N/A 121.11
Class C 42.51 N/A 121.11
Class Z 43.94 218.26% 283.88
Lipper Large-Cap
Growth Fund Avg3 37.86 197.21 ***
</TABLE>

Average Annual Total Returns1 As of 9/30/99
<TABLE>
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A 36.40% N/A 21.81%
Class B 37.51 N/A 22.22
Class C 40.09 N/A 22.19
Class Z 43.94 26.05% 21.53
</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.

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 one-
and five-year periods in the Large-Cap Growth Fund category. The Lipper
average is unmanaged. Large-Cap Growth funds, by portfolio practice, invest at
least 75% of their equity assets in companies with market capitalizations (on
a three-year weighted basis) of greater than 300% of the dollar-weighted
median market capitalization of the S&P Mid-Cap 400 IndexR. Large-Cap Growth
funds normally invest in companies with long-term earnings expected to grow
significantly faster than the earnings of the stocks represented in a major
unmanaged stock index. These funds will normally have an above-average price/
earnings ratio, price-to-book ratio, and three-year earnings growth figure,
compared to the U.S. diversified large-cap funds universe average.

R S&P is a registered trademark of the Standard & Poor's Corporation.

***Lipper Since Inception returns are 131.63% for Class A, B, and C, and
107.71% for Class Z, based on all funds in each share class.
- -------------------------------------------------------------------------------
1

<PAGE>
Review Cont'd.

Five Largest Holdings Expressed as a percentage of net assets as of 9/30/99

Security/Industry % of Net Assets Comments
Microsoft 4.7% World's largest software company.
Computer Software We expect its long-term growth to
continue. Microsoft was the biggest
profit beneficiary of the cheap PC
boom, while its corporate business
should receive a boost from the
introduction of Windows 2000 next
year.

Cisco Systems 3.8% Leading data networking equipment
Networking manufacturer. Provides most of the
Internet switching infrastructure
for both carriers and corporate
entry points, as well as internal
corporate networks. A long-term,
high-growth business.

Texas Instruments 3.6% Restructured in the past year to
Semiconductors focus on digital and analog signal
processors, a business driven by
the growth of wireless voice and
data transmission. Both of these
core businesses are growing at
about 25% a year.

General Electric 3.3% Business schools' favorite model
Diversified of a well-managed conglomerate. We
expect the retirementof legendary
chairman John (Jack) Welch to be
handled smoothly, and revenue to
continue to grow modestly over the
long term.

MCI WorldCom 3.3% A very attractive combination of
Telecommunications Svcs. local telephone, long-distance,
international, and Internet
services. Its announced acquisition
of Sprint adds wireless. Although
the stock fell on the announcement
of the acquisition, we expect it to
rebound as investors recognize the
value of a full menu of high-
growth, high-profit services.
Third-quarter profit tripled over
the 1998 level.

Looking Ahead
We expect U.S. economic growth to continue but at a more moderate pace.
Earnings should remain strong, driven by a capital spending and technology
boom.

Future price gains will depend, to a greater extent, on companies' profits
increasing, instead of on shares selling for ever-higher multiples of
earnings. We think our strategy of selecting companies with above-average
growth prospects will fare well in this environment.

Additional Performance Tracking Tools
You can access comprehensive information about the performance of your
Prudential mutual funds 24 hours a day through our Web site and automated
phone service. At www.prudential.com/investing, you'll find the daily closing
values, changes from the previous day, and quarterly performance for all of
our retail mutual funds. Other available resources include daily, monthly, and
quarterly market commentary.

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as
of September 30, 1999 PRUDENTIAL JENNISON GROWTH FUND
- ------------------------------------------------------------
- ------------------------------------------------------------
<TABLE>
<CAPTION>

Shares Description Value (Note 1)
<C> <S> <C>
- ---------------------------------------------------------------
LONG-TERM INVESTMENTS--97.7%
COMMON STOCKS--97.7%
- ---------------------------------------------------------------
Banks & Financial Services--9.3%
1,709,100 Chase Manhattan Corp. $ 128,823,412
3,056,225 Citigroup, Inc. 134,473,900
1,623,300 MBNA Corp. 37,031,531
830,190 Morgan Stanley Dean Witter 74,042,571
928,566 Mutual Risk Management, Ltd. 11,374,934
848,100 Schwab (Charles) Corp. 28,570,369
--------------
414,316,717
- ------------------------------------------------------------
Computer Systems/Peripherals--9.6%
2,270,800 Dell Computer Corp.(a) 94,947,825
1,173,000 EMC Corp.(a) 83,796,188
940,700 Hewlett-Packard Co. 86,544,400
1,018,500 International Business Machines
Corp. 123,620,437
428,600 Sun Microsystems, Inc.(a) 39,859,800
--------------
428,768,650
- ------------------------------------------------------------
Diversified Manufacturing--6.6%
866,400 AlliedSignal, Inc. 51,929,850
1,235,200 General Electric Co. 146,448,400
907,400 Tyco International Ltd. 93,689,050
--------------
292,067,300
- ------------------------------------------------------------
EDP Software & Services--6.4%
450,700 America Online, Inc.(a) 46,872,800
326,400 Equant NV (ADR) (Netherlands)(a) 26,560,800
2,326,600 Microsoft Corp.(a) 210,702,712
--------------
284,136,312
- ------------------------------------------------------------
Electronic Components--7.7%
886,000 Altera Corp.(a) 38,430,250
1,631,500 Intel Corp. 121,240,844
207,200 JDS Uniphase Corp.(a) 23,581,950
1,967,600 Texas Instruments, Inc. 161,835,100
--------------
345,088,144
Household & Personal Care Products--0.9%
970,100 Estee Lauder Co., Inc. $ 37,894,531
- ------------------------------------------------------------
Industrial Technology/Instruments--3.0%
820,400 Applied Materials, Inc.(a) 63,734,825
678,700 KLA-Tencor Corp.(a) 44,115,500
803,900 Symbol Technologies, Inc. 27,031,138
--------------
134,881,463
- ------------------------------------------------------------
Insurance--2.8%
1,442,350 American International Group,
Inc. 125,394,303
- ------------------------------------------------------------
Media & Communications--9.3%
1,516,800 AT&T Corp. - Liberty Media
Group(a) 56,311,200
2,986,800 CBS Corp.(a) 138,139,500
1,220,800 Clear Channel Communications,
Inc.(a) 97,511,400
929,300 Omnicom Group, Inc. 73,588,944
609,400 Univision Communications Inc.(a) 49,589,925
--------------
415,140,969
- ------------------------------------------------------------
Networking--4.3%
2,463,100 Cisco Systems, Inc.(a) 168,876,294
115,300 Juniper Networks, Inc.(a) 20,991,807
--------------
189,868,101
- ------------------------------------------------------------
Pharmaceuticals--12.4%
1,897,000 American Home Products Corp. 78,725,500
550,400 Amgen, Inc.(a) 44,857,600
927,200 Bristol-Myers Squibb Co. 62,586,000
139,500 Genentech, Inc.(a) 20,410,594
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

Shares Description Value (Note 1)
<C> <S> <C>
- ----------------------------------------------------------------
Pharmaceuticals (cont'd.)
1,235,100 Glaxo Wellcome PLC (ADR)
(United Kingdom) $ 64,225,200
901,200 Johnson & Johnson 82,797,750
2,064,700 Schering-Plough Corp. 90,072,537
1,638,000 Warner-Lambert Co. 108,722,250
--------------
552,397,431
- ------------------------------------------------------------
Restaurants--1.6%
1,643,500 McDonald's Corp. 70,670,500
- ------------------------------------------------------------
Retail--9.3%
400,600 Abercrombie & Fitch Co.(a) 13,645,438
1,920,287 Gap, Inc. 61,449,184
2,122,000 Home Depot, Inc. 145,622,250
1,104,900 Kohl's Corp.(a) 73,061,512
1,543,600 Staples, Inc.(a) 33,669,775
657,300 Tiffany & Co. 39,396,919
973,800 Wal-Mart Stores, Inc. 46,316,362
--------------
413,161,440
- ------------------------------------------------------------
Telecommunications--9.1%
614,400 Allegiance Telecom, Inc.(a) 32,332,800
445,400 Level 3 Communications, Inc.(a) 23,258,231
2,030,500 MCI WorldCom, Inc.(a) 145,942,187
519,100 NEXTLINK Communications, Inc.(a) 26,912,091
412,100 NTL, Inc.(a) 39,600,234
1,598,200 Qwest Communications
International, Inc.(a) 47,246,788
377,050 Vodafone AirTouch PLC (ADR)
(United Kingdom)(a) 89,643,638
--------------
404,935,969
Telecommunications Equipment--5.4%
928,560 Lucent Technologies, Inc. $ 60,240,330
518,300 Motorola, Inc. 45,610,400
779,600 Nokia Corp. (ADR)(Finland) 70,017,825
1,151,000 Tellabs, Inc.(a) 65,535,062
--------------
241,403,617
--------------
Total long-term investments
(cost $3,323,718,834) 4,350,125,447
--------------
Principal
Amount
(000)
SHORT-TERM INVESTMENTS--2.7%
Commercial Paper--2.7%
$119,847 American Express Credit Corp.
5.57%, 10/1/99
(cost $119,847,000) 119,847,000
--------------
- ------------------------------------------------------------
Total Investments--100.4%
(cost $3,443,565,834; Note 4) 4,469,972,447
Liabilities in excess of other
assets--(0.4%) (16,439,846)
--------------
Net Assets--100% $4,453,532,601
--------------
--------------
</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 PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at value (cost $3,443,565,834)............................................................ $4,469,972,447
Receivable for Series shares sold...................................................................... 14,624,693
Receivable for investments sold........................................................................ 12,892,040
Dividends and interest receivable...................................................................... 1,779,009
Deferred expenses and other assets..................................................................... 94,428
------------------
Total assets........................................................................................ 4,499,362,617
------------------
Liabilities
Bank overdraft......................................................................................... 494,680
Payable for investments purchased...................................................................... 32,478,586
Payable for Series shares reacquired................................................................... 8,763,607
Management fee payable................................................................................. 2,244,165
Distribution fees payable.............................................................................. 1,574,451
Accrued expenses and other liabilities................................................................. 231,730
Foreign withholding taxes payable...................................................................... 42,797
------------------
Total liabilities................................................................................... 45,830,016
------------------
Net Assets............................................................................................. $4,453,532,601
------------------
------------------
Net assets were comprised of:
Common stock, at par................................................................................ $ 223,837
Paid-in capital in excess of par.................................................................... 3,228,228,646
------------------
3,228,452,483
Accumulated net realized gain on investments........................................................ 198,673,505
Net unrealized appreciation on investments.......................................................... 1,026,406,613
------------------
Net assets, September 30, 1999......................................................................... $4,453,532,601
------------------
------------------
Class A:
Net asset value and redemption price per share
($911,466,742 / 45,453,887 shares of common stock issued and outstanding)........................ $20.05
Maximum sales charge (5% of offering price)......................................................... 1.06
------------------
Maximum offering price to public.................................................................... $21.11
------------------
------------------
Class B:
Net asset value, offering price and redemption price per share
($1,506,838,758 / 77,542,364 shares of common stock issued and outstanding)...................... $19.43
------------------
------------------
Class C:
Net asset value and redemption price per share
($141,769,655 / 7,295,397 shares of common stock issued and outstanding)......................... $19.43
Sales charge (1% of offering price)................................................................. .20
------------------
Offering price to public............................................................................ $19.63
------------------
------------------
Class Z:
Net asset value, offering price and redemption price per share
($1,893,457,446 / 93,545,646 shares of common stock issued and outstanding)...................... $20.24
------------------
------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income (Loss) September 30, 1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $95,578).................. $ 18,615,326
Interest.............................. 3,968,260
------------------
Total income....................... 22,583,586
------------------
Expenses
Management fee........................ 22,079,891
Distribution fee--Class A............. 1,870,788
Distribution fee--Class B............. 12,368,254
Distribution fee--Class C............. 980,326
Transfer agent's fees and expenses.... 6,273,000
Reports to shareholders............... 470,000
Registration fees..................... 434,000
Custodian's fees and expenses......... 160,000
Legal fees and expenses............... 65,000
Amortization of deferred organization
expenses........................... 37,967
Audit fee and expenses................ 20,000
Insurance expense..................... 11,000
Directors' fees and expenses.......... 7,500
Miscellaneous......................... 16,740
------------------
Total expenses..................... 44,794,466
------------------
Net investment loss...................... (22,210,880)
------------------
Realized and Unrealized Gain
on Investments
Net realized gain on:
Investment transactions............... 201,079,990
Financial futures contracts........... 244,090
------------------
201,324,080
Net change in unrealized appreciation on
investments........................... 828,202,820
------------------
Net gain on investments.................. 1,029,526,900
------------------
Net Increase in Net Assets
Resulting from Operations................ $1,007,316,020
------------------
------------------
</TABLE>

THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH FUND
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) in Year Ended September 30,
Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment loss......... $ (22,210,880) $ (6,754,609)
Net realized gain on
investments.............. 201,324,080 131,020,013
Net change in unrealized
appreciation
(depreciation) of
investments.............. 828,202,820 (190,394,651)
-------------- --------------
Net increase (decrease) in
net assets resulting from
operations............... 1,007,316,020 (66,129,247)
-------------- --------------
Distributions from net realized
capital gains (Note 1)
Class A..................... (17,349,525) (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)
-------------- --------------
(84,700,603) (108,687,688)
-------------- --------------
Series share transactions (net
of conversion) (Note 5)
Net proceeds from shares
sold..................... 2,794,924,604 1,822,040,223
Net asset value of shares
issued in reinvestment of
distributions............ 83,061,464 106,812,422
Cost of shares reacquired... (1,569,556,414) (730,978,040)
-------------- --------------
Net increase in net assets
from Series share
transactions............. 1,308,429,654 1,197,874,605
-------------- --------------
Total increase................. 2,231,045,071 1,023,057,670
Net Assets
Beginning of year.............. 2,222,487,530 1,199,429,860
-------------- --------------
End of year.................... $4,453,532,601 $2,222,487,530
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements 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 of the Series 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 and NASDAQ
(other than options on securities and indices) are valued at the last sale 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. Futures contracts and options thereon traded on a
commodities exchange or board of trade are valued at the last sale price at the
close of trading on such exchange or board of trade or, if there was no sale on
the applicable commodities exchange or board of trade on such day, at the mean
between the most recently quoted bid and asked prices on such exchange or board
of trade. Securities for which 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.

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.

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 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.

Dividends and Distributions: The Series expects to pay dividends of net
investment income, if any, semi-annually and to make distributions of any
- --------------------------------------------------------------------------------
7
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
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 Series. These costs have been
deferred and are being amortized ratably over a period of sixty months from the
date the Series commenced investment operations.

Reclassification of Capital Accounts: The Series accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants' Statement of Position 93-2: 'Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies.' For the year ended
September 30, 1999, the Series reclassified current net operating losses and
redemptions utilized as distributions for federal income tax purposes by
decreasing accumulated net investment loss by $22,210,880, decreasing
accumulated net realized gain on investments by $18,041,231 and decreasing
paid-in capital by $4,169,649. Net investment income, net realized gains and net
assets were not affected by this change.

- ------------------------------------------------------------
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
Series. 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 objective 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 Series' 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 Series.

PIMS has advised the Series that it received approximately $2,331,800 and
$629,300 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the fiscal year ended September 30, 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 fiscal year ended September 30, 1999,
it received approximately $2,013,100 and $46,500 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 ('Prudential').

As of March 11, 1999, the Fund along with other unaffiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. Interest on any borrowings will be at market rates. 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
- --------------------------------------------------------------------------------
8

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
did not borrow any amounts pursuant to either agreement during the year ended
September 30, 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 fiscal year ended September 30,
1999, the Series incurred fees of approximately $6,215,000 for the services of
PMFS. As of September 30, 1999, approximately $543,000 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 fiscal year ended September 30, 1999, Prudential Securities
Incorporated, which is an indirect, wholly owned subsidiary of Prudential,
earned approximately $391,700 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 fiscal year ended September 30, 1999 were $3,187,479,690 and
$2,011,088,170, respectively.

The cost of investments for federal income tax purposes at September 30, 1999,
was $3,446,231,745 and, accordingly, net unrealized appreciation of investments
for federal income tax purposes was $1,023,740,702 (gross unrealized
appreciation--$1,085,425,006; gross unrealized depreciation--$61,684,304).

- ------------------------------------------------------------
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.

Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
- -------------------------------- ------------- --------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold..................... 34,344,966 $ 662,914,500
Shares issued in reinvestment of
distributions................. 1,032,752 16,627,307
Shares reacquired............... (23,547,037) (457,441,788)
------------- --------------
Net increase in shares
outstanding before
conversion.................... 11,830,681 222,100,019
Shares issued upon conversion
from
Class B....................... 2,660,015 51,625,561
------------- --------------
Net increase in shares
outstanding................... 14,490,696 $ 273,725,580
------------- --------------
------------- --------------
Year ended September 30, 1998:
Shares sold..................... 14,958,226 $ 229,811,039
Shares issued due to merger of
Prudential Multi-Sector
Fund.......................... 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
- --------------------------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold..................... 42,766,896 $ 799,643,630
Shares issued in reinvestment of
distributions................. 1,698,149 26,677,924
Shares reacquired............... (14,404,393) (265,401,893)
------------- --------------
Net increase in shares
outstanding before
conversion.................... 30,060,652 560,919,661
Shares reacquired upon
conversion
into Class A.................. (2,736,865) (51,625,561)
------------- --------------
Net increase in shares
outstanding................... 27,323,787 $ 509,294,100
------------- --------------
------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Notes to Financial Statements PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class B Shares Amount
- -------------------------------- ------------- --------------
Year ended September 30, 1998:
<S> <C> <C>
Shares sold..................... 22,754,015 $ 342,894,551
Shares issued due to merger of
Prudential Multi-Sector
Fund.......................... 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
- --------------------------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold..................... 6,235,444 $ 117,953,942
Shares issued in reinvestment of
distributions................. 108,868 1,710,322
Shares reacquired............... (2,247,639) (41,843,724)
------------- --------------
Net increase in shares
outstanding................... 4,096,673 $ 77,820,539
------------- --------------
------------- --------------
Year ended September 30, 1998:
Shares sold..................... 1,687,844 $ 25,645,005
Shares issued due to merger of
Prudential Multi-Sector
Fund.......................... 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
------------- --------------
------------- --------------
<CAPTION>
Class Z
- --------------------------------
<S> <C> <C>
Year ended September 30, 1999:
Shares sold..................... 63,109,118 $1,214,412,532
Shares issued in reinvestment of
distributions................. 2,345,617 38,045,912
Shares reacquired............... (42,230,402) (804,869,008)
------------- --------------
Net increase in shares
outstanding................... 23,224,333 $ 447,589,436
------------- --------------
------------- --------------
Year ended September 30, 1998:
Shares sold..................... 52,992,987 $ 825,209,682
Shares issued due to merger of
Prudential Multi-Sector
Fund.......................... 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 PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B
---------------------------------------------------- ------------------------------------
November 2,
Year Ended 1995(a) Year Ended
September 30, Through September 30,
---------------------------------- September 30, ------------------------------------
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)... (.08) (.04) (.03) (.03) (.22) (.15) (.12)
Net realized and unrealized gain
on investment transactions..... 6.23 .40 4.45 1.00 6.08 .39 4.41
-------- -------- -------- ------ ---------- -------- --------
Total from investment
operations.................. 6.15 .36 4.42 .97 5.86 .24 4.29
-------- -------- -------- ------ ---------- -------- --------
Less distributions
Distributions from net realized
gains.......................... (.54) (1.31) -- -- (.54) (1.31) --
-------- -------- -------- ------ ---------- -------- --------
Net asset value, end of period.... $ 20.05 $ 14.44 $ 15.39 $ 10.97 $ 19.43 $ 14.11 $ 15.18
-------- -------- -------- ------ ---------- -------- --------
-------- -------- -------- ------ ---------- -------- --------
TOTAL RETURN(b)................... 43.58% 3.02% 40.29% 9.70% 42.51% 2.21% 39.39%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)... $911,467 $446,996 $145,022 $85,440 $1,506,839 $708,463 $419,405
Average net assets (000).......... $748,315 $251,118 $105,982 $70,667 $1,236,825 $557,823 $299,476
Ratios to average net assets:
Expenses, including
distribution fees........... 1.05% 1.08% 1.09% 1.23%(d) 1.80% 1.83% 1.84%
Expenses, excluding
distribution fees........... .80% .83% .84% .98%(d) .80% .83% .84%
Net investment income (loss)... (.44)% (.26)% (.25)% (.37)%(d) (1.19)% (1.01)% (1.00)%
For Class A, B, C and Z shares:
Portfolio turnover rate........ 56% 58% 63% 42% 56% 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 PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Z
-------------------------------------------------- --------------------------------------
November 2,
Year Ended 1995(a) Year Ended
September 30, Through September 30,
-------------------------------- September 30, --------------------------------------
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)... (.22) (.15) (.12) (.10) (.04) -- --
Net realized and unrealized gain
on investment transactions..... 6.08 .39 4.41 .99 6.29 .39 4.47
-------- ------- ------- ------ ---------- ---------- --------
Total from investment
operations.................. 5.86 .24 4.29 .89 6.25 .39 4.47
-------- ------- ------- ------ ---------- ---------- --------
Less distributions
Distributions from net realized
gains....................... (.54) (1.31) -- -- (.54) (1.31) --
-------- ------- ------- ------ ---------- ---------- --------
Net asset value, end of period.... $ 19.43 $ 14.11 $ 15.18 $ 10.89 $ 20.24 $ 14.53 $ 15.45
-------- ------- ------- ------ ---------- ---------- --------
-------- ------- ------- ------ ---------- ---------- --------
TOTAL RETURN(b)................... 42.51% 2.21% 39.39% 8.90% 43.94% 3.22% 40.71%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)... $141,770 $45,126 $25,134 $15,281 $1,893,457 $1,021,903 $609,869
Average net assets (000).......... $ 98,033 $35,337 $18,248 $12,550 $1,596,809 $ 810,296 $455,684
Ratios to average net assets:
Expenses, including
distribution fees........... 1.80% 1.83% 1.84% 1.98%(d) .80% .83% .84%
Expenses, excluding
distribution fees........... .80% .83% .84% .98%(d) .80% .83% .84%
Net investment income (loss)... (1.20)% (1.01)% (1.00)% (1.12)%(d) (.19)% (.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>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Report of Independent Accountants PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
The Prudential Investment Portfolios, Inc.--Prudential Jennison Growth Fund

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Prudential Investment
Portfolios, Inc.--Prudential Jennison Growth Fund (the 'Fund', one of the
portfolios constituting The Prudential Investment Portfolios, Inc.) at September
30, 1999, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended and the
financial highlights for each of the three years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above. The accompanying financial highlights for the
period ended September 30, 1996 were audited by other independent accountants,
whose opinion dated November 4, 1996 was unqualified.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
November 17, 1999
- --------------------------------------------------------------------------------
13

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Tax Information (Unaudited) PRUDENTIAL JENNISON GROWTH FUND
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Series' fiscal year end (September 30, 1999) as to the federal tax status of
dividends and distributions paid by the Series during such fiscal year end.
Accordingly, we are advising you that during the fiscal year, the Series paid
distributions for Class A, B, C and Z shares totaling $0.54 per share of
long-term capital gains which is taxable as such. The Series utilized
redemptions as distributions in the amount of $.115 of long-term capital gains
for each class of shares. Furthermore, we wish to advise you that your dividend
received deduction is zero.

In January 2000, you will be advised on IRS Form 1099 DIV or substitute 1099 DIV
as to the federal tax status of the dividends and distributions received by you
in calendar year 1999.
- --------------------------------------------------------------------------------
14

<PAGE>
Getting the Most from Your Prudential Mutual Fund
How many times have you read these reports--or other financial materials--and
stumbled across a word that you don't understand?

Basis Point: 1/100th of 1%. For example, one-half of one percent is 50 basis
points.

Collateralized Mortgage Obligations (CMOs): Mortgage-backed bonds that
separate mortgage pools into different maturity classes, called tranches.
These instruments are sensitive to changes in interest rates and homeowner
refinancing activity. They are subject to prepayment and maturity extension
risk.

Discount Rate: The interest rate charged by the Federal Reserve on loans to
member banks.

Federal Funds Rate: The interest rate charged by one bank to another on
overnight loans.

Futures Contract: An agreement to purchase or sell a specific amount of a
commodity or financial instrument at a set price at a specified date in the
future.

Leverage: The use of borrowed assets to enhance return. The expectation is
that the interest rate charged on borrowed funds will be lower than the return
on the investment. While leverage can increase profits, it can also magnify
losses.

Liquidity: The ease with which a financial instrument (or product) can be
bought or sold (converted into cash) in the financial markets.

Price/Earnings Ratio: The price of a share of stock divided by the earnings
per share for a 12-month period.

Option: An agreement to purchase or sell something, such as shares of stock,
by a certain time for a specified price. An option need not be exercised.

Spread: The difference between two values; often used to describe the
difference between "bid" and "asked" prices of a security, or between the
yields of two similar maturity bonds.

Yankee Bond: A bond sold by a foreign company or government in the U.S. market
and denominated in U.S. dollars.

<PAGE>
Comparing a $10,000 Investment
Prudential Jennison Growth Fund vs. the S&P 500 Index

Class A
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 21.81%
One Year 36.40%

Without Sales Load
Since Inception 23.42%
One Year 43.58%

Class B
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 22.22%
One Year 37.51%

Without Sales Load
Since Inception 22.50%
One Year 42.51%

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.

These graphs compare a $10,000 investment in the Prudential Jennison Growth
Fund (Class A, B, C, and Z shares) with a similar investment in the Standard &
Poor's 500 Composite Stock Price Index (S&P 500 Index) by portraying the
account values at the commencement of operations of each share class, and at
the end of the fiscal year (September 30), as measured on a quarterly basis,
beginning in 1995 for Class A, B, and C shares, and in 1992 for Class Z
shares. For purposes of the graphs, and unless otherwise indicated, it has
been assumed that (a) the maximum applicable front-end sales charge was
deducted from the initial $10,000 investment in Class A and Class C shares;
(b) the maximum applicable contingent deferred sales charges were deducted
from the value of the investment in Class B and Class C shares, assuming full
redemption on September 30, 1999; (c) all recurring fees (including management
fees) were deducted; and (d) all dividends and distributions were reinvested.
Class B shares will automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. This conversion feature is
not reflected in the graphs. Class Z shares are not subject to a sales charge
or distribution and service (12b-1) fees.

<PAGE>

Class C
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 22.19%
One Year 40.09%

Without Sales Load
Since Inception 22.50%
One Year 42.51%

Class Z
(GRAPH)

Average Annual Total Returns
Since Inception 21.53%
Five Years 26.05%
One Year 43.94%

The S&P 500 Index is a market-weighted unmanaged index of 500 stocks of large
U.S. companies that gives a broad look at how stock prices have performed.
These returns do not include the effect of any operating expense of a mutual
fund. These returns would be lower if they included the effect of operating
expenses. The S&P 500 Index is not the only index that may be used to
characterize performance of stock funds, and other indexes may portray
different comparative performance. Investors cannot invest directly in an
index.

These graphs are furnished to you in accordance with SEC regulations.

<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

(800) 225-1852
http://www.prudential.com

Class NASDAQ Cusip
A PJFAX 74437E107
B PJFBX 74437E206
C PJFCX 74437E305
Z PJFZX 74437E404

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
Stephen M. Ungerman, Assistant Treasurer

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
21 North Clark Street, Chicago, IL 60610-4795

Prudential Investments is a unit of The Prudential Insurance Company of
America, 751 Broad Street, Newark, NJ 07102.

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.

This report is not authorized for distribution to prospective investors unless
preceded or accompanied by a current prospectus.

MF168E

<PAGE>

(ICON)

Prudential
Jennison
Growth &
Income
Fund

ANNUAL
REPORT

Sept. 30, 1999

(LOGO)

<PAGE>
A Message from the Fund's President November 18, 1999
(PHOTO)

Dear Shareholder,
Prudential Jennison Growth & Income Fund Class A shares had a 26.00% return
for the 12 months ended September 30, 1999--about twice the long-term average
for large-cap stocks, about 10 percentage points above its Lipper benchmark
(the Multi-Cap Value Average), and only slightly trailing an exceptional
27.80% S&P 500 Index return. The Fund's growth-oriented but price-sensitive
strategy had an outstanding 16% gain in the second quarter of 1999 when the
markets turned toward a value style, and then held up better than value stocks
when market favor swung toward growth again.

The Fund's ability to benefit from both growth and value themes was apparent
in the strong contributions to its performance from industrial cyclicals such
as paper and equipment manufacturers, value groups, as well as technology
firms such as National Semiconductor.

New benchmark peer group
Our benchmark in this report reflects the new categories for mutual funds
introduced by Lipper, Inc. in September 1999. Funds now are classified by
their actual holdings instead of by their objectives; funds are in either a
value, growth, or core peer group. The Prudential Jennison Growth & Income
Fund is classified as a multi-cap value fund because its stocks are
inexpensive, on average, compared with quantitative measures of their value,
such as earnings or book value.

In a predominantly growth-style market, our value classification highlighted
the Fund's superior performance over its reporting period, but its return was
substantially above average even on the former Lipper Growth & Income
benchmark (20.6% for the 12 months ended September 30, 1999).

Sincerely,

John R. Strangfeld
President
The Prudential Investment Portfolios, Inc.

<PAGE>
Performance Review
(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 relative valuation
(the price the market is placing on the entire company compared to that on
similar enterprises). 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 of long-term growth of capital. Income is a secondary
objective.

Value among the growth stocks
Jennison Associates focuses its research on companies with above-average
earnings growth, but the Prudential Jennison Growth & Income Fund looks for
companies that have low valuations relative to the market as well. We like
companies where we can understand how a short-term factor has deflected
investors' interest in a good, long-term grower; we buy and (normally) wait
for growth to resume. Our stocks have tended to be classified as value stocks
on the basis of their price/earnings or price-to-book-value ratios. For
example, at the beginning of our reporting period we had a defensive focus on
cyclical stocks--companies whose fortunes tend to vary with the pace of
business activity, such as basic materials (paper, chemicals, steel),
retailers, and media companies.

Because of the very narrow market over the past year--market performance was
concentrated in a very small number of stocks--we also have been able to find
good traditional growth stocks selling at reasonable multiples of their
earnings. Shares of National Semiconductor, a stock we purchased late in 1998
at very attractive prices, had previously dropped steeply, in large part,
because of the problems of its Cyrix subsidiary (a competitor of Intel).
Earlier this year, the company announced it was eliminating this money-losing
division, allowing investors to focus on the remaining growth components of
the company.

Similarly, in the first quarter of 1999, we thought that International
Rectifier, a small manufacturer of power semiconductors, was positioned to
grow rapidly, but not for two to three quarters. By being early, we were able
to buy the stock inexpensively. Growth occurred sooner than expected, as the
company is seeing a dramatic increase in profits--the stock has more than
doubled between March 31 and the end of our reporting period. Tandy represents
another kind of story we favor. The company was already delivering good
earnings growth, but its potential for faster growth was under-appreciated
by the market. We bought Tandy early in our reporting period at about 17 to
18 times earnings when similar retailers were selling for about twice the
multiple. From its low on December 14, 1998, it rose 272%. We only went along
for part of that ride, but it was among the largest contributors to our return
nonetheless.

A good year
In addition to our technology stocks, our strong performance was particularly
due to our retailers (Limited, in addition to Tandy), media companies (CBS,
Tribune, and The New York Times), capital spending (Millipore), paper
companies (Smurfit-Stone

<PAGE>
Container, Champion International, and Boise Cascade), and financials (Chase
Manhattan, J.P. Morgan, and Cigna).

Less successful stories
Some stories haven't worked out yet. We recently purchased Allstate because
of its very strong position in personal-lines insurance, but competitive
conditions were worse than expected. The stock dropped sharply in September.
We believe Allstate is a unique franchise in an industry that is due for a
cyclical upturn in its pricing. We added a little to our holdings after the
stock fell, and expect to benefit when insurance pricing recovers.

Hilton spun off its gaming properties to better realize the value in its
premier luxury hotels. We bought, expecting its share prices to rise in
recognition of the higher-quality earnings. However, industry-wide, the growth
rate of hotel revenues per room slowed considerably, while gaming did well.
Hilton's earnings also will be diluted by its proposed acquisition of Promus
Hotel Corp. (Embassy Suites, Hampton Inn, and others). The stock has
performed quite poorly and, at the end of our reporting period, was selling
for only 11 times our estimates of year 2000 earnings. That is an attractive
price even for the lower projected earnings, and we are enthusiastic about its
potential.

We sold our shares of Ogden, a conglomerate we thought was working to maximize
shareholder value. However, after earnings were lower than expected, both
management and its plans changed. In this case, we agreed with the market
reaction and bailed out.

Performance at a Glance
<TABLE>
<CAPTION>
Cumulative Total Returns1 As of 9/30/99

One Year Since Inception2
<S> <C> <C>
Class A 26.00% 48.07%
Class B 24.98 44.90
Class C 24.98 44.90
Class Z 26.31 49.26
Lipper Multi-Cap Value
Fund Average3 16.38 45.44
</TABLE>

<TABLE>
Average Annual Total Returns1 As of 9/30/99
<CAPTION>
One Year Since Inception2
<S> <C> <C>
Class A 19.70% 12.51%
Class B 19.98 12.85
Class C 22.73 13.28
Class Z 26.31 14.84
</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.

2 Inception date: Class A, B, C, and Z, 11/7/96.

3 Lipper average returns are for all funds in each share class for the one-
year and since-inception periods in the Multi-Cap Value Fund category. Multi-
Cap Value funds, by portfolio practice, invest in a variety of market
capitalization ranges, without concentrating 75% of their equity assets in any
one market capitalization range over an extended period of time. Multi-Cap
funds will generally have between 25% and 75% of their assets invested
in companies with market capitalizations (on a three-year weighted basis)
above 300% of the dollar-weighted median market capitalization of the S&P
Mid-Cap 400 IndexR. Multi-Cap Value funds seek long-term growth of capital by
investing in companies that are considered undervalued relative to a major
unmanaged stock index based on price/earnings, book value, asset value, or
other factors. These funds will normally have a below-average price/earnings
ratio, price-to-book ratio, and three-year earnings growth figure, compared
to the U.S. diversified multi-cap funds universe average. The Lipper average
is unmanaged.

R S&P is a registered trademark of the Standard and Poor's Corporation.
- -------------------------------------------------------------------------------
1

<PAGE>
Review Cont'd.

Looking Ahead
A more positive view
At the beginning of our reporting period, we were defensive, with a
substantial cash position and some short sales. We began to put those assets
to work as investors became more optimistic. We were fully invested in time to
benefit from the value-stock boom in the second quarter of 1999. However, we
became defensive again in the third quarter of the year. The market was
unstable and seemed to be turning away from our kind of stocks. At the end of
our fiscal year, we again had cash and short positions. However, afterward,
the correction became sufficient to leave many attractive stocks on the
market, similar to the way it appeared a year earlier. History might not
repeat itself, of course, but with a portfolio of well-positioned companies
selling at roughly half the price/earnings ratio of the S&P 500 (on Jennison
estimates for the year 2000), we are optimistic.

Portfolio Composition
Expressed as a percentage of net assets
as of 9/30/99
Basic Materials 22.1%
Consumer Cyclicals 16.7
Technology 12.3
Energy 8.3
Financial Services 7.6
Consumer Staples 6.4
Transportation 4.0
Other 6.7
Cash Equivalents 15.9

Five Largest Holdings Expressed as a percentage of net assets as of 9/30/99

Security/Industry % of Net Assets Comments
General Motors Corp. 3.4% Recently announced very strong
Motor Vehicles & Equipment results from its core automobile
operations. Majority-owned Hughes
(now representing about half the
value of GM) has been doing well
on DirectTV. We believe there is
a strong likelihood that more of
Hughes will be spun off, focusing
investors on GM's undervaluation.

The New York Times Co. 2.2% Publisher of The New York Times
Publishing and Boston Globe newspapers, with
important holdings in
broadcasting and e-commerce.
Continues to meet growth
expectations of 10%--15%. Even
after doubling from last fall's
lows, priced at only 20 times
year 2000 earning estimates.

Unocal Corp. 2.2% Transformed from domestic
Oil & Gas integrated oil company to
exciting global exploration
company, Unocal is just
beginning to see the fruits of
its aggressive exploration
program. Oil reserves should
increase due to potential
additions in Thailand, Indonesia,
and the Gulf of Mexico. After the
recent decline in the oil group,
we believe the stock is
particularly attractive.

Raytheon Company 2.0% Major defense contractor with
Aerospace/Defense business lines in electronics,
engineering, and aircraft. After
our reporting period ended,
management reduced earnings
guidance through 2000, blaming
lower defense profit margins and
distractions from earlier
mergers. We continue to hold a
position much smaller than the
period-end number reported here.
We believe the stock is very
inexpensive at current levels,
and we expect a 10% earnings
growth rate going forward.

Manpower, Inc. 1.9% Second largest global provider
Human Resources of temporary staffing services.
Europe, which provides about two-
thirds of its revenues, is
improving after two poor years.
We believe the company's new
management will revise its
financial and strategic goals.
Although the stock has risen,
we believe it still has
substantial upward potential.

- -------------------------------------------------------------------------------
2

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as PRUDENTIAL JENNISON GROWTH &
of September 30, 1999 INCOME FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- -----------------------------------------------------------------
LONG-TERM INVESTMENTS--84.1%
COMMON STOCKS--84.1%
- -----------------------------------------------------------------
Aerospace/Defense--3.3%
57,240 Raytheon Co. $ 2,776,140
66,000 The B.F. Goodrich Co. 1,914,000
------------
4,690,140
- ------------------------------------------------------------
Airlines--1.7%
45,000 AMR Corp. 2,452,500
- ------------------------------------------------------------
Aluminum--3.1%
70,200 Alcan Aluminum Ltd. 2,193,750
36,600 Reynolds Metals Co. 2,209,725
------------
4,403,475
- ------------------------------------------------------------
Apparel--1.5%
120,700 Polo Ralph Lauren Corp.(a) 2,165,056
- ------------------------------------------------------------
Banking--4.0%
33,500 Chase Manhattan Corp. 2,525,062
49,300 Fleet Financial Group, Inc. 1,805,613
112,800 Hibernia Corp., Class A 1,311,300
------------
5,641,975
- ------------------------------------------------------------
Business Services--3.7%
105,900 Convergys Corp.(a) 2,098,144
51,300 Hertz Corp. 2,257,200
40,900 Ryder System, Inc. 833,338
------------
5,188,682
- ------------------------------------------------------------
Chemicals--5.0%
79,000 Cytec Industries, Inc.(a) 1,896,000
55,400 Dexter Corp. 2,067,113
82,400 IMC Global, Inc. 1,199,950
118,000 W.R. Grace & Co.(a) 1,895,375
------------
7,058,438
Computer Systems/Peripherals--0.7%
10,300 Hewlett-Packard Co. $ 947,600
- ------------------------------------------------------------
Data Processing & Reproduction--0.8%
134,800 Informix Corp.(a) 1,069,975
- ------------------------------------------------------------
Drugs & Health Care--1.8%
60,700 American Home Products Corp. 2,519,050
- ------------------------------------------------------------
EDP Software & Services--0.4%
104,600 Intergraph Corp.(a) 588,375
- ------------------------------------------------------------
Foods--1.4%
26,300 Dole Food Co., Inc. 499,700
68,300 SUPERVALU, Inc. 1,489,794
------------
1,989,494
- ------------------------------------------------------------
Hotels--2.7%
158,900 Hilton Hotels Corp. 1,569,137
70,700 Promus Hotel Corp.(a) 2,302,169
------------
3,871,306
- ------------------------------------------------------------
Human Resources--1.9%
93,000 Manpower, Inc. 2,708,625
- ------------------------------------------------------------
Industrial Technology/Instruments--1.5%
54,900 Millipore Corp. 2,062,181
- ------------------------------------------------------------
Insurance--3.6%
20,600 CIGNA Corp. 1,601,650
64,800 The Allstate Corp. 1,615,950
61,000 Travelers Property Casualty Corp. 1,799,500
------------
5,017,100
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
Portfolio of Investments as PRUDENTIAL JENNISON GROWTH &
of September 30, 1999 INCOME FUND
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- -----------------------------------------------------------------
Media--3.1%
54,600 CBS Corp. $ 2,525,250
31,904 Chris-Craft Industries, Inc.(a) 1,790,612
------------
4,315,862
- ------------------------------------------------------------
Motor Vehicles & Equipment--4.1%
26,800 Dana Corp. 994,950
37,300 General Motors Corp, Class H 2,135,425
41,400 General Motors Corp. 2,605,613
------------
5,735,988
- ------------------------------------------------------------
Oil Services--3.0%
54,200 McDermott International, Inc. 1,097,550
83,200 Unocal Corp. 3,083,600
------------
4,181,150
- ------------------------------------------------------------
Paper & Forest Products--6.1%
169,500 Abitibi-Consolidated, Inc. 2,044,594
68,600 Boise Cascade Corp. 2,499,612
36,600 Champion International Corp. 1,880,325
104,054 Smurfit-Stone Container Corp.(a) 2,250,168
------------
8,674,699
- ------------------------------------------------------------
Petroleum--6.1%
66,900 Anadarko Petroleum Corp. 2,044,631
59,000 Burlington Resources, Inc. 2,168,250
89,600 Tosco Corp. 2,262,400
73,400 USX - Marathon Group 2,146,950
------------
8,622,231
- ------------------------------------------------------------
Pharmaceuticals--1.3%
60,900 Vertex Pharmaceuticals, Inc.(a) 1,891,706
- ------------------------------------------------------------
Photography/Image Technology--0.8%
42,900 Polaroid Corp. 1,115,400
Publishing--3.6%
83,300 New York Times Co., Class A $ 3,123,750
38,900 Tribune Co. 1,935,275
------------
5,059,025
- ------------------------------------------------------------
Retail--5.5%
84,100 AutoZone, Inc.(a) 2,360,056
101,900 Boise Cascade Office Products
Corp.(a) 1,108,163
209,100 Kmart Corp.(a) 2,443,856
48,609 The Limited, Inc. 1,859,294
------------
7,771,369
- ------------------------------------------------------------
Semiconductors--2.9%
121,200 International Rectifier Corp.(a) 1,848,300
71,500 National Semiconductor Corp.(a) 2,180,750
------------
4,029,050
- ------------------------------------------------------------
Specialty Chemicals--3.2%
173,026 CK Witco Corp. 2,519,691
112,400 Engelhard Corp. 2,044,275
------------
4,563,966
- ------------------------------------------------------------
Steel & Metals--3.8%
32,800 AK Steel Holding Corp. 598,600
51,700 Nucor Corp. 2,462,213
90,200 USX-U.S. Steel Group 2,322,650
------------
5,383,463
- ------------------------------------------------------------
Telecommunications--1.8%
149,900 Loral Space & Communications Ltd.(a) 2,576,406
- ------------------------------------------------------------
Transportation--1.7%
54,100 Airborne Freight Corp. 1,139,481
33,100 CNF Transportation, Inc. 1,232,975
------------
2,372,456
------------
Total long-term investments
(cost $110,807,284) 118,666,743
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C>
- -----------------------------------------------------------------
COMMON STOCKS SOLD SHORT(a)--(6.4%)
- -----------------------------------------------------------------
Aerospace/Defense--(0.4%)
(9,700) United Technologies Corp. $ (575,331)
- -----------------------------------------------------------------
Beverages--(1.1%)
(31,600) Coca-Cola Co. (1,518,775)
- -----------------------------------------------------------------
Cosmetics/Toiletries--(0.6%)
(26,400) The Gillette Co. (895,950)
- -----------------------------------------------------------------
Financial Services--(2.4%)
(9,200) Federal National Mortgage Assoc. (576,725)
(23,100) Nasdaq-100 Shares Trust (2,780,662)
------------
(3,357,387)
- -----------------------------------------------------------------
Retail--(1.9%)
(34,200) Circuit City Stores-Circuit City
Group (1,442,813)
(21,400) Dayton Hudson Corp. (1,285,338)
------------
(2,728,151)
------------
Total common stocks sold short
(proceeds at cost $9,941,334) (9,075,594)
------------
Total investments, net of short sales--93.6%
(cost $123,285,152) 132,001,562
Other assets in excess of
liabilities--6.4% 9,086,790
------------
Net Assets--100% $141,088,352
------------
------------
</TABLE>
- ---------------
(a) Non-income producing securities.
(b) $9,555,413 of principal amount pledged as collateral for short sales.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Statement of Assets and Liabilities INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets September 30, 1999
<S> <C>
Investments, at value (cost $133,226,486)............................................................... $141,077,156
Cash.................................................................................................... 645
Receivables for securities sold short................................................................... 9,941,334
Receivable for investments sold......................................................................... 3,596,014
Receivable for Series shares sold....................................................................... 251,042
Dividends and interest receivable....................................................................... 138,187
Other assets............................................................................................ 1,342
------------------
Total assets......................................................................................... 155,005,720
------------------
Liabilities
Investments sold short, at value (proceeds $9,941,334).................................................. 9,075,594
Payable for investments purchased....................................................................... 3,420,501
Due to broker for securities sold short................................................................. 947,727
Payable for Series shares reacquired.................................................................... 162,134
Accrued expenses........................................................................................ 146,357
Distribution fees payable............................................................................... 93,034
Management fee payable.................................................................................. 72,021
------------------
Total liabilities.................................................................................... 13,917,368
------------------
Net Assets.............................................................................................. $141,088,352
------------------
------------------
Net assets were comprised of:
Common stock, at par................................................................................. $ 11,102
Paid-in capital in excess of par..................................................................... 118,323,878
------------------
118,334,980
Accumulated net realized gain on investments......................................................... 14,036,962
Net unrealized appreciation on investments........................................................... 8,716,410
------------------
Net assets, September 30, 1999.......................................................................... $141,088,352
------------------
------------------
Class A:
Net asset value and redemption price per share
($37,157,842 / 2,911,247 shares of common stock issued and outstanding)........................... $12.76
Maximum sales charge (5% of offering price).......................................................... .67
------------------
Maximum offering price to public..................................................................... $13.43
------------------
------------------
Class B:
Net asset value, offering price and redemption price per share
($92,031,782 / 7,255,503 shares of common stock issued and outstanding)........................... $12.68
------------------
------------------
Class C:
Net asset value and redemption price per share
($7,635,741 / 601,957 shares of common stock issued and outstanding).............................. $12.68
Sales charge (1% of offering price).................................................................. .13
------------------
Offering price to public............................................................................. $12.81
------------------
------------------
Class Z:
Net asset value, offering price and redemption price per share
($4,262,987 / 332,964 shares of common stock issued and outstanding).............................. $12.80
------------------
------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
INCOME FUND
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income September 30, 1999
<S> <C>
Income
Dividends (net of foreign withholding
taxes of $4,304)................... $ 1,844,883
Interest.............................. 767,804
------------------
Total income....................... 2,612,687
------------------
Expenses
Distribution fee--Class A............. 89,537
Distribution fee--Class B............. 949,035
Distribution fee--Class C............. 77,020
Management fee........................ 849,053
Transfer agent's fees and expenses.... 217,000
Reports to shareholders............... 151,000
Custodian's fees and expenses......... 110,000
Registration fees..................... 57,000
Legal fees and expenses............... 39,000
Dividends on securities sold short.... 27,759
Audit fees and expenses............... 20,000
Directors' fees and expenses.......... 7,500
Miscellaneous......................... 6,479
------------------
Total expenses..................... 2,600,383
------------------
Net investment income.................... 12,304
------------------
Realized and Unrealized Gain (Loss)
on Investments
Net realized gain (loss) on:
Investment transactions............... 16,896,114
Financial futures transactions........ (255,928)
Short sales........................... 117,643
------------------
16,757,829
------------------
Net change in unrealized
appreciation/depreciation on:
Investments........................... 14,326,911
Short sales........................... (798,696)
------------------
13,528,215
------------------
Net gain on investments.................. 30,286,044
------------------
Net Increase in Net Assets Resulting from
Operations............................... $ 30,298,348
------------------
------------------
</TABLE>

THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
INCOME FUND
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended September 30,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income.......... $ 12,304 $ 908,928
Net realized gain on investment
transactions................ 16,757,829 10,777,238
Net change in unrealized
appreciation/depreciation on
investments................. 13,528,215 (25,848,538)
------------- -------------
Net increase (decrease) in net
assets resulting from
operations.................. 30,298,348 (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..................... (6,978,474) (4,349,846)
Class C..................... (586,830) (352,855)
Class Z..................... (164,167) (39,211)
------------- -------------
(10,269,480) (6,394,570)
------------- -------------
Series share transactions (Note 5)
Net proceeds from shares
sold........................ 39,742,571 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...... (53,515,736) (40,383,538)
------------- -------------
Net increase (decrease) in net
assets from Series share
transactions................ (3,740,739) 16,140,892
------------- -------------
Total increase (decrease)......... 16,038,471 (5,073,783)
Net Assets
Beginning of period............... 125,049,881 130,123,664
------------- -------------
End of period(a).................. $ 141,088,352 $ 125,049,881
------------- -------------
------------- -------------
- ---------------
(a) Includes undistributed net
investment income of.......... $ -- $ 290,719
------------- -------------
------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Notes to Financial Statements INCOME FUND
- --------------------------------------------------------------------------------
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 or NASDAQ
(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 sale price at the close of trading on such exchange or board
of trade or, if there was no sale on the applicable commodities exchange or
board of trade on such day, at the mean between the most recently quoted bid and
asked prices on such exchange or board of trade. Securities for which 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.

All securities are valued as of 4:15 p.m., New York time.

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.

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
- --------------------------------------------------------------------------------
8
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Notes to Financial Statements INCOME FUND
- --------------------------------------------------------------------------------
Series may not achieve the anticipated benefits of the financial futures
contracts and may realize a loss. The use of futures transactions involves the
risk of imperfect correlation in movements in the price of futures contracts,
interest rates and the underlying hedged assets.

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.

Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with the American Institute of
Certified Public Accountants, Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of Income, Capital Gain, and
Return of Capital Distributions by Investment Companies. The effect of applying
this statement was to decrease undistributed net investment income by $53,365,
decrease accumulated net realized gain on investments by $1,364,827 and increase
paid-in capital by $1,418,192 due to the Fund treating redemptions as
distributions for federal income tax purposes during the year ended September
30, 1999. Net investment income, net realized gains and net assets were not
affected by this change.

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 Series. 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.

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 year ended
September 30, 1999.

PIMS has advised the Series that it received approximately $72,600 and $15,300
in front-end sales charges resulting from sales of Class A and C shares,
respectively, during the year ended September 30, 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 year ended September 30, 1999, it
received approximately $294,400 and $900 in contingent deferred sales
- --------------------------------------------------------------------------------
9
<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Notes to Financial Statements INCOME FUND
- --------------------------------------------------------------------------------
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 ('Prudential').

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. Interest on any borrowings will be at market rates. 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 year ended September
30, 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 year ended September 30, 1999,
the Series incurred fees of approximately $187,600 for the services of PMFS. As
of September 30, 1999, approximately $15,900 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 year ended September 30, 1999, Prudential Securities Incorporated
('PSI'), which is an indirect, wholly owned subsidiary of Prudential, earned
approximately $43,100 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 year ended September 30, 1999 were $142,344,623 and $161,701,363,
respectively.

The cost basis of the investments for federal income tax purposes at September
30, 1999 was $134,317,080 and, accordingly, net unrealized appreciation of
investments for federal income tax purposes was $6,760,076 (gross unrealized
appreciation-$15,275,883; gross unrealized depreciation--$8,515,807).

- ------------------------------------------------------------
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.

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Financial Highlights INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Class B
-------------------------------------------------------- -------------
November 7,
1996(a) Year Ended
Year Ended September 30, Through September 30,
------------------------------- September 30, -------------
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......................... .07 .15 .09 (.03)
Net realized and unrealized gain (loss) on
investment transactions.................... 2.68 (1.32) 2.87 2.67
------ ------ ------ ------
Total from investment operations........... 2.75 (1.17) 2.96 2.64
------ ------ ------ ------
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................ $ 12.76 $ 10.98 $ 12.89 $ 12.68
------ ------ ------ ------
------ ------ ------ ------
TOTAL RETURN(c)............................... 26.00% (9.40)% 29.72% 24.98%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $37,158 $31,339 $ 34,846 $92,032
Average net assets (000)...................... $35,815 $35,145 $ 27,008 $94,904
Ratios to average net assets:
Expenses, including distribution fees...... 1.30% 1.31% 1.58%(b) 2.05%
Expenses, excluding distribution fees...... 1.05% 1.06% 1.33%(b) 1.05%
Net investment income...................... .54% 1.20% .90%(b) (.20)%
Portfolio turnover rate....................... 111% 99% 55% 111%
<CAPTION>
November 7,
1996(a)
Through
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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 12

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Financial Highlights INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Z
-------------------------------------------------------- -------------
November 7,
1996(a) Year Ended
Year Ended September 30, Through September 30,
------------------------------- September 30, -------------
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......................... (.02) .06 .02 .09
Net realized and unrealized gain (loss) on
investment transactions.................... 2.66 (1.31) 2.86 2.69
----- ----- ----- -----
Total from investment operations........... 2.64 (1.25) 2.88 2.78
----- ----- ----- -----
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................ $ 12.68 $ 10.96 $12.86 $ 12.80
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN(c)............................... 24.98% (10.01)% 28.83% 26.31%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000)............... $ 7,636 $ 7,124 $7,111 $ 4,263
Average net assets (000)...................... $ 7,702 $ 7,734 $5,631 $ 3,088
Ratios to average net assets:
Expenses, including distribution fees...... 2.05% 2.06% 2.33%(b) 1.05%
Expenses, excluding distribution fees...... 1.05% 1.06% 1.33%(b) 1.05%
Net investment income...................... (.19)% .46% .15%(b) .76%
Portfolio turnover rate....................... 111% 99% 55% 111%
<CAPTION>
November 7,
1996(a)
Through
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.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 13

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Report of Independent Accountants INCOME FUND
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
The Prudential Investment Portfolios, Inc.--
Prudential Jennison Growth & Income Fund:

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Prudential Investment
Portfolios, Inc.--Prudential Jennison Growth & Income Fund (the 'Fund', one of
the portfolios constituting The Prudential Investment Portfolios, Inc.) at
September 30, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the two years in the period then ended and
for the period November 7, 1996 (commencement of operations) through September
30, 1997, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
'financial statements') are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
November 17, 1999
- --------------------------------------------------------------------------------
14

<PAGE>
THE PRUDENTIAL INVESTMENT PORTFOLIOS, INC.
PRUDENTIAL JENNISON GROWTH &
Tax Information INCOME FUND
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Fund's fiscal year end (September 30, 1999) as to the federal tax status of
dividends and distributions paid by the Fund during such fiscal year.
Accordingly, we are advising you that during its fiscal period ended September
30, 1999, the Series paid an ordinary distribution for Class A, Class B, Class C
and Class Z shares of $.055 per share, $.01 per share, $.01 per share, $.07 per
share, respectively, which is taxable as ordinary income. In addition, the
Series paid to Class A, B, C and Z shares a short-term capital gain distribution
of $.017 and a long-term capital gain distribution of $.893 which is taxable as
such. The Fund utilized redemptions as distributions in the amount of $.001,
$.018 and $.099 of ordinary income, short-term capital gains and long-term
capital gains, respectively, for each class of shares.

We also wish to advise you that 45.36% of the dividends paid from ordinary
income in the fiscal year ended September 30, 1999 qualified for the corporate
dividends received deduction available to corporate taxpayers.

We are required by Massachusetts, Missouri and Oregon to inform you that
dividends which have been derived from interest on federal obligations are not
taxable to shareholders. Please be advised that 8.62% of the dividends paid from
ordinary income in the fiscal year ended September 30, 1999, qualify for each of
these states' tax exclusion.

<PAGE>
Comparing a $10,000 Investment
Prudential Jennison Growth & Income Fund vs. the S&P 500 Index

Class A
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 12.51%
One Year 19.70%

Without Sales Load
Since Inception 14.53%
One Year 26.00%

Class B
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 12.85%
One Year 19.98%

Without Sales Load
Since Inception 13.67%
One Year 24.98%

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.

These graphs compare a $10,000 investment in the Prudential Jennison Growth &
Income Fund (Class A, B, C, and Z shares) with a similar investment in the
Standard & Poor's 500 Composite Stock Price Index (S&P 500 Index) by
portraying the account values at the commencement of operations of each share
class, and at the end of the fiscal year (September 30), as measured on a
quarterly basis, beginning in 1996 for Class A, B, C, and Z shares. For
purposes of the graphs, and unless otherwise indicated, it has been assumed
that (a) the maximum applicable front-end sales charge was deducted from the
initial $10,000 investment in Class A and Class C shares; (b) the maximum
applicable contingent deferred sales charges were deducted from the value of
the investment in Class B and Class C shares, assuming full redemption on
September 30, 1999; (c) all recurring fees (including management fees) were
deducted; and (d) all dividends and distributions were reinvested. Class B
shares will automatically convert to Class A shares, on a quarterly basis,
approximately seven years after purchase. This conversion feature is not
reflected in the graphs. Class Z shares are not subject to a sales charge or
distribution and service (12b-1) fees.

<PAGE>
Class C
(GRAPH)

Average Annual Total Returns
With Sales Load
Since Inception 13.28%
One Year 22.73%

Without Sales Load
Since Inception 13.67%
One Year 24.98%

Class Z
(GRAPH)

Average Annual Total Returns
Since Inception 14.84%
One Year 26.31%

These graphs are furnished to you in accordance with SEC regulations.

<PAGE>
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

(800) 225-1852
http://www.prudential.com

Class NASDAQ Cusip
A PJIAX 74437E503
B PJIBX 74437E602
C -- 74437E701
Z -- 74437E800