<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Active Balanced Fund
Fund Type Stock and bond
Objective Income and long-term growth of capital
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
Prudential 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 maximize its total investment return. Mark
Stumpp and James Scott manage the asset allocation with
the aid of 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 U.S. Liquidity Team manages the bonds.
There can be no assurance that the Fund will achieve its
investment objective.
Portfolio Composition
Expressed as a percentage of
net assets as of 3/31/00
42.3% Bonds
9.2 Cash & Equivalents*
Equities:
12.6 Electronic Tech & Services
7.0 Finance
5.0 Technology Services
4.1 Utilities
3.7 Health Technology
3.7 Retail Trade
2.4 Process Industries
2.0 Energy Materials
1.9 Consumer Non-Durables
1.7 Producer Manufacturing
1.6 Consumer Services
1.1 Consumer Durables
0.8 Transportation
0.3 Commercial Services
0.3 Health Services
0.2 Non-Energy Materials
0.1 Industrial Services
Ten Largest Equity Holdings
Expressed as a percentage of
net assets as of 3/31/00
2.03% Microsoft Corporation
Computer Software & Services
2.01 Cisco
Computer Software & Services
1.93 General Electric Co.
Diversified Operations
1.82 Intel Corp.
Electronic Components
1.04 Oracle Systems Corp.
Computer Software & Services
1.02 Wal-Mart Stores, Inc.
Retail
0.81 IBM, Corp.
Computer Systems/Peripherals
0.77 AT&T Corp.
Telecommunications Services
0.74 Exxon Mobile Corp.
Oil & Gas Exploration/Production
0.72 Sun Microsystems
Computer Software & Services
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Five Since
Months Year Years Inception2
Class A 11.72% 12.06% N/A 55.29%
Class B 11.35 11.26 N/A 51.52
Class C 11.35 11.26 N/A 51.52
Class Z 11.87 12.38 95.74% 131.20
Lipper Balanced
Fund Avg.3 10.51 10.50 105.81 ***
Average Annual Total Returns1 As of 3/31/00
One Five Since
Year Years Inception2
Class A 6.45% N/A 12.13%
Class B 6.26 N/A 12.58
Class C 9.15 N/A 12.69
Class Z 12.38 14.38% 12.28
Past performance is not indicative of future results.
Principal and investment return will fluctuate so that an
investor's shares, when redeemed, may be worth more or
less than their original cost.
1 Source: Prudential Investments Fund Management LLC and
Lipper Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns
do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 5% for Class
A shares.
Class B shares are subject to a declining contingent
deferred sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and
1% for six years. Class B shares will automatically
convert to Class A shares, on a
quarterly basis, approximately seven years after
purchase. Class C shares are subject to a front-end sales
charge of 1% and a CDSC of 1% for 18 months. Class Z
shares are not subject to a sales charge or distribution
and service (12b-1) fees.
2 Inception dates: Class A, B, and C, 11/7/96; Class Z,
1/4/93.
3 Lipper average returns are for all funds in each share
class for the six-month, one-, and five-year
periods in the Balanced Fund category. 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 57.11% for Class A,
B, and C, and 38.09% for Class Z, based on all funds in
each share class.
1
<PAGE>
Prudential Active Balanced Fund
Message From the Fund's President May 16, 2000
Dear Shareholder,
Over the six months ended March 31, 2000, Prudential
Active Balanced Fund returned 11.72%, beating the Lipper
Balanced Fund Average. The return was 6.13% for those
paying an initial Class A share maximum sales charge.
This would be considered a strong performance, by
historical standards, even for a fund holding only
stocks.
The stage for the Fund's outperformance was set by the
exceptional volatility of securities markets during this
period. U.S. bond markets were roiled by the tension
between the Treasury's plans to buy back debt
(potentially reducing long-term interest rates) and the
strong economy (which kept the Federal Reserve raising
short-term rates). The stock markets swung between
confidence in the unique growth potential of technology
and biotechnology stocks on the one hand, and concern
about their very high prices on the other. When markets
swing widely, opportunities to buy cheaply and sell high
arise for dispassionate investors who emphasize
fundamentals. Prudential Active Balanced Fund benefited
from volatility among the various asset classes and also
from its strong selection within the stock market.
It's important to emphasize that Prudential Active
Balanced Fund holds a diversified blend of stocks, bonds,
and money market instruments. The word "active" in the
name of the Fund refers to the Fund's mandate to manage
its exposures to the various securities markets instead
of leaving them at a fixed allocation. By doing so, it
attempts to allow shareholders to participate in the
strong capital appreciation of stocks while trying to
reduce the swings in asset value that may accompany that
growth.
Sincerely,
John R. Strangfeld, President
The Prudential Investment Portfolios, Inc.--Prudential Active Balanced Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
Stock and bond market volatility rose considerably over
the last six months, increasing both risk and
opportunity. We underweighted stocks through much of this
period, as our quantitative models suggested that stocks
were relatively expensive. Normally we would hold
approximately 55% to 60% of the portfolio in stocks, but
we held that proportion closer to 50% because of the
overvalued stock market. Underweighting stocks detracted
from our performance in the fourth quarter of 1999, when
the Standard & Poor's 500 Composite Stock Price Index
(S&P 500) rose by 14.9%, but enhanced our return in the
first quarter of 2000, as the stock market rally
faltered.
Although, on average, we underweighted stocks over the
reporting period, we made small variations in our asset
allocation in response to sharp swings in stock prices.
These helped our performance. For example, we held
approximately 50% of the portfolio in stocks at the end
of January, but increased that allocation after prices
fell in late February. We increased the allocation to
stocks in time to catch the rebound that began in mid-
March.
We normally maintain a relatively low allocation to cash.
However, in October, we held close to 3% of our assets in
money market instruments as a substitute for our bond
allocation because bond prices were faltering. By March,
the cash allocation had dropped to slightly more than 1%--
a more normal level. These moves also helped our
performance.
Stock returns were strong
The strong performance of our stock portfolio
considerably enhanced our return. We attempt to construct
an equity portfolio that will outperform the S&P 500
while maintaining a risk profile that is similar to that
of the Index. For example, we normally hold industry,
sector, and company size proportions fairly close to
those of the S&P 500. We allow a slight additional
exposure to industries and other factors only when stocks
in these categories overall are more attractive than
average on our quantitative measures.
3
<PAGE>
Prudential Active Balanced Fund
Investment Adviser's Report
Although much of our equity outperformance over the last
six months was the result of good stock selection within
these risk categories, we also benefited from some modest
industry focuses: performance was boosted by slight
overweights in the electronic equipment, investment
banks, and telecommunications equipment industries. The
strongest contributors to equity
performance were in the technology sector. For example,
the portfolio held KLA-Tencor, Teradyne, and Applied
Materials, each of which more than
doubled in value over the quarter.
Active Asset Allocation
Asset class exposure can have 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
kind of security that offers 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
48.5% stocks, 42.3% bonds, and 9.2% cash.
Looking ahead
We expect the U.S. stock market to continue to be
unusually volatile. Surprisingly, we view high volatility
as an opportunity rather than as a risk, because we tend
to be buyers on market panics and sellers into strong
rallies. Our strategy of buying on weakness and selling
into strength has tended to add value to the Fund.
Prudential Active Balanced Fund Management Team
4
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 75.6%
Common Stocks 48.5%
-------------------------------------------------------------------------------------
<C> <S> <C> <C>
Aerospace/Defense 0.4%
3,600 General Dynamics Corp. $ 179,100
2,237 Honeywell International, Inc. 117,862
1,600 Lockheed Martin Corp. 32,700
7,500 Raytheon Co. 133,125
5,500 The Boeing Co. 208,656
--------------
671,443
-------------------------------------------------------------------------------------
Airlines 0.4%
5,600 America West Holdings Corp. 86,800
2,400 AMR Corp.(a) 76,500
2,700 Delta Airlines, Inc. 143,775
1,350 Southwest Airlines Co. 28,097
4,900 UAL Corp.(a) 293,387
--------------
628,559
-------------------------------------------------------------------------------------
Automobiles & Trucks 1.0%
9,700 Arvin Industries, Inc. 219,462
3,500 Delphi Automotive Systems Corp. 56,000
13,300 Ford Motor Co. 610,969
8,100 General Motors Corp. 670,781
400 PACCAR, Inc. 20,000
--------------
1,577,212
-------------------------------------------------------------------------------------
Advertising
1,000 Interpublic Group of Companies, Inc. 47,250
-------------------------------------------------------------------------------------
Automotive Parts 0.2%
5,200 TRW, Inc. 304,200
-------------------------------------------------------------------------------------
Banking 1.1%
5,994 Bank One Corp. 206,044
4,300 Chase Manhattan Corp. 374,906
</TABLE>
See Notes to Financial Statements 5
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
12,900 Dime Bancorp, Inc. $ 238,650
6,200 First Union Corp. 230,950
3,200 Huntington Bancshares, Inc. 71,600
13,600 KeyCorp. 258,400
2,700 PNC Bank Corp. 121,669
2,900 Regions Financial Corp. 66,156
2,600 Suntrust Banks, Inc. 150,150
--------------
1,718,525
-------------------------------------------------------------------------------------
Beverages 0.6%
2,600 Anheuser-Busch Companies, Inc. 161,850
7,900 Coca-Cola Co. 370,806
11,600 PepsiCo, Inc. 400,925
--------------
933,581
-------------------------------------------------------------------------------------
Building & Construction 0.3%
10,500 Centex Corp. 250,031
11,500 Pulte Corp. 240,063
--------------
490,094
-------------------------------------------------------------------------------------
Business Services 0.2%
2,700 Kelly Services, Inc. 64,631
2,800 Omnicom Group, Inc. 261,625
1,734 Sabre Group Holdings, Inc.(a) 64,063
--------------
390,319
-------------------------------------------------------------------------------------
Chemicals 0.2%
1,100 Dow Chemical Co. 125,400
400 Praxair, Inc. 16,650
7,100 Schulman (A.), Inc. 94,075
300 Union Carbide Corp. 17,494
--------------
253,619
-------------------------------------------------------------------------------------
Commercial Services
600 Paychex, Inc. 31,425
</TABLE>
6 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Computer Services 0.9%
<C> <S> <C> <C>
1,900 Automatic Data Processing, Inc. $ 91,675
2,500 Electronic Data Systems Corp. 160,469
1,000 Network Appliance, Inc.(a) 82,750
1,000 Unisys Corp.(a) 25,500
3,450 VERITAS Software Corp.(a) 451,950
3,800 Yahoo, Inc.(a) 651,225
--------------
1,463,569
-------------------------------------------------------------------------------------
Computer Software & Services 8.0%
1,400 Adobe Systems, Inc. 155,838
13,000 America Online, Inc.(a) 874,250
42,600 Cisco Systems, Inc.(a) 3,293,512
10,300 Computer Associates International, Inc. 609,631
2,050 Comverse Technology, Inc.(a) 387,450
3,200 DST Systems, Inc.(a) 207,800
5,700 EMC Corp.(a) 712,500
31,300 Microsoft Corp.(a) 3,325,625
21,800 Oracle Systems Corp.(a) 1,701,763
600 Siebel Systems, Inc.(a) 71,663
12,600 Sun Microsystems, Inc.(a) 1,180,659
6,100 Teradyne, Inc.(a) 501,725
--------------
13,022,416
-------------------------------------------------------------------------------------
Computer Systems/Peripherals 1.8%
2,500 Apple Computer, Inc.(a) 339,531
4,800 Dell Computer Corp.(a) 258,900
7,300 Hewlett-Packard Co. 967,706
11,300 International Business Machines Corp. 1,333,400
100 Seagate Technology, Inc.(a) 6,025
--------------
2,905,562
-------------------------------------------------------------------------------------
Cosmetics/Toiletries 0.2%
3,000 Colgate-Palmolive Co. 169,125
2,300 Kimberly-Clark Corp. 128,800
--------------
297,925
</TABLE>
See Notes to Financial Statements 7
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Distribution/Wholesalers 0.1%
<C> <S> <C> <C>
1,800 Costco Wholesale Corp. $ 94,613
-------------------------------------------------------------------------------------
Diversfied Consumer Products 0.3%
4,500 Procter & Gamble Co. 253,125
5,717 Unilever NV 275,131
--------------
528,256
-------------------------------------------------------------------------------------
Diversified Operations 1.9%
20,300 General Electric Co. 3,150,306
-------------------------------------------------------------------------------------
Diversified Manufacturing 0.4%
1,100 Corning, Inc. 213,400
2,600 Eaton Corp. 202,800
1,200 Illinois Tool Works, Inc. 66,300
1,400 Minnesota Mining & Manufacturing Co. 123,987
500 Textron, Inc. 30,438
4,200 Trinity Industries, Inc. 99,487
--------------
736,412
-------------------------------------------------------------------------------------
Electrical Utilities 1.5%
200 American Electric Power Co., Inc. 5,963
8,200 Central & South West Corp. 139,912
2,600 Consolidated Edison, Inc. 75,400
5,600 DTE Energy Co. 162,400
3,400 Duke Energy Corp. 178,500
5,900 Edison International 97,719
7,900 Entergy Corp. 159,481
7,700 FirstEnergy Corp. 158,813
4,200 Florida Progress Corp. 192,675
4,400 FPL Group, Inc. 202,675
9,600 PG&E Corp. 201,600
15,000 Public Service Company of New Mexico 236,250
2,500 Public Service Enterprise Group, Inc. 74,062
17,300 Reliant Energy, Inc. 405,469
5,700 Texas Utilities Co. 169,219
--------------
2,460,138
</TABLE>
8 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Electronic Components 4.3%
<C> <S> <C> <C>
7,400 Altera Corp.(a) $ 660,450
1,000 Analog Devices, Inc.(a) 80,563
6,300 Atmel Corp.(a) 325,238
2,200 Emerson Electric Co. 116,325
22,600 Intel Corp. 2,981,787
2,200 Jabil Circuit, Inc.(a) 95,150
6,700 KLA-Tencor Corp.(a) 564,475
1,000 Micron Technology, Inc.(a) 126,000
3,630 Motorola, Inc. 516,821
1,800 Novellus Systems, Inc.(a) 101,025
4,400 Sanmina Corp.(a) 297,275
12,600 Solectron Corp.(a) 504,787
3,400 Texas Instruments, Inc. 544,000
1,400 Xilinx, Inc.(a) 115,938
--------------
7,029,834
-------------------------------------------------------------------------------------
Financial Services 4.5%
3,900 Allmerica Financial Corp. 198,900
3,300 American Express Co. 491,494
6,000 Astoria Financial Corp. 170,250
9,360 BankAmerica Corp. 490,815
10,430 Bear Stearns Companies, Inc. 475,869
7,900 Charles Schwab Corp. 448,819
19,425 Citigroup, Inc. 1,152,145
2,900 Countrywide Credit Industries, Inc. 79,025
5,100 Federal Home Loan Mortgage Corp. 225,356
7,400 Federal National Mortgage Association 417,637
15,900 Fleet Boston Financial Corp. 580,350
5,000 Golden West Financial Corp. 155,937
2,400 Lehman Brothers Holdings, Inc. 232,800
3,900 MBNA Corp. 99,450
700 Merrill Lynch & Co., Inc. 73,500
9,200 Morgan Stanley, Dean Witter & Co. 750,375
9,000 PaineWebber Group, Inc. 396,000
5,400 Providian Financial Corp. 467,775
3,400 SLM Holding Corp. 113,263
9,300 Wells Fargo Co. 380,719
--------------
7,400,479
</TABLE>
See Notes to Financial Statements 9
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Food Distribution
<C> <S> <C> <C>
1,000 SYSCO Corp. $ 35,688
-------------------------------------------------------------------------------------
Foods 0.6%
10,914 Archer-Daniels Midland Co. 113,233
500 Bestfoods 23,406
6,700 ConAgra, Inc. 121,437
5,400 General Mills, Inc. 195,412
1,500 H.J. Heinz Co. 52,313
19,800 Ibp, Inc. 311,850
1,600 Kellogg Co. 41,000
600 Quaker Oats Co. 36,375
4,200 Sara Lee Corp. 75,600
--------------
970,626
-------------------------------------------------------------------------------------
Health Care Services 0.1%
2,200 Columbia/HCA Healthcare Corp. 55,688
1,900 United Healthcare Corp. 113,288
--------------
168,976
-------------------------------------------------------------------------------------
Home Furnishings 0.1%
2,400 Springs Industries, Inc. 91,200
-------------------------------------------------------------------------------------
Insurance 1.4%
900 Aetna, Inc. 50,119
6,600 Allstate Corp. 157,163
10,400 American International Group, Inc. 1,138,800
25,800 Conseco, Inc. 295,087
2,200 Hartford Financial Services Group 116,050
14,800 Old Republic International Corp. 203,500
11,100 St. Paul Companies, Inc. 378,787
--------------
2,339,506
-------------------------------------------------------------------------------------
Leisure 0.1%
4,400 Carnival Corp. 109,175
2,500 Marriott International, Inc. 78,750
--------------
187,925
</TABLE>
10 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Machinery & Equipment 0.6%
<C> <S> <C> <C>
8,600 Applied Materials, Inc.(a) $ 810,550
700 Deere & Co. 26,600
600 Dover Corp. 28,725
500 Ingersoll-Rand Co. 22,125
700 Rockwell International Corp. 29,269
--------------
917,269
-------------------------------------------------------------------------------------
Measuring & Control Instrument 0.1%
4,100 Johnson Controls, Inc. 221,656
-------------------------------------------------------------------------------------
Media & Entertainment 1.1%
1,000 Dow Jones & Co., Inc. 71,812
1,400 Gannett Co., Inc. 98,525
1,100 Hispanic Broadcasting Corp.(a) 124,575
600 McGraw-Hill Companies, Inc. 27,300
10,700 Time Warner, Inc. 1,070,000
11,200 Walt Disney Co. 463,400
--------------
1,855,612
-------------------------------------------------------------------------------------
Medical Products & Services 1.7%
1,300 Baxter International, Inc. 81,494
5,900 Cardinal Health, Inc. 270,662
6,700 Johnson & Johnson Co. 469,419
100 Medtronic, Inc. 5,144
13,800 Schering-Plough Corp. 507,150
17,000 Tyco International, Ltd. 847,875
6,600 Warner-Lambert Co. 643,500
--------------
2,825,244
-------------------------------------------------------------------------------------
Medical Technology 0.6%
9,600 Abbott Laboratories 337,800
9,900 Amgen, Inc.(a) 607,612
700 Biogen, Inc.(a) 48,913
--------------
994,325
-------------------------------------------------------------------------------------
Metals Processing 0.2%
8,800 Precision Castparts Corp. 321,200
</TABLE>
See Notes to Financial Statements 11
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Office Equipment & Supplies
<C> <S> <C> <C>
1,100 Pitney Bowes, Inc. $ 49,156
-------------------------------------------------------------------------------------
Oil & Gas Exploration/Production 1.7%
11,500 Apache Corp. 572,125
2,300 Atlantic Richfield Co. 195,500
4,800 Coastal Corp. 220,800
15,532 Exxon Mobil Corp. 1,208,584
7,300 Royal Dutch Petroleum Co. 420,206
3,100 Texaco, Inc. 166,237
2,800 USX - Marathon Group 72,975
--------------
2,856,427
-------------------------------------------------------------------------------------
Oil & Gas Services 0.4%
2,500 Amerada Hess Corp. 161,562
4,400 Chevron Corp. 406,725
1,600 Schlumberger, Ltd. 122,400
1,400 Sempra Energy 23,450
--------------
714,137
-------------------------------------------------------------------------------------
Paper & Forest Products 0.3%
100 Champion International Corp. 5,325
1,900 International Paper Co. 81,225
18,100 Louisiana-Pacific Corp. 251,137
3,800 Willamette Industries, Inc. 152,475
--------------
490,162
-------------------------------------------------------------------------------------
Pharmaceuticals 2.0%
1,800 Allergan, Inc. 90,000
13,200 Bristol Myers Squibb Co. 762,300
7,300 Eli Lilly & Co. 459,900
16,800 Merck & Co., Inc. 1,043,700
27,300 Pfizer, Inc. 998,156
--------------
3,354,056
</TABLE>
12 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Photography 0.1%
<C> <S> <C> <C>
1,600 Eastman Kodak Co. $ 86,900
-------------------------------------------------------------------------------------
Precious Metals
700 Barrick Gold Corp. 10,981
-------------------------------------------------------------------------------------
Printing & Publishing 0.2%
2,100 Knight-Ridder, Inc. 106,969
900 New York Times Co. 38,644
2,800 Tribune Co. 102,375
--------------
247,988
-------------------------------------------------------------------------------------
Railroads 0.1%
3,800 Canadian National Railway Co. 101,413
-------------------------------------------------------------------------------------
Retail 3.9%
2,400 Abercrombie & Fitch Co.(a) 38,400
10,800 Circuit City Stores-Circut City Group 657,450
1,700 CVS Corp. 63,856
5,000 Federated Department Stores, Inc.(a) 208,750
10,475 Gap, Inc. 521,786
18,300 Home Depot, Inc. 1,180,350
16,700 Kmart Corp.(a) 161,781
4,200 Kohl's Corp.(a) 430,500
1,800 Lowes Companies, Inc. 105,075
1,300 May Department Stores Co. 37,050
7,000 McDonald's Corp. 262,937
2,500 Safeway Inc.(a) 113,125
7,000 Sears, Roebuck & Co. 216,125
11,100 Staples, Inc.(a) 222,000
3,400 Starbucks Corp. 152,362
2,200 Target Corp. 164,450
1,000 TJX Companies, Inc. 22,188
1,800 Tricon Global Restaurants, Inc.(a) 55,913
30,000 Wal-Mart Stores, Inc. 1,665,000
5,000 Walgreen Co. 128,750
--------------
6,407,848
</TABLE>
See Notes to Financial Statements 13
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
Telecommunication Services 2.4%
<C> <S> <C> <C>
22,350 AT&T Corp. $ 1,257,187
9,400 Bell Atlantic Corp. 574,575
3,400 BellSouth Corp. 159,800
750 CenturyTel, Inc. 27,844
5,400 GTE Corp. 383,400
8,812 MCI WorldCom, Inc.(a) 399,294
20,912 SBC Communications, Inc. 878,304
4,700 Sprint Corp. 296,100
--------------
3,976,504
-------------------------------------------------------------------------------------
Telecommunications Equipment 1.9%
13,400 ADC Telecommunications, Inc.(a) 721,925
12,800 Lucent Technologies, Inc. 777,600
6,900 Nortel Networks Corp. 869,400
4,700 QUALCOMM, Inc.(a) 701,769
900 Tellabs, Inc.(a) 56,686
--------------
3,127,380
-------------------------------------------------------------------------------------
Textile-Apparel Manufacturing
500 Jones Apparel Group, Inc.(a) 15,938
-------------------------------------------------------------------------------------
Tobacco 0.3%
18,000 Philip Morris Co., Inc. 380,250
4,300 UST, Inc. 67,188
--------------
447,438
-------------------------------------------------------------------------------------
Transportation/Trucking/Shipping 0.3%
17,700 Burlington Northern, Inc. 391,612
1,200 Fedex Corp. 46,800
100 Kansas City Southern Industries, Inc. 8,594
1,000 Union Pacific Corp. 39,125
--------------
486,131
--------------
Total common stocks (cost $60,103,770) 79,437,423
--------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
DEBT OBLIGATIONS 27.1%
CORPORATE BONDS 13.7%
-------------------------------------------------------------------------------------
Aerospace/Defense 1.1%
<C> <C> <S> <C> <C>
Boeing Inc., Deb.,
8.10%, 11/15/06 $ 731,941
A1 $ 700(e)
Northrop Grumman Corp., Deb.,
7.75%, 3/1/16 667,499
Baa3 700(e)
Raytheon Co., Note,
6.30%, 3/15/05 466,020
Baa2 500(e)
--------------
1,865,460
-------------------------------------------------------------------------------------
Agricultural Products 0.3%
Monsanto Company, Note,
5.75%, 12/1/05 471,350
A1 500
-------------------------------------------------------------------------------------
Airlines 0.1%
Delta Air Lines Inc. Deb., Note,
8.30%, 12/15/29 213,838
Baa3 230(e)
-----------------------------------------------------------------------------------
Asset Backed Securities 1.4%
Citibank Credit Card Master Trust
I,
Class A,
5.875%, 3/10/11 463,590
Aaa 500(e)
Citibank Credit Card Master Trust,
Cl. A,
6.05%, 1/15/10 1,382,340
Aaa 1,500(e)
MBNA Master Credit Card Trust, Ser.
C, Cl. A,
6.45%, 2/15/08 482,810
Aaa 500(e)
--------------
2,328,740
-------------------------------------------------------------------------------------
Banking 2.4%
BankAmerica Corp., MTN,
7.125%, 5/12/05 981,090
Aa2 1,000(e)
Barclays Bank Plc, Note,
7.40%, 12/15/09 391,168
Aa3 400(e)
Chemical Bank, Sub. Note,
7.00%, 6/1/05 979,800
Aa3 1,000(e)
</TABLE>
See Notes to Financial Statements 15
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
Citicorp, Sub. Note,
7.125%, 9/1/05 $ 494,440
A1 $ 500(e)
First Union-Lehman Brothers Bank.,
Ser. 98,
6.56%, 11/18/08 381,517
Aaa 400(e)
Keycorp Capital III, Capital
Securities,
7.75%, 7/15/29 92,138
A1 100(e)
National Westminster Bank PLC,
Sub. Note
7.375%, 10/1/09 536,387
Aa3 550
--------------
3,856,540
-------------------------------------------------------------------------------------
Building & Construction 0.5%
Hanson Overseas BV, Sr. Note,
6.75%, 9/15/05 764,480
A3 800(e)
-------------------------------------------------------------------------------------
Commercial Paper 1.1%
Bank One Corp., Note,
6.875%, 8/1/06 478,405
Aa3 500(e)
Bank Tokyo Mitsubishi Ltd
Global Sr Sub Note
8.40%, 4/15/10 253,125
A3 250
General Motors Acceptance
Corporation, Note,
7.75%, 1/19/10 252,307
A2 250(e)
Hydro-Quebec
8.00%, 2/1/13 315,783
A2 300
PaineWebber Group, Inc.
7.625%, 12/1/09 490,820
Baa1 500(e)
--------------
1,790,440
-------------------------------------------------------------------------------------
Consulting 0.2%
Comdisco, Inc., Note,
5.95%, 4/30/02 385,968
Baa1 400(e)
-------------------------------------------------------------------------------------
Financial Services 3.8%
Associates Corporation of North
America, Senior Note,
5.75%, 11/1/03 334,047
Aa3 350
</TABLE>
16 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
BCH Cayman Islands Ltd., Sub Note,
7.70%, 7/15/06 $ 159,376
A1 $ 160
Bear, Stearns & Co. Inc., Sr. Note,
8.75%, 3/15/04 1,038,120
A2 1,000(e)
Ford Motor Credit Co.,
7.375%, 10/28/09 783,728
A1 800(e)
Ford Motor Credit Corp., Deb.,
7.40%, 11/1/46 268,920
A1 285
General Motors Acceptance Corp.,
Sr. Note,
6.75%, 2/7/02 563,143
A2 570(e)
Goldman, Sachs Group LP, Note,
7.25%, 10/1/05 692,216
A1 700(e)
Heller Financial Inc., Note,
6.00%, 3/19/04 378,272
A3 400(e)
Lehman Brothers Holdings, Inc.,
Notes,
A3 240(e) 6.625%, 4/1/04 231,000
A3 130(e) 6.625%, 2/5/06 124,144
Merrill Lynch & Co., MTN,
6.02%, 5/11/01 493,705
Aa3 500(e)
Santander Finance Issuances, Note,
6.80%, 7/15/05 500,453
A1 520(e)
US West Capital Funding Inc., Note,
6.125%, 7/15/02 584,082
Baa1 600(e)
--------------
6,151,206
-------------------------------------------------------------------------------------
Foreign Government Bonds 0.1%
Comunidad Autonoma De Andalucia,
Note,
7.25%, 10/1/29 115,764
Aa3 120
-------------------------------------------------------------------------------------
Leisure 0.1%
Marriott International Inc., Ser.
C, Note,
7.875%, 9/15/09 171,073
Baa1 175(e)
-------------------------------------------------------------------------------------
Media & Entertainment 0.6%
News America Holdings, Inc., Deb.,
9.25%, 2/1/13 328,569
Baa3 300(e)
</TABLE>
See Notes to Financial Statements 17
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
Time Warner, Inc., Sr. Note,
9.125%, 1/15/13 $ 666,792
Baa3 $ 600(e)
--------------
995,361
-------------------------------------------------------------------------------------
Medical Products & Services 0.2%
Tyco International Group, Note,
6.375%, 6/15/05 375,188
Baa1 400(e)
-------------------------------------------------------------------------------------
Oil & Gas Exploration/Production 0.6%
Atlantic Richfield Co., Deb.,
10.875%, 7/15/05 810,173
A2 700(e)
Occidental Petroleum Corporation,
Senior Note,
7.65%, 2/15/06 196,610
Baa3 200
--------------
1,006,783
-------------------------------------------------------------------------------------
Oil & Gas Services
Amerada Hess Corp., Note,
7.875%, 10/1/29 48,478
Baa1 50(e)
-------------------------------------------------------------------------------------
Retail 0.1%
Wal Mart Stores Incorporated Note,
6.875%, 8/10/09 145,932
Aa2 150
-------------------------------------------------------------------------------------
Telecommunication Services 0.4%
GTE Corp.,
Baa1 220(e) 6.36%, 4/15/06, Deb. 207,238
7.51%, 4/1/09, Note 209,078
Baa1 210(e)
Sprint Capital Corp., Note,
6.875%, 11/15/28 295,934
Baa1 330(e)
--------------
712,250
-------------------------------------------------------------------------------------
Utilities 0.6%
Southern California Edison Co.,
Note,
6.50%, 6/1/01 992,360
A2 1,000(e)
--------------
Total U.S. corporate bonds
(cost $23,434,454) 22,391,211
--------------
</TABLE>
18 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS 0.5%
<C> <C> <S> <C> <C>
Commercial Mortgage Asset Trust
Series 1999 C2 Class A1,
7.285%, 12/17/07 $ 193,030
Aaa $ 195
Federal National Mortgage
Association Remic,
Series 1993 Cl55K,
6.50%, 5/25/08 580,500
Aaa 600
--------------
Total collateralized mortgage
obligations (cost $787,156) 773,530
--------------
-----------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH OBLIGATIONS 9.5%
Federal Home Loan Mortgage Corp.,
7.00%, 12/1/99 1,923,740
Aaa 2,000(c)
Federal National Mortgage Assoc.,
Aaa 558 8.50%, 10/1/24 569,430
Aaa 0(d) 9.50%, 7/1/25 139
Aaa 319 8.50%, 2/1/28 325,236
Aaa 5,600(c) 7.50%, 12/1/99 5,503,736
Aaa 3,500(c) 6.50%, 12/1/99 3,281,250
Aaa 1,600(c) 6.50%, 12/1/99 1,540,496
Government National Mortgage
Assoc.,
Aaa 1,500(c) 7.00%, 12/15/99 1,453,125
Aaa 1,000(c) 8.00%, 12/15/99 1,011,250
--------------
Total U.S. government agency
mortgage pass-through obligations
(cost $15,552,052) 15,608,402
--------------
-------------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY STRIPPED SECURITIES 1.4%
Federal National Mortgage Assoc.,
8.00%, 12/1/23 440,485
Aaa 437
Federal National Mortgage Assoc.,
7.00%, 12/1/99 1,767,924
Aaa 1,800(c)
--------------
2,208,409
--------------
Total U.S. government agency
stripped security (cost
$2,204,317) 2,208,409
--------------
</TABLE>
See Notes to Financial Statements 19
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES 2.0%
<C> <C> <S> <C> <C>
United States Treasury Notes,
Aaa $ 200(e) 6.00%, 8/15/04 $ 197,282
Aaa 270(e) 7.50%, 2/15/05 282,318
Aaa 351(e) 6.00%, 8/15/09 346,556
United States Treasury Bonds,
6.125%, 8/15/29 1,065,085
Aaa 1,045(e)
United States Treasury Notes,
6.50%, 2/28/02 549,741
Aaa 550
132(e) 6.50%, 2/15/10 136,620
Aaa
United States Treasury Stripped
Interest,
Zero Coupon, 11/15/21 713,154
Aaa 2,600
--------------
Total U.S. government securities
(cost $3,212,071) 3,290,756
--------------
Total debt obligations (cost
$45,190,050) 44,272,308
--------------
Total long-term investments
(cost $105,293,820) 123,709,731
--------------
SHORT-TERM INVESTMENTS 34.1%
-------------------------------------------------------------------------------------
U.S. GOVERNMENT SECURITIES 3.8%
United States Treasury Bills.
350(b) 5.63%, 6/22/00 345,512
950(b) 5.6725%, 6/22/00 937,725
Federal Home Loan Bank
Discount Notes,
6.05%, 4/3/00 4,890,356
4,892
--------------
Total U.S. government securities
(cost $6,173,593) 6,173,593
--------------
</TABLE>
20 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-----------------------------------------------------------------------------------------
COMMERCIAL PAPER 11.4%
<C> <C> <S> <C> <C>
Centric Capital Corp.,
6.08%, 5/19/00 $ 3,471,626
P-1 $ 3,500
Cox Enterprises Inc.,
6.20%, 4/26/00 2,987,083
P-2 3,000
General Electric Capital Services
Inc.,
6.07%, 5/18/00 3,968,301
P-1 4,000
Johnson Controls, Inc.,
6.33%, 4/3/00 3,744,683
P-1 3,746
Old Line Funding Corp.,
6.05%, 5/15/00 4,466,725
P-1 4,500
--------------
Total commercial paper
(cost $18,638,418) 18,638,418
--------------
-------------------------------------------------------------------------------------
REPURCHASE AGREEMENT 18.9%
31,014,000 Joint Repurchase Agreement Account,
6.15%, 4/3/00 (cost $31,014,000,
Note 5) 31,014,000
--------------
Total short-term investments
(cost $55,826,011) 55,826,011
--------------
Total Investments 109.7%
(cost $161,119,831) 179,535,742
Liabilities in excess of other
assets (9.7%) (15,891,444)
--------------
Net Assets 100% $ 163,644,298
--------------
--------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing security.
(b) All or partial amount of security is segregated as collateral for financial
futures transactions.
(c) Mortgage dollar roll, see Note 1 and Note 4.
(d) Figures are actual, not rounded to the nearest thousand.
(e) Pledged as collateral for dollar rolls.
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 21
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $130,105,844) $ 148,521,743
Repurchase agreement (cost $31,014,000) 31,014,000
Cash 312
Dividends and interest receivable 578,816
Receivable for Fund shares sold 312,258
Receivable for investments sold 279,799
Due from broker-variation margin 145,988
Other assets 4,770
--------------
Total assets 180,857,686
--------------
LIABILITIES
Payable for investments purchased 16,746,649
Payable for Fund shares reacquired 203,601
Accrued expenses and other liabilities 161,343
Management fee payable 87,034
Distribution fee payable 14,761
--------------
Total liabilities 17,213,388
--------------
NET ASSETS $ 163,644,298
--------------
--------------
Net assets were comprised of:
Common stock, at par $ 11,873
Paid-in capital in excess of par 141,308,908
--------------
141,320,781
Undistributed net investment income 1,200,937
Accumulated net realized gain on investments 977,217
Net unrealized appreciation on investments 20,145,363
--------------
Net assets, March 31, 2000 $ 163,644,298
--------------
--------------
</TABLE>
22 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
March 31, 2000
---------------------------------------------------------------------------------------
<S> <C> <C>
Class A:
Net asset value and redemption price per share
($12,840,607 / 932,986 shares of common stock issued and
outstanding) $13.76
Maximum sales charge (5% of offering price) .72
--------------
Maximum offering price to public $14.48
Class B:
Net asset value, offering price and redemption price per
share
($13,221,126 / 961,681 shares of common stock issued and
outstanding) $13.75
Class C:
Net asset value and redemption price per share
($1,646,547 / 119,774 shares of common stock issued and
outstanding) $13.75
Sales charge (1% of offering price) .14
--------------
Offering price to public $13.89
Class Z:
Net asset value, offering price and redemption price per
share
($135,936,018 / 9,858,229 shares of common stock issued
and outstanding) $13.79
</TABLE>
See Notes to Financial Statements 23
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 2,546,354
Dividends (net of foreign withholding taxes of $658) 446,648
-----------------
Total income 2,993,002
-----------------
Expenses
Management fee 498,745
Distribution fee--Class A 14,200
Distribution fee--Class B 59,787
Distribution fee--Class C 6,860
Transfer agent's fees and expenses 138,000
Reports to shareholders 70,000
Custodian's fees and expenses 69,000
Registration fees 45,000
Legal fees and expenses 10,000
Audit fee and expenses 10,000
Directors' fees and expenses 4,000
Miscellaneous 1,118
-----------------
Total expenses 926,710
-----------------
Net investment income 2,066,292
-----------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain (loss) on:
Investment transactions 1,467,737
Financial futures contracts (39,379)
-----------------
1,428,358
-----------------
Net change in unrealized appreciation on:
Investments 11,686,465
Financial futures contracts 2,004,060
-----------------
13,690,525
-----------------
Net gain on investments 15,118,883
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 17,185,175
-----------------
-----------------
</TABLE>
24 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 31, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 2,066,292 $ 3,573,191
Net realized gain on investments 1,428,358 9,924,830
Net change in unrealized appreciation on
investments 13,690,525 9,882,582
-------------- ------------------
Net increase in net assets resulting from
operations 17,185,175 23,380,603
-------------- ------------------
Dividends and distributions (Note 1)
Dividends from net investment income
Class A (218,395) (74,318)
Class B (155,300) (52,406)
Class C (17,058) (4,693)
Class Z (2,869,828) (4,048,216)
-------------- ------------------
(3,260,581) (4,179,633)
-------------- ------------------
Distributions from net realized gains
Class A (538,187) (438,657)
Class B (595,317) (480,842)
Class C (65,388) (43,068)
Class Z (6,387,683) (21,035,473)
-------------- ------------------
(7,586,575) (21,998,040)
-------------- ------------------
Series share transactions (net of share
conversion) (Note 6)
Net proceeds from shares sold 23,663,309 69,542,543
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 10,820,733 26,157,302
Cost of shares reacquired (23,920,755) (114,537,650)
-------------- ------------------
Net increase (decrease) in net assets
from Series share transactions 10,563,287 (18,837,805)
-------------- ------------------
Total increase (decrease) 16,901,306 (21,634,875)
NET ASSETS
Beginning of period 146,742,992 168,377,867
-------------- ------------------
End of period(a) $163,644,298 $146,742,992
-------------- ------------------
-------------- ------------------
------------------------------
(a) Includes undistributed net investment
income of $ 1,200,937 $ 2,395,226
-------------- ------------------
</TABLE>
See Notes to Financial Statements 25
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited)
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
26
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited) Cont'd.
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
27
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited) Cont'd.
account, the dollar value of which is at least equal to its obligations in
respect of dollar rolls.
Securities Transactions and Net Investment Income: Securities
transactions are recorded on the trade date. Realized gains or losses on sales
of securities are calculated on the identified cost basis. Dividend income is
recorded on the ex-dividend date and interest income is recorded on the accrual
basis. Expenses are recorded on the accrual basis which may require the use of
certain estimates by management.
Net investment income (other than distribution fees) and unrealized and
realized gains or losses are allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.
Dividends and Distributions: 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.
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 services of PIC,
the cost of 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
28
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited) Cont'd.
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 six months ended
March 31, 2000.
PIMS has advised the Series that it received approximately $16,299 and
$4,395 in front-end sales charges resulting from sales of Class A shares and
Class C shares, respectively, during the six months ended March 31, 2000. From
these fees, PIMS paid such sales charges to affiliated broker-dealers, which in
turn paid commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended March 31, 2000,
it received approximately $21,244 and $853 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').
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The Funds pay a
commitment fee of .080 of 1% of the unused portion of the credit facility. The
commitment fee is accrued and paid quarterly on a pro rata basis by the Funds.
The expiration date of the SCA is March 9, 2001. Prior to March 9, 2000, the
commitment fee was .065 of 1% of the unused portion of the credit facility. The
Fund did not borrow any amounts pursuant to the SCA during the year ended March
31, 2000.
Note 3. Other Transactions With Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months ended March 31, 2000,
the Series incurred fees of approximately $133,300 for the services of PMFS. As
of March 31, 2000, approximately $19,100 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.
29
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited) Cont'd.
Note 4. Portfolio Securities
Purchases and sales of investment securities other than short-term investments,
for the six months ended March 31, 2000 were $133,343,053 and $130,609,063,
respectively.
The average monthly balance of dollar rolls outstanding during the six
months ended March 31, 2000 was approximately $1,149,061. The value of dollar
rolls outstanding at March 31, 2000 was $16,481,521 (principal $16,393,687),
which was 9.1% of total assets.
The cost basis of investments for federal income tax purposes as of March
31, 2000 was $161,436,773 and, accordingly, net unrealized appreciation of
investments for federal income tax purposes was $18,098,969 (gross unrealized
appreciation--$24,570,567, gross unrealized depreciation--$6,471,598).
During the six months ended March 31, 2000, the Series entered into
financial futures contracts. Details of open contracts at March 31, 2000 are as
follows:
<TABLE>
<CAPTION>
Value at Value at Unrealized
Number of Expiration March 31, Trade Appreciation/
Contracts Type Date 2000 Date (Depreciation)
--------------------- ----------- ---------- ----------- ----------- --------------
<C> <S> <C> <C> <C> <C>
Long Position:
U.S. 10yr
28 T-Note Jun. 00 $ 2,746,188 $ 2,676,805 $ 69,383
42 S&P 500 Jun. 00 15,910,650 14,468,475 1,442,175
U.S. 5yr
164 T-Note Jun. 00 16,154,000 15,936,094 217,906
--------------
$1,729,464
--------------
--------------
</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 March 31,
2000, the Series had a 4.7% undivided interest in repurchase agreements in the
joint account. The undivided interest for the Series represented $31,014,000 in
principal amount. As of such date,
30
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited) Cont'd.
each repurchase agreement in the joint account and the value of the collateral
therefore was as follows:
Bear, Stearns & Co. Inc., 6.10%, in the principal amount of $120,000,000,
repurchase price of $120,061,000, due 4/3/00. The value of the collateral
including accrued interest was $123,642,827.
Credit Suisse First Boston Corp., 6.10%, in the principal amount of
$130,000,000, repurchase price of $130,066,083, due 4/3/00. The value of the
collateral including accrued interest was $134,450,258.
Greenwich Capital Markets, Inc., 6.15%, in the principal amount of
$100,000,000, repurchase price of $100,051,250, due 4/3/00. The value of the
collateral including accrued interest was $102,005,200.
Goldman, Sachs & Co., 6.09%, in the principal amount of $100,000,000,
repurchase price of $100,050,750, due 4/3/00. The value of the collateral
including accrued interest was $102,000,425.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 6.25%, in the principal
amount of $207,289,000, repurchase price of $207,396,963, due 4/3/00. The value
of the collateral including accrued interest was $211,435,308.
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. 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
31
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited) Cont'd.
Class A, Class B, Class C and Class Z, each of which consists of 250 million
authorized shares.
Transactions in shares of common stocks were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
---------------------------------------------------------- ---------- ------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 196,715 $ 2,594,785
Shares issued in reinvestment of dividends and
distributions 57,495 751,456
Shares reacquired (109,229) (1,440,019)
---------- ------------
Net increase in shares outstanding before conversion 144,981 1,906,222
Shares issued upon conversion from Class B 3,413 44,738
---------- ------------
Net increase in shares outstanding 148,394 $ 1,950,960
---------- ------------
---------- ------------
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
---------- ------------
---------- ------------
<CAPTION>
Class B
----------------------------------------------------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 262,998 $ 3,473,991
Shares issued in reinvestment of dividends and
distributions 56,023 732,778
Shares reacquired (187,290) (2,470,666)
---------- ------------
Net increase in shares outstanding before conversion 131,731 1,736,103
Shares reacquired upon conversion into Class A (3,420) (44,738)
---------- ------------
Net increase in shares outstanding 128,311 $ 1,691,365
---------- ------------
---------- ------------
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
---------- ------------
---------- ------------
</TABLE>
32
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C Shares Amount
---------------------------------------------------------- ---------- ------------
Six months ended March 31, 2000:
<S> <C> <C>
Shares sold 51,469 $ 679,021
Shares issued in reinvestment of dividends and
distributions 6,048 79,112
Shares reacquired (22,520) (297,822)
---------- ------------
Net increase in shares outstanding 34,997 $ 460,311
---------- ------------
---------- ------------
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
---------- ------------
---------- ------------
<CAPTION>
Class Z
----------------------------------------------------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 1,277,760 $ 16,915,512
Shares issued in reinvestment of dividends and
distributions 708,293 9,257,387
Shares reacquired (1,491,462) (19,712,248)
---------- ------------
Net increase in shares outstanding 494,591 $ 6,460,651
---------- ------------
---------- ------------
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)
---------- ------------
---------- ------------
</TABLE>
33
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.25
--------
Income from investment operations:
Net investment income .19
Net realized and unrealized gain (loss) on investment
transactions 2.01
--------
Total from investment operations 2.20
--------
Less distributions:
Dividends from net investment income (.28)
Distributions from net realized gains (.69)
--------
Total distributions (.97)
--------
Net asset value, end of period $ 14.48
--------
--------
TOTAL RETURN(d): 11.72%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 12,841
Average net assets (000) $ 11,360
Ratios to average net assets:
Expenses, including distribution fees 1.35%(c)
Expenses, excluding distribution fees 1.10%(c)
Net investment income 2.55%(c)
Portfolio turnover rate 112%
</TABLE>
------------------------------
(a) Commencement of offering of Class A 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.
34 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------------------
Year Ended September 30, November 7, 1996(a)
------------------------------------------ through September 30,
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 13.29 $14.41 $13.40
.31 .44 .21(b)
1.69 (.20) 1.97
-------- ------- -------
2.00 .24 2.18
-------- ------- -------
(.30) (.32) (.39)
(1.74) (1.04) (.78)
-------- ------- -------
(2.04) (1.36) (1.17)
-------- ------- -------
$ 13.25 $13.29 $14.41
-------- ------- -------
-------- ------- -------
16.07% 1.93% 17.48%
$ 10,397 $3,218 $ 990
$ 6,918 $2,090 $ 100
1.41% 1.28% 1.31%(c)
1.16% 1.03% 1.06%(c)
2.29% 2.72% 2.69%(c)
230% 256% 50%
</TABLE>
See Notes to Financial Statements 35
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.17
--------
Income from investment operations:
Net investment income .13
Net realized and unrealized gain (loss) on investment
transactions 1.32
--------
Total from investment operations 1.45
--------
Less distributions:
Dividends from net investment income (.18)
Distributions from net realized gains (.69)
--------
Total distributions (.87)
--------
Net asset value, end of period $ 13.75
--------
--------
TOTAL RETURN(d): 11.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 13,221
Average net assets (000) $ 11,957
Ratios to average net assets:
Expenses, including distribution fees 2.10%(c)
Expenses, excluding distribution fees 1.10%(c)
Net investment income 1.80%(c)
Portfolio turnover rate 112%
</TABLE>
------------------------------
(a) Commencement of offering of Class A 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.
36 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------------------------------
Year Ended September 30, November 7, 1996(a)
------------------------------------------ through September 30,
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 13.22 $14.34 $13.40
-------- ------- -------
.19 .27 .19(b)
1.69 (.14) 1.92
-------- ------- -------
1.88 .13 2.11
-------- ------- -------
(.19) (.21) (.39)
(1.74) (1.04) (.78)
-------- ------- -------
(1.93) (1.25) (1.17)
-------- ------- -------
$ 13.17 $13.22 $14.34
-------- ------- -------
-------- ------- -------
15.12% 1.10% 16.91%
$ 10,979 $3,038 $ 213
$ 7,018 $1,285 $ 71
2.16% 2.03% 2.06%(c)
1.16% 1.03% 1.06%(c)
1.54% 1.95% 1.94%(c)
230% 256% 50%
</TABLE>
See Notes to Financial Statements 37
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.17
--------
Income from investment operations:
Net investment income .14
Net realized and unrealized gain (loss) on investment
transactions 1.45
--------
Total from investment operations 1.59
--------
Less distributions:
Dividends from net investment income (.18)
Distributions from net realized gains (.69)
--------
Total distributions (.87)
--------
Net asset value, end of period $ 13.89
--------
--------
TOTAL RETURN(d): 11.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 1,647
Average net assets (000) $ 1,372
Ratios to average net assets:
Expenses, including distribution fees 2.10%(c)
Expenses, excluding distribution fees 1.10%(c)
Net investment income 1.81%(c)
Portfolio turnover rate 112%
</TABLE>
------------------------------
(a) Commencement of offering of Class C 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.
38 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------------------------------
Year Ended September 30, November 7, 1996(a)
------------------------------------------ through September 30,
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 13.22 $14.34 $13.40
-------- ------- -------
.19 .48 .13(b)
1.69 (.35) 1.98
-------- ------- -------
1.88 .13 2.11
-------- ------- -------
(.19) (.21) (.39)
(1.74) (1.04) (.78)
-------- ------- -------
(1.93) (1.25) (1.17)
-------- ------- -------
$ 13.17 $13.22 $14.34
-------- ------- -------
-------- ------- -------
15.12% 1.10% 16.91%
$ 1,117 $ 284 $ 5
$ 674 $ 118 $ 1
2.16% 2.03% 2.06%(c)
1.16% 1.03% 1.06%(c)
1.54% 2.04% 1.94%(c)
230% 256% 50%
</TABLE>
See Notes to Financial Statements 39
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 13.27
----------------
Income from investment operations:
Net investment income .19
Net realized and unrealized gain (loss) on investment
transactions 1.33
----------------
Total from investment operations 1.52
----------------
Less distributions:
Dividends from net investment income (.31)
Distributions from net realized gains (.69)
----------------
Total distributions (1.00)
----------------
Net asset value, end of period $ 13.79
----------------
----------------
TOTAL RETURN(d): 11.87%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $135,936
Average net assets (000) $128,771
Ratios to average net assets:
Expenses, including distribution fees 1.10%(c)
Expenses, excluding distribution fees 1.10%(c)
Net investment income 2.80%(c)
Portfolio turnover rate 112%
</TABLE>
------------------------------
(a) Net of expense subsidy.
(b) Calculated based upon weighted average shares outstanding during the period.
(c) Annualized.
(d) Total return is calculated assuming a purchase of shares on the first day
and a sale on the last day of each period reported and includes reinvestment
of dividends and distributions. Total return for periods of less than a full
year are not annualized.
40 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Active
Balanced Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
----------------------------------------------------------------------------------------------------------
Year Ended September 30,
----------------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 13.32 $ 14.45 $ 13.01 $ 12.46 $ 10.92
---------------- ---------------- ---------------- ---------------- ----------------
.35 .38 .39(b) .29(a) .33(a)
1.68 (.12) 2.22 .81 1.54
---------------- ---------------- ---------------- ---------------- ----------------
2.03 .26 2.61 1.10 1.87
---------------- ---------------- ---------------- ---------------- ----------------
(.34) (.35) (.39) (.37) (.29)
(1.74) (1.04) (.78) (.18) (.04)
---------------- ---------------- ---------------- ---------------- ----------------
(2.08) (1.39) (1.17) (.55) (.33)
---------------- ---------------- ---------------- ---------------- ----------------
$ 13.27 $ 13.32 $ 14.45 $ 13.01 $ 12.46
---------------- ---------------- ---------------- ---------------- ----------------
16.32% 2.12% 21.34% 9.11% 17.66%
$124,250 $161,838 $158,672 $153,588 $133,352
$130,052 $177,443 $154,199 $142,026 $104,821
1.16% 1.03% 1.06% 1.00%(a) 1.00%(a)
1.16% 1.03% 1.06% 1.00%(a) 1.00%(a)
2.54% 2.99% 2.94% 3.09%(a) 3.53%(a)
230% 256% 50% 51% 30%
</TABLE>
See Notes to Financial Statements 41
<PAGE>
Prudential Active Balanced Fund
Prudential Mutual Fund Family
Prudential offers a broad range of mutual funds designed
to meet your individual needs. For information about
these funds, contact your financial adviser or call us at
(800) 225-1852. Read the prospectus carefully before you
invest or send money.
STOCK FUNDS
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential 20/20 Focus Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
Asset Allocation/Balanced Funds
Prudential Balanced Fund
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
GLOBAL FUNDS
Global Stock Funds
Prudential Developing Markets Fund
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Global Utility Fund, Inc.
Target Funds
International Equity Fund
Global Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
<PAGE>
www.prudential.com (800) 225-1852
BOND FUNDS
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Target Funds
Total Return Bond Fund
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Prudential Active Balanced Fund
Getting the Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you
receive financial advice from a Prudential Securities
Financial Advisor or Pruco Securities registered
representative. Your advisor or representative can
provide you with the following services:
There's No Reward Without Risk; but Is This Risk Worth
It?
Your financial advisor or registered representative can
help you match the reward you seek with the risk you can
tolerate. Risk can be difficult to gauge--sometimes even
the simplest investments bear surprising risks. The
educated investor knows that markets seldom move in just
one direction. There are times when a market sector or
asset class will lose value or provide little in the way
of total return. Managing your own expectations is easier
with help from someone who understands the markets and
who knows you!
Keeping Up With the Joneses
A financial advisor or registered representative can help
you wade through the numerous available mutual funds to
find the ones that fit your individual investment profile
and risk tolerance. While the newspapers and popular
magazines are full of advice about investing, they are
aimed at generic groups of people or representative
individuals--not at you personally. Your financial advisor
or registered representative will review your investment
objectives with you. This means you can make financial
decisions based on the assets and liabilities in your
current portfolio and your risk tolerance--not just based
on the current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are among the most common investor mistakes. But
sometimes it's difficult to hold on to an investment when
it's losing value every month. Your financial advisor or
registered representative can answer questions when
you're confused or worried about your investment, and
should remind you that you're investing for the long
haul.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Directors
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E.H. Morrison, Secretary
Stephen M. Ungerman, Assistant Treasurer
William V. Healey, Assistant Secretary
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777
Distributor
Prudential Investment Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171
Transfer Agent
Prudential Mutual Fund Services LLC
194 Wood Avenue South
Iselin, NJ 08830
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
Fund Symbols NASDAQ CUSIP
Class A -- 74437E883
Class B -- 74437E875
Class C -- 74437E867
Class Z PABFX 74437E859
The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report and are subject to change thereafter.
The accompanying financial statements as
of March 31, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
(LOGO)
BULK RATE
U.S. POSTAGE
PAID
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Prudential Mutual Funds
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MF185E2 74437E883 74437E875 74437E867 74437E859
(LOGO) Printed on Recycled Paper
<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Jennison Growth Fund
Fund Type Stock
Objective Long-term growth of capital
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
Prudential 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. The Fund
may also invest in stocks of foreign companies,
investment-grade bonds, and securities issued or backed
by the U.S. government and its agencies, such as
mortgage-backed securities. There can be no assurance
that the Fund will achieve its investment objective.
Portfolio Composition
Sectors expressed as a percentage of
net assets as of 3/31/00
32.0% Technology
30.0 Communications Services
10.0 Financial Services
9.0 Consumer Cyclicals
6.0 Consumer Staples
10.0 Healthcare
2.0 Capital Goods
1.0 Cash & Equivalents
Ten Largest Holdings
Expressed as a percentage of
net assets as of 3/31/00
4.6% Microsoft Corp.
EDP Software & Services
4.3 Cisco Systems, Inc.
Networking
3.8 Vodafone AirTouch PLC
Telecommunications
3.6 Intel Corp.
Electronic Components
3.4 Nokia Corp. (ADR)
Telecommunications Equipment
3.2 Home Depot, Inc.
Retail
3.2 Citigroup, Inc.
Banks & Financial Services
3.0 Hewlett-Packard Co.
Computer Systems/Peripherals
2.7 Qwest Communications
International, Inc.
Telecommunications
2.4 Warner-Lambert Co.
Pharmaceuticals
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Five Since
Months Year Years Inception2
Class A 44.29% 44.15% N/A 228.47%
Class B 43.73 42.99 N/A 217.80
Class C 43.73 42.99 N/A 217.80
Class Z 44.55 44.47 324.80% 454.88
Lipper Large-Cap
Growth Fund Avg.3 37.61 38.08 270.26 ***
Average Annual Total Returns1 As of 3/31/00
One Five Since
Year Years Inception2
Class A 36.94% N/A 29.43%
Class B 37.99 N/A 29.88
Class C 40.56 N/A 29.68
Class Z 44.47 33.55% 26.06
Past performance is not indicative of future results.
Principal and investment return will fluctuate so that an
investor's shares, when redeemed, may be worth more or
less than their original cost.
1 Source: Prudential Investments Fund Management LLC and
Lipper Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns
do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 5% for Class
A shares. Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%,
2%, 1%, and 1% for six years. Class B shares will
automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. Class C
shares are subject to a front-end sales charge of 1% and
a CDSC of 1% for 18 months. Class Z shares are not
subject to a sales charge or distribution and service
(12b-1) fees.
2 Inception dates: Class A, B, and C, 11/2/95; Class Z,
4/15/96. On 9/20/96, The Prudential Institutional Fund--
Growth Stock Fund merged into the Prudential Jennison
Growth Fund, Class Z shares. Performance prior to 9/20/96
is for the Growth Stock Fund, which had an inception date
of 11/5/92.
3 Lipper average returns are for all funds in each share
class for the six-month, one-, and five-year
periods in the 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) greater
than 300% of the dollar-weighted median
market capitalization of the S&P(R) Mid-Cap 400 Index.
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.
(R) S&P is a registered trademark of the Standard & Poor's
Corporation.
***Lipper Since Inception returns are 209.73% for Class
A, B, and C, and 178.87% for Class Z, based on all funds
in each share class.
1
<PAGE>
Prudential Jennison Growth Fund
Message From the Fund's President May 16, 2000
Dear Shareholder,
I am pleased to report that Prudential Jennison Growth
Fund continued and accelerated its excellent performance
with a 44.29% return on its Class A shares for the six
months ended March 31, 2000. This was 39.29% for those
paying an initial Class A share sales charge. The return
was exceptional--well above an already high Lipper Large-
Cap Growth Fund Average.
The Fund benefited from its heavy representation of
technology stocks--almost 40% of its net assets at period
end. During this six-month span, and particularly during
the month of February, market gains were concentrated
among technology and biotechnology stocks. Not
surprisingly, the six largest contributors to the Fund's
return were technology stocks, including Cisco Systems,
Nokia, and Intel. The Fund also benefited from its
smaller focuses in communications services, financials,
consumer cyclicals, and healthcare.
A fund with this focus on technology could not have
escaped the March-April technology downturn unscathed.
However, Jennison's investing style in the sector favors
blue-chip stocks with a strong earnings history, which
buffered the impact somewhat. On the following pages, the
Fund's portfolio managers describe how they achieved
their exceptional results this reporting period, and what
their strategy is for the future.
No one knows in which direction the markets could be
headed next. That's why Prudential typically recommends
that its clients maintain a broadly diversified
portfolio--one that includes both growth and value funds.
Moreover, the importance of maintaining a long-term
investment approach cannot be overstated, particularly
during periods of short-term market fluctuations.
Sincerely,
John R. Strangfeld, President
The Prudential Investment Portfolio, Inc.--Prudential
Jennison Growth Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
Despite a correction that began in March, stock markets
over the six months of our reporting period were
dominated by the technology sector. We began the period
with more than a third of our portfolio invested in
technology. Among our largest holdings (see Comments on
Largest Holdings), Cisco Systems, Nokia, and Intel were
among the largest contributors to our outperformance of
the overall market. We also had substantial contributions
from Texas Instruments (semiconductors); JDS Uniphase
(optical information processing), which more than
doubled; Applied Materials (semiconductor capital
equipment); and Broadcom, an initial public offering
(IPO) that moved up sharply after its issuance (not quite
tripling by period end). We had a much smaller position
in Juniper Networks; nonetheless, its 334% rise over the
period made it an important contributor.
Not all of our technology holdings gained. IBM and Lucent
Technologies were among the larger negative impacts. The
market during this period preferred newer, more exciting
companies. We sold our holdings in Lucent, but we kept
IBM because it was inexpensively priced, with
significantly positive cash flow and good growth
prospects.
We sold several technology stocks to fund the purchase of
pharmaceuticals, which were as inexpensive as at any time
in the previous eight years. Despite the sales, the large
price appreciation of our technology holdings left us
with a higher weighting at period end than at the
beginning of the period.
Communications services were our second-largest sector
focus on March 31, as well as our second-best performing
sector. Vodafone AirTouch is described in Comments on
Largest Holdings. We added to our position there and in
Qwest, but sold our shares of MCI WorldCom. Our strategy
is to focus on companies that are increasing their market
share--not the incumbents. We concluded that when WorldCom
acquired MCI, it diluted its position in the rapidly
growing data market with the slower-growing voice
services. The stock was among our poorer performers in this period.
Vodafone, by
3
<PAGE>
Prudential Jennison Growth Fund
Holdings expressed as a percentage of the Fund's net
assets
Comments on Largest Holdings As of 3/31/00
4.6% Microsoft Corp./EDP Software & Services
World's largest software company. Microsoft's
fundamentals continue to be superb. The introduction of
Windows 2000 should drive strong earnings growth. The
lawsuit remains a cloud, of course.
4.3% Cisco Systems, Inc./Networking
Leading data networking equipment manufacturer.
Provides most of the Internet switching infrastructure
for both carriers and corporate entry points, as well as
internal corporate networks. The Internet is causing
Cisco's revenues and earnings to accelerate from already
high levels. These trends should continue for the
foreseeable future.
3.8% Vodafone AirTouch PLC/Telecommunications
With the merger of Mannesmann into Vodafone, this
company now becomes the dominant global wireless
platform. We are optimistic that strong growth will
continue as wireless data, in addition to voice, comes
into wide use.
3.6% Intel Corp./Electronic Components
Intel's business remains strong as PCs continue to
proliferate globally. We remain optimistic about this
company's leadership position in semiconductors and its
continued strong earnings growth.
3.4% Nokia Corp. (ADR)/Telecommunications Equipment
Nokia's dominant position in handsets continues.
Handset demand is growing strongly and should continue as
Internet access via wireless phone becomes a reality.
4
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
contrast, strengthened its position in wireless telephony
with its acquisition of Mannesmann. We also added Nextel.
Companies that benefit from greater consumer confidence
(consumer cyclicals) also performed well for us, notably Home
Depot. Home Depot profited, in particular, from the
continuing high level of home construction and
improvement. We also own retailers, such as Kohl's, Wal-
Mart, and Gap Stores. McDonald's stock disappointed
during the period, and we sold it in favor of companies
with the potential for more explosive growth.
Among our financials, Morgan Stanley Dean Witter had
particularly high profits because of the strong equity
markets. Citigroup and Chase Manhattan are strong global
companies in an environment of global economic growth.
Our healthcare holdings include pharmaceutical companies
and two biotechnology firms: Genentech and Amgen. These
are as close as biotech comes to blue chips. Drug company
stocks have been held back by fears that the U.S.
government will act to restrict pricing. Although drug
costs may become part of the election-year debate, we
think the importance of this sector will prevent serious
damage. Drugs are very cost-effective; they help hold
down the overall costs of medical care. We added
Pharmacia & Upjohn during this period, to our benefit.
Warner-Lambert, American Home Products, and Bristol-Myers
Squibb are also among our larger holdings in the sector.
We added Merck and sold it after it disappointed; we also
sold our shares of Johnson & Johnson.
5
<PAGE>
Prudential Jennison Growth Fund
Investment Adviser's Report
How to price a growth stock
The return on a share consists of any dividends it pays
plus any change in its market price--the capital
appreciation. Ultimately, both of these factors depend
upon the company's earnings.
The price of a share is its price/earnings ratio
multiplied by its earnings. Investors are willing to pay
more per dollar of earnings (a higher price/earnings
multiple) for companies whose future earnings they expect
to be higher or more dependable than average.
Expectations of greater earnings growth will justify a
higher price/earnings multiple.
LOOKING AHEAD
We expect to see the new electronic- and
telecommunications-based economy outperform the old basic
industry sectors in both profit growth and stock price
performance. Unless the upward movement in interest rates
continues longer than we expect, we think the current
high price/earnings multiples can be
sustained, so stock prices will be able to rise in line
with earnings growth.
We think Prudential Jennison Growth Fund, with its broad
selection of rapidly growing companies, is well
positioned for this environment.
Prudential Jennison Growth Fund Management Team
6
<PAGE>
Prudential Jennison Growth Fund
Financial
Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 97.4%
Common Stocks 97.4%
-------------------------------------------------------------------------------------
Banks & Financial Services 8.5%
735,300 American Express Co. $ 109,513,744
1,016,700 Chase Manhattan Corp. 88,643,531
4,052,425 Citigroup, Inc. 240,359,458
404,400 Merrill Lynch & Co., Inc. 42,462,000
2,008,180 Morgan Stanley Dean Witter 163,792,181
----------------
644,770,914
-------------------------------------------------------------------------------------
Computer Systems/Peripherals 8.9%
2,061,300 Dell Computer Corp.(a) 111,181,369
1,017,700 EMC Corp.(a) 127,212,500
1,686,500 Hewlett-Packard Co. 223,566,656
698,100 International Business Machines Corp. 82,375,800
1,386,900 Sun Microsystems, Inc.(a) 129,956,864
----------------
674,293,189
-------------------------------------------------------------------------------------
Diversified Manufacturing 2.2%
1,043,700 General Electric Co. 161,969,194
-------------------------------------------------------------------------------------
EDP Software & Services 7.6%
1,551,000 America Online, Inc.(a) 104,304,750
752,300 Equant NV (ADR) (Netherlands)(a) 63,992,519
3,287,000 Microsoft Corp.(a) 349,243,750
434,750 VERITAS Software Corp.(a) 56,952,250
----------------
574,493,269
-------------------------------------------------------------------------------------
Electronic Components 8.0%
335,200 Broadcom Corp. 81,411,700
2,057,800 Intel Corp. 271,500,987
614,600 JDS Uniphase Corp.(a) 74,097,713
1,200 Lexmark International Group, Inc.(a) 126,900
1,200 STMicroelectronics NV (Netherlands) 224,625
1,134,300 Texas Instruments, Inc. 181,488,000
----------------
608,849,925
</TABLE>
8 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Household & Personal Care Products 0.8%
1,212,600 Estee Lauder Co., Inc. $ 60,705,788
-------------------------------------------------------------------------------------
Industrial Technology/Instruments 2.6%
1,370,000 Applied Materials, Inc.(a) 129,122,500
830,800 KLA-Tencor Corp.(a) 69,994,900
----------------
199,117,400
-------------------------------------------------------------------------------------
Insurance 2.1%
1,415,250 American International Group, Inc. 154,969,875
-------------------------------------------------------------------------------------
Media & Communications 9.3%
2,244,000 AT&T Corp. - Liberty Media Group(a) 132,957,000
2,970,800 CBS Corp.(a) 168,221,550
1,439,000 Clear Channel Communications, Inc.(a) 99,380,937
965,600 Omnicom Group, Inc. 90,223,250
1,075,800 Time Warner, Inc. 107,580,000
740,000 Univision Communications, Inc.(a) 83,620,000
168,700 Verisign, Inc.(a) 25,220,650
----------------
707,203,387
-------------------------------------------------------------------------------------
Networking 6.3%
4,261,400 Cisco Systems, Inc.(a) 329,459,487
256,000 Juniper Networks, Inc.(a) 67,472,000
850,200 Metromedia Fiber Network, Inc. 82,256,850
----------------
479,188,337
-------------------------------------------------------------------------------------
Pharmaceuticals 10.0%
2,444,900 American Home Products Corp. 131,107,763
1,485,600 Amgen, Inc.(a) 91,178,700
2,067,200 Bristol-Myers Squibb Co. 119,380,800
482,300 Genentech, Inc.(a) 73,309,600
1,427,300 Glaxo Wellcome PLC (ADR) (United Kingdom) 81,802,131
1,377,200 Pharmacia & Upjohn, Inc. 81,599,100
1,874,400 Warner-Lambert Co. 182,754,000
----------------
761,132,094
</TABLE>
See Notes to Financial Statements 9
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Retail 9.3%
2,366,387 Gap, Inc. $ 117,875,652
3,743,150 Home Depot, Inc. 241,433,175
1,485,800 Kohl's Corp.(a) 152,294,500
996,300 Tiffany & Co. 83,315,588
2,025,100 Wal-Mart Stores, Inc. 112,393,050
----------------
707,311,965
-------------------------------------------------------------------------------------
Telecommunications 13.0%
1,058,950 Allegiance Telecom, Inc.(a) 85,377,844
692,300 Level 3 Communications, Inc.(a) 73,210,725
684,300 Nextel Communications, Inc.(a) 101,447,475
640,700 NEXTLINK Communications, Inc.(a) 79,246,581
1,640,287 NTL, Inc.(a) 152,239,137
4,250,700 Qwest Communications International, Inc.(a) 206,158,950
5,230,686 Vodafone AirTouch PLC (ADR)(United Kingdom)(a) 290,629,991
----------------
988,310,703
-------------------------------------------------------------------------------------
Telecommunications Equipment 8.8%
283,200 Applied Micro Circuits Corp.(a) 42,497,700
336,200 Corning, Inc. 65,222,800
1,020,400 Ericsson (L.M.) Telephone Co., Inc. (ADR) (Sweden) 95,726,275
247,000 General Motors Corp. 'H' 30,751,500
846,200 Motorola, Inc. 120,477,725
1,177,400 Nokia Corp. (ADR)(Finland) 255,790,150
299,000 QUALCOMM, Inc.(a) 44,644,438
61,900 Sycamore Networks, Inc.(a) 7,985,100
----------------
663,095,688
----------------
Total long-term investments (cost $4,648,924,739) 7,385,411,728
----------------
</TABLE>
10 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Amount
(000) Description Value (Note 1)
<C> <S> <C> <C>
-----------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 1.9%
Commercial Paper 1.9%
American Express Credit Corp.
$ 149,281 6.20%, 4/3/00
(cost $149,281,000) $ 149,281,000
----------------
Total Investments 99.3% (cost $4,798,205,739;
Note 4) 7,534,692,728
Other assets in excess of liabilities 0.7% 50,071,321
----------------
Net Assets 100% $ 7,584,764,049
----------------
----------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing security.
ADR--American Depository Receipt.
See Notes to Financial Statements 11
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $4,798,205,739) $ 7,534,692,728
Cash 319,259
Receivable for Series shares sold 74,719,427
Receivable for investments sold 49,450,346
Dividends and interest receivable 3,680,922
Deferred expenses and other assets 80,947
----------------
Total assets 7,662,943,629
----------------
LIABILITIES
Payable for investments purchased 60,466,050
Payable for Series shares reacquired 11,254,774
Management fee payable 3,505,009
Distribution fees payable 2,620,185
Withholding taxes payable 230,828
Accrued expenses and other liabilities 102,734
----------------
Total liabilities 78,179,580
----------------
NET ASSETS $ 7,584,764,049
----------------
----------------
Net assets were comprised of:
Common stock, at par $ 278,391
Paid-in capital in excess of par 4,516,340,430
----------------
4,516,618,821
Net investment loss (17,119,448)
Accumulated net realized gain on investments 348,777,687
Net unrealized appreciation on investments 2,736,486,989
----------------
Net assets, March 31, 2000 $ 7,584,764,049
----------------
----------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
March 31, 2000
---------------------------------------------------------------------------------------
<S> <C> <C>
Class A:
Net asset value and redemption price per share
($1,721,836,782 / 62,629,794 shares of common stock
issued and outstanding) $27.49
Maximum sales charge (5% of offering price) 1.45
----------------
Maximum offering price to public $28.94
----------------
----------------
Class B:
Net asset value, offering price and redemption price per
share ($2,480,157,441 / 93,598,826 shares of common
stock issued and outstanding) $26.50
----------------
----------------
Class C:
Net asset value and redemption price per share
($279,065,573 / 10,531,706 shares of common stock issued
and outstanding) $26.50
Sales charge (1% of offering price) .27
----------------
Offering price to public $26.77
----------------
----------------
Class Z:
Net asset value, offering price and redemption price per
share ($3,103,704,253 / 111,630,285 shares of common
stock issued and outstanding) $27.80
----------------
----------------
</TABLE>
See Notes to Financial Statements 13
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
--------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $257,871) $ 11,551,411
Interest 5,732,433
--------------
Total income 17,283,844
--------------
Expenses
Management fee 17,216,358
Distribution fee--Class A 1,594,098
Distribution fee--Class B 9,895,511
Distribution fee--Class C 1,023,086
Transfer agent's fees and expenses 3,770,000
Registration fees 489,000
Reports to shareholders 173,000
Custodian's fees and expenses 90,000
Directors' fees and expenses 47,000
Insurance expense 35,000
Legal fees and expenses 27,000
Audit fee and expenses 10,000
Amortization of deferred organization expenses 3,225
Miscellaneous 30,014
--------------
Total expenses 34,403,292
--------------
Net investment loss (17,119,448)
--------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investment transactions 423,238,037
Net change in unrealized appreciation on investments 1,710,080,376
--------------
Net gain on investments 2,133,318,413
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $2,116,198,965
--------------
--------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 30, 1999
<S> <C> <C> <C>
----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment loss $ (17,119,448) $ (22,210,880)
Net realized gain on investments 423,238,037 201,324,080
Net change in unrealized appreciation of
investments 1,710,080,376 828,202,820
-------------- ------------------
Net increase in net assets resulting
from operations 2,116,198,965 1,007,316,020
-------------- ------------------
Distributions from net realized capital
gains (Note 1)
Class A (56,726,162) (17,349,525)
Class B (94,312,745) (27,545,469)
Class C (9,330,765) (1,752,623)
Class Z (112,764,183) (38,052,986)
-------------- ------------------
(273,133,855) (84,700,603)
-------------- ------------------
Series share transactions (net of
conversion)
(Note 5)
Net proceeds from shares sold 2,484,254,391 2,794,924,604
Net asset value of shares issued in
reinvestment of distributions 267,626,458 83,061,464
Cost of shares reacquired (1,463,714,511) (1,569,556,414)
-------------- ------------------
Net increase in net assets from Series
share transactions 1,288,166,338 1,308,429,654
-------------- ------------------
Total increase 3,131,231,448 2,231,045,071
NET ASSETS
Beginning of period 4,453,532,601 2,222,487,530
-------------- ------------------
End of period $7,584,764,049 $4,453,532,601
-------------- ------------------
-------------- ------------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Notes to Financial Statements (Unaudited)
Prudential Jennison Growth Fund (the 'Series') is a separately managed
series of The Prudential Investment Portfolios, Inc. (the 'Fund'). The Fund was
incorporated in Maryland on August 10, 1995 and is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Series had no significant operations other than the issuance of
3,334 shares of Class A and 3,333 shares of Class B and Class C common stock for
$100,000 on September 13, 1995 to Prudential Investments Fund Management LLC
('PIFM'). Investment operations commenced on November 2, 1995.
The Series' investment objective is to achieve long-term growth of
capital. It invests primarily in equity securities (common stock, preferred
stock and securities convertible into common stock) of established companies
with above-average growth prospects.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Series in the preparation of its financial statements.
Securities Valuation: Securities listed on a securities exchange (other
than options on securities and indices) are valued at the last sales price on
such exchange or system on the day of valuation, or, if there was no sale on
such day, at the mean between the last bid and asked prices on such day or at
the bid price on such day in the absence of an asked price. Securities that are
actively traded in the over-the-counter market, including listed securities for
which the primary market is believed by the Manager, in consultation with the
Subadviser, to be over-the-counter, are valued by an independent pricing agent
or principal market maker. Convertible debt securities that are actively traded
in the over-the-counter market, including listed securities for which the
primary market is believed by the Manager and the Subadviser to be
over-the-counter, are valued at the mean between the last reported bid and asked
prices provided by a principal market maker. Options on securities and indices
traded on an exchange are valued at the mean between the most recently quoted
bid and asked prices on such exchange. Futures contracts and options thereon
traded on a commodities exchange or board of trade are valued at the last sales
price at the close of trading on such exchange or board of trade or, if there
was no sale on the applicable commodities exchange or board of trade on such
day, at the mean between the most recently quoted bid and asked prices on such
exchange or board of trade. Securities for which market quotations are not
readily available, other than private placements, are valued at a price supplied
by an independent pricing agent, which is, in the opinion of such pricing agent,
representative of the market value of such securities as of the time of
determination of net asset value, or using a methodology
16
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Notes to Financial Statements (Unaudited) Cont'd.
developed by an independent pricing agent, which is, in the judgment of the
Manager and the Subadviser, able to produce prices which are representative of
market value.
Short-term securities which mature in more than 60 days, for which market
quotations are readily available, are valued at current market quotations as
provided by an independent pricing agent or principal market maker. Short-term
securities which mature in 60 days or less are valued at cost with interest
accrued or discount amortizied to the date of maturity, unless the Board of
Directors determines that such valuation does not represent fair value.
All securities are valued as of 4:15 p.m., New York time.
Securities Transactions and Net Investment Income: Securities
transactions are recorded on the trade date. Realized gains or losses on sales
of securities are calculated on the identified cost basis. Dividend income is
recorded on the ex-dividend date; interest income is recorded on the accrual
basis and is net of discount accretion and premium amortization. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.
Net investment income (loss), other than distribution fees, and realized
and unrealized gains or losses are allocated daily to each class of shares based
upon the relative proportion of net assets of each class at the beginning of the
day.
Dividends and Distributions: The Series expects to pay dividends of net
investment income, if any, semi-annually and to make distributions of any net
capital gains at least annually. Dividends and distributions are recorded on the
ex-dividend date. Income distributions and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles.
Taxes: It is the Series' policy to continue to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable net income to its shareholders. Therefore, no
federal income tax provision is required.
Withholding taxes on foreign dividends have been provided for in
accordance with the Series' understanding of the applicable country's tax rules
and rates.
Deferred Organization Expenses: Approximately $200,000 of expenses were
incurred in connection with the organization of the Fund. These costs have been
deferred and are being amortized ratably over a period of sixty months from the
date the Series commenced investment operations.
17
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Notes to Financial Statements (Unaudited) Cont'd.
Note 2. Agreements
The Fund has a management agreement with PIFM. Pursuant to a subadvisory
agreement between PIFM and Jennison Associates LLC ('Jennison'), Jennison
furnishes investment advisory services in connection with the management of the
Fund. Under the subadvisory agreement, Jennison, subject to the supervision of
PIFM, is responsible for managing the assets of the Series in accordance with
its investment objectives and policies.
The management fee paid PIFM will be computed daily and payable monthly,
at an annual rate of .60 of 1% of the average daily net assets of the Series.
PIFM pays Jennison a subadvisory fee at an annual rate of .30 of 1% of the
average daily net assets of the Series up to and including $300 million and .25
of 1% of such assets in excess of $300 million. PIFM also pays the cost of
compensation of officers and employees of the Fund, occupancy and certain
clerical and bookkeeping costs of the Fund. The Fund bears all other costs and
expenses.
The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS'), which acts as the distributor of the Fund. The
Fund compensates PIMS for distributing and servicing the Fund's Class A, Class
B, Class C and Class Z shares, pursuant to plans of distribution, (the 'Class A,
B and C Plans'), regardless of expenses actually incurred by them. The
distribution fees are accrued daily and payable monthly. No distribution or
service fees are paid to PIMS as distributor of the Class Z shares of the Fund.
Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the plans were .25 of 1%, 1% and 1% of the average daily net
assets of the Class A, B and C shares, respectively, for the six months ended
March 31, 2000.
PIMS has advised the Series that it received approximately $1,601,000 and
$637,000 in front-end sales charges resulting from sales of Class A and Class C
shares during the six months ended March 31, 2000. From these fees, PIMS paid
such sales charges to affiliated broker-dealers, which in turn paid commissions
to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended March 31, 2000,
it received approximately $1,490,000 and $57,000 in contingent deferred sales
18
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Notes to Financial Statements (Unaudited) Cont'd.
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').
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 such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% of the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is March 9, 2001.
Prior to March 9, 2000, the commitment fee was .065 of 1% of the unused portion
of the credit facility. The Fund did not borrow any amounts pursuant to the SCA
during the six months ended March 31, 2000.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months ended March 31, 2000,
the Series incurred fees of approximately $3,499,000 for the services of PMFS.
As of March 31, 2000, approximately $665,000 of such fees were due to PMFS.
Transfer agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.
For the six months ended March 31, 2000, Prudential Securities
Incorporated ('PSI'), which is an indirect, wholly owned subsidiary of
Prudential, earned approximately $298,600 in brokerage commissions from
portfolio transactions executed on behalf of the Series.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended March 31, 2000 were $3,111,018,659 and $2,210,150,266,
respectively.
The cost of investments for federal income tax purposes at March 31, 2000,
was $4,808,742,634 and, accordingly, net unrealized appreciation of investments
for federal income tax purposes was $2,725,950,094 (gross unrealized
appreciation--$2,751,383,575; gross unrealized depreciation--$25,433,481).
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
19
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Notes to Financial Statements (Unaudited) Cont'd.
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. Class Z shares are not subject to any sales or redemption
charge and are offered for sale to a limited group of investors.
There are 3 billion shares of $.001 par value common stock authorized
which are divided into three series, each of which offers four classes,
designated Class A, Class B, Class C and Class Z, each of which consists of 250
million authorized shares. Of the shares outstanding at March 31, 2000, PIFM
owned 10,000 shares of the Series.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
------------------------------------------------------ ----------- ---------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 35,740,298 $ 860,644,514
Shares issued in reinvestment of distributions 2,447,380 54,576,570
Shares reacquired (23,156,354) (558,788,480)
----------- ---------------
Net increase in shares outstanding before conversion 15,031,324 356,432,604
Shares issued upon conversion from Class B 2,144,583 54,679,427
----------- ---------------
Net increase in shares outstanding 17,175,907 $ 411,112,031
----------- ---------------
----------- ---------------
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
----------- ---------------
----------- ---------------
</TABLE>
20
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B Shares Amount
------------------------------------------------------ ----------- ---------------
Six months ended March 31, 2000:
<S> <C> <C>
Shares sold 23,304,930 $ 541,699,659
Shares issued in reinvestment of distributions 4,234,039 91,243,545
Shares reacquired (9,259,958) (214,200,101)
----------- ---------------
Net increase in shares outstanding before conversion 18,279,011 418,743,103
Shares reacquired upon conversion into Class A (2,222,549) (54,679,427)
----------- ---------------
Net increase in shares outstanding 16,056,462 $ 364,063,676
----------- ---------------
----------- ---------------
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
----------- ---------------
----------- ---------------
<CAPTION>
Class C
------------------------------------------------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 4,052,329 $ 94,018,748
Shares issued in reinvestment of distributions 422,563 9,106,236
Shares reacquired (1,238,583) (28,898,775)
----------- ---------------
Net increase in shares outstanding 3,236,309 $ 74,226,209
----------- ---------------
----------- ---------------
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 $ 77,820,540
----------- ---------------
----------- ---------------
<CAPTION>
Class Z
------------------------------------------------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 40,507,642 $ 987,891,470
Shares issued in reinvestment of distributions 5,002,224 112,700,107
Shares reacquired (27,425,227) (661,827,155)
----------- ---------------
Net increase in shares outstanding 18,084,639 $ 438,764,422
----------- ---------------
----------- ---------------
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
----------- ---------------
----------- ---------------
</TABLE>
21
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 20.05
----------------
Income from investment operations
Net investment income (loss)(c) (.05)
Net realized and unrealized gain on investment transactions 8.67
----------------
Total from investment operations 8.62
----------------
Less distributions
Distributions from net realized gains (1.18)
----------------
Net asset value, end of period $ 27.49
----------------
----------------
TOTAL RETURN(b) 44.29%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $1,721,837
Average net assets (000) $1,275,278
Ratios to average net assets:
Expenses, including distribution fees .99%(d)
Expenses, excluding distribution fees .74%(d)
Net investment income (loss) (.41)%(d)
For Class A, B, C and Z shares:
Portfolio turnover rate 39%
</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.
22 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
------------------------------------------------------------------------------------------
Year Ended September 30, November 2, 1995(a)
---------------------------------------------------------- through September 30,
1999 1998 1997 1996
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 14.44 $ 15.39 $ 10.97 $ 10.00
---------------- ---------------- ---------------- --------
(.08) (.04) (.03) (.03)
6.23 .40 4.45 1.00
---------------- ---------------- ---------------- --------
6.15 .36 4.42 .97
---------------- ---------------- ---------------- --------
(.54) (1.31) -- --
---------------- ---------------- ---------------- --------
$ 20.25 $ 14.44 $ 15.39 $ 10.97
---------------- ---------------- ---------------- --------
---------------- ---------------- ---------------- --------
43.58% 3.02% 40.29% 9.70%
$911,467 $446,996 $145,022 $85,440
$748,315 $251,118 $105,982 $70,667
1.05% 1.08% 1.09% 1.23%(d)
.80% .83% .84% .98%(d)
(.44)% (.26)% (.25)% (.37)%(d)
56% 58% 63% 42%
</TABLE>
See Notes to Financial Statements 23
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 19.43
----------------
Income from investment operations
Net investment income (loss)(c) (.13)
Net realized and unrealized gain on investment transactions 8.38
----------------
Total from investment operations 8.25
----------------
Less distributions
Distributions from net realized gains (1.18)
----------------
Net asset value, end of period $ 26.50
----------------
----------------
TOTAL RETURN(b) 43.73%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $2,480,157
Average net assets (000) $1,979,102
Ratios to average net assets:
Expenses, including distribution fees 1.74%(d)
Expenses, excluding distribution fees .74%(d)
Net investment income (loss) (1.16)%(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.
24 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
-----------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------------------------- November 2, 1995(a)
1999 1998 1997 through September 30, 1996
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 14.11 $ 15.18 $ 10.89 $ 10.00
---------------- ---------------- ---------------- ----------
(.22) (.15) (.12) (.10)
6.08 .39 4.41 .99
---------------- ---------------- ---------------- ----------
5.86 .24 4.29 .89
---------------- ---------------- ---------------- ----------
(.54) (1.31) -- --
---------------- ---------------- ---------------- ----------
$ 19.43 $ 14.11 $ 15.18 $ 10.89
---------------- ---------------- ---------------- ----------
---------------- ---------------- ---------------- ----------
42.51% 2.21% 39.39% 8.90%
$1,506,839 $708,463 $419,405 $231,541
$1,236,825 $557,823 $299,476 $162,412
1.80% 1.83% 1.84% 1.98%(d)
.80% .83% .84% .98%(d)
(1.19)% (1.01)% (1.00)% (1.12)%(d)
</TABLE>
See Notes to Financial Statements 25
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 19.43
----------------
Income from investment operations
Net investment income (loss)(c) (.13)
Net realized and unrealized gain on investment transactions 8.38
----------------
Total from investment operations 8.25
----------------
Less distributions
Distributions from net realized gains (1.18)
----------------
Net asset value, end of period $ 26.50
----------------
----------------
TOTAL RETURN(b) 43.73%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 279,066
Average net assets (000) $ 204,617
Ratios to average net assets:
Expenses, including distribution fees 1.74%(d)
Expenses, excluding distribution fees .74%(d)
Net investment income (loss) (1.16)%(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.
26 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
-----------------------------------------------------------------------------------------------
Year Ended September 30,
---------------------------------------------------------- November 2, 1995(a)
1999 1998 1997 through September 30, 1996
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 14.11 $ 15.18 $ 10.89 $ 10.00
---------------- ---------------- ---------------- ----------
(.22) (.15) (.12) (.10)
6.08 .39 4.41 .99
---------------- ---------------- ---------------- ----------
5.86 .24 4.29 .89
---------------- ---------------- ---------------- ----------
(.54) (1.31) -- --
---------------- ---------------- ---------------- ----------
$ 19.43 $ 14.11 $ 15.18 $ 10.89
---------------- ---------------- ---------------- ----------
---------------- ---------------- ---------------- ----------
42.51% 2.21% 39.39% 8.90%
$141,770 $ 45,126 $ 25,134 $ 15,281
$ 98,033 $ 35,337 $ 18,248 $ 12,550
1.80% 1.83% 1.84% 1.98%(d)
.80% .83% .84% .98%(d)
(1.20)% (1.01)% (1.00)% (1.12)%(d)
</TABLE>
See Notes to Financial Statements 27
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 20.24
----------------
Income from investment operations
Net investment income (loss)(c) (.02)
Net realized and unrealized gain on investment transactions 8.76
----------------
Total from investment operations 8.74
----------------
Less distributions
Distributions from net realized gains (1.18)
----------------
Net asset value, end of period $ 27.80
----------------
----------------
TOTAL RETURN(b) 44.55%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $3,103,704
Average net assets (000) $2,446,267
Ratios to average net assets:
Expenses, including distribution fees .74%(d)
Expenses, excluding distribution fees .74%(d)
Net investment income (loss) (.16)%(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.
28 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison
Growth Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
------------------------------------------------------------------------------------------
Year Ended September 30, April 15, 1996(a)
---------------------------------------------------------- through September 30,
1999 1998 1997 1996
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 14.53 $ 15.45 $ 10.98 $ 10.32
---------------- ---------------- ---------------- ----------
(.04) -- -- (.02)
6.29 .39 4.47 .68
---------------- ---------------- ---------------- ----------
6.25 .39 4.47 .66
---------------- ---------------- ---------------- ----------
(.54) (1.31) -- --
---------------- ---------------- ---------------- ----------
$ 20.24 $ 14.53 $ 15.45 $ 10.98
---------------- ---------------- ---------------- ----------
---------------- ---------------- ---------------- ----------
43.94% 3.22% 40.71% 6.40%
$1,893,457 $1,021,903 $609,869 $ 362,416
$1,596,809 $ 810,296 $455,684 $ 26,829
.80% .83% .84% .98%(d)
.80% .83% .84% .98%(d)
(.19)% (.01)% -- (.12)%(d)
</TABLE>
See Notes to Financial Statements 29
<PAGE>
<PAGE>
Prudential Jennison Growth Fund
Prudential Mutual Fund Family
Prudential offers a broad range of mutual funds designed
to meet your individual needs. For information about
these funds, contact your financial adviser or call us at
(800) 225-1852. Read the prospectus carefully before you
invest or send money.
STOCK FUNDS
Prudential Emerging Growth Fund, Inc.
Prudential Equity Fund, Inc.
Prudential Equity Income Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Jennison Growth & Income Fund
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund
Prudential Small-Cap Quantum Fund, Inc.
Prudential Small Company Value Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Prudential 20/20 Focus Fund
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
Small Capitalization Growth Fund
Small Capitalization Value Fund
Asset Allocation/Balanced Funds
Prudential Balanced Fund
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund
GLOBAL FUNDS
Global Stock Funds
Prudential Developing Markets Fund
Prudential Developing Markets Equity Fund
Prudential Latin America Equity Fund
Prudential Europe Growth Fund, Inc.
Prudential Global Genesis Fund, Inc.
Prudential Natural Resources Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Global Utility Fund, Inc.
Target Funds
International Equity Fund
Global Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
www.prudential.com
(800) 225-1852
<PAGE>
BOND FUNDS
Taxable Bond Funds
Prudential Diversified Bond Fund, Inc.
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Structured Maturity Fund, Inc.
Income Portfolio
Target Funds
Total Return Bond Fund
Tax-Exempt Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Special Money Market Fund, Inc.
Money Market Series
Prudential MoneyMart Assets, Inc.
Tax-Free Money Market Funds
Prudential Tax-Free Money Fund, Inc.
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Command Funds
Command Money Fund
Command Government Fund
Command Tax-Free Fund
Institutional Money Market Funds
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
<PAGE>
Prudential Jennison Growth Fund
Getting the Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they
don't read annual and semiannual reports. It's quite
understandable. These annual and semiannual reports are
prepared to comply with federal regulations, and are
often written in language that is difficult to
understand. So when most people run into those
particularly daunting sections of these reports, they
don't read them.
We think that's a mistake
At Prudential Mutual Funds, we've made some changes to
our report to make it easier to understand and more
pleasant to read. We hope you'll find it profitable to
spend a few minutes familiarizing yourself with your
investment. Here's what you'll find in the report:
Performance at a Glance
Since an investment's performance is often a
shareholder's primary concern, we present performance
information in two different formats. You'll find it
first on the "Performance at a Glance" page where we
compare the Fund and the comparable average calculated by
Lipper, Inc., a nationally recognized mutual fund rating
agency. We report both the cumulative total returns and
the average annual total returns. The cumulative total
return is the total amount of income and appreciation the
Fund has achieved in various time periods. The average
annual total return is an annualized representation of
the Fund's performance. It gives you an idea of how much
the Fund has earned in an average year for a given time
period. Under the performance box, you'll see legends
that explain the performance information, whether fees
and sales charges have been included in returns, and the
inception dates for the Fund's share classes.
See the performance comparison charts at the back of the
report for more performance information. Please keep in
mind that past performance is not indicative of future
results.
<PAGE>
www.prudential.com (800) 225-1852
Performance review
The portfolio manager, who invests your money for you,
reports on successful--and not-so-successful--strategies in this
section of your report. Look for recent purchases and
sales here, as well as information about the sectors the
portfolio manager favors, and any changes that are on the
drawing board.
Portfolio of Investments
This is where the report begins to appear technical, but
it's really just a
listing of each security held at the end of the reporting
period, along with valuations and other information.
Please note that sometimes we discuss a security in the
Performance Review that doesn't appear in this listing
because it was sold before the close of the reporting
period.
Statement of Assets and Liabilities
The balance sheet shows the assets (the value of the
Fund's holdings),
liabilities (how much the Fund owes), and net assets (the
Fund's equity, or holdings after the Fund pays its debts) as of
the end of the reporting period. It also shows how we
calculate the net asset value per share for each class of
shares. The net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but
remember that the money or new shares are being paid or
issued to you. The net asset value fluctuates daily,
along with the value of every security in the portfolio.
Statement of Operations
This is the income statement, which details income
(mostly interest and
dividends earned) and expenses (including what you pay us
to manage your money). You'll also see capital gains
here--both realized and unrealized.
<PAGE>
Prudential Jennison Growth Fund
Getting the Most From Your Prudential Mutual Fund
Statement of Changes in Net Assets
This schedule shows how income and expenses translate
into changes in net assets. The Fund is required to pay out the bulk
of its income to shareholders every year, and this
statement shows you how we do it (through
dividends and distributions) and how that affects the net
assets. This statement also shows how money from
investors flowed into and out of the Fund.
Notes to Financial Statements
This is the kind of technical material that can
intimidate readers, but it does contain useful
information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition, they
outline how Prudential Mutual Funds prices securities.
The Notes also explain who manages and distributes the
Fund's shares and, more importantly, how much they are
paid for doing so. Finally, the Notes explain how many
shares are outstanding and the number issued and redeemed
over the period.
Financial Highlights
This information contains many elements from prior pages,
but on a per-share basis. It is designed to help you understand
how the Fund performed, and to compare this year's performance and
expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and
certifies that the information is fairly presented and
complies with generally accepted accounting principles.
Tax Information
This is information that we report annually about how
much of your total return is taxable. Should you have any
questions, you may want to consult a tax adviser.
<PAGE>
www.prudential.com (800) 225-1852
Performance Comparison
These charts are included in the annual report and are
required by the Securities Exchange Commission.
Performance is presented here as a hypothetical $10,000
investment in the Fund since its inception or for 10
years (whichever is shorter). To help you put that return
in context, we are required to include the performance of an unmanaged,
broad-based securities index as well. The index does not
reflect the cost of buying the securities it contains or
the cost of managing a mutual fund. Of course, the index
holdings do not mirror those of the Fund--the index is a
broad-based reference point commonly used by investors to
measure how well they are doing. A definition of the
selected index is also provided. Investors cannot invest
directly in an index.
<PAGE>
Prudential Jennison Growth Fund
Getting the Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you
receive financial advice from a Prudential Securities
Financial Advisor or Pruco Securities registered
representative. Your advisor or representative can
provide you with the following services:
There's No Reward Without Risk; but Is This Risk Worth
It?
Your financial advisor or registered representative can
help you match the reward you seek with the risk you can
tolerate. Risk can be difficult to gauge--sometimes even
the simplest investments bear surprising risks. The
educated investor knows that markets seldom move in just
one direction. There are times when a market sector or
asset class will lose value or provide little in the way
of total return. Managing your own expectations is easier
with help from someone who understands the markets and
who knows you!
Keeping Up With the Joneses
A financial advisor or registered representative can help
you wade through the numerous available mutual funds to
find the ones that fit your individual investment profile
and risk tolerance. While the newspapers and popular
magazines are full of advice about investing, they are
aimed at generic groups of people or representative
individuals--not at you personally. Your financial advisor
or registered representative will review your investment
objectives with you. This means you can make financial
decisions based on the assets and liabilities in your
current portfolio and your risk tolerance--not just based
on the current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are among the most common investor mistakes. But
sometimes it's difficult to hold on to an investment when
it's losing value every month. Your financial advisor or
registered representative can answer questions when
you're confused or worried about your investment, and
should remind you that you're investing for the long
haul.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E. H. Morrison, Secretary
William V. Healey, Assistant Secretary
Stephen M. Ungerman, Assistant Treasurer
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
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
194 Wood Avenue South
Iselin, NJ 08830
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
Fund Symbols NASDAQ CUSIP
Class A PJFAX 74437E107
Class B PJFBX 74437E206
Class C PJFCX 74437E305
Class Z PJFZX 74437E404
The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report and are subject to change thereafter.
The accompanying financial statements as
of March 31, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
BULK RATE
U.S. POSTAGE
PAID
Permit 6807
New York, NY
(LOGO)
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF168E2 74437E107 74437E206 74437E305 74437E404
(LOGO) Printed on Recycled Paper
<PAGE>
SEMIANNUAL REPORT MARCH 31, 2000
Prudential
Jennison Growth & Income Fund
Fund Type Stock
Objective Long-term growth of capital and income
(GRAPHIC)
This report is not authorized for distribution to
prospective investors unless preceded or accompanied by a
current prospectus.
(LOGO)
<PAGE>
Build on the Rock
Investment Goals and Style
Prudential Jennison Growth & Income Fund invests
primarily in stocks of established companies with growth
prospects that we believe are largely underappreciated by
the market. We aim for strong total investment returns by
combining a focus on earnings growth and attention to
valuation (the price the market is placing on the entire
company). This discipline discourages us from paying too
much for projected growth or from continuing to hold a
stock when the market offers more than a fair price.
There can be no assurance that the Fund will achieve its
investment objective of long-term growth of capital and
income (with current income as a secondary objective).
Effective May 30, the Fund's name will change to
Prudential Jennison Equity Opportunity Fund.
Portfolio Composition
Expressed as a percentage of
net assets as of 3/31/00
21.0% Consumer Cyclicals
19.0 Basic Materials
14.0 Financials
11.0 Energy
9.0 Technology
7.0 Capital Goods
7.0 Healthcare
3.0 Other
9.0 Cash Equivalents
Ten Largest Holdings
Expressed as a percentage of
net assets as of 3/31/00
3.44% General Motors Corp.
Motor Vehicles & Equipment
3.07 The Hartford Fin'l Svcs. Group, Inc.
Insurance
2.80 XL Capital Ltd.
Insurance
2.59 Dexter Corp.
Chemicals
2.54 USX-U.S. Steel Group
Steel & Metals
2.53 Millipore Corp.
Industrial Technology/Instruments
2.31 Boise Cascade Corp.
Paper & Forest Products
2.16 CIGNA Corp.
Insurance
2.04 Tosco Corp.
Petroleum
1.96 Health Management Assoc., Inc.
Health Care Services
<PAGE>
www.prudential.com (800) 225-1852
Performance at a Glance
Cumulative Total Returns1 As of 3/31/00
Six One Since
Months Year Inception2
Class A 13.58% 20.98% 68.18%
Class B 13.17 19.98 63.98
Class C 13.17 19.98 63.98
Class Z 13.88 21.37 69.97
Lipper Multi-Cap
Value Fund Avg.3 7.88 7.97 54.49
Average Annual Total Returns1 As of 3/31/00
One Since
Year Inception2
Class A 14.93% 14.80%
Class B 14.98 15.26
Class C 17.78 15.34
Class Z 21.37 16.91
Past performance is not indicative of future results.
Principal and investment return will fluctuate so that an
investor's shares, when redeemed, may be worth more or
less than their original cost.
1 Source: Prudential Investments Fund Management LLC and
Lipper Inc. The cumulative total returns do not take into
account sales charges. The average annual total returns
do take into account applicable sales charges. The Fund
charges a maximum front-end sales charge of 5% for Class
A shares. Class B shares are subject to a declining
contingent deferred sales charge (CDSC) of 5%, 4%, 3%,
2%, 1%, and 1% for six years. Class B shares will
automatically convert to Class A shares, on a quarterly
basis, approximately seven years after purchase. Class C
shares are subject to a front-end sales charge of 1% and
a CDSC of 1% for 18 months. Class Z shares are not
subject to a sales charge or distribution and service
(12b-1) fees.
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 six-month, one-year, and since-inception
periods in the Multi-Cap Value Fund category. The Lipper
average is unmanaged.
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(R) Mid-Cap 400 Stock Index. 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.
(R) S&P is a registered trademark of the Standard & Poor's
Corporation.
1
<PAGE>
Prudential Jennison Growth & Income Fund
Message From the Fund's President As of May 16, 2000
Dear Shareholder,
Prudential Jennison Growth & Income Fund had a strong
13.58% Class A share return over the six months ended
March 31, 2000. This return was 8.58% for those paying an
initial Class A share sales charge. The Fund focuses on
companies that the portfolio managers expect to have good
earnings growth, but which are attractively priced for
their potential. Because its stocks are generally
inexpensive relative to their earnings, the Fund is
classified by Lipper Inc. as a value fund. In a
predominantly growth-style market, the Fund's return was
more than five percentage points above the Lipper Multi-
Cap Value Fund Average--a substantial lead. Over the
preceding 12 months, it had a 13 percentage-point advantage.
That margin for the six-month period, and more, was
provided by the Fund's technology stocks. Although the
Fund had a substantially lower weighting in technology
than the S&P 500, and this was a tech-dominated market,
the technology stocks it did own performed very well. Its
healthcare companies also had good returns.
With the kind of volatility in the markets recently, no
one knows in which direction the markets could be headed
next. That's why Prudential typically recommends that its
clients maintain a broadly diversified portfolio,
including both growth and value funds. Prudential
Jennison Growth & Income Fund uses a blend of both
styles. In addition, the importance of maintaining a
long-term investment approach cannot be overstated,
particularly during periods of short-term market
fluctuations.
Sincerely,
John R. Strangfeld, President
The Prudential Investment Portfolios, Inc.--
Prudential Jennison Growth & Income Fund
2
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
Dear Shareholder,
Prudential Jennison Growth & Income Fund looks for
companies that have above-average earnings growth, but
where we can understand how a short-term factor has
deflected investors' interest; 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, but our
initial criterion is the potential for long-term growth.
There were some inexpensive tech stocks
The largest contributors to our return in this reporting
period were technology stocks. In technology, the most
likely reason a good growth company will be inexpensive
is because it is under some kind of duress. Our time
horizon is long enough that we often can wait until such
firms resume their growth.
For example, International Rectifier, a small
manufacturer of power semiconductors, had been positioned
to grow rapidly, but not for two to three quarters. We
were able to buy the stock inexpensively, and it rose
150% over the six months. We also owned National
Semiconductor, which became inexpensive when it bought
Cyrix, a company that competed directly with Intel in
manufacturing central processors for PCs. Two factors led
to the stock's recovery: National shut down Cyrix, and
the semiconductor cycle entered an upswing. The stock
almost doubled over our reporting period.
We took our profits on General Motors' tracking stock for
Hughes Electronics after it almost doubled. Although the
outlook is still bright, the stock no longer had
attractive risk/reward characteristics. We still own
Informix (enterprise database software), which more than
doubled, in part because of its focuses on electronic
commerce and data warehousing.
3
<PAGE>
Prudential Jennison Growth & Income Fund
Holdings expressed as a percentage of the Fund's net
assets
Comments on Largest Holdings As of 3/31/00
3.4% General Motors Corp./Motor Vehicles & Equipment
Management is focused on shareholder value: for
example, the sale of a portion of Hughes Electronics will
shrink the number of outstanding GM shares and boost
earnings per share. GM will still own a large Hughes
stake. On Star and an e-commerce auto exchange also add
value, while auto sales hover near historical peaks. The
company's stock is selling at less than nine times
estimated earnings.
3.1% The Hartford Financial Services Group,
Inc./Insurance
2.8% XL Capital Ltd./Insurance
Two growth insurance companies. We believe that we
are in the early stages of an improved property and
casualty pricing cycle, and that both companies can
increase earnings by 10% or more in each of the next
three years. Both were selling, until a recent rally, at
less than nine times estimated earnings. Both were
inexpensive relative to the S&P 500 and to other high-
quality financial stocks.
2.6% Dexter Corp./Chemicals
A specialty materials company whose long-term growth
potential was being overlooked, in our view. It owns 74%
of Life Technologies, a supplier of products such as
culture media and animal serums used in life science
research. Dexter's Board recently put the company up for
sale. Although the stock has risen nicely since, we
believe it could go further.
2.5% USX-U.S. Steel Group/Steel & Metals
May show surprising earnings growth. In addition to
the traditional steel business, U.S. Steel is a large
producer of oil field tubing, a business we expect to
turn up, with a substantial impact on U.S. Steel's
profits. Also, the company's recently announced purchase
of a Slovakian steel company gives it entree into Europe.
Selling at only about seven times estimated earnings.
4
<PAGE>
www.prudential.com (800) 225-1852
Investment Adviser's Report
We had a substantial position in Millipore, a capital
equipment company that supplies filtration equipment to
the biotechnology and semiconductor industries. Although
some tech investors might miss Millipore because of its
"old economy" classification, its earnings prospects are
linked to those of high-tech companies. It had a large gain.
We took our losses on Raytheon, formerly among our
largest holdings. Its earnings declined, primarily
because of lower defense profit margins, and we saw
better opportunities elsewhere. We also took losses on
short sales of the NASDAQ Index. We were early in our
belief that its rocket-like rise had taken leave of the
business fundamentals of its component companies. We made
up some ground after the NASDAQ peaked in March.
Consumer cyclicals still have value
We have a significant commitment to consumer cyclicals,
which have been value-priced as a group. Our interest in
General Motors is described in Comments on Largest
Holdings. We also found unappreciated growth potential
among media companies (New York Times and Knight Ridder)
and Hertz.
We expected Hilton's share price to rise after it spun
off its gaming properties, but Hilton's earnings will be
diluted by its 1999 acquisition of Promus Hotel (Embassy
Suites, Hampton Inn, and others). The stock hurt our
return over the past six months, but its attractive price
of 11.6 times last year's earnings (at period end) and
its growth potential make us enthusiastic about holding
it. It began to rise in March.
Financials were mixed
Financials also have been out-of-favor value stocks. We
looked for quality property and casualty insurers, at
prices that were generally well under 10 times earnings,
because we thought the pricing cycle in that industry was
turning up. We bought Travelers, which was 85% Citigroup-
owned, The Hartford Financial Services Group, XL Capital,
and John Hancock. Hartford was among the largest
contributors to our return for the period. We took our
5
<PAGE>
Prudential Jennison Growth & Income Fund
Investment Adviser's Report
profits on Travelers after Citigroup made a tender offer
for the shares it did not own. The others are described
in Comments on Largest Holdings.
We avoided the initial public offering (IPO) of John
Hancock stock when it became a public company (from being
a mutual), but bought it after the shares fell well below
their offering price. They then rose about 19% by the end
of our reporting period. We came into the period owning
Unumprovident, which was among our worst-performing
stocks. The result of a merger of UNUM and Provident,
Unumprovident reported fourth-
quarter earnings below expectations; we sold it.
We refocused our basic materials holdings
Basic materials, particularly paper and specialty
chemicals, also is one of our largest sector commitments
because the recovering global economy should increase
demand while many companies have brought down their
marginal costs. This profit potential is underpriced
compared to, for example, that of technology and
telecommunications companies.
Our largest industry position is in paper companies,
which rose in early 1999, then fell back. We focused on
the companies in which we have the greatest confidence--
Boise Cascade, Bowater, and Champion--and sold
International Paper and Smurfit-Stone Container, both of
which had sizable share price declines.
Our largest single position in the basic materials sector
is a specialty chemicals producer, Dexter. (See Comments
on Largest Holdings.) As a supplier to the technology and
biotechnology industries, its stock benefited
substantially from their bull market.
6
<PAGE>
www.prudential.com (800) 225-1852
We eliminated our poor-performing holding in AK Steel,
and added Newmont Mining, a large unhedged gold producer.
The price of gold has been depressed by sales and loans
from central banks, but the balance of new supply to
annual demand is promising.
We selected well in healthcare
Two healthcare companies--Health Management Associates and
Vertex Pharmaceuticals--were among the largest
contributors to our return. Health Management is a
hospital manager that used to be a high price/earnings
(P/E) stock, but lost the interest of momentum investors
when it had a bad quarter. This is fodder for our
investment style. We bought the stock at less than half
its previous high, and it had about doubled by period
end. We also bought Columbia HMA at a depressed price and
began to see price appreciation. Vertex Pharmaceuticals
is a biotechnology research firm whose stock rose rapidly
in the biotech boom.
During the period, we bought two health maintenance
organizations (HMOs)--United Healthcare and Aetna--and sold
them at a profit. We added to our holdings of CIGNA.
Looking Forward
We believe that investors' recent, more critical look at
the speculative NASDAQ technology and biotechnology
companies is good for our portfolio. Because we look for
undervalued stocks, a momentum-driven market such as we
have seen in the past two years makes things difficult
for us. When investors start to look more widely for
growth stocks and to focus on the price they must pay for
growth, we expect them to migrate toward the kinds of
stock we favor.
Prudential Jennison Growth & Income Fund Management Team
7
<PAGE>
Prudential Jennison Growth & Income Fund
Financial
Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Portfolio of Investments as of March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 94.4%
Common Stocks
-------------------------------------------------------------------------------------
Aerospace/Defense 6.0%
66,000 Litton Industries, Inc.(a) $ 2,916,375
95,900 Raytheon Co. 1,702,225
82,700 The B.F. Goodrich Co. 2,372,456
58,500 The Boeing Co. 2,219,344
--------------
9,210,400
-------------------------------------------------------------------------------------
Airlines 1.0%
49,200 AMR Corp. 1,568,250
-------------------------------------------------------------------------------------
Aluminum 2.4%
51,100 Alcan Aluminum, Ltd. 1,731,012
28,200 Reynolds Metals Co. 1,885,875
--------------
3,616,887
-------------------------------------------------------------------------------------
Apparel 1.5%
120,700 Polo Ralph Lauren Corp.(a) 2,255,581
-------------------------------------------------------------------------------------
Banking 3.0%
25,200 Chase Manhattan Corp. 2,197,125
63,200 FleetBoston Financial Corp. 2,306,800
--------------
4,503,925
-------------------------------------------------------------------------------------
Business Services 2.3%
75,700 Hertz Corp. 2,578,531
40,900 Ryder System, Inc. 927,919
--------------
3,506,450
-------------------------------------------------------------------------------------
Chemicals 4.2%
78,000 Cytec Industries, Inc.(a) 2,388,750
74,600 Dexter Corp. 3,953,800
--------------
6,342,550
-------------------------------------------------------------------------------------
Computers 2.0%
108,400 Diebold, Inc. 2,981,000
</TABLE>
See Notes to Financial Statements 9
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Containers & Packaging 1.4%
249,300 Pactiv Corp.(a) $ 2,181,375
-------------------------------------------------------------------------------------
Data Processing & Reproduction 1.6%
145,400 Informix Corp.(a) 2,462,712
-------------------------------------------------------------------------------------
Drugs & Health Care 2.0%
5,900 ALZA Corp.(a) 221,619
52,000 American Home Products Corp. 2,788,500
--------------
3,010,119
-------------------------------------------------------------------------------------
Electronic Components 1.2%
51,100 Gentex Corp.(a) 1,893,894
-------------------------------------------------------------------------------------
Foods 0.5%
41,200 SUPERVALU, Inc. 780,225
-------------------------------------------------------------------------------------
Health Care Services 3.9%
117,000 Columbia/HCA Healthcare Corp. 2,961,562
209,900 Health Management Associates, Inc.(a) 2,991,075
--------------
5,952,637
-------------------------------------------------------------------------------------
Hotels 1.1%
223,908 Hilton Hotels Corp. 1,735,287
-------------------------------------------------------------------------------------
Human Resources 3.4%
77,900 Manpower, Inc. 2,765,450
50,900 Robert Half International, Inc.(a) 2,414,569
--------------
5,180,019
-------------------------------------------------------------------------------------
Industrial Technology/Instruments 2.5%
68,500 Millipore Corp. 3,865,969
-------------------------------------------------------------------------------------
Insurance 11.0%
43,500 CIGNA Corp. 3,295,125
91,200 John Hancock Financial Services(a) 1,647,300
120,200 The Allstate Corp. 2,862,263
88,800 The Hartford Financial Services Group, Inc. 4,684,200
77,300 XL Capital, Ltd. 4,280,487
--------------
16,769,375
</TABLE>
10 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Media 1.3%
34,600 CBS Corp. $ 1,959,225
-------------------------------------------------------------------------------------
Medical Technology 0.8%
71,600 IMS Health, Inc. 1,212,725
-------------------------------------------------------------------------------------
Mining 1.4%
94,500 Newmont Mining Corp. 2,120,344
-------------------------------------------------------------------------------------
Motor Vehicles & Equipment 5.8%
58,800 Dana Corp. 1,657,425
63,400 General Motors Corp. 5,250,312
74,600 Snap-On, Inc. 1,953,587
--------------
8,861,324
-------------------------------------------------------------------------------------
Oil Services 3.9%
65,900 Diamond Offshore Drilling, Inc. 2,631,881
34,400 Triton Energy Corp.(a) 1,206,150
69,500 Unocal Corp. 2,067,625
--------------
5,905,656
-------------------------------------------------------------------------------------
Paper & Forest Products 5.6%
101,500 Boise Cascade Corp. 3,527,125
49,600 Bowater, Inc. 2,647,400
43,800 Champion International Corp. 2,332,350
--------------
8,506,875
-------------------------------------------------------------------------------------
Petroleum 6.8%
68,400 Anadarko Petroleum Corp. 2,646,225
69,500 Burlington Resources, Inc. 2,571,500
102,500 Tosco Corp. 3,119,844
80,400 USX - Marathon Group 2,095,425
--------------
10,432,994
-------------------------------------------------------------------------------------
Pharmaceuticals 0.7%
24,300 Vertex Pharmaceuticals, Inc.(a) 1,137,544
-------------------------------------------------------------------------------------
Photography/Image Technology 1.1%
73,400 Polaroid Corp. 1,743,250
</TABLE>
See Notes to Financial Statements 11
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Shares Description Value (Note 1)
------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Publishing 4.1%
52,600 Knight-Ridder, Inc. $ 2,679,313
49,100 New York Times Co., Class A 2,108,231
38,900 Tribune Co. 1,422,281
--------------
6,209,825
-------------------------------------------------------------------------------------
Retail 4.2%
89,500 AutoZone, Inc.(a) 2,483,625
188,700 Kmart Corp.(a) 1,828,031
148,700 Saks, Inc.(a) 2,156,150
--------------
6,467,806
-------------------------------------------------------------------------------------
Semiconductors 2.2%
66,500 International Rectifier Corp.(a) 2,535,313
13,700 National Semiconductor Corp.(a) 830,563
--------------
3,365,876
-------------------------------------------------------------------------------------
Specialty Chemicals 2.3%
157,926 CK Witco Corp. 1,608,871
123,300 Engelhard Corp. 1,864,913
--------------
3,473,784
-------------------------------------------------------------------------------------
Steel & Metals 2.5%
155,200 USX-U.S. Steel Group 3,880,000
-------------------------------------------------------------------------------------
Telecommunications 0.7%
22,200 Panamsat Corp.(a) 1,089,188
--------------
Total long-term investments (cost $126,030,223) 144,183,071
--------------
</TABLE>
12 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Portfolio of Investments as of March 31, 2000 (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Principal
Moody's Amount
Rating (000) Description Value (Note 1)
-------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS 6.3%
COMMERCIAL PAPER 2.0%
-------------------------------------------------------------------------------------------
<C> <C> <S> <C> <C>
American Express Co.,
P-1 $ 3,110 6.20%, 4/3/00 (cost $3,110,000) $ 3,110,000
--------------
U.S. GOVERNMENT SECURITIES 4.3%
United States Treasury Bills
2,620(b) 5.22%, 4/6/00 2,615,897
3,465(b) 5.22%, 6/22/00 3,420,019
500(b) 5.67%, 6/22/00 493,509
--------------
Total U.S. government securities
(cost $6,529,689) 6,529,425
--------------
Total short-term investments
(cost $9,639,689) 9,639,425
--------------
Total investments before short
sales 100.7%
(cost $135,669,912; Note 4) 153,822,496
--------------
-------------------------------------------------------------------------------------------
COMMON STOCKS SOLD SHORT(a) (4.0%)
<CAPTION>
Shares Description
<C> <S> <C> <C>
------------------------------------------------------------------------------------------
Computer Systems/Peripherals (0.6%)
(12,000) Oracle Systems Corp. (936,750)
-------------------------------------------------------------------------------------
Electrical Power (0.7%)
(14,200) The AES Corp. (1,118,250)
-------------------------------------------------------------------------------------
Restaurants (0.8%)
(27,300) Starbucks Corp. (1,223,381)
-------------------------------------------------------------------------------------
Financial Services (1.9%)
(26,200) Nasdaq-100 Shares Trust
Unit Series 1 (2,872,175)
--------------
Total common stocks sold short
(proceeds at cost $5,698,505) (6,150,556)
--------------
Total investments, net of short sales 96.7%
(cost $129,971,407) 147,671,940
Other assets in excess of liabilities 3.3% 4,998,689
--------------
Net Assets 100% $ 152,670,629
--------------
--------------
</TABLE>
--------------------------------------------------------------------------------
(a) Non-income producing securities.
(b) $6,585,000 of principal amount pledged as collateral for short sales.
See Notes to Financial Statements 13
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Statement of Assets and Liabilities (Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
<S> <C> <C>
---------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $135,669,912) $ 153,822,496
Cash 25,139
Receivable for investments sold 14,718,312
Due from broker for securities sold short 1,597,535
Receivable for Series shares sold 497,479
Dividends and interest receivable 83,012
Receivable for securities sold short 20,220
Deferred expenses and other assets 879
--------------
Total assets 170,765,072
--------------
LIABILITIES
Investments sold short, at value (proceeds $5,698,505) 6,150,556
Payable for investments purchased 10,741,572
Payable for Series shares reacquired 894,372
Accrued expenses and other liabilities 180,789
Distribution fees payable 90,842
Management fee payable 36,312
--------------
Total liabilities 18,094,443
--------------
NET ASSETS $ 152,670,629
--------------
--------------
Net assets were comprised of:
Common stock, at par $ 11,792
Paid-in capital in excess of par 126,719,637
--------------
126,731,429
Net operating loss (109,882)
Accumulated net realized gain on investments 8,348,549
Net unrealized appreciation on investments 17,700,533
--------------
Net assets, March 31, 2000 $ 152,670,629
--------------
--------------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Statement of Assets and Liabilities (Unaudited) Cont'd.
<TABLE>
<CAPTION>
March 31, 2000
---------------------------------------------------------------------------------------
<S> <C> <C>
Class A:
Net asset value and redemption price per share ($41,389,801 /
3,174,082 shares of common stock issued and outstanding) $13.04
Maximum sales charge (5% of offering price) 0.69
--------------
Maximum offering price to public $13.73
--------------
--------------
Class B:
Net asset value, offering price and redemption price per
share ($94,092,338 / 7,294,431 shares of common stock
issued and outstanding) $12.90
--------------
--------------
Class C:
Net asset value and redemption price per share ($9,718,012 /
753,474 shares of common stock issued and outstanding) $12.90
Sales charge (1% of offering price) 0.13
--------------
Offering price to public $13.03
--------------
--------------
Class Z:
Net asset value, offering price and redemption price per
share ($7,470,478 / 569,809 shares of common stock issued
and outstanding) $13.11
--------------
--------------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Statement of Operations (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended
March 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Dividends (net of foreign withholding taxes of $5,833) $ 801,527
Interest 351,602
-----------------
Total income 1,153,129
-----------------
Expenses
Management fee 431,423
Distribution fee--Class A 48,108
Distribution fee--Class B 458,081
Distribution fee--Class C 42,513
Transfer agent's fees and expenses 109,000
Reports to shareholders 71,000
Custodian's fees and expenses 55,000
Registration fees 20,000
Legal fees and expenses 14,000
Audit fees and expenses 10,000
Directors' fees and expenses 3,800
Miscellaneous 86
-----------------
Total expenses 1,263,011
-----------------
Net investment income (loss) $ (109,882)
-----------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on:
Investment transactions 9,254,792
Options 149,842
-----------------
9,404,634
-----------------
Net change in unrealized appreciation/depreciation on
investments 8,984,123
-----------------
Net gain on investments 18,388,757
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $18,278,875
-----------------
-----------------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Statement of Changes in Net Assets (Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
March 31, 2000 September 30, 1999
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income (loss) $ (109,882) $ 12,304
Net realized gain on investment
transactions 9,404,634 16,757,829
Net change in unrealized
appreciation/depreciation on
investments 8,984,123 13,528,215
-------------- ------------------
Net increase in net assets resulting from
operations 18,278,875 30,298,348
-------------- ------------------
Dividends and distributions (Note 1)
Dividends from net investment income
Class A -- (153,895)
Class B -- (76,687)
Class C -- (6,448)
Class Z -- (12,628)
-------------- ------------------
-- (249,658)
-------------- ------------------
Distributions from net realized capital
gains
Class A (3,943,242) (2,540,009)
Class B (9,797,850) (6,978,474)
Class C (882,006) (586,830)
Class Z (469,949) (164,167)
-------------- ------------------
(15,093,047) (10,269,480)
-------------- ------------------
Series share transactions (net of share
conversions) (Note 5)
Net proceeds from shares sold 32,844,097 39,742,571
Net asset value of shares issued to
shareholders in reinvestment of
dividends and distributions 14,301,652 10,032,426
Cost of shares reacquired (38,749,300) (53,515,736)
-------------- ------------------
Net increase (decrease) in net assets
from Series share transactions 8,396,449 (3,740,739)
-------------- ------------------
Total increase 11,582,277 16,038,471
NET ASSETS
Beginning of period 141,088,352 125,049,881
-------------- ------------------
End of period $152,670,629 $141,088,352
-------------- ------------------
-------------- ------------------
</TABLE>
See Notes to Financial Statements 17
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Notes to Financial Statements (Unaudited)
Prudential Jennison Growth & Income Fund (the 'Series') is a separately
managed series of The Prudential Investment Portfolios, Inc. (the 'Fund'). The
Fund was incorporated in Maryland on August 10, 1995 and is registered under the
Investment Company Act of 1940 as a diversified, open-end, management investment
company. Investment operations of the Series commenced on November 7, 1996.
The Series' investment objective is to achieve long-term growth of capital
and income, with current income as a secondary objective. The Series seeks to
achieve its objectives by investing primarily in common stocks of established
companies with growth prospects believed to be underappreciated by the market.
Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Series in the preparation of its financial statements.
Securities Valuation: Securities listed on a securities exchange 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
18
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Notes to Financial Statements (Unaudited) Cont'd.
independent pricing agent, which is, in the judgment of the Manager and the
Subadviser, able to produce prices which are representative of market value.
Short-term securities which mature in more than 60 days, for which market
quotations are readily available, are valued at current market quotations as
provided by an independent pricing agent or principal market maker. Short-term
securities which mature in 60 days or less are valued at cost with interest
accrued or discount amortized to the date of maturity, unless the Board of
Directors determines that such valuation does not represent fair value.
All securities are valued as of 4:15 p.m., New York time.
Securities Transactions and Net Investment Income: Securities
transactions are recorded on the trade date. Realized gains or losses on sales
of securities are calculated on the identified cost basis. Dividend income is
recorded on the ex-dividend date; interest income is recorded on the accrual
basis and is net of discount accretion and premium amortization. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.
Net investment income, other than distribution fees, and realized and unrealized
gains or losses are allocated daily to each class of shares based upon the
relative proportion of net assets of each class at the beginning of the day.
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.
19
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Notes to Financial Statements (Unaudited) Cont'd.
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 and interest are provided in
accordance with the Fund's understanding of the applicable country's tax rules
and rates.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to 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.
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.
Pursuant to the Class A, B and C Plans, the Series compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, 1% and 1%
of the average daily net assets of the Class A, B and C shares, respectively.
Such expenses under the Plans were .25 of 1%, 1% and 1% of average daily net
assets of the Class A, B and C shares, respectively, for the six months ended
March 31, 2000.
PIMS has advised the Series that it received approximately $40,900 and
$17,100 in front-end sales charges resulting from sales of Class A and C shares,
respectively, during the six months ended March 31, 2000. From these fees PIMS
20
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Notes to Financial Statements (Unaudited) Cont'd.
paid such sales charges to affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.
PIMS has advised the Series that for the six months ended March 31, 2000,
it received approximately $138,800 and $1,100 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').
The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee of .080 of 1% on the unused portion
of the credit facility. The commitment fee is accrued and paid quarterly on a
pro rata basis by the Funds. The expiration date of the SCA is march 9, 2001.
Prior to March 9, 2000, the commitment fee was .065 of 1% on the unused portion
of the credit facility. The Fund did not borrow any amounts pursuant to the SCA
during the six months ended March 31, 2000.
Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the six months ended March 31, 2000,
the Series incurred fees of approximately $101,300 for the services of PMFS. As
of March 31, 2000, approximately $17,100 of such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.
For the six months ended March 31, 2000, Prudential Securities
Incorporated ('PSI'), which is an indirect, wholly owned subsidiary of
Prudential, earned approximately $14,200 in brokerage commissions from portfolio
transactions executed on behalf of the Series.
Note 4. Portfolio Securities
Purchases and sales of investment securities, other than short-term investments,
for the six months ended March 31, 2000 were $101,756,553 and $97,818,604,
respectively.
The cost basis of the investments for federal income tax purposes at March
31, 2000 is substantially the same for financial reporting purposes and,
accordingly, net unrealized appreciation of investments for federal income tax
purposes was
21
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Notes to Financial Statements (Unaudited) Cont'd.
$17,700,533 (gross unrealized appreciation-$24,845,988; gross unrealized
depreciation--$7,145,455).
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. 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.
Transactions in shares of common stock were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
---------------------------------------------------------- ---------- ------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 1,279,498 $ 15,590,754
Shares issued in reinvestment of distributions 310,660 3,762,090
Shares reacquired (1,399,174) (17,066,163)
---------- ------------
Net increase in shares outstanding before conversion 190,984 2,286,681
Shares issued upon conversion from Class B 71,851 849,361
---------- ------------
Net increase in shares outstanding 262,835 $ 3,136,042
---------- ------------
---------- ------------
Year ended September 30, 1999:
Shares sold 923,437 $ 11,737,931
Shares issued in reinvestment of dividends and
distributions 226,178 2,592,003
Shares reacquired (1,265,737) (15,677,893)
---------- ------------
Net decrease in shares outstanding before conversion (116,122) (1,347,959)
Shares issued upon conversion from Class B 174,209 2,193,555
---------- ------------
Net increase in shares outstanding 58,087 $ 845,596
---------- ------------
---------- ------------
</TABLE>
22
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Notes to Financial Statements (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B Shares Amount
---------------------------------------------------------- ---------- ------------
Six months ended March 31, 2000:
<S> <C> <C>
Shares sold 814,591 $ 9,853,432
Shares issued in reinvestment of distributions 767,278 9,215,013
Shares reacquired (1,470,417) (17,708,330)
---------- ------------
Net increase in shares outstanding before conversion 111,452 1,360,115
Shares reacquired upon conversion from Class A (72,524) (849,361)
---------- ------------
Net increase in shares outstanding 38,928 $ 510,754
---------- ------------
---------- ------------
Year ended September 30, 1999:
Shares sold 1,447,677 $ 18,020,614
Shares issued in reinvestment of dividends and
distributions 583,173 6,683,169
Shares reacquired (2,334,384) (28,622,257)
---------- ------------
Net decrease in shares outstanding before conversion (303,534) (3,918,474)
Shares reacquired upon conversion from Class A (174,767) (2,193,555)
---------- ------------
Net decrease in shares outstanding (478,301) (6,112,029)
---------- ------------
---------- ------------
<CAPTION>
Class C
----------------------------------------------------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 205,155 $ 2,489,579
Shares issued in reinvestment of distributions 72,045 865,263
Shares reacquired (125,683) (1,497,401)
---------- ------------
Net increase in shares outstanding 151,517 $ 1,857,441
---------- ------------
---------- ------------
Year ended September 30, 1999:
Shares sold 199,958 $ 2,519,215
Shares issued in reinvestment of dividends and
distributions 51,069 585,254
Shares reacquired (299,144) (3,644,790)
---------- ------------
Net decrease in shares outstanding (48,117) $ (540,321)
---------- ------------
---------- ------------
<CAPTION>
Class Z
----------------------------------------------------------
<S> <C> <C>
Six months ended March 31, 2000:
Shares sold 399,235 $ 4,910,332
Shares issued in reinvestment of distributions 37,770 459,286
Shares reacquired (200,160) (2,477,406)
---------- ------------
Net increase in shares outstanding 236,845 $ 2,892,212
---------- ------------
---------- ------------
Year ended September 30, 1999:
Shares sold 570,577 $ 7,464,811
Shares issued in reinvestment of dividends and
distributions 14,995 172,000
Shares reacquired (419,436) (5,570,796)
---------- ------------
Net increase in shares outstanding 166,136 $ 2,066,015
---------- ------------
---------- ------------
</TABLE>
23
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited)
<TABLE>
<CAPTION>
Class A
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.76
----------------
Income from investment operations
Net investment income .02(d)
Net realized and unrealized gain (loss) on investment
transactions 1.62
----------------
Total from investment operations 1.64
----------------
Less distributions
Dividends from net investment income --
Distributions from net realized gains (1.36)
----------------
Total distributions (1.36)
----------------
Net asset value, end of period $ 13.04
----------------
----------------
TOTAL RETURN(c) 13.58%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 41,390
Average net assets (000) $ 38,486
Ratios to average net assets:
Expenses, including distribution fees 1.25%(b)
Expenses, excluding distribution fees 1.00%(b)
Net investment income .74%(b)
Portfolio turnover rate 76%
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(d) Calculated based upon weighted average shares outstanding during the period.
24 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class A
---------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------ November 7, 1996(a)
1999 1998 Through September 30, 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 10.98 $ 12.89 $ 10.00
-------- -------- --------
.07 .15 .09
2.68 (1.32) 2.87
-------- -------- --------
2.75 (1.17) 2.96
-------- -------- --------
(.06) (.12) (.07)
(.91) (.62) --
-------- -------- --------
(.97) (.74) (.07)
-------- -------- --------
$ 12.76 $ 10.98 $ 12.89
-------- -------- --------
26.00% (9.40)% 29.72%
$ 37,158 $ 31,339 $ 34,846
$ 35,815 $ 35,145 $ 27,008
1.30% 1.31% 1.58%(b)
1.05% 1.06% 1.33%(b)
.54% 1.20% .90%(b)
111% 99% 55%
</TABLE>
See Notes to Financial Statements 25
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.68
--------
Income from investment operations
Net investment income (loss) (.02)(d)
Net realized and unrealized gain (loss) on investment
transactions 1.60
--------
Total from investment operations 1.58
--------
Less distributions
Dividends from net investment income --
Distributions from net realized gains (1.36)
--------
Total distributions (1.36)
--------
Net asset value, end of period $ 12.90
--------
--------
TOTAL RETURN(c) 13.17%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 94,093
Average net assets (000) $ 91,616
Ratios to average net assets:
Expenses, including distribution fees 2.00%(b)
Expenses, excluding distribution fees 1.00%(b)
Net investment income (.80)%(b)
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(d) Calculated based upon weighted average shares outstanding during the period.
26 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class B
---------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------ November 7, 1996(a)
1999 1998 through September 30, 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 10.96 $ 12.86 $ 10.00
-------- -------- --------
(.03) .06 .02
2.67 (1.31) 2.86
-------- -------- --------
2.64 (1.25) 2.88
-------- -------- --------
(.01) (.03) (.02)
(.91) (.62) --
-------- -------- --------
(.92) (.65) (.02)
-------- -------- --------
$ 12.68 $ 10.96 $ 12.86
-------- -------- --------
-------- -------- --------
24.98% (10.01)% 28.83%
$ 92,032 $ 84,751 $ 87,558
$ 94,904 $ 93,465 $ 62,575
2.05% 2.06% 2.33%(b)
1.05% 1.06% 1.33%(b)
(.20)% .46% .15%(b)
</TABLE>
See Notes to Financial Statements 27
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.68
--------
Income from investment operations
Net investment income (loss) (.02)(d)
Net realized and unrealized gain (loss) on investment
transactions 1.60
--------
Total from investment operations 1.58
--------
Less distributions
Dividends from net investment income --
Distributions from net realized gains (1.36)
--------
Total distributions (1.36)
--------
Net asset value, end of period $ 12.90
--------
--------
TOTAL RETURN(c) 13.17%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 9,718
Average net assets (000) $ 8,503
Ratios to average net assets:
Expenses, including distribution fees 2.00%(b)
Expenses, excluding distribution fees 1.00%(b)
Net investment income (.76)%(b)
Portfolio turnover rate
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(d) Calculated based upon weighted average shares outstanding during the period.
28 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class C
---------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------ November 7, 1996(a)
1999 1998 through September 30, 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$10.96 $12.86 $10.00
------- ------- -------
(.02) .06 .02
2.66 (1.31) 2.86
------- ------- -------
2.64 (1.25) 2.88
------- ------- -------
(.01) (.03) (.02)
(.91) (.62) --
------- ------- -------
(.92) (.65) (.02)
------- ------- -------
$12.68 $10.96 $12.86
------- ------- -------
------- ------- -------
24.98% (10.01)% 28.83%
$7,636 $7,124 $7,111
$7,702 $7,734 $5,631
2.05% 2.06% 2.33%(b)
1.05% 1.06% 1.33%(b)
(.19)% .46% .15%(b)
111% 99% 55%
</TABLE>
See Notes to Financial Statements 29
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
----------------
Six Months Ended
March 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 12.80
--------
Income from investment operations
Net investment income .04(d)
Net realized and unrealized gain (loss) on investment
transactions 1.63
--------
Total from investment operations 1.67
--------
Less distributions
Dividends from net investment income --
Distributions from net realized gains (1.36)
--------
Total distributions (1.36)
--------
Net asset value, end of period $ 13.11
--------
--------
TOTAL RETURN(c) 13.88%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000) $ 7,470
Average net assets (000) $ 5,203
Ratios to average net assets:
Expenses, including distribution fees 1.00%(b)
Expenses, excluding distribution fees 1.00%(b)
Net investment income 1.30%(b)
</TABLE>
------------------------------
(a) Commencement of investment operations.
(b) Annualized.
(c) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(d) Calculated based upon weighted average shares outstanding during the period.
30 See Notes to Financial Statements
<PAGE>
The Prudential Investment Portfolios, Inc. Prudential Jennison Growth &
Income Fund
Financial Highlights (Unaudited) Cont'd.
<TABLE>
<CAPTION>
Class Z
---------------------------------------------------------------------------------------
Year Ended September 30,
------------------------------------------ November 7, 1996(d)
1999 1998 through September 30, 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$11.00 12.93 $10.00
------- ------- -------
.09 .17 .10
2.69 (1.33) 2.92
------- ------- -------
2.78 (1.16) 3.02
------- ------- -------
(.07) (.15) (.09)
(.91) (.62) --
------- ------- -------
(.98) (.77) (.09)
------- ------- -------
$12.80 $11.00 $12.93
------- ------- -------
------- ------- -------
26.31% (9.31)% 30.30%
$4,263 $1,836 $ 609
$3,088 $1,374 $ 227
1.05% 1.06% 1.33%(b)
1.05% 1.06% 1.33%(b)
.76% 1.54% 1.15%(b)
</TABLE>
See Notes to Financial Statements 31
<PAGE>
<PAGE>
Prudential Jennison Growth & Income Fund
Getting the Most From Your Prudential Mutual Fund
Some mutual fund shareholders won't ever read this--they
don't read annual and semiannual reports. It's quite
understandable. These annual and semiannual reports are
prepared to comply with federal regulations, and are
often written in language that is difficult to
understand. So when most people run into those
particularly daunting sections of these reports, they
don't read them.
We think that's a mistake
At Prudential Mutual Funds, we've made some changes to
our report to make it easier to understand and more
pleasant to read. We hope you'll find it profitable to
spend a few minutes familiarizing yourself with your
investment. Here's what you'll find in the report:
Performance at a Glance
Since an investment's performance is often a
shareholder's primary concern, we present performance
information in two different formats. You'll find it
first on the "Performance at a Glance" page where we
compare the Fund and the comparable average calculated by
Lipper, Inc., a nationally recognized mutual fund rating
agency. We report both the cumulative total returns and
the average annual total returns. The cumulative total
return is the total amount of income and appreciation the
Fund has achieved in various time periods. The average
annual total return is an annualized representation of
the Fund's performance. It gives you an idea of how much
the Fund has earned in an average year for a given time
period. Under the performance box, you'll see legends
that explain the performance information, whether fees
and sales charges have been included in returns, and the
inception dates for the Fund's share classes.
See the performance comparison charts at the back of the
report for more performance information. Please keep in
mind that past performance is not indicative of future
results.
<PAGE>
www.prudential.com (800) 225-1852
Performance review
The portfolio manager, who invests your money for you,
reports on successful--and not-so-successful--strategies in this
section of your report. Look for recent purchases and
sales here, as well as information about the sectors the
portfolio manager favors, and any changes that are on the
drawing board.
Portfolio of Investments
This is where the report begins to appear technical, but
it's really just a listing of each security held at the end of the reporting
period, along with valuations and other information.
Please note that sometimes we discuss a security in the
Performance Review that doesn't appear in this listing
because it was sold before the close of the reporting
period.
Statement of Assets and Liabilities
The balance sheet shows the assets (the value of the
Fund's holdings), liabilities (how much the Fund owes), and net assets (the
Fund's equity, or holdings after the Fund pays its debts) as of
the end of the reporting period. It also shows how we
calculate the net asset value per share for each class of
shares. The net asset value is reduced by payment of your
dividend, capital gain, or other distribution, but
remember that the money or new shares are being paid or
issued to you. The net asset value fluctuates daily,
along with the value of every security in the portfolio.
Statement of Operations
This is the income statement, which details income
(mostly interest and
dividends earned) and expenses (including what you pay us
to manage your money). You'll also see capital gains
here--both realized and unrealized.
<PAGE>
Prudential Jennison Growth & Income Fund
Getting the Most From Your Prudential Mutual Fund
Statement of Changes in Net Assets
This schedule shows how income and expenses translate
into changes
in net assets. The Fund is required to pay out the bulk
of its income to shareholders every year, and this
statement shows you how we do it (through
dividends and distributions) and how that affects the net
assets. This statement also shows how money from
investors flowed into and out of the Fund.
Notes to Financial Statements
This is the kind of technical material that can
intimidate readers, but it does contain useful
information. The Notes provide a brief history and
explanation of your Fund's objectives. In addition, they
outline how Prudential Mutual Funds prices securities.
The Notes also explain who manages and distributes the
Fund's shares and, more importantly, how much they are
paid for doing so. Finally, the Notes explain how many
shares are outstanding and the number issued and redeemed
over the period.
Financial Highlights
This information contains many elements from prior pages,
but on a per-share basis. It is designed to help you understand
how the Fund performed, and to compare this year's performance and
expenses to those of prior years.
Independent Auditor's Report
Once a year, an outside auditor looks over our books and
certifies that the information is fairly presented and
complies with generally accepted accounting principles.
Tax Information
This is information that we report annually about how
much of your total return is taxable. Should you have any
questions, you may want to consult a tax adviser.
<PAGE>
www.prudential.com (800) 225-1852
Performance Comparison
These charts are included in the annual report and are
required by the Securities Exchange Commission.
Performance is presented here as a hypothetical $10,000
investment in the Fund since its inception or for 10
years (whichever is shorter). To help you put that return
in context, we are required to include the performance of an unmanaged,
broad-based securities index as well. The index does not
reflect the cost of buying the securities it contains or
the cost of managing a mutual fund. Of course, the index
holdings do not mirror those of the Fund--the index is a
broad-based reference point commonly used by investors to
measure how well they are doing. A definition of the
selected index is also provided. Investors cannot invest
directly in an index.
<PAGE>
Prudential Jennison Growth & Income Fund
Getting the Most From Your Prudential Mutual Fund
When you invest through Prudential Mutual Funds, you
receive financial advice from a Prudential Securities
Financial Advisor or Pruco Securities registered
representative. Your advisor or representative can
provide you with the following services:
There's No Reward Without Risk; but Is This Risk Worth
It?
Your financial advisor or registered representative can
help you match the reward you seek with the risk you can
tolerate. Risk can be difficult to gauge--sometimes even
the simplest investments bear surprising risks. The
educated investor knows that markets seldom move in just
one direction. There are times when a market sector or
asset class will lose value or provide little in the way
of total return. Managing your own expectations is easier
with help from someone who understands the markets and
who knows you!
Keeping Up With the Joneses
A financial advisor or registered representative can help
you wade through the numerous available mutual funds to
find the ones that fit your individual investment profile
and risk tolerance. While the newspapers and popular
magazines are full of advice about investing, they are
aimed at generic groups of people or representative
individuals--not at you personally. Your financial advisor
or registered representative will review your investment
objectives with you. This means you can make financial
decisions based on the assets and liabilities in your
current portfolio and your risk tolerance--not just based
on the current investment fad.
Buy Low, Sell High
Buying at the top of a market cycle and selling at the
bottom are among the most common investor mistakes. But
sometimes it's difficult to hold on to an investment when
it's losing value every month. Your financial advisor or
registered representative can answer questions when
you're confused or worried about your investment, and
should remind you that you're investing for the long
haul.
<PAGE>
www.prudential.com (800) 225-1852
For More Information
Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
Trustees
Delayne Dedrick Gold
Robert F. Gunia
Douglas H. McCorkindale
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
Robin B. Smith
John R. Strangfeld
Louis A. Weil, III
Clay T. Whitehead
Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Marguerite E. H. Morrison, Secretary
William V. Healey, Assistant Secretary
Stephen M. Ungerman, Assistant Treasurer
Manager
Prudential Investments Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
Investment Adviser
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
194 Wood Avenue South
Iselin, NJ 08830
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
Legal Counsel
Gardner, Carton & Douglas
Quaker Tower
321 North Clark Street
Chicago, IL 60610-4795
Fund Symbol NASDAQ CUSIP
Class A PJIAX 74437E503
Class B PJIBX 74437E602
Class C -- 74437E701
Class Z -- 74437E800
The views expressed in this report and information about
the Fund's portfolio holdings are for the period covered
by this report and are subject to change thereafter.
The accompanying financial statements as
of March 31, 2000, were not audited and, accordingly, no
opinion is expressed on them.
<PAGE>
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Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852
MF172E2 74437E503 74437E602 74437E701 74437E800
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