Notes to Financial Statements PRUDENTIAL INDEX
SERIES FUND
(Unaudited) PRUDENTIAL STOCK
INDEX FUND
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
Taxes: It is the Fund's policy to continue to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable net investment income and net capital gains, if
any, to its shareholders. Therefore, no federal income tax provision is
required.
Withholding taxes on foreign dividends have been provided for in accordance with
the Fund's understanding of the applicable country's tax rules and rates.
Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
('PIFM'). Pursuant to this agreement PIFM has responsibility for all investment
advisory services. PIFM has a subadvisory agreement with The Prudential
Investment Corporation ('PIC'). PIC, subject to the supervision of PIFM, manages
the assets of the Fund in accordance with its investment objective and policies.
PIFM pays for the costs and expenses attributable to the subadvisory agreement
and the salaries and expenses of all personnel of the Fund except for fees and
expenses of unaffiliated Trustees. The management fee paid to PIFM is computed
daily and payable monthly at an annual rate of .30 of 1% of the Fund's average
daily net assets.
PIFM has agreed to reimburse the Fund so that total operating expenses do not
exceed .40% of the average net assets for Class Z shares of the Fund. PIFM has
agreed to reimburse the Fund so that total operating expenses do not exceed .30%
of the average net assets for Class I shares of the Fund. This voluntary waiver
may be terminated at any time without notice. For the six months ended March 31,
1999, PIFM subsidized $330,793 of the expenses of the Fund (.02% of the average
net assets of the Fund $