PRUDENTIAL MUNICIPAL SERIES FUND, N-30D, 1999-11-09

PRUDENTIAL MUNICIPAL SERIES FUND
N-30D, 1999-11-09

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<PAGE>

(ICON)

Prudential
Municipal
Series Fund
- ----------------------
Connecticut
Money Market Series

ANNUAL
REPORT
Aug. 31, 1999

(LOGO)

<PAGE>

A Message from the Fund's President October 5, 1999
(PHOTO)

Dear Shareholder,

Prudential Municipal Series Fund--Connecticut Money Market Series
provided a competitive yield and a stable $1.00 net asset value
during the 12-month reporting period that ended on August 31,
1999. On that date, its seven-day current yield was 2.69%, above
the 2.45% for the average municipal money market fund tracked by
IBC Financial Data.

The following report takes a closer look at the developments in
the money markets during our fiscal year, and explains how the
Series was positioned accordingly.

One integrated and expanded team

I would like to take this opportunity to tell you about some
changes we've made to our Fixed Income Group. Earlier in the
year, we combined our fixed-income areas into one integrated
group that will manage money for Prudential's investors and
policyholders. This group now manages approximately $135
billion in assets, making it one of the three largest
fixed-income money managers in the country. Our expanded
depth, breadth, and scale now also allow us to tap the
best talent and share investment ideas, proprietary
research, and analytical tools.

To utilize these resources effectively, we recently
organized the group into teams, each specializing in
a different sector of the fixed-income market. The one
team that was already in place is the Money Markets Sector
team, which has been headed by Joseph Tully since 1995. This
team will continue to be responsible for the day-to-day
management of your Prudential Municipal Series Fund--Connecticut
Money Market Series. Many of the investment professionals who
supported the management of the Series in the past, including
Portfolio Manager Richard Lynes, will work together to share
their knowledge and strive to enhance performance.

Thank you for your continued confidence in Prudential mutual
funds. I firmly believe that the group's combined resources
and our new team approach will make us a powerhouse in the
world of fixed-income investing across all sectors.

Sincerely,

John R. Strangfeld
President
Prudential Municipal Series Fund

<PAGE>

Performance Review
(PHOTO) (PHOTO)

Joseph Tully, Team Leader of the Money
Markets Sector team, and
Portfolio Manager Richard S. Lynes

Investment Goals and Style

Prudential Municipal Series Fund--Connecticut Money Market
Series seeks to provide the highest level of current income
that is exempt from federal and Connecticut State income
taxes, consistent with liquidity and the preservation of
capital. The Series intends to invest in a portfolio of
short-term municipal debt securities with maturities of
13 months or less from the state of Connecticut, its
municipalities, local governments, and other qualifying
issuers (such as Puerto Rico, Guam, and the U.S. Virgin
Islands). There can be no assurance that the Series will
achieve its investment objective.

Volatile year for tax-exempt money market yields

During our fiscal year that ended on August 31, 1999, tax-exempt
money market yields generally trended lower in the first six
months, then turned higher for the remainder of the period.
This change in the direction of yields largely reflected a
shift in U.S. monetary policy. The Federal Reserve had
reduced the Federal funds rate (the rate U.S. banks
charge each other to borrow money overnight) three
times in the autumn of 1998, but reversed course in
the summer of 1999 by increasing that rate twice.

A global financial crisis that spread beyond Asia
was the catalyst that prompted the Fed to lower
the Federal funds rate by a quarter of a percentage
point three times, leaving it at 4.75% in November
1998. In reducing this rate, the Fed intended to
stabilize fixed-income markets by cutting borrowing
costs. Furthermore, the lower borrowing costs would
help bolster U.S. economic growth. The U.S. economy
seemed to need a boost because Asian nations, weakened
by the global financial crisis, were expected to
purchase far fewer exports from the United States.

Stiff competition

Besides the short-term rate cuts, tax-exempt money
market yields slid in the first half of our fiscal
year as demand for newly issued securities outstripped
the supply. The supply was also constrained because some
local governments preferred to issue longer-term bonds
instead of money market eligible securities in

Tracking Municipal Money Market Fund Yields
(GRAPH)

<PAGE>

order to lock in low yields for a longer period of time.
In addition, short-term borrowing needs of some state and
local governments normally decline amid favorable domestic
economic conditions.

This supply-demand imbalance was particularly pronounced
in Connecticut, where many residents in higher federal
income tax brackets seek the tax advantage afforded by
municipal debt securities. Therefore, as yields fell in
the autumn of 1998, we encountered difficulty in buying
enough high-quality, longer-term Connecticut securities
to dramatically lengthen the Series' weighted average
maturity (WAM). WAM is a measurement tool that determines
a fund's sensitivity to changes in interest rates. It
takes into account the maturity level of each security
held by a fund. Had we been able to substantially extend
the WAM, the Series' yield would have remained higher
for a longer period of time as municipal money market
yields declined.

<TABLE>
<CAPTION>
Fund Facts As of 8/31/99
7-Day Net Asset Taxable Equivalent Yield* Weighted Avg. Net Assets
Current Yld. Value (NAV) @31% @36% @39.6% Mat. (WAM) (Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
CT Money
Market Series 2.69% $1.00 4.08% 4.40% 4.66% 73 Days $83
IBC Financial Data
Tax-Free State Specific
(SB & GP-CT) Avg.** 2.45% $1.00 3.72% 4.01% 4.25% 58 Days N/A
</TABLE>

Note: Yields will fluctuate from time to time, and past performance
is not indicative of future results. An investment in the Series
is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency. Although the Series
seeks to preserve the value of your investment at $1.00 per share,
it is possible to lose money by investing in the Series.

* Some investors may be subject to the federal alternative minimum
tax and/or state and local taxes. Taxable equivalent yields reflect
federal and applicable state tax rates.

** International Business Communications (IBC) Financial Data
reports the 7-Day Current Yield, NAV, and WAM on Mondays. This
is the data of all funds in the IBC Financial Data Tax-Free
State Specific Average (Stock Broker (SB) & General Purpose (
GP)-Connecticut) category as of August 30, 1999.

Weathering the "January effect"
In early 1999, yields edged even lower as investors temporarily
reinvested money received from coupon payments and maturing
municipal bonds in the tax-exempt money market. This seasonal
decline in yields is known as the "January effect." Fortunately,
we were able to buy AAA-rated, insured bonds that matured in
one year or less, such as those of the city of South Windsor.
These bonds were a good alternative to the more conventional
types of municipal money market securities. They provided
attractive yields to compensate for the fact that short-term,
insured tax-exempt bonds are usually issued in moderate-sized
blocks. Many money managers prefer to buy larger blocks of
bonds because they could be easier to sell. However, owning
moderate-sized blocks of insured, short-term municipal
bonds suited us because we do not plan to sell them.

Our purchases in early 1999 helped the Series weather
the "January effect." But in hindsight, we should have
bought fewer one-year, insured Connecticut bonds in
order to have more cash to invest as municipal money
market yields climbed later in the year. There was a
heavy supply of tax-exempt commercial paper, which
matures in 270 days or less. These securities were
priced so attractively that, occasionally, it made
sense for us to invest in them even though some were
not issued in Connecticut. Had we bought more shorter-term
commercial paper and less one-year insured bonds, the Series
would have been more advantageously positioned to benefit
from the rise in tax-exempt money market yields.

1
<PAGE>

Review Cont'd.

Fed engineered a shift in U.S. monetary policy

As 1999 continued, more investors worried that the surprisingly
powerful U.S. economy would overheat and spark higher
inflation, which erodes the value of bonds. To compensate
for this risk, investors demanded higher yields on debt
securities, including those in the tax-exempt money market.
The rise in municipal money market yields accelerated in
June as it became clear the Fed would boost short-term
rates to slow U.S. economic growth and avoid higher
inflation. On June 30, 1999, the Federal funds rate
was increased by a quarter of a percentage point to
5.00%. That move was followed by a second of the same
magnitude on August 24, 1999, which left the rate at
5.25%. This time the Fed also hiked the discount rate
(the rate it charges member banks to borrow at the
discount window) to 4.75% from 4.50%.

Weighted Average Maturity Compared to the
Average Municipal Money Fund
(GRAPH)

Looking Ahead
Fed poised to act again, if necessary

After their most recent meeting in early October 1999,
Fed policy makers released a statement indicating they
may consider hiking short-term rates in the near future
and will be "especially alert" to trends that could boost
inflationary pressures. Therefore, market participants
will pay close attention to data on employment and
consumer spending for goods and services, which is
the main engine of the U.S. economy. If this data
indicates that the U.S. economy is continuing to
expand at a rapid pace, we believe there is a chance
the Fed will hike rates in November 1999 to reverse
the last of three rate cuts from the autumn of 1998.

Heading toward the end of 1999, the Series is
positioned to have quick access to cash to meet
any shareholder liquidity needs due to holiday
expenditures or concerns about potential problems
that may arise when computers switch their internal
clocks from 1999 to the year 2000.

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Portfolio of Investments as
of August 31, 1999 CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Ansonia Connecticut, Gen. Oblig., Ser. 98, F.G.I.C. Aaa 4.00% 10/15/99 $ 1,175 $ 1,176,243
Brazos Harbor, Dist. Rev., BASF Corp. Proj., Ser. 96,
F.R.D.D., A.M.T. P-1 3.00 9/01/99 500 500,000
Bridgeport Connecticut, Gen. Oblig., Ser. 97A, A.M.B.A.C. Aaa 4.40 3/01/00 250 251,392
Brookfield Connecticut, Gen. Oblig., B.A.N. NR 3.00 12/09/99 1,000 1,000,130
Connecticut St., Gen. Oblig.,
Ser. 90A NR 6.90 3/15/00 1,500 (c) 1,555,426
Ser. 90B NR 6.75 7/15/00 1,850 (c) 1,935,244
Ser. 91A Aa3 6.20 3/01/00 150 152,185
Ser. 97B, F.R.W.D. VMIG1 3.05 9/08/99 3,750 3,750,000
Ser. C Aa3 6.80 9/15/99 600 600,844
Connecticut St. Dev. Auth.,
Bradley Airport Hotel, Ser. 97A, F.R.W.D. VMIG1 3.10 9/02/99 900 900,000
Bradley Airport Hotel, Ser. 97B, F.R.W.D. VMIG1 3.10 9/02/99 3,000 3,000,000
Bradley Airport Hotel, Ser. 97C, F.R.W.D. VMIG1 3.10 9/02/99 1,300 1,300,000
Conco Proj., Ser. 85, F.R.W.D. P-1 3.00 9/02/99 1,700 1,700,000
Corp. for Independ. Living Proj., Ser. 99, F.R.W.D. VMIG1 3.10 9/01/99 2,560 2,560,000
Pierce Mem'l. Baptist Home, Ser. 99, F.R.W.D. A-1+(d) 3.15 9/01/99 3,160 3,160,000
SHW Inc. Proj., Ser. 90, F.R.W.D., A.M.T. CPSI 3.10 9/01/99 5,150 5,150,000
Connecticut St. Hlth. & Edl. Facs. Auth. Rev.,
Charlotte Hungerford, Ser. C, F.R.W.D. VMIG1 3.10 9/02/99 1,425 1,425,000
Pomfret School Issue, Ser. A, F.R.W.D. VMIG1 3.25 9/01/99 1,000 1,000,000
Sharon Hosp. Issue, Ser. A, F.R.W.D. VMIG1 3.10 9/02/99 1,400 1,400,000
Yale New Haven Hospital, Ser. 90F, M.B.I.A. Aaa 6.65 7/01/00 400 (c) 417,788
Yale University, Ser. S, T.E.C.P. VMIG1 3.30 10/08/99 2,100 2,100,000
Connecticut St. Hsg. Fin. Auth., Ser. 89D, T.E.C.P. Aa2 3.35 11/09/99 3,000 3,000,000
Connecticut St. Spec. Assmt.,
Second Injury Fund, T.E.C.P. P-1 3.20 9/07/99 5,000 5,000,000
Unemployment Rev., Ser. 96A, A.M.B.A.C. Aaa 4.50 11/15/99 1,000 1,002,148
Unemployment Rev., Ser. 96A, A.M.B.A.C. Aaa 5.50 5/15/00 2,500 2,539,471
Unemployment Comp., Ser. 93C, A.N.N.M.T., F.G.I.C. VMIG1 3.38 7/01/00 1,800 1,800,000
Connecticut St. Spec. Tax Oblig., Trans. Infrastructure
Rev.,
Ser. 90I, F.R.W.D. VMIG1 3.20 9/01/99 5,000 5,000,000
Ser. 94B, F.G.I.C. Aaa 5.50 10/01/99 1,460 1,462,811
Dist. of Columbia, Gen. Oblig.,
Ser. 92A-2, F.R.D.D. VMIG1 3.05 9/01/99 200 200,000
Ser. 92A-6, F.R.D.D. VMIG1 3.05 9/01/99 800 800,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Portfolio of Investments as
of August 31, 1999 CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
East Hampton Connecticut, Gen. Oblig., Ser. 99, M.B.I.A. Aaa 3.75% 10/15/99 $ 495 $ 495,311
East Lyme Connecticut, Gen Oblig., B.A.N. NR 2.95 1/20/00 4,500 4,501,342
Gulf Coast Indl. Dev. Auth., Citgo Petroleum,
Ser. 99, F.R.D.D., A.M.T. VMIG1 3.10 9/01/99 700 700,000
Hartford Connecticut, Redev. Agcy., Multi-family Mtge.
Rev., Underwood Twrs. Proj., Ser. 90, F.R.W.D., F.S.A. A-1+(d) 3.15 9/02/99 600 600,000
Hopewell Virginia, Indl. Dev. Agcy., Hadson Pwr. Prog.
Pound13, Ser 90A, F.R.D.D., A.M.T. P-1 3.10 9/01/99 2,500 2,500,000
Iowa St. Fin. Auth., Solid Waste Disp. Rev., Cedar River
Paper, Ser. 95A, F.R.D.D., A.M.T. A-1+(d) 3.00 9/01/99 1,300 1,300,000
Jackson Cnty. Mississippi, Chevron U.S.A., Inc. Proj., Ser.
94, F.R.D.D., A.M.T. P-1 3.10 9/01/99 1,600 1,600,000
Lower Neches Valley Auth., Mobil Oil Corp., Ser. 99,
F.R.D.D., A.M.T. P-1 3.10 9/01/99 800 800,000
New Haven Connecticut, Gen. Oblig.,
Ser. A, F.G.I.C. Aaa 4.25 2/01/00 2,000 2,011,159
Ser. B, F.G.I.C. Aaa 3.75 2/01/00 1,500 1,505,532
North Branford Connecticut, B.A.N. NR 3.90 5/17/00 1,350 1,353,268
Puerto Rico Hsg. Fin. Corp., Multi-family Mtge. Rev., Port.
A,
Ser. 90I, M.O.T., A.M.B.A.C. Aaa 3.45 9/15/99 2,455 2,455,000
Sabine River Auth. Texas, Poll. Ctl. Rev., Tx. Util. Elec.,
Ser. 96B, F.R.D.D., A.M.B.A.C., A.M.T. VMIG1 2.95 9/01/99 500 500,000
Seymour Connecticut, Gen. Oblig., F.S.A. Aaa 5.75 3/01/00 805 815,164
Shelton Connecticut, Gen. Oblig., B.A.N. NR 3.25 12/01/99 1,250 1,251,058
South Windsor Connecticut, Gen. Oblig., Ser. 99 Aa 3.50 9/01/00 585 584,989
South Windsor Connecticut, Gen. Oblig., M.B.I.A. Aaa 6.30 11/15/99 500 503,311
Stamford Connecticut, Gen. Oblig., Ser. 99A Aaa 3.50 8/01/00 2,280 2,282,824
West Baton Rouge Dist. Pound3, Dow Chemical Co. Proj., Ser.
94A, F.R.D.D., A.M.T. P-1 3.15 9/01/99 500 500,000
West Hartford Connecticut, Gen. Oblig., Ser. 98 Aaa 5.60 11/01/99 1,000 1,004,410
-----------
Total Investments--100.0%
(amortized cost $83,102,050(e)) 83,102,050
Liabilities in excess of other assets (27,317)
-----------
Net Assets--100% $83,074,733
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Portfolio of Investments as
of August 31, 1999 CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation.
A.M.T.--Alternative Minimum Tax.
A.N.N.M.T.--Annual Mandatory Tender.
B.A.N.--Bond Anticipation Note.
F.G.I.C.--Financial Guaranty Insurance Company.
F.R.D.D.--Floating Rate (Daily) Demand Note (b).
F.R.W.D.--Floating Rate (Weekly) Demand Note (b).
F.S.A.--Financial Security Assurance.
M.B.I.A.--Municipal Bond Insurance Association.
M.O.T.--Monthly Optional Tender.
T.E.C.P.--Tax-Exempt Commercial Paper.
(b) For purposes of amortized cost valuation, the maturity date of Floating Rate
Demand Notes is considered to be the later of the next date on which the
security can be redeemed at par, or the next date on which the rate of
interest is adjusted.
(c) Prerefunded issues are secured by escrowed cash and/or direct U.S.
guaranteed obligations.
(d) Standard & Poor's rating.
(e) The cost of securities for federal income tax purposes is substantially the
same as for financial reporting purposes.
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. 5

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Statement of Assets and Liabilities CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets August 31, 1999
<S> <C>
Investments, at amortized cost which approximates market
value................................................................................................... $83,102,050
Cash....................................................................................................... 814,298
Interest receivable........................................................................................ 625,052
Receivable for Series shares sold.......................................................................... 515,032
Other assets............................................................................................... 1,840
---------------
Total assets............................................................................................ 85,058,272
---------------
Liabilities
Payable for Series shares reacquired....................................................................... 1,041,694
Payable for investments purchased.......................................................................... 801,908
Accrued expenses........................................................................................... 57,058
Dividends payable.......................................................................................... 37,102
Management fee payable..................................................................................... 35,534
Deferred trustee's fees.................................................................................... 5,699
Distribution fee payable................................................................................... 4,544
---------------
Total liabilities....................................................................................... 1,983,539
---------------
Net Assets................................................................................................. $83,074,733
---------------
---------------
Net assets were comprised of:
Shares of beneficial interest, at $.01 par value........................................................ $ 830,747
Paid-in capital in excess of par........................................................................ 82,243,986
---------------
Net assets, August 31, 1999................................................................................ $83,074,733
---------------
---------------
Net asset value, offering price and redemption price per share ($83,074,733 / 83,074,733 shares of
beneficial interest issued and outstanding; unlimited number of shares authorized)...................... $1.00
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 6

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
CONNECTICUT MONEY MARKET SERIES
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income August 31, 1999
<S> <C>
Income
Interest earned.......................... $ 2,708,796
---------------
Expenses
Management fee........................... 438,720
Distribution fee......................... 109,680
Custodian's fees and expenses............ 60,000
Reports to shareholders.................. 33,000
Registration fees........................ 25,000
Transfer agent's fees and expenses....... 24,000
Legal fees and expenses.................. 9,500
Audit fees and expenses.................. 8,000
Trustees' fees and expenses.............. 4,500
Miscellaneous............................ 3,753
---------------
Total expenses........................ 716,153
Less: Custodian fee credit (Note 1)...... (22,259)
---------------
Net expenses.......................... 693,894
---------------
Net investment income....................... 2,014,902
Realized Gain on Investments
Net realized gain on investment
transactions............................. 5,471
---------------
Net Increase in Net Assets
Resulting from Operations................... $ 2,020,373
---------------
---------------
</TABLE>

PRUDENTIAL MUNICIPAL SERIES FUND
CONNECTICUT MONEY MARKET SERIES
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Increase (Decrease) Year Ended August 31,
in Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income.......... $ 2,014,902 $ 2,268,083
Net realized gain on investment
transactions................ 5,471 1,460
------------ ------------
Net increase in net assets
resulting from operations... 2,020,373 2,269,543
------------ ------------
Dividends and distributions (Note
1)............................. (2,020,373) (2,269,543)
------------ ------------
Series share transactions
(at $1 per share)
Net proceeds from shares
sold........................ 311,218,175 389,111,500
Net asset value of shares
issued in reinvestment of
dividends and
distributions............... 1,968,000 2,204,564
Cost of shares reacquired...... (325,228,890) (372,125,422)
------------ ------------
Net increase (decrease) in net
assets from Series share
transactions................ (12,042,715) 19,190,642
------------ ------------
Total increase (decrease)......... (12,042,715) 19,190,642
Net Assets
Beginning of year................. 95,117,448 75,926,806
------------ ------------
End of year....................... $ 83,074,733 $ 95,117,448
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Notes to Financial Statements CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
Prudential Municipal Series Fund (the 'Fund') is registered under the Investment
Company Act of 1940, as an open-end investment company. The Fund was organized
as a Massachusetts business trust on May 18, 1984 and consists of 11 series. The
monies of each series are invested in separate, independently managed
portfolios. The Connecticut Money Market Series (the 'Series') commenced
investment operations on August 5, 1991. The Series is nondiversified and seeks
to provide the highest level of income that is exempt from Connecticut state,
local and federal income taxes with the minimum of risk by investing in
'investment grade' tax-exempt securities having a maturity of thirteen months or
less and whose ratings are within the two highest ratings categories by a
nationally recognized statistical rating organization, or if not rated, are of
comparable quality. The ability of the issuers of the securities held by the
Series to meet their obligations may be affected by economic developments in a
specific state, industry or region.

- ------------------------------------------------------------
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 Valuations: Portfolio securities of the Series are valued at
amortized cost, which approximates market value. The amortized cost method of
valuation involves valuing a security at its cost on the date of purchase and
thereafter assuming a constant amortization to maturity of any discount or
premium.

All securities are valued as of 4:30 p.m., New York time.

Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Interest income is recorded on the
accrual basis. The Series amortizes premiums and accretes original issue
discount on portfolio securities as adjustments to interest income. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.

Federal Income Taxes: For federal income tax purposes, each series in the Fund
is treated as a separate taxpaying entity. It is the intent of the Series to
continue to meet the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its net income to
shareholders. For this reason, no federal income tax provision is required.

Dividends: The Series declares daily dividends from net investment income and
net realized short-term capital gains or losses. Payment of dividends is made
monthly. Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.

Custody Fee Credits: The Series has an arrangement with its custodian bank,
whereby uninvested monies earn credits which reduce the fees charged by the
custodian.

- ------------------------------------------------------------
Note 2. Agreements

The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the cost of the
subadviser's services, the compensation of officers of the Fund, occupancy and
certain clerical and bookkeeping costs of the Fund. The Fund bears all other
costs and expenses.

The management fee paid PIFM is computed daily and payable monthly, at an annual
rate of .50 of 1% of the average daily net assets of the Series.

The Fund had 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 shares pursuant to
the plan of distribution regardless of expenses actually incurred by them. The
Series reimburses PIMS for distributing and servicing the Series' shares
pursuant to the plan of distribution at an annual rate of .125 of 1% of the
Series' average daily net assets. The distribution fee is accrued daily and
payable monthly.

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

- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates

Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended August 31, 1999, the
Series incurred fees of approximately $21,800 for the services of PMFS. As of
August 31, 1999, approximately $1,600 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.
- --------------------------------------------------------------------------------
8

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Financial Highlights CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended August 31,
-------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
------- ------- ------- ------- -------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income and realized gains............ .02 .03 .03(a) .03(a) .03(a)
Dividends and distributions to shareholders......... (.02) (.03) (.03) (.03) (.03)
------- ------- ------- ------- -------
Net asset value, end of year........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN(b):.................................... 2.34% 2.72% 3.10% 3.17% 3.16%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000)....................... $83,075 $95,117 $75,927 $77,683 $62,867
Average net assets (000)............................ $87,744 $84,800 $77,500 $74,576 $57,103
Ratios to average net assets:
Expenses, including distribution fee............. .82% .86% .46%(a) .47%(a) .58%(a)
Expenses, excluding distribution fee............. .69% .74% .34%(a) .35%(a) .46%(a)
Net investment income............................ 2.30% 2.68% 3.06%(a) 3.12%(a) 3.17%(a)
</TABLE>
- ---------------
(a) Net of management fee waiver.
(b) Total return includes reinvestment of dividends and distributions.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 9

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Report of Independent Accountants CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Prudential Municipal Series Fund, Connecticut Money Market Series:

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Municipal Series Fund,
Connecticut Money Market Series (the 'Fund', one of the portfolios constituting
Prudential Municipal Series Fund) at August 31, 1999, the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the three years in the period then ended, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as 'financial statements') are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1999 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above. The
accompanying financial highlights for each of the two years in the period ended
August 31, 1996 were audited by other independent accountants, whose opinion
dated October 14, 1996 was unqualified.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
October 15, 1999
- --------------------------------------------------------------------------------
10

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Federal Income Tax Information
(Unaudited) CONNECTICUT MONEY MARKET SERIES
- --------------------------------------------------------------------------------
We are required by the Internal Revenue Code to advise you within 60 days of the
Series' fiscal year end (August 31, 1999) as to the federal tax status of
dividends and distributions paid by the Fund during such fiscal year.
Accordingly, during its fiscal year ended August 31, 1999, dividends paid from
net investment income of $.02 per share were all federally tax-exempt interest
dividends.
- --------------------------------------------------------------------------------
11

<PAGE>

Getting the Most from Your Prudential Mutual Fund

How many times have you read these reports--or other
financial materials-- and stumbled across a word that
you don't understand?

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

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

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

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

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

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

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

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

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

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

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

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

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

<PAGE>

Getting The Most From Your Prudential Mutual Fund

When you invest through Prudential Mutual Funds, you receive
financial advice from a Prudential Securities Financial
Advisor or Prudential/Pruco Securities registered
representative. Your advisor or representative can
provide you with the following services:

There's No Reward Without Risk; but Is This Risk Worth It?

Your financial advisor or registered representative
can help you match the reward you seek with the risk
you can tolerate. 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 under-stands
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 own individual
investment profile and risk tolerance. While the
newspapers and popular magazines are full of advice
about investing, they are aimed at generic groups of
people or representative individuals--not at you
personally. Your financial advisor or registered
representative will review your investment objectives
with you. This means you can make financial decisions
based on the assets and liabilities in your current
portfolio and your risk tolerance--not just based on
the current investment fad.

Buy Low, Sell High
Buying at the top of a market cycle and selling at
the bottom are among the most common investor mistakes.
But, sometimes it's difficult to hold on to an investment
when it's losing value every month. Your financial advisor
or registered representative can answer questions when
you're confused or worried about your investment, and
should remind you that you're investing for the long haul.

<PAGE>

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

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

Cusip
74435M648

Trustees
Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Thomas T. Mooney
Stephen P. Munn
Thomas H. O'Brien
David R. Odenath, Jr.
Richard A. Redeker
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
Grace C. Torres, Treasurer
Stephen M. Ungerman, Assistant Treasurer
Deborah A. Docs, Secretary
David F. Connor, 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
P.O. Box 15005, New Brunswick, NJ 08906

Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of the Americas, New York, NY 10036

Legal Counsel
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue, New York, NY 10022

The views expressed in this report and information about the
Series' portfolio holdings are for the period covered by
this report and are subject to change thereafter.

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

MF154E

<PAGE>

(ICON)

Prudential
Municipal
Series Fund
- ----------------------
Florida Series

ANNUAL
REPORT
Aug. 31, 1999

(LOGO)

<PAGE>

A Message from the Fund's President October 5, 1999

Dear Shareholder,
Prudential Municipal Series Fund--Florida Series' Class
A shares posted a negative return of 0.61% during our 12-month
reporting period that ended August 31, 1999. Its benchmark Lipper
Average also generated a negative return as inflation fears
caused a broad sell-off in the U.S. bond markets. The following
report takes a closer look at recent bond market events and
explains how the Series was positioned.

While municipal bond prices gained early in our reporting
period, the rally was short-lived. Signs that the U.S.
economy was continuing to grow at a rapid pace fueled
concerns about higher inflation. Since a rise in inflation
would reduce the value of bonds' fixed-income payments,
investors demanded higher yields on debt securities as
compensation. This, in turn, caused bond prices to fall
during most of our reporting period.

One integrated and expanded team

I would like to take this opportunity to tell you about
some changes we've made to our Fixed Income Group. Earlier
in the year, we combined our fixed-income areas into one
integrated group that will manage money for Prudential's
investors and policyholders. This group now manages
approximately $135 billion in assets, making it one
of the three largest fixed-income money managers in
the country. Our expanded depth, breadth, and scale
now also allow us to tap the best talent and share
investment ideas, proprietary research, and analytical
tools.

To utilize these resources effectively, we recently
organized the group into teams, each specializing in
a different sector of the fixed-income market. The
Municipal Bonds Sector team, headed by Evan Lamp,
is now responsible for the day-to-day
management of your Prudential Municipal Series
Fund--Florida Series. Many of the investment
professionals who supported the management of
the Series in the past, including Portfolio Manager
Scott Diamond, are part of this new team.

Thank you for your continued confidence in Prudential mutual funds.

Sincerely,

John R. Strangfeld
President
Prudential Municipal Series Fund

<PAGE>

Performance Review
(PHOTO) (PHOTO)

Evan Lamp, team leader of the Municipal Bonds Sector
team and Portfolio Manager Scott Diamond

Investment Goals and Style

The Series' investment objective is to maximize current
income that is exempt from federal income taxes, consistent
with the preservation of capital, and to invest in
securities that will enable its shares to be exempt
from the Florida intangibles tax. However, certain
shareholders may be subject to the alternative
minimum tax (AMT) because some of the Series'
bonds are AMT eligible. There can be no assurance
the Series will achieve its investment objective.

Inflation fears battered the municipal bond market
Our fiscal year that ended on August 31, 1999, will be
remembered as a challenging period in the history of
the municipal bond market. For the first several
weeks, prices of tax-exempt bonds rallied in
sympathy with U.S. Treasuries. Investors
purchased Treasuries for their relative safety
after a global financial crisis spread beyond
Asia to Russia and Latin America in the summer
of 1998.

But concern about the global financial crisis
gave way to fears that a surprisingly strong U.S.
economy and soaring oil prices might boost inflation,
which eats into the value of bonds' fixed-interest
payments. To compensate for this risk, investors
demanded higher yields on municipal bonds and many
other types of debt securities, which caused their
prices to tumble. Long-term municipal bonds sold off
the most since their prices generally fall more rapidly
than prices of shorter-term bonds for
a given rise in yields. Amid this bearish trend, the
Series posted negative annual returns that beat the
return on its benchmark Lipper Average.

Some of the Series' bonds improved in credit quality
Despite the challenging market conditions, the Series
benefited when its Lakeland, Florida Electric and Water
revenue bonds became prerefunded, which means the utility
arranged for the bonds to be retired ahead of schedule in
October 2006. Until that time, the bonds will be backed
by direct obligations of the U.S. government. They are,
therefore, considered to have little credit risk. Because
their maturity was shortened and their credit quality
improved, the bonds rallied sharply. We were
particularly pleased because the Lakeland, Florida
Electric and Water revenue bonds were the Series'
largest position at the time the debt securities
were prerefunded.

In addition, the Series was helped by its exposure to
housing bonds, which comprised roughly 11% of its total
investments throughout our fiscal year. Because mortgage
rates climbed along with bond yields, fewer homeowners
were able to save money by refinancing their mortgages
at lower interest rates. As a result, there was less
risk that housing bonds would be retired early because
the underlying mortgages got refinanced. Housing bonds,
therefore, were more appealing to investors, which helped
the bonds weather the sell-off better than some other
types of tax-exempt debt securities.

<PAGE>

BBB rated bonds enhanced the Series' performance

We also maintained a considerable exposure to municipal
bonds rated BBB, the lowest investment-grade ratings
category. These bonds, which comprised 20% of the Series'
total investments as of August 31, 1999, provided attractive
yields. Moreover, prices of lower-rated municipal bonds,
such as those rated BBB, tend to decline less than the
prices of higher-rated bonds as the tax-exempt debt
market sells off. This was particularly true of
lower-rated bonds in economically sensitive sectors
such as transportation and industrial development.

The Fed reversed the course of U.S. monetary policy
The downturn in the prices of municipal debt securities
lasted for nearly 11 months of our fiscal year. In the
spring of 1999, the sell-off accelerated because the
Federal Reserve was expected to boost short-term interest
rates to slow economic growth to a more sustainable pace
and avoid rising inflation.

Performance at a Glance

<TABLE>
Cumulative Total Returns1 As of 8/31/99
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A -0.61% 34.00% (32.03) 79.86% (71.38)
Class B -0.91 31.45 (29.52) 31.39 (29.32)
Class C -1.16 29.81 (27.90) 30.66 (27.20)
Class Z -0.42 N/A 12.83 (12.61)
Lipper FL Muni Debt Fund Avg.3 -1.48 31.25 ***
</TABLE>

<TABLE>
Average Annual Total Returns1 As of 9/30/99
<CAPTION>
One Five Since
Year Years Inception2
<S> <C> <C> <C>
Class A -4.96% 5.78% (5.49) 6.54% (5.95)
Class B -7.30 5.86 (5.57) 5.24 (4.91)
Class C -4.52 5.54 (5.25) 4.22 (3.76)
Class Z -1.81 N/A 4.37 (4.29)
</TABLE>

<TABLE>
Distributions and Yields As of 8/31/99
<CAPTION>
Total Taxable Equivalent Yield4
Distributions 30-Day at Tax Rates of
Paid for 12 Mos. SEC Yield 36% 39.6%
<S> <C> <C> <C> <C>
Class A $0.50 4.43% 6.92% 7.33%
Class B $0.47 4.32 6.75 7.15
Class C $0.44 4.03 6.30 6.67
Class Z $0.52 4.82 7.53 7.98
</TABLE>

Past performance is not indicative of future results.
Principal and investment return will fluctuate so that
an investor's shares, when redeemed, may be worth more
or less than their original cost.

1 Source: Prudential Investments Fund Management LLC and
Lipper, Inc. The cumulative total returns do not take
into account sales charges. The average annual total
returns do take into account applicable sales charges.
The Series charges a maximum front-end sales charge of
3% for Class A shares and a declining contingent deferred
sales charge (CDSC) of 5%, 4%, 3%, 2%, 1%, and 1% for six
years for Class B shares. Class B shares will automatically
convert to Class A shares, on a quarterly basis, approximately
seven years after purchase. Class C shares are subject to a
front-end sales charge of 1% and a CDSC of 1% for 18 months.
Class C shares bought before November 2, 1998, have a 1% CDSC
if sold within one year. Class Z shares are
not subject to a sales charge or distribution and service
(12b-1) fees. Without waiver of management fees and/or
expense subsidization, the Series' cumulative and average
annual total returns would have been lower, as indicated
in parentheses ( ).

2 Inception dates: Class A, 12/28/90; Class B, 8/1/94;
Class C, 7/26/93; and Class Z, 12/6/96.

3 Lipper average returns are for all funds in each share
class for the one- and five-year periods in the Florida
Municipal Debt Fund category.

4 Taxable equivalent yields reflect federal and applicable
state tax rates.

***Lipper Since Inception returns are 74.61% for Class A;
31.30% for Class B; 32.36% for Class C; and 10.95% for
Class Z, based on all funds in each share class.

1
<PAGE>

Review Cont'd.

Federal funds rate at 5.25%. This time the Fed also hiked
the discount rate (the rate it charges its member banks that
borrow at the discount window) to 4.75% from 4.50%. When the
Fed increased short-term rates in the summer of 1999, it was
reversing an earlier stance on monetary policy adopted in the
autumn of 1998. At that time, it had embarked on a series of
three cuts in the Federal funds rate to calm financial markets
and bolster U.S. economic activity during the most critical
period of the global financial crisis.

Looking Ahead
Fed poised to act again, if necessary
If the U.S. economy does not lose steam quickly enough,
we believe the Federal Reserve will continue to increase
short-term interest rates to slow the economic expansion
to a more sustainable pace. After their latest meeting in
early October 1999, Fed policy makers released a statement
saying they were considering hiking rates again and would
be "especially alert" to trends that could boost inflationary
pressures.

Should the Fed act and bond yields continue to rise,
the supply of newly issued municipal bonds could decline.
State and local governments would have fewer opportunities
to refinance their higher-rate debt securities. Moreover,
if interest rates climbed sharply, some cost-conscious
state and local governments may postpone issuing bonds
in order to raise money for new projects. Retail investors,
on the other hand, are attracted to tax-exempt debt
securities in higher-interest-rate environments. This
combination of shrinking supply and growing demand
could allow municipal bonds to perform better than
comparable Treasuries.

But what if the Fed left monetary policy unchanged
and bond yields failed to move sharply higher? We
believe municipal bonds are still a good buy on a
relative basis. In early October 1999, an insured,
30-year municipal bond rated AAA yielded
roughly 95% as much as comparable Treasuries. This
is well above the historical average of approximately 87%.

Five Largest Issuers
Expressed as a percentage of net assets as of 8/31/99
Puerto Rico 5.5%
Commonwealth*

Lakeland Electric & Water* 4.9

Puerto Rico Electric 4.9
Power Authority*

Dade County 3.7
Prof. Sports Facs.

Brevard County 3.5
School Board Cert. of Part.*

* Prerefunded issues are secured by escrowed cash and/or
direct U.S. guaranteed obligations.

Portfolio Composition
Expressed as a percentage of total investments as of 8/31/99
Revenue Bonds 54%
Prerefunded Bonds 24
General Obligations 20
Miscellaneous 2

Credit Breakdown
Expressed as a percentage of total investmentsas of 8/31/99
AAA 5%
AA 15
A 10
BBB 20
BB 1
B 4
Insured 45

2
<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Portfolio of Investments as
of August 31, 1999 FLORIDA SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS--98.1%
- ------------------------------------------------------------------------------------------------------------------------------
Alachua Cnty. Ind. Dev. Auth. Rev., H.B. Fuller Co.
Proj., A.M.T. NR 7.75% 11/01/16 $ 3,000 $ 3,094,260
Arbor Greene Cmty. Dev. Dist.,
Florida Assmt. Rev. NR 5.75 5/01/06 610 598,880
Florida Assmt. Rev. NR 6.30 5/01/19 350 338,299
Bayside Impvt. Cmty. Dev. Dist., Florida Cap. Impvt.
Rev., Ser. A NR 6.30 5/01/18 1,000 962,260
Brevard Cnty. Edl. Facs. Auth. Rev. Ref., Florida Inst.
of Tech. BBB-(b) 6.875 11/01/22 1,500 1,562,805
Brevard Cnty. Sch. Brd. Ctfs. of Part., Ser. A,
A.M.B.A.C. Aaa 6.50 7/01/12 3,500 (d) 3,774,890
Broward Cnty. Arpt. Sys. Rev., Passenger Fac., Conv.,
A.M.T., A.M.B.A.C. Aaa 5.25 10/01/15 1,000 965,210
Broward Cnty. Edl. Facs. Auth. Rev., Nova Univ. Dorm.
Proj., Ser. A NR 7.50 4/01/17 1,500 (d) 1,603,320
Broward Cnty. Hlth. Facs. Auth., North Beach Hosp.,
M.B.I.A. Aaa 6.75 8/15/06 1,000 1,062,890
Broward Cnty. Hsg. Fin. Auth., Multi. Fam. Hsg. Rev.,
Cross Keys Apts. Proj., Ser. A, A.M.T. NR 5.75 10/01/28 1,300 1,272,960
Broward Cnty. Prof. Sports Facs. Rev., Civic Arena
Proj., Ser. A, M.B.I.A. Aaa 5.625 9/01/28 2,185 2,183,449
Clay Cnty. Hsg. Fin. Auth. Rev., Sngl. Fam. Mtge.,
Ser. A, A.M.T., G.N.M.A. Aa1 7.45 9/01/23 375 388,733
Cocoa Wtr. & Swr. Rev. Ref., F.G.I.C. Aaa 5.25 10/01/17 1,230 1,196,359
Dade Cnty. Aviation Dept. Rev.,
Ser. B, A.M.T., M.B.I.A. Aaa 6.00 10/01/24 1,500 1,580,325
Ser. E, A.M.B.A.C. Aaa 5.50 10/01/10 1,000 1,030,860
Dade Cnty. Edl. Facs. Auth. Rev. Ref., Univ. Miami,
Ser. A, M.B.I.A. Aaa 5.625 4/01/06 2,015 2,125,241
Dade Cnty. Hlth. Facs. Auth. Rev., Baptist Hosp. of
Miami Proj., Ser. A, E.T.M., M.B.I.A. Aaa 6.75 5/01/08 500 546,530
Dade Cnty. Hsg. Fin. Auth. Rev.,
Multi. Fam. Mtge., Golden Lakes Apts. Proj., Ser. A,
A.M.T. NR 6.05 11/01/39 1,000 1,012,770
Sngl. Fam. Mtge., Ser. B, A.M.T., G.N.M.A Aaa 7.25 9/01/23 305 315,751
Sngl. Fam. Mtge., Ser. C, A.M.T., G.N.M.A. Aaa 7.75 9/01/22 550 567,573
Dade Cnty. Prof. Sports Franchise Facs. Tax Rev.,
E.T.M., M.B.I.A. Aaa 5.25 10/01/30 4,200 4,023,138
Duval Cnty. Hsg. Fin. Auth. Rev., Sngl. Fam. Mtge.,
A.M.T., G.N.M.A. AAA(b) 8.375 12/01/14 215 227,513
Florida Hsg. Fin. Corp. Rev.,
Cypress Trace Apts., Ser. G, A.M.T. NR 6.60 7/01/38 1,220 1,181,704
Westchase Apts., Ser. B, A.M.T. NR 6.61 7/01/38 1,510 1,462,662
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 3

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Portfolio of Investments as
of August 31, 1999 FLORIDA SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Florida St. Mun. Pwr. Agcy. Ref., Stanton II Proj.,
A.M.B.A.C. Aaa 4.50% 10/01/27 $ 2,000 $ 1,639,240
Greater Orlando Aviation Rev. Auth. Facs., Orlando
Arpt.,
A.M.T., F.G.I.C. Aaa 5.25 10/01/23 2,000 1,872,860
Hialeah Hsg. Auth. Rev., F.H.A., G.N.M.A. AAA(b) 5.80 6/20/33 2,000 1,990,980
Hillsborough Cnty. Ind. Dev. Auth. Poll. Ctrl. Rev.,
Tampa Elec. Proj., Ser. 92 Aa3 8.00 5/01/22 1,750 1,936,095
Jacksonville Elec. Auth. Rev., St. Johns Rvr. Pwr. Park
Issue 2, Ser. 7 Aa2 Zero 10/01/10 3,000 1,678,260
Jacksonville Hlth. Facs. Auth. Hosp. Rev.,
Nat'l. Ben. Assoc. Baa1 7.00 12/01/22 1,825 1,933,879
St. Lukes Hosp. Assoc. Proj. AA+(b) 7.125 11/15/20 1,000 1,066,150
Jacksonville Swr. & Sld. Wste. Disp. Facs. Rev.,
Anheuser Busch Proj., A.M.T. A1 5.875 2/01/36 1,000 990,300
Jacksonville Wtr. & Swr. Dev. Rev.,
Suburban Utils., A.M.T. A3 6.75 6/01/22 1,000 1,056,770
United Wtr. Proj., A.M.T., A.M.B.A.C. Aaa 6.35 8/01/25 1,500 1,565,220
Lake Cnty. Res. Rec. Ind. Dev. Rev., NRG Recov. Grp.,
Ser. A, A.M.T. Baa2 5.95 10/01/13 1,035 1,024,257
Lakeland Elec. & Wtr. Rev. A1 5.625 10/01/36 5,000(d) 5,357,050
Lee Cnty. Ind. Dev. Auth. Hlth. Care Facs. Rev., Shell
Point Proj., Ser. A BBB-(b) 5.50 11/15/29 1,500 1,313,175
Leon Cnty. Hsg. Fin. Auth. Rev., Sngl. Fam. Mtge., Ser.
A,
A.M.T., G.N.M.A. Aaa 7.30 4/01/21 285 294,855
Martin Cnty. Ind. Dev. Auth. Rev., Indiantown Cogen.
Proj.,
Ser. A, A.M.T. Baa3 7.875 12/15/25 1,200 1,223,364
Miami Parking Facs. Rev. Ref., M.B.I.A. Aaa 5.25 10/01/15 400 393,164
Miami Spec. Oblig.,
Admn. Bldg. Acquis. Proj., F.G.I.C. Aaa 6.00 2/01/16 1,500 1,547,535
Admn. Bldg. Acquis. Proj., F.G.I.C. Aaa 6.00 2/01/25 500 511,340
Miami-Dade Cnty. Prof. Sports Fac. Tax Cap. Apprec.
Ref., M.B.I.A. Aaa Zero 10/01/16 2,650 1,014,526
Mirimar Wste. Wtr. Impvt. Assmt. Rev., F.G.I.C. Aaa 6.75 10/01/16 1,590 (d) 1,768,907
Northern Palm Beach Cnty. Impt. Ref., Wtr. Ctl. & Impt. NR 6.00 8/01/10 1,205 1,166,548
Okaloosa Cnty. Cap. Impvt. Rev., M.B.I.A. Aaa Zero 12/01/06 450 318,150
Orange Cnty. Hsg. Fin. Auth. Mtge. Rev., Ser. A,
A.M.T., G.N.M.A. AAA(b) 7.375 9/01/24 420 439,081
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 4

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Portfolio of Investments as
of August 31, 1999 FLORIDA SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Orange Cnty. Hsg. Fin. Auth. Rev.,
Multi. Fam. Ashley Point Apts., Ser. A, A.M.T. BBB+(b) 6.85% 10/01/16 $ 1,200 $ 1,224,864
Multi. Fam. Ashley Point Apts., Ser. A, A.M.T. BBB+(b) 7.10 10/01/24 855 872,639
Orlando Util. Comm., Wtr. & Elec. Rev., Ser. D Aa2 6.75 10/01/17 2,200 2,514,424
Palm Beach Cnty. Hlth. Facs. Auth. Rev.,
Abbey Delray South Proj. BBB(b) 5.50 10/01/11 750 732,390
Good Samaritan Hlth. Sys. Aaa 6.30 10/01/22 1,000 (d) 1,080,360
Palm Beach Cnty. Hsg. Fin. Multi. Fam. Auth. Rev.,
Windsor Pk. Apts., Ser. A, A.M.T. NR 5.80 12/01/28 680 672,377
Palm Beach Cnty. Sld. Wste. Auth. Rev. Ref., Cap.
Apprec. Bds., Ser. A, A.M.B.A.C. Aaa Zero 10/01/12 4,000 1,974,360
Palm Beach Cnty., Gen. Oblig. Aa2 5.50 12/01/14 2,000 2,043,400
Pensacola Hlth. Facs. Auth., Daughters of Charity,
M.B.I.A. Aaa 5.25 1/01/11 1,600 1,590,432
Polk Cnty. Ind. Dev. Auth., Sld. Wste. Disp. Fac. Rev.,
Tampa Elec. Co. Proj., A.M.T. Aa2 5.85 12/01/30 1,500 1,503,030
Puerto Rico Comnwlth.,
Cap. Apprec. Ref. Pub. Impvt., Gen. Oblig. Baa1 Zero 7/01/15 1,955 814,140
Cap. Apprec. Ref. Pub. Impvt., Gen. Oblig. Baa1 Zero 7/01/16 2,500 977,025
Cap. Apprec. Ref. Pub. Impvt., Gen. Oblig. Baa1 Zero 7/01/17 5,300 1,948,704
Gen. Oblig. Aaa 6.45 7/01/17 1,400 (d) 1,544,508
Gen. Oblig. Aaa 6.50 7/01/23 650 (d) 718,497
Puerto Rico Elec. Pwr. Auth. Rev., Ser. R Baa1 6.25 7/01/17 5,000 (d) 5,345,750
Puerto Rico Pub. Bldgs. Auth. Rev. Gtd., Govt. Facs.,
Ser. B Baa1 5.25 7/01/21 1,915 1,798,874
Puerto Rico Tel. Auth. Rev., Ser. I, M.B.I.A., R.I.B.S. Aaa 7.27(c) 1/16/15 2,250 (d) 2,424,375
St. Petersburg Hlth. Facs. Auth. Rev., Allegheny Hlth.
Proj.,
M.B.I.A. Aaa 7.00 12/01/15 1,000 (d) 1,077,870
Sunrise Pub. Facs. Rev. Cap. Apprec., Ser. B, M.B.I.A. Aaa Zero 10/01/20 1,120 335,507
Sunrise Util. Sys. Rev. Ref., A.M.B.A.C. Aaa 5.50 10/01/18 2,000 2,004,600
Tampa Gtd. Entitlement Rev., A.M.B.A.C. Aaa 7.05 10/01/07 2,000 2,142,920
Tampa Sports Auth. Rev., Tampa Bay Arena Proj.,
M.B.I.A. Aaa 5.75 10/01/20 1,000 1,027,130
Tampa Util. Tax, Cap. Apprec. Impvt., A.M.B.A.C. Aaa Zero 10/01/13 3,295 1,524,135
Volusia Cnty. Edl. Fac. Auth. Rev., Embry Riddle Univ. AAA(b) 6.625 10/15/22 1,000 1,087,590
Volusia Cnty. Hlth. Facs. Auth. Rev., Mem. Hlth. Sys.
Proj. NR 8.25 6/01/20 2,000 (d) 2,103,180
Volusia Cnty. Edl. Fac. Auth. Rev., Edl. Facs., Embry
Riddle Aero A Baa2 5.75 10/15/29 1,000 947,990
------------
Total long-term investments (cost $105,362,409) 107,211,159
------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 5

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Statement of Assets and Liabilities FLORIDA SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets August 31, 1999
<S> <C>
Investments, at value (cost $105,762,409)................................................................. $ 107,611,159
Cash...................................................................................................... 75,352
Interest receivable....................................................................................... 1,805,331
Receivable for investment sold............................................................................ 110,210
Receivable for Series shares sold......................................................................... 13,653
Other assets.............................................................................................. 2,907
---------------
Total assets........................................................................................... 109,618,612
---------------
Liabilities
Payable for Series shares reacquired...................................................................... 165,441
Dividends payable......................................................................................... 83,937
Accrued expenses.......................................................................................... 51,525
Management fee payable.................................................................................... 46,866
Distribution fee payable.................................................................................. 31,537
Deferred trustees' fees................................................................................... 5,699
---------------
Total liabilities...................................................................................... 385,005
---------------
Net Assets................................................................................................ $ 109,233,607
---------------
---------------
Net assets were comprised of:
Shares of beneficial interest, at par.................................................................. $ 107,340
Paid-in capital in excess of par....................................................................... 107,378,527
---------------
107,485,867
Accumulated net realized loss on investments........................................................... (101,010 )
Net unrealized appreciation on investments............................................................. 1,848,750
---------------
Net assets, August 31, 1999............................................................................... $ 109,233,607
---------------
---------------
Class A:
Net asset value and redemption price per share
($77,398,248 / 7,605,808 shares of beneficial interest issued and outstanding)...................... $10.18
Maximum sales charge (3% of offering price)............................................................ .31
---------------
Maximum offering price to public....................................................................... $10.49
---------------
---------------
Class B:
Net asset value, offering price and redemption price per share
($24,625,615 / 2,419,746 shares of beneficial interest issued and outstanding)...................... $10.18
---------------
---------------
Class C:
Net asset value and redemption price per share
($6,832,700 / 671,389 shares of beneficial interest issued and outstanding)......................... $10.18
Sales charge (1% of offering price).................................................................... .10
---------------
Offering price to public............................................................................... $10.28
---------------
---------------
Class Z:
Net asset value, offering price and redemption price per share
($377,044 / 37,064 shares of beneficial interest issued and outstanding)............................ $10.17
---------------
---------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 7

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
FLORIDA SERIES
Statement of Operations
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended
Net Investment Income August 31, 1999
<S> <C>
Income
Interest................................. $ 6,586,317
---------------
Expenses
Management fee........................... 586,541
Distribution fee--Class A................ 168,250
Distribution fee--Class B................ 123,327
Distribution fee--Class C................ 55,653
Custodian's fees and expenses............ 80,000
Reports to shareholders.................. 46,000
Registration fees........................ 37,000
Transfer agent's fees and expenses....... 35,000
Legal fees and expenses.................. 12,000
Audit fees and expenses.................. 10,000
Trustees' fees and expenses.............. 4,500
Miscellaneous............................ 7,304
---------------
Total expenses........................ 1,165,575
Less: Custodian fee credit............... (3,342)
---------------
Net expenses.......................... 1,162,233
---------------
Net investment income....................... 5,424,084
---------------
Realized and Unrealized
Gain (Loss) on Investments
Net realized gain (loss) on:
Investment transactions.................. 476,090
Financial futures transactions........... (28,900)
---------------
447,190
Net change in unrealized depreciation on:
Investments.............................. (6,574,512)
---------------
Net loss on investments..................... (6,127,322)
---------------
Net Decrease in Net Assets
Resulting from Operations................... $ (703,238)
---------------
---------------
</TABLE>

PRUDENTIAL MUNICIPAL SERIES FUND
FLORIDA SERIES
Statement of Changes in Net Assets
- ------------------------------------------------------------
<TABLE>
<CAPTION>
Decrease in Year Ended August 31,
Net Assets 1999 1998
<S> <C> <C>
Operations
Net investment income.......... $ 5,424,084 $ 5,703,424
Net realized gain on investment
transactions................ 447,190 1,015,244
Net change in unrealized
appreciation (depreciation)
of investments.............. (6,574,512) 2,637,763
------------ ------------
Net increase (decrease)in net
assets resulting from
operations.................. (703,238) 9,356,431
------------ ------------
Dividends and Distributions (Note 1):
Dividends from net investment
income
Class A..................... (4,002,478) (4,423,732)
Class B..................... (1,091,852) (950,402)
Class C..................... (309,399) (310,707)
Class Z..................... (20,355) (18,583)
------------ ------------
(5,424,084) (5,703,424)
------------ ------------
Distributions in excess of net
investment income
Class A..................... (8,316) --
Class B..................... (2,283) --
Class C..................... (710) --
Class Z..................... (45) --
------------ ------------
(11,354) --
------------ ------------
Distributions from net realized
gains
Class A..................... (8,316) --
Class B..................... (2,283) --
Class C..................... (710) --
Class Z..................... (46) --
------------ ------------
(11,355) --
------------ ------------
Series share transactions (net of
share conversions) (Note 5):
Net proceeds from shares
sold........................ 13,296,170 12,853,726
Net asset value of shares
issued in reinvestment of
dividends and
distributions............... 2,387,979 2,414,093
Cost of shares reacquired...... (19,003,105) (19,046,916)
------------ ------------
Net decrease in net assets from
Series share transactions... (3,318,956) (3,779,097)
------------ ------------
Total decrease.................... (9,468,987) (126,090)
Net Assets
Beginning of year................. 118,702,594 118,828,684
------------ ------------
End of year....................... $109,233,607 $118,702,594
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 8

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Notes to Financial Statements FLORIDA SERIES
- --------------------------------------------------------------------------------
Prudential Municipal Series Fund, (the 'Fund') is registered under the
Investment Company Act of 1940, as an open-end investment company. The Fund was
organized as a Massachusetts business trust on May 18, 1984 and consists of 11
series. The monies of each series are invested in separate, independently
managed portfolios. The Florida Series (the 'Series') commenced investment
operations on December 28, 1990. The Series is nondiversified and seeks to
achieve its investment objective of providing the maximum amount of income that
is exempt from federal income taxes with the minimum of risk, and investing in
securities which will enable its shares to be exempt from the Florida
intangibles tax by investing in 'investment grade' tax-exempt securities whose
ratings are within the four highest ratings categories by a nationally
recognized statistical rating organization or, if not rated, are of comparable
quality. The ability of the issuers of the securities held by the Series to meet
their obligations may be affected by economic developments in a specific state,
industry or region.

- ------------------------------------------------------------
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 Valuations: The Series values municipal securities (including
commitments to purchase such securities on a 'when-issued' basis) on the basis
of prices provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. If market quotations are not readily available from such
pricing service, a security is valued at its fair value as determined under
procedures established by the Trustees.

Short-term securities which mature in more than 60 days are valued at current
market quotations. Short-term securities which mature in 60 days or less are
valued at amortized cost.

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

Financial Futures Contracts: A financial futures contract is an agreement to
purchase (long) or sell (short) an agreed amount of securities at a set price
for delivery on a future date. Upon entering into a financial futures contract,
the 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. Such variation margin is recorded for
financial statement purposes on a daily basis as unrealized gain or loss. When
the contract expires or is closed, the gain or loss is realized and is presented
in the statement of operations as net realized gain (loss) on financial futures
contracts.

The Series invests in financial futures contracts in order to hedge its existing
portfolio securities, or securities the Series intends to purchase, against
fluctuations in value caused by changes in prevailing interest rates. Should
interest rates move unexpectedly, the Series may not achieve the anticipated
benefits of the financial futures contracts and may realize a loss. The use of
futures transactions involves the risk of imperfect correlation in movements in
the price of futures contracts, interest rates and the underlying hedged assets.

Securities Transactions and Net Investment Income: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of securities are
calculated on the identified cost basis. Interest income is recorded on the
accrual basis. The Series amortizes premiums and accretes original issue
discount on portfolio securities as adjustments to interest income. Expenses are
recorded on the accrual basis which may require the use of certain estimates by
management.

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.

Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distributions by Investment Companies. The
effect of applying this statement was to decrease accumulated realized gains and
increase undistributed net investment income by $11,354. The current year effect
of applying the Statement of position was due to the sale of securities
purchased with market discount. Net investment income, net realized gains and
net assets were not affected by this change.

Federal Income Taxes: For federal income tax purposes, each series in the Fund
is treated as a separate taxpaying entity. It is the intent of the Series to
meet the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its net income to shareholders.
For this reason no federal income tax provision is required.

Dividends and Distributions: The Series declares daily dividends from net
investment income. Payment of dividends is made monthly. Distributions of net
capital gains, if any, are made annually.
- --------------------------------------------------------------------------------
9
<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Notes to Financial Statements FLORIDA SERIES
- --------------------------------------------------------------------------------
Income distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.

Custody Fee Credits: The Fund has an arrangement with its custodian bank,
whereby uninvested monies earn credits which reduce the fees charged by the
custodian.

- ------------------------------------------------------------
Note 2. Agreements

The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'). PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the cost of the
subadviser's services, the 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 management fee paid PIFM is computed daily and payable monthly, at an annual
rate of .50 of 1% of the average daily net assets of the Series.

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 of the Fund. The Fund compensates PIMS for
distributing and servicing the Fund's Class A, Class B and Class C shares,
pursuant to plans of distribution (the 'Class A, B and C Plans') regardless of
expenses actually incurred by them. The distribution fees are accrued daily and
payable monthly. No distribution or service fees are paid to PIMS as distributor
for 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%, .50 of 1%
and .75 of 1% of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .10 of 1%, .50 of 1% and .75 of
1% of the average daily net assets of the Class A, B and C shares, respectively,
for the period September 1, 1998 through December 31, 1998. Effective January 1,
1999 such expenses under the Plans were .25 of 1%, .50 of 1% and .75 of 1% of
the average daily net assets of the Class A, B and C shares, respectively.

PIMS has advised the Series that they have received approximately $33,000 and
$4,300 in front-end sales charges resulting from sales of Class A and C shares,
respectively during the year ended August 31, 1999. From these fees, PIMS paid
such sales charges to affiliated broker-dealers, which in turn paid commissions
to salespersons and incurred other distribution costs.

PIMS has advised the Series that for the year ended August 31, 1999, they
received approximately $22,300 and $5,000 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.

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

As of March 11, 1999, the Series, along with other affiliated registered
investment companies (the 'Funds'), entered into a syndicated credit agreement
('SCA') with an unaffiliated lender. The maximum commitment under the SCA is $1
billion. Interest on any borrowings will be at market rates. The Funds pay a
commitment fee at an annual rate of .065 of 1% on the unused portion of the
credit facility, which is accrued and paid quarterly on a pro rata basis by the
Funds. The SCA expires on March 9, 2000. Prior to March 11, 1999, the Funds had
a credit agreement with a maximum commitment of $200,000,000. The commitment fee
was .055 of 1% on the unused portion of the credit facility. The Fund did not
borrow any amounts pursuant to either agreement during the year ended August 31,
1999. The purpose of the agreements is to serve as an alternative source of
funding for capital share redemptions.

- ------------------------------------------------------------
Note 3. Other Transactions with Affiliates

Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended August 31, 1999, the
Series incurred fees of approximately $27,300 for the services of PMFS. As of
August 31, 1999, approximately $2,100 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.

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

Purchases and sales of portfolio securities of the Series, excluding short-term
investments, for the year ended August 31, 1999 were $14,772,969 and
$18,477,481, respectively.

The cost basis of investments for federal income tax purposes at August 31, 1999
was substantially the same as for financial reporting purposes and accordingly,
net unrealized appreciation of investments for federal income tax purposes was
$1,848,750 (gross unrealized appreciation--$4,189,201 gross unrealized
depreciation--$2,340,451).
- --------------------------------------------------------------------------------
10
<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Notes to Financial Statements FLORIDA SERIES
- --------------------------------------------------------------------------------
For federal income tax purposes, the Series utilized its remaining capital loss
carryforward of approximately $536,584.

The Series will elect, for United States federal income tax purposes, to treat
short-term capital losses of $44,975 and long-term capital losses of $54,800
incurred in the ten months ended August 31, 1999 as having been incurred in the
following fiscal year.

- ------------------------------------------------------------
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 3%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Prior to November 2, 1998, Class C
shares, which prior to August 1, 1994 were known as D shares, were sold with a
contingent deferred sales charge of 1% during the first year. Effective November
2, 1998, Class C shares are sold with a front-end sales charge of 1% during the
first 18 months. Class B shares will automatically convert to Class A shares on
a quarterly basis approximately seven years after purchase. Special exchange
privileges are 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. The Fund has authorized an unlimited number of shares of beneficial
interest of each class at $.01 par value per share.

Transactions in shares of beneficial interest for the year ended August 31, 1999
and August 31, 1998 were as follows:

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Financial Highlights FLORIDA SERIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class C Class Z
--------------------------------------------------- -----------------
Year Ended August
Year Ended August 31, 31,
--------------------------------------------------- -----------------
1999 1998 1997 1996 1995 1999 1998
------ ------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............ $10.74 $10.41 $10.11 $10.06 $ 9.91 $10.73 $10.41
------ ------ ------ ------ ------- ------ ------
Income from investment operations
Net investment income........................... .44 .45 .48(a) .50(a) .53(a) .52 .53
Net realized and unrealized gain (loss) on
investment transactions...................... (.56) .33 .31 .05 .15 (.56) .32
------ ------ ------ ------ ------- ------ ------
Total from investment operations............. (.12) .78 .79 .55 .68 (.04) .85
------ ------ ------ ------ ------- ------ ------
Less distributions
Dividends from net investment income............ (.44) (.45) (.48) (.50) (.53) (.52) (.53)
Distributions in excess of net investment
income....................................... --(e) -- (.01) -- -- --(e) --
Distributions from net realized gains........... --(e) -- -- -- -- --(e) --
------ ------ ------ ------ ------- ------ ------
Total distributions.......................... (.44) (.45) (.49) (.50) (.53) (.52) (.53)
------ ------ ------ ------ ------- ------ ------
Net asset value, end of period.................. $10.18 $10.74 $10.41 $10.11 $ 10.06 $10.17 $10.73
------ ------ ------ ------ ------- ------ ------
------ ------ ------ ------ ------- ------ ------
TOTAL RETURN(b):................................ (1.16)% 7.64% 7.95% 5.52% 7.12% (.42)% 8.34%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................. $6,833 $7,520 $7,336 $7,792 $ 9,028 $ 377 $ 383
Average net assets (000)........................ $7,420 $7,325 $7,575 $8,293 $10,265 $ 413 $ 373
Ratios to average net assets:
Expenses, including distribution fees........ 1.44% 1.45% 1.22%(a) 1.02%(a) .92%(a) .69% .70%
Expenses, excluding distribution fees........ .69% .70% .47%(a) .27%(a) .17%(a) .69% .70%
Net investment income........................ 4.17% 4.24% 4.67%(a) 4.91%(a) 5.35%(a) 4.93% 4.99%
<CAPTION>
December 6,
1996(d)
through
August 31,
1997
------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............ $10.36
-----
Income from investment operations
Net investment income........................... .41(a)
Net realized and unrealized gain (loss) on
investment transactions...................... .06
-----
Total from investment operations............. .47
-----
Less distributions
Dividends from net investment income............ (.41)
Distributions in excess of net investment
income....................................... (.01)
Distributions from net realized gains........... --
-----
Total distributions.......................... (.42)
-----
Net asset value, end of period.................. $10.41
-----
-----
TOTAL RETURN(b):................................ 4.57%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000)................. $ 94
Average net assets (000)........................ $ 36
Ratios to average net assets:
Expenses, including distribution fees........ .47%(a)(c)
Expenses, excluding distribution fees........ .47%(a)(c)
Net investment income........................ 5.48%(a)(c)
</TABLE>
- ---------------
(a) Net of expense subsidy and fee waiver.
(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) Annualized.
(d) Commencement of offering of Class Z shares.
(e) Less than $.005 per share.
- --------------------------------------------------------------------------------
See Notes to Financial Statements. 14

<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Report of Independent Accountants FLORIDA SERIES
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Prudential Municipal Series Fund, Florida Series

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential Municipal Series Fund,
Florida Series (the 'Fund', one of the portfolios constituting Prudential
Municipal Series Fund) at August 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the three years in
the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as 'financial statements') are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at August 31, 1999 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above. The accompanying financial highlights for each of the two years in the
period ended August 31, 1996 were audited by other independent accountants,
whose opinion dated October 14, 1996 was unqualified.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
October 15, 1999
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15
<PAGE>
PRUDENTIAL MUNICIPAL SERIES FUND
Federal Income Tax Information
(Unaudited) FLORIDA SERIES
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We are required by the Internal Revenue Code to advise you within 60 days of the
Series' fiscal year end (August 31, 1999) as to the federal tax status of
dividends paid by the Series during such fiscal year. Accordingly, we are
advising you that in the fiscal year ended August 31, 1999, dividends paid from
net investment income of $.50 per Class A share, $.47 per Class B share, $.44
per Class C share and $.52 per Class Z share were all federally tax-exempt
interest dividends. In addition, the Series paid to Class A, B, C and Z shares a
special taxable income distribution of $.001 per share which is taxable as
ordinary income and a long-term capital gain distribution of $.001, which is
taxable as such.

We wish to advise you that the corporate dividends received deduction for the
Series is zero. Only funds that invest in U.S. equity securities are entitled to
pass-through a corporate dividends received deduction.

In January 2000 you will be advised on IRS Form 1099 DIV or substitute 1099 DIV
as to federal tax status of the distributions received by you in calendar year
1999.
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16
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Getting the Most from Your Prudential Mutual Fund

How many times have you read these reports--or
other financial materials-- and stumbled across a
word that you don't understand?

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

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

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

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