PRUDENTIAL CALIFORNIA MUNICIPAL FUND, DEFS14A, 1994-04-26

PRUDENTIAL CALIFORNIA MUNICIPAL FUND
DEFS14A, 1994-04-26

Previous: SMITH BARNEY SHEARSON CALIFORNIA MUNICIPALS FUND INC, NSAR-B, 1994-04-26

Next: MERRILL LYNCH FEDERAL SECURITIES TRUST, NSAR-A, 1994-04-26

<PAGE>
PRUDENTIAL MUTUAL FUNDS
ONE SEAPORT PLAZA
NEW YORK, NY 10292

APRIL 18, 1994
RE: IMPORTANT PROXY MATERIAL -- IMMEDIATE ACTION REQUIRED
Dear Shareholder:

We are pleased to enclose a notice and proxy statement for a special meeting
of shareholders of the Prudential Mutual Funds to be held on June 23, 1994. You
are being asked to approve, among other things, a proposal to permit the
automatic conversion of Class B shares to Class A shares after a specified
number of years. Thereafter, converted shares will be subject to the lower
annual distribution-related fees applicable to Class A shares.

The proxy statement also includes proposals to revise the current
distribution and service plans for Class A and Class B shares and other
proposals recommended by the Fund's Manager and Subadviser.

Please read the enclosed materials carefully. The proxy statement discusses
each proposal in detail and the reasons why the Board of Directors/Trustees
recommend that you vote in favor of those proposals.

The Fund is using Shareholder Communications Corporation (SCC), a
professional proxy solicitation firm, to assist shareholders in the voting
process. If we have not yet received your proxy card as the date of the meeting
approaches, you may receive a telephone call from SCC reminding you to exercise
your right to vote.

Your vote is critical in allowing your Fund to hold the meeting as
scheduled. Please take a moment now to sign and return the proxy card in the
enclosed postage-paid envelope. If less than a majority of the eligible shares
are represented, the Fund, at shareholders' expense, will have to continue to
solicit votes until a quorum is obtained. Your prompt attention in this matter
benefits all shareholders. Thank you.

Sincerely,

Lawrence C. McQuade
PRESIDENT

<TABLE>
<S> <C> <C>
SPECIAL NOTE: If you hold shares in more than one
Prudential fund, you will receive a separate proxy
package for each Fund you hold. Please be sure to
sign and return each proxy card regardless of how
many you receive.
</TABLE>
<PAGE>
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the registrant /X/
Filed by a party other than the registrant / /

Check the appropriate box:

/ / Preliminary proxy statement

/X/ Definitive proxy statement

/ / Definitive additional materials

/ / Soliciting material pursuant to Section240.14a-11(c) or Section240.14a-12

PRUDENTIAL CALIFORNIA MUNICIPAL FUND

________________________________________________________________________________
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

PRUDENTIAL CALIFORNIA MUNICIPAL FUND

________________________________________________________________________________
(NAME OF PERSON(S) FILING PROXY STATEMENT)

Payment of filing fee (Check the appropriate box):

/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).

/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
<PAGE>

PRUDENTIAL CALIFORNIA MUNICIPAL FUND

ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292

------------------------

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

------------------------

To our Shareholders:

Notice is hereby given that a Special Meeting of Shareholders of Prudential
California Municipal Fund will be held at 3:00 P.M. on June 23, 1994 at 199
Water Street, New York, N.Y. 10292, for the following purposes:

1. To elect Trustees.

2. To approve an amendment of the Fund's Declaration of Trust to permit
a conversion feature for Class B Shares.

3. With respect to shareholders of the California Series and the
California Income Series, to approve an amended and restated Class A
Distribution and Service Plan.

4. With respect to shareholders of the California Series and the
California Income Series, to approve an amended and restated Class B
Distribution and Service Plan.

5. To approve amendments to the Fund's investment restrictions
regarding restricted and illiquid securities.

6. To approve the elimination of the Fund's investment restriction
limiting the Fund's ability to invest in the securities of any issuer in
which officers and Trustees of the Fund or officers and directors of its
investment adviser own more than a specified interest.

7. To ratify the selection by the Trustees of Deloitte & Touche as
independent accountants for the fiscal year ending August 31, 1994.

8. To transact such other business as may properly come before the
Meeting or any adjournment thereof.

Only shares of beneficial interest of the Fund at the close of business on
March 31, 1994 are entitled to notice of and to vote at this Meeting or any
adjournment thereof.

S. JANE ROSE
SECRETARY

Dated: April 18, 1994

WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. IN ORDER TO
AVOID THE ADDITIONAL EXPENSE TO THE FUND OF FURTHER SOLICITATION, WE ASK YOUR
COOPERATION IN MAILING IN YOUR PROXY PROMPTLY.
<PAGE>

PRUDENTIAL CALIFORNIA MUNICIPAL FUND

ONE SEAPORT PLAZA
NEW YORK, N.Y. 10292

------------------------

PROXY STATEMENT
------------------------

This statement is furnished by the Trustees of Prudential California
Municipal Fund (the Fund), in connection with their solicitation of proxies for
use at a Special Meeting of Shareholders to be held at 3:00 P.M. on June 23,
1994 at 199 Water Street, New York, New York 10292, the Fund's principal
executive office. The purpose of the Meeting and the matters to be acted upon
are set forth in the accompanying Notice of Special Meeting.

If the accompanying form of Proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. However, if no instructions are specified, shares
will be voted for the election of Directors and for each of the other proposals.
A Proxy may be revoked at any time prior to the time it is voted by written
notice to the Secretary of the Fund or by attendance at the Meeting. If
sufficient votes to approve one or more of the proposed items are not received,
the persons named as proxies may propose one or more adjournments of the Meeting
to permit further solicitation of proxies. Any such adjournment will require the
affirmative vote of a majority of those shares present at the Meeting or
represented by proxy. When voting on a proposed adjournment, the persons named
as proxies will vote for the proposed adjournment all shares that they are
entitled to vote with respect to each item, unless directed to disapprove the
item, in which case such shares will be voted against the proposed adjournment.

If a Proxy that is properly executed and returned accompanied by
instructions to withhold authority to vote represents a broker "non-vote" (that
is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to vote
shares on a particular matter with respect to which the broker or nominee does
not have discretionary power), the shares represented thereby will be considered
not to be present at the Meeting for purposes of determining the existence of a
quorum for the transaction of business and be deemed not cast with respect to
such proposal. If no instructions are received by the broker or nominee from the
shareholder with reference to routine matters, the shares represented thereby
may be considered for purposes of determining the existence of a quorum for

1
<PAGE>
the transaction of business and will be deemed cast with respect to such
proposal. Also, a properly executed and returned Proxy marked with an abstention
will be considered present at the Meeting for purposes of determining the
existence of a quorum for the transaction of business. However, abstentions and
broker "non-votes" do not constitute a vote "for" or "against" the matter, but
have the effect of a negative vote on matters which require approval by a
requisite percentage of the outstanding shares.

The close of business on March 31, 1994 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had 18,394,474 shares of beneficial interest
outstanding and entitled to vote in the California Series, consisting of 998,805
Class A shares and 17,395,669 Class B shares, 19,630,943 shares of beneficial
interest outstanding and entitled to vote in the California Income Series,
consisting of 18,826,105 Class A shares and 804,838 Class B Shares, and
332,870,399 shares of beneficial interest outstanding and entitled to vote in
the California Money Market Series. Each share will be entitled to one vote at
the Meeting. It is expected that the Notice of Special Meeting, Proxy Statement
and form of Proxy will first be mailed to shareholders on or about April 22,
1994.

Management does not know of any person or group who owned beneficially 5% or
more of the outstanding shares of either class of beneficial interest of any
Series as of March 31, 1994.

The expense of solicitation will be borne by the Fund and will include
reimbursement of brokerage firms and others for expenses in forwarding proxy
solicitation material to beneficial owners. The solicitation of proxies will be
largely by mail. The Board of Directors of the Fund has authorized management to
retain Shareholder Communications Corporation, a proxy solicitation firm, to
assist in the solicitation of proxies for this Meeting. This cost, including
specified expenses, is not expected to exceed $12,700 and will be borne by the
Fund. In addition, solicitation may include, without cost to the Fund,
telephonic, telegraphic or oral communication by regular employees of Prudential
Securities Incorporated (Prudential Securities) and its affiliates.

ELECTION OF TRUSTEES

(PROPOSAL NO. 1)

At the Meeting, nine Trustees will be elected to hold office for a term of
unlimited duration until their successors are elected and qualify. It is the
intention of the persons named in the accompanying form of Proxy to vote for the
election of Edward D. Beach, Eugene C. Dorsey, Delayne Dedrick Gold, Harry A.
Jacobs, Jr., Lawrence C. McQuade, Thomas T. Mooney, Thomas H. O'Brien,

2
<PAGE>

Richard A. Redeker and Nancy H. Teeters, all of whom are currently Trustees.
Each of the nominees has consented to be named in this Proxy Statement and to
serve as a Trustee if elected. Mmes. Gold and Teeters and Messrs. Jacobs and
O'Brien have served as Trustees since 1984; Messrs. Beach and Mooney have served
since 1986; Mr. Dorsey has served since 1987; Mr. McQuade has served since 1988;
and Mr. Redeker has served since 1993. All of the Trustees have previously been
elected by the shareholders except Mr. Redeker.

The Trustees have no reason to believe that any of the nominees named above
will become unavailable for election as a Trustee, but if that should occur
before the Meeting, proxies will be voted for such persons as the Trustees may
recommend.

The Fund's By-laws provide that the Fund will not be required to hold annual
meetings of shareholders if the election of Trustees is not required under the
Investment Company Act of 1940, as amended (the Investment Company Act). It is
the present intention of the Trustees of the Fund not to hold annual meetings of
shareholders unless such shareholder action is required.

INFORMATION REGARDING TRUSTEES

3
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Government Plus Fund, Inc., The Global Yield Fund, Inc., Prudential
Adjustable Rate Securities Fund, Inc., Prudential Equity Fund, Inc.,
Prudential Global Genesis Fund, Prudential Global Natural Resources
Fund, Prudential GNMA Fund, Prudential Government Plus Fund, Prudential
Multi-Sector Fund, Inc. and Prudential Special Money Market Fund;
Trustee of The BlackRock Government Income Trust, Command Government
Fund, Command Money Fund, Command Tax-Free Fund, Prudential California
Municipal Fund, Prudential Equity Income Fund, Prudential FlexiFund,
Prudential Municipal Bond Fund and Prudential Municipal Series Fund.
Eugene C. Dorsey (67), Retired President, Chief Executive Officer and Trustee -0-
Trustee of the Gannett Foundation (Now Freedom Forum); former Publisher
of four Gannett newspapers and Vice President of Gannett Company; past
Chairman, Independent Sector (national coalition of philanthropic
organizations); former Chairman of the American Council for the Arts;
Director of the Advisory Board of
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Chase Manhattan Bank of Rochester, Prudential Equity Fund, Inc.,
Prudential GNMA Fund, Prudential Institutional Liquidity Portfolio,
Inc. and The High Yield Income Fund, Inc.; Trustee of Prudential
California Municipal Fund, Prudential Municipal Series Fund and The
Target Portfolio Trust.
Delayne Dedrick Gold (55), Marketing and Management Consultant; Director Trustee -0-
of Prudential Adjustable Rate Securities Fund, Inc., Prudential Equity
Fund, Inc., Prudential Global Fund, Inc., Prudential GNMA Fund,
Prudential Government Plus Fund, Prudential Growth Opportunity Fund,
Prudential High Yield Fund, Prudential IncomeVertible-R- Fund, Inc.,
Prudential MoneyMart Assets, Prudential National Municipals Fund,
Prudential Pacific Growth Fund, Inc., Prudential Short-Term Global
Income Fund, Inc., Prudential Special Money Market Fund, Prudential
Structured Maturity Fund, Prudential Tax-Free Money Fund and Prudential
Utility Fund; Trustee of The BlackRock Government Income Trust, Command
Government Fund, Command Money Fund, Command Tax-Free Fund, Prudential
</TABLE>

5
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
California Municipal Fund, Prudential Government Securities Trust,
Prudential Municipal Series Fund and Prudential U.S. Government Fund.
*Harry A. Jacobs, Jr. (72), Senior Director (since January 1986) of Pru- Trustee -0-
dential Securities; formerly Interim Chairman and Chief Executive Of-
ficer of Prudential Mutual Fund Management, Inc. (PMF) (June-September
1993); Chairman of the Board of Prudential Securities (1982-1985) and
Chairman of the Board and Chief Executive Officer of Bache Group Inc.
(1977-1982); Director of the Center for National Policy, Prudential
Adjustable Rate Securities Fund, Inc., Prudential Equity Fund, Inc.,
Prudential Global Fund, Inc., Prudential GNMA Fund, Prudential
Government Plus Fund, Prudential Growth Opportunity Fund, Prudential
High Yield Fund, Prudential IncomeVertible-R- Fund, Inc., Prudential
MoneyMart Assets, Prudential National Municipals Fund, Prudential
Pacific Growth Fund, Inc., Prudential Short-Term Global Income Fund,
Inc., Prudential Special Money Market Fund, Prudential Structured
Maturity Fund, Prudential Tax-Free Money Fund, Prudential Utility Fund,
The First Australia Fund, Inc., The First Australia
</TABLE>

6
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Prime Income Fund, Inc., The Global Government Plus Fund, Inc. and The
Global Yield Fund, Inc.; Trustee of the Trudeau Institute, The
BlackRock Government Income Trust, Command Money Fund, Command
Government Fund, Command Tax-Free Fund, Prudential California Municipal
Fund, Prudential Municipal Series Fund and Prudential U.S. Government
Fund.
*Lawrence C. McQuade (66), Vice Chairman of PMF (since 1988); Managing President and -0-
Director, Investment Banking, Prudential Securities (1988-1991); Trustee
Director of Quixote Corporation (since February 1992) and BUNZL, PLC
(since June 1991); formerly Director of Crazy Eddie Inc. (1987-1990)
and Kaiser Tech, Ltd. and Kaiser Aluminum and Chemical Corp. (March
1987-November 1988); formerly Executive Vice President and Director of
W.R. Grace & Company; President and Director of Prudential Adjustable
Rate Securities Fund, Inc., Prudential Equity Fund, Inc., Prudential
Global Fund, Inc., Prudential Global Genesis Fund, Prudential Global
Natural Resources Fund, Prudential GNMA Fund, Prudential Government
Plus Fund, Prudential Growth Fund, Inc., Pru-
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
dential Growth Opportunity Fund, Prudential High Yield Fund, Prudential
IncomeVertible-R- Fund, Inc., Prudential Institutional Liquidity
Portfolio, Inc., Prudential Intermediate Global Income Fund, Inc.,
Prudential MoneyMart Assets, Prudential Multi-Sector Fund, Inc.,
Prudential National Municipals Fund, Prudential Pacific Growth Fund,
Inc., Prudential Short-Term Global Income Fund, Inc., Prudential
Special Money Market Fund, Prudential Structured Maturity Fund,
Prudential Tax-Free Money Fund, Prudential Utility Fund, The Global
Government Plus Fund, Inc., The Global Yield Fund, Inc. and The High
Yield Income Fund, Inc.; President and Trustee of The BlackRock
Government Income Trust, Command Government Fund, Command Money Fund,
Command Tax-Free Fund, Prudential California Municipal Fund, Prudential
Equity Income Fund, Prudential FlexiFund, Prudential Government
Securities Trust, Prudential Municipal Bond Fund, Prudential Municipal
Series Fund, Prudential U.S. Government Fund and The Target Portfolio
Trust.
Thomas T. Mooney (52), President of the Greater Rochester Metro Chamber Trustee -0-
of Commerce; former Rochester City Manager; Trustee of
</TABLE>

8
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Center for Governmental Re-
search, Inc.; Director of Blue Cross of Rochester, Monroe County Water
Authority, Rochester Jobs, Inc., Northeast Midwest Institute, Executive
Service Corps of Roches-
ter, Monroe County Industrial Development Corporation, Global Utility
Fund, Inc., Prudential Adjustable Rate Securities Fund, Inc.,
Prudential Equity Fund, Inc., Prudential Global Genesis Fund,
Prudential Global Natural Resources Fund, Prudential GNMA Fund,
Prudential Government Plus Fund, Prudential Multi-Sector Fund, Inc.,
First Financial Fund, Inc., The Global Government Plus Fund, Inc., The
Global Yield Fund, Inc. and The High Yield Plus Fund, Inc.; Trustee of
Prudential California Municipal Fund, Prudential Equity Income Fund,
Prudential FlexiFund, Prudential Municipal Bond Fund and Prudential
Municipal Series Fund.
Thomas H. O'Brien (69), President, O'Brien Associates (financial and Trustee 2,645
management consultants) (since April 1984); formerly President of
Jamaica Water Securities Corp. (holding company) (February 1989-August
1990); Director (September 1987-April 1991), Chairman and Chief
Executive Officer (September 1987-February 1989) of
</TABLE>

9
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Jamaica Water Supply Company; formerly Director of TransCanada
Pipelines U.S.A. Ltd. (1984-June 1989) and Winthrop University Hospital
(November 1976-June 1988); Director of Ridgewood Savings Bank, Yankee
Energy System, Inc., Prudential Adjustable Rate Securities Fund, Inc.,
Prudential Equity Fund, Inc., Prudential GNMA Fund and Prudential
Government Plus Fund; Secretary and Trustee of Hofstra University;
Trustee of Prudential California Municipal Fund and Prudential
Municipal Series Fund.
*Richard A. Redeker (50), President, Chief Executive Officer and Direc- Trustee -0-
tor (since October 1993), PMF; Executive Vice President, Director and
Member of the Operating Committee (since October 1993), Prudential
Securities; Director (since October 1993) of Prudential Securities
Group, Inc. (PSG); formerly Senior Executive Vice President and
Director of Kemper Financial Services, Inc. (September 1978-September
1993); Director of Global Utility Fund, Inc., Prudential Adjustable
Rate Securities Fund, Inc., Prudential Equity Fund, Inc., Prudential
Global Fund, Inc., Prudential Global Genesis Fund, Prudential Global
Natural Resources Fund, Prudential GNMA
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
SHARES OF
BENEFICIAL
INTEREST
NAME, AGE, BUSINESS EXPERIENCE DURING THE PAST FIVE YEARS AND POSITION WITH OWNED AT
DIRECTORSHIPS FUND MARCH 31, 1994
- ------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Fund, Prudential Government Plus Fund, Prudential Growth Fund, Inc.,
Prudential IncomeVertible-R- Fund, Inc., Prudential Institutional
Liquidity Portfolio, Inc., Prudential Intermediate Global Income Fund,
Inc., Prudential MoneyMart Assets, Prudential Multi-Sector Fund, Inc.,
Prudential Pacific Growth Fund, Inc., Prudential Short-Term Global
Income Fund, Inc., Prudential Special Money Market Fund, Prudential
Structured Maturity Fund, Prudential Utility Fund, The Global Yield
Fund, Inc., The Global Government Plus Fund, Inc., and The High Yield
Income Fund, Inc.; Trustee of The BlackRock Government Income Trust,
Command Government Fund, Command Money Fund, Command Tax-Free Fund,
Prudential California Municipal Fund, Prudential Equity Income Fund,
Prudential FlexiFund, Prudential Municipal Bond Fund, Prudential
Municipal Series Fund, Prudential U.S. Government Fund, and The Target
Portfolio Trust.
Nancy H. Teeters (63), Economist; formerly Vice President and Chief Trustee -0-
Economist (March 1986-June 1990) of International Business Machines
Corporation; Member of the Board of Governors of the Horace H. Rackham
School of Graduate Studies of the University of Michigan;
</TABLE>

11
<PAGE>

- ------------------------

* Indicates "interested" Trustee, as defined in the Investment Company Act, by
reason of his affiliation with PMF or Prudential Securities.

The Trustees and officers of the Fund as a group owned beneficially 2,645
shares at March 31, 1994, representing less than 1% of the outstanding shares of
the Fund.

The Fund pays annual compensation of $4,000, plus travel and incidental
expenses, to each of the six Trustees not affiliated with PMF or Prudential
Securities. The Trustees have the option to receive the Trustee's fee pursuant
to a deferred fee agreement with the Fund. Under the terms of the agreement, the
Fund accrues daily the amount of such Trustee's fee which accrues interest at a
rate equivalent to the prevailing rate applicable to 90-day U.S. Treasury bills
at the beginning of each calendar quarter or, pursuant to an exemptive order of
the Securities and Exchange Commission (SEC), at the rate of return of the Fund.
Payment of the interest so accrued is also deferred and accruals become payable
at the option of the Trustee. The Fund's obligation to make payments of deferred
Trustee's fees, together with interest thereon, is a general obligation of the
Fund. During the fiscal year ended August 31, 1993, the Fund paid Directors'
fees of $24,000 and travel and incidental expenses of approximately $1,400.

12
<PAGE>

There were four regular meetings and no special meetings of the Fund's
Trustees held during the fiscal year ended August 31, 1993. The Trustees
presently have an Audit Committee, the members of which are Mmes. Gold and
Teeters and Messrs. Beach, Dorsey, Mooney and O'Brien, the Fund's non-interested
Directors. The Audit Committee met twice during the fiscal year ended August 31,
1993. The Audit Committee makes recommendations to the Trustees with respect to
the engagement of independent accountants and reviews with the independent
accountants the plan and results of the audit engagement and matters having a
material effect upon the Fund's financial operations. The Trustees also have a
Nominating Committee, comprised of the Fund's non-interested Trustees, which
selects and proposes candidates for election to the Trustees. The Nominating
Committee met once during the fiscal year ended August 31, 1993. The Nominating
Committee does not consider nominees recommended by shareholders to fill
vacancies on the Board.

During the fiscal year ended August 31, 1993, Harry A. Jacobs attended fewer
than 75% of the aggregate of the total number of meetings of the Trustees and
any committees thereof of which such Trustee was a member.

The executive officers of the Fund, other than as shown above, are: S. Jane
Rose, Secretary, having held office since November 8, 1986; Robert F. Gunia,
Vice President, and Susan C. Cote, Treasurer and Principal Financial and
Accounting Officer, both having held office since October 15, 1987; and Deborah
A. Docs, Assistant Secretary, having held office since August 3, 1989. Mr. Gunia
is 47 years old and is currently Chief Administrative Officer (since July 1990),
Director (since January 1989), Executive Vice President, Treasurer and Chief
Financial Officer (since June 1987) of PMF and a Senior Vice President (since
March 1987) of Prudential Securities. He is also Vice President and Director
(since May 1989) of The Asia Pacific Fund, Inc. Ms.Cote is 39 years old and is a
Senior Vice President (since January 1989) of PMF and a Senior Vice President
(since January 1992) of Prudential Securities. Prior thereto, she was a Vice
President (January 1986-December 1991) of Prudential Securities. Ms. Rose is 48
years old and is a Senior Vice President (since January 1991) and Senior Counsel
(since June 1987) of PMF and a Senior Vice President and Senior Counsel of
Prudential Securities (since July 1992). Prior thereto, she was a First Vice
President (June 1987-December 1990) of PMF and a Vice President and Associate
General Counsel of Prudential Securities. Ms. Docs is 36 years old and is a Vice
President and Associate General Counsel (since January 1993) of PMF and a Vice
President and Associate General Counsel (since January 1993) of Prudential
Securities. She was formerly an Associate Vice President (January 1990 -
December 1992), an Assistant Vice

13
<PAGE>

President (January 1989 - December 1989) and Assistant General Counsel (November
1991 - December 1992) of PMF. The executive officers of the Fund are elected
annually by the Trustees.

REQUIRED VOTE

Trustees must be elected by a vote of a plurality of the shares present at
the meeting in person or by proxy and entitled to vote thereupon, provided that
a quorum is present.

MANAGEMENT OF THE FUND

THE MANAGER

Prudential Mutual Fund Management, Inc. (PMF or the Manager), One Seaport
Plaza, New York, New York 10292, serves as the Fund's Manager under a management
agreement dated as of December 30, 1988 (the Management Agreement).

The Management Agreement was last approved by the Trustees of the Fund,
including a majority of the Trustees who are not parties to such contract or
interested persons of such parties (as defined in the Investment Company Act) on
May 6, 1993 and was approved by shareholders of the California Series on
December 8, 1988, by shareholders of the California Money Market Series on
December 18, 1989 and by shareholders of the California Income Series on
December 30, 1991.

TERMS OF THE MANAGEMENT AGREEMENT

Pursuant to the Management Agreement, PMF, subject to the supervision of the
Fund's Trustees and in conformity with the stated policies of the Fund, is
responsible for managing or providing for the management of the investment of
the Fund's assets. In this regard, PMF provides supervision of the Fund's
investments, furnishes a continuous investment program for the Fund's portfolio
and places purchase and sale orders for portfolio securities of the Fund and
other investments. The Prudential Investment Company (PIC), a wholly-owned
subsidiary of The Prudential Insurance Company of America (Prudential), provides
such services pursuant to a subadvisory agreement (the Subadvisory Agreement)
with PMF.

PMF also administers the Fund's corporate affairs, subject to the
supervision of the Fund's Trustees, and, in connection therewith, furnishes the
Fund with office facilities, together with those ordinary clerical and
bookkeeping services which are not being furnished by the Fund's Transfer and
Dividend Disbursing Agent and Custodian.

14
<PAGE>
PMF has authorized any of its directors, officers and employees who have
been elected as Trustees or officers of the Fund to serve in the capacities in
which they have been elected. All services furnished by PMF under the Management
Agreement may be furnished by any such directors, officers or employees of PMF.
In connection with its administration of the corporate affairs of the Fund, PMF
bears the following expenses:

(a) the salaries and expenses of all personnel of the Fund and PMF,
except the fees and expenses of Trustees not affiliated with PMF or the
Fund's investment adviser;

(b) all expenses incurred by PMF or by the Fund in connection with
administering the ordinary course of the Fund's business, other than those
assumed by the Fund, as described below; and

The Fund pays PMF for the services performed and the facilities furnished by
it a fee at an annual rate of .50 of 1% of the average daily net assets of each
Series. This fee is computed daily and paid monthly. For the fiscal year ended
August 31, 1993, PMF received a management fee of $993,612 from the California
Series and $1,597,318 from the California Money Market Series. For the fiscal
year ended August 31, 1993, PMF voluntarily waived its management fee of
$829,475 from the California Income Series.

The Management Agreement provides that, if the expenses of the Fund
(including the fees of PMF, but excluding interest, taxes, brokerage
commissions, distribution fees and litigation and indemnification expenses and
other extraordinary expenses not incurred in the ordinary course of the Fund's
business) for any fiscal year exceed the lowest applicable annual expense
limitation established and enforced pursuant to the statutes or regulations of
any jurisdiction in which shares of the Fund are then qualified for offer and
sale, the compensation due PMF will be reduced by the amount of such excess, or,
if such reduction exceeds the compensation payable to PMF, PMF will pay the Fund
the amount of such reduction which exceeds the amount of such compensation. Any
such reductions or payments are subject to readjustment during the year. No
reductions or payments were required during the fiscal year ended August 31,
1993. The Fund believes the most restrictive of such annual limitations is
2 1/2% of the Fund's average daily net assets up to $30 million, 2% of the next
$70 million of such assets and 1 1/2% of such assets in excess of $100 million.

Except as indicated above, the Fund is responsible under the Management
Agreement for the payment of its expenses, including (a) the fees payable to

15
<PAGE>

PMF, (b) the fees and expenses of Trustees who are not affiliated with PMF or
the investment adviser, (c) the fees and certain expenses of the Fund's
Custodian and Transfer and Dividend Disbursing Agent, including the cost of
providing records of the Fund and of pricing Fund shares, (d) the charges and
expenses of the Fund's legal counsel and independent accountants, (e) brokerage
commissions and any issue or transfer taxes chargeable to the Fund in connection
with its securities transactions, (f) all taxes and corporate fees payable by
the Fund to governmental agencies, (g) the fees of any trade association of
which the Fund may be a member, (h) the cost of any share certificates
representing shares of the Fund, (i) the cost of fidelity and liability
insurance, (j) the fees and expenses involved in registering and maintaining
registration of the Fund and of its shares with the Securities and Exchange
Commission and registering the Fund and qualifying its shares under state
securities laws, including the preparation and printing of the Fund's
registration statements and prospectuses for such purposes, (k) allocable
communications expenses with respect to investor services and all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
prospectuses and reports to shareholders, (l) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course of
the Fund's business and (m) distribution fees.

The Management Agreement provides that PMF will not be liable to the Fund
for any error of judgment by PMF or for any loss suffered by the Fund in
connection with the matters to which the Management Agreement relates except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or willful misfeasance, bad faith, gross negligence or
reckless disregard of duty. The Management Agreement also provides that it will
terminate automatically if assigned and that it may be terminated without
penalty by the Trustees of the Fund, by vote of a majority of the Fund's
outstanding voting securities (as defined in the Investment Company Act) or by
the Manager, upon not more than 60 days' nor less than 30 days' written notice.

INFORMATION ABOUT PMF

PMF, a subsidiary of Prudential Securities and an indirect, wholly-owned
subsidiary of Prudential, was organized in May 1987 under the laws of the State
of Delaware. Prudential's address is Prudential Plaza, Newark, New Jersey 07102.
PMF acts as manager for the following investment companies:

Open-End Management Investment Companies: Command Government Fund,
Command Money Fund, Command Tax-Free Fund, Prudential Adjustable Rate
Securities Fund, Inc., Prudential California Municipal Fund, Prudential
Equity Fund, Inc., Prudential Equity Income Fund, Prudential FlexiFund,
Prudential Global Fund, Inc., Prudential-Bache Global

16
<PAGE>

Genesis Fund, Inc. (d/b/a Prudential Global Genesis Fund), Prudential-Bache
Global Natural Resources Fund, Inc. (d/b/a Prudential Global Natural
Resources Fund), Prudential-Bache GNMA Fund, Inc. (d/b/a Prudential GNMA
Fund), Prudential-Bache Government Plus Fund, Inc. (d/b/a Prudential
Government Plus Fund), Prudential Government Securities Trust, Prudential
Growth Fund, Inc., Prudential-Bache Growth Opportunity Fund, Inc. (d/b/a
Prudential Growth Opportunity Fund), Prudential-Bache High Yield Fund, Inc.
(d/b/a Prudential High Yield Fund), Prudential IncomeVertible-R- Fund, Inc.,
Prudential-Bache MoneyMart Assets Fund, Inc. (d/b/a Prudential MoneyMart
Assets), Prudential Multi-Sector Fund, Inc., Prudential Municipal Bond Fund,
Prudential Municipal Series Fund, Prudential-Bache National Municipals Fund,
Inc. (d/b/a Prudential National Municipals Fund), Prudential Pacific Growth
Fund, Inc., Prudential Short-Term Global Income Fund, Prudential-Bache
Special Money Market Fund, Inc. (d/b/a Prudential Special Money Market
Fund), Prudential-Bache Structured Maturity Fund, Inc. (d/b/a Prudential
Structured Maturity Fund), Prudential-Bache Tax-Free Money Fund, Inc. (d/b/a
Prudential Tax-Free Money Fund), Prudential U.S. Government Fund,
Prudential-Bache Utility Fund, Inc. (d/b/a Prudential Utility Fund),
Prudential Institutional Liquidity Portfolio, Inc., Prudential Intermediate
Global Income Fund, Inc., Global Utility Fund, Inc., Nicholas-Applegate
Fund, Inc. and The BlackRock Government Income Trust.

Closed-End Management Investment Companies: The Global Government Plus
Fund, Inc., The Global Yield Fund, Inc. and The High Yield Income Fund, Inc.

The consolidated statement of financial condition of PMF and subsidiaries as
of December 31, 1993 is set forth as Exhibit A to this Proxy Statement.

Certain information regarding the directors and principal executive officers
of PMF is set forth below. Except as otherwise indicated, the address of each
person is One Seaport Plaza, New York, New York 10292.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ------------------------ -------------------- --------------------------------
<S> <C> <C>
Brendan D. Boyle ....... Executive Vice Executive Vice President
President and and Director of
Director of Marketing, PMF
Marketing
John D. Brookmeyer, Jr. Director Senior Vice President,
Two Gateway Center Prudential; Senior Vice
Newark, NJ 07102 President, PIC
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ------------------------ -------------------- --------------------------------
<S> <C> <C>
Susan C. Cote .......... Senior Vice Senior Vice President, PMF;
President Senior Vice President,
Prudential Securities
Fred A. Fiandaca ....... Executive Vice Executive Vice President, Chief
Raritan Plaza One President, Chief Operating Officer and
Edison, NJ 08847 Operating Officer Director, PMF; Chairman, Chief
and Director Operating Officer and
Director, Prudential Mutual
Fund Services, Inc.
Stephen P. Fisher ...... Senior Vice Senior Vice President, PMF;
President Senior Vice President,
Prudential Securities
Frank W. Giordano ...... Executive Vice Executive Vice President,
President, General General Counsel and Secretary,
Counsel and PMF; Senior Vice President,
Secretary Prudential Securities
Robert F. Gunia ........ Executive Vice Executive Vice President, Chief
President, Chief Financial and Administrative
Financial and Officer, Treasurer and
Administrative Director, PMF; Senior Vice
Officer, Treasurer President, Prudential
and Director Securities
Eugene B. Heimberg ..... Director Senior Vice President,
Prudential Plaza Prudential; President,
Newark, NJ 07102 Director and Chief Investment
Officer, PIC
Lawrence C. McQuade . Vice Chairman Vice Chairman, PMF
Leland B. Paton ........ Director Executive Vice President and
Director, Prudential
Securities; Director, PSG
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PMF PRINCIPAL OCCUPATIONS
- ------------------------ -------------------- --------------------------------
<S> <C> <C>
Richard A. Redeker ..... President, Chief President, Chief Executive
Executive Officer Officer and Director, PMF;
and Director Executive Vice President,
Director and Member of the
Operating Committee,
Prudential Securities;
Director, PSG
S. Jane Rose ........... Senior Vice Senior Vice President, Senior
President, Senior Counsel and Assistant
Counsel and Secretary, PMF; Senior Vice
Assistant President and Senior Counsel,
Secretary Prudential Securities
Donald G. Southwell .... Director Senior Vice President,
213 Washington Street Prudential; Director, PSG
Newark, NJ 07102
</TABLE>

THE SUBADVISER

Investment advisory services are provided to the Fund by PMF through its
affiliate, The Prudential Investment Corporation (PIC or the Subadviser),
Prudential Plaza, Newark, New Jersey 07102, under a Subadvisory Agreement. The
Subadvisory Agreement was approved by shareholders of the California Series on
December 8, 1988, by shareholders of the California Money Market Series on
December 18, 1989 and by shareholders of the California Income Series on
December 30, 1991. The Subadvisory Agreement was last approved by the Trustees
of the Fund, including a majority of the Trustees who are not parties to such
contract or interested persons of such parties (as defined in the Investment
Company Act), on May 6, 1993.

TERMS OF THE SUBADVISORY AGREEMENT

Pursuant to the Subadvisory Agreement, PIC, subject to the supervision of
PMF and the Trustees and in conformity with the stated policies of the Fund,
manages the investment operations of the Fund and the composition of the Fund's
portfolio, including the purchase, retention and disposition of securities and
other investments. PIC is reimbursed by PMF for reasonable costs and expenses
incurred by it in furnishing such services. The fees paid by the Fund to PMF
under the Management Agreement with PMF are not affected by this arrangement.
PIC keeps certain books and records required to be maintained

19
<PAGE>
pursuant to the Investment Company Act. The investment advisory services of PIC
to the Fund are not exclusive under the terms of the Subadvisory Agreement and
PIC is free to, and does, render investment advisory services to others.

PIC has authorized any of its directors, officers and employees who may be
elected as Trustees or officers of the Fund to serve in the capacities in which
they have been elected. Services furnished by PIC under the Subadvisory
Agreement may be furnished by any such directors, officers or employees of PIC.
The Subadvisory Agreement provides that PIC shall not be liable for any error of
judgment or for any loss suffered by the Fund or PMF in connection with the
matters to which the Subadvisory Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on PIC's part in the
performance of its duties or from its reckless disregard of duty. The
Subadvisory Agreement provides that it shall terminate automatically if assigned
or upon termination of the Management Agreement and that it may be terminated
without penalty by either party upon not more than 60 days' nor less than 30
days' written notice.

INFORMATION ABOUT PIC

PIC was organized in June 1984 under the laws of the State of New Jersey.
The business and other connections of PIC's directors and executive officers are
as set forth below. Except as otherwise indicated, the address of each person is
Prudential Plaza, Newark, New Jersey 07102.

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ---------------------------- ---------------------- --------------------------------
<S> <C> <C>
Martin A. Berkowitz ........ Senior Vice President Senior Vice President and Chief
and Chief Financial Financial and Compliance
and Compliance Officer, PIC; Vice President,
Officer Prudential
William M. Bethke .......... Senior Vice President Senior Vice President,
Two Gateway Center Prudential; Senior Vice
Newark, NJ 07102 President, PIC
John D. Brookmeyer, Jr. Senior Vice President Senior Vice President,
Two Gateway Center Prudential; Senior Vice
Newark, NJ 07102 President, PIC
Eugene B. Heimberg ......... President, Senior Vice President,
Director and Chief Prudential; President,
Investment Officer Director and Chief Investment
Officer, PIC
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
NAME AND ADDRESS POSITION WITH PIC PRINCIPAL OCCUPATIONS
- ---------------------------- ---------------------- --------------------------------
<S> <C> <C>
Garnett L. Keith, Jr. ...... Director Vice Chairman and Director,
Prudential; Director, PIC
Harry E. Knapp, Jr. ........ Vice President Vice President, Prudential; Vice
Four Gateway Center President, PIC
Newark, NJ 07102
William P. Link ............ Senior Vice President Executive Vice President,
Four Gateway Center Prudential; Senior Vice
Newark, NJ 07102 President, PIC
Robert E. Riley ............ Executive Vice Executive Vice President,
800 Boylston Avenue President Prudential; Executive Vice
Boston, MA 02199 President, PIC; Director, PSG
James W. Stevens ........... Executive Vice Executive Vice President,
Four Gateway Center President Prudential; Executive Vice
Newark, NJ 07102 President, PIC; Director, PSG
Robert C. Winters .......... Director Chairman of the Board and Chief
Executive Officer, Prudential;
Director, PIC; Chairman of the
Board, PSG
Claude J. Zinngrabe, Jr. Executive Vice Vice President, Prudential;
President Executive Vice President, PIC
</TABLE>

THE DISTRIBUTORS

Prudential Mutual Fund Distributors, Inc. (PMFD), One Seaport Plaza, New
York, New York 10292, acts as the distributor of the Class A shares of the
California Income Series and California Series and the shares of the California
Money Market Series. Prudential Securities, One Seaport Plaza, New York, New
York 10292, acts as the distributor of the Class B shares of the California
Income Series and the California Series.

Under separate Distribution and Service Plans (the Class A Plan and the
Class B Plan, collectively, the Plans) adopted by the California Income Series
and the California Series under Rule 12b-1 under the Investment Company Act

21
<PAGE>
and separate distribution agreements (the Distribution Agreements), PMFD and
Prudential Securities (collectively, the Distributor) incur the expenses of
distributing the Class A and Class B shares, respectively, of the California
Income Series and the California Series.

The Plans were last approved by the Trustees, including a majority of the
Trustees who are not interested persons of the Fund and who have no direct or
indirect financial interest in the operation of the Class A or Class B Plan or
in any agreement related to either Plan (the Rule 12b-1 Trustees), on May 6,
1993, except for the Class B Plan for the California Income Series, which was
approved by the Trustees on November 11, 1993. The Class A Plan was approved by
the Class A shareholders of the California Series on December 18, 1989 and by
the Class A shareholders of the California Income Series on December 30, 1991.
The Class B Plan was approved by shareholders of the California Series on
December 18, 1989 and by the sole shareholder of Class B shares of the
California Income Series on December 6, 1993 (the Class B shareholders).

The Plans are proposed to be amended as set forth in Proposals No. 3 and 4
below.

CLASS A PLAN. Under the Class A Plan, the California Series and the
California Income Series reimburse PMFD for its distribution-related expenses
with respect to Class A shares at an annual rate of up to .30 of 1% of the
average daily net assets of the Class A Shares. The Class A Plan provides that
(i) up to .25 of 1% of the average daily net assets of the Class A shares may be
used for personal service and/or the maintenance of shareholder accounts
(service fee) and (ii) total distribution fees (including the service fee of .25
of 1%) may not exceed .30 of 1% of the average daily net assets of the Class A
Shares. PMFD has advised the Fund that distribution-related expenses of the Fund
will not exceed .10 of 1% of the average daily net assets of the Class A shares
for the fiscal year ending August 31, 1994.

For the fiscal year ended August 31, 1993, PMFD received payments of $7,728
and $165,895 under the Class A Plan, representing .10 of 1% of the average daily
net assets of the Class A shares, as reimbursement of expenses related to the
distribution of Class A shares for the California Series and the California
Income Series, respectively. These amounts were expended on account servicing
fees to Prudential Securities and Pruco Securities Corporation, an affiliated
broker-dealer (Prusec), for payments to financial advisers and other
salespersons who sell Class A shares.

22
<PAGE>

In addition, for the fiscal year ended August 31, 1993, PMFD also received
approximately $180,000 and $2,860,300 in initial sales charges with respect to
the sale of shares of the California Series and the California Income Series,
respectively.

CLASS B PLAN. Under the Class B Plan, the California Series and the
California Income Series reimburse Prudential Securities for its distribution-
related expenses with respect to Class B shares at an annual rate of up to .50
of 1% of the average daily net assets of the Class B Shares. The Class B Plan
also provides for the payment of a service fee to Prudential Securities at a
rate not to exceed .25 of 1% of the average daily net assets of Class B Shares.
The aggregate distribution fee for Class B Shares (asset-based sales charge plus
service fee) will not exceed .50% of average daily net assets under the Class B
Plan.

For the fiscal year ended August 31, 1993, Prudential Securities received
$954,972 from the California Series under the Fund's Class B Plan. It is
estimated that Prudential Securities spent approximately $2,054,100 on behalf of
the California Series during such period. It is estimated that of this amount
approximately .6% ($11,400) was spent on printing and mailing of prospectuses to
other than current shareholders; 8.6% ($177,660) in interest and/or carrying
charges; 22.8% ($468,780) on compensation to Prusec for commissions to its
account executives and other expenses, including an allocation on account of
overhead and other branch office distribution-related expenses, incurred by it
for distribution of California Series shares; and 68.0% ($1,396,260) on the
aggregate of (i) payments of commissions to account executives (57.8% or
$1,187,120) and (ii) an allocation on account of overhead and other branch
office distribution-related expenses (10.2% or $209,140). The term "overhead and
other branch office distribution-related expenses" represents (a) the expenses
of operating Prudential Securities' and Prusec's branch offices in connection
with the sale of California Series shares, including lease costs, the salaries
and employee benefits of operations and sales support personnel, utility costs,
communications costs and the costs of stationery and supplies, (b) the costs of
client sales seminars, (c) expenses of mutual fund sales coordinators to promote
the sale of California Series shares, and (d) other incidental expenses relating
to branch promotion of California Series shares. No Class B shares of the
California Income Series were outstanding during the fiscal year ended August
31, 1993.

The Distributor also receives the proceeds of contingent deferred sales
charges paid by holders of Class B shares upon certain redemptions of Class B
shares. See "Shareholder Guide -- How to Sell Your Shares -- Contingent Deferred
Sales Charge -- Class B Shares" in the Prospectuses of the California

23
<PAGE>

Income Series and the California Series. The amount of distribution expenses
reimbursable by the Class B shares of the California Income Series and the
California Series is reduced by the amount of such contingent deferred sales
charges. For the fiscal year ended August 31, 1993, the Distributor received
approximately $341,800 in contingent deferred sales charges for the California
Series.

The Class A and Class B Plans continue in effect from year to year, provided
that each such continuance is approved at least annually by a vote of the
Trustees, including a majority vote of the Rule 12b-1 Trustees, cast in person
at a meeting called for the purpose of voting on such continuance. The Class A
and Class B Plans may each be terminated at any time, without penalty, by the
vote of a majority of the Rule 12b-1 Trustees or by the vote of the holders of a
majority of the outstanding shares of the applicable class on not more than 30
days' written notice to any other party to the Plans. Neither Plan may be
amended to increase materially the amounts to be spent for the services
described therein without approval by the shareholders of the applicable class,
and all material amendments are required to be approved by the Trustees in the
manner described above. Each Plan will automatically terminate in the event of
its assignment. The Fund will not be contractually obligated to pay expenses
incurred under either the Class A or Class B Plans if they are terminated or not
continued. In the event of termination or noncontinuation of the Class B Plan,
the Trustees may consider the appropriateness of having the Fund reimburse
Prudential Securities for the outstanding carry forward amounts plus interest
thereon.

Pursuant to each Plan, the Trustees will review at least quarterly a written
report of the distribution expenses incurred on behalf of the Class A and Class
B shares of the California Income Series and the California Series by PMFD and
Prudential Securities, respectively. The report includes an itemization of the
distribution expenses and the purposes of such expenditures. In addition, as
long as the Plans remain in effect, the selection and nomination of Rule 12b-1
Trustees shall be committed to the Rule 12b-1 Trustees.

Pursuant to each Distribution Agreement, the Fund has agreed to indemnify
PMFD and Prudential Securities to the extent permitted by applicable law against
certain liabilities under the Securities Act of 1933, as amended. The
Distribution Agreements were last approved by the Trustees, including a majority
of the Rule 12b-1 Trustees, on May 6, 1993 with respect to Class A shares and
Class B shares of the California Series and Class A shares of the California
Income Series and on November 11, 1993, with respect to Class B shares of the
California Income Series.

24
<PAGE>

CALIFORNIA MONEY MARKET SERIES' PLAN OF DISTRIBUTION. The California Money
Market Series' Plan of Distribution (the CMMS Plan) was last approved by the
Trustees of the Fund, including a majority of the Trustees who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the CMMS Plan or in any agreements related to the
CMMS Plan, at a meeting called for the purpose of voting on the CMMS Plan, on
May 6, 1993, and by shareholders of the California Money Market Series on
December 18, 1989. For the fiscal year ended August 31, 1993, PMFD incurred
distribution expenses of $399,329 with respect to the California Money Market
Series, all of which were recovered by PMFD through the distribution fee paid by
the California Money Market Series.

PORTFOLIO TRANSACTIONS

The Manager is responsible for decisions to buy and sell securities and
futures and options thereon for the Fund, the selection of brokers, dealers and
futures commission merchants to effect the transactions and the negotiation of
brokerage commissions, if any. For purposes of this section, the term "Manager"
includes the Subadviser. Purchases and sales of securities on a securities
exchange, which are not expected to be a significant portion of the portfolio
securities of the Fund, are effected through brokers who charge a commission for
their services. Broker-dealers may also receive commissions in connection with
options and futures transactions, including the purchase and sale of underlying
securities upon the exercise of options. Orders may be directed to any broker
including, to the extent and in the manner permitted by applicable law,
Prudential Securities and its affiliates.

In the over-the-counter market, securities are generally traded on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission, although the price of the security usually includes a profit to the
dealer. In underwritten offerings, securities are purchased at a fixed price
which includes an amount of compensation to the underwriter, generally referred
to as the underwriter's concession or discount. On occasion, certain money
market instruments may be purchased directly from an issuer, in which case no
commissions or discounts are paid. The Fund will not deal with Prudential
Securities (or any affiliate) in any transaction in which Prudential Securities
acts as principal. Thus, it will not deal in the over-the-counter market with
Prudential Securities (or any affiliate) acting as market maker, and it will not
execute a negotiated trade with Prudential Securities if execution involves
Prudential Securities (or any affiliate) acting as principal with respect to any
part of the Fund's order.

Portfolio securities may not be purchased from any underwriting or selling
group of which Prudential Securities (or any affiliate), during the existence of

25
<PAGE>
the group, is a member, except in accordance with rules of the SEC. This
limitation, in the opinion of the Fund, will not significantly affect the
Series' ability to pursue their investment objectives. However, in the future in
other circumstances, the Series may be at a disadvantage because of this
limitation in comparison to other funds with similar objectives but not subject
to such limitations.

In placing orders for portfolio securities for the Fund, the Manager is
required to give primary consideration to obtaining the most favorable price and
efficient execution. The Manager seeks to effect each transaction at a price and
commission, if any, that provides the most favorable total cost or proceeds
reasonably attainable in the circumstances. Within the framework of this policy,
the Manager will consider the research and investment services provided by
brokers, dealers or futures commission merchants who effect or are parties to
portfolio transactions of the Fund, the Manager or the Manager's other clients.
Such research and investment services are those which brokerage houses
customarily provide to institutional investors and include statistical and
economic data and research reports on particular companies and industries. Such
services are used by the Manager in connection with all of its investment
activities, and some of such services obtained in connection with the execution
of transactions for the Fund may be used in managing other investment accounts.
Conversely, brokers, dealers or futures commission merchants furnishing such
services may be selected for the execution of transactions of such other
accounts, whose aggregate assets are far larger than the Fund, and the services
furnished by such brokers, dealers or futures commission merchants may be used
by the Manager in providing investment management for the Fund. Commission rates
are established pursuant to negotiations with the broker, dealer or futures
commission merchant based on the quality and quantity of execution services
provided by the broker in the light of generally prevailing rates. The Manager's
policy is to pay higher commissions to brokers, dealers or futures commission
merchants, other than Prudential Securities, for particular transactions than
might be charged if a different broker had been selected, on occasions when, in
the Manager's opinion, this policy furthers the objective of obtaining best
price and execution. The Manager is authorized to pay higher commissions on
brokerage transactions for the Fund to brokers other than Prudential Securities
in order to secure the research and investment services described above, subject
to review by the Fund's Trustees from time to time as to the extent and
continuation of this practice. The allocation of orders among brokers and the
commission rates paid are reviewed periodically by the Fund's Trustees.

Subject to the above considerations, Prudential Securities may act as a
broker or futures commission merchant for the Fund. In order for Prudential

26
<PAGE>

Securities to effect any portfolio transactions for the Fund, the commissions,
fees or other remuneration received by Prudential Securities must be reasonable
and fair compared to the commissions, fees or other remuneration paid to other
brokers or futures commission merchants in connection with comparable
transactions involving similar securities or futures contracts being purchased
or sold on a securities exchange or board of trade during a comparable period of
time. This standard would allow Prudential Securities to receive no more than
the remuneration which would be expected to be received by an unaffiliated
broker or futures commission merchant in a commensurate arms-length transaction.
Furthermore, the Trustees of the Fund, including a majority of the Trustees who
are not "interested" Trustees, have adopted procedures which are reasonably
designed to provide that any commissions, fees or other remuneration paid to
Prudential Securities are consistent with the foregoing standard. In accordance
with Section 11(a) of the Securities Exchange Act of 1934, Prudential Securities
may not retain compensation for effecting transactions on a national securities
exchange for the Fund unless the Fund has expressly authorized the retention of
such compensation. Prudential Securities must furnish to the Fund at least
annually a statement setting forth the total amount of all compensation retained
by Prudential Securities from transactions effected for the Fund during the
applicable period. Brokerage and futures transactions with Prudential Securities
are also subject to such fiduciary standards as may be imposed upon Prudential
Securities by applicable law.

During the fiscal years ended August 31, 1991, 1992 and 1993, the California
Series paid brokerage commissions of $15,593, $6,983, $10,430, respectively, on
certain futures transactions. The California Series paid no brokerage
commissions to Prudential Securities during those periods. During the fiscal
years ended August 31, 1991, 1992 and 1993, the California Money Market Series
paid no brokerage commissions. During the period December 3, 1990 (commencement
of investment operations) through August 31, 1991 and for the fiscal years ended
August 31, 1992 and 1993, the California Income Series paid brokerage
commissions of $2,470, $4,760 and $5,828 respectively. None of the brokerage
commissions paid by the California Income Series were paid to Prudential
Securities.

27
<PAGE>

APPROVAL OF A PROPOSAL TO AMEND
THE FUND'S DECLARATION OF TRUST
TO PERMIT THE IMPLEMENTATION OF A CONVERSION FEATURE
(PROPOSAL NO. 2)

The Trustees are recommending that shareholders approve an amendment to the
Fund's Declaration of Trust to permit the implementation of a conversion feature
for Class B shares. The conversion feature is authorized pursuant to an
exemptive order of the SEC (the SEC Order) and would provide for the automatic
conversion of Class B shares to Class A shares at relative net asset value
approximately seven years after purchase. Class A shares are subject to a lower
annual distribution and service fee than Class B shares and conversions would
occur without the imposition of any additional sales charge. A description of
the conversion feature is set forth in greater detail below. Amendment of the
Declaration of Trust requires approval by a majority of the Fund's outstanding
shares.

THE CLASSES OF SHARES

The California Series and the California Income Series currently offer two
classes of shares, designated as Class A and Class B shares pursuant to the
Alternative Purchase Plan, in reliance upon the SEC Order. Class A shares of
both Series are currently offered with an initial sales charge of up to 4.5% of
the offering price and are subject to an annual distribution and service fee of
up to .30 of 1% of the average daily net assets of the Class A shares pursuant
to a Rule 12b-1 plan. This fee is currently charged at a rate of .10 of 1% of
the average daily net assets of the Class A shares and PMFD has agreed to so
limit its fee under the Class A Plan for the fiscal year ending August 31, 1994.
Class B shares are currently offered by the California Series and the California
Income Series without an initial sales charge but are subject to a contingent
deferred sales charge or CDSC (declining from 5% to zero of the lesser of the
amount invested or the redemption proceeds) on certain redemptions generally
made within six years of purchase and to an annual distribution and service fee
pursuant to a Rule 12b-1 plan of up to .50 of 1% of the average daily net assets
of the Class B shares.

In accordance with the SEC Order, the Trustees may, among other things,
authorize the creation of additional classes of shares from time to time. The
Trustees have approved the offering of a new class of shares, to be designated
Class C shares, which will be offered simultaneously with the offering of Class
B shares with the proposed conversion feature. It is anticipated that Class C
shares will be offered without an initial sales charge but will be subject to an

28
<PAGE>

annual distribution and service fee not to exceed 1% of the average daily net
assets of the Class C shares and, subject to approval by the Trustees, a 1% CDSC
on certain redemptions made within one year of purchase. If the proposed
conversion feature for Class B shares is not approved, Class C shares will not
be offered.

THE PROPOSED CONVERSION FEATURE

On May 6, 1993, the Fund's Trustees, including a majority of the Trustees
who are not "interested persons" of the Fund (as defined in the Investment
Company Act), approved an amendment to the Fund's Declaration of Trust to permit
the implementation of a conversion feature for the Fund's Class B shares. A copy
of the proposed amendment to the Fund's Declaration of Trust is attached hereto
as Exhibit B.

If this proposal is approved, it is currently contemplated that conversions
of Class B shares to Class A shares will occur on a quarterly basis
approximately seven years from the purchase. The first conversion is currently
anticipated to occur in or about January 1995. Conversions will be effected
automatically at relative net asset value without the imposition of any
additional sales charge. Class B shareholders will benefit from the conversion
feature because they will thereafter be subject to the lower annual distribution
and service fee applicable to Class A shares.

Since the Fund tracks amounts paid rather than the number of shares bought
on each purchase of Class B shares, it is currently anticipated that the number
of Class B shares eligible to convert to Class A shares (excluding shares
acquired through the automatic reinvestment of dividends and other
distributions) (the Eligible Shares) will be determined on each conversion date
in accordance with the following formula: (i) the ratio of (a) the amounts paid
for Class B shares purchased at least seven years prior to the conversion date
to (b) the total amount paid for all Class B shares purchased and then held in a
shareholder's account multiplied by (ii) the total number of Class B shares then
held in such shareholder's account. Each time any Eligible Shares in a
shareholder's account convert to Class A shares, all shares or amounts
representing Class B shares then in such shareholder's account that were
acquired through the automatic reinvestment of dividends and other distributions
will convert to Class A shares.

For purposes of determining the number of Eligible Shares, if the Class B
shares in a shareholder's account on any conversion date are the result of
multiple purchases at different net asset values per share, the number of
Eligible Shares calculated as described above will generally be either more or
less

29
<PAGE>

than the number of shares actually purchased approximately seven years before
such conversion date. For example, if 100 shares were initially purchased at $10
per share (for a total of $1,000) and a second purchase of 100 shares was
subsequently made at $11 per share (for a total of $1,100), 95.24 shares would
convert approximately seven years from the initial purchase (I.E., $1,000
divided by $2,100 (47.62%), multiplied by 200 shares equals 95.24 shares). The
Manager reserves the right to modify the formula for determining the number of
Eligible Shares in the future as it deems appropriate on notice to shareholders.

If the net asset value per share of Class A is higher than that of Class B
at the time of conversion (which may be the case because of the higher
distribution and service fee applicable to Class B shares), shareholders will
receive fewer Class A shares than Class B shares converted although the
aggregate dollar value will be the same.

For purposes of calculating the applicable holding period for conversions,
all payments for purchases of Class B shares during a month will be deemed to
have been made on the last day of the month, or for Class B shares acquired
through exchange, or a series of exchanges, on the last day of the month in
which the original payment for purchases of such Class B shares was made. For
Class B shares previously exchanged for shares of a money market fund, the time
period during which such shares were held in the money market fund will be
excluded. For example, Class B shares held in a money market fund for a period
of one year will not convert to Class A shares until approximately eight years
from purchase. For purposes of measuring the time period shares are held in a
money market fund, exchanges will be deemed to have been made on the last day of
the month. Class B shares acquired through exchange will convert to Class A
shares after expiration of the conversion period applicable to the original
purchase of such shares. As of the date of the first conversion (which, as noted
above, is currently anticipated to occur in or about January 1995) all amounts
representing Class B shares then outstanding beyond the expiration of the
applicable conversion period will automatically convert to Class A shares,
together with all shares or amounts representing Class B shares acquired through
the automatic reinvestment of dividends and distributions then held in the
shareholder's account.

The Fund has obtained an opinion of counsel to the effect that the
conversion of Class B shares into Class A shares does not constitute a taxable
event for U.S. income tax purposes. However, such opinion is not binding on the
Internal Revenue Service.

If approved by shareholders, the conversion feature may be subject to the
continuing availability of opinions of counsel or rulings of the Internal
Revenue

30
<PAGE>

Service (i) that the dividends and other distributions paid on Class A and Class
B shares will not constitute "preferential dividends" under the Internal Revenue
Code of 1986, as amended, and (ii) that the conversion of shares does not
constitute a taxable event. The conversion of Class B shares into Class A shares
may be suspended if such opinions or rulings are no longer available. If
conversions are suspended, Class B shares of the Fund will continue to be
subject, possibly indefinitely, to their higher annual distribution and service
fee.

REQUIRED VOTE

The proposed amendment to the Fund's Declaration of Trust to implement the
conversion feature requires the affirmative vote of a majority of the Fund's
outstanding shares. In the event shareholders of the Fund do not approve the
proposed amendment, the conversion feature will not be implemented for the Fund
and Class B shares of the Fund will continue to be subject, possibly
indefinitely, to their higher annual distribution and service fee.

THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL NO. 2.

APPROVAL OF
AMENDED AND RESTATED CLASS A DISTRIBUTION
AND SERVICE PLAN
(FOR CONSIDERATION BY CLASS A AND CLASS B SHAREHOLDERS, VOTING SEPARATELY,
OF THE CALIFORNIA SERIES AND THE CALIFORNIA INCOME SERIES)
(PROPOSAL NO. 3)

On May 6, 1993, the Fund's Trustees approved an amended and restated Class A
Distribution and Service Plan pursuant to Rule 12b-1 under the Investment
Company Act and an amended and restated Distribution Agreement with PMFD for
Class A shares of the California Series and the California Income Series (the
Proposed Class A Plan and the Proposed Class A Distribution Agreement,
respectively) and recommend submission of the Proposed Class A Plan to the Class
A shareholders of the California Series and the California Income Series for
approval or disapproval at this Special Meeting of Shareholders. As contemplated
by the SEC Order (previously defined under Proposal No. 2 above), the Proposed
Class A Plan is also being submitted for approval by Class B shareholders of the
California Series and the California Income Series because, subject to approval
of Proposal No. 2, Class B shares will automatically convert to Class A shares
approximately seven years after purchase. The Proposed Class A Distribution
Agreement does not require and is not being submitted for shareholder approval.

31
<PAGE>

The purpose of the Proposed Class A Plan is to compensate PMFD, the
distributor of the Fund's Class A shares, for providing distribution assistance
to broker/dealers, including Prudential Securities and Prusec, affiliated
broker/ dealers, and other qualified broker/dealers, if any, whose customers
invest in Class A shares of the Fund and to defray the costs and expenses,
including the payment of account servicing fees, of the services provided and
activities undertaken to distribute Class A shares (Distribution Activities).

The Trustees previously adopted a plan of distribution for the Class A
shares of the California Series and the California Income Series pursuant to
Rule 12b-1 under the Investment Company Act which was approved by the Class A
shareholders of the California Series on December 19, 1990 and by the Class A
shareholders of California Income Series on December 30, 1991 and last approved
by the Trustees for both Series on May 6, 1993 (the Existing Class A Plan).
Shareholders of the California Series' and the California Income Series' Class A
and Class B shares are being asked to approve amendments to the Existing Class A
Plan that change it from a reimbursement type plan to a compensation type plan.
The amendments do not change the maximum annual fee that may be paid to PMFD
under the Existing Class A Plan, although the possibility exists that expenses
incurred by PMFD and for which it is entitled to be reimbursed under the
Existing Class A Plan may be less than the fee PMFD will receive under the
Proposed Class A Plan. The amendments are being proposed to facilitate
administration and accounting. The Trustees believe that the Proposed Class A
Plan is in the best interest of each Series and is reasonably likely to benefit
the Class A shareholders of each Series. A copy of the Proposed Class A Plan is
attached hereto as Exhibit C.

THE EXISTING CLASS A PLAN

Under the Existing Class A Plan, the Fund reimburses PMFD for expenses
incurred for Distribution Activities at an annual rate of up to .30 of 1% of the
average daily net assets of the Class A shares (up to .25 of 1% of which may
constitute a service fee for the servicing and maintenance of shareholder
accounts). Article III, Section 26 of the NASD Rules of Fair Practice (the NASD
Rules) places an annual limit of .25 of 1% on fees that may be imposed for the
provision of personal service and/or the maintenance of shareholder accounts
(service fees) and an annual limit of .75 of 1% on asset-based sales charges (as
defined in the NASD Rules). Subject to these limits, the Fund may impose any
combination of service fees and asset-based sales charges under both the
Existing Class A Plan and the Proposed Class A Plan; provided that the total
fees do not exceed .30 of 1% per annum of the average daily net assets of the
Class A shares.

32
<PAGE>

The Existing Class A Plan may not be amended to increase materially the
amount to be spent for the services described therein without approval by a
majority of the holders of the Class A shares of the Fund. In addition, all
material amendments thereof must be approved by vote of a majority of the
Trustees, including a majority of the Rule 12b-1 Trustees, cast in person at a
meeting called for the purpose of voting on the Plan. So long as the Existing
Class A Plan is in effect, the selection and nomination of Trustees who are not
interested persons of the Fund will be committed to the discretion of the Rule
12b-1 Trustees.

The Existing Class A Plan may be terminated at any time without payment of
any penalty by the vote of a majority of the Rule 12b-1 Trustees or by the vote
of a majority of the outstanding Class A shares of each Series (as defined in
the Investment Company Act) on written notice to any other party to such Plan
and will automatically terminate in the event of its assignment (as defined in
the Investment Company Act). For a more detailed description of the Existing
Class A Plan, see "Management of the Fund -- The Distributors -- Class A Plan."

THE PROPOSED CLASS A PLAN

The Proposed Class A Plan amends the Existing Class A Plan in one material
respect. Under the Existing Class A Plan, the Fund reimburses PMFD for expenses
actually incurred for Distribution Activities up to a maximum of .30 of 1% per
annum of the average daily net assets of the Class A shares. The Proposed Class
A Plan authorizes the Fund to pay PMFD the same maximum annual fee as
compensation for its Distribution Activities regardless of the expenses incurred
by PMFD for Distribution Activities. The Distributor may, however, as it
currently does, voluntarily agree to limit its fee to an amount less than the
annual fee. In contrast to the Existing Class A Plan, the amounts payable by the
Fund under the Proposed Class A Plan would not be directly related to the
expenses actually incurred by PMFD for its Distribution Activities.
Consequently, if PMFD's expenses for Distribution Activities are less than the
distribution and service fees it receives under the Proposed Class A Plan, it
will retain its full fees and realize a profit.

Since inception of the Existing Class A Plan, the reimbursable expenses
incurred thereunder by PMFD have generally equalled or exceeded the amount
reimbursed by the Fund. For each of the fiscal years ended August 31, 1991, 1992
and 1993, PMFD received payments of $2,748, $4,322 and $7,728, respectively,
under the Existing Class A Plan with respect to the California Series
representing .10% of the average daily net assets of the Class A shares of the

33
<PAGE>

California Series as reimbursement of expenses incurred for Distribution
Activities. For the period from December 3, 1990 through August 31, 1991 and the
fiscal years ended August 31, 1992 and 1993, PMFD received payments of $35,427,
$59,368 and $165,895, respectively, under the Existing Class A Plan with respect
to the California Income Series representing 0%, .06% and .10%, respectively, of
the average daily net assets of the Class A shares of the California Income
Series as reimbursement of expenses incurred for Distribution Activities.
Although PMFD agreed to limit its fees under the Existing Class A Plan to .10 of
1% for the fiscal years ended August 31, 1991 and 1992 and .25 of 1% for the
fiscal year ended August 31, 1993, it in fact limited its fee to .10 of 1% for
all three fiscal years in the case of the California Series and to 0%, .06% and
.10% for the three fiscal periods in the case of the California Income Series
even though its direct and indirect reimbursable distribution expenses exceeded
such amount. PMFD believes that it would have similarly limited its fee had the
Proposed Class A Plan been in effect during the past three fiscal years,
although it could have assessed the maximum annual fee of .30 of 1%. Regardless
of which plan will be in effect, the Distributor has voluntarily agreed to limit
its fees for Distribution Activities to no more than .10 of 1% of the average
daily net assets of the Class A shares for the fiscal year ending August 31,
1994. Other expenses incurred by PMFD for Distribution Activities have been and
will continue to be, paid from the proceeds of initial sales charges.

Among the major perceived benefits of a compensation type plan, such as the
Proposed Class A Plan, over a reimbursement type plan, such as the Existing
Class A Plan, is the facilitation of administration and accounting. Under
reimbursement plans, all expenses must be specifically accounted for by the
Distributor and attributed to the specific class of shares of a fund in order to
qualify for reimbursement. Although the Proposed Class A Plan will continue to
require quarterly reporting to the Trustees of the amounts accrued and paid
under the Plan and of the expenses actually borne by the Distributor, there will
be no need to match specific expenses to reimbursements as under the Existing
Class A Plan. Thus, the accounting for the Proposed Class A Plan would be
simplified and the timing of when expenditures are to be made by the Distributor
would not be an issue. These considerations combined with the reasonable
likelihood, although there is no assurance, that the per annum payment rate
under the Proposed Class A Plan will not exceed the expenses incurred by PMFD
for Distribution Activities, suggest that the costs and efforts associated with
a reimbursement plan are unwarranted.

In considering whether to approve the Proposed Class A Plan, the Trustees
reviewed, among other things, the nature and scope of the services to be
provided by PMFD, the purchase options available to investors under the

34
<PAGE>

Alternative Purchase Plan, the amount of expenditures under the Existing Class A
Plan, the relationship of such expenditures to the overall cost structure of the
Fund and comparative data with respect to distribution arrangements adopted by
other investment companies. Based upon such review, the Trustees, including a
majority of the Rule 12b-1 Trustees, determined that there is a reasonable
likelihood that the Proposed Class A Plan will benefit the California Series and
the California Income Series and their Class A shareholders.

If approved by shareholders, the Proposed Class A Plan will continue in
effect from year to year, provided such continuance is approved at least
annually by vote of a majority of the Trustees, including a majority of the Rule
12b-1 Trustees.

REQUIRED VOTE

If proposal No. 2 is approved by shareholders, the Proposed Class A Plan
will require the approval of a majority of the outstanding Class A shares and
Class B shares of the California Series and the California Income Series (as
defined in the Investment Company Act) voting separately. If Proposal No. 2 is
not approved by shareholders, the proposed Class A Plan will only require the
approval of a majority of the outstanding Class A shares of the California
Series and the California Income Series voting separately. Under the Investment
Company Act, a majority of a class' outstanding voting shares is defined as the
lesser of (i) 67% of a class' outstanding voting shares represented at a meeting
at which more than 50% of the outstanding voting shares of the class are present
in person or represented by proxy, or (ii) more than 50% of a class' outstanding
voting shares. If the Proposed Class A Plan is not approved by a Series as
described above, the Existing Class A Plan will continue in its present form
with respect to that Series.

THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL NO. 3.

35
<PAGE>

APPROVAL OF
AMENDED AND RESTATED CLASS B DISTRIBUTION
AND SERVICE PLAN
(FOR CONSIDERATION BY CLASS B SHAREHOLDERS OF THE CALIFORNIA SERIES
AND THE CALIFORNIA INCOME SERIES VOTING SEPARATELY)
(PROPOSAL NO. 4)

On May 6, 1993, the Fund's Trustees approved an amended and restated Class B
Distribution and Service Plan pursuant to Rule 12b-1 under the Investment
Company Act and an amended and restated Class B Distribution Agreement with
Prudential Securities for Class B shares of the California Series and the
California Income Series (the Proposed Class B Plan and the Proposed Class B
Distribution Agreement, respectively) and recommend submission of the Proposed
Class B Plan to the Class B shareholders of those two Series for approval or
disapproval at this Special Meeting of Shareholders. The Proposed Class B
Distribution Agreement does not require and is not being submitted for
shareholder approval.

The purpose of the Proposed Class B Plan is to compensate Prudential
Securities, the distributor of the Fund's Class B shares, for providing
distribution assistance to broker/dealers, including Prusec, an affiliated
broker/dealer, and other qualified broker/dealers, if any, whose customers
invest in Class B shares of the Fund and to defray the costs and expenses,
including the payment of account servicing fees, of the services provided and
activities undertaken to distribute Class B shares (Distribution Activities).

The Trustees previously adopted a plan of distribution for the Class B
shares of the California Series and the California Income Series pursuant to
Rule 12b-1 under the Investment Company Act which was approved by shareholders
of the California Series on December 18, 1989 and by the sole shareholder of the
California Income Series on December 6, 1993, and last approved by the Trustees
on May 6, 1993 (the Existing Class B Plan). Shareholders of the Class B shares
of the California Series and the California Income Series are being asked to
approve amendments to the Existing Class B Plan that change it from a
reimbursement type plan to a compensation type plan. The amendments do not
change the maximum annual fee that may be paid to Prudential Securities under
the Existing Class B Plan, although the possibility exists that expenses
incurred by Prudential Securities and for which it is entitled to be reimbursed
under the Existing Class B Plan may be less than the fee Prudential Securities
will receive under the Proposed Class B Plan. The amendments are being proposed
to facilitate administration and accounting. The Trustees believe that

36
<PAGE>

the Proposed Class B Plan is in the best interest of the Fund and is reasonably
likely to benefit the Fund's Class B shareholders. A copy of the Proposed Class
B Plan is attached hereto as Exhibit D.

THE EXISTING CLASS B PLAN

Under the Existing Class B Plan, the California Series and the California
Income Series reimburse Prudential Securities for expenses incurred for
Distribution Activities at an annual rate of up to .50% of the average daily net
assets of the Class B shares (up to .25 of 1% of which may constitute a service
fee for the servicing and maintenance of shareholder accounts). Amounts
reimbursable under the Plan that are not paid because they exceed the maximum
fee payable thereunder are carried forward and may be recovered in future years
by Prudential Securities from asset-based sales charges imposed on Class B
shares, to the extent such charges do not exceed .50% per annum of the average
daily net assets of the Class B shares, and from contingent deferred sales
charges received from certain redeeming shareholders, subject to the limitations
of Article III, Section 26 of the NASD Rules. The NASD Rules place an annual
limit of .25 of 1% on fees that may be imposed for the provision of personal
service and/or the maintenance of shareholder accounts (service fees) and an
annual limit of .75 of 1% on asset-based sales charges (as defined in the NASD
Rules). Pursuant to the NASD Rules, the aggregate deferred sales charges and
asset based sales charges on Class B shares of each Series may not, subject to
certain exclusions, exceed 6.25% of total gross sales of Class B shares of the
Series.

The Existing Class B Plan may not be amended to increase materially the
amount to be spent for the services described therein without approval by a
majority of the holders of the Class B shares of each Series. In addition, all
material amendments thereof must be approved by vote of a majority of the
Trustees, including a majority of the Rule 12b-1 Trustees, cast in person at a
meeting called for the purpose of voting on the plan. So long as the Existing
Class B Plan is in effect, the selection and nomination of Rule 12b-1 Trustees
will be committed to the discretion of the Rule 12b-1 Trustees.

The Existing Class B Plan may be terminated at any time without payment of
any penalty by the vote of a majority of the Rule 12b-1 Trustees or by the vote
of a majority of the outstanding Class B shares of the Fund (as defined in the
Investment Company Act) on written notice to any other party to such Plan and
will automatically terminate in the event of its assignment (as defined in the
Investment Company Act). For a more detailed description of the Existing Class B
Plan, see "Management of the Fund -- The Distributors -- Class B Plan."

37
<PAGE>
THE PROPOSED CLASS B PLAN

The Proposed Class B Plan amends the Existing Class B Plan in one material
respect. Under the Existing Class B Plan, the Fund reimburses Prudential
Securities for expenses actually incurred for Distribution Activities up to
maximum of .50% per annum of the average daily net assets of the Class B shares.
The Proposed Class B Plan authorizes the Fund to pay Prudential Securities the
same maximum annual fee as compensation for its Distribution Activities
regardless of the expenses incurred by Prudential Securities for Distribution
Activities. In contrast to the Existing Class B Plan, the amounts payable by the
California Series and the California Income Series under the Proposed Class B
Plan would not be directly related to the expenses actually incurred by
Prudential Securities for its Distribution Activities. Consequently, if
Prudential Securities' expenses are less than its distribution and service fees,
it will retain its full fees and realize a profit. However, if Prudential
Securities expenses exceed the distribution and service fees received under the
Proposed Class B Plan, it will no longer carry forward such amounts for
reimbursement in future years.

Since inception of the Existing Class B Plan, the cumulative reimbursable
expenses incurred thereunder by Prudential Securities have exceeded the amounts
reimbursed by the California Series. As of December 31, 1993, the aggregate
amount of distribution expenses incurred and not yet reimbursed by the
California Series or recovered through contingent deferred sales charges was
approximately $5,578,500.

For the fiscal years ended August 31, 1991, 1992 and 1993, Prudential
Securities received $846,093, $862,476 and $954,972, respectively, from the
California Series under the Existing Class B Plan, representing .50%, .50% and
.50%, respectively, of the average daily net assets of the Class B shares of the
California Series, and spent approximately $1,457,200, $1,670,900 and
$2,054,100, respectively, for Distribution Activities. No Class B shares were
outstanding during those periods for the California Income Series. Since the
maximum annual fee under the Existing Class B Plan is the same as under the
Proposed Class B Plan, Prudential Securities would have received the same annual
fee under the Proposed Class B Plan as it did under the Existing Class B Plan
for the fiscal years ended August 31, 1991, 1992 and 1993.

Among the major perceived benefits of a compensation type plan, such as the
Proposed Class B Plan, over a reimbursement type plan, such as the Existing
Class B Plan, is the facilitation of administration and accounting. Under
reimbursement plans, all expenses must be specifically accounted for by the
Distributor and attributed to the specific class of shares of a fund in order to
qualify for reimbursement. Although the Proposed Class B Plan will continue to
require

38
<PAGE>

quarterly reporting to the Trustees of the amounts accrued and paid under the
Plan and of the expenses actually borne by the Distributor, there will be no
need to match specific expenses to reimbursements and no carrying forward of
such amounts, as under the Existing Class B Plan. Thus, the accounting for the
Proposed Class B Plan would be simplified and the timing of when expenditures
are to be made by the Distributor ordinarily would not be an issue. Currently,
because the Existing Class B Plan is a reimbursement plan, the Distributor
retains an independent expert to perform a study of its methodology for
determining and substantiating which of its expenses should properly be
allocated to the Series' Class B shares for reimbursement, the cost of which is
borne by the Fund and other funds for which Prudential Securities serves as
distributor. These considerations, combined with the fact that the cumulative
expenses incurred by Prudential Securities for Distribution Activities have
exceeded the amounts reimbursed by the Fund under the Existing Class B Plan,
suggest that the costs and efforts associated with a reimbursement plan are
unwarranted.

In considering whether to approve the Proposed Class B Plan, the Trustees
reviewed, among other things, the nature and scope of the services to be
provided by Prudential Securities, the purchase options available to investors
under the Alternative Purchase Plan, the amount of expenditures under the
Existing Class B Plan, the relationship of such expenditures to the overall cost
structure of the Fund and comparative data with respect to distribution
arrangements adopted by other investment companies. Based upon such review, the
Trustees, including a majority of the Rule 12b-1 Trustees, determined that there
is a reasonable likelihood that the Proposed Class B Plan will benefit each
Series and their Class B shareholders.

If approved by Class B shareholders, the Proposed Class B Plan will continue
in effect from year to year, provided such continuance is approved at least
annually by vote of a majority of the Trustees, including a majority of the Rule
12b-1 Trustees.

REQUIRED VOTE

The Proposed Class B Plan requires the approval of a majority of the
outstanding Class B shares of each of the California Series and the California
Income Series as defined in the Investment Company Act and as described under
Proposal No. 3. If the Proposed Class B Plan is not approved by a Series, the
Existing Class B Plan will continue in its present form with respect to that
Series.

THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL NO. 4.

39
<PAGE>

APPROVAL OF AMENDMENTS TO THE FUND'S FUNDAMENTAL
INVESTMENT RESTRICTIONS REGARDING RESTRICTED
AND ILLIQUID SECURITIES
(PROPOSAL NO. 5)

On May 6, 1993, at the request of the Fund's Manager and Subadviser, the
Trustees considered and recommend for shareholder approval revision of the
Fund's fundamental investment restrictions regarding illiquid and restricted
securities. The Trustees recommend elimination of Investment Restriction No. 8,
which provides that a series may not purchase any security restricted as to
disposition under federal securities laws. Further, the Board recommends
modification of Investment Restriction No. 10, which currently provides that a
series may not make loans, except through repurchase agreements (repurchase
agreements with a maturity of longer than 7 days together with other illiquid
assets limited to 10% of the total assets of the series).

The Trustees recommend replacement of such fundamental restrictions with a
non-fundamental investment policy that could be modified by the vote of the
Trustees in response to regulatory or market developments without further
approval by shareholders. The proposed non-fundamental policy would provide as
follows:

A Series may invest up to 15% (10% for the money market series) of
its net assets in illiquid securities including repurchase agreements
which have a maturity of longer than seven days, securities with legal
or contractual restrictions on resale (restricted securities) and
securities that are not readily marketable. Securities, including
municipal lease obligations, that have a readily available market are
not considered illiquid for purposes of this limitation. The investment
adviser will monitor the liquidity of such restricted securities under
the supervision of the Trustees. Repurchase agreements subject to demand
are deemed to have a maturity equal to the applicable notice period.

An open-end investment company may not hold a significant amount of
restricted securities or illiquid securities because such securities may present
problems of accurate valuation and because it is possible that the investment
company would have difficulty satisfying redemptions within seven days. The
proposed investment policy is not expected by the investment adviser or the
Trustees to affect the Series' liquidity.

Historically, illiquid securities have been defined to include securities
subject to contractual or legal restrictions on resale, securities for which
there is no readily available market and repurchase agreements having a maturity
of longer than seven days. In recent years, however, the securities markets have
evolved significantly, with the result that new types of instruments have
developed which

40
<PAGE>
make the Fund's present restriction on illiquid investments overly broad and
unnecessarily restrictive in the view of the Fund's Manager. In 1992, the SEC
staff issued amended guidelines to the effect that up to 15% (as opposed to 10%)
of an open-end fund's net assets may be invested in illiquid securities,
including repurchase agreements with a maturity of longer than seven days. The
guidelines were amended in connection with the SEC's efforts to remove
unnecessary barriers to capital formation and to facilitate access to the
capital markets by small businesses.

In reaching liquidity decisions, the Manager and the Subadviser will
consider, INTER ALIA, the following factors:

1. the frequency of trades and quotes for the security;

2. the number of dealers wishing to purchase or sell the security and
the number of other potential purchasers;

3. dealer undertakings to make a market in the security; and

4. the nature of the security and the nature of the marketplace trades
(E.G., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer).

With respect to municipal lease obligations, the investment adviser also
considers: (1) the willingness of the municipality to continue, annually or
biannually, to appropriate funds for payment of the lease, (2) the general
credit quality of the municipality and the essentiality to the municipality of
the property covered by the lease, (3) in the case of unrated municipal lease
obligations, an analysis of factors similar to that performed by nationally
recognized statistical rating organizations in evaluating the credit quality of
a municipal lease obligation, including (i) whether the lease can be cancelled,
(ii) if applicable, what assurance there is that the assets represented by the
lease can be sold, (iii) the strength of the lessee's general credit (E.G., its
debt, administrative, economic and financial characteristics), (iv) the
likelihood that the municipality will discontinue appropriating funding for the
leased property because the property is no longer deemed essential to the
operation of the municipality (E.G., the potential for an event of
non-appropriation) and (v) the legal recourse in the event of failure to
appropriate and (4) any other factors unique to municipal lease obligations as
determined by the investment adviser.

The Trustees believe that adoption of Proposal No. 5 is in the best
interests of the Series and their shareholders.

Investment Restriction No. 8 currently provides that a Series may not:

Purchase any security restricted as to disposition under federal
securities laws.

41
<PAGE>

Investment Restriction No. 10 currently provides that a Series may not:

Make loans, except through repurchase agreements (repurchase
agreements with a maturity of longer than 7 days together with other
illiquid assets being limited to 10% of the total assets of the series).

The Trustees are proposing that Investment Restriction No. 10 be modified to
provide that a Series may not:

Make loans, except through repurchase agreements.

REQUIRED VOTE

Adoption of Proposal No. 5 requires the affirmative vote of the holders of a
majority of the outstanding voting securities of each Series. Under the
Investment Company Act, a majority of a Series' outstanding voting securities is
defined as the lower of (i) 67% of the Series' outstanding voting shares
represented at a meeting at which more than 50% of the Series' outstanding
voting shares are present in person or represented by proxy, or (ii) more than
50% of the Series' outstanding voting shares. If the proposed change in
investment policy is not approved by a Series, the current limitations would
remain a fundamental policy of that Series which could not be changed without
the approval of a majority of the outstanding voting securities of that Series.

THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL NO. 5.

APPROVAL OF ELIMINATION OF THE FUND'S INVESTMENT
RESTRICTION LIMITING INVESTMENT IN THE SECURITIES
OF ANY ISSUER IN WHICH THE OFFICERS AND TRUSTEES OF
THE FUND OR ITS INVESTMENT ADVISER OWN MORE THAN
A SPECIFIED INTEREST
(PROPOSAL NO. 6)

On May 6, 1993, at the request of the Fund's Manager, the Trustees
considered and recommend for shareholder approval elimination of Investment
Restriction No. 5, which provides that a Series may not:

Invest in securities of any issuer if, to the knowledge of the
Fund, any officer or Trustee of the Fund or officer or director of the
adviser owns more than .5 of 1% of the outstanding securities of such
issuer, and such officers, Trustees and directors who own more than .5
of 1% own in the aggregate more than 5% of the outstanding securities of
such issuer.

The Manager has advised the Trustees that the restriction upon the Fund's
investing in companies in which officers, directors and Trustees of the Fund or

42
<PAGE>

the Manager own more then .5 of 1% of the outstanding securities of such company
was initially adopted to comply with a restriction imposed in connection with
the sale of the Fund's shares in Ohio. If the proposal is approved, the Fund
would continue to comply with the restriction as a non-fundamental operating
policy so long as the Fund sells its shares in Ohio. However, if Ohio were to
eliminate the requirement or the Fund stopped offering its shares for sale in
Ohio, the Trustees could eliminate the operating policy without the necessity of
shareholder approval. The Fund does not currently intend to stop offering its
shares in Ohio, nor are the Fund or the Fund's Manager aware of any proposal to
change the Ohio law.

The Trustees believe that adoption of Proposal No. 6 is in the best
interests of the Series and their shareholders.

REQUIRED VOTE

Amendment of the Fund's investment restrictions to delete Investment
Restriction No. 5 requires the approval of a majority of a Series' outstanding
voting securities, as defined in the Investment Company Act and as described
under Proposal No. 5 above. If the proposed change in investment policy is not
approved by a Series, the current limitations would remain a fundamental policy
of that Series which could not be changed without the approval of a majority of
the outstanding voting securities of that Series.

THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL NO. 6.

RATIFICATION OF INDEPENDENT ACCOUNTANTS
(PROPOSAL NO. 7)

The Trustees of the Fund, including Trustees who are not interested persons
of the Fund, have selected Deloitte & Touche as independent accountants for the
Fund for the fiscal year ending August 31, 1994. The ratification of the
selection of independent public accountants is to be voted upon at the Meeting
and it is intended that the persons named in the accompanying Proxy will vote
for Deloitte & Touche. No representative of Deloitte & Touche is expected to be
present at the Meeting of Shareholders.

The policy of the Trustees regarding engaging independent accountants'
services is that management may engage the Fund's principal independent public
accountants to perform any service(s) normally provided by independent
accounting firms, provided that such service(s) meet(s) any and all of the
independent requirements of the American Institute of Certified Public
Accountants and the SEC. In accordance with this policy, the Audit Committee

43
<PAGE>

reviews and approves all services provided by the independent public accountants
prior to their being rendered. The Trustees of the Fund receive a report from
its Audit Committee relating to all services after they have been performed by
the Fund's independent accountants.

REQUIRED VOTE

The affirmative vote of a majority of the shares present, in person or by
proxy, at the Meeting is required for ratification.

THE TRUSTEES RECOMMEND THAT YOU VOTE "FOR" THIS PROPOSAL NO. 7.

OTHER MATTERS

No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed proxy will vote thereon according to their best judgment in the
interests of the Fund.

SHAREHOLDER PROPOSALS

The Fund is not required to hold annual meetings of shareholders and the
Trustees currently do not intend to hold such meetings unless shareholder action
is required in accordance with the Investment Company Act or the Fund's By-laws.
A shareholder proposal intended to be presented at any meeting of shareholders
of the Fund hereinafter called must be received by the Fund a reasonable time
before the Trustees' solicitation relating thereto is made in order to be
included in the Fund's proxy statement and form of proxy relating to that
meeting and presented at the meeting. The mere submission of a proposal by a
shareholder does not guarantee that such proposal will be included in the proxy
statement because certain rules under the federal securities laws must be
complied with before inclusion of the proposal is required.

S. JANE ROSE
SECRETARY

Dated: April 18, 1994

SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO
HAVE THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES.

44
<PAGE>
EXHIBIT A

PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993

ASSETS

<TABLE>
<S> <C>
CASH AND SHORT-TERM INVESTMENTS....................... $42,667,507
LOAN TO AFFILIATE..................................... 85,000,000
MANAGEMENT, ADMINISTRATION AND OTHER FEES
RECEIVABLE........................................... 17,897,292
TRANSFER AGENCY AND FIDUCIARY FEES RECEIVABLE......... 3,744,874
FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
NET.................................................. 10,495,702
OTHER ASSETS.......................................... 4,676,430
-----------
$164,481,805
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Due to affiliates................................... $48,794,366
Accounts payable and accrued expenses............... 11,208,209
Income taxes payable to affiliate -- net............ 2,937,828
-----------
62,940,403
-----------
COMMITMENTS (Note 6)
STOCKHOLDERS' EQUITY:
Class A common stock, $1 par value (1,000 shares
authorized, 850 shares outstanding)................ 850
Class B common stock, $1 par value (1,000 shares
authorized, 150 shares outstanding)................ 150
Additional paid-in capital.......................... 24,999,000
Retained earnings................................... 76,541,402
-----------
101,541,402
-----------
$164,481,805
-----------
-----------
</TABLE>

See notes to consolidated statement of financial condition.

A-1
<PAGE>
PRUDENTIAL MUTUAL FUND MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
DECEMBER 31, 1993

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Prudential Mutual Fund Management, Inc. ("PMF") and subsidiaries (the
"Company"), an indirect wholly-owned subsidiary of The Prudential Insurance
Company of America (the "Prudential"), were created to operate as the manager,
distributor and/or transfer agent for investment companies.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statement includes the accounts of PMF and its
wholly-owned subsidiaries, Prudential Mutual Fund Services, Inc. ("PMFS") and
Prudential Mutual Fund Distributors, Inc. ("PMFD"). All intercompany profits,
transactions and balances have been eliminated.

INCOME TAXES

The Company is a member of a group of affiliated companies which join in
filing a consolidated Federal income tax return. Pursuant to a tax allocation
agreement, tax expense is determined for individual profitable companies on a
separate return basis. Profit members pay this amount to an affiliated company
which in turn apportions the payment among the loss members in proportion to
their losses. In January 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109). The
adoption of SFAS 109 did not have a material effect on the Company's financial
position.

2. SHORT-TERM INVESTMENTS
At December 31, 1993, the Company had invested $35,411,571 in several money
market funds which PMF manages.

3. FURNITURE, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Furniture, equipment and leasehold improvements consist of the following:

<TABLE>
<S> <C>
Furniture...................................... $6,481,799
Equipment...................................... 9,181,984
Leasehold improvements......................... 3,407,213
----------
19,070,996
Less accumulated depreciation and
amortization.................................. 8,575,294
----------
$10,495,702
----------
----------
</TABLE>

A-2
<PAGE>
4. RELATED PARTY TRANSACTIONS
In the ordinary course of business, the Company participates in a variety of
financial and administrative transactions with affiliates.

The loan to affiliate bears interest at 3.45 percent at December 31, 1993
and is due on demand.

The caption "Due to affiliates" includes $18,241,795 at December 31, 1993
for reimbursement of employee compensation and benefits, and other
administrative and operating expenses. This amount is noninterest-bearing and
payable on demand.

The Company has entered into subadvisory agreements with The Prudential
Investment Corporation ("PIC"), a wholly-owned subsidiary of Prudential. Under
these agreements, PIC furnishes investment advisory services to substantially
all the funds for which the Company acts as Manager. At December 31, 1993 there
were unpaid fees due to PIC of $23,926,277, included in the caption "Due to
affiliates."

Distribution expenses include commissions and account servicing fees paid
to, or on account of, financial advisors of Prudential Securities Incorporated
("Prudential Securities") and Pruco Securities Corporation ("PruSec"),
affiliated broker-dealers and indirect wholly-owned subsidiaries of Prudential,
advertising expenses, the cost of printing and mailing prospectuses to potential
investors, and indirect and overhead costs of Prudential Securities and PruSec,
including lease, utility, communications and sales promotion expenses. At
December 31, 1993 there were unpaid distribution expenses of approximately
$6,626,000, included in the caption "Due to affiliates."

5. CAPITAL
PMFD is subject to the SEC Uniform Net Capital Rule (Rule 15c3-1), which
requires the maintenance of minimum net capital and requires that the ratio of
aggregate indebtedness to net capital, both as defined, shall not exceed 15 to
1. At December 31, 1993, PMFD had net capital of $2,308,981, which was
$1,859,405 in excess of its required net capital of $449,576. PMFD had a ratio
of aggregate indebtedness to net capital of 2.9 to 1.

A-3
<PAGE>
6. COMMITMENTS
The Company leases office space under operating leases expiring in 2003. The
leases are subject to escalation based upon certain costs incurred by the
lessor. Future minimum rentals, as of December 31, 1993, under the leases, are
as follows:

<TABLE>
<CAPTION>
YEAR MINIMUM RENTAL
- -------------------------------------------------------- ----------------
<S> <C>
1994.................................................... $ 2,738,000
1995.................................................... 2,865,000
1996.................................................... 3,375,000
1997.................................................... 3,385,000
1998.................................................... 3,230,000
Thereafter.............................................. 13,800,000
----------------
$ 29,393,000
----------------
----------------
</TABLE>

7. PENSION AND OTHER POSTRETIREMENT BENEFITS
The Company has two defined benefit pension plans (the "Plans") sponsored by
the Prudential and Prudential Securities. The Plans cover substantially all of
the Company's employees. The funding policy is to contribute annually the amount
necessary to satisfy the Internal Revenue Service funding standards. In
addition, the Company has two defined benefit plans for key executives, the
Supplemental Retirement Plan (SRP) for which estimated pension costs are
currently accrued but not funded.

The Company provides certain health care and life insurance benefits for
eligible retired employees. Effective January 1, 1993, the Company adopted
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS 106"). SFAS 106 changed the
practice of accounting for postretirement benefits on a cash basis to an accrual
basis, whereby employers record the projected future cost of providing such
postretirement benefits as employees render services instead of when benefits
are paid. This new accounting method has no effect on the Company's cash outlays
for these retirement benefits. The adoption of SFAS 106 did not materially
impact the Company's financial position.

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits," ("SFAS 112") which is effective for fiscal years beginning after
December 15, 1993. Although several benefits are fully insured which result in
no SFAS 112 obligation, the Company currently has an obligation and resulting

A-4
<PAGE>
7. PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)
expense under SFAS 112 for medical benefits provided under long-term disability.
The Company will adopt SFAS 112 on January 1, 1994. Management believes that
implementation will have no material effect on the Company's financial position.

8. CONTINGENCY
On October 12, 1993, a purported class action lawsuit was instituted against
PMF, et al and certain current and former directors of a fund managed by PMF.
The plaintiffs seek damages in an unspecified amount for excessive management
and distribution fees they allege were incurred by them. Although the outcome of
this litigation cannot be predicted at this time, the defendants believe they
have meritorious defenses to the claims asserted in the complaint and intend to
defend this action vigorously. In any case, management does not believe that the
outcome of this action is likely to have a material adverse effect on the
Company's financial position.

A-5
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors of
Prudential Mutual Fund Management, Inc.:

We have audited the accompanying consolidated statement of financial
condition of Prudential Mutual Fund Management, Inc. and subsidiaries as of
December 31, 1993. This consolidated financial statement is the responsibility
of the Company's management. Our responsibility is to express an opinion on this
consolidated financial statement based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statement is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated statement of
financial condition. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated statement of financial condition presents
fairly, in all material respects, the financial position of Prudential Mutual
Fund Management, Inc. and subsidiaries at December 31, 1993 in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE
New York, New York
January 26, 1994

A-6
<PAGE>
EXHIBIT B

FORM OF AMENDMENT TO CERTIFICATE OF DESIGNATION

(a) The following five new paragraphs, numbered 3 through 7, are inserted
immediately after paragraph 2 of the Amended and Restated Establishment and
Designation of Series of Shares, dated November 27, 1990 and filed with the
Secretary of State of The Commonwealth of Massachusetts on December 17, 1990
(the "Certificate of Designation"), reading as follows:

3. The shares of beneficial interest of the California Series and the
California Income Series are classified into three classes, designated
"Class A Shares", "Class B Shares" and "Class C Shares", respectively, of
which an unlimited number may be issued. Class A Shares and Class B Shares
of the California Series and the California Income Series outstanding on the
date on which the amendments provided for herein become effective shall be
and continue to be Class A Shares and Class B Shares, respectively, of such
series.

4. The holders of Class A Shares, Class B Shares and Class C Shares of
each series shall be considered Shareholders of such series, and shall have
the relative rights and preferences set forth herein and in the Declaration
of Trust with respect to Shares of such series, and shall also be considered
Shareholders of the Trust for all other purposes (including, without
limitation, for purposes of receiving reports and notices and the right to
vote) and, for matters reserved to the Shareholders of one or more other
classes or series by the Declaration of Trust or by any instrument
establishing and designating a particular class or series, or as required by
the Investment Company Act of 1940 and/or the rules and regulations of the
Securities and Exchange Commission thereunder (collectively, as from time to
time in effect, the "1940 Act") or other applicable laws.

5. The Class A Shares, Class B Shares and Class C Shares of each series
shall represent an equal proportionate interest in the share of such class
in the Trust Property belonging to that series, adjusted for any liabilities
specifically allocable to the Shares of that class, and each Share of any
such class shall have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that the expenses related
directly or indirectly to the distribution of the Shares of a class, and any
service fees to which such class is subject (as determined by the Trustees),
shall be borne solely by such class, and such expenses shall be
appropriately reflected in the determination of net asset value and the
dividend, distribution and liquidation rights of such class.

B-1
<PAGE>
6. (a) Class A Shares of each series shall be subject to (i) a front-
end sales charge and (ii) (A) an asset-based sales charge pursuant to a plan
under Rule 12b-1 of the 1940 Act (a "Plan"), and/or (B) a service fee for
the maintenance of shareholder accounts and personal services, in such
amounts as shall be determined from time to time.

(b) Class B Shares of each series shall be subject to (i) a
contingent deferred sales charge and (ii) (A) an asset-based sales charge
pursuant to a Plan, and/or (B) a service fee for the maintenance of
shareholder accounts and personal services, in such amounts as shall be
determined from time to time.

(c) Class C Shares of each series having the same shall be subject to
(i) a contingent deferred sales charge and (ii) (A) an asset-based sales
charge pursuant to a Plan, and/or (B) a service fee for the maintenance of
shareholder accounts and personal services, in such amounts as shall be
determined from time to time.

7. Subject to compliance with the requirements of the 1940 Act, the
Trustees shall have the authority to provide that holders of Shares of any
series shall have the right to convert said Shares into Shares of one or
more other series of registered investment companies specified for the
purpose in this Trust's Prospectus for the Shares accorded such right, that
holders of any class of Shares of a series shall have the right to convert
such Shares into Shares of one or more other classes of such series, and
that Shares of any class of a series shall be automatically converted into
Shares of another class of such series, in each case in accordance with such
requirements and procedures as the Trustees may from time to time establish.
The requirements and procedures applicable to such mandatory or optional
conversion of any such Shares shall be set forth in the Prospectus in effect
with respect to such Shares.

(b) Paragraph 3 of the Certificate of Designation is renumbered as paragraph
8, and amended in its entirety to read as follows:

8. Shareholders of each series and class shall vote as a separate
series or class, as the case may be, on any matter to the extent required
by, and any matter shall be deemed to have been effectively acted upon with
respect to any series or class as provided in, Rule 18f-2, as from time to
time in effect, under the 1940 Act, or any successor rule and by the
Declaration of Trust. Except as otherwise required by the 1940 Act, the
Shareholders of each class of any series having more than one class of
Shares, voting as a separate class, shall have sole and exclusive voting
rights with respect to the

B-2
<PAGE>
provisions of any Plan applicable to Shares of such class, and shall have no
voting rights with respect to provisions of any Plan applicable solely to
any other class of Shares of such Series.

B-3
<PAGE>
EXHIBIT C

PRUDENTIAL CALIFORNIA MUNICIPAL FUND
DISTRIBUTION AND SERVICE PLAN
(CLASS A SHARES)
INTRODUCTION

The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Article III, Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (NASD) has been adopted by Prudential California Municipal Fund (the Fund)
and by Prudential Mutual Fund Distributors, Inc., the Fund's distributor (the
Distributor).

The Fund has entered into a distribution agreement pursuant to which the
Fund will employ the Distributor to distribute Class A shares issued by the Fund
(Class A shares). Under the Plan, the Fund intends to pay to the Distributor, as
compensation for its services, a distribution and service fee with respect to
Class A shares.

A majority of the Trustees of the Fund, including a majority of those
Trustees who are not "interested persons" of the Fund (as defined in the
Investment Company Act) and who have no direct or indirect financial interest in
the operation of this Plan or any agreements related to it (the Rule 12b-1
Trustees), have determined by votes cast in person at a meeting called for the
purpose of voting on this Plan that there is a reasonable likelihood that
adoption of this Plan will benefit the Fund and its shareholders. Expenditures
under this Plan by the Fund for Distribution Activities (defined below) are
primarily intended to result in the sale of Class A shares of the Fund within
the meaning of paragraph (a)(2) of Rule 12b-1 promulgated under the Investment
Company Act.

The purpose of the Plan is to create incentives to the Distributor and/or
other qualified broker-dealers and their account executives to provide
distribution assistance to their customers who are investors in the Fund, to
defray the costs and expenses associated with the preparation, printing and
distribution of prospectuses and sales literature and other promotional and
distribution activities and to provide for the servicing and maintenance of
shareholder accounts.

C-1
<PAGE>
THE PLAN

The material aspects of the Plan are as follows:

1. DISTRIBUTION ACTIVITIES

The Fund shall engage the Distributor to distribute Class A shares of
the Fund and to service shareholder accounts using all of the facilities of
the distribution networks of Prudential Securities Incorporated (Prudential
Securities) and Pruco Securities Corporation (Prusec), including sales
personnel and branch office and central support systems, and also using such
other qualified broker-dealers and financial institutions as the Distributor
may select. Services provided and activities undertaken to distribute Class
A shares of the Fund are referred to herein as "Distribution Activities."

2. PAYMENT OF SERVICE FEE

The Fund shall pay to the Distributor as compensation for providing
personal service and/or maintaining shareholder accounts a service fee of
.25 of 1% per annum of the average daily net assets of the Class A shares
(service fee). The Fund shall calculate and accrue daily amounts payable by
the Class A shares of the Fund hereunder and shall pay such amounts monthly
or at such other intervals as the Trustees may determine.

3. PAYMENT FOR DISTRIBUTION ACTIVITIES

The Fund shall pay to the Distributor as compensation for its services a
distribution fee, together with the service fee (described in Section 2
hereof), of .30 of 1% per annum of the average daily net assets of the Class
A shares of the Fund for the performance of Distribution Activities. The
Fund shall calculate and accrue daily amounts payable by the Class A shares
of the Fund hereunder and shall pay such amounts monthly or at such other
intervals as the Trustees may determine. Amounts payable under the Plan
shall be subject to the limitations of Article III, Section 26 of the NASD
Rules of Fair Practice.

Amounts paid to this Distributor by the Class A shares of the Fund will
not be used to pay the distribution expenses incurred with respect to any
other class of shares of the Fund except that distribution expenses
attributable to the Fund as a whole will be allocated to the Class A shares
according to the ratio of the sales of Class A shares to the total sales of
the Fund's shares over the Fund's fiscal year or such other allocation
method approved by the Trustees. The allocation of distribution expenses
among classes will be subject to the review of the Trustees.

The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:

C-2
<PAGE>
(a) amounts paid to Prudential Securities for performing services
under a selected dealer agreement between Prudential Securities and the
Distributor for sale of Class A shares of the Fund, including sales
commissions and trailer commissions paid to, or on account of, account
executives and indirect and overhead costs associated with Distribution
Activities, including central office and branch expenses;

(b) amounts paid to Prusec for performing services under a selected
dealer agreement between Prusec and the Distributor for sale of Class A
shares of the Fund, including sales commissions and trailer commissions
paid to, or on account of, agents and indirect and overhead costs
associated with Distribution Activities;

(c) advertising for the Fund in various forms through any available
medium, including the cost of printing and mailing Fund prospectuses,
statements of additional information and periodic financial reports and
sales literature to persons other than current shareholders of the Fund;
and

(d) sales commissions (including trailer commissions) paid to, or on
account of, broker-dealers and financial institutions (other than
Prudential Securities and Prusec) which have entered into selected
dealer agreements with the Distributor with respect to Class A shares of
the Fund.

4. QUARTERLY REPORTS; ADDITIONAL INFORMATION

An appropriate officer of the Fund will provide to the Trustees of the
Fund for review, at least quarterly, a written report specifying in
reasonable detail the amounts expended for Distribution Activities
(including payment of the service fee) and the purposes for which such
expenditures were made in compliance with the requirements of Rule 12b-1.
The Distributor will provide to the Trustees of the Fund such additional
information as the Trustees shall from time to time reasonably request,
including information about Distribution Activities undertaken or to be
undertaken by the Distributor.

The Distributor will inform the Trustees of the Fund of the commissions
and account servicing fees to be paid by the Distributor to account
executives of the Distributor and to broker-dealers and financial
institutions which have selected dealer agreements with the Distributor.

5. EFFECTIVENESS; CONTINUATION

The Plan shall not take effect until it has been approved by a vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Class A shares of the Fund.

C-3
<PAGE>
If approved by a vote of a majority of the outstanding voting securities
of the Class A shares of the Fund, the Plan shall, unless earlier terminated
in accordance with its terms, continue in full force and effect thereafter
for so long as such continuance is specifically approved at least annually
by a majority of the Trustees of the Fund and a majority of the Rule 12b-1
Trustees by votes cast in person at a meeting called for the purpose of
voting on the continuation of the Plan.

6. TERMINATION

This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Class A shares
of the Fund.

7. AMENDMENTS

The Plan may not be amended to change the combined service and
distribution expenses to be paid as provided for in Sections 2 and 3 hereof
so as to increase materially the amounts payable under this Plan unless such
amendment shall be approved by the vote of a majority of the outstanding
voting securities (as defined in the Investment Company Act) of the Class A
shares of the Fund. All material amendments of the Plan shall be approved by
a majority of the Trustees of the Fund and a majority of the Rule 12b-1
Trustees by votes cast in person at a meeting called for the purpose of
voting on the Plan.

8. RULE 12B-1 TRUSTEES

While the Plan is in effect, the selection and nomination of the Rule
12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.

9. RECORDS

The Fund shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 4 hereof, for a period of not less
than six years from the date of effectiveness of the Plan, such agreements
or reports, and for at least the first two years in an easily accessible
place.

10. ENFORCEMENT OF CLAIMS.

The name "Prudential California Municipal Fund" is the designation of
the Trustees under a Declaration of Trust dated May 18, 1984, and all
persons dealing with the Fund must look solely to the property of the Fund
for the enforcement of any claims against the Fund, and neither the
Trustees, officers, agents or shareholders assume any personal liability for
obligations entered into on behalf of the Fund.

Dated:

C-4
<PAGE>
EXHIBIT D

PRUDENTIAL CALIFORNIA MUNICIPAL FUND
DISTRIBUTION AND SERVICE PLAN
(CLASS B SHARES)
INTRODUCTION

The Distribution and Service Plan (the Plan) set forth below which is
designed to conform to the requirements of Rule 12b-1 under the Investment
Company Act of 1940 (the Investment Company Act) and Article III, Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (NASD) has been adopted by Prudential California Municipal Fund (the Fund)
and by Prudential Securities Incorporated (Prudential Securities) the Fund's
distributor (the Distributor).

The Fund has entered into a distribution agreement pursuant to which the
Fund will employ the Distributor to distribute Class B shares issued by the Fund
(Class B shares). Under the Plan, the Fund wishes to pay to the Distributor, as
compensation for its services, a distribution and service fee with respect to
Class B shares.

A majority of the Trustees of the Fund including a majority who are not
"interested persons" of the Fund (as defined in the Investment Company Act) and
who have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it (the Rule 12b-1 Trustees), have determined by
votes cast in person at a meeting called for the purpose of voting on this Plan
that there is a reasonable likelihood that adoption of this Plan will benefit
the Fund and its shareholders. Expenditures under this Plan by the Fund for
Distribution Activities (defined below) are primarily intended to result in the
sale of Class B shares of the Fund within the meaning of paragraph (a)(2) of
Rule 12b-1 promulgated under the Investment Company Act.

THE PLAN

The material aspects of the Plan are as follows:

1. DISTRIBUTION ACTIVITIES
The Fund shall engage the Distributor to distribute Class B shares of
the Fund and to service shareholder accounts using all of the facilities of
the Prudential Securities distribution network including sales personnel and
branch office and central support systems, and also using such other
qualified broker-dealers and financial institutions as the Distributor may

D-1
<PAGE>
select, including Pruco Securities Corporation (Prusec). Services provided
and activities undertaken to distribute Class B shares of the Fund are
referred to herein as "Distribution Activities."

2. PAYMENT OF SERVICE FEE
The Fund shall pay to the Distributor as compensation for providing
personal service and/or maintaining shareholder accounts a service fee of
.25 of 1% per annum of the average daily net assets of the Class B shares
(service fee). The Fund shall calculate and accrue daily amounts payable by
the Class B shares of the Fund hereunder and shall pay such amounts monthly
or at such other intervals as the Trustees may determine.

3. PAYMENT FOR DISTRIBUTION ACTIVITIES
The Fund shall pay to the Distributor as compensation for its services a
distribution fee, together with the service fee (described in Section 2
hereof), of .50 of 1% per annum of the average daily net assets of the Class
B shares of the Fund for the performance of Distribution Activities. The
Fund shall calculate and accrue daily amounts payable by the Class B shares
of the Fund hereunder and shall pay such amounts monthly or at such other
intervals as the Trustees may determine. Amounts payable under the Plan
shall be subject to the limitations of Article III, Section 26 of the NASD
Rules of Fair Practice.

Amounts paid to the Distributor by the Class B shares of the Fund will
not be used to pay the distribution expenses incurred with respect to any
other class of shares of the Fund except that distribution expenses
attributable to the Fund as a whole will be allocated to the Class B shares
according to the ratio of the sale of Class B shares to the total sales of
the Fund's shares over the Fund's fiscal year or such other allocation
method approved by the Trustees. The allocation of distribution expenses
among classes will be subject to the review of the Trustees.

The Distributor shall spend such amounts as it deems appropriate on
Distribution Activities which include, among others:

(a) sales commissions (including trailer commissions) paid to, or on
account of, account executives of the Distributor;

(b) indirect and overhead costs of the Distributor associated with
performance of Distribution Activities including central office and
branch expenses;

(c) amounts paid to Prusec for performing services under a selected
dealer agreement between Prusec and the Distributor for sale of Class B
shares of the Fund, including sales commissions and trailer commissions
paid to, or on account of, agents and indirect and overhead costs
associated with Distribution Activities;

D-2
<PAGE>
(d) advertising for the Fund in various forms through any available
medium, including the cost of printing and mailing Fund prospectuses,
statements of additional information and periodic financial reports and
sales literature to persons other than current shareholders of the Fund;
and

(e) sales commissions (including trailer commissions) paid to, or on
account of, broker-dealers and other financial institutions (other than
Prusec) which have entered into selected dealer agreements with the
Distributor with respect to Class B shares of the Fund.

4. QUARTERLY REPORTS; ADDITIONAL INFORMATION

An appropriate officer of the Fund will provide to the Trustees of the
Fund for review, at least quarterly, a written report specifying in
reasonable detail the amounts expended for Distribution Activities
(including payment of the service fee) and the purposes for which such
expenditures were made in compliance with the requirements of Rule 12b-1.
The Distributor will provide to the Trustees of the Fund such additional
information as they shall from time to time reasonably request, including
information about Distribution Activities undertaken or to be undertaken by
the Distributor.

The Distributor will inform the Trustees of the Fund of the commissions
and account servicing fees to be paid by the Distributor to account
executives of the Distributor and to broker-dealers and other financial
institutions which have selected dealer agreements with the Distributor.

5. EFFECTIVENESS; CONTINUATION
The Plan shall not take effect until it has been approved by a vote of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of the Class B shares of the Fund.

If approved by a vote of a majority of the outstanding voting securities
of the Class B shares of the Fund, the Plan shall, unless earlier terminated
in accordance with its terms, continue in full force and effect thereafter
for so long as such continuance is specifically approved at least annually
by a majority of the Trustees of the Fund and a majority of the Rule 12b-1
Trustees by votes cast in person at a meeting called for the purpose of
voting on the continuation of the Plan.

6. TERMINATION
This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Trustees, or by vote of a majority of the outstanding voting
securities (as defined in the Investment Company Act) of the Class B shares
of the Fund.

7. AMENDMENTS
The Plan may not be amended to change the combined service and
distribution expenses to be paid as provided for in Sections 2 and 3 hereof

D-3
<PAGE>
so as to increase materially the amounts payable under this Plan unless such
amendment shall be approved by the vote of a majority of the outstanding
voting securities (as defined in the Investment Company Act) of the Class B
shares of the Fund. All material amendments of the Plan shall be approved by
a majority of the Trustees of the Fund and a majority of the Rule 12b-1
Trustees by votes cast in person at a meeting called for the purpose of
voting on the Plan.

8. RULE 12B-1 TRUSTEES

While the Plan is in effect, the selection and nomination of the Rule
12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.

9. RECORDS
The Fund shall preserve copies of the Plan and any related agreements
and all reports made pursuant to Section 4 hereof, for a period of not less
than six years from the date of effectiveness of the Plan, such agreements
or reports, and for at least the first two years in an easily accessible
place.

10. ENFORCEMENT OF CLAIMS

The name "Prudential California Municipal Fund" is the designation of
the Trustees under a Declaration of Trust dated May 18, 1984, and all
persons dealing with the Fund must look solely to the property of the Fund
for the enforcement of any claims against the Fund, and neither the
Trustees, officers, agents of shareholders assume any personal liability for
obligations entered into on behalf of the Fund.

Dated:

D-4
<PAGE>

PLEASE MARK, SIGN,
DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
PROXY (CLASS A)

YOUR PROXY WILL BE ELECTRONICALLY SCANNED.
CAREFULLY DETACH HERE AND RETURN BOTTOM PORTION ONLY.
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
CALIFORNIA INCOME SERIES
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES.

The undersigned hereby appoints Susan C. Cote, S. Jane Rose and
Deborah A. Docs as proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all the
Class A shares of beneficial interest of Prudential California Municipal Fund
(California Income Series) held of record by the undersigned on March 31, 1994
at the Special Meeting of Shareholders to be held on June 23, 1994, or any
adjournment thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE PROPOSALS LISTED BELOW.

Your Account No.:
Your voting shares are:

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

1. Election of Directors

APPROVE ALL NOMINEES WITHHOLD ALL NOMINEES WITHHOLD THOSE LISTED ON BACK

TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, PLEASE WRITE NAME ON BACK OF
FORM.

Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Thomas T. Mooney
Thomas H. O'Brien
Richard A. Redeker
Nancy H. Teeters

2. To approve an amendment of the Fund's Declaration of Trust to permit a
conversion feature for Class B Shares.

3. With respect to shareholders of the California Series and the California
Income Series, to approve an amended and restated Class A Distribution and
Service Plan.

4. NOT APPLICABLE TO CLASS A SHAREHOLDERS.

5. To approve amendments to the Fund's investment restrictions regarding
restricted and illiquid securities.

6. To approve the elimination of the Fund's investment restriction limiting
the Fund's ability to invest in the securities of any issuer in which officers
and Trustees of the Fund or officers and directors of the investment adviser
own more than a specified interest.

7. To ratify the selection by the Trustees of Deloitte & Touche as independent
accountants for the fiscal year ending August 31, 1994.

8. To transact such other business as may properly come before the Meeting or
any adjournment thereof.

Only Class A shares of beneficial interest of the Fund of record at the close of
business on March 31, 1994 are entitled to notice of and to vote at the
Meeting or any adjournment thereof.

Please sign exactly as name appears at left. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

____________________________________
SIGNATURE DATE

____________________________________
SIGNATURE (JOINT OWNERSHIP)
<PAGE>

PLEASE MARK, SIGN,
DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

PROXY (CLASS B)

YOUR PROXY WILL BE ELECTRONICALLY SCANNED.
CAREFULLY DETACH HERE AND RETURN BOTTOM PORTION ONLY.

PRUDENTIAL CALIFORNIA MUNICIPAL FUND
CALIFORNIA INCOME SERIES
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292

THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES.

The undersigned hereby appoints Susan C. Cote, S. Jane Rose and
Deborah A. Docs as Proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all the
Class B shares of beneficial interest of Prudential California Municipal Fund
(California Income Series) held of record by the undersigned on March 31, 1994
at the Special Meeting of Shareholders to be held on June 23, 1994, or any
adjournment thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE PROPOSALS LISTED BELOW.

Your Account No.:
Your voting shares are:

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

1. Election of Directors

APPROVE ALL NOMINEES WITHHOLD ALL NOMINEES WITHHOLD THOSE LISTED ON BACK

TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, PLEASE WRITE NAME ON BACK OF
FORM.

Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Thomas T. Mooney
Thomas H. O'Brien
Richard A. Redeker
Nancy H. Teeters

2. To approve an amendment of the Fund's Declaration of Trust to permit a
conversion feature for Class B Shares.

3. With respect to shareholders of the California Series and the California
Income Series, to approve an amended and restated Class A Distribution and
Service Plan.

4. With respect to shareholders of the California Series and the California
Income Series, to approve an amended and restated Class B Distribution and
Service Plan.

5. To approve amendments to the Fund's investment restrictions regarding
restricted and illiquid securities.

6. To approve the elimination of the Fund's investment restriction limiting
the Fund's ability to invest in the securities of any issuer in which officers
and Trustees of the Fund or officers and directors of the investment adviser
own more than a specified interest.

7. To ratify the selection by the Trustees of Deloitte & Touche as independent
accountants for the fiscal year ending August 31, 1994.

8. To transact such other business as may properly come before the Meeting or
any adjournment thereof.

Only Class B shares of beneficial interest of the Fund of record at the close of
business on March 31, 1994 are entitled to notice of and to vote at the
Meeting or any adjournment thereof.

___________________________________
SIGNATURE DATE

___________________________________
SIGNATURE (JOINT OWNERSHIP)
<PAGE>

PLEASE MARK, SIGN,
DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

PROXY (CLASS A)

YOUR PROXY WILL BE ELECTRONICALLY SCANNED.
CAREFULLY DETACH HERE AND RETURN BOTTOM PORTION ONLY.
PRUDENTIAL CALIFORNIA MUNICIPAL FUND
CALIFORNIA SERIES
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292

THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES.

The undersigned hereby appoints Susan C. Cote, S. Jane Rose and
Deborah A. Docs as Proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all the
Class A shares of beneficial interest of Prudential California Municipal Fund
(California Series) held of record by the undersigned on March 31, 1994 at the
Special Meeting of Shareholders to be held on June 23, 1994, or any adjournment
thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE PROPOSALS LISTED BELOW.

Your Account No.:
Your voting shares are:

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

1. Election of Directors

APPROVE ALL NOMINEES WITHHOLD ALL NOMINEES WITHHOLD THOSE LISTED ON BACK

TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE, PLEASE WRITE NAME ON BACK OF
FORM.

Edward D. Beach
Eugene C. Dorsey
Delayne Dedrick Gold
Harry A. Jacobs, Jr.
Lawrence C. McQuade
Thomas T. Mooney
Thomas H. O'Brien
Richard A. Redeker
Nancy H. Teeters

2. To approve an amendment of the Fund's Declaration of Trust to permit a
conversion feature for Class B Shares.

3. With respect to shareholders of the California Series and the California
Income Series, to approve an amended and restated Class A Distribution and
Service Plan.

4. NOT APPLICABLE TO CLASS A SHAREHOLDERS.

5. To approve amendments to the Fund's investment restrictions regarding
restricted and illiquid securities.

6. To approve the elimination of the Fund's investment restriction limiting
the Fund's ability to invest in the securities of any issuer in which officers
and Trustees of the Fund or officers and directors of its investment adviser
own more than a specified interest.

7. To ratify the selection by the Trustees of Deloitte & Touche as independent
accountants for the fiscal year ending August 31, 1994.

8. To transact such other business as may properly come before the Meeting or
any adjournment thereof.

Only Class A shares of beneficial interest of the Fund of record at the close of
business on March 31, 1994 are entitled to notice of and to vote at the Meeting
or any adjournment thereof.

_________________________________
SIGNATURE DATE

_________________________________
SIGNATURE (JOINT OWNERSHIP)
<PAGE>

PLEASE MARK, SIGN,
DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.

PROXY (CLASS B)

YOUR PROXY WILL BE ELECTRONICALLY SCANNED.
CAREFULLY DETACH HERE AND RETURN BOTTOM PORTION ONLY.

PRUDENTIAL CALIFORNIA MUNICIPAL FUND
CALIFORNIA SERIES
ONE SEAPORT PLAZA
NEW YORK, NEW YORK 10292

THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES.

The undersigned hereby appoints Susan C. Cote, S. Jane Rose and
Deborah A. Docs as Proxies, each with the power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all the
Class B shares of beneficial interest of Prudential California Municipal Fund
(California Series) held of record by the undersigned on March 31, 1994 at the
Special Meeting of Shareholders to be held on June 23, 1994, or any adjournment
thereof.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL THE PROPOSALS LISTED BELOW.

Your Account No.:
Your voting shares are:

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
1. Election of Directors