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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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SIGNATURE EUGENE S. STARK
TITLE TREASURER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000746518
<NAME> PRUDENTIAL MUNICIPAL SERIES FUND
<SERIES>
<NUMBER> 001
<NAME> CALIFORNIA SERIES (CLASS A)
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<ARTICLE> 6
<CIK> 0000746518
<NAME> PRUDENTIAL MUNICIPAL SERIES FUND
<SERIES>
[NUMBER] 002
<NAME> CALIFORNIA SERIES (CLASS B)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
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[INVESTMENTS-AT-VALUE] 155,659,297
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[SHARES-COMMON-PRIOR] 15,002,544
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (4,239,800)
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[INTEREST-INCOME] 10,717,755
[OTHER-INCOME] 0
[EXPENSES-NET] 1,741,511
[NET-INVESTMENT-INCOME] 8,976,244
[REALIZED-GAINS-CURRENT] 514,615
[APPREC-INCREASE-CURRENT] (1,203,327)
[NET-CHANGE-FROM-OPS] 8,287,532
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (8,976,244)
[NUMBER-OF-SHARES-SOLD] 15,413,483
[NUMBER-OF-SHARES-REDEEMED] (33,442,925)
[SHARES-REINVESTED] 4,904,100
[NET-CHANGE-IN-ASSETS] (13,814,054)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (4,754,415)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 839,649
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,652,202
[AVERAGE-NET-ASSETS] 96,525,000
[PER-SHARE-NAV-BEGIN] 11.49
[PER-SHARE-NII] 0.54
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.60)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 11.43
[EXPENSE-RATIO] 1.21
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
<ARTICLE> 6
<CIK> 0000746518
<NAME> PRUDENTIAL MUNICIPAL SERIES FUND
<SERIES>
[NUMBER] 003
<NAME> CALIFORNIA SERIES (CLASS C)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
[INVESTMENTS-AT-COST] 145,656,500
[INVESTMENTS-AT-VALUE] 155,659,297
[RECEIVABLES] 2,390,189
[ASSETS-OTHER] 1,171,452
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 0
[PAYABLE-FOR-SECURITIES] 298,399
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 313,638
[TOTAL-LIABILITIES] 0
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 152,749,654
[SHARES-COMMON-STOCK] 13,870,998
[SHARES-COMMON-PRIOR] 15,002,544
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (4,239,800)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 10,099,047
[NET-ASSETS] (28,873,542)
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 10,717,755
[OTHER-INCOME] 0
[EXPENSES-NET] 1,741,511
[NET-INVESTMENT-INCOME] 8,976,244
[REALIZED-GAINS-CURRENT] 514,615
[APPREC-INCREASE-CURRENT] (1,203,327)
[NET-CHANGE-FROM-OPS] 8,287,532
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (8,976,244)
[NUMBER-OF-SHARES-SOLD] 15,413,483
[NUMBER-OF-SHARES-REDEEMED] (33,442,925)
[SHARES-REINVESTED] 4,904,100
[NET-CHANGE-IN-ASSETS] (13,814,054)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (4,754,415)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 839,649
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,652,202
[AVERAGE-NET-ASSETS] 286,000
[PER-SHARE-NAV-BEGIN] 11.49
[PER-SHARE-NII] 0.51
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.57)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 11.43
[EXPENSE-RATIO] 1.46
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
<ARTICLE> 6
<CIK> 0000746518
<NAME> PRUDENTIAL CALIFORNIA SERIES FUND
<SERIES>
[NUMBER] 001
<NAME> CALIFORNIA INCOME SERIES (CLASS A)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
[INVESTMENTS-AT-COST] 178,843,280
[INVESTMENTS-AT-VALUE] 189,984,883
[RECEIVABLES] 3,646,176
[ASSETS-OTHER] 14,410
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 0
[PAYABLE-FOR-SECURITIES] 802,315
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 354,701
[TOTAL-LIABILITIES] 0
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 185,242,116
[SHARES-COMMON-STOCK] 18,634,122
[SHARES-COMMON-PRIOR] 18,962,770
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (4,020,891)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 11,267,228
[NET-ASSETS] (37,596,892)
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 12,853,333
[OTHER-INCOME] 0
[EXPENSES-NET] 1,138,504
[NET-INVESTMENT-INCOME] 11,714,829
[REALIZED-GAINS-CURRENT] 575,926
[APPREC-INCREASE-CURRENT] 347,033
[NET-CHANGE-FROM-OPS] 12,637,788
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (11,714,829)
[NUMBER-OF-SHARES-SOLD] 30,762,482
[NUMBER-OF-SHARES-REDEEMED] (39,437,718)
[SHARES-REINVESTED] 5,331,430
[NET-CHANGE-IN-ASSETS] (2,420,847)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (4,596,817)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 988,612
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 600,504
[AVERAGE-NET-ASSETS] 161,420,000
[PER-SHARE-NAV-BEGIN] 10.28
[PER-SHARE-NII] 0.68
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.63)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 10.33
[EXPENSE-RATIO] 0.50
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
<ARTICLE> 6
<CIK> 0000746518
<NAME> PRUDENTIAL CALIFORNIA SERIES FUND
<SERIES>
[NUMBER] 002
<NAME> CALIFORNIA INCOME SERIES (CLASS B)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
[INVESTMENTS-AT-COST] 178,843,280
[INVESTMENTS-AT-VALUE] 189,984,883
[RECEIVABLES] 3,646,176
[ASSETS-OTHER] 14,410
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 0
[PAYABLE-FOR-SECURITIES] 802,315
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 354,701
[TOTAL-LIABILITIES] 0
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 185,242,116
[SHARES-COMMON-STOCK] 18,634,122
[SHARES-COMMON-PRIOR] 18,962,770
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (4,020,891)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 11,267,228
[NET-ASSETS] (37,596,892)
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 12,853,333
[OTHER-INCOME] 0
[EXPENSES-NET] 1,138,504
[NET-INVESTMENT-INCOME] 11,714,829
[REALIZED-GAINS-CURRENT] 575,926
[APPREC-INCREASE-CURRENT] 347,033
[NET-CHANGE-FROM-OPS] 12,637,788
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (11,714,829)
[NUMBER-OF-SHARES-SOLD] 30,762,482
[NUMBER-OF-SHARES-REDEEMED] (39,437,718)
[SHARES-REINVESTED] 5,331,430
[NET-CHANGE-IN-ASSETS] (2,420,847)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (4,596,817)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 988,612
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 600,504
[AVERAGE-NET-ASSETS] 32,555,000
[PER-SHARE-NAV-BEGIN] 10.28
[PER-SHARE-NII] 0.64
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.59)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 10.33
[EXPENSE-RATIO] 0.90
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
<ARTICLE> 6
<CIK> 0000746518
<NAME> PRUDENTIAL CALIFORNIA SERIES FUND
<SERIES>
[NUMBER] 003
<NAME> CALIFORNIA INCOME SERIES (CLASS C)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
[INVESTMENTS-AT-COST] 178,843,280
[INVESTMENTS-AT-VALUE] 189,984,883
[RECEIVABLES] 3,646,176
[ASSETS-OTHER] 14,410
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 0
[PAYABLE-FOR-SECURITIES] 802,315
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 354,701
[TOTAL-LIABILITIES] 0
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 185,242,116
[SHARES-COMMON-STOCK] 18,634,122
[SHARES-COMMON-PRIOR] 18,962,770
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (4,020,891)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 11,267,228
[NET-ASSETS] (37,596,892)
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 12,853,333
[OTHER-INCOME] 0
[EXPENSES-NET] 1,138,504
[NET-INVESTMENT-INCOME] 11,714,829
[REALIZED-GAINS-CURRENT] 575,926
[APPREC-INCREASE-CURRENT] 347,033
[NET-CHANGE-FROM-OPS] 12,637,788
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (11,714,829)
[NUMBER-OF-SHARES-SOLD] 30,762,482
[NUMBER-OF-SHARES-REDEEMED] (39,437,718)
[SHARES-REINVESTED] 5,331,430
[NET-CHANGE-IN-ASSETS] (2,420,847)
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (4,596,817)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 988,612
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 600,504
[AVERAGE-NET-ASSETS] 3,300,000
[PER-SHARE-NAV-BEGIN] 10.28
[PER-SHARE-NII] 0.61
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.56)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 10.33
[EXPENSE-RATIO] 1.15
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
<ARTICLE> 6
<CIK> 0000746518
<NAME> PRUDENTIAL CALIFORNIA SERIES FUND
<SERIES>
[NUMBER] 001
<NAME> CALIFORNIA MONEY MARKET SERIES
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-END> AUG-31-1996
[INVESTMENTS-AT-COST] 0
[INVESTMENTS-AT-VALUE] 245,611,748
[RECEIVABLES] 7,125,113
[ASSETS-OTHER] 71,169
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 0
[PAYABLE-FOR-SECURITIES] 2,637,687
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 337,740
[TOTAL-LIABILITIES] 0
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 249,832,603
[SHARES-COMMON-STOCK] 249,832,603
[SHARES-COMMON-PRIOR] 229,379,861
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] (479,212,464)
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 9,145,824
[OTHER-INCOME] 0
[EXPENSES-NET] 1,899,101
[NET-INVESTMENT-INCOME] 7,246,723
[REALIZED-GAINS-CURRENT] 1,708
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 7,248,431
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] (7,248,431)
[NUMBER-OF-SHARES-SOLD] 1,610,283,415
[NUMBER-OF-SHARES-REDEEMED] (1,596,786,261)
[SHARES-REINVESTED] 6,955,588
[NET-CHANGE-IN-ASSETS] 20,452,742
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 1,280,877
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 1,891,741
[AVERAGE-NET-ASSETS] 256,175,000
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] 0.03
[PER-SHARE-GAIN-APPREC] 0.00
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] (0.03)
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] 0.74
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0.00
</TABLE>
For the fiscal year ended (a) August 31, 1996
File number (c) 811-4024
SUB-ITEM 77-0
EXHIBITS
Transactions Effected Pursuant to Rule 10f-3
II. CA Income Series
1. Name of Issuer
Metropolitan Water Dist S, CA WTRWRKS
2. Date of Purchase
2/15/96
3. Number of Securities Purchased
25,000
4. Dollar Amount of Purchase
$2,345,725
5. Price Per Unit
$93.829
6. Name(s) of Underwriter(s) or Dealer(s)
From whom Purchased
Smith Barney
7. Other Members of the Underwriting Syndicate
See Exhibit A
EXHIBIT A
UNDERWRITER
Smith Barney Inc.
Bear, Stearns & Co. Inc.
Grigsby Brandford & Co., Inc.
PaineWebber Incorporated
E.J. De La Rosa & Co., Inc.
J.P. Morgan Securities Inc.
Lehman Brothers
Merril Lynch & Co.
M.R. Beal & Company
For the fiscal year ended (a) August 31, 1996
File number (c) 811-4024
SUB-ITEM 77-0
EXHIBITS
Transactions Effected Pursuant to Rule 10f-3
II. CA Series
1. Name of Issuer
Puerto Rico Common Hwy & Trans Authority
2. Date of Purchase
3/29/96
3. Number of Securities Purchased
25,183
4. Dollar Amount of Purchase
$2,405,754
5. Price Per Unit
$95.529
6. Name(s) of Underwriter(s) or Dealer(s)
From whom Purchased
Merrill Lynch
7. Other Members of the Underwriting Syndicate
See Exhibit A
EXHIBIT A
UNDERWRITER
Merrill Lynch & Co.
Bear, Stearns & Co. Inc.
Goldman, Sachs & Co.
PaineWebber Incorporated
Citicorp Securities, Inc.
Clark Melvin Securities Corporation
Lehman Brothers
Morgan Stanley & Co. Incorporated
Oriental Financial Services Corp.
Prudential Securities Incorporated
Smith Barney Inc.
cmf1096.77O
The Board of Trustees of
Prudential California Municipal Fund:
In planning and performing our audit of the financial statements of Prudential
California Municipal Fund ("Fund") for the year ended August 31, 1996 (on which
we have issued our report dated October 14, 1996), we considered its internal
control structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with the requirements of Form N-SAR, not
to provide assurance on the internal control structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and related
costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities, in amounts that
would be material in relation to the financial statements being audited, may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
August 31, 1996.
This report is intended solely for the information and use of the Board of
Trustees, management and the Securities and Exchange Commission.
Deloitte & Touche LLP
October 14, 1996
New York, New York
- 2 -
Board of Directors or Trustees of:
Prudential Adjustable Rate Prudential High Yield Fund
Securities Fund* Prudential IncomeVertible Fund*
Prudential Allocation Fund (2 Prudential Intermediate Global
Portfolios) Income Fund
The BlackRock Government Income Prudential Jennison Fund
Trust Prudential MoneyMart Assets
Global Utility Fund Prudential Mortgage Income Fund
Nicholas-Applegate Fund Prudential Multi-Sector Fund
Prudential California Municipal Prudential Municipal Bond Fund
Fund (2 Portfolios) (3 Portfolios)
Prudential Distressed Prudential Municipal Series
Securities Fund Fund (10 current
Prudential Diversified Bond Portfolios and 3 merged
Fund Portfolios*)
Prudential Equity Fund Prudential National Municipals
Prudential Equity Income Fund Fund
Prudential Global Genesis Fund Prudential Pacific Growth Fund
Prudential Global Limited Prudential Small Companies Fund
Maturity Fund Prudential Structured Maturity
Prudential Global Natural Fund
Resources Fund Prudential U.S. Government
The Global Government Plus Fund Fund*
The Global Total Return Fund Prudential Utility Fund
Prudential Government Income Prudential World Fund
Fund
Prudential Government
Securities Trust - Money
Market Series
* As of June 30, 1996, the Fund/Portfolio was no longer in operation. The
Fund/Portfolio merged into
another Fund within the Prudential Mutual Fund Family.
We have examined the accompanying description of the Prudential Multiple Class
Pricing Worksheet (the "Worksheet") application of State Street Bank and Trust
Company ("State Street"), custodian and recordkeeper for the Prudential Mutual
Funds (the "Funds"). Our examination included procedures to obtain reasonable
assurance about whether (1) the accompanying description presents fairly, in all
material respects, the aspects of State Street's policies and procedures that
may be relevant to a Fund's internal control structure relating to the
Worksheet, (2) the control structure policies and procedures included in the
description were suitably designed to achieve the control objectives specified
in the description, if those policies and procedures were complied with
satisfactorily, and (3) such policies and procedures had been placed in
operation as of June 30, 1996. The control objectives were specified by
Prudential Mutual Fund Management, Inc. Our examination was performed in
accordance with standards established by the American Institute of Certified
Public Accountants and included those procedures we considered necessary in the
circumstances to obtain a reasonable basis for rendering our opinion.
In our opinion, the accompanying description of the aforementioned application
presents fairly, in all material respects, the relevant aspects of State
Street's policies and procedures that had been placed in operation as of
June 30, 1996. Also, in our opinion, the policies and procedures, as described,
are suitably designed to provide reasonable assurance that the specified control
objectives would be achieved if the described policies and procedures were
complied with satisfactorily.
In addition to the procedures we considered necessary to render our opinion as
expressed in the previous paragraph, we applied tests to specific policies and
procedures, listed in Section I, to obtain evidence about their effectiveness in
meeting the control objectives, described in Section I during the period from
July 1, 1995 to June 30, 1996. The nature, timing, extent, and results of the
tests are listed in Section II. In our opinion the policies and procedures that
were tested, as described in Section II, were operating with sufficient
effectiveness to provide reasonable, but not absolute, assurance that the
control objectives specified in Section I were achieved during the period from
July 1, 1995 to June 30, 1996. However, the scope of our engagement did not
include tests to determine whether control objectives not listed in Section I
were achieved; accordingly we express no opinion on the achievement of control
objectives not included in Section I.
The relative effectiveness and significance of specific policies and procedures
at State Street, and their effect on assessments of control risk on the Funds
are dependent on their interaction with the policies, procedures, and other
factors present at individual Funds. We have performed no procedures to
evaluate the effectiveness of policies and procedures at individual Funds in
connection with this report.
The description of policies and procedures at State Street is as of June 30,
1996, and information about tests of the operating effectiveness of specified
policies and procedures covers the period from July 1, 1995 to June 30, 1996.
Any projection of such information to the future is subject to the risk that,
because of change, the description may no longer portray the system in
existence. The potential effectiveness of specified policies and procedures at
State Street is subject to inherent limitations and, accordingly, errors or
irregularities may occur and not be detected. Furthermore, the projection of
any conclusions, based on our findings, to future periods is subject to the risk
that changes may alter the validity of such conclusions.
This report is intended solely for use by the management and Boards of
Directors/Trustees of the Funds, the independent auditors of the Funds and the
Securities and Exchange Commission.
August 23, 1996
SECTION I
Policies and Procedures Placed in Operation
Prudential Multiple Class Pricing Worksheet
The Prudential Mutual Funds (the "Funds") have adopted a multiple class pricing
system. The multiple class pricing system consists of four classes of shares
(Class A, Class B, Class C and Class Z). Class A shares are subject to an
initial sales charge, Class B and Class C shares are subject to a contingent
deferred sales charge and Class Z shares have no sales charge (Class Z shares
which were first offered on March 1, 1996, are offered exclusively for sale to
the PSI Pension Plan). Each of the classes of shares represent interests in the
same portfolio of investments of the respective Fund and are identical in all
respects, except that each class is subject to different distribution expenses
and has exclusive voting rights with respect to the Rule 12b-1 distribution plan
pursuant to which such distribution expenses are paid.
In order to allocate income and expenses among the classes of shares, State
Street Bank and Trust Company (the Funds' custodian and recordkeeper) utilizes
the Prudential Multiple Class Pricing Worksheet (the "Worksheet") (see Exhibit
I). The Worksheet is a manual supplementary application that extracts relevant
data from the Funds' primary accounting system, allocates income and expenses
among the classes of shares and computes the daily net asset value and, if
applicable, the dividend/distribution for each class of shares. Internal
accounting controls that are relevant to the Fund can be divided into two
components - controls related to the mutual fund accounting system resident at
State Street Bank and Trust Company (the "primary accounting system") and
controls related to the Worksheet.
The specific control objectives and policies and procedures relating to the
Worksheet are described on pages 4 and 5. A description of the tests of the
policies and procedures designed to obtain evidence about the operating
effectiveness of those policies and procedures in achieving the specific control
objectives is included in Section II.
Control Objectives and Policies and Procedures
Prudential Multiple Class Pricing Worksheet
The Worksheet is a supplementary manual application to the Funds' primary
accounting system. Certain data is extracted from the primary accounting system
to allocate income and expenses and to calculate the daily net asset value and,
if applicable, dividends/distributions for each class of shares. The primary
accounting system includes the details of transactions in accordance with the
Investment Company Act of 1940, as amended.
The following represents the internal accounting control objectives and policies
and procedures for the allocation of income and expenses and the computation of
the net asset value and, if applicable, the dividend/distribution for each class
of shares utilizing the Worksheet. It does not cover the internal accounting
control policies and procedures surrounding the processing of information into
the Funds' primary accounting system.
CONTROL POLICIES
CONTROL OBJECTIVES AND PROCEDURES
A. Capital share activity as 1. Daily, the transfer agent
reported by the Fund's transfer forwards reports of capital
agent is recorded for each class share activity for each class
in an accurate and timely manner which includes a summary of
by the Fund. subscriptions, redemptions,
exchanges and other
information (the
"Supersheet"). The opening
day's balance for shares
outstanding and current day
activity is recorded on the
Worksheet.
2. Estimated interim share
activity for the current day
not recorded in the Supersheet
is received via telefax from
the transfer agent and is
recorded for each class on the
Worksheet.
3. A report of outstanding shares
eligible for dividends is
received from the transfer
agent and is recorded for each
class on the Worksheet.
B. Net Asset Value ("NAV") and, if 1. The prior days ending NAV per
applicable, the share (b) for each class is
dividend/distribution for each agreed to the prior day's
class are accurately computed on Worksheet.
a daily basis.
2. The daily net capital stock
activity for each class for
the current day is agreed to
the Supersheet as described
in Control Procedures A.1.,
2. and 3., above.
3. Percentage Assets by Class
and Percentage Dividend
Assets by Class are
calculated for each class
based upon information from
the prior day Worksheet, the
Supersheet and the telefax
from the transfer agent.
CONTROL POLICIES
CONTROL OBJECTIVES AND PROCEDURES
4. Allocate investment income
among classes based on the
appropriate asset allocation
percentage for each class.
5. Agree composite income
accounts, management fees,
other expenses, realized
gains and losses, and
unrealized
appreciation/depreciation to
the primary accounting system
of the Fund.
6. Allocate expenses among
classes as follows:
a. Expenses directly
attributable to each class
(12b-1 distribution
expenses) are calculated
and recorded to that
class.
b. Expenses attributable to
both classes are allocated
in accordance with the
appropriate asset
allocation percentage for
each class.
7. Allocate realized and unrealized
gains and losses among the
classes in accordance with the
appropriate asset allocation
percentage of each class.
8. Record
dividends/distributions to
shareholders of each class in
the primary accounting
system.
9. Aggregate the net assets for
each class and agree to the
total net assets per the
primary accounting system.
10.For each class, reconcile the
current day's NAV and, if
applicable, the
dividend/distribution to the
previous day's NAV and
dividend/ distribution for
each class.
11.The above procedures are
reviewed by the Fund
supervisor or manager.
SECTION II
Tests of Operating Effectiveness
Prudential Multiple Class Pricing Worksheet
July 1, 1995 to June 30, 1996
We reviewed the methodology and procedures for calculating the daily net asset
value and, if applicable, the dividends/distributions of the classes of shares
and the allocation of income and expenses among the classes of shares.
The following are the detailed procedures which we performed with respect to the
Worksheet. These procedures were performed for selected days encompassing all
Funds subject to multiple class pricing during the year ended June 30, 1996,
which we believe is a representative sample, to test compliance with the control
policies and procedures as described in Section I.
Prudential Mutual Fund Management, Inc. is the manager of the Funds and has
represented to us that adequate facilities are in place to ensure implementation
of the methodology and procedures for calculating the net asset value and
dividends/distributions of the classes of shares and the allocation of income
and expenses among the classes of shares. Based on our review of the
description of the policies and procedures of the Worksheet, as described in
Section I, and performance of tests of operating effectiveness as described in
Section II, we concur with such representation.
Agreed "Prior Day NAV Per Share" to the previous day's Worksheet.
Agreed "Shares Outstanding Beginning of the Day" to the previous day's
Worksheet and to the transfer agency records for each class.
Recalculated "Activity/Estimate" by adding the estimated interim share
activity reported via fax from the transfer agent and the current day's
"Capital Stock Activity" reported on the Supersheet for each class.
Recalculated "Current Shares Outstanding" by adding "Shares Outstanding
Beginning of the Day" and "Activity/Estimate" for each class.
Recalculated for each class "Adjusted Total Assets" by multiplying "Prior
Day NAV Per Share" by "Current Shares Outstanding".
Recalculated "Percentage Assets-Class A/Front End" by dividing "Adjusted
Total Assets-Class A/Front End" by "Adjusted Total Assets Composite".
Recalculated "Percentage Assets-Class B(C)/Back End" by dividing "Adjusted
Total Assets-Class B(C)/Back End" by "Adjusted Total Assets Composite".
Recalculated "Percentage Assets-Class Z/No Fee" where applicable, by
dividing "Adjusted Total Assets-Class Z/No Fee" by "Adjusted Total Assets
Composite".
Agreed "Dividend Shares" to the transfer agency records for each class.
Recalculated "Current Dividend Shares" by adding "Dividend Shares Beginning
of Day" and "Activity/Estimate" for each class.
Recalculated for each class "Adjusted Dividend Assets" by multiplying "Prior
Day NAV Per Share" by "Current Dividend Shares".
Recalculated "Percentage Dividend Assets-Class A/Front End" by dividing
"Adjusted Dividend Assets-Class A/Front End" by "Adjusted Dividend Assets
Composite".
Recalculated "Percentage Dividend Assets-Class B(C)/Back End" by dividing
"Adjusted Dividend Assets-Class B(C)/Back End" by "Adjusted Dividend Assets
Composite".
Recalculated "Percentage Dividend Assets-Class Z/No Fee" where applicable,
by dividing "Adjusted Dividend Assets-Class Z" by "Adjusted Dividend Assets
Composite".
Agreed composite total of each component of income to the primary accounting
system.
Recalculated the allocation for each class of each component of income for
daily dividend funds by multiplying the composite total by "Percentage
Dividend Assets-Class A/Front End", "Percentage Dividend Assets-Class
B(C)/Back End" and where applicable, "percentage Dividend Assets-Class Z/No
Fee", and for non-daily dividend funds by multiplying the composite total by
"Percentage Assets-Class A/Front End", "Percentage Assets-Class B(C)/Back
End" and where applicable, "Percentage Assets-Class Z/No Fee".
Recalculated "Daily Income," composite and for each class, by totaling each
component of income.
Agreed composite total "Management Fee" and "Other Fixed Expenses" to the
primary accounting system.
Recalculated the allocation for each class of "Management Fee" and "Other
Fixed Expenses" for daily dividend funds by multiplying the composite total
by "Percentage Dividend Assets-Class A/Front End", "Percentage Dividend
Assets-Class B(C)/Back End" and where applicable, "percentage Dividend
Assets-Class Z/No Fee", and non-daily dividend funds by multiplying the
composite total by "Percentage Assets-Class A/Front End", "Percentage Assets-
Class B(C)/Back End" " and where applicable, "Percentage Assets-Class Z/No
Fee"
Agreed the "12b-1 Fee-Class A/Front End" and "12b-1 Fee-Class B(C)/Back End"
to the respective "PC Expense Worksheet".
Recalculated "Daily Expense," composite and for each class, by totaling
"Management Fee," "12b-1 Fee" and "Other Fixed Expenses".
Recalculated "Daily Net Income" for each class by subtracting "Daily
Expense" from "Daily Income".
Recalculated "Dividend Rate" for each class for daily dividend funds by
dividing "Daily Net Income" by "Dividend Shares Beginning of Day-Class
A/Front End", "Dividend Shares Beginning of Day-Class B(C)/Back End" and
where applicable, "Dividend Shares Beginning of Day-Class Z/No Fee".
Agreed "Daily Income" and "Income Distribution" for each class to the
primary accounting system.
Agreed the "Capital Gain Distribution" to the amount recorded in the primary
accounting system.
Agreed composite total "Realized Gain/Loss" and "Unrealized
Appreciation/Depreciation" to the primary accounting system.
Recalculated the allocation for each class of "Realized Gain/Loss" and
"Unrealized Appreciation/Depreciation" by multiplying the composite amount
by the "Percentage Assets-Class A/Front End", "Percentage Assets-Class
B(C)/Back End" and where applicable, "Percentage Assets-Class Z/No Fee".
Agreed "Prior Days Net Assets" to the previous day's Worksheet.
Recalculated "Net Assets", composite and for each class, by totaling "Daily
Net Income", "Income nDistributed", "Capital Stock Activity", "Capital Gain
Distribution", "Realized Gain/Loss", "Unrealized Appreciation/Depreciation",
and "Prior Days Net Assets".
Recalculated "NAV Per Share" dividing the "Net Assets-Class A/Front End",
"Net Assets - Class B(C)/Back End" and where applicable, "Net Assets-Class
Z/No Fee" by "Current Shares Outstanding - Class A/Front End", "Current
Shares Outstanding - Class B(C)/Back End" and where applicable, "Current
Shares Outstanding-Class Z/No Fee", respectively.
Recalculated "Offering Price" for Class A shares by applying the "Load"
percentage as stated in the fund's prospectus.
