PRUDENTIAL CALIFORNIA MUNICIPAL FUND, N-30D, 2000-11-08

PRUDENTIAL CALIFORNIA MUNICIPAL FUND
N-30D, 2000-11-08

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<PAGE>

ANNUAL REPORT AUGUST 31, 2000

Prudential
California Municipal Fund/
California Series

Fund Type Municipal Bond

Objective Maximize current income that is exempt
from California State and federal income taxes,
consistent with the preservation of capital

(GRAPH)

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

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

(LOGO)

<PAGE>

Build on the Rock

Investment Goals and Style
The Prudential California Municipal Fund/California
Series seeks to invest primarily in carefully
selected long-term municipal bonds that provide the
maximum amount of income that is exempt from
California State and federal income taxes,
consistent with the preservation of capital.
However, certain shareholders may be subject to the
alternative minimum tax (AMT) because some of the
Series' bonds are AMT eligible. There can be no
assurance that the Series will achieve its
investment objective.

Portfolio Composition

Expressed as a percentage of
total investments as of 8/31/00
48.9% General Obligation Bonds
39.1 Revenue Bonds
11.0 Prerefunded
1.0 Miscellaneous

Credit Quality

Expressed as a percentage of
total investments as of 8/31/00
14.3% AAA
9.9 AA
12.3 A
23.8 BBB
2.4 B
37.3 Insured

Ten Largest Issuers

Expressed as a percentage of
net assets as of 8/31/00
15.1% Southern California Public
Power Authority
7.6 Orange County Local
Transportation Authority
6.5 Foothill/Eastern Transportation
Corridor Agency*
4.7 Long Beach Harbor Revenue
4.1 Metro Water District of
Southern California
4.0 Brea Public Finance
Authority Revenue
3.8 Chula Vista
Redevelopment Agency
3.5 San Bernardino County
3.4 Fairfield Public Finance
Authority Revenue*
3.3 South Orange County
Public Finance Authority

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

<PAGE>

www.prudential.com (800) 225-1852
Performance at a Glance

Cumulative Total Returns1 As of 8/31/00
One Five Ten Since
Year Years Years Inception2
Class A 8.35% 33.54% (33.42%) 97.63% (97.29%) 101.27% (100.93%)
Class B 8.18 31.23 (31.12) 90.39 (90.07) 212.08 (205.46)
Class C 7.91 29.62 (29.51) N/A 39.13 (38.89)
Class Z 8.71 N/A N/A 26.82 (26.71)
Lipper CA
Muni Debt
Fund Avg.3 6.47 31.08 94.23 ***

Average Annual Total Returns1 As of 9/30/00
One Five Ten Since
Year Years Years Inception2
Class A 4.33% 5.08% (5.06%) 6.68% (6.66%) 6.39% (6.37%)
Class B 2.20 5.17 (5.16) 6.60 (6.58) 7.30 (7.14)
Class C 4.86 4.87 (4.85) N/A 5.19 (5.16)
Class Z 7.82 N/A N/A 5.89 (5.86)

Distributions and Yields As of 8/31/00
Total Distributions 30-Day Taxable Equivalent Yield4 at Tax Rates of
Paid for 12 Months SEC Yield 36% 39.6%
Class A $0.58 4.26% 7.34% 7.78%
Class B $0.56 4.15 7.15 7.58
Class C $0.53 3.86 6.65 7.05
Class Z $0.61 4.64 7.99 8.47

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

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

2 Inception dates: Class A, 1/22/90; Class B,
9/19/84; Class C, 8/1/94; and Class Z, 9/18/96.

3 Lipper Average returns are for all funds in each
share class for the one-, five-, and ten-year
periods in the California Municipal Debt Fund
category. Single-state Municipal Debt funds limit
their securities that are exempt from taxation in a
specified state (double tax exempt) or city (triple
tax exempt).

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

***Lipper Since Inception returns are 99.76% for
Class A, 241.88% for Class B, 40.93% for Class C,
and 22.11% for Class Z, based on all funds in each
share class.

1
<PAGE>

(LOGO) October 18, 2000

Dear Shareholder,
During our fiscal year ended August 31, 2000, share
classes of the Prudential California Municipal
Fund/California Series, without considering the
initial sales charge, outperformed their benchmark
Lipper Average, which is not subject to sales
charges. The Series performed well even though
conditions in the municipal bond market were very
volatile.

Municipal bond prices began to fall early in our
fiscal year because the Federal Reserve (the Fed)
repeatedly increased short-term interest rates to
slow a rapidly expanding U.S. economy. However,
higher interest rates and strong economic growth
caused issuance of municipal bonds to decline at a
time when many investors sought the tax-exempt
income provided by these securities. This strong
investor demand helped
municipal bond prices end the 12 months higher.

Amid these shifting market conditions, Prudential's
Municipal Bond
sector team took advantage of changing investment
opportunities.
The team accomplished this by skillfully managing
the risk that fluctuating interest rates could pose
to the Series' securities, by evaluating bond
issuers' ability to make timely principal and
interest payments, and by identifying undervalued
bonds.

We discuss developments in the municipal bond
market and explain the Series' investments on the
following pages. As always, we appreciate your
continued confidence in Prudential mutual funds,
and look forward to serving your future investment
needs.

Sincerely,

John R. Strangfeld, President
Prudential California Municipal Fund

<PAGE>

Prudential California Municipal Fund California Series
Annual Report August 31, 2000

Investment Adviser's Report

Municipal bonds gained amid volatile market
conditions
Prices of municipal bonds went on a roller coaster
ride during our fiscal year that began September 1,
1999. They ended the 12 months higher as investors
hurriedly bought a shrinking supply of newly issued
tax-exempt securities. Furthermore, prices of munis
finished the 12 months higher on the belief that
the Fed was nearly through with its latest round of
increases in short-term interest rates.

The Fed raised short-term rates four times during
our fiscal year out of concern that an overheated
U.S. economy might ignite higher inflation via
rising consumer prices and accelerating wages. By
lifting short-term rates, the Fed pushed borrowing
costs higher for businesses and consumers, which it
hoped would slow economic growth to a more
sustainable pace and help check inflationary
pressures.

Timely duration moves
The trend toward higher short-term rates had
initially led investors to require higher yields on
municipal securities (and lower prices). In order
to reduce our portfolio's sensitivity to the rise
in interest rates, we lowered the Series' duration
in the early autumn of 1999. (Duration measures how
much a portfolio's bonds will fluctuate in price
for a given change in interest rates. It is
expressed in years.)

As the year 2000 began, we expected the Fed to
continue tightening monetary policy. We also
believed that further rate increases would
ultimately be viewed as positive by the bond market
because they would show the Fed's determination to
fight inflation. With this in mind, we began to
lengthen the Series' duration in January 2000,
which enabled the Series to benefit more fully as
prices of munis rallied later in the year. Our
timely adjustments to the Series' duration was an
important reason that, without considering sales
charges, the Series' share classes outperformed
their benchmark Lipper Average, which is not
subject to sales charges.

3
<PAGE>

Prudential California Municipal Fund California Series
Annual Report August 31, 2000

Focus on intermediate-term municipal bonds
The municipal bond rally picked up steam in the
spring of 2000 after the Fed aggressively raised
rates in mid-May. Data indicated that economic
growth was moderating. This in turn fueled optimism
that the Fed would not have to continue hiking
rates during the remainder of 2000. Consequently,
many investors willingly paid higher prices for
munis and accepted lower yields.

The generally strong demand for tax-exempt bonds
helped the Lehman Municipal Bond Index to return
7.56% for the first eight months of 2000, compared
with only 4.10% for the Standard & Poor's 500 Composite
Stock Price Index. Munis maturing in 10 to 15 years
performed well. Some investors sought to shelter stock market gains
by reinvesting in these intermediate-term munis
because their prices tend to be less volatile
than prices of longer-term tax-exempt bonds. Our
sizable exposure to intermediate-term munis helped bolster the Series'
total returns.

Upgrading The Golden State's bonds
While investors scrambled to buy municipal bonds,
the supply of newly issued tax-exempt securities
dwindled. Many state and local governments
accumulated such hefty cash reserves during the
long U.S. economic expansion that their borrowing
needs declined. This in turn led to decreased
issuance of tax-exempt bonds. In addition, the
supply of new issues due to refunding activity
shrank, as many state and local governments had
already replaced higher-cost debt securities with
lower-cost bonds to save on interest expenses.

California's economy has been especially vibrant so
the amount of newly issued munis from August 31,
1999 to August 31, 2000 dropped 29%, compared with
the same period a year earlier, according to
Thomson Financial Securities Data. Favorable
economic conditions were among the factors that
prompted Fitch IBCA to upgrade its rating of
California general obligation bonds to AA from AA
minus in February 2000. Moody's Investors Service
upgraded the bonds to Aa2 from Aa3, and Standard & Poor's
upgraded them to AA from AA minus shortly after our
fiscal year ended.

4
<PAGE>

www.prudential.com (800) 225-1852

We do not currently own California general
obligation bonds because strong investor demand has
driven down their yields to relatively unattractive
levels. We did purchase tax-exempt bonds backed by
United Airlines when they were trading at very
attractive levels. Concern about the impact of
higher fuel and labor costs on the profitability of
the airline industry had pressured prices of these
bonds. As market fears subsided, however, the
bonds' performance improved, and we sold them at a
profit. In addition, we owned bonds of Vacaville,
California Redevelopment Agency, which rallied when
they became "prerefunded" or backed by direct
obligations of the U.S. Treasury. This development
also boosted the Series' total returns.

Looking Ahead
Several factors could keep the rally of municipal
bond prices on track. As the Fed rate hikes work
their way through the economy, economic growth
could continue to moderate, allowing further
declines in bond yields and gains in bond prices.
Even if the economic expansion does not slow enough
to satisfy the Fed, the central bank may resume
tightening monetary policy. This could further
reassure the bond market of the Fed's determination
to fight inflation.

We also expect further gains in tax-exempt bond
prices because demand for munis will likely
continue to outpace supply for some time. We
believe this imbalance will persist due to the
aging population's higher preference for tax-
exempt, fixed-income products, and the declining
supply of long-term debt securities in general. In
the near term, however, two risks to this bullish
scenario are the proposals or policies that may
come out of the U.S. Presidential election and the
extent of price increases for energy. Uncertainty
about these factors may make investors somewhat
reluctant to continue driving prices of tax-exempt
securities higher. However, uncertainty could also
make munis more attractive as a means to reduce
risks in the context of a broader portfolio.

Prudential California Municipal Fund Management Team

5
<PAGE>
Prudential California Municipal Fund California Series
Annual Report August 31, 2000

Financial
Statements

<PAGE>
Prudential California Municipal Fund California Series
Portfolio of Investments as of August 31, 2000
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 97.8%
Abag Fin. Auth. Rev., Schools of
Sacred Heart, Ser. A Baa3 6.45% 6/01/30 $ 1,500 $ 1,562,325
Baldwin Park Pub. Fin. Auth.
Rev., Tax Alloc. BBB(d) 7.05 9/01/14 1,020 1,142,492
Brea Pub. Fin. Auth. Rev., Sub.
Tax Alloc. Redev. Proj., Ser. C NR 8.10 3/01/21 5,000 5,158,750
Buena Park Cmnty. Redev. Agcy.,
Central Bus. Dist. Proj. BBB+(d) 7.10 9/01/14 2,500 2,621,400
California St. Hsg. Fin. Agcy.
Rev., Sngl. Fam. Mtge., Ser. A Aa2 Zero 2/01/15 8,420 2,155,015
Chula Vista Redev. Agcy.,
Bayfront Tax Alloc. BBB+(d) 7.625 9/01/24 4,500 4,985,910
Commerce California Cmnty. Dev.
Comm., Rfdg. Merged Redev.
Proj., Ser. A NR 5.65 8/01/18 1,175 1,138,176
East Palo Alto Sanit. Dist.,
Cert. of Part. NR 8.25 10/01/15 1,295 1,323,386
Fairfield Pub. Fin. Auth. Rev.,
Fairfield Redev. Projs., Ser. A NR 7.90 8/01/21 4,200(b) 4,428,732
Foothill/Eastern Trans. Corridor
Agcy.,
Toll Rd. Rev. Aaa Zero 1/01/13 2,250(b) 2,041,290
Toll Rd. Rev. Aaa Zero 1/01/16 5,000 2,241,950
Toll Rd. Rev. Aaa Zero 1/01/18 2,950 1,163,539
Toll Rd. Rev. Baa3 Zero 1/15/26 5,200 2,979,964
Grass Valley Redev. Agcy.,
Redev. Proj. BBB(d) 6.40 12/01/34 2,000 2,050,820
Kings Cnty. Wst. Mgmt. Auth.,
Solid Wst. Rev., A.M.T. BBB(d) 7.20 10/01/14 1,150 1,240,390
Long Beach Harbor Rev., Ser. A,
A.M.T., F.G.I.C. Aaa 6.00 5/15/16 5,500 6,042,520
Long Beach Redev. Agcy. Dist.
No. 3, Spec. Tax Rev.
(cost $2,950,530; purchased
10/18/93) NR 6.375 9/01/23 3,000(c) 3,064,200
</TABLE>
See Notes to Financial Statements 7

<PAGE>
Prudential California Municipal Fund California Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Los Angeles Cnty., Cert. of
Part., Correctional Facs.
Proj., M.B.I.A. Aaa Zero 9/01/10 $ 3,770 $ 2,394,704
Los Angeles Cnty., Hsg. Auth.,
Multi-fam. Mtge. Rev.,
Mayflower Gardens Proj.,
Ser. K, G.N.M.A. NR 8.875% 12/20/10 2,100(b) 2,192,190
Los Angeles Community Red. Agcy.
Parking Sys. Rev. A(d) 5.40 7/01/15 1,145 1,156,141
Los Angeles Conv. & Exhib. Ctr.
Auth., Cert. of Part. Aaa 9.00 12/01/10 1,250(b) 1,539,200
Met. Wtr. Dist. of Southern
California,
Rev. Linked S.A.V.R.S. &
R.I.B.S. Aa2 5.75 8/10/18 1,000 1,063,630
Waterworks Rev. Rfdg., Ser. A Aa2 5.75 7/01/21 4,000 4,251,200
Midpeninsula Regional Open Space
Dist. Fin. Auth. Rev., 1996,
A.M.B.A.C. Aaa Zero 9/01/15 3,000 1,384,950
Mojave Desert Solid Wst. Victor
Vally Materials, Recov. Fac.,
A.M.T. Baa1 7.875 6/01/20 1,175 1,254,124
Orange Cnty. Cmnty. Facs. Dist.,
Spec. Tax Rev., No. 87-5B,
Rancho Santa Margarita NR 7.50 8/15/17 1,750(b) 1,893,010
Orange Cnty. Loc. Trans. Auth.,
Linked S.A.V.R.S. & R.I.B.S.,
A.M.B.A.C. Aaa 6.20 2/14/11 8,000 9,002,560
Spec. Tax Rev., R.I.B.S. Aa3 7.604(e) 2/14/11 750 910,312
Petaluma City Joint Union High
Sch. Dist.,
Capital Apprec., M.B.I.A. Aaa Zero 8/01/15 1,600 742,896
Capital Apprec., M.B.I.A. Aaa Zero 8/01/16 1,455 632,809
Capital Apprec., M.B.I.A. Aaa Zero 8/01/17 3,015 1,230,180
Port Redwood City Rev., A.M.T. BBB(d) 5.125 6/01/30 1,600 1,373,296
</TABLE>
8 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Puerto Rico Comnwlth.
Gen. Oblig.,
Ser. 642A, M.B.I.A. NR 7.497%(e) 7/01/10 $ 1,000 $ 1,195,130
Puerto Rico Ind. Tourist Edl.,
Cogen Fac. AES Proj., A.M.T. Baa2 6.625 6/01/26 2,000 2,084,860
Redding Elec. Sys. Rev.,
Cert. of Part., R.I.B.S.,
M.B.I.A. Aaa 8.457(e) 7/01/22 1,750 2,089,062
Linked S.A.V.R.S. & R.I.B.S.,
M.B.I.A. Aaa 6.368 7/01/22 50 54,854
Roseville City Sch. Dist., Cap.
Apprec. Ser. A, F.G.I.C. Aaa Zero 8/01/10 1,230 779,709
San Bernardino Cnty., Cert. of
Part., Med. Ctr. Fin. Proj.,
M.B.I.A. Aaa 5.50 8/01/22 4,400 4,536,224
San Francisco City & Cnty.,
Redev. Agcy., Lease Rev.,
Cap. Apprec. A1 Zero 7/01/09 2,000 1,329,120
San Jose, Unified Sch. Dist.,
Santa Clara, Gen. Oblig.,
Ser. A, F.G.I.C. Aaa Zero 8/01/17 1,350 550,827
Santa Margarita/Dana Point Auth.
Rev.,
Ser. 644A, M.B.I.A. NR 13.827(e) 8/01/08 825 1,320,470
Ser. 644B, M.B.I.A. NR 13.827(e) 8/01/09 325 535,408
Ser. 644C, M.B.I.A. NR 13.827(e) 8/01/09 460 757,652
Ser. 644G, M.B.I.A. NR 13.827(e) 8/01/14 330 576,032
So. Orange Cnty. Pub. Fin.
Auth., Spec. Tax Rev., M.B.I.A. Aaa 7.00 9/01/11 3,500 4,259,465
So. Tahoe Joint Pwrs. Fin. Auth.
Rev., Rfdg. So. Tahoe Redev.
Proj., Ser. A BBB-(d) 5.375 10/01/30 1,250 1,136,888
</TABLE>
See Notes to Financial Statements 9

<PAGE>
Prudential California Municipal Fund California Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Southern California Pub. Pwr.
Auth.,
Proj. Rev. A3 6.75% 7/01/10 $ 2,265 $ 2,648,510
Proj. Rev. A3 6.75 7/01/11 1,195 1,399,907
Proj. Rev. A3 6.75 7/01/12 2,935 3,461,451
Proj. Rev. A3 6.75 7/01/13 4,000 4,685,920
Proj. Rev., A.M.B.A.C. Aaa Zero 7/01/16 7,925 3,504,752
Proj. Rev., Ser. A, F.G.I.C. Aaa Zero 7/01/12 7,080 3,960,410
Stockton Cmnty. Facs. Dist. No.
90-2, Brookside Estates NR 6.20 8/01/15 700 718,928
Sulphur Springs Union Sch.
Dist., Ser. A, M.B.I.A. Aaa Zero 9/01/09 2,000 1,334,080
Vacaville Cmnty. Redev. Agcy.,
Cmnty. Hsg. Fin. Multi-fam. A-(d) 7.375 11/01/14 1,110(b) 1,266,144
Victor Valley Union High Sch.
Dist.,
Gen. Oblig., M.B.I.A. Aaa Zero 9/01/09 2,075 1,393,881
Gen. Oblig., M.B.I.A. Aaa Zero 9/01/15 5,070 2,371,543
Virgin Islands Terr., Hugo Ins.
Claims Fund Proj., Ser. 91 NR 7.75 10/01/06 605(b) 632,891
Walnut Valley Unified Sch.
Dist., M.B.I.A. Aaa 6.00 8/01/15 1,870 2,060,721
------------
Total long-term investments
(cost $115,453,082) 127,006,900
------------
SHORT-TERM INVESTMENT
----------------------------------------------------------------------------------------
California Hlth. Fac. Fin. Auth.
Rev., Ser. A
(cost $10,000) VMIG1 3.40 9/01/00 10 10,000
------------
Total Investments 97.8 %
(cost $115,463,082; Note 4) 127,016,900
Other assets in excess of
liabilities 2.2% 2,872,671
------------
Net Assets 100% $129,889,571
------------
------------
</TABLE>

10 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Series
Portfolio of Investments as of August 31, 2000 Cont'd.

(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation.
A.M.T.--Alternative Minimum Tax.
F.G.I.C.--Financial Guaranty Insurance Company.
G.N.M.A.--Government National Mortgage Association.
M.B.I.A.--Municipal Bond Insurance Association.
R.I.B.S.--Residual Interest Bearing Securities.
S.A.V.R.S.--Select Auction Variable Rate Securities.
(b) Prerefunded issues are secured by escrowed cash and/or direct U.S.
guaranteed obligations.
(c) Indicates a restricted security. The aggregate cost of restricted securities
is $2,950,530 and the aggregate value is $3,064,200 which represents
approximately 2.4% of net assets.
(d) Standard & Poor's Rating.
(e) Inverse floating rate bond. The coupon is inversely indexed to a floating
interest rate. The rate shown is the rate at year end.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Statement of Additional Information contains a description of
Moody's and Standard & Poor's ratings.
See Notes to Financial Statements 11

<PAGE>
Prudential California Municipal Fund California Series
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
August 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $115,463,082) $ 127,016,900
Cash 10,451
Receivable for investments sold 3,178,920
Interest receivable 1,492,148
Receivable for Series shares sold 20,200
Other assets 3,094
-----------------
Total assets 131,721,713
-----------------
LIABILITIES
Payable for investments purchased 966,350
Payable for Series shares reacquired 651,630
Dividends payable 68,274
Management fee payable 55,223
Accrued expenses 44,986
Distribution fee payable 34,669
Deferred trustee's fees 11,010
-----------------
Total liabilities 1,832,142
-----------------
NET ASSETS $ 129,889,571
-----------------
-----------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 110,270
Paid-in capital in excess of par 120,043,155
-----------------
120,153,425
Accumulated net realized loss on investments (1,817,672)
Net unrealized appreciation on investments 11,553,818
-----------------
Net assets, August 31, 2000 $ 129,889,571
-----------------
-----------------
</TABLE>

12 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Series
Statement of Assets and Liabilities Con't.
<TABLE>
<CAPTION>
August 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share ($94,775,534
/ 8,045,400 shares of beneficial interest issued and
outstanding) $11.78
Maximum sales charge (3% of offering price) .36
-----------------
Maximum offering price to public $12.14
-----------------
-----------------
Class B:
Net asset value, offering price and redemption price per
share
($32,403,283 / 2,751,575 shares of beneficial interest
issued and outstanding) $11.78
-----------------
-----------------
Class C:
Net asset value and redemption price per share
($1,111,932 / 94,421 shares of beneficial interest
issued and outstanding) $11.78
Sales charge (1% of offering price) .12
-----------------
Offering price to public $11.90
-----------------
-----------------
Class Z:
Net asset value, offering price and redemption price per
share
($1,598,822 / 135,612 shares of beneficial interest
issued and outstanding) $11.79
-----------------
-----------------
</TABLE>

See Notes to Financial Statements 13

<PAGE>
Prudential California Municipal Fund California Series
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
August 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 8,146,703
-----------------
Expenses
Management fee 672,142
Distribution fee--Class A 233,900
Distribution fee--Class B 191,741
Distribution fee--Class C 9,674
Custodian's fees and expenses 75,000
Reports to shareholders 50,000
Transfer agent's fees and expenses 45,000
Legal fees and expenses 21,000
Registration fees 21,000
Audit fee 13,000
Trustees' fees and expenses 10,000
Miscellaneous 5,301
-----------------
Total expenses 1,347,758
Less: Custodian fee credit (Note 1) (1,565)
-----------------
Net expenses 1,346,193
-----------------
Net investment income 6,800,510
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on:
Investment transactions 636,560
Financial futures transactions 424,723
-----------------
1,061,283
-----------------
Net change in unrealized appreciation (depreciation) on:
Investments 2,576,103
Financial futures contracts (87,938)
-----------------
2,488,165
-----------------
Net gain on investments 3,549,448
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,349,958
-----------------
-----------------
</TABLE>

14 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Series
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Year
Ended Ended
August 31, 2000 August 31, 1999
<S> <C> <C> <C>
-------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 6,800,510 $ 7,409,014
Net realized gain on investment
transactions 1,061,283 324,713
Net change in unrealized appreciation
(depreciation) of investments 2,488,165 (10,186,236)
----------------- ---------------
Net increase (decrease) in net assets
resulting from operations 10,349,958 (2,452,509)
----------------- ---------------
Dividends and distributions (Note 1)
Dividends from net investment income
Class A (4,800,732) (4,684,010)
Class B (1,873,857) (2,591,035)
Class C (59,842) (60,435)
Class Z (66,079) (73,534)
----------------- ---------------
(6,800,510) (7,409,014)
----------------- ---------------
Distributions in excess of net investment
income
Class A (28,246) --
Class B (12,173) --
Class C (412) --
Class Z (300) --
----------------- ---------------
(41,131) --
----------------- ---------------
Series share transactions (net of share
conversions) (Note 5)
Net proceeds from shares sold 13,855,044 18,346,773
Net asset value of shares issued in
reinvestment of dividends and
distributions 3,751,457 4,059,444
Cost of shares reacquired (34,664,321) (24,798,715)
----------------- ---------------
Net decrease in net assets from Series
share transactions (17,057,820) (2,392,498)
----------------- ---------------
Total decrease (13,549,503) (12,254,021)
NET ASSETS
Beginning of year 143,439,074 155,693,095
----------------- ---------------
End of year $ 129,889,571 $ 143,439,074
----------------- ---------------
----------------- ---------------
</TABLE>

See Notes to Financial Statements 15

<PAGE>
Prudential California Municipal Fund California Series
Notes to Financial Statements

Prudential California Municipal Fund (the 'Fund') is registered under the
Investment Company Act of 1940 as an open-end investment company. The Fund was
organized as a Massachusetts business trust on May 18, 1984 and consists of
three series. The monies of each series are invested in separate, independently
managed portfolios. The California Series (the 'Series') commenced investment
operations on September 19, 1984. The Series is diversified and seeks to achieve
its investment objective of obtaining the maximum amount of income exempt from
federal and California state income taxes with the minimum of risk by investing
in 'investment grade' tax-exempt securities whose ratings are within the four
highest ratings categories by a nationally recognized statistical rating
organization or, if not rated, are of comparable quality. The ability of the
issuers of the securities held by the Series to meet their obligations may be
affected by economic developments in a specific state, industry or region.

Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund, and the Series, in the preparation of its financial statements.

Securities Valuations: The Series values municipal securities
(including commitments to purchase such securities on a 'when-issued' basis) on
the basis of prices provided by a pricing service which uses information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining values. If market quotations are not readily available
from such pricing service, a security is valued at its fair value as determined
under procedures established by the Board of Trustees. Short-term securities
which mature in more than 60 days are valued at current market quotations.
Short-term securities which mature in 60 days or less are valued at amortized
cost.

The Series held illiquid securities, including those which are restricted
as to disposition under securities law ('restricted securities'). The restricted
security held by the Series at August 31, 2000 include registration rights under
which the Series may demand registration by the issuer. Restricted securities,
sometimes referred to as private placements, are valued pursuant to the
valuation procedures noted above.

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

<PAGE>
Prudential California Municipal Fund California Series
Notes to Financial Statements Cont'd.

Subsequent payments, known as 'variation margin,' are made or received by the
Series each day, depending on the daily fluctuations in the value of the
underlying security. Such variation margin is recorded for financial statement
purposes on a daily basis as unrealized gain or loss. When the contract expires
or is closed, the gain or loss is realized and is presented in the statement of
operations as net realized gain(loss) on financial futures contracts.

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

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

Net investment income (other than distribution fees) and realized and
unrealized gains or losses are allocated daily to each class of shares based
upon the relative proportion of net assets of each class at the beginning of the
day.

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

Dividends and Distributions: The Series declares daily dividends from
net investment income. Payment of dividends is made monthly. Distributions of
net capital gains, if any, are made annually.

Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.

Custody Fee Credits: The Fund has an arrangement with its custodian
bank, whereby uninvested monies earn credits which reduce the fees charged by
the custodian.
17

<PAGE>
Prudential California Municipal Fund California Series
Notes to Financial Statements Cont'd.

Reclassification of Capital Accounts: The Fund accounts and reports for
distributions to shareholders in accordance with Statement of Position 93-2:
Determination, Disclosure and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies. The
effect of applying this statement was to increase undistributed net investment
income and increase accumulated net realized loss by $41,131 due to the sale of
securities purchased with market discount. Net investment income, net realized
gains and net assets were not affected by this change.

Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'); PIC furnishes investment advisory services in
connection with the management of the Fund. PIFM pays for the services of PIC,
the cost of compensation of officers of the Fund, occupancy and certain clerical
and bookkeeping costs of the Fund. The Fund bears all other costs and expenses.

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

Effective January 1, 2000, the subadvisory fee paid to PIC by PIFM is
computed daily and payable monthly at an annual rate of .250 of 1% of the
average daily net assets of the Fund. Prior to January 1, 2000, PIC was
reimbursed by PIFM for reasonable costs and expenses incurred in furnishing
investment advisory services. The change in the subadvisory fee structure has no
impact on the management fee charged to the Fund or its shareholders.

The Fund has a distribution agreement with Prudential Investment
Management Services LLC ('PIMS') which acts as the distributor of the Fund. The
Fund compensates PIMS for distributing and servicing the Fund's Class A, Class B
and Class C shares, pursuant to plans of distribution (the 'Class A, B and C
Plans'), regardless of expenses actually incurred by it. The distribution fees
are accrued daily and payable monthly. No distribution or service fees are paid
to PIMS as distributor of the Class Z shares of the Fund.

<PAGE>
Prudential California Municipal Fund California Series
Notes to Financial Statements Cont'd.

expenses under the Plans were .25 of 1%, .50 of 1% and .75 of 1% of the average
daily net assets of the Class A, B and C shares for the year ended August 31,
2000.

PIMS has advised the Series that it has received approximately $22,400 and
$1,400 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the year ended August 31, 2000. From these fees,
PIMS paid such sales charges to affiliated broker-dealers, which in turn paid
commissions to salespersons and incurred other distribution costs.

PIMS has advised the Series that for the year ended August 31, 2000, they
received approximately $95,700 and $600 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.

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

The Fund, along with other affiliated registered investment companies (the
'Funds'), entered into a syndicated credit agreement ('SCA') with an
unaffiliated lender. The maximum commitment under the SCA is $1 billion.
Interest on any such borrowings will be at market rates. The purpose of the
agreement is to serve as an alternative source of funding for capital share
redemptions. The Funds pay a commitment fee at an annual rate of .080 of 1% of
the unused portion of the credit facility. The commitment fee is accrued and
paid quarterly on a pro rata basis by the Funds. The expiration date of the SCA
is March 9, 2001. Prior to March 9, 2000, the commitment fee was .065 of 1% of
the unused portion of the credit facility. The Fund did not borrow any amounts
pursuant to the SCA during the year ended August 31, 2000.

Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended August 31, 2000, the
Series incurred fees of approximately $43,600 for the services of PMFS. As of
August 31, 2000, approximately $3,300 of such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.

Note 4. Portfolio Securities
Purchases and sales of portfolio securities of the Series, excluding short-term
investments, for the year ended August 31, 2000 were $33,198,847 and
$52,778,813, respectively.

The cost basis of investments for federal income tax purposes at August
31, 2000 was substantially the same as for financial reporting purposes and,
accordingly,
19

<PAGE>
Prudential California Municipal Fund California Series
Notes to Financial Statements Cont'd.

net unrealized appreciation of investments for federal income tax purposes was
$11,553,818 (gross unrealized appreciation--$11,834,526; gross unrealized
depreciation--$280,708).

For federal income tax purposes, the Series has a capital loss
carryforward as of August 31, 2000 of approximately $1,826,600, of which,
$1,823,700 expires in 2003 and $2,900 expires in 2006. Such carryforward is
after utilization of approximately $972,100 to offset net taxable gains
recognized during the year ended August 31, 2000. Accordingly, no capital gains
distribution is expected to be paid to shareholders until net gains have been
realized in excess of such capital loss carryforward.

Note 5. Capital
The Series offers Class A, Class B, Class C and Class Z shares. Class A shares
are sold with a front-end sales charge of up to 3%. Class B shares are sold with
a contingent deferred sales charge which declines from 5% to zero depending on
the period of time the shares are held. Class C shares are sold with a front-end
sales charge of 1% and a contingent deferred sales charge of 1% during the first
18 months. Class B shares will automatically convert to Class A shares on a
quarterly basis approximately seven years after purchase. A special exchange
privilege is also available for shareholders who qualify to purchase Class A
shares at net asset value.

The Fund has authorized an unlimited number of shares of beneficial
interest for each class at $.01 par value per share.

Transactions in shares of beneficial interest for the fiscal years ended
August 31, 2000 and August 31, 1999 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
------------------------------------------------------------ ---------- ------------
<S> <C> <C>
Year ended August 31, 2000:
Shares sold 637,977 $ 7,185,783
Shares issued in reinvestment of dividends and distributions 234,288 2,651,560
Shares reacquired (2,028,431) (22,902,100)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion (1,156,166) (13,064,757)
Shares issued upon conversion from Class B 1,087,815 12,320,095
---------- ------------
Net increase (decrease) in shares outstanding (68,351) $ (744,662)
---------- ------------
---------- ------------
Year ended August 31, 1999:
Shares sold 795,762 $ 9,586,464
Shares issued in reinvestment of dividends 216,108 2,593,281
Shares reacquired (914,438) (10,998,324)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion 97,432 1,181,421
Shares issued upon conversion from Class B 541,419 6,534,806
---------- ------------
Net increase (decrease) in shares outstanding 638,851 $ 7,716,227
---------- ------------
---------- ------------
</TABLE>
20

<PAGE>
Prudential California Municipal Fund California Series
Notes to Financial Statements Cont'd.
<TABLE>
<CAPTION>
Class B Shares Amount
------------------------------------------------------------ ---------- ------------
Year ended August 31, 2000
<S> <C> <C>
Shares sold 367,823 $ 4,136,928
Shares issued in reinvestment of dividends and distributions 88,653 1,001,612
Shares reacquired (828,681) (9,384,778)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion (372,205) (4,246,238)
Shares reacquired upon conversion into Class A (1,088,264) (12,320,095)
---------- ------------
Net increase (decrease) in shares outstanding (1,460,469) $(16,566,333)
---------- ------------
---------- ------------
Year ended August 31, 1999:
Shares sold 514,171 $ 6,183,598
Shares issued in reinvestment of dividends 114,358 1,373,595
Shares reacquired (952,947) (11,419,751)
---------- ------------
Net increase (decrease) in shares outstanding before
conversion (324,418) (3,862,558)
Shares reacquired upon conversion into Class A (541,523) (6,534,806)
---------- ------------
Net increase (decrease) in shares outstanding (865,941) $(10,397,364)
---------- ------------
---------- ------------
<CAPTION>
Class C
------------------------------------------------------------
<S> <C> <C>
Year ended August 31, 2000
Shares sold 138,301 $ 1,570,858
Shares issued in reinvestment of dividends and distributions 4,033 45,608
Shares reacquired (174,362) (1,976,318)
---------- ------------
Net increase (decrease) in shares outstanding (32,028) $ (359,852)
---------- ------------
---------- ------------
Year ended August 31, 1999:
Shares sold 53,745 $ 647,299
Shares issued in reinvestment of dividends 3,582 42,860
Shares reacquired (33,739) (402,855)
---------- ------------
Net increase (decrease) in shares outstanding 23,588 $ 287,304
---------- ------------
---------- ------------
<CAPTION>
Class Z
------------------------------------------------------------
<S> <C> <C>
Year ended August 31, 2000
Shares sold 85,546 $ 961,475
Shares issued in reinvestment of dividends and distributions 4,641 52,677
Shares reacquired (35,603) (401,125)
---------- ------------
Net increase (decrease) in shares outstanding 54,584 $ 613,027
---------- ------------
---------- ------------
Year ended August 31, 1999:
Shares sold 161,138 $ 1,929,412
Shares issued in reinvestment of dividends 4,138 49,708
Shares reacquired (169,051) (1,977,785)
---------- ------------
Net increase (decrease) in shares outstanding (3,775) $ 1,335
---------- ------------
---------- ------------
</TABLE>

21
<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights
<TABLE>
<CAPTION>
Class A
-----------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.45
--------
Income from investment operations
Net investment income .58
Net realized and unrealized gain (loss) on investment
transactions .33
--------
Total from investment operations .91
--------
Less distributions
Dividends from net investment income (.58)
Distributions in excess of net investment income --(c)
--------
Total distributions (.58)
--------
Net asset value, end of year $ 11.78
--------
--------
TOTAL RETURN(b): 8.35%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $94,776
Average net assets (000) $93,560
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees .93%
Expenses, excluding distribution and service (12b-1) fees .68%
Net investment income 5.13%
For Class A, B, C and Z shares:
Portfolio turnover rate 25%
</TABLE>

------------------------------
(a) Net of management fee waiver.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each year reported and includes reinvestment of dividends and
distributions.
(c) Less than $.005 per share.
22 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 12.22 $ 11.80 $ 11.44 $ 11.49
-------- -------- -------- --------
.59 .62 .65(a) .65(a)
(.77) .43 .36 (.05)
-------- -------- -------- --------
(.18) 1.05 1.01 .60
-------- -------- -------- --------
(.59) (.62) (.65) (.65)
-- (.01) --(c) --
-------- -------- -------- --------
(.59) (.63) (.65) (.65)
-------- -------- -------- --------
$ 11.45 $ 12.22 $ 11.80 $ 11.44
-------- -------- -------- --------
-------- -------- -------- --------
(1.56)% 9.13% 9.01% 5.23%
$ 92,868 $ 91,356 $ 81,535 $ 72,876
$ 94,868 $ 85,624 $ 78,347 $ 71,119
.89% .78% .76%(a) .81%(a)
.69% .68% .66%(a) .71%(a)
4.94% 5.18% 5.53%(a) 5.58%(a)
13% 11% 14% 26%
</TABLE>

See Notes to Financial Statements 23

<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
-----------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.44
--------
Income from investment operations
Net investment income .56
Net realized and unrealized gain (loss) on investment
transactions .34
--------
Total from investment operations .90
--------
Less distributions
Dividends from net investment income (.56)
Distributions in excess of net investment income --(c)
--------
Total distributions (.56)
--------
Net asset value, end of year $ 11.78
--------
--------
TOTAL RETURN(b): 8.18%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $32,403
Average net assets (000) $38,348
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 1.18%
Expenses, excluding distribution and service (12b-1) fees .68%
Net investment income 4.89%
</TABLE>

<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 12.22 $ 11.80 $ 11.43 $ 11.49
-------- -------- -------- --------
.56 .58 .60(a) .60(a)
(.78) .43 .37 (.06)
-------- -------- -------- --------
(.22) 1.01 .97 .54
-------- -------- -------- --------
(.56) (.58) (.60) (.60)
-- (.01) --(c) --
-------- -------- -------- --------
(.56) (.59) (.60) (.60)
-------- -------- -------- --------
$ 11.44 $ 12.22 $ 11.80 $ 11.43
-------- -------- -------- --------
-------- -------- -------- --------
(1.94)% 8.70% 8.67% 4.73%
$ 48,196 $ 62,043 $ 70,093 $ 85,190
$ 56,041 $ 66,086 $ 75,935 $ 96,525
1.19% 1.18% 1.16%(a) 1.21%(a)
.69% .68% .66%(a) .71%(a)
4.62% 4.78% 5.13%(a) 5.18%(a)
</TABLE>

See Notes to Financial Statements 25

<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
-----------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 11.44
--------
Income from investment operations
Net investment income .53
Net realized and unrealized gain (loss) on investment
transactions .34
--------
Total from investment operations .87
--------
Less distributions
Dividends from net investment income (.53)
Distributions in excess of net investment income --(c)
--------
Total distributions (.53)
--------
Net asset value, end of year $ 11.78
--------
--------
TOTAL RETURN(b): 7.91%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 1,112
Average net assets (000) $ 1,290
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 1.43%
Expenses, excluding distribution and service (12b-1) fees .68%
Net investment income 4.64%
</TABLE>

<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 12.22 $ 11.80 $ 11.43 $ 11.49
-------- -------- -------- --------
.53 .55 .57(a) .57(a)
(.78) .43 .37 (.06)
-------- -------- -------- --------
(.25) .98 .94 .51
-------- -------- -------- --------
(.53) (.55) (.57) (.57)
-- (.01) --(c) --
-------- -------- -------- --------
(.53) (.56) (.57) (.57)
-------- -------- -------- --------
$ 11.44 $ 12.22 $ 11.80 $ 11.43
-------- -------- -------- --------
-------- -------- -------- --------
(2.18)% 8.43% 8.40% 4.47%
$ 1,447 $ 1,257 $ 334 $ 543
$ 1,373 $ 689 $ 480 $ 286
1.44% 1.43% 1.41%(a) 1.46%(a)
.69% .68% .66%(a) .71%(a)
4.40% 4.53% 4.88%(a) 4.93%(a)
</TABLE>

See Notes to Financial Statements 27

<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class Z
-----------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 11.45
--------
Income from investment operations
Net investment income .61
Net realized and unrealized gain (loss) on investment
transactions .34
--------
Total from investment operations .95
--------
Less distributions
Dividends from net investment income (.61)
Distributions in excess of net investment income --(c)
--------
Total distributions (.61)
--------
Net asset value, end of period $ 11.79
--------
--------
TOTAL RETURN(b): 8.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 1,599
Average net assets (000) $ 1,231
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees .68%
Expenses, excluding distribution and service (12b-1) fees .68%
Net investment income 5.37%
</TABLE>

------------------------------
(a) Net of management fee waiver.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions.
(c) Less than $.005 per share.
(d) Commencement of offering of Class Z shares.
(e) Annualized.
28 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class Z
---------------------------------------------------------------------------------------
Year Ended August 31, September 18, 1996(d)
------------------------------------------ through August 31,
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 12.23 $ 11.81 $ 11.50
---------------- ---------------- ----------
.62 .63 .64(a)
(.78) .43 .31
---------------- ---------------- ----------
(.16) 1.06 .95
---------------- ---------------- ----------
(.62) (.63) (.64)
-- (.01) --(c)
---------------- ---------------- ----------
(.62) (.64) (.64)
---------------- ---------------- ----------
$ 11.45 $ 12.23 $ 11.81
---------------- ---------------- ----------
---------------- ---------------- ----------
(1.44)% 9.24% 8.35%
$ 928 $ 1,037 $ 710
$ 1,427 $ 847 $ 458
.69% .68% .66%(a)/(e)
.69% .68% .66%(a)/(e)
5.15% 5.28% 5.35%(a)/(e)
</TABLE>

See Notes to Financial Statements 29

<PAGE>
Prudential California Municipal Fund California Series
Report of Independent Accountants

To the Shareholders and Board of Trustees of
Prudential California Municipal Fund, California Series

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential California Municipal
Fund, California Series (the 'Fund', one of the portfolios constituting
Prudential California Municipal Fund) at August 31, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the four years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at August 31, 2000 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion. The accompanying financial
highlights for the year ended August 31, 1996 were audited by other independent
accountants, whose opinion dated October 14, 1996 was unqualified.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
October 20, 2000

<PAGE>
Prudential California Municipal Fund California Series
Federal Income Tax Information (Unaudited)

We are required by the Internal Revenue Code to advise you within 60 days
of the Series' fiscal year end (August 31, 2000) as to the federal tax status of
dividends and distributions paid by the Series during such fiscal year.
Accordingly, we are advising you that in the fiscal year ended August 31, 2000,
dividends paid from net investment income of $.58 per Class A share, $.56 per
Class B share, $.53 per Class C share and $.61 per Class Z share were all
federally tax-exempt interest dividends.

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

31
<PAGE>

Prudential California Municipal Fund California Series
Prudential Mutual Funds

Prudential offers a broad range of mutual funds
designed to meet your individual needs. For
information about these funds, contact your
financial adviser or call us at (800) 225-1852.
Read the prospectus carefully before you invest or
send money.

STOCK FUNDS
Large Capitalization Stock Funds
Prudential 20/20 Focus Fund
Prudential Equity Fund, Inc.
Prudential Stock Index Fund
Prudential Tax-Managed Funds
Prudential Tax-Managed Equity Fund
Strategic Partners Focused Growth Fund
Target Funds
Large Capitalization Growth Fund
Large Capitalization Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Growth Fund
Prudential Value Fund

Small- to Mid-Capitalization Stock Funds
Nicholas-Applegate Fund, Inc.
Nicholas-Applegate Growth Equity Fund
Prudential Small Company Fund, Inc.
Prudential Tax-Managed Small-Cap Fund, Inc.
Prudential U.S. Emerging Growth Fund, Inc.
Target Funds
Small Capitalization Growth Fund
Small Capitalization Value Fund
The Prudential Investment Portfolios, Inc.
Prudential Jennison Equity Opportunity Fund

Sector Stock Funds
Prudential Natural Resources Fund, Inc.
Prudential Real Estate Securities Fund
Prudential Sector Funds, Inc.
Prudential Financial Services Fund
Prudential Health Sciences Fund
Prudential Technology Fund
Prudential Utility Fund

Global/International Stock Funds
Global Utility Fund, Inc.
Prudential Europe Growth Fund, Inc.
Prudential Pacific Growth Fund, Inc.
Prudential World Fund, Inc.
Prudential Global Growth Fund
Prudential International Value Fund
Prudential Jennison International Growth Fund
Target Funds
International Equity Fund

balanced/allocation funds
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund

<PAGE>

www.prudential.com (800) 225-1852

BOND FUNDS
Taxable Bond Funds
Prudential Government Income Fund, Inc.
Prudential Government Securities Trust
Short-Intermediate Term Series
Prudential High Yield Fund, Inc.
Prudential High Yield Total Return Fund, Inc.
Prudential Short-Term Corporate Bond Fund, Inc.
Income Portfolio
Prudential Total Return Bond Fund, Inc.
Target Funds
Total Return Bond Fund

Tax-Free Bond Funds
Prudential California Municipal Fund
California Series
California Income Series
Prudential Municipal Bond Fund
High Income Series
Insured Series
Prudential Municipal Series Fund
Florida Series
Massachusetts Series
New Jersey Series
New York Series
North Carolina Series
Ohio Series
Pennsylvania Series
Prudential National Municipals Fund, Inc.

Global/International Bond Funds
Prudential Global Total Return Fund, Inc.
Prudential International Bond Fund, Inc.
MONEY MARKET FUNDS
Taxable Money Market Funds
Cash Accumulation Trust
Liquid Assets Fund
National Money Market Fund
Prudential Government Securities Trust
Money Market Series
U.S. Treasury Money Market Series
Prudential Institutional Liquidity Portfolio, Inc.
Institutional Money Market Series
Prudential MoneyMart Assets, Inc.
Prudential Special Money Market Fund, Inc.
Money Market Series

Tax-Free Money Market Funds
Prudential California Municipal Fund
California Money Market Series
Prudential Municipal Series Fund
Connecticut Money Market Series
Massachusetts Money Market Series
New Jersey Money Market Series
New York Money Market Series
Prudential Tax-Free Money Fund, Inc.

Other Money Market Funds
Command Government Fund
Command Money Fund
Command Tax-Free Fund

<PAGE>

Prudential California Municipal Fund California Series
Class A Growth of a $10,000 Investment
(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 5.10% 5.31% (5.29) 6.72% (6.71) 6.51% (6.49)
Without Sales
Charge 8.35% 5.95% (5.94) 7.05% (7.03) 6.82% (6.80)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost.The best- and worst-year information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total
annual return for the past ten years. The graph
compares a $10,000 investment in the Prudential
California Municipal Fund/California Series (Class
A shares) with a similar investment in the Lehman
Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
beginning of the ten-year period of Class A shares,
and the account value at the end of the current
fiscal year (August 31, 2000), as measured on a
quarterly basis, beginning in August 1990 for Class
A shares. For purposes of the graph, and unless
otherwise indicated, it has been assumed that (a)
the maximum applicable
front-end sales charge of 3% was deducted from the
initial $10,000 investment in Class A shares;
(b) all recurring fees (including management fees)
were deducted; and (c) all dividends and
distributions were reinvested. The numbers in
parentheses show the Series' average annual total
return without
waiver of management fees and/or expense
subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the reinvestment of all dividends,
but does not include the effect of sales charges or
operating expenses of a mutual fund. The securities
that comprise the Index may differ substantially
from the securities in the Series. The Index is not
the only one that may be used to characterize
performance of municipal bond funds. Other indexes
may portray different comparative performance.
Investors cannot invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>

www.prudential.com (800) 225-1852
Class B Growth of a $10,000 Investment
(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 3.18% 5.42% (5.41) 6.65% (6.63) 7.40% (7.25)
Without Sales
Charge 8.18% 5.59% (5.57) 6.65% (6.63) 7.40% (7.25)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst- year
information within the graph is designed to give
you an idea of how much the Series' returns can
fluctuate from year to year by measuring the best
and worst calendar years in terms of total annual
return for the past ten years. The graph compares a
$10,000 investment in the Prudential California
Municipal Fund/California Series (Class B shares)
with a similar investment in the Lehman Brothers
Municipal Bond Index (the Index) by portraying the
initial account value at the beginning of the ten-year
period of Class B shares, and the account value at
the end of the current fiscal year (August 31,
2000), as measured on a quarterly basis, beginning
in August 1990 for Class B shares. For purposes of
the graph, and unless otherwise indicated, it has
been assumed that (a) the maximum applicable
contingent deferred sales charge of 5%, 4%, 3%, 2%,
1%, and 1% for six years was deducted from the
value of the investment in Class B shares, assuming
full redemption on August 31, 2000; (b) all
recurring fees (including
management fees) were deducted; and (c) all
dividends and distributions were reinvested. Class
B shares will automatically convert to Class A
shares, on a quarterly basis, beginning
approximately seven years after purchase. This
conversion feature is not reflected in the graph.
The numbers in parentheses show the Series' average
annual total return without waiver of management
fees and/or expense subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the
reinvestment of all dividends, but does not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Series. The Index is not the only one that
may be used to characterize performance of
municipal bond funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>

Prudential California Municipal Fund California Series
Class C Growth of a $10,000 Investment
(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 5.83% 5.11% (5.10) N/A 5.40% (5.37)
Without Sales
Charge 7.91% 5.33% (5.31) N/A 5.58% (5.55)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total
annual return since inception of the share
class.The graph compares a $10,000 investment in
the Prudential California Municipal Fund/California
Series (Class C shares) with a similar investment
in the Lehman Brothers Municipal Bond Index (the
Index) by portraying the initial account value at
the commencement of operations of Class C shares, and
the account values at the end of the current fiscal
year (August 31, 2000), as measured on a quarterly
basis, beginning in August 1994 for Class C shares.
For purposes of the graph, and unless otherwise
indicated, it has been assumed that (a) the maximum
applicable front-end sales charge of 1% was
deducted from the initial $10,000 investment in
Class C shares; (b) the maximum applicable
contingent deferred sales charge of 1% for 18 months was
deducted from the value of the investment in Class
C shares, assuming full redemption on August 31,
2000; (c) all recurring fees (including management
fees) were deducted; and (d) all dividends and
distributions were reinvested. The numbers in
parentheses show the Series' average annual total
return without waiver of management fees and/or
expense subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the
reinvestment of all dividends, but does not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Series. The Index is not the only one that
may be used to characterize performance of
municipal bond funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>

www.prudential.com (800) 225-1852
Class Z Growth of a $10,000 Investment
(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 8.71% N/A N/A 6.20% (6.18)
Without Sales
Charge 8.71% N/A N/A 6.20% (6.18)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst- year
information within the graph is designed to give
you an idea of how much the Series' returns can
fluctuate from year to year by measuring the best
and worst calendar years in terms of total annual
return since inception of the share class.The graph
compares a $10,000 investment in the Prudential
California Municipal Fund/California Series (Class
Z shares) with a similar investment in the Lehman
Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class Z shares, and
the account value at the end of the current fiscal
year (August 31, 2000), as
measured on a quarterly basis, beginning in
September 1996 for Class Z shares. For purposes of
the graph, and unless otherwise indicated, it has
been assumed that (a) all recurring fees (including
management fees) were deducted, and (b) all
dividends and distributions were reinvested. Class
Z shares are not subject to a sales charge or
distribution and service (12b-1) fees. The numbers
in parentheses show the Series'
average annual total return without waiver of
management fees and/or expense subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the
reinvestment of all dividends, but does not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Series. The Index is not the only one that
may be used to characterize performance of
municipal bond funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>
For More Information

Prudential Mutual Funds
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077
(800) 225-1852

Visit Prudential's web site at:
http://www.prudential.com

Trustees
Eugene C. Dorsey
Delayne Dedrick Gold
Robert F. Gunia
Thomas T. Mooney
Stephen P. Munn
David R. Odenath, Jr.
Richard A. Redeker
John R. Strangfeld
Nancy H. Teeters
Louis A. Weil, III

Officers
John R. Strangfeld, President
Robert F. Gunia, Vice President
David R. Odenath, Jr., Vice President
Grace C. Torres, Treasurer
Deborah A. Docs, Secretary
William V. Healey, Assistant Secretary

Manager
Prudential Investments
Fund Management LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Investment Adviser
The Prudential Investment Corporation
Prudential Plaza
Newark, NJ 07102-3777

Distributor
Prudential Investment
Management Services LLC
Gateway Center Three
100 Mulberry Street
Newark, NJ 07102-4077

Custodian
State Street Bank and Trust Company
One Heritage Drive
North Quincy, MA 02171

Transfer Agent
Prudential Mutual Fund Services LLC
P.O. Box 8098
Philadelphia, PA 19101

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

Legal Counsel
Swidler Berlin Shereff Friedman, LLP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174

Fund Symbols NASDAQ CUSIP
Class A PRMCX 744313107
Class B PBCMX 744313206
Class C PCCSX 744313701
Class Z PZCSX 744313883

MF116E

(ICON) Printed on Recycled Paper

<PAGE>
ANNUAL REPORT AUGUST 31, 2000

Prudential
California Municipal Fund/
California Income Series

Fund Type Municipal Bond

Objective Maximize current income that is exempt
from California State and federal income taxes,
consistent with the preservation of capital

(GRAPHIC)

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

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

(LOGO)

<PAGE>
Build on the Rock

Investment Goals and Style
The Prudential California Municipal Fund/California
Income Series' investment objective is to maximize
current income that is exempt from California State
and federal income taxes, consistent with the
preservation of capital. However, certain
shareholders may be subject to the alternative
minimum tax (AMT) because some of the Series' bonds
are AMT eligible. There can be no assurance that
the Series will achieve its investment objective.

Portfolio Composition

Expressed as a percentage of
total investments as of 8/31/00
53.0% General Obligation Bonds
27.7 Revenue Bonds
13.6 Prerefunded
3.4 Miscellaneous
2.3 Cash Equivalents

Credit Quality

Expressed as a percentage of
total investments as of 8/31/00
7.4% AAA
2.8 AA
8.8 A
9.4 BBB
1.0 BB
28.1 Insured
40.2 Not Rated*
2.3 Cash Equivalents

* Unrated bonds are believed to be of comparable
quality to permissible investments by the Series.

Ten Largest Issuers

Expressed as a percentage of
net assets as of 8/31/00
5.6% Southern California
Public Power Authority
5.1 Foothill/Eastern
Transit Corridor Agency*
4.7 Orange County
Local Transportation Authority
3.4 Long Beach Harbor Revenue
3.3 San Joaquin Hills
Transit Corridor Agency
2.2 Victor Valley, Union
H.S. District
2.1 Chula Vista Community
Redevelopment Agency
1.8 Sacramento City
Finance Authority
1.8 San Bernardino County
1.8 Folsom Spec. Tax
Community Facs.

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

<PAGE>

www.prudential.com (800) 225-1852

Performance at a Glance

Cumulative Total Returns1 As of 8/31/00

One Five Since
Year Years Inception2
Class A 7.10% 36.37% (35.86%) 104.66% (100.05%)
Class B 6.93 34.14 (33.64) 44.21 (42.99)
Class C 6.66 32.48 (31.98) 42.39 (41.46)
Class Z 7.26 N/A 27.41 (27.29)
Lipper CA
Muni Debt
Fund Avg.3 6.47 31.08 ***

Average Annual Total Returns1 As of 9/30/00
One Five Since
Year Years Inception2
Class A 2.75% 5.49% (5.43%) 7.14% (6.88%)
Class B 0.76 5.63 (5.57) 5.39 (5.24)
Class C 3.45 5.32 (5.26) 5.58 (5.46)
Class Z 6.09 N/A 5.98 (5.95)

Distributions and Yields As of 8/31/00
Total Distributions 30-Day Taxable Equivalent Yield4 at Tax Rates of
Paid for 12 Months SEC Yield 36% 39.6%
Class A $0.54 4.37% 7.53% 7.98%
Class B $0.51 4.25 7.32 7.76
Class C $0.49 3.96 6.82 7.23
Class Z $0.56 4.75 8.18 8.67

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

2 Inception dates: Class A, 12/3/90; Class B,
12/7/93; Class C, 8/1/94; and Class Z, 9/18/96.

3 Lipper Average returns are for all funds in each
share class for the one- and five-year periods in
the California Municipal Debt Fund category.
Single-state Municipal Debt funds limit their
securities that are exempt from taxation in a
specified state (double tax exempt) or city (triple
tax exempt).

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

***Lipper Since Inception returns are 86.59% for
Class A, 39.06% for Class B, 40.93% for Class C,
and 22.11% for Class Z, based on all funds in each
share class.

1
<PAGE>

(LOGO) October 18, 2000

Dear Shareholder,
During our fiscal year ended August 31, 2000, share
classes of the Prudential California Municipal
Fund/California Income Series, without considering
the initial sales charge, outperformed their
benchmark Lipper Average, which is not subject to
sales charges. The Series
performed well even though conditions in the
municipal bond market were very volatile.

Amid these shifting market conditions, Prudential's
Municipal Bond sector team took advantage of
changing investment opportunities. The team
accomplished this by skillfully managing the risk
that fluctuating interest rates could pose to the
Series' securities, by evaluating bond issuers'
ability to make timely principal and interest
payments, and by identifying undervalued bonds.

Sincerely,

John R. Strangfeld, President
Prudential California Municipal Fund

2
<PAGE>

Prudential California Municipal Fund California Income Series
Annual Report August 31, 2000

Investment Adviser's Report

Municipal bonds gained amid volatile market
conditions
Prices of municipal bonds went on a roller coaster
ride during our fiscal year that began September 1,
1999. They ended the 12 months higher as investors
hurriedly bought a shrinking supply of newly issued
tax-exempt securities. Furthermore, prices of munis
finished the 12 months higher on the
belief that the Federal Reserve was nearly through
with its latest round of increases in short-term
interest rates.

The Fed increased short-term rates four times
during our fiscal year out of concern that an
overheated U.S. economy might ignite higher
inflation via rising consumer prices and
accelerating wages. By lifting short-term rates,
the Fed pushed borrowing costs higher for
businesses and consumers, which it hoped would slow
economic growth to a more sustainable pace and help
check inflationary pressures.

3
<PAGE>

Prudential California Municipal Fund California Income Series
Annual Report August 31, 2000

Municipal bonds beat stocks
The municipal bond rally picked up steam in the
spring of 2000 after the Fed aggressively raised
rates in mid-May. Data indicated that economic
growth was moderating. This in turn fueled optimism
that the Fed would not have to continue hiking
rates during the remainder of 2000. Consequently,
many investors willingly paid higher prices for
munis and accepted lower yields.

Their strong demand for tax-exempt bonds enabled
the Lehman Municipal Bond Index to return 7.56% for
the first eight months of 2000, compared with only
4.10% for the Standard & Poor's 500 Composite Stock
Price Index.

Upgrading the Golden State's general obligation
bonds
While investors scrambled to buy municipal bonds,
the supply of newly issued tax-exempt securities
dwindled. Many state and local governments
accumulated such hefty cash reserves during the
long U.S. economic expansion that their borrowing
needs declined. This led to decreased issuance of
tax-exempt bonds. Also, the supply of new issues
due to refunding activity shrank, as many state and
local governments had already replaced higher-cost
debt securities with lower-cost bonds to save on
interest expenses.

In California, where the economy has been vibrant,
the amount of newly issued tax-exempt bonds from
August 31, 1999, to August 31, 2000, dropped 29%,
compared with the same period a year earlier,
according to Thomson Financial Securities Data.
Favorable economic conditions were among the
factors that prompted Fitch IBCA to upgrade its
rating of California general obligation bonds to AA
from AA minus in February 2000. Moody's Investors
Service also upgraded the bonds to Aa2 from Aa3,
and Standard & Poor's raised them to AA from AA
minus shortly after our fiscal year ended.

California's solid economic environment also
benefited bonds used to finance sewer systems and
other infrastructure for certain new housing
developments. Because the houses have sold well
during the economic expansion, market perception of
these nonrated bonds has improved,

4
<PAGE>

www.prudential.com (800) 225-1852

helping their prices to rally nicely. Our
considerable exposure to these debt securities has
enhanced the Series' performance.

Among other positions that helped boost the Series'
returns were bonds of Vacaville, California
Redevelopment Agency, which rallied when they
became "prerefunded" or backed by direct
obligations of the U.S. Treasury. We also purchased
tax-exempt bonds backed by United Airlines when
they were trading at very attractive levels.
Concern about the impact of higher fuel and labor
costs on the profitability of the airline industry
had pressured prices of these bonds. As market
fears subsided, however, the bonds' performance
improved, and we sold them at a profit.

Prudential California Municipal Fund Management Team

5
<PAGE>

Prudential California Municipal Fund California Income Series

Annual Report August 31, 2000

Financial
Statements

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
LONG-TERM INVESTMENTS 97.2%
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alisal Union Sch. Dist.,
Cap. Apprec., Ser. C., F.G.I.C. Aaa Zero 8/1/19 $ 1,615 $ 578,670
Cap. Apprec., Ser. C., F.G.I.C. Aaa Zero 8/1/22 675 201,616
Assoc. of Bay Area Govt's. Fin.
Auth., Cert. of Part., Channing
House, Ser. A NR 7.125% 1/1/21 1,500(f) 1,544,580
Brea Pub. Fin. Auth. Rev., Tax
Alloc. Redev. Proj., Ser. C NR 8.10 3/1/21 3,000 3,095,250
Buena Park Cmnty. Redev. Agcy.
Cent. Bus. Dist. Proj. NR 7.80 9/1/14 3,325 3,513,261
Calabasas Spec. Tax Ref. Cmnty.
Facs., Dist. 98-1 NR 5.75 9/1/28 1,000 948,160
California Cmnty. Dev. Comm., Ref.
Ser. A NR 5.70 8/1/28 2,250 2,144,363
California Edl. Facs. Auth. Rev.,
Univ. S. California, Ser. A Aa2 5.00 10/1/28 2,000 1,876,700
California Infrastructure & Econ.
Dev. Bk. Rev.,
Scripps Research Institute,
Ser. A A1 5.75 7/1/30 1,500 1,532,640
Amer.Ctr. for Wine, Food & Arts A(c) 5.70 12/1/19 2,060 2,104,084
California St. Cmnty. Cap. Apprec.
Cmnty. Facs.,Dist. No. 97-1 NR Zero 9/1/22 4,440 1,043,888
California St. Edl. Facs. Auth.
Rev., Chapman College Baa2 7.50 1/1/18 600(f) 618,756
Carson City Ltd. Oblig. Impvt.
Rev., Assmt. Dist. NR 7.375 9/2/22 2,310 2,447,884
Chula Vista Cmnty. Redev. Agcy.,
Ref. Tax Alloc. Sr. Bayfront,
Ser. A BBB+(c) 7.625 9/1/24 2,500 2,769,950
Ref. Tax Alloc. Sub. Bayfront,
Ser. C NR 8.25 5/1/24 2,500 2,791,800
</TABLE>
See Notes to Financial Statements 7

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chula Vista Spec. Tax Cmnty.
Facs., Dist. No. 97-3 NR 6.05% 9/1/29 $ 2,765 $ 2,765,000
Corona Cert. of Part., Vista Hosp.
Sys., Inc., Ser. C NR 8.375 7/1/11 2,000(e) 800,360
Davis Pub. Facs. Fin. Auth., Mace
Ranch, Ser. A NR 6.60 9/1/25 1,375 1,429,409
Delano Cert. of Part., Reg. Med.
Ctr., Ser. 92-A AAA(c) 9.25 1/1/22 2,810(f) 3,160,407
East Palo Alto San. Dist., Cert.
of Part. NR 8.25 10/1/15 500 510,960
El Dorado Cnty., Spec. Tax,
Cmnty. Facs., Dist. No. 92-1 NR 6.125 9/1/16 1,000 1,001,190
Cmnty. Facs., Dist. No. 92-1 NR 6.25 9/1/29 2,990 2,990,000
El Dorado Hills Dev., Cmnty.
Facs., Dist. No. 92-1 NR 8.25 9/1/24 1,945(f) 2,269,154
Fairfield Pub. Fin. Auth. Rev.,
Fairfield Redev. Proj., Ser. A NR 7.90 8/1/21 2,500(f) 2,636,150
Folsom Spec. Tax,
Cmnty. Facs., Dist. No. 10 NR 6.875 9/1/19 2,000 2,115,500
Cmnty. Facs., Dist. No. 7 NR 6.00 9/1/24 2,500 2,459,425
Fontana Pub. Fin. Auth., N.
Fontana Tax Alloc. Rev. NR 7.65 12/1/09 1,575(f) 1,674,194
Fontana Redev. Agcy. Tax Alloc.,
Ref. Jurupa Hills Redev. Proj. A BBB+(c) 5.60 10/1/27 1,595 1,516,143
Foothill/Eastern Trans. Corr.
Agcy.,
Conv. Cap. Apprec., Ser. A Aaa Zero 1/1/13 4,750(f) 4,309,390
Conv. Cap. Apprec. Baa3 Zero 1/15/26 4,800 2,750,736
Conv. Cap. Apprec. Baa3 Zero 1/15/28 4,890 2,775,906
Toll Rd., Ser. A Aaa Zero 1/1/20 10,000 3,483,200
Gateway Impvt. Auth. Rev., Marine
City Cmnty. Facs. Dist. & Redev. NR 7.75 9/1/25 2,100(f) 2,478,693
Golden West Sch. Fin. Auth.,
California Rev. Cap. Apprec.
Ref., Ser. A Aaa Zero 2/1/19 2,110 775,425
Irvine Impvt. Bond Act of 1915,
Assmt. Dist. No. 87-8 Grp. NR 6.00 9/2/24 3,000 2,988,660
Assmt. Dist. No. 94-13 NR 6.00 9/2/22 1,000 1,000,000
</TABLE>
8 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kings Cnty. Wst. Mgmt. Auth.,
Solid Wst. Rev., A.M.T. BBB(c) 7.20% 10/1/14 $ 1,200 $ 1,294,320
La Mesa Impvt. Bond Act of 1915,
Ltd. Oblig., Dist. No. 98-1 NR 5.75 9/2/23 1,000 955,840
La Mirada Redev. Agcy. Spec. Tax,
Ref. Cmnty. Fac., Dist. No. 89-1 NR 5.70 10/1/20 1,000 946,460
La Quinta Redev. Agcy.,
Proj. Area No. 1, M.B.I.A. Aaa 7.30 9/1/10 1,000 1,234,140
Tax Alloc. Ref. Proj. No.1,
M.B.I.A. Aaa 7.30 9/1/11 1,000 1,239,860
Lincoln Impvt. Bond Act of 1915,
Pub. Fin. Auth., Twelve Bridges NR 6.20 9/2/25 2,980 2,996,509
Long Beach Hbr. Rev.,
Ref. Ser. A., A.M.T., F.G.I.C. Aaa 6.00 5/15/17 5,000 5,471,850
Ref. Ser. A., A.M.T., F.G.I.C. Aaa 6.00 5/15/19 3,000 3,258,210
Long Beach Redev. Agcy. Hsg.,
Multifamily Hsg. Rev., Pacific
Ct. Apts., Ser. B NR Zero 9/1/13 1,000(e) 620,000
Multifamily Hsg. Rev., Pacific
Ct. Apts., Ser. B NR Zero 9/1/23 1,500(e) 930,000
Los Angeles Cmnty. Redev. Agy.
Sys. Rev., Cinerama Dome Pub.Pkg.
Proj. A(c) 5.75 7/1/26 3,000 2,999,730
Los Angeles Cmnty. Facs., Dist.
No. 5, Rowland Heights Area NR 7.25 9/1/19 1,500(f) 1,697,595
Lynwood Pub. Fin. Auth. Rev., Wtr.
Sys. Impvt. Proj. BBB(c) 6.50 6/1/21 1,500 1,552,710
Met. Wtr. Dist. of Southern
California, Waterworks Rev.,
Linked S.A.V.R.S. & R.I.B.S. Aa2 5.75 8/14/18 1,000 1,063,630
Mojave Desert & Mtn. Solid Waste,
Victor Valley Nat'l. Recov.
Facs., A.M.T. Baa1 7.875 6/1/20 1,175 1,254,125
</TABLE>
See Notes to Financial Statements 9

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Montebello Unified Sch. Dist.,
Cap. Apprec., F.G.I.C. Aaa Zero 8/1/18 $ 2,195 $ 839,061
Cap. Apprec., F.G.I.C. Aaa Zero 8/1/19 2,250 806,197
Cap. Apprec., F.G.I.C. Aaa Zero 8/1/20 2,300 776,066
Morgan Hill Unified Sch. Dist. Aaa 5.75% 8/1/18 1,000 1,060,730
Norco Spec.Tax Cmnty. Facs., Dist.
No. 97-1 NR 7.10 10/1/30 1,320 1,387,069
Ontario California Impvt. Bond Act
of 1915, Assmt. Dist. 100C, Com.
Ctr. III NR 8.00 9/2/11 1,050 1,093,596
Orange Cnty. Cmnty. Facs. Dist.,
Spec. Tax Rev., No. 88-1, Aliso
Viejo, Ser. A AAA 7.15(c) 8/15/06 805(f) 867,283
Orange Cnty. Loc. Trans. Auth.,
Sales Tax Rev., Linked S.A.V.R.S.
& R.I.B.S., A.M.B.A.C. Aaa 6.20 2/14/11 10,000 11,253,200
Spec. Tax Rev., Linked S.A.V.R.S.
& R.I.B.S. Aa3 7.604(d) 2/14/11 750 910,312
Perris Sch. Dist., Cert. of Part.,
Cap. Proj. NR 7.75 3/1/21 1,500(f) 1,557,360
Pico Rivera California Wtr. Auth.
Rev., Wtr. Sys. Proj. Ser. A,
M.B.I.A. Aaa 5.50 5/1/29 4,000 4,075,320
Pittsburg California Redev. Agcy.
Tax Alloc., Ext. Spec. Redem.,
Los Medanos, F.S.A. Aaa 5.80 8/1/34 2,700 2,816,856
Los Medanos Cmnty. Dev. Proj.,
A.M.B.A.C. Aaa Zero 8/1/26 1,375 323,661
Los Medanos Cmnty. Dev. Proj.,
A.M.B.A.C. Aaa Zero 8/1/30 4,145 775,944
Placentia Pub. Fin. Auth., Spec.
Tax Rev., Ser. B NR 6.60 9/1/15 1,500 1,536,165
Poway Cmnty. Facs., Dist. No.
88-1, Parkway Bus. Ctr. NR 6.75 8/1/15 1,000 1,069,490
</TABLE>
10 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Puerto Rico Commonwealth, Rites,
PA 642A, M.B.I.A. NR 7.497%(d) 7/1/10 $ 1,000 $ 1,195,130
Puerto Rico Indl. Tourist Edl.
Med. & Environmental Clt. Facs.,
Cogen Fac., A.M.T. Baa2 6.625 6/1/26 3,750 3,909,112
Puerto Rico Pub. Bldgs. Auth.,
Gtd. Pub. Ed. & Hlth. Facs.,
Ser. J Baa1 Zero 7/1/06 1,605 1,230,297
Redding Elec. Sys. Rev.,
Linked S.A.V.R.S. & R.I.B.S.,
M.B.I.A. Aaa 6.368 7/1/22 50 54,854
Cert. of Part., M.B.I.A. Aaa 8.457(d) 7/1/22 1,850 2,208,437
Richmond Redev. Agcy. Tax Alloc.,
Cap. Apprec. Ref. Harbor, Ser.
B., M.B.I.A. Aaa Zero 7/1/20 1,150 389,045
Cap. Apprec. Ref. Harbor, Ser.
B., M.B.I.A. Aaa Zero 7/1/21 1,150 366,126
Multifamily Hsg., Bridge
Affordable Hsg. NR 7.50 9/1/23 2,500 2,542,100
Rio Vista Impvt. Bond Act of 1915,
Assmt. Dist. No. 96-1, River View
Pt. NR 7.50 9/2/22 1,940 2,088,371
Riverside Unified Sch. Dist. Spec.
Tax,
Cmnty. Facs. Dist. No. 7, Ser. A NR 6.90 9/1/20 1,320 1,389,854
Cmnty. Facs. Dist. No. 7, Ser. A NR 7.00 9/1/30 1,000 1,051,440
Riverside Cnty. Cert. of Part.,
Air Force Village West NR 8.125 6/15/20 3,000(f) 3,262,170
Rocklin Stanford Ranch Cmnty.,
Spec.Tax Facs., Dist. No. 3 NR 8.10 11/1/15 1,000(f) 1,026,590
Rocklin Unified Sch. Dist., Gen.
Oblig.,
Cap. Apprec., Ser. C, M.B.I.A. Aaa Zero 8/1/12 1,110 624,153
Cap. Apprec., Ser. C, M.B.I.A. Aaa Zero 8/1/13 1,165 615,586
Cap. Apprec., Ser. C, M.B.I.A. Aaa Zero 8/1/14 1,220 604,498
Cap. Apprec., Ser. C, M.B.I.A. Aaa Zero 8/1/15 1,285 596,638
Cap. Apprec., Ser. C, M.B.I.A. Aaa Zero 8/1/16 1,400 608,888
</TABLE>
See Notes to Financial Statements 11

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Roseville California Spec. Tax,
Highland Cmnty. Fac., Dist.
No. 1 NR 6.30% 9/1/25 $ 1,900 $ 1,910,773
Ref. N. Central Cmnty., Dist.
No. 1 NR 5.80 9/1/17 2,500 2,457,625
Sacramento City Fin. Auth.,
Cap. Apprec., Tax Alloc. Comb.
Proj., Ser. B, M.B.I.A. Aaa Zero 11/1/16 5,700 2,446,839
Cap. Apprec., Tax Alloc. Comb.
Proj., Ser. B, M.B.I.A. Aaa Zero 11/1/17 5,695 2,293,092
Sacramento Cnty. Spec. Tax Rev.,
Dist. No. 1, Laguna Creek Ranch NR 5.70 12/1/20 1,410 1,349,821
Dist. No. 1, Laguna Creek Ranch NR 8.25 12/1/20 1,000(f) 1,030,070
Sacramento Impvt. Bond Act of
1915, Willowcreek II, Assmt.
Dist., No.96-1 NR 6.70 9/2/22 2,495 2,577,460
Sacramento Spec. Purpose Facs.,
Y.M.C.A. of Sacramento NR 7.25 12/1/18 2,060 2,158,674
San Bernardino Cnty., Cert. of
Part., Med. Ctr. Fin. Proj.,
M.B.I.A. Aaa 5.50 08/1/22 4,540 4,680,558
San Bruno Park Sch. Dist.,
Cap. Apprec., F.S.A. Aaa Zero 8/1/20 1,275 430,211
Cap. Apprec., F.S.A. Aaa Zero 8/1/21 1,220 387,423
Cap. Apprec., F.S.A. Aaa Zero 8/1/22 1,080 322,585
San Diego Spec. Tax, Cmnty. Facs.,
Dist. No. 1, Ser. B NR 7.10 9/1/20 2,000(f) 2,302,400
San Francisco City & Cnty.,
Redev. Agcy., Lease Rev. A1 Zero 7/1/06 1,500 1,156,395
Redev. Agcy., Lease Rev. A1 Zero 7/1/07 2,250 1,654,493
San Joaquin Hills Trans. Corridor
Agcy.,
Toll Rd. Rev. Aaa Zero 1/1/11 2,000 1,228,800
Toll Rd. Rev. Aaa Zero 1/1/22 15,000 4,626,900
</TABLE>
12 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Toll Rd. Rev., Cap. Apprec. Ref.,
Ser. A, M.B.I.A. Aaa Zero 1/15/26 $ 7,000 $ 1,677,760
Toll Rd. Rev. Aaa 5.00% 1/1/33 1,000 939,080
San Jose Multifamily Hsg. Rev.,
Sixth & Martha Family Apts.,
A.M.T., F.N.M.A. AAA(c) 5.875 3/1/33 1,400 1,408,134
San Jose Unified Sch. Dist., Santa
Clara,
Gen. Oblig., Ser. A., F.G.I.C. Aaa Zero 8/1/16 2,630 1,143,839
Gen. Oblig., Ser. A., F.G.I.C. Aaa Zero 8/1/18 2,765 1,056,949
Gen. Oblig., Ser. A., F.G.I.C. Aaa Zero 8/1/19 2,835 1,015,809
San Leandro Cmnty. Facs., Spec.
Tax, Dist. No. 001 NR 6.50 9/1/25 2,160 2,172,614
San Luis Obispo, Certs. of Part.,
Vista Hosp. Sys. NR 8.375 7/1/29 1,000(e) 400,190
San Marino Unified Sch. Dist.,
General Oblig., Ser. A AA(c) 5.25 7/1/19 1,840 1,866,330
General Oblig., Ser. A AA(c) 5.00 6/1/23 1,500 1,440,795
Santa Margarita, Dana Point Rites,
PA Ser. 644G, M.B.I.A. NR 13.827(d) 8/1/14 330 576,032
PA Ser. 644B, M.B.I.A. NR 13.827(d) 8/1/09 305 502,460
Santa Margarita Wtr. Dist. Spec.
Tax,
Cmnty Fac., Dist. No. 99-1 NR 6.20 9/1/20 2,000 2,038,320
Cmnty Fac., Dist. No. 99-1 NR 6.25 9/1/29 2,000 2,031,800
Santa Rosa Impvt. Bond Act of
1915, Ref. Fountaingrove Parkway NR 5.70 9/2/19 1,000 961,000
South Orange Cnty., Pub. Fin.
Auth., Spec. Tax Rev., M.B.I.A. Aaa 7.00 9/1/10 2,535 3,068,187
South San Francisco Redev. Agcy.,
Tax Alloc., Gateway Redev. Proj. NR 7.60 9/1/18 2,375(f) 2,581,174
South Tahoe Joint Pwrs. Fin. Ref.,
Redev. Proj., Ser. A BBB-(c) 5.375 10/1/30 1,500 1,364,265
</TABLE>
See Notes to Financial Statements 13

<PAGE>
Prudential California Municipal Fund California Income Series
Portfolio of Investments as of August 31, 2000 Cont'd.
<TABLE>
<CAPTION>
Moody's Principal
Rating Interest Maturity Amount Value
Description (a) (Unaudited) Rate Date (000) (Note 1)
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Southern California Pub. Pwr.
Auth.,
Proj. Rev. A2 6.75% 7/1/10 $ 6,250 $ 7,308,250
Proj. Rev. A2 6.75 7/1/13 3,000 3,514,440
Proj. Rev., A.M.B.A.C. Aaa Zero 7/1/16 8,400 3,714,816
Stockton Cmnty. Facs., Dist. No.
90-2, Brookside Estates NR 6.20 8/1/15 1,050 1,078,392
Sulphur Springs Unified Sch.
Dist., Ser. A, M.B.I.A. Aaa Zero 9/1/11 3,000 1,786,170
Temecula Valley Unified Sch.
Dist., Cmnty. Facs., Spec. Tax,
Dist. No. 89-1 NR 8.60 9/1/17 2,600 2,684,786
Tustin Unified Sch. Dist.,
Bond Anticipation Notes, Cmnty.
Facs., Dist. No. 97-1 NR 6.10 9/1/02 1,000 1,000,560
Spec. Tax, Cmnty.
Facs., Dist. No. 97-1 NR 6.375 9/1/35 1,500 1,512,240
Vacaville Cmnty. Redev. Agcy.,
Multifamily Hsg. Rev. NR 7.375 11/1/14 1,110(f) 1,266,144
Vallejo Cert. of Part., Touro
Univ. Baa 7.375 6/1/29 2,500 2,562,025
Ventura California Port Dist.,
Cert. of Part. NR 6.375 8/1/28 4,000 4,040,680
Victor Valley,
Union H.S. Dist., M.B.I.A. Aaa Zero 9/1/17 4,500 1,852,380
Union H.S. Dist., M.B.I.A. Aaa Zero 9/1/19 5,450 1,972,954
Union H.S. Dist., M.B.I.A. Aaa Zero 9/1/20 5,850 1,995,786
Virgin Islands Territory, Hugo
Ins. Claims Fund Proj., Ser. 91 NR 7.75 10/1/06 785(f) 821,189
West Contra Costa Unified Sch.
Dist., Cert. of Part. Baa3 6.875 1/1/09 1,015 1,096,982
------------
Total long-term investments (cost
$238,903,209) $252,994,733
------------
</TABLE>
14 See Notes to Financial Statements

------------------------------
(a) The following abbreviations are used in portfolio descriptions:
A.M.B.A.C.--American Municipal Bond Assurance Corporation.
A.M.T.--Alternative Minimum Tax.
F.G.I.C.--Financial Guaranty Insurance Company.
F.N.M.A.--Federal National Mortgage Association.
F.R.D.D.--Floating Rate (Daily) Demand Notes (b)
F.S.A.--Financial Security Assurance.
M.B.I.A.--Municipal Bond Insurance Association.
R.I.B.S.--Residual Interest Bearing Securities.
S.A.V.R.S.--Select Auction Variable Rate Securities.
Y.M.C.A.--Young Mens Christian Association.
(b) For purposes of amortized cost valuation, the maturity date of Floating Rate
Demand Notes is considered to be the later of the next date on which the
security can be redeemed at par, or the next date on which the rate of
interest is adjusted.
(c) Standard & Poor's Rating.
(d) Inverse floating rate bond. The coupon is inversely indexed to a floating
interest rate. The rate shown is the rate at year end.
(e) Issue in default on interest payment, non-income producing security.
(f) Prerefunded issues are secured by escrowed cash and/or direct U.S.
guaranteed obligations.
NR--Not Rated by Moody's or Standard & Poor's.
The Fund's current Statement of Additional Information contains a description of
Moody's and Standard & Poor's ratings.
See Notes to Financial Statements 15

<PAGE>
Prudential California Municipal Fund California Income Series
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
August 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
ASSETS
Investments, at value (cost $241,563,209) $ 255,654,733
Cash 1,480,048
Interest receivable 3,860,335
Receivable for investments sold 1,937,850
Receivable for Series shares sold 204,486
Other assets 4,527
---------------
Total assets 263,141,979
---------------
LIABILITIES
Payable for investments purchased 1,932,700
Payable for Series shares reacquired 424,041
Dividends payable 129,848
Management fee payable 109,522
Accrued expenses 82,144
Distribution fee payable 74,209
Deferred trustee's fees 11,406
---------------
Total liabilities 2,763,870
---------------
NET ASSETS $ 260,378,109
---------------
---------------
Net assets were comprised of:
Shares of beneficial interest, at par $ 244,149
Paid-in capital in excess of par 250,653,961
---------------
250,898,110
Accumulated net realized loss on investments (4,611,525)
Net unrealized appreciation on investments 14,091,524
---------------
Net assets, August 31, 2000 $ 260,378,109
---------------
---------------
</TABLE>

16 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Income Series
Statement of Assets and Liabilities Cont'd.
<TABLE>
<CAPTION>
August 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
Class A:
Net asset value and redemption price per share ($167,152,548
/ 15,673,459 shares of beneficial interest issued and
outstanding) $10.66
Maximum sales charge (3% of offering price) .33
---------------
Maximum offering price to public $10.99
---------------
---------------
Class B:
Net asset value, offering price and redemption price per
share ($80,580,224 / 7,555,173 shares of beneficial
interest issued and outstanding) $10.67
---------------
---------------
Class C:
Net asset value and redemption price per share ($8,309,390 /
779,090 shares of beneficial interest issued and
outstanding) $10.67
Sales charge (1% of offering price) .11
---------------
Offering price to public $10.78
---------------
---------------
Class Z:
Net asset value, offering price and redemption price per
share ($4,335,947 / 407,205 shares of beneficial interest
issued and outstanding) $10.65
---------------
---------------
</TABLE>

See Notes to Financial Statements 17

<PAGE>
Prudential California Municipal Fund California Income Series
Statement of Operations
<TABLE>
<CAPTION>
Year
Ended
August 31, 2000
<S> <C> <C>
----------------------------------------------------------------------------------------
NET INVESTMENT INCOME
Income
Interest $ 15,989,770
---------------
Expenses
Management fee 1,318,663
Distribution fee--Class A 429,221
Distribution fee--Class B 393,715
Distribution fee--Class C 67,660
Custodian's fees and expenses 91,000
Transfer agent's fees and expenses 56,000
Reports to shareholders 45,000
Registration fees 39,000
Legal fees and expenses 25,000
Audit fees and expenses 13,000
Trustees' fees and expenses 11,000
Miscellaneous 7,152
---------------
Total expenses 2,496,411
Custodian fee credit (Note 1) (8,903)
---------------
Net expenses 2,487,508
---------------
Net investment income 13,502,262
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Investment transactions (1,610,894)
Financial futures transactions 912,868
---------------
(698,026)
---------------
Net change in unrealized appreciation (depreciation) on:
Investments 4,511,933
Financial futures contracts (156,625)
---------------
4,355,308
---------------
Net gain on investments 3,657,282
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 17,159,544
---------------
---------------
</TABLE>

18 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Income Series
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Year
Ended Ended
August 31, 2000 August 31, 1999
<S> <C> <C> <C>
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income $ 13,502,262 $ 14,041,421
Net realized loss on investment transactions (698,026) (825,958)
Net change in unrealized appreciation
(depreciation) on investments 4,355,308 (17,810,023)
--------------- ---------------
Net increase (decrease) in net assets
resulting from operations 17,159,544 (4,594,560)
--------------- ---------------
Dividends and distributions (Note 1):
Dividends from net investment income
Class A (8,940,906) (9,496,580)
Class B (3,903,458) (3,882,376)
Class C (424,644) (413,457)
Class Z (233,254) (249,008)
--------------- ---------------
(13,502,262) (14,041,421)
--------------- ---------------
Distributions in excess of net investment
income
Class A (29,079) --
Class B (12,950) --
Class C (1,428) --
Class Z (623) --
--------------- ---------------
(44,080) --
--------------- ---------------
Series share transactions (net of share
conversions) (Note 5):
Net proceeds from shares sold 64,974,467 92,907,502
Net asset value of shares issued to
shareholders in reinvestment of dividends
and distributions 6,255,584 6,830,426
Cost of shares reacquired (98,900,936) (59,179,182)
--------------- ---------------
Net increase (decrease) in net assets from
Series share transactions (27,670,885) 40,558,746
--------------- ---------------
Total increase (decrease) (24,057,683) 21,922,765
NET ASSETS
Beginning of year 284,435,792 262,513,027
--------------- ---------------
End of year $ 260,378,109 $ 284,435,792
--------------- ---------------
--------------- ---------------
</TABLE>

See Notes to Financial Statements 19

<PAGE>
Prudential California Municipal Fund California Income Series
Notes to Financial Statements

Prudential California Municipal Fund (the 'Fund') is registered under the
Investment Company Act of 1940, as an open-end investment company. The Fund was
organized as a Massachusetts business trust on May 18, 1984 and consists of
three series. The monies of each series are invested in separate, independently
managed portfolios. The California Income Series (the 'Series') commenced
investment operations on December 3, 1990. The Series is diversified and seeks
to achieve its investment objective of obtaining the maximum amount of income
exempt from federal and California state income taxes with the minimum of risk.
The Series will invest primarily in investment grade municipal obligations but
may also invest a portion of its assets in lower-quality municipal obligations
or in nonrated securities which are of comparable quality. The ability of the
issuers of the securities held by the Series to meet their obligations may be
affected by economic developments in California or in a specific industry or
region.

Note 1. Accounting Policies
The following is a summary of significant accounting policies followed by the
Fund and the Series in preparation of its financial statements.

Security Valuations: The Series values municipal securities (including
commitments to purchase such securities on a 'when-issued' basis) on the basis
of prices provided by a pricing service which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining values. If market quotations are not readily available from such
pricing service, a security is valued at its fair value as determined under
procedures established by the Trustees. Short-term securities which mature in
more than 60 days are valued at current market quotations. Short-term securities
which mature in 60 days or less are valued at amortized cost.

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

Financial Futures Contracts: A financial futures contract is an
agreement to purchase (long) or sell (short) an agreed amount of securities at a
set price for delivery on a future date. Upon entering into a financial futures
contract, the Series is required to pledge to the broker an amount of cash
and/or other assets equal to a certain percentage of the contract amount. This
amount is known as the 'initial margin.' Subsequent payments, known as
'variation margin,' are made or received by the Series each day, depending on
the daily fluctuations in the value of the underlying security. Such variation
margin is recorded for financial statement purposes on a daily basis as
unrealized gain or loss. When the contract expires or is closed, the gain or
20

<PAGE>
Prudential California Municipal Fund California Income Series
Notes to Financial Statements Cont'd.

loss is realized and is presented in the statement of operations as net realized
gain (loss) on financial futures transactions.

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

Options: The Fund may either purchase or write options in order to
hedge against adverse market movements or fluctuations in value caused by
changes in prevailing interest rates with respect to securities which the Fund
currently owns or intends to purchase. The Fund's principal reason for writing
options is to realize, through receipt of premiums, a greater current return
than would be realized on the underlying security alone. When the Fund purchases
an option, it pays a premium and an amount equal to that premium is recorded as
an investment. When the Fund writes an option, it receives a premium and an
amount equal to that premium is recorded as a liability. The investment or
liability is adjusted daily to reflect the current market value of the option.
If an option expires unexercised, the Fund realizes a gain or loss to the extent
of the premium received or paid. If an option is exercised, the premium received
or paid is an adjustment to the proceeds from the sale or the cost of the
purchase in determining whether the Fund has realized a gain or loss. The
difference between the premium and the amount received or paid on effecting a
closing purchase or sale transaction is also treated as a realized gain or loss.
Gain or loss on purchased options is included in net realized gain (loss) on
investment transactions. Gain or loss on written options is presented separately
as net realized gain (loss) on written option transactions.

The Fund, as writer of an option, may have no control over whether the
underlying securities may be sold (called) or purchased (put). As a result, the
Fund bears the market risk of an unfavorable change in the price of the security
underlying the written option. The Fund, as purchaser of an option, bears the
risk of the potential inability of the counterparties to meet the terms of their
contracts.

<PAGE>
Prudential California Municipal Fund California Income Series
Notes to Financial Statements Cont'd.

of portfolio securities as adjustments to interest income. Expenses are recorded
on the accrual basis which may require the use of certain estimates by
management.

Net investment income (other than distribution fees) and unrealized and
realized gains or losses are allocated daily to each class of shares based upon
the relative proportion of net assets of each class at the beginning of the day.

Dividends and Distributions: The Series declares daily dividends from
net investment income. Payment of dividends is made monthly. Distributions of
net capital gains, if any, are made annually.

Income distributions and capital gain distributions are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles.

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

Reclassification of Capital Accounts: The Fund accounts for and reports
distributions to shareholders in accordance with Statement of Position 93-2:
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies. The
effect of applying this statement was to increase undistributed net investment
income and increase accumulated net realized loss by $44,080 due to the sale of
securities purchased with market discount. Net investment income, net realized
gains and net assets were not affected by this change.

Note 2. Agreements
The Fund has a management agreement with Prudential Investments Fund Management
LLC ('PIFM'). Pursuant to this agreement, PIFM has responsibility for all
investment advisory services and supervises the subadviser's performance of such
services. PIFM has entered into a subadvisory agreement with The Prudential
Investment Corporation ('PIC'). The subadvisory agreement provides that PIC will
furnish investment advisory services in connection with the management of the
Fund. In connection therewith, PIC is obligated to keep certain books and
records of the Fund. PIFM continues to have reponsibility for all investment
advisory services pursuant to the management agreement and supervises PIC's
performance of such services. PIFM

<PAGE>
Prudential California Municipal Fund California Income Series
Notes to Financial Statements Cont'd.

pays for the services of PIC, the cost of compensation of officers of the Fund,
occupancy and certain clerical and bookkeeping costs of the Fund. The Fund bears
all other costs and expenses.

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

Effective January 1, 2000, the subadvisory fee paid to PIC by PIFM is
computed daily and payable monthly at an annual rate of .250 of 1% of the
average daily net assets of the Fund. Prior to January 1, 2000, PIC was
reimbursed by PIFM for reasonable costs and expenses incurred in furnishing
investment advisory services. The change in subadvisory fee structure has no
impact on the management fee charged to the Fund or its shareholders.

Pursuant to the Class A, B and C Plans, the Fund compensates PIMS for
distribution-related activities at an annual rate of up to .30 of 1%, .50 of 1%
and 1% of the average daily net assets of the Class A, B and C shares,
respectively. Such expenses under the Plans were .25 of 1%, .50 of 1% and .75 of
1% of the average daily net assets of the Class A, B and C shares, respectively.

PIMS has advised the Series that it received approximately $123,000 and
$11,900 in front-end sales charges resulting from sales of Class A and Class C
shares, respectively, during the year ended August 31, 2000. From these fees,
PIMS paid such sales charges to affiliated broker-dealers which in turn paid
commissions to sales persons and incurred other distribution costs.

PIMS has advised the Series that for the year ended August 31, 2000, it
received approximately $281,500 and $7,900 in contingent deferred sales charges
imposed upon certain redemptions by Class B and Class C shareholders,
respectively.

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

<PAGE>
Prudential California Municipal Fund California Income Series
Notes to Financial Statements Cont'd.

alternative source of funding for capital share redemptions. The Funds pay a
commitment fee at an annual rate of .080 of 1% of the unused portion of the
credit facility. The commitment fee is accrued and paid quarterly on a pro rata
basis by the Funds. The expiration date of the SCA is March 9, 2001. Prior to
March 9, 2000, the commitment fee was .065 of 1% of the unused portion of the
credit facility. The Fund did not borrow any amounts pursuant to the SCA during
the year ended August 31, 2000.

Note 3. Other Transactions with Affiliates
Prudential Mutual Fund Services LLC ('PMFS'), a wholly owned subsidiary of PIFM,
serves as the Fund's transfer agent. During the year ended August 31, 2000, the
Series incurred fees of approximately $50,000 for the services of PMFS. As of
August 31, 2000 approximately $3,800 of such fees were due to PMFS. Transfer
agent fees and expenses in the Statement of Operations include certain
out-of-pocket expenses paid to nonaffiliates.

Note 4. Portfolio Securities
Purchases and sales of portfolio securities of the Series, excluding short-term
investments, for the year ended August 31, 2000 were $86,897,914 and
$120,720,585, respectively.

The United States federal income tax cost basis of the Fund's investments
as of August 31, 2000 was $241,734,504 and accordingly, net unrealized
appreciation on investments for federal income tax purposes was $13,920,228
(gross unrealized appreciation--$17,583,998; gross unrealized
depreciation--$3,663,770).

For federal income tax purposes, the Series has a capital loss
carryforward at August 31, 2000 of approximately $3,408,000 of which $1,520,900
expires in 2003, $975,700 expires in 2004 and $911,400 expires in 2008.
Accordingly, no capital gains distributions are expected to be paid to
shareholders until net gains have been realized in excess of such amount.

For federal income tax purposes, the Series will elect to treat net
capital losses of $933,900 incurred in the ten month period ended August 31,
2000 as being incurred in the next year.

<PAGE>
Prudential California Municipal Fund California Income Series
Notes to Financial Statements Cont'd.

B shares will automatically convert to Class A shares on a quarterly basis
approximately seven years after purchase. A special exchange privilege is also
available for shareholders who qualify to purchase Class A shares at net asset
value.

The Fund has authorized an unlimited number of shares of beneficial
interest for each class at $.01 par value per share.

Transactions in shares of beneficial interest for the years ended August
31, 2000 and August 31, 1999 were as follows:
<TABLE>
<CAPTION>
Class A Shares Amount
------------------------------------------------------------ ---------- ------------
<S> <C> <C>
Year ended August 31, 2000:
Shares sold 4,664,081 $ 47,656,875
Shares issued in reinvestment of dividends 398,989 4,096,741
Shares reacquired (7,048,893) (72,195,003)
---------- ------------
Net decrease in shares outstanding before conversion (1,985,823) (20,441,387)
Shares issued upon conversion from Class B 158,801 1,630,903
---------- ------------
Net decrease in shares outstanding (1,827,022) $(18,810,484)
---------- ------------
---------- ------------
Year ended August 31, 1999:
Shares sold 4,622,707 50,892,275
Shares issued in reinvestment of dividends 417,857 4,593,136
Shares reacquired (3,868,964) (42,458,852)
---------- ------------
Net increase in shares outstanding before conversion 1,171,600 13,026,559
Shares issued upon conversion from Class B 109,917 1,217,865
---------- ------------
Net increase in shares outstanding 1,281,517 $ 14,244,424
---------- ------------
---------- ------------
<CAPTION>
Class B
------------------------------------------------------------
<S> <C> <C>
Year ended August 31, 2000:
Shares sold 1,303,211 $ 13,414,428
Shares issued in reinvestment of dividends 167,619 1,720,710
Shares reacquired (1,815,491) (18,615,231)
---------- ------------
Net decrease in shares outstanding before conversion (344,661) (3,480,093)
Shares reacquired upon conversion into Class A (158,801) (1,630,903)
---------- ------------
Net decrease in shares outstanding (503,462) $ (5,110,996)
---------- ------------
---------- ------------
Year ended August 31, 1999:
Shares sold 2,701,343 $ 29,886,200
Shares issued in reinvestment of dividends 160,200 1,758,724
Shares reacquired (995,244) (10,928,291)
---------- ------------
Net increase in shares outstanding before conversion 1,866,299 20,716,633
Shares reacquired upon conversion into Class A (109,917) (1,217,865)
---------- ------------
Net increase in shares outstanding 1,756,382 $ 19,498,768
---------- ------------
---------- ------------
</TABLE>
25

<PAGE>
Prudential California Municipal Fund California Income Series
Notes to Financial Statements Cont'd.
<TABLE>
<CAPTION>
Class C Shares Amount
------------------------------------------------------------ ---------- ------------
Year ended August 31, 2000:
<S> <C> <C>
Shares sold 151,693 $ 1,563,439
Shares issued in reinvestment of dividends 28,025 287,690
Shares reacquired (434,581) (4,447,901)
---------- ------------
Net decrease in shares outstanding (254,683) $ (2,596,772)
---------- ------------
---------- ------------
Year ended August 31, 1999:
Shares sold 696,989 $ 7,705,871
Shares issued in reinvestment of dividends 26,026 285,305
Shares reacquired (221,550) (2,436,064)
---------- ------------
Net increase in shares outstanding 501,465 $ 5,555,112
---------- ------------
---------- ------------
<CAPTION>
Class Z
------------------------------------------------------------
<S> <C> <C>
Year ended August 31, 2000:
Shares sold 230,133 $ 2,339,725
Shares issued in reinvestment of dividends 14,647 150,443
Shares reacquired (357,044) (3,642,801)
---------- ------------
Net decrease in shares outstanding (112,264) $ (1,152,633)
---------- ------------
Year ended August 31, 1999:
Shares sold 405,701 $ 4,423,156
Shares issued in reinvestment of dividends 17,560 193,261
Shares reacquired (306,708) (3,355,975)
---------- ------------
Net increase in shares outstanding 116,553 $ 1,260,442
---------- ------------
---------- ------------
</TABLE>

<PAGE>
Prudential California Municipal Fund California Income Series
Financial
Highlights
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '
' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' ' '

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights
<TABLE>
<CAPTION>
Class A
---------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 10.49
---------------
Income from investment operations
Net investment income .54
Net realized and unrealized gain (loss) on investment
transactions .17
---------------
Total from investment operations .71
---------------
Less distributions
Dividends from net investment income (.54)
Distributions in excess of net investment income --(c)
---------------
Total distributions (.54)
---------------
Net asset value, end of year $ 10.66
---------------
---------------
TOTAL RETURN(b): 7.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 167,153
Average net assets (000) $ 171,688
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees .86%
Expenses, excluding distribution and service (12b-1) fees .61%
Net investment income 5.21%
For Class A, B, C and Z shares:
Portfolio turnover rate 34%
</TABLE>

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class A
-------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.19 $ 10.71 $ 10.33 $ 10.28
---------------- ---------------- ---------------- ----------------
.56(a) .59(a) .60(a) .63(a)
(.70) .49 .38 .05
---------------- ---------------- ---------------- ----------------
(.14) 1.08 .98 .68
---------------- ---------------- ---------------- ----------------
(.56) (.59) (.60) (.63)
-- (.01) --(c) --
---------------- ---------------- ---------------- ----------------
(.56) (.60) (.60) (.63)
---------------- ---------------- ---------------- ----------------
$ 10.49 $ 11.19 $ 10.71 $ 10.33
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
(1.37)% 10.31% 9.72% 6.67%
$183,593 $181,512 $156,684 $153,236
$187,106 $165,771 $153,019 $161,420
.76%(a) .68%(a) .73%(a) .50%(a)
.56%(a) .58%(a) .63%(a) .40%(a)
5.03%(a) 5.39%(a) 5.66%(a) 6.01%(a)
23% 10% 16% 22%
</TABLE>

See Notes to Financial Statements 29

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
---------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 10.49
---------------
Income from investment operations
Net investment income .51
Net realized and unrealized gain (loss) on investment
transactions .18
---------------
Total from investment operations .69
---------------
Less distributions
Dividends from net investment income (.51)
Distributions in excess of net investment income --(c)
---------------
Total distributions (.51)
---------------
Net asset value, end of year $ 10.67
---------------
---------------
TOTAL RETURN(b): 6.93%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $80,580
Average net assets (000) $78,743
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 1.11%
Expenses, excluding distribution and service (12b-1) fees .61%
Net investment income 4.96%
</TABLE>

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class B
-------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.19 $ 10.71 $ 10.33 $ 10.28
-------- -------- -------- --------
.53(a) .55(a) .55(a) .59(a)
(.70) .49 .38 .05
-------- -------- -------- --------
(.17) 1.04 .93 .64
-------- -------- -------- --------
(.53) (.55) (.55) (.59)
-- (.01) --(c) --
-------- -------- -------- --------
(.53) (.56) (.55) (.59)
-------- -------- -------- --------
$ 10.49 $ 11.19 $ 10.71 $ 10.33
-------- -------- -------- --------
-------- -------- -------- --------
(1.67)% 9.87% 9.28% 6.25%
$ 84,546 $ 70,535 $ 47,436 $ 35,983
$ 81,163 $ 56,011 $ 40,983 $ 32,555
1.06%(a) 1.08%(a) 1.13%(a) .90%(a)
.56%(a) .58%(a) .63%(a) .40%(a)
4.78%(a) 4.99%(a) 5.26%(a) 5.61%(a)
</TABLE>

See Notes to Financial Statements 31

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
---------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year $ 10.49
-------
Income from investment operations
Net investment income .49
Net realized and unrealized gain (loss) on investment
transactions .18
-------
Total from investment operations .67
-------
Less distributions
Dividends from net investment income (.49)
Distributions in excess of net investment income --(c)
-------
Total distributions (.49)
-------
Net asset value, end of year $ 10.67
-------
-------
TOTAL RETURN(b): 6.66%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000) $ 8,309
Average net assets (000) $ 9,021
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees 1.36%
Expenses, excluding distribution and service (12b-1) fees .61%
Net investment income 4.71%
</TABLE>

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class C
-------------------------------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------------------------------
1999 1998 1997 1996
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 11.19 $10.71 $10.33 $10.28
-------- ------- ------- -------
.50(a) .52(a) .53(a) .56(a)
(.70) .49 .38 .05
-------- ------- ------- -------
(.20) 1.01 .91 .61
-------- ------- ------- -------
(.50) (.52) (.53) (.56)
-- (.01) --(c) --
-------- ------- ------- -------
(.50) (.53) (.53) (.56)
-------- ------- ------- -------
$ 10.49 $11.19 $10.71 $10.33
-------- ------- ------- -------
-------- ------- ------- -------
(1.91)% 9.60% 9.01% 5.99%
$ 10,847 $5,960 $3,611 $3,269
$ 9,088 $4,491 $3,135 $3,300
1.31%(a) 1.33%(a) 1.38%(a) 1.15%(a)
.56%(a) .58%(a) .63%(a) .40%(a)
4.53%(a) 4.74%(a) 5.01%(a) 5.36%(a)
</TABLE>

See Notes to Financial Statements 33

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class Z
---------------
Year Ended
August 31, 2000
----------------------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 10.49
-------
Income from investment operations
Net investment income .56
Net realized and unrealized gain (loss) on investment
transactions .16
-------
Total from investment operations .72
-------
Less distributions
Dividends from net investment income (.56)
Distributions in excess of net investment income --(c)
-------
Total distributions (.56)
-------
Net asset value, end of period $ 10.65
-------
-------
TOTAL RETURN(b): 7.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 4,336
Average net assets (000) $ 4,281
Ratios to average net assets:
Expenses, including distribution and service (12b-1) fees .61%
Expenses, excluding distribution and service (12b-1) fees .61%
Net investment income 5.45%
</TABLE>

------------------------------
(a) Net of management fee waiver.
(b) Total return does not consider the effects of sales loads. Total return is
calculated assuming a purchase of shares on the first day and a sale on the
last day of each period reported and includes reinvestment of dividends and
distributions. Total returns for periods of less than a full year are not
annualized.
(c) Less than $.005 per share.
(d) Commencement of offering of Class Z shares.
(e) Annualized.
34 See Notes to Financial Statements

<PAGE>
Prudential California Municipal Fund California Income Series
Financial Highlights Cont'd.
<TABLE>
<CAPTION>
Class Z
---------------------------------------------------------------------------------------
Year Ended August 31, September 18, 1996(d)
------------------------------------------ through August 31,
1999 1998 1997
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$11.19 $10.71 $10.38
------- ------- -------
.58(a) .61(a) .57(a)
(.70) .49 .33
------- ------- -------
(.12) 1.10 .90
------- ------- -------
(.58) (.61) (.57)
-- (.01) --(c)
------- ------- -------
(.58) (.62) (.57)
------- ------- -------
$10.49 $11.19 $10.71
------- ------- -------
------- ------- -------
(1.18)% 10.42% 8.86%
$5,449 $4,507 $1,963
$4,725 $3,312 $ 970
.56%(a) .58%(a) .63%(a)(e)
.56%(a) .58%(a) .63%(a)(e)
5.28%(a) 5.49%(a) 5.76%(a)(e)
</TABLE>

See Notes to Financial Statements 35

<PAGE>
Prudential California Municipal Fund California Income Series
Report of Independent Accountants

To the Shareholders and Board of Trustees of
Prudential California Municipal Fund, California Income Series

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Prudential California Municipal
Fund, California Income Series (the 'Fund', one of the portfolios constituting
Prudential California Municipal Fund) at August 31, 2000, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each of
the four years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial
statements and financial highlights (hereafter referred to as 'financial
statements') are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with auditing
standards generally accepted in the United States of America, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at August 31, 2000 by correspondence with the custodian and
brokers, provide a reasonable basis for our opinion. The accompanying financial
highlights for the year ended August 31, 1996 were audited by other independent
accountants, whose opinion dated October 14, 1996 was unqualified.

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York
October 20, 2000

<PAGE>
Prudential California Municipal Fund California Income Series
Federal Income Tax Information (Unaudited)

We are required by the Internal Revenue Code to advise you within 60 days
of the Series' fiscal year end (August 31, 2000) as to the federal tax status of
dividends paid by the Series during such fiscal year. Accordingly, we are
advising you that in the fiscal year ended August 31, 2000, dividends paid from
net investment income of $.54 per share for Class A shares, $.51 per Class B
share, $.49 per Class C share and $.56 per Class Z share were all federally
tax-exempt interest dividends.

In January 2001, you will be advised on IRS Form 1099 DIV or substitute
1099 DIV as to federal tax status of the distributions received by you in
calendar 2000.
37

<PAGE>

Prudential California Municipal Fund California Income Series

Prudential Mutual Funds

balanced/allocation funds
Prudential Diversified Funds
Conservative Growth Fund
Moderate Growth Fund
High Growth Fund
The Prudential Investment Portfolios, Inc.
Prudential Active Balanced Fund

<PAGE>

www.prudential.com (800) 225-1852

Other Money Market Funds
Command Government Fund
Command Money Fund
Command Tax-Free Fund

<PAGE>
Prudential California Municipal Fund California Income Series
Getting the Most from Your Prudential Mutual Fund

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

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

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

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

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

Discount Rate: The interest rate charged by the
Federal Reserve on loans to member banks.
Federal Funds Rate: The interest rate charged by
one bank to another on overnight loans.

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

<PAGE>

www.prudential.com (800) 225-1852

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

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

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

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

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

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

<PAGE>

Prudential California Municipal Fund California Income Series
Class A Growth of a $10,000 Investment

(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 3.88% 5.75% (5.68) N/A 7.29% (7.04)
Without Sales
Charge 7.10% 6.40% (6.32) N/A 7.63% (7.38)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost.The best- and worst-year information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return
since inception of the share class.The graph
compares a $10,000 investment in the Prudential
California Municipal Fund/California Income Series
(Class A shares) with a similar investment in the
Lehman Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class A shares, and
the account value at the end of the current fiscal
year (August 31, 2000), as measured on a quarterly
basis, beginning in December 1990 for Class A
shares. For purposes of the graph, and unless
otherwise indicated, it has been assumed that (a)
the maximum applicable front-end sales charge of 3%
was deducted from the initial $10,000 investment in
Class A shares; (b) all recurring fees (including
management fees) were deducted; and (c) all dividends and
distributions were reinvested. The numbers in
parentheses ( ) show the Series' average annual
total return without waiver of management fees
and/or expense subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total return includes the
reinvestment of all dividends, but does not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Series. The Index is not the only one that
may be used to characterize performance of
municipal bond funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>

www.prudential.com (800) 225-1852
Class B Growth of a $10,000 Investment

(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 1.93% 5.89% (5.81) N/A 5.59% (5.46)
Without Sales
Charge 6.93% 6.05% (5.97) N/A 5.59% (5.46)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return
since inception of the share class. The graph
compares a $10,000 investment in the Prudential
California Municipal Fund/California Income Series
(Class B shares) with a similar investment in the
Lehman Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class B shares, and
the account value at the end of the current fiscal
year (August 31, 2000), as measured on a quarterly
basis, beginning in December 1993 for Class B
shares. For purposes of the graph, and unless
otherwise indicated, it has been assumed that (a)
the maximum applicable contingent deferred sales
charge of 5%, 4%, 3%, 2%, 1%, and 1% for six years was
deducted from the value of the investment in Class
B shares, assuming full redemption on August 31,
2000; (b) all recurring fees (including management
fees) were deducted; and (c) all dividends and
distributions were reinvested. Class B shares will
automatically convert to Class A shares, on a
quarterly basis, beginning approximately seven
years after purchase. This conversion feature is
not reflected in the graph. The numbers in
parentheses ( ) show the Series' average annual
total return without waiver of
management fees and/or expense subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the
reinvestment of all dividends, but does not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Series. The Index is not the only one that
may be used to characterize performance of
municipal bond funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>

Prudential California Municipal Fund California Income Series
Class C Growth of a $10,000 Investment
(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 4.59% 5.57% (5.49) N/A 5.81% (5.69)
Without Sales
Charge 6.66% 5.79% (5.71) N/A 5.98% (5.87)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return
since inception of the share class.The graph
compares a $10,000 investment in the Prudential
California Municipal Fund/California Income Series
(Class C shares) with a similar investment in the
Lehman Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class C shares, and
the account values at the end of the current fiscal
year (August 31, 2000), as measured on a quarterly
basis, beginning in August 1994 for Class C shares.
For purposes of the graph, and unless otherwise
indicated, it has been assumed that (a) the maximum
applicable front-end sales charge of 1% was
deducted from the initial $10,000 investment in
Class C shares; (b) the
maximum applicable contingent deferred sales charge
of 1% for 18 months was deducted from the value of
the investment in Class C shares, assuming full
redemption on August 31, 2000 ; (c) all recurring
fees (including management fees) were deducted; and
(d) all dividends and distributions were
reinvested.
The numbers in parentheses ( ) show the Series'
average annual total return without waiver of
management fees and/or expense subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the
reinvestment of all dividends, but does not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Series. The Index is not the only one that
may be used to characterize performance of
municipal bond funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>
www.prudential.com (800) 225-1852
Class Z Growth of a $10,000 Investment
(GRAPH)

Average Annual Total Returns as of 8/31/00
One Year Five Years Ten Years Since Inception
With Sales
Charge 7.26% N/A N/A 6.32% (6.30)
Without Sales
Charge 7.26% N/A N/A 6.32% (6.30)

Past performance is not indicative of future
results. Principal and investment return will
fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their
original cost. The best- and worst-year information
within the graph is designed to give you an idea of
how much the Series' returns can fluctuate from
year to year by measuring the best and worst
calendar years in terms of total annual return
since inception of the share class.The graph
compares a $10,000 investment in the Prudential
California Municipal Fund/California Income Series
(Class Z shares) with a similar investment in the
Lehman Brothers Municipal Bond Index (the Index) by
portraying the initial account value at the
commencement of operations of Class Z shares, and
the account value at the end of the current fiscal
year (August 31, 2000), as measured on a quarterly
basis, beginning in September 1996 for Class Z
shares.
For purposes of the graph, and unless otherwise
indicated, it has been assumed that (a) all
recurring fees (including management fees) were
deducted; and (b) all dividends and distributions
were reinvested.
Class Z shares are not subject to a sales charge or
distribution and service (12b-1) fees. The numbers
in parentheses ( ) show the Series' average annual
total return without waiver of management fees
and/or expense subsidization.

The Index is a weighted index comprised of
municipal bonds (general obligation bonds, revenue
bonds, insured bonds, and prerefunded bonds)
selected by Lehman Brothers as representative of
the long-term, investment-grade municipal bond
market. The Index is unmanaged, and the total
return includes the
reinvestment of all dividends, but does not include
the effect of sales charges or operating expenses
of a mutual fund. The securities that comprise the
Index may differ substantially from the securities
in the Series. The Index is not the only one that
may be used to characterize performance of
municipal bond funds. Other indexes may portray
different comparative performance. Investors cannot
invest directly in an index.

This graph is furnished to you in accordance with
SEC regulations.

<PAGE>

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